Exhibit 10.11
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT OF
MBW INVESTORS LLC
This Amended and Restated Limited Liability Company Agreement of MBW
Investors LLC (the "Company") is made as of December 31, 1996, among Dartford
Partnership L.L.C. and Xxxxx X. Xxxxxx, as initial Members of the Company, and
the Persons who become Members of the Company in accordance with the provisions
hereof and whose names are set forth as Members on Schedule A hereto.
WHEREAS, Dartford Partnership L.L.C. and Xxxxx X. Xxxxxx have
heretofore formed a limited liability company pursuant to the Delaware Limited
Liability Company Act, 6 Del. C. ss.18-101, et seq., as amended from time to
time (the "Delaware Act"), by filing a Certificate of Formation of the Company
with the office of the Secretary of State of the State of Delaware on December
20, 1996, and entering into a Limited Liability Company Agreement of the
Company, dated as of December 20, 1996 (the "Original Limited Liability Company
Agreement"); and
WHEREAS, the Members desire to continue the Company as a limited
liability company under the Delaware Act and to amend and restate the Original
Limited Liability Company Agreement in its entirety.
NOW THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Members, intending to be
legally bound hereby, amend and restate the Original Limited Liability Company
Agreement in its entirety and agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. Unless the context otherwise requires the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified.
"Additional Members" has the meaning set forth in Section 12.1
hereof.
"Additional Units" has the meaning set forth in Section 12.1 hereof.
"Admission Event" means the:
(a) execution of this Agreement or any other writing
evidencing intent to become a Member; and
(b) the making of a Capital Contribution.
"Affiliate" means with respect to a specified Person, any Person
that directly or indirectly controls, is controlled by, or is under common
control with the specified Person. As used in this definition, the term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
"Agreement" means this Amended and Restated Limited Liability
Company Agreement, as amended, modified, supplemented or restated from time to
time.
"Asset Purchase Agreement" means the Asset Purchase Agreement, dated
as of December 18, 1996, by and among Conopco, Inc. and the Operating Company.
"Assignee" means any Person who is an assignee of a Member's
interest in the Company, or part thereof, and who does not become a Member
pursuant to Section 13.3 hereof.
"Available Cash" means all cash (including the net proceeds from
capital transactions and sale of assets not in the ordinary course of business)
held and owned by the Company less any reserve for the working capital and other
foreseeable future needs of the Company, as determined by the Board in its sole
discretion.
"Board" means the Board of Member Managers of the Company, with such
powers and duties as described in Article VI.
"Capital Account" means, for each Member, the sum of Capital
Contributions made by such Member pursuant to Section 4.1 hereof and such
adjustments made pursuant to Section 4.3 hereof.
"Capital Contribution" means, with respect to any Member, the
aggregate amount of money and the value of any property (other than money)
contributed to the Company pursuant to Section 4.1 hereof with respect to the
Units held by such Member. In the case of a Member who acquires an interest in
the Company by virtue of an assignment in accordance with the terms of this
Agreement, "Capital Contribution" has the meaning set forth in Section 4.3(b)
hereof.
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"Cause" means (i) the failure or inability to cure or remedy, within
20 days after written notice from the Board, any willful misconduct in the
course of rendering services for or on behalf of the Company; (ii) the
commission of any fraudulent act in the course of rendering services for or on
behalf of the Company; and (iii) the conviction of a felony by any court having
competent jurisdiction.
"Certificate" means the Certificate of Formation and any and all
amendments thereto and restatements thereof filed on behalf of the Company with
the office of the Secretary of State of the State of Delaware pursuant to the
Delaware Act.
"Chase Borrowings" means indebtedness incurred by the Operating
Company under (i) the Credit Agreement, dated as of the date hereof, by and
among the Operating Company, MBW Holdings, the Lenders (as defined therein), and
The Chase Manhattan Bank, N.A., as Agent for the Lenders and (ii) the Senior
Subordinated Credit Agreement, dated as of the date hereof, between the
Operating Company and The Chase Manhattan Bank, as Agent.
"Class A Holder" means any Person listed on Schedule A hereto as a
holder of Class A Units.
"Class A Units" means the outstanding Class A Units, each of which
shall have the rights, powers and preferences set forth in Section 4.6 hereof.
"Class B Holder" means any Person listed on Schedule A hereto as a
holder of Class B Units.
"Class B Units" means the outstanding Class B Units, each of which
shall have the rights, powers and preferences set forth in Section 4.6 hereof.
"Class C Holder" means any Person listed on Schedule A hereto as a
holder of Class C Units.
"Class C Units" means the outstanding Class C Units, each of which
shall have the rights, powers and preferences set forth in Section 4.6 hereof.
"Class D Holder" means any person listed on Schedule A hereto as a
holder of Class D Units.
"Class D Units" means the outstanding Class D Units, each of which
shall have the rights, powers and preferences set forth in Section 4.6 hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any corresponding federal tax statute enacted after the date of this
Agreement. A reference
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to a specific section (ss.) of the Code refers not only to such specific section
but also to any corresponding provision of any federal tax statute enacted after
the date of this Agreement, as such specific section or corresponding provision
is in effect on the date of application of the provisions of this Agreement
containing such reference.
"Company" means MBW Investors LLC, the limited liability company
heretofore formed and continued under and pursuant to the Delaware Act and this
Agreement.
"Covered Person" means a Member, a Member Manager, an Officer, any
Affiliate of a Member, Member Manager or Officer, any officers, directors,
shareholders, partners, employees, representatives or agents of a Member, a
Member Manager, an Officer or their respective Affiliates, or any employee or
agent of the Company or its Affiliates.
"Dartford" means Dartford Partnership L.L.C., a Delaware limited
liability company.
"Delaware Act" means the Delaware Limited Liability Company Act, 6
Del.C. ss.18-101, et seq., as amended from time to time.
"Depreciation" means, for each Tax Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such Tax Year or other period; provided,
however, that if the Gross Asset Value of an asset differs from its adjusted
basis for federal income tax purposes at the beginning of such Tax Year or other
period, Depreciation shall be an amount that bears the same ratio to such
beginning Gross Asset Value as the federal income tax depreciation, amortization
or other cost recovery deduction with respect to such asset for such Tax Year or
other period bears to such beginning adjusted tax basis; and provided further,
that if the federal income tax depreciation, amortization or other cost recovery
deduction for such Tax Year or other period is zero, Depreciation shall be
determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Member Managers.
"Fair Asset Value" means the amount for which any asset could be
sold in an arm's length transaction by one who desires to sell, but is not under
any urgent requirement to sell, to a buyer who desires to buy, but is under no
urgent necessity to buy, when both have a reasonable knowledge of the facts, all
as determined by the Board. In determining such Fair Asset Value, furniture,
fixtures and equipment shall be valued at cost less depreciation and the
reasonably foreseeable prospects (including all tax liabilities and, in
particular, tax liabilities upon the sale or other disposition of Company
assets) of the business of the Company shall be taken into account. Securities
which are listed on a national securities exchange shall be valued at the
average last sales price during the immediately preceding 15 days on which such
securities are traded on such exchange or, with respect to any of such dates on
which no sales occurred, at the mean between the high "bid" and low "asked"
prices at the close of business on such date.
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"Fiscal Year" means (i) the calendar year or (ii) any portion of the
period described in Clause (i) of this sentence for which the Company is
required to allocate Profits, Losses and other items of Company income, gain,
loss or deduction pursuant to Article VIII hereof.
"Fenway" means Fenway Partners Capital Fund, L.P., a Delaware
limited partnership.
"Gross Asset Value" means, with respect to any asset, such asset's
adjusted basis for federal income tax purposes, except as follows:
(a) the initial Gross Asset Value of any asset contributed by
a Member to the Company shall be the gross fair market value of such
asset, as agreed to by the contributing Member and the Board;
(b) the Gross Asset Value of all Company assets shall be
adjusted to equal their respective Fair Asset Values, as of the
following times: (i) the acquisition of an additional interest in
the Company by any new or existing Member in exchange for more than
a de minimis Capital Contribution; (ii) the distribution by the
Company to a Member of more than a de minimis amount of Company
assets as consideration for an interest in the Company; and (iii)
the liquidation of the Company within the meaning of Treasury
Regulation ss.1.704-1(b)(2)(ii)(g); provided, however, that
adjustments pursuant to Clause (i) and Clause (ii) of this sentence
shall be made only if the Board reasonably determines that such
adjustments are necessary or appropriate to reflect the relative
economic interests of the Members in the Company; and
(c) the Gross Asset Value of any Company asset distributed to
any Member shall be the Fair Asset Value of such asset on the date
of distribution, as determined by the distributee Member and the
Board.
If the Gross Asset Value of an asset has been determined or adjusted
pursuant to Paragraph (a) or Paragraph (b) above, such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.
"Liquidating Trustee" has the meaning set forth in Section 15.3
hereof.
"Majority Vote" means the written approval of, or the affirmative
vote by, Members holding a majority of the Voting Units held by Members.
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"Management Services Agreement" means the Management Services
Agreement, dated as of December 31, 1996, between Dartford and the Operating
Company, as amended, modified, supplemented and restated from time to time.
"MBW Holdings" means MBW Holdings Inc., a Delaware corporation.
"XxXxxx De Leeuw" means, collectively, XxXxxx De Leeuw & Co. III,
L.P., a California limited partnership, XxXxxx De Leeuw & Co. Offshore (Europe)
III, L.P., a Bermuda limited partnership, XxXxxx De Leeuw & Co. III (Asia),
L.P., a Bermuda limited partnership, and Gamma Fund LLC, a California limited
liability company.
"MDC Permitted Transferee" means with respect to XxXxxx De Leeuw,
any partnership with the same controlling general partner as XxXxxx De Leeuw and
any of the partners of XxXxxx De Leeuw which receive Units upon a distribution
to any such partners by XxXxxx De Leeuw.
"Member" means any Person named as a member of the Company on
Schedule A hereto and includes any Person admitted as an Additional Member or a
Substitute Member pursuant to the provisions of this Agreement, and "Members"
means two or more of such Persons when acting in their capacities as members of
the Company. Except as otherwise provided herein, the Members shall constitute
one class or group of members.
"Member Managers" means the Members designated in Section 6.1 hereof
as the member managers of the Company and shall include successors appointed
pursuant to the provisions of this Agreement. A Member Manager shall not be
deemed to be a "manager" within the meaning of the Delaware Act.
"Non-Public Shareholders" of the Public Company means (i) the
Company, if the Public Company is MBW Holdings or the surviving entity of any
merger or consolidation of MBW Holdings and the Operating Company, (ii) the
Members, if the Public Company is the Company or the surviving entity of any
reorganization (including any incorporation of the Company) or any merger or
consolidation of the Company and MBW Holdings (or any successor), or (iii) MBW
Holdings, if the Public Company is the Operating Company and no merger or
consolidation of MBW Holdings and the Operating Company takes place.
"Officers" means officers of the Company appointed by the Board
pursuant to Article VI hereof.
"Outstanding C Units Percentage" means the percentage (with 1.0
equal to 100%) obtained by dividing (x) the number of C Units that are
outstanding as of the time a calculation of the Outstanding C Units Percentage
is required to be made by (y) 1,300.
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"Outstanding D Units Percentage" means the percentage (with 1.0
equal to 100%) obtained by dividing (x) the number of Vested Class D Units
outstanding pursuant to Section 4.6(d) by (y) the aggregate number of
outstanding Class D Units.
"Operating Company" means MBW Foods Inc., a Delaware corporation.
"Permitted Transferees" means the Persons to whom Transfers are
permitted to be made under Section 13.2.
"Person" includes any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company, or other legal entity or organization.
"Profits" and "Losses" means, for each Tax Year, an amount equal to
the Company's taxable income or loss for such Tax Year, determined in accordance
with ss.703(a) of the Code (but including in taxable income or loss, for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to ss.703(a)(1) of the Code), with the following
adjustments:
(a) any income of the Company exempt from federal income tax
and not otherwise taken into account in computing Profits or Losses
pursuant to this definition shall be added to such taxable income or
loss;
(b) any expenditures of the Company described in
ss.705(a)(2)(B) of the Code (or treated as expenditures described in
ss.705(a)(2)(B) of the Code pursuant to Treasury Regulation
ss.1.704-1(b)(2)(iv)(i)) and not otherwise taken into account in
computing Profits or Losses pursuant to this definition shall be
subtracted from such taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset is
adjusted in accordance with Paragraph (b) or Paragraph (c) of the
definition of "Gross Asset Value" above, the amount of such
adjustment shall be taken into account as gain or loss from the
disposition of such asset for purposes of computing Profits or
Losses;
(d) gain or loss resulting from any disposition of any asset
of the Company with respect to which gain or loss is recognized for
federal income tax purposes shall be computed by reference to the
Gross Asset Value of the asset disposed of, notwithstanding that the
adjusted tax basis of such asset differs from its Gross Asset Value;
and
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(e) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such Tax Year or other period, computed in accordance with the
definition of "Depreciation" above.
"Proportionate Percentage" means, (i) with respect to each Member
that elects to exercise its rights under Section 12.2 hereof, a percentage
(expressed as a decimal fraction rounded to the nearest one-hundredth) obtained
by dividing (x) the number of all Voting Units owned by such electing Member by
(y) the aggregate number of Voting Units owned by all Members and (ii) with
respect to Section 14.1 hereof a percentage (expressed as a decimal fraction
rounded to the nearest one-hundredth) obtained by dividing (x) the number of all
Class A Units proposed to be sold by XxXxxx De Leeuw pursuant to the Transfer
giving rise to the Tag-Along Period under Section 14.1 hereof by (y) the
aggregate number of Class A Units and owned by XxXxxx De Leeuw.
"Public Company" means the Operating Company, MBW Holdings, the
Company, or any surviving entity of a reorganization, merger or consolidation of
one or more of such entities, which intends to effect a Public Offering.
"Public Offering" means (i) the sale to the public by the Public
Company for its own account of equity securities issued by such Public Company,
and/or (ii) the sale to the public by the Non-Public Shareholders pursuant to a
Secondary Sale of equity securities issued by the Public Company and held by the
Non-Public Shareholders, in either case pursuant to a registration statement
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
"Secondary Sale" means any sale by one or more Non-Public
Shareholders of equity securities issued by the Public Company and held by such
Non-Public Shareholders (but not originally issued by the Public Company
pursuant to a Public Offering), whether such sale is pursuant to a registered
public offering under the Securities Act of 1933, as amended, an exemption from
the registration requirements thereof, or otherwise.
"Subsidiary" with respect to any company means any corporation more
than 50% of whose stock (measured by virtue of voting rights) in the aggregate
is owned by such company, by one or more Subsidiaries of such company, or by
such company and one or more Subsidiaries of such company. The Subsidiaries of
the Company on the date hereof are MBW Holdings and the Operating Company.
"Substitute Member" means a Person who is admitted to the Company as
a Member pursuant to Section 13.3 hereof, and who is named as a Member on
Schedule A to this Agreement.
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"Tax Liability Distributions" shall have the meaning given such term
in Section 8.2 hereof.
"Tax Matters Member" has the meaning set forth in Section 10.1
hereof.
"Tax Year" means the 12 month period ending on the last Saturday in
December.
"Transaction" has the meaning set forth in Section 6.12 hereof.
"Transaction Documents" means any and all documents, agreements,
certificates or other instruments required to be executed and delivered by or on
behalf of the Company in connection with the Chase Borrowings.
"Transfer" means (i) as a noun, any transaction (or the consummation
of a transaction) which has resulted in a change in the ownership of any Unit,
including without limitation, any voluntary or involuntary sale, assignment,
transfer, pledge, hypothecation, encumbrance, disposal, loan, gift, attachment
or levy of, by or with respect to the Member which owns such Unit which has
resulted in a transfer of the voting rights or the rights to distribution with
respect to such Unit, and (ii) as a verb, to make any transaction described in
(i).
"Treasury Regulations" means the income tax regulations, including
temporary regulations, promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of succeeding
regulations).
"Unit" means any one of the Class A Units, Class B Units, Class C
Units or Class D Units. Each Unit represents a limited liability company
interest in the Company, with the respective rights, powers and preferences as
provided in this Agreement. All issued Units are held by the Members as set
forth on the Schedule A hereto. If Additional Units are issued as provided in
Article XII, the total number of Units outstanding shall be automatically
increased by the number of Additional Units issued. Upon their issuance, all
Units shall be owned by the Members holding such Units.
"Unrecouped Capital Contribution" means as to any Member or Assignee
the amount of such Member's or Assignee's Capital Contribution with respect to
Class A Units held by such Member or Assignee minus the aggregate of all
distributions previously made to such Member or Assignee pursuant to Section
8.3(i) hereof.
"Vested Class D Units" means those Class D Units that have vested in
accordance with Schedule C hereto.
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"Voting Units" means, collectively, the Class A Units and the Class
B Units which shall vote together as a single class.
Section 1.2 Headings. The headings and subheadings in this Agreement
are included for convenience and identification only and are in no way intended
to describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
ARTICLE II
CONTINUATION AND TERM
Section 2.1 Continuation.
(a) The Members hereby agree to continue the Company as a limited
liability company under and pursuant to the provisions of the Delaware Act and
agree that the rights, duties and liabilities of the Members and the Member
Managers shall be as provided in the Delaware Act, except as otherwise provided
herein.
(b) Any Person listed on Schedule A hereto that performs an
Admission Event, and any Person listed on Schedule A hereto whose authorized
representative performs an Admission Event, shall be deemed to have evidenced
its intent to become a Member, to have complied with the conditions for becoming
a Member as set forth in this Agreement, and to have requested that the records
of the Company reflect such admission as a Member, and when the records of the
Company are amended to reflect the admission of such Person as a Member, such
Person shall be admitted to the Company as a Member. By executing this
Agreement, Dartford shall continue as a Member, and Xxxxx X. Xxxxxx shall resign
as a Member and shall receive the return of his capital contribution without
interest or deduction upon the admission of the Persons listed on Schedule A
hereto as members of the Company. Upon the resignation of Xxxxx X. Xxxxxx as a
member of the Company, the Members hereby agree to continue the business of the
Company without dissolution.
(c) The name and mailing address of each Member shall be listed on
the Schedules hereto. The Member Managers shall update any Schedule from time to
time as necessary to accurately reflect the information therein. Any amendment
or revision to a Schedule made in accordance with this Agreement shall not be
deemed an amendment to this Agreement. Any reference in this Agreement to a
Schedule shall be deemed to be a reference to such Schedule as amended and in
effect from time to time.
