Exhibit 3.3
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ARMKEL, LLC
DATED AS OF AUGUST 27, 200l
TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms......................................... 2
ARTICLE II
THE LIMITED LIABILITY COMPANY
Section 2.1 Formation..................................................... 13
Section 2.2 Name.......................................................... 13
Section 2.3 Business Purposes............................................. 13
Section 2.4 Company Powers................................................ 14
Section 2.5 Registered Office and Agent................................... 15
Section 2.6 Term.......................................................... 15
Section 2.7 Principal Place of Business................................... 15
Section 2.8 Title to Company Property..................................... 15
Section 2.9 Business Transactions of the Members with the Company......... 15
Section 2.10 Fiscal Year................................................... 15
ARTICLE III
CAPITAL STRUCTURE AND CONTRIBUTIONS
Section 3.1 Capital Structure............................................. 16
Section 3.2 Initial Capital Contributions................................. 16
Section 3.3 No Mandatory Capital Contributions............................ 16
Section 3.4 Discretionary Capital Contributions........................... 16
Section 3.5 Interest on Capital Contributions............................. 17
Section 3.6 Return of Capital Contributions............................... 17
Section 3.7 Maintenance of Capital Accounts............................... 17
ARTICLE IV
THE MEMBERS
Section 4.1 Members....................................................... 18
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Section 4.2 Actions Requiring Unanimous Consent of the Members............ 18
Section 4.3 Action by the Members......................................... 19
Section 4.4 No Liability of Members....................................... 19
Section 4.5 Power to Bind the Company..................................... 20
Section 4.6 Calling Special Meetings for the Enforcement of Corporate
Governance Provisions......................................... 20
ARTICLE V
THE BOARD OF DIRECTORS
Section 5.1 The Board of Directors........................................ 20
Section 5.2 Size of Board; Appointment of Directors....................... 20
Section 5.3 Removal and Replacement of Directors.......................... 21
Section 5.4 Duties of the Board........................................... 21
Section 5.5 Meetings of the Board......................................... 21
Section 5.6 Committees.................................................... 22
Section 5.7 Actions Requiring Consideration by Board...................... 22
Section 5.8 Actions Requiring Approval of Required Majority............... 23
Section 5.9 Deadlocks on Certain Items.................................... 25
Section 5.10 Power to Bind Company......................................... 25
Section 5.11 Liability of Directors........................................ 25
ARTICLE VI
MANAGEMENT OF THE COMPANY
Section 6.1 Management Services Agreement................................. 25
Section 6.2 Officers...................................................... 25
Section 6.3 Chief Executive Officer....................................... 26
Section 6.4 Chief Financial Officer....................................... 27
ARTICLE VII
ALLOCATIONS AND DISTRIBUTIONS
Section 7.1 Allocation of Profits and Losses.............................. 27
Section 7.2 Tax Allocations............................................... 28
Section 7.3 Special Tax Allocations....................................... 28
Section 7.4 Other Allocation Rules........................................ 29
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Section 7.5 Distributions ........................................................... 30
Section 7.6 Tax Distributions ....................................................... 30
Section 7.7 Restrictions on Distributions ........................................... 31
Section 7.8 Withholding ............................................................. 31
Section 7.9 Final Distribution ...................................................... 31
Section 7.10 Allocations and Distributions in Respect of Interests Transferred ....... 31
Section 7.11 Determinations by the Members ........................................... 32
ARTICLE VIII
REPORTS, ACCOUNTS AND ACCESS TO INFORMATION
Section 8.1 Access to Information ................................................... 33
Section 8.2 Bank Accounts ........................................................... 33
Section 8.3 Reports ................................................................. 33
Section 8.4 Federal Tax Matters ..................................................... 33
Section 8.5 Special Basis Adjustment ................................................ 34
ARTICLE IX
TRANSFERS OF INTERESTS; ADMISSION OF NEW MEMBERS
Section 9.1 Transfers ............................................................... 34
Section 9.2 Permitted Transfers ..................................................... 34
Section 9.3 Admission of Additional Members ......................................... 34
Section 9.4 Sales of Subsidiaries or Divisions ...................................... 35
ARTICLE X
PREFERENTIAL RIGHTS
OF SALE & PURCHASE
Section 10.1 Call Option ............................................................. 36
Section 10.2 Sales by C&D: Right of First Offer, Drag Along Rights ................... 37
Section 10.3 Sales by Xxxxx: Right of First Offer, Drag-AloRights .................... 38
Section 10.4 Change of Control Put ................................................... 41
Section 10.5 Valuation Procedure ..................................................... 42
Section 10.6 Noncompetition and Nonsolicitation following Transfers of Interests ..... 44
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ARTICLE XI
EVENTS OF DISSOLUTION
Section 11.1 Dissolution ............................................................ 45
Section 11.2 Liquidation ............................................................ 46
Section 11.3 Final Accounting ....................................................... 46
Section 11.4 Cancellation of Certificate ............................................ 46
Section 11.5 Termination ............................................................ 46
ARTICLE XII
EXCULPATION, INDEMNIFICATION & EXPENSES
Section 12.1 Exculpation ............................................................ 47
Section 12.2 Indemnification ........................................................ 47
Section 12.3 Expenses ............................................................... 48
ARTICLE XIII
COVENANTS OF THE MEMBERS
Section 13.1 Debt Incurrence by C&D ................................................. 48
Section 13.2 Restriction on Operations of C&D ....................................... 48
Section 13.3 Corporate Opportunity .................................................. 49
Section 13.4 Covenants Relating to the Xxxxx Blockers ............................... 49
Section 13.5 Confidentiality ........................................................ 52
ARTICLE XIV
MISCELLANEOUS
Section 14.1 GOVERNING LAW .......................................................... 53
Section 14.2 Determinations by Armkel ............................................... 54
Section 14.3 Consent to Jurisdiction, Service of Process; Venue ..................... 54
Section 14.4 Headings; Construction ................................................. 54
Section 14.5 No Third Party Beneficiaries ........................................... 54
Section 14.6 Entire Agreement ....................................................... 55
Section 14.7 Notices ................................................................ 55
Section 14.8 Severability ........................................................... 56
Section 14.9 Successors; Assigns; Amendments; Waivers ............................... 57
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Section 14.10 Defaults; No Circumvention of Agreement ..................... 57
Section 14.11 Further Assurances .......................................... 57
Section 14.12 Counterparts ................................................ 57
Section 14.13 Limited Liability Company ................................... 58
Section 14.14 Arbitration ................................................. 58
SCHEDULE I Ownership Structure of Xxxxx Member
SCHEDULE II Members
SCHEDULE III Initial Directors
SCHEDULE IV Call Exercise Price
EXHIBIT A Management Services Agreement
EXHIBIT B Manufacturing Agreement
EXHIBIT C Arrid Manufacturing Agreement
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AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
ARMKEL, LLC
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated
as of August 27, 200l (the "Agreement"), of Armkel, LLC (the "Company") is made
by and between Church & Xxxxxx Co., Inc., a Delaware corporation ("C&D") and
Xxxxx Protection Venture, LLC, a Delaware limited liability company (the "Xxxxx
Member"), as the members of the Company (each a "Member", and together with any
Person admitted as an additional Member pursuant to Section 4.1, the "Members").
RECITALS
WHEREAS, on Xxxxx 0, 0000, Xxxxx & Company, L.P. ("Xxxxx") and C&D
formed the Company as a limited liability company in accordance with the
provisions of the Delaware Limited Liability Company Act (such act and any
successor statute, as amended from time to time, the "Act") in order to purchase
and operate certain assets comprising the consumer and personal care products
business of Xxxxxx-Xxxxxxx, Inc., a Delaware corporation ("Seller");
WHEREAS, on March 9, 2001, in connection with the formation of the
Company, C&D, Xxxxx, Xxxxx Investment Associates VI, L.P. ("KIA VI") and KEP VI,
LLC ("KEP VI") entered into a limited liability company agreement (the "Interim
LLC Agreement") in accordance with the provisions of the Act, governing, among
other things, the affairs of the Company and the conduct of its business and
pursuant to which Xxxxx assigned its Interests in the Company to KIA VI and KEP
VI;
WHEREAS, KIA VI and KEP VI have formed Xxxxx Blockers Holdings, LLC, a
Delaware limited liability company ("Xxxxx Blockers Holdings"), all of the
membership interests of which are owned by KIA VI and KEP VI;
WHEREAS, Xxxxx Blockers Holdings has formed a number of corporate
entities, all of the capital stock of each such entity is owned by Xxxxx
Blockers Holdings (such entities, as illustrated on Schedule I to this
Agreement, the "Xxxxx Blockers");
WHEREAS, the Xxxxx Blockers have formed the Xxxxx Member, and, prior
to the date hereof, KIA VI and KEP VI assigned their respective Interests in the
Company to the Xxxxx Member;
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
May 7, 200l (as such agreement may be amended from time to time, including the
exhibits, schedules and annexes thereto, the "Asset Purchase Agreement"), by and
between Seller and the Company, Seller has agreed to sell, convey, assign,
transfer and deliver all of its and its Affiliates' right, title and interest in
the Purchased Assets (as such term is defined in the Asset Purchase Agreement)
to the Company and the Company has agreed to purchase and acquire such Purchased
Assets from Seller and to assume the Assumed Liabilities (as such term is
defined in the Asset Purchase Agreement), all as more fully described in the
Asset Purchase Agreement;
WHEREAS, in connection with the purchase of the Purchased Assets and
the assumption of the Assumed Liabilities, the Members desire to amend and
restate the Interim LLC Agreement in its entirety as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
obligations set forth in this Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms. As used herein, the following terms
shall have the meanings set forth below:
"Acquisition" shall mean the acquisition of the Purchased Assets and
the assumption of the Assumed Liabilities (as each such term is defined in the
Asset Purchase Agreement) by the Company pursuant to the Asset Purchase
Agreement.
"Act" shall have the meaning set forth in the Recitals.
"Actions" shall have the meaning set forth in Section 14.3.
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"Adjusted Capital Account" shall mean, with respect to a Member, such
Member's Capital Account, after increasing such Capital Account by any amounts
that such Member is obligated or deemed obligated to restore as described in the
penultimate sentence of each of Treasury Regulations Section 1.704-2(g)(l) and
Treasury Regulations Section 1.704-2(i)(5), and reducing such Capital Account by
any amounts described in Treasury Regulations Sections 1.704-l(b)(2)(ii)(d)(4),
(5) and (6). The definition of Adjusted Capital Account is intended to comply
with the provisions of Treasury Regulations Section 1.704(b)(2)(ii) and shall be
interpreted consistently therewith.
"Adjusted Capital Contribution Balance" shall mean, on any date of
determination, with respect to any Member, the amount of such Member's Initial
Capital Contribution minus the aggregate value of all distributions received by
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such Member after the Closing Date pursuant to Section 9.4 and not
re-contributed to the Company. For purposes of this definition, the value of any
non-cash distribution made to a Member pursuant to Section 9.4(a) shall be equal
to the cash consideration received by such Member in the immediately subsequent
sale of the property (including membership interests or capital stock)
distributed.
"Affiliate" shall mean, with respect to any specified Person, (i) any other
Person directly or indirectly controlling, controlled by, or under common
control with, such specified Person, (ii) any other Person that owns, directly
or indirectly, ten percent (10%) or more of such Person's capital stock or other
equity interests or any officer or director of such Person at any time during
the period for which the determination of affiliation is being made; provided
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that with respect to Xxxxx or the Xxxxx Member, the term "Affiliate" shall not
include any limited partner of KEP VI, KIA VI or any of their respective
Affiliates nor any portfolio or investee company of KEP VI or KIA VI or their
respective Affiliates.
"Agreement" shall have the meaning set forth in the Preamble.
"Arrid Assets" shall mean the properties, assets and liabilities related to
the U.S. and Canadian Arrid XX., Arrid Extra Dry and Lady's Choice product
lines, as purchased or assumed by the Company pursuant to the Asset Purchase
Agreement and to be sold to, or assumed by, C&D pursuant to the Product Line
Purchase Agreement.
"Arrid Manufacturing Agreement" shall mean the Manufacturing Agreement,
substantially in the form of Exhibit C hereto.
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"Asset Purchase Agreement" shall have the meaning set forth in the
Recitals.
"Board" shall mean the Board of Directors of the Company as described
in Article V, consisting of those Directors who are elected by the Members from
time to time (or, with respect to Directors appointed to fill vacancies on the
Board of Directors) to serve on the board pursuant to Article V.
"Business" shall have the meaning set forth in Section 2.3.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which commercial banks in the City of New York are authorized or
obligated by law or executive order to close.
"C&D" shall have the meaning set forth in the Preamble.
"C&D Change of Control" shall mean the occurrence of any of the
following events: (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, of more than 35% of the total voting power of the
capital stock of C&D outstanding at such time; (ii) a merger or consolidation or
similar transaction involving C&D after which the holders of C&D's capital stock
do not own at least 65% of the total voting power represented by the capital
stock of the surviving entity of such merger or consolidation; or (iii) the
adoption of a plan of complete liquidation or the sale or disposition by C&D of
at least 75% of its assets in any one or series of transactions.
"C&D Directors" shall have the meaning set forth in Section 5.2.
"C&D Fee Letter" shall mean that certain letter agreement, dated as
of August 14, 2001, between the Company and C&D, providing for the payment by
the Company to C&D of a transaction fee of $3.5 million, payable on or about the
Closing Date.
"C&D First Offer Price" shall have the meaning set forth in Section
10.2.
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"C&D Initial Contribution" shall have the meaning set forth in
Section 3.2.
"C&D Purchase Request" shall have the meaning set forth in Section
10.2.
"C&D Senior Credit Facility" shall mean that certain credit
agreement, to be entered into by C&D on or before the Closing Date, providing
for senior secured borrowings by C&D in an amount of up to approximately $510.0
million, as the same may be amended, refinanced or replaced from time to time,
provided that the provisions of any such amendment, refinancing or replacement
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are substantially similar to, and no more restrictive than, the provisions so
amended, refinanced or replaced, in each case as such provisions relate to
Section 13.2 hereof.
"Call Exercise Price" shall have the meaning set forth in Section
10.1.
"Call Option" shall have the meaning set forth in Section 10.1.
"Call Period" shall have the meaning set forth in Section 10.1.
"Capital Account" shall have the meaning set forth in Section 3.7.
"Capital Contribution" shall mean any contribution of cash, property
or services to the Company or the obligation to contribute cash, property or
services to the Company made by or on behalf of a Member, initially in the
amounts set forth in Section 3.2.
"Certificate of Formation" shall mean the certificate of formation of
the Company filed in the Office of the Secretary of State of the State of
Delaware on March 9, 200l pursuant to the Act and through which the Company has
been formed.
"Change of Control Put" shall have the meaning set forth in Section
10.4.
"Claims" shall have the meaning set forth in Section 12.2.
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"Closing" shall have the meaning set forth in the Asset
Purchase Agreement.
"Closing Date"`shal1 mean the date of the Closing.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time (or any corresponding provisions of succeeding law).
"Company" shall have the meaning set forth in the Preamble.
