EXHIBIT 10.2
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT, dated as of November 30, 2001
(this "Agreement"), is made by and between National Service Industries, Inc., a
Delaware corporation ("Parent"), and Acuity Brands, Inc., a Delaware
corporation ("Spinco").
WITNESSETH:
WHEREAS, Parent and Spinco are parties to an Agreement and Plan of
Distribution, dated as of November 30, 2001 (the "Distribution Agreement"),
pursuant to which Parent will transfer certain assets to Spinco and have Spinco
assume certain liabilities of Parent;
WHEREAS, in connection with the transactions contemplated by the
Distribution Agreement, Parent and Spinco wish to enter into this Agreement for
purposes of continuity and transition; and
WHEREAS, Spinco desires to cause Parent to provide the Services set
forth on Schedule A to Spinco, and Parent is willing to provide such Services,
and Parent desires to cause Spinco to provide the Services set forth on
Schedule B to Parent, and Spinco is willing to provide such Services, all on
the terms and conditions set forth below;
NOW, THEREFORE, the parties hereto, in consideration of the premises
and the mutual covenants contained herein, agree as follows:
SECTION 1. SPECIFIC DEFINITIONS.
In addition to the terms defined elsewhere in this Agreement, as used
in this Agreement, the following terms have the respective meanings set forth
below:
"Applicable Rate" shall mean the rate of interest per annum announced
from time to time by Wachovia Bank of Georgia, N.A. as its prime lending rate
plus 4% per annum.
"Loss" shall mean all losses, liabilities, damages, claims, demands,
judgments or settlements of any nature or kind, known or unknown, fixed,
accrued, absolute or contingent, liquidated or unliquidated, including all
reasonable costs and expenses (legal, accounting or otherwise as such costs are
incurred) relating thereto.
"Parent Services" shall mean those transitional services to be
provided by Parent to Spinco set forth on Schedule A hereto to assist Spinco in
operating Spinco's business.
"Person" shall mean any natural person, corporation, business trust,
limited liability company, joint venture, association, company, partnership or
government, or any agency or political subdivision thereof.
"Services" shall mean, collectively, the Parent Services and the
Spinco Services.
"Spinco Services" shall mean those transitional services to be
provided by Spinco to Parent set forth on Schedule B hereto to assist Parent in
operating Parent's business.
SECTION 2. SERVICES.
2.1 Services. (a) Parent shall provide to Spinco each Parent
Service for the term set forth opposite the description of such Parent Service
in Schedule A. Additional services may be provided to Spinco by Parent if such
arrangement is agreed to in writing and executed by Parent and Spinco.
(b) Spinco shall provide to Parent each Spinco Service
for the term set forth opposite the description of such Spinco Service in
Schedule B. Additional services may be provided by Spinco to Parent if such
arrangement is agreed in writing and executed by Parent and Spinco.
2.2 Standard of Service. In performing the Services, Parent and
Spinco shall provide substantially the same level of service and use
substantially the same degree of care as their respective personnel provided
and used in providing such Services prior to the date hereof, subject in each
case to any provisions set forth on Schedule A or Schedule B with respect to
each such Service.
SECTION 3. LICENSES AND PERMITS.
Each party warrants and covenants that all duties and obligations
(including with respect to Parent, all Parent Services and with respect to
Spinco, all Spinco Services) to be performed hereunder shall be performed in
compliance with all material applicable federal, state, provincial and local
laws, rules and regulations. Each party shall obtain and maintain all material
permits, approvals and licenses necessary or appropriate to perform its duties
and obligations (including with respect to Parent, the Parent Services and with
respect to Spinco, the Spinco Services) hereunder and shall at all times comply
with the terms and conditions of such permits, approvals and licenses.
SECTION 4. PAYMENT.
4.1 Service Fees. (a) In consideration for the provision of each
of the Parent Services, Spinco shall pay to Parent the fee set forth for such
Parent Service on Schedule A.
(b) In consideration for the provision of each of the
Spinco Services, Parent shall pay to Spinco the fee set forth for such Spinco
Service on Schedule B.
