Contract
MANAGEMENT
AGREEMENT,
dated
as of September 20, 2006, among XXXXX
PLASTICS CORPORATION,
a
Delaware corporation (the “Company”),
XXXXX
PLASTICS GROUP, INC., a
Delaware corporation (“Group”),
APOLLO
MANAGEMENT VI, L.P.,
a
Delaware limited partnership (“Apollo”)
and
XXXXXX
PARTNERS, INC. a
Delaware corporation (“Xxxxxx”;
Apollo
and Xxxxxx collectively referred to hereafter as “Sponsors”
and
each a “Sponsor”).
WHEREAS,
each of
Group and the Company desires to avail itself of Sponsors’ expertise and
consequently has requested that Sponsors make such expertise available from
time
to time in rendering certain management consulting and advisory services related
to the business and affairs of the Company and its subsidiaries and affiliates
and the review and analysis of certain financial and other transactions.
Sponsors, Group and the Company agree that it is in their respective best
interests to enter into this Agreement whereby, for the consideration specified
herein, Sponsors shall provide such services as independent consultants to
the
Company.
NOW,
THEREFORE,
in
consideration of the mutual covenants hereinafter set forth, the Company, Group
and Sponsors agree as follows:
Section
1. Retention
of Sponsors.
The
Company hereby retains Sponsors, and Sponsors accept such retention, upon the
terms and conditions set forth in this Agreement.
Section
2. Term.
This
Agreement shall commence on the date hereof and, unless otherwise extended
pursuant to the second sentence of this Section 2, shall terminate on December
31, 2012 (the “Term”).
Upon
December 31, 2012, and at the end of each year thereafter (each of December
31,
2012 and the end of each year thereafter being a “Year
End”),
the
Term shall automatically be extended for an additional year unless notice to
the
contrary is given by either party at least 30, but no more than 60, days prior
to such Year End, as applicable. Notwithstanding anything to the contrary in
this Section 2, this Agreement may be terminated at any time upon written notice
to the Company from Sponsors. The provisions of Section 3(c), the last sentence
of Section 4(a) Section 4(b), Section 4(c), Section 4(d), Section 5 and Sections
7 though 14 shall survive the termination of this Agreement.
Section
3. Management
Consulting Services.
(a) Sponsors
shall advise the Company concerning such management matters that relate to
proposed financial transactions, acquisitions and other senior management
matters related to the business, administration and policies of the Company
and
its subsidiaries and affiliates, in each case as the Company shall reasonably
and specifically request by way of written notice to Sponsors, which notice
shall specify the services required of Sponsors and shall include all background
material necessary for Sponsors to complete such services. If requested to
provide such services, Sponsors shall devote such time to any such written
request as Sponsors shall deem, in its sole discretion, necessary. Such
consulting services, in Sponsors’ sole discretion, shall be rendered in person
or by telephone or other communication. Sponsors shall have no obligation to
the
Company as to the manner and time of rendering its services hereunder, and
the
Company shall not have any right to dictate or direct the details of the
services rendered hereunder.
-1-
(b) Sponsors
shall perform all services to be provided hereunder as an independent contractor
to the Company and not as employees, agents or representatives of the Company.
Sponsors shall have no authority to act for or to bind the Company without
its
prior written consent.
(c) This
Agreement shall in no way prohibit Sponsors or any partners or Affiliates of
either Sponsor or any director, officer, partner, agent or employee of either
Sponsor or any partners, shareholders or Affiliates from engaging in other
activities, whether or not competitive with any business of the Company or
any
of its respective subsidiaries or affiliates.
Section
4. Compensation.
(a) As
consideration for Sponsors’ agreement to render the services set forth in
Section 3(a) of this Agreement and as compensation for any such services
rendered by Sponsors, the Company agrees to pay to Sponsors or their designees
an annual fee equal to the greater of $3 million and 1.25% of the Company’s
Adjusted EBITDA (as defined in the Indenture (as defined below)), payable
quarterly in advance on September 20, December 20, March 20 and June 20 of
each
year (each a “Payment Date”) (it being understood and agreed that the first such
payment shall be due to Sponsors on September
20,
2006).
In the event that a Payment Date falls on a weekend or on a public holiday
in
the United States, that Payment Date will be taken to be the first business
day
(being a day on which the New York Stock Exchange is open for business) prior
to
the relevant Payment Date. If Sponsors elect to terminate this Agreement upon
written notice to the Company pursuant to Section 2 herein, as consideration
for
the termination of Sponsors’ services under this Agreement and any additional
compensation to be received hereunder, the Company agrees to pay, or cause
its
subsidiaries to pay, to Sponsors the present value (as reasonably determined
by
Sponsors) of (x) $21 million, less (y) any amounts Sponsors have received from
the Company prior to the termination date pursuant to the first sentence of
this
Section 4(a) and
to
employee stockholders a pro rata payment based on such amount (on a fully
diluted basis). Any payments to be paid to Sponsors pursuant to Section 4(a)
above shall be paid pro-rata to Apollo and Xxxxxx or their designees based
on
the proportion of equity each of the Apollo Stockholders and Xxxxxx Stockholders
(as defined in the Stockholders Agreement) holds in Group at the time such
payment is made.
(b) Upon
presentation by Sponsors to the Company of such documentation as may be
reasonably requested by the Company, the Company shall reimburse Sponsors for
all out-of-pocket expenses, including, without limitation, legal fees and
expenses, and other disbursements incurred by Sponsors or any partners or
Affiliates of either Sponsor or any director, officer, partner, agent or
employee of either Sponsor or any of its partners or Affiliates in the
performance of Sponsors’ obligations hereunder, whether incurred on or prior to
the date hereof, including, without limitation, out-of-pocket expenses incurred
in connection with the transactions contemplated by the Agreement and Plan
of
Merger made and entered into as of the June 28, 2006 (the “Merger
Agreement”),
among
the Company, Group and BPC Holding Acquisition Corp., and each of the documents
referred to therein.
(c) Nothing
in this Agreement shall have the effect of prohibiting Sponsors or any
Affiliates of either Sponsor from receiving from the Company or any of its
subsidiaries or affiliates any other fees, including any fee payable pursuant
to
Section 6 or the Transaction Fee Agreement dated as of the date hereof
between Sponsors and the Company. Notwithstanding the preceding sentence, the
Sponsors agree that they will not receive any
-2-
transaction
fees from the Company for transactions of an aggregate value of less that $150
million unless agreed to by a majority of the management stockholders of the
Company.
(d) Reference
is made to (i) the Credit Agreement, to be entered into simultaneously with
consummation of the transactions contemplated by the Merger Agreement (as
amended, restated, modified or supplemented and in effect from time to time,
the
“Credit
Agreement”),
dated
as
of September
20, 2006 and
entered into by and among Group, BPC Holding Corporation and the lenders party
thereto,
(ii) the
senior subordinated notes due 2016 purchased by The Xxxxxxx Xxxxx Group on
September 20, 2006 (the “New
Senior Subordinated Notes”),
and
(iii) the Indenture dated as of September 20, 2006 (the “Indenture”)
among
BPC Holding Corporation and Xxxxx Fargo Bank, N.A., as trustee, and the other
documents related thereto (the New Senior Subordinated Notes, the Indenture
and
such related documents collectively being the “Debt
Instruments”).
Any
portion of the fees payable to Sponsors under this Agreement which the Company
is prohibited from paying to Sponsors under the Credit Agreement or the Debt
Instruments shall be deferred, shall accrue and shall be payable at the earliest
time permitted under the Credit Agreement and the Debt Instruments or upon
the
payment in full of all obligations under the Credit Agreement and the Debt
Instruments. The Company shall notify Sponsors if the Company shall be unable
to
pay any fees pursuant to the Credit Agreement or the Debt Instruments on each
date on which the Company would otherwise make a payment of fees under this
Agreement to Sponsors.
Section
5. Indemnification.
The
Company agrees that it shall indemnify and hold harmless Sponsors, the partners
and Affiliates of each Sponsor and any director, officer, partner, agent or
employee of each Sponsor or any of its partners, shareholders or Affiliates
(collectively, the “Indemnified
Persons”)
on
demand from and against any and all liabilities, costs, expenses and
disbursements (including reasonable fees and expenses of counsel and other
advisors) (collectively, “Claims”)
of any
kind with respect to or arising from this Agreement or the performance by any
Indemnified Person of any services in connection herewith. Notwithstanding
the
foregoing provision, the Company shall not be liable for any Claim under this
Section 5 arising from the willful misconduct of any Indemnified
Person.
Section
6. Other
Services.
If
Group,
the Company or any of their respective subsidiaries or affiliates (other than
Sponsors) shall determine that it is advisable for any such entity to hire
a
financial advisor, consultant, investment banker or any similar agent in
connection with any merger, acquisition, disposition, recapitalization, issuance
of securities, financing or any similar transaction, it shall notify Sponsors
of
such determination in writing. Promptly thereafter, upon the request of
Sponsors, the parties shall negotiate in good faith to agree upon appropriate
services, compensation and indemnification for such entity to hire Sponsors
or
its Affiliates for such services. Such entity may not hire any person, other
than Sponsors or the Affiliates of either Sponsor, for any services, unless
(a)
the parties are unable to agree after 30 days following receipt by Sponsors
of
such written notice, (b) such other person has a reputation that is at least
equal to the reputation of Sponsors in respect of such services, (c) ten
business days shall have elapsed after such entity provides a written notice
to
Sponsors of its intention to hire such other person, which notice shall identify
such other person and shall describe in reasonable detail the nature of the
services to be provided, the compensation to be paid and the indemnification
to
be
-3-
provided,
(d) the compensation to be paid is not more than Sponsors were willing to accept
in the negotiations described above, and (e) the indemnification to be provided
is not more favorable to such other person than the indemnification that
Sponsors were willing to accept in the negotiations described above.
Section
7. Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed sufficient if personally delivered, sent by
nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if
to
Apollo, to:
Apollo
Management VI, L.P.
0
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx
Telecopier:
(000) 000-0000
if
to the
Company, Sponsors or Group, to it at:
c/o
Apollo Management VI, L.P.
0
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxxx
Telecopier:
(000) 000-0000
if
to
Xxxxxx, to:
Xxxxxx
Partners, Inc.
0000
Xxxx
Xxxxxxx Xxxx
Building
2, Suite 000
Xxxxxxx
Xxxxxx, Xxxxxxxxxxxx 00000
Attention:
Xxxxxxxxxxx X. Xxxxxx
Telecopier:
(000) 000-0000
or
to
such other address as the party to whom notice is to be given may have furnished
to each other party in writing in accordance herewith. Any such notice or
communication shall be deemed to have been received (a) in the case of personal
delivery, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next business day after the date when sent, (c) in
the
case of telecopy transmission, when received, and (d) in the case of mailing,
on
the third business day following that on which the piece of mail containing
such
communication is posted.
Section
8. Benefits
of Agreement.
This
Agreement shall bind and inure to the benefit of Sponsors, the Company, the
Indemnified Persons and any successors to or assigns of each Sponsor and the
Company; provided,
however,
that
this Agreement may not be assigned by either party hereto without
the
-4-
prior
written consent of the other party, which consent will not be unreasonably
withheld in the case of any assignment by either Sponsor.
Section
9. Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York (without giving effect to principles of conflicts
of laws).
Section
10. Headings.
Section
headings are used for convenience only and shall in no way affect the
construction of this Agreement.
Section
11. Entire
Agreement; Amendments.
This
Agreement contains the entire understanding of the parties with respect to
its
subject matter and supersedes any and all prior agreements, and neither it
nor
any part of it may in any way be altered, amended, extended, waived, discharged
or terminated except by a written agreement signed by each of the parties
hereto.
Section
12. Counterparts.
This
Agreement may be executed in counterparts, and each such counterpart shall
be
deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement.
Section
13. Waivers.
Any
party
to this Agreement may, by written notice to the other party, waive any provision
of this Agreement. The waiver by any party of a breach of any provision of
this
Agreement shall not operate or be construed as a waiver of any subsequent
breach.
Section
14. Affiliates.
For
purposes of this Agreement, the term “Affiliate,” (i) with respect to Apollo,
shall include, without limitation, Apollo Investment Fund VI, L.P., Apollo
Overseas Partners VI, L.P., Apollo Overseas Partners (Delaware) VI, L.P., Apollo
Overseas Partners (Delaware 892) VI, L.P., Apollo Overseas Partners (Germany)
VI, L.P. (collectively, the “Funds”),
the
general partner of Apollo, the general partner of each of the Funds and each
person controlling, controlled by or under common control with any of the
foregoing persons and (ii) with respect to Xxxxxx, shall include, without
limitation, Xxxxxx Capital Company L.P., Xxxxxx Partners II, L.P., Xxxxxx Xxxxx
Holdings, LP, the general partners of each of the foregoing and each person
controlling, controlled by or under common control with Xxxxxx or any of the
foregoing and Xxxxxx X. Xxxxxx.
W/1063597v7
-5-
IN
WITNESS WHEREOF,
the
parties have duly executed this Management Agreement as of the date first above
written.
XXXXX
PLASTICS GROUP, INC.
By: __________________________
Name:
Title:
XXXXX
PLASTICS CORPORATION
By: __________________________
Name:
Title:
APOLLO
MANAGEMENT VI, L.P.
By: __________________________
Name:
Title:
XXXXXX
PARTNERS, INC.
By: __________________________
Name:
Title:
