Exhibit 10.8
TRANSITION AGREEMENT
--------------------
THIS TRANSITION AGREEMENT (this "Agreement") is made and entered into as of
this 25th day of July, 1997, by and between Motors and Gears Holdings, Inc., a
Delaware corporation (the "Company"), and Jordan Industries, Inc., an Illinois
corporation ("Parent").
WHEREAS, the Company wishes to occupy certain of the facilities leased by
the Parent and to purchase from Parent certain services designed to assist the
Company in transitioning to a stand-alone company pursuant to terms and
conditions as more specifically described herein;
WHEREAS, Parent desires to provide or cause to be provided those facilities
and services requested by the Company under such terms and conditions; and
WHEREAS, the Company will retain the sole and absolute right and authority
to fully and completely operate and manage its business and properties.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties hereto agree as follows:
Section 1. Facilities and Services.
-----------------------
1.1 Facilities. Parent hereby grants to the Company the right to
use the Facilities set forth on Exhibit A. The Company acknowledges and agrees
that within 60 days of the expiration of the term of this Agreement, it shall
leave the Facilities in the same condition as at the commencement of the term of
the Agreement, ordinary wear and tear and damage by casualty excepted.
1.2 Services to be Rendered. Parent shall provide the Company with
the services described below (each, a "Service", and collectively, the
"Services") as selected from time to time by the Company:
(a) Insurance Administration. Assistance in securing all forms of
insurance, including property, casualty, workers' compensation and
trustees' and officers' liability coverage; managing insurance policies;
negotiation of premiums; arranging payment terms; managing claims; and
preparation of loss fund analysis. The amount and levels of insurance shall
be determined in the sole and absolute discretion of the Company.
(b) Accounting. Provision of all accounting services, including
accounts payable functions; processing of all employee expense reports and
reimbursements of travel and entertainment expenses; and maintenance of
accounts payable, cash disbursement systems, including reasonable internal
controls, internal audit coverage and audit support, including
financial audits, operational audits and information system audits, as
requested and authorized in advance by the Company.
(c) Management Information Systems.
------------------------------
(i) Applications Development. Development, maintenance and
continuing evolution of system applications to provide technology
solutions to business needs and problems, as requested and authorized
in advance by the Company.
(ii) Telecommunications. Design, operation and maintenance of
network infrastructure, including telephone and data transmission
lines, voice mail, facsimile machines, cellular phones, pager, etc.;
negotiation of contracts with third party vendors and suppliers; and
local area network and wide area network communications support.
(iii) Operations/Technical Support and User Support. Design,
maintenance and operation of the computing environment, including
business specific applications, network wide applications, electronic
mail and other systems; purchase and maintenance of equipment,
including hardware and software; configuration, installation and
support of computer equipment; and education and training of the user
community.
(d) Special Projects. Support of all special projects, as requested
and authorized in advance by the Company.
(e) Legal. Coordination and supervision of all third party legal
services; assistance in the preparation of public filings and registration
statements; and oversight of processing of claims against the Company.
(f) Investor Relations/Communications. Preparation and coordination
of annual and quarterly reports to securityholders; presentations to
public; public relations; preparation of marketing materials; and investor
relations services.
1.3 Allocation of Facilities; Scope of Services; Charges. The parties
agree to cooperate and use reasonable efforts in order to allocate the
Facilities in accordance with the reasonable requests (based on their business
needs) of Parent and the Company. Charges for the use of the Facilities will be
allocated based upon the square footage assigned to the parties hereunder. The
parties will agree from time to time on the Services to be provided, the scope
of Services listed in Section 1.2 and the charges for such Services. The scope
of Services shall consist of the estimated amount of items to be processed or
hours to be spent for a category of the Services in any year as agreed to by the
parties. The charges for Services shall consist of an amount equal to Parent's
costs incurred in providing such Services. If the scope of Services actually
performed by Parent in any category of Services is different than that agreed to
by the parties, or if the scope
-2-
of Services is increased at the request of the Company, then the parties shall
negotiate in good faith to revise the scope of Services and to adjust the
charges for such Services.
1.4 Performance of Services. Parent covenants that it will perform
or cause to be performed the Services in a timely, efficient and workmanlike
manner and in substantially the same manner in which Parent is providing such
services to the Company currently. Parent further covenants that it will
maintain or contract for a sufficient staff of trained personnel to enable it to
perform the Services hereunder. Parent may retain third parties or its
affiliates to provide certain of the Services hereunder. Any arrangements
between Parent and its affiliates for the provision of Services hereunder shall
be commercially reasonable and on terms not less favorable than those which
could be obtained from unaffiliated third parties.
1.5 Payment for Facilities and Services. Parent shall xxxx the
Company, at the end of each calendar month for the applicable Facilities and
Services. Such amount shall be payable by the Company in full within 30 days of
receipt thereof by the Company.
1.6 Reimbursement. The Company shall reimburse Parent for all
reasonable third party out-of-pocket expenses it incurs on behalf of the Company
not billed directly to the Company within 30 days of receipt of the invoice
therefor, if not included in the charges pursuant to Section 1.3.
