Exhibit 10.21
TRANSITION SERVICES
AGREEMENT—MOTOROLA SERVICES
This TRANSITION SERVICES
AGREEMENT—MOTOROLA SERVICES (this “ Agreement
”) is entered into this 4 th day of April, 2004 by and between
Motorola, Inc., a Delaware corporation (“ Motorola
”) and Freescale Semiconductor, Inc., a Delaware
corporation (“ Freescale ”).
RECITALS
A. Pursuant to that
certain Master Separation and Distribution Agreement dated April
, 2004, by and between Motorola and
Freescale (the “ Separation Agreement ”), the
Parties have agreed to separate the businesses and operations
conducted by the Semiconductor Products Sector (
“SPS” ) of Motorola and its Affiliates from the
remainder of Motorola. Motorola and Freescale are sometimes
referred to herein as a “ Party ” and
collectively as the “Parties.” Capitalized terms
used herein and not otherwise defined herein have the meanings
given to such terms in the Separation Agreement.
B. In connection
therewith, Freescale desires that Motorola and/or its Affiliates
provide Freescale and/or its Affiliates (collectively, the
“Company” ), as applicable, with certain
transition services with respect to the operation of the Company
following the Effective Date, as more fully set forth
herein.
NOW, THEREFORE, in consideration of
the promises and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Motorola and Freescale each hereby agree as
follows:
AGREEMENT
1. Transition Services .
During the term of this Agreement as set forth in Section 4
, Motorola shall provide, or shall cause one or more of its
Affiliates or third parties to provide, to Freescale and/or its
Affiliates, as applicable, upon the terms and subject to the
conditions hereof, the services more particularly described on
Annex A (each service, a “Transition
Service” and collectively, the “Transition
Services” ). Motorola and Freescale may, by mutual
written consent, amend the Transition Services to include other
services in exchange for additional fees ( “Additional
Services” ). Freescale shall and shall cause its
Affiliates to, if applicable, adhere to any conditions or policies
applicable to its use of the Transition Services as set forth in
this Agreement or in Annex A .
2. Level of Transition
Services .
(a) Unless otherwise specifically
set forth in Annex A , Motorola will perform the Transition
Services in the manner and at a level of service substantially
similar to that provided by Motorola to SPS during the period
immediately prior to the date hereof;
provided, however, that nothing in this
Agreement will require Motorola to favor the Company over its other
business operations.
(b) Unless otherwise specifically
set forth in Annex A , it is the intention of Freescale and
Motorola that the Company’s use of any Transition Service
shall not be substantially greater than the level of use required
by SPS immediately prior to date hereof. In no event will the
Company be entitled to any new service or to substantially increase
its use of any of the Transition Services above that level of use
without the prior written consent of Motorola; provided, however
that if Motorola consents to such an increase, Motorola shall be
entitled to a pro rata increase in fees.
3. No Obligation to Continue to
Use Services; Partial Termination . The Company will have no
obligation to continue to use any of the Transition Services and
Freescale may terminate any Transition Service by giving Motorola
not less than thirty (30) days’ prior written notice of its
desire to terminate any Transition Service. To the extent possible,
Freescale will give such notice at the beginning of a fiscal month
to terminate the service as of the beginning of the next fiscal
month to avoid the need to prorate any monthly payment charges. As
soon as reasonably practicable following receipt of any such
notice, Motorola shall advise Freescale as to whether termination
of such Transition Service will (a) require the termination or
partial termination of, or otherwise affect the provision of,
certain other Transition Services, or (b) result in any early
termination costs, including those related to third party
providers. If either will be the case, Freescale may withdraw its
termination notice within five (5) business days. If Freescale does
not withdraw the termination within such period, such termination
shall be final. Upon such termination, Freescale’s obligation
to pay for such Transition Service(s), if any, shall terminate, and
Motorola shall cease, or cause its Affiliates or third party
providers to cease, providing the terminated Transition Service(s),
both subject to the terms of Section 4(c) ; provided,
however, that Freescale shall reimburse Motorola for the reasonable
termination costs actually incurred by Motorola resulting from
Freescale’s early termination of such Transition Services,
including those owed to third party providers. Motorola will use
commercially reasonable efforts to mitigate such termination
costs.
4. Term and Termination
.
(a) Subject to Section 3 ,
the term of this Agreement shall commence on the date hereof and
continue with respect to each of the Transition Services for the
term thereof as set forth in Annex A ; the last date in each
such term being referred to herein as a “Service
Termination Date” for each such Transition
Service.
(b) Notwithstanding the foregoing,
this Agreement may be terminated upon the earliest to occur of the
following (each, a “Termination Date” ): (i) by
Motorola, immediately by giving written notice to Freescale if
Freescale breaches or is in default of any payment obligation,
which default is capable of being cured, and such breach or default
has not been cured within thirty (30) days after Freescale’s
receipt of notice of such a breach or default from Motorola; (ii)
by Freescale as to any particular Transition Service pursuant to
Section 3 ; and (iii) by Motorola or Freescale,
automatically upon the occurrence of the last of the Service
Termination Dates.
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(c) Immediately following the
Termination Date, Motorola shall cease, or cause its Affiliates or
third party providers to cease, providing the Transition Services,
and Freescale shall promptly pay or cause its Affiliates to
promptly pay all fees accrued pursuant to Section 6 but unpaid to
Motorola. The terms and conditions of this Agreement that, by their
terms, require performance following the termination or expiration
of this Agreement shall survive such termination or
expiration.
