[K&E Draft -- 12/21/2000]
SECURITYHOLDERS AGREEMENT
Dated _________ __, 2001
Among
M-FOODS INVESTORS, LLC
AND
THE OTHER PARTIES HERETO
Table of Contents
Page
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE PARTIES......................... 1
1.1 Representations and Warranties of the Company.................... 1
1.2 Representations and Warranties of the Securityholders............ 1
ARTICLE II
VOTING AGREEMENTS..................................................... 2
2.1 Election of Management Committee Members and Directors........... 2
2.2 Other Voting Matters............................................. 3
ARTICLE III
TRANSFERS OF SECURITIES............................................... 4
3.1 Restrictions on Transfer of Employee Securities.................. 4
3.2 Restrictions on Transfers of Vestar Securities................... 4
3.3 Securities Act Compliance........................................ 7
3.4 Certain Transferees Bound by Agreement........................... 7
3.5 Transfers in Violation of Agreement.............................. 7
ARTICLE IV
TAKE-ALONG RIGHTS ON APPROVED SALE.................................... 8
4.1 Take-Along Rights................................................ 8
ARTICLE V
REGISTRATION RIGHTS................................................... 9
5.1 Demand Registrations............................................. 9
5.2 Incidental Registration.......................................... 11
5.3 Holdback Agreements.............................................. 13
5.4 Registration Procedures.......................................... 13
5.5 Registration Expenses............................................ 16
5.6 Indemnification; Contribution.................................... 17
5.7 Rule 144......................................................... 20
5.8 Underwritten Registrations....................................... 20
5.9 No Inconsistent Agreements....................................... 20
ARTICLE VI
PRE-EMPTIVE RIGHTS.................................................... 20
6.1 Issuance of New Securities to Affiliates......................... 20
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ARTICLE VII
AMENDMENT AND TERMINATION............................................. 22
7.1 Amendment and Waiver............................................. 22
7.2 Termination of Certain Provisions................................ 22
7.3 Termination of Agreement......................................... 22
7.4 Termination as to a Party........................................ 22
ARTICLE VIII
MISCELLANEOUS......................................................... 23
8.1 Certain Defined Terms............................................ 23
8.2 Legends.......................................................... 29
8.3 Severability..................................................... 30
8.4 Entire Agreement................................................. 30
8.5 Successors and Assigns........................................... 31
8.6 Counterparts..................................................... 31
8.7 Remedies......................................................... 31
8.8 Notices.......................................................... 31
8.9 Governing Law.................................................... 32
8.10 Descriptive Headings............................................. 33
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SECURITYHOLDERS AGREEMENT
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THIS SECURITYHOLDERS AGREEMENT (this "Agreement") is entered into as
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of _________ __, 2001 by and among (i) M-Foods Investors, LLC, a Delaware
limited liability company (the "Company"), (ii) Vestar Capital Partners IV,
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L.P., a Delaware limited partnership, Vestar/M-Foods, LLC, a Delaware limited
liability company, and any other investment fund managed by Vestar Capital
Partners that at any time acquires Securities and executes a counterpart of this
Agreement or otherwise agrees to be bound by this Agreement (collectively,
"Vestar"), (iii) Marathon Fund Limited Partnership IV, a Delaware limited
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partnership ("Marathon"), (iv) the ▇▇▇▇▇▇▇ Family Securityholders (as defined
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herein), (v) the initial parties to this Agreement who are identified as
Employees on the signature page hereto (each, an "Employee," collectively, the
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"Employees"), and (vi) each other holder of Securities who hereafter executes a
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separate agreement to be bound by the terms hereof (which holder shall be
treated similar to a holder of Marathon Securities except that such holder shall
not be entitled to demand registration rights) (Vestar, Marathon, the ▇▇▇▇▇▇▇
Family Securityholders, the Employees and each other Person that is or may
become a party to this Agreement as contemplated hereby are sometimes referred
to herein collectively as the "Securityholders" and individually as a
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"Securityholder"). Certain capitalized terms used herein are defined in Section
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8.1.
