Exhibit 10.34


 


EXECUTION COPY


 


MANAGEMENT
AGREEMENT


 


This Management Agreement is
made as of August 19, 2002, among Agrilink Foods, Inc., a New York
corporation (the “Company”), Agrilink Holdings Inc., a Delaware corporation (“Holdings
Inc.”) and Vestar Capital Partners (“Vestar”).


 


WHEREAS, Vestar, by and
through its officers, employees, agents, representatives and affiliates, has
expertise in the areas of corporate management, finance, investment,
acquisitions and other matters relating to the business of the Company and its
subsidiaries; and


 


WHEREAS, each of Holdings
Inc. and the Company desires to avail itself, for the term of this Agreement,
of the expertise of Vestar in the aforesaid areas, in which it acknowledges the
expertise of Vestar.


 


NOW, THEREFORE, in
consideration of the foregoing recitals and the covenants and conditions herein
set forth, the parties hereto agree as follows:


 


1. Appointment. Each of
Holdings Inc. and the Company hereby appoints Vestar to render the advisory and
consulting services described in Section 2 commencing upon the Closing
Date (as defined in Section 3(b)).


 


2. Services. Vestar hereby
agrees that, commencing upon the Closing Date, it shall render to each of
Holdings Inc. and the Company (and their subsidiaries) by and through such of
Vestar’s officers, employees, agents, representatives and affiliates as Vestar,
in its sole discretion, shall designate from time to time, advisory and
consulting services in relation to the affairs of Holdings Inc. and the Company
(and their subsidiaries) in connection with strategic financial planning and
other services not referred to in the next sentence, including, without
limitation, advisory and consulting services in relation to the selection,
supervision and retention of independent auditors, the selection, retention and
supervision of outside legal counsel, and the selection, retention and
supervision of investment bankers or other financial advisors or consultants.
It is expressly agreed that the services to be performed hereunder shall not
include (x) investment banking or other financial advisory services
rendered by Vestar and its affiliates to Holdings Inc. and the Company (and
their subsidiaries) after the Closing Date in connection with acquisitions,
divestitures, refinancings, restructurings and similar transactions by Holdings
Inc. and the Company (and their subsidiaries) or (y) full or part-time
employment by any of the Company and its subsidiaries of any employee or
partner of Vestar or any of its affiliates, in each case, for which Vestar and
its affiliates shall be entitled to receive additional compensation.


 


3. Fees. (a) In
consideration of the services contemplated by Section 2, subject to the
provisions of Section 6, Holdings Inc. and the Company and their
respective successors hereby jointly and severally agree to pay to Vestar a per
annum management fee (the “Fee”) equal to the greater of (i) $1,000,000
and (ii) an amount per annum equal to 0.70% of Consolidated EBITDA (as
defined in the Credit Agreement dated as of August 19, 2002 by and among
the lenders from time to time party thereto, the Company, Holdings Inc. and
certain of the subsidiaries of the Company, as the same may be amended,
modified, renewed, refunded, replaced or refinanced from time to time) before
deducting the Fee payable pursuant to this


 

















 


Section 3 (“Adjusted
EBITDA”), commencing at the Closing Date. For the period from the Closing Date
through December 31, 2002, the Fee shall be based on clause (i) above
and shall be pro rated based on the number of days in such period and shall be
payable in full on the Closing Date. For all periods beginning after December 31,
2002, the fee shall be payable semi-annually in advance on January 1 and July 1
based on the greater of clause (i) above and 0.70% of that fiscal year’s
Adjusted EBITDA. As payments will be made prior to final determination of the
fiscal year’s Adjusted EBITDA, the prior fiscal year’s Adjusted EBITDA (or
management’s best estimate of such in the case of the July 1 payment) may
be used, provided that the Fee is adjusted for any fiscal year promptly
following the determination of Adjusted EBITDA for such fiscal year or on
termination of this Agreement. All references to “per annum” or “annual” herein
refer to the fiscal year of the Company.


 


(b) Holdings Inc. and
the Company and their respective successors also hereby jointly and severally
agree to pay Vestar at the time of the closing (the “Closing Date”) of the
transactions contemplated by the Unit Purchase Agreement dated as of June 20,
2002 among the Company, Vestar/Agrilink Holdings LLC, a Delaware limited
liability company, and Pro-Fac Cooperative, Inc., a New York agricultural
cooperative corporation (as amended from time to time in accordance with its
terms, the “Purchase Agreement”), a transaction fee equal to $8,000,000 plus
all of the Out-of-Pocket Expenses (as defined in Section 4) incurred by or
on behalf of Vestar prior to the Closing Date for services rendered by Vestar
in connection with the consummation of the transactions contemplated by the
Purchase Agreement.


 


(c) As contemplated by Section 4.1(d) of
the Securityholders Agreement dated as of the date hereof, Vestar shall be
entitled to be paid customary and reasonable fees by Holdings Inc. and the
Company and their respective successors for any investment banking services
provided by it in connection with a Sale of the Company (as defined in such
Securityholders Agreement).


 


4. Reimbursements. In
addition to the Fee, Holdings Inc. and the Company hereby jointly and severally
agree, at the direction of Vestar, to pay directly or reimburse Vestar for its
reasonable Out-of-Pocket Expenses incurred after the Closing Date in connection
with the services described in Section 2. For the purposes of this
Agreement, the term “Out-of-Pocket Expenses” shall mean the amounts paid by or
on behalf of Vestar in connection with the services contemplated hereby,
including (but not limited to) (i) reasonable fees and disbursements of
any independent professionals and organizations, including independent auditors
and outside legal counsel, investment bankers or other financial advisors or
consultants, (ii) reasonable costs of any outside services or independent
contractors, such as financial printers, couriers, business publications or
similar services, (iii) reasonable transportation, per diem, telephone
calls, word processing expenses or any similar expense not associated with its
ordinary operations, and (iv) bank ticking or other similar fees in
connection with any proposed financing for Holdings Inc., the Company and/or
any of the Company’s subsidiaries. All reimbursements for Out-of-Pocket
Expenses shall be made promptly upon, or as soon as practicable after,
presentation by Vestar of the statement in connection therewith.


 


5. Indemnification. Holdings
Inc. and the Company hereby jointly and severally agree to indemnify and hold
harmless Vestar and its affiliates, partners, members, officers, directors,
employees, agents, representatives and stockholders (each being an “Indemnified


 


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Party”) from and against any
and all losses, claims, damages and liabilities of whatever kind or nature,
joint or several, absolute, contingent or consequential, to which such
Indemnified Party may become subject under any applicable federal or state law,
or any claim made by any third party, or otherwise, to the extent they relate
to or arise out of the services contemplated by this Agreement or the
engagement of Vestar pursuant to, and the performance by Vestar of the services
contemplated by, this Agreement. Holdings Inc. and the Company hereby jointly
and severally agree to reimburse any Indemnified Party for all reasonable costs
and expenses (including reasonable attorneys’ fees and expenses) as they are
incurred in connection with the investigation of, preparation for or defense of
any pending or threatened claim for which the Indemnified Party would be
entitled to indemnification under the terms of the previous sentence, or any
action or proceeding arising therefrom, whether or not such Indemnified Party
is a party hereto. Holdings Inc. and the Company will not be liable under the
foregoing indemnification provision to the extent that any loss, claim, damage,
liability, cost or expense is determined by a court, in a final judgment from
which no further appeal may be taken, to have resulted primarily from the gross
negligence or willful misconduct of Vestar.


 


6. Term. This Agreement shall
become effective as of the Closing Date and shall terminate at such time after
the Closing Date as Vestar Capital Partners IV, L.P., a Delaware limited
partnership, and the partners therein and the affiliates thereof, in the
aggregate, hold directly or indirectly, through Agrilink Holdings LLC or
otherwise, less than 20% of the voting power of the Company’s outstanding
voting stock. The provisions of Sections 4, 5, 7 and 8 and the joint and
several obligation of Holdings Inc. and the Company to pay Fees accrued during
the term of this Agreement pursuant to Section 2 shall survive the
termination of this Agreement.


