Transition Services Agreement

Exhibit 10.1

 

Transition Services Agreement

by and between

Service Provider

and

The Folgers Coffee Company

Effective as of [•], 2008

 

TABLE OF CONTENTS

 

 

i

 

ii

 

iii

SCHEDULES

 

 

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TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (this “ Agreement ”) is entered into effective [                      ], 2008 (the “ Effective Date ”) by and between The Folgers Coffee Company, a Delaware corporation (“ Customer ”) and The Procter & Gamble Company, an Ohio corporation (“ Service Provider ”).

WHEREAS, Customer desires to obtain from Service Provider the information technology and business process services described in this Agreement on the terms and conditions as set forth in this Agreement.

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valid consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

1.	DEFINITIONS

“ Action ” means any demand, charge, claim, action, suit, counter suit, arbitration, hearing, inquiry, proceeding, audit, review, complaint, litigation or investigation, or proceeding of any nature whether administrative, civil, criminal, regulatory or otherwise, by or before any federal, state, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

“ Affiliate ” means, with respect to any specified Person, those other Persons who Control, are Controlled by, or under common Control with such specified Person.

“ Agreement ” has the meaning given in the preamble.

“ Base Services ” has the meaning set forth in Section 3.1(a) .

“ Change Management Process ” has the meaning set forth in Section 5.4 .

“ Charges ” means the amounts payable by Customer to P&G pursuant to Article 10 .

“ Claim ” has the meaning set forth in Section 13.1 .

“ Claim Notice ” has the meaning set forth in Section 13.3(a) .

“ Confidential Information ” has the meaning set forth in Section 9.1 .

“ Contract ” means any contract, agreement, lease, license, sales order, purchase order, instrument or other commitment, whether written or oral, that is binding on any Person or any part of its property under applicable Law.

“ Control ” and its derivatives mean, with respect to any Person (other than an individual): (a) the legal, beneficial, or equitable ownership, directly or indirectly, of (i) at least 50% of the aggregate of all voting equity interests in such Person or (ii) equity interests having the right to at least 50% of the profits of an entity or, in the event of dissolution, to at least 50% of the assets of such Person; or (b) the right to appoint, directly or indirectly, a majority of the board of directors or equivalent governing body of such Person; or (c) the right to control, directly or indirectly, the

 

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management or direction of such Person by contract or corporate governance document; or (d) in the case of a partnership, the holding of the position of sole general partner.

“ Customer ” has the meaning set forth in the Preamble. References herein to “Customer” shall include the “Recipients” to the extent the context requires.

“ Customer Group ” has the meaning set forth in Section 5.5 .

“ Customer Data ” has the meaning set forth in Section 8.1 .

“ Customer Equipment ” means all Equipment owned or leased (other than from Service Provider) by Customer that is used in connection with the Services.

“ Customer Facilities ” has the meaning set forth in Section 6.1(a) .

“ Customer Owned Technology ” has the meaning set forth in Section 7.1 .

“ Customer Parties ” has the meaning set forth in Section 13.2 .

“ Customer Software ” means all Software owned by, or provided under license (other than from Service Provider) to, Customer that is used in connection with the Services (and all modifications, replacements, upgrades, enhancements, documentation, materials and media relating to the foregoing).

“ Customer System ” means an interconnected grouping of Customer Equipment and/or Customer Software that is used in connection with the Services, and all additions, modifications, substitutions, upgrades or enhancements thereto.

“ Customer Technology ” means Customer Owned Technology and Customer Third Party Technology.

“ Customer Third Party Technology ” means all Technology licensed (other than by Service Provider) to Customer that is provided to Service Provider for use in connection with the Services.

“ Direct Claim ” has the meaning set forth in Section 5.5 .

“ Effective Date ” has the meaning set forth in the Preamble.

“ Equipment ” means computer and telecommunications equipment (without regard to the entity owning or leasing such equipment) including: (i) servers, personal computers, and associated attachments, accessories, peripheral devices and other equipment; and (ii) private branch exchanges, multiplexors, modems, CSUs/DSUs, hubs, bridges, routers, switches and other telecommunications equipment.

