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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April 8, 1998
Commission file number 33-97752
VAN DE KAMP'S, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 43-172518
-------- ---------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
1000 St. Louis Union Station
St. Louis, Missouri 63103
(Address of Principal Executive Office, Including Zip Code)
(314) 241-0303
(Registrant's Telephone Number, Including Area Code)
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Item 1. Change in Control
There has been a change in control of Van de Kamp's, Inc. (the
"Company"), as described below. Prior to April 8, 1998, 100% of the Company's
voting securities was directly held by VDK Holdings, Inc. ("VDK Holdings"),
and 100% of the VDK Holdings' voting securities was directly held by VDK
Foods LLC ("VDK LLC"). Accordingly, 100% of the Company's voting securities
was indirectly held by VDK LLC. As of the Change in Control Event (defined
below), Aurora/VDK LLC ("New LLC") directly holds 100% of the VDK Holdings'
voting securities, VDK Holdings continues to hold directly 100% of the
Company's voting securities, and MBW Investors LLC ("MBW LLC") and VDK LLC
directly hold 55.5% and 44.5%, respectively, of the voting interests in New
LLC and, therefore, indirectly hold 55.5% and 44.5%, respectively, of the
Company's voting securities.
On April 8, 1998, MBW LLC and VDK LLC formed New LLC. MBW LLC
contributed 100% of the stock of Aurora Foods Holdings Inc., and VDK LLC
contributed 100% of the stock of VDK Holdings, to New LLC (the "Contribution").
In return for the Contribution, MBW LLC was issued 55.5% of the voting interests
in New LLC plus a right to receive a special $8.5 million priority distribution
from New LLC, and VDK LLC was issued 44.5% of the voting interests in New LLC
plus a right to receive a special $42.4 million priority distribution from New
LLC (the "Change in Control Event").
The amount and source of consideration used by MBW LLC and VDK LLC for
their acquisition of interests in New LLC were their equity holdings in Aurora
Foods Holdings Inc. and VDK Holdings, respectively.
Securityholders Agreement
In connection with the formation of New LLC and the Contribution,
New LLC, MBW LLC, VDK LLC and substantially all of the members (based on
percentage interests) of MBW LLC and VDK LLC (the parties signatories thereto
collectively, the "Stockholders") entered into a Securityholders Agreement
(the "Securityholders Agreement"), dated as of April 8, 1998, which sets
forth certain rights and obligations of the Stockholders and New LLC and its
subsidiaries, including the Company. The following discussion summarizes the
terms of the Securityholders Agreement that the Company believes are material
to the manner in which Directors of the Company are elected and the manner in
which other significant actions by the Company are taken. This summary is
qualified in its entirety by reference to the full text of the
Securityholders Agreement, which is filed as an Exhibit to this Form 8-K.
For the purposes of the following discussion, the terms "Fenway",
"MDC", "Dartford", "UBS" and "Tiger Oats" shall have their respective meanings
as set forth in the
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Securityholders Agreement. The Securityholders Agreement provides that the
Board of Directors of New LLC and each of its subsidiaries, including the
Company, shall initially each consist of ten members, of which Fenway will
designate three (each a "Fenway Designee" and collectively, the "Fenway
Designees"), MDC will designate three (each an "MDC Designee" and
collectively, the "MDC Designees"), Dartford will designate two (each a
"Dartford Designee" and collectively, the "Dartford Designees"), UBS will
designate one (the "UBS Designee") and Tiger Oats will designate one (the
"Tiger Designee"). In the event that New LLC or one of its subsidiaries
(which could include the Company) consummates an initial public offering, the
Securityholders Agreement provides that the Board of Directors of the public
company and each of its subsidiaries, including the Company, will initially
consist of the designees set forth above. For so long as Ian R. Wilson is
Chairman and Chief Executive Officer of New LLC or the public company, Mr.
Wilson will be one of the Dartford Designees. Upon the election of an
independent director to the Board of Directors of the public company who is
mutually acceptable to two of the three of Fenway, MDC and Dartford, the
number of directors will be increased to 11. Upon the election of a second
independent director to the Board of Directors of the public company, who is
mutually acceptable to two of the three of Fenway, MDC and Dartford the UBS
Designee will resign from the Board of Directors of the public company and
thereafter UBS is not entitled to have any designee elected to the Board of
Directors. Upon the appointment of a new Chief Executive Officer other than
Ian R. Wilson to the Board of Directors of the public company, the Tiger
Designee will resign from the Board of Directors of the public company and
thereafter Tiger Oats is not entitled to have any designee elected to the
Board of Directors of the public company. Because the Securityholders
Agreement provides that the Board of Directors of the Company will be the
same as the Board of Directors of the public company, the Board of Directors
of the Company will change in the manner set forth above.
After an initial public offering by New LLC or one of its
subsidiaries, the number of Fenway Designees or MDC Designees on the Board of
New LLC and its subsidiaries, including the Company, will (i) decrease to two
when the number of shares of common stock beneficially owned by Fenway or
MDC, as the case may be, is less than 50% of the total number of shares of
common stock of the public company held by MDC on the closing of such initial
public offering (excluding any shares held under a proxy), (ii) decrease to
one when the number of shares of common stock of the public company
beneficially owned by Fenway or MDC, as the case may be, is less than 5% of
the total number of shares of common stock of the public company outstanding
at the closing of such public offering, and (iii) decrease to zero when the
number of shares of common stock of the public company beneficially owned by
Fenway or MDC, as the case may be, is equal to zero. The number of Dartford
Designees will (i) decrease to one when the number of shares of common stock
of the public company beneficially owned by Dartford is less than 5% of the
total number of shares of common stock outstanding at the closing of the
initial public offering and (ii) decrease to zero when the number of shares
of common stock of the public company beneficially owned by Dartford is equal
to zero. Because the Securityholders Agreement provides that the Board of the
Company will be the same as the Board of the public company, the Board of the
Company will change in the manner set forth above.
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The Securityholders Agreement provides, in general, that the Board
of New LLC and its subsidiaries, including the Company, will act by majority
vote. However, the affirmative consent of Fenway and MDC is required for the
following actions: (a) issuance by New LLC or any subsidiary, including the
Company, of additional equity, including by way of a public offering, or the
approval or adoption of any option or equity incentive plan or any material
non-equity incentive plan; (b) merger, consolidation, recapitalization,
liquidation or other reorganization with respect to New LLC or any
subsidiary, including the Company, or any sale of any business before an
initial public offering if the transaction value is at least $100,000,000 and
after an initial public offering, sale of a business representing at least
50% of the pre-transaction consolidated revenues, assets, or EBITDA of New
LLC and its subsidiaries for the most recently completed four fiscal
quarters; (c) acquisition of stock or assets by the Company or a subsidiary
before an initial public offering if the transaction value is at least
$100,000,000 and after an initial public offering, where the revenues, assets
or EBITDA of the business to be acquired represents more than 50% of the
pre-transaction consolidated revenues, assets or EBITDA of New LLC and its
subsidiaries for the most recently completed four fiscal quarters; and (d)
removal or termination of Ian R. Wilson as Chief Executive Officer or the
hiring or termination of any subsequent Chief Executive Officer. The
above-mentioned approval rights of MDC and Fenway will expire on the earlier
of (i) the date that is 30 months after the closing of a public offering by
New LLC or one of its subsidiaries, or (ii) with respect to either Fenway or
MDC, such time as it shall not beneficially own a number of shares of common
stock of the public company equal to at least 50% of the shares of common
stock of the public company beneficially owned by MDC (excluding any shares
held under a proxy) at the closing of a public offering by New LLC or one of
its subsidiaries.
Beneficial Ownership
100% of the Company's common stock is held directly by VDK Holdings.
New LLC holds directly 100% of VDK Holdings' outstanding stock. The voting
interests of New LLC are held directly 55.5% by MBW LLC and 44.5% by VDK LLC.
The beneficial ownership of the voting securities of the Company depends on the
action for which a vote is required. The election of directors of the Company
will be determined pursuant to the Securityholders Agreement as described above.
Certain significant actions by the Company require the consent of MDC and Fenway
under the Securityholders Agreement, as described above. All other actions
requiring the affirmative vote of the Company's stockholders may be effected by
the vote of a majority of the voting interests of MBW LLC and VDK LLC taken
together as a single class, pursuant to the Securityholders Agreement. The
percentage of voting interests of the combined MBW LLC and VDK LLC group is set
forth on Schedule B to the Securityholders Agreement. The following table sets
forth certain information regarding the beneficial ownership of the voting
membership interests in MBW LLC and VDK LLC by each person who is known to the
Company to be the beneficial owner of more than 5% of such voting interests.
Page 4 of ___
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<TABLE>
<CAPTION>
MBW LLC VDK LLC
Voting Interests Voting Interests
Beneficially Owned Beneficially Owned
-------------------- ------------------
Number Percent Number Percent
---------- ------- -------- --------
Name and
Address of Owner
- ----------------
<S> <C> <C> <C> <C>
Fenway Partners Capital Fund, L.P.(1) 35,480.9 25.0% 62,430.4 54.3%
152 West 57th Street
New York, NY 10019
McCown De Leeuw & Co. III, L.P.(2)(3) 94,019.2 66.3% 0 0.0%
c/o McCown De Leeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, CA 94025
McCown De Leeuw & Co. III (Europe), L.P.(2) 94,019.2 66.3% 0 0.0%
c/o McCown De Leeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, CA 94025
McCown De Leeuw & Co. III (Asia), L.P.(2) 94,019.2 66.3% 0 0.0%
c/o McCown De Leeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, CA 94025
Gamma Fund LLC(2) 94,019.2 66.3% 0 0.0%
c/o McCown De Leeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, CA 94025
McCown De Leeuw & Co. IV, L.P.(2) 94,019.2 66.3% 0 0.0%
c/o McCown De Leeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, CA 94025
</TABLE>
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<TABLE>
<CAPTION>
MBW LLC VDK LLC
Voting Interests Voting Interests
Beneficially Owned Beneficially Owned
-------------------- ------------------
Number Percent Number Percent
---------- ------- -------- --------
Name and
Address of Owner
- ----------------
<S> <C> <C> <C> <C>
Delta Fund LLC(2) 94,019.2 66.3% 0 0.0%
c/o McCown De Leeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, CA 94025
California Public Employees' Retirement 21,538.4 15.2% 0 0.0%
System(2)
Lincoln Plaza, 400 P Street
Sacramento, CA 95814
Dartford Partnership L.L.C.(4) 8,173.1 5.8% 6,537.1 5.7%
456 Montgomery Street, Suite 2200
San Francisco, CA 94104
Tiger Oats Limited(5) 0 0.0% 22,410.7 19.5%
85 Bute Lane
Sandown, Sandton 2196
Republic of South Africa
UBS Capital LLC(6) 0 0.0% 22,410.7 19.5%
299 Park Avenue, 34th Floor
New York, NY 10171
</TABLE>
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(1) Includes 660.31 and 495.54 voting interests in MBW LLC and 479.96 and
266.52 voting interests in VDK LLC held by FPIP, LLC and FPIP Trust
LLC, respectively, as assignees of Fenway Partners Capital Fund,
L.P. (the "Fenway Fund"). The general partner of the Fenway Fund is
Fenway Partners, L.P., a Delaware limited partnership, whose general
partner is Fenway Partners Management Inc., a Delaware corporation.
FPIP, LLC and FPIP Trust, LLC are entities formed by the investment
professionals of Fenway Partners, Inc. to make co-investments along
side the Fenway Fund. The managing member of each of FPIP, LLC and
FPIP Trust, LLC is Fenway Partners, Inc. Peter Lamm, Richard
Dresdale, and Andrea Geisser, who are or will be elected as
directors of the Company, are directors and officers of each of
Fenway Partners Management, Inc. and Fenway Partners, Inc. and as
such may be deemed to have the power to vote or dispose of the
voting interests held by the Fenway Fund, FPIP, LLC and FPIP Trust
LLC. Each of Messrs. Lamm, Dresdale and Geisser has no direct
ownership of any voting interests in MBW LLC or VDK LLC and
disclaims beneficial ownership of any of such interests except to
the extent of their direct or indirect partnership interests in the
Fenway Fund, FPIP, LLC and FPIP Trust LLC.
(2) Includes 34,655.8 voting interests held by McCown De Leeuw & Co. III,
L.P. ("MDC III"), an investment partnership whose general partner is
MDC Management Company III, L.P. ("MDC"), 2,460.3 voting interests
held by McCown De Leeuw & Co. III (Europe), L.P., an investment
partnership whose general partner is MDC, 576.6 voting interests held
by McCown De Leeuw & Co. III (Asia), L.P., an investment partnership
whose general partner is MDC Management Company IIIA, L.P. ("MDC
IIIA"), 749.7 voting interests held by Gamma Fund LLC, a California
limited liability company, 33,076.9 voting interests held by McCown
De Leeuw & Co. IV, L.P., an investment partnership whose general
partner is MDC Management Company IV, L.P. ("MDC IV") and 961.5 voting
interests held by Delta Fund LLC, a California limited liability
company. In addition, under an irrevocable proxy, MDC III has the
power to vote the 21,538.4 voting interests held by California Public
Employees Retirement System. The voting members of Delta Fund LLC and
Gamma Fund LLC are George E. McCown, David E. De Leeuw, David E. King,
Robert B. Hellman, Jr., Charles Ayres, and Steven A. Zuckerman, who
are also the only general partners of MDC, MDC IIIA and MDC IV.
Messrs. De Leeuw & Ayres are to be elected as directors of the
Company. Voting and dispositive decisions regarding the securities are
made by Mr.
Page 6 of ___
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McCown and Mr. De Leeuw, as Managing General Partners of each of MDC,
MDC IIIA, and MDC IV, who together have more than the required
two-thirds-in-interest vote of the Managing General Partners necessary
to effect such decision on behalf of such entity. Voting and
dispositive decisions regarding securities owned by Delta Fund LLC and
Gamma Fund LLC are made by a vote or consent of a majority in number of
the voting members of Gamma Fund LLC and Delta Fund LLC. Each of
Messrs. McCown, De Leeuw, King, Hellman, Ayres, and Zuckerman have no
direct ownership of any voting interests and disclaim beneficial
ownership of any such interests except, in the case of Gamma Fund
LLC and Delta Fund LLC, to the extent of their proportionate
membership interests.
(3) Under an irrevocable proxy, California Public Employees Retirement
System has granted McCown De Leeuw & Co. III, L.P. the right to vote
all of the voting interests it holds.
(4) Includes 80 voting interests of MBW LLC and 685.7144 voting interests
of VDK LLC transferred to a trust for the benefit of certain family
members of Ian R. Wilson, an aggregate of 200 voting interests of MBW
LLC and 400 voting interests of VDK LLC transferred to trusts for
the benefit of certain family members of Ray Chung, and 84.615 voting
interests of MBW LLC and 110 voting interests of VDK LLC transferred
to certain family members and trusts for the benefit of certain
family members of James B. Ardrey. Such permitted transferees of
Dartford Partnership L.L.C. ("Dartford") are included under the
Securityholders Agreement in determining the number of persons
Dartford may designate to the Board of Directors of a public company
and the Board of Directors of the Company; however, Dartford
disclaims beneficial ownership of such voting interests. Mr. Ian R.
Wilson is the managing partner, and Messrs. James B. Ardrey and Ray
Chung and Ms. M. Laurie Cummings are partners, of Dartford and, as
such, they may be deemed to have the power to vote or dispose of
Dartford's voting interests. Messrs. Wilson and Ardrey are directors
of the Company. Each of Messrs. Wilson, Ardrey, and Chung and
Ms. Cummings have no direct ownership of any voting interests held
by Dartford or its permitted transferees and disclaim beneficial
ownership of any such interests.
(5) As of August 31, 1996, Tiger Oats' interests in VDK LLC have been held
by Gloriande (Luxembourg) SarL, a corporation organized under the laws
of Luxembourg ("Gloriande"), which is the record owner of the Company's
Common Stock. Gloriande is an indirect wholly-owned subsidiary of Tiger
Oats. Prior to August 31, 1996, Tiger Oats' interests in VDK LLC were
held by National Sun Industries, Inc., a North Dakota corporation
("National Sun") and an indirect wholly-owned subsidiary of Tiger Oats.
The shares of capital stock of Tiger Oats are traded publicly on the
Johannesburg Stock Exchange. Mr. Clive A. Apsey, who is a director of
the Company, is a director of Tiger Oats and as such may be deemed to
have the power to vote or dispose of any of the voting interests deemed
beneficially owned by Tiger Oats. Mr. Apsey disclaims beneficial
ownership of any such interests.
(6) UBS is a wholly-owned indirect subsidiary of Union Bank of Switzerland.
The shares of capital stock of Union Bank of Switzerland are publicly
held. Mr. Charles J. Delaney, a director of the Company, is the
President of UBS and disclaims beneficial ownership of the voting
interests held by UBS.