"Confidential Information" shall have the meaning set forth in
Section 13.4.
"Consolidated Debt" shall mean, with respect to any Person and
its Subsidiaries on any date of determination, without duplication: (i) the
principal of and premium (if any) in respect of indebtedness of such Person and
its Subsidiaries for borrowed money; (ii) the principal of and premium (if any)
in respect of obligations of such Person and its Subsidiaries evidenced by
bonds, debentures, notes or other similar instruments; (iii) all obligations of
such Person and its Subsidiaries in respect of letters of credit or other
similar instruments (including reimbursement obligations with respect thereto);
(iv) all obligations of such Person and its Subsidiaries to pay the deferred
and unpaid purchase price of property or services (except trade payables and
other accrued current liabilities arising in the ordinary course of business),
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services; (v) all capitalized lease obligations of such Person and its
Subsidiaries; (vi) the amount of all obligations of such Person and its
Subsidiaries with respect to the redemption, repayment or other repurchase of
any mandatorily redeemable capital stock or, with respect to any Subsidiary of
such Person, any preferred stock (but excluding, in each case, any accrued
dividends); (vii) all indebtedness of other Persons secured by a lien on any
asset of such Person or any subsidiary of such Person, whether or not such
indebtedness is assumed by such Person or its Subsidiary; provided, however,
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that the amount of indebtedness of such Person or its Subsidiary shall be the
lesser of (A) the fair market value of such asset at such date of determination
and (B) the amount of such indebtedness of such other Persons; (viii) all
hedging obligations of such Person and its Subsidiaries; and (ix) all
obligations of the type referred to in clauses (i) through (viii) of other
Persons and all dividends of other Persons for the payment of which, in either
case, such Person and its Subsidiaries are responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
guarantee; provided, however, that "Consol
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6
idated Debt" of a Person shall not include any liability of such Person or any
of its Subsidiaries for federal, state, provincial, foreign, local or other
taxes owed or owing by such Person or its Subsidiaries. The amount of
indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"Consolidated EBITDA" shall mean, with respect to any Person
for any period, the Consolidated Net Income of such Person and its Subsidiaries
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) provision for all taxes (whether or not paid,
estimated or accrued) based on income, profits or capital, (ii) Consolidated
Interest Expense, (iii) depreciation, amortization (including but not limited to
amortization of goodwill and intangibles and amortization and write-off of
financing costs) and any non-cash impairment charges related to goodwill, other
intangibles or long-lived assets, (iv) any expense or charges related to any
equity offering, investment or indebtedness, in each case whether or not
consummated or incurred, (v) the amount of any minority interest expense, (vi)
the amount, up to $1.0 million per year, paid to Xxxxx in respect of management,
monitoring, consulting and advisory fees, and (vii) any non-cash charges
resulting from any write-up of assets of such Person or any of its Subsidiaries
in accordance with Statement of Financial Accounting Standards No. 141,
"Business Combinations."
"Consolidated Interest Expense" shall mean, with respect to
any Person for any period, (i) the total interest expense of such Person and its
Subsidiaries to the extent deducted in calculating Consolidated Net Income, net
of any interest income of such Person and its Subsidiaries, including without
limitation any such interest expense consisting of (a) interest expense
attributable to capitalized lease obligations, (b) amortization of debt
discount, (c) the interest portion of any deferred payment obligation, and (d)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, plus (ii) dividends paid in cash in
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respect of preferred stock of such Person held by Persons (other than such
Person or a Subsidiary of such Person) and minus (iii) to the extent otherwise
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included in such interest expense, amortization or write-off of financing costs,
in each case under clauses (i) through (iii) as determined on a consolidated
basis in accordance with GAAP; provided, that gross interest expense shall be
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determined after giving effect to any net payments made or received by such
Person and its Subsidiaries with respect to interest rate hedging or similar
agreements.
7
"Consolidated Net Income" shall mean, with respect to any
Person for any period, the net income (loss) of such Person and its
Subsidiaries, determined on a consolidated basis and in accordance with
generally accepted accounting principals and before any reduction in respect of
dividends payable on preferred stock; provided, that there shall not be included
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in such Consolidated Net Income: (i) any net income of any other Person in which
such Person has an investment (other than any Subsidiary) accounted for by the
equity method of accounting, except that such Person's equity in the net income
(but not loss) of any such other Person for such period shall be included in
such Consolidated Net Income up to the aggregate amount actually distributed by
such other Person during such period to the Person or its Subsidiary as a
dividend or other distribution; (ii) any net income (loss) of any other Person
acquired by such Person or its Subsidiary in a pooling of interests transaction
for any period prior to the date of such acquisition; (iii) any gain or loss
realized upon the sale or other disposition of any asset of such Person or any
Subsidiary (including pursuant to any sale/leaseback transaction) that is not
sold or otherwise disposed of in the ordinary course of business (as determined
in good faith by the such Person's board of directors or similar governing
body); (iv) any extraordinary, unusual or nonrecurring gain, loss or charge,
including expenses incurred in connection with the Acquisition; (v) the
cumulative effect of a change in accounting principles; (vi) all deferred
financing costs written off and premiums paid in connection with any early
extinguishment of indebtedness; (vii) any unrealized gains or losses in respect
of foreign exchange contracts, currency agreements, or similar arrangements;
(viii) any unrealized foreign currency transaction gains or losses in respect of
indebtedness of any Person denominated in a currency other than the functional
currency of such Person, and (ix) any non-cash compensation charge arising from
any grant of stock, stock options or other equity-based awards.
"Covered Person" shall have the meaning set forth in Section
12.1.
"Distribution" shall mean a transfer of cash or property by
the Company to a Member on account of such Member's Interests as described in
Article VII.
"Equity Interests Percentage" shall mean, for any Member, the
percentage obtained by dividing (x) the number of Interests owned by such
Member by(y) the total number of Interests issued and outstanding in the
Company.
"Event of Dissolution" shall have the meaning set forth in
Section 11.1.
8
"Excess Contribution Balance" shall mean, on any date of
determination, with respect to the Xxxxx Member's capital contribution, (i) $5.0
million less (ii) the amount of any Excess Contribution Repayments received
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prior to such date pursuant to Section 9.4.
"Excess Contribution Repayment" shall have the meaning set
forth in Section 9.4.
"Exercise Date" shall have the meaning set forth in Section
10.1
"Fair Market Value" shall have the meaning set forth in
Section 10.5.
"Financial Advisory Services Agreement" shall mean that
certain letter agreement, dated as of August 14,2001, between the Company and
Xxxxx, providing for the payment by the Company to Xxxxx of(i) a transaction
fee of $4.5 million, payable on or about the Closing Date and (ii) an annual
advisory fee.
"Fiscal Year" shall have the meaning set forth in Section
2.10.
"Indemnified Person" and "Indemnified Persons" shall have the
meaning set forth in Section 12.2.
"Initial Directors" shall have the meaning set forth in
Section 5.2.
"Insolvency Event" shall mean, with respect to any Person, the
filing of an involuntary petition in bankruptcy or similar proceeding against
such Party seeking its reorganization, liquidation or the appointment of a
receiver, trustee or liquidator for it or for all or substantially all of its
assets, whereupon such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if such Person shall (i) apply for or consent in
writing to the appointment of a receiver, trustee or liquidator of all or
substantially all of its assets, (ii) `rile a voluntary petition in bankruptcy
or similar proceeding or admit in writing its inability to pay its debts as
they become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or an answer seeking reorganization or an arrangement with
its creditors or take advantage of any insolvency law with respect to itself as
debtor, or (v) file an answer admitting the material allegations of a petition
filed against it in any bankruptcy, reorganization, insolvency proceedings or
any similar proceedings.
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"Interest" shall have the meaning set forth in Section 3.1.
"Interim LLC Agreement" shall have the meaning set forth in
the Recitals.
"Xxxxx" shall have the meaning set forth in the Recitals.
"Xxxxx Blockers" shall have the meaning set forth in the
Recitals.
"Xxxxx Blockers Holdings" shall have the meaning set forth in
the Recitals.
"Xxxxx Directors" shall have the meaning set forth in Section
5.2.
"Xxxxx First Offer Price" shall have the meaning set forth in
Section 10.3.
"Xxxxx Initial Contribution" shall have the meaning set forth
in Section 3.2.
"Xxxxx Member" shall have the meaning set forth in the
Preamble.
"Xxxxx Purchase Request" shall have the meaning set forth in
Section 10.3.
"KEP VI" shall have the meaning set forth in the Recitals.
`KIA VI" shall have the meaning set forth in the Recitals.
"Xxxxxxx-Xxx Assets" shall mean the properties, assets and
liabilities related to the Xxxxxxx-Xxx brand, as purchased or assumed by the
Company pursuant to the Asset Purchase Agreement and to be sold to, or assumed
by, C&D pursuant to the Product Line Purchase Agreement.
"Lien" shall have the meaning set forth in Section 13.4.
"Management Services Agreement" shall mean the Management
Services Agreement, substantially in the form of Exhibit A hereto.
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"Manufacturing Agreement" shall mean the Manufacturing and
Distribution Agreement, substantially in the form of Exhibit-B hereto.
"Member" shall have the meaning set forth in the Preamble.
"Net Loss" shall mean, with respect to any period, the net
loss, if any, of the Company for such period as determined for U.S. federal
income tax purposes (taking into account items of Company loss specially
allocated pursuant to Section 7.3), provided that such loss shall be (i)
decreased by the amount of all income of the Company during such period that is
exempt from U.S. federal income tax, and (ii) increased by the amount of all
expenditures of the Company during such period which are not deductible in
computing the Company's income for U.S. federal income tax purposes and which
do not constitute capital expenditures of the Company.
"Net Profit" shall mean, with respect to any period, the net
income, if any, of the Company for such period as determined for U.S. federal
income tax purposes (taking into account items of Company income specially
allocated pursuant to Section 7.3), provided that such income shall be (i)
increased by the amount of all income of the Company during such period that is
exempt from U.S. federal income tax, and (ii) decreased by the amount of all
expenditures of the Company during such period that are not deductible in
computing the Company's income for U.S. federal income tax purposes and that do
not constitute capital expenditures of the Company.
"Officer" shall have the meaning set forth in Section 6.2.
"Person" shall mean an individual, trust, estate,
corporation, partnership, limited liability company or any other incorporated
or unincorporated entity permitted to be a member of a limited liability
company under the Act.
"Product Line Purchase Agreement" shall mean the Amended and
Restated Product Line Purchase Agreement, dated as of July 30,200l and
effective as of May 7,2001, by and between the Company and C&D, as the same may
be amended from time to time.
"Regulations" shall mean, except where the context indicates
otherwise, the permanent and temporary regulations of the Department of the
Treasury promulgated under the Code, as such regulations may be lawfully
changed from time to time (including corresponding provisions of succeeding
regulations).
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"Required Majority" shall have the meaning set forth in Section 5.8.
"Seller" shall have the meaning set forth in the Recitals.
"Senior Credit Facility" shall mean that certain Credit Agreement,
dated as of the Closing Date, by and among the Company, the Lenders named
therein, and The Chase Manhattan Bank, as Administrative Agent, together with
the related documents thereto (including, without limitation, any guarantee
agreements and security documents), as such agreements may be amended (including
any amendment and restatement thereof), supplemented or otherwise modified from
time to time.
"Senior Subordinated Notes" shall mean the Senior Subordinated Notes
of the Company, issued pursuant to that certain Indenture, dated as of August
28, 2001, between the Company and Armkel Finance, Inc., as issuers, and The Bank
of New York, as Trustee.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power or shares of capital stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, members of the governing
board, managers, or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) such Person, (ii) such Person and one or more
Subsidiaries of such Person, or (iii) one or more Subsidiaries of such Person.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall mean all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severances, stamp, payroll, sales, employment, unemployment, disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever (including any withholding
taxes for which KEP VI, KIA VI, or any Xxxxx Blocker is responsible as a result
of distributions or any other payments), together with all interest, penalties
and additions imposed with respect to such amounts and any interest in respect
of such penalties and additions.
"Tax Authority" means any governmental entity responsible for the
imposition of any Tax.
12
"Tax Return" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax Authority relating to Taxes.
"Taxable Year" shall mean the taxable year of the Company as
determined for federal income tax purposes.
"Transfer" shall have the meaning set forth in Section 9.1.
ARTICLE II
THE LIMITED LIABILITY COMPANY
Section 2.1 Formation. Xxxxx and C&D have previously formed the
Company as a limited liability company pursuant to the provisions of the Act. A
Certificate of Formation for the Company has been filed in the Office of the
Secretary of State of the State of Delaware in conformity with the Act. The
Company and, if required, each of the Members, shall execute or cause to be
executed from time to time all other instruments, certificates, notices and
documents and shall do or cause to be done all such acts and things (including
keeping books and records and making publications or periodic filings) as may
now or hereafter be required for the formation, valid existence and, when
appropriate, termination of the Company as a limited liability company under the
laws of the State of Delaware.
Section 2.2 Name. The name of the Company shall be "Armkel, LLC" and
its business shall be carried on under such name or any fictitious name or names
selected by the Board from time to time, provided that any such name reflects
the Company's status as a limited liability company or is otherwise permitted by
applicable law.
Section 2.3 Business Purposes. The Company is formed for the purpose
of acquiring, holding and operating the assets which comprise the consumer
products business of Seller before the Closing Date, as such business may be
expanded through internal growth or acquisitions of related assets or businesses
(the "Business"). The Company shall have the authority to do all things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and operation of the Business, and to carry on any lawful business,
purpose or activity permitted by the Act which is consistent with the foregoing
or related to the Business.
13
Section 2.4 Company Powers. The Company and, subject to Section 4.2, the
Board (acting on behalf of the Company), shall possess and may exercise all of
the powers and privileges granted by the Act or by any other law or by this
Agreement, together with any powers incidental thereto, so far as such powers
and privileges are necessary or convenient to the conduct, promotion or
attainment of the business purposes of the Company specified in Section 2.3
hereof, including, without limitation, the power:
(a) to acquire, hold, manage, own, sell, transfer, convey,
assign, exchange, license, pledge or otherwise dispose of the Company's
interests in assets or any property held by the Company, including, without
limitation, interests in real estate, intellectual property rights and other
proprietary processes, products or services;
(b) to establish, have, maintain or close one or more offices
within or without the State of Delaware and in connection therewith to rent or
acquire office space and to engage personnel;
(c) to open, maintain and close bank and brokerage accounts,
including the power to draw checks or other orders for the payment of moneys,
and to invest such funds as are temporarily not otherwise required for Company
purposes;
(d) to bring and defend actions and proceedings at law or in
equity or before any governmental, administrative or other regulatory agency,
body or commission;
(e) to hire consultants, custodians, attorneys, accountants and
such other agents, officers and employees of the Company as it may deem
necessary or advisable, and to authorize each such agent and employee to act for
and on behalf of the Company;
(f) to make all elections, investigations, evaluations and
decisions, binding the Company thereby, that may, in the sole judgment of the
Board, be necessary or appropriate to further the business purposes of the
Company;
(g) to enter into, perform and carry out contracts and
agreements of every kind necessary or incidental to the accomplishment of the
Business, and to take or omit to take such other action in connection with the
Business as may be necessary or desirable to further the Business; and
14
(h) to carry on any other activities necessary to, in
connection with, or incidental to any of the foregoing or the Business.