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The parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE PARTIES
1.1 Representations and Warranties of the Company. The Company
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hereby represents and warrants to the Securityholders that as of the date of
this Agreement:
(a) it is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, it has
full power and authority to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby, and the execution, delivery and
performance by it of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary limited liability
company action;
(b) this Agreement has been duly and validly executed and delivered
by the Company and constitutes a legal and binding obligation of the Company,
enforceable against the Company in accordance with its terms; and
(c) the execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby will not, with or without the giving of notice or lapse of time, or both
(i) violate any provision of law, statute, rule or regulation to which the
Company is subject, (ii) violate any order, judgment or decree applicable to the
Company or (iii) conflict with, or result in a breach or default under, any term
or condition of the Company's organizational documents or any agreement or
instrument to which the Company is a party or by which it is bound.
1.2 Representations and Warranties of the Securityholders. Each
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Securityholder (as to himself or itself only) represents and warrants to the
Company and the other Securityholders that, as of the time such Securityholder
becomes a party to this Agreement:
(a) this Agreement (or the separate joinder agreement executed by
such Securityholder) has been duly and validly executed and delivered by such
Securityholder, and this Agreement constitutes a legal and binding obligation of
such Securityholder, enforceable against such Securityholder in accordance with
its terms; and
(b) the execution, delivery and performance by such Securityholder
of this Agreement (or any joinder to this Agreement, if applicable) and the
consummation by such Securityholder of the transactions contemplated hereby (and
thereby, if applicable) will not, with or without the giving of notice or lapse
of time, or both, (i) violate any provision of law, statute, rule or regulation
to which such Securityholder is subject, (ii) violate any order, judgment or
decree applicable to such Securityholder or (iii) conflict with, or result in a
breach or default under, any term or condition of any agreement or other
instrument to which such Securityholder is a party or by which such
Securityholder is bound.
ARTICLE II
VOTING AGREEMENTS
2.1 Election of Management Committee Members and Directors.
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(a) Each Person, other than the Company, that is a party to this
Agreement hereby agrees that such Person will vote, or cause to be voted, all
voting securities of the Company over which such Person has the power to vote or
direct the voting, and will take all other necessary or desirable action within
such Person's control, and the Company will take all necessary and desirable
actions within its control, to cause the authorized number of members or
directors for each of the respective management committees or boards of
directors of the Company and its Subsidiaries to be established at up to nine
directors, and to elect or cause to be elected to the respective management
committees or boards of directors of the Company and each of its Subsidiaries
and cause to be continued in office, the following individuals:
(i) up to five (5) members/directors designated by the Vestar
Majority Holders (the "Vestar Directors");
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(ii) one (1) member/director designated by the Marathon Majority
Holders (the "Marathon Director");
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(iii) one (1) member/director designated by the ▇▇▇▇▇▇▇ Family
Majority Holders (the "▇▇▇▇▇▇▇ Family Director");
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(iv) one (1) member/director, who shall be the chief executive officer
of the Company (the "Management Director"); and
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(v) one (1) member/director designated by the chief executive officer
of the Company; provided that such member/director is not a
member, or former member, of the Company's or its Subsidiaries'
management or an employee or officer or former employee or
officer of the Company or its Subsidiaries (the "CEO Designated
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Director").
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(b) If at any time either the Vestar Majority Holders, the Marathon
Majority Holders, the ▇▇▇▇▇▇▇ Family Majority Holders or the chief executive
officer of the Company, as the case may be, shall notify the other parties to
this Agreement of their desire to remove, with or without cause, any individual
from a Company or Subsidiary membership/directorship for which such Person or
Persons have designation rights pursuant to paragraph (a) above, all such
parties so notified will vote, or cause to be voted, all voting securities of
the Company and its Subsidiaries over which they have the power to vote or
direct the voting, and shall take all such other actions promptly as shall be
necessary or desirable to cause the removal of such member/director. If the
Management Director ceases to be employed by the Company or its Subsidiaries,
such Management Director and the CEO Designated Director shall be removed
promptly after such time from each board and management committee.
