Document:

Exhibit 10.18

 

MANAGEMENT SERVICES AGREEMENT

 

MANAGEMENT SERVICES AGREEMENT (this “Agreement”), dated as of December 27, 2010, between Noodles & Company, a Delaware corporation (the “Company”) and Catterton Management Company, L.L.C., a Delaware limited liability company (the “Management  Services Company”).  Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Restated Certificate of Incorporation of the Company, filed with the Secretary of State of Delaware on the date of this Agreement, as amended from time to time (the “Charter”).

 

WHEREAS, the Company desires to retain the Management Services Company to provide, and the Management Services Company desires to provide, to the Company, certain management services on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:

 

1.             Term.  This Agreement shall be in effect commencing on the date hereof and ending upon the earliest of (a) such date as Catterton-Noodles, LLC, a Delaware limited liability company (the “Catterton Investor”), and its Permitted Transferees collectively hold less than 50% of the shares of Common Stock held by the Catterton Investor on the date of this Agreement (as adjusted for stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or the like), (b) the date of consummation of an Initial Public Offering, (c) the date of consummation of an Acquisition or (d) the date of consummation of an Asset Transfer.  For the purposes of this Agreement, (i) “Acquisition” shall mean (A) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, continue to hold at least a majority of the voting power of the surviving entity in substantially the same proportions (or, if the surviving entity is a wholly owned subsidiary, its parent) immediately after such consolidation, merger or reorganization; or (B) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent of the Company’s voting power is transferred, and (ii) “Asset Transfer” shall mean a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company.

 

2.             Services.  The Management Services Company shall perform or cause to be performed such services for the Company and its affiliates as directed by the Board of Directors of the Company (the “Board”) and agreed to by the Management Services Company, which may, but are not required to, include, without limitation, the following:

 

(a)           general management consulting services;

 

(b)           identification, support, negotiation and/or analysis of acquisitions and dispositions;

 

 

 

(c)           support, negotiation and/or analysis of financing alternatives, including, without limitation, in connection with acquisitions, capital expenditures and refinancing of existing indebtedness;

 

(d)           finance functions, including assisting in the preparation of financial projections, and monitoring of compliance with financing agreements;

 

(e)           strategic planning functions, including evaluating major strategic alternatives; and

 

(f)            other services for the Company and its affiliates upon which the Board and the Management Services Company agree.

 

Nothing contained in this Agreement shall require the Management Services Company to perform any minimum level of activities pursuant to this Agreement.

 

3.             Fees.

 

(a)           Advisory Fee.

 

(i)            As consideration for services rendered hereunder the Company shall pay to the Management Services Company an annual fee of $500,000 (the “Advisory Fee”), which shall be paid in advance in quarterly installments of $125,000, payable on January 1, April 1, July 1 and October 1 of each year, or if any such date shall not be a Business Day, on the next succeeding Business Day to occur after such date, beginning on the date of this Agreement and ending upon termination of this Agreement; provided, however, that the installment of the Advisory Fee relating to the quarter in which this Agreement is executed, shall be pro rated for the balance of the quarter remaining as of the date of this Agreement and shall be paid on the date hereof In the event the Company is prohibited for any reason from paying the full amount of any such installment payment (a “Missed Installment Payment”) and/or from declaring and paying any dividend payable to the holders of Class C Common Stock of the Company pursuant to the Charter and in accordance with that certain letter agreement, dated as of the date hereof, by and among the Company, the Management Services Company and Argentia Private Investments Inc. (a “Missed Dividend Payment”), the payment of such Missed Installment Payment shall be automatically deferred until the date upon which the Company is permitted to pay the full amount of both any such Missed Installment Payment and any such Missed Dividend Payment.  Additionally, the Management Services Company may, in its sole discretion, defer all or a portion of the Advisory Fees until a date specifically agreed to by Management Services Company (a “Deferred Installment Payment”).  Missed Installment Payments and Deferred Installment Payments shall not accrue interest or penalties.  Upon the termination of this Agreement, the Company shall promptly pay to the Management Services Company any unpaid portion of the Advisory Fees, to the extent such payment was due and payable on or prior to such date.

