EXHIBIT 10.8
MANAGEMENT AGREEMENT
This Management Agreement (this "Agreement") is entered into as of the 25
day of November, 2003, by and among Pinnacle Foods Holding Corporation, a
Delaware corporation (the "Company"), Crunch Holding Corp, a Delaware
corporation ("Crunch Holding"), X.X. Xxxxxx Partners, LLC, a Delaware limited
liability company ("JPMP") and X.X. Childs Associates, L.P., a Delaware limited
partnership ("JWC", and together with JPMP, the "Sponsors").
WHEREAS, Crunch Acquisition Corp., a Delaware Corporation ("Crunch
Acquisition"), Crunch Holding, a wholly-owned subsidiary of Crunch Equity
Holding, LLC, a Delaware limited liability company ("CEH") and the Company
entered into an Agreement and Plan of Merger, dated as of August 8, 2003 (the
"Pinnacle Agreement"), pursuant to which on the date hereof Crunch Acquisition
was merged with and into the Company, with the Company surviving the merger as a
wholly-owned subsidiary of Crunch Holding (the "Initial Transaction");
WHEREAS, certain Affiliates of JPMP and JWC have provided equity financing
to CEH in connection with the consummation of the Initial Transaction;
WHEREAS, pursuant to the Agreement and Plan of Reorganization and Merger,
dated as of November 25, 2003, between Aurora Foods Inc. ("Aurora") and CEH (as
such agreement may be replaced, amended, waived, supplemented or otherwise
modified from time to time, the "Aurora Agreement"), the Company will be merged
with and into Aurora, with Aurora surviving the merger as a wholly-owned
subsidiary of Crunch Holding (the "Aurora Transaction");
WHEREAS, certain Affiliates of JPMP and JWC will provide equity financing
(the "Aurora Equity Financing") to CEH in connection with the consummation of
the Aurora Transaction pursuant to the Documents;
WHEREAS, the Sponsors are providing advisory and other services to the
Company and its subsidiaries in connection with (i) the senior secured financing
being obtained in connection with the Aurora Transaction and (ii) the senior
unsecured subordinated note financing being obtained in connection with the
Aurora Transaction (clauses (i) and (ii), collectively, the "Aurora Debt
Financing") and have staff specifically skilled in corporate finance, strategic
corporate planning and other management skills;
WHEREAS, the Company desires to continue to avail itself of the financial
advisory and corporate structuring expertise of the Sponsors with respect to
future proposals for acquisitions and dispositions (whether by stock purchase or
sale, asset purchase or sale, merger or otherwise), tender offers, exchange
offers, restructurings, refinancings, issuances of debt or equity (whether in a
private or public offering) or other similar transactions directly or indirectly
involving Crunch Holding or the Company or any of their subsidiaries and any
other person or entity (each, a "Subsequent Transaction" and collectively, the
"Subsequent Transactions");
WHEREAS, the Company will also require the Sponsors' ongoing special
skills and management services in connection with its business operations and
execution of its strategic plan throughout the term hereof;
WHEREAS, the Sponsors are willing to provide the Company with such
services, advice and expertise on the terms and conditions contained in this
Agreement; and
WHEREAS, certain capitalized terms used in this Agreement are defined in
Section 4 of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
SECTION 1. SERVICES.
Each Sponsor, severally and not jointly, hereby agrees that if during the
term of this Agreement (the "Term") the Company reasonably and specifically
requests that the Sponsors provide the management services set forth below and
the Sponsors agree to provide such services, the Sponsors or one of their
Controlled Affiliates will:
(a) provide the Company with advice in connection with the
negotiation and consummation of agreements, contracts, documents and instruments
necessary to provide the Company with financing from banks or other financial
institutions or other entities on terms and conditions satisfactory to the
Company;
(b) provide the Company with advice with respect to the
development and implementation of strategies for improving the operating,
marketing and financial performance of the Company, and other senior management
matters related to the business, administration and policies of the Company; and
(c) provide the Company with advice concerning such management
matters that relate to proposed mergers, acquisitions, dispositions,
recapitalizations, issuances of securities, financings or other similar
transactions.
No Sponsor shall have any obligation to the Company as to the method and
time of rendering its services hereunder, and the Company shall not have any
right to dictate or direct the details of the performance of services rendered
hereunder. This Agreement shall in no way prohibit a Sponsor or any of its
Affiliates or employees from engaging in other activities, whether or not
competitive with any business of the Company of any of its Affiliates.
SECTION 2. PAYMENT OF FEES TO THE SPONSORS.
(a) Management Fees. In exchange for each Sponsor's agreement to
provide the management services set forth herein, the Company hereby agrees to
pay to each Sponsor (or its designee) a management fee equal to $125,000 per
calendar quarter, payable in advance on the first day of such quarter. Such
payments shall begin on the closing date of the Initial Transaction and continue
until the termination of this Agreement in accordance with Section 4 below.
(b) Aurora Transaction Fees. In connection with the Aurora
Transaction (including, without limitation, in connection with the Aurora Equity
Financing and the Aurora
Debt Financing), the Company shall pay to each Sponsor (or its designee) a cash
fee equal to $1,000,000, payable concurrently with, and upon, the closing of the
Aurora Transaction. If the closing of the Aurora Transaction does not occur,
then no fees shall be payable to the Sponsors pursuant to this Section 2(b).
(c) Subsequent Transaction Fees. In connection with any Subsequent
Transaction, the Company shall pay to each Sponsor (or its designee) a cash fee
equal to 0.5% of the Transaction Value of such Subsequent Transaction, payable
concurrently with, and upon, the closing of such Subsequent Transaction. If the
closing of such Subsequent Transaction does not occur, then no fees shall be
payable to the Sponsors pursuant to this Section 2(c) with respect to such
Subsequent Transaction.
(d) Payment Method. Payments made pursuant to this Section 2 shall
be paid by wire transfer of immediately available federal funds to the accounts
specified on Exhibit A attached hereto, or to such other account(s) as each
Sponsor may specify in writing to the Company.
SECTION 3. EXPENSES; INDEMNIFICATION.
(a) Expenses. The Company shall (i) pay on demand all fees and
expenses incurred by the Sponsors and their Controlled Affiliates or any of them
in connection with the Aurora Transaction, the Aurora Debt Financing, the Aurora
Equity Financing, and any Subsequent Transaction, including, without limitation,
the fees and expenses of O'Melveny & Xxxxx LLP, counsel to JPMP, and Xxxx
Xxxxxxx LLP, counsel to JWC, and any other consultants or advisors retained by
the Sponsors or their respective counsel, (ii) hold the Sponsors and their
Controlled Affiliates harmless against all liability for the payment of all fees
and expenses incurred from time to time by CEH or Crunch Holding in connection
with CEH's or Crunch Holdings' performance and compliance with all agreements
and conditions contained in the Pinnacle Agreement or the Aurora Agreement on
its or their part to be performed or complied with, (iii) pay on demand the
reasonable fees and expenses incurred by the Sponsors and their Controlled
Affiliates in any filing with any governmental authority with respect to the
Aurora Transaction or any Subsequent Transaction, or in any other filing with
any governmental authority with respect to the Company or CEH that mentions the
Sponsors or any of their Controlled Affiliates, and (iv) pay on demand all other
expenses incurred by the Sponsors and their Controlled Affiliates or any one of
them in connection with this Agreement (including fees and expenses of counsel,
accountants and other advisors), including but not limited to the preparation,
negotiation and execution of this Agreement, the performance of services
hereunder, or the transactions contemplated hereby.
(b) Indemnity and Liability. The Company shall indemnify, defend
exonerate and hold each of JPMP, JWC, and each of their respective partners,
shareholders, Controlled Affiliates, directors, officers, fiduciaries,
employees, attorneys and agents and each of the partners, shareholders,
directors, officers, fiduciaries, employees, attorneys and agents of each of the
foregoing (collectively, the "Indemnitees") free and harmless from and against
any and all actions, causes of action, suits, losses, liabilities and damages,
and expenses in connection therewith, including, without limitation, reasonable
attorneys' fees and disbursements (collectively, the "Indemnified Liabilities"),
incurred by the Indemnitees or any of them as a
result of, or arising out of, or relating to the execution, delivery,
performance, enforcement or existence of this Agreement (including, without
limitation, any indemnification obligation assumed or incurred by any Indemnitee
to or on behalf of any Sponsor, or its accountants or other representatives,
agents or Controlled Affiliates) except for any such Indemnified Liability
arising on account of such Indemnitee's gross negligence or willful misconduct,
and if and to the extent that the foregoing undertaking may be unenforceable for
any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law. None of the Indemnitees shall be liable to the Company or any of
its Affiliates for any act or omission suffered or taken by such Indemnitee that
does not constitute gross negligence or willful misconduct.
SECTION 4. TERM. This Agreement shall continue in full force and effect,
unless and until (i) terminated by a Sponsor (with respect to itself and not any
other Sponsor) upon 30 days notice to the Company and the other Sponsor, (ii)
terminated upon the mutual consent of the Sponsors upon 30 days notice to the
Company, (iii) terminated automatically, with respect to a particular Sponsor,
on the date which such Sponsor no longer owns at least 5% of the equity
securities of CEH it purchased at the closing of the Initial Transaction or upon
a Sale of the Company (as defined in the Operating Agreement of LLC dated as of
the date hereof) or Pinnacle Sale (as defined in the Members Agreement of LLC
dated as of the date hereof), or (iv) terminated by a Sponsor (with respect to
itself and not any other Sponsor) upon the consummation of an initial public
offering by CEH, the Company, Crunch Holding, or any other subsidiary of CEH, or
a change in law, event, or other occurrence (together with the initial public
offering, an "Adverse Event") which, in the determination of such Sponsor and by
a majority vote of the Company's board of directors, causes the existence of
this Agreement to (A) render any director designated by such Sponsor as an
"interested" or otherwise not an "independent" director, (B) adversely affect
such Sponsor's right to designate a Person or Persons to serve on the Company's
board of directors, or (C) affect the ability of a Person who has been
designated by such Sponsor to serve on the Company's board of directors to
perform his duties as a director. Upon any termination of this Agreement, each
of (a) the obligations of the Company under Section 3 above, (b) any and all
owed and unpaid obligations of the Company under Section 2 above and (c) the
provisions of Section 3 and Section 7 shall survive any termination of this
Agreement to the maximum extent permitted under applicable law. In the event
that a Sponsor terminates this Agreement in accordance with this Section 4,
clause (iv) above, the Company agrees to pay such Sponsor a lump-sum termination
fee in cash or other value mutually agreed by the Sponsors equal to the net
present value of the fees that would have been payable to such Sponsor (but for
the termination hereof) pursuant to Section 2(a) hereof for a period of two (2)
years from the date of such termination calculated using a discount rate equal
to the two-year treasury rate on the date of such termination. Such termination
fee shall be payable by wire transfer of immediately available funds within 10
days after the date of termination to the account specified on Exhibit A,
attached hereto, or to such other account(s) as such Sponsor may specify in
writing to the Company.
SECTION 5. AMENDMENTS AND WAIVERS. No amendment or waiver of any term,
provision or condition of this Agreement shall be effective, unless in writing
and executed by each Sponsor and the Company. No waiver on any one occasion
shall extend to or effect or be construed as a waiver of any right or remedy on
any future occasion. No course of dealing of
any person nor any delay or omission in exercising any right or remedy shall
constitute an amendment of this Agreement or a waiver of any right or remedy of
any party hereto.
SECTION 6. DEFINED TERMS.
(a) "Affiliate" means, with respect to any Person, any (i)
director, officer, limited or general partner, member or stockholder holding 5%
or more of the outstanding capital stock or other equity interests of such
Person, and (ii) other Person that, directly or indirectly, through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such Person.
(b) "control" means, including, with correlative meaning, the
terms "controlling," "controlled by" and "under common control with", with
respect to any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management, policies or investment
decisions of such Person, whether through the ownership of voting securities, by
contract or otherwise.
(c) "Controlled Affiliate" means, with respect to any Person, any
(i) director, officer, limited or general partner, member or stockholder holding
5% or more of the outstanding capital stock or other equity interests of such
Person, and (i) any other Person that, directly or indirectly, through one or
more intermediaries, is controlled by such Person.
(d) "Person" shall be construed in the broadest sense and means
and includes a natural person, a partnership, a corporation, an association, a
joint stock company, a limited liability company, a trust, a joint venture, an
unincorporated organization and any other entity and any federal, state,
municipal, foreign or other government, governmental department, commission,
board, bureau, agency or instrumentality, or any private or public court or
tribunal.
(e) "Transaction Value" means the total value of the Subsequent
Transaction as determined by the Board of Directors of the Company in good
faith, and will include the aggregate amount of the funds required to complete
the Subsequent Transaction (excluding any fees payable pursuant to Section 1(a)
hereof and including, without double counting, the amount of any indebtedness,
equity or similar items issued, assumed or remaining outstanding and the amount
of any working capital items or other assets retained by the seller in such
Subsequent Transaction).
SECTION 7. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE; WAIVER OF
JURY TRIAL.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to any
law or rule that would cause the laws of any jurisdiction other than the State
of New York to be applied.
(b) ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY
WAY TO THIS AGREEMENT MAY BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF
NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, TO THE EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFOR, AND THE
PARTIES IRREVOCABLY SUBMIT TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF
ANY SUCH ACTION OR PROCEEDING. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVE,S TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT SUCH PARTY MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN THE
COURTS OF THE STATE OF NEW YORK LOCATED IN NEW YORK COUNTY OR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY CLAIM THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM. ANY JUDGMENT MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION THEREOF.
(c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT.
SECTION 8. INDEPENDENT CONTRACTOR. The parties agree and understand that
each Sponsor is and shall act as an independent contractor of the Company in the
performance of its duties hereunder. Each Sponsor is not, and in the performance
of its duties hereunder will not hold itself out as, an employee, agent or other
representative of the Company.
SECTION 9. ENTIRE AGREEMENT. This Agreement contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior agreements and understandings with respect to such subject matter. The
parties hereto represent and warrant that there are no other agreements or
understandings regarding any of the subject matter hereof other than as set
forth herein and covenant not to enter into any such agreements or
understandings after the date hereof except pursuant to an amendment,
modification or waiver of the provisions of this Agreement.
SECTION 10. NOTICES. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
If to the Company, to:
Pinnacle Foods Holding Corporation
Xxx Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Telecopier: (000) 000-0000
If to JPMP, to:
X.X. Xxxxxx Partners, LLC
c/o X.X. Xxxxxx Partners, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Official Notices Clerk
FBO: Xxxxxxx Xxxxxx
Telecopier: (000) 000-0000
with a copy to:
O'Melveny & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
If to JWC, to:
X.X. Childs Associates, L.P.
000 Xxxxxxxxxx Xxxxxx - Xxxxx 0000
Xxxxxx, XX 00000-0000
Attention: Xxxx X. Childs
Telecopier: (000) 000-0000
with a copy to:
Xxxx Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (c) in the case of mailing, on the third business day after the
posting thereof.
SECTION 11. SEVERABILITY. It is the desire and intent of the parties to
this Agreement that the provisions of this Agreement be enforced to the fullest
extent permissible under the law and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, in the event that any
provision of this Agreement would be held in any jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 12. COUNTERPARTS. This Agreement may be executed in any number of
original or facsimile counterparts, and each such counterpart hereof shall be
deemed to be an original instrument, but all such counterparts together shall
constitute but one agreement.
SECTION 13. HEADINGS. All descriptive headings in this Agreement are
inserted for convenience only and shall be disregarded in construing or applying
any provision of this Agreement.
SECTION 14. PREVAILING PARTY. If any legal action or other proceedings is
brought for a breach of this Agreement, the prevailing party shall be entitled
to recover its reasonable attorneys' fees and other costs incurred in bringing
such action or proceeding, in addition to any other relief to which such party
may be entitled.
SECTION 15. ASSIGNMENT, ETC. Except as provided below, neither the Company
nor the Sponsors shall have the right to assign this Agreement. Each Sponsor
acknowledges that its services under this Agreement are unique. Accordingly, any
purported assignment by any Sponsor shall be void. Notwithstanding the
foregoing, any Sponsor may assign all or part of its rights and obligations
hereunder to (i) any Affiliate which provides services similar to those called
for by this Agreement, or (ii) to the other Sponsor. In the event of an
assignment in accordance with Section 15(ii) such assigning Sponsor shall be
released from all of its rights and obligations hereunder.
SECTION 16. AMENDMENTS AND WAIVERS. No amendment or waiver of any term,
provision or condition of this Agreement shall be effective, unless in writing
and executed by each Sponsor and the Company. No waiver on any one occasion
shall extend to or effect or be construed as a waiver of any right or remedy on
any future occasion. No course of dealing of any person nor any delay or
omission in exercising any right or remedy shall constitute an amendment of this
Agreement or a waiver of any right or remedy of any party hereto.
* * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Fee Agreement on
the date first written above.
PINNACLE FOODS HOLDING CORPORATION
By: /S/ N. XXXXXXX XXXX
---------------------------
Name: N. Xxxxxxx Xxxx
CRUNCH HOLDING CORP.
By: /S/ XXXXXXXX XXXXX
---------------------------
Name: Xxxxxxxx Xxxxx
X.X. XXXXXX PARTNERS, LLC
By: /S/ XXXXXXXX XXXXX
---------------------------
Name: Xxxxxxxx Xxxxx
IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement on the date first written above.
X.X. CHILDS ASSOCIATES, L.P.
By: X.X. Childs Associates, Inc.,
its general partner
By: /S/ XXXX XXXXXX
-----------------------
Name: Xxxx Xxxxxx
EXHIBIT A
X.X. Xxxxxx Partners, LLC
X.X. Xxxxxx Chase Bank
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ABA #: 021 000 021
Account #: 000-000-000
Contact: Xxxxxxxxx XxXxxxxx
X.X. Childs Associates, L.P.
Boston Private Bank & Trust Company
Boston, MA
ABA #011 002 343
Account Name: X.X. Childs Associates, L.P.
Account #0000000
