TRANSITION SERVICES AGREEMENT
Exhibit 10.4
This
Transition Services Agreement (this “Agreement”) is
dated and effective as of February 28, 2017 (the
“Effective
Date”) by and between
Brekford Corp., a Delaware corporation (“Transferor”),
and Global
Public Safety, LLC, a Delaware limited liability company
(“Transferee”).
Each capitalized term used but not otherwise defined herein
shall have the meaning ascribed to such term in the Purchase
Agreement (as defined below).
WHEREAS, pursuant to that certain
Contribution and Unit Purchase Agreement dated as of the date
hereof (the “Purchase
Agreement”) by and among Transferor, Transferee and
LB&B Associates Inc., a North Carolina corporation, Transferor
is contributing certain assets to Transferee that are used or held
for use in connection with the Business;
WHEREAS, Transferor and Transferee
desire to provide for the efficient transition of the Business
following the Closing; and
WHEREAS, in order to promote such
efficient transition and as a material inducement to Transferor and
Transferee to enter into the Purchase Agreement, Transferor and
Transferee have agreed to handle certain transitional matters in
the manner stated in this Agreement.
NOW, THEREFORE, in consideration of the
mutual promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Transition
Services. During the Term (as
defined below), Transferor shall use commercially reasonable
efforts to provide or cause to be provided certain services to
Transferee and shall provide Transferee with access to and use of
certain assets owned by Transferor, as specifically set forth
on Schedule 1
attached hereto (collectively, the
“Transition
Services”), for the time
periods set forth therein for each of the Transition Services (the
time period for which Transferor will provide each Transition
Service, the “Service
Period”).
2. Fees
and Payment.
(a) As consideration
for the provision of the Transition Services, Transferee shall pay
to Transferor the fee set forth in the relevant provision of
Schedule 1 hereto
in respect of each such Transition Service (collectively, the
“Service
Fees”).
(b) Transferor shall
submit statements of account to Transferee on a monthly basis (in
arrears) with respect to all amounts owed by Transferee to
Transferor hereunder (the “Invoiced
Amount”), setting out (i) the relevant Transition
Services provided during the preceding month by reference to
Schedule 1,
(ii) the Service Fees payable hereunder in respect thereof,
and (iii) any invoices for any service provided by third parties
(and payable by Transferee pursuant to the terms hereof).
Transferee shall pay the Invoiced Amount to Transferor by wire
transfer within thirty (30) days of the date of Transferee’s
receipt of the statement of account (the “Payment
Date”).
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(c) In the event that
Transferor purchases from any unaffiliated third party any goods or
services used to provide any Transition Service set forth on
Schedule 1 and the
fees charged by such third party or its replacement increase or
decrease following the date of this Agreement, the
parties agree that the fees associated with any such Transition
Service shall be adjusted to reflect Transferor’s
out-of-pocket costs following such increase or decrease, provided
that any increase is commercially reasonable, and Schedule 1 shall be deemed to
be amended to reflect any such adjustment.
(d) Any Service Fees
not paid on the Payment Date shall be subject to late charges for
each day any such fees are overdue, calculated at a rate of 3% per
annum from the Payment Date to the date of payment.
(e) The parties
acknowledge and agree that there may be some services Transferor
provided with respect to the Business that are not specifically
identified in this Agreement, Schedule 1 or any other agreement
referred to herein, of which Transferor and Transferee may not be
aware until the time such services are needed. Accordingly, in
addition to the Transition Services described in Section 1 above,
the parties agree that if during the Term additional Transition
Services (the “Additional Transition
Services”) not currently contemplated by this
Agreement or Schedule
1 should be reasonably required to conduct the Business as
currently conducted or to migrate the Contributed Assets to
Transferee, then the parties hereto shall negotiate in good faith
for the provision of such services by Transferor to Transferee, and
Transferor shall charge Transferee the amounts payable for such
Additional Transition Services “at cost”. Transferee
and Transferor shall document the inclusion in this Agreement of
such Additional Transition Services hereunder by an amendment,
letter, agreement or memorandum signed by duly authorized
representatives of both parties, referencing and incorporating this
Agreement, as appropriate and agreed upon by the
parties.
(f) Any taxes assessed
on the provision of the Transition Services hereunder shall be paid
by Transferor.
3. Standard
of Performance of Transition Services. Transferor shall use reasonable care in
providing the Transition Services to Transferee and Transferee
shall use reasonable care when using the assets of Transferor.
