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EXHIBIT 10.5
SERVICES AGREEMENT
This SERVICES AGREEMENT is made and entered into as of this 20th day of
December 1996, 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 pursuant to which ATL anticipates that in 1997 it will issue
additional shares of its authorized but unissued Class A Common Stock in a
registered and underwritten initial public offering of 20% or less of its
outstanding shares and subsequently, Odetics will distribute to its
shareholders pursuant to a tax free spinoff under Internal Revenue Code Section
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 asserts, 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
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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, 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 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.
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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.
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 __% per month for all overdue amounts.
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.
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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, from 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 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
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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 on the other party ("Disclosing
Party") deems confidential, including trade secrets and unpublished
technical 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
All notices to ATL shall be addressed as follows:
ATL Products, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Either party may, be 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.
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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.
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.
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.
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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 Xxxx Xxxxxxx
Title: Chief Executive Officer Title: Chief Executive Officer
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EXHIBIT A
Description of Services Calculation of Fees
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