TRANSITION SERVICES AGREEMENT
This
TRANSITION SERVICES AGREEMENT (the “Agreement”) is made
this 24th day of
December, 2008 (the “Effective Date”), by
and between Hauppauge Digital Europe S.a.r.l., PCTV Systems S.a.r.l. and
Hauppauge Computer Works, Inc. (collectively, the “Buyer”), each a
wholly owned subsidiary of Hauppauge Digital, Inc. and Avid Technology, Inc.,
Pinnacle Systems, Inc., Avid Technology GmbH, Avid Development GmbH and Avid
Technology International BV (collectively, the “Seller”). Buyer
and Seller are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”
WHEREAS, certain of the
Parties are party to that certain Asset Purchase Agreement, dated as of October
25, 2008, as amended by Amendment No. 1, dated December 23, 2008 (the “Asset Purchase
Agreement”);
WHEREAS, certain of the
Parties are party to that certain Inventory and Product Return Agreement, dated
as of the date hereof providing for, among other things, the consignment of
certain inventory (the “Consigned Inventory”)
of the Business to Buyer (the “Inventory
Agreement”); and
WHEREAS, in order to enable
Buyer to operate the Business as Conducted by the Buyer in an effective manner,
Seller has agreed to provide to Buyer, and Buyer has agreed to provide to
Seller, certain services for the periods and on the terms and conditions set
forth herein;
NOW, THEREFORE, in
consideration of the mutual agreements and covenants set forth herein and other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, and intending to be legally bound hereby, the Parties
agree:
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1.
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SERVICES
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1.1 General. During
the term of this Agreement, Seller (or an Affiliate of Seller designated by
Seller for this purpose) or Buyer (or an Affiliate of Buyer designated by Buyer
for this purpose) (as applicable) shall provide, or cause such designated
Affiliate to provide, the services (individually, a “Service” and
collectively, the “Services”) set forth
in the Statement of Work attached as exhibits hereto, each as amended and
supplemented from time to time upon mutual agreement of the Parties (the “SOWs”). The
SOWs as of the Effective Date are as follows:
(i) Service SOW 01 –
Infrastructure and Systems (Exhibit
A-1)
(ii) Service SOW 02 – Order
Processing and Related Matters (Exhibit
A-2)
(iii) Service SOW 03 –
Systems Transition and Related Matters (Exhibit
A-3)
1.2 Level of
Services. Specific performance standards for a Service
may be set forth in the applicable Service SOW. Where none is set forth in the
applicable SOW, the Services shall be provided to Buyer or Seller (as
applicable) at commercially acceptable quality levels.
1.3 Cooperation. Each
Party shall cause its employees to reasonably cooperate with employees of the
other to the extent required for the effective delivery of the
Services. In addition to the Consignor Representative (as defined in
the Inventory Agreement) and Consignee Representative (as defined in the
Inventory Agreement), each Party shall name a point of contact who shall be
responsible for the day to day implementation of Services pursuant to this
Agreement.
1.5 Additional
Services. If requested by either Party, the other Party may in
its sole discretion provide services in addition to the Services to the other
Party. The scope of any such additional services, as well as the fees
and other terms applicable to such additional services, shall be as mutually
agreed by the Parties and an existing SOW shall be amended to reflect such
additional services or such additional services shall be set forth in an
additional SOW.
1.6 Buyer Employees to Remain on
Premises. Seller acknowledges and agrees that during the term
of this Agreement (i) it may be necessary for certain employees of Buyer and/or
its Affiliates, formerly employees of Seller or its Affiliates (“Transferred
Employees”), to remain at such premises of Seller and/or its Affiliates
where the employment of such Transferred Employees were based prior to the
Closing (“Relevant
Premises”), and have access, subject to Seller’s commercially reasonable
restrictions, to resources used by such Transferred Employees prior to Closing
and necessary for the operation of the Business as conducted by Buyer, including
but not limited to communications networks, computers, phones and applications,
(ii) such Transferred Employees shall be permitted to remain at the Relevant
Premises and have such access, subject to Seller’s commercially reasonable
restrictions, to such resources, and (iii) up to a maximum of three (3)
employees of Buyer and/or its Affiliates (in addition to the Transferred
Employees) shall be able to work at the Relevant Premises of Seller and/or its
Affiliates and have such access, subject to Seller’s commercially reasonable
restrictions, to such resources together with such Transferred Employees who
remain on the Relevant Premises. While on the Relevant Premises,
Buyer and/or its Affiliates employees, including the Transferred Employees, will
comply with Seller’s reasonable rules, policies, procedures and guidelines with
respect to conduct, security, safety and similar matters existing as of the
Closing at the Relevant Premises.
