EXHIBIT 10.6
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CRUNCH EQUITY HOLDING, LLC
AMENDED AND RESTATED
MEMBERS' AGREEMENT
DATED AS OF MARCH 19 , 2004
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................................................................ 1
ARTICLE II BOARD OF MANAGERS REPRESENTATION...................................................................... 11
2.1 BOARD OF MANAGERS REPRESENTATION................................................................... 11
2.2 VOTING............................................................................................. 13
2.3 COMMITTEES; SUBSIDIARIES........................................................................... 13
2.4 MEETINGS; EXPENSES; COMPENSATION................................................................... 15
2.5 PROTECTIVE PROVISIONS.............................................................................. 15
ARTICLE III CERTAIN MATTERS AFFECTING UNITS...................................................................... 17
3.1 FUTURE MEMBERS..................................................................................... 17
3.2 LIMITATIONS ON TRANSFERS........................................................................... 18
3.3 RIGHT OF FIRST REFUSAL/RIGHT OF FIRST OFFER........................................................ 19
3.4 CO-SALE RIGHTS..................................................................................... 23
3.5 PREEMPTIVE RIGHTS.................................................................................. 25
3.6 REPURCHASE RIGHTS.................................................................................. 27
3.7 CALL OPTION........................................................................................ 28
3.8 DRAG-ALONG RIGHTS.................................................................................. 30
3.9 REGULATORY MATTERS................................................................................. 32
3.10 ACCESS TO RECORDS AND PROPERTIES................................................................... 32
3.11 INFORMATION RIGHTS................................................................................. 32
3.12 CERTAIN MATTERS RELATING TO TRANSFERS.............................................................. 33
3.13 REQUIRED IPO AND IPO LIQUIDATION................................................................... 34
3.14 PINNACLE INDEMNITY................................................................................. 34
ARTICLE IV MISCELLANEOUS......................................................................................... 35
4.1 TERMINATION........................................................................................ 35
4.2 LEGEND ON UNIT CERTIFICATES........................................................................ 35
4.3 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE; WAIVER OF JURY TRIAL............................. 35
4.4 SEVERABILITY....................................................................................... 36
4.5 ASSIGNMENTS; SUCCESSORS AND ASSIGNS................................................................ 36
4.6 AMENDMENTS; WAIVERS................................................................................ 36
4.7 NOTICES............................................................................................ 37
4.8 HEADINGS........................................................................................... 37
4.9 NOUNS AND PRONOUNS................................................................................. 38
4.10 APPROVALS.......................................................................................... 38
4.11 EXPENSES........................................................................................... 38
4.12 ENTIRE AGREEMENT................................................................................... 38
4.13 COUNTERPARTS....................................................................................... 38
4.14 FURTHER ASSURANCES................................................................................. 38
Annex I - Schedule of Members
Exhibit A - Regulatory Sideletter
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AMENDED AND RESTATED MEMBERS'
AGREEMENT (this "Agreement"), dated as of
March 19, 2004 (the "Effective Date"), among
CRUNCH EQUITY HOLDING, LLC, a
Delaware limited liability company (the
"Company") and the Members (as defined herein)
listed on the signature pages hereto.
PREAMBLE
The Company and the Members (other than Bondholder Trust (as defined
herein)) are parties to a Members' Agreement, dated as of November 25, 2003 (the
"Original Agreement"). In connection with the consummation of the Aurora
Transaction (as defined herein) and the admission of Bondholder Trust as a
Member, the parties hereto wish to amend and restate the Original Agreement in
the form of this Agreement.
Each Member owns, as of the date hereof, that number, class and type
of Units (as defined herein) set forth opposite such Member's name on Schedule I
to the Operating Agreement (as defined herein). The Members believe it to be in
the best interest of the Company and the Members to provide for the continued
stability of the business and policies of the Company and its Subsidiaries (as
defined herein), as the same may exist from time to time, and, to that end, the
parties hereto set forth this Agreement.
ACCORDINGLY, in consideration of the mutual covenants and agreements
contained in this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the meanings ascribed to such terms in the Operating
Agreement. Additionally, the Rules of Construction contained in Section 1 of the
Operating Agreement shall be deemed incorporated herein by reference. As used
herein, the following terms shall have the following respective meanings:
"ACCEPTANCE PERIOD" has the meaning set forth in Section 3.3(a)(ii).
"AGREEMENT" has the meaning set forth in the caption.
"APPRAISED VALUE NOTICE" has the meaning set forth in Section
3.6(e).
"APPRAISER" means an investment banking firm of national recognition
that has not, at any time during the one year period immediately preceding the
date of its appointment as Appraiser, been engaged by (i) the Company or any of
its direct or indirect Subsidiaries, (ii) in
the event the Appraiser is appointed in connection with Section 3.4, by the
Company, any of its direct or indirect Subsidiaries, the Co-Sale Offeror, the
Co-Sale Offeree or any of the Co-Sale Rightholders or (iii) in the event the
Appraiser is appointed in connection with Section 3.6, by the Company, any of
its direct or indirect Subsidiaries or the CDM Holder.
"AURORA" means Aurora Foods, Inc., a Delaware corporation.
"AURORA MERGER AGREEMENT" means the Agreement and Plan of
Reorganization and Merger, dated as of November 24, 2003, by and between Aurora
and the Company.
"AURORA SALE" means (i) the sale or Transfer (in one or a series of
related transactions) of all or substantially all of Aurora's assets on a
consolidated basis to a Person or a group of Persons acting in concert, (ii) the
sale or Transfer (in one or a series of related transactions) of a majority of
the outstanding capital stock of Aurora to a Person or a group of Persons acting
in concert, or (iii) the merger or consolidation of Aurora with or into another
Person, in each case in clauses (ii) and (iii) above, under circumstances in
which the holders of a majority in voting power of the outstanding capital stock
of Aurora (or its direct or indirect parent company), immediately prior to such
transaction, own less than a majority in voting power of the outstanding capital
stock of Aurora (or its direct or indirect parent company), or the surviving or
resulting corporation, entity or acquirer, as the case may be, immediately
following such transaction.
"AURORA TRANSACTION" means the reorganization of Aurora whereby
Aurora is combined with Pinnacle and the acquisition by Crunch Holding of a
direct or indirect equity interest in such combined company.
"AUTHORIZED REPRESENTATIVES" has the meaning set forth in Section
3.10.
"BONDHOLDER TRUST" means Crunch Equity Voting Trust, a Delaware
business trust.
"BONDHOLDER TRUST AGREEMENT" means the governing instrument(s) of
Bondholder Trust.
"BONDHOLDER TRUST CORRESPONDING INTERESTS" has the meaning set forth
in Section 3.2(c).
"BONDHOLDER MANAGERS" has the meaning set forth in Section
2.1(b)(iv).
"BYLAWS" means the Bylaws of the Company as amended from time to
time.
"CALL OPTION" has the meaning set forth in Section 3.7(a).
"CALL OPTION NOTICE" has the meaning set forth in Section 3.7(b).
"CALL OPTION PRICE" means an amount equal to the product of (A)
$10,750,000 multiplied by (B) a percentage (which is not greater than 100%)
representing the percentage of original investment of the capital (or
proportionate part thereof if the Sale of the Company or
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Aurora Sale does not involve the sale directly or indirectly of the Members'
entire interest in the Company or Aurora, as the case may be) returned to the
JPMP Holder, the JWC Holder and Bondholder Trust prior to, or contemporaneously
with, the Call Trigger Event pursuant to the rights and preferences set forth in
the Operating Agreement as in effect immediately prior to such Call Trigger
Event (giving effect to applicable orders of priority set forth in the Operating
Agreement); provided, that the Call Option Price shall: (i) reflect the terms
and conditions of any underlying Sale of the Company or Aurora Sale, as the case
may be (e.g., nature of consideration received, indemnities, etc.); (ii) be
reduced by any amounts received prior to, or contemporaneously with, such Sale
of the Company or Aurora Sale, as the case may be, in respect of Units owned by
the CDM Holder (including the proceeds actually received upon the prior Transfer
of Units previously held by the CDM Holder); and (iii) be reduced by any net tax
cost incurred by the CO Purchaser as a result of the exercise of the Call Option
and in connection with such Sale of the Company or Aurora Sale, as the case may
be, provided that the CO Purchaser takes all steps reasonably practicable to
eliminate or minimize the amount of such net tax cost, including, without
limitation, making a Section 754 election in connection with the exercise of the
Call Option.
"CALL OPTION PRICE STATEMENT" has the meaning set forth in Section
3.7(b).
"CALL TRIGGER EVENT" has the meaning set forth in Section 3.7(a).
"CDM CORRESPONDING INTERESTS" has the meaning set forth in Section
3.2(c).
"CDM EMPLOYMENT AGREEMENTS" means the Employment Agreements, dated
as of November 25, 2003, between Pinnacle Holding and each of ▇▇▇▇▇▇▇▇▇▇▇, N.
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (as such agreement may be
amended, waived, supplemented or otherwise modified from time to time).
"CDM EXECUTIVES" means C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, N. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and each other employee of the CDM Holder who at
such time holds a membership interest in the CDM Holder.
"CDM HOLDER" means CDM Investor Group LLC, a Delaware limited
liability company.
"CDM HOLDER AGREEMENT" means the Operating Agreement of the CDM
Holder, dated as of November 25, 2003 (as such agreement may be amended, waived,
supplemented or otherwise modified from time to time).
"COMPANY" has the meaning set forth in the caption.
"COMPANY ACCEPTANCE" has the meaning set forth in Section 3.3(a)(i).
"CO PURCHASER" means one or more of the JPMP Holder, the JWC Holder
and Bondholder Trust to the extent such Member elects to exercise the Call
Option.
"CO-SALE NOTICE" has the meaning set forth in Section 3.4(a)(i).
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"CO-SALE OFFEREE" has the meaning set forth in Section 3.4(a).
"CO-SALE OFFEROR" has the meaning set forth in Section 3.4(a).
"CO-SALE RIGHTHOLDER" has the meaning set forth in Section 3.4(c).
"CO-SALE UNITS" has the meaning set forth in Section 3.4(a)(i).
"CRUNCH HOLDING" means Crunch Holding Corp., a Delaware corporation
and the directly held Subsidiary of the Company and the direct parent of Aurora.
"CRUNCH HOLDING SHARES" has the meaning set forth in Section
3.13(b).
"DISABILITY" has the meaning ascribed to such term in the applicable
CDM Employment Agreement.
"DISPUTE LETTER" has the meaning set forth in Section 3.7(d).
"DRAG-ALONG SALE" has the meaning set forth in Section 3.8(a).
"EFFECTIVE DATE" has the meaning set forth in the caption.
"EMERGENCY FUNDING PARTICIPANTS" has the meaning set forth in
Section 3.5(f).
"EXCLUDED INVESTORS" has the meaning set forth in Section 3.5(f).
"EXCLUDED SECURITIES" means (i) Securities issued or to be issued to
employees, officers or directors of, or consultants or advisors to, the Company
or any of its Subsidiaries, pursuant to equity purchase or equity option plans
or other arrangements that are approved by the Board of Managers, (ii)
Securities issued in respect of or in exchange for Units by way of a dividend,
split or similar transaction, (iii) Securities issued upon exercise, conversion
or exchange of any Securities either previously issued or issued in accordance
with the terms of this Agreement, (iv) Securities issued to a financial
institution in connection with a debt financing of the Company and/or any of its
Subsidiaries approved by the Board of Managers, (v) Securities issued to the
seller or sellers of a business (provided such seller or sellers are not
Affiliates of the Company) in connection with the Company's (or its Affiliate's)
acquisition of such seller's or sellers' business approved by the Board of
Managers, whether such acquisition is in the form of a merger, consolidation,
asset purchase or other similar business combination, (vi) Securities issued in
connection with any recapitalization, merger, consolidation or reorganization by
the Company approved by the Board of Managers, (vii) Units issued in connection
with the consummation of the Aurora Transaction as contemplated by the Operating
Agreement, and (viii) Securities issued pursuant to the Aurora Merger Agreement
in connection with a post-closing adjustment under Article IV thereof or the
exchange by the JPMP Holder and the JWC Holder of Bondholder Trust Corresponding
Interests for Class A Units in connection with the expiration of the Indemnity
Agreement and Section 15.14 of the Aurora Merger Agreement.
"FAIR MARKET VALUE" has the meaning set forth in Section 3.6(e).
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"FEE AGREEMENTS" means the Management Agreement, dated as of
November 25, 2003, among Pinnacle Holding, ▇.▇. Childs Associates, L.P. and ▇.▇.
▇▇▇▇▇▇ Partners, LLC and the Fee Agreement, dated as of November 25, 2003,
between Pinnacle Holding and CDM Capital LLC.
"FIRST OFFER" has the meaning set forth in Section 3.3(a)(i).
"FIRST OFFERED UNITS" has the meaning set forth in Section
3.3(a)(i).
"FMV OBJECTION NOTICE" has the meaning set forth in Section 3.6(e).
"FULL ALLOTMENT" has the meaning set forth in Section 3.3(a)(ii).
"FULLY PARTICIPATING UNITS" means (i) any Class D Unit, if, as of
the date of determination (taking into account any transaction expected to occur
on the date of determination, including any adjustment to the Gross Asset Value
of the Company's assets pursuant to clause (b) of the definition of "Gross Asset
Value" expected to occur in connection therewith), the Capital Account balance
of such Class D Unit is equal to the Capital Account balance of a Class A Unit,
and (ii) any Class E Unit, if, as of the date of determination (taking into
account any transaction expected to occur on the date of determination,
including any adjustment to the Gross Asset Value of the Company's assets
pursuant to clause (b) of the definition of "Gross Asset Value" expected to
occur in connection therewith), the Capital Account balance of such Class E Unit
is equal to the Capital Account balance of a Class A Unit.
"FUTURE MEMBER" has the meaning set forth in Section 3.1.
"GOOD REASON" has the meaning ascribed to such term in the
applicable CDM Employment Agreement.
"HIGH OFFER" has the meaning set forth in Section 3.3(b)(iii)(B).
"INDEMNITY AGREEMENT" means the Indemnity Agreement dated as of the
date hereof, among the Company, Bondholder Trust and Aurora.
"INDIRECT CO-SALE OFFEREE" has the meaning set forth in Section
3.4(b).
"INDIRECT OFFER" has the meaning set forth in Section
3.3(b)(iii)(A).
"INDIRECT OFFER ACCEPTANCE" has the meaning set forth in Section
3.3(b)(iii)(B).
"INDIRECT OFFER PERIOD" has the meaning set forth in Section
3.3(b)(iii)(A).
"INDIRECT OFFER REQUEST" has the meaning set forth in Section
3.3(b)(iii)(A).
"INDIRECT OFFERED UNITS" has the meaning set forth in Section
3.3(b)(iii)(A).
"INDIRECT OFFEREE" has the meaning set forth in Section
3.3(b)(iii)(A).
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"INDIRECT OFFEROR" has the meaning set forth in Section 3.3(b).
"INVESTOR OFFEREE" has the meaning set forth in Section 3.3(a)(ii).
"INVESTORS" means the Persons designated on the signature pages
hereto as "Investors" and any Transferee of such Persons.
"IPO LIQUIDATION" has the meaning set forth in Section 3.13(b).
"JPMP HOLDER" means, collectively, (i) ▇.▇. ▇▇▇▇▇▇ Partners (BHCA),
L.P., (ii) ▇.▇. ▇▇▇▇▇▇ Partners Global Investors, L.P., (iii) ▇.▇. ▇▇▇▇▇▇
Partners Global Investors (Cayman), L.P., (iv) ▇.▇. ▇▇▇▇▇▇ Partners Global
Investors (Cayman II), L.P., and (v) ▇.▇. ▇▇▇▇▇▇ Partners Global Investors A,
L.P.
"JPMP MANAGERS" has the meaning set forth in Section 2.1(b)(i).
"JWC HOLDER" means any or all of ▇.▇. Childs Equity Partners III,
L.P. and JWC Co-Invest Fund III, LLC.
"JWC MANAGERS" has the meaning set forth in Section 2.1(b)(ii).
"LEXINGTON HOLDER" means Co-Investment Partners, L.P.
"MANAGEMENT MANAGER" has the meaning set forth in Section
2.1(b)(iii).
"MEMBER ACCEPTANCE" has the meaning set forth in Section 3.3(a)(ii).
"MEMBERS" means the Investors, the Other Members and any Future
Members.
"▇▇▇▇▇▇▇▇▇▇▇" mean C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
"NEW UNITS" means all Securities of the Company other than Excluded
Securities.
"OFFEREE" has the meaning set forth in Section 3.3(a).
"OFFEROR" has the meaning set forth in Section 3.3(a).
"OPERATING AGREEMENT" means the Operating Agreement of the Company,
dated as of the date hereof (as such agreement may be amended, waived,
supplemented or otherwise modified from time to time).
"OPERATING BUDGET" has the meaning set forth in Section 3.11(e).
"ORIGINAL AGREEMENT" has the meaning set forth in the caption.
"OTHER MEMBER" means any party to this Agreement other than an
Investor or the Company.
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"PERMITTED EXCLUDED TRANSFER" means:
(i) in the case of any Member who is an individual, (a) a Transfer
of Units to a trust for the benefit of such Member's estate (including the
executor or personal representative of such estate, as applicable), or (b) a
Transfer of Units made for no consideration to any Affiliate of such Member;
(ii) in the case of any Member that is a partnership, (a) a
Transfer of Units to its limited, special and general partners as a bona fide
pro rata distribution by such partnership to all of its partners based on the
equity holdings of each and made in accordance with the organizational documents
of such partnership as in effect on the date hereof, (b) a Transfer of Units
made for no consideration to any Affiliate of such Member or for no
consideration (other than for bona fide services rendered or to be rendered) to
any employee or consultant of such Member or any of its Affiliates, or (c) a
Transfer of Units made to a controlled Affiliate (other than any portfolio
company of any pooled investment vehicle) in the event that such Member
reasonably determines that it has a Regulatory Problem (as defined in the
Regulatory Sideletter) or in connection with a bona fide reallocation or
transfer of Units to a fund managed by such Member's Affiliates, including by
means of participation, and in each case not for purposes of circumventing the
provisions of Section 3.3 or Section 3.4 with respect to such Transfer;
(iii) in the case of any Member that is a corporation or a limited
liability company, (a) a Transfer of Units to its stockholders or members, as
the case may be, as a bona fide pro rata distribution by such corporation or
limited liability company to all of its stockholders or members, as the case may
be, based on the equity holdings of each and made in accordance with the
organizational documents of such corporation or limited liability company as in
effect on the date hereof, (b) a Transfer made for no consideration to any
Affiliate of such Member or for no consideration (other than for bona fide
services rendered or to be rendered) to any employee or consultant of such
Member or any of its Affiliates, or (c) a Transfer of Units made to a controlled
Affiliate (other than any portfolio company of any pooled investment vehicle) in
the event that such Member reasonably determines that it has a Regulatory
Problem or in connection with a bona fide reallocation or transfer of Units to a
fund managed by such Member's Affiliates, including by means of participation,
and in each case not for purposes of circumventing the provisions of Section 3.3
or Section 3.4 with respect to such Transfer;
(iv) in the case of any JPMP Holder, a Transfer of Units made to
any other JPMP Holder or the Transfer of Bondholder Trust Corresponding
Interests for Class A Units in connection with the expiration of the Indemnity
Agreement and Section 15.14 of the Aurora Merger Agreement;
(v) in the case of any JWC Holder, a Transfer of Units made to any
other JWC Holder or the Transfer of Bondholder Trust Corresponding Interests for
Class A Units in connection with the expiration of the Indemnity Agreement and
Section 15.14 of the Aurora Merger Agreement;
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(vi) in the case of the CDM Holder, a Transfer of interests in the
CDM Holder by any member of the CDM Holder to any other member of the CDM Holder
or to any employee of the CDM Holder, the Company, Pinnacle Holding or any of
their direct or indirect Subsidiaries; provided that, after giving effect
thereto, ▇▇▇▇▇▇▇▇▇▇▇ and his Family Members and Family Vehicles collectively
hold not less than 66 2/3% of the membership interests in the CDM Holder; and
(vii) with respect to Bondholder Trust (a) in the case of any Trust
Holder who is an individual, (x) a Transfer of Bondholder Trust Corresponding
Interests to a trust for the benefit of such Trust Holder's estate (including
the executor or personal representative of such estate, as applicable), or (y) a
Transfer of Bondholder Trust Corresponding Interests made for no consideration
to any Affiliate of such Trust Holder; (b) in the case of any Trust Holder that
is a partnership, (x) a Transfer of Bondholder Trust Corresponding Interests to
its limited, special and general partners as a bona fide pro rata distribution
by such partnership to all of its partners based on the equity holdings of each
and made in accordance with the organizational documents of such partnership as
in effect on the date hereof, (y) a Transfer of Bondholder Trust Corresponding
Interests made for no consideration to any Affiliate of such Trust Holder or for
no consideration (other than for bona fide services rendered or to be rendered)
to any employee or consultant of such Trust Holder or any of its Affiliates, or
(z) a Transfer of Bondholder Trust Corresponding Interests made to a controlled
Affiliate (other than any portfolio company of any pooled investment vehicle) in
connection with a bona fide reallocation or transfer of Bondholder Trust
Corresponding Interests to a fund managed by such Trust Holder's Affiliates,
including by means of participation, and in each case not for purposes of
circumventing the provisions of Section 3.3 with respect to such Transfer; (c)
in the case of any Trust Holder that is a corporation or a limited liability
company, (x) a Transfer of Bondholder Trust Corresponding Interests to its
stockholders or members, as the case may be, as a bona fide pro rata
distribution by such corporation or limited liability company to all of its
stockholders or members, as the case may be, based on the equity holdings of
each and made in accordance with the organizational documents of such
corporation or limited liability company as in effect on the date hereof, (y) a
Transfer made for no consideration to any Affiliate of such Trust Holder or for
no consideration (other than for bona fide services rendered or to be rendered)
to any employee or consultant of such Trust Holder or its Affiliates, or (z) a
Transfer of Bondholder Trust Corresponding Interests made to a controlled
Affiliate (other than any portfolio company of any pooled investment vehicle) in
connection with a bona fide reallocation or transfer of Bondholder Trust
Corresponding Interests to a fund managed by such Trust Holder's Affiliates,
including by means of participation, and in each case not for purposes of
circumventing the provisions of Section 3.3 with respect to such Transfer; (d) a
Transfer of Bondholder Trust Corresponding Interests that may be deemed to have
occurred pursuant to Section 4.03(c), Section 9.03(c) or Section 9.06 of the
Bondholder Trust Agreement; (e) a Transfer of Units held by Bondholder Trust
from the account of a Trust Holder to the account of any other Trust Holder
pursuant to the Bondholder Trust Agreement; or (f) a Transfer of Bondholder
Trust Corresponding Interests pursuant to Section 10.04 of the Bondholder Trust
Agreement.
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Notwithstanding the foregoing, Bondholder Trust shall not be
permitted to make any direct Transfer of Units held by it to any other Person
except pursuant to Section 3.4 or Section 3.8 or pursuant to the Indemnity
Agreement.
"PERMITTED EXCLUDED TRANSFEREE" means each Transferee of Units
pursuant to a Permitted Excluded Transfer.
"PINNACLE" means Pinnacle Foods Corporation, a Delaware corporation.
"PREEMPTIVE RIGHTS OFFER" has the meaning set forth in Section
3.5(a).
"PREEMPTIVE RIGHTS NUMBER" has the meaning set forth in Section
3.5(b).
"PREEMPTIVE RIGHTS PERIOD" has the meaning set forth in Section
3.5(a).
"PROPOSED SALE NOTICE" has the meaning set forth in Section 3.7(a).
"PRO RATA AMOUNT" means, with respect to any Member, the quotient
obtained by dividing (i) the number of Class A Units, Class B Units, Class C
Units and Fully Participating Units held by such Member by (ii) the aggregate
number of Class A Units, Class B Units, Class C Units and Fully Participating
Units held by all Members or class or type of Members (as applicable), assuming
in each case the conversion or exchange of all Securities of the Company by
their terms convertible into or exchangeable for Class A Units, Class B Units,
Class C Units and Fully Participating Units and the exercise of all vested and
"in the money" options to purchase or rights to subscribe for Class A Units,
Class B Units, Class C Units and Fully Participating Units (including warrants)
or such convertible or exchangeable securities. Notwithstanding the foregoing,
the Pro Rata Amount (based on the aggregate number of Class A Units, Class B
Units, Class C Units and Fully Participating Units held by all Members) of the
CDM Holder shall be deemed to be initially 8.8% on the Effective Date, subject
to adjustment for subsequent issuances and repurchases by the Company of Units
and Securities and subsequent acquisitions and dispositions of Units and
Securities of the Company by the CDM Holder.
"PURCHASE NOTICE" has the meaning set forth in Section 3.5(b).
"REFEREE" has the meaning set forth in Section 3.7(d).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated as of the date hereof among Crunch Holding and the Members party
thereto.
"REGULATORY SIDELETTER" has the meaning set forth in Section 3.9(a).
"REPURCHASE EVENT" has the meaning set forth in Section 3.6(a).
"REPURCHASE NOTICE" has the meaning set forth in Section 3.6(c).
"REPURCHASE UNITS" has the meaning set forth in Section 3.6(a).
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"REQUIRED IPO" has the meaning set forth in Section 3.13(a).
"SECOND OFFER" has the meaning set forth in Section 3.3(a)(ii).
"SECOND OFFERED UNITS" has the meaning set forth in Section
3.3(a)(ii).
"SECURITIES" means, with respect to any Person, all equity interests
of such Person, all securities convertible into or exchangeable for equity
interests of such Person, and all options, warrants, and other rights to
purchase or otherwise acquire from such Person equity interests, including any
equity appreciation or similar rights, contractual or otherwise.
"STRATEGIC PLAN" has the meaning set forth in Section 3.11(e).
"SUBSIDIARY" means, with respect to any Person, any corporation,
association, partnership, limited liability company or other business entity of
which 50% or more of the total voting power of equity interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers, representatives or
trustees thereof is at the time owned or Controlled, directly or indirectly, by
(1) such Person, (2) such Person and one or more Subsidiaries of such Person, or
(3) one or more Subsidiaries of such Person.
"TAG-ALONG NOTICE" has the meaning set forth in Section 3.4(a)(iii).
"TERMINATION DATE" means the date of the consummation of a
Liquidation Event.
"THIRD PARTY" means any Person that is not (i) the Company or any of
its Subsidiaries, (ii) an Affiliate of the Company or any of its Subsidiaries,
or (iii) a Permitted Excluded Transferee of any Member.