Transferee shall assume responsibility for the Transition Services
as soon as reasonably practicable, and in any event, prior to the
expiration of the Service Period for the applicable Transition
Service, and Transferor shall use its commercially reasonable
efforts to assist Transferee, at Transferee’s sole cost and
expense (if such assistance is not already covered by the
Transition Services), in the transfer of responsibility for the
Transition Services to Transferee.
4. Warranty
and Liability; Indemnification.
(a) Except for
applicable warranties expressly set forth in this Agreement and the
Purchase Agreement, neither party hereto makes any warranties,
express or implied, with respect to the Transition Services to be
provided under this Agreement.
(b) To the extent
necessary to facilitate as quickly as practicable
Transferee’s substitution of services for the Transition
Services, Transferor shall, at the sole cost and expense of
Transferee (if such assistance is not already covered by the
Transition Services), afford to Transferee and its employees
reasonable access, upon reasonable notice during normal business
hours during the Term, to the personnel of Transferor responsible
for providing the Transition Services.
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(c) Neither party shall
be liable to the other party for any Losses (including loss of
profits) caused directly or indirectly by any action taken in
connection with the Transition Services to be provided under this
Agreement, except as specifically provided herein or as results
from or arises in connection with the gross negligence or willful
misconduct of the other party.
(d) Each party hereto
will indemnify and hold the other party, its directors, officers,
members, employees and agents harmless from and against any and all
Losses arising out of or relating to (a) such party’s failure
or alleged failure to comply with its obligations pursuant to this
Agreement, and (b) any allegedly wrongful or grossly negligent acts
of such party (and/or its agents) with respect to the Transition
Services.
5. Force
Majeure. Neither party shall be
in default under this Agreement for failure or delay in performance
of its obligations under this Agreement, if caused by an act of God
or public enemy, war, government acts, regulations or orders, fire,
flood, embargo, quarantine, epidemic, labor stoppages or other
cause reasonably beyond the control of such party (a
“Force
Majeure Event”).
6. Term
and Termination.
(a) Term of Agreement. The term of
this Agreement shall commence on the Effective Date and shall
continue in effect until the last date on which the obligation to
provide any Transition Services hereunder (as set forth on
Schedule 1) shall
cease (the “Term”).
(b) Termination. This Agreement
shall automatically terminate at the end of the Term. Prior to the
end of the Term, this Agreement may be terminated by written notice
given as follows:
(1) by
Transferor if Transferee fails to pay any Service Fees (or any
portion thereof not being disputed in good faith) or to provide
Transferor with written notice of any good faith dispute with
respect to such Service Fees within thirty (30) days following a
Payment Date;
(2) by
either party if the other party is in breach of any material
obligation hereunder, and has not cured such breach within thirty
(30) days after receipt of written notice from the non-breaching
party specifying and requesting the correction of such
breach;
(3) by
either party upon the filing or institution of any bankruptcy,
reorganization, liquidation or receivership proceedings by the
other party, or upon the failure by the other party for more than
sixty (60) days to discharge any such actions against it. Such
termination shall be effective upon receipt of the written notice
thereof; or
(4) by
either party if any failure or delay of the other party in
performing any obligation under this Agreement due to a Force
Majeure Event shall continue for more than thirty (30) consecutive
days or any 60 non-consecutive days.
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(c) Termination of Transition
Services. Transferee may terminate receipt of any particular
Transition Service upon that number of days’ prior written
notice as set forth on Schedule 1 with respect to such
Transition Service. Such termination shall not affect any of the
other Transition Services being provided hereunder.
(d) Extension of Transition
Services. Any Service Period may be extended and applicable
rates established upon mutual agreement by Transferee and
Transferor.
7. Mutual
Cooperation and Future Assurances. Prior to the termination of this Agreement, the
parties shall reasonably cooperate in good faith to facilitate the
performance of this Agreement, and each party shall deliver to the
other party copies of such documents, records and information as
are reasonably necessary to such performance.
8. Confidentiality;
No License.
