Confidential
Exhibit 10.1
|
|
Confidential
|
July 18,
2008, Effective as of July 3, 2008
Xxxxxx
Xxxxxxxxx
General
Counsel
000
Xxxxxxxx Xxxxx Xxxxxxxxx
Suite
1800
Hamilton,
NJ 08619
Dear Xx.
Xxxxxxxxx:
This
letter agreement (this “Agreement”) confirms the terms under which Ascendia
Brands, Inc. and each of its direct and indirect subsidiaries, and
any entity formed by, or at the direction of, Ascendia Brands, Inc.
(collectively, the “Company”) has engaged Xxxxxxxx Xxxxx Xxxxxx & Xxxxx
Capital, Inc. (“Xxxxxxxx Xxxxx”), effective as of July 3, 2008 (the “Effective
Date”), as its exclusive financial advisor to provide financial advisory and
investment banking services in connection with one or more merger, acquisition
and/or restructuring transactions involving the Company and with respect to such
other financial matters as to which the Company and Xxxxxxxx Xxxxx may agree in
writing during the term of this engagement.
1. Services. In
connection with each potential Transaction (as defined below), Xxxxxxxx Xxxxx
will assist and advise the Company with the analysis, evaluation, pursuit and
effectuation of any such Transaction. Xxxxxxxx Lokey’s services will
consist of, if appropriate and if requested by the Company, (i) assisting the
Company in the development, preparation and distribution of selected
information, documents and other materials in an effort to create interest in
and to consummate any Transaction(s), including, if appropriate, advising the
Company in the preparation of a short-form offering memorandum or other
applicable offering documents; (ii) soliciting and evaluating indications of
interest and proposals regarding any Transaction(s) from current and/or
potential lenders, equity investors, acquirers and/or strategic partners
(collectively, “Investors”); (iii) assisting the Company with the development,
structuring, negotiation and implementation of any Transaction(s), including
participating as a representative of the Company in negotiations with creditors
and other parties involved in any Transaction(s); (iv) assisting the Company in
valuing the Company and/or, as appropriate, valuing the Company’s assets or
operations, provided that any real estate or fixed asset appraisals will be
undertaken by outside appraisers, separately retained and compensated by the
Company; (v) providing expert advice and testimony regarding financial matters
related to any Transaction(s), if necessary; (vi) advising and attending
meetings of the Company’s Board of Directors, creditor groups, official
constituencies and other interested parties, as the Company and Xxxxxxxx Xxxxx
determine to be necessary or desirable; and (vii) providing such other financial
advisory and investment banking services as may be agreed upon by Xxxxxxxx Xxxxx
and the Company.
Xxxxxx Xxxxxxxxx
As of July 3, 2008
Page 2
2. Exclusive
Agency. The Company
agrees that none of it, its affiliates, or its management will initiate any
discussions regarding a Transaction during the term of this Agreement, except
with prior consultation with Xxxxxxxx Xxxxx. In the event the
Company, its controlling equity holders or other affiliates, or its management
receives any inquiry regarding a Transaction from any party, the Company shall
promptly inform Xxxxxxxx Xxxxx of such inquiry so that Xxxxxxxx Xxxxx can assist
the Company in evaluating such party and its interest in a Transaction and in
any resulting negotiations.
3. Fees. In consideration
of Xxxxxxxx Lokey’s acceptance of this engagement and performance of services
pursuant to this Agreement, the Company shall pay the following:
|
(i)
|
Initial Fee: In
addition to the other fees provided for herein, upon the execution of this
Agreement, the Company shall pay Xxxxxxxx Xxxxx a nonrefundable cash fee
of $300,000, which shall be
earned upon Xxxxxxxx Lokey’s receipt thereof in consideration of Xxxxxxxx
Xxxxx accepting this engagement (“Initial Fee”);
and
|
|
(ii)
|
Monthly
Fees: In addition to the other fees provided for herein,
upon the first monthly anniversary of the Effective Date, and on every
monthly anniversary of the Effective Date during the term of this
Agreement, the Company shall pay Xxxxxxxx Xxxxx in advance, without notice
or invoice, a nonrefundable cash fee of $50,000 (“Monthly Fee”). Each Monthly Fee
shall be earned upon Xxxxxxxx Lokey’s receipt thereof in consideration of
Xxxxxxxx Xxxxx accepting this engagement and performing services as
described herein. 100% of the first three Monthly Fees timely
received by Xxxxxxxx Xxxxx, plus 50% of all subsequent Monthly Fees timely
received by Xxxxxxxx Xxxxx, shall be credited against the next Transaction
Fee (as defined below) to which Xxxxxxxx Xxxxx becomes entitled hereunder
(it being understood and agreed that no Monthly Fee shall be credited more
than once), except that, in no event, shall such Transaction Fee be
reduced below zero; and
|
|
(iii)
|
Transaction
Fee(s): In addition to the other fees provided for
herein, upon the closing of each Sale Transaction (as defined below),
Xxxxxxxx Xxxxx shall earn, and the Company shall thereupon pay immediately
and directly from the proceeds of such Sale Transaction, as a cost of such
Sale Transaction, a cash fee (“Sale Transaction
Fee”). Regardless of what assets are the subject of the
relevant Sale Transaction, the Sale Transaction Fees shall consist of a
cash fee (the “Base Fee”) equal to (y) $700,000 for the first Sale
Transaction, plus (z) $250,000 for each subsequent Sale Transaction;
provided, however, that the Sale Transaction Fee for a given Sale
Transaction shall not exceed 10% of the Aggregate Gross Consideration of
that Sale Transaction; provided further, that if the Base Fee in respect
of any Sale Transaction is not paid in full as a result of the above 10%
limitation, the unpaid amount of the Base Fee shall carry over and be paid
as a Base Fee of the next consummated Sale Transaction (if any) in
addition to the otherwise applicable Base Fee for such subsequent Sale
Transaction.
