EXHIBIT 10.8
TRANSITION SERVICES AGREEMENT
THIS TRANSITION SERVICES AGREEMENT ("Agreement") is entered into as of
July 2, 1999, by and among Suiza Foods Corporation, a Delaware corporation
("Suiza"), Consolidated Container Holdings LLC, a Delaware limited liability
company ("CCH"), and Consolidated Container Company LLC, a Delaware limited
liability company and wholly-owned subsidiary of CCH ("CCC") (CCH and CCC are,
collectively, the "Consolidated Parents").
RECITALS
Suiza and certain of its affiliates, Vestar Packaging LLC ("Vestar"), a
Delaware limited liability company, and Reid Plastics Holdings, Inc. ("Reid
Holdings"), a Delaware corporation, certain of Vestar's and Reid Holdings'
affiliates, and the Consolidated Parents are parties to a Contribution and
Merger Agreement, dated April 29, 1999 (the "Merger Agreement"), pursuant to
which Suiza has, as of the date hereof, contributed certain of its plastics
operations (the "Contributed Plastics Operations") to the Consolidated Parents
in exchange for a 49% outstanding equity ownership in CCH and certain other
consideration.
Suiza, by itself and through certain of its affiliates that are not part
of the Contributed Plastics Operations (the "Remaining Affiliates") (Suiza and
the Remaining Affiliates, collectively, the "Suiza Service Providers"), have
previously provided certain services to the Contributed Plastics Operations, and
CCH, CCC and certain of their wholly-owned subsidiaries (CCH, CCC and such
wholly-owned subsidiaries are, collectively, the "Companies"), desire to
continue to obtain these services.
THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements set forth in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Suiza, CCH and CCC agree as follows:
1. Term of Agreement. The term of this Agreement will commence as of the
date hereof (the "Effective Date") and will continue after such date, unless
otherwise terminated in accordance with the provisions of this Agreement, until
December 31, 1999; provided, however, that this Agreement will continue in
effect with respect to (i) the Services (as defined below) identified in Item 5
of Annex A and (ii) the obligations set forth in Section 8 below until the
insurance policies, performance guarantees and letters of credit referred to
therein are replaced and the Suiza Service Providers are released from their
obligations with respect thereto.
2. Transition Services. Suiza will, and Suiza will cause such of the
Remaining Affiliates as it reasonably deems appropriate to, provide to the
Companies the transition services described on Annex A to this Agreement (the
"Services") in the manner which and to the extent that the Suiza Service
Providers have historically provided the Services to the Contributed Plastics
Operations prior to the Effective Date.
3. Performance of Services. During the term of this Agreement, Suiza will,
and will cause such of the Remaining Affiliates as it reasonably deems
appropriate to, provide the Services to the Companies on the same basis and at
the same level of quality as the Services were being provided prior to the
Effective Date, except as otherwise specified on Annex A. The Companies will be
entitled to the same level of priority in connection with the performance of the
Services, including the same level of access to Suiza Service Providers
personnel and other resources required to utilize the Services, as was afforded
in connection with the Contributed Plastics Operations prior to the Effective
Date. If any dispute over the nature, quality or scope of Services provided to
the Company arises, the prior practice of the Suiza Service Providers will be
final and binding.
4. Companies Provided Information. The Companies will provide the Suiza
Service Providers any information required to be provided to the Suiza Service
Providers in connection with the performance of the Services in a manner
consistent with the practices of the Contributed Plastics Operations prior to
the Effective Date, except as set forth on Annex A to this Agreement.
5. Payment for Services. CCC and CCH will pay, or cause one of the other
Companies to pay, Suiza for each of the Services provided to the Companies by
the Suiza Service Providers in accordance with the applicable charges, cost
allocations and resource rates specified in Annex A.
6. Time of Payment. Suiza will, from time to time, as is reasonably
determined by Suiza, but not more frequently than monthly, invoice CCC for the
Services previously provided to the Companies by the Suiza Service Providers.
Each such invoice will reflect, in reasonable detail, the nature and quality of
the Services rendered during the preceding period. CCH and CCC will pay all
portions of each such invoice within 15 days after receipt.
7. Termination. Upon 30 days prior written notice to Suiza, CCH or CCC may
terminate this Agreement or any one or more of the Services designated in such
notice, each such termination to be effective as of the date specified by CCH or
CCC in such notice; provided, however, that the Suiza Service Providers will not
be obligated thereafter to provide such terminated Services and CCH or CCC will
remain liable for such Services until the effective date of termination thereof;
provided, further however, that neither CCH nor CCC may terminate this
Agreement, or any Services, as such relates to CCH's and CCC's obligations
related to the Services specified in Item 5 of Annex A and Section 8 below.
Termination of this Agreement or any one or more of the Services by either CCH
or CCC under this Section 7 will be binding upon all of the Companies. In the
event that Suiza materially or repeatedly defaults in the performance of any of
its duties or obligations under this Agreement and fails to cure such default
within 10 days after written notice of such default is given by the Consolidated
Parents, the Consolidated Parents may terminate this Agreement by giving Suiza
written notice of termination, such termination to be effective as of the date
specified in such notice; provided, however, that the Consolidated Parents may
not terminate this Agreement as it relates to their obligations related to
Section 8 below and the Services specified in Item 5 of Annex A. Likewise, in
the event that either of the Consolidated Parents materially or repeatedly
defaults in the performance of any of their duties or obligations under this
Agreement and fails to cure such default within 10 days after written notice of
such default is given by Suiza, Suiza may terminate this Agreement by
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giving the Consolidated Parents written notice of such termination, such
termination to be effective as of the date specified in such notice and binding
upon both of the Consolidated Parents; provided, however, that Suiza may
continue to enforce this Agreement to the extent necessary to reimburse it for
expenses related to the Services specified in Item 5 of Annex A to the extent
Suiza continues to provide such Services. Upon termination of this Agreement for
any reason, the Suiza Services Providers will promptly return to the
Consolidated Parents all papers, materials and other properties of the Companies
then in the Suiza Service Providers' possession that were obtained pursuant to
this Agreement and the Companies will promptly return to the Suiza Service
Providers all papers, materials and other properties of the Suiza Service
Providers then in the Companies' possession that were obtained pursuant to this
Agreement.
8. Release of Guarantees, Etc. The Consolidated Parents agree to use their
commercially reasonable efforts, upon request of Suiza, to cause any insurance
policies, performance or payment guarantees, bonds or letters of credit entered
into or obtained by Suiza or its Remaining Affiliates on behalf of the
Contributed Plastics Operations to be released as soon as practicable following
the date hereof (if and to the extent not released prior to the date hereof).
9. Disclaimer. NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE
CONTRARY, NO WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, ARE MADE
WITH RESPECT TO THE SERVICES INCLUDING, WITHOUT LIMITATION, (A) ANY IMPLIED OR
EXPRESSED WARRANTY OF MERCHANTABILITY, (B) ANY IMPLIED OR EXPRESSED WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE, (C) ANY RIGHTS OF ANY OF THE COMPANIES UNDER
APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION, OR (D) ANY CLAIM BY
ANY OF THE COMPANIES FOR DAMAGES BECAUSE OF DEFECTS (OTHER THAN THOSE CAUSED BY
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE SUIZA SERVICE PROVIDERS),
WHETHER KNOWN OR UNKNOWN, WITH RESPECT TO SUCH SERVICES. In accordance with the
foregoing, effective as of the Effective Date, the Consolidated Parents, on
behalf of themselves, their successors and assigns, and any other person or
entity covered by any fire and extended coverage, general public liability,
worker's compensation or other property or liability policy carried by the
Consolidated Parents, hereby waive each and every claim for recovery against any
of the Suiza Service Providers for any and all loss or damage to any of the
Consolidated Parents or any personal property or other property arising from or
relating to, in whole or in part, the Services, other than any such loss or
damage caused by the gross negligence or willful misconduct of the Suiza Service
Providers. Similarly, effective as of the Effective Date, the Consolidated
Parents will cause each of the Companies, on behalf of the Companies, the
Companies' successors and assigns, and any other person or entity covered by any
fire and extended coverage, general public liability, worker's compensation or
other property or liability policy carried by such Companies, to waive each and
every claim for recovery against any of the Suiza Service Providers for any and
all loss or damage to any of the Companies or any personal property or other
property arising from or relating to, in whole or in part, the Services, other
than any such loss or damage caused by the gross negligence or willful
misconduct of the Suiza Service Providers. No party to this Agreement will have
any liability for lost profits or goodwill or any consequential, incidental,
exemplary, punitive, special, indirect or similar damages for any breach of its
obligations under
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this Agreement, even if Suiza, or any of the Suiza Services Providers, has been
advised of the possibility of such damages.
