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EXHIBIT 10.5
SERVICES AGREEMENT
This SERVICES AGREEMENT is made and entered into as of this 21st day of
March, 1997, by and between ODETICS, INC., a Delaware corporation ("Odetics")
and ATL PRODUCTS, INC., a Delaware corporation ("ATL").
R E C I T A L S
WHEREAS, Odetics and ATL have entered into a Separation and
Distribution Agreement which sets forth the principal transactions between
Odetics and ATL as a result of ATL's recent issuance of additional shares of its
authorized but unissued Class A Common Stock in a registered and underwritten
initial public offering of less than 20% of its outstanding shares and Odetics'
proposed distribution to its stockholders pursuant to a tax free spinoff under
Internal Revenue Code ss. 355 of the Class A Common Stock of ATL which it owns
(the "Distribution"); and
WHEREAS, ATL desires Odetics to perform certain business, information
and facilities services on ATL's behalf following the Distribution;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Business Services. During the term of this Agreement, Odetics shall
provide to ATL the services set forth in Exhibit A attached hereto (the
"Services") in substantially the same manner and to the same extent as currently
and heretofore provided.
2. Performance of Services.
2.1 Services to be provided by Odetics may, at Odetics's sole
discretion, be provided, in whole or in part, by affiliates of Odetics.
Odetics shall not be obligated to acquire new or additional assets, or
hire new or additional employees, to perform the Services. In addition,
Odetics may contract with one or more third parties for the performance
of all or any part of the Services provided (i) the costs to ATL for
the services to be provided by the third party do not exceed the
amounts that would have been charged by Odetics, (ii) the level of
service provided by the third party is at least substantially
equivalent to that provided by Odetics hereunder, and (iii) such third
party is reasonably acceptable to ATL. It is currently contemplated
that the Services will generally continue to be provided by the
organization that is providing such Services as of the date hereof. ATL
agrees that all third parties currently providing any Services are
acceptable third parties to provide Services.
2.2 The Services to be provided by Odetics shall be provided
to ATL as appropriate to reflect the organizational and operational
structure of ATL; provided,
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however, that Odetics shall not be required to provide any Services to
the extent that the performance of such Services becomes more expensive
for Odetics as a result of an organizational or operations change by
ATL.
2.3 ATL shall provide to Odetics on a timely basis any and all
information which is reasonably necessary for Odetics to provide the
Services. ATL shall be solely responsible for the timely delivery of
such information, and the accuracy and completeness thereof. ATL shall
have no right to obtain any confidential or proprietary information of
Odetics, and any such information so obtained by ATL shall be deemed to
be confidential and treated in accordance with the provisions of
Section 7 hereof.
3. Limitation of Services.
3.1 Odetics shall not be required to provide a level of
service which is higher than that provided currently, at the date of
this Agreement.
3.2 Odetics shall not be required to perform any information
system services to the extent such services would result in the breach
of any software license or other applicable contract. If Odetics
believes it is unable to provide any information systems services
pursuant to the foregoing, Odetics shall promptly notify ATL. If
requested by ATL, Odetics shall use reasonable efforts to obtain the
rights necessary to provide such information system services, including
obtaining any appropriate consents from third parties. ATL shall be
responsible for all additional costs and expenses incurred by Odetics
in order to allow Odetics to provide such information system services.
3.3 Odetics shall not be required to provide any Services to
the extent the performance of such Services becomes impractical as a
result of a cause or causes outside the reasonable control of Odetics
or to the extent the performance of such Services would require Odetics
to violate any applicable laws, rules or regulations.
3.4 ODETICS MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, AND ODETICS SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO
THE SERVICES TO BE PROVIDED HEREUNDER.
4. Fees.
4.1 ATL shall pay to Odetics, as fees for the Services
performed by Odetics pursuant to this Agreement, the amounts set forth
in Exhibit A, which amounts are intended to represent the fair market
value of such services. Such fees shall be adjusted throughout the term
of this Agreement, so that they will reflect fair market value at all
times. In addition, ATL shall reimburse Odetics for all direct third
party costs incurred by Odetics in connection with providing the
Services, provided that such third party costs have been approved in
advance by ATL.
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4.2 Odetics shall submit to ATL, on a monthly basis, Odetics's
invoice for Services performed under this Agreement in the preceding
month. Each invoice shall be payable net thirty (30) days after the
date of the invoice; however, in the event that ATL, in good faith,
questions any invoiced item, payment of that item shall be made only
after the satisfactory resolution of those questions. ATL shall pay a
service charge of 1% per month for all overdue amounts, other than
amounts which ATL has, in good faith, questioned.
5. Term.
5.1 Unless terminated earlier as provided in this Section,
this Agreement shall terminate as of a date eighteen (18) months after
the date of this Agreement.
5.2 ATL may terminate any of the Services, in whole or in
part, upon 30 days written notice to Odetics.
5.3 This Agreement may be terminated at any time upon the
mutual consent of the parties.
5.4 Either party may terminate this Agreement if the other
party is in material default under this Agreement and fails to correct
such default within 30 days after receiving written notice of such
default.