“Final Determination ” means the final resolution of any Tax liability for any Tax period by or as a result of (i) a final and unappealable decision, judgment, decree or other order by any court of competent jurisdiction, (ii) a final settlement with the Internal Revenue Service, a closing agreement or accepted offer in compromise under Code Sections 7121 or 7122, or a comparable arrangement under the laws of another jurisdiction, (iii) any allowance of a Refund in respect of

 

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an overpayment of Tax, but only after the expiration of all periods during which such amount may be recovered by the jurisdiction imposing such Tax, or (iv) any other final disposition, including by reason of the expiration of the applicable statute of limitations.

“ Force Majeure Event ” has the meaning set forth in Section 15.5(a) .

“ Governmental Authority ” means any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

“ Indemnitee ” has the meaning set forth in Section 13.3 .

“ Indemnifying Party ” has the meaning set forth in Section 13.3 .

“ Information ” means information, whether or not patentable or copyrightable, in written, oral, electronic or other tangible or intangible forms, stored in any medium, including studies, reports, records, books, Contracts, instruments, surveys, discoveries, ideas, concepts, know-how, techniques, designs, specifications, drawings, blueprints, diagrams, models, prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes, computer programs or other software, marketing plans, customer names, communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), and other technical, financial, employee or business information or data, but in any case excluding back-up tapes.

“ Insurance Proceeds ” means those monies: (i) received by an insured from an insurance carrier; or (ii) paid by an insurance carrier on behalf of the insured.

“ Intellectual Property Rights ” means any and all common law, statutory and other intellectual property rights, including copyrights, trademarks, trade secrets, patents and other proprietary rights issued, honored and/or enforceable under any applicable Laws anywhere in the world.

“ Laws ” means any statute, law, ordinance, regulation, rule, code or other requirement of, or Order issued by, a Governmental Authority.

“ Losses ” has the meaning set forth in Section 13.1 .

“ Orders ” means any orders, judgments, injunctions, awards, decrees, writs or other legally enforceable requirement handed down, adopted or imposed by, including any consent decree, settlement Contract or similar written Contract with, any Governmental Authority.

“ Parties ” shall mean Customer and Service Provider.

“ Person ” shall mean any individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or any Governmental Authority.

“ Pricing Schedule ” means Schedule C to this Agreement.

“ Recipient ” has the meaning set forth in Section 3.1(c) .

 

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“ Recipient Personnel ” means any employees of any Recipient, and employees of any third party contractors providing Services to Customer.

“ Refund ” means any cash refund of Taxes or reduction of Taxes by means of credit, offset or otherwise, together with any interest received thereon.

“ Relationship Manager ” has the meaning set forth in Section 5.1 .

“ Required Consents ” means (i) all consents required at any time to grant Service Provider the right to use and/or access Customer Third Party Technology, Customer Software, Customer Equipment, the Customer System and Recipient software and equipment in connection with providing the Services; (ii) all consents required at any time to grant Customer and the Recipients, to the extent necessary to exercise their rights or perform their obligations under this Agreement, the right to use and/or access Service Provider Technology, Service Provider Software, Service Provider Equipment and the Service Provider System; and (iii) all other consents, including consents to modification of third party licenses or other Contracts, required from third parties at any time in connection with Service Provider’s provision of the Services.

“ Separation Agreement ” means that certain Separation Agreement, of even date herewith, by and between Customer and Service Provider, relating to the separation of Customer’s business from Service Provider.

“ Service Provider Equipment ” means all Equipment owned or leased by Service Provider or a Service Provider Affiliate or Subcontractor and used in connection with the Services.

“ Service Provider Facilities ” has the meaning given in Section 6.2(a) .

“ Service Provider Group ” has the meaning set forth in Section 5.5 .

“ Service Provider Owned Technology ” has the meaning set forth in Section 7.2 .

