EXHIBIT 10.12
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TRANSITIONAL SERVICE AGREEMENT
BETWEEN
STREAM INTERNATIONAL SERVICES CORP.
AND
MODUS MEDIA INTERNATIONAL, INC.
Dated as of December 15, 1997
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TRANSITIONAL SERVICE AGREEMENT
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THIS TRANSITIONAL SERVICE AGREEMENT, dated as of this fifteenth day of
December 1997, is entered into by and between Stream International Services
Corp., a Delaware corporation (f/k/a Stream International Inc.) ("SISC"), and
Modus Media International, Inc., a Delaware corporation ("MMI").
WITNESSETH:
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WHEREAS, Stream International Inc., a Delaware corporation (f/k/a Stream
International Holdings Inc.) ("SII"), which directly owns 100% of the
outstanding shares of SISC and indirectly owns 100% of the outstanding shares of
MMI, will (i) transfer to Modus Media International Holdings, Inc., a Delaware
corporation ("MMI Holdings") all of its assets and liabilities related to its
outsource manufacturing operations not held by MMI (other than certain net
indebtedness to X.X. Xxxxxxxxx & Sons Company); (ii) cause MMI Holdings
immediately thereafter to transfer such assets and liabilities to MMI; (iii)
effect a similar separation of SISC's operations related to the marketing and
resale of software and the development, marketing and sale of software license
management services by transferring the assets and liabilities related to such
operations to Corporate Software & Technology Holdings, Inc., a Delaware
corporation ("CST Holdings") and immediately thereafter causing CST Holdings to
transfer such assets and liabilities to Corporate Software & Technology, Inc.
("CST"); and (iv) cause the transfer of the outstanding voting common stock of
CST Holdings to SII;
WHEREAS, SII will transfer the outstanding voting common stock of CST
Holdings and MMI Holdings to the current shareholders of SII prior to the
earlier of (A) the consummation of an initial public offering of SII Common
Stock, a transaction which would result in SII becoming a stand-alone public
company and (B) January 10, 1998;
WHEREAS, each of SISC and MMI wishes to provide for an orderly and
efficient separation of their businesses; and
WHEREAS, the successful operation of the parties' businesses will require
the performance of certain administrative and other services which the parties
have previously provided to each other, and the parties and their Affiliates (as
defined below) are willing to provide certain of such services to each other
upon the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereby agree as follows:
1. DEFINITIONS
1.1. The following term has the meaning specified or referred to in this
Section 1 and shall be equally applicable to the singular and plural forms.
"Affiliate" means, with respect to either SISC or MMI, any corporation,
partnership, joint venture, limited liability company, association, joint-stock
company, trust or unincorporated organization which directly or indirectly
controls, is controlled by or is under common control with SISC or MMI,
respectively. For purposes of this Agreement, SII and its subsidiaries,
including SISC, shall not be considered Affiliates of MMI; and MMI Holdings and
its subsidiaries, including MMI, shall not be considered Affiliates of SISC.
2. SERVICES
2.1. Services to be Made Available. In accordance with the terms and
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provisions of this Agreement, SISC agrees to perform for MMI, and MMI agrees to
perform for SISC, the following services, as more fully described in the
Transition Services Plan dated December 15, 1997 (the "Services Plan") (each of
the services set forth in Part I of the Services Plan shall be referred to as a
"Service") in the amounts and to the extent specified with respect to each such
Service in the Services Plan (the provider and purchaser of each Service shall
be referred to herein as the "Provider" and "Purchaser", respectively):
Service
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Legal
Human Resources
Tax
Payroll
Telecom - Switches/Velizy
Each Provider shall have the right to fulfill its obligations to furnish
Services hereunder by causing one or more of such Provider's Affiliates to
perform such Services. In such case, the Provider shall remain liable under
this Agreement for the performance of such Services.
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2.2. Fees for Services. Each Purchaser agrees to pay each Provider a fee
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for each of the Services provided by such Provider to such Purchaser as
specified in the Services Plan.
Schedule 1 to the Services Plan ("Schedule 1") lists the monthly fees set
forth in the Services Plan to be paid by each Purchaser and calculates the net
amount to be paid each calendar month by SISC or MMI, whichever owes the net
amount, in each of the currencies specified. If this Agreement is terminated
with respect to a Service pursuant to Section 2.3 hereof, the fee for such
Service shall no longer be payable (other than to the extent earned prior to the
date of termination) following the effective date of such termination and the
net monthly payment set forth in Schedule 1 shall be adjusted accordingly. Fees
for Services provided for partial months shall be calculated based upon the
number of days Services are provided divided by the number of days in such
calendar month.