10. Use of the Services. The Services will be provided only with respect
to the Contributed Plastics Operations. The Companies will use the Services only
in accordance with applicable federal, state and local laws and regulations, and
in accordance with the reasonable conditions, rules, regulations and
specifications that may be set forth in any manuals, materials, documents or
instructions in existence on the Effective Date and furnished by the Suiza
Service Providers to the Companies. Suiza may take all actions, including
termination of any particular Service, that it reasonably believes to be
necessary to assure compliance with applicable laws, regulations or tariffs. No
party to this Agreement, or any affiliate of any party of this Agreement, will
acquire any property or other right, claim or interest, including any patent
right or copyright interest, in any of the systems, processes, equipment,
computer programs or information of another party to this Agreement, or any
affiliate of another party to this Agreement, by virtue of this Agreement.
11. Miscellaneous.
(a) Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all of which
will be considered one and the same instrument.
(b) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Texas without reference to the choice
of law principles thereof.
(c) Entire Agreement. This Agreement and the agreements and other
documents referred to in this Agreement contain the entire agreement between the
parties and supersede all prior agreements, arrangements and understandings
relating to the subject matter hereof and thereof. There are no written or oral
agreements, understandings, representations or warranties between the parties
other than those set forth or referred to in this Agreement.
(d) Force Majeure. None of the parties to this Agreement shall be liable
to any other party to this Agreement other than with respect to obligations
hereunder to pay money when due to any failure or delay in performance of its
obligations under this Agreement because of circumstances beyond its control
including, but not limited to acts of God, flood, fire, riot, accident, strikes
or work stoppages for any reason, embargo, inability to obtain phone lines,
government action (including enactment of any laws, ordinances, regulations or
the like which restrict or prohibit the providing of the Services contemplated
by this Agreement) and other causes beyond its control whether or not of the
same class or kind as specifically named above (each a "Force Majeure Event").
If any party is unable to substantially perform its obligations hereunder (other
than obligations to pay money when due) for any of the reasons described in this
Section 10(d), the obligations of such party shall be suspended for the
duration, and to the extent of, such Force Majeure Event, provided that the
affected party shall promptly notify the other party of its inability to so
perform, the steps it plans to take to rectify or mitigate such inability and
the anticipated length of such inability.
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(e) Amendment and Modification. This Agreement may be amended or modified
and any rights under this Agreement may be waived only by a written instrument
executed by the party against which enforcement of such amendment, modification
or waiver is sought. This Agreement will not be deemed to be amended or modified
or any rights under this Agreement waived by any course of conduct, and no
waiver will be deemed a continuing waiver or a waiver of any provision of this
Agreement not expressly waived, regardless of similarity to any waived
provision.
(f) Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it will be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement will be
deemed valid and enforceable to the full extent possible.
(g) Notices. All notices hereunder will be deemed given if in writing and
delivered personally or sent by facsimile or by registered or certified mail
(return receipt requested) to the parties at the following address (or at such
other addresses as is specified by like notice):
(i) If to Suiza:
2515 McKinney Avenue, Suite 1200
Dallas, Texas 75201 Attn:
Michelle P. Goolsby
Facsimile: 214-303-3851
(ii) If to CCH:
2515 McKinney Avenue, Suite 850
Dallas, Texas 75201
Attn: Tim Brasher
Facsimile: 214-303-1829
(iii) If to CCC:
2515 McKinney Avenue, Suite 850
Dallas, Texas 75201
Attn: Tim Brasher
Facsimile: 214-303-1829
(h) Successors and Assigns; Assignment: This Agreement will be binding
upon and inure to the benefit of the parties hereto and their permitted
successors and assigns. No party to this Agreement may assign or delegate, by
operation of law or otherwise, its rights or obligations to any other person or
entity without the written consent of the other parties to this Agreement;
provided, however, that Suiza may assign any of its rights and delegate any of
its duties under this Agreement to any direct or indirect wholly-owned
subsidiary.
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(i) Relationship of Parties. The relationship between Suiza and the
Consolidated Parents, as it relates to this Agreement, is that of independent
contractors. Nothing in this Agreement will be deemed to constitute any of the
Companies as the agent, partner or employee of any of the Suiza Service
Providers or any of the Suiza Service Providers as the agent, partner or
employee of any of the Companies. Further, this Agreement will not confer on any
party any right to act for or in the name of any other party.