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4.2 Costs and Expenses. (a) In addition to the fees payable in
accordance with Section 4.1(a), Spinco shall reimburse Parent for all
reasonable and necessary out-of-pocket costs and expenses (including postage
and other delivery costs, telephone, telecopy and similar expenses) incurred by
Parent with respect to third parties in connection with the provision of Parent
Services to Spinco pursuant to the terms of this Agreement or paid by Parent on
behalf of Spinco.
(b) In addition to the fees payable in accordance with
Section 4.1(b), Parent shall reimburse Spinco for all reasonable and necessary
out-of-pocket costs and expenses (including amounts for premiums, claims, fees,
postage and other delivery costs, telephone, telecopy and similar expenses)
incurred by Spinco with respect to third parties in connection with the
provision of Spinco Services to Parent pursuant to the terms of this Agreement
or paid by Spinco on behalf of Parent.
4.3 Invoices. (a) Parent will invoice Spinco in U.S. dollars: (i)
as of the last day of each calendar month for any fees payable by Spinco in
accordance with Section 4.1(a) for Parent Services listed on Schedule A
provided pursuant to the terms of this Agreement during such month; (ii) as of
the last day of each calendar month for any amounts payable by Spinco in
accordance with Section 4.2(a) for any out-of-pocket costs and expenses
incurred during the immediately preceding month to the extent Parent has
received an invoice from such third party; and (iii) as of the last day of each
calendar month for any taxes (excluding income taxes) payable with respect to
the provision of Parent Services to Spinco during such month. Parent shall
deliver or cause to be delivered to Spinco each such invoice within thirty (30)
days following the last day of the calendar month to which such invoice
relates. Spinco shall pay each such invoice received by electronic funds
transfer within thirty (30) days of the date on which such invoice was
received.
(b) Spinco will invoice Parent in U.S. dollars: (i) as
of the last day of each calendar month for any fees payable by Parent in
accordance with Section 4.1(b) for Spinco Services listed on Schedule B
provided pursuant to the terms of this Agreement during such month; (ii) as of
the last day of each calendar month for any amounts payable by Parent in
accordance with Section 4.2(b) for any out-of-pocket costs and expenses
incurred during the immediately preceding month to the extent Spinco has
received an invoice from such third party; and (iii) as of the last day of each
calendar month for any taxes (excluding income taxes) payable with respect to
the provision of Spinco Services to Parent during such month. Spinco shall
deliver or cause to be delivered to Parent each such invoice within thirty (30)
days following the last day of the calendar month to which such invoice
relates. Parent shall pay each such invoice received by electronic funds
transfer within thirty (30) days of the date on which such invoice was
received.
4.4 Late Payment. Any amount not paid when due shall be subject
to a late payment fee computed daily at a rate equal to the Applicable Rate.
Notwithstanding the foregoing, in the event a party disputes the accuracy of
any invoice, a party shall pay the undisputed portion of such invoice as
provided herein, and the parties hereto will promptly meet and seek to resolve
the disputed amount of the invoice. Each party agrees to pay the other party's
reasonable attorneys' fees and other costs incurred in collection of any
amounts owed to such other party
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hereunder and not paid when due. Notwithstanding anything to the contrary
contained herein, in the event either party fails to make a payment when due
hereunder, and such failure continues for a period of thirty (30) days
following delivery of written notice to such non-paying party of such failure,
the other party shall have the right to cease provision of Services to such
non-paying party until such overdue payment (and any applicable late payment
fee accrued with respect thereto) is paid in full. Such right of the party
providing Services shall not in any manner limit or prejudice any of such
party's other rights or remedies in the event of the non-paying party's failure
to make payments when due hereunder, including any rights or remedies pursuant
to Section 7.
4.5 Fees, Etc. Upon Termination of Services. In the event of a
termination of Services pursuant to Section 7.1, with respect to the calendar
month in which such Services cease to be provided (the "Termination Month"),
the recipient of such Services shall be obligated to pay a pro rata share of
the fee for such Service set forth on Schedule A or Schedule B, as applicable,
equal to the product of (x) the fee set forth on Schedule A or Schedule B, as
applicable, multiplied by (y) a fraction, the numerator of which is the number
of days in the Termination Month such Services are provided, and the
denominator of which is 30.
