Exhibit 10.5
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT, dated as of October 29, 2004, by and
between Xxxxxxxxx-Xxxx Company Limited, a company organized under the laws of
Bermuda, on behalf of itself and the other Sellers (as defined in the Purchase
Agreement) (together with any of its subsidiaries providing services hereunder,
"Seller"), and Dresser-Rand Group Inc., a Delaware corporation, on behalf of
itself and the other Buyers (as defined in the Purchase Agreement) (collectively
with any of their respective subsidiaries receiving services hereunder,
"Buyer"). Seller and Buyer are sometimes hereinafter collectively referred to as
the "Parties."
WITNESSETH:
WHEREAS, Seller and Dresser-Rand Holdings, LLC (f/k/a FRC Acquisitions
LLC) ("Holdings") are parties to an Equity Purchase Agreement, dated as of
August 25, 2004 (as amended, supplemented or otherwise modified from time to
time, the "Purchase Agreement"), relating to the sale by Seller and the other
sellers party thereto, and the purchase and assumption by Holdings, of the
Business (as defined in the Purchase Agreement);
WHEREAS, immediately prior to the Closing (as defined in the Purchase
Agreement), Holdings has entered into an Assignment Agreement with Buyer, dated
as of October , 2004, whereby Holdings assigned to Buyer its rights and
obligations under the Purchase Agreement relating to the purchase of the
Acquired Interests (as defined in the Purchase Agreement) and entering into any
Transaction Agreements (as defined in the Purchase Agreement) and any other
agreements in connection therewith; and
WHEREAS, the Purchase Agreement provides that, in connection with the
consummation of the transactions contemplated thereby, the Parties will enter
into this Agreement pursuant to which Buyer will purchase certain services from
Seller during a transition period from the date hereof;
NOW, THEREFORE, the Parties hereby agree as follows:
ARTICLE I DEFINITIONS
SECTION 1.1. For the purposes of this Agreement, (a) unless otherwise
defined herein capitalized terms used herein shall have the meanings assigned to
them in the Purchase Agreement and (b) the following terms shall have the
meanings hereinafter specified:
"Agreement" shall mean this Agreement, including the Schedules hereto, as
the same may be amended, supplemented or otherwise modified from time to time.
"Buyer" shall have the meaning set forth in the introductory paragraph
hereof.
"Parties" shall have the meaning set forth in the introductory paragraph
hereof.
"Purchase Agreement" shall have the meaning set forth in the recitals
hereto.
"Seller" shall have the meaning set forth in the introductory paragraph
hereof.
"Service" or "Services" shall mean those services listed and described on
Schedule A.
SECTION 1.2. Interpretation; Exhibits and Schedules. When a reference is
made in this Agreement to a Section or a Schedule, such reference shall be to a
Section of, or a Schedule to, this Agreement unless otherwise indicated. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein shall mean such
agreement, instrument or statute as from time to time amended, modified or
supplemented. References to a Person are also to its permitted successors and
assigns and, in the case of an individual, to his heirs and estate, as
applicable.
ARTICLE II AGREEMENT TO SELL AND BUY
SECTION 2.1. Provision of Services. Seller shall provide to Buyer the
Services (it being understood that Services rendered for any particular month
shall include the preparation and delivery of any required reports, filings or
other work related to such month even though performed after the end of the
particular month in question). The applicable fee for each Service shall be the
specified fee for such Service set forth in Schedule A. In addition, it is
understood that Seller shall not be required to use its own funds for any third
party-provided service that is requested by Buyer or any payment obligation of
Buyer (including employee compensation payments, employee benefit payments and
payments to fund checks issued or wire transfer payments made on behalf of
Buyer). Buyer shall be responsible to provide Seller with the funds for each
such service and shall be solely responsible for the payment of any additional
license fees, royalties and other payments and fees (including licensee fees and
application service provider fees) due under any license agreement or other
agreement relating to intellectual property (including software) necessary to
perform the Services incurred after the prior approval of Buyer as a result of
the performance of the Services for the Buyer. In every case, all of the
Services shall be provided in accordance with the terms, limitations and
conditions set forth herein and on Schedule A. Seller shall maintain all
existing insurance coverages of the types that relate to the activities
constituting or property relating to the Services.
SECTION 2.2. Access. Buyer shall make available on a timely basis to
Seller all information and materials reasonably requested by Seller to enable it
to provide the Services. Buyer shall give Seller reasonable access, during
regular business hours and at such other times as are reasonably required, to
the premises of the Business for the purposes of providing Services.
SECTION 2.3. Books and Records. Seller shall keep books and records of the
Services provided and reasonable supporting documentation of all charges and
expenses incurred in providing such Services and shall produce written records
that verify the dates and times during which the Services were performed. Seller
shall make such books and records available to Buyer, upon reasonable notice,
during normal business hours.