1.7 Insurance. Seller
and Buyer shall independently maintain in force the policies of insurance in the
amounts set forth below, with terms and coverages reasonably acceptable to the
other Party, including thirty (30) days’ written notice prior to the
cancellation, termination or material change of any such insurance policy. Each
party shall provide evidence of such policies to the other, upon its written
request and upon each renewal of insurance during the term of this
Agreement.
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Workers
Compensation Insurance
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Statutory
per jurisdictional law
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Employers’
Liability Insurance
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$1,000,000
per accident/disease (policy must contain an alternative employer
endorsement such as XX 00 00 00 X and a waiver of subrogation in favor of
the other party)
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Commercial
General Liability (“CGL”)
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$5,000,000
per occurrence/aggregate (policy must include products and completed
operations and a waiver of subrogation in favor of the other
party)
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Technology
or Electronic Errors & Omissions Insurance
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$5,000,000
per claim/aggregate
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Employment
Practices Liability Insurance
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$5,000,000
per claim/aggregate (policy must contain an extension for third-party
sexual harassment and discrimination)
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Additionally,
Buyer and Seller agree to maintain in force the policy of insurance in the
amount set out below.
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Automobile
Liability Insurance
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$1,000,000
per occurrence (policy must have SYMBOL 1 and a waiver of subrogation in
favor of the other party)
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Each of
Seller and Buyer agree to include the other party as an additional insured on
its own Commercial General Liability Insurance policy and its own Automobile
Liability Insurance and provide evidence of such through a certificate of
insurance. The foregoing insurance requirements and liability limits shall not
limit nor qualify the liability of each party under this Agreement or the Asset
Purchase Agreement.
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2.
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PAYMENTS
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2.1 Services
Fees. Exhibit B sets forth,
with respect to the Services, the fees to be charged pursuant to this Agreement
(the “Service
Fees”).
2.2 Invoicing and
Payment. Within thirty (30) days following the end of each
calendar month during the term of this Agreement, each of Buyer and Seller
shall, or shall cause, an invoice (an “Invoice”) to be
delivered to the other setting forth the Service Fees for Services rendered
hereunder during such month. Such Invoice shall contain a summary
description of the Services, the Service Fees for such Services and a listing of
any third party charges included therein. Buyer and Seller (as
applicable) shall pay all amounts due under each applicable Invoice in the
currency denominated by Buyer or Seller (as applicable) in such Invoice no later
than thirty (30) days following receipt of an Invoice. Every Invoice
that is not paid when due shall bear interest from and after the date on which
such Invoice first became overdue at an annual rate equal to ten percent
(10%). Buyer and Seller (as applicable) agrees to pay on demand all
costs of collection, including reasonable attorneys’ fees, incurred by Buyer or
Seller (as applicable) in collecting any such Invoice.
2.3 Taxes. The
fees payable by Buyer or Seller (as applicable) pursuant to this Section 2 shall be
inclusive of any federal, state, municipal, or other U.S. or foreign government
taxes, duties, excises, tariffs, fees, assessments or levies now or hereinafter
imposed on the performance or delivery of Services. Any taxes,
duties, excises, tariffs, fees, assessments or levies imposed on the performance
or delivery of Services hereunder shall be the responsibility of the Party
receiving the Services.
2.4 Records. In
addition to the records, reports and statements required to be delivered
pursuant to the SOWs, each of Seller and Buyer shall keep such full and adequate
records as are necessary to determine the fees and expenses charged pursuant to
this Section 2,
and shall have reasonable access to such records of the other
Party.
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3.
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CONFIDENTIALITY
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3.1 Information
Exchanges. Subject to applicable law and good faith claims of
privilege, each Party hereto shall provide the other Party with all information
regarding itself and the transactions under this Agreement that the other Party
reasonably believes are required to comply with all applicable laws, ordinances,
regulations and codes in connection with the provision of Services pursuant to
this Agreement.
3.2 Confidential
Information. Seller and Buyer shall hold in trust and maintain
confidential all Confidential Information relating to the other
Party. “Confidential
Information” shall mean all information disclosed by either Party to the
other in connection with this Agreement (including but not limited to all
information of Seller or its Affiliates or Buyer or its Affiliates (as
applicable) that is stored or maintained on any server or other electronic
storage device that is transferred (each a “Storage Device”) to,
or utilized by, the other Party) whether orally, visually, in writing or in any
other tangible form, and includes, but is not limited to, economic, scientific,
technical, product and business data, business plans, and the similar
information. In addition, each Party shall delete any Confidential
Information of the other Party that is not required in order to conduct the
Business and that is stored, maintained or otherwise included in any Storage
Device. Confidential Information shall not include (i) information
which becomes generally available to the public other than by disclosure in
violation of the provisions of this Section 3.2, (ii)
information which becomes available on a non-confidential basis to a Party from
a source other than the other Party to this Agreement provided that the Party in
question reasonably believes that such source is not or was not bound to hold
such information confidential, (iii) information acquired or developed
independently by a Party without violating this Section 3.2 or any
other confidentiality agreement with the other Party, and (iv) information that
any Party hereto reasonably believes it is required to disclose by law, provided
that it first notifies the other Party hereto of such requirement and allows
such Party a reasonable opportunity to seek a protective order or other
appropriate remedy to prevent such disclosure. Without prejudice to
the rights and remedies of either Party to this Agreement, a Party disclosing
any Confidential Information to the other Party in accordance with the
provisions of this Agreement shall be entitled to seek equitable relief by way
of an injunction if the other Party hereto breaches or threatens to breach any
provision of this Section
3.2.
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4.
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TERM AND TERMINATION
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4.1 Term. Unless
earlier terminated in accordance with Section 4.2 below,
this Agreement shall be in effect from the date hereof until the earlier to
occur of (i) 18 months following the Closing (as defined in the Asset Purchase
Agreement) or (ii) termination of the last of the Services to be provided
pursuant to this Agreement.
4.2 Termination.
(a) This
Agreement may be terminated by either Party if the other Party (the “Defaulting Party”)
has materially breached its obligations under this Agreement and if the
Defaulting Party has not cured such default within ten (10) days following the
date on which the other Party (the “Notifying Party”) has
given written notice specifying the facts constituting the
default. Notwithstanding the foregoing sentence, this Agreement shall
not be terminated due to a default by the Defaulting Party if such default is
directly attributable to a breach of this Agreement by the Notifying
Party.
(b) This
Agreement may be terminated by Buyer at any time upon thirty (30) days prior
written notice to Seller. In addition, Buyer shall be permitted to
terminate this Agreement with respect to any particular Service to be provided
pursuant to this Agreement upon ten (10) days prior written notice to
Seller.
(c) Upon
termination of this Agreement for any reason or upon the expiration of this
Agreement in accordance its terms, all rights and obligations of the Parties
under this Agreement shall cease and be of no further force or effect, provided, however that (i) the
provisions of Section
3.2, Section
4 and Section
5 of this Agreement and (ii) Buyer’s and Seller’s (as applicable)
obligation to pay any Invoice for Services prior to any termination or
expiration of this Agreement, in each case shall survive any such termination or
expiration of this Agreement.
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5.
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GENERAL
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5.1 Cooperation.
(a) To the
extent permitted by law, Buyer and its Affiliates shall cooperate fully with
Seller and its Affiliates in the defense or prosecution of any claims or actions
which already have been brought, are currently pending, or which may be brought
in the future against or on behalf of Seller or its Affiliates, whether before a
state or federal court, any state or federal government agency, or a mediator or
arbitrator. Buyer’s and Buyer’s Affiliates full cooperation in
connection with such claims or actions shall include, but not be limited to,
making Buyer’s and its Affiliates’ officers, directors, employees, agents and
other representatives available to meet with Seller’s counsel to prepare
Seller’s claims or defenses, to prepare for trial or discovery or an
administrative hearing or a mediation or arbitration and to act as a witness
when requested by Seller at reasonable times designated by
Seller. Seller shall reimburse Buyer and its Affiliates for
reasonably necessary and documented travel, food, and lodging expenses incurred
by Buyer and its Affiliates for providing the services set forth in this Section 5.1(a). Buyer shall notify
Seller promptly in the event that Buyer or any of its Affiliates is served with
a subpoena or in the event that Buyer or any of its Affiliates are requested to
provide a third party with information concerning any actual or potential
complaint or claim against Seller or its Affiliates.
(b) To the
extent permitted by law, Seller and its Affiliates shall cooperate fully with
Buyer and its Affiliates in the defense or prosecution of any claims or actions
which already have been brought, are currently pending, or which may be brought
in the future against or on behalf of Buyer or its Affiliates, whether before a
state or federal court, any state or federal government agency, or a mediator or
arbitrator. Seller’s and Seller’s Affiliates full cooperation in
connection with such claims or actions shall include, but not be limited to,
making Seller’s and its Affiliates’ officers, directors, employees, agents and
other representatives available to meet with Buyer’s counsel to prepare Buyer’s
claims or defenses, to prepare for trial or discovery or an administrative
hearing or a mediation or arbitration and to act as a witness when requested by
Buyer at reasonable times designated by Buyer. Buyer shall reimburse
Seller and its Affiliates for reasonably necessary and documented travel, food,
and lodging expenses incurred by Seller and its Affiliates for providing the
services set forth in this Section 5.1(b). Seller shall notify
Buyer promptly in the event that Seller or any of its Affiliates is served with
a subpoena or in the event that Seller or any of its Affiliates are requested to
provide a third party with information concerning any actual or potential
complaint or claim against Buyer or its Affiliates.
