Exhibit 10.10

 

TRANSITION SERVICES AGREEMENT

 

THIS TRANSITION SERVICES AGREEMENT the (“ Agreement ”) is made and entered into this 15th day of March, 2002, by and between Aether Systems, Inc., a Delaware corporation (the “ Buyer ”), and @Track Communications, Inc., a Delaware corporation (the “ Seller ”).

 

RECITALS

 

Buyer and Seller have entered into that certain Asset Purchase Agreement dated as of the date hereof (the “ Purchase Agreement ”), whereby Seller has conveyed and Buyer has acquired the Acquired Assets used by Seller with respect to the Business.

 

All capitalized terms used herein shall have the meaning ascribed to them in the Purchase Agreement unless otherwise defined herein.   Capitalized terms used but not defined in the body of this Agreement shall have the respective meanings given to such terms in Exhibit A attached hereto.

 

Buyer and Seller wish to make arrangements for the transition of the Business from Seller to Buyer following the Closing of the transactions contemplated by the Purchase Agreement, pursuant to this Agreement.

 

NOW, THEREFORE, in consideration of the promises and mutual covenants set forth in the Purchase Agreement and herein, and other good and valuable consideration, and contingent upon the Closing, the parties hereby agree as follows:

 

1.                    Transition of the HM5600 Business .  Pursuant to the Purchase Agreement, Seller has retained all obligations under the HM5000 Contracts and Buyer has acquired all rights under the HM5000 Contracts.  Therefore, pursuant to the Purchase, Agreement, with respect to the HM5000 Customers, Seller has retained all liability and responsibility under the HM5000 Contracts and Buyer has acquired all rights under the HM5000 Contracts, including the sole right to enforce the term thereof and, subject to the limitations set forth herein, to modify the terms thereof (including the rates thereunder) and terminate the contract, in each case in accordance with the terms of thereof.  However, as between Seller and Buyer, certain rights and responsibilities with respect to the HM5000 Customers shall be as set forth in this Section 1.

 

1.1                                  Provision of HM5000 Airtime Services .  Pursuant to the HM5000 Contracts, Seller shall remain obligated to the HM5000 Customers to provide the Enhanced Services (as defined in the HM5000 Contracts) and the Enhanced Cellular Roaming (as defined in the HM5000 Contracts) during the respective terms of such contracts and in accordance with the terms and conditions thereof (collectively, the “ HM5000 Airtime Services ”). With respect to the Term HM5000 Customers, Seller hereby agrees with and covenants to Buyer that Seller shall, unless and until otherwise directed by Buyer, provide HM5000 Airtime Services to each such Term HM5000 Customer pursuant to the terms of its HM5000 Contract until the later of (i) the expiration of the fixed term of its HM5000 Contract and (ii) September 30, 2003, or such later date as may be mutually agreed by the parties. With respect to the Month-to-Month HM5000 Customers, Seller hereby agrees with and covenants to Buyer that Seller shall, unless and until otherwise directed by Buyer, provide HM5000 Airtime Services to each such Month-to-Month HM5000 Customer pursuant to the terms of its HM5000 Contract until September 30, 2003, or

 

 

such later date as may be mutually agreed by the parties.  Each HM5000 Customer shall be permitted to renew its HM5000 Contract upon expiration in accordance with the renewal terms thereof and, in the event of any such renewal (whether automatic or otherwise), such expiration shall not constitute a termination of such contract that would relieve Seller of its obligation to Buyer to provide HM5000 Airtime Services to such HM5000 Customer pursuant to this Section 1.1; provided , however , that no HM5000 Customer may renew its HM5000 Contract for a term that extends beyond September 30,2003, unless otherwise mutually agreed by the parties.  Upon instruction from Buyer, and provided that such suspension would not result in Seller’s breach of the applicable HM5000 Contract, Seller shall permanently cease or temporarily suspend providing HM5000 Airtime Services to any HM5000 Customer.  Because, subject to the limitations set forth above, all rights under the HM5000 Contracts have been assigned to Buyer pursuant to the Purchase Agreement, subject to Section 4.l(c), Seller shall have no right to terminate or modify the HM5000 Contracts or to discontinue provision of the HM5000 Airtime Services, except as directed by Buyer in accordance with the foregoing.

 

1.2                                  Consideration for Provision of HM5000 Airtime Services .  In exchange for Seller’s promise to Buyer to provide the HM5000 Airtime Services to the HM5000 Customers in accordance with Section 1.1, for so long as Seller provides such HM5000 Airtime Services pursuant to Section 1.1, except as otherwise provided in paragraph (g), Buyer hereby agrees to pay Seller Seller’s actual costs of providing the HM5000 Airtime Services to the extent set forth below:

 

(a)  Third Party Cellular Services .

 

(i)                                      Seller is charged for the HM5000 Airtime Services by Seller’s cellular carriers (the “ Cellular Carriers ”), who charge Seller per minute of HM5000 Airtime Services. The per minute rates for each Cellular Carrier that Seller uses to provide the HM5000 Airtime Services are attached hereto, listed by carrier, as Exhibit B-1 .  Seller hereby represents and warrants to Purchaser that the rates and information set forth on Exhibit B-1 are true, correct and complete as of the date hereof.  Seller shall charge Buyer for the HM5000 Airtime Services invoiced to Seller by the Cellular Carriers at the applicable rate Seller is charged for such HM5000 Airtime Services, as set forth in Exhibit B-1 .  Seller may amend Exhibit B-1 only upon thirty (30) days prior written notice to Buyer and only to the extent necessary to reflect actual rate increases imposed on Seller by the Cellular Carriers and to reflect changes in Cellular Carriers.

 

(ii)                                   Seller shall use commercially reasonable efforts (and in no event less than the same level of efforts that Seller used in such situations prior to Closing) (A) to audit the charges made to it by the Cellular Carriers for the HM5000 Airtime Services in order to verify that Seller was charged at the correct rates and (B) in the event such audit reveals an overcharge by such Cellular Carriers, to seek a refund.  Seller shall inform Buyer of any such overcharge, keep Buyer apprised of efforts to obtain a refund of such overcharge, and promptly remit any such refund received to Buyer.

 

(b)  TSI Services .  In connection with its provision of the HM5000 Airtime Services, Seller uses services rendered to Seller under the TSI Agreements (the “ TSI Services ”).  Seller shall charge Buyer for the TSI Services used by Seller for the provision of the HM5000

 

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Airtime Services and invoiced to Seller by Telecommunications Services, Inc. at the rate Seller is charged for such TSI Services.  Seller shall not enter into any amendments, renewal or replacement of the TSI Agreements that would result in an increase in the amounts charged for the TSI Services without the prior written consent of Buyer.

 

(c)  Administrative Carrier Services.  In connection with its provision of the HM5000 Airtime Services, Seller uses services rendered to Seller under the Administrative Carrier Agreement (the “ Administrative Carrier Services ”).  “Administrative Carrier Services” shall not, however, include any charges of the Cellular Carriers that are passed through to Seller pursuant to the Administrative Carrier Agreement but shall include only those charges in respect of the services actually provided to Seller by Cingular Wireless thereunder.  Seller shall charge Buyer for the Administrative Carrier Services used by Seller for the provision of the HM5000 Airtime Services and invoiced to Seller by Cingular Wireless at the rate Seller is charged for such Administrative Carrier Services.  Seller shall not enter into any amendment, renewal or replacement of the Administrative Carrier Agreement that would result in an increase in the amounts charged for the Administrative Carrier Services without the prior written consent of Buyer.

 

(d)  Long Distance and Toll-Free Services .  In connection with its provision of the HM5000 Airtime Services, Seller uses long-distance and toll-free phone services provided by third parties (the ‘‘ Long Distance and Toll-Free Services ”).  Seller hereby agrees that it shall charge Buyer for the Long Distance and Toll-Free Services used by Seller for the provision of the HM5000 Airtime Services and invoiced to Seller by its long-distance/toll-free service providers at the applicable rate Seller is charged for such Long Distance and Toll-Free Services as set forth in Exhibit B-2 .  Seller may amend Exhibit B-2 only upon thirty (30) days prior written notice to Buyer and only to the extent necessary to reflect actual rate increases imposed on Seller by its long-distance/toll-free service providers and lo reflect changes in it its providers.

