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MANAGEMENT UNIT SUBSCRIPTION AGREEMENT

Subscription Services Agreement

MANAGEMENT UNIT SUBSCRIPTION AGREEMENT | Document Parties: PINNACLE FOODS FINANCE LLC | Peak Holdings LLC You are currently viewing:
This Subscription Services Agreement involves

PINNACLE FOODS FINANCE LLC | Peak Holdings LLC

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Title: MANAGEMENT UNIT SUBSCRIPTION AGREEMENT
Governing Law: Delaware     Date: 8/12/2009
Law Firm: Simpson Thacher    

MANAGEMENT UNIT SUBSCRIPTION AGREEMENT, Parties: pinnacle foods finance llc , peak holdings llc
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Exhibit 10.34

Execution Version

MANAGEMENT UNIT SUBSCRIPTION AGREEMENT

(Class A-2 Units, B-1 Units, B-2 Units and B-3 Units)

THIS MANAGEMENT UNIT SUBSCRIPTION AGREEMENT (this “ Agreement ”) is made as of July 13, 2009, by and between Peak Holdings LLC, a Delaware limited liability company (the “ Company ”), and the individual named on the signature page hereto (the “ Executive ”).

WHEREAS, on the terms and subject to the conditions hereof, the Executive desires to subscribe for and acquire from the Company, and the Company desires to issue and provide to the Executive, the Company’s Class A-2 Units (the “ Class A-2 Units ”), Class B-1 Units (the “ Class B-1 Units ”), Class B-2 Units (the “ Class B-2 Units ”) and Class B-3 Units (the “ Class B-3 Units ” and, together with the Class A-2 Units, Class B-1 Units and Class B-2 Units, the “ Units ”), in each case in the amount set forth on Schedule I, as hereinafter set forth; and

WHEREAS, this Agreement is one of several agreements entered into by the Company with certain persons who are or will be key employees of the Company or one or more Subsidiaries (collectively with the Executive, the “ Management Investors ”) as part of a management equity purchase plan designed to comply with Regulation D and/or Rule 701 promulgated under the Securities Act (as defined below);

NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows:

 

1.

Definitions.

1.1 Affiliate . An “ Affiliate ” of, or Person “ Affiliated ” with, a specified Person shall mean a Person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the Person specified.

1.2 Agreement. The term “Agreement” shall have the meaning set forth in the preface.

1.3 Blackstone. The term “Blackstone” means Blackstone Capital Partners V L.P. and its Affiliates.

1.4 Board. The “Board” shall mean the Company’s Management Committee.

1.5 Cause. The term “Cause” used in connection with the termination of employment of the Executive shall have the same meaning ascribed to such term in any employment or severance agreement then in effect between the Executive and the Company or one of its Subsidiaries or, if no such agreement containing a definition of “Cause” is then in effect, shall mean a termination of employment of the Executive by the Company or any Subsidiary thereof due to (A) the Executive’s continued failure substantially to perform the Executive’s duties under the Executive’s employment (other than as a result of total or partial incapacity due to


physical or mental illness) following written notice by the Company to the Executive of such failure; (B) theft or embezzlement of Company property or dishonesty in the performance of the Executive’s duties, (C) any act on the part of the Executive that constitutes (x) a felony under the laws of the United States or any state thereof or (y) a crime involving moral turpitude, (D) the Executive’s willful malfeasance or willful misconduct in connection with the Executive’s duties to the Company or any act or omission which is materially injurious to the financial condition or business reputation of the Company or any of its Subsidiaries or Affiliates, or (E) the Executive engages in Competitive Activity or breaches the confidentiality provisions of Section 6.

1.6 Change of Control. The term “Change of Control” shall have the meaning set forth in the Securityholders Agreement, except that transactions with a Person or Persons that are a Subsidiary of the Sponsor shall be excluded.

1.7 Closing. The term “Closing” shall have the meaning set forth in Section 2.2.

1.8 Closing Date. The term “Closing Date” shall have the meaning set forth in Schedule 1, Part 1.

1.9 Company. The term “Company” shall have the meaning set forth in the preface.

1.10 Constructive Termination. The term “Constructive Termination” shall have the same meaning ascribed to such term (or the term “good reason”) in any employment or severance agreement then in effect between the Executive and the Company or one of its Subsidiaries.

