EXHIBIT 10.2
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT (this "Agreement") is executed and made
effective this 25th day of November, 1996, by and between TYSON FOODS, INC., a
Delaware corporation ("Tyson"), and GORGES/QUIK-TO-FIX FOODS, INC., a Delaware
corporation ("Buyer").
WHEREAS, prior to the date hereof, Tyson owned and operated as a division
its beef further processing operations under the name of Gorges/Quik-to-Fix
Foods (the "Business"); and
WHEREAS, pursuant to that certain Asset Purchase Agreement by and among
Tyson, certain subsidiaries of Tyson and Buyer dated October 17, 1996 (the
"Purchase Agreement"), Tyson has sold and/or caused to be sold to Buyer
substantially all of the assets of the Business; and
WHEREAS, as a material inducement to Buyer to enter into the Purchase
Agreement, Tyson has agreed to provide certain services to Buyer relating to the
Business on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. DESCRIPTION OF SERVICES. Subject to the terms and provisions of this
-----------------------
Agreement, Tyson shall provide Buyer with those services with respect to the
operation of the Business as set forth on EXHIBITS A through C hereto (the
"Services"). Tyson shall supply all personnel and all equipment, software,
office supplies and other materials necessary or required for Tyson to perform
such Services to the standards and upon the terms set forth herein; provided,
however, that in performing such Services (i) Tyson may utilize any of Buyer's
personnel who were utilized in providing the Services to the Business
immediately prior to the date hereof and any equipment, software, office
supplies and other materials which constitute a part of the Purchased Assets (as
such term is defined in the Purchase Agreement), and (ii) Tyson shall not be
required to hire additional personnel or acquire additional equipment, software,
office supplies or other materials from that used in providing the Services to
the Business immediately prior to the date hereof (except that Tyson will
restock and replenish office supplies and other materials as necessary).
2. TERM OF SERVICES. Tyson shall provide the Services for the period
----------------
commencing on the date hereof and ending on the first anniversary of the date
hereof, subject to earlier termination of this Agreement and Tyson's obligations
hereunder as to all or a portion of the Services, as set forth in Section 8
hereof.
3. CONSIDERATION FOR SERVICES. During the period beginning on the date
--------------------------
hereof and ending on the 180th day after the date hereof (the "Initial Period"),
Tyson shall provide the Services at no cost to Buyer, the parties acknowledging
and agreeing that such Services are being provided as part of the consideration
for Buyer's agreements under the Purchase Agreement. For any Services provided
after the Initial Period, Buyer shall pay Tyson an amount for such Services as
the parties shall agree upon, and each party shall negotiate in good faith to
agree upon a reasonable amount; provided, however, that if the parties are not
able to agree upon such an amount, Buyer shall pay to Tyson $120,000 per
calendar month for each calendar month in which all of the Services are provided
hereunder, it being the intent of the parties that such amount be prorated if
less than all of the Services are provided hereunder during such month. In the
event that, either during the Initial Period or after, Buyer requests Tyson to
increase the type or level of the Services beyond that which was provided to the
Business immediately prior to the date hereof, Buyer and Tyson shall negotiate
in good faith to determine a reasonable fee for such increase which Buyer shall
pay to Tyson therefor; provided, however, that Tyson shall be under no
obligation to provide any such increase in Services unless a mutual agreement is
reached with respect thereto. Any monthly amount payable as provided in the
preceding sentence shall be pro rated for any partial month.
4. TERMS OF PAYMENT. With respect to any Services for which payment is
----------------
required pursuant to Section 3 above, Tyson shall submit in writing invoices
covering said charge to Buyer hereunder not later than twenty (20) days
following the end of the calendar month in which such Services are provided.
Payment shall be made no later than thirty (30) days after the invoice date.
5. METHOD OF PAYMENT. All amounts payable by Buyer for any Services
-----------------
shall be remitted to Tyson in United States dollars to a bank to be designated
in the invoice or otherwise in writing by Tyson, unless otherwise provided for
and agreed upon in writing by the parties.
6. COORDINATORS. Each party shall appoint one individual who shall serve
------------
as a contact person for purposes of communicating with the other party and
carrying out this Agreement, and who shall be authorized to act on behalf of his
or her respective party as to matters pertaining to this Agreement. Effective
upon execution of this Agreement, such coordinators shall be as set forth in
SCHEDULE 1 hereto. Each party shall notify the other in writing as to the name,
address and telephone number of any replacement for such designated coordinator.
7. PERFORMANCE STANDARDS. Tyson will provide each Service to Buyer at
---------------------
the same levels of quality and timeliness of performance as Tyson achieved in
providing like or similar Services to the Business immediately prior to the date
hereof. In any event, all Services will be provided consistent with Tyson's
past practices.
2
8. LIABILITY; INDEMNIFICATION.
--------------------------
(a) Except to the extent provided in Sections 8(b) and 8(c) below,
nothing in this Agreement is intended to impose upon Tyson, and Tyson does not
assume pursuant to this Agreement, any of the risks associated with operation of
the Business after the date hereof, including, without limitation, product
quality and liability therefor. Except as provided elsewhere in this Section 8
or in Section 3 hereof, neither party shall have any liability to the other
party for any Losses (as defined in Section 8(d) below) incurred by such other
party in connection with this Agreement or the performance of either party's
obligations hereunder, whether such claim of liability arises in an action at
law or in equity, and whether such claim sounds in contract or tort or
otherwise.
