Exhibit 10.1
TRANSITION
AGREEMENT
TRANSITION AGREEMENT (this
“Agreement”), dated as of December 14, 2006, among
Vestar Capital Partners IV, L.P. (“VCP”), Vestar Cup
Investment, LLC (“Vestar Investment”), Vestar Cup
Investment II, LLC (“Vestar Investment II”) and SCC
Holding Company LLC (“Holdings LLC”) (collectively, the
“Stockholders”) and Solo Cup Investment Corporation
(the “Company”) and Solo Cup Company (“Solo
Cup”).
W I T N E S S E T
H :
WHEREAS, as of the date hereof, VCP,
Vestar Investment, Vestar Cup Investment II and Holdings LLC are
the holders of substantially all of the outstanding shares of
voting stock of the Company and other outstanding securities
exercisable or exchangeable for or convertible into voting stock of
the Company;
WHEREAS, the parties hereto wish to
enter into certain agreements in connection with the transition of
control of the Board of Directors of the Company (the
“Board”) and the Board of Directors of Solo Cup (the
“Solo Cup Board”); and
WHEREAS, for purposes of this
Agreement, any term not defined herein shall have the meaning
assigned to such defined term in the Stockholders’ Agreement,
dated as of February 27, 2004 (the “Stockholders’
Agreement”), among the parties hereto and the Management
Investors;
NOW, THEREFORE, in consideration of
the mutual covenants and agreements herein contained, the parties
hereto agree as follows:
Section 1. Board
Changes . The parties
hereto acknowledge and agree: (i) that the Company will
substantially underperform within the meaning of
Section 2(f)(iv) of the Stockholders’ Agreement and
Section 4(d) of the Certificate of Designations for the year
ending December 31, 2006 and (ii) that VCP will be
entitled at that time to appoint additional directors to certain
boards of directors as provided in Section 2(f) of the
Stockholders’ Agreement and Section 4(d) of the
Certificate of Designations. In order to provide for an orderly
transition, the parties hereto agree to take all such actions as
are reasonably necessary to cause a duly convened meeting of the
Board and the Solo Cup Board to occur on or before
December 20, 2006, at which meetings the changes to the
composition of the Board and the Solo Cup Board contemplated by
Section 2.1(f) of the Stockholders’ Agreement and
Section 4(d) of the Certificate of Designations shall occur.
For the avoidance of doubt, after giving effect to the election of
such Additional VCP Directors and any resignations of Holdings LLC
Directors, the VCP Directors shall constitute a majority of each of
the Board and the Solo Cup Board, and the parties hereto agree that
the implementation of the provisions of this paragraph shall for
all purposes under the Stockholders’ Agreement and the
Certificate of Designations constitute the valid exercise of the
rights of VCP under Section 2(f) of the Stockholders’
Agreement and Section 4(d) of the Certificate of Designations.
At such meeting, (i) Robert L. Hulseman shall resign as
Chairman of the Board and Chairman of the Solo Cup Board and shall
be named Chairman Emeritus in each case and (ii) John F.
Hulseman shall resign as Vice Chairman of the Board and Vice
Chairman of the Solo Cup Board and shall be named Vice Chairman
Emeritus in each case.
Section 2. Compensation to
Solo Family Members .
From the date hereof through December 31, 2006, no changes
shall be made in the compensation (whether in the form of salary,
bonuses, benefits, reimbursement of personal expenses or otherwise)
paid by
Solo Cup to Solo Family Members. On and after
January 1, 2007, (i) the salary paid to each Solo Family
Member who is employed by Solo Cup (other than Robert L. Hulseman
and John F. Hulseman, whose salaries will be adjusted as described
below in this Section) may be adjusted, if necessary after review
and determination by the Chief Executive Officer of Solo Cup, to be
commensurate with salaries being paid to employees holding similar
positions in Solo Cup; (ii) the health benefits, life
insurance benefits and reimbursement of personal expenses to be
received by Solo Family Members who are employees of Solo Cup shall
in each case be commensurate with the health benefits, life
insurance benefits and reimbursement being provided to the
executive officers of Solo Cup from time to time; and
(iii) the Solo Family Members shall be subject to the same
employee policies (e.g. vacation, automobile, 401K) as applied to
the employees of Solo Cup that hold similar positions from time to
time. On and after January 1, 2007, the Company shall pay
total annual compensation on a quarterly basis to (i) Robert
L. Hulseman for his role as Chairman Emeritus $114,000 plus any
amounts less than $937,000 that the Company pays in annual salaries
and bonuses (including any severance paid in lieu of salary) to any
lineal descendants of Robert L. Hulseman or their spouses and
(ii) John F. Hulseman for his role as Vice Chairman Emeritus
$114,000 plus any amounts less than $335,000 that the Company pays
in annual salaries and bonuses (including any severance paid in
lieu of salary) to any lineal descendants of John F. Hulseman or
their spouses. The maxim
