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EXHIBIT 2.5
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement ("Agreement") is entered into on
___________, 1999 between Daisytek, Incorporated, a Delaware corporation
("Daisytek") and PFSweb, Inc., a Delaware corporation ("PFSweb").
RECITALS
WHEREAS, Daisytek and PFSweb have entered into that certain Master
Separation Agreement (the "Separation Agreement"; terms defined therein having
the same meaning when used herein) pursuant to which the PFS Business will be
separated from Daisytek; and
WHEREAS, the PFS Business has been operated as a subsidiary of Daisytek,
and Daisytek has provided various services to the PFS Business; and
WHEREAS, Daisytek has caused PFSweb to be incorporated in order to effect
the separation of the PFS Business; and
WHERAS, PFSweb desires to continue to obtain various services from Daisytek
and Daisytek desires to continue to provide such services;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Defined Terms. In addition to the words and terms defined in
the Separation Agreement which shall have the same meaning when used herein, the
following terms, as used herein, shall have the following meanings:
"Transition Period" means the period commencing on the Contribution Date
and ending on the Distribution Date; provided, however, that with respect to any
Transition Service, PFSweb may, upon notice to Daisytek, either (i) terminate
the Transition Period as of any date prior to the Distribution Date or (ii)
extend the Transition Period to a date beyond the Distribution Date, but not
later than the one year anniversary date of the Contribution Date.
"Transition Services" means any services provided by Daisytek, its
Affiliates or their suppliers to the PFS Business prior to the Contribution Date
which PFSweb reasonably identifies and requests in writing that Daisytek provide
to it during the Transition Period; provided that Transition Services expressly
excludes any such services which shall be provided to PFSweb or its Affiliates
pursuant to the terms of any of the Ancillary Agreements; and provided, further,
that Transition Services expressly excludes any such services which Daisytek
would not be legally permitted to provide to a third party.
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ARTICLE 2
TRANSITION SERVICES
Section 2.01. Transition Services.
(a) During the Transition Period, Daisytek shall use its reasonable best
efforts to provide, or cause its Affiliates to use their reasonable best efforts
to provide, to PFSweb or its Affiliates all Transition Services in the manner
and at a relative level of service consistent in all material respects with that
provided by Daisytek or its Affiliates to the PFS prior to the Contribution
Date. PFSweb shall use all commercially reasonable efforts to obtain all such
Transition Services from a source other than Daisytek and its Affiliates on or
prior to the conclusion of the Transition Period; provided that, if PFSweb
cannot obtain any Transition Service from a source other than Daisytek and its
Affiliates and such Transition Service is necessary in order to operate the PFS
Business in substantially the same manner as it was conducted immediately prior
to the Contribution Date, then, subject to Section 2.01(e) below, Daisytek (or
its Affiliates) shall provide such Transition Service to PFSweb (or its
Affiliates) for an additional period not to exceed six months.
(b) In consideration of the provision of Transition Services hereunder,
PFSweb shall pay to Daisytek (i) an amount equal to the cost historically
allocated to the PFS Business as of the Contribution Date for such service,
adjusted to reflect any changes in the nature, cost or level of the services so
provided, or (ii) if no such cost has historically been allocated to the PFS
Business for any Transition Service, then an amount equal to that portion of the
total cost borne by Daisytek which Daisytek would have allocated to the PFS
Business under its internal allocation formula as of the Contribution Date, plus
any direct user charges or similar type charges resulting from PFSweb's or its
Affiliates' use of such services which are not otherwise recouped by Daisytek
hereunder, plus, without duplication, any other reasonable charges necessary to
make Daisytek whole for the provision of such services.
(c) Except as otherwise agreed, Daisytek shall invoice PFSweb on a monthly
basis for the Transition Services to be provided hereunder, and payment shall be
due 30 days after invoice date.
(d) Notwithstanding the foregoing, (i) for any Transition Services which
include payment of payroll or wages to employees of the PFS Business, PFSweb
shall pay all necessary amounts (including payroll taxes) to Daisytek prior to
the payment thereof by Daisytek and (ii) any charges to Daisytek from outside
suppliers for the provision of Transition Services shall be submitted by
Daisytek to PFSweb for payment and, except as Daisytek may otherwise agree in
connection with any individual statement of charges which has been submitted to
Daisytek, PFSweb hereby agrees to make payment therefor either to such outside
supplier in accordance with the payment terms of such outside supplier or to
Daisytek if Daisytek is required to pay such outside supplier, (in which event
such payment shall be made on or before the date on which Daisytek notifies
PFSweb it intends to make payment, or if Daisytek does not provide such notice,
immediately after Daisytek provides notice to PFSweb that Daisytek has made such
payment).
