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EXHIBIT 10(f)
TRANSITION SERVICES AGREEMENT
between
GULTON INDUSTRIES, INC.
and
XXXX XX INDUSTRIES, INC.
Dated as of February 10, 1997
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This TRANSITION SERVICES AGREEMENT (together with all schedules
hereto, this "Agreement") is entered into as of this 10th day of February, 1997
by and between Xxxx XX Industries, Inc., a Delaware corporation ("Xxxx XX") and
Gulton Industries, Inc. a Delaware corporation ("Gulton").
RECITALS:
WHEREAS, Xxxx XX and Gulton Audio Corp., a Delaware corporation (the
"Buyer") have entered into a Purchase Agreement, dated as of December 12, 1996,
and amended as of December 18, 1996 (the "Purchase Agreement"), pursuant to
which the Buyer will purchase all of the issued and outstanding shares of common
stock, par value $1.00 per share ("Common Stock") of Gulton; and
WHEREAS, Gulton desires to purchase certain services described on
Schedule A hereto (the "Services") from Xxxx XX during a transition period of up
to one year from the date hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, covenants and representations contained herein, the parties hereto
agree as follows.
SECTION 1
PROVISION OF SERVICES
1.1. Provision of Services. (a) Xxxx XX shall, pursuant to the terms
of this Agreement, provide (or shall cause its Affiliates to provide) to Gulton
(or its Affiliates) the Services for the monthly fees set forth for such Service
on Schedule A. The parties acknowledge that the fees set forth on Schedule A
hereto include Xxxx IV's overhead expenses attributable to the provision of the
Services.
(b) Xxxx XX (or its Affiliates) shall provide the Services at a
level of quality and performance consistent
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with past practices during the twelve-month period preceding the date hereof.
(c) Xxxx XX (and its Affiliates) shall act under this Agreement
solely as independent contractors and not as agents of Gulton.
(d) For purposes of this Agreement, "Affiliate" shall mean, with
respect to any person, (i) any person that directly or indirectly controls, is
controlled by or under common control with, such person, or (ii) any director,
officer, partner, member or employee of such person.
1.2. Use of Services. Xxxx XX shall be required to provide Services
only to Gulton and its Affiliates and in connection with the conduct of the
business of the Audio Products Group. Gulton shall not, and shall not permit its
Affiliates to, resell any Services to any Person whatsoever or permit the use of
the Services by any Person other than in connection with the conduct of the
Audio Products Group business in the ordinary course by Gulton as currently
conducted.
1.3. Access. Gulton or its Affiliates shall make available on a
timely basis to Xxxx XX or its Affiliates all information and materials
reasonably requested by Xxxx XX to enable it to provide the Services.
1.4. Maintenance of Records. During the term of this Agreement, Xxxx
XX shall make available for inspection by Gulton or its representatives and
agents, during regular business hours and upon reasonable notice, records that
(a) Xxxx XX or its Affiliates have prepared or maintained in providing the
Services or (b) Gulton has requested that Xxxx XX or its Affiliates prepare or
maintain; provided, however, that any such inspection by Gulton or its
representatives or agents shall be conducted in a manner which does not
unreasonably interfere with the operation of the day-to-day business affairs of
Xxxx XX. Gulton shall pay its own costs of any such inspection.
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1.5. Priorities. In providing Services, Xxxx XX shall accord Gulton
and its Affiliates' work on the Services substantially the same priority as it
accords its own operations.
SECTION 2
PAYMENT
2.1. Invoicing and Payment. Gulton shall pay Xxxx XX for the
Services rendered during the preceding month no later than the 15th day of the
next succeeding month. Subject to Section 2.2, Xxxx XX shall submit to the Audio
Products Group on a monthly basis an invoice for out-of-pocket expenses, if any,
incurred during the preceding month in connection with its performance of the
Services. Gulton shall pay all amounts due within 30 days of receipt of such
invoice in accordance with the payment instructions specified therein or, if no
instructions are so specified, in accordance with the standing payment
instructions in effect from time to time between Xxxx XX and Gulton.
