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EXHIBIT 10.4
TRANSITION SERVICES AGREEMENT
TRANSITION SERVICES AGREEMENT (this "Agreement"), dated as of June 12,
1997, by and between PLAINWELL PAPER COMPANY, a Michigan corporation (the
"Company") and XXXXXXX PAPER COMPANY, a Washington corporation ("Xxxxxxx").
WHEREAS, Plainwell Holding Company, a Delaware corporation ("Holdings"),
and Xxxxxxx have entered into a Stock Purchase Agreement dated as of March 12,
1997 (the "Stock Purchase Agreement");
WHEREAS, pursuant to the terms of the Stock Purchase Agreement, Holdings
is acquiring all of the stock of the Company; and
WHEREAS, Xxxxxxx is prepared to provide certain transition services to the
Company following consummation of the transactions contemplated in the Stock
Purchase Agreement (the "Acquisition") upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
I. SERVICES.
A. Transition Services. Except as otherwise expressly provided below,
Xxxxxxx shall provide to the Company certain administrative,
transition and computer services, described in Exhibit A for the
periods set forth in Exhibit A (the "Transition Services"). The
Transition Services, together with the Additional Services described
in paragraph 2(a) are herein collectively referred to as the
"Services" and individually as a "Service". Xxxxxxx shall not be
obligated to: (i) purchase, license, lease or otherwise obtain the
right to use any equipment or resources (including, but not limited
to hardware or software) in addition to those used prior to the
Closing in connection with provision of the Services; (ii) maintain
or retain any such equipment or resources solely for the benefit of
the Company if it is no longer useful to or used by Xxxxxxx; (iii)
convert or assemble data for the Company into a form or content
required for use with such equipment or resources (it being the
responsibility of the Company to provide the data, where applicable,
in a ready to use form for example following Xxxxxxx'x chart of
accounts); or (iv) provide any services to the Company other than
the Services and services that are a necessary incident thereto.
Xxxxxxx may modify its current systems for its own business needs
even if such modification would render any such system unusable by
the Company. Notwithstanding the foregoing limitations on Xxxxxxx'x
obligations hereunder, Xxxxxxx intends to, and shall cooperate in
good faith to, assist the Company in obtaining the Services.
B. Additional Services. The parties have attempted to identify and
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specifically enumerate on Exhibit A hereto all transitional services
required to be provided by Xxxxxxx to the Company in order to
continue the uninterrupted operation of the business of the Company
following the Closing. In the event that the Company needs
additional services, the parties shall negotiate in good faith to
determine if Xxxxxxx can provide the additional services upon
mutually agreed terms and conditions (the "Additional Services"),
and reflect such terms and conditions as so agreed.
II. PROCESSING ERRORS. COMPANY OBLIGATIONS. ETC.
A. Correction of Processing Errors. The Company is responsible from the
date hereof for: (i) the accuracy and completeness of all data or
information submitted by the Company to Xxxxxxx for processing or
transmission in connection with the Services (the "Data"); and (ii)
any errors in and with respect to data or information obtained from
Xxxxxxx because of any inaccurate or incomplete Data.
B. Company Obligations. The Company shall: (i) maintain in good
operating condition all equipment, software and operational
resources necessary to allow Xxxxxxx to provide the Services in a
manner consistent with past practice of the Company prior to the
date hereof; and (ii) comply with any reasonable instructions
provided by Xxxxxxx that are necessary for Xxxxxxx to provide the
Services in accordance with this Agreement.
C. Company Reporting Obligations. On a periodic basis during the term
of this Agreement (as set forth in Section 9, the "Term"), the
Company shall provide Xxxxxxx with oral updates as to the current
status of the Company's efforts to establish replacement or
alternative programs and services for all Services provided by
Xxxxxxx.
III. DATA.
A. Except as may be required in order to perform the Services, all Data
shall be in the form maintained by the Company before the date
hereof and shall remain the property of the Company. Unless
furnished to Xxxxxxx by the Company, all media upon which Data is
stored is and shall remain the property of the Company. The Company
shall be entitled to copies of all media upon which Data is stored.
Upon the Company's written request, Xxxxxxx shall erase or destroy
all copies of all media upon which Data is stored and shall provide
the Company written verification thereof.
IV. FEES.
A. Fees.
1. In consideration of the provision of the Services, the Company
shall pay to
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Xxxxxxx the fees specified in Exhibit A (the "Fees").
2. Not later than the close of business on the fifth business day
of each calendar month during the Term and not later than five
business days after the last day of the Term, Xxxxxxx shall
deliver an invoice to the Company setting forth the Fees
(which shall be prorated in the case of Fees payable for any
period in the Term that is less than a full calendar month)
payable by the Company for the Services provided in the
preceding month (or, in the case of the invoice delivered
after the last day of the Term, in the period since the end of
the preceding month) (the "Fee Invoice"). The Company shall
pay the Fees set forth in the Fee Invoice in full by check or
by wire transfer of immediately available funds to Account No.
67034710 in the name of Xxxxxxx, Seattle First National Bank,
CASC, Xxxxxxx, Xxxxxxxxxx, 00000, ABA No. 000000000 or an
account of Xxxxxxx'x designation not later than the close of
business on the fifth business day following the date of
receipt of such Fee Invoice.
B. Taxes. The Company shall pay any valued-added tax and any tariff,
duty, export or import fee, sales tax, use tax, service tax or other
tax or charge imposed or incurred relating to Xxxxxxx'x performance
of the Services hereunder. Any payments made pursuant to this
paragraph 4(b) shall not reduce the amount of the Fees payable
hereunder.
V. CONFIDENTIALITY.
A. All confidential or proprietary information and documentation
relating to either party hereto provided by either party to the
other pursuant to the terms and conditions of this Agreement (the
"Confidential Information") shall be held in confidence by the other
party (including its affiliates) during and after the Term to the
same extent and in at least the same manner as such party protects
its own confidential or proprietary information. Neither party shall
disclose, publish, release, transfer or otherwise make available
Confidential Information of the other party in any form to, or for
the use or benefit of, any person or entity without the other
party's prior written approval. Each party shall, however, be
permitted to disclose relevant aspects of the other party's
Confidential Information to its officers, agents and employees and
to the officers, agents and employees of its affiliates to the
extent that such disclosure is reasonably necessary to the
performance of its duties and obligations under this Agreement,
provided that such party shall take all reasonable measures to
ensure that Confidential Information of the other party is not
disclosed or duplicated in contravention of the provisions of this
Agreement by such officers, agents and employees. The obligations in
this Section 5 shall not: (a) restrict any disclosure by either
party pursuant to order of any court or government agency (provided
that the disclosing party shall endeavor to give prior written
notice to the non-disclosing party as may be reasonable under the
circumstances); and (b) apply with respect to information that: (i)
is independently developed by the other party, (ii) becomes part of
the public domain (other than through unauthorized disclosure in
contravention
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of the terms and conditions of this Agreement); (iii) is disclosed
by the owner of such information to a third party free of any
obligation of confidentiality under the terms and conditions of this
Agreement; or (iv) either party gained knowledge or possession of
free of any obligation of confidentiality under the teens and
conditions of this Agreement.
VI. WARRANTY: DISCLAIMER.
Xxxxxxx shall perform the Services consistent with the manner (including,
without limitation, quality and level of Services) in which such Services
were provided by the Company for the business of the Company prior to the
Closing. THE COMPANY ACKNOWLEDGES THAT THE SERVICES ARE PROVIDED WITHOUT
ANY OTHER EXPRESS OR IMPLIED WARRANTIES, INCLUDING THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
VII. LIABILITY.
IN NO EVENT SHALL XXXXXXX BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL
AND CONSEQUENTIAL DAMAGES, FOR LOST PROFITS OR SAVINGS, OR FOR ANY THIRD
PARTY CLAIMS RELATED TO ITS PERFORMANCE OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, EXCEPT TO THE EXTENT SUCH INDIRECT, SPECIAL, INCIDENTAL- OR
CONSEQUENTIAL DAMAGES ARE ATTRIBUTABLE TO THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF XXXXXXX.