"TRANSFER" means, as to any Security or asset (the "Subject
Property"), to sell, directly or indirectly, or in any other way, directly or
indirectly transfer, assign, gift, pledge, grant a security interest in,
distribute, encumber or otherwise dispose of (including, without limitation, the
foreclosure or other acquisition by any lender with respect to the Subject
Property pledged to such lender by the holder of the Subject Property), whether
directly or indirectly (including, without limitation, by means of a Transfer of
any Security issued by a Person that holds, directly or indirectly, an interest
in the Subject Property), such Subject Property, either voluntarily or
involuntarily and with or without consideration. For avoidance of doubt, changes
in ownership of any direct or indirect holder of Units shall be deemed to be a
Transfer of Units; provided that, such a change in ownership of a direct or
indirect holder of Units that also holds material assets other than its Units
shall not be deemed to constitute a Transfer of Units unless and until Control
of such Person becomes held by any other Person or group of Persons that did not
hold such Control immediately prior to such Transfer, whereupon a Transfer of
Units shall be deemed to have occurred.
"TRANSFEREE" means any Person to whom a Member shall Transfer Units
in accordance with the terms of this Agreement.
10
"TRUST HOLDER" means the holders of Bondholder Trust Corresponding
Interests.
"UNITS" means all Units issued by the Company held at any time
during the term of this Agreement by any Investor or any Other Member and shall
also include any equity security issued in respect of or in exchange for Units,
whether by way of dividend or other distribution, split, recapitalization,
merger, rollup transaction, consolidation, conversion or reorganization.
ARTICLE II
BOARD OF MANAGERS REPRESENTATION
2.1 BOARD OF MANAGERS REPRESENTATION.
(a) The Company and the Members shall take all actions as may be
required to ensure that the number of Managers constituting the Board of
Managers shall be not less than seven (7) and not more than nine (9) subject to
decrease pursuant to Section 2.1(d) below.
(b) Subject to Section 2.1(c) below:
(i) The JPMP Holder shall be entitled (A) if it and its
Permitted Excluded Transferees hold (1) at least 80% of the Class A Units
owned by the JPMP Holder on the Effective Date, to nominate, subject to
Section 2.1(b)(v), three (3) individuals to the Board of Managers to serve
as Managers, (2) less than 80% but more than 50% of the Class A Units
owned by the JPMP Holder on the Effective Date, to nominate two (2)
individuals to the Board of Managers to serve as Managers and (3) less
than 50% but more than 25% of the Class A Units owned by the JPMP Holder
on the Effective Date, to nominate one (1) individual to the Board of
Managers to serve as a Manager (the Managers elected pursuant to the
preceding clauses (A)(1), (A)(2) and (A)(3), the "JPMP Managers") until
their respective successors are elected and qualified, (B) to nominate
each successor to any JPMP Manager and (C) to direct the removal from the
Board of Managers of any Manager nominated under the foregoing clauses (A)
or (B); provided, however, that (x) the JPMP Holder shall have the power
to irrevocably assign its rights in the foregoing clauses (A) through (C)
to a Permitted Excluded Transferee of the JPMP Holder who becomes a Member
and (y) the JPMP Holder assigns its right to nominate one individual to
the Board of Managers to ▇.▇. ▇▇▇▇▇▇ Partners Global Investors, L.P.
immediately upon becoming a Member and execution of this Agreement. To the
extent that the number of JPMP Managers exceeds the number of nominees
that the JPMP Holder is entitled to appoint under this clause (b)(i), then
the JPMP Holder shall cause each such excess JPMP Manager to resign
promptly from the Board of Managers. The JPMP Managers shall initially be
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇'▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇, and one of such Managers
shall serve specifically as a representative of ▇.▇. ▇▇▇▇▇▇ Partners
Global Investors, L.P.;
(ii) The JWC Holder shall be entitled (A) if it and its
Permitted Excluded Transferees hold (1) at least 80% of the Class A Units
owned by the JWC Holder on the Effective Date, to nominate, subject to
Section 2.1(b)(v), three (3) individuals to the Board of Managers to serve
as Managers, (2) less than 80% but more than 50% of the Class A
11
Units owned by JWC Holder on the Effective Date, to nominate two (2)
individuals to the Board of Managers to serve as Managers and (3) less
than 50% but more than 25% of the Class A Units owned by JWC Holder on the
Effective Date, to nominate one (1) individual to the Board of Managers to
serve as a Manager (the Managers elected pursuant to the preceding clauses
(A)(1), (A)(2) and (A)(3), the "JWC Managers") until their respective
successors are elected and qualified, (B) to nominate each successor to
any JWC Manager and (C) to direct the removal from the Board of Managers
of any Manager nominated under the foregoing clauses (A) or (B). To the
extent that the number of JWC Managers exceeds the number of nominees that
the JWC Holder is entitled to appoint under this clause (b)(ii), then the
JWC Holder shall cause each such excess JWC Manager to resign promptly
from the Board of Managers. The JWC Managers shall initially be ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇;
(iii) For so long as ▇▇▇▇▇▇▇▇▇▇▇ is the Chief Executive
Officer of Aurora, he shall serve as a Manager on the Board of Managers
(the "Management Manager"); provided, that if ▇▇▇▇▇▇▇▇▇▇▇ no longer is the
Chief Executive Officer of Aurora, then ▇▇▇▇▇▇▇▇▇▇▇ shall promptly resign
from the Board of Managers;
(iv) Bondholder Trust shall be entitled (A) if it holds (1) at
least 15% of the Units issued and outstanding, to nominate two (2)
individuals to the Board of Managers to serve as Managers and (2) less
than 15% but more than 5% of the Units issued and outstanding, to nominate
one (1) individual to the Board of Managers to serve as Manager (the
Managers elected pursuant to the preceding clauses (A)(1) and (A)(2), the
"Bondholder Managers") until their respective successors are elected and
qualified, (B) to nominate each successor to any Bondholder Manager and
(C) to direct the removal from the Board of Managers of any Manager
nominated under the foregoing clauses (A) or (B). To the extent that the
number of Bondholder Managers exceeds the number of nominees that
Bondholder Trust is entitled to appoint under this clause (b)(iv), then
Bondholder Trust shall cause such excess Bondholder Manager to resign
promptly from the Board of Managers. The Bondholder Managers shall
initially be ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇; and
(v) So long as the JPMP Holder is entitled to nominate three
(3) JPMP Managers, the JPMP Holder shall consider for nomination as one
(1) of such JPMP Managers a Person identified by Bondholder Trust, and in
any event, such JPMP Manager shall be reasonably acceptable to Bondholder
Trust. So long as the JWC Holder is entitled to nominate three (3) JWC
Managers, the JWC Holder shall consider for nomination as one (1) of such
JWC Managers a Person identified by Bondholder Trust, and in any event,
such JWC Manager shall be reasonably acceptable to Bondholder Trust.
(c) Each nomination or any proposal to remove from the Board of
Managers any Manager shall be made by delivering to the Board of Managers a
notice signed by the party or parties entitled to such nomination or proposal.
As promptly as practicable, but in any event within ten (10) days, after
delivery of such notice, the Company, the Board of Managers and the Members
shall take or cause to be taken such actions as may be reasonably required to
cause the election or removal proposed in such notice. Such actions may include
calling a meeting or
12
soliciting a written consent of the Board of Managers, or calling a meeting or
soliciting a written consent of the Members.
(d) In each instance where the number of Managers to be nominated by
the JPMP Holder, the JWC Holder or Bondholder Trust is decreased in accordance
with Section 2.1(b), the Company, the Board of Managers and the Members shall
take or cause to be taken such limited liability company actions to decrease the
total number of Managers constituting the Board of Managers by an identical
number.
(e) The rights of the JPMP Holder, the JWC Holder and Bondholder
Trust to nominate Managers pursuant to this Section 2.1 are transferable only to
a Permitted Excluded Transferee of Units held by such party.
(f) During such time as a Bondholder Manager serves on the Board of
Managers, the prior approval of a majority of the Board of Managers and of
Bondholder Trust shall be required for the Company or any of its direct or
indirect Subsidiaries to amend or modify the Fee Agreements or enter into any
contract or agreement with any of its Affiliates, including without limitation,
employment matters with any CDM Executives and the issuance of any Securities to
the CDM Holder or any CDM Executive, other than (i) any such issuance pursuant
to the Operating Agreement or in connection with a Preemptive Rights Offer
pursuant to Section 3.5 and (ii) the payment of salaries to, and reimbursement
of expenses incurred by, the CDM Executives pursuant to the first proviso set
forth in Section 2.3(b).
2.2 VOTING.
Each Member shall vote all Units held or controlled by such Member for the
election to the Board of Managers of all individuals nominated in accordance
with Section 2.1 and for the removal from the Board of Managers of all Managers
proposed to be removed in accordance with Section 2.1 and shall take all actions
required on its behalf to give effect to the agreements set forth in this
Article II. Each Member shall use all reasonable efforts to cause each Manager
originally nominated by such Member to vote for the election to the Board of
Managers of all individuals nominated in accordance with Section 2.1.
2.3 COMMITTEES; SUBSIDIARIES.
(a) Each Member shall use all reasonable efforts to cause each
Manager originally nominated by such Member to take such limited liability
company actions as may be reasonably required to ensure that the board of
directors of Aurora has at all times a compensation committee and an audit
committee, comprised as follows:
(i) The compensation committee of Aurora (the "Compensation
Committee") shall be comprised of at least three (3) directors, one (1) of
which shall be a JPMP Manager (for so long as the JPMP Holder and its
Permitted Excluded Transferees hold 25% or more of the Class A Units owned
by the JPMP Holder on the Effective Date), one (1) of which shall be a JWC
Manager (for so long as the JWC Holder and its Permitted Excluded
Transferees hold 25% or more of the Class A Units owned by the
13
JWC Holder on the Effective Date) and one (1) of which shall be the
Management Manager.
(ii) The audit committee of Aurora (the "Audit Committee")
shall be comprised of at least three (3) directors, one (1) of which shall
be a JPMP Manager (for so long as the JPMP Holder and its Permitted
Excluded Transferees hold 25% or more of the Class A Units owned by the
JPMP Holder on the Effective Date), and one (1) of which shall be a JWC
Manager (for so long as the JWC Holder and its Permitted Excluded
Transferees hold 25% or more of the Class A Units owned by the JWC Holder
on the Effective Date).
(b) Subject to Section 2.5, a majority of the Compensation Committee
shall approve all changes in executive base compensation, the award of executive
bonuses and all option grants made by Aurora or any direct or indirect
Subsidiary of Aurora (including the vesting schedules with respect to such
option grants); provided, however, that, notwithstanding the foregoing and
notwithstanding the approval rights of the JPMP Managers and the JWC Managers
under Section 2.5 and the approval rights of the Board of Managers under Section
2.1(f), so long as ▇▇▇▇▇▇▇▇▇▇▇ is the Management Manager, he shall be entitled
(i) to determine the allocation of option grants representing up to 5% of the
equity interests of the Company or any direct or indirect Subsidiary of the
Company (provided that no such allocation shall be to the CDM Executives) and
(ii) to determine the payment of annual compensation to, and the reimbursement
of expenses for office space, furniture, supplies, administration,
telecommunications and other customary provisions and travel (including costs
with respect to airplane) incurred by, any of the CDM Executives (provided, that
▇▇▇▇▇▇▇▇▇▇▇ shall not be entitled to determine the amount of his annual
compensation) in an amount not to exceed $8.0 million in any fiscal year (for
the avoidance of doubt, all "Annual Base Compensation" and "Other Benefits"
(each as defined in the applicable CDM Employment Agreement) paid to the CDM
Executives pursuant to the CDM Employment Agreements shall be included in such
amount); provided, further, that the Management Manager shall not be entitled to
vote as a member of the Compensation Committee or any equivalent committee of
the Company or its direct or indirect Subsidiaries on matters related to his or
her own compensation. The Audit Committee shall approve the engagement of the
auditors for Aurora and each of its direct and indirect Subsidiaries and approve
the audit prior to its issuance each year.
(c) Each Member shall use all reasonable efforts to cause each
Manager originally nominated by such Member to take such limited liability
company actions as may be reasonably required to ensure that the Management
Manager is a member of all committees of the Board of Managers, except for any
audit committee.
(d) The Company and each Member shall take, and each Member shall
use all reasonable efforts to cause each Manager originally nominated by such
Member to take, such limited liability company actions as may be reasonably
required to ensure that the composition of the board of managers or board of
directors (and each committee thereof), as applicable, of each of the direct and
indirect Subsidiaries of the Company (other than (i) Pinnacle Foods Brands
Corporation, the board of directors of which shall not include any JPMP Manager,
JWC Manager or Bondholder Manager, and (ii) any Subsidiaries organized in
Canada) is identical to the
14
composition of the Board of Managers (and each committee thereof, as
applicable); provided that, the composition of the board of directors or board
of managers of any Subsidiaries of Pinnacle Foods Corporation and of Sea Coast
Foods, Inc. may be smaller in number so long as such board of directors or board
of managers consists of ▇▇▇▇▇▇▇▇▇▇▇ (so long as he is the Management Member),
one (1) JPMP Manager, one (1) JWC Manager and one (1) Bondholder Manager;
provided further that, to the extent that any direct or indirect Subsidiary of
the Company has any securities listed on a national securities exchange or
Nasdaq, each of the JPMP Holder and the JWC Holder shall ensure that any JPMP
Manager or JWC Manager, as applicable, that is a member of the Audit Committee
shall meet the definition of "independent" as specified in Rule 10A-3 of the
Securities Exchange Act of 1934, as amended; and provided further that the Audit
Committee and Compensation Committee of Aurora shall be as provided in Section
2.3(a) hereof, and the composition of any audit committee or compensation
committee of the Board of Managers of the Company, or board of managers or board
of directors of any other direct or indirect Subsidiary of the Company (other
than any Subsidiaries of Pinnacle Foods Corporation or Sea Coast Foods, Inc.,
which Subsidiaries shall not have any such committees) shall be identical to the
composition of the Audit Committee and Compensation Committee of Aurora.
