EXHIBIT 10.15
TECHNOLOGY, FINANCIAL AND ADMINISTRATIVE
TRANSITION SERVICES AGREEMENT
THIS TECHNOLOGY, FINANCIAL AND ADMINISTRATIVE TRANSITION SERVICES
AGREEMENT (this "Transition Services Agreement") is made and entered into as of
April 12, 1999, between TENNECO PACKAGING INC., a Delaware corporation ("TPI"),
and PACKAGING CORPORATION OF AMERICA, a Delaware corporation ("PCA").
RECITALS
WHEREAS, TPI, PCA Holdings LLC and PCA each are party to a
Contribution Agreement, made and entered into as of January 25, 1999 (the
"Contribution Agreement"), pursuant to which TPI and PCA Holdings LLC have
organized PCA to acquire and operate the Containerboard Business (as defined
therein); and
WHEREAS, the Containerboard Business uses certain technology,
financial and administrative services provided by TPI, its Affiliates and/or
certain outside service providers, and PCA desires to obtain the use of such
services for the purpose of enabling PCA to manage an orderly separation of the
Containerboard Business from TPI's other businesses and operations.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
1. DEFINITIONS AND TERMS
1.1 Certain Definitions. As used herein, the following terms shall
have the meanings set forth or as referenced below:
"Affiliate" shall have the meaning as it is defined in the
Contribution Agreement.
"Party" shall mean either TPI or PCA; "Parties" shall mean TPI and
PCA.
"TPI Technology, Financial and Administrative Services" shall mean
the services set forth in Annex A.
"PCA Technology, Financial and Administrative Services" shall means
the services set forth in Annex B.
1.2 Other Terms. Other terms may be defined elsewhere in the text of
this Transition Services Agreement and, unless otherwise indicated, shall have
such meaning throughout this Transition Services Agreement.
1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder", and words of
similar import, when used in this Transition Services Agreement, shall refer to
this Transition Services Agreement as a whole and not to any particular
provision of this Transition Services Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
(d) The term "including" shall be deemed to mean "including without
limitation."
2. SUPPORT AND ADMINISTRATIVE SERVICES
2.1 Provision of Services by TPI. TPI shall provide or have provided
(through its Affiliates and/or certain outside service providers) to PCA the TPI
Technology, Financial and Administrative Services set forth in Annex A. TPI also
shall provide to PCA additional services not set forth on Annex A, but requested
by PCA that previously had been provided by TPI to the Containerboard Business
during the twelve (12) month period prior to the Closing Date ("Additional
Services"), if TPI has the personnel and equipment reasonably necessary to
provide such Additional Services. All Services shall be provided in a manner and
at a level of quantity and quality substantially consistent with the past
practices and operation of the Containerboard Business by TPI during the twelve
(12) month period prior to the Closing Date, and in any event, at a level
consistent with the objectives set forth in Attachment 1 exercising
substantially the same degree of care and skill as it historically has provided
to the Containerboard Business. Notwithstanding the foregoing, TPI will not
provide the services identified in Annex A-1, Excluded Services.
2.2 Provision of Services by PCA. PCA shall provide to TPI the PCA
Technology, Financial and Administrative Services set forth in Annex B. All
Services shall be provided in a manner and at a level of quantity and quality
substantially consistent with the past practices and provision of such Services
by the Containerboard Business to TPI during the twelve (12) month period prior
to the Closing Date exercising substantially the same degree of care and skill
as it exercises in performing the same or similar services for its own business
and operations.
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2.3 Required Third Party Consents.
(a) TPI or its Affiliates will obtain the consents of any relevant
third party required for TPI to provide or have provided the TPI Technology,
Financial and Administrative Services to PCA pursuant to this Agreement. If such
consent cannot be obtained, the Parties will arrange for alternative methods of
delivering the necessary service in the manner and at the level and cost
provided in this Agreement.
(b) As a precondition to PCA providing services hereunder, TPI will
obtain, at its sole expense, the consent of any relevant third party required
for PCA to provide the PCA Technology, Financial and Administrative Services to
TPI pursuant to this Agreement. If such consent cannot be obtained, TPI with
PCA's assistance will arrange for alternative methods of delivering the
necessary service in the manner provided in this Agreement. Any PCA costs for
providing any alternative method of delivering the necessary service will be
passed along to TPI.
