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TRANSITION SERVICES AGREEMENT

Transition Agreement

TRANSITION SERVICES AGREEMENT | Document Parties: ZEP INC. | Acuity Holdings, Inc | Waterbury Companies, Inc., You are currently viewing:
This Transition Agreement involves

ZEP INC. | Acuity Holdings, Inc | Waterbury Companies, Inc.,

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Title: TRANSITION SERVICES AGREEMENT
Governing Law: Delaware     Date: 9/3/2010
Industry: Personal and Household Prods.     Law Firm: Hunton Williams;Reed Smith     Sector: Consumer/Non-Cyclical

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Exhibit 10.1

TRANSITION SERVICES AGREEMENT

THIS TRANSITION SERVICES AGREEMENT (this “ Agreement ”) is entered into as of the 2nd day of September, 2010 by and between Waterbury Companies, Inc., a Delaware corporation (“ Waterbury ”), Air Guard Control (Canada) Limited, a Canadian Federal Corporation (“ Air Guard ,” and together with Waterbury, each a “ Service Provider ,” and, collectively, the “ Service Providers ”), Amrep, Inc., a Delaware Corporation (the “ US Buyer ”), and Acuity Holdings, Inc., a Quebec corporation (the “ Canadian Buyer ” and each of the US Buyer and the Canadian Buyer being individually referred to herein as a “ Buyer ” and, collectively, as the “ Buyers ,” and together with Service Providers, each a “ Party ” and, collectively, the “ Parties ”).

RECITALS

WHEREAS, prior to the consummation of the transactions contemplated by the Asset Purchase Agreement (as defined below), Waterbury and Air Guard carried on the business of, among other things, manufacturing certain air hygiene and pest control products in a manufacturing facility located in Louisiana (the “ Facility ”), through an office in Waterbury Connecticut (the “ Connecticut Office ”) and through a location in Ontario, Canada;

WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of July 23, 2010 (the “ Asset Purchase Agreement ”) by and among Buyers, Amrep IP Holdings, LLC a Delaware limited liability company (the “ IP Buyer ”), Waterbury, Air Guard Control Corporation (“ Air Guard Control ”) and Air Guard, Buyers and IP Buyer have purchased, and Waterbury, Air Guard and Air Guard Control have sold, certain assets relating to the businesses of Waterbury, Air Guard and Air Guard Control;

WHEREAS, the Parties desire that Waterbury and Air Guard provide certain transition services for Buyers as set forth herein; and

WHEREAS, the Parties are entering into this Agreement pursuant to Sections 6.1(f)(viii) and 6.2(f)(iv) of the Asset Purchase Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the agreements of the Parties contained herein and in the Asset Purchase Agreement, and intending to be legally bound, the Parties hereby agree as follows:

1. Definitions . Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Asset Purchase Agreement.

2. Transition Period . Unless a different time period is specified (with respect to each such service) in the Exhibits hereto or this Agreement is otherwise terminated prior to such date pursuant to the terms hereof, the term of this Agreement shall begin on the date hereof and expire on May 31, 2011 (the “ Final Termination Date ”), subject, (i) in the case of any termination date or service period set forth in any Exhibit hereto or the Final Termination Date, to such extensions as may be mutually agreed by the Parties in writing, and (ii) to the demonstrated need (as opposed to for the sake of convenience) of any Buyer to extend any Service provided herein, provided that with respect to any such extension, the Buyers shall pay an additional ten percent (10%) (the “ Premium ”) of the fees or costs to be paid by the Buyers to the Service Providers in accordance with this Agreement, provided , further , however, that should any transfer of Registrations or Registration Data not be completed for all purposes in accordance with Applicable Law (including consents or substituted supplemental registrations from the holder of any


Registration necessary for the transfer of any Registration that is a supplemental registration) by May 31, 2011, each Party’s obligations with respect to the Registration Services (as defined in Schedule A-7), and to the extent necessary to continue to manufacture, store, offer for sale, sell, ship, and/or deliver products with respect to such Registrations or Registration Data, the Services shall continue (the “ Transition Period ”) without payment of the Premium. Buyers shall use commercially reasonable efforts to cause its facilities to be registered as “EPA Establishments” or for Buyers to obtain sub-registrant or other necessary certifications that will allow Buyers to manufacture the Products (as defined below) at its facilities in accordance with Applicable Law.

