TRANSITION SERVICES AGREEMENT
This Transition Services Agreement ("Agreement") is made and entered into
this ___ day of _________, 2004, by and among AUDIOVOX CORPORATION,
("Audiovox"), UTSTARCOM, INC. ("UTStarcom") and UTSTARCOM CANADA COMPANY
("UTStarcom Canada" and, together with UTStarcom, "UTSI").
RECITALS:
(a) Audiovox and UTSI, among other parties, have entered into that certain
Asset Purchase Agreement dated ______________, 2004 (the "Purchase
Agreement") pursuant to which UTSI will purchase the Business (as
defined in the Purchase Agreement) and associated assets of Audiovox
Communications Corp., Quintex Mobile Communications Corporation and
Audiovox Communications Canada Co. (collectively, the "Seller") from
the Seller.
(b) Audiovox has heretofore provided certain administrative, information
technology, display and corporate services to the Seller.
(c) As a condition to its agreement to enter into the Purchase Agreement,
UTSI and Audiovox have agreed that for a limited period of time
following the Closing (as defined in the Purchase Agreement), Audiovox
continue to provide the services set forth on Schedule "A" (the
"Services") to UTSI in a manner consistent with the manner in which
such Services have heretofore been provided by Audiovox to the
Company.
(d) Audiovox is willing to enter into this Agreement and to provide the
Services to UTSI upon the terms and conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing recitals which are
incorporated with and made a part of this Agreement, and in further
consideration of the mutual covenants and agreements herein contained, the
parties agree as follows:
1. Services and Term. Audiovox agrees to provide the Services set forth
on Schedule "A" of this Agreement during the initial term commencing
on the date of the Closing and ending on the six month anniversary of
the date of the Closing (the "Initial Term"). The Initial Term shall
be automatically extended for successive one-month periods (not to
exceed six additional months) (the "Further Term" and, together with
the Initial Term, the "Term"); provided, however, that notwithstanding
any other provision of this Agreement, UTSI may terminate any or all
Services, either in whole or in part, under this Agreement upon
Exhibit 99.2
fifteen (15) business days' written notice. Audiovox may terminate the
Services hereunder effective upon not less than thirty (30) days after
the receipt of written notice of default from Audiovox to UTSI if UTSI
has failed to pay any amounts owing to Audiovox under Section 2 hereof
or if UTSI has failed to pay any amounts finally determined to be
owing to Audiovox under any other agreement between UTSI and Audiovox.
In the event that there is a dispute in any such amounts owing, the
parties shall negotiate in good faith to resolve such dispute as soon
as possible. Upon the termination of any Service pursuant to this
Section 1, Audiovox will have no further obligation to provide the
terminated Service (or any Service, in the case of termination of this
Agreement) and UTSI will remain liable to Audiovox for any amounts
owed to Audiovox under this Agreement prior to the effective date of
such termination; provided, however, that the monthly or weekly
service fee for such terminated Service (or any Service, in the case
of termination of this Agreement) set forth in Schedule B shall be
prorated. The provisions of Sections 4, 5 and 6 of this Agreement
shall not be terminated or affected by the termination of any Service
or this Agreement.
2. Consideration. As consideration for the performance of the Services
hereunder, UTSI shall pay Audiovox the amounts set forth on Schedule
"B". Payments for the Services will be made thirty (30) days from
receipt of invoice. In addition, UTSI shall pay all sales, use or
similar taxes payable with respect to the performance of the Services.
3. Cooperation. Audiovox and UTSI will cooperate with each other in good
faith in the request for, and the provision of, the Services hereunder
so as to minimize the disruption to, or additional record keeping
required by, Audiovox. Subject to applicable Law (as defined in the
Purchase Agreement), each party hereto covenants and agrees to provide
the other party with all information regarding itself and transactions
under this Agreement that the other party reasonably believes are
required to perform its obligations under this Agreement and to comply
with all applicable Law.
4. Standard of Services Provided. The parties hereby acknowledge that the
intent of this Agreement is to enable UTSI to receive the Services on
an interim basis in order to (i) permit UTSI to continue the
uninterrupted operation of the Business, (ii) permit Audiovox to
continue the uninterrupted operation of Audiovox's other businesses
and operations, (iii) assist in an orderly transfer of the Business
from the Seller to UTSI, and (iv) permit UTSI the opportunity to
obtain alternate sources of supply of such services within a
reasonable time after the date hereof. Audiovox shall provide, or
cause to be provided, the Services pursuant to this Agreement with
reasonable skill and care consistent with industry standards.