“ Service Provider Parties ” has the meaning set forth in Section 13.1(a) .

“ Service Provider Personnel ” means those employees, representatives, contractors, subcontractors and agents of Service Provider, Subcontractors and Service Provider Affiliates who perform any Services under this Agreement.

“ Service Provider Software ” means all software programs and programming owned by, or provided under license to, Service Provider and used to provide the Services (and all modifications, replacements, upgrades, enhancements, documentation, materials and media relating to the foregoing).

“ Service Provider System ” means an interconnected grouping of Service Provider Equipment and/or Service Provider Software used in connection with the Services, and all additions, modifications, substitutions, upgrades or enhancements thereto.

“ Service Provider Technology ” means Service Provider Owned Technology and Service Provider Third Party Technology.

 

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“ Service Provider Third Party Technology ” means any third party Technology (other than Customer Third Party Technology) used by Service Provider, a Service Provider Affiliate or Subcontractor in connection with the Services.

“ Services ” means the Base Services and any Termination Assistance Services.

“ Software ” means programs and programming (including the supporting documentation, media, on-line help facilities and tutorials).

“ Statements of Work ” or “ SOWs ” means the descriptions of services in Schedules A-1 through A-10 .

“ Subcontractors ” means Service Provider’s contractors or other service providers that perform a portion of the Services.

“ Subsidiary ” of any Person, means a corporation or other organization whether, incorporated or unincorporated, of which at least a majority of the securities, or interests having by the terms thereof ordinary voting power to elect at least a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization, is directly or indirectly owned or controlled by such Person or by any one or more of its Subsidiaries; provided , however , that a Person that is not directly or indirectly wholly-owned by any other Person will not be a Subsidiary of such other Person unless such other Person Controls, or has the right, power or ability to Control, that other Person.

“ Tax ” or “ Taxes ” shall mean all forms of taxation, whenever created or imposed, and whether of the United States or elsewhere, and whether imposed by a federal, state, municipal, governmental, territorial, local, foreign or other body, and without limiting the generality of the foregoing, shall include net income, gross income, gross receipts, sales, use, value added, ad valorem, transfer, recording, franchise, profits, license, lease, service, service use, payroll, wage, withholding, employment, unemployment insurance, workers compensation, social security, excise, severance, stamp, business license, business organization, occupation, premium, property, environmental, windfall profits, customs, duties, alternative minimum, estimated or other taxes, fees, premiums, assessments or charges of any kind whatever imposed or collected by any governmental entity or political subdivision thereof, together with any related interest and any penalties, additions to such tax or additional amounts imposed with respect thereto by such governmental entity or political subdivision.

“ Technology ” means all formulae; algorithms; processes; procedures; designs; ideas; concepts; research; inventions and invention disclosures (whether or not patentable or reduced to practice); know-how, proprietary information and methodologies; trade secrets; technology; computer software (in both object and source code form); databases; specifications; and all records thereof, including documentation, design documents and analyses, studies, programming tools, plans, models, flow charts, reports and drawings, and all Intellectual Property Rights subsisting in each of the foregoing.

“ Term ” has the meaning set forth in Section 2.1 .

“ Termination Assistance Services ” has the meaning set forth in Section 14.4 .

 

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“ Third-Party Claims ” has the meaning set forth in Section 13.1 .

“ Transaction Agreement ” means that certain Transaction Agreement, dated              , 2008, among Customer, Service Provider and certain Affiliates of Customer and Service Provider.

“ Transition Activities ” has the meaning set forth in Section 3.2 .

 

2.

TERM

The term of this Agreement will begin on the Effective Date and will end at midnight on              , 2008 (the “ Term ”) [This date will be 6 months after the Effective Date] , unless earlier terminated in accordance with the terms of this Agreement. Customer may extend the Term as to all or any individual Service(s) (to the extent such individual Service(s) can be segregated from the other Services which are not being extended) for one month periods up to an aggregate of six (6) additional months by providing to Service Provider sixty (60) days advance written notice.