SECTION 5. INDEMNIFICATION.
5.1 Indemnification by Principal. (a) Spinco agrees to indemnify,
defend and hold Parent harmless from and against any Loss to which Parent may
become subject arising out of, by reason of or otherwise in connection with the
provision hereunder by Parent of Parent Services, other than Losses resulting
from Parent's gross negligence, willful misconduct or material breach of its
obligations pursuant to this Agreement. Notwithstanding any provision in this
Agreement to the contrary, Spinco shall not be liable under this Section 5.1
for any consequential, special or punitive damages (including lost profits),
except to the extent that such consequential, special or punitive damages
relate to a Loss resulting from a Third-Party Claim (as defined in the
Distribution Agreement).
(b) Parent agrees to indemnify, defend and hold Spinco
harmless from and against any Loss to which Spinco may become subject arising
out of, by reason of or otherwise in connection with the provision hereunder by
Spinco of Spinco Services, other than Losses resulting from Spinco's gross
negligence, willful misconduct or material breach of its obligations pursuant
to this Agreement. Notwithstanding any provision in this Agreement to the
contrary, Parent shall not be liable under this Section 5.1 for any
consequential, special or punitive damages (including lost profits), except to
the extent that such consequential, special or punitive damages relate to a
Loss resulting from a Third-Party Claim (as defined in the Distribution
Agreement).
5.2 Indemnification by Provider. (a) Parent agrees to indemnify,
defend and hold Spinco harmless from and against any Loss to which Spinco may
become subject arising out of, by reason of or otherwise in connection with the
provision hereunder by Parent of Parent Services to Spinco where such Losses
resulted from Parent's gross negligence, willful misconduct or material breach
of its obligations pursuant to this Agreement.
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(b) Spinco agrees to indemnify, defend and hold Parent
harmless from and against any Loss to which Parent may become subject arising
out of, by reason of or otherwise in connection with the provision hereunder by
Spinco of Spinco Services to Parent where such Losses resulted from Spinco's
gross negligence, willful misconduct or material breach of its obligations
pursuant to this Agreement.
5.3 Procedures for Indemnification. Any indemnification claims
made hereunder shall be made in accordance with Article III of the Distribution
Agreement.
SECTION 6. CONFIDENTIALITY.
Each party shall keep confidential the Schedules to this Agreement and
all information received from the other party regarding the Services, including
any information received with respect to Parent or Spinco, and to use such
information only for the purposes set forth in this Agreement unless otherwise
agreed to in writing by the party from which such information was received. In
the event a party is required by any court or legislative or administrative
body (by oral questions, interrogatories, requests for information or
documents, subpoena, civil investigation demand or similar process) to disclose
any confidential information provided pursuant to this Agreement, the party
shall provide the other party with prompt notice of such requirement in order
to afford the other party an opportunity to seek an appropriate protective
order or other remedy. However, if the other party is unable to obtain or does
not seek such protective order and the party required to disclose the
confidential information is, in the opinion of its counsel, legally compelled
to disclose such confidential information, disclosure of such information may
be made without liability under this Agreement. The covenants in this Section 6
shall survive any termination of this Agreement indefinitely with respect to
information qualifying as a trade secret under applicable law and for a period
of three (3) years from the date such termination becomes effective with
respect to all other information.
SECTION 7. TERM.
7.1 Duration. (a) Subject to Sections 6, 7.2, 7.3 and 7.4, the
term of this Agreement shall commence on the date hereof and shall continue in
full force and effect with respect to each Service until the earlier of (i) the
expiration of the duration or term period assigned to such Service on Schedule
A or Schedule B or (ii) the termination of such Service in accordance with
Section 7.1(b).