3. Termination .

(a) Any Service Provider may terminate this Agreement: (i) upon the failure by Buyers to pay any amount due under Section 14 where such failure is not cured by Buyers within fifteen (15) days after receipt of notice thereof; or (ii) in the event of a material breach by Buyers of any other provision in this Agreement, where such breach is not cured by Buyers within thirty (30) days after receipt of notice by Buyers to cure such breach.

(b) Unless another termination notice period is set forth in the applicable Exhibit, Buyers may terminate this Agreement or direct that Service Providers no longer provide any particular category of Services (as defined herein) or any portion thereof at any time effective immediately upon not less than thirty (30) days prior written notice to Service Providers, provided , however , that if the provisions of the Worker Adjustment and Retraining Notification Act of 1988 (as amended or modified from time to time, the “ WARN Act ”) are applicable to Waterbury at such time, the notice period required by this provision shall not be less than seventy (70) days prior written notice to Service Providers.

(c) Any Service Provider (on one hand) or any Buyer (on the other hand) may terminate this Agreement, in whole or in part, in the event a Service Provider or a Buyer (as the case may be) (i) becomes or is declared insolvent or bankrupt, (ii) is the subject of any proceeding related to its liquidation or insolvency (whether voluntary or involuntary) which is not dismissed within sixty (60) calendar days or (iii) makes an assignment for the benefit of its creditors.

(d) No termination of this Agreement, in whole or in part, shall discharge, affect or otherwise modify in any manner the rights and obligations of the Parties that have accrued or have been incurred prior to such termination.

Notwithstanding anything to the contrary set forth herein or in the Asset Purchase Agreement, the Buyers shall indemnify, defend and hold harmless Service Providers and their Affiliates officers, directors, employees, representatives and agents (collectively, “ Service Provider Affiliated Parties ”) from and against any and all Losses incurred by any of them arising out of or otherwise with respect to the WARN Act in the event (i) Buyers fail to provide any Service Provider with notice at the times required under this Agreement or (ii) any Service Provider terminates this Agreement under Section 3(a).

4. Description of Services .

(a) During the Transition Period and subject to the terms and conditions of this Agreement, Service Providers shall provide, shall cause Watco International Holdings Corp. (“ Watco ”) to provide, and/or request their third party consultants and advisors (collectively, “ Third Party Advisors ”) who have historically provided such services to provide to Buyers those services described on Exhibits A-1 through A-8 hereto (the “ Exhibit Services ”); provided that to the extent that Buyers identify any additional services necessary for Buyers to conduct their businesses during the Transition Period, the Parties shall negotiate in good faith the provision of such additional services, the terms and conditions of

 

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such services, and the fees and costs to be paid by the Buyers pursuant to this Agreement for such services (all such services, collectively with the Exhibit Services, being the “ Services ”). For purposes of clarity, in no event shall any of the Services include any services of Robert Potvin.

(b) Notwithstanding the provision of any Services hereunder, (i) Buyers shall have no charge, management or control of the Facility during the Transition Period and this Agreement shall in no way be deemed to convey to Buyers any title to the Facility or the Connecticut Office or any right to occupy the same and (ii) Buyers shall not have and shall not be deemed to have any control over or responsibility for the employees, consultants, or advisors of any Service Provider. Buyers are not, and shall not be, the employer of, or have any liability or obligation with respect to any employee, consultant or advisor of any Service Provider by virtue of having signed this Agreement.

5. Buyers’ Representatives; Transition Timing . The Exhibits A-1 through A-8 set forth a designated representative or representatives of the Buyers to coordinate with the senior management team of Watco and senior personnel at the Facility and/or the Connecticut Office for each category of Services to be provided hereunder. During the Transition Period, Buyers may change such representatives by written notice to the Service Providers. Buyers agree to use commercially reasonable efforts to end their need for the Services as soon as reasonably practicable, provided , however , that notwithstanding the foregoing, Buyers shall provide Service Providers with notice at the times required under this Agreement.