2.4 MEETINGS; EXPENSES; COMPENSATION.
(a) The Company shall convene meetings of the Board of Managers at
least once every three (3) months. Upon any failure by the Company to convene
any meeting required by this paragraph, any JPMP Manager, any JWC Manager, any
Bondholder Manager or the Management Manager shall be empowered to convene such
meeting.
(b) The Company (or its designee) shall reimburse each Manager for
his or her reasonable out-of-pocket expenses (including up to first-class
travel) incurred in connection with attending the meetings of the Board of
Managers or any board of managers or board of directors, as applicable, of the
Company's Subsidiaries and any committee thereof or the performance of his or
her duties, in each case upon presentation of appropriate documentation
therefor.
2.5 PROTECTIVE PROVISIONS.
(a) Subject to the first proviso set forth in Section 2.3(b), the
Company shall not take any of the following actions without the prior approval
of: (A) for as long as the JPMP Holder and its Permitted Excluded Transferees
hold at least 25% of the Class A Units owned by the JPMP Holder on the Effective
Date, the JPMP Managers; and (B) for as long as the JWC Holder and its Permitted
Excluded Transferees hold at least 25% of the Class A Units owned by the JWC
Holder on the Effective Date, the JWC Managers:
(i) Terminate or materially change the duties of the
President, Chief Executive Officer, Chief Operating Officer, Chief
Information Officer, Chief Financial Officer, any Senior Vice President or
any other member of senior management, amend or revise the terms of any
employment agreements with any such officer or senior manager, or, subject
to Section 2.3(a), make any decisions in respect of compensation of any
such officer or senior manager, including the issuance of options or
granting of options, or, if
15
such officer is terminated in accordance with this Section 2.5(a), hire
a replacement for such officer;
(ii) Approve or amend the Operating Budget or Strategic Plan;
(iii) Incur any Indebtedness outside of the ordinary course of
business that is not included in the Operating Budget;
(iv) Enter into any agreement to acquire either substantially
all of the assets or a controlling interest in the capital stock of any
other entity (whether by way of asset purchase, stock purchase, merger or
otherwise);
(v) Unless otherwise included in the Operating Budget, dispose
of assets (whether by asset sale, stock sale, merger or otherwise), either
in a single transaction or a series of related transactions, in excess of
$5 million;
(vi) Unless otherwise included in the Operating Budget, make
any investment or make any capital expenditure, in each case in excess of
$3 million in the aggregate in any one fiscal year;
(vii) Enter into any contract or agreement with any of its
Affiliates, including, without limitation, for the sale or repurchase of
any Securities other than (A) any contract or agreement existing on or
prior to the date of this Agreement, or (B) repurchase rights existing on
or prior to the date of this Agreement (including the Fee Agreements);
(viii) Effect any changes in the strategic direction of lines
of business of the Company not specified in the Strategic Plan delivered
in accordance with Section 3.11(e);
(ix) Authorize, issue or sell Interests or capital stock of
the Company, other than (A) Interests or capital stock issued upon
exercise, conversion or exchange of any Securities either previously
issued or issued in accordance with the terms of this Agreement or (B) the
issuance of Interests or capital stock contemplated by the Operating
Agreement;
(x) Make distributions, pay dividends or redeem or repurchase
Interests or capital stock, except as provided in Sections 3.3, 3.6 or 3.7
below or in Section 12(b)(iv) of the Operating Agreement;
(xi) Amend the terms of any of the Company's governance
documents (including the Operating Agreement, the Bylaws and this
Agreement, including this Section 2.5);
(xii) Reorganize, exchange Interests or other Securities of
the Company, dissolve, liquidate or engage in other similar transactions;
(xiii) Make a change in the accounting year, taxable year,
accountants or accounting practices (unless specifically required by
Applicable Law or by GAAP);
16
(xiv) Establish committees of the Board of Managers (other
than a Compensation Committee or an Audit Committee as provided in Section
2.3(a)) or board of directors, as the case may be; or
(xv) Agree to take any of the foregoing actions, whether
orally or in writing.
The Company shall not permit any direct or indirect Subsidiary of
the Company to take any of the foregoing actions set forth in this Section
2.5(a) (with all references to the Company deemed to be references to such
Subsidiary) without the prior approval of the JPMP Managers and/or the JWC
Managers as set forth in Section 2.5(a) above.
(b) Notwithstanding anything to the contrary contained in Section
2.5(a), subject to Section 3.7, the written consent of the JPMP Holder, the JWC
Holder and the CDM Holder shall be required to effect a Pinnacle Sale, a Sale of
the Company, a dissolution of the Company or a Drag-Along Sale.
(c) Without the prior written approval of the CDM Holder, the
Company shall not (i) amend the terms of the Class B Units, Class C Units, Class
D Units or Class E Units, (ii) effect any other amendment, modification or
waiver of this Agreement, the Operating Agreement or the Bylaws that would
adversely affect the CDM Holder in a manner different from any other Member or
(iii) effect an IPO Liquidation, unless the CDM Holder would receive Crunch
Holding Shares in such IPO Liquidation having a value (based on the price per
share offered in the initial public offering thereof less an illiquidity
discount) of at least $10,750,000 (less any proceeds actually received upon the
prior Transfer of Units held by the CDM Holder).
(d) So long as Bondholder Trust holds at least 5% of the Units
issued and outstanding, without the prior written approval of Bondholder Trust,
the Company shall not effect any amendment, modification or waiver of this
Agreement, the Operating Agreement or the Bylaws.
ARTICLE III
CERTAIN MATTERS AFFECTING UNITS
3.1 FUTURE MEMBERS.
The Company shall require each Person (including each Permitted Excluded
Transferee) that acquires Securities of the Company after the date of this
Agreement (a "Future Member"), as a condition to the effectiveness of such
acquisition or Transfer, to execute a counterpart to this Agreement, agreeing to
be treated as (i) an Investor, if such Person acquires such Securities from an
Investor or is already an Investor, or (ii) an Other Member, if such Person
acquires such Securities from an Other Member or acquires Securities directly
from the Company, whereupon such Person shall be bound by, and entitled to the
benefits of, the provisions of this Agreement relating to Investors or Other
Members, as the case may be.
17
3.2 LIMITATIONS ON TRANSFERS.
(a) No Transfer of any Units by any Member (other than a Transfer of
Bondholder Trust Corresponding Interests) shall become effective (i) unless
prior written notice thereof has been delivered to the Company, (ii) unless such
Transfer complies with this Article III and (iii) unless and until the
Transferee (unless already party to this Agreement) executes and delivers to the
Company a counterpart to this Agreement, agreeing to be treated in the same
manner as the Transferring Member (i.e., as either an Investor or an Other
Member). Upon such Transfer and such execution and delivery, the Transferee
shall be bound by, and entitled to the benefits of, this Agreement with respect
to the Transferred Units in the same manner as the Transferring Member.
Notwithstanding the provisions of this Article III: (i) no Units may be
Transferred to a competitor of the Company, as determined by the Board of
Managers, unless a majority in interest of Members (excluding the transferring
Member and its Affiliates) consent to such Transfer; (ii) no Units may be
Transferred if any such Transfer violates Applicable Law or any of the terms and
conditions of this Agreement, the Bylaws, the Operating Agreement or any of the
financing documents of the Company, Pinnacle or Aurora; (iii) until after the
second anniversary date of the Effective Date (as defined in the Original
Agreement), no Units owned by the CDM Holder shall be Transferred to any Person
other than a Permitted Excluded Transferee, except in accordance with Section
3.4, Section 3.6 or Section 3.7 or in connection with a Sale of the Company or
other transaction approved pursuant to Section 2.5 above; (iv) no Member shall
Transfer any Class C Unit, Class D Unit or Class E Unit to any Person other than
a Permitted Excluded Transferee, except in accordance with Section 3.4, Section
3.6 or Section 3.7 or in connection with a Sale of the Company or other
transaction approved pursuant to Section 2.5 above; and (v) no direct Transfer
of Class A Units shall be made by Bondholder Trust to any Person except in
accordance with Section 3.4 or Section 3.8 or pursuant to the Indemnity
Agreement (it being understood that the only Transfers permitted, subject to the
terms of this Agreement, are Transfers of interests in Bondholder Trust). Any
attempted Transfer of Units by any Member not in accordance with this Section
3.2 shall not be effective and shall be void.
(b) In any event, a Transfer (other than a Transfer of Bondholder
Trust Corresponding Interests) shall not be permitted unless the Board of
Managers shall have determined in its sole discretion, that such proposed
Transfer, alone or together with other Transfers, does not create a material
risk that (i) the Company will be treated as a corporation for Federal income
tax purposes or (ii) the Company will become subject to Section 12(g) of the
Securities Exchange Act of 1934, and, upon reasonable request of the Board of
Managers, such Member proposing the Transfer shall have delivered to the Board
of Managers an opinion of counsel, in form and substance reasonably satisfactory
to the Board of Managers, that such transaction complies with the condition set
forth in this Section 3.2(b); provided, that the Board of Managers in its sole
discretion may waive the opinion required by this Section 3.2(b) if it has a
reasonable basis on which to conclude that the requirements set forth above, as
to which the opinion is waived, are or will be satisfied. The Board of Managers
may also request officer certificates and representations and warranties from
the Transferee and Transferor as to the matters set forth above and such other
factual matters as the Board of Managers may reasonably request.
18
(c) In order to give effect to the provisions of this Agreement,
including, without limitation, this Article III, each of the CDM Holder and
Bondholder Trust agrees that:
(i) Its capital structure shall at all times, to the extent
practicable, replicate the number and type of Units of the Company it
holds, such that the number and type of Securities issued by it and
outstanding at any time shall be substantially similar, in all material
respects, to the number and type of Units it holds at such time (such
corresponding ownership interests in the CDM Holder being referred to as
the "CDM Corresponding Interests" and such corresponding ownership
interests in Bondholder Trust being referred to as the "Bondholder Trust
Corresponding Interests").
(ii) It shall incur no indebtedness, hold no material assets
other than the Units and issue no additional membership interests (other
than in connection with the funding of claims pursuant to the Indemnity
Agreement, capital calls on the holders of Bondholder Trust Corresponding
Interests, changes to the capital structure of the Company or Transfers or
other transactions permitted under this Agreement) without the prior
written consent of the JPMP Holder and the JWC Holder.
(iii) It shall not amend its governing instruments in a manner
that would adversely affect the rights of any other Member under this
Agreement in a manner different from the CDM Holder or Bondholder Trust,
as applicable, without the prior written consent of the JPMP Holder and
the JWC Holder.
(iv) It shall be organized and operated so as to be classified
as a business entity, within the meaning of Treas. Reg. Section
301.7701-2(a).
(d) Each Member shall prohibit, and agrees not to recognize on its
books, any Transfers, including, without limitation, any indirect Transfers of
Units, in violation of the provisions of this Agreement. Any attempted Transfer
not in accordance with this Section 3.2(d) shall not be effective and shall be
void. In order to give effect to the foregoing, each of the CDM Holder and
Bondholder Trust shall require each member of such Person, as a condition to
admission as a member, to acknowledge and agree in writing that such member has
been informed of the restrictions on Transfer in this Agreement and has agreed
to comply with such restrictions in all respects.
3.3 RIGHT OF FIRST REFUSAL/RIGHT OF FIRST OFFER.
(a) If any Member (each, an "Offeror") proposes to Transfer any
Class A Units or Class B Units, as the case may be, to any Person (the
"Offeree"), other than in connection with a Permitted Excluded Transfer, the
parties hereto shall comply with the following procedures:
(i) The Offeror shall, before such Transfer, deliver to the
Company a written offer (the "First Offer") to Transfer to the Company
such Units upon the terms set forth in this Section 3.3(a), including (A)
the type and number of Units to which the First Offer relates (the "First
Offered Units") and the name of the Offeror, (B) the name and address of
the proposed Offeree, (C) the proposed amount and type of consideration
(including, if the consideration consists in whole or in part of non-cash
consideration, such
19
information available to the Offeror as may be reasonably necessary for
the Company and the Investors to properly analyze the economic value and
investment risk of such non-cash consideration) and the terms and
conditions of payment that the Offeror intends to accept. The First Offer
shall remain open and irrevocable for a period of ten (10) Business Days
from the date of its receipt by the Company. The Company shall have the
right and option to notify the Offeror, in a writing (the "Company
Acceptance") delivered within ten (10) Business Days of its receipt of the
First Offer, of its intent to purchase all or any portion of the First
Offered Units at the purchase price and on the terms and conditions stated
in the First Offer.
(ii) If the Company elects to purchase none or less than all
of the First Offered Units or does not deliver a timely Company
Acceptance, the Offeror shall deliver the First Offer, revised to take
into account any First Offered Units which the Company has elected to
purchase pursuant to a Company Acceptance (as so revised, the "Second
Offer" and, the type and number of Units to which the Second Offer
relates, the "Second Offered Units") to the Investors (other than the
Offeror or Bondholder Trust) (the "Investor Offerees"). Any Investor
Offeree may accept the Second Offer in whole or in part and purchase up to
its Pro Rata Amount (based on the aggregate number of Class A Units, Class
B Units, Class C Units and Fully Participating Units held by all Investor
Offerees) of all Second Offered Units (with respect to each Investor
Offeree, its "Full Allotment") by delivering to the Offeror a notice (the
"Member Acceptance") in writing within ten (10) Business Days of its
receipt of the Second Offer (the "Acceptance Period"). Each Investor
Offeree purchasing its Full Allotment may also offer to purchase its Pro
Rata Amount (based on the aggregate number of Class A Units, Class B
Units, Class C Units and Fully Participating Units held by all Investor
Offerees purchasing their Full Allotments) of any Second Offered Units not
so purchased by any other Investor Offeree.