 

(ii)           Notwithstanding any other provision of this Agreement, upon the occurrence of any liquidation, dissolution or winding up of the Company, the Company shall promptly pay to the Management Services Company any unpaid portion of the Advisory Fees, to the extent such payment was due and payable on or prior to such date.

 

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(b)           Prohibited Payments.  If, on the date an Advisory Fee would otherwise be required to be paid by the Company hereunder, the making of such payment would violate the Credit Agreement, dated November 14, 2007, as amended by the First Amendment to Credit Agreement, dated December 17, 2008, and the Second Amendment to Credit Agreement, dated November 26, 2010, among Noodles & Company, a Delaware corporation, the Guarantors party thereto, the Lenders party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (as such agreement may be amended or superseded by a successor credit agreement from time to time, the “Senior Credit Agreement”), then the Advisory Fee shall not be paid on such date and shall, in lieu thereof, be paid on the earliest subsequent date on which payment thereof shall not violate the Senior Credit Agreement.

 

4.             Personnel.  The Management Services Company shall provide and devote to the performance of this Agreement such employees, affiliates and agents of the Management Services Company as it shall deem appropriate to the furnishing of the services required.  The parties acknowledge and agree that this Agreement shall not create an agency relationship between either of the Company or any affiliate of the Company and the Management Services Company, and no party shall have the authority to bind the other.

 

5.             Liability.  Neither the Management Services Company nor any of its affiliates, members, partners, employees or agents shall be liable to the Company or any of its subsidiaries, stockholders or affiliates for any loss, liability, damage or expense arising out of or in connection with the performance of services contemplated by this Agreement, except to the extent any such loss, liability, damage or expense is held in a final non-appealable judgment by a court of competent jurisdiction to have resulted from the bad faith, willful misconduct or gross negligence of the Management Services Company or any of its affiliates, members, partners, employees or agents.

 

6.             Indemnity.  The Company shall defend, indemnify and hold harmless the Management Services Company and its affiliates, members, partners, employees and agents (the “Indemnified Persons”) from and against any and all losses, claims, damages, liabilities or expenses (including reasonable attorneys’ fees) (collectively, “Losses”) to which any Indemnified Person may become subject, relating to or arising out of the performance of services contemplated by this Agreement, except to the extent such Losses are held in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Person’s bad faith, willful misconduct or gross negligence.  The Company at its own cost and expense shall defend any and all suits or actions (just or unjust) (a) which may be brought against any Indemnified Person relating to or arising out of the performance of services contemplated by this Agreement by such Indemnified Person, (b) in which any Indemnified Person may be impleaded with others upon any claim or claims relating to or arising out of the performance of services contemplated by this Agreement by such Indemnified Person or (c) upon any matter directly or indirectly related to or arising out of this Agreement or the performance hereof by any Indemnified Person; provided, however, each Indemnified Person shall promptly reimburse the Company for all costs and expenses incurred by the Company in defending any such claim or claims if it shall ultimately be held in a final non-appealable judgment by a court of competent jurisdiction that such Indemnified Person is not entitled to be indemnified hereunder with respect to any Losses arising out of or relating to such claim or claims.

 

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7.             Notices.  All notices, requests, demands and other communications called for or contemplated hereunder shall be in writing and shall be deemed to have been duly given when delivered to the party to whom addressed or when sent by e-mail or courier service (if delivery is confirmed) to the parties, their successors in interest, or their assignees at the following addresses, or at such other addresses as the parties may designate by written notice in the manner aforesaid:

 

	
If   to the Management Services
   Company:
    	
c/o   Catterton Partners
   7 Greenwich Office Park, Suite 200
   599 West Putnam Avenue
   Greenwich, CT 06830
   Attn: Andrew C. Taub
   E-mail: andrewt@cpequity.com
    
	
 
    	
 
    
	
With   a copy to:
    	
Gibson,   Dunn & Crutcher LLP
   200 Park Avenue
   New York, NY 10166
   Attn: Steven R. Shoemate, Esq.
   E-mail: SShoemate@gibsondunn.com
    
	
 
    	
 
    
	
If   to the Company:
    	
Noodles &   Company
   520 Zang Street, Suite D
   Broomfield, CO 80021
   Attn: General Counsel
   E-mail: pstrasen@noodles.com
    
	
 
    	
 
    
	
