Exhibit 99.8
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
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Attention: Xxxxx X. Xxxxxx and General Counsel
If to Holdings Inc. or the c/o Vestar Capital Partners
Company: 000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx and General Counsel
In any case, Xxxxxxxx & Xxxxx
with copies to: Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx
(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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Exhibit 99.8
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/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Managing Director
AGRILINK FOODS, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Chief Financial Officer
AGRILINK HOLDINGS INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Chief Financial Officer
AGRILINK HOLDINGS LLC
By: /s/ Xxxx X. Xxxxxx
------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President and Chief Financial Officer