The Services Plan may specifically provide that all or part of a Service
will be provided by a third party and that the Purchaser shall pay for such
third party provided service separately from the fee listed in the Services Plan
(a "Third Party Service"). Purchasers shall pay for Third Party Services and
the cost thereof shall not be included on Schedule 1. To the extent that the
Purchaser is billed by the third party directly for such Third Party Services,
the Purchaser shall pay the third party directly. If the Provider is billed for
the Third Party Service, the Provider may either pay the xxxx and charge the
Purchaser the amount of the xxxx (such amount to be included as an invoice sent
to the Purchaser and not as an adjustment to Schedule 1) or forward the xxxx to
the Purchaser for payment by the Purchaser to the third party. In addition, if a
Provider obtains a service for its own use from a third party, then the Provider
may delegate to such third party the provision of such service pursuant to this
Agreement to the Purchaser. The cost thereof shall be borne solely by the
Provider.
Not more often than once per month, each Provider shall, upon request,
forward to the Purchaser of its Services a list of the Services provided
hereunder and the fees for such Services, together with such additional
documentation evidencing the provision thereof as the Purchaser shall reasonably
request. In addition, each Purchaser of Services shall be entitled, upon
request and at reasonable times and places, to audit the books and records of
the Provider that relate to the provision of Services hereunder and the related
charges appearing on Schedule 1, as adjusted from time to time. The party owing
the net monthly payment in a particular currency shall pay to the other party
the amount listed in Schedule 1 within 15 days of the end of the month for which
payment is owed unless one or both of the parties shall in good faith dispute
the types and/or amounts of Services set forth on such Schedule 1 and the
Services Plan as having been provided for such month. In the event of such good
faith dispute, the parties will determine the amounts of the fees set forth in
Schedule 1 which are not in dispute, and the party owing, in a particular
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currency, the net amount of such fees which are not in dispute shall pay such
net amount in such currency within 15 days of the end of the month for which
payment is owed. The parties hereto agree to use their respective best efforts
to resolve such dispute within 10 days. If such dispute is not resolved within
10 days, either party hereto may seek binding arbitration of such dispute in
accordance with the provisions of Section 4.10 hereof.
2.3. Term of Agreement. This Agreement shall become effective as of the
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earlier of (i) the separation from SII of both the MMI and the Corporate
Software & Technology businesses referred to in the first recital of this
Agreement or (ii) the day of, but immediately prior to, the closing of the
initial public offering of shares of Common Stock of SII (the "Effective Date")
and shall terminate with respect to each Service (A) on the date specified for
such Service in the Services Plan or (B) upon the prior written notice specified
for such Service in the Services Plan by the chief financial officer of the
Purchaser of such Service, whichever is earlier; provided, however, that upon
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termination pursuant to clause (B) above, the Purchaser shall pay the Provider
an early termination fee equal to three times the monthly fee for such Service
in Schedule 1; provided further, however, that, where specified in the Services
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Plan hereto, the term for any Service may be extended for additional periods
upon the mutual agreement of SISC and MMI, so long as the Purchaser shall have
given the Provider not less than 60 days' notice (30 days' notice in the case of
each Service with a base date of December 31, 1997) of its desire to extend such
Service. Any extension described in the proviso of the immediately preceding
sentence shall be subject to the mutual agreement of SISC and MMI as to the
renewal term, the amount and extent of such Service during such renewal term and
the fee for such Service during such renewal term.
Notwithstanding the foregoing, if the general counsel of SISC reasonably
determines that the rules of professional responsibility applicable to the SISC
attorneys prevent SISC from providing all or a portion of the legal services to
MMI pursuant to the Services Plan, then SISC's obligation to provide such
services shall, to the extent of such determination, terminate immediately upon
notice to MMI of such determination. If the general counsel of SISC
subsequently determines that such rules of professional responsibility permit
the provision by SISC of all or a portion of such services which were
terminated, SISC shall so notify MMI immediately and shall, at the option of
MMI, thenceforth be obligated to provide such services to the extent so
determined. The fee for legal services shall be prorated and Schedule 1
adjusted to reflect any changes in the provision of legal services, pursuant to
this paragraph.
Anything contained in this Agreement to the contrary notwithstanding, this
Agreement may be terminated at any time:
(i) by mutual consent of SISC and MMI;
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(ii) by SISC in the event of any material breach or default by MMI of
any of MMI's agreements, representations, or warranties contained herein
and the failure of MMI to cure such breach or default within sixty (60)
business days after receipt of written notice from SISC requesting such
breach or default to be cured; or
(iii) by MMI in the event of any material breach or default by SISC
of any of SISC's agreements, representations, or warranties contained
herein and the failure of SISC to cure such breach or default within sixty
(60) business days after receipt of notice from MMI requesting such breach
or default to be cured.