With   a copy to:
    	
Gibson,   Dunn & Crutcher LLP
   200 Park Avenue
   New York, NY 10166
   Attn: Steven R. Shoemate, Esq.
   E-mail: SShoemate@gibsondunn.com
    

 

8.             Assignment.  Neither this Agreement, nor any right, remedy, obligation or liability arising hereunder may be assigned by either party without the prior written consent of the other party hereto; provided, however, that the Management Services Company may assign its rights and obligations under this Agreement to any of its affiliates without the consent of the other parties hereto.  Nothing contained herein, expressed or implied, is intended to confer upon any person or entity other than the parties hereto and their successors in interest and permitted assignees any rights or remedies under or by reason of this Agreement unless so stated herein to the contrary.

 

9.             Successors.  All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

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10.          Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.  This Agreement may be executed by facsimile or portable document format (“PDF”) signature and a facsimile or PDF signature shall constitute an original for all purposes.

 

11.          Entire Agreement; Modification; Governing Law.  This Agreement contains the entire agreement between the parties hereto with respect to the subject matter of this Agreement and shall supersede all previous oral and written and all contemporaneous oral negotiations, commitments and understandings.  This Agreement sets forth the entire understanding of the parties and may be modified only by a written instrument duly executed by each party.  No breach of any covenant, agreement, warranty or representation shall be deemed waived unless expressly waived in writing by the party who might assert such breach.  This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be construed and enforced in accordance with and governed by the internal Laws of the State of Delaware, without regard to the Laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Delaware.

 

12.          Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE RELATED AGREEMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	
 
    	
NOODLES &   COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul A. Strasen
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CATTERTON   MANAGEMENT COMPANY, L.L.C.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ J. Michael Chu
    
	
 
    	
 
    	
Name:   J. Michael Chu
    
	
 
    	
 
    	
Title:   Authorized Person
    

 

[Signature Page to Management Services Agreement]Exhibit 10.19

 

December 27, 2010

 

Argentia Private Investments Inc.
 c/o Public Sector Pension Investments Board
 1250 Rene Levesque Blvd. West
 Suite 900
 Montreal, Quebec H3B 4W8

 

Re:          Payment of Class C Dividend

 

Ladies and Gentlemen:

 

WHEREAS, Noodles & Company, a Delaware corporation (the “Company”), and Catterton Management Company, L.L.C., a Delaware limited liability company (“Management Services Company”) have entered into the Management Services Agreement (the “Management Services Agreement”), dated as of the date hereof;

 

WHEREAS, Argentia Private Investments Inc., a corporation incorporated pursuant to the Canada Business Corporations Act, (“PSP Investor”) has agreed to purchase (the “Investment”) a portion of the Company’s Class C Common Stock, par value $0.01 per share;

 

WHEREAS, the Company has received, and will continue to receive, a material benefit as a result of the Investment;

 

WHEREAS, in consideration of the Investment, among other things, the parties hereto have agreed to the arrangements set forth in this letter agreement (this “Agreement”); Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to such terms in the Restated Certificate of Incorporation of the Company, filed with the Secretary of State of Delaware on the date of this Agreement, as amended from time to time (the “Charter”)

 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.             The Company shall be prohibited from making any quarterly payment to the Management Services Company pursuant to Section 3(a) of the Management Services Agreement, unless the Board of Directors of the Company shall have declared a dividend in respect of its Class C Common Stock which dividend shall be payable substantially concurrently with any such quarterly payment to the Management Services Company, in each case, in an amount equal to that being paid pursuant to the Management Services Agreement.  Prior to the 

 

 

termination or expiration of the Management Services Agreement, all accrued but unpaid dividends on the Class C Common Stock shall be immediately due and payable.

