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Exhibit 10.21
AMENDED AND RESTATED
TRANSITION SERVICES AGREEMENT
THIS AMENDED AND RESTATED TRANSITION SERVICES AGREEMENT (this
"Agreement") is made and entered into as of November 4, 1999, between Tenneco
Packaging Inc., a Delaware corporation ("Packaging"), and Tenneco Inc., a
Delaware corporation to be renamed Tenneco Automotive Inc. ("Tenneco"), and
amends and restates the Transition Services Agreement entered into as of the
same date and by the same Parties.
RECITALS
WHEREAS, pursuant to the terms of that certain Distribution
Agreement dated November 3, 1999 by and between Tenneco and Packaging (the
"Distribution Agreement"), the parties have entered into this Agreement
regarding certain services to be provided by Packaging to Tenneco in connection
with the Automotive Business and certain services to be provided by Tenneco to
Packaging in connection with the Packaging Business.
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. The following terms, when capitalized
herein, shall have the meanings set forth below. All other capitalized terms
used but not otherwise defined herein shall have the meanings ascribed to them
in the Distribution Agreement.
"Affiliate" shall have the meaning ascribed to such term in
the Distribution Agreement, provided, however, that the Affiliates of each Party
for purposes of this Agreement shall be determined after giving effect to the
consummation of the Distribution.
"ITOC" shall mean the Information Technology Operations Center
of TBS located in Lincolnshire, Illinois.
"Party" shall mean either Packaging or Tenneco; "Parties"
shall mean Packaging and Tenneco.
"Services" shall mean, as applicable, the (a) Tenneco
Services, (b) Outsource Services, (c) Phase-out Services, (d) ITOC Services or
(e) Other Services.
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"Set-up Costs" shall mean any costs incurred to separate data
and establish a new database for a Party in order to provide a Service.
"TBS" shall mean Tenneco Business Services Inc.
1.2 OTHER TERMS. Other terms may be defined elsewhere in the
text of this Agreement or the Schedules and, unless otherwise indicated, shall
have such meaning throughout this Agreement and Schedules.
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein", and "hereunder", and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this 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. PROVISION OF SERVICES
2.1 PROVISION OF OUTSOURCE SERVICES.
(a) SERVICES. Subject to the provisions of Section 2.1(b)
below, for the period commencing on the date hereof and ending March 31, 2001,
Packaging shall provide or cause to be provided (through one or more of its
Affiliates and/or outside service providers to the extent utilized by the
Automotive Business as of the date hereof or engaged hereafter with the prior
written consent of Tenneco in accordance with the terms of Section 2.1(b)) to
Tenneco and its Affiliates the Payroll Processing and Related Services and
Accounts Payable and Related Services described on SCHEDULE A-1 hereto
(collectively, the "Outsource Services").
(b) POSSIBLE SALE OF OUTSOURCE SERVICES BUSINESS.
(i) The parties acknowledge that Packaging and its Affiliates
are presently engaged in negotiations with respect to the possible sale to a
third party of certain of the assets of Packaging and its Affiliates related to
the provision of the Outsource Services (the "Outsourcing Sale"). Packaging
shall not cause or permit an Outsourcing Sale to be consummated without the
prior written consent of Tenneco. Subject to the conditions described in Section
2.1(b)(ii), Tenneco agrees to consent to any Outsourcing Sale which is to a
purchaser (1) that is engaged in the business of providing
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services of the nature of the Outsource Services, or that is identified
specifically in paragraph 1 of the FAS Letter (as defined below), (2) that will
be providing Outsource Services to Packaging and its Affiliates, and (3) that is
not engaged in competition with the Automotive Business.
(ii) It shall be a condition to Tenneco's approval of an
Outsourcing Sale that, on or prior to the date such Outsourcing Sale is
consummated, the purchaser in the Outsourcing Sale enters into a separate
agreement with Tenneco for the provision of Outsource Services on terms which
will afford Tenneco and its Affiliates the pricing, volume and term of services
and other terms and conditions no less favorable to Tenneco and its Affiliates
than that required to be provided hereunder (assuming this Agreement continued
for the term of such separate agreement with such purchaser). If requested by
the purchaser in an Outsourcing Sale, Tenneco agrees that the term of the
services to be provided by such party, whether pursuant to a separate agreement
or an assumption of Packaging's obligations hereunder, may be extended for a
period which ends no later than November 4, 2004.
(iii) If Packaging consummates an Outsourcing Sale in
accordance with the provisions of this Section 2.1(b), Tenneco will agree to
reimburse the purchaser in such Outsourcing Sale for postage, communications,
and other reasonable and customary "pass through" charges incurred by that
purchaser in connection with its provision of the Outsource Services to Tenneco
and its Affiliates.
2.2 PROVISION OF PHASE-OUT SERVICES. Packaging shall
provide or cause to be provided (through one or more of its Affiliates and/or
outside service providers to the extent utilized by the Automotive Business as
of the date hereof or engaged hereafter with the prior written consent of
Tenneco) to Tenneco and its Affiliates the Financial Reporting, Accounting and
Consolidations, Cash Management and Tax services described on SCHEDULE A-2
hereto (collectively, the "Phase-out Services"), in each case for the applicable
periods for such services identified on SCHEDULE A-2.
2.3 PROVISION OF ITOC SERVICES. For the period commencing
on the date hereof and ending December 31, 2001, Packaging shall provide or
cause to be provided (through one or more of its Affiliates and/or outside
service providers to the extent utilized by the Automotive Business as of the
date hereof or engaged hereafter with the prior written consent of Tenneco) to
Tenneco and its Affiliates the telecommunication and information services
described on SCHEDULE A-3 hereto (collectively, the "ITOC Services").
2.4 PROVISION OF TENNECO SERVICES. Tenneco shall provide or
cause to be provided (through one or more of its Affiliates and/or outside
service providers to the extent utilized by the Packaging Business as of the
date hereof or engaged hereafter with the prior written consent of Packaging) to
Packaging and its Affiliates the Treasury and Cash Management Administration and
Accounting Services described on SCHEDULE A-4 hereto (collectively, the "Tenneco
Services"). Except as identified on SCHEDULE A-4, Tenneco will provide Tenneco
Services to Packaging for an initial term of six months
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following the date hereof (the "Tenneco Services Term"). Packaging may elect to
extend the Tenneco Services Term on a monthly basis for up to six additional
months (the "Tenneco Extension Term") by giving Tenneco written notice thirty
(30) days prior to the end of the Tenneco Services Term or each additional month
extension.
2.5 OTHER SERVICES. Specified human resources services will be
provided by Packaging to Tenneco and its Affiliates pursuant to the Human
Resources Agreement entered as of the date hereof between the Parties (the "HR
Agreement"). Until December 31, 2001, at the request of one Party, the other
Party will perform reasonable special administrative services for that Party, if
the other Party has the personnel and equipment reasonably necessary to provide
such additional services, for terms and at fees to be mutually agreed upon (the
"Other Services").
3. CONSIDERATION FOR SERVICES
3.1 CONSIDERATION FOR OUTSOURCE SERVICES. In consideration of
the Outsource Services provided hereunder, Tenneco shall pay Packaging the
services fees established in paragraph 2 of the fees, assets and staffing letter
agreement entered into by the Parties and effective as of November 4, 1999 (the
"FAS Letter").