Section 2.2 Name. The name of the Company heretofore formed and
continued hereby is MBW Investors LLC. The business of the Company may also be
conducted under any other name or names designated by the Board from time to
time.
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Section 2.3 Term. The term of the Company commenced on the date the
Certificate was filed in the office of the Secretary of State of the State of
Delaware and shall continue until December 31, 2021, unless dissolved before
such date in accordance with the provisions of this Agreement. The existence of
the Company as a separate legal entity shall continue until the cancellation of
the Certificate.
Section 2.4 Registered Agent and Office. The Company's registered
agent and office in the State of Delaware shall be The Corporation Trust
Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000. At any time, the Board may designate another registered
agent and/or registered office.
Section 2.5 Principal Place of Business. The principal place of
business of the Company shall be at 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000. Upon 10 days' notice to the Members, the Board may
change the location of the Company's principal place of business.
ARTICLE III
PURPOSE AND POWERS OF THE COMPANY
Section 3.1 Purpose. The purpose of the Company is to acquire, hold
for investment, sell and dispose of the stock and other securities, directly or
indirectly, of any Subsidiary, and to engage in all activities necessary,
advisable or incidental thereto, including without limitation engaging in (or
causing or permitting any of its Subsidiaries to engage in) any of the
transactions identified in Sections 3.2 or 6.12 hereof.
Section 3.2 Powers of the Company.
(a) Subject to the provisions of Section 3.3, the Company shall have
the power and authority to take any and all actions necessary, appropriate,
proper, advisable, incidental or convenient to or for the furtherance of the
purpose set forth in Section 3.1, including, but not limited to, the power:
(i) to conduct its business, carry on its operations and have
and exercise the powers granted to a limited liability company by
the Delaware Act in any state, territory, district or possession of
the United States, or in any foreign country that may be necessary,
convenient or incidental to the accomplishment of the purpose of the
Company;
(ii) to acquire by purchase, lease, contribution of property
or otherwise, own, hold, operate, maintain, finance, improve, lease,
sell, convey,
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mortgage, transfer or dispose of any real or personal property that
may be necessary, convenient or incidental to the accomplishment of
the purpose of the Company;
(iii) to enter into, perform and carry out contracts of any
kind convenient to or incidental to the accomplishment of the
purpose of the Company;
(iv) to lend money for its proper purpose, to invest and
reinvest its funds, to take and hold real and personal property for
the payment of funds so loaned or invested;
(v) to appoint employees and agents of the Company, and define
their duties and fix their compensation;
(vi) to indemnify any Person in accordance with the Delaware
Act;
(vii) to cease its activities and cancel its Certificate;
(viii) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any
other action with respect to any lease, contract or security
agreement in respect of any assets of the Company; and
(ix) to guaranty the obligations of any Person and to secure
any of the same by a mortgage, pledge or other lien on the assets of
the Company.
(b) The Member Managers and Officers, or any of them, are hereby
expressly authorized to enter into and perform on behalf of the Company the
Transaction Documents, but such authorization shall not be deemed a restriction
on the power of the Member Managers to authorize the Officers to enter into
other documents on behalf of the Company to the extent permitted by this
Agreement. The Company, Member Managers and the Officers on behalf of the
Company, are expressly authorized to enter into and perform the Transaction
Documents, and to the extent the Company, Member Managers and the Officers have
previously entered into and performed such agreements such actions are ratified,
without any further act, vote or approval of any Member notwithstanding any
other provision of this Agreement, the Delaware Act or other applicable law.
Further, the Members, in their capacity as Members and, as applicable, Member
Managers, do hereby approve and adopt the resolutions attached hereto as Annex
1.
Section 3.3. Limitations on Actions. Anything in this Agreement to
the contrary notwithstanding, the Company shall not hold any investment, incur
any indebtedness or
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otherwise take any action that would cause any Member of the Company to realize
"unrelated business taxable income" as such term is defined in Section 512 of
the Code.
ARTICLE IV
CAPITAL CONTRIBUTIONS, UNITS,
CAPITAL ACCOUNTS AND ADVANCES
Section 4.1 Capital Contributions.
(a) Each Member has contributed to the capital of the Company the
amount of cash set forth opposite the Member's name on Schedule A hereto, and
the Company has issued to each Member the number of Units set forth opposite the
Member's name on Schedule A hereto; provided, that with respect to the Class D
Holders, the number of Class D Units issued to each Class D Holder and the
respective capital contributions relating thereto shall be maintained on the
books and records of the Company and not set forth on Schedule A hereto.
(b) No Member shall be required to make any additional capital
contribution to the Company.
Section 4.2 Status of Capital Contributions.
(a) Except as otherwise provided in this Agreement, the amount of a
Member's Capital Contributions may be returned to it, in whole or in part, at
any time, but only with the consent of all Members.
(b) No Member shall receive any interest, salary or drawing with
respect to its Capital Contributions or its Capital Account or for services
rendered on behalf of the Company or otherwise in its capacity as a Member,
except as otherwise specifically provided in this Agreement.
(c) Except as otherwise provided herein and by applicable state law,
the Members shall be liable only to make their Capital Contributions pursuant to
Section 4.1 hereof, and no Member or Assignee shall be required to lend any
funds to the Company or, after a Member's Capital Contributions has been fully
paid pursuant to Section 4.1 hereof, to make any additional capital
contributions to the Company. No Member shall have any personal liability for
the repayment of any Capital Contribution of any other Member or Assignee.
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Section 4.3 Capital Accounts.
(a) An individual Capital Account shall be established and
maintained for each Member. The Capital Account of each Member shall be
maintained in accordance with the rules of Section 704(b) of the Code and the
Treasury Regulations (including Section 1.704-1(b)(2)(iv) thereof) thereunder.
Adjustments shall be made to the Capital Accounts for all distributions and
allocations as required by the rules of Section 704(b) of the Code and the
Treasury Regulations thereunder. In general, a Member's Capital Account shall be
increased by (i) the amount of money and the Gross Asset Value of property (net
of liabilities secured by such contributed property that the Company is
considered to assume or to take subject to under Section 752 of the Code)
contributed to the Company by the Member and (ii) allocations to the Member of
Profits and decreased by (i) the amount of money distributed to the Member by
the Company, (ii) the Gross Asset Value of property distributed to the Member by
the Company (net of liabilities secured by such distributed property that such
Member is considered to assume or take subject to under Section 752 of the
Code), and (iii) allocations to the Member of Losses. In the event the Gross
Asset Value of Company assets is adjusted under Article I of this Agreement, the
Capital Accounts of the Members shall be adjusted to reflect the aggregate net
adjustment as if the Company recognized Profits or Losses equal to the amount of
such aggregate net adjustment and such Profits or Losses were allocated to the
Members pursuant to Sections 8.7 and 8.8 of this Agreement. The foregoing
provisions relating to the maintenance of Capital Accounts are intended to
comply with Regulations Sections 1.704-1(b) and 1.704-2 and shall be applied in
a manner consistent with such Regulations.
(b) The original Capital Account established for any Member or
Assignee who acquires an interest in the Company by virtue of a Transfer or an
assignment that does not cause a termination of the Company within the meaning
of Code Section 708(b)(1)(B) and that is in accordance with the terms of this
Agreement shall be in the same amount as, and shall replace, the Capital Account
of the transferor or assignor of such interest, and, for purposes of this
Agreement, such Member or Assignee shall be deemed to have made the Capital
Contributions made by the transferor or assignor of such interest (or made by
such transferor's or assignor's predecessor in interest) and have received the
distributions and been allocated the allocations received by or allocated to the
transferor or assignor of such interest (or received by or allocated to such
transferor's or assignor's predecessor in interest). If the Company has a Code
Section 754 election in effect, the Capital Account will not be adjusted to
reflect any adjustment under Code Section 743. To the extent such Member or
Assignee acquires less than the entire interest in the Company of the transferor
or assignor of the interest so acquired by such Member or Assignee, the original
Capital Account of such Member or Assignee and its Capital Contributions shall
be in proportion to the interest it acquires, and the Capital Account of the
transferor or assignor who retains a partial interest in the Company, and the
amount of its Capital Contributions, shall be reduced in proportion to the
interest it retains. If a Transfer or assignment of an interest in the Company
causes a termination of the Company within the meaning of Code Section
708(b)(1)(B), the income tax consequences of the distribution of the
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property and of the deemed immediate contribution of the property to the new
limited liability company (which for all other purposes continues to be the
Company) shall be governed by the relevant provisions of Subchapter K of Chapter
1 of the Code and the Regulations promulgated thereunder, and the initial
Capital Accounts of the Members and the Assignee in the new limited liability
company shall be determined in accordance with the rules of Treasury Regulations
Section 1.704-1(b)(2)(iv)(d), (e), (f), (g) and (h) under Code Section 704 and
thereafter in accordance with this Section 4.3.
Section 4.4. Negative Capital Accounts. At no time during the term
of the Company or upon dissolution and liquidation thereof shall a Member with a
negative balance in his Capital Account have any obligation to the Company or
the other Members to restore such negative balance.
Section 4.5 Advances. If any Member shall advance any funds to the
Company in excess of its Capital Contributions, the amount of such advance shall
neither increase its Capital Account nor entitle it to any increase in its share
of the distributions of the Company. The amount of any such advance shall be a
debt obligation of the Company to such Member and shall be repaid to it by the
Company with interest at a rate equal to the lesser of (i) such rate as the
Board agrees and (ii) the maximum rate permitted by applicable law, and upon
such other terms and conditions as shall be mutually determined by such Member
and the Board. Any such advance shall be payable and collectible only out of
Company assets, and the other Members shall not be personally obligated to repay
any part thereof. No Person who makes any nonrecourse loan to the Company shall
have or acquire, as a result of making such loan, any direct or indirect
interest in the profits, capital or property of the Company, other than as a
creditor.
Section 4.6 Units.
(a) Distributions. Distributions on Units shall be made in
accordance with Article VIII hereof.
(b) Voting. Except as otherwise provided in this Agreement, (i) the
Members who are Class A Holders shall be entitled to vote on each matter on
which the Members shall be entitled to vote at the rate of one vote for each
Class A Unit held by such Member; (ii) the Members who are Class B Holders shall
be entitled to vote on each matter on which the Members shall be entitled to
vote at the rate of one vote for each Class B Unit held by such Member; (iii)
except as set forth in Section 15.2(b), the Members who are Class C Holders
shall not be entitled to vote their Class C Units on any matter brought before
the Members for a vote; and (iv) the Members who are Class D Holders shall not
be entitled to vote their Class D Units on any matter brought before Members for
a vote.
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(c) Class C Units. The Class C Units shall be subject to repurchase
by the Company in accordance with the provisions set forth on Schedule B hereto.
Any Class C Units that have not been issued or that have been repurchased shall
not be outstanding for purposes of determining the Outstanding C Units
Percentage. Class C Units that are repurchased may not be reissued.
(d) Class D Units. The Class D Units shall be subject to repurchase
by the Company in accordance with the provisions set forth on Schedule C hereto.
Any Class D Units that have not been issued or that have been repurchased shall
not be outstanding for purposes of determining clause (y) of the Outstanding D
Units Percentage. Class D Units that are repurchased may be reissued (subject to
Section 12.1(a) hereof).
ARTICLE V
MEMBERS
Section 5.1 Powers of Members. The Members shall have the power to
exercise any and all rights or powers granted to the Members pursuant to the
express terms of this Agreement. Except as expressly provided in this Agreement,
Members shall have no power as Members to bind the Company.
Section 5.2 Reimbursements. The Company shall reimburse the Members
for all reasonable and necessary out-of-pocket expenses incurred by the Members
on behalf of the Company. The Board's sole determination of which expenses may
be reimbursed to a Member and the amount of such expenses shall be conclusive.
Such reimbursement shall be treated as an expense of the Company that shall be
deducted in computing the Profits and shall not be deemed to constitute a
distributive share of Profits or a distribution or return of capital to any
Member.
Section 5.3 Partition. Each Member waives any and all rights that it
may have to maintain an action for partition of the Company's property.
Section 5.4 Resignations. Other than any resignation by a Member
approved by a Majority Vote of the Members and any resignation described in
Section 13.3, a Member may not resign from the Company.
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ARTICLE VI
BOARD OF MEMBER MANAGERS AND OFFICERS OF THE COMPANY
Section 6.1 Designation of Board of Member Managers. The management
of the Company's business shall be vested, to the extent provided in this
Article VI, in a Board of Member Managers of the Company (the "Board"),
consisting of three Member Managers who in the aggregate hold at least 20% of
the total interests in the Company. Each Member Manager must be a Member. The
Members hereby designate Dartford, Fenway and XxXxxx De Leeuw to serve as the
initial Member Managers on the Board, and such Member Managers hereby accept and
agree to be bound by the terms and conditions of this Agreement. A Member
Manager that is not an individual shall act through any one of its authorized
representatives. Dartford designates Xxx X. Xxxxxx, Xxx Xxxxx and Xxxxx X.
Xxxxxx as its initial authorized representatives. Fenway designates Xxxxx Xxxx
and Xxxxxxx Xxxxxxxx as its initial authorized representatives. XxXxxx De Leeuw
designates Xxxxx Xx Xxxxx, Xxxxxxx Xxxxx and Xxxxx Xxxxxx as its initial
authorized representatives. By written notice to all other Member Managers, a
Member Manager may remove and replace any of its authorized representatives from
such position or designate additional persons as authorized representatives of
such Member Manager.
Section 6.2 Election; Resignation; Removal.
(a) Each Member Manager shall serve from the effective date of its
designation until the effective date of its resignation or removal. In the event
any Member Manager ceases to be a Member Manager of the Company whether by
resignation or removal as provided in this Agreement or otherwise, a successor
Member Manager shall be elected by a Majority Vote. Such successor Member
Manager shall execute an instrument reasonably satisfactory to the Members
accepting and agreeing to the terms and conditions of this Agreement.
(b) A Member Manager may resign from its position as a Member
Manager at any time upon not less than 10 days' prior written notice to all of
the Members.
(c) No initial Member Manager specified in Section 6.1 hereof shall
be removed unless such initial Member Manager or successor Member Manager
consents to such removal; provided, that (i) Fenway shall automatically be
removed as a Member Manager if Fenway and its Permitted Transferees no longer
hold 10% of the outstanding Voting Units or if Fenway breaches its covenant
under Section 16.1(b) hereof, and (ii) Dartford shall automatically be removed
as a Member Manager if the Management Services Agreement has been terminated in
accordance with its terms and Dartford and its Permitted Transferees no longer
hold any Units. Any other Member Manager may be removed for Cause by a Majority
Vote. Any removal of a Member Manager shall become effective on such date as may
be
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specified by the Members voting in favor thereof. Should a Member Manager that
is removed continue to be a Member, such Member shall continue to participate in
the Company as a Member and shall share in the Profits, Losses and Available
Cash in the same ratios, as provided in Article VIII hereof.
Section 6.3 Officers. The Board may appoint agents and employees of
the Company who are designated as officers of the Company. The officers of the
Company shall include a Chairman, one or more Executive Vice Presidents, a
Secretary and such other officers with such titles as may be approved by the
Board. Xxx X. Xxxxxx shall be Chairman until his resignation or removal. Xxxxx
X. Xxxxxx and Xxx Xxxxx shall each be an Executive Vice President until his
resignation or removal. Xxxxxxx Xxxxx and Xxxxx Xxxxxx shall each be a Vice
President until his resignation or removal. M. Xxxxxx Xxxxxxxx shall be a Vice
President and the Secretary until her resignation or removal. Xxxxxx Xxxxxxx and
Xxxxxxxx X. Xxxxxxxx shall each be an Assistant Secretary until his resignation
or removal. The Board may remove any officer so appointed at any time, with or
without Cause, in its absolute discretion. The Chairman and other officers shall
be agents of the Company, authorized to execute and deliver documents and take
other actions on behalf of the Company, subject to the direction of the Board,
and to have such other duties as may be approved by the Board; provided, that
the delegation of any such power and authority to the Chairman and other
officers shall not limit in any respect the power and authority of the Member
Managers to take such actions (or any other action) on behalf of the Company as
provided in this Agreement. The Secretary shall record the actions of the Board,
certify this Agreement and any related document or instrument, certify
resolutions of the Board, incumbency and other matters of the Company, and have
such other ministerial duties as may be specified by the Board from time to
time.
Section 6.4 Board Action. Unless otherwise specified in this
Agreement, the Board shall act by majority vote with each Member Manager on the
Board having the following number of votes: XxXxxx De Leeuw: two; Fenway: one;
and Dartford: one; provided, that (i) so long as XxXxxx De Leeuw holds more than
50% of the then outstanding Voting Units, XxXxxx De Leeuw shall have the right,
by taking such action as would be required under the Delaware General
Corporation Law for a majority shareholder to act without a meeting, to increase
its number of votes to the number of votes that would constitute a majority of
the total votes on the Board. Any authorized representative of any Member
Manager on the Board shall be permitted to cast all of the votes of such Member
Manager.
Section 6.5 Meetings. The Board may hold regular meetings without
call or notice at such places and at such times as the Board may from time to
time determine, provided reasonable notice of the first regular meeting
following any such determination is given to Member Managers absent at the
meeting fixing regular meetings. When called by the Chairman or by Member
Managers holding a majority of votes of the Board, the Board may hold special
meetings at such places and times as are designated in the call of the meeting,
upon at least
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seven days' notice given by the Secretary or an Assistant Secretary, or by the
officer or Member Manager calling the meeting.
Section 6.6 Quorum. At any meeting of the Board, the presence of
three Member Managers by at least one of their authorized representatives shall
constitute a quorum. Any meeting may be adjourned from time to time by a
majority of votes, whether or not a quorum is present, and the meeting may be
held as adjourned upon reasonable notice.
Section 6.7 Action By Consent. Any action of the Board may be taken
without a meeting if (i) the Member Managers holding not less than the minimum
number of votes that would be required to approve and adopt such action at a
meeting consent to the action in writing, signed by an authorized representative
of each such Member Manager, (ii) notice of the actions to be approved by such
Member Managers is given to all Member Managers in advance and copies of the
written consents are so delivered to all Member Managers promptly thereafter,
and (iii) the written consents are filed with the records of the meetings of the
Board. Such actions by consent shall be treated for all purposes as actions
taken at a meeting.
