EXHIBIT 10.4
MASTER TRANSITIONAL SERVICES AGREEMENT
This MASTER TRANSITIONAL SERVICES AGREEMENT (this "Agreement") is
entered into as of May 28, 2000 by and between Methode Electronics, Inc., a
Delaware corporation ("Methode"), and Stratos Lightwave, Inc. a Delaware
corporation ("Stratos"). Capitalized terms used and not otherwise defined herein
are defined in Article 1 of this Agreement.
RECITALS:
WHEREAS, Stratos and Methode have entered into that certain Master
Separation Agreement as of the date hereof (the "Master Separation Agreement"),
pursuant to which, among other things, Methode has contributed and transferred
to Stratos, all of the capital stock and equity interests held by Methode in
subsidiaries and other entities that conduct the Opto Business, and all other
assets and liabilities associated with such business, in exchange for shares of
Stratos common stock; and
WHEREAS, Methode and Stratos have heretofore directly or indirectly
provided each other with certain administrative, financial, management and other
services, and the parties desire to continue to provide such services to each
other for a transitional period after the Contribution Date, on the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants and agreements set forth in this Agreement, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings ascribed to them below:
"ADDITIONAL SERVICES" has the meaning set forth in Section 3.3(a).
"ANCILLARY AGREEMENTS" has the meaning set forth in the Master
Separation Agreement.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 9.1.
"CONTRIBUTION DATE" has the meaning set forth in the Master Separation
Agreement.
"DISTRIBUTION" has the meaning set forth in the Master Separation
Agreement.
"DISTRIBUTION DATE" has the meaning set forth in the Master Separation
Agreement.
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"FORCE MAJEURE" means any act of God or the public enemy, any accident,
explosion, fire, storm, earthquake, flood, or any other circumstance or event
beyond the reasonable control of the party relying upon such circumstance or
event. has the meaning set forth in Section 3.5.
"IRS" means the Internal Revenue Service of the U.S. Department of
Treasury or any successor agency.
"LETTER RULING" means the advance letter rulings expected to be issued
by the IRS to Methode regarding certain U.S. federal income tax consequences of
the Distribution and other related transactions and any supplemental letter
rulings issued by the IRS with respect thereto; provided, however, that the
requesting party complied with the provisions of the Tax Sharing Agreement
relating to requests for supplemental rulings and obtained any necessary
approval of the other party thereto.
"OPTO BUSINESS" has the meaning set forth in the Master Separation
Agreement.
"SERVICE" and "SERVICES" have the meanings set forth in Section 3.1.
"TAX SHARING AGREEMENT" means the Tax Sharing and Indemnification
Agreement to be entered into between Methode and Stratos.
"TERMINATION DATE" has the meaning set forth in Article 4.
"TRANSITION SERVICE SCHEDULE" has the meaning set forth in Article 2.
ARTICLE 2
TRANSITION SERVICE SCHEDULES
This Agreement will govern the individual transitional services
requested by one party and provided by the other party, the details of which are
set forth in the transition service schedules attached to and incorporated by
reference, into this Agreement. Each Service shall be covered by this Agreement
upon execution of a transition service schedule in the form attached hereto
(each transition service schedule, a "Transition Service Schedule").
For each Service, the parties shall set forth, among other things: (i)
the time period during which the Service will be provided if different from the
term of this Agreement determined pursuant to Article 4 hereof; (ii) a summary
of the Service to be provided; (iii) a description of the Service; and (iv) the
estimated charge, if any, for the Service and any other terms applicable thereto
on the Transition Service Schedule. The obligations regarding each Transition
Service Schedule shall be effective upon the Contribution Date.
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ARTICLE 3
SERVICES
3.1 SERVICES GENERALLY. (a) On the terms and subject to the conditions
set forth in this Agreement, each party shall provide or cause to be provided to
the other party the service(s) to be provided by such party as described in the
Transition Service Schedule(s) attached hereto. The services described on a
single Transition Service Schedule shall be referred to herein as a "Service"
and the services described on all the Transition Service Schedules shall be
collectively referred to herein as "Services."
