MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement is made as of the 1st day of
January, 1993 by and between JEFFERSON SMURFIT CORPORATION, a Delaware
corporation ("JSC"), and SMURFIT PACKAGING CORPORATION, a Delaware corporation
("SPC").
W I T N E S S E T H:
WHEREAS, SPC has merged into itself its wholly-owned subsidiaries
Smurfit Plastic Packaging Inc. ("SPPI") and Sequoia Pacific Systems Corporation
("SPSC") effective as of December 31, 1992; and
WHEREAS, each of SPPI and SPSC will continue to operate as divisions of
SPC; and
WHEREAS, SPC wishes to vest control of the management of the business
and affairs of its SPPI and SPSC divisions in JSC in accordance with the terms
and to the extent set forth herein; and
WHEREAS, the parties hereto wish to set forth certain matters
concerning the provision of such services by JSC.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, JSC and SPC agree as follows:
1. Management Services.
(a) The parties hereby agree that, during the period beginning on
the date hereof and continuing throughout the term hereof, JSC and its
subsidiaries and affiliates shall provide to SPC (x) general management,
supervision and administrative services, and the preparation of the annual and
long-term business plans of SPC's SPPI and SPSC divisions ("General Management
Services"), and (y) such of the following services (the
"Elective Services") as SPC shall in accordance with Paragraph 2 hereof
determine its SPPI and/or SPSC divisions require at any time during the term
hereof:
(i) Management operating information systems (i.e.,
cost estimating, customer order entry and reporting, invoicing, roll
stock inventory and reporting, payroll reporting, price tracking, sales
analysis, forecasting, purchase order reporting, and credit management
reporting);
(ii) Management financial information services (i.e.,
general ledger, payroll, accounts receivable, accounts payable and
fixed assets reports), accounting services, internal auditing services,
tax reporting and related services, and financial management and
treasury services;
(iii) Legal services;
(iv) Manufacturing and engineering services;
(v) Research and development services and services
pertaining to patents;
(vi) Employee pension plan and benefits management,
employee group insurance management, property and casualty insurance
management, risk management services, and employee health and safety
and personnel management services;
(vii) Traffic and transportation management and
leased-car program services;
(viii) Purchasing services;
(ix) Industrial relations services;
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(x) Public relations and marketing services;
(xi) Planning services;
(xii) Compliance Program administration and services;
and
(xiii) All other services to be provided to SPC by JSC
and its subsidiaries and affiliates in accordance with Paragraph 2
hereof.
(The General Management Services and the Elective Services are hereinafter
sometimes referred to collectively as the "Services", and the General Management
Services and each of the Elective Services are hereinafter sometimes referred to
individually as a "Service").
(b) Any Service provided to SPC hereunder shall be reasonably
necessary in the conduct of its business.
(c) Any Service hereunder shall be provided to SPC only by JSC
and its subsidiaries and affiliates or such consultants, subcontractors or
agents as may be selected from time to time by JSC.
2. Election by SPC.
At any time hereafter, the Chairman of the Board and Chief Executive
Officer and/or the President and Chief Operating Officer of SPC shall notify JSC
as to the Elective Services (if any) that JSC is to provide to SPC's SPPI and/or
SPSC divisions. Thereafter, JSC shall submit a fee proposal for same, and if
accepted by either of said officers of SPC, JSC shall provide and SPC shall
obtain and pay JSC for, those Elective Services as to which the parties have
agreed.
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3. Fees; Payment.
(a) In consideration for the General Management Services provided by
JSC to SPC hereunder, SPC shall pay to JSC annual fees or compensation therefor
(not including any related out-of-pocket expenses) in the amount of One Percent
(1%) of annual consolidated gross sales of the SPSC and SPPI divisions of SPC.
(b) In consideration for each Elective Service provided to SPC
hereunder SPC shall pay to JSC an amount equal to the agreed-upon fee for the
same; provided, however, in no event, shall such fee be higher than that which
would be charged in a commercial, unrelated third-party transaction for
comparable services.
(c) In addition to the fees referred to in Paragraphs (3)a) and 3(b)
hereof, SPC shall also pay to JSC an amount equal to all out-of-pocket expenses
paid by JSC in providing the General Management Services hereunder and/or
Elective Services hereunder including fees and expenses paid to consultants,
subcontractors and other third parties, in connection with such services.