Section 6.8 Telephonic Meetings. Member Managers, through their
respective authorized representatives, may participate in a meeting of the Board
by means of a conference telephone or similar communications equipment provided
all Member Managers participating in the meeting can hear each other at the same
time, and participation by such means shall constitute presence in person at a
meeting.
Section 6.9 Member Managers as Agents. The Member Managers, to the
extent of the powers set forth herein, are agents of the Company for the purpose
of the Company's business, and the actions of the Member Managers taken in
accordance with such powers shall bind the Company.
Section 6.10 Powers of the Board; Powers of Officers.
(a) The Board's powers on behalf and in respect of the Company,
subject to the provisions of this Agreement requiring the approval of the
Members, shall be all powers and privileges permitted to be exercised by members
that manage the Company under the Delaware Act, including, without limitation,
Section 18-402 of the Delaware Act; provided, nothing herein shall supersede,
limit or otherwise invalidate any action, authorization or resolution of the
Members set forth in this Agreement including, but not limited to those referred
to in Section 3.2(b).
(b) The Board may delegate any of its powers to the Officers of the
Company, or any one of them, except to the extent that this Agreement requires
the Board to take an action by voting.
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(c) The Board hereby delegates to the Officers of the Company the
respective powers delegated to officers of a corporation under the Delaware
General Corporation Law, subject to the powers of a board of directors of a
corporation under such Delaware law; provided, that the Board reserves the right
to rescind the delegation of any such powers at any time in the sole discretion
of the Board. Notwithstanding the foregoing, all decisions as to the hiring and
terminating the employment of and the compensation of any officer who reports
directly to the Chairman or Chief Executive Officer of the Company shall be
subject to the approval of the Board.
Section 6.11 Reimbursement. The Company shall reimburse each Member
Manager for all reasonable and necessary out-of-pocket expenses incurred by such
Member Manager on behalf of the Company according to such terms as shall be
approved by the Board. The Board's sole determination of which expenses may be
reimbursed to a Member Manager and the amount of such expenses shall be
conclusive. Such reimbursement shall be treated as an expense of the Company
that shall be deducted in computing Profits and shall not be deemed to
constitute a distributive share of Profits or a distribution or return of
capital to the Member Manager.
Section 6.12 Required Approvals by the Board. Except for
transactions between or among the Company and one or more of its Subsidiaries,
or between or among the Company's Subsidiaries themselves, without the approval
of the Board, the Company shall neither take nor permit any of its Subsidiaries
to take any of the following actions (each event hereinafter described being
hereafter referred to as a "Transaction") without the approval of the Board:
(i) any sale, Transfer, assignment or other disposition by the
Company of any interest in a Subsidiary of the Company, or by any
Subsidiary of the Company of any interest in any other Subsidiary of
the Company;
(ii) any consolidation or merger of the Company with or into
any other Delaware limited liability company or other business
entity (as defined in Section 18-209(a) of the Delaware Act), or any
liquidation, dissolution or winding-up of the Company;
(iii) (A) any consolidation or merger of any Subsidiary of the
Company with or into any business entity (as defined in Section
18-209(a) of the Delaware Act), (B) any sale by any Subsidiary of
the Company of all or substantially all of its assets, or (C) any
liquidation, dissolution or winding-up of any Subsidiary of the
Company;
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(iv) any issuance of any equity securities of any Subsidiary
of the Company, or any securities convertible into shares of
preferred stock or common stock of any Subsidiary of the Company;
(v) any acquisition by the Company or any Subsidiary of the
Company of any stock or assets of another entity or of capital
assets, in a single transaction or a series of related transactions
in any 12-month period, for an aggregate purchase price in excess of
$5,000,000;
(vi) any incurrence by the Company or any Subsidiary of the
Company of funded debt, other than the Chase Borrowings and
refinancings thereof to the extent such refinancings do not increase
the principal amount permitted to be outstanding under the Chase
Borrowings on the date hereof, in excess of $2,500,000;
(vii) any removal of Xx. Xxx X. Xxxxxx as the Chairman of the
Company or any Subsidiary of the Company and the hiring or removal
of any successor Chairman or any Chief Executive Officer, President
or Executive Vice President of the Company or any Subsidiary;
(viii) any election by the Operating Company not to extend, or
the termination by the Operating Company of, the Management Services
Agreement.
(ix) any approval of the annual budget for the Company and its
Subsidiaries; and
(x) any selection of the firm of independent public
accountants that will audit the financial statements of the Company
and its Subsidiaries.
Without the approval of the Board of Directors of the Operating
Company, the Operating Company shall neither take nor permit any of its
Subsidiaries to take the following actions (each a "Transaction"):
(i) any approval of the annual budget for the Operating
Company and its Subsidiaries;
(ii) any making of capital expenditures by the Operating
Company and its Subsidiaries in an aggregate amount for any fiscal
year in excess of $500,000; and
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(iii) the entering into by the Operating Company or any of its
Subsidiaries of any co-packing or like arrangement with annual
payments in excess of $2,500,000.
Section 6.13 Board of Directors of Subsidiaries of the Company.
(a) Each Member Manager agrees to take such action as a Member
Manager as may be necessary to cause MBW Holdings in its capacity as a
stockholder of the Operating Company, to elect the following persons as members
of the Board of Directors of the Operating Company: (A) three persons designated
by XxXxxx De Leeuw, (B) two persons designated by Fenway; provided, that (1) the
number of persons Fenway may designate shall be reduced to one if Fenway and its
Permitted Transferees no longer hold at least 15% of the outstanding Voting
Units and (2) the number of persons Fenway may designate shall be reduced to
zero if Fenway and its Permitted Transferees no longer hold at least 10% of the
outstanding Voting Units or if Fenway breaches its covenant under Section
16.1(b) hereof, (C) three persons designated by Dartford; provided, that the
number of persons Dartford may designate shall be reduced (1) to one upon the
termination of the Management Services Agreement in accordance with its terms,
and (2) to zero if Dartford and its Permitted Transferees no longer hold any
Units, and (D) Xx. Xxxxxx Xxxxxxx so long as he is serving as the President of
the Operating Company. Notwithstanding the foregoing:
(i) so long as XxXxxx De Leeuw holds more than 50% of the then
outstanding Voting Units, XxXxxx De Leeuw shall have the right, by
taking such action as would be required under the Delaware General
Corporation Law (including without limitation Section 228 of the
Delaware General Corporation Law) for a majority shareholder to act
without a meeting, to designate a number of additional persons for
election as members of the Board of Directors of the Operating
Company which, when added to the three persons previously designated
by XxXxxx De Leeuw, would constitute a majority of members of the
Board of Directors of the Operating Company, and
(ii) unless otherwise directed by all of the Member Managers
or as required to comply with clause (B) or clause (C) of Section
6.13(a) or subclause (i) above, the number of directors on the Board
of Directors of the Operating Company shall not be less than nine.
(b) Each Member Manager agrees to take such action as a Member
Manager as may be necessary to cause the Company, in its capacity as a
stockholder of MBW Holdings or any other direct Subsidiary of the Company, or to
cause any Subsidiary of the Company, in
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its capacity as a stockholder of any other Subsidiary of the Company (other than
the Operating Company and its Subsidiaries), to elect the following persons as
members of the Board of Directors of MBW Holdings and any other Subsidiary of
the Company (other than the Operating Company and its Subsidiaries): (A) three
persons designated by XxXxxx De Leeuw, (B) two persons designated by Fenway;
provided, that (1) the number of persons Fenway may designate shall be reduced
to one if Fenway and its Permitted Transferees no longer hold at least 15% of
the outstanding Voting Units and (2) the number of persons Fenway may designate
shall be reduced to zero if Fenway and its Permitted Transferees no longer hold
at least 10% of the outstanding Voting Units or if Fenway breaches its covenant
under Section 16.1(b) hereof, and (C) three persons designated by Dartford;
provided, that the number of persons Dartford may designate shall be reduced (1)
to one upon the termination of the Management Services Agreement in accordance
with its terms, and (2) to zero if Dartford and its Permitted Transferees no
longer hold any Units. Notwithstanding the foregoing:
(i) so long as XxXxxx De Leeuw holds more than 50% of the then
outstanding Voting Units, XxXxxx De Leeuw shall have the right, by
taking such action as would be required under the Delaware General
Corporation Law (including without limitation Section 228 of the
Delaware General Corporation Law) for a majority shareholder to act
without a meeting, to designate a number of additional persons for
election as members of the Board of Directors of MBW Holdings or
such other Subsidiary of the Company which, when added to the three
persons previously designated by XxXxxx De Leeuw, would constitute a
majority of members of such Board of Directors, and
(ii) unless otherwise directed by all of the Member Managers
or as required to comply with clause (B) or clause (C) of Section
6.13(b) or subclause (i), the number of directors on the Board of
Directors of MBW Holdings or such other Subsidiary of the Company
shall not be less than eight.
(c) In the event XxXxxx De Leeuw exercises its rights under this
Section 6.13, the Member Managers agree to take such actions as may be necessary
to cause the election of the additional persons designated by XxXxxx De Leeuw as
directors of MBW Holdings, the Operating Company or such other Subsidiary of the
Company and to amend the By-Laws of such entity in connection therewith.
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ARTICLE VII
AMENDMENTS AND MEETINGS
Section 7.1 Amendments. Except as expressly provided in this
Agreement, any amendment to this Agreement (including the Schedules hereto)
shall be adopted and be effective as an amendment hereto if it is approved by
the affirmative vote of Members holding 96% of the outstanding Voting Units. In
addition to the foregoing requirement:
(i) no amendment of this Section 7.1 or of Article VIII hereof
(or the definitions used therein) shall be effective without the
written approval of Members holding a majority of any class of Units
that would be adversely affected by such proposed amendment;
(ii) no amendment of Section 4.6(b) hereof or this Section
7.1(ii) shall be effective without the written approval of Members
holding a majority of the Class A Units and Class B Units,
respectively;
(iii) no amendment of Section 4.6(c) hereof, Schedule B
hereto, the third sentence of Section 12.1(a) hereof, Section
15.2(b) hereof or this Section 7.1(iii) shall be effective without
the prior written approval of Members holding a majority of the
Class C Units;
(iv) no amendment of Schedule D hereto or this Section 7.1(iv)
shall be effective without the prior written approval of Dartford;
(v) no amendment of Section 6.1 or 6.2 regarding the initial
Member Managers or this Section 7.1(v) shall be made without the
unanimous written consent of such initial Member Managers; and
(vi) no amendment of Section 4.6(d), Schedule C hereto or this
Section 7.1(vi) shall be effective without the prior written
approval of Members holding a majority of the Class D Units.
Notwithstanding the foregoing, the officers of the Company may amend Schedule A
hereto to reflect new Members or Substitute Members duly admitted in accordance
with this Agreement, with such amendment to be effective upon the filing of such
amendment with the books and records of the Company.
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Section 7.2 Meetings of the Members.
(a) Meetings of the Members may be called by the Board and shall be
called by the Board upon the written request of the Chairman or of Members
holding 20% of the outstanding Voting Units. The call shall state the location
of the meeting and the nature of the business to be transacted. Notice of any
such meeting shall be given to all Members not less than 14 days nor more than
50 days prior to the date of such meeting. Members may vote in person or by
proxy at such meeting. Whenever a vote, consent or approval of Members is
permitted or required under this Agreement, such vote, consent or approval may
be given at a meeting of Members or may be given in accordance with the
procedure prescribed in Section 7.2(e) hereof. Except as otherwise expressly
provided in this Agreement, a vote by Members holding a majority of the Voting
Units shall be required to constitute the act of the Members.
(b) For the purpose of determining the Members entitled to vote on,
or to vote at, any meeting of the Members or any adjournment thereof, the Board
or the Members requesting such meeting may fix, in advance, a date as the record
date for any such determination. Such date shall be not more than 50 days nor
less than 14 days before any such meeting.
(c) Each Member may authorize any Person to act for it by proxy on
all matters in which a Member is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. Every proxy must
be signed by the Member or its attorney-in-fact. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the Member
executing it.
(d) Each meeting of Members shall be conducted by the Board or
Members requesting such meeting or by such other Person that the Board or
Members requesting such meeting may designate.
(e) Except as otherwise provided in this Agreement, any action of
the Members may be taken without a meeting if
(i) the Members holding not less than the minimum number of
Voting Units that would be required to approve and adopt such action
at a meeting consent to the action in writing,
(ii) written notice (delivered in person or by facsimile) of
the actions to be approved by such Members is given to all Members,
and
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(iii) the written consents are filed with the records of the
meeting of the Members. Such actions by consent shall be treated for
all purposes as actions taken at a meeting.
ARTICLE VIII
DISTRIBUTIONS AND ALLOCATIONS
Section 8.1 General Distribution Rules. Except as provided in
Section 8.2 hereof, all distributions to Members shall be made at such times and
in such amounts as shall be determined by the Board. For purposes of this
Article VIII, the term "Member" shall include an Assignee of a Member and their
successors and assigns.
Section 8.2 Tax Liability Distributions. The Board shall make cash
distributions on or prior to April 15th of each Year to the Members in amounts
intended to enable the Members (or any Person whose tax liability is determined
by reference to the income of a Member) to discharge their United States
federal, state and local income tax liabilities arising from the allocations
made pursuant to this Article VIII with respect to the Company's operations in
the preceding year (a "Tax Liability Distribution"). The amount of any such Tax
Liability Distribution shall be equal to 50% of the amount of income and gain
allocated to each Member pursuant to this Article VIII; provided, however, if
any distributions are made with respect to the year in which the Tax Liability
Distribution is being determined pursuant to Sections 8.3(ii) through 8.3(v)
hereof, such distributions shall reduce, by the amount of the distribution under
the relevant Section, the amount of the Tax Liability Distribution resulting
from the allocation of income and gain to such corresponding Section.
Section 8.3 Other Distributions. Distributions other than Tax
Liability Distributions, including without limitation distributions of Available
Cash but not including distributions upon liquidation pursuant to Section 8.4
hereof, shall be made to the Members as follows:
(i) First, an amount shall be distributed to the Class A
Holders, which amount, when added to all prior distributions made to
such Members with respect to the Class A Units under this Section
8.3(i), shall be up to the aggregate Capital Contributions of all
Class A Holders at the time such distribution is made. Such
distribution shall be allocated among the Class A Holders in
proportion to their Capital Contributions.
(ii) Next, an amount shall be distributed to the Class B
Holders, which amount, when added to all prior distributions made to
such Members with respect to the Class B Units under Section 8.2 and
this Section 8.3(ii), shall be up to the
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sum of (x) $1,000,000 plus (y) the product of (A) $1,000 multiplied
by (B) the number of Class B Units hereafter issued to the Class B
Holders. Such distribution shall be allocated among the Class B
Holders in accordance with their respective Class B Units.
(iii) Next, an amount shall be distributed to each Class A
Holder and each Class B Holder, which amount, when added to all
prior distributions made to such Member under Section 8.2 with
respect to Class A Units or Class B Units, respectively (other than
those prior distributions already taken into account in clause (ii)
above), and this Section 8.3(iii) shall produce a return of 10%
simple interest per annum on (i) in the case of the Class A Holders,
the Unrecouped Capital Contributions outstanding from time to time
from December 31, 1996 and (ii) in the case of the Class B Holders,
the portion of the amount payable pursuant to Section 8.3(ii) which
remains undistributed from time to time from December 31, 1996.
Distributions to the Class A Holders shall be allocated in
proportion to their respective Class A Units. Distributions to the
Class B Holders shall be allocated in accordance with their
respective Class B Units. To the extent the amount of any proposed
distribution under this Section 8.3(iii) is not sufficient to
provide a full distribution of the amount required to be distributed
to each Class A Holder and Class B Holder by this Section 8.3(iii),
the amount of such distribution shall be allocated between the Class
A Holders as a group and the Class B Holders as a group based on the
respective amounts which each group would have received had the
total distribution been made.
(iv) Next, an amount shall be distributed to the Class C
Holders and the Class D Holders as follows: (A) an amount shall be
distributed to the Class C Holders, which amount, when added to all
prior distributions made to such Members with respect to the Class C
Units under Section 8.2 and this Section 8.3(iv), shall be up to the
Outstanding C Units Percentage multiplied by 16.25% of all prior
distributions made pursuant to Section 8.3(iii) above, with such
distribution to be allocated among the Class C Holders in proportion
to the Class C Units then held by each of them, and (B) an amount
shall be distributed to the Class D Holders holding Vested Class D
Units, which amount, when added to all prior distributions made to
such Members with respect to the Vested Class D Units under Section
8.2 and this Section 8.3(iv), shall be up to the Outstanding D Units
Percentage multiplied by 8.75% of all prior distributions made
pursuant to Section 8.3(iii) above, with such distribution to be
allocated among the Class D Holders in proportion to the Vested
Class D Units then held by each of them.
(v) Next, any balance shall be distributed to the Class A
Holders, the Class B Holders, the Class C Holders and the Class D
Holders as follows:
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(A) 80% of such balance shall be distributed to the Class A Holders
and the Class B Holders, with such distribution to be allocated
among the Class A Holders and Class B Holders in accordance with
their respective holdings of Class A Units and Class B Units as if
the Class A Units and Class B Units were Units of a single class;
(B) 13% of such balance (such amount the "13% Balance") shall be
distributed among the Class C Holders and the Class A and Class B
Holders as follows: (x) an amount equal to the Outstanding C Units
Percentage multiplied by the 13% Balance shall be distributed to the
Class C Holders to be allocated among the Class C Holders in
proportion to the Class C Units then held by each of them and (y)
the portion, if any, of the 13% Balance remaining on hand after the
distribution described in subclause 8.3(v)(B)(x) above shall be
distributed to the Class A and Class B Holders as a group to be
allocated among such Class A and Class B Holders in proportion to
which their respective holdings of Class A Units and Class B Units
as if the Class A Units and Class B Units were Units of a single
class; and (C) 7% of such balance (such amount the "7% Balance")
shall be distributed among the Company on account of the Class D
Units and the Class A, Class B and Class C Holders as follows: (x)
an amount equal to the Outstanding D Units Percentage multiplied by
the 7% Balance shall be distributed to the Class D Holders holding
Vested Class D Units to be allocated among such Class D Holders in
proportion to the Vested Class D Units then held by each of them and
(y) the portion, if any, of the 7% Balance remaining on hand after
the distribution described in subclause 8.3(v)(C)(x) above shall be
distributed to the Class A Holders, the Class B Holders and the
Class C Holders to be allocated among such Holders in proportion to
the aggregate amounts distributed to each of them pursuant to
Sections 8.3(v)(A) and (B) hereof.
