TRANSITION SERVICES AGREEMENT
dated as of
November 28, 2022
by and between
VOSS CHEMICAL INDUSTRIES, INC.
and
CRESTLINE PACKAGING SOLUTIONS LLC
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "Agreement") is made and entered into as of November 28, 2022 (the "Execution Date"), by and between Voss Chemical Industries, Inc., a New York corporation, having its principal office at 790 Niagara Falls Boulevard, Tonawanda, New York 14150 ("Service Provider" or "Seller"), and Crestline Packaging Solutions LLC, a Delaware limited liability company, having its principal office at 4100 Rockside Road, Suite 300, Independence, Ohio 44131 ("Service Recipient" or "Buyer"). Service Provider and Service Recipient are sometimes referred to herein individually as a "Party" and collectively as the "Parties."
RECITALS
WHEREAS, Service Recipient, Service Provider, and Frederick G. Voss and Elena M. Voss (solely for purposes of certain provisions therein) have entered into that certain Asset Purchase Agreement, dated as of November 28, 2022 (as may be amended, restated, supplemented, or otherwise modified from time to time, the "APA"), pursuant to which Service Recipient is acquiring substantially all of the assets comprising the ProShield Industrial Coatings product line from Service Provider, on the terms and subject to the conditions set forth therein (the "Recital A");
WHEREAS, the Closing of the transactions contemplated by the APA is expected to occur on or about January 16, 2023 (the "Target Closing Date"), and the Parties acknowledge that the Closing may occur on such later date as provided in the APA (the actual Closing occurred on January 20, 2023) (the "Recital B");
WHEREAS, in order to facilitate the orderly transition of the ProShield Industrial Coatings product line to Service Recipient following the Closing, Service Provider has agreed to provide certain transition manufacturing support, formulation technical assistance, and customer introduction services to Service Recipient for a limited period following the Closing, on the terms and subject to the conditions set forth herein (the "Recital C");
WHEREAS, this Agreement is being entered into pursuant to and as contemplated by Section 7.14 of the APA and constitutes an "Ancillary Agreement" as defined thereunder (the "Recital D"); and
WHEREAS, capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the APA (the "Recital E").
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, the representations and warranties contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"APA" means that certain Asset Purchase Agreement, dated as of November 28, 2022, by and among Service Recipient, Service Provider, and Frederick G. Voss and Elena M. Voss (solely for purposes of certain provisions therein), as may be amended, restated, supplemented, or otherwise modified from time to time in accordance with its terms.
"Closing" has the meaning ascribed to such term in the APA. The actual Closing Date is January 20, 2023.
"Closing Date" means the date on which the Closing occurs under the APA. The actual Closing Date is January 20, 2023.
"Confidential Information" has the meaning set forth in Section 4.2.
"Effective Date" means the Closing Date.
"Monthly Service Fee" means Thirty-Five Thousand Dollars ($35,000) per calendar month (or such pro-rated portion thereof as may be applicable under Section 3.1), payable by Service Recipient to Service Provider in consideration for the provision of the Services during the Service Period.
"ProShield Product Line" means the ProShield Industrial Coatings product line, as such term is defined in the APA, including all products, formulations, trademarks, trade secrets, customer relationships, inventory, equipment, and related assets constituting the Acquired Assets under the APA.
"Service Period" means the period commencing on the Closing Date and ending on the date that is six (6) months after the Closing Date, unless earlier terminated in accordance with Article VI of this Agreement. Based on the actual Closing Date of January 20, 2023, the Service Period expires on July 20, 2023.
"Services" means the transition services described in Article II of this Agreement and detailed on Schedule A attached hereto and made a part hereof, as such services may be modified or supplemented in accordance with Section 2.6.
"Service Provider" means Voss Chemical Industries, Inc., a New York corporation, having its principal office at 790 Niagara Falls Boulevard, Tonawanda, New York 14150, together with its successors and permitted assigns.
"Service Provider Personnel" means the employees, officers, agents, and independent contractors of Service Provider who are engaged in providing the Services or any portion thereof under this Agreement.
"Service Recipient" means Crestline Packaging Solutions LLC, a Delaware limited liability company, having its principal office at 4100 Rockside Road, Suite 300, Independence, Ohio 44131, together with its successors and permitted assigns.
"Tonawanda Facility" means the manufacturing facility located at 790 Niagara Falls Boulevard, Tonawanda, New York 14150, which is the primary location at which the ProShield Product Line has been manufactured by Service Provider.
Section 1.2 — Rules of Construction
(a) Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the APA. In the event of a conflict between the definitions set forth in this Agreement and those in the APA, the definitions in this Agreement shall control for purposes of this Agreement.
(b) The headings and captions contained in this Agreement are inserted for convenience of reference only and shall not affect the meaning, interpretation, or construction of any provision of this Agreement.
(c) Unless the context otherwise requires, all references to "Sections" or "Articles" herein are to Sections and Articles of this Agreement, and all references to "Schedules" are to Schedules attached to this Agreement.
(d) As used in this Agreement, the word "including" (and its correlative terms "include" and "includes") means "including without limitation."
(e) Words in the singular shall include the plural and vice versa, and words in one gender shall include all genders, as the context requires.
(f) References to "days" mean calendar days unless otherwise specified. References to "business days" mean any day other than a Saturday, Sunday, or a day on which commercial banks in New York, New York are authorized or required by law to close.