(b) The parties acknowledge the transitional nature of the Services and
that a party may make changes from time to time in the manner of performing the
Services if the party is making similar changes in performing similar services
for itself. Each party shall provide sixty (60) days prior written notice of any
such changes to the other party hereto.
3.2 SCOPE OF SERVICES. Unless otherwise agreed by Methode and Stratos,
the Services to be provided by each party pursuant to this Agreement shall be
substantially similar in scope, quality and nature as those provided by each
party prior to the Contribution Date and shall be performed by the same or
similar qualified personnel; PROVIDED, HOWEVER, that the selection of personnel
to perform the Services shall be at the sole discretion of the party providing
same; and PROVIDED, FURTHER, that, except as expressly provided in this
Agreement, each party shall not be required to materially increase the volume,
scope or quality of the Services provided to beyond that which has provided to
the other party prior to the Contribution Date.
3.3 ADDITIONAL SERVICES. (a) From time to time after the Contribution
Date, the parties may identify additional services that one party will provide
to the other party in accordance with the terms of this Agreement (the
"Additional Services"). In such event, the parties shall prepare additional
Transition Service Schedules for such Additional Services for attachment to this
Agreement. Except as set forth in subsection (b) below, the parties may agree in
writing on Additional Services during the term of this Agreement.
(b) Except as set forth in the next sentence, a party shall be
obligated to perform, at a charge determined using the principles for
determining fees under Section 5.1, any Additional Service that (i) was provided
by that party immediately prior to the Contribution Date and which a party
reasonably believes was inadvertently or unintentionally omitted from the list
of Services, or (ii) is essential to effectuate an orderly transition under the
Master Separation Agreement, unless (A) such performance would significantly
disrupt a party's operations or materially increase the scope of its
responsibility under this Agreement, or (B) tax counsel for either party
reasonably determines that the provision of those Additional Services could
jeopardize the tax treatment of the Distribution and related transactions as set
forth in the Letter Ruling. If a party reasonably believes the performance of
Additional Services required under subparagraphs (i) or (ii) above would
significantly disrupt its operations or materially increase the scope of its
responsibility under this Agreement or could jeopardize the tax treatment set
forth in the Letter Ruling, the parties shall negotiate in good faith to
establish terms under which a party can
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provide such Additional Services, but a party shall not be obligated to provide
such Additional Services if, following good faith negotiation, it is unable to
reach agreement on such terms.
3.4 ADDITIONAL RESOURCES. Except as provided in a Transition Service
Schedule for a specific Service, in providing the Services, the party providing
the Services shall not be obligated to: (i) hire any additional employees; (ii)
maintain the employment of any specific employee; (iii) purchase, lease or
license any additional equipment or software; or (iv) pay any costs related to
the transfer or conversion of such party's data to the other party or any
alternate supplier of the Services.
3.5 IMPRACTICABILITY AND FORCE MAJEURE. A party shall not be required
to provide any Service to the extent the performance of such Service becomes
impracticable as a result of a cause or causes outside the reasonable control of
the party providing the service, or to the extent the performance of such
Service would require a party to violate any applicable laws, rules or
regulations. Each party will also be excused for any failure or delay in
performing any of its obligations under this Agreement if such failure or delay
is caused by Force Majeure.
3.6 SUBCONTRACTORS. Each party may engage a subcontractor to perform
all or any portion of its duties under this Agreement; PROVIDED, HOWEVER, that
the party engaging the subcontractor shall remain responsible for the
performance of such subcontractor.
ARTICLE 4
TERM
The term of this Agreement shall commence effective as of the
Contribution Date and shall remain in effect until one (1) year after the
Distribution Date (the "Termination Date"), unless earlier terminated as
provided in Article 7 hereof. The term of this Agreement may be extended by the
parties, either in whole or with respect to one or more of the Services, unless
either party reasonably determines any such extension could jeopardize the tax
treatment of the Distribution and related transactions set forth in the Letter
Ruling; PROVIDED, HOWEVER, that such extension shall only apply to the Services
for which the term of this Agreement was extended. The parties shall be deemed
to have extended this Agreement with respect to a specific Service if the
Transition Service Schedule for such Service specifies a completion date beyond
the Termination Date. The parties may agree on an earlier termination date
respecting a specific Service by specifying such date on the Transition Service
Schedule for that Service.
