EXHIBIT 10.17
MANAGEMENT AGREEMENT
This Management Agreement is made as of February 27, 2004 (the
"CLOSING DATE"), among Solo Cup Investment Corporation, a Delaware corporation
("HOLDINGS"), Solo Cup Company, a Delaware corporation (the "COMPANY"), and SCC
Holding Company LLC, a Delaware limited liability company ("SCC").
WHEREAS, SCC, by and through its members, officers, employees, agents,
representatives and affiliates (other than Holdings and its subsidiaries), has
expertise in the disposable food service products industry and other matters
relating to the business of Holdings and its subsidiaries (including the
Company); and
WHEREAS, each of Holdings and the Company desires to avail itself, for
the term of this Agreement, of the expertise of SCC in the aforesaid areas, in
which it acknowledges the expertise of SCC.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions herein set forth, the parties hereto agree as follows:
1. APPOINTMENT. Each of Holdings and the Company hereby appoints SCC to
render advisory and consulting services referred to in Section 2 commencing upon
the Closing Date.
2. SERVICES. SCC hereby agrees that, commencing upon the Closing Date, it
shall render to each of Holdings and the Company (and their subsidiaries) from
time to time by and through such of SCC's members, officers, employees, agents,
representatives and affiliates (other than Holdings and its subsidiaries) as
SCC, in its sole discretion, shall designate from time to time, advisory and
consulting services in relation to the affairs of Holdings and the Company (and
their subsidiaries) in connection with strategic planning and enhancing industry
recognition.
3. FEES. Subject to the provisions of Section 5, Holdings and the Company
and their respective successors hereby jointly and severally agree to pay to SCC
a per annum management fee (the "FEE") equal to $2,500,000, which shall not vary
regardless of the level of services provided pursuant to Section 2 for such
year. For the period from the Closing Date through July 1, 2004, the Fee shall
be pro rated based on the number of days in such period and shall be payable in
full on July 1, 2004. For all periods beginning after July 1, 2004, the Fee
shall be payable semi-annually in arrears on each January 1 and July 1;
PROVIDED, HOWEVER, that Holdings shall promptly pay to SCC a pro rated portion
of the Fee attributable to any period between the last payment date and the date
of termination of this Agreement, based on the number of days in such period.
All references to "per annum" or "annual" herein refer to the fiscal year of the
Company. SCC shall not be reimbursed for its expenses incurred in connection
with services provided pursuant to Section 2.
4. INDEMNIFICATION. Except as provided below, Holdings and the Company
hereby jointly and severally agree to indemnify and hold harmless SCC and its
affiliates (other than Holdings and its subsidiaries), members, officers,
directors, employees, agents, representatives
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and stockholders (each being an "INDEMNIFIED PARTY") from and against any and
all losses, claims, damages and liabilities of whatever kind or nature, joint or
several, absolute, contingent or consequential, to which such Indemnified Party
may become subject under any applicable federal or state law, or any claim made
by any third party, or otherwise, to the extent they relate to or arise out of
the services contemplated by this Agreement or the engagement of SCC pursuant
to, and the performance by SCC of the services contemplated by, this Agreement.
Except as provided below, Holdings and the Company hereby jointly and severally
agree to reimburse any Indemnified Party for all reasonable costs and expenses
(including reasonable attorneys' fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense of any pending
or threatened claim for which the Indemnified Party would be entitled to
indemnification under the terms of the previous sentence, or any action or
proceeding arising therefrom, whether or not such Indemnified Party is a party
hereto; provided that in no event shall Holdings and/or the Company be required
to pay fees and expenses under this section for more than one firm of attorneys
in any jurisdiction in any one legal action or group of related actions.
Holdings and the Company will not be liable under the foregoing indemnification
provisions to the extent that any loss, claim, damage, liability, cost or
expense is determined by a court, in a final judgment from which no further
appeal may be taken, to have resulted from the gross negligence, bad faith or
willful misconduct of an Indemnified Party, and in such case, an Indemnified
Party shall promptly reimburse to Holdings any amounts advanced by Holdings or
the Company to or on behalf of such Indemnified Party with respect to such loss,
claim, damage, liability, cost or expense. No Indemnified Party seeking
indemnification or reimbursement under this Section will, without Holdings' and
the Company's prior written consent, which consent shall not be unreasonably
withheld, settle, compromise, consent to the entry of any judgment in or
otherwise seek to terminate any action, claim, suit, investigation or proceeding
referred to in this Section.
5. TERM. This Agreement shall become effective as of the Closing Date and
shall terminate at such time after the Closing Date as SCC and the affiliates
thereof (other than Holdings and its subsidiaries) cease to beneficially own (as
defined in the Stockholders' Agreement (the "STOCKHOLDERS' AGREEMENT") among
Vestar Capital Partners IV, L.P., Vestar Cup Investment, LLC, Vestar Cup
Investment II, LLC, SCC, Holdings, the Company and the Management Investors) at
least 10% of the outstanding Common Stock (as defined in the Stockholders'
Agreement). The provisions of Sections 4 and 6 and this Section 5 and the joint
and several obligations of Holdings and the Company to pay Fees accrued during
the term of this Agreement pursuant to Section 3 shall survive the termination
of this Agreement.
6. GENERAL. (a) No amendment or waiver of any provision of this
Agreement, or consent to any departure by any party from any such provision,
shall in any event be effective unless the same shall be in writing and signed
by the parties to this Agreement and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(b) Any and all notices hereunder shall, in the absence of receipted
hand delivery, be deemed duly given when mailed, if the same shall be sent by
registered or certified mail, return receipt requested, and the mailing date
shall be deemed to be the date from which all time periods pertaining to a date
of notice shall run. Notices shall be addressed to the parties at the following
addresses:
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If to SCC: SCC Holding Company LLC
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to Holdings or the Company: Solo Cup Investment Corporation
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to: Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
(c) This Agreement shall constitute the entire Agreement between the
parties with respect to the subject matter hereof, and shall supersede all
previous oral and written (and all contemporaneous oral) negotiations,
commitments, agreements and understandings relating hereto.
(d) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED THEREIN. THE PARTIES TO THIS AGREEMENT HEREBY AGREE TO
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN
NEW YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT. Each of the parties hereto waives any right it may have to trial
by jury in respect of any litigation based on, arising out of, under or in
connection with this Agreement or any course of conduct, course of dealing,
verbal or written statement or action of any party hereto. This Agreement shall
inure to the benefit of, and be binding upon, SCC, the Indemnified Parties,
Holdings, the Company and their respective successors and assigns.
(e) This Agreement may be executed in two or more counterparts, and
by different parties on separate counterparts; each set of counterparts showing
execution by all parties shall be deemed an original and shall constitute one
and the same instrument.
(f) The waiver by any party of any breach of this Agreement shall not
operate as or be construed to be a waiver by such party of any subsequent
breach.
IN WITNESS WHEREOF, the parties have caused this Management Agreement
to be executed and delivered by their duly authorized officers or agents as set
forth below.
SCC HOLDING COMPANY LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
SOLO CUP INVESTMENT CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
SOLO CUP COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer