Exhibit 10.6
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT, dated as of __________, 2003 (this
"Agreement"), is made by and between ENER1, Inc., a Florida corporation
("Parent"), and ENER1 Technologies, Inc., a Florida corporation ("Spinco").
WITNESSETH:
WHEREAS, Parent intends to "spin-off" to its shareholders 100% of the
capital stock of Spinco;
WHEREAS, in connection with the spin-off, Parent and Spinco wish to
enter into this Agreement for purposes of continuity and transition; and
WHEREAS, Spinco desires to cause Parent to provide the Services set
forth on Schedule A to Spinco, and Parent is willing to provide such Services;
NOW, THEREFORE, the parties hereto, in consideration of the premises
and the mutual covenants contained herein, agree as follows:
SECTION 1. SPECIFIC DEFINITIONS.
In addition to the terms defined elsewhere in this Agreement, as used
in this Agreement, the following terms have the respective meanings set forth
below:
"Applicable Rate" shall mean the rate of interest per annum announced
from time to time by Bank of America as its prime lending rate plus 2% per
annum.
"Bankruptcy Event" with respect to a party shall mean the filing of an
involuntary petition in bankruptcy or similar proceeding against such party
seeking its reorganization, liquidation or the appointment of a receiver,
trustee or liquidator for it or for all or substantially all of its assets,
whereupon such petition shall not be dismissed within sixty (60) days after the
filing thereof, or if such party shall (i) apply for or consent in writing to
the appointment of a receiver, trustee or liquidator of all or substantially all
of its assets, (ii) file a voluntary petition or admit in writing its inability
to pay its debts as they become due, (iii) make a general assignment for the
benefit of creditors, (iv) file a petition or an answer seeking reorganization
or an arrangement with its creditors or take advantage of any insolvency law
with respect to itself as debtor, or (v) file an answer admitting the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency proceedings or any similar proceedings.
"Loss" shall mean all losses, liabilities, damages, claims, demands,
judgments or settlements of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated, including all
reasonable costs and expenses (legal, accounting or otherwise as such costs are
incurred) relating thereto.
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"Parent Services" shall mean those transitional services to be provided
by Parent to Spinco set forth on Schedule A hereto to assist Spinco in operating
Spinco's business.
"Person" shall mean any natural person, corporation, business trust,
limited liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Services" shall mean the Parent Services.
SECTION 2. SERVICES.
Section 2.1 Services. Parent shall provide to Spinco each Parent
Service for the term set forth opposite the description of such Parent Service
in Schedule A. Additional services may be provided to Spinco by Parent if such
arrangement is agreed to in writing and executed by Parent and Spinco.
Section 2.2 Standard of Service. In performing the Services, Parent
shall provide substantially the same level of service and use substantially the
same degree of care as its personnel provided and used in providing such
Services prior to the date hereof, subject in each case to any provisions set
forth on Schedule A with respect to each such Service.
SECTION 3. LICENSES AND PERMITS.
Each party warrants and covenants that all duties and obligations
(including with respect to Parent, all Parent Services) to be performed
hereunder shall be performed in compliance with all material applicable federal,
state, provincial and local laws, rules and regulations. Each party shall obtain
and maintain all material permits, approvals and licenses necessary or
appropriate to perform its duties and obligations (including with respect to
Parent, the Parent Services and with respect to Spinco, the Spinco Services)
hereunder and shall at all times comply with the terms and conditions of such
permits, approvals and licenses.
SECTION 4. PAYMENT.
Section 4.1 Service Fees. In consideration for the provision of each of
the Parent Services, Spinco shall pay to Parent the fee set forth for such
Parent Service on Schedule A.
Section 4.2 Costs and Expenses. In addition to the fees payable in
accordance with Section 4.1, Spinco shall reimburse Parent for all reasonable
and necessary out-of-pocket costs and expenses (including postage and other
delivery costs, telephone, telecopy and similar expenses) incurred by Parent
with respect to third parties in connection with the provision of Parent
Services to Spinco pursuant to the terms of this Agreement or paid by Parent on
behalf of Spinco.
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Section 4.3 Invoices. Parent will invoice Spinco in U.S. dollars: (i)
as of the last day of each calendar month for any fees payable by Spinco in
accordance with Section 4.1 for Parent Services listed on Schedule A provided
pursuant to the terms of this Agreement during such month; (ii) as of the last
day of each calendar month for any amounts payable by Spinco in accordance with
Section 4.2(a) for any out-of-pocket costs and expenses incurred during the
immediately preceding month to the extent Parent has received an invoice from
such third party; and (iii) as of the last day of each calendar month for any
taxes (excluding income taxes) payable with respect to the provision of Parent
Services to Spinco during such month. Parent shall deliver or cause to be
delivered to Spinco each such invoice within thirty (30) days following the last
day of the calendar month to which such invoice relates. Spinco shall pay each
such invoice received by electronic funds transfer within thirty (30) days of
the date on which such invoice was received.
Section 4.4 Late Payment. Any amount not paid when due shall be subject
to a late payment fee computed daily at a rate equal to the Applicable Rate.
Notwithstanding the foregoing, in the event Spinco disputes the accuracy of any
invoice, Spinco shall pay the undisputed portion of such invoice a provided
herein, and the parties hereto will promptly meet and seek to resolve the
disputed amount of the invoice. Spinco agrees to pay Parent's reasonable
attorneys' fees and other costs incurred in collection of any amounts owed to
Parent hereunder and not paid when due. Notwithstanding anything to the contrary
contained herein, in the event Spinco fails to make a payment when due
hereunder, and such failure continues for a period of thirty (30) days following
delivery of written notice to Spinco of such failure, Parent shall have the
right to cease provision of Services to Spinco until such overdue payment (and
any applicable late payment fee accrued with respect thereto) is paid in full.
Such right of Parent shall not in any manner limit or prejudice any of Parent's
other rights or remedies in the event of Spinco's failure to make payments when
due hereunder, including any rights or remedies pursuant to Section 7.
Section 4.5 Fees Upon Termination of Services. In the event of a
termination of Services pursuant to Section 7.1, with respect to the calendar
month in which such Services cease to be provided, Spinco shall be obligated to
pay a pro rata share of the fee for such Service set forth on Schedule A , equal
to the product of (x) the fee set forth on Schedule A multiplied by (y) a
fraction, the numerator of which is the number of days in the calendar month in
which such Services cease to be provided preceding and including the last date
on which such Services are provided, and the denominator of which is 30.
SECTION 5. INDEMNIFICATION.
Section 5.1 Indemnification by Principal. Spinco agrees to indemnify,
defend and hold Parent harmless from and against any Loss to which Parent may
become subject arising out of, by reason of or otherwise in connection with the
provision hereunder by Parent of Parent Services, other than Losses resulting
from Parent's gross negligence, willful misconduct or material breach of its
obligations pursuant to this Agreement. Notwithstanding any provision in this
Agreement to the contrary, Spinco shall not be liable under this Section 5.1 for
any consequential, special or punitive damages (including lost profits).
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Section 5.2 Indemnification by Provider. Parent agrees to indemnify,
defend and hold Spinco harmless from and against any Loss to which Spinco may
become subject arising out of, by reason of or otherwise in connection with the
provision hereunder by Parent of Parent Services to Spinco where such Losses
resulted from Parent's gross negligence, willful misconduct or material breach
of its obligations pursuant to this Agreement.
SECTION 6. CONFIDENTIALITY.
Each party shall keep confidential the Schedules to this Agreement and
all information received from the other party regarding the Services, including
any information received with respect to Parent or Spinco, and to use such
information only for the purposes set forth in this Agreement unless otherwise
agreed to in writing by the party from which such information was received. In
the event a party is required by any court or legislative or administrative body
(by oral questions, interrogatories, requests for information or documents,
subpoena, civil investigation demand or similar process) to disclose any
confidential information provided pursuant to this Agreement, the party shall
provide the other party with prompt notice of such requirement in order to
afford the other party an opportunity to seek an appropriate protective order or
other remedy. However, if the other party is unable to obtain or does not seek
such protective order and the party required to disclose the confidential
information is, in the opinion of its counsel, legally compelled to disclose
such confidential information, disclosure of such information may be made
without liability under this Agreement. The covenants in this Section 6 shall
survive any termination of this Agreement indefinitely with respect to
information qualifying as a trade secret under applicable law and for a period
of three (3) years from the date such termination becomes effective with respect
to all other information.
SECTION 7. TERM.
Section 7.1 Duration.
(a) Subject to Sections 6, 7.2, 7.3 and 7.4, the term of this
Agreement shall commence on the date hereof and shall continue in full force and
effect with respect to each Service until the earlier of (i) the first
anniversary of the effective date of the spin-off contemplated hereunder or (ii)
the termination of such Service in accordance with Section 7.1(b).
(b) Each party acknowledges that the purpose of this Agreement
is for Parent to provide the Parent Services to Spinco on an interim basis until
Spinco can perform the Parent Services for itself. Accordingly, Spinco shall use
its commercially reasonable efforts to make or obtain such approvals, permits
and licenses and implement such systems, as shall be necessary for it to provide
the appropriate Services for itself as promptly as practicable. As Spinco
becomes self-sufficient or engages other sources to provide any Parent Service,
Spinco shall be entitled to release Parent from providing any or all of the
Parent Services hereunder by delivering a written notice thereof to Parent at
least thirty (30) days prior to the effective date of release of such Parent
Service(s). At the end of such thirty (30) day period (or such shorter period as
may be agreed by the parties), Parent shall discontinue the provision of the
Parent Services specified in such notice and any such Parent Services shall be
excluded from this Agreement, and Schedule A shall be deemed to be amended
accordingly.
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Section 7.2 Early Termination by Parent. Parent may terminate this
Agreement by giving written notice to Spinco under the following circumstances:
(a) if Spinco shall default in the performance of any of its
material obligations under, or breach any of its warranties set forth in, this
Agreement, and such default or breach shall continue and not be remedied for a
period of thirty (30) days after Parent has given written notice to Spinco
specifying such default or breach and requiring it to be remedied;
(b) if a Bankruptcy Event has occurred with respect to Spinco;
or
(c) upon the occurrence of a Change in Control of Spinco.
Section 7.3 Early Termination by Spinco. Spinco may terminate this
Agreement by giving written notice to Parent under the following circumstances:
(a) if Parent shall default in the performance of any of its
material obligations under, or breach any of its warranties set forth in, this
Agreement and such default or breach shall continue and not be remedied for a
period of thirty (30) days after Spinco has given written notice to Parent
specifying such default or breach and requiring it to be remedied;
(b) if a Bankruptcy Event has occurred with respect to Parent;
or
(c) upon the occurrence of a Change in Control of Parent.
Section 7.4 Force Majeure. In the event the performance by Spinco or
Parent of their respective duties or obligations hereunder is interrupted or
interfered with by reason of any cause beyond its reasonable control, including
fire, storm, flood, earthquake, explosion, war, strike or labor disruption,
rebellion, insurrection, quarantine, act of God, boycott, embargo, shortage or
unavailability of supplies, riot, or governmental law, regulation or edict
(collectively, the Force Majeure Events), the party affected by such Force
Majeure Event shall not be deemed to be in default of this Agreement by reason
of its nonperformance due to such Force Majeure Event, but shall give prompt
written notice to the other party of the Force Majeure Event. The party affected
by the Force Majeure Event shall cooperate with the other party in obtaining, at
the other party's sole expense, an alternative source for the affected Services,
and the other party shall be released from any payment obligation to the party
affected by the Force Majeure Event with respect to such Services during the
period of such Force Majeure Event. Additionally, upon and during the occurrence
of a Force Majeure Event, at the sole option of the party receiving the Services
affected by the Force Majeure Event, the term of this Agreement shall be tolled
with respect to any Services that are not being provided by a third party.
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Section 7.5 Consequences on Termination. In the event this Agreement
expires or is terminated in accordance with this Section 7, then (a) all
Services to be provided will promptly cease, (b) each of Parent and Spinco shall
promptly return all confidential information received from the other party in
connection with this Agreement (including the return of all information received
with respect to the Services of Parent or Spinco, as the case may be), without
retaining a copy thereof, and (c) each of Parent and Spinco shall honor all
credits and make any accrued and unpaid payment to the other party as required
pursuant to the terms of this Agreement, and no rights already accrued hereunder
shall be affected.
SECTION 8. RECORDS.
Each of the parties shall create and, for a period of six (6) years
after the termination or expiration of this Agreement, maintain full and
accurate books in connection with the provision of the Services, and all other
records relevant to this Agreement, and upon reasonable notice from the other
party shall make available for inspection and copy by such other party's agents
such records during reasonable business hours.
SECTION 9. DISPUTE RESOLUTION.
Section 9.1 Dispute Resolution under Distribution Agreement. Any
dispute arising out of or relating to the performance, breach or interpretation
of this Agreement shall be arbitrated in accordance with the rules of the
American Arbitration Association.
Section 9.2 Continuity of Service and Performance. Unless otherwise
agreed herein or in writing, the parties will continue to provide Services and
honor all other commitments under this Agreement during the course of dispute
resolution pursuant to the provisions of this Section 9 with respect to all
matters not subject to such dispute, controversy or claim.
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in writing,
shall reference this Agreement and shall be hand delivered or mailed by
registered or certified mail (return receipt requested) or sent by any means of
electronic message transmission with delivery confirmed (by voice or otherwise)
to the parties at the following addresses (or at such other addresses for a
party as shall be specified by like notice) and will be deemed given on the date
on which such notice is received:
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To Parent:
ENER1, Inc.
c/o Ener1 Group, Inc.
000 X. Xxxxxxx Xxxxx Xx., Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Spinco:
ENER1 Technologies, Inc.
000 X. Xxxxxxx Xxxxx Xx., Xxxxx 000
Xx. Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
SECTION 11. MISCELLANEOUS.
Section 11.1 Waivers, Modifications, Amendments. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Spinco, on the one hand,
and Parent, on the other hand, or in the case of a waiver, by the party against
whom the waiver is to be effective. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and in addition to
other or further remedies provided by law or equity.
Section 11.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF FLORIDA.
Section 11.3 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any person,
corporation, partnership or other entity or any circumstance, is invalid and
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, corporations, partnerships or other entities or circumstances shall not
be affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any jurisdiction.
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Section 11.4 Reference; Interpretation. References in this Agreement to
any gender include references to all genders, and references to the singular
include references to the plural and vice versa. The words include, includes and
including when used in this Agreement shall be deemed to be followed by the
phrase without limitation. Unless the context otherwise requires, references in
this Agreement to Sections and Schedules shall be deemed references to Sections
of, and Schedules to, this Agreement. Unless the context otherwise requires, the
words hereof, hereby and herein and words of similar meaning when used in this
Agreement refer to this Agreement in its entirety and not to any particular
Section or provision of this Agreement. This Agreement shall not be construed
against either party as the principal drafter hereof.
Section 11.5 Entire Agreement. This Agreement (including all Schedules
hereto) contains the entire agreement between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
Section 11.6 Assignment. Neither Parent nor Spinco may, directly or
indirectly, assign or subcontract, or attempt to assign or subcontract, any of
its rights or obligations hereunder, in whole or in part, by operation of law or
otherwise, except with the prior written consent of the other party; it being
understood that such consent shall not be unreasonably withheld if Parent or
Spinco assigns or subcontracts the Agreement to one of its affiliates with the
financial and other resources and expertise to perform all of the obligations of
such party hereunder. Any attempted assignment or delegation not in compliance
with the forgoing shall be null and void and of no effect. Nothing contained
herein shall prevent a party from providing Services through or with the
assistance of third parties whom such party regularly used to provide such
Services prior to the date hereof.
Section 11.7 Binding Effect. This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns, if any,
and except as provided herein, shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns, if any.
Section 11.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same Agreement.
Section 11.9 No Agency or Partnership. Nothing in this Agreement will
create, or will be deemed to create, a partnership or the relationship of
principal and agent or of employer and employee between the parties.
[Signature page follows.]
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
on behalf of the parties, effective as of the date first herein above written.
ENER1, INC.
By:/s/Xxxxx X. Light
Name: Xxxxx X. Light
Title:President and CEO
ENER1 TECHNOLOGIES, INC.
By:/s/ R. Xxxxxxx Xxxxxx
Name: R. Xxxxxxx Xxxxxx
Title: CFO
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SCHEDULE A
SERVICES AND FEES
TYPE OF SERVICES FEES
Accounting Services $50/hour to $250/hour
Facilities Management Services $50/hour to $250/hour
Technical Support Services $50/hour to $250/hour
Contracts Administration Services $50/hour to $250/hour
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