1.11 Cost. The term “Cost” shall mean the price per Unit paid by the Executive as proportionately adjusted for all subsequent distributions of Units and other recapitalizations and less the amount of any tax distributions made with respect to the Units pursuant to the LLC Agreement.

1.12 Disability. The term “Disability” of the Executive shall have the same meaning ascribed to such term in any employment or severance agreement then in effect between the Executive and the Company or one of its Subsidiaries or, if no such agreement containing a definition of “Disability” is then in effect, shall mean the inability of the Executive to perform the essential functions of the Executive’s job, with or without reasonable accommodation, by reason of a physical or mental infirmity, for a period of nine (9) consecutive months or for an aggregate of twelve (12) months in any eighteen (18) consecutive month period. The period of nine (9) months shall be deemed continuous unless the Executive returns to work for at least 30 consecutive business days during such period and performs during such period at the level and competence that existed prior to the beginning of the six-month period. The date of such Disability shall be on the first day of such nine-month period.

1.13 Employee and Employment. The term “ employee ” shall mean, without any inference as to negate the Executive’s status as a member of the Company for all purposes hereunder (subject to the terms hereof) and for federal and other tax purposes, any employee (as defined in accordance with the regulations and revenue rulings then applicable under Section 3401(c) of the Internal Revenue Code of 1986, as amended) of the Company or any of its Subsidiaries, and the term “ employment ” shall include service as a part- or full-time employee to the Company or any of its Subsidiaries.

 

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1.14 Executive. The term “Executive” shall have the meaning set forth in the preface.

1.15 Executive’s Group. The term “Executive’s Group” shall have the meaning set forth in Section 4.1(a).

1.16 Fair Market Value. Subject to Section 4.2(d), the term “Fair Market Value” used in connection with the value of Units shall mean (a) if there is a public market for the equity of the Company on the applicable date, the value for the Units shall be implied by the average of the high and low closing bid prices of such equity on the stock exchange on which the equity is principally trading on such date or (b) if there is no public market for the equity on such date, the fair market value for the Units as shall be determined in good faith by the Board (without regard to discounts for lack of marketability of such equity or minority status).

1.17 Financing Default. The term “Financing Default” shall mean an event which would constitute (or with notice or lapse of time or both would constitute) an event of default under any of the financing documents of the Company or its Affiliates from time to time (collectively, the “ Financing Agreements ”) and any restrictive financial covenants contained in the organizational documents of the Company or its Affiliates.

1.18 Management Investors. The term “Management Investors” shall have the meaning set forth in the preface.

1.19 Permitted Transferee. The term “Permitted Transferee” means any Person to whom the Executive transfers Units in accordance with the Securityholders Agreement (other than the Sponsor and the Company and their respective Affiliates and except for transfers pursuant to a Public Offering).

1.20 Person. The term “Person” shall mean any individual, corporation, partnership, limited liability company, trust, joint stock company, business trust, unincorporated association, joint venture, governmental authority or other entity of any nature whatsoever.

1.21 Public Offering. The term “Public Offering” shall have the meaning set forth in the Securityholders Agreement.

1.22 Purchase Price. The term “Purchase Price” shall have the meaning set forth in Section 2.1.

1.23 Securities Act. The term “Securities Act” shall mean the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder, as the same may be amended from time to time.

1.24 Securityholders Agreement. The term “Securityholders Agreement” shall mean the Securityholders Agreement, dated as of April 2, 2007, among the Sponsor, the Management Investors and the Company, as it may be amended or supplemented thereafter from time to time.

 

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1.25 Subsidiary. The term “Subsidiary” shall have the meaning set forth in the Securityholders Agreement.

1.26 Termination Date. The term “Termination Date” means the date upon which Executive’s employment with the Company and its Subsidiaries is terminated.

1.27 Unvested Units. The term “Unvested Units” means, with respect to Executive’s Class B-1 Units, Class B-2 Units and Class B-3 Units, the number of such Units that are subject to any vesting, forfeiture or similar arrangement under this Agreement.

1.28 Vested Units. The term “Vested Units” shall mean, with respect to an Executive’s Class B-1 Units, Class B-2 Units and Class B-3 Units, the number of such Units that are vested and nonforfeitable, as determined in Schedule I.

1.29 Sponsor. The term “Sponsor” means Blackstone.

 

2.

Subscription for and Grant of Units.