(g) All dollar amounts referenced herein are in United States dollars.
ARTICLE II — SERVICES
Section 2.1 — Obligation to Provide Services
Service Provider shall provide, or cause to be provided, to Service Recipient the Services described in this Article II and set forth in detail on Schedule A during the Service Period, in accordance with the terms and conditions of this Agreement. The Services shall commence on the Closing Date and shall continue through the end of the Service Period, unless earlier terminated in accordance with Article VI. Service Provider shall allocate sufficient qualified personnel and resources as are reasonably necessary to perform the Services in a timely and professional manner consistent with the standards set forth in Section 2.3.
Section 2.2 — Description of Services
The Services to be provided by Service Provider shall consist of the following categories of transition support, as more fully described in Schedule A:
(a) Transition Manufacturing Support. Service Provider shall provide manufacturing support services to facilitate the transition of ProShield Product Line production operations to Service Recipient or its designees. Such manufacturing support services shall include, without limitation: (i) assistance with production scheduling, including guidance on optimal batch sequencing and equipment utilization; (ii) equipment calibration and commissioning support for the Acquired Assets, which include three (3) high-speed dispersion mills, two (2) automated filling lines, fourteen (14) stainless steel mixing tanks (each with a capacity of 5,000 gallons), and associated laboratory and quality control equipment; (iii) quality assurance protocol transfer, including standard operating procedures, quality control testing methodologies, and specification documentation; (iv) raw material sourcing guidance, including introductions to and information regarding existing suppliers and vendor relationships; and (v) coordination of inventory transfers in connection with the approximately $2,100,000 in estimated inventory included among the Acquired Assets. Service Provider shall make available qualified production personnel with direct operational knowledge of the ProShield manufacturing processes at the Tonawanda Facility to assist Service Recipient in establishing and stabilizing its own production operations.
(b) Formulation Technical Assistance. Service Provider shall provide technical assistance relating to the forty-seven (47) proprietary coating formulations included among the Acquired Assets. Such formulation technical assistance shall include, without limitation: (i) detailed knowledge transfer regarding polymer-modified epoxy and acrylic latex coating formulation methodologies and know-how; (ii) batch-specific technical support, including assistance with scaling, process optimization, and raw material substitution; (iii) troubleshooting assistance with respect to formulation issues encountered by Service Recipient during the Service Period; and (iv) training of Service Recipient's research and development and production personnel in formulation preparation, testing, and quality verification. Service Provider shall make available personnel with direct knowledge of the proprietary trade secrets and formulation libraries, including customer-specific formulation libraries developed for the ProShield Product Line. Service Provider acknowledges and agrees that all intellectual property, trade secrets, and formulations related to the ProShield Product Line constitute Acquired Assets under the APA and are the exclusive property of Service Recipient from and after the Closing Date. Any access by Service Provider or Service Provider Personnel to such intellectual property during the Service Period is solely for the purpose of performing the Services under this Agreement and for no other purpose.
(c) Customer Introduction Services. Service Provider shall assist Service Recipient with introductions to, and the transition of relationships with, the customers of the ProShield Product Line. Such customer introduction services shall include, without limitation: (i) coordinated customer communications, including joint announcement letters, transition notification correspondence, and follow-up communications; (ii) joint meetings, conference calls, or site visits with key customer contacts, as reasonably requested by Service Recipient; (iii) assistance with contract novation, assignment, or transition notices related to the twenty-three (23) active supply agreements being transferred as part of the Acquired Assets; and (iv) good-faith efforts to ensure continuity of supply relationships and customer satisfaction during the transition period. The Parties acknowledge that the top five (5) customers of the ProShield Product Line represent approximately fifty-eight percent (58%) of ProShield Product Line revenue, and Service Provider shall give priority attention to the transition of such customer relationships. Frederick G. Voss and Elena M. Voss shall each personally participate in customer introduction activities as reasonably requested by Service Recipient, including attending customer meetings, participating in telephone calls, and assisting with relationship continuity efforts, subject to reasonable scheduling coordination.
Section 2.3 — Standard of Services
Service Provider shall perform the Services with substantially the same degree of care, skill, and diligence as Service Provider has historically employed in connection with the ProShield Product Line in its own operations during the twelve (12) month period immediately preceding the Closing Date. The Services shall be performed by qualified Service Provider Personnel who possess appropriate expertise, training, and knowledge of the subject matter of the applicable Service category. Service Provider shall dedicate sufficient personnel and resources to perform the Services in a timely and professional manner, and shall not, without Service Recipient's prior written consent, materially reduce the level of personnel or resources allocated to the Services below the levels reasonably necessary for performance.
Section 2.4 — Service Provider Personnel
(a) Service Provider shall designate Elena M. Voss, Vice President of Operations, as the primary point of contact for the coordination, management, and delivery of the Services under this Agreement (the "Service Provider Transition Manager"). The Service Provider Transition Manager shall have the authority to make day-to-day decisions regarding the scheduling, allocation, and performance of the Services. Service Provider shall not replace or reassign the Service Provider Transition Manager without providing Service Recipient with not less than ten (10) business days' prior written notice and obtaining Service Recipient's written consent to such replacement, which consent shall not be unreasonably withheld, conditioned, or delayed.
