Master Transitional Services Agreement

EXHIBIT 2.7


EXECUTION COPY


MASTER TRANSITIONAL SERVICES AGREEMENT


BETWEEN


ADAPTEC, INC.


AND


ROXIO, INC.


EFFECTIVE AS OF MAY 5, 2001


MASTER TRANSITIONAL SERVICES AGREEMENT


This Master Transitional Services Agreement (the "Agreement") is effective as of May 5, 2001 between Adaptec, Inc., a Delaware corporation ("Adaptec"), having an office at 491 S. Milpitas Blvd., Milpitas, CA 95035 and Roxio, Inc., a Delaware corporation ("Roxio"), having an office at 461 S. Milpitas Blvd., Milpitas, CA 95035. Adaptec and Roxio are sometimes referred to herein individually as a "party" or collectively as the "parties."


ARTICLE 1


DEFINITIONS


For the purpose of this Agreement, the following capitalized terms shall have the following meanings:


1.1 ADAPTEC GROUP. "Adaptec Group" shall have the meaning set forth in Section 6.2 of the Master Separation and Distribution Agreement.


1.2 ADDITIONAL SERVICES. "Additional Services" shall have the meaning set forth in Section 3.5.


1.3 ANCILLARY AGREEMENTS. "Ancillary Agreements" shall have the meaning set forth in Section 2.1 of the Master Separation and Distribution Agreement.


1.4 DISPUTES. "Disputes" shall have the meaning set forth in Section 4.7 of the Master Separation and Distribution Agreement.


1.5 DISTRIBUTION DATE. "Distribution Date" shall have the meaning set forth in Section 3.2 of the Master Separation and Distribution Agreement.


1.6 IMPRACTICABLE. "Impracticable" shall have the meaning set forth in Section 3.3.


1.7 FORCE MAJEURE. "Force Majeure" shall have the meaning set forth in Article 11 hereof.


1.8 MASTER CONFIDENTIAL DISCLOSURE AGREEMENT. "Master Confidential Disclosure Agreement" shall mean that certain Master Confidential Disclosure Agreement dated May 5, 2001 between Adaptec and Roxio.


1.9 MASTER SEPARATION AND DISTRIBUTION AGREEMENT. "Master Separation and Distribution Agreement" shall mean that certain First Amended and Restated Master Separation and Distribution Agreement dated February 28, 2001 between Adaptec and Roxio.


1.10 ROXIO GROUP. "Roxio Group" shall have the meaning set forth in Section 6.29 of the Master Separation and Distribution Agreement.


1.11 SEPARATION DATE. "Separation Date" shall have the meaning set forth in Section 1.1 of the Master Separation and Distribution Agreement.


1.12 SERVICE(S). "Service(s)" shall have the meaning set forth in Section 3.1 hereof.


1.13 SUBCONTRACTOR. "Subcontractor" shall have the meaning set forth in Article 9 hereof.


1.14 SUBSIDIARY. "Subsidiary" shall have the meaning set forth in Section 6.32 of the Master Separation and Distribution Agreement.


1.15 TRANSITION SERVICE SCHEDULE. "Transition Service Schedule" shall have the meaning set forth in Article 2.


ARTICLE 2


TRANSITION SERVICE SCHEDULES


This Agreement will govern individual transitional services as requested by Roxio and provided by Adaptec, the details of which are set forth in the Transition Service Schedules (each transition service schedule, a "Transition Service Schedule") attached to this Agreement. Each Service shall be covered by this Agreement upon execution of a Transition Service Schedule in the form attached hereto.


For each Service, the Transition Service Schedule shall be signed by a duly authorized representative of each party and set forth, among other things, the time period during which the Service will be provided if different from the term of this Agreement determined pursuant to Article 4 hereof, a summary of the Service to be provided; a description of the Service; and the estimated charge, if any, for the Service and any other terms applicable thereto. Obligations regarding each Transition Service Schedule shall be effective upon execution of this Agreement, or, if a particular Transition Service Schedule is amended or a new Transition Service Schedule is executed after the execution of this Agreement, the obligations created by such amendment or new Transition Service Schedule shall be effective upon execution of such amendment or such new Transition Service Schedule. This Agreement and all the Transition Service Schedules shall be defined as the "Agreement" and incorporated herein wherever reference to it is made.


ARTICLE 3


SERVICES


3.1 SERVICES GENERALLY. Except as otherwise provided herein, for the term determined pursuant to Article 4 hereof, Adaptec shall provide or cause to be provided to Roxio the service(s) described in the Transition Service Schedule(s) attached hereto. The service(s) described on a single Transition Service Schedule shall be referred to herein as a "Service." Collectively, the


-2-


services described on all the Transition Service Schedules (including Additional Services) shall be referred to herein as "Services."


3.2 SERVICE BOUNDARIES. Except as provided in a Transition Service Schedule for a specific Service: (i) Adaptec shall be required to provide the Services only to the extent and only at the locations such Services are being provided by Adaptec for Roxio immediately prior to the Separation Date; and (ii) the Services will be available only for purposes of conducting the business of Roxio substantially in the manner it was conducted prior to the Separation Date.


