Exhibit 10.21
TRANSITION SERVICES
AGREEMENT
This TRANSITION SERVICES AGREEMENT
(together with the Schedules hereto, the “
Agreement ”), dated January 25, 2006, by
and between Stewart & Stevenson LLC, a Delaware limited
liability company (“ Buyer ”), and
Stewart & Stevenson Services, Inc., a Texas
corporation (“ Parent ”). Buyer and
Parent may be referred to herein collectively as the “
Parties ” and individually as a “
Party ”. Capitalized terms used herein but not
defined herein shall have the meanings ascribed to such terms in
the PPD Purchase Agreement (as defined below).
WHEREAS , pursuant to the Asset Purchase Agreement,
dated September 27, 2005, among Parent and certain of its
subsidiaries party thereto, on the one hand, and Mr. Hushang
Ansary (“ Mr. Ansary ”), on the
other (as amended, supplemented or otherwise modified from time to
time by mutual agreement of the parties thereto, the “
EPD Purchase Agreement ”), Parent and certain
of its subsidiaries have agreed to sell and assign, and
Mr. Ansary has agreed to acquire and assume, certain assets
and liabilities of the Business (as defined in the EPD Purchase
Agreement);
WHEREAS , pursuant to the Asset Purchase Agreement,
dated as of October 24, 2005, among Parent and certain of its
subsidiaries party thereto, on the one hand, and Mr. Ansary,
on the other, (as amended, supplemented or otherwise modified from
time to time by the mutual agreements of the parties thereto, the
“ PPD Purchase Agreement ” and, together
with the EPD Purchase Agreement, the “ Purchase
Agreements ”), Parent and certain of its subsidiaries
have agreed to sell and assign, and Mr. Ansary has agreed to
acquire and assume, certain assets and liabilities of the Business
(as defined in the PPD Purchase Agreement and, collectively with
Business (as defined in the EPD Purchase Agreement), the “
Businesses ”);
WHEREAS , the EPD Purchase Agreement contemplated that
at the closing thereunder Mr. Ansary and Parent would enter
into the Transition Services Agreement in the form attached as
Exhibit 2.9(a)(vii) to the EPD Purchase Agreement (the
“ EPD Transition Services Agreement
”);
WHEREAS , the PPD Purchase Agreement contemplated that
at the closing thereunder the Parties would enter into a Transition
Services Agreement in form and substance to be agreed by the
Parties (the “ PPD Transition Services
Agreement ”);
WHEREAS , consistent with and subject to the terms and
conditions of the Purchase Agreements, Mr. Ansary has assigned
his rights and his obligations under the Purchase Agreements to
Buyer and Stewart & Stevenson Power Products LLC, a
Delaware limited liability company;
WHEREAS , following the consummation of the transactions
contemplated by the Purchase Agreements, Buyer will directly or
indirectly own and operate the Businesses;
WHEREAS , in lieu of entering into the EPD Transition
Services Agreement and the PPD Transition Services Agreement and as
a result of Buyer acquiring the Businesses, Buyer and Parent desire
to enter this Agreement in respect of transition services to be
provided between the Parties;
WHEREAS , Buyer has requested that Parent or its
Affiliates provide the Parent Support Services (as defined below),
subject to the terms and conditions set forth herein;
and
WHEREAS , Parent has requested that Buyer or its
Affiliates provide the Buyer Support Services (as defined below),
subject to the terms and conditions set forth herein.
NOW, THEREFORE
, in consideration of the premises
and the mutual agreements set forth herein, the Parties hereto
agree as follows:
1.
Provision of
Support Services.
(a)
Following the
date hereof, Parent agrees to provide or cause to be provided to
Buyer and its subsidiaries, the services listed on
Schedule 1 (the “ Parent Support Services ”), upon receipt of an
e-mail notice from one of the individuals designated on
Schedule 1 (or any other individual designated by Buyer
in a notice to Parent) to one of the individuals designated on
Schedule 2 (or any other individual designated by
Parent in a notice to Buyer) requesting any such Parent Support
Service. Each such notice shall provide reasonable detail as to the
specific Parent Support Service being requested.
