ex10-1



EXHIBIT 10.1

 

 

 

 

 

AMENDED AND RESTATED SEPARATION AGREEMENT


Dated as of February 13, 2001


By and Among


KPMG CONSULTING, LLC


KPMG CONSULTING, INC.


and


KPMG LLP








TABLE OF CONTENTS



	 	 	 	 	 	 
	
	Page

	ARTICLE I
	
	
	
	

		DEFINITIONS, INTERPRETATIONS AND EFFECTIVENESS
	
	
	
	

		Section 1.1 Definitions			2	
	
	
	
	

		Section 1.2 Rules of Construction			10	
	
	
	
	

		Section 1.3 Schedules and Exhibits			11	
	
	
	
	

		Section 1.4 Construction			11	
	
	
	
	

		Section 1.5 Effectiveness of this Agreement			11	
	
	
	
	

	ARTICLE II
	
	
	
	

		THE SEPARATION
	
	
	
	

		Section 2.1 The Separation			11	
	
	
	
	

		Section 2.2 Issuance and Delivery of the Membership Units			12	
	
	
	
	

		Section 2.3 KPMG Board Action			13	
	
	
	
	

		Section 2.4 Additional Approvals			13	
	
	
	
	

	ARTICLE III
	
	
	
	

		TRANSFERS TO CONSULTING
	
	
	
	

		Section 3.1 Transferred Assets			13	
	
	
	
	

		Section 3.2 Excluded Assets			17	
	
	
	
	

		Section 3.3 Assumed Liabilities			17	
	
	
	
	

		Section 3.4 Retained Liabilities			19	
	
	
	
	

		Section 3.5 Certain Leased Assets			20	
	
	
	
	

		Section 3.6 Determination of the Asset/Liability Schedule			20	
	
	
	
	

		Section 3.7 Adjustment			20	
	
	
	
	

		Section 3.8 Separation Note			21	
	
	
	
	

	ARTICLE IV
	
	
	
	

		ORGANIZATION OF CONSULTING
	
	
	
	

		Section 4.1 Organization of Consulting			21	
	
	
	
	

	ARTICLE V
	
	
	
	

		OTHER CLOSING MATTERS
	
	
	
	

		Section 5.1 Instruments of Conveyance			22	
	
	
	
	

		Section 5.2 No Representations or Warranties			22	
	
	
	
	

		Section 5.3 Non-Assignment			23	
	
	
	
	

		Section 5.4 Further Assurances			23	



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		Section 5.5 Release of KPMG			25	
	
	
	
	

		Section 5.6 Execution of Ancillary Agreements			25	
	
	
	
	

		Section 5.7 Resignations			25	
	
	
	
	

	ARTICLE VI
	
	
	
	

		CERTAIN COVENANTS
	
	
	
	

		Section 6.1 Conduct of Consulting Business Pending the Effective Date			26	
	
	
	
	

		Section 6.2 Insurance Policies and Claims Administration			26	
	
	
	
	

		Section 6.3 Letters of Credit			28	
	
	
	
	

		Section 6.4 Guarantee Obligations			28	
	
	
	
	

		Section 6.5 Litigation			30	
	
	
	
	

		Section 6.6 Consulting Bank Accounts			31	
	
	
	
	

		Section 6.7 Occupancy			31	
	
	
	
	

		Section 6.8 Compliance with Auditor Independence Rules			31	
	
	
	
	

		Section 6.9 Shared Contracts			31	
	
	
	
	

		Section 6.10 Collection of Receivables			32	
	
	
	
	

		Section 6.11 Notice of Separation			33	
	
	
	
	

		Section 6.12 Waiver of Certain Provisions of the Partnership Agreement			33	
	
	
	
	

		Section 6.13 No Cross Employment			33	
	
	
	
	

	ARTICLE VII
	
	
	
	

		INTELLECTUAL PROPERTY
	
	
	
	

		Section 7.1 License of Consulting Intellectual Property to KPMG			34	
	
	
	
	

		Section 7.2 License of KPMG Intellectual Property to Consulting			35	
	
	
	
	

		Section 7.3 No Transfers			36	
	
	
	
	

		Section 7.4 Limitation			36	
	
	
	
	

		Section 7.5 Further Assurances			37	
	
	
	
	

	ARTICLE VIII
	
	
	
	

		EMPLOYEES AND EMPLOYEE BENEFITS
	
	
	
	

		Section 8.1 Consulting Employee			37	
	
	
	
	

		Section 8.2 Employment of Consulting Employees			38	
	
	
	
	

		Section 8.3 Terminations/Layoff/Severance			38	
	
	
	
	

		Section 8.4 International Consulting Employees			38	
	
	
	
	

		Section 8.5 Employment Solicitation			38	
	
	
	
	

		Section 8.6 Leave of Absence Policies			39	
	
	
	
	

		Section 8.7 Withdrawal From Participation in KPMG Plans and
Establishment of Consulting Plans			39	
	
	
	
	

		Section 8.8 Transfer of Savings Plan Account Balances			40	
	
	
	
	

		Section 8.9 Entitlement to Distributions Under Pension Plans			40	
	
	
	
	

		Section 8.10 Workers’ Compensation			40	
	
	
	
	

		Section 8.11 Vacation Pay Policy			40	
	
	
	
	

		Section 8.12 Information to Be Provided to KPMG			41	
	
	
	
	

		Section 8.13 Welfare Benefits and COBRA			41	



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	ARTICLE IX
	
	
	
	

		ACCESS TO INFORMATION
	
	
	
	

		Section 9.1 Access to Information			41	
	
	
	
	

		Section 9.2 Production of Witnesses			42	
	
	
	
	

		Section 9.3 Provision of Corporate Records			43	
	
	
	
	

		Section 9.4 Confidentiality			43	
	
	
	
	

		Section 9.5 Privileged Matters			44	
	
	
	
	

		Section 9.6 Service of Process			46	
	
	
	
	

	ARTICLE X
	
	
	
	

		CONDITIONS PRECEDENT TO SEPARATION
	
	
	
	

		Section 10.1 No Actions			46	
	
	
	
	

		Section 10.2 Consents			46	
	
	
	
	

		Section 10.3 Pre-Separation Transactions			46	
	
	
	
	

		Section 10.4 Ancillary Agreements			46	
	
	
	
	

		Section 10.5 Board Approval			46	
	
	
	
	

		Section 10.6 KPMG Partner Approval			46	
	
	
	
	

		Section 10.7 Election of Consulting Board			46	
	
	
	
	

		Section 10.8 Satisfaction of Conditions			47	
	
	
	
	

		Section 10.9 Tax Opinion			47	
	
	
	
	

	ARTICLE XI
	
	
	
	

		EXPENSES; TRANSACTION TAXES
	
	
	
	

		Section 11.1 Allocation of Expenses			47	
	
	
	
	

		Section 11.2 Transaction Taxes			47	
	
	
	
	

	ARTICLE XII
	
	
	
	

		SURVIVAL, INDEMNIFICATION, CLAIMS AND OTHER MATTERS
	
	
	
	

		Section 12.1 Survival			47	
	
	
	
	

		Section 12.2 Indemnification			47	
	
	
	
	

		Section 12.3 Procedure for Indemnification			49	
	
	
	
	

		Section 12.4 Direct Claims			51	
	
	
	
	

		Section 12.5 Adjustment of Indemnifiable Losses			52	
	
	
	
	

		Section 12.6 Contribution			53	
	
	
	
	

		Section 12.7 No Third Party Beneficiaries			53	
	
	
	
	

	ARTICLE XIII
	
	
	
	

		DISPUTE RESOLUTION
	
	
	
	

		Section 13.1 Escalation			53	
	
	
	
	

		Section 13.2 Submission to Mediation			54	
	
	
	
	

		Section 13.3 Arbitration			54	
	
	
	
	

		Section 13.4 Injunctive Relief			54	



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	ARTICLE XIV
	
	
	
	

		MISCELLANEOUS PROVISIONS
	
	
	
	

		Section 14.1 Entire Agreement			55	
	
	
	
	

		Section 14.2 Choice of Law			55	
	
	
	
	

		Section 14.3 Amendment; Waiver			55	
	
	
	
	

		Section 14.4 Severability			55	
	
	
	
	

		Section 14.5 Counterparts; Signatures			56	
	
	
	
	

		Section 14.6 Records Retention			56	
	
	
	
	

		Section 14.7 Beneficiaries			56	
	
	
	
	

		Section 14.8 Notices			56	
	
	
	
	

		Section 14.9 Termination			57	
	
	
	
	

		Section 14.10 Schedules and Exhibits			57	
	
	
	
	

		Section 14.11 Performance			57	
	
	
	
	

		Section 14.12 Assignability			58	
	
	
	
	

		Section 14.13 Publicity			58	
	
	
	
	

		Section 14.14 Specific Performance			58	
	
	
	
	

		Section 14.15 Limitation			58	



iv







Schedules


Schedule 1.1 —Audited Balance Sheet of Consulting

Schedule 2.2 —Transfer of Partner Shares

Schedule 3.1(a) —Listed Assets

Schedule 3.1(c)(i) —Contracts Relating to Acquisitions or Divestitures

Schedule 3.1(c)(ii) —Consulting Contracts

Schedule 3.1(c)(iii) —Government Contracts

Schedule 3.1(c)(iv) —Supplier Contracts Categories

Schedule 3.1(c)(v) —Joint Development and Confidentiality Contracts

Schedule 3.1(c)(vi) —Telecommunications Contracts

Schedule 3.1(c)(vii) —Contracts relating to Third Party Software

Schedule 3.1(e) —Technical and Business Materials

Schedule 3.1(f)(i) —Patents

Schedule 3.1(f)(ii) —Copyrights

Schedule 3.1(f)(iii) —Trade Names, Trademarks

Schedule 3.1(f)(iv) —Software

Schedule 3.1(g) —Permits and Licenses

Schedule 3.1(i) —Transferred Subsidiaries, Joint Ventures and Minority

Interests

Schedule 3.1(m) —Loans

Schedule 3.3(a) —Liabilities of KPMG

Schedule 3.3(c) —KPMG Subsidiary Loans

Schedule 3.3(f) —Environmental Liabilities

Schedule 3.5 —Leased Personal Property

Schedule 4.1 —Consulting Directors and Officers

Schedule 6.4(a) —KPMG Guarantees

Schedule 6.4(b) —Surety Bonds

Schedule 6.5(a) —Consulting Assumed Actions


v







Exhibits


Exhibit A —Consulting Non-Eligible Member Agreement

Exhibit B —Consulting Non-Qualified Member Distribution Agreement

Exhibit C —Consulting Qualified Member Distribution Agreement

Exhibit D —Non-Competition Agreement

Exhibit E —KPMG Non-Qualified Member Distribution Agreements

Exhibit F —KPMG Qualified Member Distribution Agreements

Exhibit G —Leased Asset Agreement

Exhibit H —Operating Agreement

Exhibit I —Transition Services Agreement

Exhibit J —Registration Rights Agreement

Exhibit K —Form of Separation Note

Exhibit L —Form of Note

Exhibit M —Certificate of Incorporation of Consulting, Inc.

Exhibit N —By-laws of Consulting, Inc.


vi







AMENDED AND RESTATED SEPARATION AGREEMENT


      AMENDED AND RESTATED SEPARATION AGREEMENT (this “Agreement”), dated as of
February 13, 2001, by and among KPMG LLP, a Delaware limited liability
partnership (“KPMG”), KPMG Consulting, Inc., a Delaware corporation
(“Consulting, Inc.”) and, prior to the Separation (as hereinafter defined), a
wholly-owned Subsidiary (as hereinafter defined) of KPMG, and KPMG Consulting,
LLC, a Delaware limited liability company (“LLC” and collectively with
Consulting, Inc., “Consulting”) and, prior to the Separation, a wholly-owned
Subsidiary of KPMG.


W I T N E S S E T H


      WHEREAS, KPMG, itself and through its Subsidiaries, was engaged, inter
alia, in the management and information technology consulting services
business;


      WHEREAS, the Board of Directors of KPMG 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 (as hereinafter
defined) 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 preferred stock, (the “Consulting
Preferred Stock”), to one or more strategic investors (the “Private
Placement”);


      WHEREAS, the partners and principals of KPMG have duly approved the
Separation and the other transactions contemplated hereby;


      WHEREAS, KPMG contributed, 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
and (iii) all of the issued and outstanding shares of capital stock and other equity
interests owned by KPMG and its Subsidiaries in certain of KPMG’s Subsidiaries
and other entities in and through which the Consulting Business is conducted;


      WHEREAS, following such contribution, (i) Consulting or one or more of the
Transferred Subsidiaries (as hereinafter defined) assumed certain liabilities
and obligations arising out of or relating to the Consulting Business; (ii)   LLC
issued Membership Units (as hereinafter defined) of LLC to KPMG and Membership
Units of LLC to certain partners and principals of KPMG, and (iii) LLC issued
to KPMG certain intercompany notes; and


      WHEREAS, each of the partners and principals of KPMG who received
Membership Units agreed to exchange each such Membership Unit for one share of
the common stock of Consulting, Inc. (the “Consulting Common Stock”), and KPMG
agreed to exchange all but one-half of one percent of the total outstanding
Membership Units for Consulting Common Stock and the Note (as hereinafter
defined) following the contribution and issuance of Membership Units described
in the preceding paragraph (the “Exchange”);









      WHEREAS, immediately following the Separation and the Exchange, LLC was
owned 99.5% by Consulting, Inc. and .5% directly by KPMG;


      WHEREAS, KPMG and Consulting previously determined that it was necessary
and desirable to set forth the principal transactions required to effect the
Separation and the Exchange and to set forth other agreements that will govern
certain other matters in connection with the Separation and the Exchange;


      WHEREAS, KPMG and Consulting entered into a Separation Agreement dated
December 29, 1999 (the “Original Agreement”) setting forth the principal
transactions required to effect the Separation and Exchange and other
agreements governing certain other matters in connection with the Separation
and Exchange;


      WHEREAS, the Original
Separation Agreement became effective as of January 31, 2000 and shall remain in effect until the earlier of the occurrence of an
IPO or a Change in Control (each as defined herein); and


      WHEREAS, KPMG and Consulting desire to amend and restate the Original
Agreement, such amendment and restatement to be effective only upon the
occurrence of the earlier of the consummation of an IPO or a Change of Control
(each as defined herein)


      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, KPMG and Consulting agree as
follows:


ARTICLE I


DEFINITIONS, INTERPRETATIONS AND EFFECTIVENESS


      Section 1.1 Definitions . As used in this Agreement, the following terms
shall have the meanings set forth below.


      “Accredited Investor”  has the meaning set forth in Rule 501(a) under the
Securities Act of 1933, as amended.


      “Action” means any action, claim, suit, arbitration, inquiry, subpoena,
discovery request, proceeding or investigation by or before any court or grand
jury, any governmental or other regulatory or administrative entity, agency or
commission or any arbitration tribunal.


      “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 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 (including the Transferred 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

2







contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.


      “Agreed Adjustments” has the meaning set forth in Section 3.7(c).


      “Agreed Rate” means the prime rate published by The Wall Street Journal
under the “Money Rates” section, as that rate may vary from time to time, or if
that rate is no longer published, a comparable rate.


      “Ancillary Agreements” means collectively, the Non-Competition Agreement,
the KPMG Qualified Member Distribution Agreement, the Consulting Qualified
Member Distribution Agreement, the KPMG Non-Qualified Member Distribution
Agreement, the Consulting Non-Qualified Member Distribution Agreement, the
Consulting Non-Eligible Member Agreement, the Transition Services Agreement,
the Registration Rights Agreement, the Note, the Separation Note, the Leased
Asset Agreement, and all other agreements to be entered into between KPMG and
Consulting and their respective Affiliates, in connection with the Separation,
the Exchange and the consummation of the transactions contemplated hereby or
which relate to the ongoing relationship between Consulting and KPMG and their
respective Affiliates following the Separation, as each may be amended in
accordance with its terms from time to time.


      “Asset/Liability Schedule” has the meaning set forth in Section 3.6.


      “Auditor Independence Rules” has the meaning set forth in Section 6.8.


      “Assumed Liabilities” has the meaning set forth in Section 3.3.


      “Balance Sheet of Consulting” means the audited Balance Sheet of
Consulting as of June 30, 1999 as set forth in Schedule 1.1.


      “Benefit Subsidiary” means any Subsidiary of KPMG whose employees are
covered by the compensation policies and employee benefit plans, programs and
arrangements of KPMG.


      “Board of Directors” means the board of directors of the referenced entity
or any duly authorized committee thereof.


      “CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. §§9601 et seq., any amendments thereto, any
successor statutes and any regulations promulgated thereunder.


      “Change of Control” shall mean:



		
	 	    (i)   a sale or transfer to a non-affiliated third party of all
or substantially all of the assets of Consulting on a consolidated
basis in any transaction or series of related transactions;



3






		
	 	    (ii)     any merger, consolidation or reorganization to which
Consulting is a party, except for a merger, consolidation or
reorganization in which Consulting is the surviving corporation
and, after giving effect to such merger, consolidation or
reorganization, the holders of Consulting’s outstanding equity (on
a fully diluted basis) immediately prior to the merger,
consolidation or reorganization will own in the aggregate
immediately following the merger, consolidation or reorganization
Consulting’s outstanding equity (on a fully diluted basis) either
(i) having the ordinary voting power to elect a majority of the
members of Consulting’s Board of Directors to be elected by the
holders of Common Stock and any other class which votes together
with the Common Stock as a single class or (ii)   representing at
least 50% of the equity value of Consulting as reasonably
determined by the Board of Directors.




		
	 	    (iii)   any Person other than KPMG LLP or its affiliates,
acquires beneficial ownership of 50% or more of the outstanding
equity of Consulting generally entitled to vote on the election of
directors.



      “Claims or Losses” means all losses, liabilities, claims, demands,
settlements, penalties, fines, damages, costs and expenses of whatever kind or
nature, known or unknown, contingent or otherwise (including reasonable
attorneys’ fees and expenses, reasonable consultants’ fees and expenses, court
costs, and any and all expenses reasonably incurred in investigating, preparing
for, or responding to, or defending against, any litigation or claim,
commenced, made or threatened).


      “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended, and any applicable state law requiring continuation coverage under
a medical plan and except where the context requires otherwise, the regulations
promulgated thereunder.


      “Code” means the Internal Revenue Code of 1986, as amended, and except
where the context otherwise requires, the regulations promulgated thereunder.


      “Collection Report” has the meaning set forth in Section 6.10(b).


      “Consulting” has the meaning set forth in the Preamble.


      “Consulting Assigned Intellectual Property” has the meaning set forth in
Section 3.1(f).


      “Consulting Assumed Actions” has the meaning set forth in Section 6.5(a).


      “Consulting Books
and Records” has the meaning set forth in Section 3.1(j).


      “Consulting Business” has the meaning set forth in the Non-Compeition
Agreement, but shall not include the Excluded Assets.


      “Consulting Common Stock” has the meaning set forth in the Recitals.


      “Consulting Employee” has the meaning set forth in Section 8.1.

4







      “Consulting, Inc.” has the meaning set forth in the Preamble.


      “Consulting
Indemnified Parties” has the meaning set forth in Section 12.2(a).


      “Consulting Non-Eligible Member Agreements” means the agreements to be
executed between Consulting and each of the partners or principals who are not
Eligible Partners and who withdraw from KPMG and become employees of Consulting
substantially in the form of Exhibit A.


      “Consulting Non-Qualified Member Distribution Agreements means the
agreements to be executed between Consulting and each of the Non-Qualified
Partners who withdraw from KPMG and become employees of Consulting
substantially in the form of Exhibit B.


      “Consulting Party” has the meaning set forth in Section 12.6.


      “Consulting Preferred Stock” has the meaning set forth in the Recitals.


      “Consulting Qualified Member Distribution Agreements” means the agreements
to be executed between Consulting and each of the Qualified Partners who
withdraw from KPMG and become employees of Consulting substantially in the form
of Exhibit C.


      “Consulting Savings Plan”means the 401(K) Plan to be adopted by
Consulting to provide benefits similar to the benefits provided by the KPMG
Savings Plan.


      “Consulting Services” means those services to be provided by Consulting
and the Transferred Subsidiaries to their clients immediately following the
Effective Date.


      “Consulting
Transferred Actions” has the meaning set forth in Section 6.5(b).


      “Contracting Party” has the meaning set forth in Section 6.9.


      “Contracts” has the meaning set forth in Section 3.1(c).


      “Conveyancing and Assumption Instruments” has the meaning set forth in
Section 5.1.


      “Disabled Employee” means each partner, principal or employee who would
have been a Consulting Employee had he or she not been on a long-term
disability leave of absence on the Effective Date and whose leave of absence
commenced after June 30, 1999.