(iii) Within 30 days of receipt of the First Offer, the
Offeror shall Transfer to the Company or the Investor Offerees, as the
case may be, against receipt of payment in cash therefor, all First
Offered Units and Second Offered Units as to which a Company Acceptance or
Member Acceptance has been timely given. If the proposed consideration by
the Offeree includes consideration other than cash, the cash equivalent
value of the non-cash consideration will be determined by the Board of
Managers in good faith, which determination will be binding upon the
Company, the Offeror and each Investor Offeree, absent fraud or error.
Delivery of certificates or other instruments evidencing such First
Offered Units and Second Offered Units duly endorsed for transfer and free
and clear of all liens, claims and other encumbrances (other than those
arising hereunder and those attributable to actions by the purchasers
thereof) shall be made on such date against payment in cash of the
purchase price therefor. At such closing, all of the parties to the
transaction shall execute such additional documents as are otherwise
necessary or appropriate.
(iv) Thereafter, the Offeror may Transfer to the Offeree any
or all of the First Offered Units and Second Offered Units not purchased
by the Company or the Investor Offerees, on terms and conditions no more
favorable to the Offeree than are
20
described in the First Offer, within 90 days after expiration of the
Acceptance Period (during which time the Offeror shall ensure that
compliance with Section 3.4 has occurred). If such Transfer is not made
within such 90-day period, the provisions of this Section 3.3 shall again
become effective with respect to the proposed Transfer.
(b) If any member of the CDM Holder or Bondholder Trust (each such
member, an "Indirect Offeror") proposes to Transfer to any Person, other than in
connection with a Permitted Excluded Transfer, any CDM Corresponding Interests
or Bondholder Trust Corresponding Interests, as applicable, then such Transfer
shall be made in compliance with this Agreement and the parties hereto shall
comply with the following procedures:
(i) If the Indirect Offeror is a holder of Indirect Units in
the CDM Holder other than ▇▇▇▇▇▇▇▇▇▇▇, then the CDM Holder and ▇▇▇▇▇▇▇▇▇▇▇
first shall have a right of first refusal with respect to the Transfer of
such CDM Corresponding Interests as provided in the CDM Holder Agreement.
(ii) If the Indirect Offeror (A) is ▇▇▇▇▇▇▇▇▇▇▇ or (B) is a
holder of Indirect Units in the CDM Holder other than ▇▇▇▇▇▇▇▇▇▇▇ and the
CDM Holder and ▇▇▇▇▇▇▇▇▇▇▇ have not elected to acquire all of the CDM
Corresponding Interests pursuant to their rights of first refusal in the
CDM Holder Agreement, then the CDM Holder shall comply with Section 3.3
hereof and shall offer to the Company and each Investor Offeree in the
manner therein provided the opportunity to acquire a number and type of
Units that correspond to the CDM Corresponding Interests remaining unsold
in the offer to the CDM Holder and ▇▇▇▇▇▇▇▇▇▇▇ (and to the extent such
Units are so acquired by the Company or an Investor Offeree, promptly use
the proceeds therefrom to redeem the related CDM Corresponding Interests).
Thereafter, such Indirect Offeror may Transfer any or all of the CDM
Corresponding Interests that were not purchased by the CDM Holder or
▇▇▇▇▇▇▇▇▇▇▇ or that correspond to Units not purchased by the Company or
the Investor Offerees, on terms and conditions no more favorable to the
Offeree than are described in the First Offer and otherwise as provided in
Section 3.3(a)(iv) above.
(iii) If the Indirect Offeror is a holder of Bondholder Trust
Corresponding Interests, then the Indirect Offeror shall comply with the
following right of first offer (rather than right of first refusal)
procedures:
(A) The Indirect Offeror shall, before such Transfer,
deliver to the Company and the Investors (other than Bondholder
Trust) (the "Indirect Offerees") a written request for an offer (the
"Indirect Offer Request") to purchase the Bondholder Trust
Corresponding Interests that the Indirect Offeror proposes to
Transfer (the "Indirect Offered Units"). Each Indirect Offeree shall
have the right and option to notify the Indirect Offeror, in a
writing (the "Indirect Offer") delivered within three (3) Business
Days after the date of its receipt of the Indirect Offer, of its
offer to purchase all, but not less than all, of the Indirect
Offered Units at the cash purchase price and on the terms and
conditions stated in the Indirect Offer. Each Indirect Offer shall
remain open and irrevocable for a period of five (5) Business Days
from the date of its receipt by the Indirect Offeror (the "Indirect
Offer Period").
21
(B) If one or more Indirect Offers have been timely
received, then the Indirect Offeror shall have the right and option
to accept the Indirect Offer containing the highest offered purchase
price and/or most favorable other terms and conditions, as
determined by the Indirect Offeror in good faith (the "High Offer"),
which may reflect discussions between the Indirect Offeree and the
Indirect Offeror, by so notifying the applicable Indirect Offeree in
a writing (the "Indirect Offer Acceptance"), with copies to the
Company and Bondholder Trust, delivered prior to the expiration of
the Indirect Offer Period; provided, that if more than one Indirect
Offer offers the same purchase price and other terms and conditions
and each such offer is a High Offer, then the Indirect Offeror, if
choosing to accept any Indirect Offer, shall accept any High Offer
made by the Company, and, if no High Offer has been made by the
Company, shall have the right and option to accept any of the High
Offers.
(C) Within 15 days of receipt by Bondholder Trust of the
copy of the Indirect Offer Acceptance and in lieu of the Indirect
Offeror Transferring the Indirect Offered Units, Bondholder Trust
shall Transfer to the Company or the other Indirect Offeree, as the
case may be, against receipt of payment therefor, Units of the
Company in an amount and of the type corresponding to the Indirect
Offered Units that the Company or the other Indirect Offeree agreed
to purchase. Delivery of certificates or other instruments
evidencing Units of the Company in an amount and of the type
corresponding to the Indirect Offered Units duly endorsed for
transfer and free and clear of all liens, claims and other
encumbrances (other than those arising hereunder and those
attributable to actions by the purchasers thereof) shall be made on
such date against payment in cash of the purchase price therefor. At
such closing, all of the parties to the transaction shall execute
such additional documents as are otherwise necessary or appropriate.
Bondholder Trust shall promptly use the proceeds received by it at
such closing to redeem the Indirect Offered Units.
(D) If an Indirect Offer has not been timely delivered,
or if an Indirect Offer Acceptance has not been timely delivered,
then the Indirect Offeror may Transfer to any Person all, but not
less than all, of the Bondholder Trust Corresponding Interests that
were subject to the Indirect Offer Request on terms and conditions
no more favorable to such Person than are described in a timely
received Indirect Offer (or, if more than one, in the High Offer),
for a period of 60 days after expiration of the Indirect Offer
Period. If such Transfer is not made within such 60-day period, the
provisions of this Section 3.3(b)(iii) shall again become
effective with respect to the proposed Transfer.
(c) For purposes of this Section 3.3, each Investor may aggregate
his, her or its Pro Rata Amount among his, her or its Permitted Excluded
Transferees that are Investors to the extent that such Permitted Excluded
Transferees do not elect to purchase their respective Pro Rata Amounts.
22
3.4 CO-SALE RIGHTS.
(a) If any Member (other than Bondholder Trust) (each, a "Co-Sale
Offeree") receives an offer to Transfer (other than a Permitted Excluded
Transfer) any Class A Units or Class B Units, as the case may be, to any Person
(the "Co-Sale Offeror"), the parties hereto shall comply with the following
procedures:
(i) The Co-Sale Offeree shall, at least twenty (20) Business
Days before such Transfer, deliver a written notice (the "Co-Sale Notice")
to the Co-Sale Rightholders that sets forth substantially the same
information as the First Offer in Section 3.3(a)(i) above; provided,
however, that such Co-Sale Notice shall indicate that the Co-Sale Offeror
has been informed of the co-sale rights provided for in this Section 3.4
and has agreed to purchase Class A Units, Class B Units, Class C Units and
Fully Participating Units (the "Co-Sale Units") from the Co-Sale
Rightholders in accordance with the terms hereof. A Co-Sale Offeree shall
be deemed to satisfy the requirement to deliver a Co-Sale Notice if it has
delivered a First Offer in accordance with Section 3.3(a)(i) (with a copy
to Bondholder Trust) with respect to such offer to Transfer and such First
Offer contains the information otherwise required to be set forth in such
Co-Sale Notice, and in such case all references to the Co-Sale Notice
shall be deemed to refer to such First Offer.
(ii) The Co-Sale Offeree shall not Transfer any Units to the
Co-Sale Offeror unless each of the Co-Sale Rightholders is permitted to
Transfer simultaneously therewith, (A) in the event the proposed purchase
price per Unit offered by the Co-Sale Offeror exceeds $1,000 per Unit (as
adjusted for splits, combinations, reclassifications and the like), a
number of Co-Sale Units equal to its Pro Rata Amount (based upon the
aggregate number of Class A Units, Class B Units, Class C Units and Fully
Participating Units outstanding at such time and held by the Co-Sale
Offeree and all Co-Sale Rightholders) of the aggregate number of Units to
which the offer to the Co-Sale Offeree relates and on the same terms and
conditions (including price), and (B) in the event the proposed purchase
price per Unit offered by the Co-Sale Offeror does not exceed $1,000 per
Unit (as adjusted for splits, combinations, reclassification and the
like), a number of Co-Sale Units representing its Pro Rata Amount (based
upon the aggregate number of Class A Units, Class B Units and Class C
Units outstanding at such time and held by the Co-Sale Offeree and all
Co-Sale Rightholders) of the aggregate purchase price offered to be paid
by the Co-Sale Offeror for the Units to which the offer to the Co-Sale
Offeree relates, as specified in the Co-Sale Notice, and otherwise on the
same terms and conditions. If the proposed purchase price per Unit offered
by the Co-Sale Offeror does not exceed $1,000 per Unit (as adjusted for
splits, combinations, reclassifications and the like), then the Company
shall promptly engage the Appraiser to determine the fair market value of
the Class B Units and the Class C Units (based upon a hypothetical
liquidation of the Company at such time in accordance with Section 18 of
the Operating Agreement and without giving effect to any minority or
illiquidity discounts) in order that the parties may determine the number
of Co-Sale Units entitled to be sold by each Co-Sale Rightholder in
respect of its Pro Rata Amount of the aggregate purchase price offered to
be paid by the Co-Sale Offeror. The Company shall use commercially
reasonable efforts to cause the Appraiser to provide written notice of
such determination of the fair market value to the
23
Company, the Co-Sale Offeree and the Co-Sale Rightholders within 15 days
of its engagement. The determination by the Appraiser of such fair market
value, as set forth in the written notice described in the preceding
sentence, will be final, binding and conclusive on the parties. The fees,
costs and expenses of the Appraiser shall be paid by the Company.
(iii) Within the later of (A) thirty (30) days after delivery
of the Co-Sale Notice and (B) thirty (30) days after delivery by the
Appraiser of the written notice setting forth the fair market value
determination described in Section 3.4(a)(ii), each Co-Sale Rightholder
may elect to participate in the proposed Transfer by delivering to the
Co-Sale Offeree a notice (the "Tag-Along Notice") specifying the type and
number of Co-Sale Units (up to his, her or its Pro Rata Amount, as
determined in accordance with Section 3.4(a)(ii) above) with respect to
which such Co-Sale Rightholder shall exercise his, her or its rights under
this Section 3.4, and the number of Units to be Transferred to the Co-Sale
Offeror by the Co-Sale Offeree shall be reduced accordingly.
(iv) Any Co-Sale Units requested to be included in any
Tag-Along Notice shall be Transferred at the same time on the same terms
and conditions (including price) as are set forth in the Co-Sale Notice,
subject to any difference in the purchase price per Class A Unit and the
purchase price per Class B Unit and the purchase price per Class C Unit
determined by the Appraiser as provided above. If such Transfer is not
made within 90 days from delivery of the Co-Sale Notice, the provisions of
this Article III shall again become effective with respect to the proposed
Transfer.
(b) If any member of the CDM Holder (each such member, an "Indirect
Co-Sale Offeree") receives an offer to Transfer (other than a Permitted Excluded
Transfer) to any Person any CDM Corresponding Interests, then such Transfer
shall be made in compliance with this Agreement and the CDM Holder shall require
that, prior to such Transfer, such Indirect Co-Sale Offeree shall comply in all
respects with the provisions set forth in this Section 3.4 as if such Indirect
Co-Sale Offeree was proposing to Transfer Units of the Company, corresponding
and equal in number to the CDM Corresponding Interests proposed to be
Transferred. Any Co-Sale Rightholders electing to exercise their co-sale rights
with respect thereto shall be entitled to Transfer to such Third Party the
number of Class A Units, Class B Units, Class C Units and/or Fully Participating
Units, as applicable, that such Co-Sale Rightholder has elected to Transfer
pursuant to this Section 3.4, and the number of CDM Corresponding Interests to
be Transferred by the Indirect Co-Sale Offeree shall be reduced accordingly.
(c) As used herein, the term "Co-Sale Rightholder" means the
Investors (other than the Co-Sale Offeree) holding Class A Units, Class B Units,
Class C Units and/or Fully Participating Units.