 

(e)  Costs of NSC Operation .  Buyer shall pay Seller [*] to cover Seller’s costs of operating its Network Service Center.  Payment for any partial calendar month (i.e., the month in which Closing occurs and the month in which Seller ceases to provide HM5000 Airtime Services hereunder) shall be prorated accordingly.  In exchange for the foregoing payment, Seller agrees to maintain and technically support the NSC with same level of care as Seller used to perform these activities prior to Closing, but in no event less than a commercially reasonable standard of care.  With respect to the Cellemetry Gateway, the foregoing obligation to provide maintenance and technical support shall continue only until Buyer has implemented a replacement of the Cellemetry Gateway in accordance with Section 2.4.  With respect to the HM5000 Gateway, the foregoing obligation to provide maintenance and technical support shall continue for so long as Seller is obligated to provide the HM5000 Airtime Services hereunder.

 

(f)  Invoicing .  Seller shall invoice Buyer for the charges set forth in paragraphs (a) though (e) on a calendar month basis.  Seller shall invoice Buyer for the charges incurred in each calendar month within ten (10) business days after the last day of such calendar month.  Buyer shall remit payment to Seller in respect of such charges with fifteen (15) business days after receiving the applicable invoice.  For a period of one year after Buyer receives any invoice under this paragraph (f), Buyer shall have the right to audit the charges made to Seller that were

 

* Confidential Information.  Information has been redacted.

 

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passed through to Buyer pursuant to such invoice to verify that Seller has charged Buyer in accordance with this Section 1.  For a period of one year after Buyer receives my invoice under this paragraph (f), Seller shall retain all documentation (including the bills Seller received from the applicable service provider and the documentation recording the usage of the HM5000 Airtime Services by the HM5000 Customers) necessary for Buyer to verify the accuracy of the charges passed through to Buyer pursuant to such invoice and Seller shall make such documentation available to Buyer in the event Buyer exercises its audit right.  Seller shall promptly remit to Buyer the amount of any overcharge revealed as a result of any Buyer audit; provided , that Buyer shall provide Seller with the documentation substantiating any such overcharge.  To the extent any Buyer audit reveals that Seller has overcharged Buyer by greater than five percent (5%), Seller shall remit to Buyer the amount of such overcharge plus twenty percent (20%) of such amount.

 

(g)  Direct Payment to Third-Party Providers .  Notwithstanding any other provision of this Section 1.2, in the event that Seller is more than thirty (30) days past due on the payments it awes to my third party provider of the HM5000 Airtime Services, the TSI Services, the Administrative Carrier Services or the Long Distance or the Toll-Free Services, Buyer may, at its option, choose to pay the mounts it would otherwise pay to Seller pursuant to this Section 1.2 directly to the applicable third-party provider instead.  In such case, Buyer shall make clear to the third-party provider that it is making such payments on Seller’s behalf and shall provide evidence to Seller that it has made such payments.

 

1.3                                  Network Service Level .

 

(a)  As further described in Exhibit C , Seller shall guarantee Buyer that the HM5000 Customers will receive a certain level of network availability with respect to the network that provides the HM5000 Airtime Services.  To the extent that Seller does not meet such service levels, the amounts paid by Buyer to Seller pursuant to Sections 1.2(a) and (d) shall be reduced accordingly, as further described in Exhibit C .

 

(b)  Seller shall notify a Buyer Customer Care manager immediately in the event of any unscheduled interruption of the Network Service and shall keep Customer Care management updated on the status of any such interruption.

 

1.4                                  Warranty Service .

 

(a)  As noted above, pursuant to the Purchase Agreement, Seller has retained all liability and responsibility under the HM5000 Contracts, including the obligation to provide warranty service.  Buyer hereby agrees with and covenants to Seller to perform all such warranty service under, and pursuant to the terms and conditions of, the HM5000 Contracts.  Buyer shall indemnify, defend, protect and hold harmless the Seller Indemnified Parties from, against and in respect of any and all Damages suffered, sustained, incurred or paid by any of the Seller Indemnified Parties in connection with, resulting from or arising out of, directly or indirectly, claims made by the HM5000 Customers against the Seller Indemnified Parties for warranty service that Buyer performs or fails to perform after Closing, except for claims arising out of the gross negligence or willful misconduct of the Seller Indemnified Parties.

 

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(b)  Seller hereby represents and warrants to Buyer that it has not entered into extended warranty contracts with the existing customers of the Business (including the HM5000 Customers).

 

1.5                                  Customer Introductions .  Seller shall use its best efforts to arrange in-person meetings at the premises of each of the Major HM5000 Customers within ninety (90) days after Closing.  Such personal meetings shall include (a) at least one member of Buyer’s senior management team, (b) a representative of the Major HM5000 Customer and (c) (i) with respect to the meetings with Wal-Mart and CFI, respectively and (ii) upon request of Buyer, with respect to any other Major HM5000 Customer, Seller’s CEO.  Seller shall coordinate the timing of such meetings with Buyer and Buyer shall use its best efforts to make its senior management team available for such meetings.  At such meetings, Seller shall introduce Buyer as the new contact for the HM5000 Non-Airtime Services.  The purpose of such meeting shall be to foster and encourage a future business relationship between Buyer and such Major HM5000 Customers and the conduct of the meeting, by both parties, shall be consistent with such purpose.  “ Major HM5000 Customers ” shall mean the top ten (10) HM5000 Customers as measured by HM5000 mobile unit installation base as of the Closing.

 

1.6                                  Indemnification .  Except as otherwise provided in this Agreement, pursuant to the Purchase Agreement, Seller has retained all liability and responsibility under the HM5000 Contracts.  Therefore, Seller covenants and agrees to indemnify, defend, protect and hold harmless the Buyer Indemnified Parties from, against, and in respect of, any claims against Buyer by a HM5000 Customer (or its subrogee) arising out of or related to its HM5000 Contract, except for claims arising out of the gross negligence or willful misconduct of the Buyer Indemnified Parties.

 

1.7                                  No Third Party Beneficiaries .  The HM5000 Customers shall not be third party beneficiaries under this Agreement and shall have no right to enforce the provisions of this Agreement against either Seller or Buyer.  The rights of tile HM5000 Customers shall remain entirely governed by their respective HM5000 Contracts.

 

1.8                                  Non-Standard Versions of HM5000 Contract .  This Agreement makes reference to the term and conditions of the standard version of the HM5000 Contract, as provided by Seller to Buyer.  To the extent that this Agreement refers to terms and conditions of the HM5000 Contracts that do not match the terms and conditions used in a version of the HM5000 Contract (other than the standard version), the parties intend that such terms shall refer to the most closely corresponding terms and conditions in such HM5000 Contract so as to most closely reflect the intent of the parties hereunder:

 

2.                    Transactions of the TrackWare and 20/20V Business .

 

2.1                                  Provision of Cellemetry Services .  Until such time as Buyer has replaced the Cellemetry Gateway in accordance with Section 2.4 (and in no case later than September 30, 2003), Seller shall resell the Cellemetry Services to Buyer for Buyer in turn to resell such services to its present 2nd future customers of the TrackWare Product Line and 20/20V Product Line.

 

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2.2                                  Consideration for Provision of Cellemetry Services .  In exchange for Seller’s prevision of the Cellemetry Services to Buyer, Buyer hereby agrees to pay Seller the amounts Seller pays to Cellemetry pursuant to the Cellemetry Reseller Agreement.  Seller shall not modify or terminate the Reseller Agreement without the prior consent of Buyer.  Seller shall comply in all respects with the terms and provisions of the Cellemetry Reseller Agreement.  To the extent that Seller breaches the Cellemetry Reseller Agreement and such breach results in any interruption, failure or delay of the Cellemetry Services provided by Seller to Buyer pursuant to Section 2.1, Seller shall indemnify Buyer (a) for any loss of business that results from such interruption, failure or delay in service and (b) for any amount that Buyer may be contractually obligated to credit a customer for such interruption, delay or failure in service, but in no event shall such indemnification exceed. [*]

 

2.3                                  Assignment of Cellemetry Reseller Agreement .  As soon as Buyer has replaced the Cellemetry Gateway in accordance with Section 2.4, Seller shall make effective its assignment to Buyer all of its right and interest in the Cellemetry Reseller Agreement (which assignment is an Acquired Asset pursuant to the terms of the Purchase Agreement) and Section 2.1, providing for the provision of the Cellemetry Services by Seller, shall be of no further force and effect.

 

2.4                                  Replacement of Cellemetry Gateway .  Buyer shall use commercially reasonable efforts to replace the Cellemetry Gateway with its own gateway, capable of enabling the provision of the Cellemetry Services, in an expeditious manner and in no event later than September 30, 2003. Seller shall provide Buyer with reasonable technical cooperation and shall transfer to Buyer any technical information, in each case as reasonably necessary for Buyer to implement such replacement gateway within the foregoing timeframe.