|
|
a.
|
Sale
Transaction Fee Upon a Credit Bid: Notwithstanding the foregoing, if (a) a
Sale Transaction (or a series of Sale Transactions) for all or any portion
of the Company’s assets takes place through a Bankruptcy Court-sanctioned
auction, (b) the parties which, as of the Effective Date, hold claims
against the Company under the portion of the Company’s revolving credit
facility known as Term Loan A-1 (the “Current Senior Lenders”) submit a
credit bid of their secured claims, and (c) the Current Senior
Lenders are successful in their consummation of a purchase of all of the
Company’s assets for the consideration of their credit bid (a “Successful
Credit Bid”), then the Company shall not be obligated to Xxxxxxxx Xxxxx
for a Sale Transaction Fee for such assets as calculated above or any
Incentive Fee in respect of that Successful Credit Bid, but instead, the
Sale
|
Transaction Fee for that Successful Credit Bid shall be (i) $0, if
the Successful Credit Bid by the Current Senior Lenders is less than $50
million, (ii) $200,000, if the Successful Credit Bid by the Current Senior
Lenders is more than $50 million but less than $55 million, and (iii) $375,000,
if the Successful Credit Bid by the Current Senior Lenders is greater than $55
million.
Notwithstanding
the foregoing, in the event of any Successful Credit Bid, the Company (or the
Current Senior Lenders’ acquisition vehicle for the Company’s assets, as the
case may be) shall pay to Xxxxxxxx Xxxxx the Transaction Fee (and Incentive Fee,
if applicable) to which Xxxxxxxx Xxxxx would have been entitled if a transaction
that qualifies for such fee or fees subsequently occurs during the Tail Period,
as defined below, as if such transaction had taken place instead of the
Successful Credit Bid; and
|
(iv)
|
Incentive Fee: In
addition to the other fees provided for herein, Xxxxxxxx Xxxxx shall have
earned and be entitled to, and the Company shall thereupon pay
immediately, a cash incentive fee (“Incentive Fee”) based upon the
cumulative aggregate amount of Aggregate Gross Consideration from all
consummated Sale Transactions equal to 3% of Aggregate Gross Consideration
from $60 million to $90 million, but only within that $30 million range;
plus 5% of any additional Aggregate Gross Consideration in excess of $90
million, but only for the Aggregate Gross Consideration exceeding $90
million. Solely for purposes of this subparagraph, the net
proceeds of any liquidation of assets of the Company outside the ordinary
course of business shall be included for purposes of calculating the
dollar thresholds described in the previous sentence;
and
|
|
(v)
|
Restructuring
Fee: In addition to the other fees provided for herein,
Xxxxxxxx Xxxxx shall also receive, upon the earlier to occur of: (I) in
the case of an out-of-court Restructuring Transaction (as defined below),
the consummation of such Restructuring Transaction; and (II) in the case
of an in-court Restructuring Transaction, the date of confirmation of a
plan of reorganization under Chapter 11 of the Bankruptcy Code pursuant to
an order of the applicable bankruptcy court, Xxxxxxxx Xxxxx
shall earn, and the Company shall promptly pay to Xxxxxxxx Xxxxx, a cash
fee (“Restructuring Transaction Fee”) of $600,000, provided, however, in
the event Xxxxxxxx Xxxxx is paid its Sale Transaction Fee in respect of a
Sale Transaction, Xxxxxxxx Xxxxx shall only be entitled to a Restructuring
Transaction Fee if thereafter the Company requests, and in the event of a
bankruptcy filing, the Bankruptcy Court approves, Xxxxxxxx Lokey’s
provision of post-sale restructuring
services.
|
The Sale
Transaction Fees, Restructuring Transaction Fee, and Incentive Fee are sometimes
also referred to herein as “Transaction Fees.” All payments received
by Xxxxxxxx Xxxxx pursuant to this Agreement at any time shall become the
property of Xxxxxxxx Xxxxx without restriction. No payments received
by Xxxxxxxx Xxxxx pursuant to this Agreement will be put into a trust or other
segregated account.
4. Term and
Termination. This Agreement
may be terminated at any time by either party upon thirty days’ prior written
notice to the other party. The expiration or termination of this
Agreement shall not affect (i) any provision of this Agreement other than
Sections 1 through 3 and (ii) Xxxxxxxx Lokey’s right to receive, and the
Company’s obligation to pay, any and all fees, expenses and other amounts due,
whether or not any Transaction shall be consummated prior to or subsequent to
the effective date of expiration or termination, as more fully set forth in this
Agreement.
In
addition, notwithstanding the expiration or termination of this Agreement,
Xxxxxxxx Xxxxx shall be entitled to full payment by the Company of the
Transaction Fees described in this Agreement: (i) so long as a Transaction is
consummated during the term of this Agreement, or within 18 months after the
date of expiration or termination of this Agreement (“Tail Period”), and/or (ii)
if an agreement in principle to consummate a Transaction is executed by the
Company during the term of this Agreement, or within the Tail Period, and such
Transaction is consummated at any time following such execution with the
counterparty named in such agreement, or with any affiliate, employee or
investor in such counterparty, or any affiliate of any of the
foregoing.
5. Agreement
from Secured Lenders. Xxxxxxxx
Lokey’s obligations to provide the services described herein are contingent
upon, and expressly subject to, the execution of a waiver, subordination or
similar agreement, in form and substance satisfactory to Xxxxxxxx Xxxxx,
pursuant to which the Company’s senior secured lenders (i) consent to the
performance of the Company’s obligations under this Agreement, including,
without limitation, the Company’s payment of Xxxxxxxx Lokey’s fees and expenses
described in Section 3 hereof (but, for the avoidance of doubt, not including
any expenses due Xxxxxxxx Xxxxx for the Company’s indemnity or reimbursement
obligations pursuant to Section 20 hereof), free and clear of such lenders’
security interests in the Company’s assets, and (ii) consent to the obligation
to pay Xxxxxxxx Xxxxx a Transaction Fee and any applicable Incentive Fee on
account of a transaction after a Successful Credit Bid during the Tail
Period.