2.2. Expenses. Gulton agrees to reimburse Xxxx XX for such
reasonable out-of-pocket expenses as may be incurred by Xxxx XX or its
Affiliates (and, for each expense exceeding $500, approved in advance in writing
by Gulton) in the course or on account of rendering of any of the Services
hereunder. For all expenses, Xxxx XX will render a detailed accounting of the
amount and nature of such expenses.
2.3. Taxes. The fees set forth in Schedule A have been grossed-up to
cover any sales tax, value-added tax, goods and services tax or similar tax
("Taxes") (but excluding any Tax based upon the net income of Xxxx XX) pay able
with respect to the provision of Services, and Xxxx XX shall be responsible for
paying any such Taxes to the appropriate court, supranational, national,
federal, state or local government or governmental authority or instrumentality,
whether domestic or foreign.
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SECTION 3
TERM OF PARTICULAR SERVICES
3.1. Term of Services. The provision of Services shall commence on
the date hereof and, with respect to each Service, shall terminate on the
one-year anniversary hereof; provided, that (a) Gulton may cancel any Service
upon 15 days' written notice to Xxxx XX, and thereupon its obligation to pay
fees relating to such Service in subsequent months shall cease and (b) Xxxx XX
may cease to provide a Service upon 30 days' written notice to Gulton if Xxxx XX
ceases to use such Service in its own operations or provide such Service to its
Affiliates; provided, however, that if Xxxx XX or its Affiliates make any
arrangements with any other Person for the provision of Services terminated by
Xxxx XX pursuant to this clause (c), Xxxx XX shall arrange for such Services to
be offered to Gulton on the same terms and conditions set forth herein.
3.2. System Migration. The parties hereto agree to use their
reasonable good faith efforts to cooperate with and assist each other in
connection with the transition from the performance of the Services by Xxxx XX
to the performance of such services by Gulton, taking into account the need to
minimize both the cost of such transition and the disruption to the ongoing
business activities of the parties hereto. The parties hereto acknowledge that
the foregoing may include the provision of services requested by Gulton in
connection with its transition to non-Xxxx XX systems, including but not limited
to migration of historical data, migration-specific enhancements and cooperation
with and assistance to third party consultants engaged by Gulton in connection
with the foregoing.
3.3. Return of Materials. Upon the termination of a Service or
Services with respect to which Xxxx XX holds books, records, files, data bases
or computer software or hardware (including, but not limited to, current and
archived copies of computer files) owned or leased by Gulton or its Affiliates
and used by Xxxx XX or its Affiliates in
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connection with the provision of a Service (the "Materials"), Xxxx XX will
return all of such Materials promptly, but not later than 30 business days after
such termination. Xxxx XX may make duplicate copies of the Materials for its
legal files at its own cost and subject to the confidentiality provisions of
Section 8.7 of the Recapitalization Agreement.
SECTION 4
FORCE MAJEURE
4.1. Xxxx XX shall not be liable for any interruption of Service or
delay or failure to perform under this Agreement when such interruption, delay
or failure results from causes beyond its reasonable control, including but not
limited to any strikes, lock-outs or other labor difficulties; acts of any
foreign government; riot, insurrection or other hostilities; embargo; fuel or
energy shortage; fire, flood or acts of God (each a "Force Majeure Event"). Xxxx
XX will promptly notify Gulton upon learning of the occurrence of any Force
Majeure Event. Upon the cessation of such Force Majeure Event, Xxxx XX will use
its best efforts to resume its performance of the Services hereunder.
SECTION 5
INDEMNITY
5.1. Indemnity. Each party hereto agrees that the other party hereto
will not be liable for any claims, demands, complaints, liabilities, losses,
damages, costs or expenses (collectively, "Losses") arising from or relating to
the provision of any Service provided to Gulton or its Affiliates pursuant
hereto, except to the extent of Losses arising out of the gross negligence,
fraud or willful misconduct of the other party or its Affiliates, employees,
directors, officers, agents or representatives.
5.2. Obligation to Correct or Reperform. In the event of any breach
of this Agreement by Xxxx XX with re-
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spect to any error or defect in the provision of any Service, Xxxx XX shall, at
Gulton's request, use its best efforts to correct such error or defect or
reperform such Services without the payment of any further fees by Gulton or its
Affiliates.