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(e) In the event PFSweb shall request Daisytek to continue to provide any
Transition Service beyond the expiration of the Transition Period, Daisytek and
PFSweb shall negotiate in good faith and at arm's length the terms of any such
extension, including fair market value pricing for all such services.
Section 2.02. Insurance Coverage.
(a) During the Transition Period, Daisytek shall, subject to insurance
market conditions and other factors beyond its control, maintain policies of
insurance, including for the benefit of PFSweb or any of its Affiliates,
directors, officers, employees or other covered parties (collectively, the
"PFSweb Covered Parties") which are comparable to those maintained generally by
Daisytek. Except as provided below, during the Transition Period, such policies
of insurance shall cover PFSweb Covered Parties for liabilities and losses
insured prior to the Contribution Date. To the extent of any self insured or
other loss retentions with respect to insurance policies in force, PFSweb shall,
during the Transition Period, be solely responsible for any losses, damages and
related expenses, not included in Daisytek insurance program expense allocations
to PFSweb, incurred by itself or PFSweb Covered Parties within such loss or
retentions and shall not seek reimbursement or indemnification thereof from
Daisytek.
(b) Daisytek will use all commercially reasonable efforts to assist PFSweb
Covered Parties in asserting claims under applicable insurance policies, and
shall adjust such policies, as necessary and practicable, to provide for PFSweb
and Daisytek recoveries consistent with their respective interests and shall not
unduly favor one insured party over another.
(c) PFSweb shall promptly pay or reimburse Daisytek, as the case may be,
for premium expenses, and PFSweb Covered Parties shall promptly pay or reimburse
Daisytek for any costs and expenses which Daisytek may incur in connection with
the insurance coverages maintained pursuant to this Section, including any
subsequent premium adjustments. All payments and reimbursements by PFSweb and
PFSweb Covered Parties to Daisytek shall be made in accordance with the payment
terms set forth in Section 2.01(c) above.
(d) To the full extent permitted by contract and law, except as otherwise
set forth herein, the control and administration of such insurance policies,
including claims against insurance policies and any modifications to terms or
conditions of insurance policies, shall remain with Daisytek (except that any
such action taken by Daisytek shall treat fairly all insured parties and their
respective claims and shall not unduly favor one insured party over another).
PFSweb and PFSweb Covered Parties shall make all reasonable efforts to
facilitate Daisytek's control and administration of such policies.
(e) Daisytek's insurance policies shall be applicable to PFSweb losses, as
follows: (i) with respect to any insurance policies where coverage is provided
on a "claims-made" or "occurrences reported" basis, any events, acts or
omissions which may give rise to insured losses, or damages which give rise to
claims thereunder, must have occurred and notice given to Daisytek prior to
expiration of the Transition Period; (ii) with respect to other types of
insurance policies, including those provided on an "occurrence" basis, any
events, acts or omissions giving rise to any insured
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losses or damages must have occurred prior to expiration of the Transition
Period; and (iii) with respect to all claims under all insurance policies,
coverage for events, acts or omissions shall be interpreted consistent with the
terms of such policies and the intent of the foregoing clauses (i) and (ii).
(f) With respect to claims covered by the insurance policies described
herein, Daisytek and PFSweb shall control the investigation, defense and
settlement of all claims; provided, however, that PFSweb may not effect any
settlement with respect to any such claim without Daisytek's prior written
consent (which consent shall not be unreasonably withheld or delayed) unless
such settlement (i) will have no direct impact on Daisytek's future insurance
recoveries under relevant insurance policies, and (ii) will require that only
PFSweb or PFSweb Covered Parties, and not Daisytek or its insurers, assume
financial responsibility for the settlement (under applicable deductibles or
self-insured retentions), any related expenses and/or any subsequent premium
adjustments.
(g) From and after expiration of the Transition Period, except as provided
herein, PFSweb, shall be responsible for obtaining and maintaining insurance
programs for its risk of loss and such insurance arrangements shall be separate
and apart from Daisytek's insurance programs. Notwithstanding the foregoing, (i)
Daisytek, upon the request of PFSweb, shall use all commercially reasonable
efforts to assist PFSweb in the transition to its own separate insurance
programs from and after the Transition Period, and shall provide PFSweb with any
information that is in the possession of Daisytek and is reasonably available
and necessary to either obtain insurance coverages for PFSweb or to assist
PFSweb in preventing unintended self-insurance, (ii) each of Daisytek and
PFSweb, at the request of the other, shall cooperate with and use commercially
reasonable efforts to assist the other in recoveries from claims made under any
insurance policy for the benefit of any insured party; and (iii) neither
Daisytek nor PFSweb, nor any of their Affiliates, shall take any action which
would intentionally jeopardize or otherwise interfere with either party's
ability to collect any proceeds payable pursuant to any insurance policy.