Notwithstanding the immediately preceding sentence, the standard of
care for the provision of the Services shall be no less than the level
of care, skill and quality as are currently being provided to and by
the Business and have been provided in the preceding twelve (12)
months (the "Service Level"). During the Term, UTSI and Audiovox shall
conduct formal monthly reviews to ensure that the Services are being
provided in accordance with the Service Level and, to the extent that
the Service Level is not being met for a particular Service, the
parties shall negotiate in good faith the amount that the fees (as set
forth in Schedule B) payable in respect of such Service shall be
adjusted downward. During the Term, to the extent permitted by
contract or applicable Law, Audiovox shall assist UTSI in the transfer
of responsibility for, and the knowledge relating to, the Services to
UTSI (including, without limitation, providing UTSI with all necessary
documentation and descriptions of the current process, procedures and
data definition that are required to perform daily operations using
the existing Audiovox system environment (including, without
limitation, JDEdwards, Cell Track, and any other application
systems)), and UTSI shall use all reasonable commercial efforts to
assume the responsibility for the Services as promptly as practicable.
The parties expressly agree that no warranty shall be implied under
this Agreement, whether warranties of utility or fitness for any
particular purpose or of merchantability or of any other type and no
warranties of any sort are made herein.
5. Indemnity.
5.1 Indemnity by UTSI. During the course of, and upon and after
termination of this Agreement for any reason whatsoever, UTSI hereby
agrees to indemnify and hold Audiovox harmless from and against any
loss, liability, damage or expense whatsoever (including court costs
and reasonable attorneys' fees) incident to any claim, action or
proceeding against Audiovox or any director, officer, employee,
subsidiary, or affiliates thereof which arise out of or relate to the
performance of the Services, except acts of gross negligence, willful
misconduct or bad faith of, or the violation of any Law by, any such
persons, or willful breach of any of Audiovox's obligations under this
Agreement.
5.2 Indemnity by Audiovox. During the course of, and upon and after
termination of this Agreement for any reason whatsoever, Audiovox
hereby agrees to indemnify and hold UTSI harmless from and against any
loss, liability, damage or expense whatsoever (including court costs
and reasonable attorneys' fees) incident to any claim, action or
proceeding against UTSI or any director, officer, employee,
subsidiary, or affiliates thereof which arise out of or relate to the
performance of the Services, and which constitute acts of gross
negligence, willful misconduct or bad faith of, or the violation of
any Law by, Audiovox or any of its directors, officers, employees,
subsidiaries, or affiliates, or willful breach of any of Audiovox's
obligations under this Agreement.
6. Miscellaneous.
6.1 Non-Assignability. Neither party shall assign its rights or delegate
its duties under this Agreement without the prior written consent of
the other party. Any attempted assignment or designation in
contravention of this provision shall be void. Subject to the
foregoing, this Agreement shall be binding on, and insure to the
benefit of, the parties and their respective affiliates, successors
and assigns.
6.2 Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State of New York,
irrespective of the choice of laws principles of the State of New
York.
6.3 Third Party Beneficiaries; Compliance with Law. Except as otherwise
expressly provided in this Agreement, the provisions of this Agreement
are for the benefit of the parties hereto and not for any other
person. This Agreement shall not provide any third person with any
remedy, claim, reimbursement, claim of action or other right in excess
of those existing without reference to this Agreement. The parties
agree that the Services shall be provided in accordance with the
Seller's past practices and only with respect to the Business as it
was operated immediately prior to the Closing or as mutually agreed by
the parties. UTSI represents and agrees that it will use the Services
only in accordance with all applicable Law. Audiovox reserves the
right to take all actions, including termination of any particular
Service, that Audiovox reasonably believes to be necessary to assure
compliance with applicable Law and such actions will not constitute a
breach of this Agreement. Audiovox will notify UTSI promptly of any
decision to terminate such Services and the reasons for any such
termination of such Services.
6.4 No Partnership. Nothing contained in this Agreement shall be deemed or
construed to create a partnership or a joint venture between the
parties hereto or to cause Audiovox to be responsible in any way for
the debts or obligations of UTSI or any other party. The parties
acknowledge that Audiovox shall be an independent contractor in the
performance of the Services and shall maintain control over its
employees, its subcontractors and their employees and comply with all
withholding of income at source requirements, whether federal, state,
local or foreign. Furthermore, Audiovox shall not subcontract any of
the Services unless UTSI has pre-screened and pre-qualified such
subcontractor, which pre-screening and pre-qualification shall not be
unreasonably withheld.
