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Exhibit
10.2
TRANSITION SERVICES
AGREEMENT
This Transition Services
Agreement (the “Services Agreement”) is made as of this
16 th day of July , 2007 by and between American
Standard Companies Inc., a Delaware corporation (“ ASD
”), and WABCO Holdings Inc., a Delaware corporation (“
WABCO ”). ASD and WABCO have entered into a Separation
and Distribution Agreement dated as of July 16, 2007 (as amended
from time to time, the “ Separation Agreement
”), which sets forth, among other things, the terms of the
separation of the VCS Business from ASD, which shall occur in a
series of transactions. Prior to the Effective Time, the VCS
Business received certain services from and provided certain
services to ASD and certain of its Subsidiaries and Affiliates.
Each of the ASD and WABCO desires that these services continue to
be provided after the Effective Time upon the terms and conditions
set forth in this Services Agreement.
In consideration of the
mutual covenants and agreements contained in this Agreement, the
Parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions
Incorporated . All capitalized terms not otherwise defined in
this Services Agreement have the meaning ascribed to them in the
Separation Agreement.
1.2 Additional
Definitions . Unless the context otherwise requires, the
following terms, and their singular or plural, used in this
Services Agreement shall have the meanings set forth
below:
(a) “ ASD
” shall have the meaning set forth in the preamble to this
Services Agreement.
(b) “ ASD
Entities ” means, collectively, ASD and its Affiliates
that are listed as Providers on Schedule A or Recipients on
Schedule B (and which shall not include any WABCO
Entities).
(c) “ ASD Provided
Services ” shall have the meaning set forth in
Section 2.1 of this Services Agreement.
(d) “ Confidential
Information ” shall have the meaning set forth in
Section 8.1 of this Services Agreement.
(e) “ Force
Majeure ” shall have the meaning set forth in
Section 6.1 of this Agreement.
(f) “ Initial
Term ” shall have the meaning set forth in
Section 4.1.
(g) “ Losses
” shall mean any and all damages, losses, deficiencies,
liabilities, obligations, penalties, judgments, settlements,
claims, payments, fines, interest, costs and expenses (including
internal costs and the costs and expenses of any and all actions
and demands, assessments, judgments, settlements and compromises
relating thereto and the reasonable costs and expenses of
attorneys’, accountants’, consultants’ and other
professionals’ fees and expenses incurred in the
investigation or defense thereof or the enforcement of rights
hereunder).
(h) “ Party
” means each of the entities set forth on the signature pages
to this Services Agreement.
(i) “ Person
” means an individual, partnership, corporation, trust,
unincorporated association, or other entity or
association.
(j) “ Prime Rate
” shall mean the rate per annum publicly announced by
JPMorgan Chase Bank (or successor thereto) from time to time as its
prime rate in effect at its principal office in New York City. For
purposes of this Agreement, any change in the Prime Rate shall be
effective on the date such change in the Prime Rate is publicly
announced as effective.
(k) “ Provider
” shall mean the person identified on Schedule A or B to this
Services Agreement providing the services set forth
therein.
(l) “ Recipient
” shall mean the person identified on Schedule A or B to this
Services Agreement receiving the services set forth
therein.
(m) “ Renewal
Term ” shall have the meaning set forth in
Section 4.1 of this Agreement.
(n) “ Sales and
Service Tax ” shall have the meaning set forth in
Section 3.4(a).
(o) “ Term
” shall mean the Initial Term and the Renewal Term, if any,
or, with respect to a particular service provided for hereunder,
such shorter period as may be applicable pursuant to the terms of
this Services Agreement or the exercise of a Party’s right of
early termination as provided for herein.
(p) “ WABCO
” shall have the meaning set forth in the preamble to this
Services Agreement.
(q) “ WABCO
Entities ” means, collectively, WABCO and its Affiliates
that are listed as Recipients on Schedule A or as Providers on
Schedule B (and which shall not include any ASD
Entities).
(r) “ WABCO Provided
Services ” shall have the meaning set forth in
Section 2.2 of this Services Agreement.
Other terms are used as
defined elsewhere herein.
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ARTICLE 2
SERVICES
PROVIDED
2.1 ASD Provided
Services . Pursuant to the terms of this Services Agreement,
the ASD Entities agree to provide, or cause to be provided, to the
WABCO Entities, commencing on the date immediately following the
Effective Time, the services described in Schedule A to this
Services Agreement (the “ ASD Provided Services
”).
2.2 WABCO Provided
Services . Pursuant to the terms of this Services Agreement,
the WABCO Entities agree to provide, or cause to be provided, to
the ASD Entities, commencing on the date immediately following the
Effective Time, the services described in Schedule B to this
Services Agreement (the “ WABCO Provided Services
”).
