MANAGEMENT SERVICES AGREEMENT
This MANAGEMENT SERVICES AGREEMENT (the "Agreement"), dated as of the 6th
day of November, 2001 (the "Effective Date"), is entered into by and between
Northland Cranberries, Inc., a Wisconsin corporation with offices at 800 First
Avenue South, Wisconsin Rapids, Wisconsin, 54495 (the "Company"), and Sun
Capital Partners Management, LLC, a Delaware limited liability company with
offices at 5200 Town Center Circle, Suite 470, Boca Raton, Florida 33486 (the
"Manager").
WHEREAS, the Company desires to receive financial and management consulting
services from the Manager and to obtain the benefit of the experience of the
Manager in business and financial management;
WHEREAS, the Manager desires to provide financial and management consulting
services to the Company pursuant to the terms of this Agreement; and
WHEREAS, the compensation arrangements set forth in this Agreement are
designed to compensate the Manager for providing such financial and management
consulting services to the Company;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto agree as follows:
1. Agreement; Term.
(a) The Company hereby retains the Manager to perform, and the Manager
agrees to render to the Company, on the terms herein set forth, management
and consulting services regarding the business of the Company and such
other services relating to the Company as may from time to time be
reasonably requested by the Board of Directors (the "Board") or executive
officers of the Company. Without limiting the generality of the foregoing,
the parties currently contemplate that these services shall include advice
regarding improvements to the Company's financial reporting, accounting and
management information systems and staffing.
(b) It is expressly understood and agreed that the Manager shall
devote only so much time, and shall consult with and advise the officers
and managers of the Company only to such extent and at such times and
places as may be mutually convenient to the Company and the Manager. The
Manager shall be free to provide similar services to such other business
enterprises or activities as the Manager may deem fit without any
limitation or restriction whatsoever; provided, however, that the Company's
confidential information shall not be used to the Company's detriment.
(c) The term of this Agreement shall commence as of the Effective Date
and shall terminate on the earlier of (i) the seventh anniversary of the
Effective Date or (ii) the date
on which Sun Northland, LLC and its affiliates no longer owns at least 50%
of the voting power of the Company.
2. Compensation and Expenses.
(a) For the services to be rendered by the Manager hereunder, the
Manager shall receive an annual fee (the "Management Fee") equal to the
greater of (i) $400,000 or (ii) 6% of the Company's EBITDA (as such term is
hereinafter defined), computed without taking into consideration the fees
payable under this Section 2, as determined by the Company's regular
auditors, or in the absence thereof, by the Company's Board of Directors,
with respect to each fiscal year; provided that the Management Fee shall
not exceed $1,000,000 in any fiscal year unless approved by a majority of
the members of the Company's Board of Directors who are not affiliates of
the Manager. The Company shall pay the Management Fee in quarterly
installments in advance, subject to the proviso above, equal to the greater
of (i) $100,000 or (ii) 6% of EBITDA (as such term is hereinafter defined)
for the second immediately preceding quarter, computed without taking into
consideration the fees payable under this Section 2. At the end of each
fiscal year during the term of this Agreement, an amount shall be paid to
the Manager based on any adjustments made to the calculation of EBITDA
described above as a result of an audit of the Company's financial
statements. On the date hereof, the Company shall pay the Manager
$27,472.52, representing the pro rata portion of the Management Fee for the
quarter ending November 30, 2001. For purposes of this Agreement, the term
"EBITDA" means, for any period, the sum of the amounts for such period of
(A) net income (or loss) after taxes of the Company and its subsidiaries on
a consolidated basis ("Net Income"), plus (B) interest expense which has
been deducted in the determination of Net Income, plus (C) federal, state
and local taxes which have been deducted in determining Net Income, plus
(D) depreciation and amortization expenses which have been deducted in
determining Net Income, plus (E) extraordinary losses which have been
deducted in the determination of Net Income, minus (F) extraordinary gains
which have been included in the determination of Net Income. Each item used
in calculating EBITDA shall be determined in accordance with generally
accepted accounting principles, consistent with that used in prior periods.
(b) The Company shall reimburse the Manager for the cost of all
reasonable out-of-pocket fees and expenses incurred by the Manager and its
affiliates in the performance of the services hereunder and all matters
related thereto.
(c) The Manager shall also be entitled to additional customary and
reasonable fees for investment banking services provided to the Company or
to any of its direct or indirect subsidiaries or shareholders, including,
without limitation, refinancings, restructurings, equity or debt offerings,
acquisitions, mergers, consolidations, business combinations, sales and
divestitures. In the event that at any time during the term hereof, there
shall occur a refinancing, restructuring, equity or debt offering,
acquisition, merger, consolidation, business combination, sale or
divestiture of all or substantially all of the assets, or the outstanding
shares of the capital stock, of or involving the Company or any of the
Company's direct or indirect subsidiaries or shareholders, the Company
shall pay the Manager a fee, in cash, equal to 1% of the aggregate
consideration (including assumed debt and long-term liabilities) paid to or
by the Company or to or by any of its direct or indirect subsidiaries or
shareholders in consideration for the Manager's performance of investment
banking services in connection with such transaction. The Manager
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and the Company acknowledge and agree that the Manager shall be entitled to
receive an investment banking fee equal to $700,000.
3. Relationship of the Parties. The Manager is providing services
hereunder as an independent contractor, retaining control and responsibility for
its operations and personnel. Nothing in this Agreement shall be deemed to
constitute the parties hereto joint venturers, partners or participants in an
unincorporated business or other separate entity, nor in any manner create any
employer-employee relationship between the Company on the one hand, and the
Manager or any of the Manager's employees on the other hand.
4. Board of Directors and Officers. Nothing in this Agreement shall be
construed to relieve the directors or officers of the Company from the
performance of their respective duties or limit the exercise of their powers in
accordance with the Company's Articles of Incorporation or Bylaws, any
applicable provisions of the applicable corporate law, or otherwise. The
activities of Company shall at all times be subject to the control and direction
of its Board of Directors and officers. The Company reserves the right to make
all decisions with regard to any matter upon which the Manager has rendered its
advice and consultation.
5. Limitation of Liability. Neither the Manager nor any of its
affiliates, partners, members, officers, employees or agents shall be liable to
the Company or any of its subsidiaries or affiliates for any loss, liability,
damage or expense arising out of or in connection with the performance of
services contemplated by this Agreement, unless such loss, liability, damage or
expense shall be proven to result directly from the gross negligence or willful
misconduct of the Manager. In no event will the Manager or any of its affiliates
be liable to the Company for special, indirect, punitive or consequential
damages, including, without limitation, loss of profits or lost business, even
if the Company has been advised of the possibility of such damages. Under no
circumstances will the Manager's liability exceed, in the aggregate, the fees
actually paid to the Manager hereunder.
6. Indemnification. The Company shall reimburse, defend, indemnify and
hold the Manager, and its employees, officers, agents, members and managers,
harmless from and against any damage, loss, liability, deficiency, diminution in
value, action, suit, claim, proceeding, investigation, audit, demand,
assessment, fine, judgment, cost and other expense (including, without
limitation, reasonable legal fees and expenses) arising out of, related to or in
connection with (a) any act or omission of the Company or the Manager, except to
the extent involving the willful misconduct, bad faith or gross negligence of
the Manager, or (b) any act or omission made at the direction of the Company.
7. Notices. Any notice, request, demand or other communication permitted
or required to be given hereunder shall be in writing, shall be sent by one of
the following means to the addressee at the address set forth in the preamble to
this Agreement (or at such other address as shall be designated hereunder by
notice to the other party hereto, effective upon actual receipt) and shall be
deemed conclusively to have been given: (a) on the first business day following
the day timely deposited with a nationally recognized overnight delivery
service, with the cost of delivery prepaid for the account of the sender; (b) on
the fifth business day following the day duly sent be certified or registered
United States mail, postage prepaid and return receipt
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requested; or (c) if delivered by other means, when actually received by the
addressee on a business day (or on the next business day if received after the
close of normal business hours or on any non-business day).
8. Assignment; Successors and Assigns. This Agreement and the rights,
duties and obligations of the Company hereunder may not be assigned or delegated
by the Company without the prior written consent of the Manager. This Agreement
and the rights, duties and obligations of the Manager hereunder may not be
assigned or delegated by the Manager, other than to an affiliate of the Manager,
without the prior written consent of the Company. All covenants, promises and
agreements by or on behalf of the parties contained in this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and assigns.
9. Amendments. No amendment, supplement or waiver of any provision of
this Agreement shall be effective unless the same shall be in writing and signed
by the Manager and the Company (in the case of an amendment or supplement) or by
the waiving party (in the case of a waiver).
10. Applicable Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without giving
effect to principles of conflicts of law or choice of law that would compel the
application of the substantive laws of any other jurisdiction.
11. Section Headings. The headings of each section are contained herein
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
12. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto with regard to the subject matter hereof and supersedes and
replaces all prior agreements, understandings and representations, oral or
written, with regard to such matters.
13. Severability. If any provision of this Agreement or application
thereof under any circumstances is adjudicated to be invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall not affect any other
provision or application of this Agreement which can be given effect without the
invalid or unenforceable provision or application and shall not invalidate or
render unenforceable such provision or application in any other jurisdiction. If
any provision is held void, invalid or unenforceable with respect to particular
circumstances, it shall nevertheless remain in full force and effect in all
other circumstances.
14. Counterparts. This Agreement may be executed in counterparts, each of
which shall be an original, and both of which together shall constitute one and
the same document.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SUN CAPITAL PARTNERS MANAGEMENT, LLC
By: /s/
---------------------------------
Name:
Title:
NORTHLAND CRANBERRIES, INC.
By: /s/
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Name:
Title:
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