EXHIBIT 10.6
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT, made as of December 1, 1997, by
and between Brant-Allen Industries, Inc. ("Brant-Allen")
and Bear Island Paper Company, L.L.C. (together with its
subsidiaries and affiliates, the "Company").
W I T N E S S E T H:
WHEREAS, the Company wishes to retain Brant-
Allen to provide the Company with certain management
services and Brant-Allen wishes to provide such
management services to the Company, in each case on the
terms and subject to the conditions of this Agreement set
forth;
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained in this Agreement, the
parties to this Agreement agree as follows:
1. Retention of Brant-Allen. The Company
hereby engages Brant-Allen and Brant-Allen hereby agrees
to accept the engagement by the Company to perform the
duties and responsibilities described in Section 2 of
this Agreement on an exclusive basis in accordance with
the terms and conditions of this Agreement.
2. Duties of Brant-Allen. (a) Brant-Allen
shall have full control of the business of the Company,
subject to the overall management and control of the
Board of Directors of the Company. During the term of
this Agreement, Brant-Allen shall use reasonable efforts
to provide the Company with such senior management,
treasury, financial and administrative (including
marketing and sales) services on those matters as are
within Brant-Allen's expertise, as may be reasonably
required from time to time by the Company. Such services
shall include, among other things, the following duties
and responsibilities (and Brant-Allen shall have full
authority to carry out the following for and in the name
of the Company):
(i) to supervise, oversee and direct the operation,
improvements, maintenance and repair of the
Company's mill and related plant, facilities and
equipment;
(ii) to enter into for and in the name of the
Company such contracts, agreements and other
arrangements for (A) the purchase, lease or other
acquisition of timberlands and timber rights, (B)
the supply of wood and other necessary materials or
goods and (C) the production, sale, delivery and
distribution of newsprint, in each case, as Brant-
Allen may deem necessary or desirable.
(iii) to use its reasonable efforts to market,
price and sell newsprint, in bone fide, arms' length
transactions for the best price obtainable by Brant-
Allen using its reasonable efforts;
(iv) to bill, invoice, collect and receive all
payments from customers for sales of newsprint,
paper, inventory and other products and by-products
of the Company's mill as agent for the Company and
to remit to the Company's bank account or accounts
referred to in paragraph (xiii) below all such
payments on the business day following availability
of the funds for such payments.
(v) to execute, for and in the name of the Company,
any and all contracts, agreements, instruments or
documents of any kind, which Brant-Allen may deem
appropriate in conducting the business of the
Company and use reasonable efforts to renew, amend
or assign existing contracts entered into by the
Newsprint Sales division of Brant-Allen and
newsprint customers so that, thereafter, such
contracts are between the Company and such
customers;
(vi) to acquire for and in the name of the Company
by purchase or otherwise, to own, hold, sell,
assign, or otherwise dispose of real and personal
property of any kind and wheresoever situate
(including, without limitation, to grant easements
and rights of way in connection with the Company's
real property) for such sums and on such terms and
conditions as Brant-Allen may deem prudent;
(vii) to incur indebtedness and borrow money upon
the credit of the Company for any purpose or to
guarantee any debts, liabilities or other
obligations of any corporation or partnership or
other entity controlled by the Company ("Controlled
Entity") and mortgage, pledge, charge, assign or
transfer all or any part of the real and personal,
moveable and immoveable property, undertakings or
rights of the Company, present and future, for such
purposes and to secure any other liability of the
Company or any other debt, liability or obligation
of a Controlled Entity, provided, however, that any
such action does not: (A) conflict with the
Company's organizational documents, (B) constitute a
violation of or a default under any agreement,
indenture, instrument, or other document to which
the Company is a party or (C) contravene any
provision of those laws, rules and regulations that
are applicable to the Company;
(viii) to prosecute, defend, settle and compromise
any actions at law or in equity brought by or
against the Company (other than any action or
proceeding brought by the Company to enforce this
Agreement) in such manner as it may deem expedient;
(ix) to employ and pay for such professional or
other assistance as it may deem requisite in the
discharge of its duties under this Agreement;
(x) to employ for and in the name of the Company
such employees or agents as it may deem necessary or
desirable to conduct the business of the Company or
discharge its duties under this Agreement;
(xi) to maintain for and in the name of the Company
(A) complete and accurate records and books of
account of all operations, receipts and expenditures
of the Company and (B) such internal controls as may
be required to comply with all laws and regulations
applicable to the Company, and provide the Company,
its officers or agents, free access at all
reasonable times to inspect, examine and copy them;
(xii) to provide or make available such reports,