ARTICLE 5
SERVICES CHARGES
5.1 SERVICE CHARGES. The party receiving the Services shall pay the
party providing the Services the charges, if any, set forth on the Transition
Service Schedules for each of the Services listed therein as adjusted, from time
to time, in accordance with the procedures established under Section 5.4 hereof.
Such fees shall include all of the direct and indirect costs incurred in
providing the Services PLUS twenty percent (20%), unless specifically indicated
otherwise on a Transition Service Schedule. The parties also intend for charges
to be easy to
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administer and justify and, therefore, they hereby acknowledge it may be
impracticable to attempt to recover every cost, charge or expense, particularly
those that are insignificant or de minimus. The parties shall use their good
faith efforts to discuss any situation in which the actual charge for a Service
is reasonably expected to exceed the estimated charge, if any, set forth on a
Transition Service Schedule for a particular Service; PROVIDED, HOWEVER, that
the incurrence of charges in excess of any such estimate on such Transition
Service Schedule shall not justify stopping the provision of, or payment for,
Services under this Agreement.
5.2 PAYMENT. (a) Each party shall invoice other party monthly for all
charges for each calendar month within thirty (30) days after the end of such
month, provided that any failure by a party to provide an invoice within such
time period shall not relieve the other party of its obligation to pay an
invoice received after such date. All invoices shall reflect in reasonable
detail a description of the Services performed.
(b) Subject to subparagraph (c) below, the party receiving the Services
shall pay the charges due hereunder with respect to such Services within thirty
(30) days after receipt of an invoice therefor. If a party fails to make any
monthly payment within sixty (60) days after its receipt of an invoice, such
party shall pay, in addition to the amount stated on such invoice, interest on
such amount at the prime rate published in the Wall Street Journal plus three
percent (3.0%) per annum compounded monthly for the period such amount remains
unpaid.
(c) In the event that a party disputes any services charges under this
Agreement, such party shall promptly notify the other party of such dispute and
shall pay all undisputed amounts, but shall be entitled to withhold payment of
any amount in dispute (and shall not be obligated to pay interest on the amount
so withheld). The parties shall thereafter cooperate in good faith to resolve
such dispute promptly.
(d) Any invoice or payment not disputed in writing by a party within
180 days of an invoice or payment, as the case may be, shall be considered final
and no longer subject to adjustment.
5.3 PERFORMANCE UNDER ANCILLARY AGREEMENTS. Notwithstanding anything to
the contrary contained herein, neither party shall be charged under this
Agreement for any services that are specifically required to be performed under
the Master Separation Agreement or any other Ancillary Agreement and any such
services shall be performed and charged for (if applicable) in accordance with
the terms of the Master Separation Agreement or such other Ancillary Agreement.
5.4 PRICING ADJUSTMENTS. The parties shall reasonably agree on a
procedure for making adjustments to the service charges as a result of changes
in the Services provided and the costs incurred by a party in performing the
Services.
ARTICLE 6
PERFORMANCE STANDARDS
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6.1 PERFORMANCE STANDARDS. Subject to Section 3.4 and any other terms
and conditions of this Agreement, the party providing the Services shall
maintain sufficient resources to perform its obligations hereunder. Specific
performance criteria for each Service may be set forth in the corresponding
Transition Service Schedule. Where no performance criteria is set forth, the
party providing the Services shall use reasonable efforts to provide Services in
accordance with the policies, procedures and practices in effect before the
Contribution Date and shall exercise the same care and skill as it exercises in
performing similar services for itself.
6.2 DISCLAIMER OF WARRANTIES. NEITHER PARTY MAKES ANY WARRANTIES,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OR
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO THE
SERVICES PROVIDED BY IT UNDER THIS AGREEMENT.