Section 2.5 Registered Office and Agent. The location of the registered
office of the Company shall be 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
The Company's registered agent at such address shall be Corporation Trust
Company. The Board may, from time to time, change the Company's registered
office or registered agent, and shall forthwith amend the Certificate of
Formation to reflect such change.
Section 2.6 Term. The existence of the Company commenced on the date of the
filing of the Certificate of Formation in the Office of the Secretary of State
of the State of Delaware in accordance with the Act and, subject to the
provisions of Article XI below, the Company shall have perpetual existence.
Section 2.7 Principal Place of Business. The principal place of business of
the Company shall be located at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000,
or at such other location as the Board may, from time to time, select.
Section 2.8 Title to Company Property. Legal title to all property of the
Company shall be held, vested and conveyed in the name of the Company and no
real or other property of the Company shall be deemed to be owned by the Members
individually. The Interests of each Member shall constitute personal property.
Section 2.9 Business Transactions of the Members with the Company. In
accordance with Section 18-107 of the Act, each Member may lend money to, borrow
money from, act as a surety, guarantor or endorser for, guarantee or assume one
or more obligations of, provide collateral for, and transact other business
with, the Company and, subject to applicable law, shall have the same rights and
obligations with respect to any such matter as a Person who is not a Member.
Section 2.10 Fiscal Year. The fiscal year and tax year of the Company (the
"Fiscal Year") for financial statement purposes shall end on December 31 of each
year, or such other date as may be determined by the Required Majority from time
to time or otherwise required under applicable law.
15
ARTICLE III
CAPITAL STRUCTURE AND CONTRIBUTIONS
Section 3.1 Capital Structure. The capital structure of the Company shall
consist of one class of ownership interests in the Company (the "Interests").
Except as provided in Article V, all Interests shall have the same relative
rights, powers and duties.
Section 3.2 Initial Capital Contributions. On or prior to the Closing Date,
each Member shall make the following Capital Contributions in consideration for
their respective Interests:
(a) C&D shall contribute cash in the amount of $111,750,000
(the "C&D Initial Contribution"); and
(b) the Xxxxx Member shall contribute cash in the amount of
$116,750,000 (the "Xxxxx Initial Contribution").
Following the Initial Capital Contributions, the Interests of the Members shall
be fully paid and non-assessable, and the ownership of the Interests and the
Equity Interest Percentage for each Member shall be as set forth on Schedule II
annexed hereto. Schedule II shall be amended from time to time to appropriately
reflect any Transfer of Interests in the Company and any additional Capital
Contributions made in exchange for Interests in the Company, whether by new or
existing Members.
Section 3.3 No Mandatory Capital Contributions. No Member shall at any time
be required to make any additional Capital Contribution to the Company except as
provided in Section 3.4. No Member shall at any time be required to make any
payments to cure any deficit or negative balance which may exist from time to
time in such Member's Capital Account (as defined in Section 3.7 below).
Section 3.4 Discretionary Capital Contributions. From time to time, the
Members may determine that additional Capital Contributions are necessary or
appropriate for the conduct of the Company's business and affairs, including
without limitation expansion or diversification, and may request that the
Members make additional Capital Contributions in amounts determined by the Board
and approved by the Members. The Members (or any Person so designated by the
Members) shall agree on all aspects of any such additional Capital Contribution,
such as the amount
16
and nature of the consideration to be contributed to the Company, the Interests
to be received by the contributing Member, the resulting dilution of Equity
Ownership Percentage to be incurred by the other Members, and the extent to
which Members will participate in the allocations and distributions of the
Company as a result thereof.
Section 3.5 Interest on Capital Contributions. No interest shall accrue on
any Capital Contribution and no Member shall have the right to withdraw or be
repaid any Capital Contribution, except as provided in this Agreement. If any
Member withdraws from the Company pursuant to the terms hereof, such Member
shall remain obligated for any unpaid Capital Contributions and shall not be
entitled to a return of its Capital Contribution.
Section 3.6 Return of Capital Contributions. No Member shall have the
right to withdraw any Capital Contributions or to demand and receive property,
including cash, of the Company. Except as may be specifically provided in this
Agreement, no Member shall have the right to any Distribution in respect of its
Capital Contribution.
Section 3.7 Maintenance of Capital Accounts. There shall be established
and maintained throughout the ml1 term of the Company in accordance with
Treasury Regulations Section 1.704-l(b) a capital account ("Capital Account")
for each Member. Each Member shall have only one Capital Account, regardless of
the number or amount of Interests in the Company owned by such Member and
regardless of the time or manner in which such Interests were acquired by such
Member. Pursuant to the rules of section 1.704-l(b)(2)(iv) of the Regulations,
the balance in each Member's Capital Account shall be:
(a) increased by the amount of money contributed by such
Member (or such Member's predecessor in interest) to the capital of the Company
pursuant to this Article III and decreased by the amount of any cash
Distribution to such Member (or such Member's predecessor in interest) pursuant
to Article VII hereof;
(b) increased by the fair market value of each item of
property (determined without regard to section 7701(g) of the Code) contributed
by such Member (or such Member's predecessor in interest) to the capital of the
Company pursuant to this Article III (net of all liabilities secured by such
property that the Company is considered to assume or take subject to, under
section 752 of the Code) and decreased by the fair market value of each item of
property (determined
17
without regard to section 7701(g) of the Code) distributed to such Member (or
such Member's predecessor in interest) by the Company pursuant to Article VII
hereof (net of all liabilities secured by such property that such Member is
considered to assume or take subject to, under section 752 of the Code);
(c) increased by Company Net Profit or items of income or
gain allocated to such Member (or such Member's predecessor in interest)
pursuant to Article VII hereof;
(d) decreased by Company Net Loss or items of loss or
deduction allocated to such Member (or such Member's predecessor in interest)
pursuant to Article VII hereof; and
(e) otherwise adjusted in accordance with the other Capital
Account maintenance rules of section 1.704-1(b)(2)(iv) of the Regulations.
This Section 3.7 and the other provisions of this Agreement relating to the
maintenance of capital accounts are intended to comply with Treasury Regulations
Section 1.704-l(b), and shall be interpreted and applied in a manner consistent
with such Treasury Regulations.
ARTICLE IV
THE MEMBERS
Section 4.1 Members. Following the Initial Capital Contributions set forth
in Section 3.2, the names, addresses and Interests of each Member are as set
forth on Schedule II of this Agreement. New Members shall be admitted only upon
the unanimous vote of all Members. When any additional Member is to be admitted,
this Agreement and Schedule II shall be amended to reflect the terms of such
admission.
Section 4.2 Actions Requiring Unanimous Consent of the Members.
Notwithstanding anything to the contrary herein, without the unanimous consent
of the Members duly obtained pursuant to Section 4.3 hereof, the Company shall
not be permitted to:
(a) admit additional Members;
18
(b) increase or decrease the size of the Board;
(c) amend this Agreement;
(d) engage in any activity not consistent with the
purpose of the Company as set forth in Section 2.3;
(e) except for the transactions contemplated by the
Product Line Purchase Agreement, sell ownership interests in, or substantially
all the assets of, any Subsidiary of the Company; or
(f) appoint or replace the Tax Matters Member pursuant
to Section 8.4.
Section 4.3 Action by the Members. Any action of the Members shall
require the unanimous vote, approval or consent of each of the Members at a
meeting, in person or by proxy, or without a meeting by the written consent of
Members pursuant to subparagraph (b) below.
(a) Member Meetings. Meetings of the Members may be
---------------
called by the Board and shall be held upon at least three (3) Business Days'
prior written notice of the time and place of such meeting given by the Board to
each Member. Notice of any meeting may be waived by any Member before or after
any meeting. Meetings of the Members may be conducted in person or by conference
telephone facilities. For any meetings of the Members, the presence of all
Members, either in person or by proxy, shall constitute a quorum for the
transaction of any business.
(b) Action by Written Consent. Any action required, or
-------------------------
permitted under the Act or this Agreement, to be taken by the Members, and any
action otherwise referred to the Members for their approval by the Board, may be
taken by the Members without a meeting if authorized by the unanimous written
consent of the Members. A copy of the action taken by written consent shall be
filed with the records of the Company.
Section 4.4 No Liability of Members. All debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Member shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Member. The failure of the Company to
observe any formalities
19
or requirements relating to the exercise of its powers or management of its
business or affairs under this Agreement shall not in and of itself be grounds
for imposing personal liability on a Member.
Section 4.5 Power to Bind the Company. No Member (acting in its
capacity as such) shall have the authority to bind the Company or any other
Member to any third party with respect to any matter except pursuant to a
resolution expressly authorizing such action (and authorizing such Member to
bind the Company with respect to such action) which resolution is duly adopted
by the Board by the affirmative vote required for such matter pursuant to this
Agreement.
Section 4.6 Calling Special Meetings for the Enforcement of Corporate
Governance Provisions. In order to effectuate the provisions of this Article IV,
each Member hereby agrees that when any action or vote is required to be taken
by such Member pursuant to this Agreement, such Member shall use its reasonable
best efforts to call, or cause the appropriate officers and Directors of the
Company to call, a special or annual meeting of the Members of the Company, as
the case may be, or execute or cause to be executed a consent in writing in lieu
of any such meeting to effectuate such Member action.
ARTICLE V
THE BOARD OF DIRECTORS
Section 5.1 The Board of Directors. The Members shall establish a
Board of Directors (the "Board"), which shall be responsible for policy-setting,
approving the overall direction of the Company and making decisions affecting
the business and affairs of the Company. Each director shall be a "manager" of
the Company within the meaning of Sections 00.xXx(10) and 18-401 of the Act.
Section 5.2 Size of Board; Appointment of Directors. The Board of the
Company shall consist of six (6) members, three of which shall be designated by
C&D (the "C&D Directors") and three of which shall be designated by the Kelso
Member (the "Xxxxx Directors"). The Chairman of the Board shall be a C&D
Director. The Initial directors shall be those Persons set forth on Schedule III
attached hereto (the "Initial Directors"). The Initial Directors shall serve
until voluntary resignation or retirement, or removal with or without cause by
the Member appointing such Director.
20
Section 5.3 Removal and Replacement of Directors. The directors designated
pursuant to Section 5.2 by C&D and the Xxxxx Member may be changed from time to
time by C&D and the Xxxxx Member, respectively. C&D and the Xxxxx Member shall
each have the exclusive right to remove their respective designees, with or
without cause, and to till any vacancy caused by the removal, resignation, death
or disability of any of their respective designees.
Section 5.4 Duties of the Board. The Board shall manage, or cause to be
managed, the affairs of the Company in a prudent manner and shall devote such
time to Company affairs as shall be necessary for the conduct of such affairs.
Without limiting the generality of the foregoing, the Board's duties shall
include the following:
(a) to render periodic progress reports to the Members;
(b) to oversee the maintenance of complete and accurate
records of all operations of the Company and to maintain accurate books of
account;
(c) to prepare and distribute to the Members financial and
other information regarding the Company;
(d) to prepare and distribute to the Members all necessary
tax reporting information;
(e) to take such actions as may be necessary to maintain the
Company and its Subsidiaries, as appropriate, as limited liability companies in
accordance with the Act;
(f) to make Distributions to the Members pursuant to Article
VII of this Agreement; and
(g) to consider the matters set forth in Sections 5.7 and
5.8.
Section 5.5 Meetings of the Board.
(a) The Board shall meet at such times as determined by the
Board to be necessary for the management of the Company's business. Meetings of
the Board may be called by the Chairman of the Board or any two Directors on at
least two (2) Business Days' prior written notice of the time and place of such
meeting. An equal number of C&D Directors and Xxxxx Directors must be present at
any meeting of the Board in order for a quorum to be established.
21
(b) Notice of any Board meeting may be waived by any Director,
either by attendance or in writing before or after such meeting.
(c) Subject to the provisions of Section 5.8, all actions of
the Board shall require the affirmative vote of a majority of the Directors
voting at any meeting at which a quorum is present. For the avoidance of doubt,
the vote of the Chairman of the Board shall be accorded the same weight as the
vote of the other Directors in all matters voted upon by the Board; nothing
contained in this Agreement shall create a special "tie-breaking vote" or
"supervote" for the Chairman.
(d) Meetings of the Board may be conducted in person or by
conference telephone facilities. Any action required or permitted to be taken at
any meeting of the Board may be taken without a meeting if a majority of the
Managers then in office consent thereto in writing, and the writing or writings
are tiled with the minutes of proceedings of the Board.
Section 5.6 Committees. The Board may designate one or more
committees, each of which will consist of an equal number of C&D Directors and
Xxxxx Directors. The Board may designate one or more Directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of any such committee; provided, that if the member being replaced
--------
is a C&D Director, then his or her replacement shall also be a C&D Director and
if the member being replaced is a Xxxxx Director, then his or her replacement
shall also be a Xxxxx Director. Any committee, to the extent permitted by
applicable law and by this Agreement and provided in the resolution establishing
such committee, shall have and may exercise all the powers and authority of the
Board in the management of the business and affairs of the Company. Each
committee shall keep regular minutes and report to the Board when required.
Section 5.7 Actions Requiring Consideration by Board. Without
limiting the provisions of Section 5.1 hereof, any act or action to be taken or
required to be taken by the Company pursuant to the terms of, or any amendment,
modification, or waiver of, (i) this Agreement, (ii) the Asset Purchase
Agreement, (iii) any other agreement contemplated by this Agreement or the Asset
Purchase Agreement, or (iv) any employee stock, bonus or other incentive plan or
arrangement, shall require approval or action by the Board in accordance with
the provisions of this Article V; provided that the Officers of the Company are
--------
authorized to prepare, execute, deliver and, if necessary, file, at any time and
from time to time, any and all such instruments, deeds, requests, receipts,
notes, applications, reports, certificates,
22
filings and other documents with any foreign, federal, state or regulatory
agencies or authorities and to obtain such consents as they, or any one of them,
shall deem appropriate, necessary or advisable to carry out any action duly
approved by the Board.
Section 5.8 Actions Requiring Approval of Required Majority.