VIII. FORCE MAJEURE.
In case either party shall be hindered, delayed or prevented from
performing its obligations under this Agreement, or if such performance is
rendered impossible by reason of any force majeure event including but not
limited to fire, explosion, earthquake, storm, flood, drought, embargo,
war or other hostilities. strike, lockout or other labor disturbance,
mechanical breakdown, governmental action, or any other cause whatsoever
that is beyond a party's reasonable control, the party so hindered,
delayed or prevented shall not be liable to the other for the resulting
failure to carry out its obligations hereunder. Any such obligations, so
far as may be necessary, shall be suspended during the period of such
hindrance, delay or prevention, and the Term shall be extended by a period
of time equal to the duration of all such events of force majeure so as to
permit performance of this Agreement as contemplated.
IX. TERM: TERMINATION.
A. Term. The term of this Agreement shall commence upon the date hereof
and shall continue until the end of all periods for which Services
are to be provided as set forth on Exhibit A or such earlier date on
which this Agreement is terminated pursuant to paragraph 9(b) or
terminated in respect of all the Services pursuant to paragraph 9(c)
(the "Term").
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B. For Default. In the event that either party materially or repeatedly
fails to perform any of its material duties or obligations pursuant
to this Agreement and such failure is not cured within 30 days after
written notice to such party specifying the nature of such material
or repeated failure, the other party may terminate this Agreement
upon notice of such termination to the defaulting party.
C. For Convenience. The Company may terminate this Agreement in respect
of any or all of the Services at any time upon 14 days' written
notice to Xxxxxxx.
D. Effect of Termination. Upon the expiration of the Term, all Fees
owed by the Company to Xxxxxxx for Services provided through the
date of such expiration shall be paid within two business days of
the date of such expiration.
X. MISCELLANEOUS PROVISIONS.
A. No Waivers. The failure on the part of either party to exercise or
delay in exercising any right or remedy hereunder shall not operate
as a waiver of such right or remedy. Any single or partial exercise
by a party of any right or remedy hereunder shall not preclude the
exercise of any other right or remedy or further exercise of such
right or remedy.
B. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of each party hereto under this
Agreement will not be materially and adversely affected thereby, (i)
such provision will be fully severable, (ii) this Agreement will be
construed and enforced as if such illegal, invalid or unenforceable
provision had never comprised a part hereof, and (iii) the remaining
provisions of this Agreement will remain in full force and effect
and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
C. Headings. The headings used in this Agreement are intended for
reference only. They are not intended as and shall not be construed
to be a substantive part of this Agreement or in any way affect the
validity, construction or effect of any of the provisions of this
Agreement.
D. Exhibit. The Exhibit attached hereto is incorporated herein by
reference as an integral part of this Agreement. In the event of any
inconsistency between the terms contained in the Exhibit and the
terms contained herein, the terms in the Exhibit shall govern.
E. Notices. All notices, designations, approvals, consents, requests,
acceptances, rejections or other communications required or
permitted by this Agreement shall be in writing and shall be sent by
either telecopy (effective upon the sender's receipt of transmission
confirmation) overnight courier or similar service (effective on the
day
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after mailed) or by U.S. mail (effective on the third day after
mailed) to the addresses specified below:
If to Xxxxxxx:
Xxxxxxx Paper Company
Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Breed, Esq.
Facsimile: (000) 000-0000
If to the Company:
Plainwell Paper Company
Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy (which shall not constitute notice) to:
Citicorp Venture Capital, Ltd.
Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxx
Facsimile: (000) 000-0000
Xxxxxxxx & Xxxxx
Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Xxxxxxx & Xxxx, S.C.
Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
Any party may at any time, by notice to the other party transmitted or sent in
the manner described above, change the address or telecopy number to which
communications to it are to be sent.
F. Relationship. The performance by Xxxxxxx of its duties and
obligations under this Agreement shall be that of an independent
contractor and nothing herein contained
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shall create or imply an agency relationship between the parties,
nor shall this Agreement be deemed to constitute a joint venture,
franchise or partnership between the parties hereto.
G. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington applicable to a
contract executed and performed therein, without giving effect to
the conflicts of laws principles thereof.