2.4. Timely Performance and Cooperation. Each Provider shall use all
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reasonable efforts in the timely performance of its Services and each Purchaser
shall use all reasonable efforts to cooperate with each Provider in connection
with the provision of the Services to such Purchaser.
3. REPRESENTATIONS AND WARRANTIES
As an inducement to enter into this Agreement, each party represents to and
agrees with the other that, as of the Effective Date:
(a) it is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power to own, lease and operate its properties, to carry on its
business as presently conducted and to carry out the transactions
contemplated by this Agreement;
(b) it has duly and validly taken all corporate action necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby; and
(c) this Agreement has been duly executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable against it
in accordance with its terms.
4. OTHER TERMS AND PROVISIONS
4.1. Independent Contractor Status. Each Provider shall perform all
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services under this Agreement as an "independent contractor" and not as an agent
of the Purchaser. The Provider is not, in connection with the performance of
Services hereunder, authorized to assume or create any obligation or
responsibility, express or
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implied, on behalf of, or in the name of the Purchaser or to bind the Purchaser
in any manner.
4.2. Limitation of Liability and Reimbursement. Neither the Provider, nor
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any of its officers, employees, agents or Affiliates, shall in any event be
liable for any damages, including but not limited to loss of profits or revenue,
which arise out of the Provider's (or any such officer's, employee's, agent's or
Affiliate's) performance or failure to perform any of its obligations under this
Agreement, other than those damages caused by the Provider's (or such persons')
intentional nonperformance, willful misconduct or gross negligence. The
Purchaser hereby agrees to indemnify the Provider for all direct costs and
damages incurred by the Provider to third parties as a result of the provision
by the Provider pursuant to this Agreement of the Services, other than costs or
damages incurred by the Provider as a result of (i) its willful misconduct or
gross negligence or (ii) its failure to use commercially reasonable efforts to
acquire consents as set forth in Section 2.1.4(b) of the Contribution Agreement
dated the date hereof among MMI, MMI Holdings and SII.
4.3. Injunction. Irreparable damage would occur in the event that any of
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the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. The parties hereto shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of competent jurisdiction, such remedy being in addition to any other
remedy to which they may be entitled at law or in equity.
4.4. Severability. If any term, provision, covenant or restriction of this
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Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such which may be hereafter declared invalid, void or unenforceable, and the
parties hereto shall use their best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction.
4.5. Assignment. This Agreement and all of the provisions hereof shall be
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binding upon and inure to the benefit of the parties and their respective
successors and assigns, including any corporation with which, or into which,
either party may be merged or which may succeed to its assets or business;
provided, however, that, except as provided in the last sentence of this Section
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4.5, no party may assign, delegate or otherwise transfer its rights or
obligations under this Agreement except to a person or entity that acquires all
or substantially all of the assets or business of such party (whether by merger,
consolidation, sale of stock, sale of assets or
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otherwise). Each party agrees not to transfer all or substantially all of its
assets unless the transferee agrees in writing to be bound by this Agreement.
Either party may assign this Agreement in whole or in part to any of its
Affiliates, in which event all the rights and powers of Purchaser or Provider,
as the case may be, and remedies available to it hereunder shall extend to and
be enforceable by such Affiliate, but no such assignment shall release Purchaser
or Provider, as the case may be, from its obligations hereunder.
4.6. Further Assurances. Subject to the provisions hereof, each of SISC
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and MMI shall make, execute, acknowledge and deliver such other agreements,
documents or instruments and take or cause to be taken such other actions as may
be reasonably required in order to effectuate the purposes of this Agreement and
to consummate the transactions contemplated hereby. Subject to the provisions
hereof, each of SISC and MMI shall, in connection with entering into this
Agreement, performing its obligations hereunder and taking any and all actions
relating hereto, comply with all applicable laws, regulations, orders and
decrees, obtain all required consents and approvals and make all required
filings with any governmental agency, or other regulatory or administrative
agency, commission or similar authority and promptly provide the other with all
such information as the other may reasonably request in order to be able to
comply with the provisions of this sentence.
4.7. Non-Solicitation of Employees. During the term of this Agreement and
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for a period of two years after the termination of the provision of the last
remaining Service which is not a Third Party Service, SISC and MMI each agree
that they will not, without the prior written approval of the other party, hire
or directly or indirectly recruit, solicit or induce, or attempt to induce, any
employee or employees of the other party to this Agreement to terminate their
employment with, or otherwise cease their relationship with, such other party.
4.8. Parties in Interest. Nothing in this Agreement expressed or implied
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is intended or shall be construed to confer any right or benefit upon any person
or entity other than SISC and MMI and their respective successors and permitted
assigns.