 

3.

SERVICES

3.1 Base Services .

(a) Performance . Service Provider will provide the Services described in Schedule A (the “ Base Services ”). Services provided by Service Provider under this Agreement may be provided by Service Provider directly or through any of its Subsidiaries at Service Provider’s discretion.

(b) Commencement of Services . Unless otherwise specified in the applicable Statements of Work, Service Provider will begin to provide the Base Services on the Effective Date.

(c) Recipients . Service Provider will provide the Base Services to Customer and to Customer’s Subsidiaries, to the extent specified in Schedule B (which may be updated by Customer from time to time upon notice to Service Provider) (each, a “ Recipient ”).

(d) Subsequent Adjustments . The Parties acknowledge that certain items of Equipment or Software or certain Contracts, existing as of the Effective Date, may have been inadvertently omitted from, included in or mischaracterized under, the applicable schedules. Accordingly, the Parties agree that to the extent any such omitted, included or mischaracterized item is discovered, the discovering Party shall promptly notify the other Party and the Parties shall promptly amend the relevant schedule. If such discovered information results in a material increase in cost that is not covered by Service Provider’s cost allocation that is used to determine its Charges to Customer, using Service Provider’s normal cost allocation methodology, then the Parties will make an equitable adjustment to the Charges and impacted schedules, all of which adjustments will be reviewed and considered through the Change Management Process. In no event shall any adjustment to the Service provide Service Provider with a greater degree of discretion than it has with respect to the existing Services.

3.2 Transition Activities . Schedule D sets forth the responsibility of each Party for the initial activities required to enable Service Provider to provide the Services in a steady state manner contemplated by the SOWs (collectively the “ Transition Activities ”). In the event

 

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Customer fails or delays in the performance of any of its responsibilities set forth in such schedule, Service Provider will be excused for a corresponding amount of time, and Customer shall be responsible for any additional costs incurred by Service Provider as a result of such failure or delay.

3.3 Substantive Business Decisions Prohibited . Notwithstanding anything to the contrary contained in this Agreement or the accompanying schedules, none of Service Provider Parties, Subcontractors or Service Provider Personnel shall make any substantive business decisions with respect to Customer in performing Services or Transition Activities (including, without limitation, by performing any sales or marketing activities for customer). Each provision of this Agreement and the accompanying schedules shall be interpreted in a manner consistent with this Section 3.3 .

 

4.	SERVICE PROVIDER SUBCONTRACTORS AND THIRD PARTY CONTRACTS

4.1 Subcontractors .

(a) Use of Subcontractors . Service Provider reserves the right to use Subcontractors to assist Service Provider in the provision of the Services as Service Provider deems appropriate.

(b) Service Provider Responsibility for Subcontractors . Unless otherwise agreed, Service Provider will be responsible for the Services performed by the Subcontractor and Service Provider will be Customer’s sole point of contact regarding the Services, including with respect to payment.

4.2 Customer Compliance with Third Party Contracts . Customer agrees to be bound by and comply with the terms and conditions of Services Provider’s agreements with the third parties listed in Schedule E (as such schedule may be amended from time to time upon mutual written agreement of the Parties), other than Service Provider’s payment obligations under such agreements, in each case to the extent services are directly or indirectly provided to Customer under such agreements. In addition, Customer will comply with any obligations (e.g., use restrictions, confidentiality) to be performed under any Contracts (other than Service Provider’s payment obligations under such agreements) applicable to Customer’s receipt and use of the Services and to the extent Customer is informed of such obligations.

 

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5.	RELATIONSHIP MANAGEMENT

5.1 Relationship Managers . Each Party will appoint an individual (each, a “ Relationship Manager ”) who, from the Effective Date until replaced by the appointing Party, will serve as that Party’s representative under this Agreement during the Term. Each Relationship Manager will (a) have overall responsibility for managing and coordinating the performance of the appointing Party’s obligations under this Agreement, and (b) be authorized to act for and on behalf of the appointing Party concerning all matters relating to this Agreement. Neither Party will reassign a Relationship Manager, unless it provides at least ten (10) days prior written notice to the other Party. If a Party terminates the employment of or reassigns its Relationship Manager or its Relationship Manager resigns, dies or becomes disabled, such Party will appoint a new Relationship Manager within thirty (30) days after the reassignment, resignation, death or disability.

