Exhibit 10.56
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "Agreement") is entered into
between Scan-Optics, Inc., a Delaware corporation ("Buyer"), Photomatrix Imaging
Corporation, a Nevada corporation ("Seller"), I-PAC Manufacturing Inc., a
California corporation ("I-PAC") and Photomatrix, Inc., a California corporation
("Parent"), as of this ____ day of June, 1999.
RECITALS
WHEREAS, Buyer, Seller, I-PAC and Parent have entered into an Asset
Purchase Agreement dated as of June __________, 1999 (the "Asset Purchase
Agreement"), pursuant to which Buyer has agreed to purchase from Seller, and
Seller has agreed to sell, convey, transfer, assign and deliver to Buyer and
Buyer has agreed to purchase from Seller, free and clear of all liens,
encumbrances, security interests, purchase rights, pledges, charges, mortgages,
claims or any other limitations or restrictions whatsoever except to the extent
permitted by the Asset Purchase Agreement, all of Seller's right, title and
interest in, to and under the Subject Assets (as defined in Section 1.1 of the
Asset Purchase Agreement), which constitute certain properties and assets of
Seller related to, used or held for use in connection with the scanner product
manufacturing, engineering, sales and service portion of the business and
operations of Seller (such business and operations are referred to herein as the
"Business");
WHEREAS, Buyer, Seller, I-PAC and Parent intend that capitalized terms
used and not otherwise defined herein shall have the same meanings as are
ascribed to such terms in the Asset Purchase Agreement;
WHEREAS, Buyer, Seller, I-PAC and Parent wish to set forth herein the
terms on which the transfer and transition of Seller's Subject Assets will occur
to the extent that such terms are not set forth in the Asset Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and in the Asset Purchase Agreement,
Buyer, Seller, I-PAC and Parent do hereby agree as follows:
1. TRANSITION PERIOD
"Transition Period" shall mean a period commencing on the date hereof
and ending as provided in Section 5.2.
2. SCOPE OF AGREEMENT
This Agreement is entered into pursuant to the terms of the Asset
Purchase Agreement and is subject in all respects to the terms thereof,
provided, however, that in the event of any inconsistency between the terms of
the Asset Purchase Agreement and the terms hereof, the terms of this Agreement
shall control. This Agreement shall be effective upon execution, but
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will terminate automatically in the event of the termination of the Asset
Purchase Agreement in accordance with the terms thereof.
3. SERVICES TO BE PROVIDED BY THE SELLER AND PAID FOR BY BUYER
3.1 DATA RETENTION. During the Transition Period, in addition to the
Books and Records transferred pursuant to Section 1.1(a)(xii) and other copies
required to be provided under the Asset Purchase Agreement, Seller will retain
and maintain at Buyer's direction the accounting, financial and tax records
relating to the Subject Assets. Seller shall maintain all such accounting
records in the form and format established under and in accordance with Seller's
prior policies and practices. Seller will provide Buyer access to all said
records and permit Buyer to make copies and/or take extracts of the same, except
for any documents that Seller is prohibited from disclosing by reason of
confidentiality agreements made by Seller and previously disclosed to Buyer.
3.2 COMPUTER/ACCOUNTING SYSTEM. During the Transition Period, Seller
shall maintain an accounting system for the Subject Assets being conveyed as
part of the Agreement. This accounting system will maintain inventory and fixed
assets used in the manufacturing operations. All historical data required to
operate the accounting system effectively will be provided by the Seller. Seller
shall provide Buyer with cooperative use of such accounting system as such
relates to the Subject Assets during the term of the Transition Period.
3.3 ACCOUNTING SYSTEM PERSONNEL. During the Transition Period, Seller
shall reasonably make its accounting system personnel available to Buyer for the
purpose of cost accounting, fixed asset accounting, inventory control, accounts
payable and other related matters consistent with current use ("Accounting
System Services"). Such personnel will also continue to handle accounting
matters for Seller. Seller shall continue to pay the cost of such personnel.
Buyer will reimburse Seller for the Accounting System Services provided at
Buyer's request, as well as the support for transitioning the inventory records,
bills of material, routings, Dac/drawing files, account payable and receivable
files and other necessary data or technical assistance related to the Asset
Purchase Agreement, at an hourly rate of thirty-five dollars ($35) per hour. At
Buyer's request, Seller shall provide advance estimates of the costs of such
Accounting System Services and such support. Buyer will also reimburse Seller
for third-party costs for operation of such system which Seller incurs with
Buyer's prior approval.
3.4 ACCOUNTS RECEIVABLE. In accordance with the Asset Purchase
Agreement, in the event that Seller shall receive payment on any of the
Receivables, it shall promptly pay any such amounts over to Buyer in accordance
with the Asset Purchase Agreement.