 


7. Permissible Activities.
Subject to all applicable provisions of New York law that impose fiduciary
duties upon Vestar or its partners, members or affiliates, nothing herein shall
in any way preclude Vestar or its partners, members, officers, employees or
affiliates from engaging in any business activities or from performing services
for its or their own account or for the account of others, including for
companies that may be in competition with the business conducted by the
Company.


 


8. General. (a) No
amendment or waiver of any provision of this Agreement, or consent to any
departure by any party from any such provision, shall in any event be effective
unless the same shall be in writing and signed by the parties to this Agreement
and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.


 


(b) Any and all notices
hereunder shall, in the absence of receipted hand delivery, be deemed duly
given when mailed, if the same shall be sent by registered or certified mail,
return receipt requested, and the mailing date shall be deemed to be the date
from which all time periods pertaining to a date of notice shall run. Notices
shall be addressed to the parties at the following addresses:


 


	
  If to Vestar:

  	
  Vestar Capital Partners

  
	
   

  	
  245 Park Avenue, 41st Floor

  
	
   

  	
  New York, New York 10167

  



 


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  Attention:  David M. Hooper and General Counsel

  
	
  If to Holdings Inc. or the Company:

  	
  c/o Vestar Capital Partners

  
	
   

  	
  245 Park Avenue, 41st Floor

  
	
   

  	
  New York, New York  10167

  
	
   

  	
  Attention: David M. Hooper
  and General Counsel

  
	
  In any case, with copies
  to:

  	
  Kirkland & Ellis

  
	
   

  	
  Citigroup Center

  
	
   

  	
  153 East 53rd Street

  
	
   

  	
  New York, New York 10022

  
	
   

  	
  Attention: Michael
  Movsovich

  



 


(c) This Agreement shall
constitute the entire Agreement between the parties with respect to the subject
matter hereof, and shall supersede all previous oral and written (and all
contemporaneous oral) negotiations, commitments, agreements and understandings
relating hereto.


 


(d) THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF NEW YORK. THE PARTIES TO THIS AGREEMENT HEREBY AGREE TO SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN NEW YORK, NEW
YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
Each of the parties hereto waives any right it may have to trial by jury in
respect of any litigation based on, arising out of, under or in connection with
this Agreement or any course of conduct, course of dealing, verbal or written
statement or action of any party hereto. This Agreement shall inure to the
benefit of, and be binding upon, Vestar, the Indemnified Parties, Holdings
Inc., the Company and their respective successors and assigns.


 


(e) This Agreement may
be executed in two or more counterparts, and by different parties on separate
counterparts; each set of counterparts showing execution by all parties shall
be deemed an original and shall constitute one and the same instrument.


 


(f) The waiver by any
party of any breach of this Agreement shall not operate as or be construed to
be a waiver by such party of any subsequent breach.


 


*
* * *


 


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  EXECUTION
  COPY

  	
   

  



 


IN WITNESS WHEREOF, the
parties have caused this Management Agreement to be executed and delivered by
their duly authorized officers or agents as set forth below.


 


	
   

  	
  VESTAR CAPITAL PARTNERS

  
	
   

  	
   

  
	
   

  	
  By its General Partner:

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ David Hooper

  
	
   

  	
   

  	
  Name: David Hooper

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AGRILINK FOODS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Earl L. Powers

  
	
   

  	
   

  	
  Name: Earl L. Powers

  
	
   

  	
   

  	
  Title: Vice President and
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  AGRILINK HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Earl L. Powers

  
	
   

  	
   

  	
  Name: Earl L. Powers

  
	
   

  	
   

  	
  Title: Vice President and
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  AGRILINK HOLDINGS LLC

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Earl L. Powers

  
	
   

  	
   

  	
  Name: Earl L. Powers

  
	
   

  	
   

  	
  Title: Vice President and
  Chief Financial Officer