(b) Buyer agrees to indemnify, defend and hold harmless Tyson and its
officers, directors, shareholders, controlling persons, affiliates and
representatives (the "Tyson Indemnitees"), and each of them, from, against, for
and in respect of any and all Losses suffered or incurred by a Tyson Indemnitee
and resulting from, based upon or arising out of the provision of Services under
this Agreement, other than Losses resulting from, based upon or arising out of
any intentional breach of this Agreement by Tyson or the fraud, gross negligence
or willful misconduct of Tyson in connection with the performance of its
obligations under this Agreement.
(c) Tyson agrees to indemnify, defend and hold harmless Buyer and its
officers, directors, shareholders, controlling persons, affiliates and
representatives (the "Buyer Indemnitees"), and each of them, from, against, for
and in respect of any and all Losses suffered or incurred by a Buyer Indemnitee
and resulting from, based upon or arising out of any intentional breach of this
Agreement by Tyson or the fraud, gross negligence or willful misconduct of Tyson
in connection with the performance of its obligations under this Agreement.
(d) For purposes of this Agreement, a "Loss" shall mean any action,
suit, proceeding, claim, cost, damage, expense, liability, loss or obligation,
including but not limited to, interest or carrying costs, penalties, legal,
accounting and other professional fees and expenses incurred in the collection,
prosecution and defense of actions or claims and amounts paid in settlement
pursuant to the terms of this Agreement, that may be imposed or otherwise
incurred or suffered by the specified person (but a "Loss" shall not include
consequential, speculative or punitive damages unless asserted by a third
party).
9. TERMINATION. This Agreement shall terminate on the first anniversary
-----------
of the date hereof, but may be terminated earlier in accordance with the
following:
(a) upon the mutual written agreement of the parties;
(b) as to any Service provided hereunder, upon the lapse of fifteen
(15) days after Buyer has notified Tyson to cease providing such Service;
3
(c) by either Tyson or Buyer for material breach of any of the terms
hereof by Buyer or Tyson, as the case may be, if the breach is not corrected
within thirty (30) days after written notice of breach is delivered to the
defaulting party;
(d) by either Tyson or Buyer forthwith, upon written notice to Buyer
or Tyson, as the case may be, if Buyer or Tyson, as the case may be, shall
become insolvent or shall make an assignment for the benefit of creditors, or
shall be placed in receivership, reorganization, liquidation or bankruptcy.
Upon any such termination, Tyson shall be compensated for all Services performed
to the date of termination in accordance with the provisions of this Agreement.
10. FORCE MAJEURE. Any delays in or failure of performance by Tyson shall
-------------
not constitute a default hereunder if and to the extent such delay or failure of
performance is caused by occurrences beyond the reasonable control of Tyson,
including, but not limited to: acts of God or the public enemy; expropriation or
confiscation of facilities; compliance with any order or request of any
governmental authority; acts of war; riots or strikes or other concerted acts of
personnel; or any causes, whether or not of the same class or kind as those
specifically named above, which are not within the reasonable control of Tyson,
and which by the exercise of reasonable diligence, Tyson is unable to prevent.
11. CONFIDENTIALITY. Any and all information which is not generally known
---------------
to the public which is exchanged between the parties in connection with this
Agreement, or which is directly or indirectly obtained by one party from the
other in connection with the performance of Services hereunder, whether of a
technical or business nature, shall be considered to be confidential. The
parties agree that confidential information shall not be disclosed to any third
party or parties without the written consent of the other party. Each party
shall take reasonable measures to protect against nondisclosure of confidential
information by its officers and employees. Confidential information shall not
include any information (i) which is or becomes part of the public domain, (ii)
which is obtained from third parties who are not bound by confidentiality
obligations or (iii) which is required to be disclosed by law, regulation, legal
process or the rules of any state or federal regulatory agency or any national
stock exchange. It is further understood and agreed that money damages would
not be a sufficient remedy for any breach of this Section 11 and that the non-
breaching party shall be entitled to specific performance as a remedy for any
such breach. Such remedy shall not be deemed to be the exclusive remedy for
such breach but shall be in addition to all other remedies available hereunder,
at law or in equity, to the non-breaching party. The provisions of this section
shall survive the termination of this Agreement.
12. INDEPENDENT CONTRACTOR STATUS. Tyson shall be deemed to be an
-----------------------------
independent contractor to Buyer. Nothing contained in this Agreement shall
create or be deemed to create an employment, agency, joint venture or
partnership relationship between Buyer and Tyson.
