Exhibit 10.5
TRANSITION SERVICES
AGREEMENT
This TRANSITION
SERVICES AGREEMENT (“ Agreement ”) is entered into
as of this 30 th day of November 2004 by and among
Warner Electric Holding,
Inc. , a Delaware corporation (“ Seller ”), Colfax Corporation,
a Delaware corporation and parent of Seller (“
Colfax ,” and
together with Seller, the “ Service Providers ”), and
Altra Industrial Motion, Inc., a Delaware corporation (“
Buyer
”).
R E C
I T A L S:
A .
Pursuant to that certain LLC Purchase Agreement of even date
herewith among Seller, Colfax and Buyer (the “
Purchase Agreement
”), Seller is selling to Buyer and Buyer is purchasing from
Seller all of the limited liability company interests (the “
LLC Interests
”) of Power Transmission Holding LLC, a Delaware limited
liability company (“ PT ”).
B.
Pursuant to the Purchase Agreement, the Service Providers have
agreed for a limited period of time to provide certain transitional
supports services to Buyer in connection with the operation of the
Business following the closing of the sale of the LLC Interests of
PT to Buyer.
NOW, THEREFORE,
the Parties, intending to be legally bound, hereby agree as
follows:
ARTICLE 1
DEFINITIONS
Unless otherwise
defined herein, for the purposes of this Agreement, capitalized
terms shall have the meaning ascribed to them in the Purchase
Agreement and the following terms shall have the definitions
hereinafter specified:
1.1
“Actual
Costs” means (a) with respect to any Services
provided by non-exempt employees of the Service Providers, the
hourly rate of compensation paid to the employee providing the
Service multiplied by the number of hours such employee performed
the Services for the Buyer Parties during the period, (b) with
respect to any Services provided by exempt employees of the Service
Providers, the product of (i) the monthly salary of the employee
providing the Services, and (ii) a fraction, the numerator of which
is one (1) and the denominator of which is one hundred sixty-six
(166) and (iii) the number of hours the exempt employee performed
the Services for the Buyer Parties during the period, and (c) with
respect to any Services provided by a person other than an exempt
or non-exempt employee of the Service Providers, the actual
out-of-pocket costs
paid to such person by
the Service Providers for the Services provided to the Buyer
Parties during the period.
1.2
“ Parties
” shall mean Seller, Colfax and Buyer, collectively.
1.3
“ Service
” or “ Services ” shall mean those
services described on Schedule A hereto, including any
exhibit(s).
ARTICLE 2
SERVICES
2.1
Statement of Purpose . In connection with the
transactions contemplated under the Purchase Agreement, Buyer is
purchasing and intends to operate the Business as an ongoing
enterprise, but requires the Service Providers to continue to
provide certain services and personnel in support thereof as set
forth in this Agreement. It is the intention of the Parties
in entering into the Purchase Agreement and this Agreement to
ensure a smooth transition from Seller to Buyer in the ownership
and operation of the Business with the least disruption to the
Business. It is the intention of the Parties that they will
cooperate with each other in this regard and, where possible and
mutually desirable to do so, to terminate the provision of Services
hereunder at the earliest practicable date, and in no even later
than the conclusion of the term for each Service set forth on
Schedule A . The Parties recognize that certain
Services performed by the Service Providers may actually be
performed by Affiliates of such Persons and accordingly, for
purposes of this Agreement, references to the Service Providers
shall include their respective Affiliates.
2.2
Provision of Services . Subject to and upon the terms
and conditions set forth in this Agreement, beginning on the
Closing Date, the Service Providers shall, at the request of Buyer,
provide or cause to be provided to Buyer the Services listed and
described on Schedule A , for the term of Service set
forth on Schedule A as to any particular Service.
In every case, all of the aforesaid Services shall be provided in
accordance with the terms, limitations and conditions set forth
herein and on Schedule A . The fees to Buyer and
the costs reimbursable by Buyer to the Service Providers for the
Services shall be as specified on Schedule A .
2.3
Quality Level; Independent Contractor Status . Unless
otherwise agreed by the Parties, the Services shall be provided at
a quality level and in a manner that is substantially the same as
the quality level and manner in which such Services were provided
to the Business prior to the date of this Agreement, and Buyer
shall use the Services at the same location(s) as the Business had
used such Services prior to the Closing Date. The Service
Providers shall act under this Agreement solely as independent
contractors and not as agents of Buyer. Buyer agrees to use
commercially reasonable efforts to transition use of the Services
as soon as practically possible after the Closing Date. Buyer
shall have no obligation to utilize any or all of the Services
provided by the Service
Providers in accordance with this Agreement; provided ,
however , that, in the event Buyer elects not to use a
particular Service, it shall promptly notify the Service Providers
and the Service Providers shall have no further obligations
hereunder with respect to such Service.
2.4
Use of Service Providers’ Employees/Provider
Agreements . To the extent that the Service Providers use
their own employees in connection with the provision of any
Services hereunder, the Service Providers may, in their discretion,
replace, add, reduce or otherwise change the number and identity of
the employees providing such Services at any time. In the
event that any third party agreement to which any Service Provider
is a party is in conflict with the terms of this Agreement, the
Service Providers shall promptly notify Buyer of the nature and
extent of such conflict. Unless Buyer thereafter agrees to
indemnify the Service Providers for any breach or default under the
third party agreement attributable to the provision of services by
the Service Providers under this Agreement, the Service Providers
shall have no obligation to continue to provide such services under
this Agreement.
2.5
Disclaimer of Warranty . EXCEPT AS OTHERWISE PROVIDED
HEREIN, THE SERVICES AND GOODS PROVIDED HEREUNDER ARE PROVIDED AS
IS, WHERE IS WITHOUT WARRANTY OF ANY KIND, INCLUDING WARRANTY OF
MERCHANTIBILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
2.6
Payment . Except as otherwise provided in
Schedule A , invoices will be rendered each month by
Colfax to Buyer for Services delivered by the Service Providers
during the preceding month, and each such invoice shall be payable
net thirty (30) days after the date thereof. Such invoices
shall be substantiated by supporting information and shall itemize
in reasonable detail the basis for such statement. Invoices
not paid within such thirty (30) day period shall be subject to
late charges for each month the statement is overdue, calculated as
the greater of the following:
(i)
in the event the Service Provider is subject to a late charge by
virtue of its provision to Buyer of such service, such late charge;
or
(ii)
the then current prime rate as published in the “Money
Rates” column of the Wall Street Journal plus one percentage
point;
provided that in any
event, the late charge shall be calculated to a rate no higher than
that allowed by applicable law; and provided further, that no late
charges shall apply to the portion of any invoice that is being
contested in good faith by Buyer.
ARTICLE 3
TERM
3.1
General . The term of each Service is as set forth on
Schedule A . Unless otherwise specified on
Schedule A , Buyer may cancel any Service upon fifteen
(15) days prior written notice, subject to the requirement that
Buyer pay to the Service Providers the actual out-of-pocket costs
associated with such cancellation.
3.2
Actions on Termination . Upon the termination of a
Service or Services with respect to which the Service Providers
hold books, records, files or any other documents owned by Buyer,
the Service Providers will return all of such books, records, files
and any other documents to Buyer as soon as reasonably
practicable. Buyer shall bear the Service Provider’s
reasonable costs and expenses associated with the return of such
documents. In addition, upon the termination of any of the
Services which involved the compilation of data on the Service
Provider’s computer systems, the Service Providers shall, as
soon as reasonably practicable, deliver to Buyer on magnetic media
in readable format mutually acceptable to the Parties, which format
shall be capable of being read by a computer mutually acceptable to
the Parties, all data files maintained by the Service Providers to
the extent that they contain information related to the Business,
together with printed file descriptions sufficient to identify such
data files and their contents and structure.
ARTICLE 4
FORCE MAJEURE/MAINTENANCE
4.1
Force Majeure . The Service Providers shall not be
liable for any interruption of Service, delay or failure to perform
under this Agreement when such interruption, delay or failure
results from causes beyond their reasonable control (provided that
the Service Providers have used their commercially reasonable
efforts to avoid such interruption, delay or failure) or from any
act or failure to act of Buyer, or as the result of strikes,
lock-outs
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