Section 2.03. Records and Accounts. Daisytek shall maintain accurate
records and accounts of all transactions relating to the Transition Services
performed by it pursuant to this Agreement. Such records and accounts shall be
maintained separately from Daisytek's own records and accounts and shall reflect
such information as would normally be examined by an independent accountant in
performing a complete audit pursuant to United States generally accepted
auditing standards for the purpose of certifying financial statements, and, to
the extent required by applicable law, to permit verification thereof by
governmental agencies. PFSweb shall have the right to inspect and copy, upon
reasonable notice and at reasonable intervals during Daisytek's regular office
hours, the separate records and accounts maintained by Daisytek relating to the
Transition Services.
Section 2.04. Directors and Officers of PFSweb and Daisytek.
(a) Nothing contained in this Agreement shall be deemed to relieve the
officers and directors of PFSweb from the performance of their duties or limit
the exercise of their powers in
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accordance with PFSweb's Certificate of Incorporation or the laws of the State
of Delaware. The services of Daisytek's officers and employees which are
rendered to PFSweb under this Agreement shall at all times be in accordance with
the reasonable instructions of PFSweb's officers and in accordance with the
historical business practice of the PFS Business.
(b) Nothing in this Agreement shall limit or restrict the right of any of
Daisytek's directors, officers or employees to engage in any other business or
devote their time and attention in part to the management or other aspects of
any other business, whether of a similar nature, or to limit or restrict the
right of Daisytek to engage in any other business or to render services of any
kind to any corporation, firm, individual, trust or association.
(c) Except as expressly provided as part of any Transition Service
hereunder, Daisytek shall have no authority pursuant to this Agreement to commit
PFSweb or any of its Affiliates to any obligation in any manner or to use
PFSweb's name or to enter into any contract or commitment on behalf of PFSweb.
Section 2.05. Limitation of Liability.
(a) Daisytek shall have no liability whatsoever to PFSweb or any of its
Affiliates for any error, act or omission in connection with the Transition
Services to be rendered by Daisytek to PFSweb hereunder unless any such error,
act or omission derives from willful misconduct or gross negligence. IN NO EVENT
SHALL DAISYTEK BE LIABLE FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS, REVENUES OR DATA), WHETHER
BASED ON BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, WHETHER
OR NOT DAISYTEK HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. THE
LIABILITY OF DAISYTEK FOR DAMAGES OR ALLEGED DAMAGES HEREUNDER, WHETHER IN
CONTRACT, TORT OR ANY OTHER LEGAL THEORY, IS LIMITED TO, AND WILL NOT EXCEED,
PFSWEB'S DIRECT DAMAGES.
(b) Daisytek is an independent contractor and when its employees act under
the terms of this Agreement, they shall be deemed at all times to be under the
supervision and responsibility of Daisytek; and, notwithstanding any
reimbursement of labor costs as provided herein or otherwise, no person employed
by Daisytek and acting under the terms of this Agreement shall be deemed to be
acting as agent or employee of PFSweb or any customer of PFSweb for any purpose
whatsoever.
ARTICLE 3
MISCELLANEOUS
Section 3.01. Entire Agreement. This Agreement, including all the Ancillary
Agreements, constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof.
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Section 3.02. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware regardless of the
laws that might otherwise govern under principles of conflicts of laws
applicable thereto.
Section 3.03. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
Section 3.04. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by telecopy with answer back, by express or overnight mail delivered by
a nationally recognized air courier (delivery charges prepaid), or by registered
or certified mail (postage prepaid, return receipt requested) to the respective
parties at their chief executive offices, or to such other address as the party
to whom notice is given may have previously furnished to the others in writing
in the manner set forth above. Any notice or communication delivered in person
shall be deemed effective on delivery. Any notice or communication sent by
telecopy or by air courier shall be deemed effective on the first Business Day
at the place at which such notice or communication is received following the day
on which such notice or communication was sent. Any notice or communication sent
by registered or certified mail shall be deemed effective on the fifth Business
Day at the place from which such notice or communication was mailed following
the day on which such notice or communication was mailed.