certificates, other documents and information as any
applicable regulatory body or agency (including,
without limitation, the Securities and Exchange
Commission, the Environmental Protection Agency and
the Virginia Department of Environmental Quality)
may require under any law or regulation applicable
to the Company and as any lender, trustee,
bondholder and their respective officers, employees
and agents may be entitled to receive under the
terms of any agreement, indenture, instrument or
other document to which the Company is a party;
(xiii) to deposit all moneys received by the
Company (whether as capital contributions, income or
otherwise) to the credit of the account or accounts
of the Company at such bank or banks as may be
appointed from time to time by Brant-Allen and, if
not (w) maintained in such accounts, (x) expended
for the Company's business, (y) paid in connection
with the Company's indebtedness or (z) distributed
to the Company's members to invest such moneys only
in (A) evidences of indebtedness with a maturity of
180 days or less issued or directly and fully
guaranteed or insured by the United States of
America or any agency or a instrumentality thereof
(provided that the full faith and credit of the
United States of America is pledged in support
thereof); (B) certificates of deposit or acceptances
or Eurodollar time deposits with a maturity of 180
days or less of, and overnight bank deposits with,
any financial institution that is a member of the
Federal Reserve System having combined capital and
surplus and undivided profits of not less that $500
million; (C) commercial paper with a maturity of 180
days or less issued by a corporation that is not an
Affiliate of the Company and is organized under the
laws of any state of the United States or the
District of Columbia and rated at least A-1 by S&P
or at least P-1 by Moody's; and (D) funds which
invest in any of the foregoing; and
(xiv) to authorize such person or persons as shall
form time to time be designated by Brant-Allen to
perform any of the foregoing actions and to execute
or sign any of the foregoing documents (including,
without limitation, any checks or wire transfers
drawn on any bank account of the Company) on behalf
of the Company.
(b) Brant-Allen shall provide the foregoing services
and perform the foregoing duties and responsibilities for
the interest, advantage and profit of the Company,
devoting such of its time and attention as Brant-Allen
deems necessary to perform its duties and obligations set
forth in this Agreement.
(c) Nothing in this Agreement shall be deemed to
derogate from the powers of Brant-Allen to manage the
Company as set forth in the Virginia Limited Liability
Company Act and, in the case of conflict, the provisions
of the Virginia Limited Liability Company Act shall
control.
3. Compensation. During the term of this
Agreement, the Company shall pay to Brant-Allen, without
any set-offs, credits or deductions, a fee equal to 3%
of the Company's annual net sales (that is, the selling
price of newsprint produced by the Company less
transportation costs) payable in advance in monthly
installments (commencing on the date of this Agreement)
based on Brant-Allen's estimate of the Company's net
sales for the forthcoming month and subject to a monthly
reconciliation to reflect the Company's actual net sales
during that month provided that, if any of the Company's
10% senior secured notes due 2007 are outstanding, not
more than one third of such fee shall be paid in cash.
Brant-Allen shall receive no other fees or compensation
for managing the Company but shall be reimbursed for any
direct, out-of-pocket expenses incurred by Brant-Allen on
behalf of the Company. The Company shall bear its own
costs and expenses, including, but not limited to,
operating expenses relating to the Company's assets and
business activities.
4. Term. This Agreement shall commence on
the date of execution of this Agreement and shall
continue in full force and effect until the fifth
anniversary of the date of this Agreement and shall be
renewed automatically for successive five-year periods
unless terminated by either party to this Agreement upon
giving two years written notice to the other party.
5. Indemnification. Brant-Allen shall not be
liable or accountable for damages to the Company, except
for fraud, gross negligence or wilful misconduct. The
Company hereby agrees to indemnify, defend and hold
harmless Brant-Allen and each of its directors, officers
and employees from and against any and all damages,
claims, liabilities, injuries, losses and expenses
(including reasonable attorneys' fees) incurred by Brant-
Allen or any of its directors, officers or employees as a
result of, arising out of or otherwise relating to the
performance by Brant-Allen of its duties under this
Agreement, except for any action or inaction constituting
gross negligence or willful misconduct on the part of
Brant-Allen in the performance of its duties under this
Agreement. Brant-Allen hereby agrees to indemnify,
defend and hold harmless the Company and each of its
directors, officers and employees from and against any
and all damages, claims, liabilities, injuries, losses
and expenses (including reasonable attorneys' fees)
incurred by the Company or any of its directors, officers
or employees as a result of, arising out of or otherwise
relating to any action or inaction constituting gross
negligence or willful misconduct on the part of Brant-
Allen in the performance of its duties under this
Agreement.