6. Transaction.
|
(i)
|
As
used in this Agreement, the term “Sale Transaction” shall mean any
transaction or series of related transactions that constitute the
disposition to one or more third parties (including, without limitation,
any person, group of persons, partnership, corporation or other entity,
and also including, among others, any of the Company’s existing owners,
shareholders, employees, creditors and/or the affiliates of each) in one
or a series of related transactions of (a) all or a material portion of the
equity securities of the Company or any of its direct or indirect
subsidiaries or affiliates or any interest held by the Company, any direct
or indirect subsidiary or affiliate in any joint venture or partnership or
other entity formed by any of them and/or (b) any significant portion of
the assets (including the assignment of any executory contracts) or
operations of the Company, any of its direct or indirect subsidiaries or
any joint venture or partnership or other entity formed by it, in either
case, including, without limitation, through a sale or exchange of capital
stock, options or assets with or without a purchase option, a merger,
consolidation or other business combination, an exchange or tender offer,
a recapitalization, the formation of a joint venture, partnership or
similar entity, or any similar transaction, including, without limitation,
any sale transaction under Sections 363, 1129 or any other provision of
Title 11, United States Code (11 U.S.C. §§ 101 et seq.) (the “Bankruptcy
Code”) and/or (c) the transfer of any portion of the assets (including the
assignment of any executory contracts) or operations of the Company, any
of its direct or indirect subsidiaries or any joint venture or partnership
or other entity formed by it to the holder of any debt securities and/or
other indebtedness, obligations or liabilities (including, without
limitation, preferred stock, partnership interests, lease obligations,
trade credit facilities, collective bargaining agreements, other contract
or tort obligations, interest bearing trade debt and the Company’s secured
indebtedness), if such holder acquired some or all of its interest on or
after the date of this Agreement (each a “Sale
Transaction”).
|
|
(ii)
|
As
used in this Agreement, the term “Restructuring Transaction” shall mean
any transaction or series of transactions that constitute a
recapitalization or restructuring of the Company’s equity and/or debt
securities and/or other indebtedness, obligations or liabilities
(including,
|
without limitation, preferred stock, partnership interests, lease
obligations, trade credit facilities, collective bargaining agreements and other
contract or tort obligations), including accrued and/or accreted interest
thereon, which are outstanding as of the Effective Date, including, without
limitation, interest bearing trade debt and the Company’s secured indebtedness,
which recapitalization or restructuring is effected pursuant to an exchange
transaction, tender offer, a plan of reorganization under the Bankruptcy Code, a
solicitation of consents, waivers, acceptances or authorizations, any change of
control transaction, any refinancing, sale, acquisition, merger, repurchase,
exchange, conversion to equity, cancellation, forgiveness, retirement and/or a
modification or amendment to the terms, conditions, or covenants (including,
without limitation, the principal balance, accrued or accreted interest, payment
term, other debt service requirement and/or financial or operating covenant) of
any agreements or instruments governing any of the Company’s equity and/or debt
securities (such modification or amendment shall include, without limitation,
any forbearance for at least 12 months with respect to any payment obligation)
or any combination of the foregoing transactions, but specifically excluding
that short-term forbearance contemplated by the Company and its existing
Revolving and Term Loan A-1 lenders (each a “Restructuring Transaction”).
7. Aggregate
Gross Consideration (“AGC”). For the purpose
of calculating the Sale Transaction Fee(s) and Incentive Fee, the AGC shall be
the total proceeds and other consideration paid to, or received by, or to be
paid to or received by, the Company, or any of its equity or debt holders, or
other parties in interest, including, without limitation, holders of warrants
and convertible securities, and holders of options or stock appreciation rights,
whether or not vested (collectively “Constituents”), in connection with the
relevant Sale Transaction. Such proceeds and consideration shall be deemed to
include, without limitation: amounts in escrow and any deposits or other amounts
forfeited by any Investor; cash, notes, securities, and other property; payments
made in installments; amounts payable under
consulting agreements, above-market employment contracts, non-compete or
severance agreements, consulting contracts or similar arrangements with any
equity holder; Contingent Payments (as defined below) and/or insurance proceeds
upon the occurrence of an insurable event that diminishes the value of the
Company. Upon the consummation of a Sale Transaction in which less
than 100% of the ownership of the equity interests are sold, the AGC shall be
payable and calculated as if 100% of the ownership of the equity interests of
the Company on a fully diluted basis had been sold by dividing (i) the
total consideration, whether in cash, securities, notes or other forms of
consideration, received or receivable by the Company and/or its Constituents by
(ii) the percentage of ownership which is sold. If, in the Sale
Transaction, no consideration is being paid in respect of the existing equity,
AGC of the retained equity shall be determined by the good faith agreement of
the parties as to the value of such retained equity implied by the Sale
Transaction. In addition, if any of the Company’s liabilities are
assumed, decreased, reinstated, satisfied or otherwise paid off in conjunction
with a Sale Transaction (by the Company or any Investor, in the form of “cure”
payments or otherwise), or any of the Company’s assets are sold or otherwise
transferred outside of the Company’s ordinary course of business to another
party prior to the consummation of a Sale Transaction (including without
limitation any dividends or distributions paid to security holders or amounts
paid to repurchase any securities) or are retained by the Company after the
consummation of the Sale Transaction, the AGC will be increased to reflect the
face value of any such liabilities and the fair market value of any such
assets. Contingent Payments shall be defined as the consideration
received or receivable by the Company, or any of its Constituents and/or any
other parties in the form of deferred performance-based payments, “earn-outs”,
or other contingent payments based upon the future performance of the Company,
or any of its businesses or assets.