Item 5. Other Events
Certain 12% Senior Subordinated Notes due 2005 (the "VDK Notes") were
issued under an Indenture, dated as of September 15, 1995 (the "VDK Indenture"),
between the Company and Harris Trust and Savings Bank, as Trustee. The terms of
the VDK Notes provide, inter alia, that within 30 days after a Change of
Control, the Company is required to offer to purchase (the "Buyback") the VDK
Notes at 101% of their principal amount plus accrued interest.
The Change of Control Event constitutes a Change of Control under the
VDK Notes. Accordingly, in connection with the Buyback, the Company has made
arrangements pursuant to a Commitment Letter dated April 8, 1998 between the
Chase Manhattan Bank,
Page 7 of ___
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Chase Securities, Inc. and the Company for a standby credit facility with
respect to the VDK Notes to provide funding for the Buyback.
Item 7. Exhibits
4.1 Securityholders Agreement, dated as of April 8, 1998, by and among
Aurora/VDK LLC, MBW Investors LLC, VDK Foods LLC and the other
parties signatory thereto.
Page 8 of ___
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned, hereunto duly authorized.
VAN DE KAMP'S, INC.
Date: April 21, 1998 By /s/ Thomas O. Ellinwood
------------------------------------
Thomas O. Ellinwood
President
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Execution Copy
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AURORA/VDK LLC
SECURITYHOLDERS AGREEMENT
April 8, 1998
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<PAGE>
Table of Contents
<TABLE>
<S> <C>
1. EFFECTIVENESS; DEFINITIONS..........................................................................1
1.1. Closing. ...........................................................................1
1.2. Definitions. .......................................................................1
2. VOTING AGREEMENT....................................................................................2
2.1. Board of Managers....................................................................2
2.1.1. Designation of Board of Managers. ...............................2
2.1.2. Resignation; Removal.............................................2
2.1.3. Board Action.....................................................2
2.1.3.1. Certain Actions...............................2
2.2. Board of Directors of Subsidiaries and Successor to New LLC..........................2
2.2.1. Election of Directors............................................3
2.2.2. Resignation; Removal.............................................3
2.2.3. Board Actions....................................................3
2.2.3.1. Certain Actions...............................3
2.2.4. Required Action. ................................................3
2.3. Actions of New LLC Members...........................................................3
2.4. Further Actions......................................................................4
. ..................................................................................4
2.5. Public Offering......................................................................4
2.6. Observation Rights...................................................................5
2.6.1. CALPERS..........................................................5
2.6.2. UBS..............................................................5
2.6.3. Tiger............................................................5
2.6.4. General..........................................................6
3. CERTAIN TRANSFER RIGHTS AND RESTRICTIONS; "TAG ALONG" AND "DRAG ALONG"
RIGHTS..............................................................................................6
3.1. Transfer Restrictions................................................................6
3.1.1. New LLC, MBW LLC and VDK LLC Interests...........................6
3.1.2. Public Company and Subsidiary Shares. ..........................6
3.2. Tag Along............................................................................7
3.2.1. Notice...........................................................7
3.2.2. Exercise.........................................................7
3.2.3. Reduction of Tag Along Interests Sold............................8
3.2.4. Irrevocable Offer................................................8
3.2.5. Additional Compliance............................................9
3.2.6. Excluded Transactions; Termination. ............................9
3.3. Drag Along...........................................................................9
3.3.1. Exercise.........................................................9
3.4. Miscellaneous.......................................................................10
</TABLE>
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<TABLE>
<S> <C>
3.4.1. Certain Legal...................................................10
3.4.2. Further.........................................................11
3.4.3. Expenses........................................................12
3.4.4. Closing.........................................................12
3.4.5. Termination.....................................................12
4. PREEMPTIVE RIGHT...................................................................................12
4.1. Right of Participation for New LLC Interests........................................13
4.1.1. Offer...........................................................13
4.1.2. Exercise........................................................14
4.1.2.1. General......................................14
4.1.2.2. Irrevocable Acceptance.......................14
4.1.2.3. Time Limitation..............................15
4.1.3. Other Securities. .............................................15
4.1.4. Further Assurances..............................................15
4.1.5. Closing.........................................................16
4.2. Right of Participation for Subsidiary Stock.........................................16
4.2.1. Offer...........................................................16
4.2.2. Exercise........................................................17
4.2.2.1. General......................................17
4.2.2.2. Irrevocable Acceptance.......................17
4.2.2.3. Time Limitation..............................17
4.2.3. Other Securities................................................18
4.2.4. Further Assurances..............................................18
4.2.5. Closing.........................................................18
4.3. Certain Legal Requirements..........................................................19
4.4. Termination.........................................................................19
5. NEGATIVE COVENANTS.................................................................................19
5.1. Required Approvals by MDC and Fenway................................................19
6. REGISTRATION RIGHTS................................................................................21
6.1. Demand Registration Rights..........................................................21
6.1.1. General.........................................................21
6.1.1.1. Form.........................................23
6.1.2. Payment of Expenses.............................................24
6.1.3. Additional Procedures. ........................................24
6.2. Piggyback Registration Rights.......................................................24
6.2.1. Piggyback Registration..........................................24
6.2.1.1. General......................................24
6.2.1.2. Excluded Transactions........................25
6.2.2. Payment of Expenses.............................................25
6.2.3. Additional Procedures...........................................25
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
6.2.4. Termination. ..................................................26
6.3. Certain Other Provisions............................................................26
6.3.1. Underwriter's Cutback...........................................26
6.3.2. Other Actions...................................................28
6.3.3. Selection of Underwriters and Counsel...........................30
6.3.4. Lock-Up.........................................................30
6.4. Indemnification and Contribution. .................................................30
6.4.1. Indemnities of New LLC, the Public Company and their
Subsidiaries.....................................................................30
6.4.2. Indemnities to New LLC, the Public Company or their
Subsidiaries.....................................................................31
6.4.3. Indemnification Procedures. ...................................32
6.4.4. Contribution. .................................................33
6.4.5. Limitation on Liability of Holders of Registrable Securities....33
6.5. Reports Under Securities Exchange Act...............................................34
6.6. Future Changes in Registration Requirements. ......................................34
7. CERTAIN ISSUANCES AND TRANSFERS, ETC...............................................................35
7.1. Transfers to Permitted Transferees. ...............................................35
7.2. Other Transfers and Issuances. ....................................................35
8. REMEDIES...........................................................................................35
8.1. Generally. ........................................................................35
9. LEGENDS............................................................................................36
9.1. Restrictive Legend. ...............................................................36
9.2. Securities Act Legends. ...........................................................36
9.3. Stop Transfer Instruction...........................................................36
10. AMENDMENT, TERMINATION, ETC........................................................................36
10.1. Oral Modifications.................................................................36
10.2. Written Modifications..............................................................37
10.3. Termination........................................................................37
11. DEFINITIONS........................................................................................37
11.1. Certain Matters of Construction....................................................37
11.2. Definitions........................................................................37
12. MISCELLANEOUS......................................................................................45
12.1. Authority; Effect. ...............................................................45
12.2. Notices............................................................................45
12.3. Binding Effect, etc. ..............................................................46
12.4. Descriptive Headings...............................................................46
</TABLE>
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<TABLE>
<S> <C>
12.5. Counterparts.......................................................................46
12.6. Severability.......................................................................46
13. GOVERNING LAW......................................................................................46
13.1. Governing Law. ...................................................................46
</TABLE>
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SECURITYHOLDERS AGREEMENT
This Securityholders Agreement (the "Agreement") is made as of April 8,
1998 by and among the parties set forth on Schedule A hereto:
Recitals
On or about the date hereof, in exchange for Class A Units
(the "Class A Units") and other interests in Aurora/VDK LLC, a
Delaware limited liability company ("New LLC"), MBW Investors
LLC, a Delaware limited liability company ("MBW LLC"), has
contributed all of the outstanding shares of capital stock of
Aurora Foods Holdings Inc., a Delaware corporation ("Aurora
Holdings"), to New LLC, and VDK Foods LLC, a Delaware limited
liability company ("VDK LLC"), has contributed all of the
outstanding shares of capital stock of VDK Holdings, Inc., a
Delaware corporation ("VDK Holdings"), to New LLC pursuant to
a Contribution Agreement dated as of April 8, 1998 among MBW
LLC and VDK LLC (the "Contribution Agreement").
The parties believe that it is in the best interests of New
LLC, MBW LLC, VDK LLC and their respective members to: (i)
provide for certain transfer restrictions; (ii) provide for
certain rights and obligations with respect to the election of
the board of managers of New LLC and of directors of the
Public Company (as defined) and the subsidiaries of New LLC
and the Public Company; (iii) provide for registration rights;
and (iv) set forth their agreements on certain other matters.
Agreement
Therefore, the parties hereto hereby agree as follows:
1. EFFECTIVENESS; DEFINITIONS.
1.1. Closing. This Agreement shall become effective upon consummation
of the closing (the "Closing") under the Contribution Agreement.
1.2. Definitions. Certain terms are used in this Agreement as
specifically defined herein. These definitions are set forth or referred to in
Section 11 hereof.
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2. VOTING AGREEMENT.
2.1. Board of Managers.
2.1.1. Designation of Board of Managers. Each holder of Class
A Units ("Class A Holder") agrees to cast all votes to which such
holder is entitled to vote in respect of the Class A Units and any
other interests in New LLC now or hereinafter acquired (collectively,
"New LLC Interests"), whether at any meeting or by written consent or
otherwise, to cause, and New LLC shall cause, the Board of Managers of
New LLC (the "Managers Board"), to consist of ten Managers and to cause
to be elected to the Managers Board three individuals designated by
Fenway (each a "Fenway Designee" and collectively, the "Fenway
Designees"), three individuals designated by MDC (each an "MDC
Designee" and, collectively, the "MDC Designees"), two individuals
designated by Dartford (each a "Dartford Designee" and collectively,
the "Dartford Designees"), one individual designated by UBS (the "UBS
Designee") and one individual designated by Tiger (the "Tiger
Designee").
2.1.2. Resignation; Removal. Except as provided in Section
2.5, no Fenway Designee, MDC Designee, Dartford Designee, UBS Designee
ot Tiger Designee may be removed from the Managers Board without the
consent of the designating party. By written notice to New LLC, Fenway,
MDC, Dartford, UBS or Tiger may (i) remove and replace any of its
authorized representatives from such position and (ii) designate
another representative to fill any vacancy caused by the resignation of
any of its respective designees, except in the case of the resignation
of the UBS Designee or the Tiger Designee pursuant to Section 2.5. Each
holder of New LLC Interests and the other parties hereto shall promptly
take any and all actions necessary to cause the appointment or election
of such designees to the Managers Board pursuant to the New LLC
Agreement.
2.1.3. Board Action. Except as provided in Section 5.1, the
Managers Board shall act by majority vote of the entire Managers Board
with each member of the Managers Board having one vote. All action to
be taken by the Managers Board at a meeting shall require the presence
and consent of at least 6 members of the Managers Board. Any action by
written consent of the Managers Board shall require the consent of at
least 6 members of the Managers Board.
2.1.3.1. Certain Actions. Any transaction with
Affiliates taken after the date hereof involving any material
conflict of interest may only be taken by majority vote of the
disinterested members of the Managers Board other than any
transaction pursuant to agreements in effect on the date
hereof.
2.2. Board of Directors of Subsidiaries and Successor to New LLC.
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2.2.1. Election of Directors. Subject to the provisions of
Section 2.5, each of the parties hereto agrees to take such action as
may be necessary or desirable to cause New LLC in its capacity as a
stockholder of its Subsidiaries, to elect the persons who are Fenway
Designees, MDC Designees, Dartford Designees, the UBS Designee and the
Tiger Designee (as provided in Section 2.1.1 above) to serve as the
directors on the board of directors of each Subsidiary of New LLC (each
such board of directors, a "Subsidiary Board").
2.2.2. Resignation; Removal. Except as provided in Section
2.5, no Fenway Designee, MDC Designee, Dartford Designee, UBS Designee
or Tiger Designee may be removed from any Subsidiary Board without the
consent of the designating party. In accordance with the charter and
by-laws of the Subsidiaries, Fenway, MDC, Dartford, UBS or Tiger may
(i) remove and replace any of its authorized representatives from such
position and (ii) designate another representative to fill any vacancy
caused by the resignation of any of its respective designees except in
the case of the resignation of the UBS Designee or the Tiger Designee
pursuant to Section 2.5. New LLC, as sole stockholder of the
Subsidiaries, shall take or cause to be taken any and all actions
necessary to cause the appointment or election of such designees to
each Subsidiary Board.
2.2.3. Board Actions. Except as provided in Section 5.1, each
Subsidiary Board shall act in accordance with the charter and by-laws
of such Subsidiary and by majority vote with each director having one
vote. Except as otherwise required by law, all actions to be taken by
the Subsidiary Board at a meeting shall require the presence and
consent of at least 6 directors of such Subsidiary Board and any action
by written consent of the Subsidiary Board shall require the consent of
all of the directors of the Subsidiary Board.
2.2.3.1. Certain Actions. Any transactions with
Affiliates taken after the date hereof, other than
transactions contemplated by the Contribution Agreement or
pursuant to other agreements in effect on the date hereof,
involving any material conflict of interest may only be taken
by majority vote of the disinterested members of such
Subsidiary Board.
2.2.4. Required Action. Prior to an Initial Public Offering,
New LLC will be incorporated for tax purposes through a contribution of
all of its assets and liabilities to a new corporation in exchange for
all of the shares of capital stock of such corporation, or by such
other method as shall be approved by the Managers Board of New LLC in
accordance with the provisions of this Agreement, and thereafter, prior
to or immediately following the Initial Public Offering, New LLC will
be liquidated or dissolved.
2.3. Actions of New LLC Members. Any action or consent required to be
approved by the Members of New LLC shall require the affirmative vote of all of
the votes entitled to be cast by holders of New LLC Interests; provided,
however, that in determining whether the
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holders of New LLC Interests have so consented, the consent of the holders of
VDK LLC Interests and MBW LLC Interests, voting together as a single class, who
own a majority of the voting interests set forth on Schedule B attached hereto
(as such Schedule may be amended from time to time to reflect Transfers of MBW
LLC Interests or VDK LLC Interests as provided by this Agreement) shall be
determinative.
2.4. Further Actions. New LLC, the Public Company and any of their
respective Subsidiaries and the parties hereto agree not to give effect to any
action by the Members, the Managers Board or any Person which is in
contravention of, or has not been properly authorized in accordance with, this
Section 2 or Section 5 hereof. New LLC and the Public Company agree to cause
their respective Subsidiaries to refrain from any action which is or would be in
contravention of, or has not been properly authorized in accordance with, this
Section 2 or Section 5 hereof. Each party hereto shall agree to take any and all
actions as a member of any limited liability company or as a director or
stockholder of a corporation or in any other capacity that such party is
entitled to take, by written consent or otherwise, necessary or desirable to
effectuate the agreements contained herein, including any actions required to be
taken by VDK LLC and MBW LLC, and shall refrain from taking any action
inconsistent or in conflict with the provisions of this Agreement.
2.5. Public Offering. In the event of the consummation of a Public
Offering, the Public Company and the parties hereto agree to (i) use reasonable
best efforts to sell in the Initial Public Offering a number of shares in the
Public Company owned by New LLC sufficient to provide net proceeds to New LLC of
$50.9 million, (ii) simultaneously or immediately thereafter liquidate or
dissolve New LLC, and cause New LLC to distribute such amount pursuant to
Section 8.3(i) of the New LLC Agreement and to cause MBW LLC and VDK LLC to
distribute the amount distributed to each of them by New LLC to their members in
accordance with the provisions of the VDK LLC Agreement and the MBW LLC
Agreement, and (iii) elect three Fenway Designees, three MDC Designees, two
Dartford Designees, one UBS Designee and one Tiger Designee to the board of
directors of the Public Company (the "Public Company Board") and the board of
directors of each of its Subsidiaries (each such board of directors, a
"Subsidiary Board"). Each such Board shall initially have not more than ten (10)
directors. For so long as he is Chairman and Chief Executive Officer of the
Public Company, Ian R. Wilson will be one of the Dartford Designees. Upon the
election of an independent director mutually acceptable to two of the three of
Fenway, MDC and Dartford to the Public Company Board and to each Subsidiary
Board (unless Fenway and MDC otherwise agree that such person does not need to
be on any particular Subsidiary Board) (the "First Independent Election Date"),
the number of directors on the Public Company Board and each Subsidiary Board
shall be fixed at eleven (11). Upon the election of a second independent
director mutually acceptable to two of the three of Fenway, MDC and Dartford to
the Public Company Board and to each Subsidiary Board (unless Fenway and MDC
otherwise agree that such person does not need to be on any particular
Subsidiary Board) (the "Second Independent Election Date"), the UBS Designee
shall resign from the Public Company Board and each Subsidiary Board (and if
such UBS Designee does not resign, the parties shall remove such UBS Designee)
and UBS shall thereafter not be
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entitled to have any designee elected to the Public Company Board or any
Subsidiary Board. Upon the appointment and election of a new Chief Executive
Officer (other than Ian R. Wilson) to the Public Company Board, the Tiger
Designee shall resign from the Public Company Board and each Subsidiary Board
(and if such Tiger Designee does not resign, the parties shall remove such Tiger
Designee) and Tiger shall thereafter not be entitled to have any designee
elected to the Public Company Board or any Subsidiary Board. Each of the parties
hereto will take all action to elect to the Public Company Board and each
Subsidiary Board up to two independent directors mutually acceptable to two of
the three of Fenway, MDC and Dartford. In the event that the number of shares of
Common Stock of the Public Company (the "Common Stock") Beneficially Owned by
Fenway or MDC, as the case may be, shall equal less than (i) a number of shares
equal to 50% of the number of shares of Common Stock held by MDC upon
consummation of the Initial Public Offering (assuming liquidation of New LLC,
MBW LLC and VDK LLC contemporaneously therewith), the number of Fenway Designees
or MDC Designees, as the case may be, shall be reduced to two and (ii) a number
of shares equal to 5% of the total number of shares of Common Stock outstanding
upon consummation of the Initial Public Offering (assuming liquidation of New
LLC, MBW LLC and VDK LLC contemporaneously therewith), the number of Fenway
Designees or MDC Designees, as the case may be shall be, reduced to one. In the
event that the number of shares of Common Stock Beneficially Owned by Dartford
shall equal less than 5% of the total number of shares of Common Stock
outstanding upon consummation of the Initial Public Offering (assuming
liquidation of New LLC, MBW LLC and VDK LLC contemporaneously therewith), the
number of Dartford Designees shall be reduced to one. In the event that Fenway,
MDC or Dartford do not Beneficially Own any shares of Common Stock, the number
of Fenway Designees, MDC Designees or Dartford Designees, as the case may be,
shall be reduced to zero.
2.6. Observation Rights.
2.6.1. CALPERS. CALPERS shall have Managers Board observation
rights until such time as CALPERS directly or indirectly Beneficially
Owns less than 2% of the outstanding New LLC Interests. CALPERS shall
have Public Company Board observation rights until such time as CALPERS
owns shares of Common Stock received in the liquidation of MBW LLC
representing less than 2% of the outstanding Common Stock.
2.6.2. UBS. Upon the resignation of the UBS Designee from the
Public Company Board, UBS shall have Public Company Board observation
rights until such time as UBS Beneficially Owns shares of Common Stock
received upon liquidation of VDK LLC representing less then 2% of the
outstanding Common Stock.
2.6.3. Tiger. Upon the resignation of the Tiger Designee from
the Public Company Board, Tiger shall have Public Company Board
observation rights until such time as Tiger Beneficially Owns shares of
Common Stock received upon liquidation of VDK LLC representing less
than 2% of the outstanding Common Stock.
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2.6.4. General. Each of the parties who has board observation
rights under this Section 2.6 shall, for so long as such party has such
observation rights, have the right to receive notices of, and to
attend, all meetings of the Managers Board or the Public Company Board,
as the case may be, and to receive all materials provided to the
members of the Managers Board or to the directors of the Public Company
Board, as the case may be.
3. CERTAIN TRANSFER RIGHTS AND RESTRICTIONS; "TAG ALONG" AND "DRAG ALONG"
RIGHTS.
3.1. Transfer Restrictions.
3.1.1. New LLC, MBW LLC and VDK LLC Interests. No holder of
New LLC Interests, nor any holder of MBW LLC Interests or VDK LLC
Interests, shall Transfer any New LLC Interests, MBW LLC Interests or
VDK LLC Interests, as the case may be, now owned or hereinafter
acquired, to any other Person without the consent of Fenway and MDC,
except for Transfers (i) to Permitted Transferees (subject to Section
7), (ii) as permitted by Section 3.2, (iii) as required by Section 3.3
or (iv) pursuant to Section 6. Any attempted Transfers not so permitted
or required by such Sections shall be null and void, and New LLC, MBW
LLC, and VDK LLC, as the case may be, shall not in any way give effect
to any such impermissible Transfer. All permitted transfers shall be
further subject to the requirements of Section 7. The provisions of
this Section 3.1.1 shall terminate and be of no further force and
effect upon the consummation of the Initial Public Offering.
3.1.2. Public Company and Subsidiary Shares. Until the second
anniversary of the consummation of the Initial Public Offering, no
holder of shares of capital stock of the Public Company or any
Subsidiary of the Public Company shall Transfer any of such shares
received in respect of their interests in New LLC, MBW LLC or VDK LLC
to any other Person without the consent of Fenway and MDC except for
Transfers (i) to Permitted Transferees (subject to Section 7), (ii)
pursuant to Section 6, and (iii) beginning on the one year anniversary
of the consummation of the Initial Public Offering, by each of UBS,
Tiger, CALPERS and Bain of their respective shares of Common Stock
pursuant to Rule 144 without regard to the restrictions on Transfers
contained in Sections 3 and 7. Any attempted Transfers not so permitted
by such Sections shall be null and void and the Public Company or any
Subsidiary of the Public Company, as the case may be, shall not in any
way give effect to any such impermissible Transfer. All Transfers to
Permitted Transferees shall be further subject to the requirements of
Section 7. The provisions of this Section 3.1.2 shall be of no further
force and effect following the second anniversary of the consummation
of an Initial Public Offering.
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3.2. Tag Along. No holder of New LLC Interests shall Transfer for value
(a "Sale") any such New LLC Interests to any Prospective Buyer except in the
manner and on the terms set forth in this Section 3.2. Any attempted Transfer of
New LLC Interests not permitted by this Section 3 shall be null and void, and
New LLC shall not in any way give effect to any such impermissible Transfer.
Notwithstanding anything to the contrary herein, any Transfer under this Section
3.2 shall require the prior written consent of Fenway and MDC.
3.2.1. Notice. Each holder of New LLC Interests (a
"Prospective Selling Investor") who desires to sell such New LLC
Interests shall furnish a written notice (the "Tag Along Notice") to
each other holder of the outstanding New LLC Interests who is party to
this Agreement (the "Tag Along Offerors") at least ten business days
prior to such Transfer. The Tag Along Notice shall include:
(1) The principal terms of the proposed Sale
insofar as it relates to the New LLC
Interests being proposed for Sale (the "Tag
Along Interests"), including (i) the number
of Tag Along Interests to be purchased from
the Prospective Selling Investors, (ii) the
percentage of the total amount of New LLC
Interests held by all holders of New LLC
Interests who are parties hereto which such
amount of Tag Along Interests to be sold
represents (the "Tag Along Sale
Percentage"), (iii) the maximum and minimum
purchase price, (iv) the name and address of
the Prospective Buyer, and (v) the date such
proposed Sale is expected to be consummated;
and
(2) An invitation to each Tag Along Offeror to
make an offer to include in the proposed
Sale to the Prospective Buyer an additional
number of Tag Along Interests (not in any
event to exceed the Tag Along Sale
Percentage of the total amount of applicable
Tag Along Interests held by such Tag Along
Offeror) owned by such Tag Along Offeror, on
the same terms and conditions, with respect
to each Tag Along Interest sold, as the
Prospective Selling Investors shall sell
each of their Tag Along Interests.
(3) The determination of VDK LLC, as holder of
New LLC Interests, to make an offer under
(b) above to sell all of its applicable Tag
Along Interests shall require the consent of
70% of the holders of outstanding VDK LLC
Interests.
3.2.2. Exercise. Within ten business days after the
effectiveness of the Tag Along Notice, each Tag Along Offeror desiring
to make an offer to include Tag Along
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Interests in the proposed Sale (each a "Participating Seller" and,
together with the Prospective Selling Investors, the "Tag Along
Sellers") shall send a written offer (the "Tag Along Offer") to the
Prospective Selling Investors specifying the number of Tag Along
Interests (not in any event to exceed the Tag Along Sale Percentage of
the total number of Tag Along Interests held by such Participating
Seller) which such Participating Seller desires to have included in the
proposed Sale. Each Tag Along Offeror who does not accept the
Prospective Selling Investors' invitation to make an offer to include
Tag Along Interests in the proposed Sale shall be deemed to have waived
all of his rights with respect to such Sale, and the Tag Along Sellers
shall thereafter be free to sell to the Prospective Buyer, at a per
share price no greater than 110% of the price set forth in the Tag
Along Notice and on other principal terms which are not materially more
favorable to the Tag Along Sellers than those set forth in the Tag
Along Notice, without any further obligation to such nonaccepting Tag
Along Offerors.
3.2.3. Reduction of Tag Along Interests Sold. The Prospective
Selling Investors shall attempt to obtain the inclusion in the proposed
Sale of the entire amount of Tag Along Interests which the Tag Along
Sellers desire to have included in the Sale (as evidenced in the case
of the Prospective Selling Investors by the Tag Along Notice and in the
case of each Participating Seller by such Participating Seller's Tag
Along Offer). In the event the Prospective Selling Investors shall be
unable to obtain the inclusion of such entire amount of Tag Along
Interests in the proposed Sale, the amount of Tag Along Interests to be
sold in the proposed Sale by each Tag Along Seller shall be reduced on
a pro rata basis according to the proportion which the amount of Tag
Along Interests which each such Tag Along Seller desires to have
included in the Sale bears to the total amount of Tag Along Interests
which all of the Tag Along Sellers desire to have included in the Sale.
3.2.4. Irrevocable Offer. The offer of each Participating
Seller contained in his Tag Along Offer shall be irrevocable, and, to
the extent such offer is accepted, such Participating Seller shall be
bound and obligated to sell in the proposed Sale on the same terms and
conditions, with respect to each Tag Along Interest sold, as the
Prospective Selling Investors, up to such number of Tag Along Interests
as such Participating Seller shall have specified in his Tag Along
Offer; provided, however, that (a) if the principal terms of the
proposed Sale change with the result that the price shall be less than
90% of the price set forth in the Tag Along Notice or the other
principal terms shall be materially less favorable to the Tag Along
Sellers than those set forth in the Tag Along Notice, each
Participating Seller shall be permitted to withdraw the offer contained
in the Tag Along Offer and shall be released from its obligations
thereunder and (b) if, at the end of the 180th day following the date
of the effectiveness of the Tag Along Notice, the Prospective Selling
Investors have not completed the proposed Sale, each Participating
Seller shall be released from his obligations under his Tag Along
Offer, the Tag Along Notice shall be null and void, and it shall be
necessary for a separate Tag Along Notice to be furnished, and the
terms and provisions of this Section 3.2 separately complied with,
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in order to consummate such proposed Sale pursuant to this Section 3.2,
unless the failure to complete such Sale resulted from any failure by
any Participating Seller to comply with the terms of this Section 3.2.
3.2.5. Additional Compliance. If, prior to consummation, the
terms of the proposed Sale shall change with the result that the price
to be paid in such proposed Sale shall be greater than 110% of the
price set forth in the Tag Along Notice or the other principal terms of
such proposed Sale shall be materially more favorable to the Tag Along
Sellers than those set forth in the Tag Along Notice, the Tag Along
Notice shall be null and void, and it shall be necessary for a separate
Tag Along Notice to be furnished, and the terms and provisions of this
Section 3.2 separately complied with, in order to consummate such
proposed Sale pursuant to this Section 3.2; provided, however, that in
the case of such a separate Tag Along Notice, the applicable period to
which reference is made in Sections 3.2.1 and 3.2.2 shall be five
business days.
3.2.6. Excluded Transactions; Termination. Notwithstanding the
foregoing, no holder of New LLC Interests shall have any right of
participation pursuant to the provisions of this Section 3.2 or
otherwise with respect to any Transfer of New LLC Interests:
(1) to a Permitted Transferee;
(2) in a Public Offering; or
(3) with respect to which Fenway and MDC
exercise their "drag along" rights
under Section 3.3 of this Agreement.
The provisions of this Section 3.2 shall terminate upon the
consummation of an Initial Public Offering.
3.3. Drag Along. Each holder of New LLC Interests hereby agrees, if
requested jointly by Fenway and MDC (each, a "Prospective Selling Investor"), to
sell all or substantially all of the interests held by such holder in New LLC to
a Prospective Buyer in the manner and on the terms set forth in this Section 3.3
in connection with the Sale by the Prospective Selling Investors of all or
substantially all of their interests in the business of New LLC.
3.3.1. Exercise. If the Prospective Selling Investors elect to
exercise their rights under this Section 3.3, a written notice (the
"Drag Along Notice") shall be furnished by the Prospective Selling
Investors to each other holder of New LLC Interests who is party to
this Agreement. The Drag Along Notice shall set forth the principal
terms of the proposed Sale including the amount of New LLC Interests
(the " Drag Along Interests") to be acquired from the Prospective
Selling Investors, the manner in which such Drag Along Interests are to
be sold, the percentage of the total amount of New LLC Interests
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held by the Prospective Selling Investors of the total amount of New
LLC Interests to be sold (the "Drag Along Sale Percentage"), the
consideration to be received in the proposed Sale, the date such
proposed Sale is expected to be consummated and the name and address of
the Prospective Buyer. If the Prospective Selling Investors consummate
the proposed Sale to which reference is made in the Drag Along Notice,
each other holder of Drag Along Interests (each a "Participating
Seller", and, together with the Prospective Selling Investors,
collectively, the "Drag Along Sellers") shall be bound and obligated to
sell the Drag Along Sale Percentage of its Drag Along Interests in the
proposed Sale, on the same terms and conditions, with respect to each
Drag Along Interest sold, as the Prospective Selling Investors shall
sell in respect of their Drag Along Interests in the Sale. If at the
end of the 180th day following the date of the effectiveness of the
Drag Along Notice the Prospective Selling Investors have not completed
the proposed Sale, each Participating Seller shall be released from his
obligation under the Drag Along Notice, the Drag Along Notice shall be
null and void, and it shall be necessary for a separate Drag Along
Notice to be furnished and the terms and provisions of this Section 3.3
separately complied with, in order to consummate such proposed Sale
pursuant to this Section 3.3.
3.3.2. Termination. The provisions of this Section 3.3 shall
terminate and be of no further force and effect upon the consummation
of an Initial Public Offering.
3.4. Miscellaneous. The following provisions shall be applied to any
Sale to which Section 3.2 or 3.3 applies:
3.4.1. Certain Legal Requirements. In the event the
consideration to be paid in exchange for Tag Along Interests or Drag
Along Interests in a proposed Sale pursuant to Section 3.2 or Section
3.3 includes any securities, and the receipt thereof by a Participating
Seller would require under applicable law (i) the registration or
qualification of such securities or of any person acting as a broker or
dealer or agent with respect to such securities or (ii) the provision
to any Tag Along Seller or Drag Along Seller of any information other
than such information as would be required under Regulation D in an
offering made pursuant to Regulation D solely to "accredited investors"
as defined in Regulation D, the Prospective Selling Investors shall be
obligated only to use their reasonable efforts to cause the
requirements under Regulation D to be complied with to the extent
necessary to permit such Participating Seller to receive such
securities, it being understood and agreed that the Prospective Selling
Investors shall not be under any obligation to effect a registration of
such securities under the Securities Act or similar statutes.
Notwithstanding any provisions of this Section 3, if use of reasonable
efforts does not result in the requirements under Regulation D being
complied with to the extent necessary to permit such Participating
Seller to receive such securities, the Prospective Selling Investors
shall cause to be paid to such Participating Seller in lieu thereof,
against surrender of the Tag Along Interests or Drag Along Interests,
as the case may be, which would have otherwise been sold by such
Participating Seller to the Prospective Buyer in
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the Sale, an amount in cash equal to the Fair Market Value of such Tag
Along Interests or Drag Along Interests as of the date of the issuance
of securities in exchange for Tag Along Interests or Drag Along
Interests. The obligation of the Prospective Selling Investors to use
reasonable efforts to cause such requirements to have been complied
with to the extent necessary to permit a Participating Seller to
receive such securities shall be conditioned on such Participating
Seller executing such documents and instruments, and taking such other
actions (including, without limitation, if required by the Prospective
Selling Investors, agreeing to be represented during the course of such
transaction by a "purchaser representative" (as defined in Regulation
D) in connection with evaluating the merits and risks of the
prospective investment and acknowledging that he was so represented),
as the Prospective Selling Investors shall reasonably request in order
to permit such requirements to be complied with. Unless the
Participating Seller in question shall have taken all actions
reasonably requested by the Prospective Selling Investors in order to
comply with the requirements under Regulation D, such Participating
Seller shall not have the right to require the payment of cash in lieu
of securities under this Section 3.4.1.
3.4.2. Further Assurances. Each party hereto, whether in the
capacity of a Participating Seller, Member, Manager, officer or
Managing Member or member of New LLC, VDK LLC or MBW LLC, or otherwise,
shall take or cause to be taken all such actions as may be necessary or
reasonably desirable in order to consummate expeditiously each Sale
pursuant to and in accordance with Section 3.2 or Section 3.3 and any
related transactions, including, without limitation, executing,
acknowledging and delivering consents, assignments, waivers and other
documents or instruments; furnishing information and copies of
documents; filing applications, reports, returns, filings and other
documents or instruments with governmental authorities; and otherwise
cooperating with the Prospective Selling Investors and the Prospective
Buyer; provided, however, that Participating Sellers shall be obligated
to become liable in respect of any representations, warranties,
covenants, indemnities or otherwise to the Prospective Buyer solely to
the extent provided in the immediately following sentence. Without
limiting the generality of the foregoing, each Participating Seller
agrees to execute and deliver such agreements as may be reasonably
specified by the Prospective Selling Investors to which such
Prospective Selling Investors will also be party, including, without
limitation, agreements to (a) make individual representations,
warranties, covenants and other agreements as to the unencumbered title
to its Tag Along Interests or Drag Along Interests, as the case may be,
and the power, authority and legal right to Transfer such Tag Along
Interests or Drag Along Interests and (b) be liable (whether by
purchase price adjustment, indemnity payments or otherwise) in respect
of representations, warranties, covenants and agreements in respect of
the New LLC, MBW LLC, VDK LLC and their Subsidiaries; provided,
however, that, the aggregate amount of such liability shall not exceed
either (i) such Participating Seller's pro rata portion of any such
liability, to be determined in accordance with such Participating
Seller's portion of the total number of Tag Along
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Interests or Drag Along Interests included in such Sale or (ii) the
proceeds to such Participating Seller in connection with such Sale.
3.4.3. Expenses. All reasonable costs and expenses incurred by
any Tag Along Seller, Drag Along Seller, New LLC, MBW LLC or VDK LLC in
connection with any proposed Sale pursuant to this Section 3 (whether
or not consummated), including, without limitation, all attorneys' fees
and charges, all accounting fees and charges and all finders, brokerage
or investment banking fees, charges or commissions, shall be paid by
New LLC, MBW LLC or VDK LLC, as appropriate.
3.4.4. Closing. The closing of a Sale pursuant to Section 3.2
shall take place at such time and place as the Prospective Selling
Investors shall specify, and the closing of a Sale pursuant to Section
3.3 shall take place at such time and place as Fenway and MDC shall
specify, in each case, by notice to each Participating Seller. At the
closing of any Sale under this Section 3, each Participating Seller
shall deliver the documents evidencing the Tag Along Interests or Drag
Along Interests, as the case may be, to be sold by such Participating
Seller, duly endorsed, or with stock (or equivalent) powers duly
endorsed, for transfer with signature guaranteed, free and clear of any
liens or encumbrances, with any stock (or equivalent) transfer tax
stamps affixed, against delivery of the applicable consideration. It is
understood and agreed that no holder of New LLC Interests, MBW LLC
Interests or VDK LLC Interests shall have any liability to any other
holder of New LLC Interests, MBW LLC Interests or VDK LLC Interests
arising from, relating to or in connection with any proposed Sale which
has been the subject of a Tag Along Notice or a Drag Along Notice
whether or not such proposed Sale is consummated.
3.4.5. Termination. The provisions of this Section 3.4 shall
terminate and be of no further force and effect upon the consummation
of an Initial Public Offering.
4. PREEMPTIVE RIGHT. None of New LLC nor any of its Subsidiaries shall
issue or sell any equity interests in New LLC or any of its
Subsidiaries or any securities convertible into or exchangeable for any
equity interests in New LLC or any of its Subsidiaries, issue or grant
any options or warrants for the purchase of, or enter into any
agreements providing for the issuance (contingent or otherwise) of,
equity interests in New LLC or any of its Subsidiaries or any
securities convertible into or exchangeable for any equity interests in
New LLC or any of its Subsidiaries (other than (x) securities issued to
management which are approved by the board of directors of such issuer
and pursuant to Section 5.1, if applicable, (y) shares of Common Stock
of the Public Company issued to New LLC immediately prior to the
Initial Public Offering or (z) shares of Common Stock of the Public
Company issued in the Initial Public Offering), (i) in the case of New
LLC, to any Person (each an "Issuance" of "Subject Securities") and
(ii) in the case of any Subsidiary, to Fenway or MDC (each an
"Issuance" of "Subsidiary Securities"), except in compliance with the
following provisions of this Section 4.
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4.1. Right of Participation for New LLC Interests.
4.1.1. Offer. Not fewer than 30 days prior to the consummation
of the Issuance of Subject Securities, a notice (the "LLC Preemption
Notice") shall be furnished by New LLC to each holder of New LLC
Interests (the "LLC Preemptive Offerees"). The LLC Preemption Notice
shall include:
(1) The principal terms of the proposed
Issuance, including, without
limitation, the amount and kind of
Subject Securities to be included
in the Issuance, the percentage of
the amount of New LLC Interests
outstanding immediately prior to
giving effect to such Issuance in
respect of which the New LLC
Interests held by such Preemptive
Offeree constitutes (the "LLC
Preemptive Portion"), the maximum
and minimum price per unit of the
Subject Securities and the name and
address of the Persons to whom the
Subject Securities will be Issued
(the "LLC Prospective Subscriber");
and
(2) An offer by New LLC to Issue, at
the option of each LLC Preemptive
Offeree, to such LLC Preemptive
Offeree such portion of the Subject
Securities to be included in the
Issuance as may be requested by
such LLC Preemptive Offeree (not to
exceed the LLC Preemptive Portion
of the total amount of Subject
Securities to be included in the
Issuance), on the same terms and
conditions, with respect to each
unit of Subject Securities issued
to the LLC Preemptive Offerees, as
each of the LLC Prospective
Subscribers shall be Issued units
of Subject Securities.
(3) If MBW LLC or VDK LLC does not
accept the offer as contained in
the LLC Preemption Notice within
the time specified in Section
4.1.2, then New LLC shall thereupon
be required to furnish a LLC
Preemption Notice within 15 days to
all holders of MBW LLC Interests if
MBW LLC does not so accept and to
all holders of VDK LLC Interests if
VDK LLC does not so accept (such
offerees shall thereupon be
included as LLC Preemptive
Offerees). The LLC Preemptive
Portion of the holders of MBW LLC
Interests and the holders of VDK
LLC Interests shall be, (i) with
respect to the holders of MBW LLC
Interests, that portion of the LLC
Preemptive Portion of MBW LLC equal
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to a percentage obtained by dividing
(x) the number of voting units
provided in Schedule B owned by that
member indirectly through MBW LLC by
(y) the number of voting units
provided in Schedule B owned by all
members of MBW LLC, and (ii) with
respect to the holders of VDK LLC
Interests, that portion of the LLC
Preemptive Portion of VDK LLC equal
to a percentage obtained by dividing
(x) the number of voting units
provided in Schedule B owned by that
member indirectly through VDK LLC by
(y) the number of voting units
provided in Schedule B owned by all
members of VDK LLC.
4.1.2. Exercise.
4.1.2.1. General. Each LLC Preemptive Offeree
desiring to accept the offer contained in the LLC Preemption
Notice shall, within 20 days after the receipt of the LLC
Preemption Notice, send a written commitment to New LLC
specifying the amount of Subject Securities (not in any event
to exceed such LLC Preemptive Offeree's LLC Preemptive Portion
of the total amount of Subject Securities to be included in
the Issuance) which such LLC Preemptive Offeree desires to be
issued (each such accepting LLC Preemptive Offeree, an "LLC
Participating Buyer"). Each LLC Preemptive Offeree who has not
so accepted such offer shall be deemed to have waived all of
his rights with respect to the Issuance, and New LLC shall
thereafter be free to Issue Subject Securities in the Issuance
to the LLC Prospective Subscriber and any LLC Participating
Buyers, at a price no less than 90% of the minimum price set
forth in the LLC Preemption Notice and on other principal
terms not substantially more favorable to the LLC Prospective
Subscriber than those set forth in the LLC Preemption Notice,
without any further obligation to such non-accepting LLC
Preemptive Offerees. If, prior to consummation, the terms of
such proposed Issuance shall change with the result that the
price shall be less than 90% of the minimum price set forth in
the LLC Preemption Notice or the other principal terms shall
be substantially more favorable to the LLC Prospective
Subscriber than those set forth in the LLC Preemption Notice,
it shall be necessary for a separate LLC Preemption Notice to
be furnished, and the terms and provisions of this Section 4.1
separately complied with, in order to consummate such Issuance
pursuant to this Section 4.1.
4.1.2.2. Irrevocable Acceptance. The acceptance of
each LLC Participating Buyer shall be irrevocable except as
hereinafter provided, and each such LLC Participating Buyer
shall be bound and obligated to acquire in the Issuance on the
same terms and conditions, with respect to each unit of
Subject Securities Issued, as the LLC Prospective Subscriber,
such amount of Subject
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<PAGE>
Securities as such LLC Participating Buyer shall have
specified in such LLC Participating Buyer's written
commitment.
4.1.2.3. Time Limitation. If at the end of the 270th
day following the date of the effectiveness of the LLC
Preemption Notice New LLC has not completed the Issuance, each
LLC Participating Buyer shall be released from his obligations
under the written commitment, the LLC Preemption Notice shall
be null and void, and it shall be necessary for a separate LLC
Preemption Notice to be furnished, and the terms and
provisions of this Section 4.1 separately complied with, in
order to consummate such Issuance pursuant to this Section
4.1.
4.1.3. Other Securities. New LLC may condition the
participation of the LLC Preemptive Offerees in an Issuance upon the
purchase by such LLC Preemptive Offerees of any securities (including,
without limitation, debt securities) other than Subject Securities
("Other Securities") in the event that the participation of the LLC
Prospective Subscriber in such Issuance is so conditioned. In such
case, each LLC Participating Buyer shall acquire in the Issuance,
together with the Subject Securities to be acquired by it, Other
Securities in the same proportion to the Subject Securities to be
acquired by it as Other Securities are acquired by the LLC Prospective
Subscriber in proportion to the Subject Securities acquired in the
Issuance by such LLC Prospective Subscriber, on the same terms and
conditions, as to each unit of Subject Securities and Other Securities
issued to the LLC Participating Buyers, as the LLC Prospective
Subscriber shall be issued units of Subject Securities and Other
Securities.
4.1.4. Further Assurances. Each LLC Participating Buyer and
each Person to whom the New LLC Interests, MBW LLC Interests or VDK LLC
Interests held by such LLC Participating Buyer were originally issued,
shall, whether in his capacity as a LLC Participating Buyer, Member,
Manager, officer or director of New LLC, MBW LLC or VDK LLC or
otherwise, take or cause to be taken all such reasonable actions as may
be necessary or reasonably desirable in order to consummate
expeditiously each Issuance pursuant to this Section 4.1 and any
related transactions, including, without limitation, executing,
acknowledging and delivering consents, assignments, waivers and other
documents or instruments; filing applications, reports, returns,
filings and other documents or instruments with governmental
authorities; and otherwise cooperating with New LLC and the LLC
Prospective Subscriber. Without limiting the generality of the
foregoing, each such LLC Participating Buyer and New LLC agrees to
execute and deliver such subscription and other agreements specified by
the New LLC to which the LLC Prospective Subscriber will be party;
provided, however, that in the event any LLC Participating Buyer is
required to make a filing under the Hart-Scott-Rodino Anti-Trust
Improvement Act of 1976 (the "HSR Act") as a condition to purchasing
such securities, such LLC Participating Buyer shall use its best
efforts to obtain approvals under the HSR Act or otherwise have any
waiting period thereunder expire and the New LLC shall
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provide such LLC Participating Buyer with a reasonable period in which
to obtain such approvals or permit such waiting period to expire.
4.1.5. Closing. The closing of an Issuance pursuant to Section
4.1 shall take place at such time and place as New LLC shall specify by
notice to each LLC Participating Buyer. At the closing of any Issuance
under this Section 4.1, each LLC Participating Buyer shall be delivered
the notes, certificates or other instruments evidencing the Subject
Securities (and, if applicable, Other Securities) to be Issued to such
LLC Participating Buyer, registered in the name of such LLC
Participating Buyer or his designated nominee, free and clear of any
liens or encumbrances, with any transfer tax stamps affixed, against
delivery by such LLC Participating Buyer of the applicable
consideration.
4.2. Right of Participation for Subsidiary Stock.
4.2.1. Offer. Not fewer than 30 days prior to the consummation
of the Issuance of Subsidiary Securities to either Fenway or MDC, a
notice (the "Preemption Notice") shall be furnished by the relevant
Subsidiary to each member of MBW LLC or VDK LLC (the "Preemptive
Offerees"). The Preemption Notice shall include:
(1) The principal terms of the proposed
Issuance, including, without
limitation, the amount and kind of
Subsidiary Securities to be
included in the Issuance, the
percentage of the amount of shares
of the Subsidiary outstanding
immediately prior to giving effect
to such Issuance in respect of
which the shares of the Subsidiary
held by such Preemptive Offeree
constitutes (the "Preemptive
Portion"), the maximum and minimum
price per share of the Subsidiary
Securities and the name and address
of the Persons to whom the
Subsidiary Securities will be
Issued (the "Prospective
Subscriber"); and
(2) An offer by the Subsidiary to
Issue, at the option of each
Preemptive Offeree, to such
Preemptive Offeree such portion of
the Subsidiary Securities to be
included in the Issuance as may be
requested by such Preemptive
Offeree (not to exceed the
Preemptive Portion as set forth in
Section 4.2.1(a) above of the total
amount of Subsidiary Securities to
be included in the Issuance
determined by reference to Schedule
B hereto), on the same terms and
conditions, with respect to each
share of Subsidiary Securities
issued to the Preemptive Offerees,
as each of the
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<PAGE>
Prospective Subscribers shall be
Issued shares of Subsidiary
Securities.
4.2.2. Exercise.
4.2.2.1. General. Each Preemptive Offeree desiring to
accept the offer contained in the Preemption Notice shall
send, within 20 days after the receipt of the Preemption
Notice, a written commitment to the Subsidiary specifying the
amount of Subsidiary Securities (not in any event to exceed
such Preemptive Offeree's Preemptive Portion as set forth in
Sections 4.2.1(a) and 4.1.1(c) above of the total amount of
Subsidiary Securities to be included in the Issuance) which
such Preemptive Offeree desires to be issued (each such
accepting Preemptive Offeree, a "Subsidiary Participating
Buyer"). To the extent that any Preemptive Offeree does not
accept the offer contained in the Preemption Notice, all
Subsidiary Participating Buyers shall have the right to be
issued a pro rata portion of such Subsidiary Securities which
were not accepted by the other Preemptive Offerees. Each
Preemptive Offeree who has not so accepted such offer shall be
deemed to have waived all of his rights with respect to the
Issuance, and the Subsidiary shall thereafter be free to Issue
Subsidiary Securities in the Issuance to the Prospective
Subscriber and any Subsidiary Participating Buyers, at a price
no less than 90% of the minimum price set forth in the
Preemption Notice and on other principal terms not
substantially more favorable to the Prospective Subscriber
than those set forth in the Preemption Notice, without any
further obligation to such non-accepting Preemptive Offerees.
If, prior to consummation, the terms of such proposed Issuance
shall change with the result that the price shall be less than
90% of the minimum price set forth in the Preemption Notice or
the other principal terms shall be substantially more
favorable to the Prospective Subscriber than those set forth
in the Preemption Notice, it shall be necessary for a separate
Preemption Notice to be furnished, and the terms and
provisions of this Section 4.2 separately complied with, in
order to consummate such Issuance pursuant to this Section
4.2.
4.2.2.2. Irrevocable Acceptance. The acceptance of
each Subsidiary Participating Buyer shall be irrevocable
except as hereinafter provided, and each such Subsidiary
Participating Buyer shall be bound and obligated to acquire in
the Issuance on the same terms and conditions, with respect to
each share of Subsidiary Securities Issued, as the Prospective
Subscriber, such amount of Subsidiary Securities as such
Subsidiary Participating Buyer shall have specified in such
Subsidiary Participating Buyer's written commitment.
4.2.2.3. Time Limitation. If at the end of the 270th
day following the date of the effectiveness of the Preemption
Notice the Subsidiary has not completed the Issuance, each
Subsidiary Participating Buyer shall be released
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<PAGE>
from his obligations under the written commitment, the
Preemption Notice shall be null and void, and it shall be
necessary for a separate Preemption Notice to be furnished,
and the terms and provisions of this Section 4.2 separately
complied with, in order to consummate such Issuance pursuant
to this Section 4.2.
4.2.3. Other Securities. The Subsidiary may condition the
participation of the Preemptive Offerees in an Issuance upon the
purchase by such Preemptive Offerees of any securities (including,
without limitation, debt securities) other than Subsidiary Securities
("Other Subsidiary Securities") in the event that the participation of
the Prospective Subscriber in such Issuance is so conditioned. In such
case, each Subsidiary Participating Buyer shall acquire in the
Issuance, together with the Subsidiary Securities to be acquired by it,
Other Subsidiary Securities in the same proportion to the Subsidiary
Securities to be acquired by it as Other Subsidiary Securities are
acquired by the Prospective Subscriber in proportion to the Subsidiary
Securities acquired in the Issuance by such Prospective Subscriber, on
the same terms and conditions, as to each share of Subsidiary
Securities and Other Subsidiary Securities issued to the Subsidiary
Participating Buyers, as the Prospective Subscriber shall be issued
shares of Subsidiary Securities and Other Subsidiary Securities.
4.2.4. Further Assurances. Each Subsidiary Participating Buyer
and each Person to whom the MBW LLC Interests or VDK LLC Interests held
by such Subsidiary Participating Buyer were originally issued, shall,
whether in his capacity as a Subsidiary Participating Buyer, Member,
Manager, officer or director of the Subsidiary or otherwise, take or
cause to be taken all such reasonable actions as may be necessary or
reasonably desirable in order to consummate expeditiously each Issuance
pursuant to this Section 4.2. and any related transactions, including,
without limitation, executing, acknowledging and delivering consents,
assignments, waivers and other documents or instruments; filing
applications, reports, returns, filings and other documents or
instruments with governmental authorities; and otherwise cooperating
with the Subsidiary and the Prospective Subscriber. Without limiting
the generality of the foregoing, each such Subsidiary Participating
Buyer and the Subsidiary agrees to execute and deliver such
subscription and other agreements specified by the Subsidiary to which
the Prospective Subscriber will be party; provided, however, that in
the event any Subsidiary Participating Buyer is required to make a
filing under the HSR Act as a condition to purchasing such securities,
such Subsidiary Participating Buyer shall use its best efforts to
obtain approvals under the HSR Act or otherwise have any waiting period
thereunder expire and the Subsidiary shall provide such Subsidiary
Participating Buyer with a reasonable period in which to obtain such
approvals or permit such waiting period to expire.
4.2.5. Closing. The closing of an Issuance pursuant to Section
4.2 shall take place at such time and place as the Subsidiary shall
specify by notice to each Subsidiary Participating Buyer. At the
closing of any Issuance under this Section 4.2, each
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<PAGE>
Subsidiary Participating Buyer shall be delivered the notes,
certificates or other instruments evidencing the Subsidiary Securities
(and, if applicable, Other Subsidiary Securities) to be Issued to such
Subsidiary Participating Buyer, registered in the name of such
Subsidiary Participating Buyer or his designated nominee, free and
clear of any liens or encumbrances, with any transfer tax stamps
affixed, against delivery by such Subsidiary Participating Buyer of the
applicable consideration.
4.3. Certain Legal Requirements. In the event that the participation in
the Issuance by a holder of New LLC Interests, MBW LLC Interests or VDK LLC
Interests as a LLC Participating Buyer or Subsidiary Participating Buyer (in
either case, a "Participating Buyer") would require under applicable law (i) the
registration or qualification of such securities or of any person acting as a
broker or dealer or agent with respect to such securities or (ii) the provision
to any participant in the Issuance of any information other than such
information as would be required under Regulation D in an offering made pursuant
to Regulation D solely to "accredited investors" as defined in Regulation D, New
LLC or the Subsidiary, as the case may be, shall be obligated only to use its
reasonable efforts to cause the requirements under Regulation D to be complied
with to the extent necessary to permit such Participating Buyer to receive such
securities, it being understood and agreed that New LLC or the Subsidiary, as
the case may be, shall not be under any obligation to effect a registration of
such securities under the Securities Act or similar state statutes.
Notwithstanding any provision of this Section 4, if the use of reasonable
efforts shall not result in such requirements being complied with to the extent
necessary to permit such holder to participate in the Issuance, such holder
shall not be entitled to participate in the Issuance. The obligation of New LLC
or the Subsidiary, as the case may be, to use reasonable efforts to cause such
requirements to be complied with to the extent necessary or reasonably desirable
to permit a holder of Securities to participate in the Issuance shall be
conditioned upon such holder of Securities executing such documents and
instruments, and taking such other actions (including, without limitation, if
required by New LLC or the Subsidiary, as the case may be, agreeing to be
represented during the course of such transaction by a "purchaser
representative" (as defined in Regulation D) in connection with evaluating the
merits and risks of the prospective investment and acknowledging that he was so
represented), as New LLC or the Subsidiary, as the case may be, shall reasonably
request in order to permit such requirements to have been complied with.
4.4. Termination. This Section 4 shall terminate and be of no further
force and effect upon the consummation of an Initial Public Offering.
5. NEGATIVE COVENANTS.
5.1. Required Approvals by MDC and Fenway. Except for transactions
between or among New LLC and one or more of its Subsidiaries, or between or
among the Subsidiaries, including Subsidiaries of the Public Company, without
the approval of MDC and Fenway, neither New LLC nor the Public Company shall
take nor shall either permit any of its
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Subsidiaries to take, nor shall such Subsidiaries take, any of the following
actions (the "Restricted Actions"):
(1) issuance, reclassification,
modification, purchase or
acquisition of interests in New LLC
or of any capital stock of the
Public Company or any Subsidiary of
New LLC or the Public Company or
any rights to subscribe for or
rights exchangeable for or
convertible into such interests or
capital stock, or authorization or
execution of any agreement
providing for any call, commitment
or claim (contingent or otherwise)
in respect of interests in New LLC
or any capital stock of the Public
Company or of any Subsidiary of New
LLC or the Public Company, or the
consummation of the Initial Public
Offering;
(2) adoption of any equity incentive
plan or any material non- equity
incentive plan or issuance or grant
of any option in respect of
interests in New LLC or any capital
stock of the Public Company or any
Subsidiary of New LLC or the Public
Company other than options granted
or grants made pursuant to any
equity incentive plan or any
material non- equity incentive plan
which has already been approved by
MDC and Fenway hereunder;
(3) any merger, consolidation,
recapitalization, liquidation,
dissolution or winding up or other
reorganization with respect to New
LLC (except as provided in Section
2.2.4 hereof), the Public Company
or any Subsidiary of New LLC or the
Public Company, or any sale of the
assets or equity interests of New
LLC, the Public Company or any
Subsidiary of New LLC or the Public
Company if such transaction is to
effect the sale of any business of
New LLC, the Public Company or a
Subsidiary of New LLC or the Public
Company in a single transaction or
series of related transactions and,
prior to an Initial Public
Offering, the transaction value is
at least $100 million and, after an
Initial Public Offering, such
business represents at least 50% of
the pre-transaction consolidated
revenues, assets or EBITDA of the
Public Company for the most
recently completed four fiscal
quarters;
(4) any acquisition by New LLC, the
Public Company or any Subsidiary of
New LLC or the Public Company of
any
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<PAGE>
stock or assets of another entity
or of capital assets in a single
transaction or series of related
transactions and prior to an
Initial Public Offering, the
transaction value is at least $100
million, and after an Initial
Public Offering, the revenues,
assets or EBITDA of the
business or entity to be
acquired represents more than 50%
of the pre-transaction consolidated
revenues, assets or EBITDA of the
Public Company for the most
recently completed four fiscal
quarters; and
(5) removal or termination of Ian R.
Wilson as Chief Executive Officer
of the New LLC, the Public Company
or any of their respective
Subsidiaries or the hiring, removal
or termination of any successor
Chief Executive Officer of New LLC,
the Public Company or any of their
respective Subsidiaries (including
the hiring of any officer who, at
the time of hiring, is a candidate
to be considered for the position
of Chief Executive Officer of any
such entity, and the promotion of
any then-current officer to the
position of Chief Executive Officer
of any such entity).
The provisions of this Section 5.1 shall terminate upon the
earlier of (i) the date that is 30 months after the
consummation of the Initial Public Offering or (ii)(A) with
respect to the requirement that the approval of Fenway is
required, the date on which Fenway shall Beneficially Own, in
the aggregate, less than 50% of the number of shares of
capital stock of the Public Company Beneficially Owned by MDC
upon consummation of the Initial Public Offering (assuming the
liquidation of New LLC and MBW LLC contemporaneously
therewith), and (B) with respect to the requirement that the
approval of MDC is required, the date on which MDC shall
Beneficially Own, in the aggregate, less than 50% of the
number of shares of capital stock of the Public Company
Beneficially Owned by MDC upon consummation of the Initial
Public Offering (assuming the liquidation of New LLC and MBW
LLC contemporaneously therewith).
6. REGISTRATION RIGHTS. The Public Company will perform and comply, and
each of the other parties hereto will perform and comply, with such of
the following provisions as are applicable to such party.
6.1. Demand Registration Rights.
6.1.1. General. Any of the following (the "Initiating
Investors"):
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(1) From and after April 8, 2001, if an
Initial Public Offering has not
occurred prior thereto, either of
Fenway or MDC;
(2) Prior to the second anniversary of
an Initial Public Offering, Fenway
and MDC, acting together;
(3) From and after the second
anniversary of an Initial Public
Offering, either Fenway, MDC or
Dartford (but not on more than four
occasions for each of them);
(4) From and after the date of
resignation or removal of the UBS
Designee from the Public Company
Board pursuant to Section 2.5
hereof and prior to the second
anniversary of the Initial Public
Offering, UBS or CALPERS and from
and after the date of resignation
or removal of the Tiger Designee
from the Public Company Board
pursuant to Section 2.5 hereof and
prior to the second anniversary of
the Initial Public Offering, Tiger
(but not on more than one occasion
for each of them);
(5) From and after the second
anniversary of the Initial Public
Offering, UBS (but not on more than
two occasions) and CALPERS (but not
on more than one occasion).
by notice to the Public Company, specifying the intended
method or methods of disposition, may request that the Public
Company effect the registration under the Securities Act for a
Public Offering of all or a specified part of the Registrable
Securities held by such Initiating Investors. The Public
Company will then use its best efforts to effect the
registration under the Securities Act of the Registrable
Securities which the Public Company has been requested to
register by such Initiating Investors together with all other
Registrable Securities which the Public Company has been
requested to register pursuant to Section 6.2, all to the
extent requisite to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable
Securities which the Public Company has been so requested to
register; provided, however, that the Public Company shall not
be obligated to take any action to effect any such
registration pursuant to this Section 6.1.1:
(i) Within 180 days immediately following the
effective date of any registration statement
pertaining to an underwritten Public
Offering of securities of the Public Company
for its own account or the account of any
holder of Registrable Securities (other than
a Rule 145 Transaction, or a registration
relating solely to employee
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<PAGE>
benefit plans), provided, however, that with
respect to a request made during the time
periods specified in Section 6.1.1 above,
the Public Company shall remain obligated to
effect any request made in accordance
therewith upon expiration of the additional
period contemplated in this paragraph (i);
or
(ii) During the period ending on the second
anniversary of the consummation of an
Initial Public Offering, without the
approval of the Public Company Board if the
Public Company has previously filed two
demand registration statements pursuant to
this Section 6.1.1 after the Initial Public
Offering and prior to the second anniversary
of the consummation of the Initial Public
Offering;
(iii) If the gross proceeds of the offering to
which such registration statement applies
are not reasonably expected to exceed $25
million;
(iv) If the Public Company shall have furnished
to the Initiating Investors and such other
holders of Registrable Securities which the
Public Company has been requested to
register pursuant to this Section 6.1.1, a
certificate, signed by the Chairman or
President of such company, stating that in
the good faith judgment of the Public
Company Board, it would be seriously
detrimental to the Public Company or its
shareholders for such registration statement
to be filed at the date filing would have
been required, in which case the Public
Company shall have an additional period of
not more than 120 days within which to file
such registration statement; provided,
however, that the certificate set forth in
this clause (d) may not be given to the same
Initiating Investors more than once in any
nine month period; and provided, further,
however, that with respect to a request made
during the time periods specified in Section
6.1.1 above, the Public Company shall remain
obligated to effect any request made in
accordance therewith upon expiration of the
additional period contemplated in this
paragraph (iv); or
(v) After ten years following the consummation
of the Initial Public Offering.
6.1.1.1. Form. Each registration requested pursuant
to this Section 6.1.1 shall be effected by the filing of a
registration statement on Form S-1 (or any other form which
includes substantially the same information as would be
required to be included in a registration statement on such
form as
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<PAGE>
currently constituted), unless the use of a different form has
been agreed to in writing by holders of at least a majority of
the Registrable Securities to be included in the proposed
registration statement in question (the "Majority
Participating Investors").
6.1.2. Payment of Expenses. The Public Company shall pay all
reasonable expenses of holders of Registrable Securities incurred in
connection with each registration of Registrable Securities requested
pursuant to this Section 6.1, other than underwriting discounts and
commissions, if any, and applicable transfer taxes, if any.
6.1.3. Additional Procedures. In the case of a registration
pursuant to Section 6.1 hereof, whenever the Majority Participating
Investors shall request that such registration shall be effected
pursuant to an underwritten offering, the Public Company shall include
such information in the written notices to holders of Registrable
Securities referred to in Section 6.2. 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 6.1 shall be
conditioned upon such holder's participation in such underwriting and
the inclusion of such holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed upon by the Majority
Participating Investors and such holder) to the extent provided herein.
If requested by the underwriters, the Public 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 Public Company and such holders
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.
6.2. Piggyback Registration Rights.
6.2.1. Piggyback Registration.
6.2.1.1. General. Each time the Public Company
proposes to register any of its Common Stock under the
Securities Act on a form which would permit registration of
Registrable Securities for sale to the public, for its own
account or for the account of any holder of its shares of
Common Stock, for sale in a Public Offering, the Public
Company will give notice to all holders of Registrable
Securities of its intention to do so. Any such holder may, by
written response delivered to the Public Company within 10
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. The Public Company
thereupon will use its reasonable efforts to cause to be
included in such registration under the Securities Act all
shares of Registrable Securities which the Public Company has
been so requested to register by such holders, to the extent
required to permit the
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disposition (in accordance with the methods to be used by the
Public Company or other holders of shares of Common Stock in
such Public Offering) of the Registrable Securities to be so
registered. Subject to Section 6.3, no registration of
Registrable Securities effected under this Section 6.2 shall
relieve the Public Company of any of its obligations to effect
registrations of Registrable Securities pursuant to Section
6.1 hereof.
6.2.1.2. Excluded Transactions. The Public Company
shall not be obligated to effect any registration of
Registrable Securities under this Section 6.2 incidental to
the registration of any of its securities in connection with:
(1) Any Public Offering relating to
employee benefit plans or dividend
reinvestment plans;
(2) Any Public Offering relating to the
acquisition or merger after the
date hereof by or of the Public
Company or any of its Subsidiaries
of or with any other businesses; or
(3) An Initial Public Offering, except
for the inclusion in such Initial
Public Offering of shares of
capital stock of the Public Company
held by New LLC in an amount which
will yield net proceeds to New LLC
(or its successor by reason of an
incorporation for tax purposes of
New LLC) of at least $50.9 million;
and unless one or more of the
holders of Registrable Securities
has exercised its rights under
Section 6.1.1(a).
6.2.2. Payment of Expenses. The Public Company shall pay all
reasonable expenses of holders of Registrable Securities incurred in
connection with each registration of Registrable Securities requested
pursuant to this Section 6.2, other than underwriting discounts and
commissions, if any, and applicable transfer taxes, if any.
6.2.3. Additional Procedures. Holders of Registrable Shares
participating in any Public Offering pursuant to this Section 6.2 shall
take all such actions and execute all such documents and instruments
that are reasonably requested by the Public Company to effect the sale
of their shares in such Public Offering, including, without limitation,
being parties to the underwriting agreement entered into by the Public
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 Public
Company and any other selling shareholders to and for the benefit of
the underwriters in such underwriting agreement; provided, however,
that with respect to any representations, warranties and agreements of
sellers of shares in such Public Offering,
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the aggregate amount of such liability shall not exceed such holder's
net proceeds from such offering.
6.2.4. Termination. The provisions of this Section 6.2 shall
terminate and be of no further force and effect on the tenth
anniversary of the consummation of the Initial Public Offering.