Notwithstanding anything to the contrary herein, without the consent of at least
one C&D Director and one Xxxxx Director (the "Required Majority") present at a
meeting at which a quorum is present, the Company and its Subsidiaries shall not
be permitted to:
(a) amend its certificate of formation or other
organizational documents;
(b) issue, sell, purchase or redeem any Interests,
warrants, options or other securities, including pursuant to Section 3.4 hereof;
(c) declare any dividend or other Distribution;
(d) merge or consolidate with or into any other entity,
whether or not the Company or such Subsidiary survives such merger;
(e) except for (i) sales of inventory in the ordinary
course of business, (ii) the sale of the Arrid Assets and the Lambed-Xxx Assets
pursuant to the Product Line Purchase Agreement, or (iii) as otherwise expressly
contemplated and approved (including with respect to sale price) in the
Company's annual operating plan or budget, sell, assign or transfer in any
single transaction or related series of transactions any assets or properties
whose value is in excess of $5.0 million;
(f) incur or guarantee any new indebtedness in excess of
$5.0 million or refinance any indebtedness incurred at the Closing (it being
understood that ordinary course borrowings under the Senior Credit Facility or
the Senior Subordinated Notes shall not constitute "new" indebtedness for
purposes of this clause (f));
(g) except as expressly contemplated in the Company's
annual operating plan or budget, make any capital expenditure in excess of $1.0
million, individually, or $3.0 million, in the aggregate, in any Fiscal Year;
(h) approve the annual operating plan or budget or any
material modification thereto;
23
(i) make any investment in any entity in excess of $5.0
million;
(j) except as expressly contemplated in the annual
operating plan or budget, close any plant or facility;
(k) renew the Management Services Agreement or the
Manufacturing Agreement (other than the automatic one-year renewals as provided
by the terms thereof);
(1) except as otherwise provided in this Agreement,
enter into any contract or agreement providing for payments to be made or
received by the Company in excess of $5.0 million in any Fiscal Year;
(m) remove or replace or modify the terms of employment
of the Chief Executive Officer, the Chief Financial Officer or any other Officer
with annual base compensation in excess of $250,000 (subject to provisions set
forth in Section 6.3 hereof);
(n) other than as contemplated by the Management
Services Agreement, the Manufacturing Agreement, the C&D Fee Letter, the
Financial Advisory Services Agreement or in connection with the Product Line
Purchase Agreement (including the Arrid Manufacturing Agreement), enter into any
transaction with, or make any payments or distributions to, any Member or any of
its Affiliates which would involve the receipt or expenditure by the Company or
any of its Subsidiaries of more than $1.0 million, in any case or in the
aggregate, in any fiscal year;
(o) commence or settle any suit, action or other
administrative proceeding, except for suits, actions or other proceedings
brought in the ordinary course of business where the amount of potential damages
does not exceed $1.0 million;
(p) file any petition seeking bankruptcy protection or
similar relief; or
(q) select or replace the Company's independent public
accountants (it being agreed that the Company's initial independent public
accountants shall be Deloitte & Touche LLP) or adopt or modify its accounting
principles and practices.
24
Section 5.9 Deadlocks on Certain Items. In the event that, from time
to time, the Board shall be unable to reach agreement on the matters set forth
in Section 5.8(h), the Company will continue to be managed in accordance with
the last duly approved annual operating plan or budget, as adjusted to reflect
an increase of each individual operating expense and capital expenditures of up
to five percent (5%) per year.
Section 5.10 Power to Bind Company. No Director (acting in his or her
capacity as such) shall have any authority to bind the Company with respect to
any matter except pursuant to a resolution expressly authorizing such action
(and authorizing such Director to bind the Company with respect to such action)
which resolution is duly adopted by the Board by the affirmative vote required
for such matter pursuant to this Agreement.
Section 5.11 Liability of Directors. In carrying out their duties, no
Director shall be liable to the Company or to any of the Members for any actions
taken in good faith and reasonably believed to be in the best interests of the
Company, or for errors of judgment, except as otherwise required by applicable
law.
ARTICLE VI
MANAGEMENT OF THE COMPANY
Section 6.1 Management Services Agreement. Substantially concurrently
with the Closing of the Acquisition, the Company shall enter into the Management
Services Agreement and the Manufacturing Agreement with C&D concerning the
performance of certain administrative and management services by C&D for the
Company and its Subsidiaries.
Section 6.2 Officers. (a) The day-to day operations of the Company
shall be managed by its officers, which shall include a Chief Executive Officer,
a Chief Financial Officer and such other officers as may from time to time be
appointed by the Board of Directors (collectively, the "Officers"). Subject to
Section 6.3(c), the Officers shall be dedicated full-time to the management of
the day-to-day operations of the Company (including the general supervision and
control of the Officers, employees and day-to-day business and affairs of the
Company) and shall perform their duties in a manner consistent with the
Management Services Agreement and the approved business plan and budget, with
directions which may be given from time to
25
time by the Board. All such Officers shall serve until voluntary resignation or
retirement, or removal in accordance with the terms hereof. .The Members shall
agree upon the identities and compensation of the initial Officers of the
Company.
(b) Except as set forth in this Article VI, the Officers may
be removed at any time by the affirmative vote of the Board required for such
matter pursuant to this Agreement or the Act, or by the Chief Executive Officer.
Except as set forth in this Article VI, any vacancy in any Officer position may
be filled by the affirmative vote of the Board required for such matter pursuant
to this Agreement or the Act, or by the Chief Executive Officer.
Section 6.3 Chief Executive Officer. (a) The Chief Executive Officer
will have the responsibility for oversight of the Management Services Agreement
and the Manufacturing Agreement, for the general supervision, direction and
control of the Officers, employees, day-to-day business and affairs of the
Company, and for such other duties appropriate to such office and not
inconsistent therewith as may be delegated to him by the Board of Directors of
the Company. Subject to Section 6.3(c), the Chief Executive Officer shall be
dedicated full-time to the operations of the Company.
(b) The Chief Executive Officer may be removed (i) at any time
by the Required Majority of the Board or (ii) by the Kelso Member (x) at any
time after the first anniversary of the Closing Date in the event that the
Consolidated EBITDA of the Company for its first year of operations is at least
twenty-five percent (25%) less than the "Projected Consolidated EBITDA" set
forth in the initial annual budget or business plan approved by the Board for
such period and (y) at any time after the fifteenth month following the Closing
Date, in the event that the Consolidated EBITDA of the Company for the four full
fiscal quarters immediately preceding such removal date is at least twenty-five
percent (25%) less than the aggregate "Projected Consolidated EBITDA" set forth
in the quarterly budgets or business plans approved by the Board for such four
preceding fiscal quarters. Any vacancy in the Chief Executive Officer position
shall be filled by the Required Majority of the Board.
(c) Following the Closing Date, Xxxxxx X. Xxxxxx IIl shall
serve as the interim Chief Executive Officer. Xx. Xxxxxx shall serve in such
capacity until his resignation, retirement or until he is otherwise removed in
accordance with the provisions of Section 6.3(b). The Members acknowledge that
Xx. Xxxxxx also serves as Chairman and Chief Executive Officer of C&D.
26
Section 6.4 Chief Financial Officer. (a) The Chief Financial Officer
will have the responsibility for oversight of the Company's financial reporting
and for such other duties appropriate to such office and not inconsistent
therewith as may be delegated to him by the Board of Directors or the Chief
Executive Officer of the Company. The Chief Financial Officer shall be dedicated
full-time to the operations of the Company.
(b) Any vacancy in the Chief Financial Officer position
shall be filled by the Required Majority of the Board.
ARTICLE VII
ALLOCATIONS AND DISTRIBUTIONS
Section 7.1 Allocation of Profits and Losses. After giving effect to
the special allocations set forth in Section 7.3, Net Profits and Net Losses
and each item of income, gain, loss, deduction and credit thereof of the
Company shall be determined for each Fiscal Year in accordance with the
accounting method used by the Company for federal income tax purposes and shall
be allocated among the Members as follows:
(a) Net Losses shall be allocated among the Members as
follows:
(i) First, to the Members in accordance with their
-----
respective Equity Interests Percentage; provided, however, that to the
-------- -------
extent such allocation would result in any Member having a deficit in
such Member's Adjusted Capita1 Account, allocations of Net Loss shall
be made pursuant to Section 7.l(a)(ii) and (iii) exclusively;
(ii) Second, to the Members having positive Adjusted
------
Capital Account balances in proportion to the relative amounts of such
positive balances until all such balances are reduced to zero; and
(iii) Third, the balance of any Net Losses to all
-----
Members in accordance with their Equity Interests Percentage;
(b) Except as otherwise provided in this Article VII, Net
Profits shall be allocated among the Members as follows:
27
(i) First, to Members having negative Adjusted
-----
Capital Account balances, in proportion to the relative amount each
such deficit Adjusted Capital Account balance bears to the aggregate of
all such deficit balances, until all such deficit balances are
increased to zero;
(ii) Second, to the Members to the extent of the
------
excess, if any, of (i) the amount of Net Losses previously allocated to
each Member pursuant to Section 7.l(a)(ii) over (ii) the amount of Net
Profits previously allocated to each such Member pursuant to this
Section 7.1(b)(ii); and
(iii) Third, to the Members proportionately in
-----
accordance with their respective Equity Interests Percentage.
Section 7.2 Tax Allocations. (a) Items of income, gain, loss,
deduction and credit realized by the Company shall, for each Fiscal Year, be
allocated, for federal, state and local income tax purposes, among the Members,
and in the same manner as Net Profits or Net Losses were allocated pursuant to
Section 7.1, subject, however, to any adjustment required to comply with
Treasury Regulations promulgated under Section 704(b) of the Code, including any
adjustment arising as a result of the special tax allocations set forth in
subsection 7.3 below.
(b) Income, gains, losses and deductions, with respect to
any property contributed to the capital of the Company shall, solely for income
tax purposes, be allocated between the Members so as to take account of any
variation between the adjusted basis of the property to the Company for federal
income tax purposes and its fair market value at the time of the contribution in
accordance with Section 704(c) of the Code and the Treasury Regulations
promulgated thereunder.
Section 7.3 Special Tax Allocations. Notwithstanding any other
provision of this Article VII, the following special allocations shall be made
in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided
-----------------------
in Treasury Regulations Section 1.704-2(f), if there is a net decrease in
company minimum gain (as defined using the definition of "partnership minimum
gain" in Treasury Regulations Sections 1.704-2(b)(2) and (d)) during any Fiscal
Year, each Member shall be specially allocated items of Company income and gain
for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to the portion of such Member's share of the net decrease in company
minimum gain,
28
determined in accordance with Treasury Regulations Sections 1.704-2(f), (g) and
(j). This subsection 7.3(a) is intended to comply with the minimum gain
chargeback requirement in Section 1.704-2(f) of the Treasury Regulations and
shall be interpreted consistently therewith.
(b) Member Nonrecourse Debt Minimum Gain Chargeback. Except
-----------------------------------------------
as otherwise provided in Treasury Regulations Section 1.704-2(i)(4), if there is
a net decrease in Member nonrecourse debt minimum gain attributable to a Member
nonrecourse debt (as defined using the definition of "partner nonrecourse debt"
in Treasury Regulation Section 1.704-2(i)) during any Fiscal Year, any Member
with a share of Company nonrecourse debt minimum gain attributable to such
Member's nonrecourse debt at the beginning of such Fiscal Year shall be
specially allocated items of Company income and gain for such Fiscal Year (and,
if necessary, subsequent Fiscal Years) in the manner and amounts provided for in
the applicable provisions of Treasury Regulation Sections 1.704-2(i) and (j).
This Section 7.3(b) is intended to comply with the minimum gain chargeback
requirement in Section 1.704-2(i)(4) of the Treasury Regulations and shall be
interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Member
-----------------------
unexpectedly receives any adjustments, allocations, or distributions described
in Treasury Regulations Sections 1.704.l(b)(2)(ii)(d)(4), (5) or (6), items of
Company income and gain shall be specially allocated to each such Member, as the
case may be, in an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations under Section 704(b) of the Code, the
deficit of such Member's Adjusted Capital Account as quickly as possible;
provided that an allocation pursuant to this subsection 7.3(c) shall be made
only if and to the extent that such Member would have such capital account
deficit after all other allocations provided for in Sections 7.1 and 7.2 have
been tentatively made as if this subsection 7.3(c) were not in this Agreement.
Section 7.4 Other Allocation Rules. (a) In each Fiscal Year, Net Profits
and Net Losses and each item of income, gain, loss, deduction and credit thereof
shall be allocated as of the last day of such Fiscal Year.
(b) The Members hereby agree to be bound by the provisions
of this Article VII in reporting their respective shares of items of Company
income, gain, loss, deduction and credit.
(c) It is the intention of the Company that the allocations
hereunder comply with the provisions of Section 704(b) of the Code and the
Treasury
29
Regulations so that the allocations made hereunder will be deemed to have
"substantial economic effect" as provided therein. To the extent special
allocations of Net Profit or Net Loss are required to comply with the
requirements thereof, and which are not otherwise provided for herein, such
special allocations shall be made in the manner set forth in the Code and the
Treasury Regulations, as determined in good faith by the Members. To the extent
any such special allocations are made, subsequent allocations of Net Profit and
Net Loss shall be made to offset any economic distortion caused by such special
allocations, as determined by the Members.
(d) If any Member contributes property to the Company with
an initial book value to the Company different from its adjusted basis for
federal income tax purposes to the Company, or if Company property is revalued
pursuant to Section 1.704-l(b)(2)(iv)(f) of the Treasury Regulations or as
otherwise required by the Treasury Regulations, Net Profits and Net Losses will
be computed as if the initial adjusted basis for federal income tax purposes to
the Company of such contributed or revalued property equaled its initial book
value to the Company as of the date of contribution or revaluation. Credits or
debits to Capital Accounts due to a revaluation of Company assets in accordance
with Section 1.704-l(b)(2)(iv)(f) of the Treasury Regulations, or due to a
distribution of noncash assets, will be taken into account as gain or loss from
the disposition of such assets for purposes of computing Net Profit and Net
Loss.
Section 7.5 Distributions. Subject to the provisions of Sections 7.7
and 7.8 of this Agreement, Distributions of available cash may be made as the
Required Majority of the Board shall deem appropriate in immediately available
funds to the Members in accordance with their Equity Interest Percentage or the
provisions of Section 9.4.
Section 7.6 Tax Distributions. Subject to Sections 7.7 and 7.8, to the
extent that a Member is allocated taxable income from the Company as a result of
it being a Member, the Company shall, prior to any Distribution pursuant to
Section 7.5, make Distributions to the Members in amounts and at times to be
determined as set forth in the immediately following sentences. The amount
distributable pursuant to this Section 7.6 shall be the amount, and shall be
distributable at such times, that would be necessary to enable the Company to
discharge its United States federal, state, provincial, foreign and local income
tax liability assuming that the Company and its domestic non-corporate
Subsidiaries were collectively a U.S. corporation subject to Federal, state,
provincial, foreign and local taxes at a combined effective corporate tax rate
of 42%. Such amount shall be distributed to the Members in accordance with their
Equity Interests Percentages.
30
Section 7.7 Restrictions on Distributions. The foregoing provisions of
this Article VII to the contrary notwithstanding, no Distribution under this
Article VIl shall be made if, and for so long as, such Distribution would
violate any contract or agreement to which the Company is a party or any law
(including, without limitation, (S)18-607 of the Act), rule, regulation, order
or directive of any governmental authority then applicable to the Company.
Section 7.8 Withholding. Notwithstanding any other provision of this
Agreement, the Company is authorized to take any action that it reasonably
determines to be necessary or appropriate to cause the Company to comply with
any foreign or United States federal, state or local withholding requirement
with respect to any allocation, payment or Distribution by the Company to any
Member or other Person. All amounts so withheld, and, in the manner determined
by the Company, amounts withheld with respect to any allocation, payment or
distribution by any Person to the Company, shall be treated as Distributions to
the applicable Member under the applicable provisions of this Agreement, as the
case may be. If any such withholding requirement with respect to any Member
exceeds the amount distributable to such Member under applicable provisions of
this Agreement or if any such withholding requirement was not satisfied with
respect to any amount previously allocated, paid or distributed to such Member,
such Member and any successor or assignee with respect to such Member's Interest
hereby indemnifies and agrees to hold harmless the other Member and the Company
for such excess amount or such withholding requirement, as the case may be. Any
amount so withheld by the Company shall be promptly paid by the Company to the
appropriate federal, state or local taxing authority.
Section 7.9 Final Distribution. The final distributions following
dissolution of the Company shall be made in accordance with the provisions of
Section 11.2.
Section 7.10 Allocations and Distributions in Respect of Interests
Transferred. (a) If any Interest in the Company is transferred, or is increased
or decreased by reason of the admission of a new Member or otherwise, during any
Fiscal Year, each item of income, gain, loss, deduction or credit of the Company
for such Fiscal Year shall be assigned to the particular period of such Fiscal
Year to which such item is attributable on the basis of the interim closing of
the books method and the amount of each such item so assigned to any such day
shall be allocated to the Member based upon its respective Interest in the
Company at the close of such day. For the purpose of accounting convenience and
simplicity, the Company may treat a Transfer of, or an increase or decrease in,
an Interest in the Company which occurs at any time during a semi-monthly period
(commencing with the semi-monthly period
31
including the date hereof) as having been consummated on the first day of such
semi-monthly period, regardless of when during such semi-monthly period such
transfer, increase, or decrease actually occurs (i.e., sales and dispositions
-----
made during the first 15 days of any month may be deemed to have been made on
the first day of the month and sales and dispositions thereafter may be deemed
to have been made on the 16th day of the month).
(b) Distributions of Company assets in respect of an
Interest in the Company shall be made only to the Persons who, according to the
books and records of the Company, are the holders of record of the Interests in
respect of which such Distributions are made on the actual date of Distribution.
Neither the Company nor any Member shall incur any liability for making
Distributions in accordance with the provisions of the preceding sentence,
whether or not the Company or the Member has knowledge or notice of any Transfer
or purported Transfer of ownership of any Interest in the Company.
Section 7.11 Determinations by the Members. All matters concerning the
computation of Capital Accounts, the allocation of items of Company income,
gain, loss, deduction and expense for all purposes of this Agreement and the
adoption of any accounting procedures not expressly provided for by the terms of
this Agreement shall be determined by the Required Majority of the Board. Such
determinations shall be final and conclusive as to all Members. Without in any
way limiting the scope of the foregoing, if and to the extent that, for income
tax purposes, any item of income, gain, loss, deduction or expense of any
Member, or the Company, is constructively attributed to, respectively, the
Company or any Member, or any contribution to or Distribution by the Company or
any payment by any Member or the Company is recharacterized, the Members may
specially allocate items of Company income, gain, loss, deduction and expense
and/or make correlative adjustments to the Capital Accounts of the Members in a
manner so that the net amount of income, gain, loss, deduction and expense
realized by each relevant party (after taking into account such special
allocations) and the net Capital Account balances of the Members (after taking
into account such special allocations and adjustments) shall, as nearly as
possible, be equal, respectively, to the amount of income, gain, loss, deduction
and expense that would have been realized by each relevant party and the Capital
Account balances of the Members that would have existed if such attribution
and/or recharacterization and the application of this sentence of this Section
7.11 had not occurred. In the event that the Members shall determine that it is
prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto, are computed in order to effectuate their intended economic
sharing arrangement, then each Member agrees to take such action as they decide
jointly, in good faith, is required to effect such result.
32
ARTICLE VIII
REPORTS, ACCOUNTS AND ACCESS TO INFORMATION
Section 8.1 Access to Information. (a) The Members shall cause to be
maintained complete and accurate books of account of the Company's affairs at
the Company's principal place of business. Such books shall be kept on such
method of accounting as the Required Majority of the Board shall select. The
books and records of the Company and each of its Subsidiaries shall be
reasonably available for inspection and review by representatives and agents of
each of the Members upon request.
(b) Representatives of each of the Members shall have
reasonable access to the plants and properties of the Company and its
Subsidiaries for the purpose of inspecting such plants and properties and the
operations thereon from time to time. In addition, each of the Members shall
have reasonable access to the employees and representatives of the Company.
Section 8.2 Bank Accounts. All funds of the Company will be deposited
in its name in an account or accounts maintained with such bank or banks
selected by the Company. The funds of the Company will not be commingled with
the funds of any other Person. Checks will be drawn upon the Company account or
accounts only for the purposes of the Company and shall be signed by such
authorized officers of the Company as the Board may designate.
Section 8.3 Reports. For each Fiscal Year, at the cost and expense of
the Company, the Company shall furnish each Member a balance sheet and
statements of income and cash flows for such Fiscal Year (all of which shall be
audited by the Company's independent accountants) and will make reasonable
efforts to cause to be delivered to each Member, as promptly as practicable on
or before March 15 of each year, such financial statements for the immediately
preceding Fiscal Year. Such financial statements shall be accompanied by a
narrative discussion and analysis of the results of operations of the Company.
In addition, the Members shall be provided with financial reports prepared
monthly and quarterly in accordance with the customary practice of C&D.
Section 8.4 Federal Tax Matters. C&D shall be the Tax Matters Member,
who shall be considered the tax matters partner for purposes of Section 6231 of
the Code. Appointment of a replacement Tax Matters Member shall require the
unanimous approval of the Members. The Tax Matters Member shall cause to be
prepared and shall sign all tax returns of the Company, make any tax elections
for the Company
33
allowed under the Code or the tax laws of any state or other jurisdiction
having taxing jurisdiction over the Company and monitor any governmental tax
authority in any audit that such authority may conduct of the Company's books
and records or other documents.
Section 8.5 Special Basis Adjustment. The Tax Matters Member shall
not, without the prior written consent of the other Members, such consent not
to be unreasonably withheld, make an election for federal income tax purposes
to adjust the basis of property pursuant to Sections 754, 734(b) and 743(b) of
the Code, or comparable provisions of state, local or foreign law, in
connection with Distributions.
ARTICLE IX
TRANSFERS OF INTERESTS; ADMISSION OF NEW MEMBERS
Section 9.1 Transfers. Except as provided in Section 9.2, no Member
may sell, assign, transfer, pledge or otherwise dispose of or transfer
("Transfer") its Interest without the prior written consent of the other
Members. Transfers of the capital stock of the Xxxxx Blockers by Xxxxx Blockers
Holdings shall be deemed to be a Transfer of an Interest. Any Transfer of an
Interest by any Member not made in compliance with this Section 9.1 shall be
void and of no effect.
Section 9.2 Permitted Transfers. Notwithstanding the provisions of
Section 9.1, (a) C&D shall be permitted to transfer its Interest to any
wholly-owned Subsidiary (after which all references in this Agreement to C&D
shall be deemed to include such transferee); (b) the Xxxxx Member shall be
permitted to transfer its Interest to any Affiliate of Xxxxx (after which all
references in this Agreement to the Xxxxx Member shall be deemed to include
such transferee), and Xxxxx Blockers Holdings shall be permitted to transfer
the capital stock of the Xxxxx Blockers to any Affiliate of Xxxxx (after which
all references in this Agreement to Xxxxx Blockers Holdings shall be deemed to
include such transferee); (c) the Members shall be permitted to cause the
Transfer of Interests in compliance with the Right of First Offer and
Drag-Along provisions set forth in Sections 10.2 and 10.3 below; provided that,
-------- ----
with respect to clauses (a) and (b) of this Section 9.2, any such transferee
shall agree to be bound by the terms of this Agreement.
Section 9.3 Admission of Additional Members. No Person shall have any
right as a Member of the Company unless and until such Person is admitted as a
Member after such approval as is required by, and in compliance with the other
conditions set forth in, this Section 9.3. A new Member may be admitted to the
34
Company only with the consent of the Members in accordance with Section 4.2 and
only if such person shall have executed an appropriate supplement to this
Agreement agreeing to be bound by its terms, as such terms may be modified by
such supplement. Any person so admitted shall have all the rights and
obligations of a Member hereunder effective on and after the date of admission
as a Member of the Company.
Section 9.4 Sales of Subsidiaries or Divisions. From time to time,
the Members may agree to cause the Company to sell any of its Subsidiaries,
assets, product lines or divisions. Notwithstanding anything to the contrary
contained in this Agreement, such sale shall be accomplished at the Xxxxx
Member's sole option by either:
(a) following the distributions contemplated by the next
sentence, a sale (i) by the Xxxxx Blockers Holdings of the capital stock of the
Xxxxx Blocker which tracks and indirectly holds an ownership interest in the
Subsidiary being sold and (ii) by C&D of the remaining capital stock or
membership interests in the Subsidiary being sold, with the aggregate sales
proceeds from clauses (i) and (ii) above allocated between Xxxxx Blockers
Holdings and C&D in a manner consistent with the distributions made to the Xxxxx
Member and C&D pursuant to the following sentence. Immediately prior to the
sales referred to in the previous sentence, the following distributions shall
take place: (1) the capital stock or membership interests in the Subsidiary
being sold shall be distributed to each Member in the following manner: first,
-----
equally between the Xxxxx Member and C&D, until the Adjusted Capital
Contribution Balance of C&D is zero and the Adjusted Capital Contribution
Balance of Xxxxx is $5.0 million; second, to the Xxxxx Member, until the Xxxxx
------
Member's Excess Contribution Balance is zero (any amount received by the Xxxxx
Member pursuant to this clause second or clause second paragraph (b) below and
------ ------
not re-contributed to the Company being referred to herein as the "Excess
Contribution Repayment"); and third, equally between the Xxxxx Member and C&D;
-----
and (2) the Xxxxx Member shall subsequently distribute its share of the capital
stock or membership interest distributed pursuant to clause (1) to the Xxxxx
Blocker which tracks and indirectly holds an ownership interest in the
Subsidiary being sold; or
(b) a sale by the Company of the capital stock or membership
interests in the Subsidiary being sold, or the assets, product lines or
divisions being sold. The proceeds from any such sales shall be distributed as
follows: first, equally between the Xxxxx Member and C&D, until the Adjusted
-----
Capital Contribution Balance of C&D is zero and the Adjusted Capital
Contribution Balance of Xxxxx is $5.0 million; second, to the Xxxxx Member,
------
until the Xxxxx Member's Excess Contribution Balance is zero; and third, the
-----
remaining proceeds shall be divided equally
35
between the Xxxxx Member and C&D.
Notwithstanding the foregoing, any sales by the Company contemplated by the
Product Line Purchase Agreement shall not be subject to this Section 9.4.
ARTICLE X
PREFERENTIAL RIGHTS
OF SALE & PURCHASE
Section 10.1 Call Option. (a) At any time after the third anniversary
of the Closing until and including the fifth anniversary of the Closing (the
"Call Period"), C&D shall have the right (but not the obligation) to purchase
from the Xxxxx Member, and the Xxxxx Member shall have the obligation to sell
to C&D, all (but not less than all) of the Xxxxx Member's Interests in the
Company (such right, the "Call Option") for an aggregate purchase price
determined in accordance with paragraph (c) of this section. If C&D determines
to exercise its Call Option, it shall deliver to the Xxxxx Member a notice of
such determination, which notice shall be binding and shall set forth the
purchase price and other material terms of the proposed sale as C&D may
determine.
(b) At the option of the Xxxxx Member, the purchase of
the Xxxxx Member's Interests pursuant to exercise of the Call Option shall be
structured so that C&D purchases the stock owned by Xxxxx Blockers Holdings of
the Xxxxx Blockers.
(c) The purchase price for the Xxxxx Member's Interests
(regardless of whether or not the structure described in paragraph (b) is
utilized) in connection with the exercise of the Call Option (the "Call
Exercise Price") shall be equal to fifty percent (50%) of the Fair Market Value
of the Company at the time notice of exercise of the Call Option is delivered
(the "Exercise Date"), as determined pursuant to the valuation procedure
described in Section 10.5 hereof; provided, that the Call Exercise Price
--------
payable by C&D shall be subject to the floors and caps set forth on Schedule IV
attached hereto.
(d) Following the exercise of the Call Option, the
Members shall meet, exchange documents and do all things necessary to conclude
the closing of the sale of the Xxxxx Member's Interests to C&D as expeditiously
as possible. The closing with respect to such sale shall occur at the New York
offices of Xxxxxx, Xxxx
36
& Xxxxxxxx LLP at 10:00 a.m. on the thirtieth (30th) day (or if not a Business
Day, on the next Business Day) following the final determination of the
valuation of the Company pursuant to Section 10.5, or as soon thereafter as
possible upon receipt or waiver of all appropriate consents and approvals with
respect to the transaction.
Section 10.2 Sales by C&D: Right of First Offer, Drag Along Rights.
(a) At any time after the seventh anniversary of the Closing, C&D may request by
notice to the Xxxxx Member (such request, the "C&D Purchase Request") that the
Xxxxx Member purchase all (but not less than all) of its Interests in the
Company at a purchase price and other material terms as C&D may determine
specified in the C&D Purchase Request (such price and other material terms, the
"C&D First Offer Price").
(b) Within sixty (60) days of receipt of a C&D Purchase
Request, the Xxxxx Member shall notify C&D that it either (i) agrees to purchase
all of C&D's Interests at the C&D First Offer Price or (ii) does not intend to
accept such offer. The failure to notify C&D within such sixty (60) day period
shall be deemed to be a notice that the Kelso Member does not intend to accept
such offer. If the Xxxxx Member has timely notified C&D that the Xxxxx Member
agrees to purchase all of C&D's Interests at the C&D First Offer Price, the
Members shall meet, exchange documents and do all things necessary to conclude
the closing of the sale of C&D's Interests to the Xxxxx Member as expeditiously
as possible. The closing with respect to such sale shall occur at the New York
offices of Xxxxxx, Xxxx & Xxxxxxxx LLP at 10:00 a.m. on the thirtieth (30th) day
(or if not a Business Day, on the next Business Day) following the receipt by
C&D of the Xxxxx Member's notice of its agreement to purchase all of C&D's
Interests, or as soon thereafter as possible upon receipt or waiver of all
appropriate consents and approvals with respect to the transaction.