5.2 Regulatory Review . Each Party will notify the other promptly of any formal request or Order by a Government Authority to examine records regarding Customer that are maintained by Service Provider or to examine Service Provider’s performance of the Services. Service Provider will cooperate with any such examination. Customer will reimburse Service Provider for the reasonable costs Service Provider incurs in connection with such examination.

5.3 Books and Records . During the Term, Service Provider shall be provided with access at no cost to Service Provider to Customer’s books and records to the extent necessary for Service Provider to fulfill its obligations under this Agreement.

5.4 Change Management Process . Service Provider will use the same change management process for changes to the Services that Service Provider uses to manage changes for Service Provider’s own businesses that use the same or similar services (“ Change Management Process ”).

5.5 Dispute Resolution . Any dispute, controversy or claim by Service Provider or any of its Subsidiaries (collectively, “ Service Provider Group ”) against Customer or any of its Subsidiaries (collectively, “ Customer Group ”) in connection with this Agreement (collectively “ Direct Claims ”) shall be resolved by the Parties in accordance with Article 6 of the Separation Agreement, except that any executive level discussions to be held pursuant to Article 6 of the Separation Agreement with regard to such dispute, controversy or claim shall be held by Customer’s Chief Executive Officer (or his designee) and Service Provider’s President of Global Business Services (or his designee).

5.6 Continued Performance . Each Party agrees that it will, unless otherwise directed by the other Party, continue performing its obligations under this Agreement while any dispute is being resolved until this Agreement expires or is terminated in accordance with its terms, except in the case of a dispute with regards to Customer’s alleged failure to pay amounts in excess of $500,000; provided , however , that if Customer pays such disputed amounts, (a) Service Provider shall continue to perform its obligations under this Agreement and (b) such payment shall not constitute a waiver of any claims by Customer may have with respect to such disputed amounts.

 

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6.	FACILITIES

6.1 Use of Customer Facilities .

(a) General . Customer will provide Service Provider, at no charge, the space, office furnishings, janitorial service, telephone service, utilities (including air conditioning) and office-related equipment, supplies, and duplicating services at Customer’s premises that Service Provider may reasonably need to provide the Services (collectively, the “ Customer Facilities ”). In addition, Customer will provide necessary storage space for backup data files and will provide additional storage space that may be required by any change in retention schedules required by Customer. Service Provider’s employees will have reasonable access to the Customer Facilities twenty-four (24) hours a day, seven (7) days a week.

(b) Service Provider’s Obligations . To the extent Service Provider is using any part of a Customer Facility to perform the Services, Service Provider will comply with Customer’s standard policies and procedures, as made available to Service Provider, regarding access to and use of the Customer Facilities.

6.2 Service Provider Facilities and Systems .

(a) Service Provider Facilities . Service Provider may perform the Services in such facilities maintained by Service Provider or its Subcontractors or Affiliates (collectively, “ Service Provider Facilities ”) as Service Provider reasonably deems appropriate.

(b) Access to Service Provider Systems . Customer will, and will require that all Recipient Personnel who have access to Service Provider Systems, including computer or electronic data storage systems, limit their access to those portions of such systems for which they are authorized in connection with their receipt and use of the Services. Customer will (i) limit such access to those Recipient Personnel who are authorized to use the Services, (ii) maintain and make available to Service Provider a written list of the names of each individual who will be granted such access, and (iii) adhere to Service Provider’s security rules and procedures for use of Service Provider Systems. All user identification numbers and passwords disclosed to Recipients to permit any Recipient Personnel to access the Service Provider Systems will be deemed to be, and will be treated as, Service Provider’s Confidential Information. Customer will cooperate with Service Provider in the investigation of any apparent unauthorized access by Recipient Personnel to Service Provider Systems.