 

2.5                                  Website .

 

(a)  Seller currently uses a Website located at the domain name “www.webhost.at-track.com” to provide integral services to customers of the TrackWare Product Line and 20/20V Product Line.  Promptly after Closing, Buyer shall display the content of this Website, which has been transferred to Buyer pursuant to the Purchase Agreement, under a new domain name of Buyer’s choosing (the “ New Webhost Website ”) and Seller shall provide Buyer with technical assistance reasonably necessary for Buyer to implement the New Webhost Website.  Until Buyer displays such content at the New Webhost Website, Seller shall allow Buyer to continue to display such content at “www.webhost.at-track.com.”

 

(b)  Seller shall, at its own expense, maintain the “www.webhost.at-track.com” registration and, within two (2) business days after instruction by Buyer to do so, Seller shall display content at such website that automatically redirects users to the New Webhost Website and notifies users of the domain name the New Webhost Website (the “ Link Content ”).  Seller shall continue to display the Link Content at the “www.webhost.at-track.com” Website until the first anniversary of the Closing.  Within five (5) business days after Closing, Seller shall provide a draft version of the Link Content to Buyer for review and comment.  Seller shall incorporate all suggestions and changes reasonably requested by Buyer to the Link Content.  Seller shall not display any content at “www.webhost.at-track.com” that has not been previously approved by Buyer in writing.  To the extent that Buyer takes longer than two (2) business days to provide suggestions and comments to Seller with respect to the proposed Link Content or to notify

 

* Confidential information.  Information has been redacted.

 

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Seller that it has no such suggestions or comments, the timeframe in which Seller shall be required to display the Link Content shall be extended.

 

(c)  The parties shall cooperate and communicate with respect to the activities set forth in this Section 2.5 such that any lag time between when the New Webhost Website becomes available for use by customers and when the Link Content is displayed at “www.webhost.at-track.com” shall be eliminated or minimized to the greatest extent possible and that any such lag time shall occur during non peak-use hours.

 

3.                    Transition of the Business in General .

 

3.1                                  Customer Care .

 

(a)  Customer Inquiries .  Seller shall promptly refer all inquires it receives from customers or potential customers of the Business (including the HM5000 Customers), e.g., all requests for “Customer Care,” technical support, billing inquires, warranty service or non-warranty service, whether written or verbal, in each case with respect to the Business, to a Buyer Customer Care representative and Buyer shall have the sole right to respond to all such inquiries.

 

(b)  Customer Phone Calls .  All telephone numbers to which the customers of the Business (including the HM5000 Customers) have been directed for customer or technical support inquiries, including those numbers listed in the customer contracts of the Business acquired by Buyer pursuant to the Purchase Agreement (including the HM5000 Contracts) (the “ Customer Care Phone Numbers ”) are an Acquired Asset.  To the extent that Buyer is using Seller’s phone system or automated call distribution system pursuant to Section 9.2, Seller shall route all calls that come in to the Customer Care Phone Numbers to the extensions of Buyer’s Customer Care employees, as directed by Buyer.  To the extent that Buyer is no longer using Seller’s phone system or automated call distribution system pursuant to Section 9.2, Seller shall use commercially reasonable efforts to have the Customer Care Phone Numbers transferred to Buyer or shall forward all calls that come in to such phone numbers as Buyer may direct.

 

(c)  Customer Faxes .  All fax numbers to which the customers of the Business (including the HM5000 Customers) have been directed for customer or technical support inquiries, including those numbers listed in the customer contracts of the Business acquired by Buyer pursuant to the Purchase Agreement (including the HM5000 Contracts) (the “ Customer Care Fax Numbers ”) are an Acquired Asset.  To the extent that Buyer is using Seller’s phone system pursuant to Section 9.2 Seller shall route all fax transmissions that come in to the Customer Care Fax Numbers to the fax machines of Buyer’s Customer Care employees, as directed by Buyer.  To the extent that Buyer is no longer using Seller’s phone system pursuant to Section 9.2, Seller shall use commercially reasonable efforts to have the Customer Care Fax Numbers transferred to Buyer or shall forward all fax transmissions that come in to such fax numbers as Buyer may direct.