SECTION 6
TERMINATION
6.1. Termination. This Agreement shall terminate on the earliest to
occur of (a) twelve months after the Closing Date, (b) the date on which the
provision of all Services have been canceled pursuant to Section 3 and (c) the
date on which this Agreement is terminated pursuant to Section 6.2.
6.2. Breach of Agreement. If either party shall cause or suffer to
exist any breach of any of its obligations under this Agreement, including but
not limited to any failure to make payments when due, and said party does not
cure such default within 30 days after receiving written notice thereof from the
non-breaching party, the non-breaching party may terminate this Agreement,
including, as the case may be, the provision of Services pursuant hereto,
immediately by providing written notice of termination.
6.3. Sums Due. In the event of a termination of this Agreement, Xxxx
XX shall be entitled to all outstanding amounts due from Gulton for Services
performed during the month in which the date of termination occurs.
6.4. Effect of Termination. Sections 3.2, 5, 6.3 and 7 of this
Agreement and this Section 6.4 shall survive any termination of this Agreement.
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SECTION 7
MISCELLANEOUS
7.1. Title to Data; Confidentiality. (a) Each of the parties hereto
acknowledges that any information of the other party received in the course of
performance of this Agreement shall be confidential information subject to the
confidentiality provisions of Section 8.7 of the Recapitalization Agreement.
(b) Gulton acknowledges that it will acquire no right, title or
interest (including any license rights or rights of use) in any software or the
licenses therefor which are owned by Xxxx XX, by reason of Xxxx IV's provision
of the Services.
(c) Xxxx XX agrees that all Materials and other information
received, compiled, prepared or computed for the benefit of Gulton or its
Affiliates and which relate to the conduct of the Audio Products Group are the
sole property of Gulton and that neither Xxxx XX nor its Affiliates will acquire
any right, title or interest (including any license rights or rights in use) in
any such Materials or other information by reason of its or their provision of
the Services.
7.2. Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given: (a) if delivered by hand, when delivered; (b) if
sent by telex, telecopy or cable (and confirmed by telephone) or by overnight
delivery, when received, or (c) if sent by mail, five days after being mailed,
certified or registered mail, with postage prepaid:
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(a) If to Gulton, to:
Gulton Industries, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx Xxx Xxxx 00000
Telecopy: (000) 000-0000
or to such other person or address as Gulton shall furnish to Xxxx XX in
writing.
(b) If to Xxxx XX, to:
Xxxx XX Industries, Inc.
One Towne Centre
000 Xxxx Xxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxx
Telecopy:
With a copy to:
Xxxxxx X. Xxxxxx, Esq.
Lippes, Xxxxxxxxxxx, Xxxxxxx & Xxxxxx LLP
000 Xxxxxxxx Xxxxxxxx
00 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telecopy: (000) 000-0000
or to such other person or address as Xxxx XX shall furnish to Gulton in
writing.
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All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w) if by personal
delivery, on the day after such delivery, (x) if by certified or registered
mail, on the seventh business day after the mailing thereof, (y) if by next-day
or overnight mail or delivery, on the day delivered, (z) if by telecopy or
telegram, on the next day following the day on which such telecopy or telegram
was sent, provided that a copy is also sent by certified or registered mail.
7.3. Headings. The headings contained in this Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Agreement.
7.4. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof.
7.5. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
7.6. Applicable Law. This Agreement and the legal relations among
the parties hereto will be governed by and construed in accordance with the
substantive laws of the State of New York, without giving effect to the
principles of conflict of laws thereof.
7.7. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, successors and
permitted as signs.
7.8. Assignment and Delegation. This Agreement shall not be
assignable by either party hereto without the prior written consent of the
other. No assignment hereunder shall in any way affect the parties' obligations
or
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liabilities under this Agreement. Xxxx XX may delegate performance of all or any
part of its obligations under this Agreement to (a) any subsidiary of Xxxx XX or
(b) third parties to the extent such third parties are routinely used to provide
such Services to Xxxx XX or its subsidiaries. Any purported assignment in
violation of this Section 7.8 shall be void.
7.9. No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity other than Gulton and Xxxx XX and
each such party's respective successors and permitted assigns.
