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Transition Services Agreement

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Exhibit 10.5


TRANSITION SERVICES AGREEMENT


TRANSITION SERVICES AGREEMENT, dated as of March 31, 2000 (the "Services Agreement"), by and between SILICON GRAPHICS, INC., a Delaware corporation ("SGI"), and TERA COMPUTER COMPANY, a Washington corporation ("Tera"). SGI and Tera are sometimes hereinafter collectively referred to as the "Parties."


RECITALS


A. SGI and Tera are parties to an Asset Purchase Agreement, dated as of March 1, 2000, as amended March 31, 2000 (the "Asset Purchase Agreement"), pursuant to which Tera has agreed to acquire certain business and assets of SGI.


B. The Parties are interested in purchasing from each other certain transition services listed and described in Schedule A and Schedule B attached hereto during certain transition periods commencing from the date hereof.


NOW, THEREFORE, the Parties, in consideration of the premises and the mutual covenants and agreements contained herein, and intending to become legally bound, hereby agree as follows:


SECTION 1
AGREEMENT TO SELL AND BUY SERVICES


1.1 Definitions. Except as otherwise defined in this Services Agreement, all capitalized terms shall have the meaning assigned to them in the Asset Purchase Agreement.


1.2 Provision of Services.


(a) SGI shall provide to Tera the services described on Schedule A (the "SGI Services") for the period set forth on Schedule A for each such SGI Service. All of the SGI Services shall be provided in accordance with the terms, limitations and conditions set forth herein and on Schedule A.


(b) Tera shall provide to SGI the services described on Schedule B (the "Tera Services" and together with the SGI Services, the "Services") for the period set forth on Schedule B for each such Tera Service. All of the Tera Services shall be provided in accordance with the terms, limitations and conditions set forth herein and on Schedule B.


(c) The Party providing Services (the "Service Provider") shall receive, as payment for providing each Service, the amount, if any, set forth on Schedule A or B, as the case may be, for each such Service.


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(d) If the Service Provider's obligation to perform any Service expires or is terminated pursuant to this Agreement, there shall be no obligation to reinstate such Service, unless the Parties mutually agree in writing.


(e) If after the date of this Agreement, either Party identifies any additional Service it reasonably requires from the other Party in order to operate its business, the Parties will negotiate in good faith for such additional Service and amend Schedule A or B, as the case may be, to reflect the same; provided that this Section 1.2(e) shall not require any Party to provide any additional Services absent the agreement of such Party.


1.3 Access.


(a) Tera shall make available on a timely basis to SGI all information and materials reasonably required by SGI to enable it to provide the SGI Services. SGI shall not be liable for any claims, errors or omissions resulting from untimely or incorrect information provided by Tera. To the extent reasonably necessary in order to provide the SGI Services, upon reasonable advance notice to the applicable Tera Representative (as defined below), Tera shall give appropriate representatives of SGI reasonable access, during regular business hours and at such other times as are reasonably required, to the premises of Tera.


(b) SGI shall make available on a timely basis to Tera all information and materials reasonably required by Tera to enable it to provide the Tera Services. Tera shall not be liable for any claims, errors or omissions resulting from untimely or incorrect information provided by SGI. To the extent reasonably necessary in order to provide the Tera Services, upon reasonable advance notice to the applicable SGI Representative (as defined below), SGI shall give appropriate representatives of Tera reasonable access, during regular business hours and at such other times as are reasonably required, to the premises of SGI.


1.4 Tera Representatives. Tera has designated the individual(s) set forth on Schedule B for each Tera Service as its representative(s) for such Tera Service (the "Tera Representatives") who have the authority to act on Tera's behalf in connection with the performance of such Tera Services for which they are the named Tera Representative, and who shall serve as the primary contact for communications between SGI and Tera concerning the performance of such Tera Services for which they are the named Tera Representative. No Tera Representative has the authority to (i) amend or supplement the terms, limitations or conditions of any Tera Service set forth on Schedule B or (ii) agree to provide any services beyond the Tera Services described on Schedule B.


1.5 SGI Representatives. SGI has designated the individual(s) set forth on Schedule A for each SGI Service as its representative(s) for such SGI Service (the "SGI Representatives") who have the authority to act on SGI's behalf in connection with the performance of such SGI Services for which they are the named SGI Representative, and who shall serve as the primary contact for communications between Tera and SGI concerning


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the performance of such SGI Services for which they are the named SGI Representative. No SGI Representative has the authority to (i) amend or supplement the terms, limitations or conditions of any SGI Service set forth on Schedule A or (ii) agree to provide any services beyond the SGI Services described on Schedule A.


SECTION 2
SERVICES, PAYMENT; INDEPENDENT CONTRACTOR


2.1 Services to be Provided.


(a) Unless otherwise agreed in writing by the Parties, the Service Provider shall use commercially reasonable efforts to perform all Services to be performed under this Services Agreement. Notwithstanding anything to the contrary contained herein, the Service Provider shall not be in default of its obligations to provide any Service hereunder to the extent the inability to provide such Service arises out of the other Party's failure to perform such tasks as are required to be performed by the other Party to enable the Service Provider to provide such Service.


(b) SGI and Tera agree to cooperate, to provide such information, and to take such actions as may be reasonably required to assist each other in accomplishing the Services, including, without limitation, in the manner specifically set forth in Schedules A and B hereto. The Parties agree to maintain the confidentiality of all non-public information relating to the other Party and its affiliates regarding the Services and each Party's business activities, except as may be required to be disclosed by law.


(c) Any amendment, supplement, variation, alteration or modification to any Service as described on Schedule A or B must be made in writing and signed by an executive officer or agent of each of the Parties.


(d) The Service Provider shall have the right to cease temporarily for maintenance purposes the operation of the equipment or facilities providing any Service whenever in its reasonable and good faith judgment such action is necessary. In the event such maintenance is required, the other Party shall be reasonably notified of such maintenance (which notice may be given during or after any emergency maintenance). Notwithstanding the above, the Service Provider shall give the other Party as much advance notice of any shutdown as is practicable, but in no event less that five business days (except in the case of an emergency as set forth above). Where written notice is not feasible, oral notice may be given. The Service Provider shall be relieved of its obligations to provide such Service during the period that its equipment or facilities are shut down; provided that the Service Provider shall use all reasonable efforts to restart such equipment or reopen such facilities as promptly as practicable.


2.2 Payment. Invoices for SGI Services rendered will be delivered to Tera as provided in Schedule A for each SGI Service for which SGI will be paid, and amounts


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charged shall be payable as provided in Schedule A. Invoices for Tera Services rendered will be delivered to SGI as provided in Schedule B for each Tera Service for which Tera will be paid, and amounts charged shall be payable as provided in Sc
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