8. Value of
Consideration. For the purpose
of calculating the AGC received in a Sale Transaction, any securities, other
than a promissory note, will be valued at the time of the closing of the
Sale
Transaction,
without regard to any restrictions on transferability, as
follows: (i) if such securities are traded on a stock exchange,
the securities will be valued at the average last sale or closing price for the
ten trading days immediately prior to the closing of the Sale Transaction;
(ii) if such securities are traded primarily in over-the-counter
transactions, the securities will be valued at the mean of the closing bid and
asked quotations similarly averaged over a ten trading day period immediately
prior to the closing of the Sale Transaction; and (iii) if such securities
have not been traded prior to the closing of the Sale Transaction, Xxxxxxxx
Xxxxx and the Company shall negotiate in good faith to agree on a fair valuation
thereof, without regard to any restrictions on transferability, for the purposes
of calculating the AGC. For any lease payments and other
consideration that is not freely tradeable or has no established public market,
if the consideration utilized consists of property other than securities, then
the value of such property shall be the fair market value thereof as determined
in good faith by Xxxxxxxx Xxxxx and the Company. If any consideration
to be paid is computed in any foreign currency, the value of such foreign
currency shall, for purposes hereof, be converted into U.S. dollars at the
prevailing exchange rate on the date or dates on which such consideration is
payable. The value of any purchase money or other promissory notes
shall be deemed to be the face amount thereof. In the event the AGC
includes any Contingent Payments, Xxxxxxxx Lokey’s applicable Transaction Fees
shall be calculated based on the mutually agreed value of such Contingent
Payments as of closing. If the parties cannot reach such an agreement, an
additional applicable Transaction Fee shall be paid to Xxxxxxxx Xxxxx from, and
on account of, such Contingent Payments at the same time that each of such
Contingent Payments are received regardless of any prior termination or
expiration of this Agreement. Each such additional applicable
Transaction Fee shall be calculated pursuant to the provisions of this Agreement
based upon the amount of each such Contingent Payment.
9. Characterization
of Multiple and/or Complex Transactions. In the event the
Company and Xxxxxxxx Xxxxx are unable to agree in good faith upon the
classification of any single Transaction as a Restructuring or Sale Transaction,
or if a single Transaction with only one third party shall consist of two, or
more, of the foregoing types of Transactions, or elements thereof, Xxxxxxxx
Xxxxx shall receive only one Transaction Fee in respect of such Transaction,
which shall be equal to the greater of the Restructuring Transaction Fee or the
Sale Transaction Fee, as applicable, as calculated in accordance with the terms
of this Agreement. For the avoidance of doubt, if two or more single
Transactions occur simultaneously or at different times, whether or not they are
connected with or related to one another, the Company shall pay Xxxxxxxx Xxxxx
the Transaction Fee for each such Transaction in addition to, and not in lieu
of, each other.
10. Reasonableness
of Fees. The parties
acknowledge that a substantial professional commitment of time and effort will
be required of Xxxxxxxx Xxxxx and its professionals hereunder, and that such
commitment may foreclose other opportunities for the firm. Moreover,
the actual time and commitment required for the engagement may vary
substantially, creating “peak load” issues for the firm. Given the
numerous issues which may arise in engagements such as this, Xxxxxxxx Lokey’s
commitment to the variable level of time and effort necessary to address such
issues, the expertise and capabilities of Xxxxxxxx Xxxxx that will be required
in this engagement, and the market rate for Xxxxxxxx Lokey’s services of this
nature, whether in-court or out-of-court, the parties agree that the fee
arrangement provided for herein is reasonable, fairly compensates Xxxxxxxx
Xxxxx, and provides the requisite certainty to the Company.
11. Expenses. In addition to
all of the other fees and expenses described in this Agreement, and regardless
of whether any Transaction is consummated, the Company shall reimburse Xxxxxxxx
Xxxxx for its reasonable out-of-pocket expenses incurred from time to time in
connection with its services hereunder, promptly after invoicing the Company
therefor. Xxxxxxxx Xxxxx bills its clients for its reasonable
out-of-pocket expenses including, but not limited to (i) travel-related and
certain other
expenses,
without regard to volume-based or similar credits or rebates Xxxxxxxx Xxxxx may
receive from, or fixed-fee arrangements made with, travel agents, airlines or
other vendors, and (ii) research, database and similar information charges paid
to third party vendors, and postage, telecommunication and duplicating expenses,
to perform client-related services that are not capable of being identified
with, or charged to, a particular client or engagement in a reasonably
practicable manner, based upon a uniformly applied monthly assessment or
percentage of the fees due to Xxxxxxxx Xxxxx.
Xxxxxxxx
Xxxxx shall, in addition, be reimbursed by the Company for the fees and expenses
of Xxxxxxxx Lokey’s legal counsel incurred in connection with the negotiation
and performance of this Agreement and the matters contemplated
hereby.
12. Invoicing
and Payment. All amounts
payable to Xxxxxxxx Xxxxx shall be made in lawful money of the United States in
accordance with the payment instructions set forth on the invoice provided with
this Agreement, or to such accounts as Xxxxxxxx Xxxxx shall direct, and the
Company shall provide contemporaneous written notice of each such payment to
Xxxxxxxx Xxxxx. All
amounts invoiced by Xxxxxxxx Xxxxx shall be exclusive of value added tax,
withholding tax, sales tax and any other similar taxes (“Taxes”). All
amounts charged by Xxxxxxxx Xxxxx will be invoiced together with Taxes where
appropriate.
13. Information. The Company will
provide Xxxxxxxx Xxxxx with access to management and other representatives of
the Company, as reasonably requested by Xxxxxxxx Xxxxx. The Company will furnish
Xxxxxxxx Xxxxx with such information as Xxxxxxxx Xxxxx may reasonably request
for the purpose of carrying out its engagement hereunder, all of which will be,
to the Company’s best knowledge, accurate and complete at the time furnished.
The Company further represents and warrants that any financial projections
delivered to Xxxxxxxx Xxxxx have been or will be reasonably prepared in good
faith on bases reflecting the best currently available estimates and judgments
of the future financial results and condition of the Company. The Company will
promptly notify Xxxxxxxx Xxxxx in writing of any material inaccuracy or
misstatement in, or material omission from, any information previously delivered
to Xxxxxxxx Xxxxx, or any materials provided to any interested
party. Xxxxxxxx Xxxxx shall rely, without independent verification,
on the accuracy and completeness of all information that is publicly available
and of all information furnished by or on behalf of the Company or any other
potential party to any Transaction or otherwise reviewed by Xxxxxxxx
Xxxxx. The Company understands and agrees that Xxxxxxxx Xxxxx will
not be responsible for the accuracy or completeness of such information, and
shall not be liable for any inaccuracies or omissions therein. The
Company acknowledges that Xxxxxxxx Xxxxx has no obligation to conduct any
appraisal of any real property or fixed assets or liabilities of the Company or
any other participant in a proposed Transaction. Any advice (whether written or
oral) rendered by Xxxxxxxx Xxxxx pursuant to this Agreement is intended solely
for the use of the Company. Any advice rendered by, or other materials prepared
by, or any communication from, Xxxxxxxx Xxxxx may not be disclosed, in whole or
in part, to any third party, or summarized, quoted from, or otherwise referred
to in any manner without the prior written consent of Xxxxxxxx Xxxxx. In
addition, neither Xxxxxxxx Xxxxx nor the terms of this Agreement may otherwise
be referred to without our prior written consent.
14. Confidential
Information. Xxxxxxxx Xxxxx
acknowledges that, in connection with the services to be provided pursuant to
this Agreement, certain confidential, non-public and proprietary information
concerning the Company and the Transaction (“Confidential Information”) has been
or may be disclosed by the Company to Xxxxxxxx Xxxxx or its employees,
affiliates, attorneys, subcontractors and advisors (collectively,
“Representatives”). Xxxxxxxx Xxxxx agrees that, without the Company’s prior
consent, no Confidential Information will be disclosed, in whole or in part, to
any other person (other than to any potential party to a Transaction under
appropriate assurances of confidentiality, to those Representatives
who need
access to any Confidential Information for purposes of performing the services
to be provided hereunder, to the Company’s lenders and other creditors as
needed, or as may be required by law or regulatory authority). The term
“Confidential Information” does not include any information: (a) that was
already in Xxxxxxxx Lokey’s possession, or that was available to Xxxxxxxx Xxxxx
on a non-confidential basis, prior to the time of disclosure to Xxxxxxxx Xxxxx;
(b) obtained by Xxxxxxxx Xxxxx from a third person which, insofar as is known to
Xxxxxxxx Xxxxx, is not subject to any prohibition against disclosure; (c) which
was or is independently developed by Xxxxxxxx Xxxxx or its Representatives
without violating any confidentiality obligations under this paragraph; or (d)
which was or becomes generally available to the public through no fault of
Xxxxxxxx Xxxxx or any of its Representatives. If Xxxxxxxx Xxxxx becomes required
by legal process or regulatory authority to disclose any Confidential
Information, prompt notice thereof shall be given to the Company, and Xxxxxxxx
Xxxxx may disclose only that information which its counsel advises it is
compelled to disclose. Xxxxxxxx Lokey’s obligations under this paragraph shall
remain in effect for a period of one year after the Effective Date of this
Agreement.
Except as
set forth below, the Company represents and warrants that it has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the Securities Exchange Commission (the “SEC”) pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (“1934
Act”) (all of the foregoing filed prior to the Effective Date and all exhibits
included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
“SEC Documents”). Except as set forth below, as of their respective
dates, all complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC promulgated thereunder applicable
to the SEC Documents, and none of the SEC Documents, at the time they were filed
with the SEC contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. As of their respective dates, the
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto.
The
foregoing paragraph notwithstanding: (a) the Company has not filed (i) its
Quarterly Report on Form 10-Q for the thirteen and thirty-nine weeks ended
November 24, 2007, and (ii) its Annual Report on Form 10-K for the fiscal year
ended February 29, 2008; and (b) the Current Report on Form 8-K filed by the
Company in connection with the February, 2007 acquisition of the Calgon and the healing garden brands
from Coty, Inc. and affiliates did not include, and the Company has is unable to
provide, the pro forma
historical financial information described in Rule 3.05(b) of Regulation SX, as
to which disclosure is required pursuant to Item 9.01(a)(1) of Current Report on
Form 8-K.
15. Limitations
on Services as Advisor. Xxxxxxxx Lokey’s
services are limited to those specifically provided in this Agreement, or
subsequently agreed-upon, in writing, by the parties hereto. Xxxxxxxx Xxxxx
shall have no obligation or responsibility for any other services including,
without limitation, any crisis management or business consulting services
related to, among other things, the implementation of any operational,
organizational administrative, cash management, or similar activities. Xxxxxxxx
Xxxxx is providing the Company with Xxxxxxxx Lokey’s services hereunder as an
independent contractor, and the parties agree that this Agreement does not
create an agency, fiduciary, or third party beneficiary relationship between
Xxxxxxxx Xxxxx, on the one hand, and the Company and/or its creditors or any
other person, on the other hand. Any advice (whether written or oral) rendered
by Xxxxxxxx Xxxxx pursuant to this Agreement is intended solely for the use of
the Company in considering the matters to which this Agreement relates, and such
advice may not be relied upon by any other person or used for any other purpose.
In performing its services pursuant to this Agreement, Xxxxxxxx Xxxxx is not
assuming any
Xxxxxx Xxxxxxxxx
Ascendia Brands,
Inc.
As of July 3, 2008
Page 9
responsibility
for the Company’s decision to pursue, or not to pursue, any business strategy,
or to effect, or not to effect, any Transaction(s), which decision shall be made
by the Company in its sole discretion.
16. Bankruptcy
Court Approval.
In the event that the Company is or becomes a debtor under Chapter 11 of
the Bankruptcy Code, whether voluntarily or involuntarily, the Company shall
seek an order authorizing the employment of Xxxxxxxx Xxxxx pursuant to the terms
of this Agreement, as a professional person pursuant to, and subject to the
standard of review of, Section 328(a) of the Bankruptcy Code, the Federal Rules
of Bankruptcy Procedure (the “Bankruptcy Rules”) and applicable local rules and
orders and not subject to any other standard of review under Section 330 of the
Bankruptcy Code. In so agreeing to seek Xxxxxxxx Lokey’s retention
under Section 328(a) of the Bankruptcy Code, the Company acknowledges that it
believes that Xxxxxxxx Lokey’s general restructuring experience and expertise,
its knowledge of the capital markets and its merger and acquisition capabilities
will inure to the benefit of the Company in pursuing any Transaction, that the
value to the Company of Xxxxxxxx Lokey’s services derives in substantial part
from that expertise and experience and that, accordingly, the structure and
amount of the contingent Transaction Fee(s) is reasonable regardless of the
number of hours to be expended by Xxxxxxxx Lokey’s professionals in the
performance of the services to be provided hereunder. The Company
shall submit Xxxxxxxx Lokey’s employment application as soon as practicable
following the Company’s filing of a voluntary Chapter 11 case, or the entry of
an order for relief in any involuntary case filed against the Company, and use
its best efforts to cause such application to be considered on the most
expedited basis. The employment application and the proposed order
authorizing employment of Xxxxxxxx Xxxxx shall be provided to Xxxxxxxx Xxxxx as
much in advance of any Chapter 11 filing as is practicable, and must be
acceptable to Xxxxxxxx Xxxxx in its sole discretion. Following entry
of the order authorizing the employment of Xxxxxxxx Xxxxx, the Company shall pay
all fees and expenses due pursuant to this Agreement, as approved by the court
having jurisdiction of the bankruptcy case involving the Company (the
“Bankruptcy Court”), as promptly as possible in accordance with the terms of
this Agreement and the order of such Bankruptcy Court, the Bankruptcy Code, the
Bankruptcy Rules and applicable local rules and orders, and will work with
Xxxxxxxx Xxxxx to promptly file any and all necessary applications regarding
such fees and expenses with the Bankruptcy Court. Xxxxxxxx Xxxxx
shall have no obligation to provide services under this Agreement in the event
that the Company becomes a debtor under the Bankruptcy Code unless Xxxxxxxx
Lokey’s retention under this Agreement is approved under Section 328(a) of the
Bankruptcy Code by final order of the Bankruptcy Court no longer subject to
appeal, rehearing, reconsideration or petition for certiorari, and which is
acceptable to Xxxxxxxx Xxxxx in all respects. If the order
authorizing the employment of Xxxxxxxx Xxxxx is not obtained, or is later
reversed or set aside for any reason, Xxxxxxxx Xxxxx may terminate this
Agreement, and the Company shall reimburse Xxxxxxxx Xxxxx for all fees and
expenses reasonably incurred prior to the date of expiration or termination,
subject to the requirements of the Bankruptcy Code, Bankruptcy Rules and
applicable local rules and orders. Prior to commencing a Chapter 11
case, the Company shall pay all amounts due and payable to Xxxxxxxx Xxxxx in
cash. The terms of this Section are solely for the benefit of
Xxxxxxxx Xxxxx, and may be waived, in whole or in part, only by Xxxxxxxx
Xxxxx.
Additional
Services. To the extent
Xxxxxxxx Xxxxx is requested by the Company to perform any financial advisory or
investment banking services which are not within the scope of this engagement,
the Company shall pay Xxxxxxxx Xxxxx such fees as shall be mutually agreed upon
by Xxxxxxxx Xxxxx and the Company in writing, in advance, depending on the level
and type of services required, and shall be in addition to the fees and expenses
described hereinabove.
17. Post-Termination
Services. If Xxxxxxxx Xxxxx
is required to render services not described herein, but which relate directly
or indirectly to the subject matter of this Agreement (including, but not
limited to, producing documents, answering interrogatories, attending
depositions, giving expert or other
Xxxxxx Xxxxxxxxx
Ascendia Brands,
Inc.
As of July 3, 2008
Page 10
testimony,
whether by subpoena, court process or order, or otherwise), the Company shall
pay Xxxxxxxx Xxxxx additional fees to be mutually agreed upon for such services,
plus reasonable related out-of-pocket costs and expenses, including, among other
things, the reasonable legal fees and expenses of Xxxxxxxx Lokey’s counsel in
connection therewith.
18. Credit. After the
announcement or consummation of any Transaction, Xxxxxxxx Xxxxx may, at its own
expense, place announcements on its corporate website and in financial and other
newspapers and periodicals (such as a customary “tombstone” advertisement,
including the Company’s logo or other identifying marks) describing its services
in connection therewith. Furthermore, if requested by Xxxxxxxx Xxxxx,
the Company agrees that in any press release announcing any Transaction, the
Company will include in such press release a mutually acceptable reference to
Xxxxxxxx Lokey’s role as financial advisor to the Company with respect to such
Transaction.
19. Choice of
Law; Jury Trial Waiver; Jurisdiction. THIS AGREEMENT SHALL BE DEEMED TO BE
MADE IN NEW YORK. ALL DISPUTES ARISING OUT OF OR RELATED TO THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK. EACH OF XXXXXXXX XXXXX AND THE COMPANY
(ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF
ITS EQUITY HOLDERS) IRREVOCABLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
RELATED TO OR ARISING OUT OF THE ENGAGEMENT OF XXXXXXXX XXXXX PURSUANT TO, OR
THE PERFORMANCE BY XXXXXXXX XXXXX OF THE SERVICES CONTEMPLATED BY, THIS
AGREEMENT. REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL
PLACE OF BUSINESS OF THE PARTIES HERETO, EACH PARTY HEREBY IRREVOCABLY CONSENTS
AND AGREES THAT ANY CLAIMS OR DISPUTES BETWEEN OR AMONG THE PARTIES HERETO
ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL BE BROUGHT AND MAINTAINED IN
ANY FEDERAL OR STATE COURT OF COMPETENT JURISDICTION SITTING IN THE COUNTY OF
NEW YORK IN THE STATE OF NEW YORK, WHICH COURTS SHALL HAVE EXCLUSIVE
JURISDICTION OVER THE ADJUDICATION OF SUCH MATTERS; PROVIDED THAT SUCH CONSENT
AND AGREEMENT SHALL NOT BE DEEMED TO REQUIRE ANY BANKRUPTCY CASE INVOLVING THE
COMPANY TO BE FILED IN SUCH COURTS, AND IF THE COMPANY BECOMES A DEBTOR UNDER
CHAPTER 11 OF THE BANKRUPTCY CODE, DURING ANY SUCH CASE, ANY CLAIMS MAY ALSO BE
HEARD AND DETERMINED BEFORE THE BANKRUPTCY COURT. BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY FURTHER IRREVOCABLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND HEREBY WAIVES IN ALL RESPECTS ANY CLAIM OR OBJECTION WHICH IT MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON-CONVENIENS. THE COMPANY AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION BROUGHT IN ANY SUCH COURT SHALL BE
CONCLUSIVE AND BINDING UPON IT AND MAY BE ENFORCED IN ANY OTHER COURTS HAVING
JURISDICTION OVER IT BY SUIT UPON SUCH JUDGMENT. THE COMPANY IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN ALL SUCH DISPUTES BY THE MAILING OF COPIES OF
SUCH PROCESS TO THE COMPANY AT THE ADDRESS FOR THE COMPANY SET FORTH
ABOVE.
20. Indemnification
and Standard of Care. As a material part of the consideration
for the agreement of Xxxxxxxx Xxxxx to furnish its services under this
Agreement, the Company agrees (i) to
Xxxxxx Xxxxxxxxx
Ascendia Brands,
Inc.
As of July 3, 2008
Page 11
indemnify
and hold harmless Xxxxxxxx Xxxxx and its affiliates, and their respective past,
present and future directors, officers, shareholders, partners, members,
employees, agents, representatives, advisors, subcontractors and controlling
persons (collectively, the “Indemnified Parties”), to the fullest extent lawful,
from and against any and all losses, claims, damages or liabilities (or actions
in respect thereof), joint or several, arising out of or related to this
Agreement, Xxxxxxxx Lokey’s engagement under this Agreement, any Transaction or
proposed Transaction, or any actions taken or omitted to be taken by an
Indemnified Party or the Company in connection with this Agreement and (ii) to
reimburse each Indemnified Party for all expenses (including without limitation
the fees and expenses of counsel) as they are incurred in connection with
investigating, preparing, pursuing, defending, settling or compromising any
action, suit, dispute, inquiry, investigation or proceeding, pending or
threatened, brought by or against any person (including without limitation any
shareholder or derivative action), arising out of or relating to this Agreement,
or such engagement, Transaction or actions. However, the Company
shall not be liable under the foregoing indemnity and reimbursement agreement
for any loss, claim, damage or liability, the preponderance of which is finally
judicially determined by a court of competent jurisdiction to have resulted from
the willful misconduct or gross negligence of such Indemnified
Party.
If for
any reason the foregoing indemnification or reimbursement is unavailable to any
Indemnified Party or insufficient fully to indemnify any such party or to hold
it harmless in respect of any losses, claims, damages, liabilities or expenses
referred to in such indemnification or reimbursement provisions, then the
Company shall contribute to the amount paid or payable by the Indemnified Party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and Xxxxxxxx Xxxxx, on the other hand, in connection
with the matters contemplated by this Agreement. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law, then the Company shall contribute to such amount paid or payable
by any Indemnified Party in such proportion as is appropriate to reflect not
only such relative benefits, but also the relative fault of the Company, on the
one hand, and such Indemnified Party, on the other hand, in connection
therewith, as well as any other relevant equitable
considerations. Notwithstanding the foregoing, in no event shall the
Indemnified Parties be required to contribute an aggregate amount in excess of
the amount of fees actually received by Xxxxxxxx Xxxxx from the Company pursuant
to this Agreement. Relative benefits to the Company, on the one hand, and
Xxxxxxxx Xxxxx, on the other hand, shall be deemed to be in the same proportion
as (i) the total value paid or received or contemplated to be paid or received
by the Company, and its security holders, creditors, and other affiliates, as
the case may be, pursuant to the transaction(s) (whether or not consummated)
contemplated by the engagement hereunder, bears to (ii) the fees received by
Xxxxxxxx Xxxxx under the Agreement. The Company shall not settle, compromise or
consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened action, suit, dispute, inquiry, investigation or
proceeding in respect of which indemnification may be sought hereunder (whether
or not an Indemnified Party is an actual or potential party thereto), unless
such settlement, compromise, consent or termination contains a release of the
Indemnified Parties reasonably satisfactory in form and substance to Xxxxxxxx
Xxxxx.
The
Company further agrees that neither Xxxxxxxx Xxxxx nor any other Indemnified
Party shall have any liability (whether direct or indirect and regardless of the
legal theory advanced) to the Company or any person or entity asserting claims
on behalf of or in right of the Company related to or arising out of this
Agreement, Xxxxxxxx Lokey’s engagement under this Agreement, any Transaction or
proposed Transaction, or any actions taken or omitted to be taken by an
Indemnified Party or the Company in connection with this Agreement, except for
losses, claims, damages or liabilities incurred by the Company which are finally
judicially determined by a court of competent jurisdiction to have resulted
primarily from the willful misconduct or gross negligence of such Indemnified
Party. The indemnity, reimbursement, and other obligations and agreements of the
Company set forth herein (i) shall apply to
Xxxxxx Xxxxxxxxx
Ascendia Brands,
Inc.