7.10. Amendment; Waivers, etc. No amendment, modification, discharge
or waiver of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party against whom
enforcement of the amendment, modification, discharge or waiver is sought. Any
such waiver shall constitute a waiver only with respect to the specific matter
described in such writing and shall in no way impair the rights of the party
granting such waiver in any other respect or at any other time.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
XXXX XX INDUSTRIES, INC.
By /s/ XXXX X. XXXXX
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Name: Xxxx X. Xxxxx
Title: Vice President and
Chief Financial Officer
GULTON INDUSTRIES, INC.
By /s/ XXXXXXXX X. XXXXXX
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Name: Xxxxxxxx X. Xxxxxx
Title: President
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SCHEDULE A
Services to be Provided by Xxxx XX
Pursuant to the Agreement
Service Monthly Fees
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1. Xxxx XX will provide accounting $925
services, and otherwise assist and
advise on, accounting issues,
including, but not limited to, in
connection with the preparation of
financial statements, consolidation
issues, GAAP adjustments and the use
and operation of the "FDC" software
program, provided, that any
assistance with respect to the use
and operation of the FDC software
will only be done at the Xxxx XX
headquarters in Amherst, NY.
2. Xxxx XX will provide services or $925
information as necessary with
respect to the data it has
maintained on employees of the Audio
Products Group, in the areas of
medical, pension, workers' compensa-
tion and dates of hire, and will
continue to enter and track data on
a post-closing basis as requested.
3. Xxxx XX will provide assistance in $925
preparing and filing Forms 5500 for
the Audio Products Group benefit
plans and with respect to other
regulatory reporting, including, but
not limited to, insurance, employee
benefits and securities matters.
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4. Xxxx XX will provide general tax $925
planning and advice, including, but
not limited to, assistance and
advice on the timely and accurate
preparation of all required U.S.
Federal, state and local and foreign
tax filings (including all required
attachments, elections, disclosures
and schedules); audits and appeals
of the Audio Products Group; the
computation of all quarterly or
periodic estimated tax payments; and
the calculation of the Audio
Products Group's tax provision, tax
basis and deferred taxes for
financial reporting purposes; and
Xxxx XX will make available the use
of tax preparation software and tax
research materials to accomplish the
foregoing.
5. For a period not to exceed 30 days $925
after the Closing, Xxxx XX will
permit Audio Products Group Company
employees employed in the United
States to participate in its
medical, dental or other welfare
benefit plans, in each case only to
the extent that such employees
participated in such plan
immediately prior to the Closing
Date or would have been eligible to
participate in such plan upon the
completion of the necessary
paperwork.
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6. Xxxx XX will assist in procuring $925
contracted arrangements with North
American Administrators and UNUM as
administrators of the death,
disability, medical and life
insurance benefits programs for the
employees of the Audio Products
Group immediately prior to the
Closing.
7. Until a transfer of assets is $925
effectuated in accordance with the
terms of the Purchase Agreement,
Xxxx XX will (a) cause the trustees
of its 401(k) plan (Marine Midland
Bank) to continue to hold and invest
assets that relate to employees of
any Audio Products Group Company who
were involved in such plan
immediately prior to the Closing,
and (b) cause Kwasha Lipton to
continue to serve as record keeper
and administrate the 401(k) plan (in
accordance with its terms) for such
employees during such period. After
the Closing Date, Xxxx XX will not
be required (i) to accept additional
contributions into its 401(k) plan
from employees of the Audio Products
Group, (ii) to make loans from its
401(k) plan to employees of the
Audio Products Group, or (iii) to
take any other actions with respect
to its 401(k) plan that would
contravene applicable law or
regulations.
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8. Xxxx XX will assist and advise on $925
the development of a foreign
currency hedging program for the
Audio Products Group and will
provide reports that (a) track
hedging obligations into which the
Audio Products Group may enter into
and (b) provide information
currently being generated by Xxxx XX
with respect to its hedging program,
including reports on net currency
exposures.
9. Xxxx XX will provide assistance and $925
advice with respect to daily cash
management, including, but not
limited to, forecasting, reconcilia-
tions and the use and operation of
cash management systems and software
programs.
Notwithstanding any of the foregoing descriptions of Services to the
contrary, Xxxx XX will not be required to provide any Services to the Audio
Products Group that are not provided to the Audio Products Group as of the
Closing Date.
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