2.3 Other Services .
If, after the execution of this Services Agreement and prior to the
two month anniversary of the Effective Time, the Parties determine
that a service provided by or to the VCS Business as conducted by
ASD prior to the Effective Time was inadvertently omitted from the
Schedules to this Services Agreement, then the Parties shall
negotiate in good faith to attempt to agree to the terms and
conditions upon which such services would be added to this Services
Agreement, it being agreed that the charges for such services
should be determined on a basis consistent with the methodology for
determining the initial prices provided for herein ( i.e. ,
sufficient to cover a Provider’s reasonable estimate of its
actual costs and, if applicable, consistent with the prices such
Provider would charge to an Affiliate), in each case without taking
into account any profit margin or projected savings from increased
efficiency. Upon the Parties’ agreement on the fees and other
specific terms and conditions applicable to such services, the
Parties shall update this Services Agreement through the
substitution of the relevant Schedule, or additions or supplements
to the relevant Schedule, which substitutions, additions or
supplements shall describe the service and the related fees and
other specific terms and conditions applicable thereto.
ARTICLE 3
COMPENSATION
3.1 Compensation for ASD
Provided Services . Subject to Section 3.5, the
compensation for the ASD Provided Services for the duration of the
Term shall be as described for each individual service provided to
the WABCO Entities as set forth on Schedule A. For the avoidance of
doubt, the ASD Provided Services shall commence on the date
immediately following the Effective Time.
3.2 Compensation for WABCO
Provided Services . Subject to Section 3.5, the
compensation for the WABCO Provided Services for the duration of
the Term shall be as described for each individual service provided
by the WABCO Entities set forth on Schedule B. For the avoidance of
doubt, the WABCO Provided Services shall commence on the date
immediately following the Effective Time.
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3.3 Allocation of Certain
Expenses .
(a) Each Provider shall bear
the costs and expenses of obtaining any and all consents from third
parties which may be necessary in connection with such
Provider’s performance of its obligations hereunder,
including, with respect to the obligations of the WABCO Entities
acting in their capacity as Providers, the costs of obtaining the
consent to the assignment of all leases of equipment and licenses
of software which may be necessary to provide the services
contemplated hereby.
(b) In addition to the
payment of all compensation provided under Section 3.1 or
Section 3.2, as applicable, Recipient shall reimburse Provider
for all reasonable out-of-pocket costs and expenses incurred by
Provider or its Affiliates in connection with providing the
applicable services hereunder (including all travel-related
expenses) to the extent that such costs and expenses are not
reflected in the compensation for such services on Schedule A or
Schedule B, as applicable; provided, however, any such expenses
exceeding $1000 per month (other than routine business travel and
related expenses) shall require advance approval of Recipient. Any
travel-related expenses incurred by Provider in performing the
applicable services hereunder shall be incurred and charged to
Recipient in accordance with Provider’s then applicable
business travel policies.
(c) In the event that
Recipient terminates any individual service as contemplated by
Section 4.2 earlier than the expiration of the Initial Term or
the Renewal Term, if applicable, Recipient shall reimburse Provider
for any and all costs and expenses incurred by Provider or any of
its subsidiaries as a result of such early termination by
Recipient, including incremental early termination fees and other
costs incurred in order to terminate or reduce the level of
services provided by third parties under Contracts with Recipient
or any of its subsidiaries, which services are affected by such
early termination, such reimbursement to be due and payable within
five business days following Recipient’s receipt of any
invoice from Provider with respect to such costs and
expenses.
3.4 Taxes .
(a) In addition to the
compensation payable to Provider determined exclusive of the taxes
payable by Recipient under this Section 3.4, Recipient will
pay and be liable for all sales, service, value added, lease, use,
transfer, consumption or similar taxes levied and measured by:
(i) the cost of services provided to Recipient under this
Agreement or (ii) Provider’s cost in acquiring property
or services used or consumed by Provider in providing Services
under this Agreement (the “ Sales and Service Taxes
”). Such taxes will be payable by Recipient to Provider in
accordance with Section 3 or as otherwise mutually agreed in
writing by the parties and under the terms of the applicable law
which govern the relevant Sales and Service Tax. Recipient’s
obligation to pay Sales and Service Taxes under this
Section 3.4 shall be subject to the receipt of (i) a
computation of the Sales and Service Taxes payable under this
Section 3.4 identifying the nature and amount of the goods or
services on which the Sales and Service Tax is assessed and the
applicable rate and (ii) a valid and customary invoice (or
other document) under the terms of applicable law for each Sales
and Service Tax. If Recipient complies with the terms of this
Section 3.4 regarding the payment of Sales and Service Taxes,
it shall not be liable for any interest, penalties or other charges
attributable to Provider’s improper filing relating to Sales
and Service Taxes or late payment or failure to remit Sales and
Service Taxes to the relevant taxing authority.
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(b) Each of Provider and
Recipient shall pay and be responsible for their own personal
property taxes and taxes based on their own income or profits or
assets.