4
13. ARBITRATION. If a dispute, controversy or claim arises out of or in
-----------
connection with the terms and conditions of this Agreement, it shall be
submitted to binding arbitration which shall be conducted as follows: (a) the
arbitrator shall be an independent third party knowledgeable of the beef further
processing and distribution industries and mutually satisfactory to Buyer and
Tyson; (b) the arbitrator, in conducting such arbitration, shall have access to
all relevant documents and records of the parties; (c) the arbitration shall be
conducted in accordance with the Commercial Arbitration Rules of the American
Arbitration Association in effect on the date such arbitration is commenced and
shall be final and binding on the parties hereto; and (d) all arbitration
proceedings shall be conducted in English in a location mutually agreed upon by
the parties.
14. AMENDMENT AND WAIVER.
--------------------
(a) This Agreement may be amended, or any provision of this Agreement
may be waived, provided that any such amendment or waiver will be binding upon
Tyson only if set forth in a writing executed by Tyson, and any such amendment
or waiver will be binding upon Buyer only if set forth in a writing executed by
Buyer.
(b) No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
15. NOTICES. Except as otherwise expressly set forth in this Agreement,
-------
all notices, demands and other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and will be
deemed to have been given when delivered personally, or by documented overnight
delivery service, or sent by telecopy, telex, or other electronic transmission
service, provided a confirmation copy is also sent no later than the next
business day by first class mail, return receipt requested. Notices, demands
and communications to Buyer or Tyson will, unless another address is specified
in writing, be sent to the address indicated below:
If to Tyson, to: Tyson Foods, Inc.
0000 Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxx
(000) 000-0000
(000) 000-0000 (FAX)
5
With a copy to: Tyson Foods, Inc.
0000 Xxxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attn: Xxxxx X. Xxx Xxxxxx, Esq.
(000) 000-0000
(000) 000-0000 (FAX)
If to Buyer, to: Gorges/Quik-to-Fix Foods, Inc.
x/x Xxxxxx, Xxxxx & Xxxxxx
Xxxxx 000
Twelve Piedmont Center
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx
(000) 000-0000
(000) 000-0000 (FAX)
With a copy to: Xxxxxx & Bird
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
(000) 000-0000
(000) 000-0000 (FAX)
16. ASSIGNMENT. This Agreement and all of the provisions hereof will be
----------
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by either party
without prior written consent of the other party; provided, however, that Buyer
may assign its rights hereunder to any lender to Buyer upon the condition that
such lender may only exercise any of Buyer's rights hereunder if Buyer is then
and continues to be in default under any credit agreement with such lender.
17. SEVERABILITY. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
18. NO THIRD PARTY BENEFICIARIES. This Agreement does not create any
----------------------------
rights in any person or party who is not a party to this Agreement.
6
19. NO STRICT CONSTRUCTION. The language used in this Agreement will be
----------------------
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any person.
20. SECTION HEADINGS. The headings of sections contained in this
----------------
Agreement are provided for convenience only. They form no part of this
Agreement and shall not affect its construction or interpretation. All
references to sections or subsections refer to the corresponding sections and
subsections of this Agreement. All words used herein shall be construed to be
of such gender or number as the circumstances require. This "Agreement" shall
mean this Agreement and the Exhibits and Schedule hereto as a whole and as the
same may, from time to time hereafter, be amended, supplemented or modified.
The words "herein," "hereby," "hereof," "hereinabove," and "hereinbelow," and
words of similar import, refer to this Agreement as whole and not to any
particular section, subsection, paragraph, clause or other subdivision hereof,
unless otherwise specifically noted.
21. COMPLETE AGREEMENT. This document and the documents referred to
------------------
herein or attached hereto contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.
22. GOVERNING LAW. The substantive law (and not the law of conflicts) of
-------------
the State of Delaware will govern all questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement.
23. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts (including by means of FAXed signature pages), any one of which
need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same instrument.
24. DEFINED TERMS. Any capitalized term used but not defined herein
-------------
(including in the Exhibits hereto) shall have the meaning set forth in the
Purchase Agreement.
[Signatures on Next Page]
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.
TYSON FOODS, INC.,
A DELAWARE CORPORATION
[Corporate Seal]
By: /s/ Xxxxx X. Xxx Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxx Xxxxxx
-----------------------------------
Title: Assistant Secretary
-----------------------------------
GORGES/QUIK-TO-FIX FOODS, INC.,
A DELAWARE CORPORATION
[Corporate Seal]
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Secretary
-----------------------------------
8
SCHEDULE 1
INITIAL COORDINATORS
FOR TYSON:
Name: Xxxx Xxxxxxx
Address: Tyson Foods, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
FOR BUYER:
Name: J. Xxxxx Xxxxxxx
Address: 0000 XXX Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
9
EXHIBIT A
COMPUTER PROCESSING, ACCOUNTING, REPORTS,
SCHEDULING, CUSTOMER SERVICE AND RELATED FUNCTIONS
STATEMENT OF INTENT
It is the intent of this agreement that Buyer be provided computer processing
and related business services necessary to operate the Business on an ongoing
basis, including but not limited to information systems support, computer
processing time, telecommunications access, reporting, documentation, training,
functional and technical support, interim processing of transactions, online
access and others.
Detailed system and process requirements not specified in this document but
necessary for ongoing operations of Buyer will be considered included in this
agreement by this statement of intent.
Services described by this agreement are defined according to the time periods
covered, and include Transition, Conversion, and Post Conversion Support
services. In some cases, the time periods overlap.