 

(d)  Customer Mail .  Seller shall forward all incoming mail, written or electronic, pertaining to the Business to Buyer’s receptionist at the Office Space or to such other person as Buyer may designate.

 

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3.2                                  Warranty Claims .  Pursuant to Section 1.2(h) of the Purchase Agreement, the Acquired Assets include Seller’s warranty rights against third parties.  To the extent that Seller has any warranty rights against the original equipment manufacturer(s) of the Inventory Buyer has acquired from Seller pursuant to the Purchase Agreement that are not assignable to Buyer, Seller hereby agrees, upon the request of Buyer, to use commercially reasonably efforts, at Buyer’s expense, to pursue such warranty claims against such original equipment manufacturer(s), on Buyer’s behalf and for Buyer’s account.

 

3.3                                  Billing .

 

(a)  Provision of HM5000 Billing Services .  As noted in Section 1, pursuant to the Purchase Agreement, Seller has retained all liability and responsibility under the HM5000 Contracts, including the obligation to provide bills to the customers thereunder, which includes monthly bills for the following: usage-based charges for HM5000 Airtime Services and fixed monthly service charges for each unit.  Seller hereby agrees with and covenants to Buyer that it shall continue to provide the foregoing billing services under the HM5000 Contracts during the respective terms of such contracts and in accordance with the terms and conditions thereof (the “ HM5000 Billing Services ”).

 

(b)  Provision of TrackWare and 20/20V Billing Services .  Pursuant to the Purchase Agreement, Buyer has acquired all rights and obligations under the contracts between Seller and the TrackWare Product Line and 20/20V Product Line customers, including the obligation to provide bills to such customers thereunder.  Pursuant to the Purchase Agreement, Buyer has also acquired the TrackWare and 20/20V Billing Software and related database currently used by Seller to perform billing for the TrackWare Product Line and 20/20V Product Line customers (the “ Cellemetry Billing System ”).  Until such time as Buyer has replaced the Cellemetry Gateway pursuant to Section 2.4 and integrated the replacement gateway with the Cellemetry Billing System, Buyer shall not, however, have the ability to use the Cellemetry Billing System.  Therefore, until such time as Buyer has replaced the Cellemetry Gateway pursuant to Section 2.4, but in no event later than September 30, 2003, Seller shall provide billing services (i) under the existing TrackWare Product Line and 20/20V Product Line customer contracts in accordance with the terms and conditions thereof and (ii) under any future contracts Buyer may enter with new TrackWare Product Line and 20/20V Product Line customers which have substantially similar billing provisions (the “ Cellemetry Billing Services ,” and together with the HM5000 Billing Services, the “ Billing Services ”).  The Cellemetry Billing Services shall include the provision of monthly bills for the following: usage-based charges for the Enhanced Services (as defined in the existing customer contracts), monthly service charges for Fixed-Price Reports (as defined in the existing customer contracts), charges for additional Data Reports (as defined the existing customer contracts) ordered above the number of Fixed-Price Reports and occurrence event charges.  Buyer shall provide Seller with access to the Cellemetry Billing System, and Seller shall maintain and support the Cellemetry Billing System in each case as required for Seller to perform the Cellemetry Billing Services in accordance with this Agreement.

 

(c)  Consideration for Billing Services .  In exchange for (i) Seller’s provision of the Cellemetry Billing Services and (ii) Seller’s promise to Buyer to provide the HM5000 Billing Services to the HM5000 Customers, for so long as Seller provides the Billing Services, for each

 

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invoice sent by Seller to a customer in the course of providing the Billing Services Buyer shall pay Seller an amount equal to [*].  Seller shall not invoice customers more frequently than monthly.  Seller shall invoice Buyer for such charges on a calendar month basis.  Seller shall invoice Buyer for the charges incurred in each calendar month within (10) business days after the last day of such calendar month.  Buyer shall remit payment to Seller in respect of such charges with fifteen (15) business days after receiving the applicable invoice.

 

(d)  Buyer Name and Logo .  At Buyer’s option, upon ten (10) business days’ notice to Seller, Buyer’s name and corporate logo shall appear in place of, or in addition to (as Buyer may decide),’ Seller’s name and corporate logo on all invoices Seller sends to customers in the performance of the Billing Services.  Within ten (10) business days after Closing, Buyer’s payment information shall appear in place of Seller’s payment information on all such invoices.

