EXHIBIT 10.6
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT, dated as of July 25, 1997 (this
"Agreement"), between NextLevel Systems, Inc., a Delaware corporation ("Service
Provider" or "NextLevel Systems") and General Semiconductor, Inc., a Delaware
corporation ("Recipient" or "GS").
WHEREAS, General Instrument Corporation, a Delaware corporation
("GI"), is being separated and divided into three separate and independent
public companies and, in order to effectuate the separation, (a) GI intends to
distribute (the "Next Level Systems Distribution"), as a dividend to the holders
of shares of common stock, par value $.01 per share, of GI, shares of common
stock, par value $.01 per share, of NextLevel Systems (the "NextLevel Systems
Common Stock") and (b) NextLevel Systems intends to distribute, following the
NextLevel Systems Distribution, as a dividend to the holders of NextLevel
Systems Common Stock, shares of common stock, par value $.01 per share of
CommScope (the "CommScope Distribution"; and, together with the NextLevel
Systems Distribution, the "Distributions");
WHEREAS, the Distributions will be effected pursuant to a
Distribution Agreement, dated as of June 12, 1997 (the "Distribution
Agreement"), among NextLevel Systems, CommScope and GI;
WHEREAS, the NextLevel Systems Distribution is becoming effective as
of the date hereof (the "NextLevel Systems Distribution Date"); and
WHEREAS, in order to facilitate the orderly continuation of
Recipient's business for a transitional period after the NextLevel Systems
Distribution Date, Service Provider has agreed to provide to Recipient, and
Recipient has agreed to purchase from Service Provider, the Transition Services
described in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
respective covenants and agreements set forth herein, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. As used in this Agreement, the following
terms shall have the following respective meanings (capitalized terms used but
not defined herein shall have the respective meanings ascribed thereto in the
Distribution Agreement):
"Agreement" shall have the meaning specified in the first paragraph
hereof.
"CommScope" shall have the meaning specified in the recitals to this
Agreement.
"CommScope Distribution" shall have the meaning set forth in the
recitals.
"Distributions" shall have the meaning specified in the recitals to
this Agreement.
"Distribution Agreement" shall have the meaning specified in the
recitals to this Agreement.
"Distribution Date" shall have the meaning specified in the recitals
to this Agreement.
"GI" shall have the meaning specified in the recitals to this
Agreement.
"NextLevel Systems Common Stock" shall have the meaning set forth in
the recitals.
"NextLevel Systems Distribution" shall have the meaning set forth in
the recitals.
"NextLevel Systems Distribution Date" shall have the meaning
specified in the recitals to this Agreement.
"Notice" shall have the meaning specified in Section 4.08 hereof.
"Other Services" shall have the meaning specified in Section 2.04.
"Recipient" shall have the meaning set forth in the first paragraph
hereof.
"Service Provider" shall have the meaning set forth in the first
paragraph hereof.
"Transition Period" shall mean, for each Transition Service, the
transition period (commencing on the NextLevel Systems Distribution Date) set
forth opposite such Transition Service on Schedule I hereto.
"Transition Services" shall mean the administrative services set
forth on Schedule I hereto.
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ARTICLE II
TRANSITION SERVICES
Section 2.01. Transition Period. Service Provider shall make
available to Recipient each of the Transition Services for the applicable
Transition Period on the terms and subject to the conditions set forth herein.
The Transition Period for each Transition Service may be extended for such
additional periods as may be mutually agreed by the parties hereto. The Service
Provider shall only be obligated to provide Transition Services during normal
business hours and in a manner that will not interfere with the Service
Provider's business operations.
Section 2.02. Fees. Recipient shall pay to Service Provider the fees
set forth on Schedule I hereto in respect of each of the Transition Services,
plus reasonable out-of-pocket expenses incurred by the Service Provider in
providing the Transition Services (including, but not limited to travel,
overnight lodging, telephone, postage, reproduction costs, computer time,
supplies and parts). Any payments required to be made hereunder shall be due and
payable within 30 days of the date of invoice. Recipient shall pay any
value-added tax and any tariff, duty, export or import fee, sales tax, use tax,
service tax or other tax or charge subsequently imposed by any government or
government agency on Recipient or Service Provider with respect to the
Transition Services or the execution or performance of this Agreement.
Section 2.03. Performance of Transition Services. Service Provider
agrees to perform the Transition Services to be provided hereunder in a
professional and competent manner, using at least the same standard of care that
it uses in performing such services in its own affairs. Recipient understands
that the Transition Services provided hereunder are transitional in nature and
are furnished by Service Provider solely for the purpose of facilitating the
Distributions. Recipient understands that Service Provider is not in the
business of providing Transition Services to third parties and has no long term
interest in continuing this Agreement. Recipient agrees to make a transition to
its own internal organization or other third party suppliers for the Transition
Services as promptly as practicable.