. Transition includes all time from moment of Closing to the point at which the
----------
last remaining application is converted, and focuses on those services
necessary to operate Buyer as a going concern in the absence of its own
established systems and processes.
. Conversion includes all time from the point at which conversion planning
----------
begins for the first application up to and including the point at which the
last remaining application is converted to Buyer. The focus of conversion
services is on those services necessary to convert existing Tyson systems and
processes being run on behalf of Buyer to Buyer's own systems and processes.
. Post Conversion Support includes all time from the point at which an
-----------------------
application is converted to Buyer systems to a point in time 60 days after
conversion date for that application. Each application will have a Post
Conversion Support period.
The terms "routine," "normal," and "reasonable" used throughout this document in
relation to Tyson services connote a level of service and performance that Tyson
management would expect of its own service departments.
SERVICES PROVIDED DURING TRANSITION
-----------------------------------
DATA PROCESSING
Applications
Application processing will be performed for the following applications in
support of the locations listed with an X. Table 1 is intended to represent
actual application processing services provided on the date of sale.
This service includes the appropriate handling and processing of all inbound
inputs, timely processing of inputs and printing and distribution of outputs
according to normal business priority.
TABLE 1
TABLE OF APPLICATIONS BY LOCATION
---------------------------------
SIOUX ORANGE
APPLICATIONS GARLAND HARLINGEN CENTER CENTER
------------ ------- --------- ------ ------
DECISION SUPPORT SYSTEMS
------------------------
Executive Information System (EIS) X X X X
PLANT SYSTEMS
-------------
Maintenance Management System X X X X
SIM/RF X X X X
Production Planning and Scheduling X X X X
WORKERS COMPENSATION X X X X
--------------------
SOE/INV/TRK
-----------
Sales Order Entry (SOE) X X X X
Inventory/Warehouse Mgmt (INV/WMS) X X X X
Trucking X X X X
MTP X X
FINANCIAL SYSTEMS AND HR SYSTEMS
--------------------------------
Purchasing Management X X X X
Vehicle Management X X X X
Materials Management X X X X
Vendor Application X X X X
2
GLM - General Ledger X X X X
FAM - Fixed Assets X X X X
CPM - Capital Project / CIR X X X X
APM - Accounts Payable X X X X
DAS - Deduct Admin X X X X
Payroll X X X X
*Insurance Benefits (per Buyer's
instructions) X X X X
*Cyborg HR System X X X X
*Time and Attendance X X X X
*Garnishments X X X X
*Credit Union X X X X
*Vision X X X X
*TALX X X X X
*Cobra X X X X
*PersMaster X X X
AS/400 X X X X
------
Product Specification X X
Xxxx of Materials X X
Production Line Scheduling X X
Product Costing X X
Lab Test Tracking X X
Blender System X X
Materials Management X X
Attendance Management X X
NOTES TO TABLE 1:
. Product specifications that have been converted to the new system should be
available in acceptable format to be dumped to tape for conversion purposes.
. The EIS system includes access to (in hard copy report form and not on-line
access) margin reports, cost accounting, fixed assets, inventory, and all
other data normally provided as part of this system.
. Lab tests and other data recorded on paper are considered to be data and are
transferable to Buyer.
. The PC-based Excel pricing system in marketing will be made available on
magnetic media along with authorization for its use and support in its use
from those within Tyson with knowledge of the system.
3
. The AS/400 applications are not currently in use at Garland and Harlingen.
However, both plants have access to the systems should they choose to use
them, and access to these systems will continue through transition.
. Each of the applications indicated by an asterisk (*) relates to human
resources/employee functions. With respect to these applications, Buyer will
provide Tyson with Buyer's preferred practices and policies, and the parties
will mutually determine a reasonable and practical method by which Tyson will
provide Services for Buyer in these application areas.
HARDWARE AND SOFTWARE
Hardware and software systems physically located in the four Facilities are to
be transferred to Buyer with the sale, and become property of Buyer, including
any third-party support agreements that are in place as of the date of sale,
including but not limited to the hardware and software shown in Table 1, except
any software that is proprietary to Tyson. Also, any hardware or software at
Tyson that is being stored on behalf of any of the Facilities, or is under
repair at any other facility or vendor, or for any reason is not located on site
but is the rightful property of one of the four Facilities, becomes property of
Buyer on the date of sale and should be transferred to Buyer in a timely manner.
Computer hardware and software, including but not limited to laptop/notebook
computers, in use by employees transferring to Buyer, regardless of whether they
are located at one of the four Facilities, will be transferred to Buyer.
PROCESS SERVICES
During the Transition period, there will be a need for certain business
processes to be performed by Tyson on behalf of Buyer. This will, in many
cases, require the commitment of Tyson resources (i.e. personnel) to perform the
duties described below. Some changes may be made by Buyer to daily duties and
responsibilities of those processing transactions on behalf of Buyer in order
to facilitate the transition.
As a condition of the sale, Tyson has agreed to provide process support for many
of the business functions necessary to continue smooth and efficient processing,
delivery, and accounting for customer orders and payments. It is the intent of
this agreement that Tyson employees acting on behalf of Buyer will do so in a
manner consistent with Tyson standards of operations and customer care,
notwithstanding exceptions expressly designated by Buyer.