Notwithstanding the foregoing, in the event that distributions have been made
under Sections 8.3(i)-(iv) above and are then eligible to be made under Section
8.3(v), and the Outstanding D Units Percentage is increased from the percentage
in effect at the time distributions were previously made under Section 8.3(iv)
above, additional distributions shall be made under Section 8.3(iv) above to
those Class D Holders holding Vested Class D Units to the extent their holdings
of such Units increased the Outstanding D Units Percentage, respectively, before
any further distributions under Section 8.3(v) are made.
Section 8.4 Distribution of Proceeds Upon Liquidation. Upon
liquidation of the Company, any distributions shall be made in accordance with
the terms and conditions of Article XV hereof and shall be made by the end of
the taxable year in which the liquidation occurs, or, if later, within ninety
(90) days after the liquidation.
Section 8.5 Tax Withholding. All amounts withheld pursuant to the
Code or any provision of any state or local tax law with respect to any payment,
distribution or allocation to the Company or the Members shall be treated as
amounts distributed to the Members pursuant
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to this Article VIII for all purposes of this Agreement. The Board is authorized
to withhold from distributions, or with respect to allocations, to the Members
and to pay over to any federal, state or local government any amounts required
to be so withheld pursuant to the Code or any provision of any other federal,
state or local law and shall allocate such amounts to those Members or with
respect to which such amounts were withheld.
Section 8.6 Limitations on Distribution. Notwithstanding any
provision to the contrary contained in this Agreement, the Company shall not
make a distribution to any Member on account of its interest in the Company if
such distribution would violate Section 18-607 of the Delaware Act or other
applicable law.
Section 8.7 Allocation of Profits. Profits of the Company for any
Tax Year shall be allocated in the following order and priority:
(i) First, among the Members in accordance with and in an
amount equal to the cumulative Losses allocated among the Members
pursuant to Section 8.8(ii) hereof for all prior periods and not
previously taken into account under this clause.
(ii) Next, among the Members in accordance with and in an
amount equal to the cumulative Losses allocated among the Members
pursuant to Section 8.8(i) hereof for all prior periods and not
previously taken into account under this clause.
(iii) Next, among the Class B Holders in proportion to, and in
an amount equal to the excess, if any, of (A) the cumulative cash
distributions under Section 8.3(ii) that have previously been made
to the Class B Holders and that each Class B Holder would have
received under such Section for the then current Tax Year of the
Company had an amount of cash at least equal to such Profits been
available for such distribution under such Section over (B) the
cumulative allocations previously made to the Class B Holders
pursuant to this Section 8.7(iii).
(iv) Next, among the Class A Holders and the Class B Holders
in proportion to and in an amount equal to the excess, if any, of
(A) the cumulative cash distributions under Section 8.3(iii) hereof
that have previously been made to the Class A Holders and Class B
Holders and that each Class A Holder and Class B Holder would have
received under Section 8.3(iii) hereof for the then current Tax Year
had an amount of cash at least equal to such Profits been available
for such distribution under such Section over (B) the cumulative
allocations previously made to the Class A Holders and Class B
Holders pursuant to this Section 8.7(iv).
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(v) Next, among the Class C Holders and Class D Holders
holding Vested Class D Units in proportion to, and in an amount
equal to the excess, if any, of (A) the cumulative cash
distributions under Section 8.3(iv) that have previously been made
to the Class C Holders and such Class D Holders and that each Class
C Holder and each such Class D Holder would have received under
Section 8.3(iv) hereof for the current Tax Year of the Company had
an amount of cash at least equal to such Profits been available for
distribution under such Section over (B) the cumulative allocations
previously made to the Class C Holders and such Class D Holders
pursuant to this Section 8.7(v).
(vi) Next, among the Members in proportion to and in an amount
equal to the excess, if any, of (A) the cumulative cash
distributions under Section 8.3(v) hereof that have previously been
made to such Members and that such Member would have received under
Section 8.3(v) hereof for the then current Tax Year had an amount of
cash at least equal to such Profits been available for such
distribution under such Section over (B) the cumulative allocations
previously made to the Members pursuant to this Section 8.7(vi).
For purposes of determining Profits allocations under this Section 8.7, amounts
actually distributed under the relevant paragraph of Section 8.3 shall be
increased by the amount of the reduction under such paragraph that was made to
reflect the Section 8.2 distribution referred to therein.
Section 8.8 Allocation of Losses. Losses of the Company for any Tax
Year shall be allocated in the following order and priority:
(i) First, to offset any Profits previously allocated under
Section 8.7 in the inverse order and priority in which such Profits
were allocated; and
(ii) Next, in the following order (a) to the Class A Holders
to the extent of their Capital Contributions and (b) to the Class A
Holders and the Class B Holders in accordance with their respective
pro rata portion of Class A Units and Class B Units taken together
for this purpose as a single class of Units.
Section 8.9. Special Allocations. The following special allocations
shall be made in the following order:
(i) Qualified Income Offset. Notwithstanding the foregoing, in
the event that any Member receives any adjustments, allocations or
distributions described in Sections 1.704-1(b)(2)(ii)(d)(4), (5) or
(6) of the Treasury Regulations, items of Company income and gain
(including gross income) shall be specially allocated to each such
Member in a manner and amount sufficient to
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eliminate, to the extent required by such Regulations, the negative
balance in the Capital Account of the Member described in Section
1.704-1(b)(2)(ii)(d)(3) of the Treasury Regulations as quickly as
possible.
(ii) Gross Income Allocation. In the event any Member has a
deficit Capital Account at the end of any Tax Year, each such Member
shall be specially allocated items of Company income and gain in the
amount of such deficit Capital Account as quickly as possible,
provided that an allocation pursuant to this Section 8.9(ii) shall
be made only if and to the extent that such Member would have a
deficit Capital Account in excess of such sum after all other
allocations provided for in this Article 8 have been made as if
Section 8.9(i) and (ii) were not in this Agreement.
Section 8.10 Allocation Rules.
(a) In the event Members are admitted to the Company pursuant to
this Agreement on different dates, the Profits (or Losses) allocated to the
Members for each Tax Year during which Members are so admitted shall be
allocated among the Members in proportion to the respective Units that each
holds from time to time during such Tax Year in accordance with ss.706 of the
Code, using any convention permitted by law and selected by the Board.
(b) For purposes of determining the Profits, Losses or any other
items allocable to any period, Profits, Losses and any such other items shall be
determined on a daily, monthly or other basis, as determined by the Board using
any method that is permissible under ss.706 of the Code and the Treasury
Regulations thereunder.
(c) Except as otherwise provided in this Agreement, all types of
Company income, gain, loss, deduction and any other allocations not otherwise
provided for shall be divided among the Members in the same proportions as they
share Profits and Losses for the Tax Year in question.
(d) The Members are aware of the income tax consequences of the
allocations made by this Article VIII and hereby agree to be bound by the
provisions of this Article VIII in reporting their shares of Company income and
loss for income tax purposes.
Section 8.11 Tax Allocations of Section 704(c) of the Code.
(a) In accordance with ss.704(c) of the Code and the Treasury
Regulations thereunder, income, gain, loss and deduction with respect to any
property contributed to the capital of the Company shall, solely for income tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the
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Company for federal income tax purposes and its initial Gross Asset Value
(computed in accordance with Section 1.1 hereof).
(b) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to Paragraph (b) of the definition of "Gross Asset Value"
contained in Section 1.1 hereof, subsequent allocations of income, gain, loss
and deduction with respect to such asset shall take account of any variation
between the adjusted basis of such asset for federal income tax purposes and its
Gross Asset Value in the same manner as under ss.704(c) of the Code and the
Treasury Regulations thereunder.
(c) Any elections or other decisions relating to allocations under
this Article VIII, including the selection of any allocation method permitted
under proposed Treasury Regulation ss.1.704-1(c), shall be made by the Board in
any manner that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 8.11 are solely for purposes of federal,
state and local taxes and shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Profits, Losses, other
items or distributions pursuant to any provision of this Agreement.
ARTICLE IX
BOOKS AND RECORDS
Section 9.1 Books, Records and Financial Statements.
(a) At all times during the continuance of the Company, the Company
shall maintain, at its principal place of business, separate books of account
for the Company that shall show a true and accurate record of all costs and
expenses incurred, all charges made, all credits made and received and all
income derived in connection with the operation of the Company business in
accordance with generally accepted accounting principles consistently applied,
and, to the extent inconsistent therewith, in accordance with this Agreement.
Such books of account, together with a copy of this Agreement and of the
Certificate, shall at all times be maintained at the principal place of business
of the Company and shall be open to inspection and examination at reasonable
times by each Member and its duly authorized representative for any purpose
reasonably related to such Member's interest in the Company. The books of
account and the records of the Company shall be examined by and reported upon as
of the end of each Fiscal Year by a firm of independent certified public
accountants selected by the Board. Any Member shall have the right to have a
private audit of the Company books and records conducted at reasonable times and
after reasonable advance notice to the Company for any purpose reasonably
related to such Member's interest in the Company, but any such private audit
shall be at the expense of the Member desiring it, and it shall not be paid for
out of Company funds.
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(b) The Board shall prepare and maintain, or cause to be prepared
and maintained, the books of account of the Company and the following documents
shall be transmitted by the Board to each Member holding 5% or more of the
outstanding Voting Units at the times hereinafter set forth:
(i) as soon as available and in any event within 95 days after
the end of each Fiscal Year of the Company, a balance sheet of the
Company as of the end of such Fiscal Year and the related statements
of income and cash flows of the Company for such Fiscal Year, all
reported on by such independent public accountants of nationally
recognized standing as the Board shall select;
(ii) as soon as available and in any event within 50 days
after the end of each of the first three quarters of each Fiscal
Year of the Company, a balance sheet of the Company as of the end of
such quarter and the related statements of income and cash flows of
the Company for such quarter; and
(iii) such other financial reports of the Company or any
Subsidiary that the Company or any Subsidiary is required to deliver
to its senior lender, within 5 days after such financial reports are
required to be delivered to such senior lender.
(c) All information contained in any statement or other document
distributed to any Member pursuant to Section 9.1(b) hereof shall be deemed
accurate, binding and conclusive with respect to such Member unless written
objection is made thereto by such Member to the Company within 20 business days
after the receipt of such statement or other document by such Member.
Section 9.2 Accounting Method. The books and records of the Company
shall be kept on the accrual method of accounting applied in a consistent manner
and shall reflect all Company transactions and be appropriate and adequate for
the Company's business.
Section 9.3 Annual Audit. As soon as practical after the end of each
Fiscal Year, but not later than 90 days after such end, the financial statements
of the Company shall be audited by the independent certified public accountants
referred to in Section 9.1(a) hereof, and such financial statements shall be
accompanied by a report of such accountants containing their opinion. The cost
of such audits will be an expense of the Company. A copy of the audited
financial statements and the accountants' report will be furnished to each
Member within 10 business days after their receipt by the Member Manager.
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ARTICLE X
TAX
Section 10.1 Tax Matters Member.
(a) Dartford is hereby designated as the initial "Tax Matters
Member" of the Company and as the "Tax Matters Partner" for purposes of
ss.6231(a)(7) of the Code and shall have the power to manage and control, on
behalf of the Company, any administrative proceeding at the Company level with
the Internal Revenue Service relating to the determination of any item of
Company income, gain, loss, deduction or credit for federal income tax purposes.
The Tax Matters Member shall not take any action or make any decision that
materially affects the Company or the Members (including without limitation with
respect to income, loss, deduction or credit of the Company) without the prior
written consent of Members by Majority Vote.
(b) The Tax Matters Member shall, within 10 days of the receipt of
any notice from the Internal Revenue Service in any administrative proceeding at
the Company level relating to the determination of any Company item of income,
gain, loss, deduction or credit, mail a copy of such notice to each Member.
(c) The Members may at any time hereafter designate a new Tax
Matters Member by a Majority Vote; provided, however, that only a Member may be
designated as the Tax Matters Member of the Company.
Section 10.2 Right to Make Section 754 Election. The Board may, in
its sole discretion, make or revoke, on behalf of the Company, an election in
accordance with ss.754 of the Code, so as to adjust the tax basis of Company
property in the case of a distribution of property within the meaning of ss.734
of the Code, and in the case of a transfer of a Company interest within the
meaning of ss.743 of the Code. Each of the Members shall, upon request of the
Board, supply the information necessary to give effect to such an election.
ARTICLE XI
LIABILITY, EXCULPATION AND INDEMNIFICATION
Section 11.1 Liability. Except as otherwise provided by the Delaware
Act, the 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 Covered Person shall be obligated personally
for any such debt, obligation or liability of the Company solely by reason of
being a Covered Person.
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Section 11.2 Exculpation.
(a) No Covered Person shall be liable to the Company or any other
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Covered Person in good faith on behalf of
the Company and in a manner reasonably believed to be within the scope of
authority conferred on such Covered Person by this Agreement, except that a
Covered Person shall be liable for any such loss, damage or claim incurred by
reason of such Covered Person's gross negligence or willful misconduct.
(b) A Covered Person shall be fully protected in relying in good
faith upon the records of the Company and upon such information, opinions,
reports or statements presented to the Company by any Person as to matters the
Covered Person reasonably believes are within such other Person's professional
or expert competence and who has been selected with reasonable care by or on
behalf of the Company, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, Profits, Losses or any other
facts pertinent to the existence and amount of assets from which distributions
to Members might properly be paid.
Section 11.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, a Covered Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Company or to any other Covered Person, a Covered Person acting under this
Agreement shall not be liable to the Company or to any other Covered Person for
its good faith reliance on the provisions of this Agreement. The provisions of
this Agreement, to the extent that they restrict the duties and liabilities of a
Covered Person otherwise existing at law or in equity, are agreed by the parties
hereto to replace such other duties and liabilities of such Covered Person.
(b) Unless otherwise expressly provided herein,
(i) whenever a conflict of interest exists or arises between
Covered Persons, or
(ii) whenever this Agreement or any other agreement
contemplated herein or therein provides that a Covered Person shall
act in a manner that is, or provides terms that are, fair and
reasonable to the Company or any Member, the Covered Person shall
resolve such conflict of interest, taking such action or providing
such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating to
such interests, any customary or accepted industry practices, and
any applicable generally accepted accounting practices or
principles; provided that the Board shall vote on the adequacy of
any such
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resolution of conflict of interest by the Covered Person, making
such adjustments to such resolution as the Board in its sole
discretion sees fit; and provided further that if such Covered
Person is a Member Manager, such Covered Person shall not vote with
the Board on the adequacy of such resolution. In the absence of bad
faith by the Covered Person, the resolution, action or term so made,
taken or provided by the Covered Person shall not constitute a
breach of this Agreement or any other agreement contemplated herein
or of any duty or obligation of the Covered Person at law or in
equity or otherwise.
(c) Whenever in this Agreement a Covered Person is permitted or
required to make a decision
(i) in its "discretion" or under a grant of similar authority
or latitude, the Covered Person shall be entitled to consider such
interests and factors as it desires, including its own interests,
and shall have no duty or obligation to give any consideration to
any interest of or factors affecting the Company or any other
Person, or
(ii) in its "good faith" or under another express standard,
the Covered Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Agreement or other applicable law.
Section 11.4 Indemnification. To the fullest extent permitted by
applicable law, a Covered Person shall be entitled to indemnification from the
Company for any loss, damage or claim incurred by such Covered Person by reason
of any act or omission performed or omitted by such Covered Person in good faith
on behalf of the Company and in a manner reasonably believed to be within the
scope of authority conferred on such Covered Person by this Agreement, except
that no Covered Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Covered Person by reason of gross
negligence or willful misconduct with respect to such acts or omissions;
provided, however, that any indemnity under this Section 11.4 shall be provided
out of and to the extent of Company assets only, and no Covered Person shall
have any personal liability on account thereof.
Section 11.5 Expenses. To the fullest extent permitted by applicable
law, expenses (including legal fees) incurred by a Covered Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim, demand,
action, suit or proceeding including any claim, demand, action, suit or
proceeding with respect to which such Covered Person is alleged to have not met
the applicable standard of conduct or is alleged to have committed conduct so
that, if true, such Covered Person would not be entitled to indemnification
under this Agreement, upon receipt by the Company of an undertaking by or on
behalf of the Covered Person to repay such amount if
- 36 -
it shall be determined that the Covered Person is not entitled to be indemnified
as authorized in Section 11.4 hereof.
Section 11.6 Outside Businesses. Except as provided in Section 16.1
hereof, any Member, Member Manager, Officer or Affiliate thereof may engage in
or possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Company or any of its Subsidiaries, and the Company, the Members, the Member
Managers and the Officers shall have no rights by virtue of this Agreement in
and to such independent ventures or the income or Profits derived therefrom, and
the pursuit of any such venture, even if competitive with the business of the
Company, shall not be deemed wrongful or improper. Except as provided in Section
16.1 hereof, no Member, Member Manager, Officer or Affiliate thereof shall be
obligated to present any particular investment opportunity to the Company even
if such opportunity is of a character that, if presented to the Company, could
be taken by the Company, and any Member, Member Manager, Officer or Affiliate
thereof shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
opportunity.
ARTICLE XII
ADDITIONAL MEMBERS AND UNITS
Section 12.1 Additional Units.