      “Dispute” has the meaning set forth in Section 13.1.


      “Effective Date” means the close of business on the date on which the
closing of the Separation and Exchange occur.


      “Effective Time” means the time on the Effective Date on which the closing
of the Separation and Exchange occur.

5







      “Eligible Partners” means those partners or principals of KPMG who were
partners or principals both on August 12, 1998 and as of the date of the
signing of the definitive agreement relating to the Private Placement.


      “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and except where the context requires otherwise, the regulations
promulgated thereon.


      “Exchange” has the meaning set forth in the Recitals.


      “Excluded Assets” has the meaning set forth in Section 3.2.


      “First Party” has the meaning set forth in Section 9.4(b).


      “Foreign Exchange Rate” means, with respect to any currency other than
United States dollars, as of any date of determination, the rate on such date
at which such currency may be exchanged for United States dollars as published
by The Wall Street Journal under its “Currency Trading” section, as that rate
may vary from time to time, or if that rate is no longer published, a
comparable rate.


      “Indemnified Party” means any Party who is entitled to receive payment
from an Indemnifying Party pursuant to Article XII hereof.


      “Indemnifying Party” means any Party who is required to pay any other
person pursuant to Article XII hereof.


      “Indemnity Payment” means the amount an Indemnifying Party is required to
pay an Indemnified Party pursuant to Article XII hereof.


      “Information” has the meaning set forth in Section 9.1(a).


      “Insurance Charges” has the meaning set forth in Section 6.2(d).


      “Insured Claims” means those liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the KPMG
Policies, whether or not subject to deductibles, co-insurance,
uncollectability, premium adjustments (including reserves),
retrospectively-rated premium adjustments or retentions, but only to the extent
that such liabilities are within applicable KPMG Policy limits, including
aggregates and deductibles.


      “Intellectual Property Rights” means any and all United States and foreign
copyrights, copyright registrations and applications therefor, nonpatented
inventions, discoveries, processes, formulations, trade secrets and associated
rights, know-how, technical data, all patent applications and issued patents,
including continuations, continuations-in-part, divisionals, reissues, and
extensions thereof, and trade names, trademarks, service marks, service names,
any registrations for any of the foregoing, and any applications for such
registration.


      “IPO” shall mean the initial public offering of the common stock of
Consulting registered under the Securities Act of 1933, as amended.

6






      “KPMG” has the meaning set forth in the Preamble.


      “KPMG Actions” has the meaning set forth in Section 6.5(d).


      “KPMG Assumed Actions” has the meaning set forth in Section 6.5(c).


      “KPMG Guarantees” has the meaning set forth in Section 6.4(a).


      “KPMG Guarantee Fee” has the meaning set forth in Section 6.4(c).


      “KPMG Indemnified Parties” has the meaning set forth in Section 12.2(b).


      “KPMG International” means KPMG International, a Swiss Verein.


      “KPMG’s Membership Units” has the meaning set forth in Section 2.2(a).


      “KPMG Non-Qualified Member Distribution Agreements” means the agreements
to be executed between KPMG and each of the Non-Qualified Partners who will
remain partners or principals of KPMG substantially in the form of Exhibit E.


      “KPMG Party” has the meaning set forth in Section 12.6.


      “KPMG Pension Plan” means the KPMG Pension Plan.


      “KPMG Plan” means any employee benefit plan or program maintained by KPMG.


      “KPMG
Policy” and “KPMG Policies” have
the meanings set forth in Section 6.2(a).


      “KPMG Qualified Member Distribution Agreements” means the agreements to be
executed between KPMG and each of the Qualified Partners who will remain
partners or principals of KPMG substantially in the form attached hereto as
Exhibit F.


      “KPMG Savings Plan” means the KPMG 401(k) Plan.


      “LLC” has the meaning set forth in the Preamble.


      “Leased Asset Agreement” means the Leased Asset Agreement among KPMG,
Consulting, Inc. and LLC attached hereto as Exhibit G.


      “Liabilities” means any and all claims, debts, demands, actions, causes of
action, suits, sum or sums of money, accounts, reckonings, bonds, specialities,
indemnities, exonerations, covenants, contracts, controversies, agreements,
obligations, promises, doings, omissions, variances, damages, executions and
liabilities whatsoever, both at law and in equity, whether accrued, unrecorded,
absolute, known or unknown, contingent or otherwise, and whether due or to
become due.

7







      “Licensed Consulting Intellectual Property” has the meaning set forth in
Section 7.1(a).


      “Licensed Retained Intellectual Property” has the meaning set forth in
Section 7.2(a).


      “Listed Asset
Schedule” has the meaning set forth in
Section 3.1(a).


      “Loan” means any indebtedness for borrowed money between KPMG and the
Consulting Business.


      “Member Distribution Agreements” means the KPMG Qualified Member
Distribution Agreements, the Consulting Qualified Member Distribution
Agreements, the KPMG Non-Qualified Member Distribution Agreements, the
Consulting Non-Qualified Member Distribution Agreements and the Consulting
Non-Eligible Member Agreements.


      “Membership Units” means Membership Units in LLC representing an interest
of a member in LLC.


      “Money Purchase Plan” has the meaning set forth in Section 8.9(b).


      “Net Amount of Receivables” has the meaning set forth in Section 6.10(c).


      “Non-Competition Agreement” means the Non-Competition Agreement among
Consulting, Inc., LLC and KPMG, substantially in the form of Exhibit D.


      “Non-Qualified Partners” means those partners or principals of KPMG who
are Eligible Partners but who are not Accredited Investors.


      “Note” has the meaning set forth in Section 2.2(d).


      “Operating Agreement” means the Operating Agreement among LLC and the
members of LLC, substantially in the form of Exhibit H.


      “Original Agreement” has the meaning set forth in the Preamble.


      “PAR” has the meaning set forth in Section 8.9(b).


      “Partners’ Membership Units” has the meaning set forth in Section 2.2(a).


      “Partnership Agreement” means that certain agreement among KPMG and the
partners and principals of KPMG dated July 1, 1997, as amended from time to
time.


      “Party” means KPMG, Consulting, Inc. or LLC.


      “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.

8








      “Preliminary
Required Adjustment” has the meaning set forth in Section 3.7.


      “Preliminary
Valuation Date Report” has the meaning set forth in Section 3.7.


      “Pre-Separation Claims Administration” has the meaning set forth in
Section 6.2(e).


      “Private Placement” has the meaning set forth in the Preamble.


      “Privilege”
and “Privileges” have the meanings set forth
in Section 9.5(a).


      “Privileged Information” has the meaning set forth in Section 9.5(d).


      “Qualified Partners” means those partners or principals of KPMG who are
both Eligible Partners and Accredited Investors.


      “RAP” has the meaning set forth in Section 8.9(c).


      “Receivables” means all accounts receivable, notes receivable, lease
receivables, prepayments (other than prepaid insurance), advances, WIP and
other receivables arising out of or produced by the Consulting Business and
owing by any Person.


      “Registration Rights Agreement” means the Registration Rights Agreement
dated as of the date hereof between Consulting, Inc. and KPMG, substantially in
the form of Exhibit J.


      “Required Adjustment” has the meaning set forth in Section 3.7(b).


      “Retained Business” means (i) those portions of the business of KPMG and
its Subsidiaries immediately prior to the date of this Agreement which are not
part of the Consulting Business and (ii)   the Excluded Assets.


      “Retained
Intellectual Property” has the meaning set forth in Section 7.2(a).


      “Retained Liabilities” has the meaning set forth in Section 3.4.


      “Retained Subsidiaries” means any Subsidiary of KPMG at any time after the
date of this Agreement, but excluding Consulting and the Transferred
Subsidiaries.


      “Section 6.10 Receivables” has the meaning set forth in Section 6.10.


      “Senior Executives” has the meaning set forth in Section 13.2.


      “Separation” has the meaning set forth in the Recitals.


      “Separation Note” means the note to be issued pursuant to Section 3.8,
substantially in the form of Exhibit K.


      “Shared Contract” has the meaning set forth in Section 6.9(a).

9







      “Shared Services Contract” has the meaning set forth in Section 6.9(b).

      “Subcontracting Party” has the meaning set forth in Section 6.9(a).


      “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 the Transferred Subsidiaries) shall be deemed
Subsidiaries of KPMG.


      “Surety Bonds” has the meaning set forth in Section 6.4(b).


      “Tax” or “Taxes” means any federal, state, local or foreign net income,
gross income, gross receipts, windfall profit, severance, property, production,
sales, use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or
environmental Tax, or any other Tax, custom, duty, governmental fee or other
like assessment or charge of any kind.


      “Transaction Taxes” has the meaning set forth in Section 11.2.


      “Transferred Accounts” has the meaning set forth in Section 8.8.


      “Transferred Assets” has the meaning set forth in Section 3.1.


      “Transferred Subsidiaries” means any Subsidiary which relates to the
Consulting Business and which is transferred to Consulting or a Subsidiary of
Consulting, whether such transfer occurs on the Effective Date in connection
with the Separation or thereafter in connection with the acquisition of any
non-U.S. entity or assets engaged in a business substantially similar to the
Consulting Business.


      “Transition Services Agreement” means the Transition Services Agreement
among Consulting, Inc., LLC and KPMG, substantially in the form of Exhibit I.


      “Valuation Date Report” has the meaning set forth in Section 3.7(b).


      “WIP” means work in progress of the type set forth on the Balance Sheet of
Consulting.


      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;
	 
	 	    (ii)   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)   reference to any gender includes the other gender;



10








		
	 	    (iv)   reference to any Section or Exhibit or Schedule means
such Section of this Agreement or such Exhibit 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 Exhibits or 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.



      Section 1.3 Schedules and Exhibits. The Schedules and Exhibits to this
Agreement may be amended prior to the Effective Date upon the mutual consent of
the Parties.


      Section 1.4 Construction. 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.


      Section 1.5 Effectiveness of this Agreement. This Agreement shall become
effective upon the earlier to occur of (i) the consummation of
an IPO, or (ii) the consummation of a Change in Control. Prior to the effectiveness of this
Agreement, the Original Agreement shall be in full force and effect.


ARTICLE II


THE SEPARATION


      Section 2.1 The Separation. Subject to the terms and conditions of this
Agreement, KPMG and Consulting and their respective Subsidiaries shall use
their good faith efforts to consummate, on or prior to the Effective Date, the
Separation and Exchange transactions heretofore documented and agreed to by the
Parties. It is the intent of the Parties

11







that after the consummation of the Separation and the Exchange, subject to
receipt of all approvals required of any governmental or regulatory authority,
domestic or foreign, or any third party, (i) the Consulting Business will be
owned and conducted, directly or indirectly, entirely by Consulting, (ii)   the
equity interests currently owned by KPMG in the Transferred Subsidiaries will
be owned, directly or indirectly, entirely by Consulting, (iii) Consulting,
directly or indirectly, will own all of the Transferred Assets, (iv) Consulting, directly or indirectly, will, to the extent not previously liable
therefor, have assumed and be liable for all of the Assumed
Liabilities, (v) the Retained Business will continue to be owned and conducted, directly or
indirectly, entirely by KPMG and its Subsidiaries, (vi) KPMG or its
Subsidiaries will, directly or indirectly, continue to own all the Excluded
Assets and (vii) KPMG or its Subsidiaries will, directly or indirectly,
continue to remain liable for all of the Retained Liabilities.


      Section 2.2 Issuance and Delivery of the Membership Units. (a) Upon the
consummation of the Separation, LLC shall issue Membership Units to KPMG
(“KPMG’s Membership Units”) and to those Qualified Partners who have duly
executed and delivered to KPMG prior to the Effective Date the appropriate
Member Distribution Agreement (the “Partners’ Membership Units”). The number
and allocation of the Membership Units shall be determined by KPMG prior to the
Effective Time. Each such Qualified Partner shall receive the number of
Membership Units set forth opposite his or her name on Schedule 2.2, which
schedule shall be delivered by KPMG prior to the Effective Time; provided,
however, that each Qualified Partner who fails to execute and deliver the
appropriate Member Distribution Agreement prior to the Effective Date shall not
receive any Membership Units (or any shares of Consulting Common Stock), and in
lieu thereof, such Membership Units shall be issued to KPMG and shall be
included in the definition of KPMG’s Membership Units. KPMG’s Membership Units
and the Partners’ Membership Units shall represent all of the Membership Units
then issued and outstanding. Non-Qualified Partners shall receive, in lieu of
any Membership Units or shares of Consulting Common Stock, a memorandum entry
in their respective partner capital accounts in the amounts and subject to the
terms and conditions set forth in the Partnership Agreement.



		
	 	    (b)   The Membership Units will be subject to the provisions of the
Operating Agreement and the Member Distribution Agreements which will, among
other things, (i) restrict the transfer and, except in the case of partners and
principals in the Consulting Business, the voting of the Membership Units and
(ii)   obligate holders of the Membership Units to exchange such Membership Units
for Consulting Common Stock.
	 
	 	    (c)   Following the receipt of the Partners’ Membership Units, the holders
thereof shall exchange each such Membership Unit for one share of Consulting
Common Stock, and immediately following the receipt of the KPMG Membership
Units, KPMG will exchange all but .5% of the total outstanding Membership Units
for an equivalent number of shares of Consulting Common Stock and the Note.
After the completion of the Exchange, Consulting, Inc. will hold approximately
99.5% and KPMG will directly hold approximately 0.5% of the outstanding
Membership Units of LLC.
	 
	 	   (d)     In connection with the Exchange and in partial consideration for the
KPMG Membership Units, Consulting, Inc. shall issue a demand note to KPMG in
the principal amount of $630 million (the “Note”). The Note shall carry
interest at a per annum rate of 6%



12








		
	and shall be substantially in the form attached hereto as Exhibit L.
After the completion of the Private Placement, a portion of the proceeds
therefrom will be used to repay the Note in full.
	 
	 	    (e)   The Consulting Common Stock will be subject to certain transfer
restrictions and certain of the partners and principals of KPMG, including
partners and principals who withdraw from KPMG and become employees of
Consulting, will enter into an applicable Member Distribution Agreement.




		
	 	    (f)   Each certificate representing shares of Consulting Common Stock shall
bear a legend in substantially the following form:




	 	 	 	“THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT
BE OFFERED OR SOLD UNLESS THEY HAVE BEEN REGISTERED UNDER SUCH
SECURITIES ACT OR SUCH STATE SECURITIES LAWS OR UNLESS AN
EXEMPTION FROM REGISTRATION OR SUCH STATE SECURITIES LAWS IS
AVAILABLE. THESE SHARES OF COMMON STOCK ARE ALSO SUBJECT TO
RESTRICTIONS ON TRANSFER, AND OTHER TERMS AND CONDITIONS, SET
FORTH IN THE MEMBER DISTRIBUTION AGREEMENT, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER AT ITS PRINCIPAL EXECUTIVE OFFICES.”



      Section 2.3 KPMG Board Action. The Board of Directors of KPMG shall, in
its sole discretion, determine the terms of, and all appropriate procedures in
connection with, the Separation and the Exchange. The consummation of the
transactions provided for in this Article II shall only be effected after the
Board of Directors of KPMG has directed the Separation and the Exchange to
occur promptly and after all of the conditions set forth in Article X hereof
shall have been satisfied or waived by KPMG.


      Section 2.4 Additional Approvals. KPMG shall cooperate with LLC and
Consulting, Inc. in effecting the transactions referenced in or contemplated by
this Agreement, and if so requested by LLC or Consulting, Inc., KPMG shall, as
the sole stockholder of Consulting, Inc. and sole member of LLC immediately
prior to the Separation, ratify any actions which are reasonably necessary or
desirable to be taken by LLC or Consulting, Inc. to effectuate such
transactions, all in a manner consistent with the terms of this Agreement.


ARTICLE III


TRANSFERS TO CONSULTING


      Section 3.1 Transferred Assets. Subject to the terms and conditions of
this Agreement, KPMG hereby agrees to convey, assign, transfer, contribute and
set over, or cause to be conveyed, assigned, transferred, contributed and set
over, to LLC on or prior to the Effective Date, and LLC hereby agrees to accept
and receive on or prior to the Effective Date, all of the right, title and
interest of KPMG and its Subsidiaries in and to the tangible and intangible
assets, properties, rights and interests of the Consulting Business (all of
such assets being herein

13







referred to as the “Transferred Assets”) specified in this Section 3.1,
excluding any Excluded Assets described in Section 3.2 below. Except as
otherwise provided herein, the Transferred Assets will consist of all of the
right, title and interest of KPMG and its Subsidiaries in, to and under the
following:



		
	 	   (a)     Listed Assets. All assets reflected or disclosed on the schedule (the
“Listed Asset Schedule”) attached as Schedule 3.1(a) hereto, subject to
acquisitions, dispositions and adjustments in the ordinary course of the
Consulting Business, consistent with past practice, after the date hereof
through the Effective Date;
	 
	 	    (b)   Receivables and WIP. The portion of the Receivables and WIP related
to the Consulting Business determined pursuant to Section 3.6, 3.7 and 3.8 to
be transferred to the LLC and all cash payments received after the Effective
Date on account of such Receivables or WIP;
	 
	 	    (c)   Contracts. All of the following contracts, agreements, arrangements,
leases, warranties, memoranda, understandings and offers open for acceptance of
any nature, whether written or oral, (each subject to change due to the
completion of work or entry into new arrangements in the ordinary course of the
Consulting Business, consistent with past practice, after the date hereof
through the Effective Date) (the “Contracts”):




		
	 	    (i)   all Contracts related to acquisitions or divestitures of
assets or stock or other equity interests related primarily to the
Consulting Business, including Contracts related to the
transactions set forth on

Schedule 3.1(c)(i) hereto, except to the
extent indicated on Schedule 3.1(c)(i);
	 
	 	    (ii)   all Contracts pursuant to which a client is primarily
provided Consulting Services, including those listed on Schedule 3.1(c)(ii);
	 
	 	    (iii)   all public services Contracts including Contracts with
governmental agencies and entities, non-profits and educational
institutions primarily relating to the Consulting Business,
including those set forth on Schedule 3.1(c)(iii) hereto;
	 
	 	    (iv)   all supplier Contracts and alliance contracts with
vendors primarily relating to the Consulting Business, including
those in the categories set forth on Schedule 3.1(c)(iv) hereto;
	 
	 	    (v)   all joint development and confidentiality Contracts
primarily relating to the Consulting Business, including those set
forth on Schedule 3.1(c)(v) hereto;
	 
	 	    (vi)   all telecommunications Contracts primarily relating to
the Consulting Business, including those set forth on Schedule 3.1(c)(vi) hereto;
	 
	 	    (vii)   the Contracts relating to third party software primarily
relating to the Consulting Business set forth on Schedule 3.1(c)(vii); and



14








		
	 	   (viii)   all other contracts primarily relating to the
Consulting Business.




		
	 	    (d)   Work Products. All completed work products, reports, files,
electronic documents, data, material, analysis or recommendations in connection
with the Contracts or related exclusively to the Consulting Business.
	 
	 	    (e)   Technical and Business Materials and Know-How. All business and
technical information, trade secrets, nonpatented inventions, discoveries,
processes, methodologies, formulations, know-how and technical data to the
extent used primarily in connection with the Consulting Business, including
those set forth on

Schedule 3.1(e).
	 
	 	    (f)   Intellectual Property. All Intellectual Property Rights used
primarily in the Consulting Business, including the Intellectual Property
Rights set forth below:




		
	 	    (i)   the patents and patent applications and invention records
set forth on Schedule 3.1(f)(i) hereto, including any
continuations, continuations-in-part, divisions, renewals, reissues
and extensions thereof;




		
	 	    (ii)   the unregistered copyrights and copyright registrations
and applications therefor set forth on Schedule 3.1(f)(ii) hereto;




		
	 	    (iii)   the trade names, trademarks, service marks, service
names and slogans, any registrations thereof, and any applications
for registration thereof set forth on Schedule 3.1(f)(iii) hereto,
and the goodwill associated with each of the foregoing; and




		
	 	    (iv)   all templates, methodologies and proprietary software set
forth on Schedule 3.1(f)(iv) hereto.