3. PRICING, BILLING AND PAYMENT
3.1 Pricing. The cost to PCA for the TPI Technology, Financial and
Administrative Services listed on Annex A-2 shall be the lesser of (i) the
actual cost on a fully loaded basis without allocation of corporate overhead
("TPI's Cost") and (ii) 105% of the amounts reflected on Annex A-2 across from
such Service. The cost to PCA for the TPI Technology, Financial and
Administrative Services set forth on Annex A and not listed on Annex A-2 will be
the agreed upon rates as specifically set forth in Annex A. The cost to PCA for
any Additional Services will be TPI's Cost. If and to the extent PCA is
obligated to pay any fees for a TPI Technology, Financial and Administrative
Service or Additional Service hereunder, and a fee, charge or expense is charged
PCA for the same service as Rent under Facilities Use Agreement between TPI and
PCA, PCA shall pay such fee, charge or expense under the Facilities Use
Agreement and not under this Transition Services Agreement, unless the parties
shall otherwise mutually agree. All PCA Technology, Financial and Administrative
Services shall be charged to and payable by TPI on a monthly basis at the actual
cost on a fully loaded basis without allocation of corporate overhead ("PCA's
Cost").
3.2 Billing, Payments and Adjustments. Charges for TPI and PCA
Technology, Financial and Administrative Services and Additional Services shall
be billed monthly to the recipient Party by the service-providing Party. The
recipient Party shall remit the amount due for such services to the
service-providing Party within thirty (30) days after receipt of any such xxxx.
If any adjustment is needed to properly reflect the cost to PCA pursuant to
Section 3.1 for a particular TPI Technology, Financial and Administrative
Service, such adjustment will be made quarterly within thirty (30) days after
the billing date for the third month of the subject quarter. TPI will afford
PCA, upon reasonable notice, access to such information, records and
documentation of TPI as PCA may reasonably request in order to verify TPI's Cost
for any TPI Technology, Financial and Administrative Service or additional
Service. If PCA disputes TPI's Cost for a particular Service, PCA may request an
arbitration hearing to be conducted by a neutral arbitrator, mutually agreed
upon by the Parties, to verify the accuracy
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of TPI's Cost. If the neutral arbitrator determines that TPI's Cost is less than
the cost charged, TPI will credit the difference to PCA and pay for the neutral
arbitrator's services. Otherwise, PCA will pay for the neutral arbitrator's
services.
4. WARRANTIES AND LIABILITIES
4.1 Warranty. TPI (and its Affiliates) and PCA (and its Affiliates)
each warrant that the Services provided hereunder by it will be performed in a
good workmanlike and timely manner and at a level of quantity and quality
substantially consistent with the past practices regarding the same provision of
services.
4.2 Compliance with Law. Each Party shall, insofar as it relates to
compliance with material laws, rules and regulations, perform its Services under
this Transition Services Agreement in a manner generally consistent with past
practices of TPI in conducting the Containerboard Business and the
Containerboard Business in the provision of Services to TPI as of and during the
12-month period prior to the date hereof, including the Fair Labor Standards Act
of 1938, the Xxxxx-Xxxxxx Public Contracts Act, the Contract Work Hours and
Safety Standards Act, and laws prohibiting the us of convict labor.
4.3 Infringement Indemnification. TPI shall indemnify, defend and
hold PCA harmless against any claim of patent or copyright infringement or
infringement of any other rights relating to PCA's use of the Services provided
hereunder by TPI, and shall bear all costs and expenses, including reasonable
attorneys' fees, arising from or related to any such claim so long as PCA
provides TPI with prompt notice of such claim, provided that TPI shall have no
obligation with respect to claims based on use of such Services in combination
with other processes or products.