 

2.             Notwithstanding the provisions of Section 1 of this Agreement (a) if distributing such amounts or declaring or paying such dividends is prohibited, or would cause a default under the terms of the Credit Agreement, dated November 14, 2007, as amended by the First Amendment to Credit Agreement, dated December 17, 2008, and the Second Amendment to Credit Agreement, dated November 26, 2010, among Noodles & Company, a Delaware corporation, the Guarantors party thereto, the Lenders party thereto and Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (as such agreement may be amended or superseded by a successor credit agreement from time to time, the “Senior Credit Agreement”), then no dividends shall be payable by the Company in respect of its Class C Common Stock until the earliest subsequent date on which distributing such amounts or declaring or paying such dividends shall not violate the Senior Credit Agreement, and (b) in the event the Company is prohibited for any reason from declaring and paying the full amount of any dividend payable pursuant to Section 1 hereof and/or from paying the full amount of any fees payable pursuant to Section 3(a) of the Management Services Agreement, then no dividends shall be payable by the Company in respect of its Class C Common Stock until the date upon which the Company is permitted to declare and pay the full amount of any dividend payable pursuant to Section 1 hereof and to pay the full amount of any fees payable pursuant to Section 3(a) of the Management Services Agreement.

 

3.             Notwithstanding the provisions of Section 1 of this Agreement, in the event of any payment to the Management Services Company pursuant to the Management Services Agreement in connection with a termination of the Management Services Agreement or otherwise structured as a final payment thereunder, the Company shall be required to redeem all outstanding shares of Class C Common Stock for the aggregate amount otherwise due and payable pursuant to Section 1.

 

4.             This Agreement shall continue in full force and effect until, and shall terminate upon, the earliest of (a) such date as the PSP Investor and its Permitted Transferees collectively hold less than 50% of the aggregate number of shares of Class A Common Stock and Class B Common Stock held by the PSP Investor on the date of this Agreement (as adjusted for stock dividends, stock splits, combinations of shares, reorganizations, recapitalizations, reclassifications or the like), (b) the date of consummation of an Initial Public Offering, (c) the date of consummation of an Acquisition or (d) the date of consummation of an Asset Transfer.  For the purposes of this Agreement, (i) “Acquisition” shall mean (A) any consolidation or merger of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, other than any such consolidation, merger or reorganization in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, continue to hold at least a majority of the voting power of the surviving entity in substantially the same proportions (or, if the surviving entity is a wholly owned subsidiary, its

 

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parent) immediately after such consolidation, merger or reorganization; or (B) any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent of the Company’s voting power is transferred, and (ii) “Asset Transfer” shall mean a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company.

 

5.             No amendment of any term, provision or condition of this Agreement shall be effective, unless in writing and executed by each of the parties hereto.  No waiver on any one occasion shall affect, extend to, or be construed as a waiver of, any right or remedy on any future occasion.  No course of dealing of any person nor any delay or omission in exercising any right or remedy shall constitute an amendment of this Agreement or a waiver of any right or remedy of any party hereto.  Neither this Agreement nor any of the rights, interests or obligations under this agreement may be assigned, in whole or in part, by operation of law or otherwise by any of the parties hereto without the prior written consent of the other parties hereto, and any such assignment without such prior written consent shall be null and void, except that PSP Investor may assign this Agreement and any of its rights, interests or obligations under this Agreement to any of its Permitted Transferees.

 

6.             This Agreement shall be governed by and construed, and interpreted in all respects, in accordance with the laws of the State of Delaware without regard to conflicts of laws principles thereof

 

7.             This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which together shall constitute one and the same instrument.

 

8.             No service of any kind has been or shall be furnished by PSP Investor or any of its parent entities, affiliates or subsidiaries in respect of, or in exchange for, the arrangements set forth in this Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed on its behalf by its duly authorized officer or representative as of the date first above written.

 

	
 
    	
ARGENTIA   PRIVATE INVESTMENTS INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Derek Murphy
    
	
 
    	
 
    	
Name:
    	
Derek Murphy
    
	
 
    	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jim Pittman
    
	
 
    	
 
    	
Name:
    	
Jim   Pittman
    
	
 
    	
 
    	
Title:
    	
Vice   President
    

 

[Signature Page to Side Letter Re: Class C Dividend]

 

 

	
 
    	
NOODLES   & COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul A. Strasen
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

[Signature Page to Side Letter Re: Class C Dividend]

 

 

	
 
    	
CATTERTON   MANAGEMENT COMPANY, L.L.C.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ J. Michael Chu
    
	
 
    	
 
    	
Name: J.   Michael Chu
    
	
 
    	
 
    	
Title: Authorized   Person
    

 

[Signature Page to Side Letter Re: Class C Dividend]

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