(b) Each party acknowledges that the purpose of this
Agreement is for Parent to provide the Parent Services to Spinco on an interim
basis until Spinco can perform the Parent Services for itself, and for Spinco
to provide the Spinco Services to Parent on an interim basis until Parent can
perform the Spinco Services for itself. Accordingly, each of Parent and Spinco
shall use its commercially reasonable efforts to make or obtain such approvals,
permits and licenses and implement such systems, as shall be necessary for it
to provide the appropriate Services for itself as promptly as practicable. As
Spinco becomes self-sufficient or engages
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other sources to provide any Parent Service, Spinco shall be entitled to
release Parent from providing any or all of the Parent Services hereunder by
delivering a written notice thereof to Parent at least thirty (30) days prior
to the effective date of release of such Parent Service(s). At the end of such
thirty (30) day period (or such shorter period as may be agreed by the
parties), Parent shall discontinue the provision of the Parent Services
specified in such notice and any such Parent Services shall be excluded from
this Agreement, and Schedule A shall be deemed to be amended accordingly. As
Parent becomes self-sufficient or engages other sources to provide any Spinco
Service, Parent shall be entitled to release Spinco from providing any or all
of the Spinco Services hereunder by delivering a written notice thereof to
Spinco at least thirty (30) days (or in the case of Services provided under the
heading "Employee Benefits" on Schedule B, at least ninety (90) days). At the
end of such thirty (30) or ninety (90) day period (or such shorter period as
may be agreed by the parties), Spinco shall discontinue the provision of the
Spinco Services specified in such notice and any such Spinco Services shall be
excluded from this Agreement, and Schedule B shall be deemed to be amended
accordingly.
7.2 Early Termination by Parent. Parent may terminate this
Agreement by giving written notice to Spinco if Spinco shall default in the
performance of any of its material obligations under, or breach any of its
warranties set forth in, this Agreement, and such default or breach shall
continue and not be remedied for a period of thirty (30) days after Parent has
given written notice to Spinco specifying such default or breach and requiring
it to be remedied.
7.3 Early Termination by Spinco. Spinco may terminate this
Agreement by giving written notice to Parent if Parent shall default in the
performance of any of its material obligations under, or breach any of its
warranties set forth in, this Agreement and such default or breach shall
continue and not be remedied for a period of thirty (30) days after Spinco has
given written notice to Parent specifying such default or breach and requiring
it to be remedied.
7.4 Force Majeure. In the event the performance by Spinco or
Parent of their respective duties or obligations hereunder is interrupted or
interfered with by reason of any cause beyond its reasonable control, including
fire, storm, flood, earthquake, explosion, war, strike or labor disruption,
rebellion, insurrection, quarantine, act of God, boycott, embargo, shortage or
unavailability of supplies, riot, or governmental law, regulation or edict
(collectively, the "Force Majeure Events"), the party affected by such Force
Majeure Event shall not be deemed to be in default of this Agreement by reason
of its nonperformance due to such Force Majeure Event, but shall give prompt
written notice to the other party of the Force Majeure Event. The party
affected by the Force Majeure Event shall cooperate with the other party in
obtaining, at the other party's sole expense, an alternative source for the
affected Services, and the other party shall be released from any payment
obligation to the party affected by the Force Majeure Event with respect to
such Services during the period of such Force Majeure Event. Additionally, upon
and during the occurrence of a Force Majeure Event, at the sole option of the
party receiving the Services affected by the Force Majeure Event, the term of
this Agreement shall be tolled with respect to any Services that are not being
provided by a third party.
7.5 Consequences on Termination. In the event this Agreement
expires or is terminated in accordance with this Section 7, then (a) all
Services to be provided will promptly cease, (b) each of Parent and Spinco
shall promptly return all confidential information received
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from the other party in connection with this Agreement (including the return of
all information received with respect to the Services of Parent or Spinco, as
the case may be), without retaining a copy thereof, and (c) each of Parent and
Spinco shall honor all credits and make any accrued and unpaid payment to the
other party as required pursuant to the terms of this Agreement, and no rights
already accrued hereunder shall be affected.
SECTION 8. RECORDS.
Each of the parties shall create and, for a period of six (6) years
after the termination or expiration of this Agreement, maintain full and
accurate books in connection with the provision of the Services, and all other
records relevant to this Agreement, and upon reasonable notice from the other
party shall make available for inspection and copy by such other party's agents
such records during reasonable business hours.
SECTION 9. DISPUTE RESOLUTION.
9.1 Dispute Resolution under Distribution Agreement. Any dispute
arising out of or relating to the performance, breach or interpretation of this
Agreement shall be handled in accordance with Article V of the Distribution
Agreement.