ARTICLE III SERVICES; PAYMENT; INDEPENDENT CONTRACTOR
SECTION 3.1. Service Quality.
(a) Unless otherwise agreed in writing by the Parties, the Services
shall be performed by Seller for Buyer in a manner and quality that are
substantially consistent with Seller's past practice in performing the Services
for the Business, and Buyer shall use such Services in substantially the same
manner as they were used by Seller in the past practice of the Business. Seller
shall act under this Agreement solely as an independent contractor and not as an
agent of Buyer. All employees and representatives providing the Services shall
be under the direction, control and supervision of Seller (and not of Buyer),
and Seller shall have the sole right to exercise all authority with respect to
such employees and representatives and in no event shall such employees and
representatives be deemed to be employees or agents of Buyer.
(b) Seller shall have the right to shut down temporarily for routine
maintenance purposes the operation of the facilities providing any Service
whenever in its judgment, reasonably exercised, such action is necessary,
provided, that such shut down shall not adversely and unduly affect Buyer's
operations to which the provision of Services relate. Seller shall notify Buyer
as much in advance as reasonably practicable that maintenance is required.
Unless not feasible under the circumstances, this notice shall be given in
writing. Where written notice is not feasible, Seller shall give prompt oral
notice to Buyer, which notice shall be promptly confirmed in writing by Seller.
Seller shall be relieved of its obligations to provide Services only for the
period of time that its facilities are so shut down but shall use diligent and
commercially reasonable efforts to minimize each period of shutdown for such
purpose and to schedule such shutdown so as not to inconvenience or disrupt the
conduct of the Business by Buyer. Seller shall consult with Buyer prior to
temporary shutdowns to the extent reasonably practicable or, if not reasonably
practicable, immediately thereafter in order to establish alternative sources
for such services. To the extent commercially reasonable, Seller will afford
Buyer the benefit of any arrangements for substitute services that Seller makes
on its own behalf.
SECTION 3.2. Payment. Statements will be rendered each month by Seller to
Buyer for Services delivered during the preceding month. Each such statement
shall set forth in reasonable detail a description of such Services and the
amounts charged therefor and shall be payable 30 days after the date thereof.
Any amount not paid within such 30-day period, unless such amount is being
challenged, shall be subject to late charges at a rate of 10% per annum pro
rated for each day that such amount is overdue.
SECTION 3.3. Priorities. In providing Services, Seller shall accord Buyer
the same priority it accords its own operations.
SECTION 3.4. Taxes. The amounts set forth for each Service on Schedule A
do not include any Taxes. Any Taxes required to be charged by Seller under
applicable Law are in addition to the amounts to be paid by Buyer hereunder for
the Services.
SECTION 3.5. Uses of Services. Seller shall be required to provide
Services only to Buyer in connection with the Buyer's operation of the Business.
Buyer shall not resell any Services to any Person whatsoever or permit the use
of the Services by any Person other than in connection with the operation of the
Business in the ordinary course by Buyer and its subsidiaries.
ARTICLE IV TERM OF SERVICES
The provision of Services shall commence on the Closing Date and shall
terminate on the first anniversary of the Closing Date; provided, however, that:
(i) Buyer may cancel any Service upon 30 days' written notice of cancellation
and (ii) Seller may cease to provide a Service upon 90 days' written notice to
Buyer if Seller ceases to provide such Service to all of Seller's subsidiaries,
divisions and business units. Upon termination of any Services pursuant to this
Article IV, except as set forth in Section 7.3, Buyer's obligation to pay Seller
for such Services will cease.
ARTICLE V FORCE MAJEURE
Seller shall not be liable for any interruption, delay or failure to
perform any obligation under this Agreement when such interruption, delay or
failure results from causes beyond its reasonable control, including, but not
limited to, any strikes, lockouts or other labor difficulties, acts of any
government, riot, insurrection or other hostilities, embargo, fuel or energy
shortage, fire, flood, acts of God, wrecks or transportation delays, or
inability to obtain necessary labor, materials or utilities. In any such event,
Seller's obligations hereunder shall be postponed for such time as its
performance is suspended or delayed on account thereof. Seller will promptly
notify Buyer, either orally or in writing, upon learning of the occurrence of
such event of force majeure. In the event of a force majeure event, Seller will
use commercially reasonable efforts to resume its performance with the least
possible delay (including, to the extent commercially reasonable, affording
Buyer the benefit of any arrangements for substitute services that Seller makes
on its own behalf).
ARTICLE VI LIABILITIES
SECTION 6.1. Consequential and Other Damages. No Party shall be liable,
whether in contract, in tort (including negligence and strict liability), or
otherwise, for any special, indirect, incidental or consequential damages
whatsoever which in any way arise out of, relate to, or are a consequence of,
its performance or nonperformance hereunder, or the provision of or failure to
provide any Service hereunder, including, but not limited to, loss of profits,
business interruptions and claims of customers.