6. General Limitations .

(a) Service Providers shall use commercially reasonable efforts to provide the Services; provided , however , that Service Providers shall have no liability in the event that they are unable to fulfill any of their obligations hereunder if (i) Buyers transfer to their manufacturing facilities, or otherwise limit Service Providers’ full access to, any Transferred Equipment and/or Inventory which is reasonably necessary for such Service Provider to fulfill its obligations hereunder, (ii) Buyers fail to timely provide Service Providers with customer information they are required to provide, and/or (iii) any Service Provider is unable to retain those employees whose employment is, in such Service Provider’s sole opinion, necessary for such Service Provider to satisfactorily fulfill its obligations hereunder, and, after using its good faith efforts to do so, is unable to promptly replace such vacancies with appropriately skilled replacement employees. Service Providers shall not be required to provide any Service to the extent that such Service was performed by any employee of Service Provider that is hired by any Buyer.

(b) In the event that Service Providers encounter or anticipate encountering a material change in production capacity or encounter or anticipate encountering material difficulties in meeting or filling Buyers’ orders, or otherwise performing any of the Services, they shall promptly so notify Buyers; provided that nothing herein shall limit or relieve Service Providers from their obligation to provide any and all of the Services required hereunder.

(c) Except with respect to the obligations Service Providers have to FMC pursuant to that certain Transition Services Agreement between Waterbury and FMC dated February 20, 2009, that certain Manufacturing Agreement between Waterbury and FMC dated February 20, 2009, that certain Supply Agreement between Waterbury and FMC dated February 20, 2009 and the FMC APA (collectively, the “ FMC Transaction Documents ”) and with regard to Spectrum Brands (the manufacturing obligations set forth therein, collectively, the “ FMC/Spectrum Obligations ”), no Acquired Assets (as defined in Schedule A-1 hereof) shall be used or otherwise made available for any purpose except as described herein. Except for the FMC/Spectrum Obligations, the Services described herein shall only be made available for the benefit of the Buyers. For purposes of clarity, Service Providers shall be entitled to utilize the Acquired Assets and the Services described herein to fulfill the FMC/Spectrum Obligations.

 

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7. Indemnity .

(a) Service Providers shall jointly and severally indemnify, defend and hold harmless Buyers, their Affiliates, officers, directors, employees, representatives and agents (collectively, “ Buyer Affiliated Parties ”), from and against any and all Losses resulting from: (i) the negligence or other tortious acts of any Service Provider, its employees, representatives or agents; (ii) any misrepresentation or breach of any of the covenants or other commitments of any Service Provider in this Agreement; (iii) any misrepresentation in or omission from any certificate or document furnished or to be furnished to Buyers hereunder; (iv) any misstatement or breach of any representation or warranty under and pursuant to this Agreement; (v) any Service Provider’s past, current or future operation of the Facility with respect to handling or disposal of wastes or other compliance with environmental, health or safety laws; (vi) except to the extent an Assumed Liability under the Asset Purchase Agreement or Losses for which Buyers are obligated to indemnify a Service Provider hereunder, any Service Provider’s past, current or future obligations in respect of employment of its employees or any other labor related liability; (vii) except to the extent resulting from acts of any Buyer Affiliated Party, performance of the FMC/Spectrum Obligations; or (viii) the costs to comply with or Service Provider’s failure to comply with the requirements of Section 3 of Exhibit A-7 or the failure of the Service Provider to comply with any Applicable Law related to labels or labeling (each, an “ Indemnifiable Loss ,” and, collectively, “ Indemnifiable Losses ”). Notwithstanding the foregoing, except with respect to Third-Party Claims or claims pursuant to clause (viii) of this Section 7(a), no indemnifying party hereunder shall be obligated to indemnify an indemnified party under this Agreement for any consequential, incidental, indirect, special or punitive damages, lost profits, or opportunity costs, diminution of value or similar items or damages or losses calculated as a multiple of damages or as a multiple of earnings, profits, contribution margin or similar items.

(b) Except with respect to Indemnifiable Losses resulting from, related to, or arising out of performance of the FMC/Spectrum Obligations or claims pursuant to clause (viii) of Section 7(a), Service Providers will not have any obligation to indemnify Buyers with respect to Indemnifiable Losses until the aggregate of all such Indemnifiable Losses exceeds an amount equal to One Hundred and Fifty Thousand Dollars ($150,000) (the “ TSA Basket ”) (at which point Service Providers will be obligated to indemnify Buyers for (but only for) such Indemnifiable Losses in excess of the TSA Basket).