9.2 Continuity of Service and Performance. Unless otherwise
agreed herein or in writing, the parties will continue to provide Services and
honor all other commitments under this Agreement and each Ancillary Agreement
(as defined in the Distribution Agreement) during the course of dispute
resolution pursuant to the provisions of this Section 9 with respect to all
matters not subject to such dispute, controversy or claim.
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in writing,
shall reference this Agreement and shall be hand delivered or mailed by
registered or certified mail (return receipt requested) or sent by any means of
electronic message transmission with delivery confirmed (by voice or otherwise)
to the parties at the following addresses (or at such other addresses for a
party as shall be specified by like notice) and will be deemed given on the
date on which such notice is received:
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To Parent:
National Service Industries, Inc.
1420 Peachtree Street, N.E.
Atlanta, Georgia 30309-3002
Attention: Carol E. Morgan
Telephone: (404) 853-1000
Facsimile: (404) 853-1015
To Spinco:
Acuity Brands, Inc.
1420 Peachtree Street, N.E.
Atlanta, Georgia 30309-3002
Attention: Kenyon W. Murphy
Telephone: (404) 853-1400
Facsimile: (404) 853-1415
SECTION 11. MISCELLANEOUS.
11.1 Waivers, Modifications, Amendments. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Spinco, on the one hand,
and Parent, on the other hand, or in the case of a waiver, by the party against
whom the waiver is to be effective. No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and in
addition to other or further remedies provided by law or equity.
11.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF DELAWARE.
11.3 Severability. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability of the other provisions hereof. If
any provision of this Agreement, or the application thereof to any person,
corporation, partnership or other entity or any circumstance, is invalid and
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, corporations, partnerships or other entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any jurisdiction.
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11.4 Reference; Interpretation. References in this Agreement to
any gender include references to all genders, and references to the singular
include references to the plural and vice versa. The words "include",
"includes" and "including" when used in this Agreement shall be deemed to be
followed by the phrase "without limitation." Unless the context otherwise
requires, references in this Agreement to Sections and Schedules shall be
deemed references to Sections of, and Schedules to, this Agreement. Unless the
context otherwise requires, the words "hereof", "hereby" and "herein" and words
of similar meaning when used in this Agreement refer to this Agreement in its
entirety and not to any particular Section or provision of this Agreement. This
Agreement shall not be construed against either party as the principal drafter
hereof.
11.5 Entire Agreement. This Agreement (including all Schedules
hereto) contains the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters.
11.6 Assignment. Neither Parent nor Spinco may, directly or
indirectly, assign or subcontract, or attempt to assign or subcontract, any of
its rights or obligations hereunder, in whole or in part, by operation of law
or otherwise, except as contemplated by Schedule A or Schedule B or except with
the prior written consent of the other party; it being understood that such
consent shall not be unreasonably withheld if Parent or Spinco assigns or
subcontracts the Agreement to one of its Affiliates (as defined in the
Distribution Agreement) with the financial and other resources and expertise to
perform all of the obligations of such party hereunder. Any attempted
assignment or delegation not in compliance with the forgoing shall be null and
void and of no effect. Nothing contained herein shall prevent a party from
providing Services through or with the assistance of third parties whom such
party regularly used to provide such Services prior to the date hereof.
11.7 Binding Effect. This Agreement shall be binding upon the
parties hereto and their respective successors and permitted assigns, if any,
and except as provided herein, shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns, if any.
11.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same Agreement.
11.9 No Agency or Partnership. Nothing in this Agreement will
create, or will be deemed to create, a partnership or the relationship of
principal and agent or of employer and employee between the parties.
11.10 Provisions Unaffected. Nothing contained in this Agreement
shall affect the rights and obligations of Parent and Spinco pursuant to the
Distribution Agreement.
[SIGNATURES FOLLOW ON NEXT PAGE.]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered on behalf of the parties as of the date first herein above written.
NATIONAL SERVICE INDUSTRIES, INC.
By: /s/ Brock A. Hattox
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Name: Brock A. Hattox
Title: Executive Vice President
ACUITY BRANDS, INC.
By: /s/ James S. Balloun
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Name: James S. Balloun
Title: President