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Exhibit
10.2
TRANSITION SERVICES
AGREEMENT
This TRANSITION SERVICES
AGREEMENT dated as of October 31, 2007 (this “
Agreement ”), by and between ACUITY BRANDS, INC., a
Delaware corporation (“ Parent ”), and ZEP INC.,
a Delaware corporation (“ SpinCo ”).
WITNESSETH:
WHEREAS , Parent and
SpinCo are parties to an Agreement and Plan of Distribution of even
date herewith (the “ Distribution Agreement
”);
WHEREAS , in
connection with the transactions contemplated by the Distribution
Agreement, Parent and SpinCo wish to enter into this Agreement for
purposes of continuity and transition; and
WHEREAS , SpinCo
desires to cause Parent to provide the Services set forth on
Schedule A to SpinCo, and Parent is willing to provide
such Services, and Parent desires to cause SpinCo to provide the
Services set forth on Schedule B to Parent, and SpinCo is
willing to provide such Services, all on the terms and conditions
set forth below.
NOW, THEREFORE , the
parties hereto, in consideration of the premises and the mutual
covenants contained herein, agree as follows:
SECTION 1. SPECIFIC
DEFINITIONS.
In addition to the terms
defined elsewhere in this Agreement, as used in this Agreement, the
following terms have the respective meanings set forth
below:
“ Applicable
Rate ” shall mean the rate of interest per annum
announced from time to time by JPMorgan Chase Bank, N.A., as its
prime lending rate.
“ Auditing Standard
No. 2 ” shall mean Auditing Standard No. 2, as
adopted by the Public Company Accounting Oversight Board, and any
successor thereto, including Auditing Standard
No. 5.
“ Force Majeure
Events ” shall have the meaning assigned to such term in
Section 7.4.
“ Loss ”
shall mean all losses, liabilities, damages, claims, demands,
judgments or settlements of any nature or kind, known or unknown,
fixed, accrued, absolute or contingent, liquidated or unliquidated,
including all reasonable costs and expenses (legal, accounting or
otherwise as such costs are incurred) relating thereto.
“ Parent
Services ” shall mean those transitional services to be
provided by Parent to SpinCo set forth on Schedule A hereto
to assist SpinCo in operating SpinCo’s business.
“ Person ”
shall mean any natural person, corporation, business trust, limited
liability company, joint venture, association, company, partnership
or government, or any agency or political subdivision
thereof.
“ Services
” shall mean, collectively, the Parent Services and the
SpinCo Services.
“ SOX §404
” shall have the meaning assigned to such term in
Section 8.
“ SpinCo
Services ” shall mean those transitional services to be
provided by SpinCo to Parent set forth on Schedule B hereto
to assist Parent in operating Parent’s business.
“ Standard of
Care ” shall have the meaning assigned to such term in
Section 2.2(a).
“ Termination
Month ” shall have the meaning set forth in
Section 4.5.
SECTION 2.
SERVICES.
2.1 Services
.
(a) Parent shall provide to
SpinCo each Parent Service for the term set forth opposite the
description of such Parent Service in Schedule A .
Additional services may be provided to SpinCo by Parent if such
arrangement is agreed to in writing and executed by Parent and
SpinCo.
(b) SpinCo shall provide to
Parent each SpinCo Service for the term set forth opposite the
description of such SpinCo Service in Schedule B .
Additional services may be provided by SpinCo to Parent if such
arrangement is agreed to in writing and executed by Parent and
SpinCo.
2.2 Standard of
Service .
(a) In performing the
Services, Parent and SpinCo shall provide substantially the same
level of service and use substantially the same degree of care as
their respective personnel provided and used in providing such
Services prior to the date hereof, subject in each case to any
provisions set forth on Schedule A or Schedule B with
respect to each such Service (as applicable, the “
Standard of Care ”).
(b) Notwithstanding the
foregoing, each party shall comply with the provisions of all
applicable federal, state, and local laws, ordinances, regulations,
and codes
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(including procurement of required
permits or certificates) in fulfillment of their obligations under
this Agreement.
SECTION 3. LICENSES AND
PERMITS.
Each party warrants and
covenants that all duties and obligations (including with respect
to Parent, all Parent Services and with respect to SpinCo, all
SpinCo Services) to be performed hereunder shall be performed in
compliance with all material applicable federal, state, provincial
and local laws, rules and regulations. Each party shall obtain and
maintain all material permits, approvals and licenses necessary or
appropriate to perform its duties and obligations (including with
respect to Parent, the Parent Services and with respect to SpinCo,
the SpinCo Services) hereunder and shall at all times comply with
the terms and conditions of such permits, approvals and
licenses.
SECTION 4.
PAYMENT.
4.1 Service Fees
.
(a) In consideration for the
provision of each of the Parent Services, SpinCo shall pay to
Parent the fee set forth for such Parent Service on Schedule
A .
(b) In consideration for the
provision of each of the SpinCo Services, Parent shall pay to
SpinCo the fee set forth for such SpinCo Service on Schedule
B .
4.2 Costs and Expenses
.
(a) In addition to the fees
payable in accordance with Section 4.1(a), SpinCo shall
reimburse Parent for all reasonable and necessary out-of-pocket
costs and expenses (including postage and other delivery costs,
telephone, telecopy and similar expenses) incurred by Parent with
respect to third parties in connection with the provision of Parent
Services to SpinCo pursuant to the terms of this Agreement or paid
by Parent on behalf of SpinCo.