(b) Service Recipient shall designate a transition manager (the "Service Recipient Transition Manager") to coordinate the receipt, review, and oversight of the Services. Service Recipient shall notify Service Provider in writing of the identity and contact information of the Service Recipient Transition Manager promptly following the Closing Date.
(c) Service Provider shall not, without reasonable prior written notice to Service Recipient, reassign or remove any key Service Provider Personnel who are actively engaged in providing the Services, to the extent such reassignment or removal would reasonably be expected to have a material adverse effect on the quality, timeliness, or completeness of the Services.
Section 2.5 — Access and Cooperation
(a) Each Party shall provide the other Party with reasonable access to its facilities, personnel, books, records, and systems as may be reasonably necessary for the performance and receipt of the Services. Such access shall be provided during normal business hours and upon reasonable advance notice, unless otherwise agreed by the Parties or required by the nature of the Services.
(b) Service Recipient shall provide Service Provider Personnel with reasonable access to the Tonawanda Facility, to the extent that Service Recipient has the right to use and occupy the Tonawanda Facility under its lease with Niagara Industrial Realty LLC, for the purpose of performing the Services. Service Provider Personnel shall comply with all safety, security, and access policies established by Service Recipient or the landlord at the Tonawanda Facility.
(c) Each Party shall cooperate in good faith and shall use commercially reasonable efforts to facilitate the orderly, efficient, and timely transition of the ProShield Product Line from Service Provider to Service Recipient. The Parties shall communicate regularly and promptly regarding the progress of the transition and any issues or obstacles that may arise.
Section 2.6 — Additional Services
(a) From time to time during the Service Period, Service Recipient may request in writing that Service Provider provide additional transition services beyond those described on Schedule A (each, a "Request for Additional Services"). Each such request shall describe in reasonable detail the nature, scope, and expected duration of the additional services being requested.
(b) Service Provider shall consider each Request for Additional Services in good faith and shall respond to Service Recipient within ten (10) business days of receipt of such request. If Service Provider agrees to provide the requested additional services, the Parties shall execute a written amendment to Schedule A (or a separate written addendum to this Agreement) setting forth the scope, duration, and fees for such additional services prior to the commencement of such services.
(c) Unless otherwise agreed in writing by the Parties, any additional services agreed upon pursuant to this Section 2.6 shall be subject to all terms, conditions, and limitations of this Agreement, including the indemnification, confidentiality, and limitation of liability provisions set forth herein.
Section 2.7 — Excluded Services
Nothing in this Agreement shall require Service Provider to provide any services or perform any obligation that would: (i) violate any applicable law, statute, regulation, rule, ordinance, or order of any Governmental Authority; (ii) conflict with Service Provider's obligations to any third party under any contract, agreement, or arrangement existing as of the Closing Date or entered into thereafter in the ordinary course of Service Provider's retained business; (iii) require Service Provider to retain, re-employ, or engage any employee or independent contractor whom Service Provider has otherwise terminated, released, or elected not to retain following the Closing; or (iv) result in a breach of any contractual obligation of Service Provider to any third party. Service Provider shall promptly notify Service Recipient in writing if Service Provider determines that any requested Service or portion thereof falls within the scope of this Section 2.7, and the Parties shall cooperate in good faith to identify reasonable alternative means of providing the transition support contemplated by this Agreement.
ARTICLE III — COMPENSATION AND PAYMENT
Section 3.1 — Monthly Service Fee
(a) In consideration for the provision of the Services during the Service Period, Service Recipient shall pay to Service Provider a monthly fee of Thirty-Five Thousand Dollars ($35,000) per calendar month (the "Monthly Service Fee"). The Monthly Service Fee shall be payable in arrears in accordance with the invoicing and payment procedures set forth in Section 3.3.
(b) If the Service Period does not commence on the first day of a calendar month or does not end on the last day of a calendar month, the Monthly Service Fee for such partial calendar month shall be prorated on a per diem basis, calculated by dividing the Monthly Service Fee by thirty (30) and multiplying the result by the number of calendar days in such partial month during which the Service Period is in effect.
(c) For the avoidance of doubt, the maximum aggregate Monthly Service Fees payable under this Agreement, if the Services are provided for the full six (6) month Service Period, shall be Two Hundred Ten Thousand Dollars ($210,000).
Section 3.2 — Reimbursable Expenses
(a) In addition to the Monthly Service Fee, Service Recipient shall reimburse Service Provider for all reasonable, documented out-of-pocket expenses actually incurred by Service Provider in direct connection with the performance of the Services (the "Reimbursable Expenses"). Reimbursable Expenses shall include, without limitation, reasonable travel expenses (including airfare, lodging, ground transportation, and meals) incurred by Service Provider Personnel in connection with the performance of the Services at locations other than the Tonawanda Facility.
(b) Notwithstanding the foregoing, any single Reimbursable Expense item exceeding Two Thousand Five Hundred Dollars ($2,500), or aggregate monthly Reimbursable Expenses exceeding Ten Thousand Dollars ($10,000) in any calendar month, shall require the prior written approval of Service Recipient. Service Provider shall submit a written request for such approval with reasonable supporting detail, and Service Recipient shall respond within five (5) business days of receipt.
(c) Service Provider shall maintain accurate records of all Reimbursable Expenses and shall provide reasonable supporting documentation (including receipts and invoices) with each reimbursement request.
Section 3.3 — Invoicing and Payment
(a) Service Provider shall deliver to Service Recipient monthly invoices within fifteen (15) days after the end of each calendar month during the Service Period, setting forth in reasonable detail: (i) the Services performed during such calendar month; (ii) the Monthly Service Fee (or prorated portion thereof) applicable to such month; and (iii) all Reimbursable Expenses incurred during such month, together with reasonable supporting documentation.
(b) Service Recipient shall pay each undisputed invoice within thirty (30) days of receipt thereof by wire transfer of immediately available funds to an account designated in writing by Service Provider.
(c) Any amounts not paid when due under this Agreement shall bear interest from the due date until the date of payment at a rate equal to the lesser of (i) one percent (1.0%) per month (twelve percent (12%) per annum, compounding monthly) and (ii) the maximum rate of interest permitted by applicable law.
Section 3.4 — Disputed Amounts
(a) If Service Recipient in good faith disputes any amount set forth in an invoice, Service Recipient may withhold payment of such disputed amount, provided that Service Recipient delivers to Service Provider written notice specifying the basis for the dispute in reasonable detail within twenty (20) days of receipt of the applicable invoice. The withholding of disputed amounts shall not constitute a breach of this Agreement or an event giving rise to termination, provided that Service Recipient acts in good faith and continues to pay all undisputed portions of invoices in accordance with Section 3.3.
(b) The Parties shall endeavor in good faith to resolve any billing disputes within thirty (30) days following Service Provider's receipt of Service Recipient's dispute notice. If the Parties are unable to resolve a billing dispute within such thirty (30) day period, either Party may pursue resolution in accordance with the dispute resolution provisions of Section 10.2.
(c) Undisputed portions of all invoices shall remain payable by Service Recipient in accordance with Section 3.3, notwithstanding any pending dispute with respect to other amounts.
Section 3.5 — Taxes
(a) All fees and expenses payable under this Agreement are exclusive of any applicable sales, use, value-added, goods and services, or similar taxes (collectively, "Transaction Taxes"). All Transaction Taxes imposed on or with respect to the Services provided under this Agreement shall be borne by Service Recipient. Service Provider shall separately state any applicable Transaction Taxes on each invoice.
(b) Each Party shall be solely responsible for its own income taxes, franchise taxes, and similar taxes arising from or relating to payments made or received under this Agreement.
(c) Each Party shall provide the other Party with any tax forms, certificates, or documentation reasonably requested in connection with the obligations of this Section 3.5.
ARTICLE IV — INTELLECTUAL PROPERTY AND CONFIDENTIALITY
Section 4.1 — Ownership of intellectual Property
(a) The Parties acknowledge and agree that all intellectual property rights in and to the ProShield Product Line, including, without limitation, the "ProShield" trademark (United States Patent and Trademark Office Registration No. 2,876,411), all forty-seven (47) proprietary coating formulations, all related trade secrets, customer-specific formulation libraries, manufacturing process documentation, quality control specifications, and all associated know-how and goodwill, are the exclusive property of Service Recipient from and after the Closing Date, as provided in the APA and the intellectual Property Assignment Agreement executed in connection therewith.
(b) Nothing in this Agreement shall be construed to grant Service Provider any license, right, title, or interest in or to any Acquired Assets (as defined in the APA) or any intellectual property of Service Recipient, whether by implication, estoppel, or otherwise. Service Provider's access to and use of any intellectual property of Service Recipient during the Service Period is limited solely and exclusively to the purpose of performing the Services under this Agreement.
(c) Any and all improvements, modifications, enhancements, derivative works, or new developments created by Service Provider or Service Provider Personnel in connection with the performance of the Services, whether or not based upon or derived from pre-existing intellectual property of Service Recipient, shall be the sole and exclusive property of Service Recipient. Service Provider hereby irrevocably assigns and agrees to assign to Service Recipient all right, title, and interest in and to any such improvements, modifications, enhancements, derivative works, or new developments. Service Provider shall execute and deliver, and shall cause its personnel to execute and deliver, such further instruments and documents as Service Recipient may reasonably request to evidence, perfect, or record such assignment.
Section 4.2 — Confidentiality
(a) Each Party (in such capacity, the "Receiving Party") shall maintain the confidentiality of all Confidential Information of the other Party (in such capacity, the "Disclosing Party") received in connection with the performance or receipt of Services under this Agreement. The Receiving Party shall protect the Disclosing Party's Confidential Information using the same degree of care that it uses to protect its own confidential information of a similar nature, but in no event less than a reasonable degree of care.
(b) As used herein, "Confidential Information" means all non-public technical, financial, business, and operational information disclosed by or on behalf of either Party to the other Party in connection with this Agreement, whether disclosed orally, in writing, electronically, or by inspection, including, without limitation, trade secrets, formulations, manufacturing processes, customer lists, pricing information, business plans, financial data, employee information, and strategic plans.
(c) Without limiting the generality of the foregoing, Service Provider specifically acknowledges and agrees that all ProShield Product Line formulations, customer information, customer-specific formulation libraries, manufacturing process parameters, quality control specifications, and related trade secrets constitute Confidential Information of Service Recipient, and that Service Provider's obligations with respect to such Confidential Information are of the highest importance to Service Recipient.
(d) The Receiving Party shall not disclose, publish, or disseminate any Confidential Information of the Disclosing Party to any third party, except to those employees, officers, agents, advisors, or representatives of the Receiving Party who have a need to know such information in connection with the performance or receipt of the Services and who are bound by confidentiality obligations no less restrictive than those set forth herein.
(e) The confidentiality obligations set forth in this Section 4.2 shall survive the expiration or termination of this Agreement for a period of three (3) years from the date of such expiration or termination; provided, however, that with respect to any information constituting a trade secret under applicable law, the confidentiality obligations shall continue for so long as such information retains its trade secret status.
(f) The obligations of confidentiality set forth in this Section 4.2 shall not apply to information that: (i) is or becomes publicly available through no breach of this Agreement by the Receiving Party; (ii) was already known to the Receiving Party, without restriction on disclosure, prior to its disclosure by the Disclosing Party, as demonstrated by competent written records; (iii) is independently developed by the Receiving Party without reference to or use of the Disclosing Party's Confidential Information, as demonstrated by competent written records; or (iv) is required to be disclosed by applicable law, rule, regulation, or order of any court or governmental authority, provided that the Receiving Party gives the Disclosing Party prompt written notice of such requirement (to the extent permitted by law) and cooperates with the Disclosing Party's reasonable efforts to obtain a protective order or other appropriate protection for such information.
Section 4.3 — Return of Materials
Upon the expiration or termination of this Agreement for any reason, Service Provider shall promptly, and in any event within fifteen (15) days, return to Service Recipient, or destroy (at Service Recipient's election, as communicated in writing), all materials, documents, data, files, records, samples, equipment, and other tangible or intangible property of Service Recipient that are in Service Provider's possession or control, including all copies, reproductions, summaries, analyses, or extracts thereof. If Service Recipient elects destruction, Service Provider shall provide to Service Recipient a written certification of destruction executed by an authorized officer of Service Provider within five (5) business days following such destruction. Notwithstanding the foregoing, Service Provider may retain one (1) archival copy of Confidential Information of Service Recipient solely to the extent required by applicable law, regulation, or its document retention policies, provided that such retained copy remains subject to the confidentiality obligations of Section 4.2 for the duration of the applicable survival period.
ARTICLE V — REPRESENTATIONS AND WARRANTIES
Section 5.1 — Mutual Representations
Each Party hereby represents and warrants to the other Party, as of the Execution Date and as of the Closing Date, as follows:
(a) Organization and Good Standing. Such Party is duly organized, validly existing, and in good standing under the laws of its jurisdiction of organization (the State of Delaware, in the case of Crestline Packaging Solutions LLC; the State of New York, in the case of Voss Chemical Industries, Inc.) and has all requisite organizational power and authority to own, lease, and operate its properties and to carry on its business as currently conducted.
(b) Power and Authority. Such Party has full organizational power and authority to execute, deliver, and perform this Agreement and to consummate the transactions contemplated hereby. The execution, delivery, and performance of this Agreement by such Party have been duly and validly authorized by all necessary organizational action on the part of such Party, and no other organizational proceedings on the part of such Party are necessary to authorize the execution, delivery, and performance of this Agreement.
(c) Due Execution; Binding Obligation. This Agreement has been duly and validly executed and delivered by such Party and constitutes a legal, valid, and binding obligation of such Party, enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and other similar laws affecting creditors' rights generally, and subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(d) No Conflict. The execution, delivery, and performance of this Agreement by such Party does not and will not (i) conflict with or violate such Party's certificate of incorporation, certificate of formation, operating agreement, bylaws, or other organizational documents; (ii) conflict with or violate any material law, statute, regulation, rule, order, judgment, or decree applicable to such Party; or (iii) result in a breach of, constitute a default under, or give rise to any right of termination, cancellation, or acceleration under any material agreement, contract, or instrument to which such Party is a party or by which such Party or its assets may be bound.
Section 5.2 — Service Provider Representations
In addition to the representations and warranties set forth in Section 5.1, Service Provider hereby represents and warrants to Service Recipient as follows:
(a) Sufficiency of Personnel and Resources. Service Provider has, and throughout the Service Period will maintain, sufficient qualified personnel and resources to perform the Services as described in this Agreement and Schedule A in a timely and professional manner consistent with the standards set forth in Section 2.3.
(b) Compliance with Laws. Service Provider shall perform the Services in compliance with all applicable federal, state, and local laws, statutes, regulations, rules, ordinances, and orders, including all environmental, health, and safety laws and regulations applicable to the performance of the Services.
(c) No Encumbrances. Service Provider has the right to provide the Services contemplated hereby free and clear of any liens, claims, encumbrances, or restrictions that would prevent or materially impair Service Provider's ability to perform the Services.
ARTICLE VI — TERM AND TERMINATION
Section 6.1 — Term
This Agreement shall become effective on the Closing Date and shall remain in full force and effect until the expiration of the Service Period (i.e., six (6) months after the Closing Date), unless earlier terminated in accordance with this Article VI (the "Term"). Based on the actual Closing Date of January 20, 2023, the Service Period expires on July 20, 2023. If the Closing does not occur under the APA, this Agreement shall be of no force or effect and shall be deemed null and void without any action by either Party.
Section 6.2 — Early Termination by Service Recipient
(a) Service Recipient may terminate this Agreement in its entirety at any time upon not less than thirty (30) days' prior written notice to Service Provider.
(b) Service Recipient may terminate this Agreement with respect to any individual Service category (i.e., Transition Manufacturing Support, Formulation Technical Assistance, or Customer Introduction Services) upon not less than thirty (30) days' prior written notice to Service Provider, in which case this Agreement shall continue in full force and effect with respect to the remaining, non-terminated Service categories.