4. SPECIFIC ARRANGEMENTS REGARDING MANUFACTURING BUSINESS
4.1 TRANSITION PERSONNEL. The individuals currently engaged in the
manufacture of scanners and spare parts (the "Transition Personnel") are:
Xxxxx Xxxxxx
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Xxx Xxxxxx
Xxxxxxx (Xxxxxxx) XxXxxxx
Xxxxx Phlek
Xxxxxxx Xxxxx
Xxx Xxxxxx
Xxxxx Xxxxxxxx
Hung Xxxxx
Xxx Van Le
Xxxxxx Xxxxxxx
4.2 TRANSITION SERVICES. The Transition Personnel will continue on
Seller's payroll, performing manufacturing-related work for Buyer for document
scanners, aperture card scanners, feeders and all spare parts to support the
Business that Buyer has purchased from Seller ("Transition Services"). Such
Transition Personnel will work under the supervision of Xxxxx Xxxxxx, who in
turn will be supervised by Xxx Xxxxxx, or such other representative as Buyer may
from time to time designate.
4.3 SCHEDULING; ALLOCATION OF RESOURCES. The determination of work
priorities, production schedules, and allocation of Transition Personnel
resources shall be at the sole discretion of Buyer.
4.4 LABOR COSTS. Seller will invoice Buyer, as provided in Section
4.11(a), for the labor cost of the Transition Personnel. Seller shall xxxx Buyer
for labor costs at the rate (consistent with such Transition Personnel's
customary rate consistent with past practice) of actual wages, plus payroll tax
and fringe benefit burden at the rate of thirty percent (30%), plus ten percent
(10%) of this combined total for administration ("Administration Costs").
4.5 BENEFIT PLANS. The Transition Personnel shall continue to receive
health insurance, dental insurance, 401K, life insurance, workers compensation
insurance and general liability insurance plan benefits under Seller's existing
benefits plans. The Administration Costs compensate Seller for payroll services
and administration of the benefit plan participation by the Transition
Personnel.
4.6 ADDITIONAL PERSONNEL. If Buyer determines that additional personnel
are required to perform the Transition Services, Buyer shall recruit and select
such additional Transition Personnel at its sole discretion (i.e., Xxxxx Xxxxxx
at Xxx Xxxxxx'x direction). Seller shall employ such additional Transition
Personnel and enroll them in Seller's benefit plans as described in Section 4.5
above; however, Seller reserves the right to not employ an individual so
selected if it determines that the process of selection of an individual would
expose it to legal action, or if the individual was deemed by the Seller to be
wholly unsuitable as an employee with access to its facilities.
4.7 WHEN SERVICES OF TRANSITION PERSONNEL NO LONGER REQUIRED. If Buyer
in its sole discretion determines that the services of one or more of the
Transition Personnel are not required for production, (a) Buyer shall give
notice to Seller that Buyer no longer wishes to
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obtain the services of such Transition Personnel under the Agreement and (b)
Buyer shall have no further obligation in respect of such Transition Personnel
under this Agreement.
4.8 MATERIALS REIMBURSEMENT. Buyer shall reimburse Seller for any
materials belonging to Seller used during this Transition Period by the
Transition Personnel, if any, at Seller's actual cost.
4.9 DIRECT SERVICES; PHONE SERVICE. Buyer, in its discretion, shall
either (i) reimburse Seller for Seller's reception, long distance phone charges,
freight or other such service costs or (ii) elect to install its own direct
phone lines and other direct services.
4.10 RENT FOR SPACE UTILIZED. Buyer shall pay rent to Seller for any
such manufacturing or office space utilized pursuant to this Agreement. Such
rent shall be billed to Buyer at a gross rate equal to the current $0.63 triple
net square feet lease costs that Seller currently pays. This equates to $0.80
per square foot, which rate includes all triple net charges (i.e., taxes,
utilities, maintenance, association fees, insurance, operating cost
assessments).
4.11 PAYMENT TERMS. (a) Labor reimbursement costs will be billed
bi-weekly (per payroll period) and are payable in ten (10) days.
(b) Rent will be due on the first day of each month.
(c) Any materials used and service and use reimbursements will
be invoiced as used and will be due on net thirty (30) day terms.
4.12 TRANSITION PERSONNEL WORK PERFORMANCE, FACILITY ACCESS. Buyer
shall assume the responsibility for the work performance and the output of the
Transition Personnel. Seller will provide keys, security codes and facility
access to these individuals consistent with current business practices.
4.13 SUPPLY OF COMPONENT PARTS. During this period, Seller, Parent, and
Parent's subsidiaries will continue to supply outsourced component parts to
Buyer on a contract manufacturing basis for printed circuit boards (I-PAC),
precision machined metal parts (Amcraft), and sheet metal (National Metal
Technologies, Inc.). This will be done pursuant to purchase orders issued by
Buyer based on Buyer's requirements, at the current turn-key, standard cost for
any of these components. Seller, I-PAC and Parent shall be jointly and severally
liable for each others' obligations under this Agreement.
4.14 SALES AND TECHNICAL LITERATURE. Buyer shall have the right to use
sales and technical literature which incorporate the use of Seller's, I-PAC's
and Parent's logo and company name for a period of six (6) months from the date
of this Agreement.
5. TERM
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5.1 TERM. The term of this Agreement shall continue for the period
beginning as of the date hereof and continuing through the close of business on
such date as this Agreement is terminated pursuant to Section 5.2 hereof.