3.3 IMPRACTICABILITY. Adaptec shall not be required to provide any Service to the extent the performance of such Service becomes "Impracticable" as a result of a cause or causes outside the reasonable control of Adaptec despite the Adaptec's good faith effort to provide the relevant Service including unfeasible technological requirements, or to the extent the performance of such Services (a) would require Adaptec (in the opinion of its counsel) to violate any applicable laws, rules or regulations or (b) would result in the breach of any software license or other applicable contract.


3.4 ADDITIONAL RESOURCES. Except as provided in a Transition Service Schedule for a specific Service, in providing the Services, Adaptec shall not be obligated to: (i) hire any additional employees; (ii) maintain the employment of any specific employee; (iii) purchase, lease or license any additional equipment or software; or (iv) pay any costs related to the transfer or conversion of Roxio's data to Roxio or any alternate supplier of Services. Prior to executing a Transition Service Schedule, the parties shall in good faith attempt to determine whether any of actions described in immediately preceding clauses (i), (ii) or (iii) would be required for Adaptec to perform the contemplated Services.


3.5 ADDITIONAL SERVICES. From time to time after the Separation Date, the parties may identify Services other than those described on the Transition Service Schedules attached hereto, that Adaptec will provide to Roxio in accordance with the terms of this Agreement (the "Additional Services"). Accordingly, the parties shall execute additional Transition Service Schedules for such Additional Services pursuant to Article 2.


3.6 OBLIGATIONS AS TO ADDITIONAL SERVICES. Except as set forth in the next sentence, Adaptec shall be obligated to perform, at a charge determined using the principles for determining fees under Section 5.1, any Additional Service that: (a) was provided by Adaptec immediately prior to the Separation Date and that Roxio reasonably believes was inadvertently or unintentionally omitted from the list of Services described in the Transition Service Schedules attached hereto, or (b) is in the reasonable opinion of the parties necessary or desirable to effectuate an orderly transition of the Roxio Business under the Master Separation and Distribution Agreement unless such performance would significantly disrupt Adaptec's operations or materially increase the scope of its responsibility under this Agreement. If Adaptec reasonably believes the performance of Additional Services required under subparagraphs (a) or (b) would significantly disrupt its operations or materially increase the scope of its responsibility under this Agreement, Adaptec and Roxio shall negotiate in good faith to establish terms under which Adaptec can provide such


-3-


Additional Services, but Adaptec shall not be obligated to provide such Additional Services if, following good faith negotiation, the parties are unable to reach agreement on such terms.


ARTICLE 4


TERM


The term of this Agreement shall commence on the Separation Date and shall remain in effect until one year after the Separation Date (the "Expiration Date"), unless earlier terminated under Article 7. This Agreement may be extended by the parties in writing, either in whole or with respect to one or more of the Services; provided, however, that such extension shall only apply to the Services for which the Agreement was extended. The parties shall be deemed to have extended this Agreement with respect to a specific Service if the Transition Service Schedule for such Service specifies a completion date beyond the aforementioned Expiration Date. The parties may agree on an earlier expiration date respecting a specific Service by specifying such date on the Transition Service Schedule for that Service.


ARTICLE 5


COMPENSATION


5.1 CHARGES FOR SERVICES. Roxio shall pay Adaptec the charges, if any, set forth on the Transition Service Schedules for each of the Services listed therein as adjusted, from time to time, in accordance with the processes and procedures established under Section 5.4 and Section 5.5 hereof. Such fees shall include the costs, as determined using the process described in such Transition Service Schedule, of providing the Services plus five percent (5%), unless specifically indicated otherwise on a Transition Service Schedule. The parties also intend for charges to be easy to administer and justify and, therefore, they hereby acknowledge it may be counterproductive to try to recover every cost, charge or expense, particularly those that are insignificant or de minimus. The parties shall use good faith efforts to discuss any situation in which the actual charge for a Service is reasonably expected to exceed the estimated charge, if any, set forth on a Transition Service Schedule for a particular Service; provided, however, that the incurrence of charges in excess of any such estimate on such Transition Service Schedule shall not justify stopping the provision of, or payment for, Services under this Agreement.


5.2 PAYMENT TERMS. Adaptec shall bill Roxio monthly for all charges pursuant to this Agreement. Such bills shall be accompanied by reasonable documentation or other reasonable explanation supporting such charges. Roxio shall pay Adaptec for all Services provided hereunder within forty-five (45) days after receipt of an invoice therefor. Late payments shall bear interest at the lesser of 12% per annum or the maximum rate allowed by law.


5.3 PERFORMANCE UNDER ANCILLARY AGREEMENTS. Notwithstanding anything to the contrary contained herein, Roxio shall not be charged under this Agreement for any obligations that are specifically required to be performed under the Master Separation


-4-


and Distribution Agreement or any other Ancillary Agreement and any such other obligations shall be performed ...