(c) Except with respect to Indemnifiable Losses resulting from the performance of the FMC/Spectrum Obligations or claims pursuant to clause (viii) of Section 7(a), the aggregate liability of the Service Providers (collectively) to indemnify the Buyer Affiliated Parties from and against the Indemnifiable Losses under this Agreement shall not exceed two million dollars ($2,000,000).

(d) Notwithstanding the foregoing, so long as Service Providers provide the Services in accordance with the terms and conditions of this Agreement or the terms and conditions of the FMC/Spectrum Obligations (including without limitation provisions of Section 10 and Section 12 hereof), Service Providers shall not have any liability to Buyers or any obligation to indemnify Buyers from and against any Indemnifiable Losses (i) to the extent arising out of or relating to defects in the raw materials supplied or provided to Service Providers hereunder by Buyers, (ii) to the extent arising out of or relating to raw materials Buyers direct Service Providers to otherwise acquire, (iii) to the extent arising out of or relating to Services provided by a Third Party Advisor, the services of whom were directed to be used by Buyers, or (iv) to the extent arising out of or relating to changes made or actions taken by Buyers hereunder.

(e) Buyers shall jointly and severally indemnify, defend and hold harmless Service Providers, their Affiliates, officers, directors, employees, representatives and agents (the “ Service Provider Affiliated Parties ”) from and against any and all Losses resulting from the negligence or other

 

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tortious acts of any Buyer, its employees, representatives or agents. The aggregate liability of Buyers (collectively) to indemnify the Service Provider Affiliated Parties under this Agreement shall not exceed two million dollars ($2,000,000).

8. Compliance with Applicable Law . Service Providers are and shall continue to be in compliance in all material respects with all Applicable Laws applicable to such Service Provider’s performance of Services hereunder, property insurance requirements and waste removal, disposal, storage handling and other legal requirements. Service Providers have all Permits that are necessary to perform the Services in all material respects.

9. The Facility .

(a) Each Service Provider represents and covenants that:

(i) the Facility and each other location where any of the products that were included in the Acquired Assets (the “ Products ”) are located are registered establishments in compliance in all material respects with all Applicable Laws and, at all times during the Transition Period, shall be in compliance in all material respects with all Applicable Laws;

(ii) all wastes arising out of manufacture hereunder will be handled, stored, treated and disposed of, in compliance in all material respects with Applicable Laws; provided that nothing herein shall limit the obligation of Service Providers to, at all times, be solely responsible for their compliance with all applicable Environmental Laws and nothing herein shall cause or give Buyers any obligation or responsibility for any compliance with Environmental Laws at the Facility, the Connecticut Office or otherwise applicable to the Service Providers;

(iii) the Facility is registered with the US Environmental Protection Agency as required by all Applicable Laws and is operated and will be operated in all cases in all material respects in accordance with all Applicable Laws;

(iv) Service Providers shall keep such records and submit such reports as are required by any Governmental Entity or otherwise in accordance in all material respects with all Applicable Laws;

(v) each Service Provider is familiar with the requirements of applicable safety laws and codes governing the manufacture of the Products and will follow good manufacturing practices in production, packaging and storage of the Products as generally recognized in the industry; and

(vi) it shall notify Buyers in writing within five (5) Business Days of receipt of any notice any Service Provider receives from any Governmental Entity that expressly states that it is not in compliance with any material Applicable Laws relating to or involving the Products or any Service Provider’s manufacture thereof. Service Providers shall also notify Buyers in writing of the adoption of any new requirement relating to the manufacturing of the Products of which any Service Provider becomes aware.

(b) Service Providers shall promptly notify Buyers (in advance, if possible) of any inspection by a representative of any Governmental Entity involving or relating to the Facility, any of Products (or and products that are the subject of the FMC/Spectrum Obligations), raw materials,

 

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packaging materials, labeling and other agreed forms of packaging of the Products (and products that are the subject of the FMC/Spectrum Obligations), and, except to the extent restricted by the confidentiality provisions in the FMC Transaction Documents (the “ FMC Confidentiality Obligations ”), Buyers may, if they choose, be present at any such inspection. If Buyers cannot or fail to attend such inspection, representatives of Service Providers shall, upon Buyers’ request, provide Buyers with all relevant details relating to the inspection.

