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EXHIBIT 10.7
CORPORATE SERVICES AGREEMENT
THIS CORPORATE SERVICES AGREEMENT (the "Services Agreement") is
executed as of November 6, 1998, by and between Xxxxxxx Research Corporation, a
Delaware Corporation ("Xxxxxxx Research"), and Xxxxxxx TXEN Corporation, a
Delaware Corporation ("TXEN").
RECITALS:
TXEN is presently wholly owned by Xxxxxxx Research. TXEN proposes to
file with the Securities and Exchange Commission (the "SEC") a Form S-1
Registration Statement related to an initial public offering of common stock of
TXEN (the "Offering"). After the Offering, Xxxxxxx Research will own
approximately 78% of the outstanding Common Stock of TXEN (75% if the
Underwriters' over-allotment option is exercised in full). Xxxxxxx Research and
TXEN recognize that it is to their mutual advantage to centralize certain
administrative and financial services, and that such centralized services are
most efficiently administered by Xxxxxxx Research. By this Agreement, Xxxxxxx
Research and TXEN intend to set forth the agreement of the parties related to
such services.
AGREEMENT:
It is mutually agreed by the parties as follows:
1. COMPENSATION.
1.1 Compensation. For performing the services described in Section 4 of
this Services Agreement, TXEN shall pay Xxxxxxx Research an annual fee equal to
2.4% of operating expenses less cost of goods sold defined as direct materials
and purchased labor. Such amount shall be prorated on a daily basis for any
partial year. This fee is intended to compensate Xxxxxxx Research for TXEN's pro
rata share of the aggregate costs incurred by Xxxxxxx Research in connection
with the provision of such services to other subsidiaries and operating
divisions. The fee may be adjusted at any time by mutual agreement of Xxxxxxx
Research and TXEN.
1.2 Additional Services. In addition to the services listed in Section
4, certain other administrative and technical services contemplated under this
Agreement may be rendered by Xxxxxxx Research to TXEN if requested by TXEN.
These services may include, but are limited to, services specifically requested
by TXEN or services which, in the judgment of Xxxxxxx Research, are not routine
administrative services or create unusual burdens or demands on the resources of
Xxxxxxx Research, such as support for litigation, acquisitions, securities
offerings, tax audits, and corporate development. TXEN shall be under no
obligation to contract with Xxxxxxx Research for such services and may perform
such services or may contract with a third party for such services. In the event
TXEN contracts with Xxxxxxx Research for such additional services, TXEN shall
pay Xxxxxxx Research an amount equal to the cost incurred to perform such
services, plus a reasonable fee as agreed to by the parties. The costs incurred
to perform such services shall include out-of-pocket expenses and an allocable
share of overhead and general administrative expenses.
1.3 Payment and Billing Schedule. The charges for services pursuant to
Subsections 1.1 and 1.2 above shall be determined and paid on a quarterly or
more frequent basis. The charges shall be paid no later than 30 days from
billing.
2. TERM. The term of this Services Agreement shall be for a period of one year
commencing on the
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effective date of the Offering. This Services Agreement shall automatically
renew at the end of the initial term for successive one-year terms until
terminated in accordance with Section 3.
3. TERMINATION. After the initial one year term, either party may terminate this
Services Agreement on ninety days prior written notice to the other party.
4. SERVICES. Beginning on the date of this Services Agreement, Xxxxxxx Research,
through its corporate staff, will provide or otherwise make available to TXEN
certain general corporate services, including, but not limited to the following:
4.1 Management Support. Xxxxxxx Research will provide management
support to TXEN, including reasonable access to key management personnel of
Xxxxxxx Research for consultation and advice regarding strategic business
planning, corporate development, acquisitions, and technology. Xxxxxxx Research
will also provide assistance to develop and implement policies and procedures
related to human resources and employee training.
4.2 Risk Management. Xxxxxxx Research will assist TXEN in the
development and implementation of an appropriate risk management program.