(c) If at any time any Vestar Director, the Marathon Director, the
▇▇▇▇▇▇▇ Family Director or the CEO Designated Director ceases to serve on the
management committee or board of directors of the Company or any Subsidiary of
the Company (whether due to resignation, removal or otherwise), the
Securityholders entitled to designate the Vestar Directors, the Marathon
Director, the ▇▇▇▇▇▇▇ Family Director or the CEO Designated Director as
appropriate, shall be entitled to designate a successor member/director to fill
the vacancy created thereby on the terms and subject to the conditions of
paragraph (a) above. Each Person that is a party hereto agrees to vote, or
cause to be voted, all voting securities of the Company and its Subsidiaries
over which such Person has the power to vote or direct the voting, and shall
take all such other actions as shall be necessary or desirable to cause the
designated successor to be elected to fill such vacancy.
(d) Nothing in this Agreement shall be construed to impair any rights
that the unitholders or stockholders of the Company or any Subsidiary of the
Company may have to remove any director for cause under applicable law, the LLC
Agreement of the Company or the organizational documents of such Subsidiary, as
the case may be. No such removal of an individual designated pursuant to this
Section 2.1 for cause shall affect any of the Securityholders' rights to
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designate a different individual pursuant to this Section 2.1 to fill the
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position from which such individual was removed.
(e) Subject to Section 7.2, the provisions of this Section 2.1 shall
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remain in effect following the first Public Offering.
2.2 Other Voting Matters. In order to effectuate the provisions of
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Sections 2.1, 2.2 and 4.1, each holder of Employee Securities hereby grants to
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, or if ▇▇▇▇▇
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▇. ▇▇▇▇▇▇▇▇▇ shall cease to be the chief executive officer of ▇▇▇▇▇▇▇ Foods,
Inc., to his successor in such position with ▇▇▇▇▇▇▇ Foods, Inc., or if the
chief executive officer of ▇▇▇▇▇▇▇ Foods, Inc. shall be unable to exercise this
proxy due to illness or absence or if the position of chief executive officer of
▇▇▇▇▇▇▇ Foods, Inc. shall be vacant, to the chief financial officer of ▇▇▇▇▇▇▇
Foods, Inc., a proxy to vote at any annual or special meeting of
Securityholders, or to take any action by written consent in lieu of such
meeting with respect to, or to otherwise take action in respect of, all of the
Securities owned or held of record by such holder in connection with the matters
set forth in Sections 2.1 and 2.2 in accordance with the provisions of Sections
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2.1 and 2.2. EACH OF THE PROXIES GRANTED HEREBY IS IRREVOCABLE AND IS COUPLED
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WITH AN INTEREST. To effectuate the provisions of this Section 2, the secretary
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of each of the Company and each Subsidiary of the Company, or if there be no
secretary such other officer or employee of the Company or such Subsidiary as
the management committee or board of directors of the Company or such Subsidiary
may appoint to fulfill the duties of the Secretary, shall not record any vote or
consent or other action contrary to the terms of this Section 2.
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ARTICLE III
TRANSFERS OF SECURITIES
3.1 Restrictions on Transfer of Securities. Prior to the completion
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of the Company's first Public Offering, no holder of Marathon Securities,
▇▇▇▇▇▇▇ Family Securities or Employee Securities may Transfer any Marathon
Securities, ▇▇▇▇▇▇▇ Family Securities or Employee Securities, as the case may
be, except in an Exempt Transfer or otherwise provided by this Agreement.
3.2 Restrictions on Transfers of Vestar Securities.
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(a) Tag-Along Rights. Prior to making any Transfer of Vestar
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Securities (other than a Transfer described in Section 3.2(b)) any holder of
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Vestar Securities proposing to make such a Transfer (for purposes of this
Section 3.2, a "Selling Holder") shall give at least 30 days prior written
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notice to each holder of Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and
Employee Securities (for purposes of this Section 3.2, each an "Other Holder")
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and the Company, which notice (for purposes of this Section 3.2, the "Sale
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Notice") shall identify the type and amount of Vestar Securities to be sold (for
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purposes of this Section 3.2, the "Offered Securities"), describe in reasonable
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detail the terms and conditions of such proposed Transfer and identify each
prospective Transferee. Any of the Other Holders may, within 15 days of the
receipt of the Sale Notice, give written notice (each, a "Tag-Along Notice") to
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the Selling Holder that such Other Holder wishes to participate in such proposed
Transfer upon the terms and conditions set forth in the Sale Notice, which Tag-
Along Notice shall specify the Marathon Securities, ▇▇▇▇▇▇▇ Family Securities
and Employee Securities such Other Holder desires to include in such proposed
Transfer; provided, however, that (1) each Other Holder shall be required, as a
condition to being permitted to sell Marathon Securities, ▇▇▇▇▇▇▇ Family
Securities and Employee Securities pursuant to this Section 3.2(a) in connection
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with a Transfer of Offered Securities, to elect to sell Marathon Securities,
▇▇▇▇▇▇▇ Family Securities and Employee Securities of the same type and class
and in the same relative proportions (which proportions shall be determined on a
unit for unit or, as the case
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may be, share for share basis and on the basis of aggregate liquidation value
with respect to Preferred Units or Stock) as the Securities which comprise the
Offered Securities, (2) no Employee Security that is subject to vesting shall be
entitled to be sold pursuant to this Section 3.2(a) unless such Employee
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Security has fully vested and (3) to exercise its tag-along rights hereunder,
each Other Holder must agree to make to the Transferee the same representations,
warranties, covenants, indemnities and agreements as the Selling Holder agrees
to make in connection with the Transfer of the Offered Securities (except that
in the case of representations and warranties pertaining specifically to, or
covenants made specifically by, the Selling Holder, the Other Holders shall make
comparable representations and warranties pertaining specifically to (and, as
applicable, covenants by) themselves), and must agree to bear his or its ratable
share (which shall be proportionate based on the value of Securities that are
Transferred but shall not exceed the amount of proceeds received in connection
with such Transfer) of all liabilities to the Transferees arising out of
representations, warranties and covenants (other than those representations,
warranties and covenants that pertain specifically to a given Securityholder,
who shall bear all of the liability related thereto), indemnities or other
agreements made in connection with the Transfer. Each Securityholder will bear
(x) its or his own costs of any sale of Securities pursuant to this Section
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3.2(a) and (y) its or his pro-rata share (based upon the relative amount of
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Securities sold) of any of the other costs of any reasonable and customary sale
of Securities pursuant to this Section 3.2(a) to the extent such costs are
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incurred for the benefit of all Securityholders and are not otherwise paid by
the Transferee.
If none of the Other Holders gives the Selling Holder a Tag-Along
Notice prior to the expiration of the 15-day period for giving Tag-Along notices
with respect to the Transfer proposed in the Sale Notice, then (notwithstanding
the first sentence of this Section 3.2(a)) the Selling Holder may Transfer such
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Offered Securities on the terms and conditions set forth, and to or among any of
the Transferees identified (or Affiliates of Transferees identified), in the
Sale Notice at any time within 180 days after expiration of the 15-day period
for giving Tag-Along Notices with respect to such Transfer. Any such Offered
Securities not Transferred by the Selling Holder during such 180-day period will
again be subject to the provisions of this Section 3.2(a) upon subsequent
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Transfer. If one or more Other Holders give the Selling Holder a timely Tag-
Along Notice, then the Selling Holder shall use all reasonable efforts to obtain
the agreement of the prospective Transferee(s) to the participation of the Other
Holders in any contemplated Transfer, on the same terms and conditions as are
applicable to the Offered Securities, and no Selling Holder shall transfer any
of its shares to any prospective Transferee if such prospective Transferee(s)
declines to allow the participation of the Other Holders. If the prospective
Transferee(s) is unwilling or unable to acquire all of the Offered Securities
and all of the Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and Employee
Securities specified in a timely Tag-Along Notice upon such terms, then the
Selling Holder may elect either to cancel such proposed Transfer or to allocate
the maximum number of each class of Securities that the prospective Transferees
are willing to purchase (the "Allocable Shares") among the Selling Holder and
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the Other Holders giving timely Tag-Along Notices as follows (it being
understood that the prospective Transferees shall be required to purchase
Securities of the same class on the same terms and conditions taking into
account the provisions of clause (1) of the first paragraph of this Section
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3.2(a), and to consummate such Transfer on those terms and conditions):
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(i) each participating Securityholder (including the Selling Holder)
shall be entitled to sell a number of shares of each class of
Securities (taking into
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account the provisions of clause (1) of the first paragraph of
this Section 3.2(a)) (not to exceed, for any Other Holder, the
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number of shares of such class of Securities identified in such
Other Holder's Tag-Along Notice) equal to the product of (A)
the number of Allocable Shares of such class of Securities and
(B) a fraction, the numerator of which is such Securityholder's
Ownership Percentage of such class of Securities and the
denominator of which is the aggregate Ownership Percentage for
all participating Securityholders of such class of Securities;
and
(ii) if after allocating the Allocable Shares of any class of
Securities to such Securityholders in accordance with clause
(i) above, there are any Allocable Shares of such class that
remain unallocated, then they shall be allocated (in one or
more successive allocations on the basis of the allocation
method specified in clause (i) above) among the Selling Holder
and each such Other Holder that has elected in its Tag-Along
Notice to sell a greater number of shares of such class of
Securities than previously has been allocated to it pursuant to
clause (i) and this clause (ii) (all of whom (but no others)
shall, for purposes of clause (i) above, be deemed to be the
participating Securityholders) until all such Allocable Shares
have been allocated in accordance with this clause (ii).
(b) Excluded Transfers. The rights and restrictions contained in
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Section 3.2(a) shall not apply with respect to any of the following Transfers of
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Securities:
(i) any Transfer of Vestar Securities in a Public Sale;
(ii) any Transfer of Vestar Securities to and among the partners of
Vestar and the partners, securityholders and employees of such
partners (subject to compliance with Sections 3.3 and 3.4);
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(iii) any Transfer of Vestar Securities in accordance with Section
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4.1;
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(iv) any Transfer of Vestar Securities incidental to the exercise,
conversion or exchange of such securities in accordance with
their terms, any combination of shares (including any reverse
stock split) or any recapitalization, reorganization or
reclassification of, or any merger or consolidation involving,
the Company;
(v) any Transfer of Vestar Securities to employees or directors of,
or consultants to, any of the Company and its Subsidiaries; and
(vi) any Transfer constituting an Exempt Individual Transfer.
(c) Excluded Securities. No Securities that have been transferred
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by the Selling Holder or an Other Holder in a Transfer pursuant to the
provisions of Section 3.2(a) ("Excluded
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Securities") shall be subject again to the restrictions set forth in Section
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3.2(a), nor shall any Securityholder holding Excluded Securities be entitled to
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exercise any rights as an Other Holder under Section 3.2(a) with respect to such
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Excluded Securities, and no Excluded Securities held by a Selling Holder or any
Other Holder shall be counted in determining the respective participation rights
of such Holders in a Transfer subject to Section 3.2(a).
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(d) Upon the occurrence of any event which gives rise to a
Securityholder's ability or requirement to transfer (including by operation of
law) such Securityholder's interests in the Company or a Subsidiary of the
Company to a third party in exchange for consideration pursuant to this
Agreement, at the election of such Securityholder, the Company shall take, and
shall cause its Subsidiaries to take, all actions necessary to convert
Securities then held by such Securityholder into the appropriate type of
security to permit the Securityholder to transfer such Securities to such third
party.
(e) The provisions of this Section 3.2 shall remain in effect
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following the first Public Offering.
3.3 Securities Act Compliance. No Securities may be transferred by a
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Securityholder (other than pursuant to an effective registration statement under
the Securities Act) unless such Securityholder first delivers to the Company an
opinion of counsel, which opinion and counsel shall be reasonably satisfactory
to the Company, to the effect that such Transfer is not required to be
registered under the Securities Act.
3.4 Certain Transferees Bound by Agreement. Subject to compliance
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with the other provisions of this Article III, any Securityholder may Transfer
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any Securities held by such Securityholder in accordance with applicable law;
provided, however, that if the Transfer is not made pursuant to a Public Sale or
a transaction the consummation of which will cause the termination of this
Agreement pursuant to Article VII, then the Transferor of such Security shall
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first deliver to the Company a written agreement of the proposed Transferee
(excluding a Transferee that is a Limited Partner) to become a Securityholder
and to be bound by the terms of this Agreement (unless such proposed Transferee
is already a Securityholder). All Marathon Securities, ▇▇▇▇▇▇▇ Family
Securities and Employee Securities will continue to be Marathon Securities,
▇▇▇▇▇▇▇ Family Securities and Employee Securities in the hands of any Transferee
(other than the Company, Vestar or any Transferee in a Public Sale); provided
that Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and Employee Securities
Transferred pursuant to an exercise of tag-along rights as an Other Holder under
Section 3.2(a) shall not be subject to the provisions of Section 3.1 in the
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hands of the Transferee or any subsequent Transferee. All Vestar Securities
will continue to be Vestar Securities in the hands of any Transferee (other than
the Company, Marathon, the ▇▇▇▇▇▇▇ Family Securityholders, the Employees or a
Transferee in a Public Sale).
3.5 Transfers in Violation of Agreement. Any Transfer or attempted
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Transfer of any Securities in violation of any provision of this Agreement shall
be void, and the Company shall not record such Transfer on its books or treat
any purported transferee of such Securities as the owner of such Securities for
any purpose.
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ARTICLE IV
TAKE-ALONG RIGHTS ON APPROVED SALE
4.1 Take-Along Rights.
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(a) If Vestar elects to consummate, or to cause the Company to
consummate, a transaction constituting a Sale of the Company, Vestar shall
notify the Company and the other Securityholders in writing of that election,
the other Securityholders will consent to and raise no objections to the
proposed transaction, and the Securityholders and the Company will take all
other actions reasonably necessary or desirable to cause the consummation of
such Sale of the Company on the terms proposed by Vestar. Without limiting the
foregoing, (i) if the proposed Sale of the Company is structured as a sale of
assets or a merger or consolidation, or otherwise requires equityholder
approval, the Securityholders and the Company will vote or cause to be voted all
Securities that they hold or with respect to which such Securityholder has the
power to direct the voting and which are entitled to vote on such transaction in
favor of such transaction and will waive any appraisal rights which they may
have in connection therewith and (ii) if the proposed Sale of the Company is
structured as or involves a sale or redemption of Securities, the
Securityholders will agree to sell their pro-rata share of the Securities being
sold in such Sale of the Company on the terms and conditions approved by Vestar,
and the Securityholders will execute any merger, asset purchase, security
purchase, recapitalization or other sale agreement approved by Vestar in
connection with such Sale of the Company.
(b) The obligations of the Securityholders with respect to the Sale
of the Company are subject to the satisfaction of the following conditions: (i)
upon the consummation of the Sale of the Company, all of the holders of a
particular class or series of Securities shall receive the same form and amount
of consideration per share, unit or amount of Securities, or if any holders of a
particular class or series of Securities are given an option as to the form and
amount of consideration to be received, all holders of such class or series will
be given the same option and (ii) all holders of rights without regard to
vesting or exercise restrictions to acquire a particular class or series of
Securities will be given an opportunity to either (A) exercise such rights prior
to the consummation of the Sale of the Company and participate in such sale as
holders of such Securities or (B) upon the consummation of the Sale of the
Company, receive in exchange for such rights consideration equal to the amount
determined by multiplying (1) the same amount of consideration per share, unit
or amount of Securities received by the holders of such type and class of
Securities in connection with the Sale of the Company less the exercise price
per share, unit or amount of such rights to acquire such Securities by (2) the
number of shares, units or aggregate amount of Securities represented by such
rights.
(c) Each Securityholder will bear its or his pro-rata share (based
upon the relative amount of Securities sold) of the reasonable and customary
costs of any sale of Securities pursuant to a Sale of the Company to the extent
such costs are incurred for the benefit of all Securityholders and are not
otherwise paid by the Company or the acquiring party (it being understood that
the reasonable and documented legal fees of one counsel for the holders of
Employee Securities up to a cap as determined by the Company's management
committee prior to the Sale of the Company
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shall be deemed costs for the benefit of all Securityholders). Costs incurred by
or on behalf of a Securityholder for its or his sole benefit will not be
considered costs of the transaction hereunder. In the event that any transaction
that Vestar elects to consummate or cause to be consummated pursuant to this
Section 4.1 is not consummated for any reason, the Company will reimburse Vestar
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for all actual and reasonable expenses paid or incurred by Vestar in connection
therewith.
(d) Notwithstanding any provision in this Agreement to the contrary,
Vestar Capital Partners shall be entitled to be paid customary and reasonable
fees by the Company for any investment banking services provided by it in
connection with a Sale of the Company. The provisions of this Section 4.1 shall
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remain in effect following the first Public Offering.
(e) In the event of a sale or exchange by the Securityholders of all
or substantially all of the Securities held by the Securityholders (whether by
sale, merger, recapitalization, reorganization, consolidation, combination or
otherwise), each Securityholder shall receive in exchange for the Securities
held by such Securityholder the same portion of the aggregate consideration from
such sale or exchange that such Securityholder 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 LLC
Agreement as in effect immediately prior to such sale or exchange. Each
Securityholder shall take all necessary or desirable actions in connection with
the distribution of the aggregate consideration from such sale or exchange as
requested by the Company.
ARTICLE V
REGISTRATION RIGHTS
5.1 Demand Registrations.
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(a) Requests for Registration. Subject to the provisions of this
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Article V, the holders of a majority of Vestar Securities that constitute
---------
Registrable Securities shall have the right (the "Vestar Demand Right"), the
-------------------
holders of a majority of Marathon Securities that constitute Registrable
Securities shall have the right (the "Marathon Demand Right") and the holders of
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a majority of ▇▇▇▇▇▇▇ Family Securities that constitute Registrable Securities
shall have the right (the "▇▇▇▇▇▇▇ Family Demand Right"), in each case, to
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request registration under the Securities Act of all or any portion of the
Registrable Securities held by such Securityholders (in each case, referred to
herein as the "Requesting Holders") by delivering a written notice to the
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principal business office of the Company, which notice identifies the Requesting
Holders and specifies the number of Registrable Securities to be included in
such registration (the "Registration Request"). Subject to the restrictions set
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forth in Section 5.1(d), the Company will give prompt written notice of such
--------------
Registration Request (the "Registration Notice") to all other holders of
-------------------
Registrable Securities and will thereupon use its commercially reasonable
efforts to effect the registration (a "Demand Registration") under the
-------------------
Securities Act on any form available to the Company of:
(i) the Registrable Securities requested to be registered by the
Requesting Holders;
-9-
(ii) all other Registrable Securities of the same type and class
which the Company has received a written request to register
within 30 days after the Registration Notice is given and any
securities of the Company proposed to be included in such
registration by the Company for its own account; and
(iii) any securities of the Company proposed to be included in such
registration by the holders of registration rights granted
other than pursuant to this Agreement ("Other Registration
------------------
Rights").