6.3. Certain Other Provisions
6.3.1. Underwriter's Cutback. In connection with any
registration of shares, the underwriter may determine 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. Notwithstanding any contrary provision of this Section
6 and subject to the terms of this Section 6.3.1, the underwriter may
limit the number of shares which would otherwise be included in such
registration by excluding any or all Registrable Securities from such
registration (it being understood that the number of shares which the
Public Company seeks to have registered for its own account in such
registration shall not be subject to exclusion, in whole or in part,
under this Section 6.3.1). Upon receipt of notice from the underwriter
of the need to reduce the number of shares to be included in the
registration, the Public Company shall so advise all holders of the
Public 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 shall be allocated in the following manner:
(1) first, shares, other than
Registrable Securities, requested
to be included in such registration
by shareholders shall be excluded;
(2) second, if a limitation on the
number of shares is still required,
the number of Registrable
Securities that may be included in
such registration by holders of
shares under Sections 6.1 and 6.2
shall be allocated among the
holders of Registrable Securities
in proportion, as nearly as
practicable, to the respective
amounts of Registrable Securities
which each such shareholder
requested be registered under
Sections 6.1 and 6.2 in such
registration as follows: (i) to the
extent that a limitation on the
number of shares is required with
respect to a registration effected
pursuant to Section 6.1.1(d)
(provided that if (A) a
registration has been requested
under Section 6.1.1(b) or (B) there
is a registration pursuant to which
the Public Company is selling
shares for its own account or (C)
there
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is any other registration as to
which Section 6.2 would be
applicable (1) UBS or CALPERS,
after the date of the resignation
or removal of the UBS Designee from
the Public Company Board in
accordance with Section 2.5 hereof
and (2) Tiger after the date of the
resignation or removal of the Tiger
Designee from the Public Company
Board in accordance with Section
2.5 hereof (the parties specified
in (1) and (2), collectively, the
"Priority Holders") and prior to
the date of the request under
Section 6.1.1(d), the registration
shall be treated as if requested by
the applicable holders of
Registrable Securities under
Section 6.1.1(d) so long as such
Priority Holders were entitled to
make a request under Section
6.1.1(d)), Registrable Securities
held by the Priority Holders in an
amount equal to up to 50% of the
Registrable Securities then held by
each such Priority Holder shall not
be excluded until all shares
requested to be registered by other
holders of Registrable Securities
have been excluded, and, if the
underwriter concludes that 50% of
the Registrable Securities held by
the Priority Holders shall not be
included, such lesser amount shall
be pro rated among such Priority
Holders based upon their respective
ownership of Registrable Securities
(provided that in the event such
Priority Holders have not been
permitted by the underwriters to
include 50% of the Registrable
Securities held by the Priority
Holders in such registration (a
"Priority Registration"), the
Registrable Securities held by the
Priority Holders shall, in an
amount which, together with the
amount held by such Priority
Holders sold in the Priority
Registration, not be excluded in
the next succeeding registration in
which the Priority Holders have the
right to include shares of
Registrable Securities pursuant to
Section 6.2 unless all of the
shares of Registrable Securities or
other securities held by holders
other than the Priority Holders
have been excluded), (ii) in the
event the underwriter concludes
that after giving effect to (i)
above there may be included
additional Registrable Securities,
Registrable Securities held by
holders who have not requested such
registration pursuant to Section
6.1.1(d) in an amount equal to up
to 50% of the Registrable
Securities then held by such other
holders shall not be excluded until
shares of other Registrable
Securities have been excluded
(other than shares included by
reason of clause (i) of this
proviso) and, if the underwriter
concludes
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<PAGE>
that 50% of the Registrable
Securities held by such holders
shall not be included, such lesser
amount shall be pro rated among
such holders based upon their
respective ownership of Registrable
Securities, and (iii) in the event
the underwriter concludes that
after giving effect to (i) and (ii)
above there may be included
additional Registrable Securities,
Registrable Securities held by all
the holders of Registrable
Securities so requesting
registration, including those
holders requesting registration
pursuant to Section 6.1.1(d), shall
be included in proportion, as
nearly as practicable, to the
respective remaining amounts of
Registrable Securities which each
such shareholder requested to be
registered.
In the event that the number of shares of Registrable Securities to be
sold in a registration of shares by an Initiating Investor under
Section 6.1.1 is reduced to less than 80% of the number of Registrable
Securities requested to be registered, the registration shall be deemed
not to have been made pursuant to such demand and such holder shall
thereafter be entitled to exercise such right to demand registration
subject to the provisions of Section 6.1.1. and, to the extent the
provisions of Section 6.3.1(b) have afforded UBS, CALPERS and Tiger the
priorities as provided therein, without regard to such priorities. 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 Public Company and the underwriter. The
Registrable Securities so withdrawn shall also be withdrawn from
registration.
6.3.2. Other Actions. If and in each case when the Public
Company is required to use its best efforts to effect a registration of
any Registrable Securities as provided in this Section 6, the Public
Company shall take appropriate and customary actions in furtherance
thereof, including, without limitation: (i) promptly, and in any event
within 60 days after requested, filing with the Commission a
registration statement and using its best efforts to cause such
registration statement to become effective, (ii) preparing and filing
with the Commission such amendments and supplements to such
registration statements and the prospectus used in connection therewith
as may be necessary to comply with the Securities Act and, with respect
to the disposition of all Registrable Securities and other securities,
if any, covered by such registration statement, keeping such
registration statement effective for a period not to exceed 270 days
from the date of effectiveness or such earlier time as the Registrable
Securities covered by such registration statement shall 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) using its best
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<PAGE>
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 and do any and all other acts and
things which may be necessary or advisable to enable each seller to
consummate the disposition in such jurisdictions of its Registrable
Securities covered by such registration statement; provided, however,
that the Public Company shall not be obligated to file any general
consent to service 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; (iv) using its best efforts to
obtain all legal opinions, auditors' consents and comfort letters and
experts' cooperation as may be required, including furnishing to each
seller of such Registrable Securities a signed counterpart of (x) an
opinion of counsel for the Public Company and (y) a "cold comfort"
letter signed by the independent public accountants who have certified
the financial statements of the Public Company included in such
registration statement, covering substantially the same matters as are
customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities; (v) immediately notifying each seller of Registrable
Securities covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances
then existing, and at the request of any such seller preparing and
furnishing to such seller a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing; (vi) using its best efforts to
cooperate with the seller in the disposition of the securities covered
by such registration statement, including without limitation in the
case of an underwritten offering causing key executives of the Public
Company and its subsidiaries to participate under the direction of the
managing underwriter in a "road show" scheduled by such managing
underwriter in such locations and of such duration as in the judgment
of such managing underwriter are appropriate for such underwritten
offering; (vii) furnishing to each seller of such Registrable
Securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each
case including all exhibits, except that the Public Company shall not
be obligated to furnish any such seller with more than two copies of
such exhibits other than incorporated documents), such number of copies
of the prospectus included in such registration statement (including
each preliminary prospectus and any summary prospectus), each in
conformity with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or prospectus
and such other documents as such seller may reasonably request in order
to facilitate the disposition of its Registrable Securities
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<PAGE>
covered by such registration statement; (viii) otherwise using its best
efforts to comply with the Securities Act, the Exchange Act and any
other applicable rules and regulations of the Commission, and make
available to its securityholders, as soon as reasonably practicable, an
earning statement covering the period of at least 12 months after the
effective date of such registration statement, which earnings statement
shall satisfy Section 11(a) of the Securities Act and any applicable
regulations thereunder, including Rule 158; and (ix) using its best
efforts to list such Registrable Securities on each securities exchange
on which any equity security of the Public Company is then listed, and
if such securities are not already so listed, list them on a national
securities exchange.
6.3.3. Selection of Underwriters and Counsel. The underwriters
and legal counsel to be retained in connection with any Public Offering
shall be selected by the Public Company Board; provided, that if the
majority of the Registrable Securities included in any Public Offering
are held by Fenway, MDC and Dartford (or any one or more of them), then
the underwriters and legal counsel to be retained in connection
therewith shall be selected by holders of a majority of the Registrable
Securities held by Fenway, MDC and Dartford to be included in such
Public Offering, subject to the consent of the Public Company Board
which consent shall not be unreasonably withheld.
6.3.4. Lock-Up. Without the prior written consent of the
underwriters managing any Public Offering, for a period beginning seven
days immediately preceding and ending on the earlier of (a) such date
as the underwriters managing the Public Offering may require or (b) the
180th day following the effective date of a registration statement
filed pursuant to or subject to this Section 6, neither the Public
Company nor any holder of Registrable Securities (whether or not a
selling shareholder pursuant to such registration statement) shall
issue or Transfer any Common Stock of the Public Company, except
pursuant to such registration statement or to a Permitted Transferee in
accordance with the terms of this Agreement.
6.4. Indemnification and Contribution.
6.4.1. Indemnities of New LLC, the Public Company and their
Subsidiaries. In the event of any registration of any Registrable
Securities or other equity securities of New LLC, the Public Company or
any of their respective Subsidiaries under the Securities Act pursuant
to this Section 6 or otherwise, and in connection with any registration
statement or any other disclosure document produced by or on behalf of
New LLC, the Public Company or any of their respective Subsidiaries
including, without limitation, reports required and other documents
filed under the Exchange Act, and other documents pursuant to which any
equity securities of New LLC, the Public Company or any of their
respective Subsidiaries are sold (whether or not for the account of New
LLC, the Public Company or any of their respective Subsidiaries), each
of New LLC and the Public Company will, and hereby does, and will cause
each of its respective Subsidiaries, jointly and severally to,
indemnify and hold harmless each seller of Registrable
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<PAGE>
Securities, any Person who is or might be deemed to be a controlling
Person of New LLC, the Public Company or any of their respective
Subsidiaries within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, the direct and indirect partners,
advisory board members, directors, officers, employees and advisors,
trustees, members and shareholders of any Person who is or might be
deemed to be a controlling Person of New LLC, the Public Company or any
of their respective Subsidiaries within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, and each other
Person, if any, who controls any such seller 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, any other securities or other law of
any jurisdiction, the 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, or any other such
disclosure document (including without limitation reports and other
documents filed under the Exchange Act and any document incorporated by
reference therein) or other document or report, (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 New LLC, the Public Company
or any of their respective Subsidiaries of any federal, state, foreign
or common law rule or regulation applicable to New LLC, the Public
Company or any of their respective Subsidiaries, and relating to action
or inaction in connection with any such registration, disclosure
document or other document or report, 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 New
LLC, the Public Company nor any of their respective 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 or other document or report, in reliance upon and in
conformity with written information furnished to New LLC, the Public
Company or to any of their respective Subsidiaries through an
instrument duly executed by such Covered Person specifically stating
that it is for use in the preparation thereof. The indemnities
contained in this Section 6.4.1 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.
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<PAGE>
6.4.2. Indemnities to New LLC, the Public Company or their
Subsidiaries. New LLC, the Public Company and any of their respective
Subsidiaries may require, as a condition to including any securities in
any registration statement filed pursuant to this Section 6, that New
LLC, the Public Company and any of their respective Subsidiaries shall
have received an undertaking satisfactory to it from the prospective
seller of such securities, to indemnify and hold harmless New LLC, the
Public Company and any of their respective Subsidiaries, each director
of New LLC, the Public Company or any of their respective Subsidiaries,
each officer of New LLC or any of its Subsidiaries who shall sign such
registration statement and each other Person (other than such seller),
if any, who controls New LLC, the Public Company and any of their
respective Subsidiaries within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act 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) or other
document or report, if such statement or omission was made in reliance
upon and in conformity with written information furnished to New LLC,
the Public Company or any of their respective Subsidiaries through an
instrument executed by such seller specifically stating that it is for
use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement, incorporated document or other document or report. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of New LLC, the Public Company and
any of their respective Subsidiaries or any such director, officer or
controlling Person and shall survive any transfer of securities.
6.4.3. Indemnification Procedures. Promptly after receipt by a
Person entitled to indemnification pursuant to the foregoing provisions
of this Section 6.4 (an "Indemnitee") 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 6.4, such Indemnitee will, if
a claim in respect thereof is to be made by such Indemnitee 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 Indemnitee 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 6.4, except and solely
to the extent that such indemnifying party is actually and materially
prejudiced by such failure to give notice. In case any such action is
brought against an Indemnitee, 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 Indemnitee and after
notice from an indemnifying party to such Indemnitee of its election so
to assume the defense thereof, such indemnifying party will not be
liable to such Indemnitee for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof;
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<PAGE>
provided, however, that (i) if the Indemnitee reasonably determines
that there may be a conflict between the positions of such
indemnifying party and the Indemnitee in conducting the defense of
such action or if the Indemnitee reasonably concludes that
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them, then counsel for the Indemnitee shall conduct the defense to
the extent reasonably determined by such counsel to be necessary to
protect the interests of the Indemnitee and such indemnifying party
shall employ separate counsel for its own defense, (ii) in any
event, the Indemnitee shall be entitled to have counsel chosen by
such Indemnitee participate in, but not conduct, the defense and
(iii) 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 clause (i) 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 Indemnitee 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 Indemnitee of a release from
all liabilities in respect of such claim or litigation.
6.4.4. Contribution. If the indemnification provided for in
Sections 6.4.1 or 6.4.2 hereof is unavailable to a party that would
have been an Indemnitee 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 Indemnitee, contribute to the amount paid or payable by such
Indemnitee 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 Indemnitee 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 Indemnitee 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 6.4.4 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 6.4.4 shall include
any legal or other expenses reasonably incurred by such Indemnitee 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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<PAGE>
Section 11(f) of the Securities Act) shall be entitled to contribution
from any Person who was not guilty of such fraudulent
misrepresentation.
6.4.5. 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 6.4 shall not in any event exceed an
amount equal to the net proceeds to such holder (after deduction of all
underwriters' discounts and commissions) from the disposition of the
Registrable Securities disposed of by such holder pursuant to such
registration.
6.5. Reports Under Securities Exchange Act. With a view to making
available to the holders the benefits of Rule 144 promulgated under the
Securities Act ("Rule 144") and any other rule or regulation of the Commission
that may at any time permit a holder to sell securities of the Public Company to
the public without registration, the Public Company agrees to:
(1) use its best efforts to make and
keep public information available,
as those terms are understood and
defined in Rule 144, at all times
commencing 90 days after the
effective date of the registration
statement for its Initial Public
Offering;
(2) use its best efforts to file with
the Commission in a timely manner
all reports and other documents
required of the Public Company under
the Securities Act and the Exchange
Act; and
(3) furnish to any holder forthwith upon
request (1) a written statement by
the Public Company as to its
compliance with the reporting
requirements of Rule 144 (at any
time more than 90 days after the
effective date of the registration
statement for the Initial Public
Offering), the Securities Act and
the Exchange Act (at any time after
it has become subject to such
reporting requirements), and
(2) a copy of the most recent annual
or quarterly report of the Public
Company and such other reports and
documents so filed by the Public
Company.
6.6. Future Changes in Registration Requirements. In the event that the
registration requirements under the Securities Act are amended or eliminated to
accommodate a "Company registration" or similar approach, this Agreement shall
be deemed amended to the extent necessary to reflect such changes and the intent
of the parties hereto with respect to the benefits and obligations of the
parties, and in such connection, the Public Company shall use reasonable
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<PAGE>
efforts to provide holders of Registrable Securities equivalent benefits to
those provided under this Agreement.
6.7. Limitations on Other Registration Rights. None of New LLC, the
Public Company or any of their respective Subsidiaries shall enter into or be
subject to any agreement with any holder or prospective holder of securities of
New LLC, the Public Company or any of their respective Subsidiaries relating to
registration rights unless (i) such agreement provides that the registration
rights of the parties hereto contained herein would, in all respects, have
priority over any such additional registration rights and (ii) such agreement
shall not include rights or obligations that would conflict or be inconsistent
with or diminish in any respect the rights contained herein. In the event of any
conflict between this Section 6 and any agreement to which New LLC, the Public
Company or any of their respective Subsidiaries is a party or by which it is
bound, the provisions of this Section 6 shall govern.
7. CERTAIN ISSUANCES AND TRANSFERS, ETC.
7.1. Transfers to Permitted Transferees. Each party hereto agrees that
no Transfer of any New LLC Interests or securities of the Public Company or any
Subsidiary of New LLC or the Public Company to any Permitted Transferee shall be
effective unless such Permitted Transferee has delivered to New LLC, the Public
Company or such Subsidiary of New LLC or the Public Company a written
acknowledgment and agreement in form and substance reasonably satisfactory to
New LLC, the Public Company or any such Subsidiary of New LLC or the Public
Company, as applicable, that such New LLC Interests or securities to be received
by such Permitted Transferee shall continue to be subject to all of the
provisions of this Agreement and that such Permitted Transferee shall be bound
by and a party to this Agreement to the same extent as the transferor hereunder;
provided, however, that no Transfer by any party to a Permitted Transferee shall
relieve such party of any of its obligations hereunder.
7.2. Other Transfers and Issuances. Assuming compliance with all
transfer restrictions set forth in this Agreement, New LLC Interests or other
securities transferred pursuant to Sections 3.2 or 3.3 hereof or in a Public
Offering or to the public under Rule 144 shall, notwithstanding any other
provision (other than this Section 7.2) of this Agreement, be conclusively
deemed thereafter not to be New LLC Interests or securities subject to this
Agreement or entitled to the benefit of any of the provisions hereof.
8. REMEDIES.
8.1. Generally. The parties hereto shall have all remedies available
at law, in equity or otherwise in the event of any breach or violation of this
Agreement or any default hereunder by any other party. The parties acknowledge
and agree that in the event of any breach of this Agreement, in addition to any
other remedies which may be available, each of the parties hereto shall be
entitled to specific performance of the obligations of the other parties hereto
and, in
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addition, to such other equitable remedies (including, without limitation,
preliminary or temporary relief) as may be appropriate in the circumstances.
9. LEGENDS.
9.1. Restrictive Legend. Each certificate representing New LLC
Interests, MBW LLC Interests, VDK LLC Interests or shares of common stock of the
Public Company or any Subsidiary of New LLC or the Public Company held by any
party hereto shall have the following legend endorsed conspicuously thereupon:
The voting of the securities represented by this certificate,
and the sale, encumbrance or other disposition thereof, are subject to
the provisions of a Securityholders Agreement to which the issuer and
certain of its securityholders are party, a copy of which may be
inspected at the principal office of the issuer or obtained from the
issuer without charge.