(b)
Following the
date hereof, Buyer agrees to provide or cause to be provided to
Parent and its subsidiaries, the services listed on
Schedule 2 (the “ Buyer Support Services ” and, together with
the Parent Support Services, the “ Support Services ” and each a
“ Support
Service ”) upon receipt of an
e-mail notice from one of the individuals designated on
Schedule 2 (or any other individual designated by
Parent in a notice to Buyer) to one of the individuals designated
on Schedule 1 (or any other individual designated by
Buyer in a notice to Parent) requesting any such Buyer Support
Service. Each such notice shall provide reasonable detail as to the
specific Buyer Support Service being requested.
(c)
Subject to the
terms and conditions hereof, any requested modification in the
provision of any Support Service, including the provision of
additional services, will only be made if each Party in its sole
discretion agrees in writing to the provision of the Support
Services as so modified.
(d)
The Parties
acknowledge that Parent has prepaid certain maintenance, license
and other fees in respect of the contracts listed on
Schedule 3 (the “ Prepaid Fees ”) and the Parties
agree that such amounts will be reimbursed to Parent in the manner
described in Schedule 3 . The Parties recognize that in
connection with the transfer to Buyer of the assets listed in
section 2.1(l) of the Seller Disclosure Letter to the PPD
Purchase Agreement (the
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“
IT Assets ”) and the transfer to
and assumption by Buyer of the Contracts listed on
Schedule 3 and Buyer’s obligation to provide the
Buyer Support Services certain fees have been or will need to be
paid to third parties to obtain consents and additional licenses,
which fees are set forth on Schedule 4 (the
“ Transition
Fees ”). The Parties agree
that the Transition Fees shall be borne equally by the
Parties.
(e)
During the
Transition Period (as defined in Section 7(a)), each Party
agrees to provide such advice and assistance relating to the use of
the JD Edwards system and associated software on an informal,
cost-free basis (but not on a recurring or unreasonable basis) and
in a manner consistent with such advice and assistance provided on
an unallocated basis among the Parent and its divisions prior to
the date hereof.
(f)
Upon the earlier
of the termination of this Agreement and the end of the Transition
Period, Buyer shall deliver to Parent electronic, usable and
archivable copies of all electronic records in its possession
(including its electronic data systems) relating to Parent and its
Subsidiaries.
(g)
Each agreement,
covenant and obligation of each Party in Schedules 1 and 2 shall be
binding upon such Party notwithstanding the fact that such
agreement, covenant or obligation may be present in the
schedule of services to be provided by the other
Party.
2.
Force Majeure;
Emergency Situations.
In the event that
war, fire, explosion, flood, accident, strike, riot, act of
governmental authority, act of terrorism, act of God or other
contingency beyond the reasonable control of a party obligated to
provide a Support Service (the “ Providing Party ”) causes cessation or
interruption of the Providing Party’s or its
subcontractor’s performance hereunder (a “
Force Majeure Event
”),
performance by the Providing Party shall be temporarily excused for
the period of the disability, without liability, provided that the
Providing Party shall promptly after it has actual knowledge of the
beginning of any excusable delay, notify the party for whom the
Support Service is being provided (the “
Receiving Party
”) of such
delay, the reason therefor, and the probable duration and
consequence thereof. The Providing Party shall use its commercially
reasonable efforts to resume performance of its obligations
hereunder as soon as reasonably practicable.
3.
Charges for
Support Services.
(a)
Each Party shall
pay the other Party for the Support Services provided hereunder on
the basis of the charges set forth on Schedule 1 or
Schedule 2 , as the case may be, plus
,
(i)
the reasonable
out-of-pocket costs and expenses incurred by the Providing Party
and its Affiliates in connection with the travel of any Person to
facilitate the delivery of the Support Services and transition of
such services to the Businesses or to Parent, as the case
may be; and
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(ii)
the reasonable
out-of-pocket costs and expenses incurred by the Providing Party
and its Affiliates to purchase and install new hardware and/or
software reasonably necessary to provide a Support Service or
reasonably required by the Providing Party for security and or
confidentiality purposes.