6.3 GOOD FAITH COOPERATION. The parties will use good faith efforts to
cooperate with each other in all matters relating to the provision and receipt
of Services. Such cooperation shall include exchanging information, performing
true-ups and adjustments, and obtaining all third party consents, licenses,
sublicenses or approvals necessary to permit each party to perform its
obligations hereunder. The costs of obtaining such third party consents,
licenses, sublicenses or approvals shall be borne by the party receiving the
Service. Each party will maintain in accordance with its standard document
retention procedures, appropriate documentation supporting the Services and
related charges provided for pursuant to this Agreement.
6.4 ALTERNATIVES. If a party reasonably believes it is unable to
provide any Service, the parties shall cooperate to determine the best
alternative approach. Until such alternative approach is found or the problem
otherwise resolved to the satisfaction of the parties, the party providing the
Service shall use reasonable efforts, subject to Section 3.4 and Section 3.5, to
continue providing the Service.
ARTICLE 7
TERMINATION
7.1 TERMINATION. (a) Each party may terminate this Agreement, either
with respect to all or any one or more of the Services provided by the other
party, at any time upon sixty (60) days prior written notice to the party
providing such Services.
(b) Either party may terminate this Agreement with respect to any one
or more of the Services if the other party shall have failed to perform any of
its material obligations under this Agreement relating to any such Service(s),
the aggrieved party has notified the other party in writing of such failure, and
such failure shall have continued for a period of thirty (30) days after receipt
by the other party of notice of such failure.
7.2 SURVIVAL. Those Articles and Sections of this Agreement that, by
their nature, are intended to survive termination will survive in accordance
with their terms. Notwithstanding the foregoing, in the event of any termination
with respect to one or more, but less than all Services, this Agreement shall
continue in full force and effect with respect to any Services which have not
been terminated.
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ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
8.1 LIMITATION OF LIABILITY. (a) Each party agrees that the other party
and its directors, officers, employees and agents, shall only be liable to it
for or in connection with the Services rendered by the other party and the
performance of the other party's obligations under this Agreement, for claims,
damages, losses, liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees) resulting from, or arising out of, breach of
contract, gross negligence or willful misconduct on the part of such party.
(b) WITHOUT LIMITING THE FOREGOING, NEITHER PARTY WILL BE LIABLE TO THE
OTHER FOR ANY LOST PROFITS OR OTHER SPECIAL, INCIDENTAL, INDIRECT, PUNITIVE OR
CONSEQUENTIAL DAMAGES, HOWEVER CAUSED, UNDER ANY THEORY OF LIABILITY, ARISING
FROM ITS PERFORMANCE OF THE SERVICES OR OTHERWISE RELATING TO THIS AGREEMENT.
8.2 INDEMNIFICATION. Each party agrees to indemnify and hold harmless
the other party and its directors, officers, employees and agents, from and
against any claims, damages, losses, liabilities, costs and expenses (including,
without limitation, reasonable attorneys' fees) arising out of or in connection
with the Services rendered by such party and the performance by such party of
its obligations under this Agreement, except for claims, damages, losses,
liabilities, costs and expenses (including, without limitation, reasonable
attorneys' fees) resulting from, or arising out of, breach of contract, gross
negligence or willful misconduct on the part of the other party hereto.
ARTICLE 9
CONFIDENTIALITY
9.1 CONFIDENTIALITY. (a) Each party agrees to keep confidential and not
disclose, and shall cause their respective subsidiaries and affiliates to keep
confidential and not disclose, to any party or use for any purpose (other than
the performance of this Agreement), any proprietary or other confidential
information of the other party which is received pursuant to this Agreement
("Confidential Information"). Confidential Information shall be subject to the
restrictions in this paragraph only if it is marked as confidential or
proprietary or, if not disclosed in tangible form, the disclosing party notifies
the recipient of its confidential or proprietary nature prior to its disclosure
and confirms the same in writing within thirty (30) days of its disclosure.