Section 3.05. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their legal representatives
and successors, and each Subsidiary and each Affiliate of the parties hereto,
and nothing in this Agreement, express or implied, is intended to confer upon
any other Person any rights or remedies of any nature whatsoever under or by
reason of this Agreement, except as otherwise expressly provided herein. Except
as otherwise expressly set forth herein, this Agreement may not be assigned or
transferred to any other unaffiliated Person without the prior written consent
of each of the parties hereto.
Section 3.06. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which shall
constitute one and the same agreement.
Section 3.07. Dispute Resolution. Resolution of any and all disputes
arising from or in connection with this Agreement, whether based on contract,
tort, or otherwise (collectively, "Disputes"), shall be exclusively governed by
and settled in accordance with the provisions of this Section. The parties
hereto shall use all commercially reasonable efforts to settle all Disputes
without resorting to mediation, arbitration, litigation or other third party
dispute resolution mechanisms. If any Dispute remains unsettled, a party hereto
may commence proceedings hereunder by first delivering a written notice from a
Senior Vice President or comparable executive officer of such party (the
"Demand") to the other parties providing a reasonable description of the Dispute
to the others and expressly requesting mediation hereunder. The parties hereby
agree to submit all Disputes to non-binding mediation before a mediator
reasonably
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acceptable to all parties involved in such Dispute. If the parties are unable to
agree upon a mediator or if, after such mediation, the parties subject to such
mediation disagree regarding the mediator's recommendation, such Dispute shall
be submitted to arbitration under the terms hereof, which arbitration shall be
final, conclusive and binding upon the parties, their successors and assigns.
The arbitration shall be conducted in Dallas, Texas by three arbitrators acting
by majority vote (the "Panel") selected by agreement of the parties, or, failing
such agreement, appointed pursuant to the commercial arbitration rules of the
American Arbitration Association, as amended from time to time (the "AAA
Rules"). If an arbitrator so selected becomes unable to serve, his or her
successors shall be similarly selected or appointed. The arbitration shall be
conducted pursuant to the Federal Arbitration Act and such procedures as the
parties subject to such arbitration (each, a "Party") may agree, or, in the
absence of or failing such agreement, pursuant to the AAA Rules. Notwithstanding
the foregoing: (i) each Party shall have the right to inspect the books and
records of the other Party that are reasonably related to the Dispute; (ii) each
Party shall provide to the other, reasonably in advance of any hearing, copies
of all documents which a Party intends to present in such hearing; and (iii)
each Party shall be allowed to conduct reasonable discovery through written
requests for information, document requests, requests for stipulation of fact
and depositions, the nature and extent of which discovery shall be determined by
the Parties; provided that if the Parties cannot agree on the terms of such
discovery, the nature and extent thereof shall be determined by the Panel which
shall take into account the needs of the Parties and the desirability of making
discovery expeditious and cost effective. The award shall be in writing and
shall specify the factual and legal basis for the award. The Panel shall
apportion all costs and expenses of arbitration, including the Panel's fees and
expenses and fees and expenses of experts, between the prevailing and
non-prevailing Party as the Panel deems fair and reasonable. The parties hereto
agree that monetary damages may be inadequate and that any party by whom this
Agreement is enforceable shall be entitled to seek specific performance of the
arbitrators' decision from a court of competent jurisdiction, in addition to any
other appropriate relief or remedy. Notwithstanding the foregoing, in no event
may the Panel award consequential, special, exemplary or punitive damages. Any
arbitration award shall be binding and enforceable against the parties hereto
and judgment may be entered thereon in any court of competent jurisdiction.
Section 3.08. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the fullest
extent possible.
Section 3.09. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
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further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
Section 3.10. Amendment. No change or amendment will be made to this
Agreement except by an instrument in writing signed on behalf of each of the
parties to be bound by such change or amendment.
Section 3.11. Authority. Each of the parties hereto represents to the other
that (a) it has the corporate or other requisite power and authority to execute,
deliver and perform this Agreement, (b) the execution, delivery and performance
of this Agreement by it has been duly authorized by all necessary corporate or
other action, (c) it has duly and validly executed and delivered this Agreement,
and (d) this Agreement is a legal, valid and binding obligation, enforceable
against it in accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equity principles.
Section 3.12. Interpretation. 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. When a reference is made in this Agreement to
an Article or a Section, such reference shall be to an Article or Section of
this Agreement unless otherwise indicated.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.
DAISYTEK, INCORPORATED
By:
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Name:
Title:
PFSWEB, INC.
By:
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Name:
Title:
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