Section 2. Term. The initial term of this Agreement shall commence on the
date hereof and shall be through December 31, 1997 (the "Initial Term") and
shall be renewable by the Company every year thereafter, subject to approval by
a majority of the Independent Directors (which they may withhold or grant in
their sole discretion). Absent written notice of non-renewal as provided in this
Section 2, this Agreement shall be automatically renewed for successive one-year
terms (each, a "Renewal Term") upon the expiration of the Initial Term and each
Renewal Term. Notice of non-renewal, if given, shall be given in writing by
either party hereto not less than ninety (90) calendar days before the
expiration of the Initial Term or any Renewal Term. Upon termination of this
Agreement, Parent shall promptly return to the Company all monies, books,
records and other materials held by it for or on behalf of the Company. As used
herein, the term "Independent Director" means each member of the Company's Board
of Trustees who is not affiliated with Parent or any of its affiliates, directly
or indirectly, whether by ownership of, ownership interest in, employment by,
any material business or professional relationship with, or service as an
officer of Parent or any of its affiliates, and is not serving as a trustee or
director for more than three real estate investment trusts organized by a
sponsor of the Company.
Section 3. Audit of Services. At any time during regular business hours
and as often as reasonably requested by the Company's officers, Parent shall
permit the Company or its authorized representatives to examine and make copies
and abstracts from the records and books of Parent for the purpose of auditing
the performance of, and the charges of, Parent under the terms of this
Agreement; provided, that all costs and expenses of such inspection shall be
borne by the Company.
-3-
Section 4. Prevention of Performance. Parent shall not be determined to
be in violation of this Agreement if it is prevented from performing any
Services hereunder for any reason beyond its reasonable control, including
without limitation, acts of God, nature, or of public enemy, strikes, or
limitations of law, regulations or rules of the Federal or of any state or local
government or of any agency thereof.
Section 5. Indemnification.
5.1 By the Company. The Company shall indemnify, defend and hold
Parent, and its directors, officers, and employees harmless from and against all
damages, losses and reasonable out-of-pocket expenses (including fees) incurred
by them in the course of performing the duties on behalf of the Company and its
subsidiaries as prescribed hereby.
5.2 Remedy. Parent does not assume any responsibility under this
Agreement other than to render the services called for under this Agreement in
good faith and in a manner reasonably believed to be in the best interests of
the Company. The Company's sole remedy on account of the failure of Parent to
render the services as and when required hereunder shall be to procure services
elsewhere and to charge Parent the difference between the reasonable increased
cost, if any, to procure new services, and the current cost to the Company to
procure services under this Agreement.
Section 6. Notices.
6.1 Manner of Delivery. Each notice, demand, request, consent,
report, approval or communication (each a "Notice") which is or may be required
to be given by either party to the other party in connection with this Agreement
and the transactions contemplated hereby, shall be in writing, and given by
telecopy, personal delivery, receipted delivery service, or by certified mail,
return receipt requested, prepaid and properly addressed to the party to be
served.
6.2 Addresses. Notices shall be addressed as follows:
If to the Company:
Motors and Gears Holdings, Inc.
Arborlake Center
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
If to Parent:
Jordan Industries, Inc.
Arborlake Center
0000 Xxxx Xxxx Xxxx, Xxxxx 000
-0-
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
6.3 Effective Date. Notices shall be effective on the date sent via
telecopy, the date delivered personally or by receipted delivery service, or
three (3) days after the date mailed.
6.4 Change of Address. Each party may designate by notice to the
others in writing, given in the foregoing manner, a new address to which any
notice may thereafter be so given, served or sent.
Section 7. Independent Contractor. The Parent and its personnel shall, for
purposes of this Agreement, be independent contractors with respect to the
Company
Section 8. Entire Agreement. This Agreement sets forth the entire
understanding of the Company and Parent, and supersedes all prior agreements,
arrangements and communications, whether oral or written, with respect to the
subject matter hereof. No supplement, modification, termination in whole or in
part, or waiver of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver by either party of any breach of any
provision of this Agreement shall be deemed a continuing waiver or a waiver of
any preceding or succeeding breach of such provision or of any other provision
herein contained.
Section 9. Assignability; Binding Effect. This Agreement may be assigned
by either party hereto without the consent of the other party, provided,
however, such assignment shall not relieve such party from its obligations
hereunder. Any assignment of this Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto, each of their respective successors and permitted assigns, and no other
persons shall have or derive any right, benefit or obligation hereunder.
Section 10. Headings. The headings and titles of the various paragraphs of
this Agreement are inserted merely for the purpose of convenience, and do not
expressly or by implication limit, define, extend or affect the meaning or
interpretation of this Agreement or the specific terms or text of the paragraph
so designated.
Section 11. Governing Law. This Agreement shall be governed by the internal
laws (and not the law of conflicts) of the State of Illinois.
Section 12. Severability. In the event that any provision of this Agreement
shall be held to be void or unenforceable in whole or in part, the remaining
provisions of this Agreement and the remaining portion of any provision held
void or unenforceable in part shall continue in full force and effect.
-5-
Section 13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall be considered one and the same instrument.
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
MOTORS AND GEARS HOLDINGS, INC.
By:
------------------------------
Name: Xxxxxx X. Xxxxx
Title: Authorized Officer
JORDAN INDUSTRIES, INC.
By:
------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Senior Vice President
-7-
EXHIBIT A
Description of Facilities
-------------------------
For purposes of the Transition Agreement, Facilities shall mean the
facilities maintained by Parent or one of its affiliates at the following
addresses:
Arborlake Center
0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Facilities shall also include any other premises owned, leased or subleased
by Parent at which the Company desires to utilize such premises as well as the
utilities, fixtures, furniture and equipment used in connection with the
operation of such premises.