4.9. Waivers, Etc. No failure or delay on the part of SISC or MMI in
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exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement
nor consent to any departure by SISC or MMI therefrom shall in any event be
effective unless the same shall be in writing and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
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4.10. Arbitration. Each party hereto may refer any dispute arising
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under this Agreement or the matters contemplated hereby (including without
limitation the payment of fees for Services provided hereunder) to binding
arbitration in the Commonwealth of Massachusetts under the commercial
arbitration rules of the American Arbitration Association before a panel of
three arbitrators, one selected by each party and the third selected by the
other two arbitrators or, if they are unable to agree, by the American
Arbitration Association. Any award made in such arbitration may be enforced in
any court of competent jurisdiction.
4.11. Changes of Law. If, due to any change in applicable law or
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regulations or the interpretation thereof by any court of law or other governing
body having jurisdiction subsequent to the date of this Agreement, performance
of any provision of this Agreement or any transaction contemplated thereby shall
become impracticable or impossible, the parties hereto shall use their best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such provision.
4.12. Confidentiality. Subject to any contrary requirement of law and
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the right of each party to enforce its rights hereunder in any legal action,
each party shall keep strictly confidential and shall cause its employees,
Affiliates and agents to keep strictly confidential, except as necessary for the
performance of Services under this Agreement any information (whether written or
oral) concerning the other party and its Affiliates, including without
limitation information which the other party and its Affiliates are required by
customer or other agreements to keep confidential, which is in the possession of
such party or its agents, Affiliates or employees as of the Effective Date or
which it or any of its agents, Affiliates or employees may acquire pursuant to,
or in the course of performing its obligations under, any provision of this
Agreement; provided, however, that such obligation to maintain confidentiality
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shall not apply to information which (a) at the time of disclosure was in the
public domain not as a result of acts by the receiving party or (b) lawfully
came into the possession of the receiving party other than pursuant to this
agreement after the Effective Date but prior to the time of disclosure.
4.13 Employment Relationships. Employees of Provider engaged in
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performing the Services shall under no circumstances be, or be deemed to be,
employees of Purchaser. Purchaser shall not have any supervision or control over
any such employees of Provider and any complaint or requested change in
procedure shall be transmitted by Purchaser to Provider, which shall in turn
give any necessary instructions to its employees in accordance with its policies
and practices then in effect. Provider shall have full and exclusive liability
for the payment of worker's compensation or employer's liability insurance
premiums with respect to such employees and for the payment of all taxes,
contributions, withholdings or other payments for unemployment compensation or
severance, termination, retirement, old age or other benefits, pensions,
annuities or other obligations or liabilities of any
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nature now or hereafter imposed upon employers by the relevant government in
respect of such employees, measured by the wages, salaries, compensation or
other remuneration paid to such employees or otherwise, and Provider shall make
such payments and shall make and file all reports and returns and do all other
things necessary to comply with the law imposing such taxes, contributions,
withholdings or other payments.
4.14. Entire Agreement. This Agreement, together with the Services
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Plan, contains the entire understanding of the parties with respect to the
provision of Services by SISC to MMI and by MMI to SISC.
4.15. Survival. The provisions of Sections 4.2, 4.3, 4.7 and 4.12
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shall survive any termination of this Agreement.
4.16. Amendments. Neither this Agreement nor the Services Plan may be
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amended except by an agreement in writing signed by the parties hereto, with
respect to this Agreement, and by the parties affected by such amendment, with
respect to the Services Plan.
4.17. Headings. Descriptive headings are for convenience only and
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shall not control or affect the meaning or construction of any provision of this
Agreement.
4.18. Counterparts. For the convenience of the parties, any number of
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counterparts of this Agreement may be executed by the parties hereto, and each
such executed counterpart shall be, and shall be deemed to be, an original
instrument.
4.19. Notices. Any notice or other communication in connection with
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this Agreement shall be deemed to be delivered if in writing (or in the form of
a telecopy) addressed or transmitted as provided below and if either (i)
actually delivered at said address, (ii) in the case of a letter, three business
days shall have elapsed after the same shall have been deposited in the United
States mails, postage prepaid and registered or certified, or (iii) if in the
form of a telecopy, when the receiving party shall have given telephonic notice
of complete and legible receipt, to:
SISC at: Stream International Services Corp.
000 Xxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attn: Treasurer
MMI at: Modus Media International, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Telecopy Number: (000) 000-0000
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Attn: Treasurer
4.20. Governing Law. This Agreement shall be governed by and construed
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in accordance with the domestic substantive laws of the Commonwealth of
Massachusetts without giving effect to any choice or conflict of law provision
or rule that would cause the application of the domestic substantive laws of any
other jurisdiction.
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IN WITNESS WHEREOF, SISC and MMI have caused this Agreement to be duly
executed by their respective officers, each of whom is fully authorized, all as
of the day and year first above written.
STREAM INTERNATIONAL SERVICES CORP.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: President
MODUS MEDIA INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title: President