(a) Without limiting
the effectiveness of the transfer of the Contributed Assets to
Transferee pursuant to the Purchase Agreement, each party hereto
agrees that such party’s materials, data and/or information,
including, without limitation, any configuration files or indices,
that may be provided to the other party concerning the CI Providing
Party’s (as defined below) business provided to or generated
by the CI Receiving Party (as defined below) in connection with the
Transition Services are proprietary trade secrets and confidential
information (“Confidential
Information”) of the CI Providing Party, and neither
party shall possess any interest, title, lien or right in any
Confidential Information of the other party. Each party agrees not
to (i) disclose the Confidential Information of the other
party to any third party (other than its Representatives (as
defined below)) or (ii) use the Confidential Information of
the other party except as necessary to perform its obligations
under this Agreement, in either case without the express prior
written consent of the CI Providing Party, and each party shall be
responsible for any breaches of this Section 8 by its directors,
officers, members, managers, employees, representatives (including
financial advisors, attorneys and accountants) or agents
(collectively, the “Representatives”).
(b) The term
“Confidential
Information” will not, however, include information
that (i) is or becomes publicly available other than as a
result of a disclosure in breach of this Agreement by the party
receiving the Confidential Information (the “CI Receiving
Party”) or its Representatives, (ii) is or
becomes available to the CI Receiving Party on a non-confidential
basis from a source (other than the party providing, directly or
indirectly, its Confidential Information (the “CI Providing
Party”) or its Representatives) which, to the CI
Receiving Party’s knowledge, is not prohibited from
disclosing such information by a legal, contractual or fiduciary
obligation to the CI Providing Party, or (iii) is independently
developed by the CI Receiving Party.
(c) Upon the earliest
to occur of the termination of this Agreement, such time as any
Confidential Information ceases to be required by the CI Receiving
Party to perform or receive Transition Services hereunder or at the
request of a CI Providing Party, a CI Receiving Party shall
promptly return, or cause to be returned, all or any requested
portion of such Confidential Information and shall destroy, or
cause to be destroyed, all copies (including electronic versions)
of any compilations, analyses, studies or other documents prepared
by the CI Receiving Party or its Representatives containing or
reflecting any such Confidential Information, subject to and in
accordance with the terms and provisions of this Agreement and any
record retention requirement to which a CI Receiving Party is
subject under applicable Law; provided, however, that all such
Confidential Information, including any electronically stored
Confidential Information, which is not returned and/or destroyed in
accordance with this Section 8(c) shall continue to be treated as
Confidential Information by CI Receiving Party until its return or
destruction.
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(d) Notwithstanding the
other provisions of this Section 8, the CI Receiving Party may
disclose Confidential Information of the CI Providing Party to the
minimum extent required by applicable Law, regulation or legal
process; provided,
that the CI Receiving Party (i) has, to the extent legally
permissible, first provided the CI Providing Party with prompt,
prior written notice of such request or requirement, and (ii) shall
cooperate with the CI Providing Party, at the CI Providing
Party’s expense, to seek an appropriate protective order or
other remedy or to take steps to resist or narrow the scope of such
request or legal process. Notwithstanding the foregoing, if the CI
Receiving Party discloses any of the CI Providing Party’s
Confidential Information pursuant to this Section 8(d) to any
Governmental Entity, the CI Receiving Party shall take all
reasonably necessary steps to ensure that such Governmental Entity
does not acquire the right to re-publish the Confidential
Information outside of said Governmental Entity.
(e) Notwithstanding the
other provisions of this Section 8, the CI Receiving Party
acknowledges that the CI Providing Party has a responsibility to
its customers and other consumers using its services to keep
information about such persons strictly confidential. Except to
carry out the purposes for which the CI Providing Party or one of
its affiliates disclosed such information to the CI Receiving
Party, the CI Receiving Party hereby agrees that it will not
disclose Confidential Information of the CI Providing Party, during
or after the Term of this Agreement, other than on a “need to
know” basis and then only to: (i) affiliates of the CI
Providing Party, as requested by the CI Providing Party;
(ii) the CI Receiving Party’s directors, members,
managers, employees or officers; (iii) affiliates of the CI
Receiving Party, and (iv) the CI Receiving Party’s
independent contractors, agents and consultants, provided that such
independent contractors, agents and consultants are subject to a
written confidentiality agreement requiring such persons to comply
with the CI Receiving Party’s confidentiality and
non-disclosure policies or to otherwise maintain the
confidentiality of such information in accordance with the terms of
the applicable confidentiality agreement. The CI Receiving Party
shall not use or disclose Confidential Information of the CI
Providing Party for any purpose other than in connection with the
performance of this Agreement. The CI Receiving Party shall treat
Confidential Information of the CI Providing Party with at least
the same care that it employs for its own Confidential Information
of a similar nature which shall not be less than a commercially
reasonable level of care.