 

(e)  Service Level Guarantees .  As further described in Exhibit D , Seller shall guarantee Buyer that it shall provide the Billing Services in a timely and accurate manner. To the extent that Seller does not meet such service levels, the amounts paid by Buyer to Seller pursuant to Section 3.3(c) shall be reduced accordingly, as further described in Exhibit D .

 

(f)  Notification to Customers .  Within ten (10) business days after Closing, Seller shall notify all existing customers of the Business (including the HM5000 Customers) that the rights under the applicable contracts with Seller have been assigned to Buyer, that payment in respect of all invoices under such contracts that are received by such customer after the Closing shall be made payable to Buyer, and that all future inquiries regarding the Business shall be made to Buyer (but may be still be made by calling the same toll-free number as set forth in their contract or writing to the same address as set forth in their contract).  In addition, such notices shall provide Buyer’s email contact information.  With respect to customers of the TrackWare Product Line and 20/20V Product Line, the notification shall also provide the website address of the New Webhost Website.  Within five (5) business days after Closing, Seller shall provide a draft version of the foregoing notice to Buyer for Buyer’s review and comment.  Seller shall incorporate all suggestions and changes reasonably requested by Buyer to such notice.  To the extent that Buyer takes longer than two (2) business days either to provide suggestions and comments to Seller or to notify Seller that it has no such suggestions or comments, the timeframe in which Seller shall be required to send such notice to the customers shall be extended.

 

(g)  Taxes with Respect to HM5000 Business .  Seller shall be responsible for remitting to the appropriate local, state, federal or foreign government or governmental agency (“ Taxing Authority ”) all Taxes owed in respect of the amounts billed to HM5000 Customers pursuant to Section 3.3(a) hereof (collectively, the “ HM5000 Taxes ”).  Seller shall invoice Buyer on a monthly basis for any HM5000 Taxes paid by Seller.  Upon receipt of an invoice and supporting documentation showing the calculation of the HM5000 Taxes and evidencing that such Taxes have been properly and timely paid to the appropriate Taxing Authorities, Buyer shall reimburse Seller within fifteen (15) business days for the amount of such HM5000 Taxes.  Notwithstanding the foregoing, Buyer shall not be responsible for reimbursing Seller for any Taxes With respect to the period prior to and on the Closing.  Seller shall indemnify, defend, protect and hold harmless the Buyer Indemnified Parties from, against and with respect to any Damages arising out of or related to (i) any failure by Seller to pay any HM5000 Taxes owed and

 

* Confidential information.  Information has been redacted.

 

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(ii) any assertion, allegation or claim, of whatever nature, by any Taxing Authority that any Buyer Indemnified Party is liable for payment of or was required to remit any HM5000 Taxes, but in no event shall such indemnification exceed fifteen million dollars ($15,000,000).  Seller shall provide such Buyer Indemnified Party with such assistance as may be reasonably requested in connection the with any claim for which Seller may have indemnification responsibility pursuant to the preceding sentence.  In its performance of the HM5000 Billing Services, Seller shall accommodate Buyer’s requests regarding the invoicing and remittance of Taxes to the extent that Buyer has been advised by its outside legal counsel or its outside accountants that Buyer is legally obligated to collect from customers and remit to any Taxing Authority any such Tax.

 

(h)   Taxes with Respect to TrackWare and 20/20V Business .  Buyer shall be responsible for remitting to the appropriate Taxing Authority all Taxes owed in respect of the amounts billed to TrackWare Product Line and 20/20V Product Line customers with respect to the period after the Closing.  In addition, Buyer shall have sole control over what Taxes are invoiced to such customers and, in its performance of the Cellemetry Billing Services, Seller shall follow Buyer’s instruction in the preparation of the invoice, including with respect to invoicing of Taxes.

 

3.4                                  Buyer Responsible for Collection Efforts .  Although Seller will send out all invoices to customers pursuant to performance of the Billing Services, Buyer shall control all collection and posting of payment.  Buyer shall send Seller a file containing the posting records of all moneys received in payment of the invoices sent by Seller in the performance of the Billing Services within one business day after posting in Buyer’s billing system.  Such file shall be in a format reasonably specified by Seller, which format may be changed by Seller from time to time upon reasonable advance notice to Buyer.  All post office boxes listed as the address for payment in the customer contracts of the Business acquired by Buyer pursuant to the Purchase Agreement (including the HM5000 Contracts) (“ Acquired Post Office Boxes ”) are an Acquired Asset and Seller shall take all action necessary to transfer ownership of such post office boxes and keys to Buyer promptly after Closing.