5. General Intent . The
Company shall use commercially reasonable efforts to end its use of
the Transition Services as soon as reasonably possible and (unless
the Parties otherwise agree) in all events to end such use with
respect to each Transition Service not later than the applicable
Service Termination Date.
6. Fees .
(a) Consideration . As
consideration for the Transition Services, Freescale will pay to
Motorola (or will cause its Affiliates to pay to Motorola or
Motorola’s Affiliates, as applicable) the amount specified
for each Transition Service as set forth in Annex A on a
monthly basis except (i) as otherwise specified in Annex A
with respect to a particular Transition Service, (ii) for Tigers
purchases, Web Money reimbursements, other “normal”
department charges which will result in a cash disbursement made by
Motorola or its Affiliates on behalf of Freescale or its
Affiliates, reimbursement shall be made as described in clause (b)
below ,
and (iii) Motorola and its Affiliates, as applicable, shall be
entitled to charge Freescale or its Affiliates, as applicable, for
any VAT or similar charges that they are legally required to charge
on such amounts. Unless the parties otherwise agree, any amounts
charged to Freescale’s Affiliates outside of the United
States will be billed and paid in the local currency of the entity
providing the Transition Services; provided that such payments are
made within such country. Unless the parties otherwise agree, if
payments are to be made between legal entities not within the same
country, such amounts will be billed and paid in U.S. dollars. To
the extent necessary, local currency conversion will be based on
the P&L rate for the current month. The Transition Services to
be provided by third parties will be charged to the Company at no
higher cost than the actual payments made by Motorola to third
party providers for providing such Transition Services. All charges
based on a monthly or other time basis will be pro rated based on
actual days elapsed during the period of service. Upon the
termination of any Transition Service in accordance with and
subject to, Sections 3 or Section 4 above, the
consideration to be paid under this Section 6 will be the
accrued pro rated daily fees payable under this Section 6
except in cases where Motorola or its Affiliate has already
procured and pre-paid for the services of a third party
provider.
(b) Invoices . On the last
Friday of each fiscal month, each of Motorola and each of its
Affiliates providing Transition Services will submit one invoice to
each of Freescale and each of its Affiliates receiving Transition
Services for all Transition Services provided to the Company during
such fiscal month pursuant to this Agreement. Notwithstanding the
foregoing, for items described in clause (a)(ii) above, each of
Motorola and each of its Affiliates shall submit a weekly invoice
to each of Freescale and each of its Affiliates for the amount
subject to reimbursement and the related VAT. The invoices shall
break out the amount for each type of Transition Service or amounts
subject to reimbursement. Motorola will
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provide documentation supporting any amounts
invoiced pursuant to this Section 6 as Freescale may from
time to time reasonably request, including, without limitation,
detail with respect to any third party billing information relating
to the Transition Services provided under this
Agreement.
(c) Time of Payment . Except
as provided in clause (a) above, Freescale will pay and will cause
each of its Affiliates to pay all amounts due pursuant to this
Agreement (ii) within thirty (30) days after receipt of each such
invoice hereunder for the Transition Services and (ii) within
forty-five (45) days after receipt of each such invoice hereunder
for the amounts subject to reimbursement; provided that in the
event that Freescale, in good faith and upon reasonable grounds,
questions any invoiced item, payment of that item may be made only
after resolution of such question.
7. Personnel .
(a) Right to Designate and Change
Personnel . Motorola will make available such personnel as will
be required to provide the Transition Services described in
Annex A . Motorola will have the right to designate which
personnel it will assign to perform the Transition Services.
Motorola also will have the right to remove and replace any such
personnel at any time or designate any of its Affiliates or a
third-party provider at any time to perform the Transition
Services; provided, however, that Motorola will use its
commercially reasonable efforts to limit the disruption to the
Company in the transition of the Transition Services to different
personnel or a third party. In the event that personnel with the
designated level of experience are not then employed by Motorola,
Motorola will substitute such personnel or third party personnel
having an adequate level of experience; provided, however, that
Motorola will have no obligation to retain any individual employee
for the sole purpose of providing the applicable Transition
Services.
(b) Financial Responsibility for
Motorola Personnel . Motorola will pay for all personnel
expenses, including wages, of its employees performing the
Transition Services. Any request by the Company for travel by any
Motorola employee will be considered and treated as a request for
Additional Services pursuant to Section 1 and the costs of
such travel shall be charged to the Company as additional
fees.
(c) Motorola Manager . During
the term of this Agreement, Motorola will appoint one of its
employees (the “Motorola Manager” ) who will
have overall responsibility for managing and coordinating the
delivery of the Transition Services and one of its employees for
each category of service. The Motorola Manager and each of the
sub-managers will coordinate and consult with the Freescale Manager
(as defined in Section 7(d) ) and each of the Freescale
sub-managers. Motorola may, at its discretion, select other
individuals to serve in these capacities during the term of this
Agreement.
(d) Freescale Manager .
During the term of this Agreement, Freescale will appoint one of
its employees (the “Freescale Manager” ) who
will have overall responsibility for managing and coordinating the
delivery of the Transition Services and one of its employees for
each c