(b) In addition to the fees
payable in accordance with Section 4.1(b), Parent shall
reimburse SpinCo for all reasonable and necessary out-of-pocket
costs and expenses (including amounts for premiums, claims, fees,
postage and other delivery costs, telephone, telecopy and similar
expenses) incurred by SpinCo with respect to third parties in
connection with the provision of SpinCo Services to Parent pursuant
to the terms of this Agreement or paid by SpinCo on behalf of
Parent.
4.3 Invoices
.
(a) Parent will invoice
SpinCo in U.S. dollars in accordance with Schedule A for any
fees and out-of-pocket expenses payable by SpinCo pursuant to this
Agreement. SpinCo shall pay each such invoice received by
electronic funds transfer within the time frame set forth on
Schedule A with respect to the applicable
invoice.
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(b) SpinCo will invoice
Parent in U.S. dollars in accordance with Schedule B for any
fees and out-of-pocket expenses payable by Parent pursuant to this
Agreement. Parent shall pay each such invoice received by
electronic funds transfer within the time frame set forth on
Schedule B with respect to the applicable
invoice.
4.4 Late Payment . Any
amount not paid when due shall be subject to a late payment fee
computed daily at a rate equal to the Applicable Rate.
Notwithstanding the foregoing, in the event a party disputes the
accuracy of any invoice, a party shall pay the undisputed portion
of such invoice as provided herein, and the parties hereto will
promptly meet and seek to resolve the disputed amount of the
invoice. Each party agrees to pay the other party’s
reasonable attorneys’ fees and other costs incurred in
collection of any amounts owed to such other party hereunder and
not paid when due. Notwithstanding anything to the contrary
contained herein, in the event either party fails to make a payment
when due hereunder, and such failure continues for a period of 30
days following delivery of written notice to such non-paying party
of such failure, the other party shall have the right to cease
provision of Services to such non-paying party until such overdue
payment (and any applicable late payment fee accrued with respect
thereto) is paid in full. Such right of the party providing
Services shall not in any manner limit or prejudice any of such
party’s other rights or remedies in the event of the
non-paying party’s failure to make payments when due
hereunder, including any rights or remedies pursuant to
Section 7.
4.5 Fees, Etc. Upon
Termination of Services . In the event of a termination of
Services pursuant to Section 7.1, with respect to the calendar
month in which such Services cease to be provided (the “
Termination Month ”), the recipient of such Services
shall be obligated to pay a pro rata share of the fee for such
Service set forth on Schedule A or Schedule B , as
applicable, equal to the product of (a) the fee set forth on
Schedule A or Schedule B , as applicable,
multiplied by (b) a fraction, the numerator of
which is the number of days in the Termination Month such Services
are provided, and the denominator of which is 30.
SECTION 5. LIABILITY;
INDEMNIFICATION.
5.1 Indemnification by
Recipient .
(a) SpinCo agrees to
indemnify, defend and hold Parent harmless from and against any
Loss to which Parent may become subject arising out of, by reason
of or otherwise in connection with the provision hereunder by
Parent of Parent Services, other than Losses resulting from
Parent’s willful misconduct or material breach of its
obligations pursuant to this Agreement. Notwithstanding any
provision in this Agreement to the contrary, SpinCo shall not be
liable under this Section 5.1 for any consequential, special
or punitive damages (including lost profits), except to the extent
that such consequential, special or punitive damages relate to a
Loss resulting from a Third-Party Claim (as defined in the
Distribution Agreement).
(b) Parent agrees to
indemnify, defend and hold SpinCo harmless from and against any
Loss to which SpinCo may become subject arising out of, by reason
of or otherwise in connection with the provision hereunder by
SpinCo of SpinCo Services, other than Losses resulting from
SpinCo’s willful misconduct or material breach of its
obligations pursuant to this
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Agreement. Notwithstanding any provision
in this Agreement to the contrary, Parent shall not be liable under
this Section 5.1 for any consequential, special or punitive
damages (including lost profits), except to the extent that such
consequential, special or punitive damages relate to a Loss
resulting from a Third-Party Claim (as defined in the Distribution
Agreement).
5.2 Indemnification by
Provider .
(a) Parent agrees to
indemnify, defend and hold SpinCo harmless from and against any
Loss to which SpinCo may become subject arising out of, by reason
of or otherwise in connection with the provision hereunder by
Parent of Parent Services to SpinCo where such Losses resulted from
Parent’s willful misconduct or material breach of its
obligations pursuant to this Agreement.
(b) SpinCo agrees to
indemnify, defend and hold Parent harmless from and against any
Loss to which Parent may become subject arising out of, by reason
of or otherwise in connection with the provision hereunder by
SpinCo of SpinCo Services to Parent where such Losses resulted from
SpinCo’s willful misconduct or material breach of its
obligations pursuant to this Agreement.
5.3 Procedures for
Indemnification . Any indemnification claims made hereunder
shall be made in accordance with Article III of the
Distribution Agreement.
5.4 Limitation of
Liability . A breach of the Standard of Care not involving
willful misconduct shall not constitute a material breach of a
party’s obligations for purposes of Section 5.1 or
Section 5.2. In the event of the provision of Services in
breach of the Standard of Care not involving willful misconduct,
the sole remedy of the claiming party shall be that, at the option
of the claiming party, the breaching party shall either:
(a) perform again the particular Service performed in breach
of the Standard of Care at no cost to the other party or
(b) give the other party a refund of the portion of the
Service fees attributable to the cost of performance of the Service
provided in breach of the Standard of Care.
SECTION 6.
CONFIDENTIALITY.
Subject to Section 8 of
this Agreement, each party shall keep confidential the Schedules to
this Agreement and all information received from the other party
regarding the Services, including any information received with
respect to Parent or SpinCo, and to use such information only for
the purposes set forth in this Agreement unless otherwise agreed to
in writ
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