Any person who holds or acquires securities which are not subject to
all or part of the terms of this Agreement shall have the right to have such
legend (or the applicable portion thereof) removed from certificates
representing such securities.
9.2. Securities Act Legends. Each certificate representing New LLC
Interests, MBW LLC Interests, VDK LLC Interests or shares of common stock of the
Public Company or any Subsidiary of New LLC or the Public Company held by any
party hereto shall have the following legend endorsed conspicuously thereupon:
The securities represented by this certificate were issued in
a private placement, without registration under the Securities Act of
1933, as amended (the "Act"), and may not be sold, assigned, pledged or
otherwise transferred in the absence of an effective registration under
the Act covering the transfer or an opinion of counsel, satisfactory to
the issuer, that registration under the Act is not required.
Any person who holds or acquires securities which are no longer subject
to the restrictions on transfer under the Securities Act shall have the right to
have such legend removed from certificates representing such securities.
9.3. Stop Transfer Instruction. The Public Company will instruct any
transfer agent not to register the Transfer of any New LLC Interests or shares
of common stock of the Public Company or any Subsidiary of New LLC or the Public
Company held by any party hereto until the conditions specified in the foregoing
legends are satisfied.
10. AMENDMENT, TERMINATION, ETC.
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10.1. Oral Modifications. This Agreement may not be orally amended,
modified, extended or terminated, nor shall any oral waiver of any of its terms
be effective.
10.2. Written Modifications. This Agreement may be amended, modified,
extended or terminated, and the provisions hereof may be waived, only by an
agreement in writing signed by Fenway and MDC; provided, however, that (a) for
so long as Dartford Beneficially Owns New LLC Interests or shares of Common
Stock, its consent shall be required for any amendment to the provisions of
Sections 2, 3, 4, 5, 6 and 10.2 which affects adversely the rights and
obligations of Dartford as provided therein and, if Dartford is directly
adversely affected, its consent shall be required for amendments to the other
provisions of this Agreement; (b) for so long as UBS Beneficially Owns New LLC
Interests or shares of Common Stock, its consent shall be required for any
amendment to the provisions of Sections 2, 3, 4, 5, 6 and 10.2 which affects
adversely the rights and obligations of UBS as provided therein and, if UBS is
directly adversely affected, its consent shall be required for amendments to the
other provisions of this Agreement; (c) for so long as Tiger Beneficially Owns
New LLC Interests or shares of Common Stock, its consent shall be required for
any amendment to the provisions of Sections 2, 3, 4, 5, 6 and 10.2 which affects
adversely the rights and obligations of Tiger as provided therein and, if Tiger
is directly adversely affected its consent shall be required for amendments to
the other provisions of this Agreement; (d) for so long as CALPERS Beneficially
Owns 2% or more of New LLC Interests or shares of Common Stock, its consent
shall be required for any amendment to the provisions of Sections 2, 3, 4, 5, 6
and 10.2 which affects adversely the rights and obligations of CALPERS as
provided therein, and, if CALPERS is directly adversely affected, its consent
shall be required for amendments to the other provisions of this Agreement and
(e) the approval of a majority of the disinterested directors of the Managers
Board or the Public Company Board, as the case may be, shall be required for any
amendment to Sections 4 or 5 that provides greater rights to or diminishes the
obligations of Fenway or MDC as set forth therein. Each such amendment,
modification, extension, termination and waiver shall be binding upon each party
hereto and each holder of securities subject hereto. In addition, each party
hereto and each holder of securities subject hereto may waive any right
hereunder by an instrument in writing signed by such party or holder.
10.3. Termination. No termination under this Agreement shall relieve
any Person of liability for breach prior to termination.
11. DEFINITIONS. For purposes of this Agreement:
11.1. Certain Matters of Construction. In addition to the definitions
referred to or set forth below in this Section 11:
(a) The words "hereof", "herein", "hereunder" and words of
similar import shall refer to this Agreement as a whole and not to any
particular Section or provision of this Agreement, and reference to a
particular Section of this Agreement shall include all subsections
thereof;
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(b) Definitions shall be equally applicable to both the
singular and plural forms of the terms defined; and
(c) The masculine, feminine and neuter genders shall each
include the other.
11.2. Definitions. The following terms shall have the following
meanings:
"Affiliate" shall mean, with respect to any specified Person,
any other Person which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, such specified Person (for the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as
used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of
voting securities, by agreement or otherwise).
"Agreement" shall have the meaning set forth in the Preamble.
"Aurora Foods" means Aurora Foods Inc., a Delaware
corporation.
"Aurora Holdings" shall have the meaning set forth in the
Recitals.
"Bain" shall mean Sunapee Securities, Inc. and Squam Lake
Investors II, L.P.
"Beneficial Ownership" and "Beneficially Owned" shall mean the
ownership, directly or indirectly (through MBW LLC, VDK LLC or
otherwise), of the voting interests set forth on Schedule B (as amended
from time to time to reflect Transfers permitted by this Agreement);
provided, however, that for purposes of determining the amount of
shares Beneficially Owned under Sections 2.5, 3, 4, 5 and 6, any right
to vote securities by grant of a proxy of securities owned by another
Person shall not be included.
"CALPERS" shall mean the California Public Employees'
Retirement System.
"Class A Holder" shall have the meaning set forth in Section
2.1.1.
"Class A Units" shall have the meaning set forth in the
Recitals.
"Closing" shall have the meaning set forth in Section 1.1.
"Commission" shall mean the Securities and Exchange
Commission.
"Common Stock" shall have the meaning set forth in Section
2.5.
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"Consolidated Net Income" means, for any period, the net
income (loss) of a company and its Subsidiaries on a consolidated basis
determined in accordance with generally accepted accounting principles;
provided, however, that there shall not be included in such
Consolidated Net Income: (i) any net income (loss) of any Person
acquired by the company or a Subsidiary in a pooling of interests
transaction for any period prior to the date of such acquisition; (ii)
any gain or loss realized upon the sale or disposition of any property,
plant or equipment of the company or its Subsidiaries which is not sold
or otherwise disposed of in the ordinary course of business and any
gain or loss realized upon the sale or disposition of any capital stock
of any Person; (iii) extraordinary gain or loss, (iv) any non-cash
compensation charge for employee stock options or other stock awards,
(v) non-cash, non-recurring charges reducing or increasing Consolidated
Net Income (excluding any such non-cash charge to the extent it
represents an accrual of or reserve for cash charges in any future
period or amortization of prepaid cash expense that was paid in a prior
period not included in the calculation) and (vi) cumulative effect of
any change in accounting principles.
"Contribution Agreement" shall have the meaning set forth in
the Recitals.
"Convertible Securities" shall mean any evidence of
indebtedness, shares of stock (other than Common Stock) or other
securities directly or indirectly convertible into or exchangeable or
exercisable for shares of Common Stock.
"Covered Person" shall have the meaning set forth in Section
6.4.1.
"Dartford" shall mean Dartford Partnership L.L.C., a Delaware
limited liability company and its Permitted Transferees and the
Dartford Trusts for so long as Dartford or its Affiliates shall control
the voting of shares held by such Dartford Trusts.
"Dartford Designees" shall have the meaning set forth in
Section 2.1.1.
"Dartford Trusts" shall mean The Ian and Susan Wilson 1998
Irrevocable Trust, Ray and Eileen Chung Children's Trust f/b/o Melissa
Ann Chung, Ray and Eileen Chung Children's Trust f/b/o Jessica Michelle
Chung, Scott W. Seaton, Trustee f/b/o Caitlin E. Ardrey, Scott W.
Seaton, Trustee f/b/o Ian B. Ardrey, R. Holt Ardrey, Trustee f/b/o
Blake Ardrey, R. Holt Ardrey, Trustee f/b/o Scott Ardrey, Wendy R.
Ardrey, Trustee f/b/o Ann Richardson, and Elizabeth D. Ardrey.
"Drag Along Interests" shall have the meaning set forth in
Section 3.3.1.
"Drag Along Notice" shall have the meaning set forth in
Section 3.3.1.
"Drag Along Sale Percentage" shall have the meaning set forth
in Section 3.3.1.
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"Drag Along Sellers" shall have the meaning set forth in
Section 3.3.1.
"EBITDA" shall mean the Consolidated Net Income plus the
following to the extent deducted in calculating such Consolidated Net
Income (i) income tax expense, (ii) consolidated interest expense,
(iii) depreciation expense, (iv) amortization of intangibles, and (v)
other non-cash charges reducing Consolidated Net Income (excluding any
such non-cash charge to the extent it represents an accrual of or
reserve for cash charges in any future period or amortization of a
prepaid cash expense that was paid in a prior period not included in
the calculation) and less, to the extent added in calculating
Consolidated Net Income, non-cash items increasing Consolidated Net
Income.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as in effect from time to time.
"Fair Market Value" shall mean, as of any date, the good faith
determination of the Managers Board or Subsidiary Board, as the case
may be, of the fair value of the securities to be received as of the
applicable reference date.
"Fenway" shall mean Fenway Capital Partners Fund, L.P., a
Delaware limited partnership and any of its Affiliates (including FPIP
LLC and FPIP Trust LLC), which hold directly or indirectly interests in
MBW LLC or VDK LLC or securities received in respect thereof.
"Fenway Designees" shall have the meaning set forth in Section
2.1.1.
"First Independent Election Date" shall have the meaning set
forth in Section 2.5.
"HSR Act" shall have the meaning set forth in Section 4.1.4.
"Indemnitee" shall have the meaning set forth in Section
6.4.3.
"Initial Public Offering" shall mean the initial public
offering of (i) common stock of the surviving corporation in any
merger, consolidation or incorporation for tax purposes of New LLC or
(ii) the common stock of any entity that is a Subsidiary of New LLC
immediately prior to the time of such public offering.
"Initiating Investors" shall have the meaning set forth in
Section 6.1.1.
"Issuance" shall have the meaning set forth in Section 4.
"LLC Participating Buyer" shall have the meaning set forth in
Section 4.1.2.1.
"LLC Preemption Notice" shall have the meaning set forth in
Section 4.1.1.
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"LLC Preemptive Offeree" shall have the meaning set forth in
Section 4.1.1.
"LLC Preemptive Portion" shall have the meaning set forth in
Section 4.1.1(a).
"LLC Prospective Subscribers" shall have the meaning set forth
in Section 4.1.1(a).
"Majority Participating Investors" shall have the meaning set
forth in Section 6.1.1.1.
"Management Securities" shall mean those shares of Common
Stock acquired by virtue of their interests in MBW LLC or VDK LLC held
by Persons who are then current employees of the Public Company or any
of its Subsidiaries other than those shares of Common Stock held by
Dartford and its Affiliates.
"Managers" shall mean the members of the Managers Board.
"Managers Board" shall have the meaning set forth in Section
2.1.1.
"MBW LLC" shall have the meaning set forth in the Recitals.
"MBW LLC Agreement" shall mean the Second Amended and Restated
Limited Liability Company Agreement of MBW Investors LLC dated as of
April 8, 1998, as amended, modified, supplemented or restated from time
to time.
"MBW LLC Interests" shall mean the Voting Units of MBW LLC as
defined in the MBW LLC Agreement except that for purposes of Section
3.1 and 7, "MBW LLC Interests" shall mean all units of MBW LLC.
"MDC" shall mean collectively, McCown De Leeuw & Co. III,
L.P., a California limited partnership, McCown De Leeuw & Co. III
(Europe), L.P., a Bermuda limited partnership, McCown DeLeeuw & Co. III
(Asia), L.P., a Bermuda limited partnership, Gamma Fund LLC, a
California limited liability company, McCown De Leeuw & Co. IV, L.P., a
California limited partnership, and Delta Fund LLC, a California
limited liability company.
"MDC Designees" shall have the meaning set forth in Section
2.1.1.
"Members" shall mean the members of New LLC as set forth in
the New LLC Agreement.
"Members of the Immediate Family" shall mean, with respect to
any individual, each spouse or child of such individual, each trust
created solely for the benefit of one or
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more of the aforementioned Persons and each custodian or guardian of
any property of one or more of the aforementioned Persons in his
capacity as such custodian or guardian.
"New LLC" shall have the meaning set forth in the Recitals.
"New LLC Agreement" shall mean the Limited Liability Company
Agreement of New LLC dated April 8, 1998.
"New LLC Interests" shall mean the Class A Units and any other
interests in New LLC .
"Other Securities" shall have the meaning set forth in Section
4.1.3.
"Other Subsidiary Securities" shall have the meaning set forth
in Section 4.2.3.
"Participating Buyer" shall have the meaning set forth in
Section 4.3.
"Participating Seller" shall have the meaning set forth in
Section 3.2.2 and 3.3.1, as the context may require.
"Permitted Transferee" shall mean (i) Members of the Immediate
Family or ancestors or descendants thereof or a trust, custodianship,
partnership or fiduciary account for the benefit of such person or a
Permitted Transferee thereof; (ii) by a holder which is a partnership
to its partners or by a holder which is a limited liability company to
its members; (iii) by UBS to (A) any Affiliate of UBS, including
co-investment entities established and controlled by UBS (collectively,
"UBS Affiliates"), (B) any managing director, director, officer or
employee of UBS or any UBS Affiliate or the heirs, executors,
administrators, testamentary trustee, descendants of any of the
foregoing persons referred to in this clause (B) (collectively, "UBS
Associates"), and (C) a trust, the beneficiaries of which, or a
corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which, include
only UBS, UBS Affiliates or UBS Associates; (iv) by Dartford to any
officer, director or employee of New LLC or any of its Subsidiaries;
and (v) by Fenway, MDC or Tiger, to any Affiliate thereof; provided,
that each Permitted Transferee must agree in writing to be bound by
this Agreement.
"Person" shall mean any individual, partnership, corporation,
company, limited liability company, association, trust, joint venture,
unincorporated organization, entity or division, or any government,
governmental department or agency or political subdivision thereof.
"Preemption Notice" shall have the meaning set forth in
Section 4.2.1.
"Preemptive Offerees" shall have the meaning set forth in
Section 4.2.1.
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"Preemptive Portion" shall have the meaning set forth in
Section 4.2.1(a).
"Prospective Buyer" shall mean any Person.
"Prospective Selling Investor" shall have the meaning set
forth in Section 3.2.1 or 3.3, as the context may require.
"Prospective Subscriber" shall have the meaning set forth in
Section 4.2.1(a).
"Public Company" shall mean any of New LLC, its Subsidiaries,
and any successors thereto (including by reason of an incorporation of
New LLC for tax purposes), which shall be the issuer of shares of
Common Stock in the Initial Public Offering.
"Public Company Board" shall have the meaning set forth in
Section 2.5.
"Public Offering" shall mean a public offering and sale of
Common Stock for cash pursuant to an effective registration statement
under the Securities Act.
"Registrable Securities" shall mean (i) all shares of Common
Stock or other securities of the Public Company held by any party
hereto as a result of such party's interest in New LLC, MBW LLC or VDK
LLC other than Management Securities, (ii) Management Securities and
(iii) all shares of Common Stock or other securities directly or
indirectly issued or issuable with respect to the securities referred
to in clauses (i) and (ii) above by way of stock dividend or stock
split or in connection with a combination of shares, recapitalization,
merger, consolidation, incorporation of a limited liability company or
other reorganization, other than securities transferred pursuant to
Sections 3.2 or 3.3 hereof. As to any particular Registrable
Securities, such shares shall cease to be Registrable Securities when
(a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such
registration statement, (b) such securities shall have been distributed
to the public pursuant to Rule 144 (or any successor provision) under
the Securities Act, (c) for purposes of Sections 6.1 and 6.2, with
respect to any Registrable Securities that any holder and its
Affiliates shall otherwise be entitled to include in a registration
statement pursuant to Sections 6.1 or 6.2, when such securities may be
distributed without volume limitation or other restrictions on transfer
under Rule 144 (including without application of paragraphs (c), (e)
(f) and (h) of Rule 144), provided that this clause (c) shall have no
applicability if such securities represent more than 2% of the
outstanding Common Stock of the Public Company, or (d) such securities
shall have ceased to be outstanding.
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"Regulation D" shall mean Regulation D under the Securities
Act.
"Restricted Actions" shall have the meaning set forth in
Section 5.1
"Rule 144" have the meaning specified in Section 6.5.
"Rule 145 Transaction" shall mean a registration on Form S-4
pursuant to Rule 145 of the Securities Act.
"Sale" shall have the meaning set forth in Section 3.2.
"Second Independent Director Date" shall have the meaning set
forth in Section 2.5.
"Securities Act" shall mean the Securities Act of 1933, as in
effect from time to time.
"Subject Securities" shall have the meaning set forth in
Section 4.
"Subsidiary" with respect to any company shall mean any
corporation or other entity more than 50% of whose stock or other
equity securities (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 and any successor thereto.
"Subsidiary Board" shall have the meaning set forth in Section
2.2.1 and 2.5.