2.1 Purchase/Grant of Units. Pursuant to the terms and subject to the conditions set forth in this Agreement, (a) the Executive hereby subscribes for and agrees to purchase, and the Company hereby agrees to issue and award to the Executive on the Closing Date, the number of Class A-2 Units set forth in Part 1 of Schedule I attached hereto for the cash amount (the “ Purchase Price ”) set forth in Part 1 of Schedule I attached hereto and (b) the Executive hereby subscribes for and agrees to acquire, and the Company hereby agrees to issue and award to the Executive, on the Closing Date the number of Class B-1 Units, Class B-2 Units and Class B-3 Units set forth in Part 1 of Schedule I attached hereto in exchange for services performed for the Company and its Subsidiaries.

2.2 The Closing. The closing (the “ Closing ”) of the grant of Units hereunder shall take place on the Closing Date. At least two business days prior to the Closing, the Executive shall deliver to the Company the Purchase Price, payable by delivery of the amount in cash set forth on Schedule I attached hereto, by delivery of a cashier’s or certified check or by wire transfer in immediately available funds.

2.3 Section 83(b) Election. Within 10 days after the Closing, the Executive shall provide the Company with a copy of a completed election under Section 83(b) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder in the form of Exhibit A attached hereto. The Executive shall timely file (via certified mail, return receipt requested) such election with the Internal Revenue Service (“ IRS ”) and shall thereafter certify to the Company the Executive has made such timely filing.

2.4 Closing Conditions. Notwithstanding anything in this Agreement to the contrary, the Company shall be under no obligation to issue and sell to the Executive any Units unless (i) the Executive is an employee of, or consultant to, the Company or one of its Subsidiaries on the Closing Date; (ii) the representations of the Executive contained in Section 3 hereof are true and correct in all material respects as of the Closing Date and (iii) the Executive is not in breach of any agreement, obligation or covenant herein required to be performed or observed by the Executive on or prior to the Closing Date.

 

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3.

Investment Representations and Covenants of the Executive.

3.1 Units Unregistered. The Executive acknowledges and represents that the Executive has been advised by the Company that:

(a) the offer and sale of the Units have not been registered under the Securities Act;

(b) the Units must be held in accordance with the Securityholders Agreement and the Executive must continue to bear the economic risk of the investment in the Units unless the offer and sale of such Units are subsequently registered under the Securities Act and all applicable state securities laws or an exemption from such registration is available;

(c) there is no established market for the Units and it is not anticipated that there will be any public market for the Units in the foreseeable future;

(d) a restrictive legend in the form set forth below and the legends set forth in Section 8.2(a) and (b) of the Securityholders Agreement shall be placed on the certificates, if any, representing the Units:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE OPTIONS AND OTHER PROVISIONS SET FORTH IN A MANAGEMENT UNITS SUBSCRIPTION AGREEMENT WITH THE ISSUER DATED AS OF JULY 13, 2009, AS AMENDED AND MODIFIED FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE ISSUER’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE”; and

(e) a notation shall be made in the appropriate records of the Company indicating that the Units are subject to restrictions on transfer and, if the Company should at some time in the future engage the services of a securities transfer agent, appropriate stop-transfer instructions will be issued to such transfer agent with respect to the Units.

3.2 Additional Investment Representations. The Executive represents and warrants that:

(a) the Executive’s financial situation is such that the Executive can afford to bear the economic risk of holding the Units for an indefinite period of time, has adequate means for providing for the Executive’s current needs and personal contingencies, and can afford to suffer a complete loss of the Executive’s investment in the Units;

(b) the Executive’s knowledge and experience in financial and business matters are such that the Executive is capable of evaluating the merits and risks of the investment in the Units;

 

5


(c) the Executive understands that the Units are a speculative investment which involves a high degree of risk of loss of the Executive’s investment therein, there are substantial restrictions on the transferability of the Units and, on the Closing Date and for an indefinite period following the Closing, there will be no public market for the Units and, accordingly, it may not be possible for the Executive to liquidate the Executive’s investment in case of emergency, if at all;

(d) the terms of this Agreement provide that if the Executive ceases to be an employee of the Company or its Subsidiaries, the Company and its Affiliates have the right to repurchase the Units at a price which may, under certain circumstances, be less than the Fair Market Value thereof;

(e) the Executive understands and has taken cognizance of all the risk factors related to the purchase of the Units and, other than as set forth in this Agreement, no representations or warranties have been made to the Executive or the Executive’s representatives concerning the Units or the Company or their prospects or other matters;

(f) the Executive has been given the opportunity to examine all documents and to ask questions of, and to receive answers from, the Company and its representatives concerning the Company and its Subsidiaries, the Securityholders Agreement, the Company’s organizational documents and the terms and conditions of the purchase of the Units and to obtain any additional information which the Executive deems necessary;

(g) all information which the Executive has provided to the Company and the Company’s representatives concerning the Executive and the Executive’s financial position is complete and correct as of the date of this Agreement; and

(h) the Executive is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act.

 

4.

Certain Sales and Forfeitures Upon Termination of Employment.

4.1 Put Option.

(a) If the Executive’s employment with the Company and its Subsidiaries terminates due to the Disability or death of the Executive prior to the earlier of (i) an initial Public Offering or (ii) a Change of Control, the Executive and the Executive’s Permitted Transferees (hereinafter sometimes collectively referred to as the “ Executive’s Group ”) shall have the right, subject to the provisions of Section 5 hereof, for 180 days (the “ Put Option Period ”) following the date that is six (6) months after the date of such termination of employment of the Executive, to sell to the Company, and the Company shall be required to purchase (subject to the provisions of Section 5 hereof), on one occasion from each member of the Executive’s Group, all (but not less than all) of the number of Units then held by the Executive’s Group that equals the sum of (i) all Class A-2 Units collectively held by the Executive’s Group and (ii) all Vested Units collectively held by the Executive’s Group, at a price per Unit equal to the Fair Market Value of each Class of such Units (measured as of the date of death or such termination; provided , that, respecting any Units that have vested less than six months and one day prior to the date of such termination, such Fair Market Value shall be measured as of the date that is one day following the date that is six months after the date such Units had vested); provided , further, that in any case the Board shall have the right, in its sole

 

6


discretion, to increase the foregoing purchase price. In order to exercise its rights with respect to the Units pursuant to this Section 4.1(a), the Executive’s Group shall also be required to simultaneously exercise any similar rights it may have with respect to any other units of the Company held by the Executive’s Group in accordance with the terms of the agreements pursuant to which such other units were purchased from the Company.

(b) If the Executive’s Group desires to exercise its option to require the Company to repurchase Units pursuant to Section 4.1(a), the members of the Executive’s Group shall send one written notice to the Company setting forth such members’ intention to collectively sell all of their Units pursuant to Section 4.1(a), which notice shall include the signature of each member of the Executive’s Group. Subject to the provisions of Section 5.1, the closing of the purchase shall take place at the principal office of the Company on a date specified by the Company no later than the 60th day after the giving of such notice.

(c) Notwithstanding anything herein to the contrary, the rights of the Executive’s Group as set forth in this Section 4.1 shall not in any way be affected by the rights (whether or not exercised) of the Company or the Sponsor as set forth in Section 4.2 below.

4.2 Call Options; Forfeitures.

(a) If the Executive’s employment with the Company and its Subsidiaries terminates for any reason, or if the Executive engages in “Competitive Activity” (as defined in Section 6.1 of this Agreement), the Company shall have the right and option to purchase for a period of 210 days following the Termination Date or the discovery of the Competitive Activity (except that the Company shall not exercise such right or option to purchase any Units that have vested less than six months and one day prior to the Termination Date, at any time on or prior to the date that is one day following the date that is six months after the date such Units had vested (“ Risk Period ”), and each member of the Executive’s Group shall be required to sell to the Company, any or all of such Units (other than, in the case of a termination described in clause (ii) below, the Class A-2 Units, although such Class A-2 Units remain subject to repurchase if the Executive engages in “Competitive Activity” as described above) then held by such member of the Executive’s Group (it being understood that if Units of any class subject to repurchase hereunder may be repurchased at different prices, the Company may elect to repurchase only the portion of the Units of such class subject to repurchase hereunder at the lower price), at a price per unit equal to the applicable purchase price determined as follows:

(i) Death or Disability . If the Executive’s employment with the Company and its Subsidiaries is terminated due to the Disability or death of the Executive:

(A) for all Class A-2 Units and Vested Units, the purchase price per Unit will be the Fair Market Value (measured as of the Termination Date except respecting any Units subject to the Risk Period, the first day after the Risk Period), and

(B) all Unvested Units will be forfeited without consideration therefor;

 