      All of the rights described in this Section 3.1(f) are referred to
collectively as the “Consulting Assigned Intellectual Property” and shall
include: (A) the right to sue for infringement or misappropriation of
the Consulting Assigned Intellectual Property which infringement or
misappropriation occurred either before or after the Effective Date and
to continue in the name of KPMG any pending actions involving claims of
infringement or misappropriation of the Consulting Assigned Intellectual
Property and to retain any recoveries from any of the foregoing;
provided, however, that to the extent that such recoveries relate to
infringement or misappropriation of both Intellectual Property Rights
retained by KPMG and any Consulting Assigned Intellectual Property, such
recoveries shall be apportioned between KPMG and Consulting, pro rata,
based on the costs and expenses incurred by each Party in obtaining such
recoveries, until each Party is reimbursed for all such costs and
expenses, and, if the recoveries exceed such costs and expenses, such
excess shall be apportioned between KPMG and Consulting, pro rata, based
on the relative damages, profits or other amounts suffered by each Party;
and (B) all permits, grants, contracts, agreements and licenses running
to or from KPMG or its Subsidiaries relating to the Consulting Assigned
Intellectual Property.



		
	 	    (g)   Permits and Licenses. All permits, approvals, licenses, franchises,
authorizations or other rights granted by any federal, state, local or foreign
governmental



15







		
	 	authority held or applied for by KPMG and its Subsidiaries, to the extent
transferable, and which are solely used in the Consulting Business or which
relate solely to the Transferred Assets or any of the Transferred Subsidiaries,
and all other consents, grants, and other rights that are used solely for the
lawful ownership of the Transferred Assets or the operation of the Consulting
Business and that are legally transferable to Consulting including those set
forth on Schedule 3.1(g) hereto;




		
	 	      (h) Claims
and Indemnities. All rights, claims, demands, causes of
action, judgments, decrees and rights to indemnity or contribution, whether
contractual or otherwise, in favor of KPMG or its Subsidiaries to the extent
arising out of or relating to the Consulting Business, including those set
forth on Schedule 6.5(a) hereto;
	 
	 	    (i)   Subsidiaries, Joint Ventures, Alliance Agreements and Minority
Interests. All shares of capital stock, equity, bonds, debentures, debt or
other interests owned by KPMG or its Subsidiaries in the Transferred
Subsidiaries, joint ventures and minority investments and all alliance
agreements primarily relating to the Consulting Business set forth on Schedule 3.1(i) hereto and all loans, advances or other extensions of credit in such
entities;




		
	 	      (j) Books And Records. All books and records (including all records
pertaining to clients, accounts, suppliers, management reports and personnel)
wherever located, whether in paper, microfiche, computer tape or disc, magnetic
tape, electronic format or any other form that relate primarily to the
operation of the Consulting Business, the Consulting Employees, the clients of
the Consulting Business or the Assumed Liabilities (the “Consulting Books and
Records”); provided, however, that Consulting Books and Records shall not
include any portion of the books and records of KPMG or any Retained Subsidiary
containing minutes of meetings of any board of directors of any of them or any
Tax Returns of KPMG or any Retained Subsidiary or other information, documents
or materials relating to Taxes of KPMG or any Retained Subsidiary; and,
provided, further, that this Section 3.1(j) shall not create any obligation to
physically separate such books and records when they reflect both the
Consulting Business and the Retained Business;
	 
	 	      (k) Supplies; Written Materials. All office supplies, production
supplies, spare parts, purchase orders, forms, labels, shipping material, art
work, catalogues, sales brochures, operating manuals and advertising and
promotional material and all other printed or written material that relate
primarily to the operation of the Consulting Business;
	 
	 	      (l) Sales Information. All cost information, sales and pricing data,
client prospect lists, data, correspondence and lists, product literature,
artwork, design, development and manufacturing files, client drawings,
formulations and specifications, quality records and reports and other books,
records, studies, surveys, reports, plans and documents in each case primarily
relating to the Consulting Business;
	 
	 	      (m) Loans. All loans to partners, principals and employees of KPMG who
become employees of the Consulting Business, including those listed on Schedule 3.1(m); and
	 
	 	      (n) Goodwill. Goodwill relating to all of the foregoing assets.



16






      Section 3.2 Excluded Assets. The Transferred Assets shall not include
any asset not set forth in Section 3.1 and, in particular, shall not include
the following (subject to the adjustment set forth in Sections 3.6, 3.7 and
3.8, and the further assurances set forth in
Section 5.4,) (such assets not
being transferred to Consulting being herein referred to as the “Excluded
Assets”):



		
	 	     (a)   Cash and cash equivalents, any cash on hand or in bank accounts,
certificates of deposit, commercial paper and similar securities of KPMG except
for (i) cash and cash equivalents of the Transferred Subsidiaries, (ii) deposits securing bonds, letters of credit, leases and all other obligations
related to the Consulting Business, and (iii) petty cash and impressed funds
related to the Consulting Business;
	 
	 	      (b) all Receivables and WIP determined pursuant to Sections 3.6, 3.7 and
3.8 to be retained by KPMG and all cash payments received after the Effective
Date on account of such Receivables or WIP;
	 
	 	      (c) Any right, title or interest of KPMG and its Subsidiaries in any U.S. federal, state or local Tax refund, credit or benefit (including any income
with respect thereto) relating to the United States operations of the
Consulting Business prior to the Effective Date;
	 
	 	     (d)   Any amounts accrued on the books and records of KPMG and its
Subsidiaries or the Consulting Business with respect to any Retained
Liabilities;
	 
	 	      (e) Assets relating to the provision of pensions and benefits to present
or former partners or employees of the Consulting Business, but excluding
assets transferred from the KPMG Savings Plan to the Consulting Savings Plan as
described in Article VIII;
	 
	 	      (f) Any allocations of assets not primarily related to the Consulting
Business heretofore made by KPMG or its Subsidiaries to the Consulting Business
for internal management responsibility reporting purposes;
	 
	 	      (g) Any Intellectual Property Rights in and to the name “KPMG” and the
related emblem design, and any variants thereof, and the trademarks and trade
names used by KPMG or its Subsidiaries in relation to the Retained Business,
except as provided in Article VII; and
	 
	 	      (h) All of the tangible and intangible assets and properties primarily
related to the Retained Business.



      Section 3.3 Assumed Liabilities. Except as expressly limited in this
Article III, Consulting shall assume, effective as of the Effective Date, and
pay, perform, comply with and discharge the Liabilities (whether arising before
or after the Effective Date) of KPMG or its Subsidiaries or any of their
predecessor companies, businesses or divisions, relating to, resulting from or
arising out of the present, past or future operations or conduct of the
Consulting Business (whether accrued, unrecorded, absolute, known or unknown,
contingent or otherwise, and whether due or to become due), excluding any
Retained Liabilities described in Section 3.4 below. The Liabilities to be
assumed by Consulting as described in this Section 3.3 are referred to in this
Agreement collectively as the “Assumed Liabilities.” Without limiting the
value of the

17







foregoing, except as otherwise provided herein, the Assumed Liabilities
will include the following:



		
	 	     (a)   All of
the Liabilities of KPMG listed on Schedule 3.3(a), as such
Liabilities may be increased or reduced in the operation of the Consulting
Business from the date hereof through the Effective Date in the ordinary course
of business consistent with past practice;
	 
	 	      (b) Certain Liabilities related to the Consulting Business as determined
pursuant to Sections 3.6, 3.7 and 3.8 to be transferred to the LLC;
	 
	 	      (c) The Loans of
the Transferred Subsidiaries set forth on Schedule 3.3(c);
	 
	 	     (d)   All warranty, performance and similar obligations entered into or made
by KPMG prior to the Effective Date with respect to the services of the
Consulting Business;
	 
	 	      (e) All Liabilities of KPMG related to any and all Actions asserting a
violation of any law, rule or regulation (including common law) related to or
arising out of the operations or conduct of the Consulting Business or the
ownership or use of the Transferred Assets, whether arising before, on or after
the Effective Date and the Liabilities relating to any Consulting Assumed
Actions;
	 
	 	      (f) All Liabilities arising under (i) CERCLA and any other federal, state
or local laws regarding the management, control and cleanup of hazardous
materials (including off-site waste disposal liabilities) or (ii)   the
Occupational Safety and Health Act or similar state laws or regulations, in
either case relating to or arising out of the operations or conduct of the
Consulting Business or the ownership or use of the Transferred Assets, whether
before, on or after the Effective Date, including those set forth on
Schedule 3.3(f) hereto;
	 
	 	      (g) All Liabilities under each of the guarantees or surety bonds by KPMG
and letters of credit for the account of KPMG or its Subsidiaries, relating to
the Consulting Business, including those set forth on
Schedules 6.4(a) and
6.4(b);
	 
	 	      (h) All Liabilities assumed by Consulting or any of the Transferred
Subsidiaries pursuant to this Agreement or any of the Ancillary Agreements;
	 
	 	      (i)   All Liabilities relating to, resulting from or arising out of the
transfer of the Transferred Assets pursuant to this Agreement or the Ancillary
Agreements, other than the expenses of KPMG described in
Article XI;
	 
	 	      (j) All Liabilities and obligations of KPMG or its Subsidiaries under or
related to the Contracts, such assumption to occur as (i) assignee if such
Contracts are assignable and are assigned or otherwise transferred to
Consulting or a Consulting Subsidiary, or (ii)   subcontractor, sublessee or
sublicensee as provided in Section 5.3 below if assignment of such Contracts
and/or the proceeds thereof is prohibited by law, by the terms thereof or not
permitted by the other Contracting Party;



18








		
	 	      (k) All Liabilities relating to, resulting from or arising out of the
ownership or use of the Transferred Assets to the extent they arise out of the
use of such assets in, or for the benefit of, the Consulting Business; and




		
	 	      (l) All other Liabilities of KPMG or its Subsidiaries relating to the
Consulting Business, whether existing on the date hereof or arising at any time
or from time to time after the date hereof, and whether based on circumstances,
events or actions arising heretofore or hereafter, which shall not have been
disclosed herein, or reflected on the books and records of Consulting or KPMG
or the Balance Sheet.



      Section 3.4
Retained Liabilities. Except as expressly limited in this
Article III, after the Effective Date, KPMG shall, to the extent KPMG is
obligated as of the Effective Date, continue to be obligated to pay, perform,
comply with and discharge all Liabilities (whether arising on, before or after
the Effective Date) of KPMG or its Subsidiaries or any of their predecessor
companies, businesses or divisions, relating to, resulting from or arising out
of the present, past or future operations or conduct of the Retained Business
(whether accrued, unrecorded, absolute, known or unknown, contingent or
otherwise, and whether due or to become due). The Liabilities to be retained
by KPMG as described in this Section 3.4 are referred to in this Agreement
collectively as the “Retained Liabilities.” Without limiting the generality of
the foregoing, except as otherwise provided herein, the Retained Liabilities
will include the following:



		
	 	     (a)   All warranty, performance and similar obligations entered into or made
by KPMG prior to the Effective Date with respect to the services of the
Retained Business;
	 
	 	      (b) All Liabilities of KPMG related to any and all Actions asserting a
violation of any law, rule or regulation (including common law) related to or
arising out of the operations or conduct of the Retained Business or the
ownership or use of the assets in the Retained Business, whether arising
before, on or after the Effective Date and the Liabilities relating to any KPMG
Assumed Actions;
	 
	 	      (c) All Liabilities of KPMG arising under (i) CERCLA and any other
federal, state or local laws regarding the management, control and cleanup of
hazardous materials (including off-site waste disposal liabilities) or (ii)   the
Occupational Safety and Health Act or similar state laws or regulations, in
either case relating to or arising out of the operations or conduct of the
Retained Business or the ownership or use of the Excluded Assets, whether
before, on or after the Effective Date;
	 
	 	     (d)   All Liabilities assumed or retained by KPMG or any of its Subsidiaries
pursuant to this Agreement or any of the Ancillary Agreements;
	 
	 	      (e) All Liabilities relating to, resulting from or arising out of the
ownership or use of the Excluded Assets to the extent they arise out of the use
of such assets in, or for the benefit of, the Retained Business; and
	 
	 	      (f) The Liabilities related to the Consulting Business determined pursuant
to Sections 3.6 and 3.7 to be retained by KPMG.



19







      Section 3.5 Certain
Leased Assets. KPMG agrees to lease to Consulting
the tangible personal property set forth on Schedule 3.5 (as adjusted for
acquisitions and dispositions after the date hereof through the Effective Date
in the ordinary course of the Consulting Business consistent with past
practice) on the terms and subject to the conditions set forth in the Leased
Asset Agreement.


      Section 3.6
Determination of the Asset/Liability Schedule. At least two
business days prior to the Effective Date, KPMG shall deliver to Consulting a
certificate executed on behalf of KPMG by the chief financial officer of KPMG
dated the date of its delivery, setting forth those Receivables, WIP, other
assets and certain Liabilities to be transferred to Consulting as of the
Effective Date (the “Asset/Liability Schedule”). The determination of which
Receivables, WIP, other assets and Liabilities to include on the
Asset/Liability Schedule, and therefore to be transferred to Consulting as of
the Effective Date, shall be made in the sole and absolute discretion of KPMG.


      Section 3.7
Adjustment. (a) As promptly as practicable following the
Effective Date (but not later than 60 days after the Effective Date), KPMG
shall deliver to Consulting a certificate (the “Preliminary Valuation Date
Report”), executed on behalf of KPMG by the chief financial officer of KPMG,
setting forth the value of the Receivables, WIP, other assets and Liabilities
set forth on the Asset/Liability Schedule as of the Effective Date and the
difference, if any, between the value of the Transferred Assets and the value
of the Assumed Liabilities (each calculated on the same basis as such
Receivables, WIP, other assets and Liabilities were carried on the books of
KPMG) (such difference, if any, is referred to herein as the “Preliminary
Required Adjustment”).



		
	 	     (b)   Promptly following receipt of the Preliminary Valuation Date Report,
Consulting shall review the same and, within 30 days after the date of such
receipt, may deliver to KPMG a certificate (signed by its chief financial
officer) setting forth any objections to the Preliminary Required Adjustment or
the Preliminary Valuation Date Report, together with a summary of the reasons
therefor and calculations which, in its view, are necessary to eliminate such
objections. In the event Consulting does not so object within such 30-day
period, the Preliminary Required Adjustment and the Preliminary Valuation Date
Report shall be final and binding as the “Required
Adjustment” and the
“Valuation Date Report”, respectively, for purposes of this Agreement, but
shall not limit the covenants and agreements of the Parties set forth elsewhere
in this Agreement.
	 
	 	      (c) In the event Consulting so objects within such 30-day period,
Consulting and KPMG shall use their reasonable efforts to resolve by written
agreement (the “Agreed Adjustments”) any differences as to the Preliminary
Required Adjustment as set forth on the Preliminary Valuation Date Report and,
in the event KPMG and Consulting so resolve all such differences, the
Preliminary Required Adjustment and the Preliminary Valuation Date Report as
adjusted by the Agreed Adjustments shall be final and binding as the Required
Adjustment and the Valuation Date Report, respectively, for purposes of this
Agreement but shall not limit the covenants and agreements of the Parties set
forth elsewhere in this Agreement.
	 
	 	      (d) In the event any objections raised by Consulting are not resolved by
Agreed Adjustments within the 30-day period next following the 30-day period
referred to in



20








		
	 	Section 3.7(c), then Consulting and KPMG shall resolve any remaining
objections in accordance with Article XIII. The Preliminary Required
Adjustment as set forth on the Preliminary Valuation Date Report after giving
effect to any Agreed Adjustments and to the resolution of objections pursuant
to Article XIII, shall be final and binding as the Required Adjustment and the
Valuation Date Report, respectively for purposes of this Agreement but shall
not limit the covenants and agreements of the Parties set forth elsewhere in
this Agreement.



      Section 3.8
Separation Note. Promptly (but not later than five days)
after the determination of the Required Adjustment and the Valuation Date
Report pursuant to Section 3.7 that is final and binding as set forth herein:



		
	 	     (a)   if the Required Adjustment is a positive number (i.e. the value of the
Transferred Assets exceeded the value of the Assumed Liabilities as of the
Effective Date), Consulting shall issue the Separation Note to KPMG in a
principal amount equal to the amount of the Required Adjustment, plus accrued
interest on such amount from the Effective Date to the date of issuance thereof
at the Agreed Rate in effect on the Effective Date; or
	 
	 	      (b) if the Required Adjustment is a negative number (i.e. the value of the
Assumed Liabilities exceeded the value of the Transferred Assets as of the
Effective Date), KPMG shall, at its sole option, transfer Receivables or cash
to Consulting in an amount equal to the amount of the Required Adjustment plus
interest on such amount from the Effective Date to the date of payment or
transfer thereof at the Agreed Rate in effect on the Effective Date; or
	 
	 	      (c) if the Required Adjustment equals zero (i.e. the value of the
Transferred Assets equals the value of the Assumed Liabilities as of the
Effective Date), the Separation Note shall not be issued and no payment shall
be made.




		
	 


ARTICLE IV



	 
	 


ORGANIZATION OF CONSULTING



      Section 4.1
Organization of Consulting. Prior to the Effective Time,
each of LLC, Consulting, Inc. and KPMG shall take, approve or ratify, or cause
to be approved or ratified, any and all actions that are reasonably necessary
or desirable to be taken by LLC, Consulting, Inc. or KPMG to effect the
transactions contemplated by this Agreement in a manner consistent with the
terms of this Agreement, including, without limitation, the following: (a) approving the Separation and the Exchange; (b) amending the Certificate of
Incorporation of Consulting, Inc. so that the provisions thereof at the
Effective Time shall be substantially the provisions set forth on
Exhibit M;
(c) amending the By-laws of Consulting, Inc. so that the provisions thereof at
the Effective Time shall be substantially the provisions set forth on
Exhibit N; (d) adopting, preparing and implementing appropriate plans, agreements and
arrangements for employees of Consulting and non-employee directors of
Consulting, Inc.; and (e) electing or otherwise appointing those individuals
named on Schedule 4.1 to be directors or officers of Consulting, effective as
of or prior to the Effective Date, except for those to be elected or appointed
thereafter.


21







ARTICLE V


OTHER CLOSING MATTERS


      Section 5.1
Instruments of Conveyance. In order to effect the transfer
of the Transferred Assets and the assumption of the Assumed Liabilities
contemplated by Article III, (a) KPMG shall cause to be executed and delivered
prior to or as of the Effective Date (i) with respect to those Transferred
Assets which are evidenced by capital stock certificates or similar
instruments, certificates duly endorsed in blank or accompanied by stock powers
or other instruments of assignment executed in blank and (ii)   with respect to
all other assets and the Assumed Liabilities, such bills of sale, instruments
of assumption, trademark and patent assignments, certificates of title and
other documents of assignment, transfer, assumption and conveyance as the
Parties shall reasonably deem necessary or appropriate to effect such
transactions and (b) Consulting shall execute and deliver to KPMG and its
Subsidiaries such bills of sale, stock powers, certificates of title,
assumptions of contracts and other instruments of assumption as and to the
extent necessary to evidence the valid and effective assumption of the Assumed
Liabilities by Consulting (collectively, the “Conveyancing and Assumption
Instruments”).


      Section 5.2 No
Representations or Warranties. Subject to the Ancillary
Agreements, neither KPMG nor any of its Subsidiaries is, in this Agreement or
in any other agreement or document contemplated by this Agreement, representing
or warranting: (a) as to the value or freedom from encumbrance of, or any
other matter concerning, any Transferred Assets or any Transferred
Subsidiaries; or (b) as to the legal sufficiency to convey title to any
Transferred Assets or any Transferred Subsidiaries on the execution, delivery
and filing of the Conveyancing and Assumption Instruments. SUBJECT TO THE
ANCILLARY AGREEMENTS, ALL THE TRANSFERRED ASSETS AND TRANSFERRED SUBSIDIARIES
ARE BEING TRANSFERRED “AS IS, WHERE IS” WITHOUT ANY REPRESENTATION OR WARRANTY
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, MARKETABILITY, TITLE,
VALUE, FREEDOM FROM ENCUMBRANCE OR ANY OTHER REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, and Consulting and the Transferred Subsidiaries, as
applicable, shall bear the economic and legal risk as to the condition of the
Transferred Assets and Transferred Subsidiaries and that any conveyances of the
Transferred Assets and the Transferred Subsidiaries shall prove to be
insufficient or that Consulting’s or the Transferred Subsidiaries’, as
applicable, title to any of the Transferred Assets and the Transferred
Subsidiaries shall be other than good and marketable and free of encumbrances.
Neither KPMG nor any of its Subsidiaries is, in this Agreement or in any other
agreement or document contemplated by this Agreement, representing or
warranting that the obtaining of the consents or approvals, the execution and
delivery of any amendatory agreements and the making of the filings and
applications contemplated by this Agreement shall satisfy the provisions of all
applicable agreements or the requirements of all applicable laws or judgments
and, subject to Section 5.3, Consulting and the Transferred Subsidiaries shall
bear the economic and legal risk that any necessary consents or approvals are
not obtained or that any requirements of law or judgments are not complied
with. Notwithstanding the foregoing, the Parties shall fully cooperate and use
reasonable efforts to obtain all consents and approvals, to enter into all
amendatory agreements and to make all filings

22







and applications which may be required for the consummation of the
transactions contemplated by this Agreement.