(d) The Co-Sale Offeree shall, in addition to complying with the
provisions of this Section 3.4, comply with the other provisions of this Article
III (it being understood that the notice contemplated by Section 3.3(a)(i) and
the Co-Sale Notice contemplated by this Section 3.4 may be included in a single
notice).
24
(e) For purposes of this Section 3.4, each Co-Sale Rightholder may
aggregate his, her or its Pro Rata Amount among his, her or its Permitted
Excluded Transferees that are Co-Sale Rightholders to the extent that such
Permitted Excluded Transferees do not elect to sell their respective Pro Rata
Amounts.
3.5 PREEMPTIVE RIGHTS.
(a) If the Company proposes to offer New Units to any Person, the
Company shall, prior to issuing any New Units, deliver to the Investors a
written offer (the "Preemptive Rights Offer") to issue to the Investors such New
Units to maintain their respective Pro Rata Amounts at a price per New Unit, in
cash, equal to the fair market value thereof as determined in good faith by the
Board of Managers and otherwise upon the terms and conditions set forth in this
Section 3.5. The Preemptive Rights Offer shall state that the Company proposes
to issue New Units and specify their number, type and terms (including the
purchase price per New Unit, which shall equal the fair market value thereof as
determined in good faith by the Board of Managers). If the New Units are to be
offered for property other than cash, the Board of Managers shall make a good
faith determination of the fair market value of the property proposed to be
received for the New Units and such determination shall constitute the price at
which such New Units will be offered for purposes of the Preemptive Rights Offer
and this Section 3.5. The Preemptive Rights Offer shall remain open and
irrevocable for a period of twenty (20) Business Days (the "Preemptive Rights
Period") from the date of its delivery. The Company and Bondholder Trust shall
take all reasonable steps necessary to ensure that the issuance of New Units
pursuant to such Preemptive Rights Offer will be exempt from registration under
the Securities Act of 1933, as amended, including without limitation the
appointment, at the Company's expense, of a "purchaser's representative"
pursuant to Regulation D under the Securities Act of 1933, as amended.
(b) Each Investor may accept the Preemptive Rights Offer by
delivering to the Company a written notice (the "Purchase Notice") within the
Preemptive Rights Period. The Purchase Notice shall state the number (the
"Preemptive Rights Number") of New Units such Investor desires to purchase. If
the sum of all Preemptive Rights Numbers exceeds the number of New Units that
the Company proposes to issue, the New Units shall be allocated among the
Investors that delivered a Purchase Notice in accordance with their respective
Pro Rata Amounts (based on the aggregate number of Class A Units, Class B Units,
Class C Units and Fully Participating Units held by all such participating
Investors).
(c) The issuance of New Units (against receipt of payment in cash
therefor) to the Investors who delivered a Purchase Notice shall be made on a
Business Day, as designated by the Company, not less than ten (10) and not more
than thirty (30) days after expiration of the Preemptive Rights Period on terms
and conditions of the Preemptive Rights Offer consistent with this Section 3.5.
At the closing of the issuance of the New Units to such Investors, the Company
shall deliver certificates or other instruments evidencing such New Units
against payment in cash of the purchase price therefor, and such New Units shall
be issued free and clear of all liens, claims and other encumbrances (other than
those arising hereunder and those attributable to actions by the purchasers
thereof). At such closing, all of the parties to the transaction shall execute
such additional documents as are otherwise necessary or appropriate.
25
(d) If the number of New Units included in the Preemptive Rights
Offer exceeds the sum of all Preemptive Rights Numbers, the Company may issue
(against receipt of payment therefor) such excess or any portion thereof on the
terms and conditions of the Preemptive Rights Offer to any Person within 90 days
after expiration of the Preemptive Rights Period. If such issuance is not made
within such 90-day period, the restrictions provided for in this Section 3.5
shall again become effective.
(e) For purposes of this Section 3.5, each Investor may aggregate
his, her or its Pro Rata Amount among his, her or its Permitted Excluded
Transferees that are Investors to the extent that such Permitted Excluded
Transferees do not elect to purchase their respective Pro Rata Amounts.
(f) If the Company determines in good faith that the delay
occasioned by complying with the procedures contemplated by this Section 3.5
would be prejudicial to the Company or its financial condition or business and
operations, then the Company may issue and sell the New Units without first
offering the New Units to the Investors in compliance with Section 3.5. If the
Company so elects to issue New Units under this Section 3.5(f), then the Company
shall deliver the Preemptive Offer to each Investor to which it has not so
issued or sold New Units (the "Excluded Investors") no later than three (3)
Business Days after the date on which such New Units were issued and sold. If an
Excluded Investor delivers a Purchase Notice within twenty (20) Business Days
after receipt of the Preemptive Offer and (A) the Company has issued or sold the
subject New Units to a Third Party but not to any Investor, then the Company
shall issue and sell to each electing Excluded Investor such number of New Units
as such Excluded Investor would have been entitled had the Preemptive Rights
Offer been made and accepted by such Excluded Investor in accordance with
Sections 3.5(a) through (e) as promptly as practicable, but in no event later
than five Business Days following the date of delivery of the Purchase Notice,
at the same price, and on the same terms and conditions as the issuance and sale
occurred or (B) the Company has issued and sold the subject New Units to one or
more of the Investors (the "Emergency Funding Participants"), then the New Units
as to which such Excluded Investors have exercised preemptive rights under this
Section 3.5(f) shall be sold by the Emergency Funding Participants to such
Excluded Investors as promptly as practicable, but in no event later than five
Business Days following the date of delivery of the Purchase Notice, in such
amount as will most closely replicate the outcome if such Excluded Investors had
timely delivered a Purchase Notice in accordance with Section 3.5(b) and the
sale shall occur at a price per New Unit equal to the price paid by the
Emergency Funding Participants therefor, plus interest on such amount from the
date of purchase by the Emergency Funding Participants through the date of sale
to such Excluded Investors, at a rate per annum equal to the then-effective
prime rate, as announced by Citibank N.A. At the closing of any such sale by the
Emergency Funding Participants, such Emergency Funding Participants shall
deliver to such Excluded Investors certificates representing the New Units to be
conveyed, duly endorsed or accompanied by stock powers or other appropriate
instruments of Transfer duly executed in blank, free and clear of all liens,
encumbrances, security interests, adverse claims or other restrictions (other
than those created by this Agreement), against payment of the purchase price
therefor calculated hereunder.
26
3.6 REPURCHASE RIGHTS.
(a) In the event that a CDM Executive resigns voluntarily from
Aurora without Good Reason and other than as a result of Disability (a
"Repurchase Event"), then the Company, Pinnacle, Aurora or any of their
respective designees shall have the right (but not the obligation) to repurchase
from the CDM Holder Units corresponding in type and number to the CDM
Corresponding Interests owned by such CDM Executive and his Permitted Excluded
Transferees, as determined in accordance with Section 3.6(f) below (the
"Repurchase Units"); provided that, if the CDM Executive is other than
▇▇▇▇▇▇▇▇▇▇▇, the CDM Holder and its members first shall have the right to
repurchase the CDM Corresponding Interests held by such CDM Executive, as
provided in the CDM Holder Agreement.
(b) The price to be paid in cash for the Repurchase Units under this
Section 3.6 shall be determined as follows:
(i) if the Repurchase Event occurs on or prior to the first
anniversary of the closing of the Pinnacle Transaction, the price to be
paid in cash for the Repurchase Units shall be equal to such CDM
Executive's pro rata portion (based on the number of CDM Corresponding
Interests held by such CDM Executive and, if applicable, his Permitted
Excluded Transferees relative to the aggregate number of CDM Corresponding
Interests then outstanding) of $10,750,000 less the proceeds actually
received upon the prior Transfer of Units held by the CDM Holder; and
(ii) if the Repurchase Event occurs after the first
anniversary of the closing of the Pinnacle Transaction and on or before
the second anniversary of the closing of the Pinnacle Transaction, the
price to be paid in cash for the Repurchase Units shall be equal to such
CDM Executive's pro rata portion (based on the number of CDM Corresponding
Interests held by such CDM Executive and, if applicable, his Permitted
Excluded Transferees relative to the aggregate number of CDM Corresponding
Interests then outstanding) of the greater of (A) $10,750,000 less the
proceeds actually received upon the prior Transfer of Units held by the
CDM Holder and (B) the Fair Market Value (as defined in Section 3.6(e)
below).
(c) The repurchase right of the Company, Pinnacle, Aurora or any of
their respective designees, as applicable, under this Section 3.6 may be
exercised by written notice (a "Repurchase Notice") to the applicable CDM
Executive and the CDM Holder within 60 days of the date of the Repurchase Event.
Upon the delivery of a Repurchase Notice, the applicable CDM Executive and the
CDM Holder shall be obligated to sell or cause to be sold to the Company,
Pinnacle, Aurora or any of their respective designees, as applicable, the
Repurchase Units in accordance with the terms of this Section 3.6.
(d) The purchase of the Repurchase Units under the terms of this
Section 3.6 shall be made at the offices of the Company, Pinnacle, Aurora or any
of their respective designees, as applicable, on a mutually satisfactory
Business Day within ten (10) days after the final determination of the
repurchase price as described below. Delivery of certificates or other
instruments evidencing such Repurchase Units duly endorsed for transfer and free
and clear of all liens, claims and other encumbrances (other than those arising
hereunder and those
27
attributable to actions by the purchasers thereof) shall be made on such date
against payment in cash of the purchase price therefor. At the closing, all of
the parties to the transaction shall execute such additional documents as are
otherwise necessary or appropriate. Simultaneously with such closing, the CDM
Holder shall use the repurchase price proceeds to redeem from the applicable CDM
Executive and, if applicable, his Permitted Excluded Transferees all CDM
Corresponding Interests held by the applicable CDM Executive and, if applicable,
his Permitted Excluded Transferees.
(e) For purposes of this Section 3.6, "Fair Market Value" means the
fair market value of the Repurchase Units (including any Units that become
Participating Units by reason of such determination of Fair Market Value and the
related adjustment to the Gross Asset Value of the Company's assets pursuant to
clause (b) of the definition of "Gross Asset Value") (without giving effect to
any minority or illiquidity discounts) determined by the Board of Managers in
good faith and delivered in writing to the applicable CDM Executive and the CDM
Holder as soon as practicable following the Repurchase Event, but in any event
prior to delivery of the Repurchase Notice. In the event that the CDM Holder
gives the Board of Managers written notice of its objection (the "FMV Objection
Notice") to the Board of Managers' calculation of Fair Market Value within ten
(10) days of its receipt of such calculation, then the Company shall engage the
Appraiser to determine the Fair Market Value; provided, however, that if the CDM
Holder does not deliver the FMV Objection Notice within such ten (10) day
period, then the Board of Managers' calculation of Fair Market Value shall be
final, binding and conclusive on the parties, unless otherwise agreed to by the
Board of Managers and the CDM Holder. The Company shall use commercially
reasonable efforts to cause the Appraiser to provide written notice (the
"Appraised Value Notice") of such determination of the Fair Market Value to the
Company, the applicable CDM Executive and the CDM Holder within fifteen (15)
days of its engagement. The determination by the Appraiser of the Fair Market
Value, as set forth in the Appraised Value Notice, will be final, binding and
conclusive on the parties. The fees, costs and expenses of the Appraiser shall
be paid 50% by the Company and 50% by the CDM Holder.
3.7 CALL OPTION.
(a) If (i) the JPMP Holder and the JWC Holder propose to effect the
Sale of the Company to a Third Party or an Aurora Sale to a Third Party on terms
and conditions described in detail and in writing to the CDM Holder (the
"Proposed Sale Notice"), or (ii) Bondholder Trust proposes to effect an IPO
Liquidation, but in either case of clauses (i) or (ii) the CDM Holder does not
so consent pursuant to Section 2.5(c) (any such event, a "Call Trigger Event"),
then the JPMP Holder, the JWC Holder, Bondholder Trust and the Lexington Holder
each shall have the right (but not the obligation) to purchase (the "Call
Option"), simultaneously with the consummation of such Call Trigger Event, as
the case may be, all (but not less than all) of the Units held by the CDM Holder
and its Permitted Excluded Transferees at the Call Option Price; provided that,
in the case of a Sale of the Company to a Third Party or an Aurora Sale to a
Third Party, such Call Trigger Event is consummated within 90 days after
delivery of the Proposed Sale Notice and on the terms and conditions described
in the Proposed Sale Notice .
(b) The Call Option shall be exercisable upon delivery of a written
notice (the "Call Option Notice") by the CO Purchaser to the CDM Holder at least
thirty (30) days but not
28
more than forty five (45) days prior to the proposed date of the consummation of
the Call Trigger Event. The Call Option Notice shall state the proposed date for
the consummation of the Call Trigger Event and shall include a statement (the
"Call Option Price Statement") of the CO Purchaser's calculation of the Call
Option Price (and the basis for such calculation).
(c) If (A) only one of the JPMP Holder, the JWC Holder, Bondholder
Trust or the Lexington Holder elects to exercise the Call Option, then such
electing Member shall pay 100% of the Call Option Price, and (B) more than one
of the JPMP Holder, the JWC Holder, Bondholder Trust or the Lexington Holder
elects to exercise the Call Option, then the Call Option Price shall be
allocated among such electing Members in accordance with their relative holdings
of Units.