4.4 Disclaimer of Year 2000 Compliance Warranty. TPI (AND ITS
AFFILIATES) AND PCA (AND ITS AFFILIATES) EXPRESSLY DISCLAIM ANY WARRANTIES THAT
THE SERVICES PROVIDED BY TPI AND/OR ITS AFFILIATES TO PCA OR BY PCA AND/OR ITS
AFFILIATES TO TPI UNDER THIS TRANSITION SERVICES AGREEMENT (INCLUDING WITHOUT
LIMITATION THE YEAR 2000 SERVICES SET FORTH IN ANNEX A) ARE YEAR 2000 COMPLIANT,
THAT IS, THAT SOFTWARE, HARDWARE AND OTHER EQUIPMENT USED IN THE PROVISION OF
THE SERVICES HEREUNDER WILL ACCURATELY PROCESS DATE DATA SUCH THAT: (a) NO VALUE
FOR A DATE WILL CAUSE ANY INTERRUPTION IN PROCESSING, (b) DATE-BASED
FUNCTIONALITY OPERATES CONSISTENTLY FOR DATES PRIOR TO, DURING AND AFTER THE
YEAR 2000, AND (c) LEAP YEARS WILL BE ACCURATELY RECOGNIZED AND PROCESSED.
NOTWITHSTANDING THE FOREGOING AND SUBJECT TO THE CAP LIMITATIONS SET FORTH IN
ANNEX B, SECTIONS 4 AND 5, THE PARTIES WILL WORK TOGETHER AND USE THEIR
COMMERCIALLY REASONABLE EFFORTS TO RENDER THE PCA SYSTEMS ADDRESSED BY THE TPI
Y2K PROJECT PLAN YEAR 2000 COMPLIANT IN 1999.
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4.5 Disclaimer of All Other Warranties. EXCEPT AS PROVIDED HEREIN,
NEITHER TPI (AND ITS AFFILIATES) NOR PCA (AND ITS AFFILIATES) MAKE ANY
REPRESENTATIONS, WARRANTIES (INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE) OR GUARANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO ANY
SERVICES PROVIDED HEREUNDER.
4.6 Limitation on Liability. A Party's maximum liability to, and the
sole remedy of, the other Party for breach of this Transition Services Agreement
caused by mistake constituting gross negligence or error constituting gross
negligence or by willful misconduct with respect to the Services provided under
sections 1.c. and 1.d. of Annex A, Annex B and for which a Party provides
assistance (including but not limited to Annex A, sections 1.a.v, 1.a.x,
1.e.ii., 1.e.vii., 1.e.xiii., 1.f., 3.b., 3.d., and 4.a.), or for breach,
mistake or error with respect to all other Services, shall be for the Party upon
receipt of written notice from the other Party of such breach, to use
commercially reasonable efforts to cure the breach at its expense, including
retaining a third party to provide the particular service, and reimbursement of
the actual direct monetary out-of-pocket damages directly caused by such Party's
actions. However, a Party shall not be liable to other Party for any breach of
this Transition Services Agreement if either (a) the Party is unable to perform
the particular Service due to the the other Party's failure to provide proper
guidance, requisite assistance or requisite cooperation as identified in Annexes
A and B or (b) to the extent the other Party contributed to such breach.
4.7 No Consequential, Incidental or Special Damages. In no event
shall either Party be liable to the other Party for any consequential,
incidental or special damages suffered by the other Party arising out of this
Transition Services Agreement, whether resulting from negligence of a Party or
otherwise.
5. FORCE MAJEURE
No Party shall be responsible for, or be considered to be in breach hereunder
because of, failure or delay in delivery of any service hereunder, nor shall any
Party be responsible for failure or delay in receiving such service, if caused
by an act of God or public enemy, war, government acts or regulations, fire,
flood, embargo, quarantine, epidemic, labor stoppages beyond its reasonable
control, accident, unusually severe weather or other cause similar or dissimilar
to the foregoing beyond its control.
6. TERM AND TERMINATION
This Transition Services Agreement shall be effective on the Closing Date and
will continue thereafter for an initial term of one year (the "Transition
Period"). PCA may extend the Transition Period with respect to any TPI
Technology, Financial and Administrative Service or Additional Service for an
additional six month period, for an up charge of 15% of the cost of such TPI
Technology, Financial and Administrative Service or Additional Service
hereunder, by giving TPI notice ninety (90) days prior to the end of the initial
Transition Period. PCA may terminate any of the TPI Technology, Financial or
Administrative Services or Additional
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Services at any time on ninety (90) days prior written notice to TPI. PCA may
reduce or phase-down the TPI Technology, Financial or Administrative Services or
Additional Services during the Transition Period upon reasonable prior written
notice to TPI, in which case the charge to PCA will be reduced to reflect TPI's
Cost for rendering such reduced Services. TPI may terminate any such PCA
Technology, Financial or Administrative Services upon reasonable prior written
notice to PCA, in which case the charge to TPI will be reduced to reflect PCA's
Cost (calculated in substantially the same manner as TPI's Cost) for rendering
such reduced Services. Sections 4.2-4.5, 7, 8.1 and 8.2 shall survive
termination of this Transition Services Agreement.