"Subsidiary Participating Buyer" shall have the meaning set
forth in Section 4.2.2.1.
"Subsidiary Securities" shall have the meaning set forth in
Section 4.
"Tag Along Interests" shall have the meaning set forth in
Section 3.2.1(a).
"Tag Along Notice" shall have the meaning set forth in Section
3.2.1.
"Tag Along Offer" shall have the meaning set forth in Section
3.2.2.
"Tag Along Offeror" shall have the meaning set forth in
Section 3.2.1.
"Tag Along Sale Percentage" shall have the meaning set forth
in Section 3.2.1(a).
"Tag Along Sellers" shall have the meaning set forth in
Section 3.2.2.
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"Transfer" shall mean any sale, pledge, assignment,
hypothecation, encumbrance or other transfer or disposition of any
applicable securities to any other Person, whether directly,
indirectly, voluntarily, involuntarily, by operation of law, pursuant
to judicial process or otherwise.
"Tiger" shall mean Gloriande (Luxembourg) S.a.r.L., an
Affiliate of Tiger Oats Limited.
"Tiger Designee" shall have the meaning set forth in Section
2.1.1.
"UBS" shall mean UBS Capital LLC, a New York limited liability
company.
"UBS Designee" shall have the meaning set forth in Section
2.1.1.
"VDK Holdings" shall have the meaning set forth in the
Recitals.
"VDK LLC" shall have the meaning set forth in the Recitals.
"VDK LLC Agreement" shall mean the Second Amended and Restated
Limited Liability Company Agreement of VDK Foods LLC dated as of April
8, 1998, as amended, modified, supplemented or restated from time to
time.
"VDK LLC Interests" shall mean the Voting Units of VDK LLC as
defined in the VDK LLC Agreement except that for purposes of Section
3.1 and 7, "VDK LLC Interests" shall mean all units of VDK LLC.
"Van de Kamp's" shall mean Van de Kamp's, Inc., a Delaware
corporation.
12. MISCELLANEOUS.
12.1. Authority; Effect. Each party hereto represents and warrants to
and agrees with each other party that the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized on behalf of such party and do not violate any agreement or
other instrument applicable to such party or by which its assets are bound. This
Agreement does not, and shall not be construed to, give rise to the creation of
a partnership among any of the parties hereto, or to constitute any of such
parties members of a joint venture or other association.
12.2. Notices. Any notices and other communications required or
permitted in this Agreement shall be effective if in writing and (a) delivered
personally, (b) sent (i) by Federal Express, DHL or UPS or (ii) by registered or
certified mail, postage prepaid, or (c) sent by facsimile, in each case,
addressed to the parties at the address set forth on Schedule A hereto.
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Notice to the holder of record of any securities shall be deemed to be
notice to the holder of such shares or interests for all purposes hereof.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date received, if personally delivered or
delivered by facsimile upon receipt of confirmation thereof, (b) two business
days after being sent by Federal Express, DHL or UPS and (c) three business
days, if sent by registered or certified mail. Each of the parties hereto shall
be entitled to specify a different address by giving notice as aforesaid to each
of the other parties hereto.
12.3. Binding Effect, etc. This Agreement constitutes the entire
agreement of the parties with respect to its subject matter, supersedes all
prior or contemporaneous oral or written agreements or discussions with respect
to such subject matter, and shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, representatives, successors and
assigns.
12.4. Descriptive Headings. The descriptive headings of this Agreement
are for convenience of reference only, are not to be considered a part hereof
and shall not be construed to define or limit any of the terms or provisions
hereof.
12.5. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one instrument.
12.6. Severability. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect, such provision shall
be construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and possible under, applicable law. The
provisions hereof are severable, and in the event any provision hereof should be
held invalid or unenforceable in any respect, it shall not invalidate, render
unenforceable or otherwise affect any other provision hereof.
13. GOVERNING LAW.
13.1. Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic substantive laws of the State of Delaware
without giving effect to any choice or conflict of laws provision or rule that
would cause the application of the domestic substantive laws of any other
jurisdiction.
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Securityholders Agreement
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement (or caused this Agreement to be executed on its behalf by its officer
or representative thereunto duly authorized) under seal as of the date first
above written.
AURORA/VDK LLC
By: /s/ James B. Ardrey
-----------------------------------
Name: James B. Ardrey
Title: Executive Vice President
MBW INVESTORS LLC
By: /s/ James B. Ardrey
-----------------------------------
Name: James B. Ardrey
Title: Executive Vice President
VDK FOODS LLC
By: /s/ James B. Ardrey
-----------------------------------
Name: James B. Ardrey
Title: Executive Vice President
AURORA FOODS HOLDINGS INC.
By: /s/ James B. Ardrey
-----------------------------------
Name: James B. Ardrey
Title: Executive Vice President
<PAGE>
Securityholders Agreement
AURORA FOODS INC.
By: /s/ James B. Ardrey
-----------------------------------
Name: James B. Ardrey
Title: Executive Vice President
VDK HOLDINGS, INC.
By: /s/ James B. Ardrey
-----------------------------------
Name: James B. Ardrey
Title: Executive Vice President
VAN de KAMPS, INC.
By: /s/ James B. Ardrey
-----------------------------------
Name: James B. Ardrey
Title: Executive Vice President
FENWAY CAPITAL PARTNERS FUND, L.P.
By: Fenway Partners, L.P., its General Partner
By: Fenway Partners Management, Inc. its
General Partner
By: /s/ Richard Dresdale
-----------------------------------
Name:
Title:
<PAGE>
Securityholders Agreement
FPIP LLC
By: Fenway Partners, Inc., its Manager
By: /s/ Richard Dresdale
-----------------------------------
Name:
Title:
FPIP TRUST, LLC
By: Fenway Partners, Inc., its Manager
By: /s/ Richard Dresdale
-----------------------------------
Name:
Title:
<PAGE>
Securityholders Agreement
McCOWN DeLEEUW & CO. III, L.P.
By: MDC Management Company III, L.P.,
its General Partner
By: /s/ Charles Ayres
-----------------------------------
Name:
Title:
McCOWN DeLEEUW & CO. III (Europe), L.P.
By: MDC Management Company III, L.P.,
its General Partner
By: /s/ Charles Ayres
-----------------------------------
Name:
Title:
McCOWN DeLEEUW & CO. III (Asia), L.P.
By: MDC Management Company IIIA, L.P.,
its General Partner
By: /s/ Charles Ayres
-----------------------------------
Name:
Title:
GAMMA FUND LLC
By: /s/ Charles Ayres
-----------------------------------
Name:
Title:
<PAGE>
Securityholders Agreement
McCOWN DeLEEUW & CO. IV, L.P.
By: MDC Management Company IV, L.P.
its General Partner
By: /s/ Charles Ayres
-----------------------------------
Name:
Title:
DELTA FUND LLC
By: /s/ Charles Ayres
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Name:
Title:
<PAGE>
Securityholders Agreement
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ David E. J. Maxwell
-----------------------------------
Name: David E. J. Maxwell
Title: Principal Investment Officer
<PAGE>
Securityholders Agreement
DARTFORD PARTNERSHIP L.L.C.
By: /s/ James B. Ardrey
-----------------------------------
Name: James B. Ardrey
Title: Member
THE IAN AND SUSAN WILSON 1998
IRREVOCABLE TRUST
By: /s/ Timothy R. Wilson
-----------------------------------
Name: Timothy R. Wilson
Title: Trustee
SCOTT W. SEATON, TRUSTEE
f/b/o CAITLIN E. ARDREY
By:
-----------------------------------
Name:
Title:
SCOTT W. SEATON, TRUSTEE
f/b/o IAN B. ARDREY
By:
-----------------------------------
Name:
Title:
<PAGE>
Securityholders Agreement
R. HOLT ARDREY, TRUSTEE
f/b/o BLAKE ARDREY
By:
-----------------------------------
Name:
Title:
R. HOLT ARDREY, TRUSTEE
f/b/o SCOTT ARDREY
By:
-----------------------------------
Name:
Title:
WENDY R. ARDREY, TRUSTEE
f/b/o ANN RICHARDSON
By:
-----------------------------------
Name:
Title:
---------------------------------
Elizabeth D. Ardrey
RAY AND ELLEN CHUNG CHILDREN'S
TRUST f/b/o Melissa Ann Chung
By:
-----------------------------------
Name:
Title:
<PAGE>
Securityholders Agreement
RAY AND ELLEN CHUNG CHILDREN'S
TRUST f/b/o Jessica Michelle Chung
By:
-----------------------------------
Name:
Title:
<PAGE>
Securityholders Agreement
UBS CAPITAL LLC
By: /s/ Charles J. Delancy
-----------------------------------
Name:
Title:
GLORIANDE (LUXEMBOURG) S.a.r.L.
By: /s/ I. W. M. Isdale
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Name: I. W. M. Isdale
Title: Authorized Signatory
<PAGE>
Securityholders Agreement
SUNAPEE SECURITIES, INC.
By: /s/ Gary Wilkinson
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Name: Gary Wilkinson
Title: Treasurer
SQUAM LAKE INVESTORS II, L.P.
By: GPI, Inc. its Managing General Partner
By: /s/ Gary Wilkinson
-----------------------------------
Name: Gary Wilkinson
Title: Treasurer
<PAGE>
Securityholders Agreement
/s/ Thomas J. Ferraro
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Thomas J. Ferraro
/s/ C. Gary Willett
---------------------------------
C. Gary Willett
/s/ Alan Mintz
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Alan Mintz
/s/ Dirk Grizzle
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Dirk Grizzle
/s/ Robert Kraska
----------------------------------
Robert Kraska
<PAGE>
Securityholders Agreement
/s/ Thomas O. Ellinwood
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Thomas O. Ellinwood
/s/ Timothy B. Andersen
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Timothy B. Andersen
/s/ C. Renee Sloan
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C. Renee Sloan
/s/ Thomas J. Youngerman
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Thomas J. Youngerman
/s/ Olafur Gundmundsson
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Olafur Gundmundsson
/s/ Gregory L. Smith
----------------------------------
Gregory L. Smith
/s/ Anthony A. Bevilacqua
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Anthony A. Bevilacqua
<PAGE>
Schedule A
Aurora/VDK LLC
c/o Dartford Partnership L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94104
Facsimile: (415) 982-3023
MBW Investors LLC
c/o Dartford Partnership L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94104
Facsimile: (415) 982-3023
VDK Foods LLC
c/o Dartford Partnership L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94104
Facsimile: (415) 982-3023
Aurora Foods Holdings Inc.
c/o Dartford Partnership L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94104
Facsimile: (415) 982-3023
Aurora Foods Inc.
Community Corporate Center
445 Hutchinson Avenue, Suite 960
Columbus, Ohio 43235
Facsimile: (614) 436-6655
VDK Holdings, Inc.
c/o Dartford Partnership L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94104
Facsimile: (415) 982-3023
Van de Kamps, Inc.
1000 Union Station, Suite 200
St. Louis, Missouri 63103
60
<PAGE>
Facsimile: (314) 632-5690
Fenway Capital Partners Fund, L.P.
FPIP Trust LLC
FPIP LLC
152 West 57th Street, 59th Floor
New York, New York 10019
Attention: Richard C. Dresdale
Facsimile: (212) 757-0609
McCown De Leeuw & Co. III, L.P.
c/o McCown DeLeeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, California 94025
Facsimile: (650) 854-0853
McCown De Leeuw & Co. III (Europe), L.P.
c/o McCown DeLeeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, California 94025
Facsimile: (650) 854-0853
McCown De Leeuw & Co. III (Asia), L.P.
c/o McCown DeLeeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, California 94025
Facsimile: (650) 854-0853
Gamma Fund LLC c/o McCown DeLeeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, California 94025
Facsimile: (650) 854-0853
McCown De Leeuw & Co. IV, L.P.
c/o McCown DeLeeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, California 94025
61
<PAGE>
Facsimile: (650) 854-0853
Delta Fund LLC c/o McCown DeLeeuw & Co.
3000 Sand Hill Road
Building 3, Suite 290
Menlo Park, California 94025
Facsimile: (650) 854-0853
California Public Employees' Retirement System
Lincoln Plaza
400 P Street
Sacramento, California 95814
Attention: David E.J. Maxwell
with a copy to: Pacific Corporate Group
1200 Prospect Street
La Jolla, California 92037
Attention: Brian Kinsman
Dartford Partnership L.L.C.
456 Montgomery Street, Suite 2200
San Francisco, California 94104
Facsimile: (415) 982-3023
The Ian and Susan Wilson 1998 Irrevocable Trust
945 Green Street
San Francisco, California 94133
Ray and Eileen Chung Children's Trust
f/b/o Melissa Ann Chung
11 Smithdale Estates
Houston, Texas 77024
Ray and Eileen Chung Children's Trust
f/b/o Jessica Michelle Chung
11 Smithdale Estates
Houston, Texas 77024
Scott W. Seaton, Trustee
f/b/o Caitlin E. Ardrey
48 Pheasant Lane
Greenwich, Connecticut 06830
62
<PAGE>
Scott W. Seaton, Trustee
f/b/o Ian B. Ardrey
48 Pheasant Lane
Greenwich, Connecticut 06830
R. Holt Ardrey, Trustee
f/b/o Blake Ardrey
48 Pheasant Lane
Greenwich, Connecticut 06830
R. Holt Ardrey, Trustee
f/b/o Scott Ardrey
48 Pheasant Lane
Greenwich, Connecticut 06830
Wendy R. Ardrey, Trustee
f/b/o Ann Richardson
48 Pheasant Lane
Greenwich, Connecticut 06830
Elizabeth D. Ardrey
48 Pheasant Lane
Greenwich, Connecticut 06830
UBS Capital LLC
299 Park Avenue
New York, New York 10171
Attention: Charles J. Delaney
Facsimile: (212) 821-6333
Gloriande (Luxembourg) S.a.r.L.
c/o Moore Stephens Services SAM
L'Estoril
Avenue Princess Grace
MONACO
Sunapee Securities, Inc.
Two Copley Place
Boston, MA 02116
63
<PAGE>
Attention: Gary Wilkinson
Facsimile: (617) 572-3266
Squam Lake Investors II, L.P.
Two Copley Place
Boston, MA 02116
Attention: Gary Wilkinson
Facsimile: (617) 572-3266
Aurora Foods Management:
Thomas J. Ferraro
438 Delegate Drive
Worthington, Ohio 43235
C. Gary Willett
1001 Elcliff Drive
Westerville, Ohio 43081
Alan Mintz
8005 Spalding Hills
Atlanta, GA 30350
Dirk Grizzle
1050 Isle Court
Westerville, OH 43082
Robert Kraska
1151 Nautilus Place
Westerville, OH 43082
Van de Kamp's Management:
Thomas O. Ellinwood
12451 Montsouris Drive
St. Louis, Missouri 63141
Timothy B. Andersen
20 Georgian Acres
St. Louis, Missouri 63131
C. Renee Sloan
64
<PAGE>
1159 Olive Lake Drive, Apt. C
St. Louis, Missouri 63132
Thomas J. Youngerman
232 N. Kingshighway, Apt. 412
St. Louis, Missouri 63108
Olafur Gundmundsson
95 Aberdeen Place
St. Louis, Missouri 63105
Gregory L. Smith
388 Wellington Cove
Jackson, Tennessee 38305
Anthony A. Bevilacqua
424 Yorkshire Place
Webster Grove, Missouri 63119
65
<PAGE>
SCHEDULE B
<TABLE>
<CAPTION>
Beneficial Ownership of
Name New LLC
<S> <C>
Fenway Partners Capital Fund, L.P. 38.0228
McCown DeLeeuw & Co. III, L.P. 13.5568
McCown De Leeuw & Co. III (Europe), L.P. 0.9624
McCown DeLeeuw & Co. III (Asia), L.P. 0.2256
Gamma Fund LLC 0.2933
McCown DeLeeuw & Co. IV, L.P. 12.9392
Delta Fund LLC 0.3761
California Public Employees' Retirement System 8.4255
Gloriande Industries, Inc. 8.6667
UBS Capital LLC 8.6667
Dartford Partnership L.L.C. 5.1201
The Ian and Susan Wilson 1998 Irrevocable Trust 0.2965
Ray and Eileen Chung Children's Trust 0.1164
f/b/o Melissa Ann Chung
Ray and Eileen Chung Children's Trust 0.1164
f/b/o Jessica Michelle Chung
Certain trusts f/b/o ancestors and 0.0756
descendants of James B. Ardrey
Sunapee Securities, Inc. 0.4026
Squam Lake Investors II, L.P. 0.4026
</TABLE>
66
<PAGE>
<TABLE>
<S> <C>
Thomas O. Ellinwood 0.0829
Thomas J. Youngerman 0.0282
C. Renee Sloan 0.0282
Olafur Gudmundsson 0.0282
Timothy B. Andersen 0.0282
Gregory L. Smith 0.0166
Thomas J. Ferraro 0.1330
C. Gary Willett 0.0544
Dirk Grizzle 0.1306
George Jamiel 0.1330
Alan Mintz 0.0693
</TABLE>
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