Xxxxxxx Research shall arrange for and pay the premium cost of liability,
property, casualty, and other normal business insurance coverage, provide a
centralized insurance purchasing service for such insurance coverage, and manage
all insurance claims under TXEN's insurance policies. Xxxxxxx Research shall not
be responsible for paying the premium cost of workers' compensation insurance.
Xxxxxxx Research shall assist TXEN when necessary to develop and maintain
suitable worker safety and employment-related programs.
4.3 Financial Services. Xxxxxxx Research shall provide credit
management services to TXEN, including coordination and management of credit
facilities. The credit facilities may include loans from third party lenders or
Xxxxxxx Research. Xxxxxxx Research shall be under no obligation to loan funds to
TXEN, and TXEN shall be under no obligation to borrow funds from Xxxxxxx
Research, but if any such credit facility is offered from Xxxxxxx Research to
TXEN it will be at rates and upon terms experienced by Xxxxxxx Research from
third-party lenders. Xxxxxxx Research shall serve as a central depository for
cash held by TXEN and shall provide the financial services listed in Exhibit 1
to this Services Agreement.
4.4 Securities Compliance. Xxxxxxx Research will provide services and
assistance to enable TXEN to comply with its reporting obligations under the
Securities Exchange Act of 1934 (the "1934 Act"), and the rules and regulations
of the Nasdaq Stock Market. Such assistance will include preparation of Forms
10-K, 10-Q, and 8-K under the 1934 Act. Xxxxxxx Research will provide necessary
resources to enable TXEN to make XXXXX filings with the SEC. Xxxxxxx Research
shall provide internal audit support services for such filings and reports,
including accounting staff as required. Accounting and financial reporting
policies and procedures will be established by the Chief Financial Officer of
Xxxxxxx Research (the "Xxxxxxx' CFO"). The parties acknowledge that Xxxxxxx
Research is a reporting company under the 1934 Act. Because of TXEN's status as
a majority owned subsidiary of Xxxxxxx Research, the parties also acknowledge
that Xxxxxxx Research has a material interest in the financial statements and
reports of TXEN to insure that accounting matters are treated consistently
between the parties. Therefore, before financial statements of TXEN are released
publicly or are included in a filing with the SEC or the Nasdaq Stock Market,
such financial statements will be furnished to the Xxxxxxx' CFO for review and
comment. All public releases of financial information will be authorized in
advance by the Xxxxxxx' CFO. Xxxxxxx Research will administer a program to
promote compliance by the officers and directors of TXEN with their reporting
requirements under Sections 13 and 16 of the 1934 Act. Xxxxxxx Research shall
prepare documents necessary for officer and director compliance under Section 16
of the 1934 Act, including Forms 3, 4, 5, 13G and 13D. Xxxxxxx Research shall
maintain
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detailed records and SEC receipts of all such filings and shall administer
periodic reminders to Section 16 officers. Xxxxxxx Research shall periodically
provide information to officers and directors of TXEN with respect to their
responsibilities under Section 16 of the Act.
4.5 Corporate Record Keeping. Xxxxxxx Research shall maintain detailed
records of TXEN's historical and current financial data. In addition, Xxxxxxx
Research shall assist in preparing the minutes of meetings of the boards of
directors and shareholders, and shall maintain records pertaining to stock
offerings, acquisition transactions, and annual meetings.
4.6 Annual Shareholders Meetings and Proxy Statement Preparation.
Xxxxxxx Research shall provide assistance to conduct the annual meeting of TXEN
shareholders. Xxxxxxx Research shall assist in the preparation of the notice of
the annual meeting, proxies and proxy statements related thereto, the
solicitation of proxies, and the filing of any preliminary or definitive proxy
statements with the SEC and the Nasdaq Stock Market. Xxxxxxx Research shall
assist TXEN in design, preparation, drafting and distribution of its annual
report to shareholders. Printing and distribution costs related to the proxy
materials for the annual meeting shall be paid by TXEN.
