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EXHIBIT 10.7
TRANSITIONAL SERVICES AGREEMENT
This Transitional Services Agreement (this "Agreement") is made as of
this __ day of November 1998 between Stac, Inc., a Delaware corporation
("Stac"), and hi/fn, inc., a Delaware corporation ("Hi/fn").
RECITALS
WHEREAS, pursuant to a Distribution Agreement dated as of November __,
1998, (the "Distribution Agreement") between Stac and Hi/fn, Stac will separate
its software business and its semiconductor business (the "Spin-off") by way of
a special dividend by Stac to the stockholders of record of Stac's common stock,
consisting of the distribution on an approximately 1-for-4 basis, of all of the
outstanding shares of Hi/fn Common Stock held by Stac (following the conversion,
at Stac's election, of 6,000,000 shares of Series A Preferred Stock, par value
$.001 per share, of Hi/fn into 6,000,000 shares of Hi/fn Common Stock) (the
"Distribution"); and
WHEREAS, a condition of the closing of the transactions contemplated
by the Distribution Agreement is that Stac and Hi/fn enter into, among other
things, a transitional services agreement pursuant to which Stac shall provide
certain accounting services to Hi/fn.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, and intending to be legally bound
hereby, the parties agree as follows:
1. ACCOUNTING SERVICES. Stac agrees to use its employees and assets to
provide to Hi/fn the accounting services listed below (the "Accounting
Services"). The monthly charge for the Accounting Services from and after the
date hereof shall be $6,500.00. Such amount shall be prepaid through December
31, 1999 by Hi/fn prior to the Distribution. If the term of this Agreement is
extended past December 31, 1999 pursuant to Section 4 hereof, Stac shall invoice
Hi/fn monthly for Accounting Services performed during the prior month
(beginning January 1, 2000), and Hi/fn shall pay Stac for such services not
later than ten (10) days from the receipt of invoice.
Accounting Services shall consist of the type, quality and level of
accounting services provided by Stac to Hi/fn prior to the Distribution. These
services shall include the processing of Hi/fn transactions for sales orders,
sales invoicing, accounts receivable collection, trade accounts payable, payroll
processing, entry of general ledger journal entries, cash management,
reconciliation of accounts and cash balances, preparation of financial
statements in accordance with instructions from Hi/fn, maintenance of accounting
software used by Stac for the Accounting Services at the time of Distribution,
assisting Hi/fn management in preparation of budgets and forecasts using Excel
workbook models, assisting Hi/fn management in analysis of operations, assisting
Hi/fn in audits of Hi/fn's financial statements and other financial records, and
such other duties as may be expressly agreed to in writing by the parties. Hi/fn
may decline any or all of these services at any time in its sole discretion;
provided that the monthly charge for services will not be reduced below $6,500
(i) unless Hi/fn has given Stac at least 30 days notice of its decision to
decline all services (in which case no monthly charge will be due) or (ii)
unless otherwise agreed by the parties in writing.
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Hi/fn expressly acknowledges and agrees that (i) Stac and its
officers, directors, employees, agents and counsel shall not be responsible for
the contents of Hi/fn financial statements generated by Stac or for their
preparation in accordance with generally accepted accounting principles, (ii)
the contents and accuracy of Hi/fn's financial statements shall be solely the
responsibility of Hi/fn and (iii) Stac's responsibility shall be only to process
transactions and journal as instructed by Hi/fn and to generate the resulting
financial statements. Hi/fn understands and agrees that it shall be responsible
for all planning and reporting to its various constituencies, including, but not
limited to its board of directors, stockholders, employees, the Securities and
Exchange Commission, the Internal Revenue Service, the California Franchise Tax
Board, other federal and state regulatory agencies, other taxing authorities and
any corresponding or other foreign entities.
2. OUTSIDE SERVICES. In the event that the providing party is required
to retain outside consultant/contractor assistance to perform any of the
services hereunder, the providing party shall first obtain the consent of the
other party to such retention and the other party shall pay directly the fees of
such consultant/contractor. The providing party shall not be held responsible
for the performance of such consultant/contractor services and the other party
assumes the risk thereof.
3. CONTRACTUAL RELATIONSHIP. The relationship between Stac and Hi/fn
under this Agreement shall be that of principal and agent in respect of the
services to be performed hereunder. In no event is the relationship of the
parties intended to be that of employer and employee and in no event is either
party to be deemed or purported to be the partner or joint venturer of the other
for any purpose whatsoever.
4. TERM. The term of this Agreement shall expire on December 31, 1999;
provided, however, that each party shall have the right, Hi/fn upon thirty (30)
days advance notice to Stac, and Stac upon six (6) months advance notice to
Hi/fn, to terminate all or part of the services it performs hereunder. This
Agreement may be extended on a month-to-month basis following December 31, 1999
upon mutual agreement of the parties. Upon the termination of all services,
payment therefor and payment of all consultants/contractors, this Agreement
shall terminate and any payments due the other party shall be immediately
payable.
5. LIMITATION OF LIABILITY. Stac shall not have any liability
whatsoever to Hi/fn or to any third party for any loss, liability, damage, cost
or deficiency (collectively, "Losses"), or for any claim for Losses, including,
without limitation, Losses or claims for personal injury, death or property
damage, warranty, tort or products liability, resulting from, caused by or
arising out of Stac's performance under this Agreement except for claims arising
out of the negligence or willful default or breach of Stac hereunder. In no
event shall Stac have liability to Hi/fn or to any third party for indirect,
special or consequential damages or loss of profits (except with respect to its
willful default or breach), or for punitive damages for any reason whatsoever.
6. INDEMNIFICATION. Hi/fn agrees to indemnify, protect, defend and
hold harmless Stac (for purposes of this Section 6 "Stac" shall include the
officers, directors, employees, agents and counsel of Stac), from and against
any and all losses, claims, damages, expenses or liabilities, including the fees
of not more than one counsel to Stac, arising out of or based upon allegations
that financial statements or other accounting records prepared by Hi/fn with
Stac's assistance pursuant to this Agreement contain inaccuracies or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
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7. NOTICES. All notices and other communications hereunder shall be in
writing and shall be delivered by hand or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other addresses for a party as shall be specified by like notice) and shall be
deemed given on the date on which such notice is received:
To Stac:
Stac, Inc.
00000 Xxxx Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
To Hi/fn:
Hi/fn, Inc.
0000 Xxxxxxxx Xxx., Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
8. ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any party
hereto without the prior written consent of the other party (other than to an
affiliate). Any purported assignment in violation of the provisions hereof shall
be void.
9. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California (regardless of the laws that might otherwise govern under
applicable California conflict of laws principles) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
10. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11. INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
12. SEVERANCE. In the event that any provision of this Agreement is
declared illegal, invalid or unenforceable or contrary to law, it shall not
affect any other provision in the Agreement.
13. ENTIRE AGREEMENT. This Agreement and the Distribution Agreement
embody the entire agreement and understanding of the parties hereto in respect
of the subject matter hereof. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the transactions contemplated
hereby.
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14. DISPUTES. Any disputes arising under this Agreement shall be
resolved by binding arbitration in the manner contemplated by Section 8.13 of
the Distribution Agreement, including the attorneys' fees provision referenced
therein.
IN WITNESS WHEREOF, each of Stac and Hi/fn has caused this Agreement
to be executed by its duly authorized officer as of the date first above
written.
STAC, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
HI/FN, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
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