In order to facilitate the transition of processes from Tyson employees to Buyer
employees, Buyer may require changes to processes that require more or less of
Tyson employee(s) time and effort. Also, toward this end, Tyson agrees to
provide training to Buyer employees in various areas including but not limited
to customers, products, shipping/delivery requirements, brokers, salesmen, and
other critical functions. The training may occur either at Tyson headquarters
or at Buyer, as designated by Buyer. Implicit in this agreement is access by
4
trainees to personnel and records located at Tyson headquarters, for periods of
time to be mutually agreed upon, but not less than is reasonable for training
purposes.
The functions to be provided by Tyson during the transition period include, but
are not limited to, the following:
BILLING/INVOICING
Responsible Party- Xxxx Xxxxxxxx, Billing Supervisor
Includes but not limited to invoice processing, exception handling,
bursting, decollating, preparing for mailing and mailing, and all
accounting and reporting processes required for adequate control.
Buyer will have the option of printing locally at the Garland Facility
any or all of the billing/invoicing forms and reports.
PAYROLL PROCESSING
Responsible Party - Xxxx Xxxxx, Payroll Manager
Plant sites will continue to gather time and attendance locally using
automated means for hourly and some clerical positions. Tyson will
provide full payroll processing services including printing and
delivery of checks and remittances, and the facilitation of direct
deposit where appropriate. Line and clerical personnel will be paid
weekly or 52 times per year. Management/salaried personnel will be
paid biweekly or 26 times per year. Monthly payroll exceptions will
be converted to biweekly. Buyer will provide stock forms for checks
and remittances.
Buyer will choose its own benefits provider, and will direct Tyson as
to the appropriate deductions and payments to be made for each payroll
period.
401k deductions will be terminated as of date of sale, as will any
applicable stock purchase programs.
The Human Resources department at Tyson will provide reasonable
assistance to Buyer's Human Resources department in preparing the
targeted jobs tax credits and other government program data.
Buyer will set up a separate transaction account for payroll
processing.
ACCOUNTS PAYABLE
Responsible Party -Xxxx Xxxxxxxxx, A/P Manager
Tyson will provide accounts payables processing and check printing and
mailing. Buyer will continue to use payables clerks at the plant
5
locations to match invoices with purchase orders and receiving
documents, and key the payables data into the system.
Sales and marketing and other miscellaneous expense data will be
collected and keyed at the Garland Facility.
ACCOUNTS RECEIVABLE/CASH APPLICATION/CREDIT
Responsible Party - Xxxxx Xxxxxxxxx, A/R Supervisor
Subject to the Collection Agreement (as defined in the Purchase
Agreement), Tyson will support Buyer by providing system support and
reporting for facilitating accounts receivable management, the
application of cash to open invoices, and the setting and managing of
credit and credit limits and exceptions. Buyer will assume
appropriate management decisions associated with credit processes
including granting initial credit and setting and changing credit
limits.
Tyson will continue to support lockbox processing, and has agreed to
provide separate lockbox processing at NationsBank of Dallas, Texas.
GENERAL LEDGER PROCESSING
Responsible Party - Xxx Xxxxx, Accounting Manager
Tyson will provide full general ledger processing for Buyer as a
separate company. Buyer will be granted authorization to make all
necessary entries to the general ledger including adjusting entries,
reclassifications, prior and current period adjustments, etc. Buyer
may make changes to the chart of accounts as required, subject to the
reasonableness of the request and Tyson's standard procedures.
BANK RECONCILIATION
Responsible Party - Xxx Xxxxx, Accounting Manager
Bank reconciliation will occur at Buyer, and Tyson will provide Buyer
original documents concerning deposits, statements, lockbox listings,
system reports, etc., necessary to perform full account
reconciliation.
SALES ORDER ENTRY/INVENTORY MANAGEMENT
Responsible Party - Xxxxx Xxxxxx, Manager, Sales Support
Sales order entry will require Tyson employees to be staffed as needed
to process orders in a timely fashion. These employees will be
resident in Tyson facilities and remain as Tyson employees, and may
be asked to perform related duties including pricing, deductions
processing, expediting, product prorating, electronic data interchange
orders (EDI), responding to bids, program paying processing,
promotions, and other duties as reasonably requested by Buyer.
6
Buyer will set prices and maintain the products and prices in the
system. Sales Order clerks will require a separate Purchase Order
number for Beef and Pork orders.
Buyer may, at its option, change the 1-800 inbound telephone number
used for beef and pork telephone orders. Buyer shall be responsible
for the cost of such change, and Tyson will accommodat this change
should it occur while orders are still being taken at Tyson
headquarters at Springdale.
PRICING
Responsible Party - Xxxxx Xxxxxx, Pricing Supervisor
A Tyson employee to be mutually determined will act as Pricing
Coordinator to verify order prices and publish/distribute price
schedules for Buyer, with all price information to be determined by
Buyer.