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(ii) Termination Without Cause; Constructive Termination . If the Executive’s employment with the Company and its Subsidiaries is terminated by the Company and its Subsidiaries without Cause or by the Executive as a result of a Constructive Termination:

(A) with respect to Class A-2 Units and Vested Units, the purchase price per Unit will be the Fair Market Value (measured as of the Termination Date except respecting any Units subject to the Risk Period, the first day after the Risk Period); and

(B) all Unvested Units will be forfeited without consideration therefor;

(iii) Termination for Cause . If the Executive’s employment with the Company and its Subsidiaries is terminated by the Company or any of its Subsidiaries for Cause or if Executive engages in a “Competitive Activity,”

(A) with respect to Class A-2 Units, the purchase price per Unit will be the lesser of (x) Fair Market Value (measured as of the Termination Date) and (y) Cost, and

(B) all Vested Units and Unvested Units will be forfeited without consideration therefor;

(iv) Voluntary Termination (Before or After the Third Anniversary) . If the Executive’s employment with the Company and its Subsidiaries is terminated by the Executive for any other reason not set forth in Section 4.2(a)(i) or (ii) or (iii):

(A) if the employment terminates on or after the third anniversary of the Closing Date:

 

 

(1)

with respect to Class A-2 Units and Vested Units, , the purchase price per Unit will be the Fair Market Value (measured as of the Termination Date except respecting any Units subject to the Risk Period, the first day after the Risk Period); and

 

 

(2)

all Unvested Units will be forfeited without consideration therefor; or

(B) if the employment terminates prior to the third anniversary of the Closing Date:

 

 

(1)

with respect to Class A-2 Units, the purchase price per Unit will be the lesser of (A) Fair Market Value (measured as of the Termination Date) and (B) Cost; and

 

 

(2)

all Vested Units and Unvested Units will be forfeited without consideration therefor;

 

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provided that in any case the Board shall have the right, in its sole discretion, to increase any purchase price set forth above.

(b) If the Company desires to exercise one of its options to purchase Units pursuant to this Section 4.2, the Company shall, not later than 210 days after the Termination Date or the discovery of the Competitive Activity, send written notice to each member of the Executive’s Group of its intention to purchase Units, specifying the number of Units to be purchased (the “ Call Notice ”). Subject to the provisions of Section 5, the closing of the purchase shall take place at the principal office of the Company on a date specified by the Company no later than the 30th day after the giving of the Call Notice.

(c) Notwithstanding the foregoing, if the Company elects not to exercise one of its options to purchase Units pursuant to this Section 4.2, the Sponsor may elect to purchase such Units on the same terms and conditions set forth in this section 4.2 by providing written notice to each member of the Executive’s Group of its intention to purchase Units within 30 days after the expiration of the Company’s 210 day call window following the Termination Date.

(d) If there is no public market for the Units on the applicable determination date, (i) unless the Company and the Executive otherwise agree at the time of a repurchase of Units by the Company pursuant to Section 4.1 or Section 4.2 hereof, if within 180 days of a termination date in which the Company has exercised its right to repurchase Units (or within 180 days of the commencement of a Put Option Period in which the Executive’s Group has exercised its right to have the Units repurchased by the Company), either (A) the Company enters into a binding agreement that, when consummated would be a Change of Control, and such Change of Control actually thereafter occurs, or (B) a Public Offering occurs, Fair Market Value shall be the price obtained in such Change of Control or Public Offering (and the Company or the Executive, as applicable, shall promptly pay the other the difference between Fair Market Value used for purposes of such call and the Fair Market Value as determined pursuant to this proviso)); and (ii) subject to proviso (i), if the Executive believes that the amount determined by the Board to be the Fair Market Value of the Units is less than the amount that the Executive believes to be the Fair Market Value of such Units and the amount in dispute exceeds $50,000, the Executive may elect to direct the Company to obtain an appraisal of the Fair Market Value of such Units, which appraisal shall be prepared by a qualified independent appraiser, mutually selected by the Company and the Executive. If the Company and the Executive are unable to agree on such appraiser, they shall each select a qualified independent appraiser and the two appraisers shall select a third appraiser, which third appraiser shall prepare the appraisal of Fair Market Value. In all events, the appraiser shall not, in the past 12 months, have been, or then be, engaged to provide any services to the Company or a Subsidiary of the Company or to the Executive. Such election shall be in writing and given to the Company within fifteen (15) days after receipt by the Executive of the Board’s determination of F


 
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