(a) If approved by a Majority Vote, the Company is authorized to
raise additional capital by offering and selling, or causing to be offered and
sold, additional limited liability company interests in the Company ("Additional
Units") to any Person in such amounts and on such terms as the Board may
determine. With respect to any issuance of Class D Units, or reissuance of Class
D Units that are forfeited in accordance with Schedule C hereto, the approval of
a Majority Vote of Members shall not be required with respect thereto; provided,
that (i) any issuance of Class D Units to Xxxxxx X. Xxxxxxx, C. Xxxx Xxxxxxx and
the direct reports of Xxxxxx X. Xxxxxxx and any other person that reports to the
Chairman or the Chief Executive Officer of the Operating Company and that
person's direct reports shall be in such amounts as the Chairman of the Company
recommends to the Board subject to the approval of the Board, and (ii) any
issuance of Class D Units to any other person shall be in such amounts as the
President of the Operating Company and the Chairman of the Company disclose to
the Board after consultation with each other. Notwithstanding the foregoing, the
Company is not authorized to issue any additional Class C Units unless all of
the Class C Holders consent to such issuance in advance thereof. Each Person who
subscribes for any of the Additional Units shall be admitted as an additional
member of the Company (each, an "Additional Member" and collectively, the
"Additional Members") at the time such Person (i) executes this Agreement
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or a counterpart of this Agreement and (ii) is named as a Member on the
Schedules hereto. The legal fees and expenses associated with such admission may
be borne by the Company.
(b) If Additional Units are issued pursuant to this Article XII such
Additional Units will be treated for all purposes of this Agreement as Units as
of the date of issuance.
Section 12.2 Preemptive Rights. In the event that the Company at any
time shall propose to issue additional Class A Units or units of any other class
of limited liability company interests (other than Class C Units or Class D
Units), or any securities convertible into, or exchangeable for, or any rights,
warrants or options to purchase, any limited liability company interests in the
Company, each Class A Holder and Class B Holder shall have the right to purchase
up to such Holder's Proportionate Percentage of such Additional Units or such
securities being issued. To the extent any such proposed issuance would result
in XxXxxx De Leeuw and its Permitted Transferees not holding in excess of 50% of
the outstanding Voting Units, each such Holder who elects to purchase a full
Proportionate Percentage of such Additional Units or securities shall also be
entitled to elect to purchase additional amounts of such Additional Units or
securities up to the amount of such Holder's recalculated Proportionate
Percentage of the number of Additional Units which the Holders purchasing less
than their full Proportionate Percentages did not purchase.
Section 12.3 Allocations. Additional Units shall not be entitled to
any retroactive allocation of the Company's income, gains, losses, deductions,
credits or other items; provided that, subject to the restrictions of ss.706(d)
of the Code, Additional Units shall be entitled to their respective share of the
Company's income, gains, losses, deductions, credits and other items arising
under contracts entered into before the effective date of the issuance of any
Additional Units to the extent that such income, gains, losses, deductions,
credits and other items arise after such effective date. To the extent
consistent with ss.706(d) of the Code and Treasury Regulations promulgated
thereunder, the Company's books may be closed at the time Additional Units are
issued (as though the Company's Tax Year had ended) or the Company may credit to
the Additional Units pro rata allocations of the Company' income, gains, losses,
deductions, credits and items for that portion of the Company's Tax Year after
the effective date of the issuance of the Additional Units.
ARTICLE XIII
ASSIGNABILITY AND SUBSTITUTE MEMBERS
Section 13.1 Restrictions on Transfer.
(a) No Member shall sell or otherwise Transfer any of its Units
(whether now held or hereafter acquired), except in accordance with the terms of
this Agreement. Any
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attempted Transfer of any of a Member's Units in violation of the terms of this
Agreement will be null, void and of no effect and the proposed transferee shall
not be recognized by the Company as the owner or holder of the Units attempted
to be Transferred or any rights pertaining thereto (including, without
limitation, voting rights and rights to allocations and distributions).
(b) Except as otherwise provided in this Agreement, no Transfer of
(i) a Class A Unit by a Class A Holder, (ii) a Class B Unit by a Class B Holder,
(iii) a Class C Unit by a Class C Holder, or (iv) a Class D Unit by a Class D
Holder may be made without the consent of the Board, which may be withheld in
its sole discretion.
(c) As a condition precedent to the effectiveness of any Transfer of
Units to any Person (other than the Company or a Person that is already a Member
and has executed this Agreement), the transferee shall execute a counterpart of
this Agreement and deliver it to the Company.
Section 13.2. Permitted Transfers. The rights and obligations under
Section 13.1 of this Agreement will not apply to a Transfer:
(a) to a Member's ancestors or descendants or spouse or to a trust,
partnership, custodianship or other fiduciary account for his or for their
benefit;
(b) if the Member is a partnership or limited liability company, to
the respective partners in such partnership or Affiliates of such partners or
members of such limited liability company;
(c) to an Affiliate of the Member, provided, that such Affiliate is
not being used as a device to avoid the restrictions on Transfer provided in
this Agreement;
(d) by XxXxxx De Leeuw to an MDC Permitted Transferee, or by an MDC
Permitted Transferee to another MDC Permitted Transferee, provided, that such
MDC Permitted Transferee is not being used as a device to avoid the restrictions
on Transfer provided in this Agreement; or
(e) a Transfer pursuant to Article XIV of this Agreement.
Section 13.3 Substitute Members. Any Transfer of Units pursuant to
this Article XIII or XIV including, but not limited to a Transfer made pursuant
to Section 14.1 hereof, shall, nevertheless, not entitle the transferee to
become a Substitute Member or to be entitled to exercise or receive any of the
rights, powers or benefits of a Member other than the right to share in such
profits and losses, to receive distribution or distributions and to receive such
allocation of income, gain, loss, deduction or credit or similar item to which
the transferor
- 39 -
Member would otherwise be entitled, to the extent assigned, unless the
transferor Member designates, in a written instrument delivered to the other
Members, its transferee to become a Substitute Member and the non-transferring
Members holding a majority of the capital and Profits interests of the Company
in their sole and absolute discretion, consent to the admission of such
transferee as a Member; and provided further, that such transferee shall not
become a Substitute Member without having first executed an instrument
reasonably satisfactory to the other Members accepting and agreeing to the terms
and conditions of this Agreement, including a counterpart signature page to this
Agreement, and without having paid to the Company a fee sufficient to cover all
reasonable expenses of the Company in connection with such transferee's
admission as a Substitute Member. If a Member Transfers all of its interest in
the Company and the transferee of such interest is entitled to become a
Substitute Member pursuant to this Section 13.3, such transferee shall be
admitted to the Company effective immediately prior to the effective date of the
Transfer, and, immediately following such admission, the transferor Member shall
automatically resign as a Member of the Company. In such event, the Company
shall not dissolve if the business of the Company is continued without
dissolution in accordance with Section 15.2(e) hereof.
Section 13.4 Recognition of Assignment by Company. No Transfer or
assignment, or any part thereof, that is in violation of this Article XIII shall
be valid or effective, and neither the Company nor the Members shall recognize
the same for the purpose of making distributions pursuant to Article VIII hereof
with respect to such assigned interest or part thereof. Neither the Company nor
the nonassigning Members shall incur any liability as a result of refusing to
make any such distributions to the assignee of any such invalid assignment.
Section 13.5 Effective Date of Transfer. Any valid Transfer of a
Member's interest in the Company, or part thereof, pursuant to the provisions of
this Article XIII shall be effective as of the close of business on the last day
of the calendar month in which such Transfer occurs. The Company shall, from the
effective date of such assignment, thereafter pay all further distributions on
account of the Company interest (or part thereof) so assigned, to the transferee
of such interest, or part thereof. As between any Member and its transferee,
Profits and Losses for the Fiscal Year of the Company in which such Transfer
occurs shall be apportioned for federal income tax purposes in accordance with
any convention permitted under ss.706(d) of the Code and selected by the Member
Manager.
Section 13.6 Indemnification. In the case of Transfer or assignment
or attempted Transfer or assignment of an interest in the Company that has not
received the consents required by this Article XIII, the parties engaging or
attempting to engage in such Transfer or assignment shall be liable to indemnify
and hold harmless the Company and the other Members from all costs, liabilities
and damages that any of such indemnified Persons may incur (including, without
limitation, incremental tax liability and lawyers' fees and expenses) as a
result of such Transfer
- 40 -
or assignment or attempted Transfer or assignment and efforts to enforce the
indemnity granted hereby.
Section 13.7 Repurchase Obligation of the Company. The Company shall
repurchase from Dartford and its Permitted Transferees the Class A Units and
Class B Units held by Dartford or its Permitted Transferees at the times and on
the terms and conditions set forth in Schedule D hereto.
ARTICLE XIV
TAG-ALONG OPTION AND COME-ALONG OBLIGATION
Section 14.1. Tag-Along Option. Subject to Section 13.1(c) hereof,
in the event that XxXxxx De Leeuw intends to voluntarily Transfer to another
Person (other than to a Permitted Transferee or pursuant to a public offering)
(such Person being the "Purchaser") any of its Class A Units, then XxXxxx De
Leeuw shall deliver to the Company and each other Member a written notice (the
"Tag Notice") stating that it intends to make such a Transfer and setting forth
the terms and conditions of such proposed Transfer. During the 30-day period
(the "Tag-Along Period") from and after the delivery of such notice to the
Company and such other Members, each Member shall have the right to elect to
sell to the Purchaser, and the Purchaser shall have the obligation to purchase
from such Member, (i) such Member's Proportionate Percentage of the Class A
Units being proposed to be sold pursuant to the notice on the terms and
conditions set forth in the Tag Notice; and (ii) any Class B Units such Member
elects to sell to the Purchaser up to such Member's Proportionate Percentage of
the Class B Units at the fair market value of such Class B Units as interpolated
based upon the price of the Class A Units set forth in the Tag Notice. In
addition, if the proposed Transfer will result in a Change of Control (as
defined in Schedule B to this Agreement), each Member shall have the right to
elect to sell to the Purchaser, and the Purchaser shall have the obligation to
purchase from such Member, any Class C Units and Class D Units such Member
elects to sell to the Purchaser up to such Member's Proportionate Percentage of
the Class C Units or Class D Units, as the case may be, at the fair market value
of such Class C or D Units, as the case may be, as interpolated based on the
price of the Class A Units set forth in the Tag Notice, provided that the
aggregate price for all such Class C and Class D Units which Members shall have
a right to sell pursuant to this Section 14.1 shall not exceed that percentage
of the value that the Purchaser would have paid for all Class A and B Units
which would have been sold pursuant to this Section 14.1 but for the provisions
of this sentence as (x) the fair market value of all Class C and D Units bears
to (y) the fair market value of all Units of all classes, in each case as
interpolated based on the value of the Class A Units as set forth in the Tag
Notice. In the event that the value of the Class C and D Units that Members wish
to sell exceeds the value that is permitted to be sold pursuant to the preceding
sentence, then any such limitation shall be shared by the Members
- 41 -
wishing to sell such Class C and D Units based upon the relative values of the
respective Class C and D Units they wish to sell.
Section 14.2. Come-Along Obligation. If any Person or group of
Persons makes an offer to purchase all outstanding Units of the Company from all
Members (a "Tender Offer"), then the Members (other than any Members who are
Affiliates of the Person making the Tender Offer) who hold 50% or more of the
total number of Voting Units held by Members who are not Affiliates of the
Persons making the Tender Offer (the "Approving Members") may require all other
Members ("Minority Members") to sell their Units pursuant to the Tender Offer.
To exercise this right, the Approving Members must deliver a written notice to
the Minority Members describing the terms and conditions of the Tender Offer. If
such an exercise has been made by the Approving Members, then each Minority
Member shall be obligated to sell all of its Units pursuant to the Tender Offer.
Any amounts to be received by Members or Assignees in connection with a Transfer
of Units under this Section 14.2 shall be allocated in accordance with Section
15.5 hereof.
ARTICLE XV
DISSOLUTION, LIQUIDATION AND TERMINATION
Section 15.1 No Dissolution. The Company shall not be dissolved by
the admission of Additional Members or Substitute Members in accordance with the
terms of this Agreement.
Section 15.2 Events Causing Dissolution. The Company shall be
dissolved and its affairs shall be wound up upon the occurrence of any of the
following events:
(a) the expiration of the term of the Company, as provided in
Section 2.3 hereof;
(b) the written consent of Members holding at least 96% of the
outstanding Voting Units and at least 51% of the Class C Units;
(c) the sale of all or substantially all of the assets of the
Company and the expiration of any indemnity period or escrow or the payment of
any deferred payment relating to such sale;
(d) immediately prior to the effectiveness of a Public Offering;
(e) the death, insanity, bankruptcy, retirement, resignation,
expulsion or dissolution of any Member or the occurrence of any other event
under the Delaware Act that
- 42 -
terminates the continued membership of a Member in the Company (other than a
resignation described in Sections 5.4 or 13.3 hereof, which resignation shall
not cause the Company to be dissolved and the business of the Company shall
continue without dissolution) unless, within 90 days after the occurrence of
such an event, the remaining Members holding a majority of capital and Profits
interests of the Company agree in writing to continue the business of the
Company and to the appointment, if necessary or desired, effective as of the
date of such event, of one or more Additional Members; or
(f) the entry of a decree of judicial dissolution under Section
18-802 of the Delaware Act.
Except as provided in Section 15.2(e), the death, insanity,
bankruptcy, retirement, resignation, expulsion or dissolution of a Member shall
not cause the Company to be dissolved and upon the occurrence of such an event
the Company shall be continued without dissolution.
Section 15.3 Notice of Dissolution. Upon the dissolution of the
Company, the Person or Persons approved by a Majority Vote to carry out the
winding up of the Company (the "Liquidating Trustee") shall promptly notify the
Members of such dissolution.
Section 15.4 Liquidation. Upon dissolution of the Company, the
Liquidating Trustee shall immediately commence to wind up the Company's affairs;
provided, however, that a reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the satisfaction of liabilities to
creditors so as to enable the Members to minimize the normal losses attendant
upon a liquidation. The Members shall continue to share Profits and Losses
during liquidation in the same proportions, as specified in Article VIII hereof,
as before liquidation. Each Member shall be furnished with a statement prepared
by the Company's certified public accountants that shall set forth the assets
and liabilities of the Company as of the date of dissolution.
(a) The proceeds of any liquidation (or of any transaction that is
deemed to be a liquidation under Section 15.5 hereof) shall be distributed, as
realized, in the following order and priority:
(i) first, to creditors of the Company, including Members who
are creditors, to the extent otherwise permitted by law, in
satisfaction of the liabilities of the Company (whether by payment
or the making of reasonable provision for payment thereof), other
than liabilities for distributions to Members;
(ii) second, to the Members pursuant to Sections 8.3(i), (ii),
(iii) and (iv) in the same priority and after giving effect to all
prior distributions; and
- 43 -
(iii) the balance, to the Members in accordance with their
positive Capital Accounts after giving effect to all contributions,
distributions and allocations for all periods. For clarification,
for the purpose of this Section 15.4(iii) all allocations under
Section 8.7(vi) and all distributions under Section 15.4(ii) shall
be deemed to have been made prior to the distributions required by
this Section 15.4(iii).
(b) If the Liquidating Trustee shall determine that it is not
feasible to liquidate all of the assets of the Company, then the Liquidating
Trustee shall cause the Fair Asset Value of the assets not so liquidated to be
determined. Any unrealized appreciation or depreciation with respect to such
assets shall be allocated among the Members in accordance with Article VIII as
though the property were sold for its Fair Asset Value and distribution of any
such assets in kind to a Member shall be considered a distribution of an amount
equal to the assets' Fair Asset Value. Such assets, as so appraised, shall be
retained or distributed by the Liquidating Trustee as follows:
(i) The Liquidating Trustee shall retain assets having a Fair
Asset Value equal to the amount by which the net proceeds of
liquidated assets are sufficient to satisfy the requirements of
paragraph (a)(i) of this Section 15.4. The foregoing
notwithstanding, the Liquidating Trustee shall, to the fullest
extent permitted by law, have the right to distribute property
subject to liens at the value of the Company's equity therein.
(ii) The remaining assets (including mortgages and other
receivables) shall be distributed to the Members in such proportions
as shall be equal to the respective amounts to which each Member is
entitled pursuant to Section 15.4(a) hereof giving full effect in
the calculation thereof to any previous distributions made pursuant
to this Section 15.4. If, in the sole and absolute judgment of the
Liquidating Trustee, it shall not be feasible to distribute to each
Member an aliquot share of each asset, the Liquidating Trustee may
allocate and distribute specific assets to one or more Members as
tenants-in-common as the Liquidating Trustee shall determine to be
fair and equitable.
(c) No Member shall have the right to demand or receive property
other than cash upon dissolution and termination of the Company.
Section 15.5 Sale Transactions. Any sale of all or substantially all
of the Voting Units in a transaction or series of related transactions,
including without limitation pursuant to a Tender Offer, shall be deemed to be a
liquidation of the Company, and any amounts to be received by Members of
Assignees upon the consummation of any such transaction shall be distributed, as
realized, in accordance with Section 15.4(a) hereof.
- 44 -
Section 15.6 Termination. The Company and this Agreement shall
terminate when all of the assets of the Company, after payment of or due
provision for all debts, liabilities and obligations of the Company, shall have
been distributed to the Members in the manner provided for in this Article XV
(including without limitation after the sale of Units pursuant to a Tender Offer
in accordance with Section 14.2 hereof), and the Certificate shall have been
canceled in the manner required by the Delaware Act.
Section 15.7 Claims of the Members. The Members and Assignees shall
look solely to the Company's assets for the return of their Capital
Contributions, and if the assets of the Company remaining after payment of or
due provision for all debts, liabilities and obligations of the Company are
insufficient to return such Capital Contributions, the Members and Assignees
shall have no recourse against any other Member or the Member Managers or
Officers.
ARTICLE XVI
BUSINESS OPPORTUNITIES
Section 16.1 Business Opportunities.
(a) Subject to Section 16.1(b) hereof, in the event that any Member,
directly or indirectly, is presented with a business opportunity relating to the
potential acquisition of assets or stock or other equity securities of any
"Covered Business" (as defined below), such Member shall be obligated to present
such business opportunity to the Board for its consideration. If the Board does
not, within 10 days after the presentation of such business opportunity to the
Board, authorize the Company to pursue such business opportunity, such Member
shall have the right to pursue such business opportunity for its own benefit
without any further obligation to the Company or its Members with respect
thereto, whether under this Agreement or otherwise.
A "Covered Business" shall include any business whose primary
business is the production, marketing or sale of dry, shelf-stable grocery food
products, not including pet food products and for the avoidance of doubt
expressly excluding all frozen food products.