5.2 Assignment. Neither
Party shall assign any of its rights or obligations hereunder without the prior
written consent of the other Party. This Agreement shall be
deemed to be for the benefit of Buyer and its Affiliates and Seller and its
Affiliates (as applicable), and all rights of any Party under this Agreement may
be exercised by any Affiliate of such Party. This Agreement shall
inure to the benefit of and be binding upon any successors or permitted assigns
of the Parties.
5.3 Force
Majeure. No Party shall bear any responsibility or liability
for any Damages arising out of any delay, inability to perform or interruption
of its performance of its obligations under this Agreement due to any acts or
omissions of the other Party or for events beyond its reasonable control
including, without limitation, acts of God, acts of governmental authorities,
acts of the public enemy or due to war, riot, flood, civil commotion,
insurrection, labor difficulty, severe or adverse weather conditions, lack of or
shortage of electrical power, malfunctions of equipment or software programs, or
any other cause beyond the reasonable control of such Party.
5.4 Applicable Law and
Jurisdiction. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the application of laws
of any jurisdictions other than those of the State of New York. Each
Party (a) submits to the jurisdiction of any state or federal court sitting
in New York, New York in any action or proceeding arising out of or relating to
this Agreement, (b) agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court, (c) agrees not to
bring any action or proceeding arising out of or relating to this Agreement in
any other court and (d) waives any right it may have to a trial by jury with
respect to any action or proceeding arising out of or relating to this
Agreement. Each Party hereby waives any defense of inconvenient forum
to the maintenance of any action or proceeding so brought and waives any bond,
surety or other security that might be required of the other Party with respect
thereto. Either Party may make service on the other Party by sending
or delivering a copy of the process to the Party to be served at the address and
in the manner provided for the giving of notices in Section 5.11. Nothing
in this Section 5.4,
however, shall affect the right of either Party to serve legal process in any
other manner permitted by law.
5.5 Relationship of the
Parties. The Parties shall for all purposes be considered
independent contractors with respect to each other, and neither shall be
considered an employee, employer, agent, principal, partner or joint venturer of
the other. Seller agrees that the employees of Seller or its
Affiliates or subcontractors shall not be recognized as employees of Buyer, its
Affiliates or subcontractors and shall solely be recognized as the employees of
Seller or of an Affiliate or subcontractor of Seller and will receive no
Buyer-sponsored benefits from Buyer where benefits include, but are not limited
to, paid vacation, sick leave, group insurance and any pension related program
or plan, including 401k participation or other similar programs, as applied in
accordance with the local laws and customs of the relevant jurisdiction of
Seller. Seller agrees to be solely liable for the conduct of its employees and
shall require Affiliates and subcontractors of Seller to be liable for the
conduct of their employees. Buyer agrees that the employees of Buyer or its
Affiliates or subcontractors shall not be recognized as employees of Seller and
shall solely be recognized as the employees of Buyer or of an Affiliate or
subcontractor of Buyer and will receive no Seller-sponsored benefits from Seller
where benefits include, but are not limited to, paid vacation, sick leave, group
insurance and any pension related program or plan, including 401k participation
or other similar programs, as applied in accordance with the local laws and
customs of the relevant jurisdiction of Buyer. Buyer agrees to be
solely liable for the conduct of its employees and shall require Affiliates and
subcontractors of Buyer to be liable for the conduct of their employees, in each
case in connection with the transactions contemplated by this Agreement and the
related SOWs. If a party’s employee or subcontractor is reclassified by a state
or federal agency or court as an employee of the other party (the “Reclassified
Employer”), such employee or subcontractor will become a reclassified
employee and will receive no benefits from the Reclassified Employer, except
those mandated by state or federal law, even if by the terms of the Reclassified
Employer’s benefit plans or programs of the Reclassified Employer in effect at
the time of such reclassification, such employees or subcontractors would
otherwise be eligible for such benefits. The provisions of this Section 5.5 shall not
limit or alter either Party’s indemnification obligations pursuant to the Asset
Purchase Agreement.