6. Company Employee and Other Plans. The
Company hereby agrees that the directors, officers and
employees of Brant-Allen may participate in any employee
stock ownership or option plan, employee benefit plan or
arrangements, defined contribution retirement plan,
employee insurance, long term disabilities, medical and
other plans maintained or sponsored by the Company for
the benefit of its directors, officers and employees.
7. Headings. The headings in this Agreement
are for convenience and reference only and are not part
of the substance of this Agreement.
8. Severability. The parties to this
Agreement expressly agree that it is not the intention of
any of them to violate any public policy, statutory or
common law rules, regulations, or decisions of any
governmental or regulatory body. If any provision of
this Agreement is judicially or administratively
interpreted or construed as being in violation of any
such policy, rule, regulation, or decision, then such
provision, section, sentence, word, clause, or
combination thereof shall be inoperative (and in lieu
thereof there shall be inserted such provision, sentence,
word, clause, or combination thereof as may be valid and
consistent with the intent of the parties under this
Agreement) and the remainder of this Agreement, as
amended, shall remain binding upon the parties hereto,
unless the inoperative provision would cause enforcement
of the remainder of this Agreement to be inequitable
under the circumstances.
9. Further Assurances. Each party to this
Agreement shall cooperate and shall take such further
reasonable action and shall execute and deliver such
further documents as may be reasonably requested by any
of the other parties to this Agreement in order to carry
out the intent and accomplish the purpose of this
Agreement.
10. Notices. All notices pursuant to this
Agreement shall be deemed to have been validly delivered
five days after deposit in the United States mail,
certified mail, return receipt requested, with proper
postage prepaid, or upon receipt thereof (whether by non-
certified mail, facsimile, telegram, express delivery, or
otherwise), whichever is earlier, and addressed to the
party to be notified as follows:
If to the Company, at:
Bear Island Paper Company L.L.C.
P.O. Box 2119
Ashland, VA 23005
If to Brant-Allen, at:
Brant-Allen Industries Inc.
80 Field Point Road
Greenwich, CT 06830
or to such other address as each party may designate for
itself by like notice. Failure or delay in delivering
the courtesy copies of any notice shall in no way
adversely affect the effectiveness of such notice.
11. Successors. This Agreement shall be
binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted
assigns; provided, however, that, except as otherwise
provided in this Agreement, neither party hereto may
delegate its duties or assign its obligations under this
Agreement to any other person or entity without the prior
written consent of the other party hereto which consent
may be granted or withheld in the absolute discretion of
the other party hereto.
12. Remedies. The failure of any party to
enforce any right or remedy under this Agreement, or to
enforce any such right or remedy promptly, shall not
constitute a waiver thereof, nor give rise to any
estoppel against such party nor excuse any other party
from its obligations under this Agreement. Any waiver of
any such right or remedy by any party must be in writing
and signed by the party against which such waiver is
sought to be enforced.
13. Counterparts. This Agreement, executed in
any number of counterparts, shall collectively constitute
one agreement.
14. CHOICE OF LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
15. Consent to Jurisdiction. Brant-Allen
hereby consents and submits to the jurisdiction and venue
of the federal and state courts of the Commonwealth of
Virginia, in connection with matters arising out of this
Agreement. The parties hereby waive the right to contest
the jurisdiction and venue of such courts on the ground
of inconvenience or otherwise.
IN WITNESS WHEREOF, the parties have executed
and delivered this Agreement as of date first above
written.
BEAR ISLAND PAPER COMPANY, L.L.P.
By: /s/ Edward D. Sherrick
__________________________
Name: Edward D. Sherrick
Title: Vice President of Finance
BRANT-ALLEN INDUSTRIES, INC.
By: /s/ Edward D. Sherrick
__________________________
Name: Edward D. Sherrick
Title: Vice President of Finance