(j) Confidentiality. Suiza and the Consolidated Parents agree to use all
reasonable efforts to, and to cause their affiliates, employees, agents and
representatives to, hold in confidence and not to disclose to any person or
entity or use for any purpose any Confidential Information except as is
reasonably necessary to carry out or enforce the terms of this Agreement. For
the purposes of this Section 10(j), "Confidential Information" means all
information obtained by Suiza or any of the Companies pursuant to this Agreement
except for any such information (i) that is generally available in the public
domain other than by breach of this Section 10(j), (ii) as is made available to
any of the Suiza Service Providers or any of the Companies by a person or entity
not bound by a confidentiality agreement with Suiza or any of the Companies, as
the case may be, or (iii) as is required to be disclosed by legal process of any
sort. A party to this Agreement will be deemed not to have breached its
obligation under this Section 10(j) to the extent that it exercises the same
degree of care with Confidential Information of another party to this Agreement
as it exercises with respect to its own Confidential Information.
IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties as of the day first above written.
SUIZA FOODS CORPORATION
By: /s/ Michelle P. Goolsby
------------------------------------------
Name: Michelle P. Goolsby
Title: Executive Vice President and
General Counsel
CONSOLIDATED CONTAINER HOLDINGS LLC
By: /s/ Steven M. Silver
------------------------------------------
Name: Steven M. Silver
Title: Vice President
CONSOLIDATED CONTAINER COMPANY LLC
By: /s/ Steven M. Silver
------------------------------------------
Name: Steven M. Silver
Title: Vice President
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ANNEX A
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Description of Service Fee or Charges for Service
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1. Medical Insurance Coverage for 1. Suiza's actual allocable cost
officers and employees located based on actual number of
in Dallas, TX officers and employees
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2. Execu Care Coverage 2. Suiza's actual out of pocket
claims paid
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3. Telephone Service to Corporate 3. Suiza's actual allocable cost
Headquarters (based on total telephone
services costs allocated per
capita)
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4. Computer Services (Garelick) 4. $17,000 per month for the months
of July and August 1999, $34,000
per month for the month of
September 1999, and $50,000 per
month for the months of October,
November and December 1999,
provided, however, that should
these computer services be used
by any of the Consolidated
Plastics Operations for only
part of any such month and not
be used thereafter, the fee for
that month shall be pro-rated
based on the amount of days
during that month in which such
computer services were used.
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5. Payment under insurance 5. The Contributed Plastics
policies, performance or payment Operations' allocable share of
guarantees, bonds or letters of actual payments made by the
credit (including, but not Suiza Service Providers in
limited to, guarantees of connection with such policies,
General Electric Capital performance or payment
Corporation equipment leases and guarantees, bonds and letters of
workers compensation policies credit. The allocable share of
and claims) on behalf of the the Contributed Plastics
Contributed Plastics Operations Operations shall include, but is
and their employees by any of not limited to, (i) all sums
the Suiza Service Providers or owing to General Electric
their insurers, banks or other Capital corporation and its
lending sources successors and assigns under
guarantees of leases of
equipment utilized by the
Contributed Plastics Operations,
(ii) all sums owing to insurers
or issuers of letters of credit
that relate to employees of the
Contributed Plastics Operations
and, (iii) until a more accurate
allocation can be made, twenty
percent (20%) of the fees and
expenses charged by issuers of
letters of credit relating to
the Contributed Plastics
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Description of Service Fee or Charges for Service
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Operations' workers compensation
policies to maintain the
effectiveness of such letters of
credit.
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6. Four (4) Vehicles 6. No charge, unless such vehicles
are not relinquished to the
Suiza Service Providers within
thirty (30) days after the
Effective Date of this
Agreement, then the charge will
be the fair market value of each
vehicle not so relinquished.
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7. Electricity Payments. Applicable 7. West Central - $100,000 per month;
until the earlier of December New York Plastics - $30,000 per month;
31, 1999 or until the listed Florence Plastics $35,000 per month;
Contributed Plastics Operations Ocean Park Plastics $20,000 per month
have their own electric meters
in place.
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8. Office space and rent payments 8. Actual cost of rent and other
for Suite 850 at 2515 McKinney payments under the lease
Avenue, Dallas, Texas which are agreement for Suite 850.
currently billed by the landlord
to Suiza Packaging.
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9. Certain employee benefits paid 9. The Companies will reimburse the
for by Suiza GTL, LLC for Suiza Service Providers for the
employees of Ocean Park actual cost of such employee
Plastics. benefits.
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