SECTION 6.2. Limitation of Liability. The liability of Seller with respect
to this Agreement or in connection with the performance, delivery or provision
of any Service provided under this Agreement shall be limited to the Losses of
Buyer arising from Seller's willful misconduct, bad faith or negligence;
provided that in no event shall the liability exceed the fees previously paid to
Seller by Buyer in respect of the Service from which such liability flows.
SECTION 6.3. Indemnity. Buyer hereby agrees to indemnify Sellers
Indemnified Persons from any and all Losses as defined in the Purchase Agreement
resulting from a demand, claim, lawsuit, action or proceeding relating to
Seller's conduct in connection with the provision of Services to Buyer under
this Agreement, except to the extent such Losses arise out of the willful
misconduct, bad faith or negligence of Seller or any of its employees, agents,
officers and directors. Seller represents and warrants that it has all necessary
right and authority to provide the Services to Buyer hereunder. Seller hereby
agrees to indemnify Buyers Indemnified Persons from any and all Losses resulting
from a demand, claim, lawsuit, action or proceeding relating to Seller's willful
misconduct, bad faith or negligence in connection with the provision of
Services to Buyer under this Agreement.
SECTION 6.4. Obligation to Correct. In the event of any breach of this
Agreement by Seller with respect to any error or defect in the provision of any
Service, Seller shall, at Buyer's request, correct such error or defect or
re-perform such Service in a timely manner as promptly as practical after
Buyer's request at the expense of Seller.
ARTICLE VII TERMINATION
SECTION 7.1. Termination. This Agreement shall terminate on the earliest
to occur of (a) the latest date on which any Service is to be provided as
indicated on Schedule A, (b) the date on which the provision of all Services has
terminated or been canceled pursuant to Article IV and (c) the date on which
this Agreement is terminated pursuant to Section 7.2.
SECTION 7.2. Breach of Agreement. If either Party shall cause or suffer to
exist any material breach of any of its obligations under this Agreement,
including, but not limited to, any failure to perform any Services or to make
payments when due, and said Party does not cure such breach within 30 days after
receiving written notice thereof from the non-breaching Party, the
non-breaching Party may terminate this Agreement, including the provision of
Services pursuant hereto, immediately by providing written notice of
termination. The failure of a Party to exercise its rights hereunder with
respect to a breach by the other Party shall not be construed as a waiver of
such rights nor prevent such Party from subsequently asserting such rights with
regard to the same or similar defaults.
SECTION 7.3. Sums Due. In the event of a termination of this Agreement,
Seller shall be entitled to all outstanding amounts due from Buyer for the
provision of Services rendered prior to the date of termination.
SECTION 7.4. Effect of Termination. Article VI, Section 7.3, Article VIII
and this Section 7.4 shall survive any termination of this Agreement.
ARTICLE VIII MISCELLANEOUS
SECTION 8.1. Notices.
(a) Any notice, demand, or communication required or permitted to be
given by any provision of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if (i) personally delivered, (ii)
sent by a nationally recognized courier service to the recipient at the address
below indicated, (iii) sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) delivered by facsimile with confirmation of
receipt:
If to Seller:
c/o Xxxxxxxxx Xxxx Company
000 Xxxxxxxx Xxxxx Xxxx
Xxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: Deputy General Counsel - Transactions
(000) 000-0000 (telecopier)
(000) 000-0000 (telephone)
If to Buyer:
Dresser-Rand Group Inc.
Xxxx Xxxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
(000) 000-0000 (telecopier)
(000) 000-0000 (telephone)
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx
(000) 000-0000 (telecopier)
(000) 000-0000 (telephone)
and to:
Dresser-Rand Holdings, LLC
c/o First Reserve Corporation
Xxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx Xxxxxxx
(000) 000-0000 (telecopier)
(000) 000-0000 (telephone)
or to such other address as any Party may, from time to time, designate in a
written notice given in like manner.
(b) Except as otherwise provided herein, any notice under this Agreement
will be deemed to have been given (i) on the date such notice is personally
delivered or delivered by facsimile, (ii) the next succeeding Business Day after
the date such notice is delivered to the overnight courier service if sent by
overnight courier, or (iii) five Business Days after the date such notice is
sent by registered or certified mail; provided, however, that in each case
notices received after 4:00 p.m. (local time of the recipient) shall be deemed
to have been duly given on the next Business Day.
SECTION 8.2. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
SECTION 8.3. Entire Agreement. This Agreement and the Purchase Agreement
contains the entire understanding of the Parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between the Parties with respect to the subject matter hereof.