7. PROPRIETARY INFORMATION AND RIGHTS
Each Party acknowledges that the other Party possesses and will continue to
possess information that has been created, discovered or developed by it and/or
in which property rights have been assigned or otherwise conveyed to it, which
information has commercial value and is not in the public domain. The
proprietary information of each Party will be and remain the sole property of
such Party and its assigns. Each Party will use the same degree of care that it
normally uses to protect its own proprietary information to prevent disclosing
to third parties the information of the other Party that it possesses. No Party
will make any use of any information of the other which has been identified as
proprietary except as contemplated or required by the terms of this Transition
Services Agreement. Notwithstanding the foregoing, this Section will not apply
to any information that a Party can demonstrate was, at the time of disclosure
to it, either in the public domain through no fault of such Party, received
after disclosure to it from a third party who had a lawful right to disclose
such information to it, or already in possession of or independently developed
by the receiving Party.
8. MISCELLANEOUS
8.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been given if (i) delivered in person (to
the individual whose attention is specified below) or via facsimile (followed
immediately with a copy in the manner specified in clause (ii) hereof), (ii)
sent by prepaid first-class registered or certified mail, return receipt
requested, or (iii) sent by recognized overnight courier service, as follows:
to TPI:
Tenneco Packaging Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Tenneco Packaging Inc.
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0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Jenner & Block
Xxx XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
to PCA:
Packaging Corporation of America
0000 Xxxx Xxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Chief Financial Officer
Facsimile: (000) 000-0000
with a copy to:
Madison Dearborn Partners, Inc.
Three First Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Xxxxxxxx & Xxxxx
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other address as any party hereto may, from time to time, designate
in a written notice given in like manner. All notices and other communications
hereunder shall be effective: (i) the day of delivery when delivered by hand,
facsimile or overnight courier; and (ii) three Business Days from the date
deposited in the mail in the manner specified above.
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8.2 Amendment; Waiver. Any provision of this Transition Services
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 PCA and TPI, 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. Except as otherwise provided herein, the
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
8.3 Assignment; Successors and Assigns. Neither Party may assign any
of its rights or obligations under this Transition Services Agreement without
the prior written consent of the other Party, provided, however, that either
party may assign its rights and delegate its obligations under this Transition
Service Agreement to any of its affiliates, divested affiliates or divested
business units or an outside service provider so long as it continues to be
responsible for any obligations hereunder in the event an obligation is not met,
and PCA may collaterally assign its rights and obligations under this Transition
Services Agreement to its lenders. This Transition Services Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
8.4 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.
THIS TRANSITION SERVICES AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS. JURISDICTION AND SELECTION OF FORUM SHALL BE
SUBJECT TO SECTION 10.11 OF THE CONTRIBUTION AGREEMENT.
8.5 Counterparts. This Transition Services 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.
8.6 Severability. The provisions of this Transition Services
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 or thereof. If any provision of this Transition Services
Agreement, or the application thereof to any Party or any circumstance, is
invalid or 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 Transition Services Agreement and the application
of such provision to other persons 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 other jurisdiction.
8.7 Human Resources Agreement. To the extent that any provision in
this Transition Services Agreement is determined to be in conflict with any
provision in the Human Resources Agreement, except for the second sentence of
Section 4.2(c) thereof, the terms of this Transition Services Agreement shall
prevail.
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IN WITNESS WHEREOF, the parties have executed or caused this
Transition Services Agreement to be executed as of the date first written above.
Tenneco Packaging Inc.
By: /s/ Xxxxx X. Fanlkner, Jr.
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Name: Xxxxx X. Fanlkner, Jr.
Title: Vice President
Packaging Corporation of America
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx X. Xxxxxxx
Title: Assistant Secretary
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