4.7 Stock Plan Administration Services. Subject to the direction of
the administrative committees of TXEN's compensation stock plans, Xxxxxxx
Research shall administer TXEN's stock option plans, employee stock purchase
plans and non-employee director stock option plans. Xxxxxxx Research shall
maintain records of grant dates, shares covered by option grants, vesting
schedules, expiration dates and other information necessary for proper
administration of the TXEN compensatory stock plans. Xxxxxxx Research shall also
prepare stock option grant agreements and stock option exercise notices.
4.8 Investor and Media Relations. Xxxxxxx Research shall prepare
quarterly stock reports, track outstanding shares, communicate appropriate
information to transfer agents, provide for missing stock certificates and
perform general services pertaining to the investor relations. Xxxxxxx Research
shall upon request, provide stock status reports including stockholder
statistics, earnings estimates, shares held by institutions and any other
reports that can be reasonably created using TXEN data maintained by Xxxxxxx
Research. Xxxxxxx Research shall assist TXEN to manage investors and media
relations and to prepare press releases. All public releases of information by
TXEN will be authorized in advance by Xxxxxxx Research. Investor and Media
Relations polices and procedures will be established by the Chief Administrative
Officer of Xxxxxxx Research (the Xxxxxxx' XXX"). Xxxxxxx Research shall assist
TXEN in its relationship with investment analysts and institutional holders of
TXEN stock; Xxxxxxx Research will also assist TXEN regarding presentations at
financial conferences.
4.9 Tax Matters. Xxxxxxx Research will assist TXEN to prepare and file
state and federal income tax returns and will consult with TXEN regarding tax
planning matters. The cost of such tax return preparation shall be paid by
Xxxxxxx Research.
4.10 Routine Legal Services. Xxxxxxx Research shall provide access to
and payment of routine legal services. Routine legal services shall not include
expenses incurred in connection with litigation, arbitration, government and
other audits and acquisitions.
4.11 Other Services. Other routine services in addition to those
enumerated in subsections 4.1 through 4.10, but excluding the services
identified in Section 1.2, shall be provided by Xxxxxxx Research as reasonably
requested by TXEN. Such other services shall include human resources support,
publications support, corporate training programs, video teleconferencing, data
and voice communications, and trade show support.
5. COOPERATION. TXEN shall corporate with Xxxxxxx Research in providing
information
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and data reasonably requested by Xxxxxxx Research to perform its services
hereunder. The parties shall exert best efforts to coordinate with each other in
such a manner to enable Xxxxxxx Research to furnish the services required
hereunder.
6. TXEN'S DIRECTORS AND OFFICERS. Nothing contained herein will be construed to
relieve the directors or officers of TXEN from the performance of their
respective duties or to limit the exercise of their powers in accordance with
the charter or by-laws of TXEN or in accordance with any applicable statute or
regulation.
7. LIABILITIES. In furnishing TXEN with management advice and other services as
herein provided, neither Xxxxxxx Research nor any of its officers, directors or
agents shall be liable to TXEN or its creditors or shareholders for errors of
judgment or for anything except willful malfeasance, bad faith or gross
negligence in the performance of their duties or reckless disregard of their
obligations and duties under the terms of this Services Agreement. The
provisions of this Services Agreement are for the sole benefit of Xxxxxxx
Research and TXEN and will not, except to the extent otherwise expressly stated
herein, inure to the benefit of any third party.
8. POST-TERMINATION SERVICES. Following a termination of this Services
Agreement, corporate administrative services of the kind provided under the
services Agreement may continue to be provided to TXEN on an as-requested basis
by TXEN or as required in the event it is not practicable for TXEN to provide
such services or it is otherwise unable to identify another source to provide
such services (as would be the case of administration of employee benefit plans
and insurance programs sponsored by Xxxxxxx Research and in which TXEN's
employees participate) or as otherwise required by Xxxxxxx Research acting in is
capacity as majority stockholder of TXEN. In the event such services are
provided by Xxxxxxx Research to TXEN, TXEN shall be charged by Xxxxxxx Research
a fee equal to the market rate for comparable services charged by third-party
vendors. Such fee will be charged monthly and payable by TXEN within thirty
days. The obligations of TXEN set forth in this Section 8 shall survive the
termination of this Services Agreement.