SECTION 8.4. Headings. The headings contained in this Agreement are for
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
SECTION 8.5. Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
SECTION 8.6. Consent to Jurisdiction; Waiver of Jury Trial. Each of the
Parties irrevocably submits to the exclusive jurisdiction of the United States
District Court for the Southern District of New York located in the borough of
Manhattan in the City of New York, or if such court does not have jurisdiction,
the Supreme Court of the State of New York, New York County, for the purposes of
any Proceeding arising out of this Agreement or any transaction contemplated
hereby. Each of the Parties irrevocably and fully waives the defense of an
inconvenient forum to the maintenance of such Proceeding, and waives any
objection it might otherwise have to service of process under law. Each of the
Parties further agrees that service of any process, summons, notice or document
to such party's respective address listed above in one of the manners set forth
in Section 8.1 shall be deemed in every respect effective service of process in
any such Proceeding. Nothing herein shall affect the right of any Person to
serve process in any other manner permitted by law. Each of the Parties
irrevocably and unconditionally waives any objection to the laying of venue of
any Proceeding arising out of this Agreement or the transactions contemplated
hereby in (a) the United States District Court for the Southern District of New
York or (b) the Supreme Court of the State of New York, New York County, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such Proceeding brought in any such court has
been brought in an inconvenient forum. The Parties hereby irrevocably and
unconditionally waive trial by jury in
any Proceeding relating to this Agreement or any other agreement entered into in
connection therewith and for any counterclaim with respect thereto.
SECTION 8.7. Governing Law. This Agreement shall be construed under and
governed by the laws of the State of New York without regard to the principles
of conflicts of law thereof.
SECTION 8.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any Party without the
prior written consent of the other Party; provided, that (i) Buyer may assign
any of its rights and obligations under this Agreement to one or more of its
wholly owned subsidiaries or any member of the Dresser-Rand Group and may pledge
its rights as security to any of its financing sources without the Seller's
prior written consent; provided, further, that no assignment by Buyer to any
such subsidiary, entity or financing source shall in any way affect Seller's
rights or relieve Buyer of any of its obligations under this Agreement, and (ii)
Seller may delegate performance of all or any part of its obligations under this
Agreement to (x) any subsidiary of Seller or (y) one or more third parties to
the extent such third parties are routinely used to provide such Services to
other businesses of the Seller and its Affiliates; provided, further, that no
such delegation by Seller to any such subsidiary or third party shall in any way
affect Buyer's rights or relieve Seller of any of its obligations under this
Agreement. Any purported assignment in violation of this Section 8.8 shall be
void.
SECTION 8.9. No Third Party Beneficiaries. Nothing herein expressed or
implied is intended or shall be construed to confer upon or give to any Person,
other than the Parties and their permitted successors or assigns, any rights or
remedies under or by reason of this Agreement.
SECTION 8.10. Amendment. This Agreement may not be amended, modified or
supplemented except upon the execution and delivery of a written agreement
executed by the Parties and specifically referencing this Agreement.
SECTION 8.11. Waiver. Any of the terms or conditions of this Agreement
that may be lawfully waived may be waived in writing at any time by the Party
which is entitled to the benefits thereof. Any waiver of any of the provisions
of this Agreement by any Party shall be binding only if set forth in an
instrument in writing signed on behalf of such Party. No failure to enforce any
provision of this Agreement shall be deemed to or shall constitute a waiver of
such provision and no waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 8.12. Confidentiality: Security: Title to Data.
(a) Each of the Parties agrees that any confidential information of the
other Party received in the course of performance under this Agreement shall be
kept strictly confidential by the Parties, except that Seller may disclose such
information in a manner consistent with past practice in respect of
Services provided to the Business for the purpose of providing Services pursuant
to this Agreement to any subsidiary of Seller or to third parties that
provide such Services; provided, that Seller shall be responsible for any such
subsidiary keeping confidential such confidential information and, with respect
to third parties, will take action to keep confidential such confidential
information in substantially the same manner as in the past practice of the
Business. Upon the termination of this Agreement, each Party shall return to the
other Party or destroy all of such other Party's confidential information. Each
of the Parties agree to take such actions as may be reasonably necessary, if any
to ensure compliance with the Health Insurance Portability and Accountability
Act of 1996 in connection with the provision of the Services.
(b) Buyer acknowledges that it will acquire no right, title or interest
(including any license rights or rights of use) in any firmware or software, and
the licenses therefor which are owned by Seller by reason of Seller's provision
of the Services provided hereunder; provided, that the foregoing shall not
affect any rights of Buyer under the Purchase Agreement.
[SIGNATURES ON FOLLOWING PAGE]
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed by its duly authorized officer, in each case as of the date first above
written.
XXXXXXXXX-XXXX COMPANY LIMITED
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: Assistant Secretary
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DRESSER-RAND GROUP INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
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Title: President
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