 

7.	TECHNOLOGY, SOFTWARE AND PROPRIETARY RIGHTS

7.1 Customer Owned Technology .

(a) Definition . The term “ Customer Owned Technology ” means: (i) Technology owned by Customer on the Effective Date; (ii) Technology developed or acquired by Customer or its third-party service providers (other than Service Provider) after the Effective Date; (iii) derivative works, modifications and enhancements to any of the foregoing; and (iv) all Intellectual Property Rights subsisting in any of the foregoing.

 

(b) Ownership by Customer; License to Service Provider . Customer Owned Technology will be owned exclusively by Customer. As of the Effective Date, Customer hereby

 

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grants to Service Provider (and solely to the extent necessary for Service Provider to provide the Services, to the Subcontractors) a non-exclusive, worldwide, non-transferable (except as provided in Section 15.2 ), revocable, fully paid-up, royalty-free right and license, solely during the Term, to access, use, execute, reproduce, display, perform, modify, enhance, distribute and create derivative works of the Customer Owned Technology made available by Customer to Service Provider pursuant to this Agreement for the express and sole purpose of providing the Services. Except as otherwise requested or approved by Customer, Service Provider will, and will cause the Service Provider Personnel to, cease all use of Customer Owned Technology upon the later of the end of the Term and the completion of any Termination Assistance Services.

7.2 Service Provider Owned Technology .

(a) Definition . The term “ Service Provider Owned Technology ” means Technology owned by Service Provider or a Service Provider Affiliate or Subcontractor and used in connection with the Services, including any modifications, enhancements or derivative works of such Technology or any new Technology developed by Service Provider.

(b) Ownership by Service Provider; License to Customer . Service Provider Owned Technology will be owned exclusively by Service Provider. In addition to any other license rights granted hereunder, Service Provider hereby grants to each Recipient a non-exclusive, worldwide, non-transferable (except as provided in Section 15.2 ), fully paid-up, royalty-free right and license during the Term, to the extent required to fully and completely use the Services, to use all Intellectual Property Rights in Service Provider Technology. The Parties acknowledge that such right and license may be subject to additional terms and conditions, and, except as otherwise provided herein, will terminate upon the termination of the Services. As between the Parties, all Internet addresses, network identification, access codes and telephone numbers provided or issued to Customer or its users by Service Provider or Service Provider Personnel, and not transferred to Customer pursuant to the Separation Agreement, shall be and remain the sole property of Service Provider.

7.3 No Implied Licenses; Residuals . Except as expressly specified in this Agreement, nothing in this Agreement will be deemed to grant to one Party, by implication, estoppel or otherwise, license rights, ownership rights or any other Intellectual Property Rights in any Technology owned by the other Party or any Affiliate of the other Party. Service Provider shall be free to use its general knowledge, skills and experience, and any ideas, concepts, know how, and techniques that are required or used in the course of providing the Services.

7.4 Required Consents .

(a) Prior to the Effective Date, Service Provider used its commercially reasonable efforts to identify and obtain Required Consents with respect to the Service Provider supplied Software, materials, Equipment and third party Contracts that are necessary for Service Provider to provide Services under this Agreement. Service Provider shall, in consultation with Customer, continue to use commercially reasonable efforts to obtain any Required Consents not obtained by the Effective Date with respect to such Software, materials, Equipment and third party Contracts. Service Provider makes no warranty as to the receipt of any Required Consents by the Effective Date.

 

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(b) If at any time after the Effective Date either Party identifies or becomes aware of the need to obtain a Required Consent, such Party shall promptly inform the other Party.

(c) If Service Provider or Customer, as applicable, is unable to obtain a Required Consent, regardless of when the need to obtain such consent arises, then, unless and until such Required Consent is obtained, the Parties will use their commercially reasonable efforts to determine and adopt such alternative ap