(c) Service Providers shall use commercially reasonable efforts to follow the Product Care guidelines attached hereto as Exhibit B hereto (the “ Product Care Guidelines ”).

(d) Service Providers acknowledge that the Asset Purchase Agreement conveyed to the Buyers the Transferred Equipment to be used by Service Providers to provide the Services. In addition to the Services provided herein, Service Providers shall maintain all such Transferred Equipment in accordance with the maintenance requirements recommended by the manufacturer or (to the extent more stringent) the maintenance schedule conducted by the Service Providers for the twelve (12) month period preceding the date hereof. Except for in respect of the FMC/Spectrum Obligations, Service Providers covenant and agree that they shall not, and will not, use any of the Transferred Equipment, the inventory, supplies or other assets of the Buyers, whether or not at the Facility or the Connecticut Office, for any purpose other than the provision of the Services hereunder. Service Providers shall maintain all records with respect to all such maintenance in all material respects in accordance with Applicable Laws, customary business standards and otherwise in accordance with the Service Providers past practice and shall provide Buyers upon request copies of all such maintenance records.

10. Product Specifications .

(a) Throughout the Transition Period, Service Providers shall ensure that the Products comply with the agreed finished product specifications for each of the Products as set forth in Exhibit C hereto including, without limitation, conforming to all Confidential Statements of Formula and Methods of Manufacture included with any Registration Data (the “ Finished Product Specifications ”); provided that Buyers may make changes to the Finished Product Specifications to conform with the requirements of Applicable Laws or to reflect developments and changes in the products developed by Buyers and provided , further , that unless Buyers agree to promptly reimburse Service Providers for such costs, the foregoing shall not obligate any Service Provider to make any change or addition that will require any capital expenditures or otherwise increase the costs of the Service Providers hereunder or require the application for new permits or authorizations from any third party by such Service Provider, without the prior agreement of such Service Provider.

(b) Service Providers may not make any changes to production processes used to make Products or the Finished Product Specifications. Service Providers’ existing Management of Change (MOC) procedure shall be modified to include Buyers’ written approval for any changes implemented at the Facility affecting the Products. Notwithstanding the foregoing, nothing in this Agreement will prohibit Service Providers from making changes to the extent required by Applicable Law.

(c) Without limiting the generality of the provisions of this Agreement, in case Buyers choose to no longer market, sell, or offer for sale any Product manufactured at the Facility or in case Buyers no longer desire to have any Product manufactured by Service Providers, Buyers may require Service Providers to stop manufacturing such specified Product by delivering a written notice requiring Service Providers to cease manufacturing a specified Product (a “ Stop Notice ”). The Stop Notice shall indicate (i) each Product to be discontinued (the “ Discontinued Product ”) and (ii) the date of which manufacture of such Discontinued Product(s) shall cease. Buyers may deliver more than one Stop Notice

 

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during the Transition Period, provided , however , that Buyers shall not deliver any Stop Notice in respect of products that are the subject of the FMC/Spectrum Obligations, and provided , further , that if the provisions of the WARN Act are applicable to Waterbury, then Buyers shall provide no less than seventy (70) days prior written notice to Service Providers.

(d) On ceasing to manufacture the Discontinued Product(s), the Service Providers shall provide to Buyers a statement showing the quantity and description of all ingredients, packaging and raw materials and Products relating to the Discontinued Products which remain with Service Providers and which Service Providers can no longer use in the continued production of the Products (other than the Discontinued Products). Other than in respect of ingredients, packaging and raw materials and Products that are the subject of the FMC/Spectrum Obligations, Buyers undertake to use commercially reasonable efforts to collect the ingredients, packaging and raw materials and Products relating to the Discontinued Products from such Service Provider’s premises within five (5) weeks following issuance of the Stop Notice.

11. Cooperation .

(a) Since Buyers anticipate a close working relationship with Service Providers, Service Providers agree to allow representatives of Buyers to have free access to the Facility during normal business hours and upon reasonable prior notice to Service Providers so long as such access provides minimal interference to the ongoing business operations of the Service Providers and will not violate the FMC Confidentiality Obligations. Service Providers will work with Buyers so as to be highly flexible to change formulation type, packaging and process, both within the capacity, capability, labor flexibility and lead-times of the operations at the Facility and taking into account the FMC/Spectrum Obligations. Buyers will work with Service Providers so as to be highly flexible to change formulation type, packaging and process, within the capacity, capability, labor flexibility and lead-times of the operations at the Facility.