      Section 5.3 Non-Assignment. (a) In the event and to the extent that
KPMG and its Subsidiaries are unable to obtain any consent, approval,
amendment, filing or application required to transfer, convey or assign any
Transferred Asset or other right that would otherwise be transferred to
Consulting or one of the Transferred Subsidiaries as contemplated by this
Agreement or any other agreement or document contemplated hereby, (i) KPMG and
the Retained Subsidiaries shall continue to hold and, to the extent required by
the terms applicable to such Transferred Asset, operate the Transferred Asset
in the case of real or personal property, or to be bound thereby in the case of
Contracts, leases, licenses or other rights relating to the Consulting
Business, and (ii)   unless not permitted by the terms thereof or by law,
Consulting or the Transferred Subsidiaries shall pay, perform and discharge
fully, promptly when due, all the obligations of KPMG or the Retained
Subsidiaries thereunder from and after the Effective Date, or such earlier date
as such transfer would otherwise have taken place, and Consulting and its
Subsidiaries shall indemnify, defend and hold harmless the KPMG Indemnified
Parties for all Claims or Losses arising out of such performance by Consulting
or any of its Subsidiaries. KPMG and the Retained Subsidiaries shall, without
further consideration therefor, pay and remit to Consulting or the Transferred
Subsidiaries promptly all monies, rights and other consideration received in
respect of such performance.



		
	 	     (b)   KPMG and the Retained Subsidiaries shall exercise or exploit their
respective rights and options under all such Transferred Assets referred to in
this Section 5.3 only as reasonably directed by Consulting and at Consulting’s
expense. If and when any such consent shall be obtained or such Contract,
lease, license or other right shall otherwise become assignable or able to be
novated, KPMG or the Retained Subsidiaries shall promptly assign and novate (to
the extent permissible) all its rights and obligations thereunder to Consulting
or its Subsidiaries without payment of further consideration, and Consulting
(or its Subsidiaries) shall, without the payment of any further consideration
therefor, assume such rights and obligations. To the extent that the
assignment of any Contract, lease, license or other right (or the proceeds
thereof) pursuant to this Section 5.3 is prohibited by law, the assignment
provisions of this Section 5.3 shall operate to create a subcontract with
Consulting or one of its Subsidiaries to perform each relevant unassignable
KPMG Contract at a subcontract price equal to the monies, rights and other
consideration received by KPMG or its Subsidiaries with respect to the
performance by Consulting or its Subsidiaries under such subcontract.
	 
	 	      (c) Notwithstanding any provision of this Section 5.3 to the contrary, any
asset which would, but for this Section 5.3, be a Transferred Asset, shall be
deemed a Transferred Asset for purposes of determining whether any Liability is
an Assumed Liability.



      Section 5.4 Further Assurances. (a) In addition to the actions
specifically provided for elsewhere in this Agreement, each of the Parties
shall use its reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things reasonably necessary, proper or
advisable under applicable laws, regulations and agreements to consummate and
make effective the transactions contemplated by this Agreement and the other
agreements and documents contemplated hereby. Without limiting the foregoing,
each Party shall cooperate with the other Party, and execute and deliver, or
use reasonable efforts to cause to be executed

23







and delivered, all instruments, including instruments of conveyance,
assignment and transfer, and to make all filings with, and to obtain all
consents, approvals or authorizations of, any governmental or regulatory
authority or any other Person under any permit, license, contract or other
instrument, and to take all such other actions as such Party may reasonably be
requested to take by the other Party from time to time, consistent with the
terms of this Agreement, in order to vest in Consulting or the Transferred
Subsidiaries all of the title and ownership interest of KPMG and its
Subsidiaries to all of the assets of the Consulting Business, to put Consulting
or the Transferred Subsidiaries in actual possession and operating control
thereof and to permit Consulting or the Transferred Subsidiaries to exercise
all rights with respect thereto held by the transferor (including, without
limitation, rights with respect to Transferred Assets as to which the consent
of any third party to the transfer thereof shall not have previously been
obtained) and to effectuate the provisions and purposes of this Agreement, the
Ancillary Agreements and the other agreements and documents contemplated hereby
or thereby. In addition, each Party shall execute and deliver, or use its
reasonable efforts to cause to be executed and delivered, all instruments,
undertakings or other documents and take such other actions as such Party may
reasonably be requested to be taken by any other Party from time to time,
consistent with the terms of this Agreement, in order to have Consulting or one
of the Transferred Subsidiaries fully assume and discharge the Assumed
Liabilities and to release KPMG and its Subsidiaries from any Liability with
respect thereto.



		
	 	     (b)   For one year following the Effective Date, if KPMG or Consulting, as
the case may be, identifies any asset then owned or any Liability then assumed
by either KPMG or any of the Retained Subsidiaries, on the one hand, or
Consulting or any of the Transferred Subsidiaries, on the other hand, that both
KPMG and Consulting each agree in their good faith judgment more properly
belongs to, or should be assumed by, the other Party, or a Subsidiary of the
other Party, then KPMG or Consulting, as the case may be, shall (i) convey,
assign, transfer, contribute and set over any such asset or shall cause any
such asset to be conveyed, assigned, transferred, contributed and set over in
accordance with this Section 5.4 to the entity identified by KPMG or Consulting
as the appropriate transferee or (ii)   convey, assign, transfer and set over any
such Liability or shall cause any such Liability to be conveyed, assigned,
transferred and set over, and any such Liability shall be assumed in accordance
with this Section 5.4 by the entity identified by KPMG and Consulting as the
appropriate obligor. The Parties hereto acknowledge and agree that the
transfer of assets and Liabilities provided for in this Section 5.4(b) are to
be made without any additional consideration other than the assumption of
Liabilities of such transferred assets by the transferee.




		
	 	      (c) All conveyances, assignments, transfers and contributions of assets
occurring after the Effective Date pursuant to this Section 5.4 shall be
governed by the terms of this Agreement. In furtherance of the foregoing, any
asset transferred pursuant to this Section 5.4 to Consulting or any of the
Transferred Subsidiaries shall be deemed a Transferred Asset for purposes of
this Agreement and the Ancillary Agreements and, unless the Parties otherwise
agree, shall be made without additional consideration other than the assumption
of Liabilities by the transferee.




		
	 	      (d) Whether or not all of the Transferred Assets or the Assumed
Liabilities shall have been legally transferred to, or assumed by, Consulting
or one of the Transferred Subsidiaries as of the Effective Date, the Parties
agree that as between KPMG and Consulting



24








		
	 	and their respective Subsidiaries, as of the Effective Date, Consulting or
one of the Transferred Subsidiaries shall have, and shall be deemed to have
acquired, complete and sole beneficial ownership over all of the Transferred
Assets, except as described in Section 5.3 with respect to Transferred Assets
which are non-assignable, together with all of KPMG’s and its Subsidiaries’
rights, powers and privileges incident thereto, and shall be deemed to have
assumed in accordance with the terms of this Agreement all of the Assumed
Liabilities and all of KPMG’s and its Subsidiaries’ duties, obligations and
responsibilities incident thereto. The Parties agree that the Schedules and
Exhibits attached hereto may be updated and modified at the Effective Date to
reflect changes in the Consulting Business including, without limitation,
changes in personnel, Contracts, assets, Liabilities and Transferred
Subsidiaries. Any such changes shall not be deemed an amendment or waiver of
this Agreement and shall not require any consent or other written agreement.



      Section 5.5 Release of KPMG. (a) It is expressly understood and agreed
by the Parties hereto that upon the assumption by Consulting of the Assumed
Liabilities, KPMG, its Subsidiaries, and their respective partners, principals,
officers and employees shall be released by Consulting from any and all
liability, whether joint, several or joint and several, for the discharge,
performance or observance of any of the Assumed Liabilities.



		
	 	     (b)   Each Party, at the request of the other Party, shall use its
reasonable best efforts to obtain, or to cause to be obtained, any consent,
substitution, approval or amendment required to novate (including with respect
to any government contract) or assign all obligations under agreements, leases,
licenses and other obligations or Liabilities of any nature whatsoever that
constituted Assumed Liabilities, or to obtain in writing the unconditional
release of all Parties to such arrangements other than Consulting or any of its
Subsidiaries, so that, in any case, Consulting and its Subsidiaries will be
solely responsible for such Liabilities; provided, however, that no Party shall
be obligated to pay any consideration therefor to any third party from whom
such consents, approvals, substitutions and amendments are requested.



      Section 5.6 Execution of Ancillary Agreements. On or prior to the
Effective Date, KPMG and Consulting shall, and shall cause their respective
Subsidiaries (as appropriate) to, enter into and deliver the Ancillary
Agreements, each of which shall be effective as of the Effective Time, unless
otherwise specified therein, and the Conveyancing and Assumption Instruments.


      Section 5.7 Resignations. On or prior to the Effective Date, KPMG shall
cause all partners, principals or employees of KPMG who are directors or
officers of any Transferred Subsidiaries to offer letters of resignation from
such positions with such Transferred Subsidiary, and Consulting shall cause all
persons who are or will be Consulting Employees who are directors or officers
of KPMG or any Retained Subsidiaries to resign from such positions with KPMG or
such Retained Subsidiary.


25







ARTICLE VI


CERTAIN COVENANTS


      Section 6.1 Conduct of Consulting Business Pending the Effective Date.
Each of the Parties agrees that, from the date hereof until the Effective Date,
except as otherwise expressly contemplated by this Agreement, it will take, or
cause to be taken, all reasonable efforts to carry on the Consulting Business
diligently in the ordinary course and substantially in the same manner as
heretofore conducted and to preserve intact the business organization and
goodwill of the Consulting Business.


      Section 6.2 Insurance Policies and Claims Administration. (a) Ownership
of Insurance Policies and Programs Which Include Coverage for Consulting
Business. KPMG or one or more of its Subsidiaries shall continue to own all
property, casualty and liability insurance programs, including, without
limitation, primary and excess general liability, automobile, workers’
compensation, property and crime insurance policies in effect on or before the
Effective Date (collectively, the “KPMG Policies” and individually, a “KPMG
Policy”). KPMG shall use reasonable efforts to maintain the KPMG Policies in
full force and effect up to and including the Effective Date, and, subject to
the provisions of this Agreement, KPMG and its Subsidiaries shall retain all of
their respective rights, benefits and privileges, if any, under the KPMG
Policies. Nothing contained herein shall be construed to change the ownership
of the KPMG Policies.


      (b) Procurement of Insurance for Consulting. To the extent not already
provided for by the terms of a KPMG Policy, KPMG shall use its reasonable
efforts to cause Consulting and its appropriate Subsidiaries to be named as
additional insureds under KPMG Policies whose effective policy periods include
the Effective Date, in respect of claims arising or relating to periods prior
to the Effective Date; provided, however, that nothing contained herein shall
be construed to require KPMG or any of its Subsidiaries to pay any additional
premium or other charges in respect to, or waive or otherwise limit any of its
rights, benefits or privileges under, any KPMG Policy in order to effect the
naming of Consulting and its Subsidiaries as such additional insureds.


      (c) Acquisition and Maintenance of Post-Separation Consulting Insurance
Policies and Programs. Commencing on and as of the Effective Date, Consulting
shall be responsible for establishing and maintaining such separate property,
casualty and liability insurance policies and programs (including, primary and
excess general liability, directors and officers, automobile, workers’
compensation, property, errors and omissions, fire, crime, surety and other
similar insurance policies) as Consulting may elect for activities and claims
involving Consulting or any of its Subsidiaries or Affiliates. Consulting will
exercise reasonable efforts in securing liability insurance to avoid potential
gaps in coverage for claims arising from events prior to the Effective Date
which gap would not exist had the Consulting Business continued to be covered
with the same retroactive dates existing in the KPMG Policies in effect on the
Effective Date. Consulting and each of its Subsidiaries, as appropriate, shall
be responsible for all administrative and financial matters relating to
insurance policies established and maintained by Consulting and its
Subsidiaries or Affiliates for claims made on or after the Effective Date
involving Consulting or any of its Subsidiaries. Notwithstanding any other
agreement or


26









		
	 	understanding to the contrary, except as set forth in this Section 6.2
with respect to claims administration and financial administration of the KPMG
Policies, neither KPMG nor any of its Subsidiaries shall have any
responsibility for or obligation to Consulting or any of its Subsidiaries and
Affiliates relating to property and casualty insurance matters for any period,
whether prior to, on or after the Effective Date.




		
	 	     (d)   Post-Separation Claims Administration. KPMG and its Subsidiaries
shall have the primary right, responsibility and authority for claims and
financial administration for claims that relate to or affect the KPMG Policies.
Upon notification by Consulting or one of its Subsidiaries of a claim relating
to Consulting or a Subsidiary or Affiliate thereof under one or more of the
KPMG Policies, KPMG shall cooperate with Consulting in asserting and pursuing
coverage and payment for such claim by the appropriate insurance carrier(s).
In asserting and pursuing such coverage and payment, KPMG shall have sole power
and authority to make binding decisions, determinations, commitments and
stipulations on its own behalf and on behalf of Consulting and its Subsidiaries
and Affiliates, which decisions, determinations, commitments and stipulations
shall be final and conclusive if made to maximize the overall economic benefit
of the KPMG Policies. Consulting, and its Subsidiaries and Affiliates, shall
assume responsibility for, and shall pay to the appropriate insurance carriers
or otherwise, any premiums, retrospectively rated premiums, defense costs,
indemnity payments, deductibles, retentions or other charges, as appropriate
(collectively, “Insurance Charges”), whenever arising, which shall become due
and payable under the terms and conditions of any applicable KPMG Policy in
respect of any liabilities, losses, claims, actions or occurrences, whenever
arising or becoming known, involving or relating to any of the assets,
businesses, operations or Liabilities of Consulting or any of its Subsidiaries
or Affiliates, whether the same relate to the period prior to, on or after the
Effective Date. To the extent that the terms of any applicable KPMG Policy
provide that KPMG or any of its Subsidiaries shall have an obligation to pay or
guarantee the payment of any Insurance Charges relating to Consulting or any of
its Subsidiaries, KPMG shall be entitled to demand that Consulting make such
payment directly to the Person or entity entitled thereto. In connection with
any such demand, KPMG shall submit to Consulting a copy of any invoice received
by KPMG pertaining to such Insurance Charges together with appropriate
supporting documentation, to the extent available. In the event that
Consulting fails to pay any such Insurance Charges when due and payable,
whether at the request of the Party entitled to payment or upon demand by KPMG,
KPMG and its Subsidiaries may (but shall not be required to) pay such insurance
charges for and on behalf of Consulting and, thereafter, Consulting shall
forthwith reimburse KPMG for such payment. Subject to the other provisions of
this Section 6.2, the retention by KPMG of the KPMG Policies and the
responsibility for claims administration and financial administration of the
KPMG Policies are in no way intended to limit, inhibit or preclude any right of
Consulting, KPMG or any other insured to insurance coverage for any Insured
Claims under the KPMG Policies.




		
	 	      (e) Pre-Separation Insurance Claims Administration. Consulting and its
Subsidiaries and Affiliates acknowledge that KPMG has previously experienced
losses and received claims which arose from the Consulting Business and which
were, or might have been, covered by one or more KPMG Policies, and prior to
the Effective Date KPMG will have made decisions and commitments regarding the
administration of such claims, and including reaching agreements and
stipulations regarding such claims (collectively “Pre-Separation Claims
Administration”). Consulting and its Subsidiaries and Affiliates covenant not
to contest or



27








		
	 	challenge in any manner any action taken by KPMG prior to the Effective
Date in connection with or relating to Pre-Separation Claims Administration, or
to interfere with the performance of any agreement, commitment or stipulation
so made by KPMG in connection with or relating to Pre-Separation Claims
Administration.




		
	 	      (f) Non-Waiver of Rights to Coverage. An insurance carrier which would
otherwise be obligated to pay any claim shall not be relieved of the
responsibility with respect thereto, or, solely by virtue of the provisions of
this Section 6.2, have any subrogation rights with respect thereto, it being
expressly understood and agreed that no insurance carrier or any third party
shall be entitled to a windfall (i.e., a benefit they would not be entitled to
receive had no Separation occurred, or in the absence of the provisions of this
Section 6.2) by virtue of the provisions hereof.




		
	 	      (g) Scope of Affected Policies of Insurance. The provisions of this
Section 6.2 relate solely to matters involving liability, casualty and workers’
compensation insurance, and shall not be construed to affect any obligation of
or impose any obligation on the Parties with respect to any life, health and
accident, dental or medical insurance policies applicable to any of the
officers, directors, employees or other representatives of the Parties hereto
or their Affiliates.



      Section 6.3 Letters of Credit. (a) After the Effective Date, if letters
of credit issued by a financial institution for the account of KPMG or any
Retained Subsidiary on behalf of a Transferred Subsidiary or on behalf of the
Consulting Business for the benefit of a third party remain outstanding,
Consulting shall, and shall cause its Subsidiaries to, use their respective
best efforts to replace such letters of credit as promptly as practicable with
letters of credit issued for the account of Consulting or any of its
Subsidiaries. Following the Effective Date, (i) Consulting shall indemnify and
hold harmless the KPMG Indemnified Parties for any Claims or Losses arising
from or relating to any letters of credit that are not replaced by Consulting
or its Subsidiaries, including but not limited to, any fees in connection with
the issuance and maintenance thereof and (ii)   Consulting shall not, and shall
not permit any of its Subsidiaries to, enter into, renew or extend the term of,
increase its obligations under, or transfer to a third party, any loan, lease,
contract or other obligation in connection with which KPMG or any Retained
Subsidiary is or may be liable with respect to any letters of credit which
remain outstanding. The Parties hereto agree that neither KPMG nor any of the
Retained Subsidiaries will have any obligation to renew any letters of credit
issued on behalf of the Consulting Business after the expiration of any such
letter of credit.


      Section 6.4 Guarantee Obligations. (a) KPMG and Consulting shall
cooperate and Consulting shall use its best efforts to terminate, or to cause
Consulting and/or one of the Transferred Subsidiaries to be substituted in all
respects for KPMG or any of the Retained Subsidiaries in respect of, all
obligations of KPMG or any of the Retained Subsidiaries under any loan,
financing, lease, contract or other obligation in existence as of the Effective
Date pertaining to the Consulting Business for which KPMG or any of the
Retained Subsidiaries is or may be liable, as guarantor, primary obligor or
otherwise including, but not limited to, those set forth on Schedule 6.4(a),
but excluding any real estate leases or Surety Bonds (collectively, the “KPMG
Guarantees”). If such a termination or substitution is not effected by the
Effective Date, (i) Consulting shall indemnify and hold harmless the KPMG
Indemnified Parties for any Claims or

28








Losses arising from or relating to the KPMG Guarantees, and (ii)   from and
after the Effective Date, Consulting shall not, and shall not permit any of
this Subsidiaries to, enter into, renew or extend the term of, increase its
obligations under, or transfer to a third party, any loan, lease, contract or
other obligation for which KPMG or any Retained Subsidiary is or may be liable
pursuant to a KPMG Guarantee. KPMG agrees that it shall notify Consulting in a
timely manner of any changes to the KPMG Guarantees. To the extent that KPMG
or the Retained Subsidiaries have performance obligations under any KPMG
Guarantee, Consulting will use its best efforts to (X) perform such obligations
on behalf of KPMG and the Retained Subsidiaries or (Y) otherwise take such
action as requested by KPMG so as to put KPMG and the Retained Subsidiaries in
the same position as if Consulting, and not KPMG and the Retained Subsidiaries,
had performed or were performing such obligations.



		
	 	      (b) KPMG and Consulting shall cooperate and Consulting shall use its best
efforts to terminate, or to cause Consulting and/or one of the Transferred
Subsidiaries to be substituted in all respects for KPMG or any of the Retained
Subsidiaries in respect of all obligations of KPMG or any of the Retained
Subsidiaries under any surety bond listed on Schedule 6.4(b) (the “Surety
Bonds”); provided, however, that with respect to any Surety Bond, if the
Parties mutually agree in writing, Consulting shall not be required to make any
such effort. If such termination or substitution is not effected by the
Effective Date, (i) Consulting shall indemnify and hold harmless the KPMG
Indemnified Parties for any Claims or Losses arising from or relating to the
Surety Bonds, and (ii)   from and after the Effective Date, Consulting shall not,
and shall not permit any of its Subsidiaries to, enter into, renew or extend
the term of, increase its obligations under, or transfer to a third party, any
loan, lease, contract or other obligation for which KPMG or any Retained
Subsidiary is or may be liable pursuant to any Surety Bond. KPMG agrees that
it shall notify Consulting in a timely manner of any changes to the Surety
Bonds. To the extent that KPMG or the Retained Subsidiaries have performance
obligations under any Surety Bond, Consulting shall use its best
efforts to (X) perform such obligations on behalf of KPMG and the Retained Subsidiaries or (Y) otherwise take such action as requested by KPMG so as to put KPMG and the
Retained Subsidiaries in the same position as if Consulting, and not KPMG and
the Retained Subsidiaries, had performed or were performing such obligations.