(c) If the Xxxxx Member declines the offer set forth in
a C&D Purchase Request, C&D may elect to cause all of the Company (including the
Interests of the Xxxxx Member) to be sold to a third party, provided that the
--------
purchase price paid by such third party must be no lower than an amount equal to
(x) two hundred percent (200%) of the C&D First Offer Price specified in the C&D
Purchase Request plus (y) the Excess Contribution Balance. At the Xxxxx Member's
----
option, any such sale to a third party shall be structured as a sale by Xxxxx
Blockers Holdings of the capital stock in the Xxxxx Blockers (rather than a sale
by the Xxxxx Member of its Interests) and by C&D of its Interests. If such sale
is structured as a sale by the Members of their Interests, the aggregate price
paid by the third party shall be allocated as follows: first, equally between
-----
the Xxxxx Member and C&D in an amount equal to each party's Adjusted Capital
Contribution Balance (less, in the case of the
37
Xxxxx Member, the Excess Contribution Balance); second, to the Xxxxx Member in
------
the amount of the Excess Contribution Balance; and third, the remaining balance
-----
shall be divided equally between the Xxxxx Member and C&D. If such sale is
structured as a sale by Xxxxx Blockers Holdings of the capital stock in the
Xxxxx Blockers and by C&D of its Interests, then the aggregate price paid by the
third party shall be allocated as follows: first, equally between Xxxxx Blockers
-----
Holdings, in an amount equal to the Xxxxx Member's Adjusted Capital Contribution
Balance (less the Excess Contribution Balance) and C&D, in an amount equal to
its Adjusted Capital Contribution Balance; second, to Xxxxx Blockers Holdings in
------
the amount of the Xxxxx Member's Excess Contribution Balance; and third, the
-----
remaining balance shall be divided equally between the Xxxxx Blockers Holdings
and C&D. If C&D elects to sell the Company to a third party pursuant to this
paragraph (c), it shall deliver to the Xxxxx Member a notice of its intention to
cause such a sale at least thirty (30) days before the consummation of any such
sale.
Section 10.3 Sales by Xxxxx: Right of First Offer, Drag-Along Rights. (a)
At any time after the fifth anniversary of the Closing, the Xxxxx Member may
request by notice to C&D (such request, a "Xxxxx Purchase Request") that C&D
purchase all (but not less than all) of its Interests in the Company at a
purchase price and other material terms as the Xxxxx Member may determine
specified in the Xxxxx Purchase Request (such price and other material terms,
the "Xxxxx First Offer Price"). At the Xxxxx Member's option, the purchase shall
be structured so that C&D purchases the stock owned by Xxxxx Blockers Holdings
of the Xxxxx Blockers.
(b) Within sixty (60) days of receipt of a Xxxxx Purchase
Request, C&D shall either notify the Xxxxx Member that it (i) agrees to purchase
all of the Xxxxx Member's Interests (or stock of the Xxxxx Blockers) at the
Xxxxx First Offer Price (which such price shall be no lower than the amount of
the Xxxxx Initial Contribution) or (ii) does not intend to accept such offer.
The failure to notify the Xxxxx Member within such sixty (60) day period shall
be deemed to be a notice that C&D does not intend to accept such offer. If C&D
has timely notified the Xxxxx Member that C&D agrees to purchase all of the
Xxxxx Member's Interests at the Xxxxx First Offer Price, the Members shall meet,
exchange documents and do all things necessary to conclude the closing of the
sale of the Xxxxx Member's Interests to C&D as expeditiously as possible. The
closing with respect to such sale shall occur at the New York offices of Xxxxxx,
Xxxx & Xxxxxxxx LLP at 1O:OO a.m. on the thirtieth (30th) day (or if not a
Business Day, on the next Business Day) following the receipt by the Xxxxx
Member of C&D's notice of its agreement to purchase all of the Xxxxx Member's
Interests, or as soon thereafter as possible upon receipt or waiver of all
appropriate consents and approvals with respect to the transaction.
38
(c) If the Xxxxx Member makes a Xxxxx Purchase Request and
C&D declines the offer set forth therein, the Xxxxx Member may, after a bona
fide sale process has been conducted in good faith, elect to do one of the
following:
(i) cause all of the Company (including the Interests
of C&D) to be sold to a third party at any price, with the purchase price
paid by the third party allocated as follows: first, equally between the
-----
Xxxxx Member and C&D in an amount equal to each party's Adjusted Capital
Contribution Balance (less, in the case of the Xxxxx Member, the Excess
Contribution Balance); second, to the Xxxxx Member in the amount of the
------
Excess Contribution Balance; and third, the remaining balance shall be
-----
divided equally between the Xxxxx Member and C&D; provided that if the
--------
Xxxxx Member's portion of such proceeds does not equal or exceed the Xxxxx
Member's Adjusted Capital Contribution Balance (less the Excess
Contribution Balance), then C&D, at its option, shall be obligated to
either (x) pay the Xxxxx Member, in immediately available funds, the amount
of such shortfall; or (y) purchase all (but not less than all) of the Xxxxx
Member's Interests at a purchase price equal to the Xxxxx Member's Adjusted
Capital Contribution Balance (less the Excess Contribution Balance); or
(ii) sell to C&D, and C&D shall have the obligation to
purchase, all (but not less than all) of the Xxxxx Member's Interests in
the Company for a purchase price equal to the Xxxxx Member's Adjusted
Capital Contribution Balance (less the Excess Contribution Balance).
C&D's obligation to pay the Xxxxx Member (I) in the case of clause (i)(x) above,
the amount of the shortfall, (II) in the case of clause (i)(y) above, the
difference between the Xxxxx Member's Adjusted Capital Contribution Balance
(less the Excess Contribution Balance) and fifty percent (50%) of the third
party purchase price otherwise obtained by the Xxxxx Member for the sale of all
Interests (including those of C&D) of the Company pursuant to the sale process
conducted in accordance with this paragraph (c), and (III) in the case of clause
(ii) above, the purchase price for the Xxxxx Member's Interests, shall only
accrue and be payable (A) following the seventh anniversary of the Closing Date
and (B) after ninety (90) days' prior notice from the Xxxxx Member to C&D of the
date of payment.
(d) At the Xxxxx Member's option, any sale pursuant to
paragraph (c) above shall be structured as a sale by Xxxxx Blockers Holdings of
the stock in the Xxxxx Blockers (rather than a sale by the Xxxxx Member of its
Interests).
39
In such case, the Xxxxx Blockers Holdings may elect to do one of the following:
(i) cause all of the Company (including the Interests of
C&D and the capital stock of the Xxxxx Blockers) to be sold to a
third party at any price, with the purchase price paid by the
third party allocated as follows: first, equally between Xxxxx
-----
Blockers Holdings, in an amount equal to the Xxxxx Member's
Adjusted Capital Contribution Balance (less the Excess
Contribution Balance) and C&D, in an amount equal to its Adjusted
Capital Contribution Balance; second, to Xxxxx Blockers Holdings,
------
in the amount of the Xxxxx Member's Excess Contribution Balance;
and third, the remaining balance shall be divided equally between
-----
the Xxxxx Blockers Holdings and C&D; provided that if Xxxxx
--------
Blockers Holdings' portion of such proceeds does not equal or
exceed the Xxxxx Member's Adjusted Capital Contribution Balance
(less the Excess Contribution Balance), then C&D, at its option,
shall be obligated to either (x) pay Xxxxx Blockers Holdings, in
immediately available funds, the amount of such shortfall; or (y)
purchase all (but not less than all) of the capital stock of the
Xxxxx Blockers from Xxxxx Blockers Holdings at a purchase price
equal to the Xxxxx Member's Adjusted Capital Contribution Balance
(less the Xxxxx Member's Excess Contribution Balance); or
(ii) sell to C&D, and C&D shall have the obligation to
purchase, all (but not less than all) of Xxxxx Blockers
Holdings's capital stock in the Xxxxx Blockers for a purchase
price equal to the Xxxxx Member's Adjusted Capital Contribution
Balance (less the Xxxxx Member's Excess Contribution Balance).
C&D's obligation to pay Xxxxx Blockers Holdings (I) in the case of clause (i)(x)
above, the amount of the shortfall, (II) in the case of clause (i)(y) above, the
difference between the Xxxxx Member's Adjusted Capital Contribution Balance
(less the Xxxxx Member's Excess Contribution Balance) and fifty percent (50%) of
the third party purchase price otherwise obtained by Xxxxx Blockers Holdings for
the sale of all of the Company (including the Interests of C&D and the capital
stock of the Xxxxx Blockers) pursuant to the sale process conducted in
accordance with paragraph (c) of this Section 10.3, and (III) in the case of
clause (ii) above, the purchase price for its capital stock in the Xxxxx
Blockers, shall only accrue and be payable (A) following the seventh anniversary
of the Closing Date and (B) after ninety (90) days' prior notice from Xxxxx
Blockers Holdings to C&D of the date of payment.
40
(e) If the Xxxxx Member or Xxxxx Blockers Holdings elects
to sell the Company to a third party pursuant to paragraph (c) or (d) of this
Section 10.3, the Xxxxx Member or Xxxxx Blockers Holdings, as the case may be,
shall deliver to C&D a notice of its intention to cause such a sale at least
thirty (30) days before the consummation of any such sale. If (I) C&D elects to
purchase the Xxxxx Member's Interests pursuant to clause (i)(y) of paragraph
(c), (II) C&D elects to purchase Xxxxx Blockers Holdings' capital stock of the
Xxxxx Blockers pursuant to clause (i)(y) of paragraph (d), (III) the Xxxxx
Member elects to sell its Interests to C&D pursuant to clause (ii) of paragraph
(c) or (IV) Xxxxx Blockers Holdings elects to sell its capital stock to C&D
pursuant to clause (ii) of paragraph (d), then, in each case, the parties shall
meet, exchange documents and do all things necessary to conclude the closing of
the sale of the Xxxxx Member's Interests or Xxxxx Blockers Holdings' capital
stock to C&D as expeditiously as possible. The closing with respect to such sale
shall occur at the New York offices of Xxxxxx, Xxxx & Xxxxxxxx LLP at 10:00 a.m.
on the thirtieth (30th) day (or if not a Business Day, on the next Business Day)
following the receipt by C&D of such notice, or as soon thereafter as possible
upon receipt or waiver of all appropriate consents and approvals with respect to
the transaction.
Section 10.4 Change of Control Put. (a) If, at any time after the Closing
Date, there occurs a C&D Change of Control, then the Xxxxx Member shall have the
right (but not the obligation) to sell to C&D (or any successor entity thereto),
and C&D (or such successor entity) shall have the obligation to purchase, all
(but not less than all) of the Xxxxx Member's Interests (the "Change of Control
Put"). At the Xxxxx Member's option, the purchase may be structured so that C&D
purchases from Xxxxx Blockers Holdings the stock of the Xxxxx Blockers (rather
than the Interests held by the Xxxxx Member). Subject to the last three
sentences of this paragraph (a), if the Xxxxx Member determines to exercise its
Change of Control Put, it shall deliver to C&D (or its successor) a binding
notice of such determination within 180 days of such C&D Change of Control. The
failure to notify C&D (or its successor) within 180 days of such C&D Change of
Control shall be deemed to be a forfeiture of the right to exercise the Change
of Control Put as a result of such C&D Change of Control. In the event C&D is
contemplating a transaction that would result in a C&D Change of Control, C&D
may request that the Xxxxx Member make a determination with respect to the Xxxxx
Member's intention to exercise its Change of Control Put in advance of execution
of definitive documentation for such transaction. After delivery of such a
request, if C&D provides the Xxxxx Member with all information the Xxxxx Member
reasonably requests in order to make such an advance determination (including
but not limited to the Fair Market Value of the Company determined in accordance
with Section 10.5), the Xxxxx Member shall provide C&D with a binding decision
with respect to the exercise of its Change of Control Put for such proposed
41
transaction. If so requested by C&D, Xxxxx shall make its advance determination
at least fifteen (15) days in advance of the expected execution date of
definitive documentation for the contemplated transaction, as reasonably
estimated by C&D, or by such other date as agreed upon by the parties; provided,
--------
in no event shall Xxxxx be required to make an advance determination on any date
unless such date is at least fifteen (15) days following the date on which the
Kelso Member received from C&D all information requested pursuant to the
previous sentence.
(b) The purchase price for the Xxxxx Member's Interests (or
the capital stock of the Xxxxx Blockers, as the case may be) in connection with
a Change of Control shall be equal to (x) fifty percent (50%) of the amount
obtained by subtracting the Xxxxx Member's Excess Contribution Balance from the
Fair Market Value of the Company at the time notice of exercise of the Change of
Control Put is delivered, as such Fair Market Value is determined pursuant to
the valuation procedure described in Section 10.5 herein plus (y) the Xxxxx
----
Member's Excess Contribution Balance; provided that (i) if the Change of Control
--------
Put is exercised during the Call Period, the purchase price paid in connection
therewith shall be subject to the floors and caps applicable to the Call Option
as set forth on Schedule III; and (ii) if the Change of Control Put is exercised
at any other time, the purchase price paid in connection therewith shall not be
lower than the amount of the Xxxxx Member's Adjusted Capital Contribution
Balance and shall not be subject to any cap.
(c) If the Xxxxx Member timely notifies C&D of its exercise
of its Change of Control Put, the Members shall meet, exchange documents and do
all things necessary to conclude the closing of the sale of the Xxxxx Member's
Interests (or the capital stock of the Xxxxx Blockers) to C&D as expeditiously
as possible. The closing with respect to such sale shall occur at the New York
offices of Xxxxxx, Xxxx & Xxxxxxxx LLP at 10:00 a.m. on the thirtieth (30th) day
(or if not a Business Day, on the next Business Day) following the final
determination of the valuation of the Company pursuant to Section 10.5, or as
soon thereafter as possible upon receipt or waiver of all appropriate consents
and approvals with respect to the transaction.
Section 10.5 Valuation Procedure. At the time of the event giving rise to
the need to determine the Fair Market Value of the Company (i.e., upon notice of
---
exercise of the Call Option or the Change of Control Put), the following
procedure shall be used to determine the Fair Market Value of the Company:
(a) Within ten (10) days of receipt of notice of the
event giving rise to the need to determine Fair Market Value, C&D shall select a
nationally
42
recognized investment banking firm, which shall establish the fair market value
of all of the Interests of the Company by using valuation methods customary in
the investment banking industry (including those set forth below) to determine
the value of an enterprise in a sale to a third party in a process designed to
maximize the value of the Member's Interests. C&D shall deliver the results of
such valuation to the Xxxxx Member within twenty (20) days of such notice.
Within ten (10) days of the Xxxxx Member's receipt of the results of such
valuation, if the Xxxxx Member does not agree with the valuation provided by the
bank selected by C&D, the Xxxxx Member shall select a nationally recognized
investment banking firm to establish the fair market value of all of the
Interests of the Company. The Xxxxx Member shall deliver the results of such
valuation within twenty (20) days of the receipt of the results of the valuation
by C&D's investment banking firm. If, after consideration of the valuation
provided by the second bank, the Xxxxx Member and C&D are still unable to agree
upon an appropriate valuation, then the Xxxxx Member and C&D shall promptly
choose a third independent nationally recognized investment banking firm to
perform a similar valuation. The "Fair Market Value" of the equity of the
Company shall be the average of the two closest valuations by the investment
banks. Costs and expenses incurred by each Member in connection with its
selected investment banking firm providing a valuation shall be paid by such
Member. If a third investment banking firm is chosen, costs and expenses
incurred in connection with such firm providing a valuation shall be shared and
paid equally by the Members.