(f) Nothing contained
in this Agreement shall be construed as conferring by implication,
estoppel or otherwise any license of any intellectual property
owned or controlled by either party following consummation of the
transactions contemplated by the Purchase Agreement.
9. Relationship
of Parties. The relationship
between Transferee and Transferor is that of independent
contractors and nothing herein shall be deemed to constitute the
relationship of partners, joint venturers, nor of principal and
agent between Transferee and Transferor. Neither party shall have
any express or implied right or authority to assume or create any
obligation on behalf of or in the name of the other party or to
bind the other party to any contract, agreement or undertaking with
any third party.
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10. Amendment
and Waiver. This Agreement may
be amended, or any provision of this Agreement may be waived, only
in writing executed by both parties. No course of dealing between
or among any persons having any interest in this Agreement will be
deemed effective to modify, amend, or discharge any part of this
Agreement or any rights or obligations of any person under or by
reason of this Agreement.
11. Notices.
The notice provisions of the Purchase Agreement shall govern this
Agreement.
12. Assignment.
Neither this Agreement nor any of the rights and obligations of the
parties hereunder may be assigned, by operation of law or
otherwise, by either of the parties hereto without the prior
written consent of the other party hereto. Notwithstanding the
foregoing, each party shall remain liable for all of their
respective obligations under this Agreement. Subject to the
forgoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns and no other person shall have any right, obligation or
benefit hereunder. Any attempted assignment or transfer in
violation of the foregoing shall be void.
13. Survival.
All terms of this Agreement that by their nature extend beyond the
expiration or termination of this Agreement shall remain in effect
until fulfilled, including Sections 4, 8, 13 and
14.
14. Miscellaneous.
This Agreement does not create any rights in any person or party
who is not a party to this Agreement. The language used in this
Agreement will be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict
construction will be applied against any person. This Agreement
shall be enforced, governed and construed in all respects in
accordance with the laws of the State of Delaware without regard to
the laws of any other jurisdiction that might be applied because of
the conflicts of laws principals of the State of Delaware, and
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This Agreement
may be executed in one or more counterparts, any one of which need
not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same
instrument. The exchange of executed copies of this Agreement by
facsimile transmission, portable document format (PDF) or other
reasonable electronic transmission shall constitute effective
execution and delivery of this Agreement. Except for matters set
forth in the Purchase Agreement or other agreements executed in
connection with the Purchase Agreement, this Agreement sets forth
the complete agreement between the parties and supersedes any prior
understandings, agreements, or representations by or between the
parties, written or oral, that may have related to the subject
matter hereof in any way.
(Signatures appear on the following page.)
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
TRANSFEREE:
[GLOBAL PUBLIC SAFETY, LLC]
By:
/s/ Xxxxxx X.
Xxxxxxx
Name:
Xxxxxx X.
Xxxxxxx
Its: President
Its: President
TRANSFEROR:
By:
/s/ Xxxxxx X.
Xxxxxxx
Name:
Xxxxxx X.
Xxxxxxx
Its: President and COO
Its: President and COO
Schedule
1
SERVICES TO BE PROVIDED BY TRANSFEROR
|
|
Service
|
Term of Service
|
Cost
|
Notice required by Recipient to Terminate
|
|
1.
|
Technical
training and support to transition equipment and
systems
|
Two
Months
|
None
|
Immediate
|
|
2.
|
Engineering
consulting to support on-going programs as needed
|
Two
– Three Months
|
None
|
Immediate
|
|
3.
|
Transition
of payroll and benefits to Transferee systems.
|
One
Month
|
None
|
Immediate
|
|
4.
|
Contract
management services pertaining to existing contract portfolio
during Term of Service, including, without limitation, client
communications pending assignment and/or novation of the prime
agreement, and historical background and context.
|
Six
Months
|
None
|
Immediate
|
|
5.
|
Subcontract
management services pertaining to subcontracts and consultant
agreements arising from the Business’s existing contract
portfolio during Term of Service, including, without limitation,
subcontractor communications pending assignment and/or consent to
assignment, and historical background and context.
|
Six
Months
|
None
|
Immediate
|
|
6.
|
General
FP&A & accounting support on Transferor’s existing
contract portfolio until system migration & novation of
contracts is complete.
|
Three
– Six Months
|
None
|
Immediate
|
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