(b) With respect to Fenway and its Permitted Transferees only, a
"Covered Business" shall be any business whose primary business at the time of
its acquisition is or will be the production, marketing or sale of dry,
shelf-stable grocery food products with annual revenues of $100,000,000 or less,
but shall not include (i) the Aunt Jemima(R) syrup and/or pancake mix business,
(ii) a business whose primary business is the production, marketing or sale of
ethnic foods (including by way of illustration but not of limitation, Mexican),
(iii) a
- 45 -
business whose revenues are not derived primarily from sales in the United
States, and (iv) for the avoidance of doubt any frozen food product.
In the event that Fenway, VDK Foods LLC, or an Affiliate of either
of them (other than an Affiliate of the Company) acquires the Aunt Jemima(R)
syrup and/or pancake mix business, Fenway shall give XxXxxx De Leeuw written
notice of such acquisition on or before the effective date thereof. XxXxxx De
Leeuw will have a right and option (the "MDC Call Right") during the 30-day
period beginning on the effective date of such acquisition to notify Fenway of
its intent to purchase all (but not less than all) of the Class A Units then
held by Fenway and its Permitted Transferees at a purchase price equal to the
fair market value thereof (without discount for lack of marketability or
minority interest at the time of purchase by XxXxxx De Leeuw). XxXxxx De Leeuw
shall exercise the MDC Call Right by delivering a written notice to Fenway
stating such election. Within 10 days after its receipt of such notice, Fenway
shall designate not less than three independent nationally-recognized investment
banking firms by written notice to XxXxxx De Leeuw. Within 10 days after its
receipt of such notice from Fenway, XxXxxx De Leeuw shall select one of the
investment banking firms designated by Fenway to make a fair market value
determination of the Class A Units being purchased by XxXxxx De Leeuw from
Fenway and its Permitted Transferees. Such investment banking firm shall make
such fair market value determination within 60 days after such selection by
XxXxxx De Leeuw. The closing of XxXxxx De Leeuw's purchase of Class A Units from
Fenway and its Permitted Transferees shall take place within 60 days after
determination of the fair market value of such Class A Units. Alternatively,
XxXxxx De Leeuw and Fenway can agree to a fair market value of the Class A Units
being purchased by XxXxxx De Leeuw.
ARTICLE XVII
REGISTRATION RIGHTS
Section 17.1 Registration Rights. In the event the Public Company
(or any successor entity into which the Company merges or consolidates) intends
to effect a Public Offering, the Class A Holders, the Class B Holders, the Class
C Holders and the Class D Holders shall have such registration rights with
respect to the Securities of the Public Company distributed to such Holders as
set forth on Schedule E hereto. The Members shall have such additional
registration rights as set forth on Schedule E hereto.
- 46 -
ARTICLE XVIII
MISCELLANEOUS
Section 18.1 Notices. All notices provided for in this Agreement
shall be in writing, duly signed by the party giving such notice, and shall be
delivered in person or by an acknowledged overnight delivery service, telecopied
or mailed by registered or certified mail, as follows:
(a) if given to the Company, in care of the President at the
Company's mailing address set forth in Section 2.5 hereof with a copy to the
Chairman and the Chief Executive Officer at such address as each such officer
shall designate to the Company;
(b) if given to the Member Managers, at their mailing addresses set
forth on Schedule A attached hereto; or
(c) if given to any Member at the address set forth opposite its
name on Schedule A attached hereto, or at such other address as such Member may
hereafter designate by written notice to the Company.
All such notices shall be deemed to have been given when received.
Section 18.2 Failure to Pursue Remedies. The failure of any party to
seek redress for violation of, or to insist upon the strict performance of, any
provision of this Agreement shall not prevent a subsequent act, which would have
originally constituted a violation, from having the effect of an original
violation.
Section 18.3 Cumulative Remedies. The rights and remedies provided
by this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
Section 18.4 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of all of the parties and, to the extent permitted by
this Agreement, their successors, legal representatives and assigns.
Section 18.5 Interpretation. Throughout this Agreement, nouns,
pronouns and verbs shall be construed as masculine, feminine, neuter, singular
or plural, whichever shall be applicable. All references herein to "Articles,"
"Sections" and paragraphs shall refer to corresponding provisions of this
Agreement unless otherwise indicated.
- 47 -
Section 18.6 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
Section 18.7 Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if all parties hereto had signed
the same document. All counterparts shall be construed together and shall
constitute one instrument.
Section 18.8 Integration. This Agreement, together with Schedules A,
B, C, D and E and Annex 1 hereto constitutes the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersedes all prior
agreements and understandings pertaining thereto.
Section 18.9 Governing Law. This Agreement, together with Schedules
A, B, C, D and E hereto and Annex 1 and the rights of the parties hereunder
shall be interpreted in accordance with the laws of the State of Delaware, and
all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
[the remainder of this page is intentionally left blank]
- 48 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above stated.
MEMBERS:
DARTFORD PARTNERSHIP L.L.C.
By: /s/ Xxx Xxxxx
----------------------------------
Name: Xxx Xxxxx
Title: Member
/s/ Xxxxxx X. Xxxxxxx
------------------------------------
XXXXXX X. XXXXXXX
/s/ C. Xxxx Xxxxxxx
------------------------------------
C. XXXX XXXXXXX
XXXX SECURITIES, INC.
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Treasurer
SQUAM LAKE INVESTORS II, L.P.
By: /s/ Xxxx Xxxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxxx
Title: Treasurer, GPI, Inc.
(Managing G.P.)
- 49 -
XxXXXX De LEEUW & CO. III, L.P.
By: MDC Management Company III, L.P.,
its general partner
By: /s/ Xxxxxxx Xxxxx
------------------------------
Name: Xxxxxxx Xxxxx
Title: General Partner
XxXXXX De LEEUW & CO.
OFFSHORE (Europe) III, L.P.
By: MDC Management Company IIIE,
L.P., its general partner
By: /s/ Xxxxxxx Xxxxx
------------------------------
Name: Xxxxxxx Xxxxx
Title: General Partner
XxXXXX De LEEUW & CO. III (Asia),
L.P.
By: MDC Management Company IIIA,
L.P., its general partner
By: /s/ Xxxxxxx Xxxxx
------------------------------
Name: Xxxxxxx Xxxxx
Title: General Partner
GAMMA FUND LLC
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxx
Title: Member
- 50 -
FENWAY PARTNERS CAPITAL FUND,
L.P.
By: Fenway Partners, L.P.,
its general partner
By: Fenway Partners Management,
Inc.,
its general partner
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Director
- 51 -
ANNEX I
To the Amended and Restated Limited Liability
Company Agreement of MBW Investors LLC
Approval of Closing Documents:
RESOLVED, that the form, terms and provisions of each of the other
documents listed on the Closing List attached hereto as Schedule I
(collectively, the "Closing Documents") to be ratified, confirmed,
approved, executed and/or delivered by the Company, be, and they hereby
are, approved and adopted substantially in the form presented to the Board
of Member Managers and ordered filed with the records of the Company.
General Authorization:
RESOLVED, that the Chairman, President, any Executive Vice
President, any Vice President, any Treasurer, any Secretary or any
Assistant Secretary (each an "Authorized Officer") of the Company be, and
each of them hereby is, authorized and directed, in the name and on behalf
of the Company, to execute and deliver the Closing Documents and all other
agreements, instruments and documents relating thereto, required thereby
or contemplated thereunder, with such amendments thereto and such changes
and modifications as to the terms and provisions thereof as the Authorized
Officer or Authorized Officers executing and/or delivering the same, in
their sole discretion, shall approve or deem to be necessary or
appropriate, the execution and/or delivery thereof by such officer or
officers to be conclusive evidence of the necessity or appropriateness
thereof; and further
RESOLVED, that all of the actions of the officers of the Company
heretofore or hereafter taken relating to any of the matters referred to
in the foregoing documents and the transactions contemplated thereby are
hereby confirmed, ratified and approved in all respects; and further
RESOLVED, that the performance by the Company of all of its
obligations referred to in or contemplated by the foregoing resolutions
are hereby authorized and directed.
- 52 -
SCHEDULE A
To the Amended and Restated
Limited Liability Company Agreement
of MBW Investors LLC
CAPITAL NUMBER
NAME AND MAILING ADDRESS CONTRIBUTION OF UNITS
------------------------ ------------ --------
A. Class A Units
XxXxxx De Leeuw & Co. III, L.P. $20,959,875.00 20,959.9
c/x XxXxxx De Leeuw & Co.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
XxXxxx De Leeuw & Co. Offshore $1,488,000.00 1,488.0
(Europe) III, L.P.
c/x XxXxxx De Leeuw & Co.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
XxXxxx De Leeuw & Co. III (Asia), L.P. $348,750.00 348.7
c/x XxXxxx De Leeuw & Co.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Gamma Fund LLC $453,375.00 453.4
c/x XxXxxx De Leeuw & Co.
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Fenway Partners Capital Fund, L.P. $8,750,000.00 8,750.0
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Dartford Partnership L.L.C. $1,000,000.00 1,000.0
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
- 53 -
CAPITAL NUMBER
NAME AND MAILING ADDRESS CONTRIBUTION OF UNITS
------------------------ ------------ --------
Bain Securities, Inc. $250,000.00 250.0
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
Squam Lake Investors II, L.P. $250,000.00 250.0
Two Xxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxxx X. Xxxxxxx $200,000.00 200.0
000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
C. Xxxx Xxxxxxx $100,000.00 100.0
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
B. Class B Units
Dartford Partnership L.L.C. $500.00 1,000.0
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
C. Class C Units
Dartford Partnership L.L.C. $650.00 1,300.0
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
D. Class D Units
Xxxxxx X. Xxxxxxx $ 15.00 30.0
000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
C. Xxxx Xxxxxxx $ 10.00 20.0
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
- 54 -
SCHEDULE B
To the Amended and Restated
Limited Liability Company Agreement
of MBW Investors LLC
CLASS C UNITS
(a) Defined Terms. For purposes of this Schedule B (which includes
Schedule B-1), capitalized terms used herein but not otherwise defined in the
Agreement shall have the meanings set forth in (i) paragraph (f) of this
Schedule B or (ii) if not defined in such paragraph (f), in the Amended and
Restated Limited Liability Company Agreement of MBW Investors LLC.
(b) Repurchase Options of Company. Subject to the remaining provisions of
this Schedule B, certain of the Class C Units held by the Class C Holder(s)
shall be subject to repurchase in accordance with the provisions hereof in the
event that a Separation Event occurs prior to the earlier of (x) a Change of
Control, (y) the fourth anniversary of the date hereof or (z) the date on which
the Company's Sales exceed $400,000,000. In the event that such a Separation
Event occurs, the Company shall have the exclusive right and option (the "FMV
Repurchase Option") to repurchase a portion of the Class C Units at Fair Market
Value and the exclusive right and option (the "NFMV Repurchase Option") to
repurchase a portion of the Class C Units at Non-Fair Market Value, in each case
as determined in accordance with the matrix attached as Schedule B-1 and subject
to the remaining provisions of this Schedule B. In the event a Separation Event
does not occur prior to the earlier of a Change of Control, the fourth
anniversary of the date hereof or the date on which the Company's Sales exceed
$400,000,000, all of the Class C Units shall no longer be subject to repurchase
by the Company in accordance with this Schedule B.
(c) Procedures. The Company shall have the right to exercise the FMV
Repurchase Option and/or the NFMV Repurchase Option by delivering a written
notice (a "Company Election Notice") to the Class C Holder(s) within 45 days
following the effectiveness of the Separation Event giving rise to such right.
The Company Election Notice shall state (i) the number of Class C Units being
repurchased pursuant to the FMV Repurchase Option and (ii) the number of Class C
Units being repurchased pursuant to the NFMV Repurchase Option. In the event the
Company exercises both the FMV Repurchase and the NFMV Repurchase Option, the
Company shall consummate its purchase of such Class C Units and pay the purchase
price therefor promptly following determination of the Fair Market Value of the
Units subject to the FMV Repurchase Option, but no later than the 120th day
following receipt by the Class C Holder(s) of the Company Election Notice,
subject to extension as provided below (the "Expiration Date"). In the event the
Company exercises the NFMV Repurchase Option but not the FMV Repurchase Option,
the Company shall consummate its purchase of such Units on or
- 55 -
before the Expiration Date. At the closing of any such purchase (a "Repurchase
Closing"), (i) the Class C Holder(s) shall deliver any documentation reasonably
requested by the Company and necessary to transfer such Class C Units to the
Company and (ii) the Company shall deliver in cash or otherwise in immediately
available funds to the Class C Holder(s) the purchase price being paid by the
Company for such Class C Units; provided, that the following events shall each
be a condition precedent to a Repurchase Closing to the extent relating to an
exercise of the FMV Repurchase Option, but not the NFMV Repurchase Option: (i)
the receipt by the Class C Holder(s) of any severance amount due to it pursuant
to the Management Services Agreement in connection with the Separation Event
that gave rise to such repurchase by the Company and (ii) the receipt by the
Class C Holder(s) of any purchase price due to it pursuant to an exercise by
Dartford or its Permitted Transferees of the Company Repurchase Obligation (as
defined in Schedule D to this Agreement). In the event the Repurchase Closing is
not completed by the Expiration Date, the FMV Repurchase Option and the NFMV
Repurchase Option shall terminate and be of no further force and effect as of
the Expiration Date, and the Class C Holder(s) shall continue to hold the Class
C Units.
The Expiration Date shall be subject to automatic extension as provided
herein. In the event that a distribution by the Operating Company to MBW
Holdings or by MBW Holdings to the Company of the amount necessary to pay (i)
any severance amount due to the Class C Holder(s) pursuant to the Management
Services Agreement, (ii) any purchase price due to Dartford or its Permitted
Transferees pursuant to the Company Repurchase Obligation, or (iii) any purchase
price payable to the Class C Holder(s) upon exercise of the FMV Repurchase
Option or the NFMV Repurchase Option would violate any covenant or otherwise not
be permitted under the credit agreement or indenture relating to the Chase
Borrowings or senior subordinated indebtedness of the Company or any Subsidiary
of the Company, the Expiration Date shall be automatically extended to the
seventh day following the date on which the making of such distributions by the
Operating Company and MBW Holdings, respectively, would not violate such
covenants or agreements.
(d) Change of Control. Upon a Change of Control, the FMV Repurchase Option
and the NFMV Repurchase Option shall terminate and be of no further force and
effect. Payments to each Class C Holder with respect to its Class C Units
following a Change of Control shall be made in accordance with the terms and
provisions of the Agreement (including without limitation Article VIII thereof).
(e) Public Offering. In the event the Public Company intends to consummate
a Public Offering:
(i) the FMV Repurchase Option and the NFMV Repurchase Option shall
terminate and be of no further force and effect, as of the effective date
of such Public Offering;
- 56 -
(ii) the Class C Units shall be valued as if all of the equity
securities of the Public Company (including those to be sold pursuant to
the Public Offering) were sold at the price per share at which the equity
securities of the Public Company are to be sold pursuant to the Public
Offering (which price shall be before underwriter's discounts and before
expenses) and the aggregate gross proceeds from such hypothetical sale
were distributed pursuant to this Agreement in accordance with Article
VIII thereof;
(iii) immediately prior to the effectiveness of the Public Offering,
the Company shall distribute or cause the distribution to the Class C
Holder(s) the aggregate number of shares of capital stock of the Public
Company equal in value to the value of the Class C Units as determined in
accordance with clause (ii) above; and
(iv) each Class C Holder shall have the registration rights set
forth on Schedule E to this Agreement.
(f) Definitions.
"Change of Control" means a transaction or series of related transactions
(other than by the Company or any Subsidiary thereof with any Subsidiary of the
Company) to effect any of the following:
(i) a sale, redemption, exchange or other disposition of shares
(including by way of merger or consolidation) of the Common Stock of the
Operating Company (or any successor thereto), par value $.01 per share, or
options or warrants to acquire such Common Stock, after which MBW Holdings
holds 50% or less of the number of outstanding shares of such Common Stock
on the date of this Agreement;
(ii) a sale, redemption, exchange or other disposition of shares
(including by way of merger or consolidation) of the Common Stock of MBW
Holdings (or any successor thereto), par value $.01 per share, or options
or warrants to acquire such Common Stock, after which the Company holds
50% or less of the number of outstanding shares of such Common Stock on
the date of this Agreement;
(iii) a sale, redemption, exchange or other disposition of Class A
Units (including by way of merger or consolidation), or options or
warrants to acquire Class A Units, after which the Class A Holders holding
Class A Units on the date of this Agreement hold 50% or less of the number
of outstanding Class A Units on the date of this Agreement;
(iv) a sale of all or substantially all of the assets of the
Company, MBW Holdings or the Operating Company; or
- 57 -
(v) a liquidation, dissolution, or other winding up of the affairs
of the Company, whether voluntary or involuntary.
"Fair Market Value" means the fair market value of the Class C Units being
repurchased by the Company (without discount for lack of marketability or
minority interest) at the time of repurchase by the Company, as determined by an
independent nationally-recognized investment banking firm selected as follows:
(i) Within 10 days after receipt by the Class C Holder(s) of a
Company Election Notice with respect to an exercise of the FMV Repurchase
Option, the Class C Holder(s) shall designate not less than three
independent nationally-recognized investment banking firm by written
notice to the Company.
(ii) Within 10 days after its receipt of such notice, the Company
shall select one of the investment banking firms designated by the Class C
Holder(s) to make a Fair Market Value determination of the Class C Units
being repurchased.
(iii) Such investment banking firm shall make such Fair Market Value
determination within 60 days after its selection by the Company.
Alternatively, the Board and Dartford can agree to a Fair Market Value for the
Class C Units being repurchased pursuant to the FMV Repurchase Option.
"Non-Fair Market Value" means $1.00 per Class C Unit being repurchased
pursuant to the NFMV Repurchase Option.
"Sales" means the annual net sales of the Company and its Subsidiaries;
provided, that in the event the Company or any of its Subsidiaries consummates
an acquisition of the stock or assets of another entity (including, without
limitation, by way of merger or consolidation), enters into a joint venture with
another entity, or effects any similar investment or business combination (each
an "Acquisition"), the amount of Sales shall be increased as of the closing date
of such Acquisition to reflect the additional annual net Sales of the entity or
business acquired pursuant to such Acquisition; and, provided, further, that in
the event, during the six-month period following the closing date of an
Acquisition, the Company or any of its Subsidiaries consummates a sale or
divestiture of a material portion of the assets or business acquired pursuant to
such Acquisition, the amount of annual net Sales shall be decreased as of the
closing date of such sale or divestiture to reflect the annual net Sales of the
business or division sold or divested.