Section 2.04. Other Services. From time to time, Recipient may find
it desirable to request, in addition to the Transition Services, additional
services to be made available to Recipient by Service Provider ("Other
Services"). It is understood and agreed, however, that Service Provider is under
no obligation to provide Other Services, nor has Service Provider made any
promises, representations, or commitments to provide Recipient with any such
Other Services. Upon Recipient's written request for such Other Services, the
parties shall commence negotiations in good faith in order to arrange for the
delivery thereof and compensation therefor. Any such Other Services shall only
be
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deemed to be Transition Services upon execution of an amendment to Schedule I
signed by each party hereto.
Section 2.05. Personnel. Service Provider shall select, employ, pay,
supervise, and direct all Service Provider personnel providing Transition
Services hereunder. Service Provider shall be solely responsible for the payment
of all direct and indirect compensation (including fringe benefits) for Service
Provider personnel assigned to perform services under this Agreement, and shall
be responsible for worker's compensation insurance, employment taxes, and other
employer liabilities relating to such personnel. Service Provider shall be
solely responsible for assigning personnel to perform the Transition Services,
which personnel shall be instructed by Service Provider to perform the
Transition Services in a timely, efficient and workmanlike manner.
ARTICLE III
NO WARRANTIES; LIMITATION ON LIABILITY; INDEMNIFICATION
Section 3.01. No Warranties. Service Provider makes no warranties,
express or implied, including but not limited to any implied warranties of
merchantability or fitness for a particular purpose with respect to the
Transition Services to be provided hereunder.
Section 3.02. Limitation on Liability. In no event shall Service
Provider be liable for any incidental or consequential damages (including
without limitation lost profits) to Recipient arising from the provision of the
Transition Services by Service Provider hereunder, other than for Service
Provider's gross negligence or willful misconduct.
Section 3.03. Indemnification. Recipient agrees to indemnify, defend
and hold harmless Service Provider, its directors, officers, employees, agents
and representatives from any and all claims, actions, demands, judgments,
losses, costs, expenses, damages and liabilities (including but not limited to
attorneys fees and other expenses of litigation) arising out of or connected
with the Transition Services supplied under this Agreement or in any way related
to this Agreement, regardless of the legal theory asserted (other than such as
result directly from Service Provider's gross negligence or willful misconduct).
Recipient further agrees to reimburse Service Provider and indemnify, defend and
hold harmless Service Provider, its directors, officers, employees, agents, and
representatives from any and all claims, actions, demands, judgments, losses,
costs, expenses, damages, and liabilities (including but not limited to
attorneys fees and expenses of litigation), arising from or related to any
Recipient act or omission connected with the provision of any Transition Service
by Service Provider in the performance of this Agreement or caused by any
Recipient product or information provided to Service Provider in connection with
the Transition Services. This indemnity
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shall apply to claims, actions and demands for which Service Provider may be, or
may be claimed to be, partially or solely liable. The parties agree that the
indemnities set forth in this Section 3.03 shall not apply to claims between the
parties arising out of or connected to this Agreement. Service Provider shall
promptly notify Recipient in writing of any claim, action, or demand for which
Service Provider intends to claim indemnification hereunder (however, failure to
give such notice shall not relieve Recipient from its obligations hereunder).
Service Provider agrees that Recipient will control the defense of all claims,
actions, or demands which are indemnified against hereunder at Recipient's
expense, unless Service Provider notifies Recipient that it will assume
responsibility therefor (in which event Recipient shall bear all expenses
thereof, including fees and expenses of one counsel and any local counsel).
Service Provider will cooperate fully with Recipient and its legal
representatives in the investigation and defense of any claim, action, or demand
covered by this indemnification. Service Provider will permit Recipient to
settle any claim, action or demand and agrees that Recipient will control such
settlement, provided, however that such settlement does not adversely affect
Service Provider's rights under this Agreement or impose any obligations on
Service Provider in addition to those stated in this Agreement. Recipient, in
the defense of any claims, actions or demands, will not consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term the giving by the claimant or plaintiff to Service Provider of a release
from all liability with respect to the claim, action, or demand. No such claim,
action, or demand will be settled by Service Provider without the prior written
consent of Recipient.
ARTICLE IV
MISCELLANEOUS
Section 4.01. Cooperation. The parties hereto shall cooperate with
each other and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other during the Transition Period to
facilitate the orderly transition of the separation of the businesses of
NextLevel Systems, CommScope and GS and to minimize any disruption to the
respective businesses that might result from the transactions contemplated by
the Distribution Agreement and hereby.
Section 4.02. Relationship of the Parties. The parties hereto agree
that, from after the NextLevel Systems Distribution Date, nothing herein shall
constitute, be construed to be, or create a partnership, joint venture or
similar relationship between them, and that any actions performed by or on
behalf of another party hereunder shall be as an agent for such other party.