 

3.5                                  Customer Billing Inquiries .  Because Seller’s performance of the Billing Services for Buyer will result in Seller employees who have the knowledge and access to information to answer the billing inquires of Buyer’s customers, Seller shall insure that personnel familiar with the Billing Services and qualified to answer such inquiries will be available to Buyer’s Customer Care representatives to answer such inquires during regular business hours.

 

4.                    Accounts Receivable and Payable .

 

4.1                                  Accounts Receivable: General .

 

(a)  Pursuant to the Purchase Agreement, it is generally understood that all receivables (i) of the Business for activities on and before the Closing and (ii) in respect of the provision of HM5000 Airtime Services on and before the Closing (“ Pre-Closing Receivables ”) are the property of Seller, and that all receivables (x) of the Business for activities after the Closing, and (y) in respect of the provision of HM5000 Airtime Services after the Closing (“ Post-Closing Receivables ”) are the property of Buyer.  The parties shall cooperate to insure

 

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that Buyer receives payment in respect of Post-Closing Receivables and Seller receives payment in respect of Pre-Closing Receivables.  However, to the extent that Buyer receives payment in respect of a Pre-Closing Receivable it shall transfer such payment promptly to Seller and to the extent that Seller receives payment in respect of a Post-Closing Receivable, it shall transfer such payment promptly to Buyer.  For example, if a customer makes a payment for the billing cycle in which Closing occurs, and such amount was billed in arrears, Buyer shall remit the pre-Closing portion of such payment to Seller and if such amount was billed in advance, Seller shall remit the post-Closing portion of such payment to Buyer.  In the event that (A) a payment is received by either party within the forty-five (45) day period following Closing that is not designated by the payor as being in respect of either a Pre-Closing Receivable or Post-Closing Receivable, (B) the designation of such payment as a Pre-Closing or Post-Closing Receivable is not otherwise addressed by Section 4.2, and (C) such payor owes money with respect to at least one Pre-Closing Receivable and at least one Post-Closing Receivable, Seller shall be entitled to such payment to the extent required to cover all Recent Receivables owed by such payor and Buyer shall be entitled to the balance thereof.  In the event that (A) a payment is received by either party after the forty-five (45) day period following Closing that is not designated by the payor as being in respect of either a Pre-Closing Receivable or Post-Closing Receivable, (B) the designation of such payment as a Pre-Closing or Post-Closing Receivable is not otherwise addressed by Section 4.2, and (C) such payor owes money with respect to at least one Pre-Closing Receivable and at least one Post-Closing Receivable, Buyer shall be entitled to such payment to the extent required to cover all Post-Closing Receivables owed by such payor and Seller shall be entitled to the balance thereof to the extent required to cover all Recent Receivables owed by such payor.

 

(b)  With respect to Pre-Closing Receivables that, as of the Closing, have been outstanding for more than ninety (90) days, Seller, agrees with and covenants to Buyer that Seller shall not seek payment from or legal recourse against customers with respect to such receivables or contact customers with respect to such receivables.  For the avoidance of doubt, to the extent that, after Closing, Buyer receives payment that is designated by payor in respect of any Pre-Closing Receivable, including any receivable that was outstanding for more than ninety (90) days as of the Closing, Buyer shall promptly transfer such payment to Seller in accordance with paragraph (a).

 

(c)  With respect to Pre-Closing Receivables that, as of the Closing, have been outstanding for ninety (90) days or less (the “ Recent Receivables ”), during the sixty (60) day period following the Closing, Seller may contact customers to seek payment of such Recent Receivables in the ordinary course, but may not take or threaten to take legal action against such customers, or terminate or threaten to terminate such customers’ HM5000 Airtime Services or Cellemetry Services, as the case may be.  After the first sixty (60) days following the Closing, in the event that (A) a Recent Receivable is more than 90 days’ past due and (B) Seller has made at least one post-Closing request for payment of such Recent Receivable from such customer and customer either has not responded to such request or has not provided any valid reason t