(c) Upon a partial termination pursuant to Section 6.2(b), the Monthly Service Fee shall be equitably reduced to reflect the eliminated Services. The Parties shall negotiate such fee reduction in good faith within ten (10) days of Service Provider's receipt of the applicable termination notice. If the Parties are unable to agree upon an equitable reduction within such ten (10) day period, the matter shall be resolved in accordance with the dispute resolution provisions of Section 10.2; provided, however, that pending resolution of any such dispute, Service Recipient shall continue to pay the Monthly Service Fee as adjusted by Service Recipient's good-faith estimate of the equitable reduction, subject to a true-up upon final resolution.
Section 6.3 — Termination for Cause
Either Party may terminate this Agreement immediately upon written notice to the other Party if:
(a) The other Party commits a material breach of any representation, warranty, covenant, or obligation under this Agreement, and such breach remains uncured for a period of thirty (30) days after written notice from the non-breaching Party specifying the nature of the breach in reasonable detail; or
(b) The other Party (i) becomes the subject of a voluntary or involuntary petition in bankruptcy or any proceeding relating to insolvency, receivership, liquidation, or composition for the benefit of creditors, (ii) makes a general assignment for the benefit of its creditors, (iii) has a receiver, trustee, custodian, or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business, or (iv) is generally unable to pay its debts as they become due.
Section 6.4 — Termination by Service Provider
Service Provider may not terminate this Agreement or any individual Service category for convenience prior to the expiration of the Service Period. Service Provider's right to terminate this Agreement is limited solely to the circumstances described in Section 6.3. The Parties acknowledge that Service Recipient's ability to rely upon the continued availability of the Services during the full Service Period is a material inducement to Service Recipient's willingness to enter into the APA and to consummate the transactions contemplated thereby.
Section 6.5 — Effect of Termination
(a) Upon the expiration or termination of this Agreement (whether in whole or in part), Service Provider shall have no further obligation to provide the Services (or the terminated portion thereof), except that Service Provider shall complete, in a commercially reasonable manner, any services that are in progress and that require a reasonable wind-down period, which wind-down period shall not exceed fifteen (15) calendar days from the effective date of termination or expiration.
(b) The expiration or termination of this Agreement shall not relieve either Party of any obligations or liabilities that have accrued prior to the effective date of such expiration or termination, including, without limitation, Service Recipient's obligation to pay all Monthly Service Fees and Reimbursable Expenses for Services rendered and expenses incurred prior to the effective date of expiration or termination.
(c) The following provisions of this Agreement shall survive the expiration or termination of this Agreement: Section 3.1 (as to accrued and unpaid fees), Section 3.2 (as to accrued and unreimbursed expenses), Section 3.3 (as to payment procedures for accrued amounts), Article IV (Intellectual Property and Confidentiality), Article VII (Indemnification), Article VIII (Limitation of Liability), Article IX (Relationship of Parties), and Article X (General Provisions).
ARTICLE VII — INDEMNIFICATION
Section 7.1 — Service Provider Indemnification
Service Provider shall indemnify, defend, and hold harmless Service Recipient and its affiliates, and each of their respective officers, directors, managers, members, employees, agents, successors, and permitted assigns (collectively, the "Service Recipient Indemnitees") from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses of investigation and litigation) (collectively, "Losses") arising out of or relating to:
(a) any gross negligence or willful misconduct of Service Provider or any Service Provider Personnel in the performance of the Services;
(b) any material breach by Service Provider of its representations, warranties, covenants, or obligations under this Agreement; or
(c) any third-party claims arising from the acts or omissions of Service Provider Personnel in the performance of the Services, except to the extent such claims arise from the gross negligence or willful misconduct of Service Recipient.
Section 7.2 — Service Recipient Indemnification
Service Recipient shall indemnify, defend, and hold harmless Service Provider and its affiliates, and each of their respective officers, directors, shareholders, employees, agents, successors, and permitted assigns (collectively, the "Service Provider Indemnitees") from and against any and all Losses arising out of or relating to:
(a) any gross negligence or willful misconduct of Service Recipient or its employees, agents, or representatives;
(b) any material breach by Service Recipient of its representations, warranties, covenants, or obligations under this Agreement; or
(c) any third-party claims arising from Service Recipient's use of the Services or the operation of the ProShield Product Line following the Closing, except to the extent such claims arise from the gross negligence or willful misconduct of Service Provider.
Section 7.3 — Indemnification Procedures
(a) Notice. The Party seeking indemnification (the "Indemnified Party") shall provide prompt written notice to the Party from which indemnification is sought (the "Indemnifying Party") of any claim, demand, suit, or proceeding for which indemnification is or may be sought under this Article VII (a "Claim"). Such notice shall describe the Claim in reasonable detail, including the facts and circumstances giving rise to the Claim and the estimated amount of Losses (to the extent reasonably determinable). The failure of the Indemnified Party to provide prompt notice shall not relieve the Indemnifying Party of its indemnification obligations, except to the extent that the Indemnifying Party is materially prejudiced by such failure.