5.5 The parties acknowledge that the purpose of this Agreement
is to provide the Services on an interim basis to permit ATL to obtain
alternative sources for the Services. ATL shall use its best efforts to
obtain alternative sources for the Services as soon as practicable.
6. Indemnification.
6.1 ATL shall indemnify and hold harmless Odetics, its
affiliates, and their officers, directors, employees, and agents from
and against all claims, liabilities, obligations, suits, causes of
action, or expenses (including reasonable attorneys fees) (collectively
"Claims") claimed to have resulted, directly or indirectly, in
connection with the performance of Services by Odetics, provided,
however, that ATL shall not be required to indemnify or hold harmless
any indemnitee to the extent the Claims are caused by the gross
negligence or willful misconduct of such indemnitee.
6.2 An indemnitee shall provide written notice to ATL of any
Claims with respect to which it seeks indemnification, and ATL shall
assume the defense of such Claims with counsel reasonably satisfactory
to the indemnitee. If such defense is assumed by ATL with counsel so
selected, ATL will not be subject to any liability for
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any settlement of such Claims made by an indemnified party without
ATL's consent (such consent to not be unreasonably withheld or
delayed). No indemnified party will be subject to any liability for any
settlement of such Claims made by ATL without such party's consent
(which consent is not to be unreasonably withheld), and such settlement
shall include an unconditional release of all indemnitees from all
liability on such Claims. If an indemnified party desires to retain
separate counsel, such indemnified party shall have the right to do so,
but ATL will not be obligated to pay the fees and expenses of such
separate counsel. The parties hereto agree to cooperate fully with each
other in connection with the defense, negotiation or settlement of any
legal proceeding, claim or demand and to engage in no action that would
result in or increase liability on the part of another party.
6.3 The provisions of this Section 6 shall survive termination
of the Agreement.
7. Confidentiality.
7.1 In the course of performance of this Agreement, either
party ("Receiving Party") may acquire information the other party
("Disclosing Party") deems confidential, including trade secrets and
unpublished technical or business related information and data to which
the Disclosing Party (or companies affiliated with the Disclosing
Party) has proprietary rights. Confidential information shall also
include information of a third party which the Disclosing Party is
under an obligation to maintain in confidence. All such information is
referred to hereinafter as "Disclosed Information."
7.2 The Receiving Party shall retain Disclosed Information in
strict confidence and shall not communicate it to others without the
Disclosing Party's prior written agreement. Notwithstanding the
foregoing, Odetics shall be allowed to disclose Disclosed Information
of ATL to third parties as necessary to perform the Services, provided
such third parties have undertaken confidentiality obligations
substantially similar to those set forth in this Section 7.
7.3 Nothing in this Agreement shall prevent the communication
to others of any Disclosed Information which the Receiving Party can
show was known to it or its representatives prior to its receipt
hereunder, was lawfully received by the Receiving party and its
representatives other than directly or indirectly from the Disclosing
Party or became public knowledge through no fault of the Receiving
Party.
7.4 The provisions of this Section 7 shall survive termination
of this Agreement for a period of three years.
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8. Miscellaneous.
8.1 Notices. All notices required or permitted to be given
under this Agreement shall be in writing and shall be sent by facsimile
transmission or mailed by registered or certified mail addressed to the
party to whom such notice is required or permitted to be given. All
notices shall be deemed to have been given when transmitted if given by
facsimile and confirmation of receipt is received or, if mailed, 48
hours after mailed as evidenced by the postmark at the point of
mailing.
All notices to Odetics shall be addressed as follows:
Odetics, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxx Xxxxxxx
All notices to ATL shall be addressed as follows:
ATL Products, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxx, Ph.D.
Either party may, by written notice to the other, designate a new
address to which notices to the party giving the notice shall thereafter be
mailed.
8.2 Force Majeure. Odetics shall not be liable for any delay
or failure of performance to the extent such delay or failure is caused
by circumstances beyond its reasonable control and that by the exercise
of due diligence it is unable to prevent, provided that the party
claiming excuse use its best efforts to overcome the same.
8.3 Limitation of Liability. In no event shall Odetics be
liable to ATL for indirect, consequential, incidental or special
damages, including but not limited to lost profits, arising from or
relating to any breach of this Agreement, regardless of any notice of
such damages. Nothing in this Section is intended to limit or restrict
the indemnification rights or obligations of either party.
8.4 Entirety of Agreement. This Agreement sets forth the
entire agreement and understanding of the parties relating to the
subject matter contained herein and merges all prior discussions
between them, and neither party shall be bound by any representation
other than as expressly stated in this Agreement, or by a written
amendment to this Agreement signed by authorized representatives of
both parties.
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8.5 Waiver. The failure of either party in any one or more
instances to insist upon strict performance of any of the terms and
conditions of this Agreement shall not be construed as a waiver or
relinquishment, to any extent, of the right to assert or rely upon any
such terms or conditions on any future occasion.