(b) Service Providers shall provide Buyers with daily production and efficiency reports with respect to the operation of the Facility (including with respect to the performance of the FMC/Spectrum Obligations) not later than Monday of each week during the Transition Period. Service Providers shall ensure that the inventory levels of all Products and all raw materials (other than those relating to the products that are the subject of the FMC/Spectrum Obligations) shall not be greater than the average inventory levels maintained by the Service Providers for the twelve (12) month period prior to the date hereof, except (i) to the extent such increased inventory levels are necessary to satisfy increased customer orders or demand or accelerated customer delivery requirements, or (ii) to the extent that Buyers’ otherwise approve such an increase upon the written request of Service Providers, which shall not be unreasonably withheld. Buyers shall be deemed to have approved Service Providers’ request to maintain increased inventory on a reasonable basis in the event that Service Providers provide such request to Buyers in writing and Buyers fail to respond to such request in writing within five (5) Business Days. Service Providers shall use commercially reasonable efforts to ensure that the Facility operates at all times at an efficiency consistent with the operation of the Facility prior to the date hereof.

(c) Service Providers and Buyers shall work cooperatively to identify cost reduction and other efficiency projects relevant to production of the Products (e.g., reduction of active ingredient loss), and, if any are identified, the Parties shall assign a reasonable amount of staff support to seek to develop process solutions that could be implemented at the Facility.

(d) Subject to reasonable prior notice, Buyers shall be permitted to have its experts carry out, during normal business hours, audits of the Facility in the areas of quality, environment, safety and health, Product Care Guidelines and/or operations relating to the Products and, subject to the FMC

 

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Confidentiality Obligations, those products that are the subject of the FMC/Spectrum Obligations, provided that the access granted in connection with such audits will give due regard to minimizing interference with the operations, activities and employees of Service Providers and such access would not violate the terms of any agreement by which any Service Provider is bound or any Applicable Laws. The cost of any such inspection shall be borne by Buyers and Buyers shall ensure that all of its employees or agents (or employees or agents of a third party entrusted by it with the audit) who visit the Facility comply with all security, safety, hygiene and other applicable regulations at the Facility.

(e) Except as provided otherwise herein, Buyers shall make available on a timely basis to Service Providers all information and materials reasonably requested by Service Providers to enable them to provide the Services.

12. Quality Control, Reports and Inspections .

(a) Service Providers shall sample, test and maintain records and samples of all raw material inventory and production lots for all Products manufactured pursuant to this Agreement in the ordinary course of business as required by Applicable Law, customary business practices and otherwise in a manner consistent with such Service Provider’s historical practices, using the same standard of care as such Service Provider used in maintaining records and samples of all raw materials inventory and production lots for its own products during the twelve (12) month period immediately prior to the date hereof but in all cases in accordance with Applicable Law and the Finished Product Specifications. Notwithstanding the foregoing, upon expiration or earlier termination of the Transition Period and except with respect to products that are the subject of the FMC/Spectrum Obligations, Service Providers shall deliver to Buyers all such samples, and copies of all records and other documents relating to the raw materials inventory received and all Products manufactured and packaged and thereafter have no obligation to retain such items.

(b) Service Providers shall conduct quality assurance testing of Products manufactured hereunder in the ordinary course of business in accordance with such Service Provider’s historical practices, using the same standard of care as such Service Provider used in quality assurance testing for its own products during the twelve (12) month period immediately prior to the date hereof but in all cases in accordance with Applicable Law, the Confidential Statements of Formula, Methods of Manufacture, and the Finished Product Specifications.