(b) Defense. The Indemnifying Party shall have the right, at its sole cost and expense, to assume the defense of any third-party Claim upon written notice to the Indemnified Party within thirty (30) days of receipt of notice of such Claim, using counsel reasonably acceptable to the Indemnified Party. If the Indemnifying Party assumes the defense of a third-party Claim, the Indemnified Party shall have the right to participate in such defense at its own expense and shall cooperate with the Indemnifying Party and its counsel in such defense.
(c) Cooperation. The Indemnified Party shall cooperate fully with the Indemnifying Party in the investigation, defense, and resolution of any Claim, including by providing access to relevant records, documents, and personnel.
(d) Settlement. The Indemnifying Party shall not settle, compromise, or consent to the entry of any judgment with respect to any Claim without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, that no such consent shall be required if the settlement (i) involves only the payment of monetary damages (which are paid in full by the Indemnifying Party), (ii) does not impose any injunctive or other equitable relief upon the Indemnified Party, and (iii) includes a full and unconditional release of the Indemnified Party from all liability with respect to such Claim.
Section 7.4 — Relationship to APA Indemnification
The indemnification obligations set forth in this Agreement are independent of and in addition to any indemnification obligations set forth in the APA. For the avoidance of doubt, the APA provides for an indemnification cap of Four Million Five Hundred Thousand Dollars ($4,500,000) and a basket of One Hundred Eighty Thousand Dollars ($180,000) with respect to indemnification claims under the APA, and such cap and basket shall apply solely to indemnification claims under the APA and shall not limit or otherwise affect indemnification claims under this Agreement. Claims may be asserted by an Indemnified Party under either or both this Agreement and the APA, as applicable, but in no event shall any Indemnified Party be entitled to duplicative recovery with respect to the same Loss.
ARTICLE VIII — LIMITATION OF LIABILITY
Section 8.1 — Cap on Liability
Except in the case of Losses arising from (i) gross negligence, (ii) willful misconduct, (iii) fraud, or (iv) a breach of Article IV (Intellectual Property and Confidentiality), neither Party's total aggregate liability to the other Party under or in connection with this Agreement, whether in contract, tort (including negligence), strict liability, or otherwise, shall exceed the total amount of Monthly Service Fees actually paid or payable by Service Recipient under this Agreement during the Service Period (i.e., a maximum of Two Hundred Ten Thousand Dollars ($210,000) if the Services are provided for the full six (6) month Service Period).
Section 8.2 — Exclusion of Consequential Damages
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE PERFORMANCE OR NON-PERFORMANCE OF THE SERVICES, INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOST PROFITS, LOSS OF REVENUE, LOSS OF DATA, LOSS OF GOODWILL, BUSINESS INTERRUPTION, OR COST OF PROCUREMENT OF SUBSTITUTE SERVICES, REGARDLESS OF THE THEORY OF LIABILITY (WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE) AND REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING EXCLUSION SHALL NOT APPLY TO DAMAGES ARISING FROM (A) FRAUD OR INTENTIONAL MISREPRESENTATION, (B) WILLFUL MISCONDUCT, OR (C) A BREACH OF THE CONFIDENTIALITY OBLIGATIONS SET FORTH IN SECTION 4.2.
Section 8.3 — No Warranty of Outcomes
Service Provider does not guarantee, and makes no representation or warranty with respect to, any particular outcome, result, or level of performance arising from the provision of the Services, including, without limitation, with respect to customer retention rates, production volumes, product quality, operational continuity, or the successful completion of the transition of the ProShield Product Line. The Services are provided on a commercially reasonable efforts basis, and Service Provider's obligation is limited to the exercise of the standard of care set forth in Section 2.3. The Parties acknowledge that the success of the transition depends on range factors, many of which are beyond Service Provider's control, including Service Recipient's own operational capabilities, staffing decisions, and capital investments.
ARTICLE IX — RELATIONSHIP OF PARTIES
Section 9.1 — Independent Contractor
The relationship between Service Provider and Service Recipient under this Agreement is that of independent contractors. Nothing contained in this Agreement shall be construed to create or imply a partnership, joint venture, agency, fiduciary, franchise, or employment relationship between the Parties. Service Provider shall have sole control over the manner and means by which the Services are performed, subject to the standards and requirements set forth in this Agreement. Service Provider Personnel are employees or contractors of Service Provider, and not of Service Recipient. Service Recipient shall have no liability or responsibility for the compensation, benefits, withholding taxes, unemployment insurance, workers' compensation insurance, or other employment-related obligations with respect to Service Provider Personnel.
Section 9.2 — No Authority to Bind
Neither Party shall have any authority to bind, commit, obligate, or make any representation or warranty on behalf of the other Party, or to incur any liability or obligation on behalf of the other Party, and neither Party shall hold itself out to any third party as having any such authority. Any action taken by a Party in violation of this Section 9.2 shall be void and of no force or effect, and the other Party shall have no liability or obligation with respect thereto.
ARTICLE X — GENERAL PROVISIONS
Section 10.1 — Governing Law
This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York.
Section 10.2 — Dispute Resolution
Any dispute, controversy, or claim arising out of or relating to this Agreement, including the breach, termination, or validity thereof, shall be resolved in accordance with the dispute resolution provisions set forth in the APA, including, without limitation, submission to the exclusive jurisdiction and venue of the state courts of the State of New York located in New York County, New York, and the United States District Court for the Southern District of New York. Each Party irrevocably consents to the personal jurisdiction of such courts for purposes of any action or proceeding arising out of or relating to this Agreement and waives any objection to venue or any claim of inconvenient forum with respect to any such action or proceeding brought in such courts.