(d) After delivery of the Call Option Price Statement to the CDM
Holder, the CDM Holder may make inquiries of the CO Purchaser regarding
questions concerning or disagreements with the Call Option Price Statement
arising in the course of such review. The CDM Holder shall complete its review
of the Call Option Price Statement within thirty (30) days following the
delivery of the Call Option Notice. Promptly following completion of its review,
the CDM Holder shall submit to the CO Purchaser a letter regarding its
concurrence or disagreement with the calculation of the Call Option Price set
forth in the Call Option Price Statement. Unless the CDM Holder delivers a
letter (the "Dispute Letter") to the CO Purchaser disagreeing (such letter must
contain a statement describing in reasonable detail the basis of such
disagreement) with the calculation of the Call Option Price set forth in the
Call Option Price Statement within such thirty (30) day period, the Call Option
Price Statement shall be final and binding upon the parties unless there shall
have occurred any material change in any of the information contained in the
Call Option Price Statement (including, without limitation, the basis for the
calculation of the Call Option Price), in which case, the CO Purchaser shall be
required to deliver promptly a revised Call Option Price Statement and the
procedures provided for herein shall be repeated. Following delivery of the
Dispute Letter, the CDM Holder and the CO Purchaser shall attempt promptly to
resolve such disagreement in good faith. If a resolution of such disagreement
has not been effected within ten (10) days (or longer, as mutually agreed by the
parties) after delivery of the Dispute Letter, the CDM Holder and CO Purchaser
shall submit such disagreement to an independent accounting firm of
international recognition (other than the accountants for the Company, the CDM
Holder, the CO Purchaser, Pinnacle or Aurora) jointly selected by the CDM Holder
and the CO Purchaser (the "Referee"); provided, that if the parties are unable
to agree upon the accounting firm within three (3) days, then the Referee shall
be an independent accounting firm selected by lot from among the "Big 4"
accounting firms, and the selection of the accounting firm by lot shall be final
and binding upon the parties. The CDM Holder and the CO Purchaser shall use
their respective commercially reasonable efforts to cause the determination of
the Referee with respect to the matters in dispute to be completed within twenty
(20) days after the appointment of the Referee, and such determination shall be
final and binding upon the parties unless there shall have occurred any material
change in any of the information contained in the Call Option Price Statement
(including, without limitation, the basis for the calculation of the Call Option
Price), in which case, the CO Purchaser shall promptly provide the Referee (with
a copy to the CDM Holder) with any updated information in order that the Referee
may make a revised determination. The fees, costs and expenses of the Referee
shall be paid by the Company. Each of the Company, the CDM Holder and the CO
Purchaser shall
29
provide and cause to be provided to the Referee, on a confidential basis, such
information as it reasonably requests to perform its duties.
(e) The purchase of all of the Units held by the CDM Holder under
the terms of this Section 3.7 shall be made following the final determination of
the Call Option Price as described above and simultaneously with the
consummation of the Sale of the Company, the Aurora Sale or the IPO Liquidation,
as the case may be. Delivery of certificates or other instruments evidencing the
Units held by the CDM Holder duly endorsed for transfer and free and clear of
all liens, claims and other encumbrances (other than those arising hereunder and
those attributable to actions by the CO Purchaser) shall be made on such date
against payment in cash of the Call Option Price or, in the case of a Call
Trigger Event that relates to a proposal by Bondholder Trust to effect an IPO
Liquidation, in Crunch Holding Shares having a value (based on the price per
share offered in the initial public offering thereof less an illiquidity
discount) equal to the Call Option Price. At the closing, all the parties to the
transaction shall execute such additional documents as are otherwise necessary
or appropriate.
3.8 DRAG-ALONG RIGHTS.
(a) If at any time following the consummation of the Aurora
Transaction, the JPMP Holder, the JWC Holder and/or the CDM Holder proposes to
Transfer to an Unaffiliated third party, in a single arms-length transaction or
a series of related arms-length transactions, Units representing, in the
aggregate, at least 50% of the total number of Units owned on the Effective Date
by the JPMP Holder, the JWC Holder, the Lexington Holder and the CDM Holder (a
"Drag-Along Sale"), such holders shall give written notice thereof to all other
Members, including, without limitation, Bondholder Trust. The other Members
shall consent to (if such consent is required) and raise no objections against
the Drag-Along Sale, and if the Drag-Along Sale if structured as (A) a merger,
exchange or consolidation of the Company, or a sale of all or substantially all
of the assets of the Company, the other Members shall waive any dissenters'
rights, appraisal rights or similar rights in connection with such merger,
exchange, consolidation or asset sale, or (B) a sale of Units of the Company,
each other Member shall agree to sell a pro rata percentage (equal to the
percentage of Units proposed to be sold by the JPMP Holder, the JWC Holder and
the CDM Holder relative to the aggregate number of Units held by such holders)
of its Units, on the terms and conditions of such Drag-Along Sale. The Members
shall take all necessary and desirable actions in connection with the
consummation of the Drag-Along Sale, including obtaining the consent of the
Board of Managers, if necessary, to the Drag-Along Sale and the execution of
such agreements and such instruments and other actions reasonably necessary to
(1) provide customary representations, warranties, indemnities, and escrow
arrangements relating to such Drag-Along Sale and (2) effectuate the allocation
and distribution of the aggregate consideration upon the Drag-Along Sale as set
forth in Section 3.8(c) below. The Members shall be permitted to sell their
Units pursuant to a Drag-Along Sale without complying with any other provisions
of Article III of this Agreement.
(b) The JPMP Holder, the JWC Holders and the CDM Holder shall
represent and warrant to each other and the other Members that no direct or
indirect collateral benefit or supplemental consideration (whether or not in the
nature of a tangible or intangible asset, money, property, security or other
tangible benefits or opportunities) has been or is to be paid by such
30
prospective purchaser or any other Person to any of them in connection with the
Drag-Along Sale and that such Drag-Along Sale is not made as part of or in
connection with any other transaction pursuant to which any of the JPMP Holder,
the JWC Holder or the CDM Holder will receive any additional benefit or
consideration. The foregoing provision shall not be deemed to prohibit a
Drag-Along Sale to any Person merely because such Person has, is currently
having or intends to have a business relationship with one or more Members.
(c) The obligations of the Members pursuant to this Section 3.8 are
subject to the satisfaction of the following conditions:
(i) upon the consummation of the Drag-Along Sale, each seller
shall receive the same proportion of the aggregate consideration from such
approved Drag-Along Sale that such seller would have received if such
aggregate consideration had been distributed by the Company in complete
liquidation pursuant to the rights and preferences set forth in the
Operating Agreement as in effect immediately prior to such Drag-Along Sale
(giving effect to applicable orders of priority in the Operating
Agreement);
(ii) if any Members of a class are given an option as to the
form and amount of consideration to be received, all Members will be given
the same option;
(iii) all holders of options, warrants or similar rights to
acquire Securities of the Company that are then-currently exercisable will
be given an opportunity to exercise such rights prior to the consummation
of the Drag-Along Sale (but only to the extent such options, warrants or
similar rights are then vested or would be vested on an accelerated basis
pursuant to the terms of their issuance) and participate in such sale as
Members;
(iv) no Member shall be obligated to make any out-of-pocket
expenditure prior to the consummation of the Drag-Along Sale (excluding
modest expenditures for postage, copies, etc.) and no Member shall be
obligated to pay any portion (or shall be entitled to be reimbursed by the
Company for that portion paid) that is more than its pro rata share (based
upon the amount of consideration received) of reasonable expenses incurred
in connection with a consummated Drag-Along Sale, to the extent such costs
are incurred for the benefit of all Members, and are not otherwise paid by
the Company or the acquiring party (costs incurred by or on behalf of a
Member for its sole benefit will not be considered costs of the
transaction hereunder), provided, that a Member's liability for such
expenses shall be capped at the total purchase price received by such
Member for its Units, plus any options, warrants or similar rights; and
(v) no Member shall be required to provide any
representations, warranties or indemnities in connection with the
Drag-Along Sale, other than those contemplated by Section 3.8(a) or
required to be made pursuant to Section 3.8(b) to other Members and those
representations, warranties and indemnities concerning each Member's valid
ownership of Units and options, warrants or similar rights, free and clear
of all liens, claims and other encumbrances (other than those arising
under applicable securities laws and those attributable to actions by the
purchasers thereof), and each Member's authority, power, and right to
enter into and consummate such purchase,
31
merger, exchange or other agreement without violating any other agreement.
Any indemnity required to be given by a Member shall be several and not
joint.
3.9 REGULATORY MATTERS.
(a) Each Member agrees to cooperate with the Company in all
reasonable respects in complying with the terms and provisions of the letter
agreement between the Company and ▇.▇. ▇▇▇▇▇▇ Partners (BHCA), L.P., a copy of
which is attached hereto as Exhibit A, regarding regulatory matters (the
"Regulatory Sideletter"), including, without limitation, voting to approve
amending the Operating Agreement, the Bylaws or this Agreement in a manner
reasonably acceptable to the Members, the JPMP Holder or any Affiliate of the
JPMP Holder entitled to make such request pursuant to the Regulatory Sideletter
in order to remedy a Regulatory Problem (as defined in the Regulatory
Sideletter). Anything contained in this Section 3.9 to the contrary
notwithstanding, no Member shall be required under this Section 3.9 to take any
action that would adversely affect in any material respect such Member's rights
under this Agreement or as a member of the Company.
(b) The Company and each Member agree not to amend or waive the
voting or other provisions of the Operating Agreement, the Bylaws or this
Agreement if such amendment or waiver would cause the JPMP Holder or any of its
Affiliates to have a Regulatory Problem. The JPMP Holder agrees to notify the
Company as to whether or not it would have a Regulatory Problem promptly after
the JPMP Holder has notice of such amendment or waiver.
3.10 ACCESS TO RECORDS AND PROPERTIES.
The Company shall permit any Member (other than Other Members) and its
employees, members, stockholders, partners, counsel and other authorized
representatives (collectively, the "Authorized Representatives"), during normal
business hours and upon reasonable advance notice (which shall not be less than
one Business Day's prior notice) to (a) visit and inspect the assets and
properties of the Company and its direct and indirect Subsidiaries, (b) examine
the books of accounts and records of the Company and its direct and indirect
Subsidiaries, and make copies of such records and (c) discuss all aspects of the
Company and its direct and indirect Subsidiaries with any officers, employees or
accountants of the Company or any of its direct and indirect Subsidiaries;
provided, however, that such investigation shall not unreasonably interfere with
the operations of the Company and its direct and indirect Subsidiaries. The
Company will instruct its accountants to discuss such aspects of the financial
condition of the Company and its Subsidiaries with any such Member and its
Authorized Representatives as such Member may reasonably request, and to permit
such Member and its Authorized Representatives to inspect, copy and make
extracts from such financial statements, analyses, and other documents and
information (including electronically stored documents and information) prepared
by the accountants with respect to the Company or any of its direct and indirect
Subsidiaries as such Member may reasonably request.
3.11 INFORMATION RIGHTS.
The Company shall provide each Investor who owns at least 5% of the Units
originally purchased by it:
32
(a) Within 90 days after the end of each fiscal year, an audited
balance sheet of Aurora as of the end of such fiscal year, and an audited
statement of income and statement of cash flows of Aurora for such year, in each
case prepared in accordance with GAAP and setting forth in comparative form the
figures for the previous fiscal year, all in reasonable detail, and audited by
Aurora's independent public accountants.
(b) Within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, unaudited balance sheets of Aurora as of the end
of such fiscal quarter, unaudited statements of income, and unaudited statements
of cash flows for such fiscal quarter and for the current fiscal year to date.
Such financial statements shall be prepared in accordance with GAAP (other than
omission of accompanying notes and subject to normal year-end adjustments) and
compared with both the actual results from the corresponding quarter of the
previous fiscal year and the budget (including any reforecasts) for the current
fiscal year, all in reasonable detail and certified by the principal financial
or accounting officer of Aurora.
(c) Within 30 days after the end of each month of each fiscal year,
unaudited balance sheets of Aurora as of the end of such month, unaudited
statements of income, and unaudited statements of cash flows for such month and
for the current fiscal year to date. Such financial statements shall be prepared
in accordance with GAAP (other than omission of accompanying notes and subject
to normal year-end adjustments) and compared with both the actual results from
the corresponding month of the previous fiscal year and the budget (including
any reforecasts) for the current fiscal year, all in reasonable detail and
certified by the principal financial or accounting officer of Aurora.
(d) Promptly at the end of each month of each fiscal year, the
management report for such month.
(e) Not less than 30 days prior to the beginning of each fiscal
year, a copy of an annual budget with line items compared to the previous year's
budget (the "Operating Budget") and an annual strategic plan for such fiscal
year (the "Strategic Plan").
3.12 CERTAIN MATTERS RELATING TO TRANSFERS.
Upon any Transfer (or series of Transfers) of Units that involves the
Class A Units and another class of Units, the Members agree to share the
proceeds related to such Transfer in the following manner: (i) in the event that
the proposed purchase price per Class A Unit exceeds $1,000 per Unit (as
adjusted for splits, combinations, reclassifications and the like), the proceeds
shall be shared ratably (based on number) among the Participating Units included
in such Transfer; and (ii) in the event that the proposed purchase price per
Class A Unit does not exceed $1,000 per Unit (as adjusted for splits,
combinations, reclassifications and the like), the Company shall promptly engage
the Appraiser (as defined in the Operating Agreement) to determine the fair
market value of the Class B Units and Class C Units (based upon a hypothetical
liquidation of the Company at such time in accordance with Section 18 of the
Operating Agreement, and without giving effect to any minority or illiquidity
discounts) and the proceeds shall be shared among the Participating Units
included in such Transfer in proportion to their respective Fair Market Values
as so determined. The Company shall use commercially reasonable efforts to cause
such Appraiser to provide written notice of such determination of the
33
Fair Market Value to the Company within 15 days of its engagement. The
determination by such Appraiser of such Fair Market Value, as set forth in the
written notice described in the preceding sentence, will be final, binding and
conclusive on the parties. The fees, costs and expenses of such Appraiser shall
be paid by the Company.