(b) For purposes of this Agreement, Confidential Information of a party
does not include information which: (i) is already known to the receiving party
from a source other than the disclosing party; (ii) is or becomes publicly known
through no wrongful act of the receiving party (in which event the receiving
party's obligations under this Agreement in respect thereto shall terminate on
the date such information enters the public domain; (iii) is rightfully received
by the receiving party from a third party without violation of any obligations
of confidentiality owned by a third party to the disclosing party; (iv) is
disclosed by the disclosing party to a third party without restrictions on the
third party's right to use or disclose such information; (v) is independently
developed by employees or consultants of the receiving party without use of or
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reference to the disclosing party's Confidential Information; or (vi) is
approved for release by written authorization of the disclosing party.
ARTICLE 10
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement and the schedules referenced or
attached hereto constitutes the entire agreement between the parties with
respect to the subject matter hereof and shall supersede all prior agreements
and understandings, whether written or oral, with respect thereto.
10.2 RELATIONSHIP. The relationship between the parties established
under this Agreement is that of independent contractors. Nothing in this
Agreement shall constitute or be deemed to constitute a partnership or joint
venture between the parties hereto or constitute or be deemed to constitute any
party as the agent or employee of the other party for any purpose whatsoever and
neither party shall have the authority or power to bind the other or to contract
in the name of, or create a liability against, the other in any way or for any
purpose.
10.3 WAIVER. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in writing signed by the party against which such
waiver is to be asserted. Unless otherwise expressly provided in this Agreement,
no delay or omission on the part of any party in exercising any right under this
Agreement shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any right under this Agreement operate as a waiver of any other
right under this Agreement nor shall any single or partial exercise of any right
preclude any other or further exercise thereof or the exercise of any other
right under this Agreement. No failure by either party to take any action or
assert any right hereunder shall be deemed to be a waiver of such right in the
event of the continuation or repetition of the circumstances giving rise to such
right unless expressly waived in writing by the party against whom the existence
of such waiver is asserted.
10.4 AMENDMENTS. This Agreement may not be amended or modified in any
respect except by a written agreement signed by both of the parties hereto.
10.5 NOTICES. All notices and other communications hereunder shall be
in writing and shall be delivered in person, by telecopy, by express or
overnight mail delivered by a nationally recognized air courier (delivery
charges prepaid), or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:
If to Methode: Methode Electronics, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
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If to Stratos: Stratos Lightwave, Inc.
0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy No.: (000) 000-0000
or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery or when delivery is refused. Any notice or communication sent by
telecopy or by air courier shall be deemed effective on the first business day
at the place at which such notice or communication is received following the day
on which such notice or communication was sent.
10.6 NONASSIGNABILITY. Except as specifically provided herein, neither
party may, directly or indirectly, in whole or in part, whether by operation of
law or otherwise, assign or transfer this Agreement, without the other party's
prior written consent, and any attempted assignment, transfer or delegation
without such prior written consent shall be voidable at the sole option of such
other party. Notwithstanding the foregoing, each party (or its permitted
successive assignees or transferees hereunder) may assign or transfer this
Agreement as a whole without consent to an entity that succeeds to all or
substantially all of the business or assets of such party. Subject to the
foregoing, this Agreement will be binding upon and inure to the benefit of the
parties and their permitted successors and assigns.
10.7 SEVERABILITY. If any term or other provision of this Agreement is
determined by a court, administrative agency or arbitrator to be invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement will nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the fullest extent possible.
10.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
10.9 HEADINGS. The headings contained in this Agreement and in any
schedule hereto are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Any capitalized term used in
any schedule but not otherwise defined therein, shall have the meaning assigned
to such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section or Schedule, such reference shall be to an article or
section of, or a schedule to, this Agreement unless otherwise indicated.
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10.10 GOVERNING LAW. This Agreement shall be governed, construed and
enforced in accordance with the internal laws of the State of Illinois,
excluding any choice of law rules which may direct the application of the laws
of another jurisdiction.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and date first written above.
METHODE ELECTRONICS, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
Executive Vice President and
Chief Financial Officer
STRATOS LIGHTWAVE, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Xxxxx X. Xxxxx
Vice President, Finance and
Chief Financial Officer
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