H. Covenant of Further Assurances. The parties covenant and agree that,
subsequent to the execution and delivery of this Agreement and
without any additional consideration, each of the parties hereto
will execute and deliver, or cause their respective appropriate
affiliates to execute and deliver, any further legal instruments and
perform any acts which are or may become reasonably necessary to
effectuate this Agreement.
I. Assignment. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by either party hereto without
the prior written consent of the other party hereto.
J. Entire Understanding. This Agreement represents the entire
understanding of the parties with respect to its subject matter and
supersedes all prior or contemporaneous writings, correspondence and
memoranda with respect hereto. No representations, warranties,
agreements or covenants, express or implied, of any kind or
character whatsoever with respect to such subject matter have been
made by either party to the other, except as herein expressly set
forth.
K. Successors. Subject to the restrictions on assignment set forth in
paragraph I l(i) above, this Agreement shall be binding upon and
inure to the benefit of and be enforceable against the parties
hereto and their respective successors and permitted assigns.
L. Amendments. This Agreement can be modified or amended only by a
written amendment executed by both parties.
M. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
N. Third Party Beneficiaries. Each party intends that this Agreement
shall not benefit or create any right or cause of action in or on
behalf of any person or entity other than the Company and Xxxxxxx.
O. Time is of the Essence: Computation of Time. Time is of the essence
for each and every provision of this Agreement. Whenever the last
day for the exercise of any privilege or the discharge of any duty
hereunder shall fall upon any day which is not
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a business day, the party having such privilege or duty may exercise
such privilege or discharge such duty on the next succeeding
business day.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers to be effective as of the day and
year first above written.
PLAINWELL PAPER COMPANY
By:
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Title:
XXXXXXX PAPER COMPANY
By:
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Title:
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EXHIBIT A
TRANSITION SERVICES
A. Services
1. If requested by the Company, the following accounting services shall be
provided by Xxxxxxx on behalf of the Company for the period or periods requested
by the Company, in any event ending not later than 2 years after the date hereof
in the format and timetable that was used by the Company prior to the date
hereof:
General Ledger - masterfile maintenance
General Accounting - masterfile maintenance
Monthly Closing
Financial Statements
2. If requested by the Company, Xxxxxxx will make available its host
computers for purposes of preparing general ledgers from time to time for he
Business and for accounts payable and accounts receivable purposes for a period
ending not later than 2 years after the date hereof.
3. If requested by the Company, Xxxxxxx will make available its host
computers for purposes of Sales Order Entry (provided the Company pays the cost
of partitioning the mainframe to permit segregation of the data), Sales
Analysis, Costing, Purchasing, Receiving, and Inventory Reporting including
existing End-of-Day and Start-of-Day processes and utilizing the interface
processes in place for continued updates to the General Ledger and Accounts
Receivable Systems, as well as any other computer systems in use for the
Facilities, for a period ending not later than 2 years after the date hereof.
4. If requested by the Company, Xxxxxxx will make available its host
computers for use in providing data for sales and use tax computations for a
period ending not later than 2 years after the date hereof.
5. On reasonable notice and during normal business hours, Xxxxxxx will
make available its Project Cost System for use by the Company in preparing its
projections for the calendar year 1998.
B. Monthly Fees for Transition Services
As fees for the Transition Services (which, for any particular period,
shall comprise fees for all or any part of the Transition Services provided
during such period), the Company shall pay Xxxxxxx an aggregate amount per
calendar month (pro rated in the case of any partial calendar month) equal to
(i) all reasonable direct costs incurred by Xxxxxxx (which shall include
Xxxxxxx'x actual expenses incurred in providing the services of an employee of
Xxxxxxx) in providing the Services ("Xxxxxxx'x Cost") plus 25% on a per month
basis during the period from the date hereof
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until the 90th day after the date hereof, (ii) Xxxxxxx'x Cost plus 50% on a per
month basis during the period from the 90th day after the date hereof until the
80th day after the date hereof, (iii) Xxxxxxx'x Cost plus 65% on a per month
basis during the period from the 1 80th date hereof until the 365th day after
the date hereof, and (iv) Xxxxxxx'x Cost plus 75% on a per month basis
thereafter.
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