(c) Payments for services or
other amounts under this Agreement shall be made net of withholding
taxes, provided however , that if Provider reasonably
believes that a reduced rate of withholding applies or Provider is
exempt from withholding, Recipient shall only be required to apply
such reduced rate of withholding or not withhold if Provider
provides Recipient with evidence reasonably satisfactory to
Recipient that a reduced rate of or no withholding is required,
including rulings or certificates from, or other correspondence
with taxing authorities and tax opinions rendered by qualified
persons, to the extent reasonably requested by Recipient. Recipient
shall promptly remit any amounts withheld to the appropriate taxing
authority and in the event that Recipient receives a refund of any
amounts previously withheld from payments to Provider and remitted,
Recipient shall surrender such refund to Provider.
(d) Each of Provider and
Recipient shall promptly notify the other party of any deficiency
claim or similar notice by a taxing authority with respect to Sales
and Service Taxes payable under this Service Agreement, and of any
pending tax audit or other proceeding relating to Sales and Service
Taxes or withholding with respect to this Service Agreement, and
shall afford such party all reasonable opportunity to participate
in any such audit or proceeding affecting its interests.
3.5 Price Adjustments
.
(a) The Parties shall review
the Providers’ respective costs of providing services
hereunder as of September 30, 2007, and each two-month anniversary
thereafter. If it is determined in connection with any such review
that a Provider’s cost of providing services hereunder (taken
individually) exceeds by at least five percent (5%) the charge for
such service(s) because of a significant increase in usage by the
Recipient or other circumstances beyond the reasonable control of
the Provider (including, without limitation, events of Force
Majeure), then, upon request of such Provider, such Provider and
its Recipient shall negotiate in good faith to determine an
appropriate adjustment to the then-current prices for such services
on a basis consistent with the methodology for determining the
initial prices provided for herein (as described in
Section 2.3).
(b) If the Parties determine
(which determination shall be made in good faith) that the initial
prices set forth on the Schedules hereto are not consistent with
the methodology for determining the initial prices as described in
Section 3.5(a), then the Parties shall negotiate in good faith
to adjust such charges in a manner that is consistent with such
methodology.
3.6 Terms of Payment;
Dispute Resolution; Audits .
(a) Provider shall invoice
the Recipient for the Services provided by Section 3.1 or
Section 3.2, as applicable, monthly in advance on the first
calendar day of each month of the term following the date hereof
(or the first business day following each such date).
Provider
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shall also provide invoices to Recipient
monthly in arrears for amounts, such as Sales and Service Taxes and
out-of-pocket or other expenses, that are payable in addition to
the flat fee for service that was paid in advance pursuant to the
first sentence of this Section 3.6. Payment shall be made by
Recipients within 30 days after receipt of an invoice and other
required documentation. No Recipient shall withhold any payments to
its Provider under this Services Agreement (other than any required
withholding for taxes) and such payments shall be made without any
other set-off or deduction, notwithstanding any dispute that may be
pending between them, whether under this Services Agreement or
otherwise (any required adjustment being made on subsequent
invoices). Subject to the provisions of Section 3.6(c),
amounts not paid on or before the date required to be paid
hereunder shall accrue interest at a rate per annum equal to the
then effective Prime Rate plus 2% (the “ Default Interest
Rate ”) (or the maximum legal rate whichever is lower),
calculated for the actual number of days elapsed, accrued from the
date such payment was due hereunder until the date of the actual
receipt of payment.
(b) All amounts due for
services rendered pursuant to this Services Agreement shall be
billed and paid in the currency in which the rate for such service
is quoted, as stated herein or as shown on the Schedules
hereto.
(c) If there is a dispute
between any Recipient and any Provider regarding the amounts shown
as billed to such Recipient on any invoice, such Provider shall
furnish to such Recipient reasonable documentation to substantiate
the amounts billed including, but not limited to, listings of the
dates, times and amounts of the services in question where
applicable and practicable. Upon delivery of such documentation,
such Recipient and such Provider shall cooperate and use their best
efforts to resolve such dispute among themselves. If such disputing
parties are unable to resolve their dispute within thirty
(30) calendar days of the initiation of such procedure, and
such Recipient believes in good faith and with a reasonable basis
that the amounts shown as billed to such Recipient are inaccurate
or are otherwise not in accordance with the terms of this Services
Agreement, then such Recipient shall have the right, at its own
expense, to have any disputed invoice(s) audited as provided in
Section 3.6(d).
(d) Any audit pursuant to
Section 3.6(c) shall be limited solely to the purpose of
verifying the amounts in dispute and shall be made by an
independent certified public accounting firm selected and paid for
by the Recipient initiating such audit and reasonably satisfactory
to the Provider being audited (such accounting firm, the “
Independent Accountants ”). Any such audit shall be
reasonably conducted by the Independent Accountants during the
normal business hours of the Provider being audited. Such Provider
shall reasonably cooperate with the Independent Accountants and
shall make available to the Independent Accountants all applicable
cost and other data may be reasonably necessary for the sole
purpose of verifying the
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