3.2 CONSIDERATION FOR PHASE-OUT SERVICES. In consideration of
the Phase-out Services provided hereunder, Tenneco shall pay Packaging (1) the
services fees established in paragraph 3(a) of the FAS Letter for the period
during which the related services are provided and (2) a monthly general
administration fee (which includes the charge for LAN/WAN Support) established
in paragraph 3(b) of the FAS Letter through March 31, 2001.
3.3 CONSIDERATION FOR ITOC SERVICES. In consideration of the
ITOC Services provided hereunder, Tenneco shall pay Packaging a fee equal to (1)
an amount equal to the actual direct costs to Packaging to provide such ITOC
Services on a fully loaded basis without allocation of corporate overhead (the
"ITOC Direct Fee"), plus (2) an amount (the "ITOC Overhead Fee") equal to 50% of
the unreimbursed costs for general and administrative expenses directly related
to operating the ITOC in respect of the provision of such ITOC Services (the
"ITOC Overhead Expenses"), which costs shall specifically exclude (a) amounts
related to the severance of or retention payments for any employee and (b)
allocations of general and administrative expenses that were not directly
related to the operation of the ITOC, provided that any reduction of the costs
in clause (1) or (2) above from the cost to provide such Services as of the date
hereof (other than reductions due to a reduction in volume, pursuant to Section
3.6 or pursuant to the transactions contemplated by Section 5) shall be governed
by Section 3.5(d).
3.4 CONSIDERATION FOR TENNECO SERVICES. In consideration of
the Tenneco Services, Packaging shall pay Tenneco the services fees established
in paragraph 4 of the FAS Letter.
3.5 OTHER CONSIDERATION.
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(a) SET-UP COSTS. Each Party will reimburse the other Party
for one-half of the initial Set-up Costs actually and reasonably incurred by the
other Party or its Affiliates (directly or through the engagement of outside
service providers engaged hereafter with the prior written consent of the Party
obligated to reimburse the other) relating to the provision by the other Party
or its Affiliates of Services to the first Party or its Affiliates on the terms
and conditions and at the standards of performance set forth herein, including
the Set-up Costs in connection with an Outsourcing Sale. The Parties
specifically agree that Set-up Costs shall exclude the costs of any licenses or
third-party consents or any costs with respect to a Party providing for itself
Services which are provided to such Party by the other Party hereunder, which
costs are separately addressed herein.
(b) INCREASED VOLUME. If the volume of transactions for a
specific Service provided to a Party and its Affiliates exceeds the level which
historically has been utilized by that Party's Group during the 12 months prior
to the date hereof and, as a result, requires human or equipment resources in
excess of the level of resources allocated to such Service by the Party required
to provide such Service as of the date hereof, the additional cost associated
with the increased volume will be passed through directly to the Party whose
Group is receiving the Service.
(c) INTEGRATION OF ACQUIRED BUSINESSES. Each Party will
reimburse the other Party on a cost (time and materials) basis plus 10% to
integrate acquired businesses of the first Party and its Affiliates into the
Services provided or caused to be provided by the other Party hereunder.
(d) COST SAVINGS REBATE. Notwithstanding Section 3.3, if
Packaging or one of its Affiliates (or a purchaser in an Outsourcing Sale) is
able to reduce or cause the reduction of the direct costs incurred by it in
providing any Services provided to Tenneco or its Affiliates hereunder from the
direct costs to provide such Services as of the date hereof, including any
savings arising from an outsourcing arrangement, Packaging will pay Tenneco a
cost savings rebate equal to 50% of such savings, provided that Tenneco shall
receive the full benefit of all cost reductions which are attributable to its
volume reductions. Notwithstanding Section 3.3, if Packaging or one of its
Affiliates (or a purchaser in an Outsourcing Sale) is able to reduce the shared
costs incurred by it with respect to the Services provided to Tenneco or its
Affiliates hereunder from the costs to provide such Services as of the date
hereof, including any savings arising from an outsourcing arrangement, Packaging
will pay Tenneco a cost savings rebate equal to 25% of such savings. The amounts
payable by Packaging under this Section 3.5(d) are referred to herein as the
"Cost Savings Rebates." Packaging shall pay the Cost Savings Rebates to Tenneco
at the end of each six-month period of this Agreement, as a credit against fees
hereunder as contemplated by Section 10.2, provided that if the Cost Savings
Rebate exceeds the amount due hereunder, Packaging shall pay the balance in cash
to Tenneco. The Cost Ravings Rebate shall terminate in the event Tenneco is
acquired (whether by stock purchase, asset purchase, merger, or otherwise) by a
third party.
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3.6 THIRD-PARTY CHARGES. Packaging agrees to use its
reasonable best efforts to cause all third-party (i.e. other than from Packaging
or its Affiliates) charges related directly to the ITOC Services provided to
Tenneco and its Affiliates hereunder (the "Third-Party Direct Charges") to be
billed directly to Tenneco by such third-party, and such Third-Party Direct
Charges shall not be included in any ITOC Direct Fee.
3.7 NO DOUBLE CONSIDERATION. In no event shall any Party be
entitled to compensation or consideration under any provision of this Agreement
in respect of a matter for which such Party (or one of its Affiliates) has been
compensated pursuant to another provision hereof, the terms of the Distribution
Agreement or the terms of any Ancillary Agreement.
4. TERM AND TERMINATION
4.1 COMMENCEMENT OF TERM. The term of this Agreement shall
commence on the date hereof.
4.2 TERM OF OUTSOURCE SERVICES. Packaging shall provide or
cause to be provided the Outsource Services for the term set forth in Section
2.1(a), and otherwise in accordance with the provisions of this Agreement.
4.3 TERM OF PHASE-OUT SERVICES. Except as otherwise set forth
in this Section 4.3, Packaging shall provide or cause to be provided the
Phase-out Services for the term set forth in Section 2.2, and otherwise in
accordance with the provisions of this Agreement. Except for the Tax services
described on SCHEDULE A-2, Tenneco may discontinue all or any portion of the
Phase-out Services prior to the expiration of the term therefor at any time on
thirty (30) days prior written notice to Packaging. In the event Tenneco so
elects to discontinue all or any portion of the Phase-out Services, Tenneco
shall cease paying the service fees established pursuant to clause (1) of
Section 3.2 with respect to the discontinued Phase-out Services. In any event,
Tenneco shall continue to pay the general administration fee established
pursuant to clause (2) of Section 3.2 through March 31, 2001.
4.4 TERM OF ITOC SERVICES. Except as otherwise set forth in
this Section 4.4 or as contemplated by Section 5 hereof, Packaging shall provide
or cause to be provided the ITOC Services for the term set forth in Section 2.3,
and otherwise in accordance with the provisions of this Agreement. Tenneco may
discontinue all or any portion of the ITOC Services prior to the expiration of
the term therefor at any time on sixty (60) days prior written notice to
Packaging. In the event Tenneco so elects to discontinue all or any portion of
the ITOC Services, Tenneco shall (1) no longer be required to pay the portion of
the ITOC Direct Fee with respect to the ITOC Services which have been
discontinued (other than third party costs related to the provision of such
portion of the ITOC Services, to the extent such costs will continue to be
incurred by Packaging even though such services have been discontinued), and (2)
continue to pay the ITOC Overhead Fee through December 31, 2001.
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4.5 TERM OF TENNECO SERVICES. Tenneco shall provide or cause
to be provided the Tenneco Services for the term (including any extension of
such term) set forth in Section 2.4, and otherwise in accordance with the
provisions of this Agreement.