"Separation Event" means a termination by the Company of the Management
Services Agreement pursuant to the terms thereof.
- 58 -
SCHEDULE B-1
Continuing
Number of Number of
Number of Class C Number of Class C
Class C Units Class C Units Not
Units Remaining Units Subject
Subject to If NFMV Subject to to FMV or
Date of Number of NFMV NFMV Repurchase FMV FMV NFMV
Sales Separation Class C Repurchase Repurchase Option Fully Repurchase Repurchase Repurchase
Threshold(1) Event Units Option(2) Option Exercised Option(3) Option Option
Prior to 1st 1,300 50.0% 650 650 50.0% 325 325
Anniversary
1st to 2nd 1,300 37.5% 487.5 812.5 25/50%(4) 203/406 609/406
A-$200M 2nd to 3rd 1,300 25.0% 325 975 25.0% 243.75 731.25
B-$300M 3rd to 4th 1,300 12.5% 162.5 1,137.5 12.5% 142.2 995.3
C-$400M After 4th 1,300 0 0 1,300 0.0% 0 1,300
----------
(1) If Sales of the Company reach a Sales Threshold level, the vesting
schedule accelerates to that level. For example, if Sales reach
$325,000,000 as of June 30, 1998, the percentage of outstanding Class C
Units subject to the NFMV Repurchase Option would be 12.5% instead of
37.5%. That percentage would remain at 12.5% until the earlier of (x) the
4th anniversary of the date hereof and (y) the date on which the Company's
Sales reach $400,000,000, at which time no Class C Units would be subject
to the NFMV Repurchase Option. Notwithstanding the foregoing, if Sales
reached $325,000,000 as of June 30, 1998 because of an Acquisition that
closed on such date and a division acquired pursuant to that Acquisition
with Sales of $75,000,000 was sold on October 31, 1998, the vesting
schedule would revert to Sales Threshold A.
(2) The NFMV Repurchase Option may be exercised up to the percentage of
outstanding Class C Units listed in this column at the relevant time.
(3) The FMV Repurchase Option may be exercised up to the percentage of those
Class C Units that are outstanding but not subject to the NFMV Repurchase
Option as listed in this column at the relevant time.
(4) 50% if Sales Threshold A has not been achieved; 25% otherwise.
- 59 -
SCHEDULE C
To the Amended and Restated
Limited Liability Company Agreement
of MBW Investors LLC
CLASS D UNITS
(a) Defined Terms. For purposes of this Schedule C capitalized terms used
herein but not otherwise defined in the Agreement shall have the meanings set
forth in (i) paragraph (f) of this Schedule C or (ii) if not defined in such
paragraph (f), in the Amended and Restated Limited Liability Company Agreement
of MBW Investors LLC.
(b) Vesting. Subject to the remaining provisions of this Schedule C, a
Class D Holder shall become vested in Class D Units as follows:
(i) Xxxxxx X. Xxxxxxx and C. Xxxx Xxxxxxx shall each be vested in
50% of the Class D Units issued to him on the date of this Agreement. On
each of December 31, 1997 and December 31, 1998, respectively, unless
earlier terminated by the Operating Company in accordance with the terms
of his Employment Agreement with the Operating Company, Messrs. Xxxxxxx
and Xxxxxxx shall each be vested in an additional 25% of the Class D Units
issued to him on the date of this Agreement.
(ii) For any Class D Units issued to a Class D Holder (other than
Xxxxxx X. Xxxxxxx and C. Xxxx Xxxxxxx) on the date of this Agreement or on
or before March 31, 1997, such Class D Holder shall become vested in the
following portion of such Class D Units on the following dates:
Date of Vesting Percentage That Vests
--------------- ---------------------
December 31, 1997 25%
December 31, 1998 25%
December 31, 1999 25%
December 31, 2000 25%
(iii) For any Class D Units issued to a Class D Holder after
March 31, 1997, such Class Holder shall become vested in such Class
D Units on the following dates:
Date of Vesting Percentage that Vests
--------------- ---------------------
first anniversary of date of issuance 25%
second anniversary of date of issuance 25%
third anniversary of date of issuance 25%
fourth anniversary of date of issuance 25%
- 60 -
(iv) On the effective date of a Change of Control (as defined
below), all outstanding Class D Units that have not vested prior to
the effective date of such Change of Control shall become Vested
Class D Units as of the effectiveness of such Change of Control.
Notwithstanding the foregoing, a Class D Holder and his Permitted Transferees
shall not become vested in Class D Units on the future dates specified above in
clauses (i), (ii) and (iii) unless such Class D Holder has remained in the
continuous employ of the Company (or any Subsidiary) from the date of issuance
of such Class D Units up to and including the date such portion of such Class D
Units may become vested in accordance with this Schedule C.
(c) Forfeiture; Repurchase. Class D Units held by a Class D Holder
or his Permitted Transferees shall be subject to forfeiture to the Company or
repurchase by the Company as provided below:
(i) In the event a Class D Holder's employment by the Company
and/or a Subsidiary of the Company terminates because of discharge
or termination by the Company or its Subsidiary with Cause (as
defined below), then (A) all unvested Class D Units held by such
Class D Holder or his Permitted Transferees at the time of such
termination shall be automatically forfeited to the Company without
the payment of any consideration to the Class D Holder or his
Permitted Transferees by the Company, and (B) all Vested Class D
Units held by such Class D Holder or his Permitted Transferees at
the time of such termination shall be subject to repurchase by the
Company at a repurchase price equal to the lesser of (x) $1.00 per
Vested Class D Unit being repurchased and (y) the fair market value
thereof as determined by the Board in good faith.
(ii) In the event a Class D Holder's employment by the Company
and/or a Subsidiary of the Company terminates because of death or
Permanent Disability (as defined below) of the Class D Holder, then
(A) all unvested Class D Units held by such Class D Holder or his
Permitted Transferees at the time of such termination shall be
automatically forfeited to the Company without the payment of any
consideration to the Class D Holder or his Permitted Transferees (or
his estate) by the Company and (B) such Class D Holder or his
Permitted Transferees (or his estate) shall continue to hold all
Vested Class D Units held at the time of such termination.
(iii) In the event a Class D Holder's employment by the
Company and/or a Subsidiary of the Company terminates (1) because of
discharge or termination by the Company or its Subsidiary without
Cause or (2) with respect to any Class D Holder which is a party to
a written employment agreement with the Company or a Subsidiary of
the Company which provides such Holder with an express right to
terminate such agreement for material breach by the Company or such
Subsidiary, because of termination by the Class D Holder of such
employment for such material breach, then (A) all unvested Class D
Units held by such Class D
- 61 -
Holder or his Permitted Transferees at the time of such termination
shall be automatically forfeited to the Company without the payment
of any consideration to the Class D Holder or his Permitted
Transferees by the Company; (B) up to 50% of the Vested Class D
Units held by such Class D Holder or his Permitted Transferees at
the time of such termination shall be subject to repurchase by the
Company at a purchase price equal to the fair market value thereof
(without discount for lack of marketability and minority interest)
at the date of repurchase as determined by the Board in good faith;
and (C) the remaining 50% of the Vested Class D Units held by such
Class D Holder or his Permitted Transferees shall continue to be
held and not be subject to repurchase by the Company.
(iv) In the event a Class D Holder's employment by the Company
and/or a Subsidiary of the Company terminates because of resignation
by the Class D Holder from the Company or its Subsidiary (other than
in connection with a termination by such Class D Holder referenced
in subclause (2) of clause (iii) above), then (A) all unvested Class
D Units held by such Class D Holder or his Permitted Transferees at
the time of such termination shall be automatically forfeited to the
Company without the payment of any consideration to the Class D
Holder or his Permitted Transferees by the Company, and (B) up to
100% of the Vested Class D Units held by such Class D Holder or his
Permitted Transferees at the time of such termination shall be
subject to repurchase by the Company at a repurchase price equal to
the fair market value thereof (without discount for lack of
marketability and minority interest) at the date of repurchase as
determined by the Board in good faith.
(d) Procedures. To exercise any right to repurchase Class D Units
pursuant to this Schedule C, the Company shall deliver a written notice (an
"Election Notice") to the Class D Holder whose Class D Units are being
repurchased within 45 days following the event giving rise to such right. The
Election Notice shall state (i) the number of Class D Units being repurchased
and (ii) the repurchase price therefor. Such repurchase shall be consummated
within 60 days following delivery by the Company of such Election Notice. At the
closing of any such purchase, (A) such Class D Holder shall deliver any
documentation reasonably requested by the Company and necessary to Transfer such
Class D Units to the Company and (B) the Company shall deliver in cash or
otherwise in immediately available funds to such Class D Holder the purchase
price being paid by the Company for such Class D Units.
(e) Public Offering. In the event the Public Company intends to
consummate a Public Offering:
(i) subject to clause (vi) below, immediately prior to the
effective date of the Public Offering, all outstanding Class D Units
that have not vested prior to such effective date shall become
Vested Class D Units;
- 62 -
(ii) subject to clause (vi) below, the Company's right to
repurchase Vested Class D Units in accordance with this Schedule C
shall terminate and be of no further force and effect, as of the
effective date of such Public Offering;
(iii) the Vested Class D Units shall be valued as if all of
the equity securities of the Public Company (including those to be
sold pursuant to the Public Offering) were sold at the price per
share at which the equity securities of the Public Company are to be
sold pursuant to the Public Offering (which price shall be before
underwriter's discounts and before expenses) and the aggregate gross
proceeds from such hypothetical sale were distributed pursuant to
this Agreement in accordance with Article VIII thereof;
(iv) subject to clause (vi) below, immediately prior to the
effectiveness of the Public Offering, the Company shall distribute
or cause the distribution to the Class D Holder(s) the aggregate
number of shares of capital stock of the Public Company equal in
value to the value of the Vested Class D Units as determined in
accordance with clause (iii) above;
(v) each Class D Holder shall have the registration rights set
forth on Schedule E to this Agreement; and
(vi) with respect to shares of capital stock of the Public
Company distributed to Class D Holders on account of Class D Units
issued after December 31, 1997 to Class D Holders who were not
issued other Class D Units on or before December 31, 1997 but that
had not vested prior to the effective date of the Public Offering
("Restricted Class D Units"), the following provisions shall apply:
A. Shares of capital stock of the Public Company
distributed to Class D Holders on account of
Restricted Class D Units shall, as of the
effective date of the Public Offering, be
"Unvested Shares" for purposes of this clause
(vi).
B. Unvested Shares shall vest and become "Vested
Shares" for purposes of this clause (vi) on the
same dates and in the same percentages that the
underlying Restricted Class D Units would have
become Vested Class D Units pursuant to clause
(iii) of paragraph (b) above if no Public Offering
had occurred; provided, that the Board at its
option shall have the right to accelerate the
vesting of such Unvested Shares. For example,
assume a Class D Holder that was not previously
issued Class D Units was issued 8 Class D Units on
January 1, 1998, and the effective date of the
Public Offering was January 2, 1999. All of such
Class D Holder's 8 Class D Units would be Vested
Class D Units
- 63 -
immediately prior to the effective date of the
Public Offering, but 6 of those 8 Units would be
Restricted Class D Units. If 100 shares of capital
stock were issued to the Class D Holder on account
of the 8 Class D Xxxxx, 00 of such shares would be
Unvested Shares distributed on account of the 6
Restricted Class D Units. 25 of those 75 Unvested
Shares will become Vested Shares on each of
January 1, 2000, January 1, 2001, and January 1,
2002, respectively.
C. Unvested Shares shall be subject to forfeiture or
repurchase on the same terms as set forth in
paragraph (c) above. Unvested Shares shall be
treated as unvested Class D Units are treated
under such paragraph (c). The Public Company shall
be treated as the Company is treated under such
paragraph (c). Vested Shares shall no longer be
subject to forfeiture to the Public Company or
repurchase by the Public Company.
With respect to any grant of Class D Units after December 31, 1997 to a Class D
Holder who was issued other Class D Units on or before such date, (A) a
percentage of the Class D Units granted after December 31, 1997 shall be Vested
Class D Units as of the date of grant thereof, with such percentage to be equal
to the percentage of Class D Units issued to such Class D Holder prior to
December 31, 1997 that are Vested Class D Units as of the date of grant of Class
D Units after December 31, 1997; and (B) the remaining Class D Units granted
after December 31, 1997 shall become Vested Class D Units at the same time and
in the same proportions as the Class D Units issued to such Class D Holder prior
to December 31, 1997 but that are not Vested Class D Units as of the date of
grant of Class D Units after December 31, 1997.
(a) Definitions.
"Cause" means (i) embezzlement, theft or other misappropriation of
any property of the Company or any Affiliate, (ii) gross or willful misconduct
resulting in substantial loss to the Company or any Affiliate or substantial
damage to the reputation of the Company or any Affiliate, (iii) any act
involving moral turpitude which results in a conviction for a felony involving
moral turpitude, fraud or misrepresentation, (iv) gross neglect of his assigned
duties to the Company or any Affiliate, (v) gross breach of his fiduciary
obligations to the Company or any Affiliate, or (vi) any chemical dependence
which materially affects the performance of his duties and responsibilities to
the Company or any Affiliate; provided that in the case of the misconduct set
forth in clauses (iv) and (vi) above, such misconduct shall continue for a
period of 30 days following written notice thereof by the Company to the Holder.
- 64 -
"Change of Control" means a transaction or series of related
transactions (other than by the Company or any Subsidiary thereof with any
Subsidiary of the Company) to effect any of the following:
(i) a sale, redemption, exchange or other disposition of
shares (including by way of merger or consolidation) of the Common
Stock of the Operating Company (or any successor thereto), par value
$.01 per share, or options or warrants to acquire such Common Stock,
after which MBW Holdings holds 50% or less of the number of
outstanding shares of such Common Stock on the date of this
Agreement;
(ii) a sale, redemption, exchange or other disposition of
shares (including by way of merger or consolidation) of the Common
Stock of MBW Holdings (or any successor thereto), par value $.01 per
share, or options or warrants to acquire such Common Stock, after
which the Company holds 50% or less of the number of outstanding
shares of such Common Stock on the date of this Agreement;
(iii) a sale, redemption, exchange or other disposition of
Class A Units (including by way of merger or consolidation), or
options or warrants to acquire Class A Units, after which the Class
A Holders holding Class A Units on the date of this Agreement hold
50% or less of the number of outstanding Class A Units on the date
of this Agreement;
(iv) a sale of all or substantially all of the assets of the
Company, MBW Holdings or the Operating Company; or
(v) a liquidation, dissolution, or other winding up of the
affairs of the Company, whether voluntary or involuntary.
"Permanent Disability" means, as a result of physical or mental
illness or incapacity, the Holder has been unable to perform his duties to the
Company and/or a Subsidiary of the Company for a period of four consecutive
months or for an aggregate of more than six months in any 12-month period.
- 65 -
SCHEDULE D
To the Amended and Restated
Limited Liability Company Agreement
of MBW Investors LLC
COMPANY REPURCHASE OBLIGATION
(a) For purposes of this Schedule D, capitalized terms used herein
but not otherwise defined herein shall have the meanings given such terms in the
Amended and Restated Limited Liability Company Agreement of MBW Investors LLC,
dated as of December 31, 1996.
(b) In the event that a Separation Event (as defined in Schedule B
to the Agreement) occurs prior to the second anniversary of the date hereof and
prior to the Company having at least $200,000,000 of Sales (as defined in and
determined in accordance with Schedule B to this Agreement), Dartford and its
Permitted Transferees shall have the exclusive right and option during the
30-day period beginning on the effective date of the Separation Event to require
the Company to purchase (the "Company Repurchase Obligation") all (but not less
than all) of the Class A Units and Class B Units then held by Dartford and its
Permitted Transferees at a purchase price equal to the Fair Market Value thereof
(as defined below). Dartford shall exercise such right by delivering a written
notice (a "Dartford Election Notice") to the Board stating such election. In the
event that Dartford exercises such right, the Company shall consummate its
purchase of such Units and pay the purchase price therefor promptly following
determination of the Fair Market Value thereof, but no later than the 90th day
following the Company's receipt of the Dartford Election Notice, subject to
extension as provided below. At the closing of such purchase (i) Dartford shall
deliver to the Company any documentation reasonably requested by the Company and
necessary to transfer such Units to the Company and (ii) the Company shall
deliver in immediately available funds to Dartford the purchase price being paid
by the Company therefor.
The date by which the Company must consummate its purchase of Class
A Units and Class B Units pursuant to the Company Repurchase Obligation shall be
subject to automatic extension as provided herein. In the event that a
distribution by the Operating Company to MBW Holdings or by MBW Holdings to the
Company of the amount necessary to pay any purchase price due to Dartford or its
Permitted Transferees pursuant to the Company Repurchase Obligation would
violate any covenant or otherwise not be permitted under the credit agreement or
indenture relating to the Chase Borrowings or the senior subordinated
indebtedness of the Company or any Subsidiary of the Company, the date by which
the Company must consummate its purchase of Units pursuant to the Company
Repurchase Obligation shall be automatically extended to the seventh day
following the date on which the making of such distributions by the Operating
Company and MBW Holdings, respectively, would not violate such covenants or
agreements.
- 66 -
(c) "Fair Market Value" of Dartford's Class A Units and Class B
Units means the fair market value thereof (without discount for lack of
marketability or minority interest) at the time of repurchase by the Company, as
determined by an independent nationally-recognized investment banking firm
selected as follows:
(i) Within 10 days following its delivery of a Dartford
Election Notice to the Company, Dartford shall designate not less
than three independent nationally-recognized investment banking
firms by written notice to the Company.
(ii) Within 10 days after its receipt of such notice from
Dartford, the Company shall select one of the investment banking
firms designated by Dartford to make a Fair Market Value
determination of the Class A Units and Class B Units that are
subject to the Company Repurchase Obligation.
(iii) Such investment banking firm shall make such Fair Market
Value determination within 60 days after its selection by the
Company.
Alternatively, the Board and Dartford can agree to a Fair Market Value of the
Class A Units and Class B Units being purchased by the Company.