6.5. Notices. All notices or other communications under this Agreement
(other than day-to-day communications between the parties by
authorized persons concerning the provision and performance of the
Services) shall be in writing and shall be deemed to be duly given
when delivered or mailed in accordance with Section 10.01 of the
Purchase Agreement.
6.6 Severability and Invalidity. Any provision of this Agreement which is
invalid or unenforceable in any jurisdiction, shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining provisions of this Agreement or affecting the validity or
enforceability of any of the provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad
as is enforceable.
6.7 Force Majeure. Audiovox shall not be deemed in default of this
Agreement to the extent that any delay or failure in the performance
of its obligation under Agreement results from any cause beyond its
reasonable control, such as power failures, computer equipment or
system failures, acts of God, acts of civil or military authority,
embargoes, epidemics, war, riots, insurrections, fires, explosions,
earthquakes, floods, or unusually severe weather conditions or labor
problems.
6.8 Captions. The paragraph headings and captions contained in this
Agreement are for reference purposes only and shall not affect in any
way the meaning of interpretation of this Agreement.
6.9 Authority. Each party represents and warrants that the officer
executing this Agreement on its behalf is duly authorized to so
execute this Agreement, and this Agreement, when executed and
delivered by such party, shall constitute the valid and binding
agreement of such party, enforceable in accordance with its terms.
6.10 Amendments. No provisions of this Agreement shall be deemed waived,
amended, supplemented or modified by either party, unless such waiver,
amendment, supplement or modification is in writing and signed by the
authorized representative of the party against whom it is sought to
enforce such waiver, amendment, supplement or modification.
6.11 Entire Agreement. This Agreement sets forth the entire agreement of
the parties with respect to the subject matter hereof and supersedes
all prior agreements, writings, communications, negotiations,
discussions and undertakings between the parties pertaining to the
subject matter hereof.
6.12 Omitted
6.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which is to be deemed an original, and all of
which constitute, collectively, one agreement.
6.14 Arbitration. All disputes arising out of this Agreement shall be
subject to the arbitration provisions of the Purchase Agreement.
6.15 Confidentiality. Each of Audiovox and UTSI hereby acknowledges that
each party's confidential information (the "Information") may be
exposed to the other party's employees, subsidiaries, affiliates and
agents as a result of the activities contemplated by this Agreement.
Each party agrees that such party's obligation to keep confidential
the other parties' Information shall be governed by Section 5.03 of
the Purchase Agreement.
6.16 Specific Performance. The parties acknowledge and agree that remedies
at law would be an inadequate remedy for the breach of any agreement
contained herein and that in addition thereto, the parties shall be
entitled to specific performance of the terms hereof or other
equitable remedies in the event of any such breach.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
AUDIOVOX CORPORATION
By: ________________________________
UTSTARCOM, INC.
By: ________________________________
UTSTARCOM CANADA COMPANY
By: ________________________________
SCHEDULE A
1. IT Services (as defined in Section 1.1 of Schedule B)
2. Data Telecommunications Services
3. EDI Services
4. Internet Services
5. Project Services
SCHEDULE B
1. IT Services
1.1 IT Services shall comprise of the following services:
(a) System Administration: Provide operational support which includes all
required tasks performed to ensure uptime, reasonable performance and
functionality of hardware systems, which support the daily business
operations of the Business.
(b) Network Administration: Provide operational support which includes all
required tasks performed to ensure uptime, reasonable performance of the
LAN and WAN operations as well as the functionality of network equipment,
as required by the daily business operations of the Business.
(c) Database Administration: Provide operational support which includes
all required tasks performed to ensure uptime, reasonable performance
and functionality of the various database systems that house the
corporate data of the Business for support of the daily business
operations of the Business.
(d) Applications Management: Provide operational support which includes all
required tasks performed to ensure uptime, reasonable performance and
functionality of the various business systems that support all the business
processes and operations for the Business. The business systems include,
without limitation: JDEdwards, EDI, ACC Website, CellTrack, etc.
(e) Email Support: Provide operational support which includes all required
tasks performed to ensure uptime, reasonable performance and functionality
of the email systems and associated communication that support all the
Business' email usage.
(f) Helpdesk & Desktop Support: Provide first line troubleshooting and
support which includes all required tasks performed for all office
automation systems (hardware and software) as well as provide the necessary
first line fielding of any other IT Services related inquiries.