(b)
In the event the
Providing Party receives timely notice pursuant to
Section 7(a) of the Receiving Party’s request to
terminate any Support Service or additional service prior to the
termination of this Agreement, the Receiving Party shall not be
charged for such Support Service or additional service for the
remaining term of this Agreement following the effective date of
the termination of such Support Service.
(c)
The Providing
Party shall obtain the Receiving Party’s written consent
prior to incurring any cost or expense hereunder in excess of
$5,000 if such incurrence would obligate a party to share such cost
or expense with the other Party pursuant to
Section 1(c) or reimburse the other Party pursuant to
Section 3(a)(i), 3(a)(ii) or 4(g).
(d)
In no event shall
either Party be responsible for (i) paying any salaries,
wages, withholding, severance payments or any other compensation or
payments with respect to employees of the other Party,
(ii) overhead costs or (iii) matters of any nature
associated with the provision of Support Services, other than as
expressly provided in this Agreement.
(e)
On or before the
last day of each month, the Providing Party shall invoice the
Receiving Party for the amount due for the period covered by that
invoice (each, an “ Invoice ”). Invoices shall be
sent in a format and containing a level of detail reasonably
sufficient for the Receiving Party to determine the accuracy of the
computation of the amount invoiced. If the Receiving Party does not
dispute the amount payable pursuant to the Invoice, then the full
amount of the Invoice shall be paid on or before the 30
th day after which it was delivered. If the Receiving
Party disputes any amount payable pursuant to an Invoice, the
Receiving Party shall pay to the Providing Party the undisputed
portion within the 30-day period specified above. All amounts due
under this Agreement that are not paid on or before the due date
and which are ultimately due and payable shall bear interest at the
rate of twelve percent (12%) per annum. The obligation to pay for
Support Services rendered shall survive the termination of this
Agreement. No Party shall have any right to setoff any amounts due
and payable to the other Party pursuant to this Agreement against
any payments to be made pursuant to this Agreement, the Purchase
Agreements or otherwise. Notwithstanding anything to the contrary
in this Section 3(e), after a material Force Majeure Event has
continued for a thirty (30) consecutive day period with respect to
any Support Service, the monthly fee (or any portion thereof) for
such Support Service shall not accrue until the ability to provide
such Support Service has been restored, in which case the
resumption of the monthly fee shall be calculated by multiplying
the monthly fee by the quotient of (x) the number of days in the
month in which the Support Service was capable of being
provided,
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divided by (y)
the number of days in the month. By way of example, if a material
Force Majeure Event occurs on April 15 and continues until
June 15, Buyer will be invoiced one-half of the monthly fee
for April, no fee for May, one-half of the monthly fee for
June and the monthly fee for July.
(f)
All payments made
hereunder are exclusive of any and all sales and use taxes, similar
duties or levies assessed by applicable Governmental Bodies on the
payments hereunder. The Receiving Party agrees to pay or reimburse
the Providing Party for any such taxes or similar fees or duties
for such Support Service provided hereunder.
(g)
Costs for long
distance, the MAN (Metropolitan Area Network) data circuit from the
Businesses to Parent, P-card, blackberry service, telephone
services, travel related services and other business expenses that
have been paid by Parent and charged directly to the Businesses,
rather than charged to the Corporate segment of Parent and
allocated to the Businesses via an allocation mechanism, shall
continue to be paid by Parent and reimbursed by Buyer until the
earlier of (i) 120 days after the date hereof and
(ii) such time as Buyer has contracted for such services in
Buyer’s name.
4.
Conduct of the
Business.
(a)
Buyer recognizes
that the transfer of the IT Assets and the performance of the Buyer
Support Services will result in Buyer having access to confidential
and proprietary information of Parent and its Affiliates. Buyer
hereby agrees and
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