5.6 No Third Party
Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the parties and their respective successors
and permitted assigns and their respective Affiliates.
5.7 Registration. In
the event that this Agreement is required to be registered with any governmental
authority, Seller and Buyer shall use their respective commercially reasonable
efforts to cause such registration to be made.
5.8 Precedence. In
the event of a conflict between this Agreement and any SOW, this Agreement shall
control and supersede the conflicting terms contained in any such SOW, unless
expressly stated otherwise in the SOW. In the event of a
conflict between this Agreement and the Asset Purchase Agreement or the
Inventory Agreement, the Asset Purchase Agreement or the Inventory Agreement (as
applicable) shall control.
5.9 Entire Agreement;
Amendment. This Agreement, the Asset Purchase Agreement and
the Inventory Agreement constitute the entire agreement between Seller and Buyer
with respect to the subject matter hereof. This Agreement shall not
be amended, altered or changed except by a written agreement signed by the
Parties.
5.10 No
Waiver. No delay or omission on the part of either Party to
this Agreement in requiring performance by the other Party or in exercising any
right hereunder shall operate as a waiver of any provision hereof or of any
right or rights hereunder; and the waiver, omission or delay in requiring
performance or exercising any right hereunder on any one occasion shall not be
construed as a bar to or waiver of such performance or right, or of any right or
remedy under this Agreement, on any future occasion.
5.11 Notices. All
notices, requests, demands, claims and other communications hereunder shall be
in writing. Any notice, request, demand, claim or other communication
hereunder shall be deemed duly delivered four business days after it is sent by
registered or certified mail, return receipt requested, postage prepaid, or one
business day after it is sent for next business day delivery via a reputable
nationwide overnight courier service, in each case to the intended recipient as
set forth below:
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If to the
Buyer:
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Copy
to:
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Hauppauge
Digital, Inc.
00
Xxxxx Xxxxx
Xxxxxxxxx,
Xxx Xxxx 00000
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Certilman
Balin Xxxxx & Xxxxx, LLP
00
Xxxxxxx Xxxxxx
Xxxx
Xxxxxx, Xxx Xxxx 00000
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Facsimile:
(000) 000-0000
Attention:
Chief Executive Officer
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Facsimile:
(000) 000-0000
Attention:
Xxxxxx X. Xxxxxxxxxxx, Esq.
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If to any
Seller:
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Copies
to:
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Avid
Technology, Inc.
Avid
Technology Park
Xxx
Xxxx Xxxx
Xxxxxxxxx,
XX 00000
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Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP
0000
X. Xxxxxxxxxx Xxxxxx
Xxxx
Xxxx, XX 00000
Facsimile:
(000) 000-0000
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Facsimile:
(000) 000-0000
Attention: Legal
Department
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Attention:
Xxx X. Xxxxxx, Esq. and Xxxxxx X. Xxxxx, Esq.
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Any Party
may give any notice, request, demand, claim, or other communication hereunder
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim or other communication shall be deemed to have
been duly given unless and until it actually is received by the Party for whom
it is intended. Any Party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other Party notice in the manner herein set forth.
5.12 Section Headings;
Definitions. Section headings are for descriptive purposes
only and shall not control or alter the meaning of this
Agreement. Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings ascribed to them in the Asset Purchase
Agreement.
5.13 Severability. If
any provision of this Agreement shall for any reason be held illegal or
unenforceable, such provision shall be deemed separable from the remaining
provisions of this Agreement and shall in no way affect or impair the validity
or enforceability of the remaining provisions of this Agreement.
5.14 Incorporation of
SOWs and
Exhibits. The SOWs identified in this Agreement are
incorporated herein by reference and made a part hereof.
5.15 Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
5.16 Facsimile
Signature. This Agreement may be executed by facsimile
signature.
IN WITNESS WHEREOF, Seller and
Buyer have duly executed this Transition Services Agreement as of the day and
year first above written.
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SELLER:
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BUYER: | |||
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/s/
Xxx Xxxxxx
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/s/
Xxx Xxxxxxx
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Title:
Chief Financial Officer
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Title:
Chief Executive Officer
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SIGNATURE
PAGE TO TRANSITION SERVICES AGREEMENT
EXHIBIT
A-1
SERVICE
SOW 01 – INFRASTRUCTURE AND SYSTEMS
EXHIBIT
A-2
SERVICE
SOW 02 – ORDER PROCESSING AND RELATED MATTERS
EXHIBIT
A-3
SERVICE
SOW 03 – SYSTEMS TRANSITION AND RELATED MATTERS
EXHIBIT
B
SERVICE
FEES