Section 10.3 — Notices
All notices, requests, demands, consents, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when (a) delivered by hand or by personal delivery, (b) sent by a nationally recognized overnight courier service (with tracking capability), or (c) sent by certified mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as either Party may designate by written notice to the other Party in accordance with this Section 10.3):
If to Service Provider:
Voss Chemical Industries, Inc. 790 Niagara Falls Boulevard Tonawanda, New York 14150
Attention: Frederick G. Voss, President
with a copy (which shall not constitute notice) to:
Langford, Crewe & Cascade Insurance Brokers 120 Delaware Avenue, Suite 900 Buffalo, New York 14202
Attention: Patricia Okonkwo
If to Service Recipient:
Crestline Packaging Solutions LLC 4100 Rockside Road, Suite 300 Independence, Ohio 44131
Attention: Derek Amato, General Counsel
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 1114 Avenue of the Americas, 32nd Floor New York, New York 10036
Attention: Harrison Wexford
Notices shall be deemed effective upon actual receipt by the addressee (or its designated agent for receipt of notices). Refusal to accept delivery or inability to deliver because of a changed address for which no notice was given shall be deemed receipt as of the date of such refusal or inability.
Section 10.4 — Assignment
Neither Party may assign, transfer, or delegate this Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other Party, which consent may be withheld in such other Party's sole discretion; provided, however, that Service Recipient may, without the consent of Service Provider, assign this Agreement (in whole or in part) to (a) any affiliate of Service Recipient, or (b) any successor to all or substantially all of Service Recipient's business or assets, whether by merger, consolidation, reorganization, sale of assets, or otherwise. Any purported assignment in violation of this Section 10.4 shall be null and void and of no force or effect. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
Section 10.5 — Force Majeure
Neither Party shall be liable to the other Party for any delay in or failure to perform its obligations under this Agreement (other than payment obligations) to the extent such delay or failure results from causes beyond such Party's reasonable control, including, without limitation, acts of God, fire, flood, earthquake, hurricane, tornado, or other natural disaster; epidemic, pandemic, or public health emergency; explosion or accident; war, terrorism, riot, civil commotion, or armed conflict; strike, lockout, or other labor disturbance; embargo, sanctions, or trade restrictions; action or inaction of any governmental authority; power outage or telecommunications failure; or any other event or circumstance of similar character (each, a "Force Majeure Event"). The Party affected by a Force Majeure Event shall (a) provide prompt written notice to the other Party describing the nature and expected duration of the Force Majeure Event, (b) use commercially reasonable efforts to mitigate the effects of such Force Majeure Event and to resume performance as promptly as practicable, and (c) keep the other Party reasonably informed of the status of such Force Majeure Event. If a Force Majeure Event continues for more than sixty (60) consecutive days, either Party may terminate this Agreement upon written notice to the other Party.
Section 10.6 — Entire Agreement
This Agreement, together with the APA and the other Ancillary Agreements (as defined in the APA), and all exhibits and schedules attached hereto and thereto, constitutes the entire agreement of the Parties with respect to the subject matter hereof and supersedes all prior negotiations, discussions, representations, understandings, and agreements, whether written or oral, between the Parties relating to the subject matter hereof. No Party shall be bound by or charged with any representations, warranties, or agreements other than as specifically set forth in this Agreement, the APA, or the other Ancillary Agreements.
Section 10.7 — Amendment and Waiver
(a) This Agreement may not be amended, modified, supplemented, or restated except by a written instrument duly executed by both Parties.
(b) No waiver by either Party of any provision of this Agreement or of any breach or default hereunder shall be effective unless in writing and signed by the waiving Party. No waiver of any provision or breach shall constitute a continuing waiver of the same or any other provision or breach. The failure of either Party to enforce any provision of this Agreement at any time or for any period of time shall not be construed as a waiver of such provision or of the right of such Party thereafter to enforce each and every provision of this Agreement.
Section 10.8 — Severability
If any provision of this Agreement is held by a court of competent jurisdiction or arbitral tribunal to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. The Parties shall negotiate in good faith to replace any invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that, to the greatest extent possible, achieves the original intent and economic effect of the invalid, illegal, or unenforceable provision.
Section 10.9 — Counterparts
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by electronic mail (including in .pdf, .tif, or similar format) or by facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof. Electronic signatures complying with the New York Electronic Signatures and Records Act (N.Y. State Tech. Law § 301 et seq.) or the federal Electronic Signatures in Global and National Commerce Act (15 U.S.C. § 7001 et seq.) shall be deemed original signatures for all purposes hereunder.
Section 10.10 — No Third-Party Beneficiaries
This Agreement is for the sole benefit of the Parties hereto and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
Section 10.11 — Interpretation
The Parties acknowledge that each Party has participated in the drafting of this Agreement and that, accordingly, no presumption or rule of construction shall apply against either Party as the drafter of this Agreement. The rules of construction set forth in the APA shall apply to the interpretation of this Agreement to the extent relevant and not inconsistent with the terms hereof.
IN WITNESS WHEREOF, the Parties have caused this Transition Services Agreement to be executed by their respective duly authorized representatives as of the date first written above.
VOSS CHEMICAL INDUSTRIES, INC. (Service Provider)
By: ________
Name: Frederick G. Voss
Title: President