8.6 Disclaimer of Agency. This Agreement shall not constitute
either party the legal representative or agent of the other, nor shall
either party have the right or authority to assume, create, or incur
any third-party liability or obligation of any kind, express or
implied, against or in the name of or on behalf of the other party
except as expressly set forth in this Agreement. The relationship of
Odetics and ATL shall be solely that of contracting parties and no
partnership, joint venture or other arrangement of any nature shall be
deemed to be created hereby.
8.7 Severability. In the event any term of this Agreement is
or becomes or is declared to be invalid or void by any court of
competent jurisdiction, such term or terms shall be null and void and
shall be deemed deleted from this Agreement, and all the remaining
terms of the Agreement shall remain in full force and effect.
8.8 Governing Law. The validity, performance and construction
of this Agreement shall be governed by the laws of California without
regard to principles of conflicts of laws.
8.9 Assignment. Except as provided in Section 2, neither party
shall delegate duties of performance or assign, in whole or in part,
rights or obligations under this Agreement without the prior written
consent of the other party, and any attempted delegation or assignment
without such written consent shall be of no force or effect. Subject to
the restrictions contained in the preceding sentence, this Agreement
shall be binding upon the successors and assigns of both parties.
8.10 Amendment. This Agreement shall be amended as mutually
agreed by Odetics and ATL in order to comply with any requirements
imposed by the Internal Revenue Service in order to issue a ruling
pursuant to Section 355 of the Internal Revenue Service Code of 1986,
as amended.
This Agreement is executed by the parties as of the date indicated
above.
ATL PRODUCTS, INC. ODETICS, INC.
By: /s/ Xxxxx X. Xxxx By: /s/ Xxxx Xxxxxxx
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Xxxxx X. Xxxx, Ph.D. Xxxx Xxxxxxx,
Chief Executive Officer Chief Executive Officer
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EXHIBIT A
ATL PRODUCTS, INC.
ODETICS CORPORATE SERVICES TO BE PROVIDED TO ATL
FOR THE PERIOD 4/1/97 - 3/31/98
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AMOUNT ASSUMPTIONS
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QTR QTR QTR QTR FYE QTR QTR QTR QTR
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Jun-97 Sep-97 Xxx-00 Xxx-00 Xxx-00 Xxx-00 Xxx-00 Xxx-00 Xxx-00
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40k sq ft 1.3k sq ft 1.3k sq ft 1.3k sq ft
RENT @ 0000 X Xxxxxxxxxx 32,000 3,000 3,000 3,000 41,000 apr mo mo mo
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1.3 sq ft
mo
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Payroll preparation 16,600 16,600 16,600 16,600 66,400 .75MM .75MM .75MM .75MM
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All other accounting
support 10,800 10,800 10,800 10,800 43,200 .25MM .25MM .25MM .25MM
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MIS Support
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MRP 8,150 8,150 8,150 8,150 32,600 .25MM .25MM .25MM .25MM
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Network security 8,150 8,150 8,150 8,150 32,600 .25MM .25MM .25MM .25MM
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Alpha HW/SW
maintenance support 11,550 11,550 11,550 11,550 46,200 35% 35% 35% 35%
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Alpha lease payment 2,993 2,993 2,993 2,993 11,972 35% 35% 35% 35%
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Sun H/S Support 2,100 2,100 2,100 2,100 8,400 35% 35% 35% 35%
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Phone Switch 0 0 0 0 0 25% 25% 0 0
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Facilities management 6,500 6,500 0 0 13,000 .25MM .25MM 0 0
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Associate Relations 30,000 30,000 0 0 60,000 1MM 1MM 0 0
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Health/Insurance Benefits 7,700 7,700 7,700 7,700 30,800 .25MM .25MM .25MM .25MM
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CFO 25,00 25,000 0 0 50,000 .5MM .5MM 0 0
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CEO Support 22,250 22,250 44,500 .25MM .25MM 0 0
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TOTAL 183,793 154,793 71,043 71,043 480,672
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ATL PRODUCTS LIMITED
OEL FACILITY COSTS AND SERVICES TO BE PROVIDED TO APL
FOR THE PERIOD 1/4/97 - 12/31/97
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AMOUNT ASSUMPTIONS
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QTR QTR QTR QTR FYE QTR QTR QTR QTR
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Jun-97 Sep-97 Dec-97 Mar-98 Mar-98 Jun-97 Sep-97 Dec-97 Mar-98
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RENT & RATES 23,822 23,822 23,822 0 71,466 1.5k sq ft 1.5k sq ft 1.5k sq ft N/A
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Utilities 2,616 2,616 2,616 0 7,848 Water, Light, Heat, Cleaning N/A
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Office equipment 2,450 2,450 2,450 0 7,350 fire, phone, copier, s/w, pc spt, etc N/A
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Depreciation on Tls 11,550 11,550 11,550 0 34,650 Ref: Seymour memo 3/26/97 N/A
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Support
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Warehousing 2,549 2,549 2,549 0 7,647 1/3 MM 1/3 MM 1/3 MM N/A
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Accounting 5,821 5,821 5,821 0 17,463 1/3 MM 1/2 MM 1/2 MM N/A
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TOTAL 48,808 48,808 48,808 0 146,424
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