9. ELECTION OF SECRETARY AND TREASURER. During the term of this Services
Agreement, the Board of Directors of TXEN shall elect as Secretary of TXEN the
Secretary of Xxxxxxx Research and shall elect as Treasurer of TXEN the Chief
Financial Officer of Xxxxxxx Research. The parties acknowledge that by electing
such officers, Xxxxxxx Research may provide the services under this Services
Agreement more efficiently. The Secretary and Treasurer of TXEN shall serve in
such capacities during the term of this Services Agreement without compensation
from TXEN.
10. REIMBURSEMENT OF AMOUNTS ADVANCED. TXEN shall promptly reimburse Xxxxxxx
Research for any amounts paid by Xxxxxxx Research to third parties on behalf of
TXEN, including advancement of expenses, fees and other charges and any payment
to a third party with respect to a guaranty of any debt or obligation of TXEN by
Xxxxxxx Research. Xxxxxxx Research shall pay the travel expenses of its
employees while on travel for TXEN.
11. STATUS. Xxxxxxx Research shall be deemed to be an independent contractor,
and except as expressly provided or authorized in this Services Agreement, shall
have no authority to act for or represent TXEN.
12. OTHER ACTIVITIES OF XXXXXXX RESEARCH. TXEN recognizes that Xxxxxxx
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Research now renders and may continue to render management and other services to
other companies that may or may not have policies and conduct activities similar
to those of TXEN. Xxxxxxx Research shall be free to render such advice and other
services, and TXEN hereby consents thereto. Xxxxxxx Research shall not be
required to devote full time and attention to the performance of its duties
under this Services Agreement, but shall devote only so much of its time and
attention as it deems reasonable or necessary to perform the services required
hereunder.
13. NOTICES. All notices, xxxxxxxx, requests, demands, approvals, consents, and
other communications which are required or may be given under this Services
Agreement shall be in writing and will be deemed to have been duly given if
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth below:
IF TO TXEN: IF TO XXXXXXX RESEARCH:
Mr. H. Grey Wood Xx. Xxxxx X. Xxxxxx
Xxxxxxx TXEN Corporation Xxxxxxx Research Corporation
00 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000 0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000-0000
14. NO ASSIGNMENT. This Services Agreement shall not be assignable except with
the prior written consent of the other party to this Services Agreement.
15. APPLICABLE LAW. This Services Agreement shall be governed by and construed
under the laws of the State of Alabama applicable to contracts made and to be
performed therein.
16. PARAGRAPH TITLES. The paragraph titles used in this Services Agreement are
for convenience of reference only and will not be considered in the
interpretation or construction of any of the provisions thereof.
IN WITNESS WHEREOF, the parties have caused this Services Agreement to
be executed as a sealed instrument by their duly authorized officers as of the
date first above written.
Xxxxxxx TXEN Corporation
By: /s/ H. Grey Wood
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H. Grey Wood
President
Xxxxxxx Research Corporation
By: /s/ Xxxxxxx X. Xxxx
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Its Chief Executive Officer
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EXHIBIT 1
FINANCIAL SERVICES PROVIDED TO TXEN
Banking Services Administration
Select banks and establish accounts
Administer cash balances
Administer outstanding indebtedness
Administer any debt covenant compliance issues
Maintain a cash collections and disbursement system
Arrange letters of credit and cash transfers
Manage any foreign currency exchange needs.
Financial Management and Information
Cash management
Pension fund management
Leasing management services
Customer financing
Information on financial markets and products
Information on foreign currency, risk assessment and hedge strategies
Arrange Credit Support
Insurance performance and bid bonds
Letters of credit
Corporate guarantees
Investment Banking Services
Advice and support for equity and debt financing
Manage relationships with debt rating agencies
Analysis, negotiations, advice and support for mergers and acquisitions
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