13. Service Providers’ Insurance .

(a) Service Providers shall, at all times during the term of this Agreement at Service Providers’ sole cost and expense, procure and maintain insurance necessary for its operations, including but not limited to the insurance coverage and amounts set forth below:

(i) Commercial general liability insurance in an amount not less than $7,000,000 per occurrence for bodily injury, property damage and personal and advertising injury including products and completed operations;

(ii) Commercial automobile liability insurance in an amount not less than $1,000,000 per occurrence combined single limit for bodily injury and property damage covering any owned, hired or leased automobile;

(iii) Commercial pollution liability insurance in an amount not less $5,000,000 per occurrence for bodily injury, property damage and clean up expense applying to pollution releases at or associated with any owned, leased or occupied facility of any Service Provider,

 

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including above ground storage tanks, any off site releases including non-owned disposal sites and products related pollution;

(iv) Statutory workers’ compensation providing primary coverage for all employees, including any leased employees, and employers liability with limits not less than $1,000,000 for each accident, which such policy shall be endorsed to provide for waiver of subrogation in favor of Buyers and include an alternate employer endorsement for any employees leased to Buyers during the Transition Period;

(v) All risk property insurance covering the replacement cost value of personal property, stock, machinery, equipment, and the personal property of others, including losses directly or indirectly associated with named windstorm, flood and earth Movement, with Buyers named as a loss payee for direct or indirect loss to Buyers’ assets that remain in the care, custody and control of any Service Provider;

(vi) Business interruption and extra expense coverage allowing for 12 months actual loss sustained on an all risk basis, including losses directly or indirectly associated with named windstorm, flood, earth movement and breakdown of the Transferred Equipment, subject to retention of not more than $500,000 per loss event and/or a waiting period not more than 72 hours; and

(vii) Employment practices liability insurance, including coverage for 3rd party discrimination in an amount not less than $1,000,000 per offense.

(b) Except for the employment practices liability policy and the commercial pollution liability policy described above, all coverage must apply on an occurrence basis. Such policies shall be issued by insurance companies that are qualified to do business in the state where work is performed and shall have an A.M. Best rating of at least A. The commercial general liability, commercial auto liability, commercial pollution liability and business interruption policies shall be endorsed to include Buyers, their subsidiaries, directors, employees, agents, affiliates and assigns as additional insured and provide a waiver of subrogation in favor of Buyers. Specific to liability policies (e.g., commercial general liability, commercial auto liability and commercial pollution liability), an additional insured endorsement shall extend to ongoing and completed operations. Service Providers’ coverage shall apply on a primary and non-contributory basis whereby no Service Provider shall receive contribution from any insurance afforded by or available to the additional insured (except to the extent that any Buyer is solely negligent). Liability coverage shall apply with or without deductible, but in no case shall retained amount exceed $25,000 per occurrence.

(c) Service Providers shall provide certificates of insurance to Buyers evidencing required coverage is in place prior to the commencement of this agreement and confirming that absolute cancellation or material change in coverage shall be not made without thirty (30) days prior written notice.

(d) Subject to Section 13(c) hereof, if Buyers elect to deliver a Stop Notice with respect to any Discontinued Products or delivers a Transfer Notice (as defined in Exhibit A-2 hereof) with respect to the relocation of any Transferred Equipment, the Service Providers may reduce the foregoing insurance limits to limits that are reasonable to reflect the reduced operations as a result of such relocation, which insurance limits shall be subject to the reasonable approval of Buyers.

14. Price; Payment; Service Costs . The Services to be provided hereunder shall be performed for the charges set forth on the applicable Exhibit hereto, but in all cases without profit or

 

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markup. All amounts payable pursuant to this Agreement shall be payable in arrears by wire transfer of immediately available funds within five (5) Business Days following delivery of a detailed billing statement or invoice. Should Buyers dispute any portion of any invoice, Buyers shall pay in full all amounts not in dispute and notify Service Providers in writing of the nature and basis of the dispute.

15. Force Majeure . Any failure or omission by a Party in the performance of any obligation under this Agreement arising from any cause or causes beyond the control of such Party shall be suspended to the extent and for the period that performance is prevented (to a maximum of five (5) Business Days in respect of obligations for the payment of money) and during such suspension shall not be deemed a breach of this Agreement or create any liability, if the same arises from any cause or causes beyond the control of such Party, including the following, which for purposes of this Agreement shall be regarded as beyond the control of each of the Parties hereto: acts of God, fire, storm, flood, hurricane, earthquake, power failure, governmental regulation or direction, acts of a public enemy, war, rebellion, insurrection, riot, terrorism, invasion, employee departure, strike or lockout; provided that the Party relying on the provisions of this Section 15 shall forthwith give to the other Party notice of such suspension, the reasons therefor and the expected duration thereof; provided , however , that no amounts shall be due and payable for any Services not provided herein, whether or not the failure to provide such Service is excused pursuant to this Section 15 or otherwise and nothing herein shall limit or restrict the right of Buyers to terminate all or part of the Services provided hereunder in accordance with the terms set forth herein.