- 67 -
SCHEDULE E
To the Amended and Restated
Limited Liability Company Agreement
of MBW Investors LLC
REGISTRATION RIGHTS
1. REGISTRATION RIGHTS. The Company will perform and comply, and
cause each of its Subsidiaries to perform and comply, with such of the following
provisions as are applicable to it. Each holder of Units will perform and comply
with such of the following provisions as are applicable to such holder. Unless
this Schedule E otherwise requires, the term the "Company" shall include
Subsidiaries of the Company, as applicable. Capitalized terms used herein but
not otherwise defined herein shall have the meanings given such terms in the
Amended and Restated Limited Liability Company Agreement of MBW Investors LLC,
dated as of December 31, 1996 (the "LLC Agreement").
1.1. Demand and Piggyback Registration Rights.
1.1.1. Registration on Request. Any one or more of the
following (such Persons being the "Initiating Investor
Holders").
(i) one or more holders of Voting Units
representing at least fifty percent (50%) of the total
amount of Voting Units then outstanding, or
(ii) after the second anniversary of the closing
of an initial Public Offering of the Company, if Fenway
has not exercised its right in clause (iii) below,
Fenway, or
(iii) after December 31, 2001, if the Company has
not previously closed an initial Public Offering,
Fenway, may, by notice to the Company specifying the
intended method or methods of disposition, request that
the Company effect the registration under the Securities
Act of 1933, as amended (the "Securities Act"), for a
Public Offering of all or a specified part of the Units
held by such Initiating Investor Holders (the
"Registrable Investor Securities"). Promptly after
receipt of such notice, the Company will give notice of
such requested registration to all other holders of
Units (other than, in the case of the initial Public
Offering, of the Company, the Class D Units) (such
Units, collectively with the Registrable Investor
Securities, the "Registrable Securities"). The Company
will then use its commercially reasonable efforts to
effect the registration under the
- 68 -
Securities Act of the Registrable Investor Securities
which the Company has been requested to register by such
Initiating Investor Holders together with all other
Registrable Securities which the issuer has been
requested to register pursuant to Section 1.1.2 by other
holders of Registrable Securities by notice delivered to
the Company within twenty (20) days after the giving of
such notice by the Company (which request shall specify
the intended method of disposition of such Registrable
Securities), all to the extent requisite to permit the
disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities
which the Company has been so requested to register;
provided, however, that the Company shall not be
obligated to take any action to effect any such
registration pursuant to this Section 1.1.1:
(a) If the Company has previously
effected four (4) registrations of Registrable
Securities under this Section 1.1.1; provided,
however, that no registrations of Registrable
Securities which either (i) shall not have become
and remained effective in accordance with the
provisions of this Section 1, or (ii) shall not
have enabled the Initiating Investor Holders and
the holders of Registrable Securities joining
therein to include in such registration at least
90% of the Registrable Securities which they
desired to include, shall be included in the
calculation of the numbers of registrations
contemplated by this clause (a);
(b) Within 180 days immediately
following the effective date of any registration
statement pertaining to an underwritten public
offering of securities of the Company for its own
account (other than a registration on Form S-4
pursuant to Rule 145 of the Securities Act (a
"Rule 145 Transaction"), or a registration
relating solely to employee benefit plans);
(c) (i) On Form S-3 (or any successor
form), if the Company has previously effected two
or more registrations of Registrable Securities
under this Section 1.1.1 on Form S-3 (or any such
successor forms) or (ii) on any form other than
Form S-3 (or any successor form), if the Company
has previously effected two or more registrations
of Registrable Securities under this Section 1.1.1
on any such other forms; provided, however, that
no registrations of Registrable Securities which
shall not have become and remained effective in
accordance with
- 69 -
the provisions of this Section 1, and no
registrations of Registrable Securities pursuant
to which the Initiating Investor Holders and all
other holders of Registrable Securities joining
therein are not able to include at least 90% of
the Registrable Securities which they desired to
include, shall be included in the calculation of
numbers of registrations contemplated by this
clause (c);
(d) If the Company shall have
furnished to the Initiating Investor Holders and
such other holders of Registrable Securities which
the Company has been requested to register
pursuant to this Section 1.1.1 a certificate,
signed by the President of the Company, stating
that in the good faith judgment of the Board it
would be detrimental to the Company and its
shareholders for such Registration Statement to be
filed at the date filing would have been required,
in which case the Company shall have an additional
period of not more than 270 days within which to
file such Registration Statement; provided,
however, that the Company shall not so postpone a
registration pursuant to this clause (d) more than
once in any twelve month period;
(e) If the Registration under this
Section 1.1.1 covers less than ten percent (10%)
of the Registrable Securities then outstanding and
the proposed aggregate offering price to the
public of the Registrable Securities to be
included in the registration by all holders is
less than $5,000,000; or
(f) After the fifth (5th) anniversary
of the closing of the initial Public Offering of
the Company's Common Stock, if the Company's
Common Stock shall have been listed for trading on
a national or regional stock exchange or on NASDAQ
National Market, at all times during the preceding
twelve (12) consecutive months.
1.1.2. Piggyback Registration.
(a) General. If the Company at any
time proposes to register any of its securities
under the Securities Act, for its own account or
for the account of any holder of its securities,
for a Public Offering, the Company will each such
time give notice to all holders of Registrable
Securities of its intention to do so. Any such
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holder may, by written response delivered to the
Company within twenty (20) days after the
effectiveness of such notice, request that all or
a specified part of the Registrable Securities
held by such holder be included in such
registration. Such response shall also specify the
intended method of disposition of such Registrable
Securities. The Company thereupon will use its
commercially reasonable efforts to cause to be
included in such registration under the Securities
Act all Registrable Securities which the Company
has been so requested to register by such holders
of Registrable Securities, to the extent required
to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the
Registrable Securities so to be registered. No
registration of Registrable Securities effected
under this Section 1.1.2 shall relieve the Company
of any of its obligations to effect registrations
of Registrable Securities pursuant to Section
1.1.1 hereof.
(b) Excluded Transactions. The Company
shall not be obligated to effect any registration
of Registrable Securities under this Section 1.1.2
incidental to the registration of any of its
securities in connection with:
(i) Any Public Offering relating to
the acquisition or merger after the
date hereof by the Company or any of
its Subsidiaries of or with any other
business.
(ii) Any Public Offering relating to
employee benefit plans or dividend
reinvestment plans.
1.1.3. Payment of Expenses. The Company shall pay all
expenses of holders of Registrable Securities incurred in
connection with each registration of Registrable Securities
requested pursuant to this Section 1.1, other than
underwriting discount and commission, if any, and applicable
transfer taxes, if any.
1.1.4. Additional Procedures.
(a) Registrations Pursuant to Section
1.1.1. In the case of a registration pursuant to
Section 1.1.1 hereof, whenever holders holding a
majority of Units (the "Investor Majority
Holders") shall request that such registration
shall be effected pursuant to an underwritten
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offering, the Company shall include such
information in the written notices to holders of
Registrable Securities referred to in Section
1.1.1. In such event, the right of any holder of
Registrable Securities to have securities owned by
such holder included in such registration pursuant
to Section 1.1.1 shall be conditioned upon such
holder's participation in such underwriting and
the inclusion of such holders' Registrable
Securities in the underwriting (unless otherwise
mutually agreed upon by the Investor Majority
Holders and such holder) to the extent provided
herein. If requested by such underwriters, the
Company together with the holders of Registrable
Securities proposing to distribute their
securities through such underwriting will enter
into an underwriting agreement with such
underwriters for such offering containing such
representations and warranties by the Company and
such other terms and provisions as are customarily
contained in underwriting agreements with respect
to secondary distributions, including, without
limitation, customary indemnity and contribution
provisions.
(b) Registrations Pursuant to Section
1.1.2. Holders of Registrable Securities
participating in any Public Offering pursuant to
Section 1.1.2 shall take all such actions and
execute all such documents and instruments that
are reasonably requested by the Company to effect
the sale of their Registrable Securities in such
Public Offering, including, without limitation,
being parties to the underwriting agreement
entered into by the Company and any other selling
shareholders in connection therewith and being
liable in respect of the representations and
warranties by, and the other agreements (including
customary selling stockholder indemnifications and
"lock-up" agreements) on the part of, the Company
and any other selling shareholders to and for the
benefit of the underwriters in such underwriting
agreement; provided, however, that (i) with
respect to individual representations, warranties
and agreements of sellers of Registrable
Securities in such Public Offering, the aggregate
amount of such liability shall not exceed the
lesser of (a) such holder's pro rata portion of
any such liability, in accordance with such
holder's portion of the total number of
Registrable Securities included in the offering or
(b) such holder's net proceeds from such offering.
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1.2. Certain Other Provisions.
1.2.1. Underwriter's Cutback. Notwithstanding any
contrary provision of this Section 1, if, in connection with
any registration of Registrable Securities, the underwriter
determines that marketing factors (including, without
limitation, an adverse effect on the per share offering price)
require a limitation of the number of shares to be
underwritten, the underwriter may limit the number of
Registrable Securities to be included in the registration and
underwriting or may exclude Registrable Securities entirely
from such registration and underwriting, subject to the terms
of this paragraph. The Company shall so advise all holders of
the Company's securities that would otherwise be registered
and underwritten pursuant hereto, and the number of shares of
such securities, including Registrable Securities, that may be
included in the registration and underwriting (and thereby
sold by Persons other than the Company) shall be allocated so
that the number of Registrable Securities that may be included
shall be allocated among the holders of Registrable Securities
thereof in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by each such
holder at the time of filing the Registration Statement. No
securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such
registration. If any holder of Registrable Securities
disapproves of the terms of the underwriting, it may elect to
withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities so withdrawn shall
also be withdrawn from registration.
1.2.2. Other Actions. If and in each case when the
Company is required to use its commercially reasonable efforts
to effect a registration of any Registrable Securities as
provided in this Section 1, the Company shall take appropriate
and customary actions in furtherance thereof, including,
without limitation: (i) filing with the Securities and
Exchange Commission (the "Commission") a registration
statement and using reasonable efforts to cause such
registration statement to become effective, (ii) preparing and
filing with the Commission such amendments and supplements to
such registration statements as may be required to comply with
the Securities Act and to keep such registration statement
effective for a period not to exceed 180 days from the date of
effectiveness or such earlier time as the Registrable
Securities covered by such registration statement have been
disposed of in accordance with the intended method of
distribution therefor or the expiration of the time when a
prospectus relating to such registration is required to be
delivered under the Securities Act, (iii) use its commercially
reasonable efforts to register or qualify such Registrable
Securities under the state securities or "blue sky" laws of
such jurisdictions as the sellers shall reasonably request;
provided, however, that the Company shall not be obligated to
file any general
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consent to services of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it would not otherwise
be so subject; and (iv) otherwise cooperate reasonably with,
and take such customary actions as may reasonably be requested
by the holders of Registrable Securities in connection with
such registration.
1.2.3. Lock-Up. For a period of the lesser of (i) 180
days from the effective date of any registration statement
filed by the Company, or (ii) the shortest period applicable
to any Affiliate (as defined in the Securities Act) of the
Company who is a selling shareholder pursuant to such
registration statement, each holder of Registrable Securities
of the Public Company shall refrain from directly or
indirectly selling such securities except pursuant to such
registration statement.
1.2.4. Black-Out. Upon receipt of any notice from the
Company of the happening of any event of which any prospectus
included in such registration statement, as then in effect,
includes an untrue statement of material fact or omits to
state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, each
holder of Registrable Securities will forthwith discontinue
such holder's disposition of Registrable Securities pursuant
to the registration statement until such holder receives
copies of a supplemental or amended prospectus from the
Company and, if so directed by the Company, shall deliver to
the Company all copies, other than permanent file copies, then
in such holders' possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such
notice.
1.2.5. Selection of Underwriters and Counsel. The
underwriters and legal counsel to be retained in connection
with any Public Offering shall be selected by the Board.
1.3. Indemnification and Contribution.
1.3.1. Indemnities of the Company. In the event of any
registration of any Registrable Securities or other securities
of the Company or any of its Subsidiaries under the Securities
Act pursuant to this Section 1 or otherwise, and in connection
with any registration statement or any other disclosure
document produced by or on behalf of the Company including,
without limitation, reports required or other documents filed
under the Exchange Act, and other documents pursuant to which
securities of the Company are sold (whether or not for the
account of the Company), the Company will, and hereby does,
and will cause its Subsidiaries, jointly and severally to,
indemnify and hold
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harmless each seller of Registrable Securities, any other
holder of securities who is or might be deemed to be a
controlling Person of the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act, their respective direct and indirect partners, advisory
board members, directors, officers and shareholders, and each
other Person, if any, who controls any such seller or any such
holder within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act (each such person being
referred to herein as a "Covered Person"), against any losses,
claims, damages or liabilities, joint or several, to which
such Covered Person may be or become subject under the
Securities Act, the Exchange Act, state securities or blue sky
laws, common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact
contained or incorporated by reference in any registration
statement under the Securities Act, any preliminary prospectus
or final prospectus included therein, or any related summary
prospectus, or any amendment or supplement thereto, or any
document incorporated by reference therein, (ii) any omission
or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements
therein not misleading, or (iii) any violation or alleged
violation by the Company of any federal, state or common law
rule or regulation applicable to the Company, and will
reimburse such Covered Person for any legal or any other
expenses incurred by it in connection with investigating or
defending any such loss, claim, damage, liability, action or
proceeding; provided, however, that neither the Company nor
any of its Subsidiaries shall be liable to any Covered Person
in any such case to the extent that any such loss, claim,
damage, liability, action or proceeding arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration
statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement, incorporated
document or other such disclosure document in reliance upon
and in conformity with written information furnished to the
Company through an instrument duly executed by such Covered
Person specifically stating that it is for use in the
preparation thereof. The indemnities of the Company and of its
Subsidiaries contained in this Section 1.3.1 shall remain in
full force and effect regardless of any investigation made by
or on behalf of such Covered Person and shall survive any
transfer of securities.
1.3.2. Indemnities to the Company. The Company may
require, as a condition to including any securities in any
registration statement filed pursuant to this Section 1, that
the Company shall have received an undertaking satisfactory to
it from the prospective seller of such securities,
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to indemnify and hold harmless the Company, each director of
the Company, each officer of the Company who shall sign such
registration statement and each other Person (other than such
seller), if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the
Exchange Act (each such person being referred to herein as a
"Covered Person") with respect to any statement in or omission
from such registration statement, any preliminary prospectus
or final prospectus included therein, or any amendment or
supplement thereto, or any other disclosure document
(including, without limitation, reports and other documents
filed under the Exchange Act) or any document incorporated
therein, if such statement or omission was made in reliance
upon and in conformity with written information furnished to
the Company through an instrument executed by such seller,
specifically stating that it is for use in the preparation of
such registration statement, incorporated document, or other
disclosure document. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on
behalf of the Company or any such director, officer or
controlling Person and shall survive any transfer of
securities.
1.3.3. Indemnification Procedures. Promptly after
receipt by a Covered Person of notice of the commencement of
any action or proceeding involving a claim of the type
referred to in the foregoing provisions of this Section 1.3,
such Covered Person will, if a claim in respect thereof is to
be made by such Covered Person against any indemnifying party,
give written notice to each such indemnifying party of the
commencement of such action; provided, however, that the
failure of any Covered Person to give notice to such
indemnifying party as provided herein shall not relieve any
indemnifying party of its obligations under the foregoing
provisions of this Section 1.3, except and solely to the
extent that such indemnifying party is actually prejudiced by
such failure to give notice. In case any such action is
brought against a Covered Person, each indemnifying party will
be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel
reasonably satisfactory to such Covered Person (who shall not,
except with the consent of the Covered Person, be counsel to
such an indemnifying party), and after notice from an
indemnifying party to such Covered Person of its election so
to assume the defense thereof, such indemnifying party will
not be liable to such Covered Person for any legal or other
expenses subsequently incurred by the latter in connection
with the defense thereof; provided, however, that (i) if the
Covered Person reasonably determines that there may be a
conflict between the positions of such indemnifying party and
the Covered Person in conducting the defense of such action or
if the Covered Person reasonably concludes that representation
of both parties by the same counsel would be inappropriate due
to actual or
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potential differing interests between them, then counsel for
the Covered Person shall conduct the defense to the extent
reasonably determined by such counsel to be necessary to
protect the interests of the Covered Person and such
indemnifying party shall employ separate counsel for its own
defense, (ii) the indemnifying party shall bear the legal
expenses incurred in connection with the conduct of, and the
participation in, the defense as referred to in clauses (i)
and (ii) above. If, within a reasonable time after receipt of
the notice, such indemnifying party shall not have elected to
assume the defense of the action, such indemnifying party
shall be responsible for any legal or other expenses incurred
by such Covered Person in connection with the defense of the
action, suit, investigation, inquiry or proceeding. No
indemnifying party will consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Covered Person of a release from all
liabilities in respect to such claim or litigation.
1.3.4. Contribution. If the indemnification provided for
in Sections 1.3.1 or 1.3.2 hereof is unavailable to a party
that would have been a Covered Person under any such Section
in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to
therein, then each party that would have been an indemnifying
party thereunder shall, in lieu of indemnifying such Covered
Person, contribute to the amount paid or payable by such
Covered Person as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in
such proportion as is appropriate to reflect the relative
fault of such indemnifying party on the one hand and such
Covered Person on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof).
The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by such
indemnifying party or such Covered Person and the parties'
relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just or equitable if
contribution pursuant to this Section 1.3.4 were determined by
pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred
to in the preceding sentence. The amount paid or payable by a
contributing party as a result of the losses, claims, damages
or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 1.3.4 shall include any
legal or other expenses reasonably incurred by such Covered
Person in connection with investigating or defending any such
action or claim. No Person guilty of fraudulent
misrepresentation (within the meaning of
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Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such
fraudulent misrepresentation.
1.3.5. Limitation on Liability of Holders of Registrable
Securities. The liability of each holder of Registrable
Securities in respect of any indemnification or contribution
obligation of such holder arising under this Section 1.3 shall
not in any event exceed an amount equal to the net proceeds to
such holder (after deduction of all underwriters' discounts
and commissions and all other expenses paid by such holder in
connection with the registration in question) from the
disposition of the Registrable Securities disposed of by such
holder pursuant to such registration.
1.4. Survival.
1.4.1. Survival. The registration rights set forth in
this Section 1 shall survive the dissolution of MBW Investors LLC pursuant to
Section 15.2(d) of the LLC Agreement and shall remain binding on the
Subsidiaries of MBW Investors LLC.
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