4.6 SURVIVAL. Sections 5, 6, 7, 8, 9, 10, 11.2, 11.3, 11.4,
13 and 14 shall survive termination of this Agreement or the provision of
any Services hereunder.
5. TRANSITION OF ITOC SERVICES
5.1 GENERAL. Tenneco and Packaging agree to cooperate and work
together in good faith so that, on or before the end of the term contemplated by
Section 2.3, Packaging will have completely conveyed and transferred to Tenneco
and/or its Affiliates licenses, leases, equipment and other assets and
operations, free and clear of any liens and encumbrances, that will enable
Tenneco to provide for itself and its Affiliates the ITOC Services at the same
level of quality and quantity as has been utilized by the Automotive Business
during the 12 months prior to the date hereof, subject to increase to reflect
increased volume for which Packaging is compensated pursuant to Section 3.5, all
at Tenneco's cost (subject to Section 5.6 hereof). Neither Tenneco nor any of
its Affiliates will be required to pay any additional consideration to Packaging
or its Affiliates in respect of such conveyance and transfer.
5.2 TRANSFERS OF OWNED AND LEASED EQUIPMENT. Without limiting
the generality of Section 5.1, as soon as practical after the date hereof
Packaging agrees to:
(a) Use commercially reasonable efforts to cause any lease of
equipment which is dedicated to providing ITOC Services to the Automotive
Business to be assigned to and assumed by Tenneco.
(b) Cause any owned equipment which is dedicated to providing
ITOC Services to the Automotive Business to be assigned to Tenneco.
The costs of any assignments shall be borne by Tenneco.
5.3 MAINFRAME. Without limiting the generality of Section 5.1,
with respect to the mainframe computer system located at the ITOC , Packaging
and Tenneco agree to negotiate in good faith a mutually satisfactory arrangement
whereby Tenneco shall be granted access to and the right to use the mainframe.
5.4 TRANSFERS OF EMPLOYEES. Without limiting the generality of
Section 5.1, Packaging agrees to cooperate and work with Tenneco to encourage
and cause any employee of Packaging or its Affiliates whose primary
responsibility is to provide an ITOC Service to the Automotive Business to
accept employment with Tenneco or one of its Affiliates when such ITOC Service
is transitioned to Tenneco pursuant hereto.
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5.5 FACILITY LEASE. Without limiting the generality of Section
5.1, upon completion of the transition of the ITOC Services to Tenneco at the
end of the term contemplated by Section 5.1 hereof, Tenneco shall sublease 50%
of the ITOC until April 30, 2013, such sublease to include raised floor,
control, lab and office space substantially equivalent to that retained by
Packaging or its Affiliates, provided that Packaging shall not be required to
incur any expenses in connection therewith. The rent under such sublease shall
include 50% of all costs to occupy, maintain and operate the ITOC facility.
5.6 COSTS AND EXPENSES. Each party will pay its own internal
costs incurred by it or its Affiliates in connection with the transition of the
ITOC Services to Tenneco as contemplated by this Section. Notwithstanding
anything to the contrary contained herein, to the extent Tenneco or its
Affiliates assume any expenses from Packaging or its Affiliates in connection
with the transition of ITOC Services pursuant to this Section 5, (1) such
assumed expenses shall not be included in the ITOC Direct Fee or ITOC Overhead
Expenses for purposes of Section 3.3 and (2) the ITOC Overhead Fee shall be
reduced by 50% of the amount of such assumed expenses (not duties and
responsibilities) that were ITOC Overhead Expenses.
6. TRANSFER OF ASSETS TO TENNECO
6.1 TRANSFER OF ASSETS TO TENNECO. Effective as of the date
hereof, Packaging shall, and shall cause its applicable Affiliates to, sell,
assign, transfer and convey to Tenneco (or one of Tenneco's Affiliates as
directed by Tenneco) all of the right, title and interest of Packaging and its
Affiliates in and to the assets identified in paragraph 5 of the FAS Letter,
free and clear of any and all liens and encumbrances.
7. CERTAIN EMPLOYEES
7.1 OFFER OF EMPLOYMENT. Effective as of the date hereof,
Tenneco shall offer employment to the individuals identified in paragraph 6 of
the FAS Letter (the "Employees") at Tenneco's facility in Lake Forest, Illinois
on terms and conditions that otherwise are equivalent to the terms and
conditions of their employment by TBS as described in materials provided to
Tenneco by TBS prior to the date hereof. Those Employees who accept such offer
of employment are referred to herein as the "Transferred Employees" and those
Employees who do not accept such offer of employment are referred to herein as
the "Non-Transferred Employees."
7.2 RESPONSIBILITY FOR TRANSFERRED EMPLOYEES. From and after
the date hereof, the Transferred Employees shall be considered employees of the
Automotive Group for purposes of the Human Resources Agreement, dated as of the
date hereof, by and between the Parties (the "Human Resources Agreement").
7.3 RESPONSIBILITY FOR NON-TRANSFERRED EMPLOYEES. Packaging
shall use reasonable efforts to cause TBS to continue the employment of the
Non-Transferred Employees with TBS on terms and conditions equivalent to the
terms and conditions of their employment by TBS immediately prior to the date
hereof, until such
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time as Tenneco directs Packaging to terminate such employment. At such time,
Packaging agrees to cause the Non-Transferred Employees to be terminated by TBS
(or transferred to a function that is not the responsibility of Tenneco) at such
time as may be specified in Tenneco's direction. Notwithstanding anything to the
contrary contained in the Human Resources Agreement, Tenneco shall reimburse
Packaging for all compensation, retention payments and severance payments paid
by TBS to such Non-Transferred Employees, so long as such compensation and
payments are made pursuant to terms and conditions of employment applicable to
the Non-Transferred Employees as provided to Tenneco by TBS pursuant to Section
7.1.
7.4 SEVERANCE AND RETENTIONS. Notwithstanding anything herein
or in the Human Resources Agreement to the contrary, (1) severance and retention
payments reasonably incurred by either Party in respect of employees then
providing Services to each Party's Group hereunder shall be borne and paid 50%
by Tenneco and 50% by Packaging and (2) severance and retention payments
reasonably incurred by either Party in respect of employees then providing
Services exclusively to the other Party's Group hereunder shall be borne and
paid 100% by the Party whose group has received such Services.
8. THIRD PARTY CONSENTS AND LICENSES
8.1 SEPARATION. With respect to any hardware or software
licenses that are utilized as of the date hereof by both the Automotive Business
and the Packaging Business related to the Services to be provided hereunder, the
Parties agree to cooperate and use their reasonable best efforts to cause, on or
before the expiration of the relevant terms hereunder, such licenses to be
separated and allocated between the Parties so that Tenneco receives a number of
such licenses that is consistent with the historical usage of the licensed
hardware or software by Tenneco and its Affiliates.
8.2 FEES. The Parties will cooperate and use their reasonable
best efforts to obtain the consents or licenses of any relevant third party
required to (1) provide or have provided any of the Services contemplated by
this Agreement, (2) effect the transition of the ITOC Services to Tenneco as
contemplated by Section 5 hereof or (3) effect the separation of the licenses as
contemplated by Section 8.1 hereof. If any consent or license to provide or have
provided any of the Services contemplated by this Agreement cannot be obtained,
the Party required to provide the related services will arrange for alternative
methods of delivering the necessary Services in the manner provided in this
Agreement. Costs relating to obtaining such consents or licenses or for
providing any alternative method of delivering the necessary service shall be
shared 50% by Packaging and 50% by Tenneco. Subject to Section 5.6, Tenneco will
pay the costs, if any, to effect the transition of the ITOC Services to Tenneco
as contemplated by Section 5 hereof.
9. SAP/HR PAYROLL PROJECT
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9.1 PROJECT CONSTRUCTION IN PROGRESS. With respect to the
SAP/HR payroll project which Tenneco and Packaging are jointly pursuing as of
the date hereof (the "Project"), effective as of the date hereof Packaging shall
allocate to Tenneco 50% of the construction in progress balance (cash payments
to date) for the Project which appears on the books and records of Packaging.
9.2 RESPONSIBILITY FOR AND COMPLETION OF PROJECT. Packaging
and Tenneco shall each use its commercially reasonable efforts to cause the
Project to be completed according to the plan for the Project in effect as of
the date hereof. Ownership over the Project and any construction in progress
with respect to the Project shall be shared 50% by Tenneco and 50% by Packaging.
Packaging shall retain project management responsibility.
9.3 COSTS TO COMPLETE.. All costs to complete the Project
shall be incurred directly Packaging. Tenneco shall reimburse Packaging for 50%
of the costs reasonably incurred by Packaging in connection with the completion
of the Project.
10. BILLING, PAYMENT AND AUDIT
10.1 OUTSOURCE, PHASE-OUT AND TENNECO SERVICES; PROJECT. The
consideration set forth in Section 3 for the Outsource and Phase-out Services
shall be billed on a calendar monthly basis by the Party providing the service,
in advance on the first day of each month. In addition, Packaging shall xxxx
Tenneco monthly for 50% of the costs reasonably incurred to complete the Project
described in Section 9 hereof. Each Party shall remit the amount due for the
applicable Services to the other Party within fifteen (15) days after receipt of
any such xxxx.
10.2 ITOC SERVICES.
(a) ESTIMATED MONTHLY PAYMENTS. For the term of the ITOC
Services, Tenneco shall pay to Packaging a monthly fee in the amount established
in paragraph 7 of the FAS Letter, less the amount of any Third Party Direct
Charges for the immediately preceding month (the "Estimated Monthly Payment").
(b) WORKSHEET. Within 60 days following the end of each
six-month period during which Packaging is obligated to provide or cause to be
provided Services to Tenneco and its Affiliates pursuant hereto and within 60
days following the termination of Packaging's obligations to provide Services
hereunder, Packaging shall prepare, or cause to be prepared, and deliver to
Tenneco a written worksheet setting forth Packaging's determination (a
"Worksheet") of the amount of any ITOC Overhead Expenses, any ITOC Direct Fees
and ITOC Overhead Fees payable by Tenneco, and any Cost Savings Rebates payable
to Tenneco, pursuant to this Agreement, in respect of such period.
(c) REVIEW OF WORKSHEET. Tenneco shall complete its review
of each Worksheet within 30 days after the date on which the Worksheet is
delivered to Tenneco.
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In the event that Tenneco determines that any item reflected on the Worksheet
has not been determined on the basis set forth in this Agreement, Tenneco shall
so notify Packaging in writing (the "Objection"), on or before the last day of
such 30-day period, setting forth a specific description of the basis or bases
of the Objection and the adjustments to the Worksheet which Tenneco believes
should be made. Packaging shall have 30 days after the delivery of the Objection
to review and respond to the Objection and the Parties shall attempt in good
faith to reach an agreement with respect to any matters in dispute. If Tenneco
and Packaging are unable to resolve all of their differences within 45 days
after delivery of the Objection, they shall refer their remaining differences to
an internationally recognized firm of independent public accountants as to which
Tenneco and Packaging shall mutually agree (the "CPA Firm").
(d) DISPUTES REGARDING WORKSHEET. The CPA Firm shall
determine, acting as experts and not arbitrators, on the basis of the standards
set forth in this Agreement, and only with respect to the remaining differences
so submitted, whether and to what extent, if any, the items reflected on the
Worksheet require adjustment. The CPA Firm's determination shall be conclusive
and binding upon Tenneco and Packaging and shall be set forth in a written
determination of the CPA Firm. The fees and disbursements of the CPA Firm shall
be shared equally by Tenneco and Packaging. Tenneco and Packaging shall each
make readily available to the CPA Firm all relevant books and records and any
work papers (including those of their respective accountants) relating to the
Worksheet, and all other items reasonably requested by the CPA Firm. As used
herein, the term "Final Worksheet" shall mean (i) any Worksheet as delivered by
Packaging in the event no Objection is delivered to Packaging during the 30-day
period specified above, or Tenneco and Packaging so agree, (ii) the Worksheet,
adjusted in accordance with the Objection in the event that Packaging does not
respond to such Objection within the 30-day period following receipt by
Packaging of such Objection, (iii) the Worksheet, as adjusted by the mutual
agreement of the Tenneco and Packaging or (iv) the Worksheet, as determined by
the CPA Firm pursuant hereto if the Tenneco and Packaging are unable to reach a
mutual agreement and refer their remaining differences to the CPA Firm.
(e) ACCESS. Packaging shall provide Tenneco and its
accountants full access to the books and records, any other information,
including work papers of its accountants, and to any employees to the extent
necessary for Tenneco or its accountants to review any Worksheet. Tenneco and
its accountants shall have full access to all information used by Packaging in
preparing any Worksheet, including the work papers of its accountants.
(f) ADJUSTMENT PAYMENT BASED ON FINAL WORKSHEET. If the ITOC
Direct Fees plus ITOC Overhead Fees (less any Cost Savings Rebates) for any
period as reflected on the Final Worksheet for that period exceed the Estimated
Monthly Payments made by Tenneco to Packaging in respect of that period, Tenneco
shall pay such excess, together with accrued interest thereon from the date when
such excess was originally due to the date of payment calculated at the rate of
8.5% per annum, to Packaging. If the Estimated Monthly Payments made by Tenneco
to Packaging in respect of any six-month
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period exceed the ITOC Direct Fees plus ITOC Overhead Fees (less any Cost
Savings Rebates) for any that period as reflected on the Final Worksheet for
that period , Packaging shall refund such excess, together with accrued interest
thereon from the date such excess was originally paid to Packaging to the date
of refund calculated at the rate of 8.5% per annum, to Tenneco. Any payment to
be made pursuant to this Section 10.2(e) shall be payable 10 business days after
determination of the applicable Final Worksheet. Any such payment shall be paid
by wire transfer of immediately available funds to an account designated by
Tenneco or Packaging, as applicable.
(g) FEES AND COSTS. To the extent a Party is obligated to
reimburse the other Party in respect of any fees, costs or expenses not subject
to Section 10.1 or 10.2, above, such reimbursement shall be made promptly upon
receipt by the reimbursing Party of a written request for reimbursement from the
other Party.
11. WARRANTIES AND LIABILITIES
11.1 LEVEL OF PERFORMANCE. EACH PARTY WARRANTS THAT THE
SERVICES PROVIDED HEREUNDER BY IT (OR THROUGH ITS AFFILIATES OR OUTSIDE SERVICE
PROVIDERS) UNDER SCHEDULES A-1 TO A-4 WILL BE PERFORMED IN A MANNER AND AT A
LEVEL OF VOLUME AND QUALITY AT LEAST EQUIVALENT TO THE MANNER, VOLUME AND
QUALITY STANDARDS AT WHICH SUCH SERVICES HAVE HERETOFORE BEEN PROVIDED BY THAT
PARTY OR ITS AFFILIATES TO THE OTHER PARTY AND ITS AFFILIATES DURING THE TWELVE
(12) MONTH PERIOD PRIOR TO THE DISTRIBUTION DATE AND AT A DEGREE OF CARE AND
SKILL NO LESS THAN IT PROVIDES WITH RESPECT TO SIMILAR SERVICES IT PROVIDES OR
HAS PROVIDED FOR ITS OWN PURPOSES.
11.2 DISCLAIMER OF YEAR 2000 COMPLIANCE WARRANTY. EACH PARTY
AND ITS AFFILIATES EXPRESSLY DISCLAIM ANY WARRANTIES THAT THE SERVICES PROVIDED
UNDER THIS TRANSITION SERVICES AGREEMENT 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.
11.3 DISCLAIMER OF ALL OTHER WARRANTIES. EXCEPT AS
EXPRESSLY PROVIDED HEREIN, EACH PARTY AND ITS AFFILIATES DISCLAIM ALL OTHER
WARRANTIES INCLUDING THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO ANY SERVICES PROVIDED HEREUNDER.
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11.4 LIMITATION ON LIABILITY. EACH PARTY ACKNOWLEDGES THAT
THE OTHER PARTY IS NOT IN THE BUSINESS OF PROVIDING SERVICES OF THE TYPE
CONTEMPLATED BY THIS AGREEMENT, AND THAT SUCH SERVICES ARE PROVIDED ON A
TEMPORARY BASIS, SOLELY AS AN ACCOMMODATION. ACCORDINGLY, EACH PARTY
ACKNOWLEDGES THAT A PARTY'S MAXIMUM LIABILITY TO, AND THE SOLE REMEDY OF, THE
OTHER PARTY FOR BREACH OF THIS TRANSITION SERVICES AGREEMENT (EXCLUDING GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) SHALL BE FOR THE FIRST 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. HOWEVER, A PARTY SHALL NOT BE
LIABLE TO THE OTHER PARTY FOR ANY BREACH OF THIS TRANSITION SERVICES AGREEMENT
IF EITHER (A) THE FIRST PARTY IS UNABLE TO PERFORM THE PARTICULAR SERVICE DUE TO
THE OTHER PARTY'S FAILURE TO PROVIDE PROPER GUIDANCE, REQUISITE ASSISTANCE OR
REQUISITE COOPERATION AS IDENTIFIED IN SCHEDULES X-0, X-0, X-0 or A-4 AND (B) TO
THE EXTENT THE OTHER PARTY CONTRIBUTED TO SUCH BREACH.
11.5 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
AGREEMENT, WHETHER RESULTING FROM NEGLIGENCE OF A PARTY OR OTHERWISE.
12. 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, except to the extent
such failure or delay is due to such Party's failure to maintain disaster
recovery provisions that are customary in nature and scope (based on historical
practices) to minimize the impact of any such event.
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13. 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 the other Party and/or in which property rights have been assigned
or otherwise conveyed to the other Party, 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. The disclosure
and use of any such proprietary information shall be subject to and governed by
the terms of the Distribution Agreement.
14. MISCELLANEOUS
14.1 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 Packaging:
Tenneco Packaging Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Tenneco Packaging Inc.
0000 Xxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
to Tenneco:
Tenneco Automotive Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
with a copy to:
Tenneco Automotive Inc.
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000 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
or to such other address as either 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.
14.2 MODIFICATION; WAIVER; SEVERABILITY. Subject to the
provisions of Section 9.08 of the Distribution Agreement, this Agreement and the
FAS Letter may not be amended or modified except in a writing executed by each
of the parties hereto. The failure by any party to exercise or a delay in
exercising any right provided for herein shall not be deemed a waiver of any
right hereunder. Whenever possible, each provision of this Agreement and the FAS
Letter will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the FAS Letter 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 this Agreement or the FAS letter.
14.3 ASSIGNMENT. The provisions of this Agreement and the
FAS Letter shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective permitted successors and permitted assigns.
This Agreement and the FAS Letter shall be assignable in whole in connection
with a merger or consolidation or the sale of all or substantially all the
assets of a party hereto so long as the resulting, surviving or transferee
entity assumes all the obligations of the relevant party hereto by operation of
law or pursuant to an agreement in form and substance reasonably satisfactory to
the parties to this Agreement. Otherwise this Agreement and the FAS Letter shall
not be assignable, in whole or in part, directly or indirectly, by any party
hereto without the prior written consent of the other, and any attempt to assign
any rights or obligations arising under this Agreement and the FAS Letter
without such consent shall be void.
14.4 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF
FORUM. THIS AGREEMENT AND THE FAS LETTER 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 9.17 OF THE DISTRIBUTION AGREEMENT.
14.5 COUNTERPARTS. This Agreement and the FAS Letter 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.
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14.6 TERMINATION. This Agreement and the FAS Letter may be
terminated at any time prior to the Distribution by and in the sole discretion
of Tenneco without the approval of Packaging. In the event of such termination,
no party shall have any liability of any kind to any other party or any other
person. After the Distribution, this Agreement and the FAS Letter may not be
terminated except by an agreement in writing signed by all of the parties hereto
or as expressly contemplated herein with respect to the termination and
discontinuation of Services provided hereunder.
14.7 PACKAGINGCORPORATION OF AMERICA. Notwithstanding
anything set forth to the contrary, the Agreement does
not cover and shall not be construed to provide any
services to Packaging Corporation of America.
14.8 ENTIRE AGREEMENT. This Agreement, together with the
schedules hereto, the FAS Letter and the portions of
the HR Agreement regarding the provision of human
resources services, constitute the entire agreement
between the Parties with respect to the subject
matter hereof and thereof and shall supersede all
previous negotiations, commitments and writings with
respect thereto.
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. TENNECO INC.
By: By:
----------------------------- ---------------------------
Name: Name:
--------------------------- -------------------------
Title: Title:
-------------------------- ------------------------
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SCHEDULE A-1
OUTSOURCE SERVICES
Packaging shall provide or have provided (as set forth in the
Agreement) to Tenneco (and its Affiliates) the following Outsource Services:
1. Payroll Processing and Related Services.
a. Interfacing benefits elections to the Integral (or its
replacement) payroll system to maintain appropriate payroll
deductions, update benefits data, and support existing
financial and third party interfaces;
b. Time and attendance data processing, including ensuring that
time data is received from all Tenneco locations assigned to
a particular payroll run (note: time and attendance files
received from Tenneco after the Packaging published deadline
may be defaulted to the standard hours (40 hours weekly/80
hours bi-weekly) for the affected payroll run); provided,
however, Packaging will use all reasonable efforts to
accommodate Tenneco in special circumstances in which time
and attendance files are not received prior to the Packaging
published deadline before defaulting to the standard hours;
in any event, Tenneco will advise Packaging in advance that
deadlines will not be met. Tenneco will reimburse Packaging
for any costs associated with processing late time and
attendance files, except where Packaging is responsible, in
whole or part, for the delay;
x. Xxxxx to net processing, i.e., entering and verifying payroll
transactions (W4 changes, special pay, etc.); resolving out of
balance batches and time data errors sent in from Tenneco
locations; verifying and balancing the payroll run;
transmitting the direct deposit (ACH); and printing, sealing,
and boxing paychecks and advices;
d. Tax filings, withholdings, deductions and reporting;
e. Assist Tenneco locations with processing mass transactions for
merit increases, gainsharing, data changes, etc. (requests
must be received per the Packaging published lead time in
order to ensure on time processing);
f. Payroll processing related to domestic and international
relocation transactions and coordination of expatriate and
domestic outside service providers and compliance tax
reporting;
g. Garnishments and wage attachments and third party remittances;
Packaging will collect and retain any court ordered
garnishment fees relating to Tenneco employees;
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h. Check preparation (including off-cycle and on demand checks)
and direct deposit administration (only demand requests
received by 1:00 p.m. CST may be processed and distributed the
same day);
i. Distribute payroll checks and advices based on a mutually
agreed upon schedule to be published by Packaging;
j. Process year-end adjustments (true-ups, etc.), as well as
incentive bonuses, gainsharing, merit increases, benefits
enrollment, relocation adjustments, etc., and support federal,
state and local tax reporting, including preparation of W2
forms;
k. Help desk support for answering payroll questions from Tenneco
employees or operations personnel from 7:00 a.m. CST to 6:00
p.m. CST, Monday through Friday (except for mutually agreed
upon corporate holidays), and voice response unit employee
assistance to handle employee inquiries through an 800 number;
l. Security administration for the payroll system, subject to
mutually agreed upon standards for system access;
m. Payroll system enhancement requests submitted by Tenneco that
require more than three (3) days of programming effort by
Packaging may be charged to Tenneco;
n. Interface payroll documents will be posted from the Integral
payroll system. Package will review the SAP job error log
daily and work with Tenneco personnel to resolve
discrepancies;
o. Replace the Integral payroll system with the SAP HR/payroll
system within the scope of the defined project;
p. Provide Tenneco with data necessary to compile the annual
proxy statement pursuant to a mutually agreed upon time
schedule; and
q. Payroll Accounting Related Services.
(i) Payroll withholding and tax liability
reconciliations. Journal entry reconciliation
(reclassification and/or corrections), interface
error management and the reconciliation of amounts,
other than for benefit related items, that Tenneco
employees have deducted from their paychecks to
verify that the amounts withheld are paid. The
reconciliation process also includes the
identification and correction of
mapping/classification issues.
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(ii) Payroll Disbursement Accounts. Reconciling the
Tenneco Payroll Disbursement Account at Bank of
America (or other Tenneco-designated bank) utilizing
the data from the payroll (currently Integral)
system, as well as transactions that are filtered
through one or more other systems before they reach
SAP's general ledger.
2. Accounts Payable and Related Services.
a. Document Management/Imaging. Appropriate invoice documents
will be scanned by optical reading equipment, tested for
readability, committed to invoice processing queues and
assigned batch numbers. Hard copies of batched invoices with
assigned batch numbers filed on site for approximately 90 days
will be moved to off-site storage. Imaged invoices will be
linked to SAP documents and will be available for review by
all Tenneco plants/facilities with users established on
Filenet software;
b. Invoice Processing of Imaged Documents. Imaged invoices will
be manually inputted (commonly referred to as "posted") into
the SAP system and matched to the proper purchase order number
or cost element/cost center number. If an imaged invoice does
not contain required information, the invoice will be:
(i) Parked" because of inadequate purchase order or cost
element/cost center information and further action is
required by Packaging's accounts payable staff or
(ii) Entered in the SAP system as "non-compliant." A
letter will be sent to the vendor identifying the
reason the invoice cannot be processed. Purchase
order invoices that do not match (within a tolerance
level) the receiving document or the purchase order
price will be "blocked" by the SAP system and
require corrective action by the Tenneco purchase
requisitioner or buyer. Tenneco will provide
Packaging with documentation outlining the
appropriate buyer assignments by vendor. This
documentation will include authorization for
Packaging to release payments to the appropriate
vendor based on the buyer's approval. At the
direction of the Tenneco purchase requisitioner or
buyer, Packaging will clear the blocked document
by applying the document to a different purchase
order or line number on the purchase order or by
processing a sub-debit to the same purchase order
line;
c. Check Request Processing. Requests for check payments received
via the Lotus Notes database will be processed for payment
with the proper authorization and cost element/cost center
number. Tenneco will be responsible for identifying in writing
each Tenneco employee who may
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utilize the check request process and the level of approval
authority for such Tenneco employee;
d. Evaluated Receipt Settlement (ERS) Processing. On a mutually
agreed upon time schedule, Packaging will execute the SAP job
that will match purchase order and goods receipt documents to
create ERS invoices for payment. Tenneco will be responsible
for providing Packaging with accurate receiving and remit data
on the goods documentation and the correct purchase order
pricing. After executing the SAP job, Packaging will review
the SAP ERS error log daily and work with the appropriate
Tenneco personnel to resolve discrepancies;
e. Recurring Payment Processing. Tenneco will identify in writing
goods and services that can be purchased utilizing a recurring
payment process. Tenneco will provide Packaging with the start
and end dates on payments and the amounts to be paid.
Packaging will then create payment documents and schedule
settlement dates for each payment. Packaging will review the
SAP job error log daily and work with the appropriate Tenneco
personnel to resolve discrepancies;
f. Tenneco Interface Processing. Invoice documents will be posted
in the SAP system. Packaging will review the SAP job error log
daily and work with Tenneco personnel to resolve
discrepancies;
g. Payment of Posted Documents. Invoices, check requests and
other documents will be scheduled for payment based on terms
outlined in the purchase order or in the accounts payable
vendor master file. Tenneco personnel will be responsible for
managing the payment terms placed on the purchase orders and
the payment terms provided for in the accounts payable vendor
master file.
(i) Payments will be scheduled according to payment type:
check, special handling check, netting or electronic
transmission (same day settlement called "wire" and
next day settlement is called "ACH").
(ii) Checks will be printed, sealed and distributed to a
third party mail sorting facility for grouping and
application of bulk mailing rates.
(iii) Special handling checks will be distributed pursuant
to written instructions from authorized Tenneco
personnel. Tenneco will reimburse Packaging directly
for the cost of all checks distributed via special
carrier services (e.g., UPS, Federal Express and wire
transfer).
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(iv) Netting and wire transfer payment information will be
settled through the former Tenneco Management Europe
Limited office in London.
(v) ACH payment information will be electronically
submitted through the SAP system to Xxxxxx Bank (or
other Tenneco- designated bank) for execution;
h. Vendor Maintenance. Packaging will maintain the accounts
payable vendor master file within the SAP system pursuant to
written instructions from authorized Tenneco personnel.
Services include establishing new vendors and updating
existing vendor records (i.e., remittance address changes and
payment methods). In compliance with the Internal Revenue
Service, Packaging will require all non-exempt accounts
payable vendors to have a Taxpayer Identification Number prior
to making payment to the vendor. Tenneco will assist Packaging
with securing the required W-9 forms for all exempt vendors
including government entities and employees;
i. 1099 Processing. Packaging will coordinate the annual
processing of IRS Form 1099 to identified vendors including
consolidation and reporting to the IRS. Tenneco will provide
Packaging with all appropriate 1099 data that might be
associated with xxxxx cash or related remote payables
functions administered in the various field locations;
j. Matching Gift Processing. Applications for matching gift
requests received from Tenneco employees will be checked for
eligibility (employee status and institution) and processed in
the SAP accounts payable system. Disbursements to charitable
institutions are considered special handling because of return
remittances required for such institutions.
k. Accounts Payable Related Accounting Services.
(i) Payable related reconciliations. Journal entry
reconciliation (reclassification and/or corrections),
interface error management and reconciliation of
related accounts (e.g., T&E), as well as providing
information required to reconcile or manage goods
received, invoices received and intercompany related
accounts (T&E reconciliations involve the vendor
accounts and corresponding general ledger accounts,
as well as reclassifying amounts appropriately
between groups where payroll and expenses are
cross-charged).
(ii) Payable disbursement accounts. Reconciliation of
accounts payable for Tenneco bank accounts including
identifying and reconciling outstanding transactions
on Xxxxxx Bank's (or other
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Tenneco-designated bank's) records, SAP's general
ledger and the accounts payable system.
l. Travel and Entertainment Administration.
(i) Travel and Entertainment Expense Reimbursement.
Packaging will post and schedule Tenneco employee
travel and entertainment expense reimbursements (T&E)
in one of three forms:
(a) Electronic SAP Filing. Semi-monthly
settlement processing for T&E submitted
directly by Tenneco employees into the SAP
system.
(b) Non-Electronic SAP Filing. Tenneco employees
without access to the SAP system will submit
T&E on the Visual Basic tool that is
currently in use. The expense report then
will be up-loaded into the SAP system and
made ready for settlement;
(c) Manual Filing. Paper expense reports will
be processed by Packaging directly into the
SAP system and settled;
(ii) Employee Record Maintenance. Packaging will maintain
Tenneco employee personnel records in the SAP system
pursuant to written instructions from authorized
Tenneco personnel or initiated by the payroll
process.
(iii) T&E Verification. Packaging will verify the receipt
of all required T&E support documentation and update
the SAP system accordingly. Also, Packaging will
contact Tenneco personnel who do not comply with
established policies. Packaging may suspend T&E
filing privileges for any Tenneco employee whose
outstanding T&E support documentation is more than 3
months old; and
(iv) Post Payment Audit. Packaging will conduct
post-payment auditing of expense reports and
associated receipt packages pursuant to mutually
agreed upon performance documentation standards.
Packaging will notify Tenneco employees and the
designated Tenneco management representative of
violations to the performance documentation standards
and follow-up with the Tenneco employees to assure
compliance.
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m. Travel Card Administration.
(i) Manage the relationship with the bank including
recovering rebates earned and assist with: securing
credit for marginal Tenneco employees, managing the
delinquent account portfolio, removing the travel
card program from divested businesses and
establishing organizational hierarchies for
management reporting;
(ii) Administer credit card program policies and
procedures including obtaining the necessary
authorization to increase traveler credit limits,
notifying appropriate company personnel of violations
to company policy, and reviewing credit card
applications and credit limits to assure they are
appropriate for a Tenneco employee's position and
travel needs;
(iii) Issue and cancel credit cards related to the
termination or reassignment of a Tenneco employee or
for the purpose of reporting a lost or stolen travel
card;
(iv) Assist Tenneco employees with resolution of disputed
charges that appear on the credit card statement, but
require further investigation by non-bank personnel
prior to removal from the statement; and
(v) Notify designated Tenneco management monthly, in
writing, of all delinquent credit card accounts that
have resulted in the suspension of a Tenneco
employee's travel card privileges and assist Tenneco,
as directed, in the collection of these delinquent
account balances.
Any periodic volume or delinquency management rebates paid by
the travel card supplier and earned by Tenneco will be
reported to Tenneco on a timely basis and netted against the
billing of services.
n. Procurement Card Administration (Procard).
(i) Manage the relationship with the bank including the
recovery of rebates earned and assist with: removal
of the Procard program from divested businesses,
establishing organizational hierarchies for
management reporting, and coordinating the
establishment of standard cardholder profiles
controlled by daily and week spending limits and
uniform merchandise codes;
(ii) Provide training materials, such as cardholder and
administrator handbooks and bank issued training
tapes to the designated Procard site coordinators
(Tenneco will reimburse Packaging for any on-site
training that Packaging provides);
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(iii) Issue and cancel credit cards related to the
termination or reassignment of a Tenneco employee or
for the purpose of reporting a lost or stolen card;
(iv) Assist Tenneco employees with the resolution of
disputed charges that appear on their credit card
statement and require further non-bank related
investigation prior to removal from the credit card
statement;
(v) Process monthly payments to Citibank (or other
Tenneco- designated bank) to include assuring all
individual card transactions are properly posted in
the SAP general ledger and that the payment is
received and posted at the bank prior to the due
date;
(vi) Assist vendors to become Procard enabled including
facilitating the initial interaction with the Procard
provider's new account department and, if requested,
providing the vendor with assistance to obtain a
favorable transaction fee from the Procard provider;
and
(vii) Distribute Procard usage and management reports
generated from the purchase history accumulated by
the Procard provider to designated Tenneco personnel.
Any periodic volume/usage rebates paid by the Procard provider
and earned by Tenneco will be reported and netted against the
billing of services; and
o. Help Desk Support. Packaging will provide accounts payable
help desk support to answer questions from Tenneco vendors or
operations personnel from 7:00 a.m. CST to 6:00 p.m. CST,
Monday through Friday (except for mutually agreed upon
corporate holidays). This includes inquiry support for
Accounts Payable, T&E and Travel and Procurement Card
Programs.
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SCHEDULE A-2
PHASE-OUT SERVICES
1. Financial Reporting, Accounting and Consolidations. Packaging will
provide or cause to be provided (as set forth in the Agreement) the
following financial reporting, accounting and consolidations services
through August 15, 2000:
a. Preparation of monthly, quarterly and annual consolidated
financial statements including income statements, balance
sheets and cash flow statements, as well as consolidated
entries to eliminate the impact of intercompany activity in a
manner sufficient to meet internal and external reporting
requirements including all creditor requirements;
b. Preparation (in conjunction with Tenneco management) of
Management Discussion and Analysis schedules based upon the
consolidated financial statements, it being understood that
Packaging is not responsible for preparing related text;
c. Preparation of SEC compliant financial statements on a
quarterly and annual basis including balance sheets,
statements of income and cash flow, statements of changes in
owners' equity (this includes providing the financial data
necessary, as needed, for footnotes and management discussion
and analysis recognizing fiduciary responsibility rests with
Tenneco for regulatory filings);
d. Administration of currently assigned monthly general closing
activities which includes ensuring that journal entries,
interfaces and management reviews occur in sequence and in
accordance with the mutually agreed upon financial closing
schedule (referred to as a "Run Book"), preparation and
execution of recurring and nonrecurring financial journal
entries, clearing of SAP related interface error sessions
(daily, weekly or monthly) and ensuring the integrity of the
assigned general accounts and general ledger balances;
e. Reconciliation of assigned bank accounts. These
reconciliations will be sufficient in nature to fully account
for and display the components of each account balance, and
period over period changes; Tenneco and Packaging management
will participate in quarterly financial statement reviews in a
time frame sufficient to allow for required regulatory and
creditor filings;
f. Maintenance of the SAP fixed asset system to include creation
of project numbers within the SAP general ledger for the
accumulation of dollars spent against a project or fixed
asset purchase including: creation of a
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SAP fixed asset master record from the data captured by the
SAP internal order process (including determining the asset
valuation for depreciation purposes and placement into the
appropriate asset classification to determine the
depreciable life of the asset as provided by Packaging to
Tenneco); accounting for the transfer, retirement or sale of
assets within the SAP fixed asset system; posting
depreciation on a monthly basis; and reconciling SAP fixed
asset records to general ledger on a monthly basis. Tenneco
is responsible for providing Packaging with the financial
data necessary to execute the establishment and/or
maintenance of an asset in the SAP fixed asset system; and
g. Compilation and consolidation of data required to prepare
domestic and foreign government reports. Tenneco will assure
its operating locations provide the appropriate operating data
required to complete these reports and that this information
is made available to Packaging in accordance with the mutually
agreed upon data submission schedule. Tenneco will reimburse
Packaging of any costs incurred due to Tenneco's late
submission of data unless the late submission is caused by
Packaging.
2. Cash Management Administration. Packaging will provide or cause to be
provided (as set forth in the Agreement) the following cash management
services through June 30, 2000:
a. Management of daily cash position and funds movements
including:
(i) Establishment of Tenneco's daily cash position to
determine short-term borrowing or cash investment
needs;
(ii) Daily reporting and concentration of lockbox
receipts;
(iii) Daily reporting and funding of payroll and accounts
payable disbursement accounts;
(iv) Daily funding of other disbursement accounts
controlled by third party service providers (e.g.,
medical benefit payments, local property tax
payments, freight payments);
(v) Execution of other intercompany/divisional cash
transfers between Tenneco and its subsidiaries and/or
divisions;
(vi) Entering daily bank activity detail into XRT
(treasury cash management computerized workstation);
and
(vii) Daily reconciliation of XRT and bank cash receipts
and disbursement reports.
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b. Short-term Cash Flow Forecasting including: (a) maintaining a
forecast of daily receipts and disbursements for current month
using input from Tenneco's finance staff for use in planning
short-term borrowing and cash investing activity; and (b)
coordinating daily receipts and disbursements forecasts with
quarterly cash flow forecasts prepared by Tenneco's finance
staff;
c. Executing short-term borrowing for Tenneco based on daily cash
position and short-term cash flow forecasts under guidance
from Tenneco's finance staff. Packaging cash management
personnel will have authority from Tenneco to borrow under an
established bank facility within parameters established by
Tenneco's finance staff (frequency, single borrowing limits,
absolute bank debt limits, maximum interest rates, etc.);
d. Executing short-term cash investments for Tenneco based on
daily cash position and short-term cash flow forecasts.
Packaging cash management personnel will have authority from
Tenneco to invest surplus cash balances within parameters
established by Tenneco's finance staff (term, investment
counter parties, asset type, etc.);
e. Executing electronic payments to suppliers as directed by
Tenneco's accounts payable group;
f. Receiving, logging and forwarding to Tenneco lockboxes
miscellaneous checks received directly by Tenneco (e.g.,
customer payments not sent to lockboxes, employee checks,
etc.);
g. Assisting Tenneco's accounts receivable staff to promptly
identify and return remittances from Tenneco and Packaging
customers erroneously mailed to Packaging and Tenneco
lockboxes, respectively;
h. Executing foreign currency invoice payments up to USD 100,000
limit; spot purchasing of foreign currency; mailing checks or
executing international wires. Tenneco's finance staff will
handle larger FX transactions and any FX hedging activity;
i. Reviewing and analyzing monthly bank account analysis
statements for all operating banks, reviewing and approving
bank fee invoices for payment and resolving fee discrepancies
with banks;
j. Implementing and maintaining Tenneco's XRT cash management
system, writing XRT scripts (programs) to perform automated
cash management functions (e.g., generate bank activity and
balance reports, repetitive wire transfers, etc.) and working
with XRT vendor programmers to install updates/enhancements to
XRT system and resolve any system problems;
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k. Preparing documentation to (a) open and close bank accounts,
(b) establish and change authorized signatories and limits,
(c) fill out bank system security forms, and (d) establish and
revise other bank account operating instructions per direction
of Tenneco's finance staff (for control reasons Tenneco's
finance staff must sign and mail letters to banks), as well as
preparing new repetitive wire transfer authorizations for
approval by Tenneco's finance staff;
l. Generating and filing reports of daily receipts and
disbursements activity off the XRT cash management system, and
preparing monthly cash flow report showing actual daily
receipts and disbursements for Tenneco's finance staff; and
m. Preparing in collaboration with Tenneco's finance staff a
daily, weekly and monthly reconciliation process to ensure the
appropriate separation of Tenneco and Packaging cash;
3. Tax Services. Packaging will provide or cause to be provided (as set
forth in the Agreement):
a. the preparation and filing of Federal and State income and
franchise tax returns required to be filed through October
30, 2000; and
b. U.S. tax accounting, IRS audit assistance, preparation of
sales and use tax audits through October 30, 2000.
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SCHEDULE A-3
ITOC SERVICES
Packaging shall provide or have provided (as set forth in the
Agreement) to Tenneco (and its Affiliates) the following ITOC Services:
1. Telecommunications and Information Services.
a. Operations and technology management of the mainframe and SAP
UNIX systems at Tenneco's data center as set forth in
paragraph 8 of the FAS letter.
b. Help Desk Services set forth in paragraph 8 of the FAS
Letter.
c. Network Service and Support for WAN, LAN, voice and messaging
set forth in paragraph 8 of the FAS Letter;
d. Disaster Recovery Services set forth in paragraph 8 of the
FAS Letter.
e. Communications between the Automotive Business located at
Tenneco's Lake Forest facility and the ITOC (Information
Technology Operations Center) as set forth in paragraph 8 of
the FAS Letter.
f. Overall support of the Filenet imaging system from a
hardware/software/vendor management perspective. Tenneco will
be responsible for the cost of expanding the current remote
imaging user community. Tenneco will also be responsible for
providing desktop support for imaging software at Tenneco
locations.
g. Overall support of the Hyperion hardware/software platform
including system administration (maintenance, security, etc.).
h. Support of Lotus Notes Forms Request System (used for SAP
accounts payable, vendor maintenance and T&E processing)
including security administration and application support.
i. MCI telecommunications services that are currently provided to
the Automotive Business through December 31, 2001.
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SCHEDULE A-4
TENNECO SERVICES
Tenneco shall provide or cause to be provided (as set forth in
the Agreement) to Packaging (and its Affiliates) the following Tenneco Services:
1. Treasury and Cash Management Administration
a. Daily management of Tenneco Packaging (UK) Limited (Tenneco
Packaging's international finance company) in respect of
arranging intercompany loans, cash management, short term
borrowings, hedging of foreign exchange exposures. All
transactions will be recorded in Tenneco Europe's treasury
system IT/2.
b. Daily management of Sterling cashpool held at Barclays Bank.
c. Daily management of German cashpool held at Commerzbank.
d. Processing of intercompany and cross-border third party
payments through the Tenneco Netting System.
e. Assistance with setting up a new Tenneco Packaging
international treasury function and training of staff.
f. Treasury support function to process payment transfers, check
deal confirmations and maintain adequate internal controls.
2. Accounting Services
a. Prepare monthly management accounts for Tenneco Packaging
(UK) Limited and report into Hyperion.
b. Assist in transfer of accounting for Tenneco Packaging (UK)
Limited to a Tenneco Packaging accounting system.
3. Insurance Administration
a. For four (4) months only, provide insurance administration
Packaging requires for the operation of its
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