(d) On or before the twentieth (20th) day of each month, JSC shall
furnish to SPC bills for the Services hereunder (plus related expenses) during
the immediately preceding month. Each such xxxx shall specify the fee billed for
each service provided during such previous month and shall identify in
reasonable detail any out-of-pocket expenses included in such xxxx.
(e) Each xxxx furnished to SPC hereunder shall be paid in full within
ten (10) days of the date of such xxxx. All payments of such bills shall be sent
to JSC at the following address:
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Jefferson Smurfit Corporation
0000 Xxxxxxxx Xxxxxx
P. O. Xxx 00000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxx
or to such other address as JSC may specify from time to time by written notice
to SPC.
4. Direct Expenses.
It is understood that the consideration to be paid by SPC to JSC for
Services hereunder shall not be in lieu of, and that SPC shall be directly
liable for, direct expenses incurred by SPC, or by JSC on SPC's behalf (other
than the out-of-pocket expenses billed to SPC by JSC pursuant to Paragraphs 3(c)
and 3(d) hereof), or by either the SPPI or SPSC division of SPC, for services
rendered to SPC or its SPPI or SPSC divisions by third parties, including, but
not limited to, legal and accounting fees and insurance premiums. SPC shall pay
any compensation (including employee benefit costs and any related out-of-pocket
expenses) to officers and other employees of SPC who provide substantially
full-time services to SPC, notwithstanding that said officers and other
employees may simultaneously be officers or employees of JSC or one of its
subsidiaries or affiliates.
5. Term.
The term of this Agreement shall commence on the date hereof and shall
continue until terminated upon not less than sixty (60) days' prior written
notice given at any time by either party to the other party.
6. Events of Default.
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Any one of the following shall constitute an Event of Default:
(a) The failure (other than by reason of an Event of Force
Majeure (as defined in Paragraph 8 hereof) or refusal of any party to comply
with, and perform its obligations under, this Agreement and such failure or
refusal continues unremedied for more than sixty (60) days after written notice
of the existence of such failure or refusal shall have been given to the failing
or refusing party by any of the parties;
(b) JSC or SPC is declared insolvent or bankrupt by any court
of competent jurisdiction, or a voluntary petition in bankruptcy is filed in any
court of competent jurisdiction by either of them;
(c) An involuntary petition in bankruptcy is filed in any
court of competent jurisdiction against JSC or SPC and within forty-five (45)
days thereafter shall not have been dismissed or stayed (and, in the event of
any such stay, such stay shall not have been set aside and the petition
dismissed within forty-five (45) days after the stay shall have been granted);
(d) A trustee or receiver is appointed for JSC or SPC and
remains undischarged for more than forty-five (45) days after being appointed;
(e) A proceeding seeking a reorganization, arrangement,
liquidation or dissolution, of JSC or SPC is instituted in a court of competent
jurisdiction and remains undismissed for more than forty-five (45) days after
being instituted; or
(f) JSC or SPC voluntarily seeks any such reorganization or
arrangement or makes an assignment for the benefit of creditors.
7. Limitation of Liability; Indemnification.
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(a) JSC and its subsidiaries and affiliates shall not be
liable to SPC, to any director, officer, stockholder, consultant or
subcontractor, of SPC, or to any person or entity controlling SPC or any such
stockholder, consultant or subcontractor of SPC, for any cost, damage, expense
or loss, including without limitation any special, indirect, consequential or
punitive damages, of SPC or any such officer, director, stockholder, consultant,
subcontractor or controlling person or entity, allegedly arising out of (i)
JSC's and/or its subsidiaries' and/or affiliates' failure to perform any
services for SPC hereunder or the misperformance of any such service, or (ii)
SPC's or such officer's, director's, stockholder's, consultant's,
subcontractor's or controlling person's or entity's reliance on any advice or
data JSC and/or its subsidiaries and affiliates may provide to SPC pursuant to
this Agreement.
(b) SPC shall indemnify JSC and each of its subsidiaries,
affiliates, officers, directors, employees, consultants and subcontractors, and
any Person or entity controlling JSC, its subsidiaries or affiliates, or any
such consultant or subcontractor and shall hold JSC and its subsidiaries and
affiliates and each such officer, director, employee, consultant, sub-contractor
and controlling person or entity, harmless against any damage, loss, cost or
expense (including court costs and reasonable attorneys' fees) which JSC, and
its subsidiaries and affiliates, or any such officer, director, employee,
consultant, sub-contractor or controlling Person or entity, may sustain or incur
by reason of any claim, demand, suit or recovery by any Person or entity arising
in connection with this Agreement or out of JSC's, its subsidiaries' or
affiliates', or any consultant's or subcontractor's, performance of JSC's
obligations under this Agreement, provided, however, that no officer of JSC may
benefit from the foregoing indemnity in the event of his serious criminal
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conduct, fraud or dishonesty.
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8. Force Majeure.
This Agreement shall not be terminated as a result of any failure of a
party to perform any of its obligations hereunder if such failure is due to
circumstances beyond its control (an "Event of Force Majeure"), including, but
not limited to, any requisition by any government authority, act of war, strike,
boycott, lockout, picketing, riot, sabotage, civil commotion, insurrection,
epidemic, disease, act of God, fire, flood, accident, explosion, earthquake,
storm, failure of public utilities or common carriers, mechanical failure,
embargo, or prohibition imposed by any governmental body or agency having
authority over the party, provided that at such time as an Event of Force
Majeure no longer exists, the respective obligations of the parties hereto shall
be reinstated and this Agreement shall continue in full force and effect. The
party affected by an Event of Force Majeure shall give prompt notice thereof to
the other parties hereto and each party each shall use its best efforts to
minimize the duration and consequences of, and to eliminate, any such Event of
Force Majeure.
9. Notices.
All notices and other communications required by or specifically
provided for in this Agreement shall be in writing and shall be deemed to have
been given (a) when delivered in person, (b) when sent by telex or telecopier
with answer back received, (c) twenty-four (24) hours after having been
deposited with any overnight courier, next-day delivery, or (d) seventy-two (72)
hours after having been deposited in the U.S. mails, certified mail with return
receipt requested and postage prepaid, and in any case addressed to the party
for which it is intended at that party's address as set forth below, or at such
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other address as the addressee shall have designated by notice hereunder to the
other party.
If to JSC:
Jefferson Smurfit Corporation
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00x00
Attention: J. R. Xxxxx, Vice President
If to SPC:
Smurfit Packaging Corporation
0000 Xxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: X. X. Xxxxxx, Chairman and President
Any notice or request sent by telecopier or similar facsimile telecommunication
shall be confirmed promptly by the sending of a copy of such notice or request
to the addressee thereof by prepaid certified mail, return receipt requested.
10. Amendment; Assignment; Binding Effect.
This Agreement may be amended or modified only by a written instrument
signed by the parties hereto. Neither party shall assign or transfer this
Agreement, in whole or in part, or any of such party's rights or obligations
hereunder, to any other person or entity without the prior written consent of
the other party.
11. Waiver; Severability.
The failure of a party to insist in any instance upon the strict and
punctual performance of any provision of this Agreement shall not constitute a
continuing waiver of such provision. No party shall be deemed to have waived any
right, power, or privilege under this Agreement or any provisions hereof unless
such waiver shall have been in writing and duly executed by the party to be
charged with such waiver, and such waiver
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shall be a waiver only with respect to the specific instance involved and shall
in no way impair the rights of the waiving party or the obligations of the other
party in any other respect or at any other time. If any provision of this
Agreement shall be waived, or be invalid, illegal or unenforceable, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain binding and in full force and effect.
12. Relationship of the Parties.
In all matters relating to this Agreement, each party hereto shall be
solely responsible for the acts of its employees, and employees of one party
shall not be considered employees of the other party. Except as otherwise
provided herein, no party shall have any right, power or authority to create any
obligation, express or implied, on behalf of any other party.
13. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without giving effect to its conflict of laws
rules and laws.
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14. Entire Agreement.
This Agreement constitutes the entire Agreement between the parties
hereto with respect to the subject matter hereof, and supersedes all prior
agreements and understandings, either oral or written, with respect thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
JEFFERSON SMURFIT CORPORATION
By:____________________________
Xxxxx X. Xxxxxx,
President,
Chief Executive Officer and
Chief Operating Officer
SMURFIT PACKAGING CORPORATION
By:____________________________
Xxxxx X. Xxxxxxx
Executive Vice President
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