TRAFFIC/TRANSPORTATION
Responsible Party - Xxxxx XxXxxxxx, Director of Distribution
Tyson will continue to provide services related to truckload building
and the contracting of carriers for delivery of Buyer product to
customer and distributor locations. Tyson will also provide at the
request of Buyer intra- and interstate transfers of inventory.
INVENTORY AND WAREHOUSE MANAGEMENT, SALES ACCRUAL TRACKING
Responsible Party - Xxxxx Xxxxx, Director Sales and Distribution
Accounting
Buyer will continue to maintain regular and consigned inventory in
public and privately owned warehouses currently in use and at
additional locations designated by Buyer. Tyson will transfer all
Buyer inventory to accounts in Buyer's name at all inventory
locations. Buyer will be responsible for determining levels of
inventory to be held at each location.
It is understood by both parties that Buyer will establish its own
distribution network during the transition period, and may request
changes in process and procedure that will facilitate the transition.
Sales accrual tracking data will also be provided to Buyer on a
regular basis.
7
With respect to Sales Order Entry/Inventory Management, Traffic/
Transportation and Inventory and Warehouse Management, Sales Accrual
Tracking, Tyson shall continue to provide for all of Buyer's products
and customers all services that Tyson currently performs in connection
with the Business with respect to receiving, entering and processing
customer orders; scheduling production, storage and distribution of
products; providing customer service; and generally performing
logistical services. Without limiting the generality of the
immediately preceding sentence, Tyson will provide for Buyer to
maintain such regular and consigned inventory, in such amounts that
Buyer shall determine, in warehouses or other storage facilities which
are either owned or leased by Tyson or its subsidiaries and routinely
used by Tyson or its subsidiaries in conneciton with the Business. The
parties expressly agree, however, that the costs for the
transportation and storage of products shall be at Buyer's expense,
and Buyer shall pay the charges of any third-party provider of such
services that is scheduled by Tyson, or reimburse Tyson if it provides
such services (at rates that are reasonable and comparable to rates
charged by other providers in the marketplace and consistent with past
practices for the Business and for other Tyson business units).
TAX REMITTANCE
Responsible Party - Xxxxx Xxxxxxx, Director of Taxation
Tyson will remit sales and use taxes, payroll withholding taxes, and
supervise Buyer's selected agents in remittance of unemployment
insurance taxes to any and all taxing jurisdictions where such taxes
are due and payable. Buyer will provide Tyson with the applicable
Power of Attorney to perform these tasks.
Buyer reserves the right to access the Tyson records, files, data, and personnel
associated with the functions listed above for the purpose of performing routine
inspection and audits.
FORMS
Certain of the business functions listed above will require either new or
changes to existing computer printed forms, letterhead, invoices, and other
consumable items. Tyson agrees to make system changes to printed forms and
external reports to reflect new names and identifiers for Buyer. Buyer will
provide Tyson with those preprinted forms necessary to conduct business under
the new company name.
PRODUCTION OF REPORTS
Timing
8
Reports will be produced for Buyer on a timely basis and will be accurate and
free from defects as normally and routinely provided to Tyson management.
Delivery of reports
Reports will be delivered using normal and routine processes as defined by
those processes to deliver reports used in the months up to and including the
date of sale. This should include shipping reports to Buyer headquarters in
Garland, TX, and/or directly to the other three Facilities as defined by
normal and routine use.
9
ACCESS TO INFORMATION DATABASES
Online-databases
The telecommunications network will be available to Buyer 24 hours each day,
seven days per week through the final post conversion support period. Online
access, to the extent that it is provided on the date of sale, to all
databases related to or incidental to the applications listed in Table 1, will
be provided to Buyer employees using routine access policies and procedures.
New employees will be granted access in a timely manner, and terminated
employees will have access removed in a prudent and reasonable timeframe.
Response times and uptimes will be reasonable and will be no worse than
response times and uptimes provided to Tyson employees.
Additionally, Tyson will provide additional terminals and necessary
telecommunications to increase the number of available terminals at the
Garland, TX , Facility to a total of 15. Charges for this additional service
level will be paid by Buyer. The response times to all sites should be
maintained at levels incurred prior to the sale.
Archived databases
Access to archived data for three years prior to the date hereof, will be
granted to Buyer employees for the purposes of accessing prior period
information. Access, information, reports, and technical assistance will be
provided in a timely manner.
Hardcopy databases
To the extent that hardcopy data exist and related to the ongoing business of
Buyer, Tyson will provide access and/or a copy of such databases to Buyer for
use at their discretion.
HISTORICAL INFORMATION
Tyson will maintain three years historical data related to Buyer during the
transition period, at which time it will make historical data available to
Buyer. Access to historical information during the transition period will be
granted to Buyer employees in a manner consistent with that prior to the sale.
Reports of historical information will be produced according to routine business
practices at Tyson, and distributed to Buyer in a timely manner.
SYSTEM MAINTENANCE
Enhancements
Enhancements to current system processes will be made through routine business
procedures currently in process at Tyson, with Tyson providing a number of
10
hours of maintenance development per month at a level consistent with past
practices. Unused maintenance hours in any given months will carry over to
the following months. Enhancements and additional maintenance hours requested
by Buyer in excess of 100 will be billed as contemplated in Section 3 of this
Agreement.