Section 4.03. Amendments. This Agreement may be amended,
supplemented or waived only by a subsequent writing signed by all of the parties
hereto.
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Section 4.04. Successors and Assigns. All terms and conditions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and permitted assigns of the parties hereto.
Section 4.05. Termination. This Agreement shall be automatically
terminated without action by either party if the Distribution Agreement is
terminated and the NextLevel Systems Distribution is abandoned. In the event of
such termination, neither party shall have any liability of any kind to the
other party. This Agreement, or any Transition Service provided hereunder, may
be terminated by either party upon written notice to the other party if the
other party fails to perform or otherwise breaches an obligation under this
Agreement; provided, however, that such party failing to perform or otherwise
breaching shall have thirty days from the date notice of intention to terminate
is received to cure the failure to perform or breach of an obligation.
Notwithstanding the foregoing, neither party shall be responsible for any delay
in the performance of any obligation hereunder due to labor disturbances,
accidents, fires, floods, wars, riots, rebellions, blockages, acts of
governments, governmental requirements and regulations, restrictions imposed by
law or any other similar conditions, beyond the reasonable control and without
the fault or negligence of such party, and the time for performance by such
party shall be extended by the period of such delay.
Section 4.06. Confidentiality. From and after the NextLevel Systems
Distribution Date, each of Service Provider and Recipient shall hold, and cause
their affiliates, directors, officers, employees, agents, consultants, advisors
and representatives to hold, in strict confidence, and shall not make use of,
divulge or otherwise disclose any Information (as defined in the Distribution
Agreement) concerning the other party's business obtained by it prior to the
NextLevel Systems Distribution Date, including any trade secret or other similar
proprietary data, or furnished to it by such other party pursuant to the
Distribution Agreement, any ancillary agreements to the Distribution Agreement
or this Agreement, except disclosure to such of its directors, officers,
employees, agents, consultants, advisors, affiliates and representatives, who
shall have a bona fide "need to know" and (in the case of agents, consultants,
advisors and representatives) who shall execute an agreement agreeing to be
bound by the provisions of this Section 4.06, and each party shall be
responsible for a breach by any of such persons or representatives; provided,
however, that the Service Provider or Recipient, or any of their respective
affiliates, may disclose such Information to the extent that: (a) disclosure is
compelled by an order of a court of competent jurisdiction or is required by law
to be disclosed to a governmental authority and the applicable party uses
reasonable efforts to notify the other party prior to (and, to the extent
practicable, at least ten days prior to) any disclosure of Information pursuant
to the foregoing clause (a), except to the extent that the giving of such notice
would be unlawful or violate any order, ruling or directive of any governmental
authority; or (b) such party can show that such Information was (i) available to
such person on a nonconfidential basis (other than from the other
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party or its affiliates or representatives) prior to the disclosure by the other
party, (ii) in the public domain through no fault of such person, or (iii)
lawfully acquired by such person from another source after the time it was
furnished to such person by the other party, and not acquired from such source
subject to any confidentiality obligation on the part of such source, or on the
part of the acquiror.
Section 4.07. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREUNDER.
Section 4.08. Notices. All notices, consents, requests, waivers or
other communications required or permitted under this Agreement (each a
"Notice") shall be in writing and shall be sufficiently given (a) if hand
delivered or sent by telecopy, (b) if sent by nationally recognized overnight
courier, or (c) if sent by registered or certified mail, postage prepaid, return
receipt requested, and in each case addressed as follows:
If to Service Provider, to: NextLevel Systems, Inc.
0000 Xxxx Xxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
If to Recipient, to: General Semiconductor, Inc.
00 Xxxxxxxx Xxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attn: General Counsel
or such other address as shall be furnished by any of the Parties in a Notice.
Any Notice shall be deemed given upon receipt.
Section 4.09. Counterparts. This Agreement may be executed with
counterpart signature pages or in one or more counterparts, all of which shall
be one and the same Agreement, and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to all the
parties hereto.
Section 4.10. Interpretation. The parties intend that the
Distributions shall be tax-free pursuant to the Internal Revenue Code of 1986,
as amended, so that no gain or loss shall be recognized for Federal income tax
purposes as a result of the transaction, and all provisions of this Agreement
shall be so interpreted.
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Section 4.11. Severability. If any provision of this Agreement or
the application thereof to any person or circumstance is determined by a court
of competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and in no way be affected,
impaired or invalidated thereby, so long as the economic or legal substance of
the transaction contemplated hereby is not affected in any manner adverse to any
party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
GENERAL SEMICONDUCTOR, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman, CEO & President
NEXTLEVEL SYSTEMS, INC.
By: /s/ Xxxxx X. Zar
--------------------------------
Name: Xxxxx X. Zar
Title: Vice President and General Counsel