(g) Voice Communications Support: Interface with external service providers
to provide troubleshooting and support which includes all required tasks
performed for all telecommunications equipment for all the voice usage.
(h) Knowledge Transfer/On-the-job Training and Data Migration
o Provide documentation and walk through of business procedures to
familiarize the business operations of ACC
o Provide data definition documentation of current data usage of
the systems
o Provide data migration service to UTSI in the effort to migrate
current business systems onto the UTSI's standard platform.
Audiovox's responsibilities will include only the scope of the
current business systems and associated infrastructure. Examples
of such tasks may include data extract from current systems and
the associated documentation of data mapping, business flows and
applications setups, business and code logic, etc.
(i) Period End Processing Support:
o Troubleshoot any application functionality which may be required
for Period End processing
o Support account reconciliation process, include interfacing with
external entities such as banks, logistics firms, etc. o Support
subledger close process
o Support Consolidation process
o Perform data fixes to help in the above reconciliation and
consolidation processes
o Provide support in financial audits
o Support all business operations set forth in Section 1.1(j) of
this Schedule B
(j) Support all business operations by performing all required tasks that
encompass support of business flows as follows:
o Order to Cash (a.k.a. Quote to Collect)
o Procure to Pay
o Accounting to Reporting
o Call to Resolution (a.k.a. Services and Call Center Operations)
o Service Logistics (a.k.a. Depot Repair, RMA processing, etc.)
o Retail Stores operations and associated synchronization with
central processing
o Warehouse Management
o Demand to Build
o Forecast and Planning
o Commissions & Sales compensation
o Business to Business or Business to Consumer interaction in the
form of system transactions
(k) Provide support to the SOX 404 compliance initiative which includes
attendance of all required meetings, provide all required documentation and
participate in internal controls walk-throughs.
1.2 The IT Services shall be performed on software and hardware systems
including, without limitation: Peoplesoft/JDEdwards, IBM Websphere, IBM
Lotus Notes, Microsoft software, EDI, Novell, NT, IBM I-Series and any
other services required to provide full operation to support the normal
business functions of the Business.
1.3 The weekly charges for IT Services shall be as follows:
Option 1: 24 x 5 Operations Support: $9,750 per week
Option 2: 24 x 7 Operations Support: $11,430 per week
The fees for IT Services shall be billed on a monthly basis based on the
weekly rate, and will be pro-rated based on per actual week service usage
(number of business days in a calendar month).
Option 1 (24 x 5 Operations Support) shall be in effect upon the signing of
this Agreement; provided, however, that, at any time during the Term, UTSI
may change the weekly charge option set forth in this Section 1.3 by
written notice to Audiovox and, upon receipt by Audiovox of such
notification, the fees shall be adjusted accordingly on a pro-rata basis.
In the case of termination by UTSI of any IT Service under this Agreement,
the parties shall negotiate in good faith the amount that the weekly
charges payable in respect of the IT Services shall be adjusted downward to
take account of such termination. Notwithstanding the immediately preceding
sentence, the weekly charges for IT Services shall automatically be
adjusted downward upon termination by UTSI of the following IT Services as
follows:
--------------------------------------------------- --------------------
Terminated IT Service Decrease in Charges
($ per week)
------------------------------------------------------------------------
Lotus Notes 1,000
------------------------------------------------------------------------
Cell Track 1,500
------------------------------------------------------------------------
Web Services 375
------------------------------------------------------------------------
ERP System 5,000
------------------------------------------------------------------------
Desk Top Support 2,125
------------------------------------------------------------------------
2. Data Telecommunications Services
Frame Relay Remote and Host Locations and Dial Up Networking for the
Business: The monthly charges shall be based on actual usage, but not to
exceed $8,500 per month.
3. EDI Services
Based on actual usage, includes volume discount, Annually Monthly
-------- -------
but not to exceed: $ 84,000. $ 7,000.
4. Internet Services
The monthly charge shall be $1,500 per month.
5. Project Services
For any services other than services covered in Sections 1 to 4 (inclusive)
of this Schedule B, such services shall be charged on a project basis and
the labor effort shall be negotiated per project; provided, however, that
the hourly rate for labor shall be as follows:
Labor Rates ($ per hour):
A. Programming Services:
o Programmers $50
o Senior Programmers $60
o Managers $65
B. Network Services:
o Analyst $50
o System Analyst $60
o Manager $65
C. Operations Services:
o Desktop Support $35
o Operations Support $35