(b) Any investment bank retained pursuant to this section
to determine the enterprise value for the Company shall utilize the most
appropriate and relevant methods of financial analysis as it, in its discretion,
shall determine. Without limiting the foregoing, any such investment bank shall
consider each of the following valuation methodologies: (i) comparable public
companies analysis (including public trading market multiples for companies in
similar lines of business and size (assuming continuation of the Company in
corporate form)); (ii) selected comparable precedent M&A transactions analysis
(including in such precedent transactions the Acquisition, after giving effect
to changes in the operations and business of the Company, the industry in which
it operates and general market conditions since the Closing Date); (iii)
discounted cash flow analysis; and (iv) any other methodologies deemed
appropriate or relevant by such investment bank (e.g., initial public offering
---
analysis, liquidation analysis, leveraged buyout analysis, sum-of-the-parts
analysis (using varying multiples and tax effects, if applicable)). Any such
valuation shall consider market conditions and shall be based on the assumption
that the Company is an independent enterprise with its own executive management
team and cost structure. Such valuation shall also be based on the assumption
that the stock of the Company is widely distributed with no significant
concentration held by
43
any stockholder and could be freely sold without any negative implication
arising with respect to its management by C&D, as well as such other assumptions
as any such investment bank deems appropriate or relevant.
(c) The Xxxxx Member agrees that in the event of a sale of
the Company in its entirety to a third party, if appropriate in its sole
discretion, it will take into consideration in connection with such sale the
fact that Xxxxx'x Interests in the Company have been held through the Xxxxx
Blockers.
Section 10.6 Noncompetition and Nonsolicitation following Transfers of
Interests. In connection with any Transfer of Interests of any Member pursuant
to this Article X, during the period from the date of the consummation of such
Transfer through the earlier of (x) second anniversary of such date and (y) the
date the non-Transferring Member ceases to own any Interests in the Company, the
Transferring Member shall not, and shall cause its Affiliates not to:
(a) directly or indirectly engage or invest in, own,
manage, operate, finance, control or participate in the ownership, management,
operation, financing or control of, any Person at least twenty percent (20%) of
whose revenues are derived from the sale of pregnancy and ovulation test kits or
at least ten percent (10%) of whose revenues are derived from the sale of
condoms and depilatories; provided, that such Member may, directly or
--------
indirectly, invest in or own up to twenty percent (20%) of the outstanding
shares of any class of securities or other ownership interests of any such
Person so long as such Member does not otherwise participate in the day-to-day
management or operation of such enterprise; and
(b) directly or indirectly, either for itself or for any
other Person (i) solicit, induce or attempt to solicit or induce any Person
known by such Member to be an officer, director, partner, member or employee of
the Company or any of its Subsidiaries, Affiliates, successors or assigns to
terminate his or her employment or other relationship with the Company or such
Subsidiary, Affiliate, successor or assign for the purpose of associating with
(1) such Member or any Person controlled by such Member or (2) any direct
competitor of the Company; or (ii) encourage any Person known by such Member to
be an officer, director, partner, member or employee of the Company or any of
its Subsidiaries, Affiliates, successors or assigns to terminate his or her
employment or other relationship with the Company or such Subsidiary, Affiliate,
successor or assign for any other purpose or no purpose.
44
ARTICLE XI
EVENTS OF DISSOLUTION
Section 11.1 Dissolution. (a) Notwithstanding any other provision of this
Agreement, the Company shall be dissolved and its properties and other assets
liquidated and the proceeds therefrom distributed in the manner and order
provided for in Section 11.2 upon the first to occur of any of the following
events (each, an "Event of Dissolution"):
(i) the vote by all Members in favor of dissolution;
(ii) the failure of the Closing to have occurred by October
31, 200l (or such other date as may have been agreed in the Asset Purchase
Agreement), and the vote by any Member in favor of dissolution;
(iii) the sale, exchange or disposition of all or
substantially all of the assets of the Company;
(iv) the occurrence of an Insolvency Event with respect to
any Member, at the vote of the other Members holding at least fifty percent
(50.0%) of the Interests not owned by the Member which is the subject of
the Insolvency Event;
(v) it becoming unlawful for either Member to comply with
the terms of this Agreement, or it becoming unlawful for the Company to
conduct its business substantially in the manner contemplated by this
Agreement; or
(vi) a judicial dissolution of the Company pursuant to
Section 18-8O, of the Act.
(b) Except as set forth in paragraph (a) above, no other
event, including the retirement, withdrawal, insolvency, liquidation,
dissolution, insanity, resignation, expulsion, death, incapacity or adjudication
of incompetency of a Member, shall cause the dissolution of the Company.
45
Section 11.2 Liquidation. If an Event of Dissolution shall occur, the
Board shall immediately proceed to liquidate the Company and wind up the
Company's affairs. All proceeds from such liquidation shall be distributed as
set forth below, in accordance with the provisions of Section 18-804 of the Act:
(i) First, to creditors, including Members who are
-----
creditors to the extent permitted by law, in satisfaction of the Company's
liabilities, and to establish such reserves as may be reasonably necessary
to provide for contingent liabilities of the Company; and
(ii) Second, to the Members as follows: All proceeds from
------
the liquidation of any Company property or assets shall be distributed pro
rata to the Members in accordance with their positive Capital Account
balances, taking into account all Capital Account adjustments for the
Company's Taxable Year in which the liquidation occurs. Liquidation
proceeds shall be paid within sixty (60) days of the end of the Company's
Taxable Year or, if later, within ninety (90) days after the date of
liquidation.
Section 11.3 Final Accounting. In the event of the dissolution of the
Company, prior to any liquidation, a proper accounting shall be made to the
Members from the date of the last previous accounting to the date of
dissolution.
Section 11.4 Cancellation of Certificate. Upon the completion of the
Distribution of the Company's assets upon dissolution of the Company, the
Company shall be terminated, all Interests shall be cancelled and the Board
shall cause the Company to execute and file a Certificate of Cancellation in
accordance with Section 18-203 of the Act.
Section 11.5 Termination. This Agreement shall terminate upon the
occurrence of any of the following: (i) the Agreement of all of the Members;
(ii) the date of an initial public offering of equity interests in the Company;
(iii) payment to the Members of the proceeds of any sale of the Company to a
third party, or upon the final liquidating distribution made to the Members in
connection with a dissolution of the Company pursuant to Section 11.l; (iv)
payment in full by a Member of the purchase price payable in connection with the
purchase of all of the other Member's ownership interests in the Company
pursuant to Article X.
46
ARTICLE XII
EXCULPATION, INDEMNIFICATION EXPENSES
Section 12.1 Exculpation. Notwithstanding any other provisions of this
Agreement, whether express or implied, or obligation or duty at law or in
equity, none of the Members, or any officers, directors, stockholders, partners,
employees, representatives, consultants or agents of any of the Members, nor any
officer, employee, representative, consultant or agent of the Company or any of
its Affiliates (individually, a "Covered Person" and, collectively, the "Covered
Persons") shall be liable to the Company or any other Person for any act or
omission (relating to the Company and the conduct of its business, this
Agreement, any related document or any transaction contemplated hereby or
thereby) taken or omitted in good faith by a Covered Person and in the
reasonable belief that such act or omission was in or was not contrary to the
best interests of the Company; provided that such act or omission does not
constitute fraud, willful misconduct, bad faith or gross negligence.
Section 12.2 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless each Member, officer, employee,
representative, agent and consultant of the Company and each officer, director,
employee, representative, agent and consultant of any Member (individually, an
"Indemnified Person" and, collectively, the "Indemnified Persons") from and
against any and all losses, claims, demands, liabilities, expenses, judgments,
fines, settlements and other amounts (including reasonable attorneys' fees)
arising from any and all actions, suits or proceedings, whether civil, criminal,
administrative or investigative ("Claims"), in which such Indemnified Person may
be involved, or threatened to be involved, as a party or otherwise, by reason of
its management of the affairs of the Company or which relates to or arises out
of the Company or its property, business or affairs. An Indemnified Person shall
not be entitled to indemnification under this Section 12.2 with respect to any
Claim in which it has engaged in fraud, willful misconduct, bad faith or gross
negligence. Whenever any claim shall arise for indemnification, the Indemnified
Persons shall notify the Company of the claim and, when known, the facts
constituting the basis for such claim and the amount or estimate of the amount
of the liability arising from such claim. Within 45 days of receipt of notice by
the Company of a Claim by the Indemnified Person, the Company shall satisfy such
Claim by the payment of cash to the Indemnified Persons for the full amount of
such Claim. Expenses incurred by an Indemnified Person in investigating or
defending any Claim shall be paid by the Company in advance of the final
disposition of such Claim upon receipt by the Company of an undertaking by or on
behalf of such Indemnified Person to repay such amount if it shall be ultimately
determined that
47
such Indemnified Person is not entitled to be indemnified by the Company as
authorized by this Section 12.2.
Section 12.3 Expenses. Except as otherwise provided in this Agreement, the
Company shall be responsible for paying, and shall pay, all costs and expenses
related to the organization and business of the Company. Upon the Closing, the
Company shall pay all the expenses incurred by the Members in connection with
the Acquisition and the formation of the Company. If the Closing does not occur,
the total expenses of the Members shall be divided and paid equally. Costs and
expenses incurred by the Members in connection with any transaction contemplated
under this Agreement shall be paid by the Member incurring such costs or
expenses.
ARTICLE XIII
COVENANTS OF THE MEMBERS
Section 13.1 Debt Incurrence by C&D. Following the Closing Date, without
the prior consent of the Xxxxx Member, C&D shall not incur any Consolidated Debt
unless (i) at the time of incurrence and after giving effect thereto, C&D's
ratio of Consolidated Debt to Consolidated EBITDA for the last four fiscal
quarters (treating any such indebtedness to be incurred and giving pro forma
effect to any acquisitions and synergies related thereto, if any (in a manner
consistent with Regulation S-X) as if such incurrence or acquisition took place
on the first day of such four-quarter period) is less than 4.5:l.0 or (ii) C&D
provides to the Xxxxx Member a letter of credit or other reasonably satisfactory
credit support from a major money center financial institution in an amount
equal to the amount of the Xxxxx Initial Contribution, less the Excess
Contribution Balance.
Section 13.2 Restriction on Operations of C&D. C&D shall not create or
otherwise cause or permit to exist or become effective any material consensual
restriction on:
(a) the ability of C&D to invest in, own, or provide
management or operational support services (as contemplated by the Management
Services Agreement, the Manufacturing Agreement and other similar arrangements
that may exist in the future) to, the Company or to honor its obligations under
this Agreement (it being understood for purposes of this Section 13.2 that the
restrictions imposed by Senior Credit Facility, the Senior Subordinated Notes
Indenture and the C&D Senior Credit Facility shall be deemed approved by the
Xxxxx Directors); or
48
(b) except with the approval of the Xxxxx Directors, the
ability of the Company to engage or compete in any line of business (it being
understood for purposes of this Section 13.2 that the restrictions imposed by
Senior Credit Facility or the Senior Subordinated Notes Indenture shall be
deemed approved by the Kelso Directors).
Section 13.3 Corporate Opportunity.
(a) If C&D is presented with an opportunity to operate or
invest in any entity operating in the business of manufacturing, marketing or
sale of condoms, depilatory products or pregnancy and ovulation test kits and,
with respect to non-U.S. operations, cosmetics, over-the-counter drugs and
toning and exfoliating products, as conducted by the Company on the date of the
Closing (or any reasonable product line extension thereof), it must first offer
such opportunity to the Company by submitting such opportunity to the Board for
action. The C&D Directors shall not participate in the consideration of such
matter. If the Xxxxx Directors fail to approve the making of such investment by
the Company within ten (10) Business Days of the receipt of such offer, then C&D
shall be free to take any action with respect to such investment as it may, in
its sole discretion, decide.
(b) If KIA VI, KEP VI or the Xxxxx Member is presented with
an opportunity to operate or invest in any entity operating in the business of
manufacturing, marketing or sale of condoms, depilatory products or pregnancy
and ovulation test kits as conducted by the Company on the date of the Closing
(or any reasonable product line extension thereof), it must first offer such
opportunity to the Company by submitting such opportunity to the Board for
action. The Kelso Directors shall not participate in the consideration of such
matter. If the C&D Directors fail to approve the making of such investment by
the Company within 10 Business Days of the receipt of such offer, then KIA VI,
KEP VI and the Xxxxx Member shall be free to take any action with respect to
such investment as each may, in its sole discretion, decide.
Section 13.4 Covenants Relating to the Xxxxx Blockers.
(a) Except as otherwise disclosed, the Kelso Member
represents, warrants, and covenants for the term of this Agreement as to each of
the Xxxxx Blockers as follows (collectively, the "Xxxxx Blocker Covenants"):
49
(i) Each Xxxxx Blocker is and shall be a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and each Xxxxx Blocker is and shall be wholly
owned by Xxxxx Blockers Holdings.
(ii) Each Xxxxx Blocker has been formed for the sole
purpose of holding a portion of KIA VI's and KBP VI's indirect interest in the
Company and has been and shall be operated solely for such purpose, and no Xxxxx
Blocker shall have any other purpose.
(iii) No Xxxxx Blocker has or will have any assets or
liabilities other than those related to its ownership interest in the Xxxxx
Member.
(iv) Each Xxxxx Blocker has duly and timely filed and will
duly and timely file (taking into account any extension of time within which to
tile) all material Tax Returns required to be tiled by it. All Tax Returns tiled
by such Xxxxx Blocker will be consistent with information returns provided by
the Company unless otherwise required by law and are otherwise true, correct and
complete in all material respects.
(v) Each Xxxxx Blocker has paid and will pay all material
Taxes for which it is liable consistent with the information returns provided by
the Company, whether or not such Taxes are shown as due on such tiled Tax
Returns, except with respect to matters contested in good faith and made known
to C&D, and has withheld and remitted and will withhold and remit to the
appropriate Tax Authority, with respect to amounts paid or owing to employees,
creditors, and third parties, all Taxes it is required to have withheld or
withhold.
(vi) No Xxxxx Blocker has waived or will waive without the
consent of C&D any statute of limitations with respect to Taxes or has agreed to
any extension of time with respect to a Tax assessment or deficiency, nor is
there any Tax deficiency outstanding, proposed or assessed against any Xxxxx
Blocker and there will be no such deficiency as of the date of any purchase by
C&D of a Xxxxx Blocker pursuant to Article X hereof, except matters contested in
good faith and made known to C&D.
(vii) Except as disclosed to C&D, as of the date
50
hereof and on the date of any purchase by C&D of a Xxxxx Blocker pursuant
to Article X hereof, there are not pending or, to the knowledge of the
Xxxxx Member, threatened in writing, any audits, examination,
investigations or other proceedings in respect of the Taxes or Tax matters
of the Xxxxx Blockers.
(viii) The unpaid Taxes of the Xxxxx Blockers shall not,
as of the most recent month-end, materially exceed the reserve for Taxes
(rather than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of the
balance sheet for the Xxxxx Blockers made available to C&D, from time to
time, upon its reasonable request.
(ix) Each Xxxxx Blocker is treated as a corporation
for U.S. federal income tax purposes, and no Xxxxx Blocker shall cease to
be treated as a corporation without the prior consent of C&D.