As of July 3, 2008
Page 12
any
services provided by Xxxxxxxx Xxxxx in connection with this engagement prior to
the date hereof and to any modifications of this Agreement, (ii) shall be in
addition to any obligation or liability which the Company may otherwise have to
any Indemnified Party, (iii) shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Company or any
Indemnified Party or any person controlling any of them, and (iv) shall survive
the completion of the services described in, and any expiration or termination
of the relationship established by, this Agreement.
The
Company shall cause any new company that may be formed by the Company or the
Company’s subsidiaries, for any purpose, to agree to all of the obligations in
this Section to Xxxxxxxx Xxxxx in accordance with the foregoing
provisions. Prior to entering into any agreement or arrangement with
respect to, or effecting, any (i) merger, statutory exchange or other business
combination or proposed sale, exchange, dividend or other distribution or
liquidation of all or a significant portion of its assets, or (ii) significant
recapitalization or reclassification of its outstanding securities that does not
directly or indirectly provide for the assumption of the obligations of the
Company set forth in this Agreement, the Company will notify Xxxxxxxx Xxxxx in
writing thereof (if not previously so notified) and, if requested by Xxxxxxxx
Xxxxx, shall arrange in connection therewith alternative means of providing for
the obligations of the Company set forth in this Agreement, including the
assumption of such obligations by another party, insurance, surety bonds, the
creation of an escrow, or other credit support arrangements, in each case in an
amount and upon terms and conditions satisfactory to Xxxxxxxx Xxxxx. The Company
agrees that Xxxxxxxx Xxxxx would be irreparably injured by any breach of this
Agreement (including the agreement set forth in the immediately preceding
sentence), that money damages alone would not be an adequate remedy for any such
breach and that, in the event of any such breach, Xxxxxxxx Xxxxx shall be
entitled, in addition to any other remedies, to pursue injunctive relief and
specific performance.
21. Miscellaneous. This Agreement
shall be binding upon the parties hereto and their respective successors, heirs
and assigns and any successor, heir or assign of any substantial portion of such
parties’ respective businesses and/or assets. If appropriate, in connection with
performing its services for the Company hereunder Xxxxxxxx Xxxxx may utilize the
services of one or more of its affiliates, in which case the references herein
to Xxxxxxxx Xxxxx shall include such affiliates, provided, however, that the
fees and other obligations described herein comprise all compensation and other
obligations to be paid to Xxxxxxxx Xxxxx and its affiliates, and neither
Xxxxxxxx Xxxxx, nor any affiliate of Xxxxxxxx Xxxxx, shall charge any separate
or additional fees, or seek the payment of any additional obligations, for
services rendered pursuant hereto.
Nothing
in this Agreement, express or implied, is intended to confer or does confer on
any person or entity, other than the parties hereto, the Indemnified Parties and
each of their respective successors, heirs and assigns, any rights or remedies
under or by reason of this Agreement or as a result of the services to be
rendered by Xxxxxxxx Xxxxx hereunder.
This
Agreement is the complete and exclusive statement of the entire understanding of
the parties regarding the subject matter hereof, and supersedes all previous
agreements or understandings regarding the same, whether written or
oral. This Agreement may not be amended, and no portion hereof may be
waived, except in a writing duly executed by the parties hereto.
The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect pursuant to the terms
hereof.
This
Agreement may be executed in any number of counterparts, each of which will be
deemed an original and all of which will constitute one and the same instrument.
Such counterparts may be delivered
Xxxxxx Xxxxxxxxx
Ascendia Brands,
Inc.
As of July 3, 2008
Page 13
by one
party to the other by facsimile or other electronic transmission, and such
counterparts shall be valid for all purposes. The Company has all requisite
power and authority to enter into this Agreement and to perform its obligations
hereunder. This Agreement has been duly and validly authorized by all
necessary action on the part of the Company and has been duly executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company, enforceable in accordance with its terms. This Agreement
has been reviewed by the signatories hereto and their counsel. There
shall be no construction of any provision against Xxxxxxxx Xxxxx because this
Agreement was drafted by Xxxxxxxx Xxxxx, and the parties waive any statute or
rule of law to such effect.
The
Company agrees that it will be solely responsible for ensuring that any
Transaction complies with applicable law. The Company understands
that Xxxxxxxx Xxxxx is not undertaking to provide any legal, regulatory,
accounting, insurance, tax or other similar professional advice and the Company
confirms that it is relying on its own counsel, accountants and similar advisors
for such advice.
To the
extent that the Company hereunder is comprised of more than one entity or
company, the obligations of the Company under this Agreement are joint and
several, and any consent, direction, approval, demand, notice or the like given
by any one of such entities or companies shall be deemed given by all of them
and, as such, shall be binding on the Company.
Xxxxxx Xxxxxxxxx
Ascendia Brands,
Inc.
As of July 3, 2008
Page 14
If the
foregoing correctly sets forth our Agreement, please sign and return to us the
enclosed duplicate hereof along with a check (or wire transfer confirmation) for
$300,000 on account of the Initial Fee.
All of us
at Xxxxxxxx Xxxxx thank you for choosing us to advise the Company, and look
forward to working with you on this engagement.
Very truly
yours,
XXXXXXXX XXXXX XXXXXX
& XXXXX CAPITAL, INC.
By: /s/ Xxxx
Xxxxxx
Xxxx
Xxxxxx
Managing
Director
Accepted
and agreed to as of the Effective Date:
Ascendia
Brands, Inc., on behalf of itself, its direct and indirect subsidiaries and its
controlled affiliates
By: /s/ Xxxxxx Xxxxxxxxx
Xxxxxx
Xxxxxxxxx
General
Counsel