		
	 	      (c) With respect to each KPMG Guarantee and Surety Bond which remains in
effect after the Effective Date, the Parties shall agree upon an appropriate
fee to be paid by Consulting in consideration for such KPMG Guarantee or Surety
Bond remaining in effect (the “KPMG Guarantee Fee”).




		
	 	     (d)   Consulting agrees that it will not, without the express written
consent of KPMG, which consent may be withheld in the sole discretion of KPMG,
enter into any agreement with respect to a merger, consolidation or
amalgamation with, or sale of all or substantially all its assets, in one
transaction or in a series of related transactions to, any third party, unless
such third party expressly agrees as a term of such agreement to (i) terminate,
or to cause such third party or one of its Affiliates to be substituted in all
respects for KPMG in respect of, all obligations of KPMG or any of the Retained
Subsidiaries under the KPMG Guarantees, (ii)   indemnify and hold harmless the
KPMG Indemnified Parties for any Claims or Losses arising from or relating to
the KPMG Guarantees, (iii) assume or guarantee the payment to KPMG of any
unpaid KPMG Guarantee Fee by Consulting or any successor to Consulting in



29








		
	 	accordance with Section 6.4(c) and (iv) not, and to not permit Consulting
or any of its Subsidiaries or Affiliates to, renew or extend the term of,
increase its obligations under, or transfer to another third party, any loan,
lease contract or other obligation for which KPMG or any Retained Subsidiary is
or may be liable pursuant to a KPMG Guarantee prior to such termination or
substitution.



      Section 6.5 Litigation. (a) On or as of the Effective Date, Consulting
shall assume and pay all liabilities which may result from the Consulting
Assumed Actions and all fees and costs relating to the defense of the
Consulting Assumed Actions, including attorneys’ fees and costs incurred after
the Effective Date. “Consulting Assumed Actions” shall mean those cases,
claims, circumstances, investigations, proceedings, lawsuits and incidents (and
any other matters reported to KPMG’s professional practice insurance carrier as
a potential claim) related to, or arising in connection with, the Consulting
Business, the Transferred Assets or the Assumed Liabilities and listed on
Schedule 6.5(a) as to which KPMG or its Subsidiaries is a defendant or a party
against which the claim or investigation is directed.



		
	 	      (b) KPMG and its Subsidiaries shall transfer the Consulting Transferred
Actions to Consulting and its Subsidiaries, and Consulting and its Subsidiaries
shall receive and have the benefit of all of the proceeds of such Consulting
Transferred Actions. “Consulting Transferred Actions” shall mean those cases
and claims on which KPMG or its Subsidiaries are plaintiffs or claimants
relating to, or arising in connection with, the Consulting Business, the
Transferred Assets or the Assumed Liabilities and which are listed on Schedule 6.5(a).
	 
	 	      (c) On or as of the Effective Date, KPMG or its Subsidiaries shall
continue to assume and pay all liabilities which may result from the KPMG
Assumed Actions and all fees and costs relating to the defense of the KPMG
Assumed Actions, including attorneys’ fees and costs incurred after the
Effective Date. “KPMG Assumed Actions” shall mean those cases, claims
circumstances, investigations, proceedings, lawsuits and incidents (and any
other matters reported to KPMG’s professional practice insurance carrier as a
potential claim) related to, or arising in connection with, the Retained
Business, the Excluded Assets or the Retained Liabilities as to which KPMG or
its Subsidiaries is a defendant or the party against which the claim or
investigation is directed.
	 
	 	     (d)   On or as of the Effective Date, KPMG and its Subsidiaries shall
continue to have the benefit of all of the proceeds of the KPMG Actions and
shall continue to have exclusive authority and control over the investigation,
settlement or compromise of any such KPMG Actions, without the consent of
Consulting. “KPMG Actions” shall mean those cases and claims on which KPMG or
its Subsidiaries are plaintiffs or claimants relating to, or arising in
connection with, the Retained Business, the Excluded Assets or the Retained
Liabilities.
	 
	 	      (e) Notwithstanding Section 6.5(a) and (c), if both KPMG and Consulting
are named as parties to any Consulting Assumed Action or KPMG Assumed Action,
as the case may be, in order to settle or compromise, or consent to the entry
of any judgment with respect to, any such action, KPMG, Consulting and their
respective Subsidiaries must comply with the provisions of Section 12.3.
Consulting shall, and shall cause each of its Subsidiaries to, use its best
efforts to have KPMG and any KPMG Indemnified Party removed as parties to any
Consulting Assumed Action in which they are named as parties as soon as is
reasonably



30








		
	 	practicable, and KPMG shall, and shall cause the Retained Subsidiaries to,
use their best efforts to have Consulting and any Consulting Indemnified Party
removed as parties to any KPMG Assumed Action in which they are named as
parties as soon as is reasonably practicable.




		
	 	      (f) Notwithstanding any provision in this Section 6.5 to the contrary, no
provision of this Section 6.5 shall limit the right of any Party to
indemnification pursuant to Article XII, and any such right to indemnification
shall be absolute, regardless of whether the Indemnified Party has the right to
control such matter.



      Section 6.6 Consulting Bank Accounts. On or prior to the Effective Date,
Consulting and its Subsidiaries shall establish separate bank accounts.
Consulting shall cause any amounts received, by mistake or otherwise, in such
accounts after the Effective Date on account of the Retained Business to be
promptly transferred to KPMG and its Subsidiaries, as appropriate. KPMG shall
cause any amounts received, by mistake or otherwise, after the Effective Date
on account of the Consulting Business, other than amounts received on account
of any Excluded Assets, to be promptly transferred to Consulting and its
Subsidiaries, as appropriate.


      Section 6.7 Occupancy. Unless otherwise provided herein or in an
Ancillary Agreement, Consulting and its Subsidiaries may continue to occupy,
from and after the Effective Date, such space in the facilities of KPMG and its
Subsidiaries as it occupied immediately prior to the Effective Date, or such
other space therein as may be mutually agreed to from time to time by KPMG and
Consulting in accordance with the terms and conditions of the Transition
Services Agreement.


      Section 6.8 Compliance with Auditor Independence Rules. Following the
Separation and prior to the IPO, to the extent applicable to it, Consulting
shall conduct its business in such a manner as to be in full compliance with
all applicable rules and regulations regarding auditor independence promulgated
by the Securities and Exchange Commission, the American Institute of Certified
Public Accountants, the Independence Standards Board, the state boards of
accountancy or any other accounting regulatory authorities with jurisdiction
over KPMG (the “Auditor Independence Rules”).


      Section 6.9 Shared Contracts. (a) In the event and to the extent that,
following the Separation, any contract executed prior to the Separation
pertaining to either KPMG or Consulting, respectively (the “Contracting Party”)
requires the performance by the other Party (the “Subcontracting Party”) to
complete the requirements of the contract (each a “Shared Contract”), the
Parties shall, to the extent permitted under such Shared Contract, enter into a
subcontract with respect to such Shared Contract pursuant to which the
Subcontracting Party shall agree to deliver the appropriate services to the
client. Each subcontract shall provide that the Subcontracting Party shall
perform and discharge fully, all obligations of the Subcontracting Party with
respect to the Shared Contract and that each Subcontracting Party shall
indemnify and hold harmless the Contracting Party for all Claims or Losses
arising out of its performance under the subcontract. Such subcontract shall
also give the Subcontracting Party its allocable portion of the rights and
privileges with respect to such Shared Contract, including the right to receive
the Subcontracting Party’s allocable portion of the monies and other
consideration received with respect to the performance under such Shared
Contract.

31








		
	 	      (b) In the event and to the extent that, following the Separation, any
contract executed prior to the Separation pertaining to either KPMG or
Consulting provides goods or services to both KPMG and Consulting, which goods
or services are not provided for or contemplated by the Transition Services
Agreement (each a “Shared Services Contract”), the Parties shall, to the extent
permitted under such Shared Services Contract, enter into a subcontract with
respect to such Shared Services Contract pursuant to which the Subcontracting
Party may obtain its allocable portion of (i) any goods or services offered
pursuant to such Shared Services Contract and (ii)   any other rights and
privileges with respect to such Shared Services Contract. The Subcontracting
Party shall make its allocable share of any payments due pursuant to such
Shared Services Contract and assume its allocable portion of any other
obligations thereunder.



      Section 6.10 Collection of Receivables. (a) From and after the Closing
Date, KPMG shall use reasonable efforts to collect the accounts receivable,
notes receivable and WIP pertaining to the Consulting Business and included in
the Excluded Assets or retained by KPMG pursuant to Sections 3.6 and 3.8 (the
“Section 6.10 Receivables”) generally in accordance with the billing and
collection practices presently applied by KPMG in the collection of its
accounts receivable, notes receivable and WIP, except that with respect to any
particular Section 6.10 Receivable, KPMG shall be under no obligation to
commence litigation to effect collection and, after consultations with
Consulting, may make any adjustment, concession or settlement which in the good
faith judgment of KPMG is commercially reasonable. In connection with the
collections by KPMG, if a payment is received from an account debtor who has
not designated the invoice being paid thereby, such payment shall be applied to
the earliest invoice outstanding with respect to indebtedness of such account
debtor, except for those invoices which are subject to a dispute to the extent
of such dispute. Consulting will use reasonable efforts to assist KPMG in the
collection of the Section 6.10 Receivables.



		
	 	      (b) KPMG shall, on or before the tenth business day of each calendar month
commencing with the second complete calendar month following the Effective
Date, deliver to Consulting a written report (“Collection Report”) of the
following information with respect to the Section 6.10 Receivables:




		
	 	    (i)   The aggregate amount of the Section 6.10 Receivables (and
the number of accounts comprising such Section 6.10 Receivables);
and




		
	 	      (ii)   The aggregate amount of cash collections of the Section 6.10 Receivables during the period from the Effective Date through
the date of the Collection Report.




		
	 	      (c) If KPMG has not collected by the close of business on June 29, 2000,
as to any Section 6.10 Receivable an amount equal to the excess
of such Section 6.10 Receivable over the allowance for doubtful accounts in respect of such
Section 6.10 Receivable, (such excess being referred to herein as the “Net
Amount of Receivable”), then KPMG shall have the right to require Consulting to
pay KPMG an amount equal to (i) the Net Amount of Receivable minus (ii)   the
amount collected in cash in respect of such Section 6.10 Receivable by KPMG
during the period prior to June 30, 2000; provided that concurrently with the
payment by Consulting of such amount, KPMG shall assign to Consulting such
uncollected Section 6.10 Receivable. Upon any



32








		
	 	such assignment, Consulting shall have the right to exercise any remedies
available to it under law or equity to collect such Section 6.10 Receivable.




		
	 	     (d)   If, after the Effective Date, Consulting shall receive any remittance
from any account debtors with respect to the Section 6.10 Receivables
(excluding any Section 6.10 Receivable reassigned to Consulting pursuant to
Section 3.8 or Section 6.10(c)), Consulting shall endorse such remittance to
the order of KPMG and forward it to KPMG immediately upon receipt thereof, and
any such amounts shall be deemed to have been collected by KPMG for purposes of
this Section 6.10.




		
	 	      (e) If, after the Effective Date, KPMG shall receive any remittance from
or on behalf of any account debtor with respect to any Section 6.10 Receivable
after such Section 6.10 Receivable has been reassigned to Consulting, KPMG
shall endorse such remittance to the order of Consulting and forward it to
Consulting immediately upon receipt thereof.



      Section 6.11 Notice of Separation. Following the Effective Date,
Consulting shall, and shall cause its Subsidiaries to, use commercially
reasonable efforts to advise and put on notice all third parties with whom
Consulting or any of its Subsidiaries conducts business or maintains
contractual relationships that Consulting is a separate company from KPMG.


      Section 6.12 Waiver of Certain Provisions of the Partnership Agreement.
(a) In the event that a partner or principal of KPMG who becomes an employee
of Consulting engages in conduct that constitutes a breach of both (i) Section 12 of the Partnership Agreement and (ii)   either Article VIII of the Consulting
Qualified Member Distribution Agreement, Article V of the Consulting
Non-Qualified Member Distribution Agreement or Article V of the Consulting
Non-Eligible Member Agreement, as the case may be, KPMG hereby covenants and
agrees to waive the enforcement of its remedies in connection with the breach
of Section 12 of the Partnership Agreement and not to pursue any remedies
available to it thereunder pursuant to such breach so long as Consulting
pursues its remedies under the applicable Member Distribution Agreements.



		
	 	      (b) In respect of any partner or principal who withdraws from KPMG and
simultaneously with such withdrawal becomes an employee of Consulting, KPMG
hereby waives the requirement in Section 10 of the Partnership Agreement that
such partner or principal provide advance notice of such withdrawal.



      Section 6.13 No Representation. (a) KPMG covenants and agrees that:



		
	 	    (i)   KPMG will not have any representation on the board of
directors of Consulting, Inc.; and




		
	 	      (ii)   KPMG will use its best efforts to assure that no partner,
principal or employee of KPMG serves as an officer, director or
employee of Consulting, Inc.




		
	 	      (b) Consulting covenants and agrees that it will use its best efforts to
assure that no officer, director or employee of Consulting serves as a partner,
principal or employee of KPMG.



33







ARTICLE VII


INTELLECTUAL PROPERTY


      Section 7.1 License of Consulting Intellectual Property to KPMG. (a) Grant of License. Consulting and its Subsidiaries hereby grant to KPMG and the
Retained Subsidiaries, and KPMG and the Retained Subsidiaries hereby accept and
retain, a perpetual, nonexclusive, fully paid-up, worldwide right and license
to use, manufacture, make, sell, distribute, publicly display, publicly
perform, and otherwise practice or exploit by any means (whether now known or
contemplated or hereafter invented or discovered), solely in the ordinary
course of the Retained Business, any Consulting Assigned Intellectual Property
that KPMG is or will be using, practicing or exploiting in connection with the
Retained Business as of the Effective Date (the “Licensed Consulting
Intellectual Property”). No right is granted to use, manufacture, make, sell,
distribute, publicly display, publicly perform, or otherwise practice or
exploit the Licensed Consulting Intellectual Property other than in connection
with the Retained Business. Notwithstanding the foregoing, the Licensed
Consulting Intellectual Property shall not include, and no right is granted
under this Section 7.1 with respect to, (i) any trademark, trade name, service
mark, service name, slogan, logo, any registration of any of the foregoing, or
any application for registration of any of the foregoing, or (ii)   Consulting
Assigned Intellectual Property that KPMG uses solely to support or provide
services to the Consulting Business.



		
	 	      (b) Ownership of the Licensed Consulting Intellectual Property. KPMG and
the Retained Subsidiaries acknowledge that, subject to the foregoing license,
Consulting and its Subsidiaries, as the case may be, are the sole and exclusive
owners of all of right, title and interest in and to the Licensed Consulting
Intellectual Property. KPMG and the Retained Subsidiaries agree that they will
do nothing inconsistent with Consulting’s or its Subsidiaries’ ownership of, or
rights in, the Licensed Consulting Intellectual Property.




		
	 	      (c) Marking and Notices. KPMG and the Retained Subsidiaries agree that
any services which are provided, offered, sold or otherwise delivered by them
pursuant to the license(s) granted hereunder shall bear a legal or proprietary
rights notice in such form as may be reasonably requested by and to the extent
directed by Consulting from time to time.





		
	 	     (d)   Termination of Licenses. The licenses granted in this Section 7.1 may
be terminated by Consulting only under the following conditions:




		
	 	    (i)   Breach. If KPMG or the Retained Subsidiaries are in
breach or default of a material term of this Section 7.1 which
breach or default continues for sixty (60) days after written
notice thereof by Consulting, Consulting may terminate the license
granted pursuant to this Section 7.1, provided that such
termination shall be limited to those Licensed Consulting
Intellectual Property rights that relate to the uncured breach.




		
	 	      (ii)   Divestiture. If KPMG or the Retained Subsidiaries sell,
assign, transfer or otherwise divest themselves of ownership of any
business units or services that use the Licensed Consulting
Intellectual Property, the licenses granted in this Section 7.1 may
be assigned, but only with respect to the divested




34








		
	 	businesses or services that are substitutes for or line
extensions of such services, and only with the written consent of
Consulting, which consent shall not be unreasonably withheld.
Consulting shall have no obligation to consent to the transfer of
such license to any entity that is a competitor of Consulting or
any of its Subsidiaries or in the field in which Consulting or any
of its Subsidiaries uses the Intellectual Property Right that is
the subject of the license.




		
	 	    (iii)   Change of Control. If more than 50% of the equity
interest of KPMG or any Retained Subsidiary thereof is acquired,
directly or indirectly, by a competitor of Consulting in the field
in which Consulting or its Subsidiaries are then using the Licensed
Consulting Intellectual Property, then Consulting, by written
notice to KPMG, may (A) in the case of the acquisition of the
equity interest of KPMG, terminate the license granted pursuant to
this Section 7.1 in its entirety, or (B) in the case of the
acquisition of the equity interest of a Retained Subsidiary
terminate the license granted pursuant to this Section 7.1 only
with respect to such Retained Subsidiary.



      Section 7.2 License of KPMG Intellectual Property to Consulting. (a) KPMG and the Retained Subsidiaries hereby grant to Consulting and its
Subsidiaries, and Consulting and its Subsidiaries hereby accept and retain, a
perpetual, nonexclusive, fully paid-up, worldwide right and license to use,
manufacture, make, sell, distribute, publicly display, publicly perform, and
otherwise practice or exploit by any means (whether now known or contemplated
or hereafter invented or discovered), solely in the ordinary course of the
Consulting Business, any Intellectual Property Rights that KPMG retains
relating to the Retained Business (the “Retained Intellectual Property”) that
the Consulting Business is using, practicing or exploiting as of the Effective
Date (the “Licensed Retained Intellectual Property”). No right is granted to
use, manufacture, make, sell, distribute, publicly display, publicly perform,
or otherwise practice or exploit the Licensed Retained Intellectual Property
other than in connection with the Consulting Business. Notwithstanding the
foregoing, the Licensed Retained Intellectual Property shall not include, and
no right is granted under this Section 7.2 with respect to, (i) any trademark,
trade name, service mark, service name, slogan, logo, any registration of any
of the foregoing, or any application for registration of any of the foregoing,
or (ii)   Retained Intellectual Property that the Consulting Business uses solely
to support or provide services to KPMG or the Retained Business.



		
	 	      (b) Ownership of the Licensed Retained Intellectual Property. Consulting
and its Subsidiaries acknowledge that, subject to the foregoing license, KPMG
and the Retained Subsidiaries are the sole and exclusive owners of all of
right, title and interest in and to the Licensed Retained Intellectual
Property. Consulting and its Subsidiaries agree that they will do nothing
inconsistent with KPMG’s and the Retained Subsidiaries’ ownership of, or rights
in, the Licensed Retained Intellectual Property.




		
	 	      (c) Marking and Notices. Consulting and its Subsidiaries agree that any
services which are provided, offered, sold or otherwise delivered by them
pursuant to the license(s) granted hereunder shall bear a legal or proprietary
rights notice in such form as may be reasonably requested by and to the extent
directed by KPMG from time to time.



35








		
	 	     (d)   Termination of Licenses. The licenses granted in this Section 7.2 may
be terminated by KPMG only under the following conditions:




		
	 	    (i)   Breach. If Consulting or its Subsidiaries are in breach
or default of a material term of this Section 7.2 which breach or
default continues for sixty (60) days after written notice thereof
by KPMG, KPMG may terminate the license granted pursuant to this
Section 7.2, provided that such termination shall be limited to
those Licensed Retained Intellectual Property rights that relate to
the uncured breach.




		
	 	      (ii)   Divestiture. If Consulting or its Subsidiaries sell,
assign, transfer or otherwise divests themselves of ownership of
any business units or services that use the Licensed Retained
Intellectual Property, the licenses granted in this Section 7.2 may
be assigned, but only with respect to the divested businesses or
services that are substitutes for or line extensions of such
services, and only with the written consent of KPMG, which consent
shall not be unreasonably withheld. KPMG shall have no obligation
to consent to the transfer of such license to any entity that is or
by virtue of such license is enabled to become a competitor of KPMG
or the Retained Subsidiaries in the field in which KPMG or any
Retained Subsidiary uses the Intellectual Property Right that is
the subject of the license.




		
	 	    (iii)   Change of Control. If more than 50% of the voting stock
of Consulting or any Subsidiary thereof is acquired, directly or
indirectly, by a competitor of KPMG in the field in which KPMG or
its Subsidiaries are then using the Licensed Retained Intellectual
Property, then KPMG, by written notice to Consulting, may (A) in
the case of the acquisition of the voting stock of Consulting,
terminate the license granted pursuant to this Section 7.2 in its
entirety, or (B) in the case of the acquisition of the voting stock
of any Subsidiary, terminate the license granted pursuant to this
Section 7.2 only with respect to such Subsidiary.



      Section 7.3 No Transfers. Except as set forth in Section 7.1(d)(ii) and
Section 7.1(d) (iii), the licenses granted under Sections 7.1 and 7.2 may not be
assigned without the prior written consent of the licensor thereunder (KPMG or
Consulting, as the case may be). However, each licensee under such licenses
(KPMG or Consulting, as the case may be) may grant sublicenses thereunder that
are incidental to transactions entered into in the ordinary course of such
licensee’s business. To the extent that any of the Intellectual Property
Rights licensed under Section 7.1 or 7.2 include trade secrets or other
information protected from disclosure hereunder or otherwise, then the licensee
shall disclose such information only as necessary in connection with its
exercise of its rights under such license, and only subject to a written
confidentiality agreement conforming to the requirements of Section 9.4 hereof
or such other reasonable requirements of which it may be notified in writing by
the licensor.


      Section 7.4 Limitation. (a) As of the Effective Date, and except as
permitted pursuant to the terms and conditions of Section 7.1, KPMG and its
Subsidiaries shall cease all use of the Consulting Assigned Intellectual
Property, and KPMG agrees to terminate any licenses granted to its Subsidiaries
with respect to the Consulting Assigned Intellectual Property.

36








		
	 	      (b) As of the Effective Date, and except as permitted pursuant to the
terms and conditions of Section 7.2, Consulting and its Subsidiaries shall
cease all use of the KPMG Retained Intellectual Property, and Consulting agrees
to terminate any licenses granted to its Subsidiaries with respect to the KPMG
Retained Intellectual Property.



      Section 7.5 Further Assurances. (a) KPMG and the Retained Subsidiaries
shall cooperate with Consulting and its Subsidiaries at Consulting’s request
and at Consulting’s expense, in any reasonable steps that Consulting or its
Subsidiaries wish to take to protect the Consulting Assigned Intellectual
Property or to protect, perfect or evidence Consulting’s interest therein,
including, without limitation, by (i) obtaining execution by KPMG’s and KPMG’s
Subsidiaries’ employees, consultants and agents of any papers, documents or
instruments Consulting or any of its Subsidiaries consider necessary to enable
Consulting and its Subsidiaries to protect, perfect or evidence the Consulting
Assigned Intellectual Property or Consulting’s or its Subsidiaries’ interest
therein; and (ii)   making their respective employees, consultants and agents who
have direct knowledge of facts pertaining to any Consulting Assigned
Intellectual Property or the subject matter thereof, available to Consulting
and its Subsidiaries for the purpose of protecting, perfecting or evidencing
any Consulting Assigned Intellectual Property or Consulting’s or its
Subsidiaries’ interest therein, including by disclosing all information
regarding any unpatented inventions for the purpose of preparing and filing
patent applications with respect thereto and otherwise reasonably assisting
with such patent applications.



		
	 	      (b) Similarly, Consulting and its Subsidiaries shall cooperate with KPMG
and the Retained Subsidiaries at KPMG’s request and at KPMG’s expense, in any
reasonable steps that KPMG or the Retained Subsidiaries wish to take to protect
the Retained Intellectual Property or to protect, perfect or evidence KPMG’s
interest therein, including, without limitation, by (i) obtaining execution by
Consulting’s and its Subsidiaries’ employees, consultants and agents of any
papers, documents or instruments KPMG or any of the Retained Subsidiaries
consider necessary to enable KPMG and the Retained Subsidiaries to protect,
perfect or evidence the Retained Intellectual Property or KPMG’s or the
Retained Subsidiaries’ interest therein; and (ii)   making their respective
employees, consultants and agents who have direct knowledge of facts pertaining
to any Retained Intellectual Property or the subject matter thereof, available
to KPMG and the Retained Subsidiaries for the purpose of protecting, perfecting
or evidencing any Retained Intellectual Property or KPMG’s or the Retained
Subsidiaries’ rights therein, including by disclosing all information regarding
any unpatented inventions for the purpose of preparing and filing patent
applications with respect thereto and otherwise reasonably assisting with such
patent applications.



ARTICLE VIII


EMPLOYEES AND EMPLOYEE BENEFITS


      Section 8.1 Consulting Employee. “Consulting Employee” means any
partner, principal or employee of KPMG or a Benefit Subsidiary (A) who in the
ordinary course of his or her duties performs substantially all his or her
services for any Consulting Business and (i) is actively at work on the
Effective Date (including any individual on temporary assignment at the request
of KPMG at a Subsidiary that is not a Benefit Subsidiary) or (ii)   is not
actively at work

37







on the Effective Date on account of a leave of absence, which commenced
after June 30, 1999, duly granted by KPMG or a Benefit Subsidiary pursuant to
an established plan or policy of general application or applicable law and (B) and other such partners, principals or employees who the parties agree to
classify as a Consulting Employee. Notwithstanding the foregoing, an
individual who would be a Consulting Employee but for the fact that such
individual is not actively at work on the Effective Date on account of a leave
of absence duly granted by KPMG or a Benefit Subsidiary before July 1, 1999
shall become a Consulting Employee upon his or her proper return to active
service with Consulting or a Benefit Subsidiary at the end of and as
contemplated by such leave of absence.


      Section 8.2 Employment of Consulting Employees. On the Effective Date,
Consulting and its Subsidiaries shall employ or continue to employ each
Consulting Employee. Consulting and KPMG (and their respective Subsidiaries)
shall use commercially reasonable efforts to accomplish any transfers of
employment required by this Section 8.2 in a timely manner. As of the
Effective Date, each Consulting Employee shall be paid from Consulting or one
of its Subsidiaries compensation and benefits in the aggregate comparable to
those provided to such individual from KPMG or its Subsidiaries immediately
before the Effective Date. Notwithstanding the foregoing, nothing in this
Agreement shall be interpreted as requiring Consulting or the Subsidiaries to
retain any individual in employment for any specific period of time or as
limiting the right of Consulting or its Subsidiaries to terminate the
employment of any Consulting Employee or to change the terms of his or her
employment (including, without limitation, compensation and benefits).


      Section 8.3 Terminations/Layoff/Severance. (a) No Consulting Employees
shall be eligible for any severance benefits from KPMG or its Subsidiaries as a
result of the transfer of their employment or service from KPMG or its
Subsidiaries to Consulting or its Subsidiaries or any subsequent termination of
their employment or service with Consulting or its Subsidiaries.
Notwithstanding the foregoing, Consulting shall pay certain severance benefits
as provided in Section 8.3(b).



		
	 	      (b) Effective as of the Effective Date, Consulting (or the applicable
Consulting Subsidiary) shall assume any obligations of KPMG or its Subsidiaries
for and shall be obligated to pay severance benefits to any Consulting Employee
whose employment or service by Consulting or its Subsidiaries terminates within
one year after the Effective Date in an amount not to be less than the amount
of such severance benefits which such Consulting Employee would have received
from KPMG or its Subsidiaries had his or her employment by KPMG or its
Subsidiaries terminated immediately before the Effective Date.



      Section 8.4 International Consulting Employees. Notwithstanding anything
herein to the contrary, all issues relating to any individual who, immediately
prior to the Effective Date, is employed in a foreign jurisdiction by
Consulting or a Transferred Subsidiary and who is not a Consulting Employee
shall be governed by any agreements made in connection with the transactions
applicable to such Transferred Subsidiary and shall not be subject to this
Agreement.


      Section 8.5 Employment Solicitation. For one year after the Effective
Date, neither KPMG nor Consulting shall, or shall permit any of their
respective Subsidiaries or agents

38







to, directly or indirectly, without the prior written consent of the
other, actively solicit or recruit for employment any then current partner,
principal or employee of the other or of any of the other’s Subsidiaries.
Notwithstanding the foregoing, nothing contained in this Section 8.5 shall (a) prohibit the hiring of any employee who in good faith is believed to be
actively seeking employment on his or her own initiative without prior contact
initiated by any employee or agent of the company where employment is sought,
or any of such company’s Affiliates, provided that such employee has obtained
written authorization from an officer (or a direct report to a current officer)
of his or her current employer; or (b) prohibit KPMG or Consulting or any of
their respective Subsidiaries from hiring any person for status as a partner or
principal with the other company until after such individual has been
terminated for at least six months.


      Section 8.6 Leave
of Absence Policies. Effective immediately after the
Effective Date, Consulting and its Subsidiaries shall honor all terms and
conditions of leaves of absence which have been granted to any Consulting
Employee by KPMG or its Benefit Subsidiaries under any established policy
program of general application or pursuant to applicable law before the
Effective Date and after June 30, 1999, including such leaves that are to
commence after the Effective Date where KPMG or any of its Benefit Subsidiaries
has approved such leave or where an employee has submitted appropriate
paperwork to KPMG or any of its Benefit Subsidiaries for such leave prior to
the Effective Date.


      Section 8.7 Withdrawal From Participation in KPMG Plans and Establishment
of Consulting Plans. (a) Prior to the Effective Date, KPMG and Consulting
shall take any and all action as shall be necessary or appropriate to cause
Consulting to become a participating employer in the KPMG Plans that are
pension or profit sharing plans intended to be qualified under Section 401(a)
of the Code. Effective as of the Effective Date, except as provided in Section 8.13, Consulting shall cease to be a participating employer in such KPMG Plans
and shall take any and all action necessary to effectuate its withdrawal as a
participating employer under the terms of such plans. KPMG and Consulting
shall take any and all action as may be necessary or appropriate to cause
Consulting Employees to cease accruing benefits under the KPMG Plans in effect
on the Effective Date as of the Effective Date. KPMG shall take any and all
action as may be necessary or appropriate to cause employment of Consulting
Employees by Consulting and its Subsidiaries after the Effective Date to be
taken into account under the KPMG Pension Plan and the KPMG Savings Plan for
vesting purposes to the same extent as if such employment were by KPMG. KPMG
and its Subsidiaries shall after the Effective Date remain liable for claims
incurred before the Effective Date by Consulting Employees (and their
dependents) under KPMG plans that are “welfare plans” as defined in ERISA, but
not paid as of the Effective Date.



		
	 	      (b) Effective as of the Effective Date, Consulting shall establish its own
employee benefit plans for the benefit of eligible employees of Consulting.
The Consulting Savings Plan shall take into account for eligibility and vesting
purposes employment by and service rendered to KPMG or its Subsidiaries prior
to the Effective Date and welfare plans of Consulting and its Subsidiaries
shall take into account such employment and service for reliability purposes,
and shall take into account any payments by Consulting Employees for purposes
of satisfying deductible and out of pocket limits to the same extent as under
the KPMG welfare plans and shall not exclude as a pre-existing condition any
condition covered by the KPMG welfare plans as of the Effective Date.



39







      Section 8.8 Transfer of Savings Plan Account Balances. Subject to
applicable law and the provisions of the KPMG Savings Plan, as soon as
practicable after the Effective Date, as determined by the plan administrator
for the KPMG Savings Plan, the account balances (including outstanding loans)
of all KPMG Savings Plan participants who are Consulting Employees shall be
transferred from the KPMG Savings Plan to the Consulting Savings Plan (the
“Transferred Accounts”). The plan administrator for the Consulting Savings
Plan shall take any action reasonably requested by the plan administrator for
the KPMG Savings Plan which is necessary or advisable, in the sole opinion of
the plan administrator for the KPMG Savings Plan, to maintain the status of the
KPMG Savings Plan as qualified under Section 401(a) of the Code or to avoid the
imposition of any penalties with respect to such plan in either case, as a
result of the transfer of accounts contemplated by this Section 8.8.


      Section 8.9 Entitlement to Distributions Under Pension Plans. (a) Consulting acknowledges that benefits under the KPMG Pension Plan shall not
become payable to Consulting Employees prior to the date their employment with
Consulting terminates.



		
	 	     (b)   KPMG Money Purchase Plan (the “Money Purchase Plan”), KPMG Personal
Account for Retirement Plan (the “PAR”) and KPMG Partners Savings Plan (the
“PSP”). Consulting acknowledges that benefits under the Money Purchase Plan,
the PAR or the PSP shall not become payable to Consulting Employees prior to
the date their employment with Consulting terminates.
	 
	 	      (c)   KPMG Retirement Allowance Plan (the “RAP”). Consulting acknowledges
that the benefits under the RAP (including any supplemental plans) for
Consulting Employees who immediately before the Effective Date were partners or
principals of KPMG, ceased accruing as of June 30, 1999, and that benefits
thereunder shall not be payable to such Consulting Employees prior to the date
their employment with Consulting terminates.



      Section 8.10 Workers’ Compensation. After the Effective Date, (i) KPMG
and its Subsidiaries shall remain liable for workers’ compensation claims
arising with respect to Consulting Employees with respect to events that
occurred prior to the Effective Date and (ii)   Consulting and its Subsidiaries
shall be liable for workers’ compensation claims of Consulting Employees with
respect to events arising after the Effective Date.


      Section 8.11 Vacation Pay Policy. After the Effective Date, Consulting
and its Subsidiaries shall maintain for the Consulting Employees a vacation pay
policy and Consulting shall be responsible for costs incurred to provide
vacation pay to employees of Consulting following such date. Consulting shall
assume any and all KPMG liabilities to provide to Consulting Employees who
immediately before the Effective Date were employees of KPMG or any Benefit
Subsidiary, vacation which such persons accrued under the KPMG vacation pay
policy as of the Effective Date, and no accrued vacation shall be payable by
KPMG (or its Benefit Subsidiaries) on or after the Effective Date. Consulting
acknowledges that Consulting Employees who immediately before the Effective
Date were partners or principals of KPMG may be entitled to unused vacation
under KPMG’s vacation policy for which no liability has been accrued by KPMG
and it is expected that Consulting shall credit such Consulting Employees with
such unused vacation under Consulting’s vacation pay policy.

40







      Section 8.12
Information to Be Provided to KPMG. Consulting shall
provide any information which KPMG (or any KPMG Subsidiary) may reasonably
request, including but not limited to information relating to dates of
termination of employment, in order to provide benefits to any eligible
employee of Consulting or any of its Subsidiaries under the terms and
conditions described herein or under the applicable KPMG Plans. Any
information relating to an employee’s termination of employment shall be
provided by Consulting to KPMG as soon as available to Consulting, but in any
event no later than 30 days after such information is made available to
Consulting. Consulting shall, as necessary, update the system used to keep
such information in such timely manner as is required to administer the KPMG
Plans.


      Section 8.13
Welfare Benefits and COBRA. As of the Effective Date,
Consulting shall assume KPMG’s liability for (i) health care continuation
coverage for Consulting Employees (and their dependents) who upon the
occurrence of their “qualifying events” as defined in COBRA and whose
“qualifying events” occurred after June 30, 1999, and (ii)   wage continuation
and other disability payments to any Disabled Employee pursuant to any KPMG
Plan providing for disability benefits.


ARTICLE IX


ACCESS TO INFORMATION


      Section 9.1 Access
to Information. (a) Access to Information. At all
times from and after the Effective Date for a period of ten years, (i) KPMG,
upon reasonable notice, shall afford Consulting, its Subsidiaries and their
authorized accountants, counsel and other designated representatives reasonable
access during normal business hours to, or, at Consulting’s expense, provide
copies of, all records, books, contracts, instruments, data, documents,
communications, items, matters and other information other than workpapers
generated in the course of a client engagement (collectively, “Information”)
relating to Consulting or any of its Subsidiaries, the Consulting Business, the
Transferred Assets, the Assumed Liabilities, the partners, principals and
employees of KPMG who will become employees of Consulting or the Consulting
Business within KPMG’s possession or control immediately following the
Effective Date, insofar as such access or copies are required by Consulting or
any of its Subsidiaries for a particular purpose permitted by this Section 9.1(a), and (ii)   Consulting, upon reasonable notice, shall afford to KPMG, its
Subsidiaries and their authorized accountants, counsel and other designated
representatives reasonable access during normal business hours to, or, at
KPMG’s expense, provide copies of, Information relating to KPMG or any of its
Retained Subsidiaries, the Retained Business, the Excluded Assets, the Retained
Liabilities, or any partners, principals and employees of KPMG or any of its
Subsidiaries within Consulting’s possession or control immediately following
the Effective Date insofar as such access or copies are required by KPMG for a
particular purpose permitted by this Section 9.1(a). Information may be
requested under this Section 9.1(a) for audit, accounting and Tax purposes,
claims defense, Consulting Assumed Actions and KPMG Assumed Actions (other than
in connection with litigation or threatened litigation in which the interests
of KPMG or any Retained Subsidiary, on the one hand, and Consulting or any
Transferred Subsidiary, on the other hand, as the case may be, may be adverse
to one another), regulatory filings, for purposes of fulfilling disclosure and
reporting obligations, for compensation, benefit or welfare plan administration
and for other proper business purposes

41







but not for competitive purposes. KPMG and Consulting shall maintain the
Information in the same way that KPMG maintains similar material relating to
the ongoing business of KPMG. The provisions of this Article IX shall not
prejudice the rights or obligations of the Parties under any of the Ancillary
Agreements.



		
	 	      (b) Limitations. KPMG makes no representations or warranties, express or
implied, about the accuracy, completeness, adequacy or sufficiency of the
Information provided hereunder and EXPRESSLY DISCLAIMS ALL WARRANTIES
WHATSOEVER RELATING THERETO, WHETHER STATUTORY, WRITTEN, ORAL, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY, NON-INFRINGEMENT AND
FITNESS FOR A PARTICULAR PURPOSES. The rights of access pursuant to this
Section 9.1 shall not include, however, such Information of KPMG, Consulting
and their respective Subsidiaries relating to (i) products, materials and
components under development by KPMG, Consulting or their respective
Subsidiaries; (ii)   Information pertaining to potential acquisitions,
divestitures and other business arrangements of KPMG, Consulting or their
respective Subsidiaries (other than with respect to the Transferred
Subsidiaries); (iii) studies and investigations being undertaken by KPMG,
Consulting or their respective Subsidiaries for their own benefit or for the
benefit of a third party; (iv) Information KPMG, Consulting or their respective
Subsidiaries are required by law, applicable professional standards or
confidentiality agreements with a third party to maintain in confidence; and
(v) Information which, in a Party’s good faith judgment, if disclosed could
result in a loss of such Party’s ability to successfully assert a claim of
Privilege. Each Party agrees to abide by and adhere to all reasonable
requirements and limitations imposed by the other Party in respect of the
Information and access thereto.




		
	 	      (c) Any Information owned by one Party that is provided to a requesting
Party pursuant to this Section 9.1 shall be deemed to remain the property of
the providing Party. Unless specifically set forth herein, nothing contained
in this Agreement shall be construed as granting or conferring rights of
license or otherwise in any such Information.



      Section 9.2 Production of Witnesses. At all times from and after the
Effective Date, each Party shall use its reasonable efforts to make available
to the other Party (without cost (other than reimbursement of actual
out-of-pocket expenses (other than officers’ or employees’ salaries or partner
or principal compensation), which expenses shall not include legal fees) to,
and upon prior written request of, the other Party) its officers, directors,
partners, principals, employees and agents as witnesses to the extent that the
same may reasonably be required by the other Party in connection with any
legal, administrative or other proceedings (other than any legal proceeding in
which KPMG or any Retained Subsidiary, on the one hand, and Consulting or any
Transferred Subsidiary, on the other hand, as the case may be, are Parties and
may be adverse to one another in such proceeding) in which the requesting Party
may from time to time be involved with respect to the Consulting Business, the
Retained Business, the Exchange, the Separation or any related transactions.
KPMG and Consulting agree to reimburse each other for reasonable out-of-pocket
expenses (other than officers’ or employees’ salaries or partner or principal
compensation), which expenses shall not include legal fees, incurred by the
other in connection with providing individuals and witnesses pursuant to this
Section 9.2. Nothing in this Section 9.2 shall require any such witness to
testify or give evidence relating to the matters described in Section 9.1(b)(iv) or Section 9.1(b)(v).

42






      Section 9.3 Provision of Corporate Records. Prior to or as promptly as
practicable after the Effective Date, KPMG shall deliver to Consulting or one
or more of its Subsidiaries all corporate books and records of Consulting and
the Transferred Subsidiaries and copies of all corporate books and records of
KPMG relating to the Consulting Business in the possession of KPMG, including
in each case all active agreements, litigation files and government filings,
except to the extent otherwise agreed by the Parties. From and after the
Effective Date, all books, records and copies so delivered shall be the
property of Consulting or such Subsidiaries. Notwithstanding the foregoing,
KPMG may (a) retain copies of books and records delivered to Consulting,
subject to holding in confidence in accordance with
Section 9.4, the
Information contained in such books and records, (b) refuse to furnish any
Information if it believes in good faith that doing so could adversely affect
its ability to successfully assert a claim of Privilege, and (c) refuse to
deliver books and records or portions thereof which are subject to any law,
applicable professional standards or confidentiality agreements which would by
their terms prohibit such delivery (in which case, if requested by Consulting,
KPMG shall use its reasonable efforts to seek a waiver of or other relief from
such confidentiality restriction).


      Section 9.4 Confidentiality. (a) From and after the Effective Date,
each of KPMG and Consulting shall hold, and shall cause its Subsidiaries and
its and their partners, principals, officers, directors, employees, agents,
consultants, advisors and other representatives to hold in strict confidence
all non-public Information (i) concerning the other Party or any of its
Subsidiaries or Affiliates obtained prior to the Effective Date, (ii)   accessed
pursuant to Section 9.1 hereof, or (iii) received from the other Party or any
of its Subsidiaries or Affiliates pursuant to this Agreement, any Ancillary
Agreement or any agreement or document contemplated hereby directly or
indirectly, orally or in writing or via disk or other electronic media,
including, without limitation, any trade secrets, technology, know-how and
other non-public, proprietary intellectual property rights licensed pursuant to
Sections 7.1 and 7.2 herein, and shall not release or disclose such Information
to any other Person, except its representatives, who shall be bound by the
provisions of this Section 9.4 without the prior written consent of the other
Party or as expressly permitted in Section 7.1 or 7.2; provided, however, that
KPMG and Consulting and their respective Subsidiaries, partners, principals,
officers, directors, employees, agents, consultants, advisors and
representatives may disclose such Information if, and only to the extent that,
(A) such confidential Information is disclosed to their respective auditors,
attorneys, financial advisors, bankers and other appropriate consultants and
advisors who have a need to know such confidential Information and are informed
of their obligation to hold such confidential Information in confidence to the
same extent as is applicable to the Parties and in respect of whose failure to
comply with such obligations, Consulting or KPMG, as the case may be, will be
responsible, (B) a disclosure of such confidential Information is compelled by
judicial or administrative process or, in the opinion of such Party’s counsel,
by other requirements of law, or (C) such Party can show that such confidential
Information (I) is published or is or otherwise becomes available to the
general public as part of the public domain without breach of this Agreement;
(II) has been furnished or made known to the recipient without any obligation
to keep it confidential by a third Party under circumstances which are not
known to the recipient to involve a breach of the third Party’s obligations to
a Party hereto; (III) was developed independently of Information furnished to
the recipient under this Agreement; or (IV) in the case of confidential
Information furnished after the Effective Date, was known to the recipient at
the time of receipt thereof from the other Party. Notwithstanding the
foregoing, in the event that any demand or request for disclosure of
confidential Information is made pursuant to clause (B)

43







above, the disclosing Party shall promptly notify the other Party of the
existence of such request or demand and shall provide the other Party a
reasonable opportunity to seek an appropriate protective order or other remedy,
which both Parties will cooperate in obtaining. In the event that such
appropriate protective order or other remedy is not obtained, the Party whose
confidential Information is required to be disclosed shall or shall cause the
disclosing Party to furnish, or cause to be furnished, only that portion of the
confidential Information that is legally required to be disclosed.



		
	 	      (b) Each Party (the “First Party”) acknowledges that the other Party would
not have an adequate remedy at law for the breach by the First Party of any one
or more of the covenants contained in this Section 9.4 and agrees that, in the
event of such breach, the other Party may, in addition to the other remedies
which may be available to it, apply to a court for an injunction to prevent
breaches of this Section 9.4 and to enforce specifically the terms and
provisions of this Section 9.4. Notwithstanding Section 12.1 hereof, the
provisions of this Section 9.4 shall survive the Effective Date indefinitely.



      Section 9.5 Privileged Matters. (a) Each of KPMG and Consulting agree
to maintain, preserve and assert any or all privileges belonging to either
Party (or as to which any Party is entitled to assert) not heretofore waived,
that relate to the Consulting Business or the Retained Business, including,
without limitation, privileges arising under or relating to the attorney-client
relationship and the attorney-client, accountant-client and work product
privileges (collectively, the “Privileges” and, individually, a “Privilege”).



		
	 	      (b) With respect to matters relating to the Retained Business, (i) KPMG
shall have the sole authority in perpetuity to determine whether to assert or
waive any or all Privileges; (ii)   Consulting shall take no action (nor permit
any of its Subsidiaries to take any action) without the prior written consent
of KPMG that could result in any waiver of any Privilege that could be asserted
by KPMG or any Retained Subsidiary under applicable law and this Agreement and
(iii) KPMG shall not take any action which could impair a Privilege of
Consulting without first notifying and consulting with Consulting in respect of
such action.
	 
	 	      (c) With respect to matters relating to the Consulting Business, (i) Consulting shall have the sole authority in perpetuity to determine whether to
assert or waive any or all Privileges; (ii)   KPMG shall take no action (nor
permit any of the Retained Subsidiaries to take any action) without the prior
written consent of Consulting that could result in any waiver of any Privilege
that could be asserted by Consulting or any of its Subsidiaries under
applicable law and this Agreement and (iii) Consulting shall not take any
action which could impair a Privilege of KPMG without first notifying and
consulting with KPMG in respect of such action.
	 
	 	     (d)   The rights and obligations created by this Section 9.5 shall apply to
all Information as to which, but for the Separation, either Party would have
been entitled to assert or has asserted the protection of a Privilege
(“Privileged Information”). Privileged Information of KPMG includes but is
not limited to (i) any and all Information existing prior to the Separation
regarding the Retained Business but which after the Separation is in the
possession of Consulting or any of the Transferred Subsidiaries; (ii)   all
communications subject to a Privilege occurring prior to the Separation between
counsel for KPMG or any of the Retained Subsidiaries (including in-house
counsel and former in-house counsel who will become employees of



44








		
	 	Consulting or the Transferred Subsidiaries) and any person who, at the
time of the communication, was a partner, principal or employee of KPMG or any
of the Retained Subsidiaries, regardless of whether such a partner, principal
or employee is or becomes a partner, principal or employee of either Party; and
(iii) all Information generated, received or arising after the Effective Date
that refers or relates to Privileged Information generated, received or arising
prior to the Effective Date. Privileged Information of Consulting includes but
is not limited to (x) any and all Information generated prior to the Separation
regarding the Consulting Business but which after the Separation is in the
possession of KPMG or any of the Retained Subsidiaries; (y) all communications
subject to a Privilege occurring prior to the Separation between counsel for
Consulting or any of the Transferred Subsidiaries (including in-house counsel
and former in-house counsel who will continue to be partners, principals or
employees of KPMG or the Retained Subsidiaries) and any person who, at the time
of the communication, was engaged in the Consulting Business, regardless of
whether such partner, principal or employee is or becomes a partner, principal
or employee of either Party; and (z) all Information generated, received or
arising after the Effective Date that refers or relates to Privileged
Information generated, received or arising prior to the Effective Date.




		
	 	      (e) Upon receipt by KPMG or Consulting, as the case may be, of any
subpoena, discovery or other request from any third party that actually or
arguably calls for the production or disclosure of Privileged Information of
the other Party or if KPMG or Consulting, as the case may be, obtains knowledge
that any current or former partner, principal or employee of KPMG or
Consulting, as the case may be, has received any subpoena, discovery or other
request from any third party that actually or arguably calls for the production
or disclosure of Privileged Information of the other Party, such Party shall
promptly notify the other Party of the existence of the request and shall
provide the other Party a reasonable opportunity to review the Information and
to assert any rights it may have under this Section 9.5 or otherwise to prevent
the production or disclosure of Privileged Information. Each Party agrees that
it will not produce or disclose to any third party any Information that may be
covered by a Privilege under this Section 9.5 unless (i) the other Party has
provided its express written consent to such production or disclosure (which
consent will not be unreasonably withheld), or (b) a court of competent
jurisdiction has entered a final, nonappealable order finding that the
Information is not entitled to protection from disclosure under any applicable
Privilege.




		
	 	      (f) KPMG’s transfer of books and records and other Information to
Consulting, KPMG’s agreement to permit Consulting to possess Privileged
Information of KPMG occurring or generated prior to the Effective Date and
Consulting’s agreement to permit KPMG to possess Privileged Information of
Consulting occurring or generated prior to the Effective Date, are made in
reliance on Consulting’s and KPMG’s respective agreements, as set forth in this
Section 9.5, to maintain the confidentiality of such Information and to take
the steps provided herein for the preservation of all Privileges that may
belong to or be asserted by either Party. The access to Information being
granted pursuant to Section 9.1, the agreement to provide witnesses and
individuals pursuant to Section 9.2 and the disclosure to Consulting and KPMG
of Privileged Information relating to the Consulting Business or the Retained
Business pursuant to this Agreement in connection with the Separation shall not
be asserted by KPMG or Consulting to constitute, or otherwise be deemed, a
waiver of any Privilege that has been or may be asserted under this Section 9.5
or otherwise. Nothing in this Agreement shall operate to reduce, minimize



45







or condition the rights granted to KPMG and Consulting in, or the
obligations imposed upon KPMG and Consulting by, this Section 9.5.


      Section 9.6 Service of Process. Nothing in this Agreement shall be
deemed to constitute an authorization by either Party to permit the other Party
to accept service of process on its behalf, and neither Party is or shall be
deemed to be the agent of the other Party for service of process purposes.


ARTICLE X


CONDITIONS PRECEDENT TO SEPARATION


      The obligation of KPMG to effect the Separation is subject to the
satisfaction or the waiver by KPMG (if permissible) at or prior to the
Effective Date of each of the following conditions:


      Section 10.1 No Actions. No action shall have been instituted or
threatened by or before any court or administrative body to restrain, enjoin or
otherwise prevent the Separation or the other transactions contemplated hereby,
and no order, injunction or decree issued by any court of competent
jurisdiction shall be in effect restraining the Separation or such other
transactions.


      Section 10.2 Consents. All material authorizations, consents, approvals
and clearances of all federal, state, local and foreign governmental agencies
and any other Person required to permit the valid consummation of the
transactions contemplated herein shall have been obtained without any
conditions being imposed that would have a material adverse effect on
Consulting.


      Section 10.3 Pre-Separation Transactions. The pre-Separation
transactions contemplated by
Articles III and IV of this Agreement shall have
been consummated in all material respects.


      Section 10.4 Ancillary Agreements. Each of the Ancillary Agreements
shall have been executed and each of such agreements shall be in full force and
effect.


      Section 10.5 Board Approval. The Boards of Directors of KPMG and
Consulting, Inc. and the sole Member of LLC each shall have duly approved the
Separation and the transactions contemplated hereby.


      Section 10.6 KPMG Partner Approval. The partners and principals of KPMG
shall have duly approved the Separation and the transactions contemplated
hereby and such approval shall not have been revoked or modified subsequent to
August 31, 1999.


      Section 10.7 Election of Consulting Board. The Board of Directors of
Consulting as set forth on Schedule 4.1 shall have been duly elected.

46







      Section 10.8 Satisfaction of Conditions. The satisfaction of such
conditions shall not create any obligations on the part of KPMG or any other
Party hereto to effect the Separation or in any way limit KPMG’s power of
termination set forth in Section 14.9.


      Section 10.9 Tax Opinion. The Board of Directors of KPMG shall have
received a tax opinion from King and Spalding, which, in the absolute
discretion of the Board of Directors, satisfactorily addresses certain tax
matters relating to the Separation and the Private Placement.


ARTICLE XI


EXPENSES; TRANSACTION TAXES


      Section 11.1 Allocation of Expenses. (a) Each Party shall absorb all
costs associated with the dedication of internal resources and personnel to the
Separation and/or the Private Placement at all times prior to the Effective
Date.



		
	 	     (b)   All of the out-of-pocket costs of professional services firms incurred
in connection with the Separation and/or the Private Placement shall be borne
60% by KPMG and 40% by Consulting, provided, however, that Consulting shall
bear 100% of any costs of Grant Thornton LLP in connection therewith.



      Section 11.2 Transaction Taxes. KPMG will determine the amount of sales,
transfer, V.A.T. or other similar Taxes or fees (including, without limitation,
all real estate, patent, copyright and trademark transfer Taxes and real estate
recording fees but not patent, copyright and trademark recording fees) payable
in connection with the transactions contemplated by this Agreement (the
“Transaction Taxes”). KPMG and/or Consulting as the case may be, agree to file
promptly and timely the returns for such Transaction Taxes with the appropriate
taxing authorities and remit payment of the Transaction Taxes.


ARTICLE XII


SURVIVAL, INDEMNIFICATION,

CLAIMS AND OTHER MATTERS


      Section 12.1 Survival. Notwithstanding the termination of any Ancillary
Agreement, all covenants and agreements of KPMG and Consulting contained in
this Agreement shall survive the Effective Date indefinitely, unless a specific
survival or other applicable period is expressly set forth therein.


      Section 12.2 Indemnification. (a) KPMG shall indemnify, defend and hold
harmless Consulting and each of its Affiliates, directors, officers, employees
and agents (collectively, the “Consulting Indemnified Parties”) from and
against any and all Claims or Losses incurred or suffered by the Consulting
Indemnified Parties in connection with or arising out of or due to, directly or
indirectly:

47








		
	 	    (i)   the conduct and operation of the Retained Business
conducted by KPMG or its Subsidiaries, Affiliates or predecessors
on or at any time prior to or following the Effective Date;
	 
	 	      (ii)   the assets owned by KPMG or its Subsidiaries other than
the Transferred Assets;
	 
	 	    (iii)   the Liabilities and obligations (including the Retained
Liabilities) of KPMG or its Subsidiaries other than the Assumed
Liabilities; and




		
	 	      (iv) the breach by KPMG or any of its Subsidiaries of any
representation, covenant or agreement set forth in this Agreement
(including, without limitation, Article VIII) or any Conveyancing
and Assumption Instruments.




		
	 	      (b) Consulting shall indemnify, defend and hold harmless KPMG and each of
its Affiliates, partners, principals, officers, employees and agents
(collectively, the “KPMG Indemnified Parties”) from and against any and all
Claims or Losses incurred or suffered by the KPMG Indemnified Parties in
connection with or arising out of or due to, directly or indirectly:




		
	 	    (i)   the conduct and operation of the Consulting Business as
conducted by KPMG or its Subsidiaries, Affiliates or predecessors
on or at any time prior to the Effective Date and as conducted by
Consulting after the Effective Date;




		
	 	      (ii)   the Transferred Assets;
	 
	 	    (iii)   the Assumed Liabilities;
	 
	 	      (iv) the Transferred Subsidiaries;




		
	 	      (v) the breach by Consulting or any of its Subsidiaries of any
representation, covenant or agreement set forth in this Agreement
(including, without limitation, Article VIII) or any Conveyancing
and Assumption Instruments;




		
	 	      (vi) the Indemnifiable matters set forth in Section 5.3; and




		
	 	      (vii) the instigation, continuance, or expansion of any
investigation, inquiry, hearing, claim, suit or other proceeding by
or before any governmental body or before an accounting regulatory
body (including, without limitation, the Securities and Exchange
Commission, the American Institute of Certified Public Accountants,
the state boards of accountancy of the various states, and any
successor to any of the foregoing) in connection with or arising
out of or due to, directly or indirectly, the circumstances
described in 
Section 12.2(b)(i).




		
	 	      (c) EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE INDEMNITY OBLIGATION UNDER
THIS SECTION 12.2 SHALL APPLY NOTWITHSTANDING ANY INVESTIGATION MADE BY OR ON
BEHALF OF ANY INDEMNIFIED PARTY AND



48








		
	 	SHALL APPLY WITHOUT REGARD TO WHETHER THE LOSS, LIABILITY, CLAIM, DAMAGE,
COST OR EXPENSE FOR WHICH INDEMNITY IS CLAIMED HEREUNDER IS BASED ON STRICT
LIABILITY, ABSOLUTE LIABILITY, NEGLIGENCE, ARISES AS AN OBLIGATION FOR
CONTRIBUTION OR OTHERWISE.




		
	 	     (d)   NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO
EVENT SHALL KPMG BE LIABLE TO ANY CONSULTING INDEMNIFIED PARTY, OR CONSULTING
BE LIABLE TO ANY KPMG INDEMNIFIED PARTY, UNDER THIS AGREEMENT FOR ANY SPECIAL,
INDIRECT, INCIDENTAL, CONSEQUENTIAL (EXCEPT WITH RESPECT TO LIABILITY UNDER
SECTION 6.5 HEREOF) OR PUNITIVE DAMAGES, INCLUDING, WITHOUT LIMITATION, LOSS OF
ANTICIPATED PROFITS OR LOSS OR DIMINUTION OF REVENUES, REGARDLESS OF THE FORM
OF ACTION, WHETHER IN CONTRACT, TORT OR OTHERWISE, EXCEPT TO THE EXTENT THAT
SUCH LIABILITY HAS BEEN ASSERTED BY A THIRD PARTY AGAINST A PARTY ENTITLED TO
INDEMNIFICATION HEREUNDER.



      Section 12.3
Procedure for Indemnification. (a) If any third party
shall make any claim or commence any arbitration proceeding or suit against any
one or more of the Indemnified Parties with respect to which an Indemnified
Party intends to make any claim for indemnification against Consulting under
Section 12.2(b) or against KPMG under Section 12.2(a), such Indemnified Parties
shall promptly give written notice to the Indemnifying Party of such third
party claim, arbitration proceeding or suit and the following provisions shall
apply. The notice shall state that the Indemnified Party is seeking
indemnification pursuant to this Agreement. For purposes of this
Section 12.3(a), the foregoing notice shall be deemed to have been given by KPMG to
Consulting with respect to each item listed on
Schedule 6.5(a).



		
	 	      (b) The Indemnifying Party shall have 20 business days after receipt of
the notice referred to in Section 12.3(a) to notify the Indemnified Party that
it elects to conduct and control the defense of such claim, proceeding or suit.
If the Indemnifying Party does not give the foregoing notice of its election,
the Indemnified Party shall have the right to defend, contest, settle or
compromise such claim, proceeding or suit in the exercise of its exclusive
discretion subject to Section 12.3(d) and the Indemnifying Party shall, upon
request from any of the Indemnified Parties, promptly pay to such Indemnified
Parties in accordance with the other terms of this
Section 12.3(b) and Section 12.3(c), the amount of any Claim or Loss resulting from their liability to the
third party claimant.




		
	 	      (c) Except as
otherwise provided pursuant to this Article XII, if the
Indemnifying Party gives notice of its election to conduct and control the
defense, the Indemnifying Party shall have the right to undertake, conduct and
control, through counsel reasonably acceptable to the Indemnified Party, and at
the Indemnifying Party’s sole expense, the conduct and settlement of such
claim, proceeding or suit, and the Indemnified Party shall cooperate with the
Indemnifying Party in connection therewith, provided that (i) the Indemnifying
Party shall not thereby permit any lien, encumbrance or other adverse charge to
thereafter attach to any asset of any Indemnified Party; (ii)   the Indemnifying
Party shall not thereby permit any injunction against any Indemnified Party;
(iii) the Indemnifying Party shall permit the Indemnified Party and counsel
chosen by the Indemnified Party and reasonably acceptable to the Indemnifying
Party to monitor such conduct or settlement and shall provide the



49








		
	 	Indemnified Party and such counsel with such information regarding such
claim, proceeding or suit as either of them may reasonably request (which
request may be general or specific), but the fees and expenses of such counsel
shall be borne by the Indemnified Party unless (A) the Indemnifying Party and
the Indemnified Party shall have mutually agreed to the retention of such
counsel and the reimbursement of such fees and expenses by the Indemnifying
Party or (B) the named parties to any such claim, proceeding or suit include
the Indemnified Party and the Indemnifying Party and in the reasonable opinion
of counsel to the Indemnified Party representation of both parties by the same
counsel would be inappropriate due to actual or likely conflicts of interest
between them, in either of which cases the reasonable fees and disbursements of
counsel for such Indemnified Party shall be reimbursed by the Indemnifying
Party to the Indemnified Party; and (iv) the Indemnifying Party shall agree
promptly to reimburse to the extent required under this
Article XII the
Indemnified Party for the full amount of any Claim or Loss resulting from such
claim, proceeding or suit and all related expenses incurred by the Indemnified
Party, in each case, as incurred. In no event shall the Indemnifying Party,
without the prior written consent of the Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment that does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party a release from all liability in respect of
such claim. In no event may the Indemnified Party settle any claim, suit or
proceeding without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld. Notwithstanding the foregoing,
the Indemnified Party shall have the right to pay or settle any such claim,
proceeding or suit, provided, however that in such event the Indemnified Party
shall waive any right to indemnity therefor by the Indemnifying Party, and no
amount in respect thereof shall be claimed as a Claim or Loss under this
Article XII.




		
	 	     (d)   If the Indemnifying Party shall not have undertaken the conduct and
control of the defense of any claim, suit or proceeding as provided
in Section 12.3(b), (i) the Indemnifying Party shall nevertheless be entitled through
counsel chosen by the Indemnifying Party and reasonably acceptable to the
Indemnified Party to monitor the conduct or settlement of such claim by the
Indemnified Party, and the Indemnified Party shall provide the Indemnifying
Party and such counsel with such information regarding such action or suit as
either of them may reasonably request (which request may be general or
specific), but all costs and expenses incurred in connection with such
monitoring shall be borne by the Indemnifying Party and (ii)   the Indemnified
Party may not settle any claim, suit or proceeding without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.




		
	 	      (e) In the event any claim, proceeding or suit arises on or after the
Effective Date in which (i) KPMG is the Indemnified Party and (ii)   a proposed
settlement of the claim, proceeding or suit will, in the reasonable good faith
judgment of KPMG, adversely affect the Retained Business or the conduct of the
Retained Businesses, Consulting may not settle such claim, proceeding or suit
without the prior written consent of KPMG, which consent shall not be
unreasonably withheld.




		
	 	      (f) Notwithstanding any provision herein to the contrary, with respect to
any Consulting Assumed Action set forth in Schedule 6.5(a) or any Consulting
Transferred Action set forth on Schedule 3.1(h), KPMG shall have the right to
undertake, conduct and control, through counsel reasonably acceptable to
Consulting, and at Consulting’s sole expense, the conduct and settlement of
such claim, proceeding or suit and Consulting shall cooperate with



50








		
	 	KPMG in connection therewith, provided that (i) KPMG shall not permit any
lien, encumbrance or other adverse charge to thereafter attach to any asset of
Consulting; (ii)   KPMG shall not thereby permit any injunction against
Consulting; (iii) KPMG shall permit Consulting and counsel chosen by Consulting
and reasonably acceptable to KPMG to monitor such conduct or settlement and
shall provide Consulting and such counsel with such information regarding such
claim, proceeding or suit as either of them may reasonably request (which
request may be general or specific), but the fees and expenses of such counsel
shall be borne by Consulting; and (iv) Consulting shall agree promptly to
reimburse to the extent required under this Article XII KPMG for the full
amount of any Claim or Loss resulting from such claim, proceeding or suit and
all related expenses incurred by KPMG, in each case, as incurred and provided,
further, that in no event shall KPMG settle any such claim, suit or proceeding
without the prior written consent of Consulting, which consent shall not be
unreasonably withheld.




		
	 	      (g) Notwithstanding any provision herein to the contrary, with respect to
Section 12.2(b)(viii), KPMG shall have the right to undertake, conduct and
control, through counsel reasonably acceptable to Consulting, and at
Consulting’s sole expense, the conduct and settlement of such investigation,
inquiry, hearing, claim, proceeding or suit, Consulting shall cooperate with
KPMG in connection therewith, provided that (i) KPMG shall not permit any lien,
encumbrance or other adverse charge to thereafter attach to any asset of
Consulting; (ii)   KPMG shall not thereby permit any injunction against
Consulting; (iii) KPMG shall permit Consulting and counsel chosen by Consulting
and reasonably acceptable to KPMG to monitor such conduct or settlement and
shall provide Consulting and such counsel with such information regarding such
investigation, inquiry, hearing, claim, proceeding or suit as either of them
may reasonably request (which request may be general or specific), but the fees
and expenses of such counsel shall be borne by Consulting; and (iv) Consulting
shall agree promptly to reimburse to the extent required under this
Article XII
KPMG for the full amount of any Claim or Loss resulting from such
investigation, inquiry, hearing, claim, proceeding or suit and all related
expenses incurred by KPMG, in each case, as incurred and provided,
further,
that in no event shall KPMG settle any such investigation, inquiry, hearing,
claim, suit or proceeding without the prior written consent of Consulting,
which consent shall not be unreasonably withheld.




		
	 	      (h) In respect of all claims, proceedings or suits in respect of which
indemnification is sought pursuant to this Article XII, the Party conducting
and controlling the defense shall (i) permit the other Party to monitor the
conduct or settlement of such claim, proceeding or suit and shall provide the
other Party and counsel for the other Party with such information regarding
such claim, proceeding or suit as either of them may reasonably request (which
request may be general or specific) and (ii)   regularly consult with the other
Party regarding the conduct or settlement of such claim, proceeding or suit.



      Section 12.4 Direct
Claims. Any claim for indemnity on account of a
Claim or Loss made directly by the Indemnified Party against the Indemnifying
Party and which does not result from a third party claim shall be asserted by
written notice from the Indemnified Party to the Indemnifying Party
specifically claiming indemnification hereunder. Such Indemnifying Party shall
have a period of 30 business days within which to respond thereto. If such
Indemnifying Party does not respond within such 30 business-day period, such
Indemnifying Party shall be deemed to have accepted responsibility to make
payment and shall have no further right to contest the validity of such claim.
If such Indemnifying Party does respond within such

51







30 business-day period and rejects such claim in whole or in part, such
Indemnified Party shall be free to pursue resolution as provided in Article XIII.


      Section 12.5
Adjustment of Indemnifiable Losses. (a) The amount which
an Indemnifying Party is required to pay to an Indemnified Party shall be
reduced (including, without limitation, retroactively) by any insurance
proceeds and other amounts actually recovered by such Indemnified Party in
respect of the related Claim or Loss. If an Indemnified Party shall have
received an Indemnity Payment in respect of a Claim or Loss and shall
subsequently actually receive insurance proceeds or the other amounts in
respect of such Claim or Loss, then such Indemnified Party shall pay to such
Indemnifying Party a sum equal to the lesser of (1) the amount of such
insurance proceeds or other amounts actually received and (2) the net amount of
Indemnity Payments actually received previously. The Indemnified Party agrees
that the Indemnifying Party shall be subrogated to such Indemnified Party under
any insurance policy. An insurer who 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.



		
	 	      (b) If any Indemnified Party realizes a Tax benefit or detriment in one or
more Tax periods by reason of having incurred a Claim or Loss for which such
Indemnified Party receives an Indemnity Payment from an Indemnifying Party (or
by reason of the receipt of any Indemnity Payment), then such Indemnified Party
shall pay to such Indemnifying Party an amount equal to the Tax benefit or such
Indemnifying Party shall pay to such Indemnified Party an additional amount
equal to the Tax detriment (taking into account, without limitation, any Tax
detriment resulting from the receipt of such additional amounts), as the case
may be. The amount of any Tax benefit or any Tax detriment for a Tax period
realized by an Indemnified Party by reason of having incurred a Claim or Loss
(or by reason of the receipt of any Indemnity Payment) shall be deemed to equal
the product obtained by multiplying (i) the amount of any deduction or loss or
inclusion in income for such period resulting from such Claim or Loss (or the
receipt of any Indemnity Payment or additional amount), as the case may be
(without regard to whether such deduction or loss or such inclusion in income
results in any actual decrease or increase in Tax liability for such period),
by (ii)   the highest applicable marginal Tax rate for such period (provided,
however, that the amount of any Tax benefit attributable to an amount that is
creditable shall be deemed to equal the amount of such creditable item). Any
payment due under this Section 12.5(b) with respect to a Tax benefit or Tax
detriment realized by an Indemnified Party in a Tax period shall be due and
payable within 30 days from the time the return for such Tax period is due,
without taking into account any extension of time granted to the Party filing
such return.




		
	 	      (c) In the event that an Indemnity Payment shall be denominated in a
currency other than United States dollars, the amount of such payment shall be
translated into United States dollars using the Foreign Exchange Rate for such
currency determined in accordance with the following rules:



59








		
	 	    (i)   with respect to a Claim or Loss arising from payment by a
financial institution under a guarantee, comfort letter, letter of
credit, foreign exchange contract or similar instrument, the
Foreign Exchange Rate for such currency shall be determined as of
the date on which such financial institution shall have been
reimbursed;
	 
	 	      (ii)   with respect to a Claim or Loss covered by insurance, the
Foreign Exchange Rate for such currency shall be the Foreign
Exchange Rate employed by the insurance company providing such
insurance in settling such Claim or Loss with the Indemnifying
Party; and
	 
	 	    (iii)   with respect to a Claim or Loss not covered by clause (i) or (ii)   above, the Foreign Exchange Rate for such currency
shall be determined as of the date that notice of the claim with
respect to such Claim or Loss shall be given to the Indemnified
Party.



      Section 12.6 Contribution. If the indemnification provided for in
Section 12.2 is unavailable to an Indemnified Party as a matter of law in
respect of any Claim or Loss, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Claim or Loss in such
proportion as is appropriate to reflect the relative fault of the Consulting
Indemnified Parties (a “Consulting Party”), on the one hand, and the KPMG
Indemnified Parties (a “KPMG Party”), on the other hand.


      Section 12.7 No Third Party Beneficiaries. Except to the extent
expressly provided otherwise in this Article XII, the indemnification and
contribution provided for in this Agreement or any Ancillary Agreement shall
not inure to the benefit of any third party or parties and shall not relieve
any insurer or other third party who would otherwise be obligated to pay any
claim or the responsibility with respect thereto or, solely by virtue of the
indemnification and contribution provisions hereof, provide any subrogation
rights with respect thereto, and each Party agrees to waive such rights against
the other to the fullest extent permitted.


ARTICLE XIII


DISPUTE RESOLUTION


      Section 13.1 Escalation. If a dispute, claim or controversy arises out
of or arises in connection with this Agreement, any of the Ancillary Agreements
or any other agreement entered into in accordance with this Agreement,
including, but not limited to, the termination or validity thereof or any
matter involving a Claim or Loss (a “Dispute”), KPMG and Consulting agree to
use the following procedures, in lieu of either Party pursuing other available
remedies, to resolve the Dispute. The Parties agree that they will first
attempt to settle any Dispute arising out of this Agreement through good faith
negotiations in the spirit of mutual cooperation between business executives
with authority to resolve the Dispute. Prior to taking action as provided in
Section 13.2, the Parties shall first submit the Dispute to an appropriate
corporate officer or partner of each Party for resolution, and if such
corporate officers and partners are

53







unable to resolve such Dispute, either Party may request that their
respective chief executive officers, or their respective delegees, attempt to
resolve such Dispute. The officers or delegees to whom any such claim or
controversy is submitted shall attempt to resolve the Dispute through good
faith negotiations over a reasonable period, not to exceed 30 days in the
aggregate unless otherwise agreed. Such 30 day period shall be deemed to
commence on the date of a notice from either Party describing the particular
Dispute.


      Section 13.2 Submission to Mediation. If, within 30 days after such
meeting of officers or delegees, the Parties have not succeeded in negotiating
a resolution of the Dispute, KPMG and Consulting agree to refer the matter to a
panel consisting of one (1) senior partner or principal or the delegee thereof
from KPMG and one (1) executive officer or the delegee thereof from Consulting
(which individuals or delegees shall not have been, as much as practicable,
directly involved in the Dispute) for review and resolution. These individuals
are referred to herein as the “Senior Executives.” Upon such referral, the
Senior Executives or delegees shall review the following materials provided by
KPMG and Consulting: a copy of the terms of this Agreement and a concise (less
than 10 page) summary of the basis of each Party’s contentions, including the
relevant facts and areas of disagreement. If the Dispute cannot be resolved by
the Senior Executive panel pursuant to this Section 13.2 within 30 days of the
referral of such Dispute, KPMG and Consulting may then pursue the remedies
contemplated by Sections 13.3 and 13.4.


      Section 13.3 Arbitration. Any Dispute that is not resolved by
negotiations pursuant to Section 13.1 and 13.2 will, upon written notice by
either Party to the other Party involved in the Dispute, shall be resolved by
binding arbitration administered by the American Arbitration Association
(“AAA”) in accordance with its Commercial Arbitration Rules. Within ten (10) business days after the commencement of arbitration, each Party shall select
one person to act as arbitrator and the two arbitrators so selected shall
select a third arbitrator within ten (10) business days of their appointment.
If the arbitrators selected by the Parties are unable or fail to agree upon the
third arbitrator within such time period, the third arbitrator shall be
selected by the AAA within the (10) business days following a written request
by any of the Parties to the AAA. The place of arbitration shall be New York,
New York, and the language of the arbitration shall be English. It is
understood and agreed by the Parties that money damages might not be a
sufficient remedy for any breach of this Agreement, and that, notwithstanding
anything else set forth in this Section 13.3 concerning the arbitration of
Disputes and the procedure for such arbitration, and pending the outcome of any
such arbitration, the Parties shall be entitled to seek and obtain, in
accordance with Section 14.2 injunctive relief as a provisional remedy for any
such breach, which shall not be deemed to be the exclusive remedy for any such
breach but shall be in addition to all other provisional remedies available at
law or equity. The prevailing Party in the arbitration shall be entitled, in
addition to such other relief as may be granted, to its reasonable attorney’s
fees and other costs reasonably incurred in such arbitration. The Parties
specifically agree to be bound by the decisions rendered by the arbitration
panel provided for herein and agree not to submit a Dispute subject to this
Section 13.3 to any national, federal, state, provincial, local or other court
or arbitration association except as may be necessary to enforce the decision
rendered by the arbitrators.


      Section 13.4 Injunctive Relief. Nothing contained in this Article XIII
shall prevent either Party from resorting to judicial process, in accordance
with Section 14.2 if

54







injunctive or other equitable relief from a court is necessary to prevent
serious and irreparable injury to one Party or to others or to maintain the
status quo before, during or after the commencement of the mediation process
set forth in this Article XIII. The use of arbitration procedures will not be
construed under the doctrine of laches, waiver or estoppel to affect adversely
either Party’s right to assert any claim or defense.


ARTICLE XIV


MISCELLANEOUS PROVISIONS


      Section 14.1 Entire
Agreement. This Agreement and the Schedules and
Exhibits hereto, the Ancillary Agreements and the Conveyancing and Assumption
Instruments constitute the only agreements between the Parties with respect to
the subject matter hereof, there being no prior written or oral promises or
representations not incorporated herein or therein.


      Section 14.2 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
permitted in Section 13.3, 13.4 and 14.14, in any state court in the City of
New York in the State of New York and in the United States District Courts
located in the Borough of Manhattan, New York, New York. To the extent
permissible by law, the Parties hereby consent to the jurisdiction and venue of
such courts. 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 14.3
Amendment; Waiver. Except as provided in Section 6.8(b), 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
the 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 either Party to exercise any right arising from
any default by the other Party affect or impair any rights which the
nondefaulting Party may have with respect to the same or any future default.


      Section 14.4
Severability. If any provision of this Agreement 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, such provision shall be deemed
narrowed to the broadest term permitted by applicable law and shall be enforced
as so narrowed.

55







      Section 14.5
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, the Ancillary Agreements 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
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, any such Ancillary 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 14.6
Records Retention. Except when a longer retention period is
otherwise required by law or agreed to in writing, each Party will retain all
Information obtained or created in the course of performance hereunder in
accordance with its own records retention guidelines existing from time to
time. Each Party has advised the other of its respective guidelines as in
effect on the Effective Date and will advise the other Parties of any
subsequent changes therein. Each Party hereto agrees that upon written request
from the other that certain Information relating to the Consulting Business,
the Separation or the transactions contemplated hereby be retained in
connection with a Consulting Assumed Action, a Consulting Transferred Action, a
KPMG Assumed Action or a KPMG Action, the Parties shall preserve and not
destroy or dispose of such Information without the consent of the requesting
Party. Each Party shall provide 30 days’ prior notice to the other Party
before destroying any Information. If a Party shall request in writing prior
to the scheduled date for the destruction or disposal of any Information that
any of the Information proposed to be destroyed or disposed of be delivered to
such requesting Party, the other Parties shall promptly arrange for the
delivery of the Information so requested, and the requesting Party shall pay
the reasonable out-of-pocket costs, which costs shall not include legal fees,
of the delivering Party in connection therewith; provided,
however, nothing in
this Section 14.6 shall require the delivery of any Information which (i) in
the Party’s good faith judgment could result in a waiver of any Privilege or
(ii)   such Party is not permitted to deliver because of any law or
confidentiality obligation with a third party with respect to which such Party
shall use its reasonable efforts to obtain a waiver of or other relief from
such confidentiality restriction. The provisions of this
Section 14.6 shall
not prejudice the rights or alter the obligations of the Parties under any of
the Ancillary Agreements with respect to records retention.


      Section 14.7
Beneficiaries. Except for the provisions of Section 12.2
hereof, 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 14.8
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,

56







registered mail or certified mail (or its equivalent), or overnight
courier to the other Parties at its 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 by the
Parties to be notified.


      If to KPMG:


     KPMG LLP

     345 Park Avenue

     New York, NY 10154

     Attention: Chairman

     Facsimile: (212) 909-5007


If to Consulting, Inc.:


     KPMG Consulting, Inc.

     1676 International Drive

     McLean, Virginia 22102

     Attention: Chief Executive Officer

     Facsimile: (703) 747-4832


      If to LLC:


     KPMG Consulting, Inc.

     1676 International Drive

     McLean, Virginia 22102

     Attention: Chief Executive Officer

     Facsimile: (703) 747-4832


      A Party may change its address or addresses set forth above by giving the other
Party notice of such change in accordance with the provisions of this Section.


      Section 14.9
Termination. Notwithstanding any provision hereof, this
Agreement may be terminated and the Separation abandoned at any time prior to
the Effective Date by and in the sole discretion of the Board of Directors of
KPMG without the approval of any Person. In the event of such termination, no
Party shall have any liability to any Person by reason of this Agreement.


      Section 14.10
Schedules and Exhibits. All Schedules and Exhibits
referred to herein are intended to be and hereby are specifically made a part
of this Agreement.


      Section 14.11
Performance. Each Party shall cause to be performed, and
hereby guarantee the performance of, all actions, agreements and obligations
set forth herein to be performed by any Subsidiary or Affiliate of such Party.

57







      Section 14.12
Assignability. Except as set forth in any Ancillary
Agreement, this Agreement and each Ancillary Agreement shall be binding upon
and inure to the benefit of the Parties hereto and thereto, respectively, and
their respective successors and assigns; provided, however, that no party
hereto or thereto may assign its respective rights or delegate its respective
obligations under this Agreement or any Ancillary Agreement without the express
prior written consent of the other Parties hereto or thereto.


      Section 14.13
Publicity. Prior to the Separation, each of the Parties
shall consult with each other Party prior to issuing any press releases or
otherwise making public statements with respect to the Separation or any of the
other transactions contemplated hereby and prior to making any filings with any
governmental authority with respect thereto.


      Section 14.14
Specific Performance. In the event of any actual or
threatened default in, or breach of, any of the terms, conditions and
provisions of this Agreement or any Ancillary Agreement, the Party or Parties
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 or such Ancillary Agreement, in addition to any and all other rights
and remedies at law or in equity, and all such rights and remedies shall be
cumulative. The Parties agree that the remedies at law for any breach or
threatened breach, including monetary damages, are inadequate compensation for
any loss and that any defense in any action for specific performance that a
remedy at law would be adequate is waived. Any requirements for the securing
or posting of any bond with such remedy are waived.


      Section 14.15
Limitation. The Parties understand and acknowledge that
this Agreement is among KPMG, Consulting, Inc. and LLC and that their
respective partners, principals, officers, directors, shareholders and members
are not liable hereunder in their capacity as such.

58







      IN WITNESS WHEREOF, the Parties hereto have caused this Amended and
Restated Separation Agreement to be signed by their authorized representatives
as of the date first above written.




	
	KPMG LLP

	By:	/s/ Stephen G. Butler



	
	Name: Stephen G. Butler

Title: Chairman
	KPMG CONSULTING, LLC
	By:	/s/ Randolph C. Blazer



	
	Name: Randolph C. Blazer

Title: President and CEO of KPMG Consulting, Inc., member
	KPMG CONSULTING, INC.
	By:	/s/ Randolph C. Blazer



	
	Name: Randolph C. Blazer

Title: President & CEO