(x) There are and, as of the date of any purchase by
C&D of a Xxxxx Blocker, there will be, no material liens, pledges, charges,
claims, restrictions on transfer, mortgages, security interests or other
encumbrances of any sort (collectively, "Liens") on the assets of any Xxxxx
Blocker relating to or attributable to Taxes, other than Liens for personal
property taxes not yet due and payable as of such time.
(xi) No Xxxxx Blocker is a party to a Tax sharing, Tax
indemnity, Tax allocation or similar contract (whether or not written), nor
does or will any Xxxxx Blocker owe any amount under such agreement.
(xii) No adjustment relating to any Tax Return filed by
any Xxxxx Blocker has been proposed formally or informally by any Tax
Authority to any Xxxxx Blocker which has not been resolved to the
satisfaction of the relevant Tax Authority, except adjustments contested in
good faith and made known to C&D.
(b) If, at the time of any purchase from Xxxxx Blockers
Holdings of the capital stock of the Xxxxx Blockers in connection with any sale
pursuant to Section 9.4 or Article X of this Agreement, there has occurred or
exists a breach of any Xxxxx Blocker Covenant which results in any loss, claim,
demand, liability, expense, tine, settlement or other amount ("Loss") to be
incurred or suffered by C&D, then the purchase price for the capital stock of
the Xxxxx Blockers shall be
51
reduced by the amount of such Loss; provided that in no event shall any
reduction in the purchase price pursuant to this paragraph (b) impact Xxxxx
Blockers Holdings' right to receive any payment pursuant to Section 10,3(d). In
connection with any sale of the capital stock of the Xxxxx Blockers made
pursuant to Section 10.1, any reduction in purchase price pursuant to this
Section 13.4 shall be taken before application of the floors and caps set forth
in such section. The remedies set forth in this clause (b) shall be the sole and
exclusive remedy for any breach of the Xxxxx Blocker Covenants and in no event
shall Xxxxx, Xxxxx Blockers Holdings, the Xxxxx Member or any of their
respective affiliates have any obligation to C&D with respect to any breach of
the Xxxxx Blocker Covenants except as set forth herein. No claim for any breach
of any Xxxxx Blocker Covenant shall survive the sale of the capital stock of the
Xxxxx Blockers.
(c) The Xxxxx Member agrees that any documents effecting the
purchase from Xxxxx Blockers Holdings of the capital stock of the Xxxxx Blockers
in connection with any sale pursuant to Section 9.4 or Article X shall include
representations and warranties as of the date of such documents in substantially
the same form as the Xxxxx Blocker Covenants
Section 13.5 Confidentiality.
(a) The terms of this Agreement, the identity of any Person
with whom the Company may be holding discussions with respect to any provision
of services, investment, acquisition, disposition or other transaction, and all
other business, financial and other information regarding the conduct of the
business and affairs of the Company or the relative or absolute rights or
interests of any of the Members (collectively, the "Confidential Information")
that has not been disclosed pursuant to the authorization of all of the Members
is confidential and proprietary information of the Company, the disclosure of
which would cause irreparable harm to the Company and the Members. Accordingly,
each Member represents that it has not disclosed Confidential Information to any
Person, and each Member agrees that it and its Affiliates will not, and will
direct its shareholders, partners, members, officers, directors, agents and
advisors not to, disclose Confidential Information unless and until the Company
has disclosed such Confidential Information pursuant to authorization by the
Members and has notified each Member that it has done so; provided, however,
-------- -------
that any Member (and its Affiliates) may disclose such Confidential Information
required by law (it being specifically understood and agreed that anything set
forth in a registration statement or any other document tiled pursuant to law
will be deemed required by law) or necessary for it to perform any of its duties
or obligations hereunder.
52
(b) Subject to the provisions of paragraph (a) of this Section 13.5,
each Member agrees not to disclose any Confidential Information to any Person
(other than a Person providing consulting services to such Member who agrees in
writing to maintain all Confidential Information in strict confidence, or a
judge, magistrate, or referee in any action, suit or proceeding relating to or
arising out of this Agreement or otherwise) and to keep confidential all
documents (including, without limitation, responses to discovery requests)
containing any Confidential Information. Each Member hereby agrees not to
contest any motion for any protective order brought by any other Member
represented as being intended by the movant to implement the purposes of this
Section 13.5; provided that, if a Member receives a request to disclose any
--------
Confidential Information under the terms of a valid and effective order issued
by any court or governmental agency and the order was not sought by or on behalf
of or consented to by such Members, then such Member may disclose such
Confidential Information to the extent required if the Member as promptly as
practicable (i) notifies each other Member of the existence, terms and
circumstances of the order, (ii) consults in good faith with the other Members
on the advisability of taking legally available steps to resist or narrow the
order, and (iii) if disclosure of the Confidential Information is required,
exercises its best efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded to the portion of the
disclosed Confidential Information that the other Members may designate. The
cost (including, without limitation, reasonable attorneys' fees and expenses) of
obtaining a protective order covering Confidential Information designated by any
other Member will be borne by the Company.
(c) The covenants in this Section 13.5 shall survive any transfer of
an Interest and the dissolution of the Company.
ARTICLE XIV
MISCELLANEOUS
Section 14.1 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER AND THE PARTIES SUBJECT HERETO SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES OR ANY OTHER
RULE, PRINCIPLE OR LAW THAT WOULD MAKE THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF DELAWARE APPLICABLE HERETO.
53
Section 14.2 Determinations by Armkel. The parties acknowledge the
determination provisions contained in (i) Section 10.2 of the Product Line
Purchase Agreement, (ii) Section 9.2 of the Management Services Agreement, (iii)
Section 9.18 of the Manufacturing Agreement and (iv) Section 9.18 of the Arrid
Manufacturing Agreement. Determinations to be made by the Company (including any
determination to enforce the Company's rights against C&D) under or arising out
of the agreements referred to in (i) through (iv), or any other material
determination involving a conflict between the Company and C&D that is or would
be the subject of Board deliberation, shall be made solely as directed by the
Xxxxx Directors, in each case, acting in good faith on behalf of the Company and
its Members.
Section 14.3 Consent to Jurisdiction, Service of Process; Venue. Each
Member hereby irrevocably and unconditionally (i) consents to the submission to
the exclusive jurisdiction of the courts of the State of Delaware and of the
United States of America located in the State of Delaware, county of Wilmington,
for any action, claim, complaint, investigation, petition, suit or other
proceeding, whether civil or criminal, in law or equity, or by or before any
Governmental Entity (as defined in the Asset Purchase Agreement) ("Actions")
arising out of or relating to this Agreement or the breach, termination or
validity thereof and the transactions contemplated by this Agreement, (ii)
agrees not to commence any Action relating thereto except in such courts and in
accordance with the provisions of this Agreement, (iii) agrees that service of
any process, summons, notice, or document by U.S. registered mail or as
otherwise provided in this Agreement shall be effective service of process for
any Action brought in any such court, (iv) waives any objection to the laying of
venue of any Action arising out of this Agreement or the transactions
contemplated by this Agreement in the courts of the State of Delaware or the
United States of America located in the State of Delaware, and (v) agrees not to
plead or claim in any such court that any such Action brought in any such court
has been brought in an inconvenient forum.
Section 14.4 Headings; Construction. The headings and captions contained
herein are for convenience of reference only and shall not control or affect the
meaning or construction of any of the provisions hereof. All references to
"Article," "Articles" "Section" or "Sections" refer to the corresponding
Article, Articles, Section or Sections of this Agreement unless specifically
noted otherwise.
Section 14.5 No Third Party Beneficiaries. Except as otherwise expressly
provided herein, the covenants, agreements and other provisions contained in
this Agreement are for the sole benefit of the parties hereto and their
permitted successors and assigns, and they shall not be construed as conferring,
and are not intended to
54
confer, any rights, remedies or other benefits hereunder on any other persons.
Section 14.6 Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein, and there are no restrictions, promises,
representations, warranties, covenants or undertakings with respect to the
subject matter hereof, other than those expressly set forth or referred to
herein. This Agreement supersedes all prior commitments, agreements and
understandings, both oral and written, between the parties hereto with respect
to the subject matter hereof, including, without limitation, any term sheets.
Section 14.7 Notices. All notices, requests, instructions and other
communications to be given hereunder by any party hereto to another party hereto
shall be in writing and, unless otherwise provided herein, shall be deemed duly
given if delivered personally, telecopied (which is confirmed) or sent by
registered or certified mail (postage prepaid, return receipt requested) or by a
national overnight courier service to the Company or a Member at the addresses
set forth below:
If to the Company, to:
Armkel, LLC
c/o Church & Xxxxxx Co., Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
Fax: (000) 000-0000
If to Church & Xxxxxx, to:
Church & Xxxxxx Co., Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: General Counsel
Fax: (000)000-0000
55
With copies to:
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Attention: Xxxxxxx X. Xxxxxx
Fax: (000)000-0000
If to the Xxxxx Member, to:
c/o Kelso & Company
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000)000-0000
With copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxx
Attention: Xxxxxx X. Xxxxxx
Fax: (000)000-0000
;provided, that, in the event any of the parties referred to above desires to
-------- ----
designate another address to which such notices should be sent to such party,
such party may designate such other address by giving notice to the other
parties hereto in writing as set forth in this Section 14.7 (provided that any
change of address shall be effective only upon receipt).
Section 14.8 Severability. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
56
Section 14.9 Successors; Assigns; Amendments; Waivers. (a) Except as
otherwise provided herein, the provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns.
(b) This Agreement and the Certificate of Formation may be
amended or modified from time to time upon the approval in writing by each
Member. An amendment shall become effective as of the date specified in the
approval of the Members or if none is specified as of the date of such approval
or as otherwise provided in the Act.
(c) The rights and remedies of the Members and the Company
under this Agreement shall be cumulative and not exclusive of any rights or
remedies which either would otherwise have hereunder or at law or in equity or
by statute, and no failure or delay by either party in exercising any right or
remedy shall impair any such right or remedy or operate as a waiver of such
right or remedy, nor shall any single or partial exercise of any power or right
preclude such party's other or further exercise or the exercise of any other
power or right.
Section 14.10 Defaults; No Circumvention of Agreement. A default by any
party to this Agreement in such party's compliance with any of the conditions or
covenants hereof or performance of any of the obligations of such party
hereunder shall not constitute a default by any other party. No Member may do
indirectly, through the sale of its equity interests or the capital stock or
equity interests of its Subsidiaries or otherwise, that which is not permitted
directly by this Agreement.
Section 14.11 Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all such further acts and things and shall
execute and deliver all such other agreements, certificates, instruments and
documents as any other party hereto may reasonably request in order to carry out
the intent and accomplish the purposes of this Agreement and the consummation
of the transactions contemplated hereby.
Section 14.12 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same Agreement.
57
Section 14.13 Limited Liability Company. The parties to this Agreement
agree to form a limited liability company and do not intend to form a
partnership under the laws of the State of Delaware or any other laws; provided,
--------
however, that, to the extent permitted by U.S. law, the Company will be treated
-------
as a partnership for U.S. federal, state and local income tax purposes.
Section 14.14 Arbitration. The Members shall endeavor to settle all
disputes by amicable negotiations. Except as otherwise provided herein, any
claim, dispute, disagreement or controversy that arises among the Members
relating to this Agreement that is not amicably settled shall be resolved by
arbitration. Any such arbitration shall be heard in The City of New York, New
York, before a panel consisting of three (3) arbitrators, each of whom shall be
impartial. Upon the written Request for Arbitration of any Member to commence
arbitration hereunder, each Member shall choose one (1) arbitrator within
fifteen (15) days of the date of such request. The arbitrators chosen by each
Member shall then mutually choose one (1) additional arbitrator within fifteen
(15) days after both arbitrators have been chosen by the Members. Except as the
Members may otherwise agree, all arbitrators (if not selected by the Members and
arbitrators within a total of thirty (30) days of a written Request for
Arbitration) shall be appointed pursuant to the commercial arbitration rules of
the American Arbitration Association. In determining the appropriate background
of the arbitrators, the appointing authority shall give due consideration to the
issues to be resolved, but his or her decision as to the identity of the
arbitrator(s) shall be final. An arbitration may be commenced by any Member by
the service of a written Request for Arbitration upon the other. Such Request
for Arbitration shall summarize the controversy or claim to be arbitrated. All
attorneys' fees and costs of the arbitration shall in the first instance be
borne by the respective Member incurring such costs and fees but the arbitrators
shall have the discretion to award costs and/or attorney's fees as they deem
appropriate under the circumstances. The Members hereby expressly waive punitive
damages, and under no circumstances shall an award contain any amount that in
any way reflects punitive damages. Judgment on the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. It is
intended that controversies or claims submitted to arbitration under this
Section 14.14 shall remain confidential, and to that end it is agreed by the
Members that neither the facts disclosed in the arbitration, the issues
arbitrated, nor the views or opinions of any Persons concerning them, shall be
disclosed to third Persons at any time, except to the extent necessary to
enforce an award or judgment or as required by law or in response to legal
process or in connection with such arbitration. Any arbitration under this
Section 14.14 shall be conducted pursuant to the commercial arbitration rules of
the American Arbitration Association. All decisions by the panel of arbitrators
shall be final, binding and nonappealable. The Members hereby
58
acknowledge and agree that the provisions of this Section 14.14 shall not be
used to resolve any deadlock of the Board on any matters requiring the approval
of the Required Majority or to resolve any deadlock on any matter requiring the
approval of all of the Members, in each case as provided by this Agreement.
[SIGNATURE PAGE FOLLOWS]
59
IN WITNESS WHEREOF, each Member has duly executed this Agreement as of the
day first above written.
CHURCH & XXXXXX CO., INC.
By:
-----------------------
Name:
Title:
XXXXX PROTECTION VENTURE, LLC
By:
-----------------------
Name:
Title:
60
SCHEDULE I
Ownership Structure of Xxxxx Member
[CHART]
SCHEDULE II
Members
Name & Address Interests Owned Equity Interest Percentage
-------------- --------------- --------------------------
Church & Xxxxxx Co., Inc. 5,000 50%
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Xxxxx Protection Venture, LLC 5,000 50%
c/x Xxxxx & Company, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
SCHEDULE III
Initial Directors
C&D Directors
-------------
Xxxxxx X. Xxxxxx, III
Xxx Xxxxx
Xxxxx Xxxxxx
Xxxxx Directors
---------------
Xxxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxx
SCHEDULE IV
Call Exercise Price
On any exercise date, the Call Exercise Price shall be no less than the
Floor and no greater than the Cap set forth below:
Floor: 1.23/x/ X $111,750,000
-----
Cap: 1.33/x/ X $111,750,000
---
Where
x = the number of years elapsed from the Closing Date,
calculated for actual months elapsed on the basis of a
12-month year
SCHEDULE IV
Call Exercise Price
On any exercise date, the Call Exercise Price shall be no less than the
Floor and no greater than the Cap set forth below:
Floor: 1.23" x $111,750,000
m: 1 . 3 3 " x $111,750,000 where
x = the number of years elapsed from the Closing Date,
calculated for actual months elapsed on the basis of a
12-month year