Correction of "bugs"
From time to time, software applications fail to perform as designed for
various reasons. Tyson will apply routine business practices toward
correcting software "bugs" in a timely fashion and will prioritize the
correction effort in a manner consistent with standards used at Tyson. There
will be no charges for or limits to the effort of Tyson on behalf of Buyer
systems toward correcting system deficiencies defined as "bugs".
Development
Buyer will make every effort to limit the need for development of new
functionality to software application development during the transition
period. However, should the need arise, Tyson will apply its routine business
procedures and policies in establishing priority for development requested,
and Buyer will agree to pay charges related to development as contemplated in
Section 3 of this Agreement.
USER SUPPORT
Functional
Functional support is defined as providing expertise to Buyer system users in
answering questions related to how application software works. Functional
support will be provided by Tyson to Buyer employees during the transition,
conversion and post conversion support periods in a manner consistent with
standard Tyson procedures. This will include help desk and phone support and
research requests made by Buyer employees.
Technical
Technical support is defined as providing expertise and corrective services to
problems related to application processing that transcend software
functionality. An example would be in the area of telecommunications, i.e. a
terminal is "down," but the software appears to be working elsewhere in the
company. Technical support will cover any and all requests of a technical
nature to restore the system to normal operating mode. To the extent that the
technical problem is determined to reside with equipment owned entirely by
Buyer, or related to a specific Buyer location, Tyson will help facilitate
Buyer employees resolving the issue. During the conversion and post
conversion support periods, technical support requests from Buyer will be
given the priority necessary to facilitate such conversion.
11
Training
Tyson will provide system, application, functional and technical training to
Buyer employees to the extent that such training is not provided under
contract by a third party vendor. This training will be mutually determined,
and timing of delivery will be coordinated with Tyson. Due to the fact that
most of the packaged software in place at Tyson has been heavily modified,
Tyson will be responsible for training of packaged software as well as
software that is developed in-house.
ACCESS TO THIRD PARTY PROVIDERS
In many cases, Tyson has contracted with outside or third party providers for
software, hardware, telecommunications, functional and technical training and
support. To the extent that any service provided to Buyer during the transition
period involves a third party provider, Tyson will grant access to and use of
that provider to Buyer employees as if they were employees of Tyson. Buyer will
make every effort to rely on third party providers to answer questions and
receive support. All contact by Buyer with such third party providers shall be
only with Tyson's prior knowledge and approval.
DISASTER RECOVERY
Tyson will provide disaster recovery services necessary to support Buyer during
the transition period such that Buyer may resume operations in a reasonable
timeframe following a disaster. Disaster recovery plans and systems in place as
of the date of Closing, including but not limited to off-site processing sites,
contracts to provide disaster recovery services, telecommunications services,
and others, will be presumed to cover and include Buyer during the transition
period and extending through the conversion period. Disaster recovery plans,
policies and procedures will be made available to Buyer, and Buyer employees
will be kept updated with regard to changes to disaster recovery plans. Tyson
will include, where appropriate, Buyer employees in testing disaster recovery
preparedness.
DATABASE ADMINISTRATION
Normal and routine administration of all databases related to the list of
applications in Table 1 will continue during the transition period. From time
to time, special database administrative actions requested by Buyer will be
performed according to established priority and scheduling.
REMOTE ACCESS - EMAIL SYSTEMS
Buyer employees will be allowed all access and maintenance rights associated
with use of the corporate electronic mail systems. This will include Tyson
maintenance of the associated telecommunications systems and hardware necessary
12
to provide access and availability to all four Buyer locations, and to remotes
users such as salesmen who dial-in from time to time.
REPORT WRITER
Access to the various report writing utilities and software applications will
remain in use by Buyer employees during the transition period. Printed reports
will be delivered with daily printed reports produced by core applications and
included with daily shipments/deliveries.
ROUTINE CHANGES TO PRODUCTION SYSTEMS
Buyer will be made aware of all changes to production systems within a
reasonable timeframe prior to implementation of such changes. Training,
documentation, functional and technical support, and all other services
routinely provided to Tyson employees to implement the changes will be made
available to Buyer employees in a manner and timeframe conducive to effective
implementation.
Tyson will use its best efforts to avoid any changes to production systems that
may adversely impact the conversion of any application system listed in Table 1.
SYSTEM DOCUMENTATION
All system documentation currently in existence and that is developed in the
future relative to the applications in Table 1 will be made available to Buyer
at the same time it becomes available to Tyson employees. Tyson will provide at
least one copy per location of all pertinent documentation, and deliver each
copy to the individual location. All documentation relevant to Tyson owned
systems will be returned promptly following the transition period.
COMPUTER LICENSES
All licenses, contracts, bills of sale, and any other written proof of
ownership, right to do business with, right to access, etc., associated with
computer hardware, vendor support, telecommunications, written materials, or any
other aspect of business associated with Buyer and its acquired assets will be
transferred and/or made available to Buyer on date of Closing.