5.2 TERMINATION. Notwithstanding any contrary provision contained
herein, this Agreement may be terminated:
(a) by the mutual written consent of all of the parties
hereto;
(b) by the Buyer at any time upon thirty (30) days prior
written notice to the Seller;
(c) by a party in the event of the material breach by the
other party of any provision of this Agreement, which breach is not remedied by
the breaching party within thirty (30) days after receipt of notice thereof from
the non-breaching party.
6. RIGHT TO AUDIT
For purposes of verifying the accuracy of charges and payments made by
Seller hereunder, the Buyer shall be entitled, prior or subsequent to any
payment of charges hereunder, on reasonable notice and during normal business
hours to inspect and copy the records of the Seller and its agents providing
services hereunder as may be reasonably necessary for such purpose. This section
shall survive termination of this Agreement for a period of six (6) months.
7. MISCELLANEOUS
7.1 AMENDMENT AND MODIFICATION. This Agreement may not be amended or
modified, nor may compliance with any condition or covenant set forth herein be
waived, except by a writing duly and validly executed by each party hereto, or
in the case of a waiver, the party waiving compliance.
7.2 ASSIGNMENT. This Agreement may not be assigned by Seller or Buyer
without the prior written consent of Buyer or Seller, as the case may be. This
Agreement shall be binding upon and enforceable by, and shall inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.
7.3 ENTIRE AGREEMENT. This Agreement supersedes all prior negotiations,
commitments and rights pertaining to the subject matter hereof; provided,
however, that this Agreement is intended to supplement the Asset Purchase
Agreement and does not supersede or replace the provisions thereof.
7.4 SEVERABILITY. If at any time subsequent to the date hereof, any
provision of this Agreement shall be held by any court of competent jurisdiction
to be illegal, void or unenforceable, such provision shall be of no force and
effect, but the illegality or unenforceability of such provision shall have no
effect upon and shall not impair the enforceability of any other provision of
this Agreement.
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7.5 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
7.6 COUNTERPART FACSIMILE. For the convenience of the parties and to
facilitate execution, this Agreement may be executed in two or more counterparts
and by facsimile, each of which shall be deemed an original, but all of which
shall constitute one and the same document.
7.7 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, or if
sent by registered or certified mail or by a nationally recognized commercial
carrier, upon the sooner of the date on which receipt is acknowledged or the
expiration of five (5) days after deposit in United States post office
facilities properly addressed with postage prepaid. All notices to a party will
be sent to the addresses set forth below or to such other address or person as
such party may designate by notice to each other party hereunder:
TO BUYER: Scan-Optics, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: CFO
Facsimile No.: (000) 000-0000
With a copy to: Day, Xxxxx & Xxxxxx XXX
XxxxXxxxx X
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
TO SELLER, I-PAC Photomatrix, Inc.
OR PARENT: 0000 Xxxxxxx Xxx.
Xxxxxxxx, XX 00000
Attn: CEO
Facsimile No.: (000) 000-0000
With a copy to: Xxxx, Forward, Xxxxxxxx & Scripps LLP
000 Xxxx Xxxxxxxx
Xxxxx 0000
Xxx Xxxxx, XX 00000
Attn: Xxxx Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
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Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
7.8 GOVERNING LAW. This Agreement shall be construed under and governed
by the internal laws of the State of California without regard to its conflict
of laws provisions.
7.9 NO IMPLIED THIRD PARTY RIGHTS OR BENEFICIARIES. Except as otherwise
expressly provided herein, nothing herein expressed or implied is intended to or
shall (a) confer on any person other than the parties hereto and their
respective successors or assigns any rights (including third party beneficiary
rights), remedies, obligations or liabilities under or by reason of this
Agreement or (b) constitute the parties hereto as partners or as participants in
a joint venture. This Agreement shall not provide third parties with any remedy,
claim, liability, reimbursement, cause of action or other right in excess of
those existing without reference to the terms of this Agreement. Nothing in this
Agreement shall be construed as giving to any employee of the Business, or any
other individual, any right or entitlement under any Employee Program, policy or
procedure maintained by Buyer or any affiliate thereof or by Seller or an
affiliate thereof, except as expressly provided in such Employee Program, policy
or procedure. No third party shall have any rights under Section 502, 503 or 504
of ERISA or any regulations thereunder because of this Agreement that would not
otherwise exist without reference to this Agreement. No third party shall have
any right, independent of any right that exists irrespective of this Agreement,
under or granted by this Agreement, to bring any suit at law or equity for any
matter governed by or subject to the provisions of this Agreement.
(THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
BUYER:
SCAN-OPTICS, INC.
By:________________________________
Name:______________________________
Title:_______________________________
SELLER:
PHOTOMATRIX IMAGING CORPORATION
By:________________________________
Name:______________________________
Title:_______________________________
I-PAC:
I-PAC MANUFACTURING, INC.
By:________________________________
Name:______________________________
Title:_______________________________
PARENT:
PHOTOMATRIX, INC.
By:________________________________
Name:______________________________
Title:_______________________________