3.13 REQUIRED IPO AND IPO LIQUIDATION.
(a) If a Sale of the Company, an Aurora Sale or an IPO (as defined
in the Registration Rights Agreement) shall not have occurred prior to the
seventh anniversary of the Effective Date, Bondholder Trust shall have the right
to deliver a written notice to the Company requiring the Company to commence
using its best efforts to consummate an IPO (the "Required IPO"), and specifying
the percentage of Bondholder Trust's Registrable Shares (as defined in the
Registration Rights Agreement) that Bondholder Trust wishes to have registered
in connection with the Required IPO. Such efforts shall include promptly
engaging an investment bank selected by the Bondholder Trust to determine the
feasibility and terms and conditions of the Required IPO. Following a
determination by such investment bank that the Required IPO is feasible,
Bondholder Trust shall give written notice to the Company whether or not the
Company shall continue to use its best efforts to continue with the process of
the Required IPO, and upon receipt of a notice directing the Company to continue
with such process, the Company shall use its best efforts to effectuate the
Required IPO by, among other things, retaining an investment bank selected by
Bondholder Trust to act as managing underwriter, retaining advisors and other
professionals (such as the Company's accountants and lawyers) to commence
preparation of a registration statement and prospectus, and proceeding with
other reasonable and customary activities designed to further the consummation
of the Required IPO.
(b) Immediately prior to the consummation of the Required IPO,
subject to Section 2.5(c), the Company shall be liquidated (the "IPO
Liquidation") and the shares of common stock of Crunch Holding (the "Crunch
Holding Shares") shall be distributed by the Company to each holder of Units
(including Bondholder Trust) outstanding on the date of the IPO Liquidation
pursuant to the rights and preferences of the Units as provided in Section 18 of
the Operating Agreement. Upon completion of the IPO Liquidation, this Agreement
shall terminate and be of no further force and effect.
3.14 PINNACLE INDEMNITY.
The JPMP Holder, the JWC Holder and the CDM Holder agree that they will
not pursue for their own account any claim for indemnification under the
Agreement and Plan of Merger, dated as of August 8, 2003, by and among Pinnacle
Foods Holding Corporation, Crunch Holding, Crunch Acquisition Corp. and HMTF PF,
L.L.C. for any Loss (as defined under that agreement) that would adversely
affect the value of Pinnacle, and that any such claim shall be brought instead
by Aurora or Pinnacle; provided, however, that the JPMP Holder, the JWC Holder
and the CDM Holder may pursue for their own account any claim for
indemnification for a Loss incurred directly by the JPMP Holder, the JWC Holder
or the CDM Holder, as the case may be.
34
ARTICLE IV
MISCELLANEOUS
4.1 TERMINATION.
This Agreement shall automatically terminate and be of no further force or
effect as of the Termination Date; provided that, no such termination shall
relieve any party from the completion of performance of any of its obligations
under this Agreement arising on or prior to the Termination Date, including,
without limitation, the obligation to pay the Call Option Price due and payable,
if any, under Section 3.7 hereof.
4.2 LEGEND ON UNIT CERTIFICATES.
Each certificate representing Securities that are subject to this
Agreement shall bear legends substantially in the following form:
"THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH
SECURITIES IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT TO AN
AMENDED AND RESTATED MEMBERS' AGREEMENT DATED AS OF MARCH 19, 2004, AMONG
CRUNCH EQUITY HOLDING, LLC AND CERTAIN HOLDERS OF ITS OUTSTANDING
SECURITIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY
OF CRUNCH EQUITY HOLDING, LLC."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT OR LAWS."
The Company shall make a notation regarding the above restriction in its
books, and no Units shall be Transferred on the books of the Company except in
accordance with this Agreement and the above restriction.
4.3 GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE; WAIVER OF JURY TRIAL.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware, without giving effect to any law or rule that
would cause the laws of any jurisdiction other than the State of Delaware to be
applied.
35
ANY ACTION OR PROCEEDING AGAINST THE PARTIES RELATING IN ANY WAY TO THIS
AGREEMENT MAY BE BROUGHT AND ENFORCED IN THE COURTS OF THE STATE OF NEW YORK OR
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, TO THE
EXTENT SUBJECT MATTER JURISDICTION EXISTS THEREFOR, AND THE PARTIES IRREVOCABLY
SUBMIT TO THE JURISDICTION OF BOTH SUCH COURTS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE OF ANY SUCH ACTION OR PROCEEDING IN THE COURTS OF THE STATE OF NEW YORK
LOCATED IN NEW YORK COUNTY OR THE SOUTHERN DISTRICT OF NEW YORK AND ANY CLAIM
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
ANY INCONVENIENT FORUM. ANY JUDGMENT MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION THEREOF.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
4.4 SEVERABILITY.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
4.5 ASSIGNMENTS; SUCCESSORS AND ASSIGNS.
Except in connection with any Transfer of Units in accordance with this
Agreement and the Operating Agreement, the rights of each party under this
Agreement may not be assigned. This Agreement shall bind and inure to the
benefit of the parties and their respective successors, permitted assigns, legal
representatives and heirs.
4.6 AMENDMENTS; WAIVERS.
Subject to Section 2.5, this Agreement may only be modified or amended,
and provisions hereof may be waived, by an instrument in writing signed by the
Company and a Super Majority in Interest of Members provided, however, that: (i)
without the prior written consent of the CDM Holder, the following provisions
shall not be amended or modified: Sections 2.1(b)(iii), 2.1(e), 2.2, 2.3,
2.4(b), 2.5(b), 2.5(c), 3.6, and 3.7; (ii) any amendment, modification or waiver
36
that would adversely affect the rights or obligations of any Member, in its
capacity as a Member, without similarly affecting the rights or obligations
hereunder of all Members, shall not be effective as to such Member without its
prior written consent; and (iii) the Company shall automatically amend Annex I
hereto without the consent of a Super Majority in Interest of Members and
distribute such amended Annex I to each of the Members upon any change in any
Member's information thereon, such as a change in the Member's notice
information and a Transfer of Units by a Member in accordance with this
Agreement and the addition of Future Members in accordance with Section 3.1. Any
waiver of any provision of this Agreement requested by any party hereto must be
granted in advance, in writing by the party granting such waiver.
4.7 NOTICES.
All notices, requests, consents and other communications hereunder to any
party shall be deemed to be sufficient if contained in a written instrument
delivered in person or sent by telecopy, nationally-recognized overnight courier
or first class registered or certified mail, return receipt requested, postage
prepaid, addressed to such party at the address set forth below or such other
address as may hereafter be designated in writing by such party to the other
parties:
(i) if to the Company, to:
Crunch Equity Holding, LLC
c/o Pinnacle Foods Holding Corporation
▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
With a copy to the Investors to their
respective addresses set forth on Annex I
hereto:
(ii) if to the Members, to their respective addresses set
forth on Annex I hereto.
All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery (and, if such date is not a Business
Day, then on the next Business Day), (b) in the case of dispatch by
nationally-recognized overnight courier, on the next Business Day following such
dispatch and (c) in the case of mailing, on the third Business Day after the
posting thereof.
4.8 HEADINGS.
The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be a part of this
Agreement.
37
4.9 NOUNS AND PRONOUNS.
Whenever the context may require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
names and pronouns shall include the plural and vice versa.
4.10 APPROVALS.
When any reference is made herein to an action to be taken or consent or
approval to be granted by the JPMP Holder or the JWC Holder, the holder or
holders of a majority of the Interests then held by the JPMP Holder or the JWC
Holder, respectively, shall be sufficient to cause such action to be taken or
such consent or approval to be granted.
4.11 EXPENSES.
The Company shall reimburse each of the JPMP Holder, the JWC Holder, the
CDM Holder and Bondholder Trust for its respective out-of-pocket expenses,
including any fees, disbursements and other charges of counsel, incurred in
connection with the formation of the Company (including the negotiation and
completion of this Agreement, the Operating Agreement and the Bylaws) and the
formation of the CDM Holder upon presentation of appropriate documentation
therefor, unless such expenses, fees, disbursements and other charges have been
reimbursed by Pinnacle Holding.
4.12 ENTIRE AGREEMENT.
This Agreement, the Operating Agreement and the Bylaws contain the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings with respect to such subject
matter, including, without limitation, the Letter Agreement. The parties hereto
represent and warrant that there are no other agreements or understandings
regarding any of the subject matter hereof other than as set forth herein and
covenant not to enter into any such agreements or understandings after the date
hereof except pursuant to an amendment, modification or waiver of the provisions
of this Agreement.
4.13 COUNTERPARTS.
This Agreement may be executed in any number of original or facsimile
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
4.14 FURTHER ASSURANCES.
Each party hereto shall do and perform or cause to be done and performed
all such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments, and documents as any other party hereto
reasonably may request in order to carry out the provisions of this Agreement
and the consummation of the transactions contemplated hereby.
[Remainder of page intentionally left blank]
38
IN WITNESS WHEREOF, the parties hereto have executed this Members'
Agreement on the date first written above.
THE COMPANY:
CRUNCH EQUITY HOLDING, LLC
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-Signature Page to Members' Agreement-
IN WITNESS WHEREOF, the parties
hereto have executed this Members'
Agreement on the date first
written above.
INVESTORS:
▇.▇. ▇▇▇▇▇▇ PARTNERS (BHCA), L.P.
By: JPMP MASTER FUND MANAGER, L.P.,
its general partner
By: JPMP CAPITAL CORP.,
its general partner
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ PARTNERS GLOBAL
INVESTORS, L.P.
By: JPMP GLOBAL INVESTORS, L.P.,
its general partner
By: JPMP CAPITAL CORP.,
its general partner
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-Signature Page to Members' Agreement-
IN WITNESS WHEREOF, the parties hereto have executed this Members'
Agreement on the date first written above.
INVESTORS:
▇.▇. ▇▇▇▇▇▇ PARTNERS GLOBAL
INVESTORS (CAYMAN), L.P.
By: JPMP GLOBAL INVESTORS, L.P.,
a general partner
By: JPMP CAPITAL CORP.,
its general partner
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ PARTNERS GLOBAL
INVESTORS A, L.P.
By: JPMP GLOBAL INVESTORS, L.P.,
a general partner
By: JPMP CAPITAL CORP.,
its general partner
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇▇ PARTNERS GLOBAL
INVESTORS (CAYMAN) II, L.P.
By: JPMP GLOBAL INVESTORS, L.P.,
a general partner
By: JPMP CAPITAL CORP.,
its general partner
By: /S/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-Signature Page to Members' Agreement-
IN WITNESS WHEREOF, the parties hereto have executed this Members'
Agreement on the date first written above.
INVESTORS:
▇.▇. CHILDS EQUITY PARTNERS III, L.P.
By: ▇.▇. Childs Advisors III, L.P.,
as general partner
By: ▇.▇. Childs Associates, L.P.,
as general partner
By: ▇.▇. Childs Associates, Inc.,
as general partner
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
JWC FUND III CO-INVEST, LLC
By: ▇.▇. Childs Associates, L.P., as manager
By: ▇.▇. Childs Associates, Inc., as
general partner
By: /S/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
-Signature Page to Members' Agreement-
IN WITNESS WHEREOF, the parties hereto have executed this Members'
Agreement on the date first written above.
INVESTORS:
CDM INVESTOR GROUP LLC
By: /S/ C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
-Signature Page to Members' Agreement-
IN WITNESS WHEREOF, the parties hereto have executed this Members'
Agreement on the date first written above.
INVESTORS:
CRUNCH EQUITY VOTING TRUST
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
-Signature Page to Members' Agreement-
IN WITNESS WHEREOF, the parties hereto have executed this Members'
Agreement on the date first written above.
INVESTORS:
CO-INVESTMENT PARTNERS, L.P.
By: CIP Partners LLC, Managing Member
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Member
-Signature Page to Members' Agreement-
ANNEX I
SCHEDULE OF MEMBERS
▇.▇. ▇▇▇▇▇▇ PARTNERS (BHCA), L.P.
J.P. ▇▇▇▇▇▇ PARTNERS GLOBAL INVESTORS, L.P.
J.P. ▇▇▇▇▇▇ PARTNERS GLOBAL INVESTORS (CAYMAN), L.P.
J.P. ▇▇▇▇▇▇ PARTNERS GLOBAL INVESTORS (CAYMAN ) II, L.P.
J.P. ▇▇▇▇▇▇ PARTNERS GLOBAL INVESTORS A, L.P.
IN EACH CASE:
C/O ▇.▇. ▇▇▇▇▇▇ PARTNERS
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: OFFICIAL NOTICES CLERK
FBO: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
O'Melveny & ▇▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇.▇. CHILDS EQUITY PARTNERS III, L.P.
JWC FUND III CO-INVEST, LLC
IN EACH CASE:
C/O ▇.▇. CHILDS ASSOCIATES, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
ATTENTION: ▇▇▇▇ ▇. ▇▇▇▇▇▇
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CDM INVESTOR GROUP LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CRUNCH EQUITY VOTING TRUST
C/O OAKTREE CAPITAL MANAGEMENT
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇▇▇ ▇▇▇▇▇
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Debevoise & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CO-INVESTMENT PARTNERS, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇ ▇. ▇▇▇▇▇
TELEPHONE: (▇▇▇) ▇▇▇-▇▇▇▇
FACSIMILE: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