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EXHIBIT 10.24
SOLO CUP / DSC LOGISTICS
OPERATING AGREEMENT
PRESENTED TO:
RON WHALEY COO, CFO
DAWN KELLER V.P., LOGISTICS
NOVEMBER 19, 2001
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SOLO CUP / DSC LOGISTICS
OPERATING AGREEMENT
TABLE OF CONTENTS
OPERATING AGREEMENT UPDATED: NOVEMBER 16, 2001
EXHIBIT A INFORMATION TECHNOLOGY SERVICES
EXHIBIT B SAMPLE FACILITY SPECIFIC ADDENDUM
EXHIBIT C WAREHOUSE SERVICE LEVEL AGREEMENTS
EXHIBIT D START UP & TRANSITION COST ESTIMATION
EXHIBIT E WAREHOUSE PRICING ESTIMATE, ACCESSORIALS & PRODUCTIVITY
NOVEMBER 19, 2001
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SOLO CUP / DSC LOGISTICS
OPERATING AGREEMENT
TABLE OF CONTENTS
EXHIBIT F TRANSPORTATION RATES, ACCESSORIALS & SERVICE LEVEL
AGREEMENTS
EXHIBIT G PROFILE ELEMENTS
EXHIBIT H KEY OPERATIONAL VARIABLES
EXHIBIT I PROPOSED GEOGRAPHIES
EXHIBIT J SOLO CUSTOMERS WITH PRE-PAID FREIGHT ARRANGEMENTS
EXHIBIT K EXISTING SOLO TRANSPORTATION AGREEMENTS
EXHIBIT L EDI TRANSACTION SETS
EXHIBIT M SOLO CUP COMPANY LOGO
EXHIBIT N DSC LOGISTICS LOGO
NOVEMBER 19, 2001
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Solo Final 11/16/01
Agreement
Between
Solo Cup Company
And
DSC Logistics
November 19, 2001
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Solo Final
TABLE OF CONTENTS
<Table>
1. SERVICES..................................................................3
2. TERM......................................................................5
3. COMPENSATION..............................................................6
4. BUDGET AND PRICING ADMINISTRATION........................................11
5. REAL ESTATE OPTIONS......................................................11
6. CAPITAL INVESTMENT OPTIONS...............................................12
7. INVOICING & PAYMENT......................................................13
8. INVENTORY RECONCILIATION, LOSS OR DAMAGE.................................14
10. LIABILITY FOR INJURY TO PERSONS AND PROPERTY.............................15
11. INSURANCE................................................................16
12. PERMITS, LICENSES AND APPLICABLE LAWS....................................17
13. INDEPENDENT CONTRACTOR...................................................17
14. AGENCY...................................................................17
15. TITLE; LIENS.............................................................17
16. OPERATIONS TRANSPORTATION SERVICES.......................................18
17. OPERATIONS WAREHOUSE.....................................................23
18. FORCE MAJEURE............................................................24
19. DEFAULT; REMEDIES........................................................24
20. TERMINATION COSTS........................................................26
21. NOTICES..................................................................27
22. CONFIDENTIALITY..........................................................28
23. INTELLECTUAL PROPERTY....................................................29
24. ALLIANCE COMMITTEE.......................................................30
25. MISCELLANEOUS............................................................31
26. PUBLIC RELATIONS AND MARKETING...........................................32
27. ASSIGNMENT...............................................................33
28. CONSEQUENTIAL DAMAGES....................................................33
29. GOVERNING STATE LAW......................................................33
30. SEVERABILITY.............................................................33
31. ENTIRE AGREEMENT, MODIFICATION...........................................33
33. ARBITRATION..............................................................34
</Table>
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AGREEMENT
This Agreement entered into as of this 1st day of January, 2002 (the
"Effective Date"), by and between Solo Cup Company, located at 1700 Old
Deerfield Rd., Highland Park, IL 60035 (hereinafter "SOLO") and DSC Logistics,
Inc., located at 1750 S. Wolf Road, Des Plaines, IL 60018, (hereinafter "DSC").
GENERAL PRINCIPLES:
WHEREAS, SOLO is in the business of manufacturing and selling consumer
products;
WHEREAS, DSC is in the business of providing supply chain logistical
services;
WHEREAS, SOLO intends to restructure its entire supply chain network and
transportation management and DSC is in the business of supplying such services;
WHEREAS, SOLO and DSC seek a Strategic Alliance to enhance each of their
businesses, which Strategic Alliance will deliver a sustainable competitive
advantage by providing products to consumers through SOLO's customers at the
best possible value;
WHEREAS, the parties intend for this Agreement to provide a framework for
the continued growth of the Strategic Alliance. This Agreement is also intended
to provide governing principles for multiple locations and for transportation
management. For these reasons some matters are deliberately left for later
determination pursuant to resolution and change mechanisms provided by this
Agreement or will be included in location specific addenda provided for in this
Agreement; and
WHEREAS, while the parties may, for convenience, view themselves as
"partners" in developing this mutually beneficial business combination or
Strategic Alliance, it is not their intention to create a separate business
entity or "partnership" having a separate or distinct legal existence or
capacity. Each party retains its own separate legal capacity and neither party
becomes the agent for, or the partner of, the other.
THEREFORE, the parties agree as follows:
1. SERVICES
DSC shall make available or perform, during the term of this Agreement, the
following services (collectively, the "DSC Services"):
A. Customary warehousing services at all distribution centers ("Facility"
or "Facilities"). "Customary warehousing services" are, for purposes of
this Agreement, receiving and unloading goods (the "Products") delivered to
the Facility by or on behalf of either SOLO at the warehouse door, placing
them in proper storage, maintaining a true, correct and complete inventory
of the Products, returning the
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Products to the warehouse door in substantially the same condition as
delivered, loading outbound trailers, and providing the necessary
facilities, sanitation, equipment, security, labor and supervision to
properly conduct such activities in accordance with the provisions and
requirements of this Agreement, including the EXHIBITS and attachments
hereto. The customary warehousing services provided hereunder are referred
to as the "Warehousing Services."
B. Transportation services including truckload, less than truckload
(LTL), intermodal, rail, airfreight and package delivery for Products, as
required by SOLO, as well as transportation management, all in accordance
with the requirements more fully set forth in PARAGRAPH 16 hereof (the
"Transportation Services").
C. Knowledge Based Services ("KBS"), as may be requested and agreed upon
by the parties from time to time.
D. Value Added Services ("VAS"), such as packaging, pallet building and
display building, as may be requested from time to time.
E. Accessorial transportation and warehouse services, as described in
this Agreement and the EXHIBITS hereto (the "Accessorial Services").
F. Information Technology Services ("IT Services") described on
EXHIBIT A.
G. OTHER OPERATIONS. Both DSC and SOLO anticipate that there will be
other operations or locations from which DSC will provide the DSC Services
through a fourth party logistics provider to be managed by DSC. At the time
that such fourth party logistics provider agreement is entered into DSC and
SOLO will agree if there are to be specific modifications to this
Agreement. All of the terms and conditions of such agreements shall be set
forth in a Facility Specific Addendum ("FSA") as provided for in this
Agreement.
H. This Agreement contemplates that each Facility shall have an FSA which
shall become a part of this Agreement and subject to its terms and
conditions, and which may be amended or supplemented to reflect growth or
changes in the needs of SOLO and other modifications agreed to by the
parties. Except to the extent specifically changed or modified by the terms
of an FSA with respect to the specific Facility governed by that FSA, the
terms of this Agreement shall govern for all Facilities. A change or
modification of any of the terms of this Agreement in an FSA shall not
change or modify the terms of this Agreement for any other Facility or FSA.
This Agreement, as a whole, may be modified only in conformance with
PARAGRAPH 31. A sample FSA is attached hereto as EXHIBIT B. In the event
that an FSA shall, by its terms, extend beyond the Term of this Agreement
and this Agreement not be renewed, then the terms of this Agreement shall
remain in effect for the life of the FSA. An FSA should usually include the
following:
i. The Facility to which it is applicable.
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ii. In the first FSA for a particular Facility, the estimated
dates for search and site location and Start Up.
iii. Any space, real estate or capital commitments of the parties.
Reference should be made to the applicable PARAGRAPH and SUBPARAGRAPH
of this Agreement which governs the FSA.
iv. Start Up budget and product Profile assumptions.
v. The time periods for which the FSA is applicable.
vi. Pricing Agreements applicable to the particular Facility in
question.
vii. The Facility SOLO Profile and Facility Operating Capacity
required by PARAGRAPH 3M.
viii. Any other specific agreements made by the parties which add
to, subtract from or modify in any way the terms of this Agreement
with respect to the specific Facility.
I. All DSC Services performed and supplied by DSC to or for SOLO prior to
execution or the Effective Date shall be governed by and deemed to have
been performed or supplied pursuant to the terms of this Agreement.
J. It is DSC's intent to make available to SOLO all services and
capabilities developed by DSC (both operational and technological) for use
by SOLO in carrying out its business, it being understood and agreed that
the allocation of costs and risks associated with the developing and
offering of such services will be agreed upon by the parties within the
framework established by this Agreement.
K. In performing the DSC Services, DSC will comply with the Service Level
Agreements (the "SLA") set forth as EXHIBIT C.
2. TERM
A. The term of this Agreement shall commence on the Effective Date and
continue for an initial term of five (5) years. Thereafter the Agreement
may be renewed for additional five (5) year terms if both parties agree to
such extension at least six (6) months prior to the expiration of the
initial term or any renewal term. The Agreement may be terminated during
the initial term or any additional term as provided in PARAGRAPHS 19 and
24.
B. In the event that this Agreement shall terminate, either as a result
of notice given pursuant to this PARAGRAPH 2 or the operation of the
provisions of PARAGRAPHS 19 and 24. DSC will continue to provide all of
SOLO's logistics needs at the same level of service, at such rates as are
in effect at the time of the termination for a period equal to the notice
period. The parties may agree to a longer or shorter period.
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C. Termination or non-renewal shall not affect either party's obligations
pursuant to PARAGRAPH 5 (Real Estate Options) or PARAGRAPH 6 (Capital
Investment Options). Each new or different location shall be the subject of
an FSA to this Agreement which shall set forth any facility specific
changes, additions or omissions to this Agreement. Unless otherwise
specified in such addendum the terms of this Agreement shall govern.
3. COMPENSATION
A. GENERAL. The parties anticipate that there will be multiple facilities
or parts of Facilities governed by this Agreement. Facilities may be added
or eliminated and SOLO may add substantially new products or product lines
to the Facilities. The Compensation provisions herein are designed to
accommodate this need for flexibility and are intended to be administered
by the Alliance Committee set forth in PARAGRAPH 24 within the context of
the specific agreements set forth herein. In general the parties have
agreed to a cost plus a percentage fee arrangement as more fully set forth
in this PARAGRAPH.
B. PHASES OF PRICING. The parties have agreed that, with respect to
warehouse and logistics services (but not transportation services), pricing
will be in two principal phases: 1) Start Up and 2) Operational Pricing.
Phases may also overlap because of operational or business necessity. In
broad terms the parties agree that the phases are defined as follows:
i. START UP: This period begins when a new or alternate site is
suggested or proposed and SOLO authorizes DSC to begin consideration
of such site. It includes all transitional services to prepare and
staff the location, move SOLO's product to it, and receive the first
inbound, and ends when the Facility begins normal outbound shipping.
There will be times when Start Up does not end until the Facility or
SOLO operation within a Facility has reached sufficient maturity that
the following characteristics are true with respect to that Facility:
a) SOLO product profile has reached reasonable stability
in both throughput and mix, and the geographic region to be
serviced by the Facility is reasonably stable.
b) The Facility has been deemed operational for six (6)
months from initial Start Up.
ii. OPERATIONAL: This pricing phase will begin at the end of the
Start Up phase and end upon:
a) The giving by either party of a notice of termination
for cause of this entire Agreement or with respect to any one
Facility governed by this Agreement; or
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b) A substantial change in SOLO's product profile, or
geographic regions or other business discontinuity which
causes the Facility to be more appropriately priced as a start
up.
iii. SPECIAL PROJECTS: If SOLO requests DSC to perform special
projects as defined by the Alliance Committee, pricing for such
projects will be determined on a project-by-project basis.
C. PRICING. The parties agree that until changed by the mutual agreement
of the parties, the pricing for the several phases will be as follows:
i. START UP: Cost to DSC plus a percentage equal to nine (9%)
percent for all cost categories that are ultimately included in the
warehouse operating budget. The nine (9%) percent shall not be applied
to Start Up costs such as administrative and shuttle costs. Categories
of Start Up Costs to which the nine percent 9% shall not apply are set
forth in EXHIBIT D. This phase anticipates a pre-approved fixed
expense budget, an estimated variable budget based upon an agreed set
of operational assumptions and SOLO Profiles. Such budget and Profile
and operational assumptions to be set forth in each FSA. There will be
a joint management review by the Alliance Committee of unforeseen
matters. The parties have agreed to Start Up costs as set forth in
EXHIBIT D. This phase will include many one-time costs which will be
budgeted and reviewed as set forth in PARAGRAPH 4.
ii. OPERATIONAL PRICING: Shall include two fundamental
components:
a) Fixed Costs. This component is to be administered
pursuant to an annual budget to be approved by the Alliance
Committee. DSC will receive actual costs plus a fixed annual
compensation, to be paid in monthly installments, in the
amount of six percent (6%) of the fixed costs budgeted for a
given Facility during the first year of Operational Pricing
for the Facility. In addition thereto, DSC will be eligible to
receive annual compensation, to be paid in quarterly
installments, equivalent to another three percent (3%) of the
fixed costs budgeted for a given Facility during the first
year of Operational Pricing for the Facility, dependent on the
performance of DSC on the Service Level Agreements (SLA) as
more fully set forth in PARAGRAPH 3iic. As provided for
herein, the budget shall be adjusted by the Alliance Committee
for changes in Profile. If SOLO's business changes
significantly over the term of this Agreement (for example, if
SOLO increases the number of required Facilities or makes
other major network changes), the Fixed compensation shall be
reviewed, and will not be deemed effective until approved, by
the Alliance Committee.
b) VARIABLE COSTS. DSC is to receive compensation for
actual variable cost plus a fixed annual compensation, to be
paid in monthly installments, in the amount of six percent
(6%) of the variable costs budgeted for a given Facility
during the first year of Operational
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Pricing for the Facility. In addition thereto, DSC will be
eligible to receive compensation equivalent to another three
percent (3%) of the variable costs budgeted for a given
Facility during the first year of Operational Pricing for that
Facility, dependent on the performance of DSC on the Service
Level Agreements (SLA) as more fully set forth in PARAGRAPH
3iic. If SOLO's business changes significantly over the term
of this Agreement (for example, if SOLO increases the number
of required Facilities or makes other major network changes),
the Fixed compensation shall be reviewed, and will not be
deemed effective until approved, by the Alliance Committee.
c) PERFORMANCE INCENTIVE. The parties agree that in order
to achieve all of their goals the non cost performance
incentives designed to reward DSC for measurable service
quality are set forth in the SLA attached hereto as EXHIBIT C.
The percentage of cost to be paid to DSC pursuant to
SUBPARAGRAPHS 3iia, b shall be determined as set forth in
EXHIBIT C. The percentage to be applied shall be adjusted each
calendar quarter to reflect DSC's performance during the prior
calendar quarter as determined pursuant to EXHIBIT C.
d) EFFECT OF TERMINATION. The parties agree that no aspect
or component of the Operational Pricing shall be allocated to
cover any of DSC's costs or other expenses incurred in or
related to any divestiture of DSC assets pursuant to the
termination of this Agreement, except where such termination
results from a breach by SOLO of its obligations hereunder.
e) BUDGETS. The budgets referred to in (a) and (b) above
shall be Facility-specific and shall be attached to the
applicable FSAs. The budget for the first year of Operational
Pricing for each Facility shall be prepared and approved
during the last thirty (30) days of the Start Up Pricing phase
for that Facility.
iii. COSTS. For purposes of this Agreement during both Start Up and
Operational Pricing and in connection with both fixed and variable
costs, the word "Cost" or "Costs" shall include all of the actual and
allocated Facility costs to provide the DSC Services plus seven and
93/100 (7.93%) percent, which shall represent all DSC corporate
functional support to the Facilities.
iv. MAJOR CHANGE INCENTIVE: It is the intention of the parties to
provide for an incentive to make such major changes in the SOLO
network - locations and operations - which result in higher value to
SOLO and its customers. In order to do so, decisions may have to be
made which may cause DSC unanticipated costs or losses. In
implementing such decisions, the parties agree that DSC will be made
whole whenever possible for such costs or losses. In addition, if the
higher value to SOLO or its customers is a measurable reduced system
or unit cost and the higher value results from a major change and DSC
is a substantial contributor to such lower cost or
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higher value, then the parties shall share equally in the greater
value or reduced cost. The Alliance Committee shall administer this
provision.
v. PRODUCTIVITY INCENTIVE. It is the intention of the parties to
continuously improve productivity of all of the Facilities operating
pursuant to this Agreement. A Profile driven productivity model is set
forth in EXHIBIT E. After the Start Up period, the Alliance Committee
will determine the actual Profile and the actual achieved productivity
for a period to be determined by the Alliance Committee. Except as
otherwise provided in Exhibit A, productivity savings shall be
allocated between the parties as follows. During the first twelve (12)
months following a productivity improvement, the parties will divide
equally (fifty percent (50%) each) quarter-to- quarter improvements in
productivity. DSC shall receive twenty-five percent (25%) of such
productivity savings during the following twelve-month period, and
zero percent (0%) thereafter. DSC shall bill SOLO a discrete savings
amount on a quarterly basis for the prior quarter's savings. Savings
have to be evidenced by lower operating cost, subject to the Product
Profile, during the quarter. Productivity improvements will be
considered part of the next new operating budget.
D. TRANSPORTATION SERVICES: Fees and charges for Transportation Services
shall be as follows:
i. OPERATIONAL PRICING. Transportation Services and
Transportation Accessorials shall be priced as set forth in EXHIBIT F
plus a management fee of eight percent (8%) of base transportation
costs. Base transportation charges shall exclude fuel surcharges and
certain accessorial charges as identified in EXHIBIT F. Of the eight
percent (8%) management fee, six percent (6%) of this fee is
guaranteed during the term of the Agreement and two percent (2%) is
contingent on achievement of the Service level Agreements (SLA) as
more fully set forth in PARAGRAPH 3iic. EXHIBIT F will be mutually
developed as hereinafter set forth. The parties intend that the
provisions of PARAGRAPH 3Civ Major Change Incentive, shall be
applicable to SOLO's complete supply chain, including all
Transportation Services.
ii. PRODUCTIVITY INCENTIVE. Should DSC's actual costs in providing
the Transportation Services for any given contract year (as measured
annually from the Effective Date) be less than the budgeted costs for
such contract year, then the parties shall allocated the amount of the
difference between the actual costs and the budgeted costs pursuant to
the allocation formula set forth in PARAGRAPH 3Cv hereof; provided,
however, that the budget for each contract year shall 1) be based upon
substantially the same criteria as in the previous year and 2) reflect
all cost savings identified and implemented in previous years.
Additionally, the operating budget for the first contract year
hereunder cannot be in excess of $35MM; provided, however, that, in
the event SOLO's requirements for Transportation Services change
substantially for any contract year, including the first contract
year, the budgeted amount shall be adjusted accordingly.
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E. KBS: KBS shall be billed at an hourly rate of $200.00 per hour plus
expenses or a daily rate of $1,400 per day plus reasonable expenses. SOLO
or DSC shall submit to the other a proposed scope of work and the parties
will agree on the scope of work, time to completion and cost prior to
commencement of any KBS.
F. ACCESSORIAL SERVICES: Warehousing Accessorial Services shall be
billed as set forth in EXHIBIT E.
G. VALUE ADDED SERVICES: Pricing for value added services shall be
agreed upon at the time of the request for such services.
H. IT SERVICES: IT Services, IT enhancements, initial integration as set
forth in EXHIBIT A and start up activities, such as EDI connections, are
included in the current Start Up fees. New or additional IT Services shall
be billed at the blended hourly billing rate of not more than $125.00. SOLO
or DSC shall submit to the other a proposed scope of work and the parties
will agree on the scope of work, time to completion and cost prior to
commencement.
I. PRODUCTIVITY MODEL. The Profile-based Productivity Model is set forth
in EXHIBIT E. The parties have agreed that the Key Operational Variables
and Profile Elements necessary for the Productivity Model are as set forth
in EXHIBITS G AND H.
J. PROFILE. The compensation agreed to in this Agreement assumes the
accuracy of the "Profile" for the Products of SOLO. The "Profile" consists
of all of the expected elements of Product flow affecting time, space,
velocity, number of goods, complexity and handling variability which result
from how SOLO or its customers do business. The Profile elements set forth
on EXHIBIT G represent the elements necessary to the Pricing Model.
K. "KEY OPERATIONAL VARIABLES" are those Profile elements which the
parties believe will have the most impact on the operations of DSC and the
price to SOLO. The Key Operational Variables are as identified in EXHIBIT H
as a subset of the entire Profile. The Key Operational Variables shall be
reviewed and modified, if necessary, at the same time and pursuant to the
same method as price adjustments are made pursuant to this Agreement.
L. PROFILE REVIEW. DSC and SOLO shall review the Profile for each
Facility on a quarterly basis. Such review shall be conducted by the
Alliance Committee as more fully set forth in this Agreement. If
rebudgeting or resetting of SLA's is necessary, they shall meet the
criteria set forth in the Pricing EXHIBIT attached hereto as EXHIBIT E or
the SLA EXHIBIT attached hereto as EXHIBIT C. Quarterly Reviews shall be
limited to review of Profile data and budgets and SLA's shall not be
adjusted on a quarterly basis up or down unless the adjustment required by
the change in profile exceeds plus or minus five percent (5%) of the Key
Operational Variables.
M. ANNUAL PRICING. The parties agree that they will meet annually to
establish the fixed space price, the applicable hourly handling rate for
each Facility and transportation rates for the following calendar year.
Annual price change proposals for each Facility shall be submitted to the
Alliance Committee no later than each
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September 15 before the commencement of the next calendar year. The
Alliance Committee shall have thirty (30) days to agree on the annual
repricing. In the event no agreement is reached regarding repricing by the
Alliance Committee, the parties shall follow the Alternative Dispute
Resolution, arbitration and other related provisions of this Agreement.
Annual price adjustments shall be put into effect no later than January 1
of the applicable calendar year. In the event that the price adjustment is
not determined by that date it shall be retroactive to January 1. Quarterly
or interim price adjustments shall be effective when agreed upon or on such
other dates as agreed to or determined pursuant to this Agreement. The
first annual review of pricing, required by this PARAGRAPH, shall occur
during calendar year 2002 for the year 2003.
4. BUDGET AND PRICING ADMINISTRATION
Estimated or budgeted charges and expenses within any phase of pricing will be
presented to SOLO for prior approval. Wherever possible those expenses will be
approved by SOLO prior to commitment and will be tracked and reported on in a
manner approved by the Alliance Committee. Matters or costs not foreseen by the
parties at the time of the execution of this Agreement and which are not the
subject of an FSA are to be administered by the Alliance Committee.
5. REAL ESTATE OPTIONS
A. The parties envision that there will be many different combinations of
landlord and tenant or subtenant between SOLO and DSC and between one or
both of them and third parties in order to meet SOLO's current and changing
future needs. Each such relationship may be sufficiently unique as to
require separate negotiation, however, this PARAGRAPH is intended by the
parties to set forth the agreements the parties have reached concerning
presently anticipated relationships. These agreements are to be
administered by the Alliance Committee. The terms of each FSA shall govern.
i. Assume that SOLO owns or directly leases the real estate and
directly pays the costs of the Facility. DSC will manage as much or
little of the physical plant as SOLO requests pursuant to an
appropriate fixed building and handling cost. DSC will also actively
manage anticipated (if any) empty space for SOLO in order to reduce
SOLO's Facility costs. SOLO will be at risk for such empty space.
ii. Assume a DSC owned or leased Facility and that the Facility is
for the exclusive use of SOLO. DSC manages the Facility and space.
Pricing is set by the appropriate phase and SOLO takes the risk of
unutilized or underutilized space.
iii. Assume a DSC owned or leased Facility and that the Facility
was acquired or leased as a result of a SOLO need or Alliance
Committee decision but there is space in excess of SOLO's anticipated
needs. DSC will manage both Facility and space. SOLO will be
responsible for (at risk for) its anticipated needs. The parties will
agree at the time of purchase or lease by
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DSC as to how long the responsibility for space in excess of SOLO's
anticipated needs shall be SOLO's.
iv. Assume a DSC owned or leased Facility not purchased or leased
primarily for SOLO or where SOLO is not the principal tenant. DSC
manages both Facility and space. SOLO is responsible only for its
committed fixed space need as set forth in the FSA and as administered
by the Alliance Committee. DSC will be at risk for such empty space.
DSC will actively assist in filling unfilled space that had been set
aside for SOLO usage.
v. The parties currently contemplate that there will be
Facilities governed by the terms of this Agreement in the geographical
areas set forth on EXHIBIT I.
6. CAPITAL INVESTMENT OPTIONS
A. The parties envision that there will be many different combinations of
financing relationships between SOLO and DSC and between one or both of
them and third parties in order to best meet SOLO's current and changing
future needs. Each such relationship may be sufficiently unique as to
require separate negotiation, however, this PARAGRAPH is intended by the
parties to set forth the agreements the parties have reached concerning
presently anticipated relationships. These agreements are to be
administered by the Alliance Committee. The terms of any FSA shall govern.
i. Assume that SOLO owns or directly leases the equipment and
directly pays the costs of the equipment. DSC will manage and maintain
the equipment as required.
ii. Assume DSC owned or leased equipment and that the equipment is
for the exclusive use of SOLO. DSC manages and maintains the
equipment. The cost of such equipment is borne by SOLO and pricing is
set by the appropriate phase and SOLO takes the risk of unutilized or
underutilized equipment.
iii. Assume DSC owned or leased equipment and that the equipment
was acquired or leased as a result of a SOLO need or Alliance
Committee decision but there is equipment in excess of SOLO's current
needs. DSC will manage equipment. SOLO will be responsible for (at
risk for) its anticipated needs. The parties will agree at the time of
purchase or lease by DSC as to how long the responsibility for
equipment in excess of SOLO's anticipated needs shall be SOLO's, if at
all.
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iv. Assume a DSC owned or leased equipment not purchased or leased
primarily for SOLO. SOLO is responsible only for its annual estimated
usage as budgeted for and administered by the Alliance Committee.
7. INVOICING & PAYMENT.
DSC shall invoice SOLO separately for fixed storage and variable handling and
will provide such supporting documentation as SOLO may reasonably require, as
follows:
A. DSC shall invoice SOLO monthly for variable unit charges incurred,
Transportation Services and Accessorial Services. Payment of all undisputed
amounts shall be due fifteen (15) days after the date of the invoice.
B. DSC shall invoice SOLO for all fixed charges on the fifteenth day of
the month before the month that such charges will be incurred based upon
the SOLO's fixed space commitment or the actual excess fixed space
utilized, whichever is applicable. Payment of all undisputed amounts shall
be due fifteen (15) days after the date of the invoice.
C. All other services shall be invoiced monthly and payment of all
undisputed amounts shall be due fifteen (15) days after the date of the
invoice.
D. All invoicing shall be in a form reasonably acceptable to SOLO and
shall include sufficiently detailed entries so that SOLO may allocate its
costs. SOLO may require that invoice detail be submitted via a "flat file"
or other mutually agreeable electronic format.
E. Special Provisions relating to Transportation Services:
i. Each of DSC's invoices, if complete correct, and undisputed by
SOLO, shall be paid by SOLO to DSC as the motor carrier's agent not
more than fifteen (15) days after receipt thereof, but the inadvertent
failure in one or more instances to make payment within such period
shall not be deemed to be a breach of this Agreement.
ii. Payment of all charges by SOLO to DSC shall be deemed payment
to the carrier and, upon payment by SOLO to DSC of all applicable
freight charges, DSC shall defend, indemnify and hold SOLO harmless
against any and all claims, demands and actions, including attorneys
fees and costs, by a carrier or others seeking payment from SOLO.
F. In the event that any line item on any invoice is reasonably disputed
by SOLO, then SOLO shall notify DSC of the reason for the dispute in
writing within forty-five (45) days of receipt of the invoice. SOLO agrees
to pay undisputed amounts according to the terms described in this
PARAGRAPH. SOLO may not dispute an invoice item after forty-five (45) days.
Except for those portions of an invoice which are reasonably in dispute,
any invoice not paid within thirty (30) days of its date (twenty (20) days
in the case of fixed space charges) shall accrue interest at a per annum
rate equal at all times to one percent (1%) in excess of the "Prime Rate"
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as listed in THE WALL STREET JOURNAL from time to time (such rate to adjust
when the Prime Rate adjusts), commencing on the first business day
following the end of the aforementioned thirty (30)-day (twenty (20)-day in
the case of fixed space charges) period.
8. INVENTORY RECONCILIATION, LOSS OR DAMAGE
A. DSC shall not be liable for any loss or damage to Products, however
caused, unless such loss or damage resulted from the failure by DSC to
exercise such care in regard to them as a reasonably careful person would
exercise in like circumstances. DSC shall not be liable for damages which
could not have been avoided by the exercise of such care. In the event that
DSC shall be liable for any loss or damage to Products pursuant to this
PARAGRAPH, DSC shall be entitled to reduce such damage by the salvage value
of such product. DSC's liability for loss or damage shall be limited to
SOLO's standard manufacturing cost plus the actual cost of transportation
to the Facility.
B. DSC shall not be liable for any loss of profit or special, indirect or
consequential damages of any kind.
C. SOLO's inventory records shall determine the number of Products
shipped to and from the Facility. DSC shall use SOLO's inventory data to
compare, on a daily basis, differences from DSC's records in recorded
receipts and shipment. All discrepancies in daily inventory records shall
be resolved promptly.
D. Physical Inventory. On-line physical inventory shall be continuously
available to SOLO from DSC's electronic inventory management system. In
addition, cycle counts shall be as required by normal DSC procedure. In
addition, SOLO shall have the right to cause DSC to take physical
inventories, and SOLO agrees to pay DSC costs therefor. DSC shall furnish
personnel or equipment as requested by SOLO to conduct such inventories.
SOLO shall have the right to observe the taking of such physical
inventories and to participate in taking any such physical inventories.
Inventories shall be scheduled at a time determined by SOLO and agreed to
by DSC.
E. Inventory Reconciliation. DSC shall notify SOLO of the net annual
inventory shortage or overage, as the case may be, and DSC shall reimburse
SOLO for any net annual inventory shortages; provided, however, that, for
the purpose of computing the amount of any reimbursement due to SOLO for
the previous year, the amount of any net annual inventory shortage for such
year shall be reduced by the amount of the cumulative net inventory
overages from prior years, but only to the extent such overages were not
previously credited against a net inventory shortage for a prior year.
F. Loss or Damage Allowance. The amount of any inventory shortage or loss
or damage for which reimbursement is due from DSC shall be further reduced
by a loss allowance of 0.1% of the number of cases handled by DSC in the
year in which the shortage occurred (the "Loss Allowance"). The
reimbursement rate for any shortage
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shall be determined by reference to SOLO's cost of manufacture plus the
cost of inbound transportation. The Loss Allowance shall be applied to the
annual through put at an individual facility. The Loss Allowance at one
facility may not be used to offset loss or damage at another facility. It
is not the intention of the parties that any unutilized Loss Allowance
become a credit for DSC to be paid by SOLO. Loss Allowances shall be
reviewed and reconciled on an annual basis.
9. INDEMNITY
Each party to this Agreement shall indemnify, defend and save the other,
including but not limited to its officers, directors, employees and agents,
harmless from any and all loss, cost and expense, including reasonable
attorneys' fees, arising out of bodily injury (including death) and damage or
loss of property (excluding the Products covered by the insurance described in
PARAGRAPH 11 hereof and the Products of SOLO to the extent the liability is
covered in PARAGRAPH 8 above) caused by or arising from the negligent act or
omission of such party. Where the parties are both negligent they shall share
the loss in proportion to their respective negligence. DSC shall indemnify and
defend SOLO from any claim for employment benefits which any of DSC's employees
may attempt to assert against SOLO. In the case of third-party claims covered by
the indemnities hereunder granted, the indemnifying party shall be notified
promptly of the existence of any such claim, action, suit, proceeding, or
demand, and shall be given the opportunity to defend or settle the same, in
which defense or settlement the indemnified party shall reasonably cooperate.
The indemnifying party shall not settle any claim without the indemnified
party's approval, which approval shall not be unreasonably withheld.
10. LIABILITY FOR INJURY TO PERSONS AND PROPERTY
A. DSC assumes the entire responsibility and liability for and will
indemnify and hold harmless SOLO, its agents and employees, from any and
all losses, expenses, demands, claims and causes of action made or brought
against SOLO, its agents and employees, by any employee, agent or officer
of DSC as a result of any property damage or any personal injury or alleged
personal injury (including death), from any cause, except from negligent or
willful acts of SOLO, while DSC's employees, agents or officers are on
premises owned, operated or leased by SOLO or under the control of SOLO, or
while said employee, agent or officer of DSC is performing under this
Agreement, and DSC agrees to defend any suit or action brought against SOLO
based on any such property damage or personal injury, and to pay all costs
and expenses, including attorney's fees, in connection therewith or
resulting therefrom.
B. SOLO assumes the entire responsibility and liability for and will
indemnify and hold harmless DSC, its agents and employees, from any and all
losses, expenses, demands, claims and causes of action made or brought
against DSC, its agents and employees, by and employee, agent or officer of
SOLO as a result of any property damage or any personal injury or alleged
personal injury (including death), from any cause, except the negligent or
willful act of DSC, while SOLO employees, agents or officers are on
premises owned, operated or leased by DSC or under the control of DSC, or
while said employee, agent or officer of SOLO is performing under this
Agreement, and SOLO agrees to defend any suit or action brought against DSC
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based on any such property damage or personal injury, and to pay all costs
and expenses including attorneys fees, in connection therewith or resulting
therefrom.
C. DSC hereby assumes the entire risk and responsibility for loss, damage
or destruction of DSC's tools, equipment, vehicles and other furnished
materials while in or about the premises where the work is being performed
under the terms of this Agreement.
11. INSURANCE
A. At all times during the term of this Agreement, DSC shall maintain in
force and effect insurance coverage of the types and in amounts equal to or
greater than those required by the federal and state regulatory bodies
having jurisdiction over DSC's performance of the DSC Services, including
the Transportation Services, for each Facility location. Such insurance
coverage shall include, at a minimum throughout the term:
i. Property Damage;
ii. Cargo;
iii. Comprehensive General Liability;
iv. Automotive;
v. Warehouseman's Legal Liability; and
vi. Workers' Compensation.
Such insurance shall be provided by reputable and financially responsible
insurance companies reasonably satisfactory and acceptable to SOLO, in the
amount of Five Million Dollars ($5,000,000) aggregate, One Million Dollars
($1,000,000) per occurrence. DSC agrees that it shall not change such
insurance policies and/or insurance companies without at least thirty (30)
days' prior written notice to SOLO.
B. DSC's Cargo insurance policy shall not exclude coverage for
infidelity, fraud, dishonesty or criminal acts of DSC's employees, agents,
officers or directors. In the event said policy contains such exclusions,
DSC shall obtain and furnish a surety bond providing such coverage to the
satisfaction of SOLO. For purposes of this Agreement, the liability of DSC
or its insurer with respect to claims made under its Cargo insurance policy
shall be limited to situations where DSC is acting as a carrier performing
Transportation Services.
C. SOLO shall be named as an "Additional Insured" on the Bodily Injury
and Property Damage policies, and "Loss Payee" on the Cargo liability
policy. The policy or policies evidencing such insurance shall contain a
clause that the insurer will not cancel or change coverage of the insurance
without first giving SOLO thirty (30) days' prior written notice, and that
the insurer will be liable to SOLO for any and all damages resulting from
insurer's failure to give such notice.
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D. Prior to commencement of any services to be performed hereunder, DSC
shall deliver to SOLO copies of certificates of insurance evidencing such
insurance coverage, for SOLO's approval.
E. DSC shall also deliver to SOLO a BMC 32 "Endorsement" to its Cargo
insurance policy in the form required by the U.S. Surface Transportation
Board or the U.S. Department of Transportation for carriers operating as
common carriers. Said Endorsement shall protect SOLO for loss of or damage
to its goods while in the possession or control of DSC up to the limits of
said Endorsement, and subject to its limitations. Any bill of lading or
delivery receipt used by DSC to impose released value rates or a lower
level of liability shall be deemed contrary to this Agreement, and
therefore, null and void.
F. SOLO shall keep its Products continuously insured against all risk of
loss or damage pursuant to its risk retention programs, as such programs
may be maintained and amended from time to time.
12. PERMITS, LICENSES AND APPLICABLE LAWS
DSC shall obtain and maintain all permits and licenses necessary for performing
the DSC Services and all other work specified hereunder, and shall observe and
abide by all applicable federal, state and municipal laws, regulations,
ordinances and rules.
13. INDEPENDENT CONTRACTOR
DSC shall be an independent contractor under this Agreement and shall assume all
of the rights, obligations and liabilities applicable to an independent
contractor. DSC shall make all required or applicable withholdings from the
wages of DSC's employees assigned to perform DSC Services and shall, upon
request, provide SOLO with proof that such withholdings have been properly
deposited with the appropriate federal, state or municipal authority.
14. AGENCY
DSC shall not for any purpose be deemed the agent of SOLO and at all times shall
remain an independent contractor with respect to SOLO. DSC shall not represent
to anyone in any manner, express or implied, that DSC is an employee or agent,
or that DSC personnel are employees or agents, of SOLO, and nothing in this
Agreement shall be construed to confer on DSC any authority, express or implied,
to bind or commit SOLO to any third party in any way whatsoever, except that DSC
shall have authority on behalf of SOLO to accept shipments and to issue bills of
lading and other transportation documents in respect of SOLO products.
15. TITLE; LIENS
SOLO shall retain title to all Products, equipment, supplies, and other property
of SOLO intended to be stored in or located in the Facility. DSC shall not grant
any security interest, charge or lien against any such Products, equipment,
supplies or property, or cause any security interest, charge or lien to be
placed against same; provided, however, that nothing contained in this PARAGRAPH
or any other PARAGRAPH of this Agreement shall be construed to require DSC to
discharge or release any security interests, charges or liens not caused or
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granted by DSC, its agents or employees; and provided, further, that nothing
contained herein shall be construed to waive, limit, or impair DSC's
warehouseman's lien against the stored Products, equipment, supplies or property
for unpaid charges or to limit or impair DSC's right to exercise its
warehouseman's lien. DSC claims, and SOLO acknowledges, that DSC has a general
warehouseman's lien on all Product in storage in any Facility for all unpaid
charges under this Agreement, and for all unpaid charges applicable to the
Products currently in storage or Product that has been delivered. DSC's general
warehouseman's lien on product stored shall be for unpaid charges of any kind
rendered pursuant to this Agreement or at the request of SOLO whether for the
Products in storage or Products that have been delivered.
16. OPERATIONS TRANSPORTATION SERVICES
A. Operating Authority
i. DSC represents and warrants that it is qualified and
authorized to lawfully provide the Transportation Services specified
herein, in interstate and foreign commerce from, to or between all
points and places in the United States and to lawfully provide all of
the Transportation Services provided in accordance with the terms,
provisions and conditions of this Agreement.
ii. In providing for the transportation of the Products, DSC will
select, contract; engage or otherwise arrange for transportation by
carriers that are registered with or qualified or authorized by the
federal and state regulatory agencies in accordance with all
applicable law, and such registration, qualification and/or
authorization shall cover the commodities and geographic scope of all
Services required under this Agreement. Furthermore, DSC will not
tender SOLO freight to any carrier that does not possess a
Satisfactory or better DOT safety rating. DSC may, but is not required
to, select a carrier affiliated with DSC to perform the transportation
services contemplated by this Agreement.
B. Shipments: Tender Under Agreement: Loading Or Unloading Of Product Or
Goods
i. During the term of this Agreement, each and every shipment of
Products tendered or caused to be tendered to DSC shall be deemed to
be a tender to DSC, except as set forth in this PARAGRAPH. SOLO shall
tender to DSC one hundred percent (100%) of the shipments of Products
inbound to or outbound from Facilities except (a) any CPU shipments to
customers identified in EXHIBIT J specifically requiring SOLO to
prepay freight but use their designated carrier; (b) shipments
prohibited by carrier contracts and SOLO's existing private fleet
arrangements as identified in EXHIBIT K; and (c) SOLO may, in good
faith, from time-to-time, tender shipments to others in an emergency,
in the event of SOLO's inability to reach DSC or the clear inability
of DSC to handle such shipment. SOLO will make every reasonable
attempt to convert customers to CPU or to DSC managed carriers and
customers will be deleted from EXHIBIT J as soon as practical without
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jeopardizing customer business. EXHIBIT K consists solely of SOLO's
existing private fleet business and those carriers with whom SOLO had
contracts in place effective prior to the commencement of this
Agreement and those carriers will remain on EXHIBIT K only until such
time that these carrier contracts expire or can be terminated without
causing SOLO to be in breach of such agreements. The parties have
agreed that this Agreement will be executed and become effective
without the attachment of EXHIBITS J & K. The parties have further
agreed that they will agree to final EXHIBITS J & K within two weeks
of the execution of this Agreement.
ii. SOLO may from time to time tender to DSC freight for the
transportation of raw materials or intermediaries to or between SOLO
Facilities.
iii. As used in this Agreement, the term "shipment" shall mean that
quantity of Products tendered by SOLO (or SOLO's designee) at one
origin, at one time, consigned to SOLO or SOLO's consignee(s) or
designee(s) at one or more destinations.
iv. DSC shall arrange for all motor carriers to load and unload
each shipment tendered and transported under this Agreement. Customer
use of lumper services will be accommodated.
C. Time For Deliveries
i. DSC understands and acknowledges that the time is of the
essence at all times in the performance of its obligations under this
Agreement. The parties have agreed to certain service levels for
Transportation Services, as set forth on EXHIBIT F.
D. Receipts And Bills Of Lading
i. Each shipment shall be evidenced by a cargo receipt or bill of
lading or such other documentation as may be required by federal,
state or local laws, rules or regulations governing the DSC Services,
all in the form specified by SOLO, written or electronic, which shall
be legibly signed by DSC or DSC's carrier, agent or employee showing
the kind and quantity of Products received by DSC at origin and
intermediate points, if any. The absence or loss of any such receipt
shall not relieve DSC of its obligations and responsibilities with
respect to any shipment made hereunder. DSC or its agent shall
indicate acceptance of each shipment tendered by legibly signing the
original cargo receipt or bill of lading and indicating thereon the
kind and quantity of Products accepted by DSC at the origin and at all
intermediate points, if any, designated by SOLO. The signature of DSC,
its carrier or their agents, employees or representatives, shall be
evidence of and acknowledgment that the shipment is in the sole
possession and responsibility of DSC or its carrier. Said signature
shall also be evidence of and acknowledgment that the goods are in
good order and condition unless
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otherwise noted on the receipt and/or bill of lading. The use of a
bill of lading, manifest or other form of freight receipt or contract,
and any terms, conditions and provisions of such bill of lading,
manifest or other form shall be subject and subordinate to the terms,
conditions and provisions of this Agreement and, in the event of a
conflict between the terms, conditions and provisions of such receipt,
bill of lading, manifest or other form and of this Agreement, the
terms, conditions and provisions of this Agreement shall govern.
ii. Upon delivery of each shipment made hereunder, DSC or its
carrier shall obtain a delivery receipt, in a form specified or
approved by SOLO, showing the kind, quantity and count of Products
delivered to the consignee of such shipment at the destination
specified by SOLO and the time of such delivery, and DSC shall cause
such receipt to be signed by such consignee or by such consignee's
agent or employee at such destination. DSC agrees to retain all signed
receipts for two (2) years after delivery of the Products in question,
or for such greater period of time as may be required by federal or
state laws, rules or regulations, and shall make same available for
SOLO 's inspection upon reasonable oral or written notice.
E. Operations And Employees
i. DSC and the carriers selected by it shall furnish, at their
sole cost and expense, all fuel, oil, tires and used or other parts,
supplies and equipment necessary or required for the safe, efficient
and lawful operation and maintenance of their tractors, trailers and
other motor vehicles and related equipment used or furnished for the
performance of services hereunder (collectively referred to as the
"DSC Equipment"). DSC and its carriers shall pay all expenses of every
nature, including the expense of road service, repair, tolls and taxes
in connection with the use and operation of the DSC Equipment. DSC and
its carriers shall, at their sole cost and expense, at all times
during the term of this Agreement, maintain the DSC Equipment in good
repair, mechanical condition and appearance in order to assure minimum
service interruption due to mechanical failure. SOLO shall not be
liable to DSC for any damage sustained by or to DSC's equipment or for
loss by confiscation or seizure of such equipment by any public
authority, except where such loss or damage is caused by the negligent
act or omission or intentional misconduct of SOLO, its employees or
agents.
ii. DSC and its carriers, at their sole cost and expense, shall
employ in the performance of this Agreement only competent, fully
qualified, able and legally licensed personnel, and shall provide said
personnel with effective training regarding the use and operation of
all DSC Equipment, if any, including, without limitation, DSC
Equipment used for loading unloading, transportation and delivery. DSC
and its carriers shall also provide and maintain such licenses and
permits as are required by local, state or federal authorities with
respect to the Transportation Services, and shall further comply with
all laws and regulations applicable thereto. DSC shall have sole
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and exclusive control over the manner in which DSC and its employees
and agents perform the Transportation Services, and DSC employees
shall be subject to discharges, discipline and control solely and
exclusively by DSC.
F. Food Grade Products
i. DSC is aware of and understands that SOLO Products are "food
grade products" (as that term is customarily and generally used in the
warehousing industry). Accordingly, DSC's equipment used for
transportation of the Products shall be clean, odor-free, dry, leak
proof and free of contamination and infestation. Such equipment shall
be subject to inspection for suitability and cleanliness by SOLO.
Additionally, all trailers shall be sealed upon completion of loading,
with all such seal numbers (a) recorded at the time of loading, and
(b) confirmed at the time of unloading.
G. Compensation
i. As full compensation for the Transportation Services provided
by DSC hereunder, SOLO shall pay DSC in accordance with the rates,
charges, rules and regulations specified in EXHIBIT F which set forth
the rates and charges for full truck load, less than full truckload,
package and accessorial charges plus a management fee as specified in
PARAGRAPH 3D. EXHIBIT F, as attached to this Agreement when executed
by the parties, will not include a complete tariff schedule.
Immediately after the execution of this Agreement the parties shall
mutually agree on the completion of EXHIBIT F, and the complete
revised EXHIBIT F will be attached by written agreement of the
parties. The initial rates and charges set forth in EXHIBIT F have
been agreed to by the parties and shall be subject to annual review by
the parties pursuant to SUBPARAGRAPH 3M in the same manner as the
warehouse compensation rates. The EXHIBITS may be modified, added to,
deleted or republished only by written agreement of both parties. Such
written agreement shall reference this Agreement and the specific
EXHIBIT that is affected.
ii. Under no circumstances shall any shipment be deemed to have
moved under common carrier authority. Each and every shipment tendered
by or on behalf of SOLO to DSC and transported by or on behalf of DSC
shall be deemed to have been transported pursuant to motor contract
carrier.
H. Lien
i. DSC, when acting as a freight forwarder or motor carrier
pursuant to this Agreement, and its carriers shall have such liens
and/or security interest in the freight cargo, Products, components,
SOLO 's equipment or other property of SOLO, that arise by operation
of law, and DSC, for itself and its carriers, expressly agrees not to
create any other lien or claim or right to such lien and security
interest. Nothing in this PARAGRAPH shall impair DSC's warehouseman's
lien. In addition thereto, DSC shall have the right to include in the
exercise of its warehouseman's lien against Products in any Facility
all
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amounts due to DSC pursuant to the Transportation Services provided
under this Agreement.
I. Independent Contractor
The parties agree that DSC, its carriers and their employees, agents, and
representatives, and any other persons performing under this Agreement at the
request of or on behalf of DSC, are independent contractors and are not and
shall not act as employees or agents of SOLO. DSC or its carrier shall perform
the Transportation Services hereunder as an independent contractor and shall
have exclusive control and direction of the persons operating any equipment with
respect thereto or otherwise engaged in such Services. As between SOLO and DSC,
but for no other purpose, DSC assumes full responsibility for the acts and
omissions of such persons and shall have exclusive liability for the payment of
local, state and federal payroll taxes or contributions or taxes for
unemployment insurance, worker's compensation, pensions or other social security
and related protection, and all employee benefits with respect to the persons
engaged in the performance of such Transportation Services and agrees to comply
with all applicable laws, or governmental orders, rules and regulations
pertaining thereto.
J. Freight Loss Or Damage. The provisions of this SUBPARAGRAPH 16K apply
only when DSC is acting in its Transportation Services capacity and not in
its warehouseman capacity.
i. DSC agrees that, when acting in its Transportation Services
capacity, it shall and does assume the liability of an interstate
motor carrier as provided by 49 U.S.C. Section 14706 from the time of
receipt of a shipment until proper delivery has been made and shall
not in any way limit its liability thereunder. In addition, DSC shall
be liable to SOLO at common law for the full actual loss, damage, or
injury to shipments occurring while in the custody, possession or
control of DSC or its carriers hereunder or resulting from performance
or failure to perform the services provided for in this Agreement. DSC
shall not be liable for loss or damage or injury to shipments if such
loss or damage results solely from the fault or neglect of SOLO. Where
such loss or damage results in part from the fault or neglect of SOLO,
DSC shall be excused from liability to the extent the loss or damage
relates to the fault or neglect of SOLO.
ii. In the event that a shipment or any part thereof is lost,
damaged or destroyed, whether or not lost, damaged or destroyed en
route to a purchaser or customer of SOLO, DSC shall pay to SOLO the
cost of manufacture of such Products plus net transportation cost to
the Facility. SOLO will not be responsible for the freight costs
incurred during outbound transit for product that is damaged during
such transit.
iii. The parties agree that lost, damaged or destroyed Products may
be salvaged and that, if so salvaged, the salvage value will be
deducted from the measure of damages hereunder. All damaged Products
shall be immediately returned to SOLO or disposed of pursuant to
SOLO's direction Damaged
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Products shall include Products which have been lost and recovered but
which, because of passage of time, spoilage, contamination or
adulteration or a reasonable suspicion thereof and/or uncertainty of
custody and/or storage conditions, have been rendered in unsaleable,
stale, out of date or code, or otherwise unfit for use.
iv. DSC shall promptly notify SOLO of any loss or damage to any
shipment, including delays or shortages that impair or might
reasonably be expected to impair the sale and prompt delivery of
Products. DSC shall also promptly notify SOLO of any refused or
"on-hand" freight and request additional instructions regarding
delivery or storage of the "on-hand" goods. SOLO shall submit to DSC a
written claim for the actual or estimated loss of or damage to any
shipment within nine (9) months after delivery at the destination of
such shipment with respect to which such claim is made or, in the case
of failure to make such delivery, within nine (9) months after
reasonable time for delivery has elapsed. Within ninety (90) days of
DSC's receipt of a claim from SOLO, DSC shall either pay such claim in
full or refer the matter to the Alliance Committee for resolution.
K. Overcharges And Undercharges. Any action by DSC to recover charges
alleged to be due hereunder, and any action by SOLO to recover overcharges
alleged hereunder, shall be commenced not more than one (1) year after the
receipt by DSC of the shipment with respect to which such charges or
overcharges are claimed. To the extent permitted by applicable law, the
expiration of the said one-year period shall be a complete and absolute
defense to any such action, without regard to any mitigating or extenuating
circumstance or excuse whatsoever, unless the party named as defendant in
any such action has expressly agreed in writing to waive such defense in
whole or in part. The provisions of this Section shall survive the
termination, expiration or cancellation of this Agreement.
L. Back-solicitation. SOLO shall not, and for a period of one year after
the termination of the Transportation Services under this Agreement, hire
or contract directly with any common carrier hired by DSC to perform any of
the Transportation Services for SOLO unless SOLO had been utilizing such
common carrier prior to the provision of services to SOLO through DSC,
unless the common carrier is among the top twenty carriers, as measured by
net sales, in its freight category (truckload, less than truckload,
intermodal, rail, airfreight, package delivery).
17. OPERATIONS WAREHOUSE
A. DSC's operations hereunder shall be conducted, on an as needed basis
seven (7) days per week, 24 hours per day, except holidays in accordance
with good warehousing practices:
B. DSC shall store and handle all products in accordance with all
Federal, State, and local requirements applicable to public warehouse
operations. DSC shall implement a safety, security, and loss prevention
program for all products delivered to DSC.
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C. DSC shall refuse to accept any products that, in the reasonable
judgment of DSC, would cause contamination or damage to other goods stored
in the Facility, and shall immediately notify SOLO of such refusal in
writing setting forth in reasonable detail the basis for DSC's judgment as
contemplated above. DSC shall have no liability for any demurrage,
detention, transportation or other charges by virtue of any such refusal if
such refusal was reasonable at the time and under the circumstances when
made.
D. SOLO shall advise DSC prior to tendering Product to DSC of any
particular material which is susceptible to receive or render damage or
contamination from storage in the same facility with other types of
materials.
E. Right To Inspect. SOLO shall have the right to inspect the Facility
and the Services being provided by DSC at any time the Facility is in
operation. DSC shall have the right to show the operations of the Facility
for the purpose of demonstrating the services that DSC provides, at such
times and in such ways as do not interfere with DSC's delivery of services
to SOLO.
F. Pallet Exchange Programs. DSC will administer any of SOLO's pallet
exchange programs. However, SOLO shall be responsible for the collection of
pallet balances directly from SOLO customers. DSC shall collect pallet
balances from its carriers. To the extent necessary to service SOLO
customers DSC agrees to purchase pallets for SOLO at the rate that the
Facility pays for such pallets from time to time plus seven percent (7%).
Such amount shall be billed to SOLO as an accessorial charge.
18. FORCE MAJEURE
Neither party shall be liable to the other for any failure to perform or delay
in performance to the extent such failure or delay is caused by circumstances
beyond its reasonable control, including without limitation acts of God or
nature, fire, flood, explosion, casualty, war, action or request of governmental
authority, accident, labor trouble or shortage, unavailability of material,
supplies, power, equipment or transportation. If the cause is one that
nevertheless requires DSC to continue to protect the Product, SOLO agrees to
continue to pay storage and other charges as required by this Agreement during
the continuance of the force majeure.
19. DEFAULT; REMEDIES
A. If either party shall fail, in a material respect, to perform any of
the covenants or obligations of performance or payment imposed upon it
under this Agreement (except where such failure shall be excused under
other provisions hereof and except as otherwise provided in SUBPARAGRAPH
19B below), the other party may give the party in default written notice,
setting forth in reasonable detail a description of the unperformed
obligation for which such notice of default is given. If, within a period
of sixty (60) days after receipt of such notice, the party in default does
not either remove and remedy, or commence with diligence to remove and
remedy the default to the satisfaction of the Alliance Committee or, in the
event of deadlock of the Alliance Committee in the opinion of the
Responsible Executives, then the party not
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in default may terminate this Agreement upon written notice to the other
party. Such notice may, in the reasonable discretion of the terminating
party, terminate the application of this Agreement as to less than all
Facilities.
B. In the application of this PARAGRAPH 19 and PARAGRAPHS 24 and 25, the
words "Material Default" shall include only such defaults as are
specifically set forth in this SUBPARAGRAPH 19B as Material Defaults. All
other defaults shall be deemed for purposes of this Agreement to be
non-material. Material Defaults shall be as follows:
i. It shall be a Material Default for SOLO to:
a) Fail to make any payment when due in accordance with
this Agreement, other than one or more inadvertent failures as
described in SUBPARAGRAPH 7Ei above;
b) Fail to comply with the exclusivity provisions set
forth in PARAGRAPH 16B; and
c) Fail to abide by the indemnification provisions set
forth in PARAGRAPH 9, including without limitation the making
of timely payments required thereunder.
ii. It shall be a Material Default for DSC to:
a) Fail to comply with specifically identified Service
Level Agreements set forth in EXHIBITS C AND F. EXHIBITS C AND
F set forth all SLA's and specifically identify those that
may, if not complied with, constitute material default;
b) Fail to make any payment when due in accordance with
this Agreement; and
c) Fail to abide by the indemnification provisions set
forth in PARAGRAPH 9 of this Agreement, including without
limitation the making of timely payments required thereunder.
C. If the default(s) is not a Material Default as defined above in
SUBPARAGRAPH 19B, and such non-material default is not timely remedied or
resolved to the satisfaction of the non-defaulting party, then the matters
shall be submitted to the Alliance Committee for resolution. The parties
shall follow the resolution steps provided for in PARAGRAPHS 24 AND 33. If
the default(s) is a Material Default, and such Material Default, is not
timely remedied or resolved to the satisfaction of the Alliance Committee
or of the non-defaulting party, then the party not in default may submit
the matter directly to Arbitration upon written notice to the other party
requesting termination (among other things) of this Agreement as a remedy.
The foregoing provisions of this PARAGRAPH shall not impair the rights of
either party to collect any amount due it hereunder for any damage or loss
suffered by it or any other amount due hereunder. Any termination of this
Agreement as set forth in this
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PARAGRAPH 19 shall not waive any other remedy in law or equity to which the
party not in default may be entitled for breach of this Agreement.
D. No remedy herein conferred upon or reserved to SOLO or DSC is intended
to be exclusive of any other available remedy except as may be expressly
limited by this Agreement, but each and every such remedy shall be
cumulative and in addition to every other remedy given under this Agreement
or now or hereafter existing at law or in equity. No delay or failure to
exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often as may be
deemed expedient. In order for SOLO or DSC to exercise any remedy reserved
to either of them under this Agreement, the party shall be required to
conform to any notice or procedural requirement or limitation provided for
in this Agreement.
E. In no event shall either party be responsible for the consequential
damages of the other.
20. TERMINATION COSTS.
The parties agree that the costs and risks of terminating all or a part of this
Agreement shall be shared differently depending upon the circumstances of such
termination. Therefore, in addition to such rights as either party may have to
collect any amount due it hereunder for any damage or loss suffered by it, the
parties hereby agree to the following:
A. Termination of the entire Agreement at the end of its first term or
any renewal term by timely notice of non renewal.
i. Each party's real estate and capital commitments shall be as
set forth in PARAGRAPHS 5 and 6 hereof and the parties shall execute
such documents as may be necessary to effect the provision of those
PARAGRAPHS.
ii. DSC is to receive payment in full for all services performed
on or before the termination date and for all assets or rights
transferred to SOLO or a new provider.
iii. DSC will receive compensation in full for all extraordinary
costs or expenses necessary to provide a smooth closing or transition
to another provider; provided, however, that any such costs or
expenses shall be first approved by SOLO in its reasonable discretion
whenever reasonably possible.
B. Termination of the entire Agreement or with respect to a single
Facility for default.
i. Each party's real estate and capital commitments shall be as
set forth in PARAGRAPHS 5 and 6 hereof and the parties shall execute
such documents as may be necessary to effect the provision of those
PARAGRAPHS.
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ii. DSC is to receive payment in full for all services performed
in accordance with this Agreement on or before the termination date
and for all assets or rights transferred to SOLO or a new provider.
iii. DSC will receive compensation in full for all extraordinary
costs or expenses reasonably necessary to provide a smooth closing or
transition to another provider including employee related costs such
as severance in the event of a termination based on SOLO's default;
provided, however, that any such costs or expenses shall be first
approved by SOLO in its reasonable discretion whenever reasonably
possible.
C. Termination of one or more Facilities by the decision of the Alliance
Committee in furtherance of the parties, stated goals.
i. When the Alliance Committee makes the decision to close a
Facility, the pricing shall be revised to reflect the termination of
the Facility.
ii. The costs shall be allocated as the Alliance Committee shall
determine. The Alliance Committee shall be governed by the principle
of making DSC whole whenever possible. In the event that the
provisions of PARAGRAPH 3 and/or 5 apply, those PARAGRAPHS shall
govern.
21. NOTICES
Any notice provided for in this Agreement shall be considered as having been
given to SOLO if mailed by certified mail, postage prepaid to SOLO at the
address specified below.
Solo Cup Company
1700 Old Deerfield Rd.
Highland Park, Illinois 60035
Attention: R. L Whaley
With copy to Attention: Dawn S. Keller
Solo Cup Company
1700 Old Deerfield Rd.
Highland Park, Illinois 60035
Any notice or order provided for in this Agreement shall be considered as
having been given to DSC if mailed by certified mail, postage prepaid, to DSC at
the address specified below.
DSC Logistics
1750 S. Wolf Road
Des Plaines, IL 60018
Attention: Adrian Potgieter
With a copy to Attention: Robin G. Munden, Esq.
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22. CONFIDENTIALITY
The parties acknowledge that, in connection with DSC's performance of the DSC
Services hereunder, each party may have access to confidential or proprietary
information ("Confidential Information") of the other party, and its
subsidiaries and affiliates. Each party may be either or both a "disclosing
party" and a "receiving party" and such terms shall apply to both parties as the
context may require.
A. For purposes of this Agreement and all FSA's, as well as all Exhibits,
amendments, addenda and modifications hereto and thereto, "Confidential
Information" means any and all information that is marked "confidential" or
that a reasonable person would consider to be confidential, including
without limitation all information relating to the past, present or future
research, development or business affairs of a person that such person does
not disclose to the public in the ordinary course of its business, such as
proprietary information and processes, all computer hardware and software,
software development and implementation methodologies, software and
technology architecture, networks, all "know how," all "trade secrets,"
technical information, business methods and strategies, business processes,
pricing, algorithms, billing records, policies, databases, financial and
operational information, contracts, officer, director and shareholder
information, contracts, suppliers, alliances and joint ventures, client
lists, marketing prospects, product designs, blueprints, drawings, models,
prototypes or inventions (inventions shall mean any new machines, methods,
processes, uses, compositions or matter, designs or other configurations or
apparatus of any kind, discovered, conceived, developed, made or produced
or any improvements to them and shall not be limited to the definition of
an invention contained in the patent laws of the United States), together
with all copies, reproductions, notes, analyses, data, reports, records,
evaluations, forecasts, compilations, studies, interpretations, summaries
and other documents or materials based on the foregoing, whether furnished
orally, in writing, or through computer storage or transmission or gathered
by inspection. The receiving party shall treat as confidential any and all
Confidential Information furnished by the disclosing party to the receiving
party, or accessed by the receiving party in the course of providing its
services under this Agreement, whether furnished or accessed before or
after the date of this Agreement. The Confidential Information shall only
be used by the parties hereto in connection with the performance of its
obligations hereunder and, except for disclosure to officers, employees or
other authorized representatives who need to know such Confidential
Information and who are informed of the confidential nature of the
information so disclosed and agree to be bound by the terms of this
PARAGRAPH 22, the receiving party shall not disclose or use, and shall
direct its officers, directors, employees and authorized representatives
not to disclose or use, any Confidential Information, without the prior
written consent of the disclosing party. The parties specifically agree
that the terms of this Agreement, including but not limited to the rates
charged by DSC to SOLO and the rates charged by SOLO to its customers, are
Confidential Information.
B. In utilizing the Confidential Information, neither party shall be
deemed to have transferred any right, title or interest to its Confidential
Information to the other and neither party shall have the right to use the
Confidential Information except in connection with the performance of its
obligations hereunder and under any FSA's
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(including all modifications, addenda and supplements thereto), without the
express written consent of the disclosing party.
C. Confidential Information does not include, and the provisions of this
Paragraph 22 shall not apply to, information or materials that: (1) may be
demonstrated to have been in the receiving party's possession prior to
disclosure by the disclosing party; (2) is furnished to the receiving party
on a non-confidential basis from a person or entity not a party to this
Agreement where such person or entity is not bound by an obligation of
confidentiality to the disclosing party; or (3) has become part of the
public domain by publication or otherwise through no act of the party to
whom information has been disclosed.
D. SOLO specifically agrees that SOLO will not use DSC's Confidential
Information for SOLO's benefit without DSC's express written consent. DSC
specifically agrees that DSC will not use SOLO's Confidential Information
for DSC's benefit and/or for services to any other party.
E. If the receiving party or any of its officers, directors, employees or
authorized representatives is requested or required to disclose any
Confidential Information, the receiving party shall immediately notify the
disclosing party so that the disclosing party may seek an appropriate
protective order and/or waive compliance with the provisions of this
PARAGRAPH 22. If the disclosing party does not provide such protective
order or waiver within a reasonable time after such notice, the receiving
party may disclose only that portion of the Confidential Information so
required to be disclosed.
F. Upon the request of the disclosing party, and also upon the
termination of this Agreement, the receiving party shall promptly destroy
or deliver to the disclosing party the Confidential Information possessed
by the receiving party and any of its officers, directors, employees or
authorized representatives, together with any notes, extracts or
reproductions.
G. The parties agree that a breach of the provisions of this PARAGRAPH 22
would cause the other party to suffer irreparable damage that could not be
adequately remedied by an action at law or in equity. Accordingly, each
party agrees that the injured party shall have the right to injunctive
relief (without any bond or other security being required therefor) or
specific performance to prevent an actual or threatened breach of this
PARAGRAPH, such right being in addition to all other rights and remedies
might be available to the disclosing party at law, in equity or otherwise.
The provisions of this PARAGRAPH shall be binding upon the parties for a
period of five (5) years after the termination or expiration of this
Agreement or any extension or renewal thereof:
23. INTELLECTUAL PROPERTY
A. In carrying out their respective obligations hereunder, the
Intellectual Property of both parties will or may be utilized in ensuring
the success of the Strategic Alliance. Such Intellectual Property may or
may not be confidential and
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shall for purposes of this Agreement include, but not be limited to,
patents, trademarks, trade names, copyrights, computer hardware and
software, "know-how," all "trade secrets," technical information, product
designs, blueprints, drawings, models, prototypes or inventions (inventions
shall mean any new machines, methods, processes, uses, compositions or
matter, designs or other configurations or apparatus of any kind,
discovered, conceived, developed, made or produced or any improvements to
them and shall not be limited to the definition of an invention contained
in the patent laws of the United States).
B. In utilizing such Intellectual Property in furtherance of the goals of
this Strategic Alliance neither party shall be deemed to have transferred
any right, title or interest to its Intellectual Property to the other and
at the conclusion of this Agreement neither party shall have the right to
use the Intellectual Property of the other without the express written
consent of the other. DSC agrees that, to the extent its Intellectual
Property can be characterized as a Management Practice or Technique which
has been applied to better supply chain management for SOLO, nothing in the
Agreement will require SOLO to discontinue such practice after termination
of the Agreement and DSC grants to SOLO the perpetual, royalty free, non
assignable right to continue such Management practice or Technique in the
manner described herein.
C. Any new Intellectual Property jointly developed by SOLO and DSC using
shared investment or human capital shall be the joint property of each and
if patentable or otherwise protectable the parties shall be joint owners.
The parties shall also share in jointly developed improvements in the
Intellectual Property of the other but not in the underlying Intellectual
Property. Finally, Intellectual Property separately or independently
developed by either party and implemented in furtherance of this Agreement
shall not become property of the other nor shall the other have any right
to utilize such Intellectual Property in the event of termination of this
Agreement.
24. ALLIANCE COMMITTEE
A. SOLO and DSC have identified four (4) areas which will require
communication and joint decision making. Those areas are: (1) overall
Strategic Alliance administration, (2) pricing and services, (3)
operational excellence and (4) measurement. The Alliance Committee will
administer this Agreement, and will be comprised of a standing committee
made up of an equal number of SOLO and DSC employees, up to a maximum of
four (4). The Alliance Committee shall make decisions on all matters
relevant to the administration of this Agreement. The Alliance Committee
may also form ad hoc committees made up of an equal number of
representatives from each party to make recommendations with respect to any
matter. Each such ad hoc committee shall have a specific charter and sunset
date. All such committees shall report to the Alliance Committee.
B. The Alliance Committee shall make a strategic presentation concerning
the overall Strategic Alliance to the Responsible Executives on an annual
basis.
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C. Future pricing decisions will be governed by the elements set forth in
PARAGRAPHS 3, 4, and 16, the pricing elements described in EXHIBIT E, and
the product Profiles set forth in the FSA to this Agreement.
D. The Alliance Committee shall not have the authority to modify or
change this Agreement. Modification may only be made in conformance with
PARAGRAPH 31 of this Agreement.
E. In the event the Alliance Committee cannot reach a decision, then each
party shall make a presentation of the issues to be resolved to the Chief
Executive Officer of DSC and the Chief Operating Officer of SOLO for
resolution (collectively, the "Responsible Executives"). Such presentation
shall be no longer than thirty (30) minutes in length and summarized in a
writing of no more than five pages. In the event that the Responsible
Executives cannot resolve the matter, they shall submit the dispute to
binding arbitration in conformance with PARAGRAPH 33. That submission will
keep this Agreement in full force and effect. The decision of the
arbitrator shall be binding.
25. MISCELLANEOUS
A. Each party agrees to provide all relevant information, including
Confidential Information on a "need to know" basis, available to it with
respect to its business, business plans and projections, as may be
necessary for the parties to jointly carry out the purposes of this
Agreement. Notwithstanding the prior sentence, nothing in this Agreement
requires disclosure of Confidential Information not specifically required
to achieve the stated purposes and goals stated in this Agreement.
B. ELECTRONIC DATA INTERCHANGE. The parties agree that in order to
support the business of SOLO as contemplated by this Agreement, they will
be required to support electronic data interchange ("EDI") Warehouse
Transactions sets, all as specifically set forth in EXHIBIT L. The
reasonable and pre-approved costs of establishing such EDI transaction sets
shall be paid by SOLO as a part of the Start Up pricing. DSC shall be
entitled to rely for all purposes on information transmitted to it by
facsimile, EDI or similar communication. DSC's EDI or similar
acknowledgement of receipt of Product sent to SOLO shall constitute the
issuance of a warehouse receipt for all purposes. SOLO agrees to accept
such EDI acknowledgement of receipt of Product as a valid, complete
warehouse receipt satisfying all statutory requirements, including the
claiming of a general warehouseman's lien on all Products.
C. Instructions to DSC to deliver Products from the Facility shall not be
effective until received in writing by DSC (including any form of
electronic notification agreed upon by the parties). SOLO may, by a written
notice, authorize and instruct DSC to rely on electronically transmitted
instructions from SOLO for delivery of the Products. Provided DSC has
complied with such instructions, DSC shall not be liable for any loss or
error in connection with the delivery of Products resulting from
electronically transmitted instructions.
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D. RIGHT TO INSPECT. SOLO shall have the right to inspect the Facility
and the Services being provided by DSC at any time the Facility is in
operation. Subject to the prior consent of SOLO, which consent shall not be
unreasonably withheld, DSC shall have the right to show the operations of
the Facility to no more than five (5) persons at a time for the purpose of
demonstrating the services that DSC provides, but at such times and in such
ways as do not interfere with the business operations of the Facility or
with DSC's delivery of services to SOLO, and provided that demonstrations
do not in any way breach the confidentiality provisions of this Agreement.
E. DSC will maintain separate transportation service and warehouse space
between SOLO and SOLO's competitors, unless specifically agreed to in
writing by SOLO. DSC will not utilize supervisory or day-to-day operational
personnel in the same or similar capacity for SOLO and for a competitor of
SOLO. DSC may use general management personnel not actively involved in the
full time delivery of services to SOLO in connection with the product of
SOLO competitors so long as the confidentiality provisions of this
Agreement are not breached.
F. Except as the parties may agree in writing, neither SOLO nor DSC shall
employ or solicit for employment, directly or indirectly, any former
employee of the other until at least one year shall have elapsed after such
former employee shall have left the employment of the other. The parties
contemplate that, with respect to several Facilities that are currently
being operated by SOLO with employees of SOLO, that DSC will provide the
Services in the same Facility. With respect to any employee of SOLO at such
Facility that SOLO determines will not remain in its employ, DSC may hire
such employee. Such employee shall be subject to all normal DSC
pre-employment testing and procedures and to DSC's usual terms of
employment.
G. HAZARDOUS MATERIAL CLASSIFICATION. SOLO represents and warrants that
none of its Products to be stored at the Facility is classified as a
hazardous material. In the event, however, that the storage or handling of
the Products causes DSC to incur any additional cost or expense directly
related to the hazardous nature of such Products, SOLO will indemnify DSC
against any such costs and expenses, including but not limited to increased
insurance premiums and the cost of constructing a caged enclosure, if
appropriate.
26. PUBLIC RELATIONS AND MARKETING
A. The parties agree that press releases, advertisements or announcements
in mass media of any kind concerning the other party shall not be issued
without the prior consent of the other party. Notwithstanding the preceding
sentence, either party may post an announcement on its website regarding
the parties' relationship, so long as such announcement does not violate
the confidentiality obligations created in Paragraph 22 and 23 hereof;
provided, however, that DSC may not post such an announcement until SOLO
notifies DSC that SOLO has generally disclosed the parties' relationship to
its employees. The parties agree that communications regarding the parties'
relationship other than those described above which do not
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breach the parties' obligations pursuant to Paragraph 22 and 23 hereof
shall be subject to the other party's prior consent, which consent shall
not be unreasonably withheld.
B. Except as otherwise prohibited, SOLO hereby grants to DSC for the term
of this Agreement a nonexclusive license to publish, disseminate, transmit
or otherwise use, in each case solely in connection with advertising and/or
promotion in any manner or media (i) SOLO's official corporate name and
"DBA" names used by SOLO or by which SOLO is known and (ii) SOLO's logos,
as set forth on EXHIBIT M. SOLO shall have the absolute right to revoke
this nonexclusive right, upon thirty (30) days' written notice.
C. Except as otherwise prohibited, DSC hereby grants to SOLO for the term
of this Agreement a nonexclusive license to publish disseminate, transmit
or otherwise use, in each case solely in connection with advertising and/or
promotion in any manner or media (i) DSC's official corporate name and
"DBA" names used by DSC or by which DSC is known and (ii) DSC's logos, as
set forth on EXHIBIT N. DSC shall have the absolute right to revoke this
nonexclusive right, upon thirty (30) days written notice.
27. ASSIGNMENT
Neither party to this Agreement shall assign or transfer this Agreement or any
of its rights or obligations hereunder without the prior written consent of the
other party; PROVIDED, HOWEVER, that either party may, without such consent,
assign and transfer its rights and obligations, in whole or in part, (a) to any
Affiliate (as defined in the next sentence) or (b) in connection with a sale of
all or substantially all of its assets and business as a going concern, provided
such Affiliate or the transferee of such business expressly assumes the
obligations hereunder in writing. As used herein, "Affiliate" shall mean, any
party, any person, corporation, Strategic Alliance or business venture which
either directly or indirectly controls, is controlled by or is under common
control of a party.
28. CONSEQUENTIAL DAMAGES
Neither party hereto shall be liable to the other for any indirect, special or
consequential damages.
29. GOVERNING STATE LAW
The provisions of this Agreement shall be construed and interpreted according to
the internal laws of the State of Illinois.
30. SEVERABILITY
If any term or provision of this Agreement or any application thereof shall be
invalid or unenforceable, the remainder of this Agreement or any other
application of such term or provision shall not be affected thereby.
31. ENTIRE AGREEMENT, MODIFICATION
This Agreement and any and all appendices, attachments and EXHIBITS referenced
herein, constitutes the entire agreement between the parties hereto on the
subject matter hereof, and
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supersedes all prior proposals, oral or written. Any amendment of or
modification to this Agreement shall be effective only if in writing and signed
by the party sought to be charged therewith.
32. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original but all of which together shall constitute one
agreement.
33. ARBITRATION
A. Any controversy or claim arising out of or relation to this Agreement
or the breach thereof shall first be settled by submission to the Alliance
Committee and then by resolution of the Responsible Executives in
conformance with PARAGRAPH 24E. All matters not resolved by PARAGRAPH 24E
shall be submitted to binding arbitration before a single arbitrator of the
American Arbitration Association (AAA), in accordance with the Arbitration
Rules of the AAA, and the judgment upon the award rendered by the
Arbitrator may be entered in any Court having jurisdiction thereof. The
Arbitrator shall be chosen by mutual agreement from a panel provided by the
AAA.
B. The parties may obtain any discovery in aid of the arbitration in
accordance with the State of Illinois rules of discovery; provided,
however, discovery by means of requests for admission shall not be
permitted.
C. The arbitration award shall be in writing and shall specify the
factual and legal bases for the award. The award shall be binding upon the
parties.
SOLO CUP COMPANY DSC LOGISTICS, INC.
/s/ Ronald L. Whaley /s/ Ann M. Drake
- ----------------------------------- -------------------------------------
Signature Signature
Ronald L. Whaley Ann M. Drake
- ----------------------------------- -------------------------------------
Printed/Typed Name Printed/Typed Name
COO / CFO Chief Executive Officer
- ----------------------------------- -------------------------------------
Title Title
11/21/01 November 19, 2001
- ----------------------------------- -------------------------------------
Date Date
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EXHIBITS
Exhibit A Information Technology Services
Exhibit B Sample Facility Specific Addendum
Exhibit C Warehouse Service Level Agreements
Exhibit D Startup & Transition Cost Estimation
Exhibit E Warehouse Pricing Estimate, Accessorials & Productivity Model
Exhibit F Transportation Rates, Accessorials & Service Level Agreements
Exhibit G Profile Elements
Exhibit H Key Operational Variables
Exhibit I Proposed Geographies
Exhibit J SOLO Customers with Pre-Paid Freight Arrangements
Exhibit K Existing SOLO Transportation Agreements
Exhibit L EDI Transaction Sets
Exhibit M SOLO Cup Company Logo
Exhibit N DSC Logistics Logo
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DSC LOGISTICS EXHIBIT A:
SOLO CUP INFORMATION TECHNOLOGY SERVICES
OPERATING AGREEMENT
<Table>
<Caption>
BILLABLE IT SERVICES IT SERVICES INCLUDED IN BASE PRICING
- -----------------------------------------------------------------------------------
1. Integration services, including 1. Maintaining and supporting facility
setup and testing of Electronic hardware once installed.
Data Interchange (EDI) transaction
sets. Any customized changes, as
needed, to the Warehouse Management
System (WMS) or the Shipment
Management System (SMS) to retain
or pass through data to the EDI
transaction sets.
2. Custom account or item master 2. Maintaining and supporting Data
functions. Center operations once installed.
3. Creation of new lot code 3. Maintaining and supporting network
translations. operations.
4 Custom WMS, SMS and other software 4. Maintaining and supporting WMS, SMS
enhancements. and other software.
5. Development of custom reports, 5. Maintaining and supporting EDI
custom reporting mechanisms such as transactions.
proprietary data transmissions, or
custom invoicing, rendered from the
WMS or SMS.
6. Custom Bill of Lading or label 6. Maintaining and supporting existing
creation reports or reporting mechanisms.
7. Evaluating and developing custom 7. Maintaining and supporting standard
solutions to customer requests. Bills of Lading, Master Bills,
Manifests, and Invoices.
8. Startup support and services as
agreed in the Facility Specific
Agreements, including on site IT
support.
</Table>
Solo or DSC shall submit to the other a proposed scope of work and the parties
will agree on the scope of work, time to completion and cost prior to
commencement.
During the course of the parties' relationship, either party may propose
IT-related enhancements or modifications that are intended and expected to
result in operational cost savings and/or improvements in productivity. If the
parties mutually agree to develop and implement the proposed enhancement or
modification, then the party that is engaged in the agreed upon development
implementation work will initially bear the cost of that work. Thereafter, that
party will be paid, credited, or otherwise allocated, as the case may be, one
hundred percent (100%) of any productivity and/or cost savings that result from
the enhancement/modification until such time as it has recovered all of its cost
incurred in connection with development/implementation of that
enhancement/modification. Thereafter, any additional resulting productivity
savings shall be allocated between the parties as set forth in Section 3.C.v. of
the Agreement.
UPDATED NOVEMBER 16, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT B:
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
Pursuant to PARAGRAPH _ of the Operating Agreement dated as of ________, 2001
(the "Agreement") between Solo Cup ("SOLO") and DSC Logistics, Inc. ("DSC") have
entered into the following Facility Specific Addendum (this FSA or this
Addendum), which shall be applicable only to the facility named in this
document:
1. The effective date of this Addendum is _____________.
2. This Addendum is applicable to the following facility (the Facility):
FULL NAME:
SHORTHAND NAME (IF ANY):
STREET ADDRESS (IF AVAILABLE):
3. Real Estate Event Estimations (if applicable):
<Table>
<Caption>
REAL ESTATE EVENT ESTIMATED START DATE ESTIMATED COMPLETION DATE
------------------------------------------------------------------------------
Real Estate Search
Site Location
Start-Up
</Table>
4. Real Estate and Capital Commitments
a) The Real Estate Options paragraph or subparagraph of the Agreement
applicable to this Facility shall be subparagraph ___.
b) If the parties determine that none of the subparagraphs of paragraph 5
of the Agreement apply, the parties shall set forth in Attachment 1 to
this Exhibit the specific terms of the real estate agreements
applicable to this Facility.
c) The Capital Investment Option paragraph or subparagraph of the
Agreement applicable to this Facility is ___. If subparagraph ___ is
applicable then the parties agree that SOLO will be at risk for
equipment in excess of its needs for a period of N/A. If no
subparagraph of paragraph 6 of the Agreement is applicable then the
parties shall set forth on Attachment 1 the specific terms of the
Capital Investment agreements.
5. Estimated Operating Budgets applicable to the facility, if any, are set
forth in Attachment 2.
6. Attached hereto and incorporated herein by reference are the following
Attachments applicable to this Facility:
a) Attachment 3 - Warehouse Accessorials
b) Attachment 4 - Start-Up Budget Estimate
c) Attachment 5 - Product Profile Assumptions
d) Attachment 6 - Operating Capacity Constraints
e) Attachment 7 - Facility specific agreements which add, subtract from
or modify the terms of the Agreement. Any such terms are applicable
only to this Facility and do not modify or amend the Agreement with
respect to any other facility. The parties shall include on Attachment
6 any specific agreement concerning the length of the operating
agreement applicable only to this Facility.
7. Attached hereto as Attachment 8 are any agreements concerning the length of
the operating agreement to this Facility.
UPDATED OCTOBER 25, 2001 PAGE 1 OF 10
<Page>
DSC LOGISTICS EXHIBIT B:
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
Solo Cup, Inc. DSC Logistics, Inc.
____________________________________ _________________________________
____________________________________ _________________________________
Date:_______________________________ Date:____________________________
UPDATED OCTOBER 25, 2001 PAGE 2 OF 10
<Page>
DSC LOGISTICS EXHIBIT B:
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
ATTACHMENT 1
REAL ESTATE AND CAPITAL AGREEMENTS
Additional Real Estate Agreements (if applicable):
Additional Capital Investment Agreements (if applicable):
UPDATED OCTOBER 25, 2001 PAGE 3 OF 10
<Page>
DSC LOGISTICS EXHIBIT B
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
ATTACHMENT 2
FACILITY ESTIMATED OPERATING BUDGET
<Table>
<Caption>
WAREHOUSE EXPENSE
- --------------------------------------------------------------------------------
CATEGORY SUBCATEGORY COST
- --------------------------------------------------------------------------------
FIXED Rent
BUILDING Taxes & Licenses
Maintenance & Repair Facility
Utilities
Security
Insurance
Trash Removal
Other Outside Services
TOTAL FIXED BUILDING
FIXED Management & Supervision Salaries
HANDLING Customer Service & Administrative
Salaries
Handling Equipment Cost
Administrative Equipment
Communication
Office Supplies & Services
Hiring Expenses
Professional Fees
Training & Education
Travel & Entertainment
Other
Claims & Uncollectibles
TOTAL FIXED HANDLING
VARIABLE Direct Labor Expense
HANDLING Fuel
Warehouse Supplies
Maintenance & Repairs Handling
Pallets
Detention
TOTAL VARIABLE HANDLING
DSC CORPORATE FUNCTIONAL SUPPORT (7.93%)
SUBTOTAL WAREHOUSE EXPENSE
BASE COST PLUS (6%)
INCENTIVE COST PLUS (3%)
TOTAL WAREHOUSE EXPENSE
</Table>
UPDATED OCTOBER 25, 2001 PAGE 4 OF 10
<Page>
DSC LOGISTICS EXHIBIT B:
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
<Table>
<Caption>
TRANSPORTATION EXPENSE
- ------------------------------------------------------
TRANSPORTATION
LANE VOLUME
- ------------------------------------------------------
ORIGIN DESTINATION CASES WEIGHT CUBE MODE
- ------------------------------------------------------
<Caption>
TRANSPORTATION EXPENSE
- ---------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION CARRIER ALLOCATION
- ---------------------------------------------------------------------------------------------------------------------------
PRIMARY CARRIER SECONDARY CARRIER TERTIARY CARRIER SUMMARY STATISTICS
- ---------------------------------------------------------------------------------------------------------------------------
% ALLOCATION COST SERVICE % ALLOCATION COST SERVICE % ALLOCATION COST SERVICE TOTAL COST SERVICE AVG
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
CARRIER ALLOCATION % IS AN ESTIMATE THAT MAY VARY DUE CARRIER CAPACITY
CONSTRAINTS.
UPDATED OCTOBER 25, 2001 PAGE 5 OF 10
<Page>
DSC LOGISTICS EXHIBIT B:
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
ATTACHMENT 3
WAREHOUSE ACCESSORIALS
<Table>
<Caption>
REQUIRES WRITTEN
REQUEST OR
DESCRIPTION AUTHORIZATION "X" RATE BASIS RATE
- -------------------------------------------------------------------------------
PHYSICAL INVENTORY X COST PLUS
PRODUCT DISPOSAL X COST PLUS
SPECIAL PACKAGING X QUOTE
DISPLAY BUILDING X QUOTE
LABELING X QUOTE
SPECIAL FUMIGATION X QUOTE
</Table>
UPDATED OCTOBER 25, 2001 PAGE 6 OF 10
<Page>
DSC LOGISTICS EXHIBIT B
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
ATTACHMENT 4
START-UP BUDGET ESTIMATE
<Table>
<Caption>
ESTIMATED COMPLETION
START-UP ACTIVITY ESTIMATED COST ESTIMATED START DATE DATE
- ----------------------------------------------------------------------------------------------------------------
TRAVEL & RELOCATION
Airfare
Taxi & Rental Cars
Hotel Rooms (w/tax)
Meals
Other
TOTAL TRAVEL
HIRING EXPENSE
Drug Tests & Physicals
Integrity Tests
Background Checks
Psychological Profile
Aptitude Tests
Drug Tests
TOTAL HIRING
OPERATIONS MOVE & SET-UP
Floor Striping
RF Signage
Temp. Equipment Rental
Misc. Building Preparation
Office Move / Improvement
TOTAL OPERATIONS
ADDITIONAL LABOR
Human Resources
PI&T, SI&P & SMT
Start-Up Coordinator
Engineering
Information Technologies
Visiting Operators
Visiting CSR, Office
Visiting Warehouse Help
Warehouse Labor Ramp Up
TOTAL ADDITIONAL LABOR
DSC CORPORATE FUNCTIONAL SUPPORT (7.93%)
TOTAL START UP COSTS
</Table>
UPDATED OCTOBER 25, 2001 PAGE 7 OF 10
<Page>
DSC LOGISTICS EXHIBIT B:
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
ATTACHMENT 5
PRODUCT PROFILE ASSUMPTIONS
<Table>
<Caption>
PRODUCT PROFILE PROFILE DATA
- -----------------------------------------------------------
CATEGORY SUBCATEGORY
- --------------------------------------------------------------------------------
INBOUND Cases Received Per Year
Pallets Received Per Year
Average Cases Per Pallet
SKUs Per Pallet
% Truckload Cases
Truckloads Per Year
Pallets Per Inbound Truckload
Cases Per Inbound Truckload
SKUs Per Inbound Truckload
% Railcar Cases
Railcars Per Year
Pallets Per Inbound Railcar
Cases Per Inbound Railcar
SKUs Per Inbound Railcar
% Pallets Load
% Clamp Load
%Slip Load
% Floor Load
STORAGE # of SKUs
Average Cases in Inventory
Peak Cases in Inventory
Average Pallets in Inventory
Peak Pallets in Inventory
Cases Per Pallet in Inventory
Stackability
Maximum Pallet Height
GMA Pallet (yes/no)
Annual Turns
Inventories Per Year
Cycle Count (yes/no)
Lot Control (yes/no)
Pick to Specific Lot (yes/no)
OUTBOUND Cases Shipped Per Year
Pallets Shipper Per Year
% Pallet Pick
% Tier Pick
% Case Pick
% Each Pick
Average Cases Per Pallet - Case Pick
Orders Per Year
Lines Per Year
Total Lines Per Order
Tier Pick Lines Per Order
Cases Tier Picked Per Line
Case Pick Lines Per Order
Total Cases Per Order
</Table>
UPDATED OCTOBER 25, 2001 PAGE 8 OF 10
<Page>
DSC LOGISTICS EXHIBIT B:
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
<Table>
<Caption>
PRODUCT PROFILE PROFILE DATA
- -----------------------------------------------------------
CATEGORY SUBCATEGORY
- --------------------------------------------------------------------------------
OUTBOUND CONT'D Total Pallets Per Order
% Truckload Cases
% LTL Cases
% Rail Cases
Pallets Per Outbound Truckload
Pallets Per Outbound LTL
Pallets Per Outbound Rail
% Pallet Load
% Clamp Load
% Slip Load
% Floor Load
% CHEP Load
</Table>
UPDATED OCTOBER 25, 2001 PAGE 9 OF 10
<Page>
DSC LOGISTICS EXHIBIT B:
SOLO CUP SAMPLE
OPERATING AGREEMENT FACILITY SPECIFIC ADDENDUM
ATTACHMENT 6
OPERATING CAPACITY CONSTRAINTS
<Table>
<Caption>
OPERATIONAL CATEGORY OPERATING CAPACITY CONSTRAINT
- ---------------------------------------------------------
</Table>
UPDATED OCTOBER 25, 2001 PAGE 10 OF 10
<Page>
DSC LOGISTICS EXHIBIT C:
SOLO CUP WAREHOUSE
OPERATING AGREEMENT SERVICE LEVEL AGREEMENTS
<Table>
<Caption>
REQUIRED TO SUBJECT TO
ACHIEVE AGREED
PERFORMANCE OPERATING
SERVICE LEVEL INCENTIVE 3% CAPACITY
CATEGORY SERVICE LEVEL AGREEMENT FEE CONSTRAINTS
- -----------------------------------------------------------------------------------------------------------
Maintain warehouse cycle times (order receipt from SMS to
shipment) within timeframes required by each Solo Cup order
on a minimum of 98% of orders processed with the following
ORDER CYCLE TIME minimum lead times: X X
- TRUCKLOAD: 48 HOURS
- LESS THAN TRUCKLOAD: 24 HOURS
- PACKAGE/PARCEL: 24 HOURS
SHIPMENT Maintain a minimum of 98 % of outbound shipments confirmed
CONFIRMATION electronically within 24 hours of actual physical shipment.
INBOUND Maintain a minimum of 98% of inbound receipts confirmed
CONFIRMATION electronically within 24 hours of actual physical receipt.
INBOUND Maintain a minimum of 99% of inbound receipts processed and
PROCESSING available for shipment within 4 hours of physical unloading X
Maintain a two-tiered inventory accuracy based on physical
inventory count:
1. 99.5% net inventory accuracy, calculated as the
Total Cases Physically Counted divided by Total
INVENTORY Cases in Book Inventory. X
ACCURACY 2. 97% absolute inventory accuracy, calculated as the
weighted average of the variance percentages,
measured in cases, for each item (not to lot code
level).
Maintain 95% error-free (correct items and quantities)
ORDER ACCURACY orders shipped as compared to total DSC-delivered orders
processed if product is available. X
Generate and issue the following Operational Monthly and
Year to Date Statistical Reports:
1. Executive Summary
2. Warehousing & Freight Invoice Report
3. Variance Analysis-Monthly & YTD
4. Actual Dollars by Category Trended-YTD
5. Ratio Analysis Detail by Location & Network
REPORTS 6. Case Pick Variance-YTD
7. Productivity Variance-YTD
8. Productivity Cost Analysis-Monthly
9. Plus Point Summary -Monthly, Network & By Location
10. Project Analysis Network Summary -Monthly, YTD &
By Location
11. Surge Report
</Table>
UPDATED NOVEMBER 16, 2001 PAGE 1 OF 2
<Page>
DSC LOGISTICS EXHIBIT C:
SOLO CUP WAREHOUSE
OPERATING AGREEMENT SERVICE LEVEL AGREEMENTS
THE PARTIES AGREE THAT ALL THREE (3) APPLICABLE SERVICE LEVEL CATEGORIES (I.E.,
ORDER CYCLE TIME, INVENTORY ACCURACY, AND ORDER ACCURACY) MUST BE MET, MEASURED
IN THE AGGREGATE ACROSS ALL FACILITIES, DURING ANY SINGLE CONTRACT YEAR BEFORE
THE THREE PERCENT (3%) INCENTIVE FEE SHALL BE DEEMED EARNED BY DSC FOR THAT
CONTRACT YEAR. NOTWITHSTANDING THE PRECEDING SENTENCE, THE THREE PERCENT (3%)
INCENTIVE FEE SHALL BE PAID QUARTERLY DURING EACH CONTRACT YEAR, AND RETURNED TO
SOLO BY DSC IF THE APPLICABLE SERVICE LEVEL CATEGORIES ARE NOT MET FOR THAT
CONTRACT YEAR.
DSC LOGISTICS' PERFORMANCE WILL BE MEASURED BY A SERVICE LEVEL AGREEMENT
COMPLIANCE REPORT, WHICH WILL BE PREPARED BY DSC LOGISTICS ON A QUARTERLY BASIS.
DSC'S FAILURE TO ACHIEVE ORDER CYCLE TIME, INVENTORY ACCURACY, OR ORDER ACCURACY
PERCENTAGES AT THE LEVELS DESCRIBED ABOVE MINUS 10% ON A QUARTERLY BASIS MAY BE
CONSIDERED A MATERIAL DEFAULT UNDER SECTION 19(A)(ii)(a) OF THE AGREEMENT.
SLA PRICING CALCULATIONS
DSC LOGISTICS WILL PERFORM WAREHOUSE OPERATION FUNCTIONS ON BEHALF OF SOLO CUP
AND WILL ADMINISTER THE COSTS AND FEES IN THE FOLLOWING MANNER:
<Table>
<Caption>
WAREHOUSE COST CATEGORY COST CALCULATION INVOICE METHODOLOGY
- -------------------------------------------------------------------------------------------------------
FIXED BUILDING COSTS At Cost Monthly Total
FIXED HANDLING COSTS At Cost Monthly Total
VARIABLE HANDLING COSTS At Cost Monthly Total
[Fixed Building Costs +
DSC CORPORATE FUNCTIONAL Fixed Handling Cost +
SUPPORT 7.93% FEE Variable Handling Costs]
* 0.0793 Monthly Calculation
[Fixed Building Costs +
Fixed Handling Cost +
GUARANTEED 6% COST PLUS FEE Variable Handling Costs + Monthly Calculation
DSC Corporate Functional
Support Fee] * 0.06
[Fixed Building Costs +
Fixed Handling Cost + Quarterly Calculation
PERFORMANCE INCENTIVE 3% Variable Handling Costs + contingent on DSC Logistics'
COST PLUS FEE DSC Corporate Functional performance outlined in the Service
Support Fee] * 0.03 Level Agreement matrix
</Table>
UPDATED NOVEMBER 16, 2001 PAGE 2 OF 2
<Page>
DSC LOGISTICS EXHIBIT D: START UP AND TRANSITION COSTS
SOLO CUP START UP DSC COST ESTIMATION
OPERATING AGREEMENT
START UP DSC COST ESTIMATION
<Table>
<Caption>
LAKESIDE/ HAVRE DE LOS
97TH STREET GRACE JONESBORO ANGELES DALLAS SEATTLE TOTAL
-------------------------------------------------------------------------------------
NETWORK STATISTICS
Square Footage 621,856 310,139 243,936 164,569 136,914 117,813 1,595,227
Warehouse Personnel 45.8 34.0 23.3 19.2 14.1 7.1 143
TRAVEL & RELOCATION
Airfare $ 23,572 $ 26,319 $ 24,279 $ 25,568 $ 20,454 $ 4,080 $ 124,272
Taxi & Rental Cars $ 17,679 $ 19,740 $ 18,210 $ 19,176 $ 15,341 $ 3,060 $ 93,206
Hotel Rooms (w/ Tax) $ 8,840 $ 9,870 $ 9,105 $ 9,588 $ 7,670 $ 1,530 $ 46,603
Meals $ 5,893 $ 6,580 $ 6,070 $ 6,392 $ 5,114 $ 1,020 $ 31,069
Other $ 2,946 $ 3,290 $ 3,035 $ 3,196 $ 2,557 $ 510 $ 15,534
-------------------------------------------------------------------------------------
TOTAL TRAVEL & RELOCATION $ 58,930 $ 65,799 $ 60,699 $ 63,920 $ 51,136 $ 10,200 $ 310,684
==========
HIRING EXPENSES
ADMINISTER PRE-EMPLOYMENT TESTS:
Drug Tests & Physicals (Hourly) $ 9,153 $ 6,790 $ 4,667 $ 3,839 $ 2,813 $ 0 $ 27,262
Integrity Tests (Hourly) $ 1,017 $ 754 $ 519 $ 427 $ 313 $ 0 $ 3,030
Background Checks (Hourly & Mgmt) $ 6,102 $ 4,527 $ 3,111 $ 2,559 $ 1,875 $ 0 $ 18,174
Psychological Profiles &
Assessments (Mgmt) $ 3,051 $ 2,263 $ 1,556 $ 1,280 $ 938 $ 0 $ 9,088
Aptitude Tests (Supervisor) $ 610 $ 453 $ 311 $ 256 $ 188 $ 0 $ 1,818
Drug Test Salaried) $ 407 $ 302 $ 207 $ 171 $ 125 $ 0 $ 1,212
-------------------------------------------------------------------------------------
TOTAL HIRING EXPENSES $ 20,340 $ 15,089 $ 10,371 $ 8,532 $ 6,252 $ 0 $ 60,584
==========
OPERATIONS MOVE & SETUP
Striping $ 71,400 $ 33,150 $ 0 $ 20,400 $ 17,000 $ 0 $ 141,950
RF Signage $ 22,100 $ 11,050 $ 9,350 $ 6,800 $ 5,950 $ 0 $ 55,250
Temporary Equipment Rental $ 9,764 $ 7,243 $ 4,978 $ 8,190 $ 6,001 $ 0 $ 36,176
Sanitation Prep, Lighting, Misc. Building $ 0 $ 0 $ 0 $ 10,685 $ 8,896 $ 0 $ 19,581
Preparation
Office Move / Improvement $ 0 $ 0 $ 0 $ 1,781 $ 1,483 $ 0 $ 3,264
-------------------------------------------------------------------------------------
TOTAL OPERATIONS MOVE & SETUP $ 103,264 $ 51,443 $ 14,328 $ 47,856 $ 39,330 $ 0 $ 256,221
==========
FIXED BUILDING
Rent
Taxes
Utilities
Racking
Security
Other Outside Services
Temporary Guard Service
-------------------------------------------------------------------------------------
TOTAL FIXED BUILDING
==========
INFORMATION SYSTEMS
PC's
Printer - Medium Speed
Printer - Zebra
Terminals
Office Phones
Conference Room Phone
Phone System
Building Cabling
Copier & Fax
Two Way Radios
5 kVA UPS
RF Signage
-------------------------------------------------------------------------------------
TOTAL INFORMATION SYSTEMS
==========
ADDITIONAL LABOR
NON-LOCAL SALARIES (FOR TRAINING/SETUP):
Human Resources $ 6,960 $ 9,120 $ 9,120 $ 9,600 $ 9,600 $ 0 $ 44,400
PI&T, SI&P & SMT $ 16,050 $ 27,300 $ 27,300 $ 22,500 $ 18,000 $ 0 $ 111,150
Startup Coordinator $ 30,000 $ 20,000 $ 20,000 $ 30,000 $ 30,000 $ 4,800 $ 134,800
Engineering $ 30,461 $ 15,192 $ 11,949 $ 8,061 $ 6,707 $ 0 $ 72,370
Information Technologies $ 66,733 $ 31,962 $ 28,308 $ 17,809 $ 14,827 $ 12,190 $ 171,829
Visiting Operators, Supervisors $ 22,000 $ 24,800 $ 24,800 $ 19,000 $ 15,200 $ 0 $ 105,800
Visiting CSR, Office $ 17,816 $ 43,425 $ 43,425 $ 17,816 $ 10,021 $ 0 $ 132,503
Visiting Warehouse Help $ 80,209 $ 108,518 $ 70,773 $ 34,600 $ 25,164 $ 0 $ 319,264
Additional Warehouse Labor Ramp Up $ 116,640 $ 88,128 $ 59,616 $ 49,248 $ 36,288 $ 0 $ 349,920
-------------------------------------------------------------------------------------
TOTAL ADDITIONAL LABOR $ 386,869 $ 368,445 $ 295,291 $ 208,634 $ 165,807 $ 16,990 $1,442,306
==========
DSC CORPORATE FUNCTIONAL SUPPORT (7.93%) $ 45,154 $ 39,712 $ 30,189 $ 26,085 $ 20,818 $ 2,156 $ 164,113
TOTAL START UP COSTS $ 614,557 $ 540,488 $ 410,878 $ 355,027 $ 283,343 $ 29,346 $2,233,638
-------------------------------------------------------------------------------------
</Table>
5:11 PM Updated November 2, 2001 Page 1 of 1
<Page>
DSC LOGISTICS EXHIBIT D: START UP AND TRANSITION COSTS
SOLO CUP TRANSITION COST ESTIMATION
OPERATING AGREEMENT
TRANSITION COST ESTIMATION
<Table>
<Caption>
20% PALLET SHUTTLE HANDLING
SHIP FROM SHIP TO: INVENTORY # TLs COST COST TOTAL
- --------------------------------------------------------------------------------------------------------------------------
Solo Cup, 97th St TBD 8,244 242 $ 21,822 $ 41,541 $ 63,363
Central American Whse TBD 3,478 102 $ 13,297 $ 17,525 $ 30,822
Solo Cup, Havre De Grace - 5,725 0 $ 0 $ 0 $ 0
Worley Logistics Solo Cup, Jonesboro 1,844 36 $ 4,339 $ 8,886 $ 13,224
Solo Cup, Jonesboro - 2,956 0 $ 0 $ 0 $ 0
Solo Cup, Santa Fe Springs DSC Logistics, Mira Loma 1,519 32 $ 5,334 $ 8,152 $ 13,486
Pacific Coast Warehouse DSC Logistics, Mira Loma 1,750 37 $ 3,351 $ 9,389 $ 12,740
Shippers Warehouse DSC Logistics, Roanoke 2,692 56 $ 6,730 $ 13,150 $ 19,879
United Warehouse, Kent - 1,567 0 $ 0 $ 0 $ 0
29,775 507 $ 54,872 $ 98,642 $ 153,514
</Table>
UPDATED: OCTOBER 15, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT E:
SOLO CUP WAREHOUSE PRICING ESTIMATE
OPERATING AGREEMENT ACCESSORIALS & PRODUCTIVITY MODEL
WAREHOUSE PRICING ESTIMATE
<Table>
<Caption>
WAREHOUSE EXPENSE SOLO CUP REGIONAL DISTRIBUTION CENTER
- ------------------------------------------------------------------------------------------------------------------------
LAKESIDE/ HAVRE DE LOS
CATEGORY SUBCATEGORY 97TH STREET GRACE JONESBORO ANGELES DALLAS *SEATTLE SUMMARY
- ------------------------------------------------------------------------------------------------------------------------
FIXED Rent $ 0 $ 41,610 $ 29,582 $ 675,464 $ 473,180 $ 392,328 $ 1,612,164
BUILDING Taxes & Licenses $ 0 $ 0 $ 0 $ 57,664 $ 130,306 $ 65,902 $ 253,872
Maintenance &
Repair Facility $ 111,545 $ 80,090 $ 34,056 $ 110,097 $ 122,049 $ 62,654 $ 520,491
Utilities $ 0 $ 0 $ 0 $ 58,582 $ 64,497 $ 29,331 $ 152,410
Security $ 213,645 $ 91,058 $ 60,984 $ 17,614 $ 4,992 $ 10,210 $ 398,503
Insurance $ 0 $ 0 $ 0 $ 16,591 $ 24,711 $ 10,237 $ 51,539
Trash Removal $ 0 $ 0 $ 0 $ 12,407 $ 11,620 $ 6,866 $ 30,893
Other Outside
Services $ 34,549 $ 21,214 $ 7,104 $ 3,701 $ 5,477 $ 2,315 $ 74,360
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED BUILDING $ 359,739 $ 233,972 $ 131,726 $ 952,120 $ 836,832 $ 579,843 $ 3,094,232
========================================================================================================================
FIXED Management &
HANDLING Supervision Salaries $ 546,885 $ 496,631 $ 377,150 $ 261,068 $ 211,494 $ 140,710 $ 2,033,938
Customer Service &
Administrative
Salaries $ 368,063 $ 365,182 $ 309,696 $ 222,465 $ 165,035 $ 52,268 $ 1,482,709
Handling Equipment
Cost $ 178,709 $ 98,345 $ 94,226 $ 88,242 $ 57,425 $ 75,549 $ 592,496
Administrative
Equipment $ 199,472 $ 126,187 $ 115,672 $ 100,554 $ 46,957 $ 65,459 $ 654,301
Communication $ 59,942 $ 41,785 $ 33,727 $ 21,762 $ 18,105 $ 9,938 $ 185,259
Office Supplies &
Services $ 29,427 $ 23,145 $ 18,510 $ 12,059 $ 11,826 $ 5,507 $ 100,483
Hiring Expenses $ 8,184 $ 5,362 $ 1,643 $ 2,389 $ 4,521 $ 1,091 $ 23,190
Professional Fees $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Training & Education $ 6,522 $ 5,312 $ 2,678 $ 869 $ 894 $ 397 $ 16,672
Travel &
Entertainment $ 13,044 $ 6,444 $ 5,201 $ 3,356 $ 2,792 $ 1,533 $ 32,370
Other $ 15,546 $ 7,786 $ 5,822 $ 3,757 $ 3,315 $ 1,716 $ 37,942
Claims &
Uncollectibles $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL FIXED HANDLING $ 1,425,794 $ 1,176,188 $ 964,325 $ 716,521 $ 522,364 $ 354,167 $ 5,159,359
========================================================================================================================
VARIABLE Direct Labor
HANDLING Expense $ 1,448,054 $ 1,137,980 $ 686,523 $ 639,869 $ 440,551 $ 192,398 $ 4,545,375
Fuel $ 62,713 $ 33,201 $ 29,512 $ 29,512 $ 22,134 $ 7,966 $ 185,038
Warehouse Supplies $ 28,522 $ 14,493 $ 11,698 $ 7,548 $ 6,280 $ 3,447 $ 71,988
Maintenance &
Repairs Handling $ 61,050 $ 35,850 $ 32,700 $ 32,700 $ 26,400 $ 26,479 $ 215,179
Pallets $ 0 $ 0 $ 0 $ 0 $ 0 $ 39,821 $ 39,821
Detention $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------
TOTAL VARIABLE HANDLING $ 1,600,339 $ 1,221,524 $ 760,433 $ 709,629 $ 495,365 $ 270,110 $ 5,057,400
========================================================================================================================
</Table>
UPDATED NOVEMBER 16, 2001 PAGE 1 OF 2
<Page>
DSC LOGISTICS EXHIBIT E:
SOLO CUP WAREHOUSE PRICING ESTIMATE
OPERATING AGREEMENT ACCESSORIALS & PRODUCTIVITY MODEL
<Table>
DSC CORPORATE FUNCTIONAL
SUPPORT (7.93%) $ 268,500 $ 208,693 $ 147,219 $ 188,597 $ 147,067 $ 95,487 $ 1,055,563
SUBTOTAL WAREHOUSE EXPENSE $ 3,654,372 $ 2,840,377 $ 2,003,703 $ 2,566,867 $ 2,001,628 $ 1,299,607 $ 14,366,553
BASE COST PLUS (6%) $ 219,262 $ 170,423 $ 120,222 $ 154,012 $ 120,098 $ 77,976 $ 861,993
INCENTIVE COST PLUS (3%) $ 109,631 $ 85,211 $ 60,111 $ 77,006 $ 60,049 $ 38,988 $ 430,997
TOTAL WAREHOUSE EXPENSE $ 3,983,265 $ 3,096,010 $ 2,184,036 $ 2,797,885 $ 2,171,774 $ 1,416,571 $ 15,659,542
</Table>
* The Seattle numbers are estimates based on Solo's existing contract with
United Warehouse
WAREHOUSE ACCESSORIALS
<Table>
<Caption>
REQUIRES WRITTEN
REQUEST OR
DESCRIPTION AUTHORIZATION "X" RATE BASIS RATE
- ----------------------------------------------------------
Physical Inventory X Cost Plus See FSA
Product Disposal X Cost Plus See FSA
Special Packaging X Quote See FSA
Display Building X Quote See FSA
Labeling X Quote See FSA
Special Fumigation X Quote See FSA
</Table>
PRODUCTIVITY MODEL ESTIMATION BASED ON PROFILE
<Table>
<Caption>
PRODUCTIVITIES SOLO CUP HOURLY PRODUCTIVITY RATES
- -------------------------------------------------------------------------------------------------
LAKESIDE/ HAVRE DE LOS
CATEGORY UNIT OF MEASURE 97TH STREET GRACE JONESBORO ANGELES DALLAS SEATTLE
- -------------------------------------------------------------------------------------------------
RECEIVE PALLETS PALLETS PER HOUR 28.5 28.5 32.2 25.2 30.4 26.7
CHECK PALLETS PALLETS PER HOUR 0.0 0.0 0.0 0.0 0.0 0.0
PUTAWAY PALLETS PER HOUR 25.7 25.9 27.4 28.4 29.1 30.3
BULK PICK PALLETS PER HOUR 18.2 17.9 18.6 18.9 20.6 21.3
TIER PICK CASES PER HOUR 232.1 261.8 277.9 243.0 282.1 253.6
CASE PICK CASES PER HOUR 79.0 81.1 94.3 92.1 97.6 88.1
REPLENISH CASE PICK PALLETS PER HOUR
AREA WITH PALLETS 16.2 16.0 16.2 16.4 16.6 16.9
EACH PICK EACHES PER HOUR 0.0 0.0 0.0 0.0 0.0 0.0
REPLENISH EACH PICK CASES PER HOUR
AREA WITH CASES 0.0 0.0 0.0 0.0 0.0 0.0
CHECK-OUT PALLETS PER HOUR 0.0 0.0 0.0 0.0 0.0 0.0
LOAD OUTBOUND PALLETS PER HOUR 30.8 29.8 31.8 30.7 30.6 30.3
DIRECT THROUGHPUT CASES PER HOUR 159.4 158.6 179.0 155.1 171.9 130.8
TOTAL THROUGHPUT CASES PER HOUR 134.4 133.2 151.0 130.9 145.1 110.4
</Table>
UPDATED NOVEMBER 16, 2001 PAGE 2 OF 2
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP TRANSPORTATION AGREEMENT
OPERATING AGREEMENT
<Table>
<Caption>
TAB # TRANSPORTATION EXHIBIT SECTION
- ----------------------------------------
1 ORIGIN LIST
2 COST PLUS PRICING EXCEPTIONS
3 SERVICE LEVEL REQUIREMENTS
4 CARRIER STANDARDS
5 FUEL SURCHARGE SAMPLE SCHEDULE
6 PACKAGE RATE
7 LTL RATES - Origin Zip 21078
8 TL RATES - Origin Zip 21078
9 LTL RATES - Origin Zip 30253
10 TL RATES - Origin Zip 30253
11 LTL RATES - Origin Zip IL
12 TL RATES - Origin Zip IL
13 LTL RATES - Origin Zip 76014
14 TL RATES - Origin Zip 76014
15 LTL RATES - Origin Zip 91752
16 TL RATES - Origin Zip 91752
17 LTL RATES - Origin Zip 98032
18 TL RATES - Origin Zip 98032
</Table>
DSC LOGISTICS: SOLO CUP:
Print Name: Print Name:
------------------------- -------------------------
Signature: Signature:
-------------------------- --------------------------
Title: Title:
------------------------------ ------------------------------
Date: Date:
------------------------------- -------------------------------
UPDATED: OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP ORIGIN LIST
OPERATING AGREEMENT
<Table>
<Caption>
REGIONAL DISTRIBUTION CENTERS
- -----------------------------------------------------------------------------------------
REGION NAME ADDRESS CITY STATE ZIP
- -----------------------------------------------------------------------------------------
NE Solo Cup, Havre De Grace 1900 Clark Road Havre de Grace MD 21078
SE Solo Cup, Jonesboro 9250 South Main Street Jonesboro GA 30236
SW DSC Logistics 4001 New York Avenue Arlington TX 76014
W DSC Logistics 12350 Philadelphia Street Mira Loma CA 91752
NW United Warehouse 6013 South 194Th Kent WA 98032
MW TBD TBD TBC IL TBD
</Table>
<Table>
<Caption>
OTHER WAREHOUSE LOCATIONS
- ------------------------------------------------------------------------------------------------
TYPE NAME ADDRESS CITY STATE ZIP
- ------------------------------------------------------------------------------------------------
PLANT Solo Cup, Leominster 177 Florence Street Leominster MA 01453
PLANT Solo Cup, Federalsburg 1000 Industrial Park Drive Federalsburg MD 21632
3PL* Worley Logistics 1000 Westlake Parkway, Ste 100 Atlanta GA 30336
PLANT Solo Cup, Highland Park 1700 Old Deerfield Road Highland Park IL 60035
PLANT Solo Cup, Wheeling Road 1175 S Wheeling Road Wheeling IL 60090
PLANT Solo Cup, Peterson Dr 1234 Peterson Drive Wheeling IL 60090
3PL* Central American Warehouse 2601 International Drive Woodridge IL 60517
WHSE* Solo Cup Co, 97Th St 1500 East 97Th Street Chicago IL 60628
PLANT Solo Cup, East End 7431 East End Ave Chicago IL 60649
PLANT Solo Cup, Urbana 1505 E Main Street Urbana IL 61802
PLANT Solo Cup, Shreveport 1214 Hawn Avenue Shreveport LA 71107
PLANT Solo Cup, Ada 401 N E JA Richardson Loop Ada OK 74820
3PL* Shippers Warehouse 2115 Beltline road Carrollton TX 75006
PLANT Solo Cup, Twin Falls 750 Eastland Drive South Twin Falls ID 83301
PLANT Solo Cup, Belen 1951 Highway 304 Belen NM 87002
WHSE* Solo Cup, Santa Fe Springs 13930 Gannett Street Santa Fe CA 90670
Springs
3PL* Pacific Coast Warehouse 5125 Schaefer Avenue Chino CA 91710
PLANT Solo Cup, Santa Paula 118 W Santa Barbara Santa Paula CA 93060
3PL* Intercontinental Warehouses 135 Bethridge Road Etobicoke OT M9W1N4
</Table>
*Represents Solo Cup warehouses and/or 3rd party logistics companies that will
be transitioned to DSC Logistics
UPDATED: OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP COST PLUS PRICING EXCEPTIONS
OPERATING AGREEMENT
ALL TRANSPORTATION SERVICES PERFORMED BY DSC LOGISTICS ON BEHALF OF SOLO
CUP WILL BE BILLED ON A COST PLUS BASIS WITH THE FOLLOWING EXCEPTIONS:
<Table>
<Caption>
TRANSPORTATION SERVICE BILLING METHOD
-----------------------------------------------------------
Initial product transfer from At cost
current Solo Cup warehouses
and 3rd party logistics
companies to DSC Logistics
facilities
Fuel Surcharge At cost
Lumper Fees At cost
</Table>
UPDATED: OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP SERVICE LEVEL AGREEMENTS
OPERATING AGREEMENT
DSC Logistics will perform Transportation Management functions on behalf of Solo
Cup and will administer the costs and fees in the following manner:
<Table>
<Caption>
REQUIRED TO ACHIEVE SUBJECT TO AGREED
PERFORMANCE INCENTIVE 2% OPERATING CAPACITY
SERVICE LEVEL CATEGORY SERVICE LEVEL AGREEMENT MANAGEMENT FEE CONSTRAINTS
- -----------------------------------------------------------------------------------------------------------------------------
Truckload On Time Delivery Maintain or exceed 98% on time delivery X X
of all Shipments as compared to appointment time
Consolidated Orders on Enable Maintain or exceed 98% on time delivery X X
Truckload on Time Delivery of all Shipments as compared to appointment time
LTL On Time Delivery Maintain or exceed 95% on time delivery X X
of all Shipments as compared to appointment time
Intermodal On Time Delivery Maintain or exceed 93% on time delivery X X
of all Shipments as compared to appointment time
</Table>
The parties agree that all four (4) applicable Service Level Categories (i.e.,
Truckload On Time Delivery, Consolidated Orders on Enable Truckload On Time
Delivery, LTL On Time Delivery & Intermodal On Time Delivery) must be met,
measured in the aggregate across all Facilities, during any single contract year
before the two percent (2%) Incentive Fee shall be deemed earned by DSC for that
contract year. Notwithstanding the preceding sentence, the two percent (2%)
Incentive Fee shall be paid quarterly during each contract year, and returned to
SOLO by DSC if the applicable Service Level Categories are not met for that
contract year.
DSC Logistics' performance will be measured by a Service Level Agreement
Compliance Report, which will be prepared by DSC Logistics on a quarterly basis.
DSC's failure to achieve Truckload On Time Delivery, Consolidated Orders on
Enable Truckload On Time Delivery, LTL On Time Delivery & Intermodal On Time
Delivery percentages at the levels described above minus 10% on a quarterly
basis may be considered a Material Default under Section 19(A)(ii)(a) of the
Agreement.
SLA PRICING CALCULATIONS
<Table>
<Caption>
TRANSPORTATION COST CATEGORY COST CALCULATION INVOICE METHODOLOGY
- -------------------------------------------------------------------------------------------------
FUEL SURCHARGES & LUMPER FEES At Cost Monthly Total
ALL OTHER TRANSPORTATION RATES & At Cost Monthly Total
FEES
GUARANTEED 6% MANAGEMENT FEE [All Other Transportation Rates & Monthly Calculation
Fees]*0.06
Quarterly Calculation
Contingent on DSC Logistics'
PERFORMANCE INCENTIVE 2% [All Other Transportation Rates & performance outlined in the
MANAGEMENT FEE Fees]*0.02 Service Level Agreement
matrix
</Table>
UPDATED: NOVEMBER 16, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP CARRIER STANDARDS
OPERATING AGREEMENT
<Table>
<Caption>
DSC LOGISTICS PARTNER CARRIER
SERVICE STANDARDS STANDARDS DESCRIPTION
- ----------------------------------------------------------------------------------------------------------------------
SAFETY AND COMPLIANCE 1. Responsibility for Department of Transportation (DOT) regulatory compliance with
safety regulations lies with each carrier. This responsibility cannot be passed on
to DSC Logistics its divisions and subsidiaries. All drivers are required to be
fully licensed under Federal and State regulations.
2. Carriers must provide the following:
a. Operating Authority
b. Certificate of Insurance
1) Comprehensive General Liability and Property Damage - $1,000,000
2) Comprehensive Automobile Liability Insurance, including Property Damage -
$1,000,00
3) Cargo Liability Insurance - $350,000
EQUIPMENT REQUIREMENTS 1. Clean and food grade equipment
2. Carriers will not utilize equipment which was used for the transportation of
garbage, trash, or wastes
3. If waste materials are found in trailers before loading or if a trailer is deemed
to be unsuitable by DSC personnel, it is the responsibility of the carrier to have
the trailer cleaned out prior to it being loaded
4. Trailers must be free of odors, holes or cuts. DSC Logistics reserves the right to
refuse usage of any trailer
5. When requested by DSC Logistics, carrier will provide pallets, load locks and any
other special equipment necessary for error free transit
PICKUP AND DELIVERY DOCK 1. Carriers will arrange for and coordinate pick up appointments with the shipper and
REQUIREMENTS delivery appointments with the consignee
2. Drivers must adhere to all facility rules and regulations and remain in areas
designated allowable by the facility
3. All delivery drivers are regarded as an extension of DSC and should be adherent to
all the consignees rules and regulations and show courtesy and compliance
EDI REQUIREMENTS 1. Preferred method of load tender is 204's. If a carrier is unable to receive 204's,
a fax will be sent. DSC requests that the carrier accept or reject a load within
90 minutes.
2. DSC Logistics expects to be billed via 210's. Paper bills will be accepted.
3. DSC Logistics expects appointment and delivery information to be conveyed via
214's. Faxes or e-mail will be accepted on a case by case basis.
CARRIER REQUIREMENTS 1. To sign the DSC Logistics contract
2. Follow the DSC Logistics OS&D Procedural Manual
3. Report Delivery Appointments daily
4. Actual Delivery Status must be conveyed within 24 hours of delivery
</Table>
UPDATED: OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP FUEL SURCHARGE SAMPLE SCHEDULE
OPERATING AGREEMENT
<Table>
<Caption>
U.S. NATIONAL AVERAGE FUEL FUEL SURCHARGE
COST PER GALLON APPLICABLE
- ------------------------------------------
$ 1.15 to $ 1.20 -
$ 1.20 to $ 1.30 -
$ 1.30 to $ 1.40 -
$ 1.40 to $ 1.50 -
$ 1.50 to $ 1.60 -
</Table>
<Table>
<Caption>
EXAMPLE:
- -------------------------------------
Cost of Shipment: $ 500.00
(2)Fuel Surcharge (1.5%) $ 7.50
--------
Total cost: $ 507.50
</Table>
(2)Computed on Dept. of Energy Index of fuel cost of 1.15 - 1.99 per gallon
FUEL SURCHARGE APPLIES TOWARDS LTL & TL SHIPMENTS AND WILL BE INVOICED TO SOLO
CUP AT COST.
THE FUEL SURCHARGE COST WILL BE DERIVED FROM EACH CARRIER'S SEPARATE FUEL
SURCHARGE COST SCHEDULE.
THE FUEL SURCHARGE PER CENT WILL CHANGE (OR REMAIN THE SAME) EACH MONDAY OF
EVERY WEEK.
THE FUEL COST INDEX CAN BE ACCESSED VIA THE INTERNET.
THE WEB ADDRESS IS: WWW.EIA.DOE.GOV.
OR BY TELEPHONE, THE NUMBER IS: (202) 586-6966.
UPDATED OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP PACKAGE RATE
OPERATING AGREEMENT
<Table>
<Caption>
GROSS UPS CHARGES DISCOUNT % OF UPS
ORIGIN PER WEEK LIST RATES
- ---------------------------------------------------------------------
ALL ZIPS $0.00 - $3,499.99
$3,500 - $4999.99
$5,000 - $6,999.99
$7,000 - $8,499.99
$8,500 - up
</Table>
APPLIES TO ONLY UPS GROUND COMMERCIAL SHIPMENTS.
DOES NOT APPLY TOWARD UPS RESIDENTIAL SHIPMENTS.
EACH ELIGIBLE PACKAGE WILL RECEIVE A DISCOUNT PER THE ABOVE SCHEDULE.
UPDATED: OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP LTL RATES - ORIGIN ZIP 21078
OPERATING AGREEMENT
<Table>
<Caption>
OUTBOUND DESTINATION PRIMARY CARRIER SECONDARY CARRIER TERTIARY CARRIER
- ------------------------------------------------------------------------------------------------------------------------
CZAR 98 SERVICE CZAR 98 SERVICE CZAR 98 SERVICE
ZIP STATE REGION CARRIER DISCOUNT % (DAYS) CARRIER DISCOUNT % (DAYS) CARRIER DISCOUNT % (DAYS)
- ------------------------------------------------------------------------------------------------------------------------
010 MA NE
011 MA NE
012 MA NE
013 MA NE
014 MA NE
015 MA NE
016 MA NE
017 MA NE
018 MA NE
019 MA NE
020 MA NE
021 MA NE
022 MA NE
023 MA NE
024 MA NE
025 MA NE
026 MA NE
027 MA NE
028 RI NE
029 RI NE
030 NH NE
031 NH NE
032 NH NE
033 NH NE
034 NH NE
035 NH NE
036 NH NE
037 NH NE
038 NH NE
039 ME NE
040 ME NE
041 ME NE
</Table>
UPDATED: OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT F: TRANSPORTATION
SOLO CUP TL RATES - ORIGIN ZIP 21078
OPERATING AGREEMENT
<Table>
<Caption>
OUTBOUND DESTINATION PRIMARY CARRIER SECONDARY CARRIER
- ----------------------------------------------------------------------------------------------------------------------
COST PER SERVICE COST PER SERVICE
REGION CITY STATE MILEAGE CARRIER MILE FLAT RATE (DAYS) CARRIER MILE FLAT RATE (DAYS)
- ----------------------------------------------------------------------------------------------------------------------
SE ALBERTVILLE AL
SE ANNISTON AL
SE BESSEMER AL
SE BIRMINGHAM AL
SE CALERA AL
SE COTTONDALE AL
SE COTTONWOOD AL
SE CULLMAN AL
SE DOTHAN AL
SE FOLEY AL
SE GENEVA AL
SE HOMEWOOD AL
SE MOBILE AL
SE MONTGOMERY AL
SE OPP AL
SE PELHAM AL
SE TUSCALOOSA AL
SW BENTONVILLE AR
SW HARRISON AR
SW HOTSPRINGS AR
SW LITTLE ROCK AR
SW MAUMELLE AR
SW NORTH LITTLE ROCK AR
SW SEARCY AR
SW SPRINGDALE AR
SE WEST MEMPHIS AR
W BUCKEYE AZ
W BULLHEAD CITY AZ
W CHANDLER AZ
<Caption>
OUTBOUND DESTINATION TERTIARY CARRIER
- ---------------------------------------------------------------------------------
COST PER SERVICE
REGION CITY STATE MILEAGE CARRIER MILE FLAT RATE (DAYS)
- --------------------------------------------------------------------------------
SE ALBERTVILLE AL
SE ANNISTON AL
SE BESSEMER AL
SE BIRMINGHAM AL
SE CALERA AL
SE COTTONDALE AL
SE COTTONWOOD AL
SE CULLMAN AL
SE DOTHAN AL
SE FOLEY AL
SE GENEVA AL
SE HOMEWOOD AL
SE MOBILE AL
SE MONTGOMERY AL
SE OPP AL
SE PELHAM AL
SE TUSCALOOSA AL
SW BENTONVILLE AR
SW HARRISON AR
SW HOTSPRINGS AR
SW LITTLE ROCK AR
SW MAUMELLE AR
SW NORTH LITTLE ROCK AR
SW SEARCY AR
SW SPRINGDALE AR
SE WEST MEMPHIS AR
W BUCKEYE AZ
W BULLHEAD CITY AZ
W CHANDLER AZ
</Table>
UPDATED: OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT G: PROFILE ELEMENTS
SOLO CUP PROFILE ELEMENTS
OPERATING AGREEMENT
<Table>
<Caption>
KEY OPERATIONAL VARIABLES SOLO CUP PROFILE
- -------------------------------------------------------------------------------------------------------------------------------
LAKESIDE / 97TH
CATEGORY SUBCATEGORY STREET HAVRE DE GRACE JONESBORO LOS ANGELES DALLAS SEATTLE
- -------------------------------------------------------------------------------------------------------------------------------
INBOUND Cases Received per Year 11,486,127 8,418,551 6,597,265 4,969,661 3,985,526 1,554,570
Pallets Received per Year 339,102 253,535 194,677 151,871 114,592 61,558
Average Cases per Pallet 33.9 33.2 33.9 32.7 34.8 25.3
SKUs per Pallet 1 1 1 1 1 1
% Truck 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Truckloads per Year 9,945 6,007 3,787 3,240 2,388 1,218
Pallets per Inbound Truckload 34 42 51 47 48 51
Cases per Inbound Truckload 1,156 1,401 1,743 1,533 1,670 1,279
SKUs per Inbound Truckload 5.12 7.24 7.63 7.89 9.67 9.62
% Rail 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Railcars per Year 0 0 0 0 0 0
Pallets per Inbound Railcar 0 0 0 0 0 0
Cases per Inbound Railcar 0 0 0 0 0 0
SKUs per Inbound Truckload 0 0 0 0 0 0
% White Pallet, CHEP no 39.0% 34.0% 51.0% 0.0% 41.0% 0.0%
transfer 55.0% 59.0% 44.0% 90.0% 53.0% 90.0%
% Clamp 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% Slip 6.0% 7.0% 5.0% 10.0% 6.0% 10.0%
% Floor
STORAGE # of SKUs 2,649 2,271 1,642 1,420 1,473 1,010
Average Cases in Inventory 1,811,564 953,197 790,954 526,032 446,907 215,896
Peak Cases in Inventory 2,077,442 1,082,553 835,279 561,152 470,261 233,284
Average Pallets in Inventory 58,608 28,624 24,002 16,346 13,459 7,834
Peak Pallets in Inventory 70,667 33,274 28,119 17,359 14,730 8,826
Cases per Pallet in Inventory 30.9 33.3 33.0 32 33 27.6
Stackability (# pallets high) 3 3 3 3 3 3
Maximum Pallet Height 72 72 72 72 72 72
GMA Pallet (y/n) y y y y y y
Annual Turns 6.34 9.01 8.44 9.61 8.93 7.34
Inventories per Year 1 1 1 1 1 1
Cycle Count (y/n) y y y y y y
Lot Control (y/n) y y y y y y
Pick to specific lot? N N N N N N
OUTBOUND Cases Shipped per Year 13,704,107 8,754,516 6,747,981 5,138,634 3,996,305 1,615,524
Pallets Shipped per Year 433,753 262,937 196,935 154,060 114,941 63,364
% Pallet Pick 74.3% 72.9% 74.9% 74.6% 71.2% 72.1%
% Tier Pick 20.1% 20.6% 19.9% 19.1% 22.3% 21.8%
% Case Pick 5.6% 6.5% 5.2% 6.3% 6.5% 6.1%
% Each Pick 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Avg Cases per Pallet - Case Pick 21 28 23 25 24 21
Orders per Year 31,049 18,097 15,400 12,992 10,639 4,782
Lines per Year 311,594 214,176 140,864 129,316 95,422 44,414
Total Lines per Order 10.04 11.8 9.15 9.95 8.97 9.29
Tier Pick Lines per Order 5 5.7 5 4 4 4
Cases Tier Picked per Line 15 17 19 17 19 17
Case Pick Lines per Order 6.00 7.7 5.00 6.10 5.50 5.20
Total Cases per Order 370 484 438 396 376 338
Total Pallets per Order 14 19 17 15 15 16
% Truckload 80.6% 73.1% 65.5% 56.0% 55.9% 38.2%
% LTL 19.4% 26.9% 34.5% 44.0% 44.1% 61.8%
% Rail 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Pallets per Outbound Truckload 24 24 24 24 24 30
Pallets per Outbound LTL 5 6 7 8 8 8
Pallets per Outbound Rail 0 0 0 0 0 0
% White Pallet 32.0% 34.0% 52.0% 41.0% 41.0% 22.0%
% Clamp 61.0% 59.0% 43.0% 53.0% 53.0% 70.0%
% Slip 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
% Floor 7.0% 7.0% 5.0% 6.0% 6.0% 8.0%
% CHEP 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
</Table>
UPDATED NOVEMBER 2, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT H:
SOLO CUP KEY OPERATIONAL VARIABLES
OPERATING AGREEMENT
KEY OPERATIONAL VARIABLES
<Table>
<Caption>
CATEGORY SUBCATEGORY
-------------------------------------------------------------
INBOUND CASES RECEIVED PER YEAR
PALLETS RECEIVED PER YEAR
AVERAGE CASES PER PALLET
STORAGE # OF SKUs
AVERAGE CASES IN INVENTORY
PEAK PALLETS IN INVENTORY
OUTBOUND CASES SHIPPED PER YEAR
PALLETS SHIPPER PER YEAR
% CASE PICK
ORDERS PER YEAR
LINES PER YEAR
</Table>
UPDATED OCTOBER 25, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT I:
SOLO CUP PROPOSED GEOGRAPHIES
OPERATING AGREEMENT
ORIGIN LIST
<Table>
<Caption>
REGIONAL DISTRIBUTION
REGION CENTER ADDRESS CITY STATE ZIP
- --------------------------------------------------------------------------------------------------------------------------
MW TBD TBD TBD IL TBD
NE Solo Cup 1900 Clark Road Havre de Grace MD 21078
SE Solo Cup 9250 South Main Street Jonesboro GA 30236
SW DSC Logistics 4001 New York Avenue Arlington TX 76014
W DSC Logistics 12350 Philadelphia Street Mira Loma CA 91752
NW United Warehouse 6013 South 194Th Kent WA 98032
<Caption>
OTHER WAREHOUSE
TYPE FACILITY ADDRESS CITY STATE ZIP
- --------------------------------------------------------------------------------------------------------------------------
PLANT Solo Cup, Leominster 177 Florence Street Leominster MA 01453
PLANT Solo Cup, Federalsburg 1000 Industrial Park Drive Federalsburg MD 21632
3PL* Worley Logistics 1000 Westlake Parkway, Ste 100 Atlanta GA 30336
PLANT Solo Cup, Highland Park 1700 Old Deerfield Road Highland Park IL 60035
PLANT Solo Cup, Wheeling Road 1175 S Wheeling Road Wheeling IL 60090
PLANT Solo Cup, Peterson Dr 1234 Peterson Drive Wheeling IL 60090
3PL* Central American Warehouse 2601 International Drive Woodridge IL 60517
WHSE* Solo Cup Co, 97Th St 1500 East 97Th Street Chicago IL 60628
PLANT Solo Cup, East End 7431 East End Ave Chicago IL 60649
PLANT Solo Cup, Urbana 1505 E Main Street Urbana IL 61802
PLANT Solo Cup, Shreveport 1214 Hawn Avenue Shreveport LA 71107
PLANT Solo Cup, Ada 401 N E JA Richardson Loop Ada OK 74820
3PL* Shippers Warehouse 2115 Beltline Road Carrollton TX 75006
PLANT Solo Cup, Twin Falls 750 Eastland Drive South Twin Falls ID 83301
PLANT Solo Cup, Belen 1951 Highway 304 Belen NM 87002
WHSE* Solo Cup, Santa Fe Springs 13930 Gannett Street Santa Fe Springs CA 90670
3PL* Pacific Coast Warehouse 5125 Schaefer Avenue Chino CA 91710
PLANT Solo Cup, Santa Paula 118 W Santa Barbara Santa Paula CA 93060
3PL* Intercontinental Warehouses 135 Bethridge Road Etobicoke OT M9W1N4
</Table>
* Represents Solo Cup warehouses and/or 3rd party logistics companies that will
be transitioned to DSC Logistics
UPDATED NOVEMBER 15, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT K:
SOLO CUP EXISTING SOLO TRANSPORTATION
OPERATING AGREEMENT AGREEMENTS
LIST ALL SOLO CUP TRANSPORTATION SERVICE PROVIDERS CURRENTLY UNDER CONTRACT /
SERVICE AGREEMENT, AND PROVIDE COPIES OF THE CONTRACTS / SERVICE AGREEMENTS AND
ACCOMPANYING RATE MATRICES AND EXHIBITS.
<Table>
<Caption>
(3)PRIMARY CONTRACT CONTRACT GUARANTEED
CARRIER (1)CARRIER (2)PRIMARY DESTINATION START END SALES SALES VOLUMES?
NAME TYPE ORIGIN(S) REGION(S) DATE DATE CONTACT PHONE # (YES/NO) COMMENT
- --------------------------------------------------------------------------------------------------------------
</Table>
(1) CARRIER TYPES:
- TL: Truckload
- IM: Intermodal
- LTL: Less Than Truckload
- PKG: Package
- AIR: Air Freight
- RAIL: Rail Freight
- OC: Ocean Freight
(2) PRIMARY ORIGINS:
- IL: Chicago area RDC
- MD: Havre De Grace RDC
- GA: Jonesboro RDC
- TX: Dallas area RDC
- CA: Los Angeles area RDC
- WA: Seattle area RDC
(3) PRIMARY DESTINATION REGIONS:
- NE: Northeast region
- SE: Southeast region
- MW: Midwest region
- SW: Southwest region
- W: West region
- NW: Northwest region
UPDATED OCTOBER 23, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT L:
SOLO CUP EDI TRANSACTION SETS
OPERATING AGREEMENT
<Table>
<Caption>
SOLO APPLICATION SOLO APPLICATION
EDI TRANSACTION EDI GENERIC DESCRIPTION TRANSACTION DESCRIPTION
- ------------------------------------------------------------------------------------------------
204 Transportation Shipment
Tender/Schedule
210 Freight Invoice
214 Shipment Status Information
852 Product Activity Data
856 Advance Shipment Notice
888 Product Information
940 Warehouse Shipping Order
944 Warehouse Receiving Advice
945 Warehouse Shipment Advice
947 Inventory Adjustment Notice
</Table>
UPDATED OCTOBER 15, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT M:
SOLO CUP [SOLO CUP COMPANY LOGO]
OPERATING AGREEMENT
[SOLO CUP COMPANY LOGO]
UPDATED OCTOBER 15, 2001 PAGE 1 OF 1
<Page>
DSC LOGISTICS EXHIBIT N:
SOLO CUP DSC LOGISTICS LOGO
OPERATING AGREEMENT
[DSC LOGISTICS AND SUPPLY CHAIN MANAGEMENT LOGO]
[DSC LOGISTICS AND SUPPLY CHAIN MANAGEMENT LOGO]
[DSC LOGISTICS AND SUPPLY CHAIN MANAGEMENT LOGO]
[DSC LOGISTICS AND SUPPLY CHAIN MANAGEMENT LOGO]
[DSC LOGISTICS AND SUPPLY CHAIN MANAGEMENT LOGO]
READY FOR ANYTHING!
[DSC LOGISTICS SUPPLY AND CHAIN MANAGEMENT LOGO]
READY FOR ANYTHING!
UPDATED NOVEMBER 1, 2001 PAGE 1 OF 1