SERVICES PROVIDED DURING CONVERSION
-----------------------------------
Conversion of applications processes from Tyson to Buyer will occur in phases
over the course of the transition period. There will be one "conversion" for
each of the applications listed in Table 1. Application conversion sequence
and timing will be closely coordinated with Tyson, as will the transition of
business processes (i.e. cash application). It is the intent of Buyer to make
13
the conversion of all application systems at the earliest possible time while
not jeopardizing Buyer's ability to continue successful operation.
Software, hardware, communications and related decisions concerning systems and
processes at Buyer will be made by Buyer.
It is the intent of Buyer to secure services from Tyson necessary to perform a
successful, timely, accurate conversion or in continuing successful business
operations. The parties agree that to the extent that a particular conversion
service is not listed in this agreement, but would be required to meet the
objectives of Buyer in performing a successful, timely, accurate conversion, and
it is reasonable that the service be provided in support of conversion effort,
that service will be provided by Tyson, subject to charges to Buyer as
contemplated in Section 3 of this Agreement.
TECHNICAL SUPPORT
The first and most important step in conversion is conversion planning. Subject
to Section 3 of the Agreement, Tyson will assist with technical support
necessary to ensure that all required data is identified and prepared in a
format acceptable by the new system. This will include but is not limited to,
data mapping (from Tyson to the new system), designing and programming
conversion programs, running conversion programs and producing magnetic media to
support transferring the data to the new system, and assisting in conversion
balancing and reconciliation where appropriate.
File layouts
Tyson will provide file layouts and field level technical details for all
records, forms, data sets and/or databases (for the three-year period prior to
Closing) as required to perform data mapping and design of conversion
programs.
Tape dumps
In an effort to perform a successful conversion, Buyer may desire to perform
one or more trial runs of the conversion effort prior to performing the actual
conversion. This will require Tyson to provide trial run samples of
conversion tapes. Tyson agrees to provide these tapes, up to three valid and
readable tapes, for each application conversion, on a schedule to be agreed
upon by both parties.
Assistance in data mapping
Data mapping is the process of mapping each data field in the present Tyson
systems to data fields in the new Buyer systems. Tyson will participate in
data mapping to the extent that assistance is needed concerning various areas
of the current systems including but not limited to definitions and formatting
14
of data, chart of accounts, translation of codes, or specific processing
routines in the Tyson systems. Tyson will not be expected to participate in
understanding fields in the Buyer systems.
Temporary Interfaces
In the process of converting from one application system to another over a
period of time, there will be a need to design, program and implement
temporary interface programs that format and transfer data from one
application to one or more additional applications. Subject to Section 3 of
the Agreement, Tyson will assist with the technical and functional support
necessary to design, program and implement necessary conversion programs
during the conversion period. Tyson further agrees to continue the operation
of the interfaces through the final post conversion period.
Access to functional and technical specialists at Tyson
As other conversion issues arise, Tyson will provide reasonable and timely
assistance concerning functional and technical areas of the current Tyson
systems covered in this agreement.
POST CONVERSION:
----------------
After conversion of data from each Tyson application system to Buyer systems,
Tyson will maintain the converted system on its computer in a usable format for
a period of 60 calendar days. During that period of time, Tyson will continue
to provide functional and technical support necessary to resolve conversion
issues that arise after data conversion, and support the first month-end closing
process of Buyer for each application. At the end of the 60 day period, Tyson
may remove data associated with Buyer from computer systems and archived
databases.
Tyson will provide reasonable assistance and support during year-end closing
process of all application systems listed in Table 1.
OTHER ISSUES
------------
Points of Contact
Tyson will provide a single point of contact for Buyer to report and
coordinate resolution of all issues regarding services provided under this
Exhibit A. At least two alternate points of contact will be provided as back
up for the primary point of contact. The primary and alternate points of
contact together will be available from 8:00 am to 5:00 p.m. each business
day, and from 8:00 to 5:00 on each of the three days prior to any application
conversion, which may include weekends and holidays.
15
Notice of planned maintenance and downtime
From time to time system maintenance must be performed on an "emergency" basis
which may cause downtime to the application systems which was not scheduled
(unplanned). For purposes of this Agreement, unplanned maintenance or
downtime will be defined as any maintenance performed by Tyson in which
reasonable notice was not provided to Buyer. Tyson will make every effort to
notify Buyer of such maintenance effort prior to the maintenance being
implemented, to minimize its adverse impact.
16
EXHIBIT B
KITCHEN AND TEST FACILITY
Tyson will permit Buyer to use Tyson's kitchen, laboratory and other related
facilities that are used in connection with product research and development,
located at Tyson's Springdale, Arkansas facilities. Tyson will (i) permit
Buyer's employees to have full and complete access to such facilities, including
access to incidental supplies used in such research and development activities
(for example, spices and seasonings), and (ii) provide such Buyer's employees
with reasonable support services relating to their research and development
activities (including, but not limited to, purchasing supplies and
administrative and clerical support).
EXHIBIT C
TRAVEL PLANNING
Tyson shall provide for Buyer's employees such business travel planning services
as Tyson currently provides for its own employees, which currently is provided
through a third-party travel agency. Buyer shall be responsible for all costs
of its employees' travel.