16. Independent Contractor . The Parties agree that Service Providers are independent contractors under this Agreement and that their relationship with Buyers will not be represented as agent, partner or anything other than that of an independent contractor. Service Providers agree that all personnel employed in connection with the performance of this Agreement are, and shall be, for all purposes, employees of such Service Provider and not of any Buyer.

17. Confidentiality . Each Party (as “ Receiving Party ”) shall hold, and cause its directors, officers, employees, agents, consultants and advisors to hold, in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of law, all information concerning the other Party (as “ Disclosing Party ”), provided , however , that to the extent that a party receiving any confidential information of the other party hereunder may receive the opinion of outside counsel that disclosure of any such confidential information is required in order that such party not commit a violation of law, such party: (a) to the extent not inconsistent with such party’s obligation to disclose, will give the other party hereto prompt notice of such request so that such party may seek an appropriate protective order; (b) may only disclose such information if it shall first have used commercially reasonable efforts to obtain an appropriate protective order or other satisfactory assurance of confidential treatment for the information required to be so disclosed; and (c) if such protective order or other remedy is not obtained, or the other Party waives such Party’s compliance with the provisions of this Section 17, shall only furnish that portion of such confidential information which is legally required to be so disclosed. Notwithstanding the foregoing, no information will be considered confidential information hereunder to the extent that it can be shown to have been (x) in the public domain through no fault of the Receiving Party; (y) later lawfully acquired on a non-confidential basis from other sources by the Receiving Party; or (z) was independently developed by the Receiving Party, as shown by the written business records of the Receiving Party, without use of any other information, and neither Party shall release or disclose such information to any other person (subject to the terms and performance of this Agreement).

18. Office Furniture and Equipment . If requested by any Buyer prior to the end of the Transition Period, (a) Service Providers and such Buyer will negotiate in good faith the sale to such Buyer of any office furniture or office equipment owned by any Service Provider and located at such Service

 

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Provider’s Connecticut Office, and (b) Service Providers will use commercially reasonable efforts to assign to such Buyer, effective as of the end of the Transition Period, the lease of any office furniture or office equipment leased by Service Providers and located at the Connecticut Office, provided , however , that in no event shall Service Providers be required to expend any funds to effectuate such assignment.

19. General .

(a) Entire Agreement; Assignment . This Agreement (including the exhibits hereto) (i) constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all other prior agreements and understandings both written and oral between the parties hereto with respect to the subject matter hereof and thereof; and (ii) shall not be assigned by operation of law or otherwise without the written consent of all the parties hereto; provided , however , that Buyers may assign any or all of its rights and obligations under this Agreement to any subsidiary or affiliate of Buyer, but no such assignment shall relieve Buyers of their obligations hereunder if such assignee does not perform such obligations.

(b) Severability . If any provision of this Agreement or the application thereof to any Person or circumstance is held invalid or unenforceable the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected thereby and to such end the provisions of this Agreement are agreed to be severable.

(c) Notices . All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by facsimile, by nationally recognized overnight courier or by registered or certified mail (postage prepaid, return receipt requested) to each other party hereto as follows:

 

if to Buyers:

 

  

Amrep, Inc.

 

  

1310 Seaboard Industrial Boulevard, NW

 

  

Atlanta, GA 30318

 

  

Telecopier: 404) 367-4083

 

  

Attention: Mark Bachmann, CFO and Executive

Vice President

with a copy to:

 

  

Hunton & Williams LLP

 

  

600 Peachtree Street, N.E., Suite 4100

 

  

Atlanta, GA 30308-2216

 

  

Telecopier: (404) 602-9012

 

  

Attention: G. Roth Kehoe II

if to Service Providers to:

 

  

c/o Watco International

Holdings Corp.

 

  

64 Avenue of Industry

 

  

Waterbury, CT 06705

 

  

Telecopier: (203) 805-0630

 

  

Attention:         Michael Rohl


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