------
(b) Preservation of Demand Registration. A registration undertaken
-----------------------------------
by the Company at the request of the Requesting Holder will not count as a
Demand Registration:
(i) if, pursuant to the Vestar Demand Right, the Marathon Demand
Right or the ▇▇▇▇▇▇▇ Family Demand Right the Requesting Holders
fail to register and sell at least 75% of the Registrable
Securities requested to be included in such registration by
them, unless such failure results from any act of, or failure
to act by, any of the Requesting Holders (provided that if the
--------
Requesting Holders withdraw their Registration Request prior to
the time the registration statement therefor is declared
effective and promptly reimburse the Company for all
Registration Expenses incurred by the Company in connection
with effecting such registration, such Registration Request
shall not count as a Demand Registration); or
(ii) if the Requesting Holders withdraw a Registration Request (A)
upon the determination of the management committee or, as the
case may be, board of directors of the Company to postpone the
filing or effectiveness of a Registration Statement pursuant to
Section 5.1(d) or (B) within 10 days of receiving notice from
--------------
the Company of its intent to exercise its Priority Right in
connection with such registration.
(c) Priority on Demand Registration. If the sole or managing
-------------------------------
underwriter of a Demand Registration advises the Company in writing that in its
opinion the number of Registrable Securities and other securities requested to
be included exceeds the number of Registrable Securities and other securities
which can be sold in such offering without adversely affecting the distribution
of the securities being offered, the price that will be paid in such offering or
the marketability thereof, the Company will include in such registration the
greatest number of (i) Registrable Securities proposed to be registered by the
holders thereof, (ii) securities having Other Registration Rights that are pari
passu with the demand rights granted in respect of Registrable Securities
hereunder proposed to be registered by the holders thereof and (iii) securities
proposed to be registered by the Company for its own account which in the
opinion of such underwriters can be sold in such offering without adversely
affecting the distribution of the securities being offered, the price that will
be paid in such offering or the marketability thereof, ratably among the holders
of Registrable Securities, the holders of such Other Registration Rights and the
Company, based (A) as between the Company and such holders requesting
registration, on the respective amounts of
-10-
securities requested to be registered and (B) as among the holders requesting
registration, on the respective amounts of Registrable Securities (whether
requested to be registered pursuant to Section 5.1 or 5.2) and securities
------------------
subject to such Other Registration Rights, as the case may be, held by each such
holder; provided, however, that the Company shall have the right (the "Priority
--------
Right") to receive priority over all holders of Registrable Securities in any
-----
Demand Registration to be effected under this Section 5.1 with respect to
-----------
securities that the Company proposes to include in such registration for its own
account by giving written notice of its election to exercise such Priority Right
to the holders of Registrable Securities requesting registration thereof.
(d) Restrictions on Demand Registrations. Except as otherwise
------------------------------------
provided in this Section 5.1(d), the Company shall be obligated to effect four
--------------
Demand Registrations pursuant to a Vestar Demand Right. The Company shall not
be obligated to effect a Marathon Demand Right or a ▇▇▇▇▇▇▇ Family Demand Right
until after the Company's first Public Offering. Thereafter, the Company shall
be obligated to effect two Marathon Demand Rights and two ▇▇▇▇▇▇▇ Family Demand
Rights. Any Demand Registration requested must be for a firmly underwritten
public offering of Registrable Securities with an expected value of at least $15
million to be managed by an underwriter or underwriters of recognized national
standing selected by the Requesting Holders and reasonably acceptable to the
Company. The Company shall not be obligated to effect a Demand Registration if
after a request is made, the Company has determined in good faith that the
filing of a registration request would require disclosure of material
information which the Company has a bona fide business purpose for preserving as
confidential, the Company shall not be obligated to effect the registration
until the earlier of (A) the date upon which such material information is
disclosed to the public or is no longer material or (B) 120 days after the
Company first makes such good faith determination.
(e) Stock Splits. In connection with any Demand Registration
------------
pursuant to this Section 5.1, each party to this Agreement will vote, or cause
-----------
to be voted, all securities of the Company over which it has the power to vote
or direct the voting to effect any stock split which, in the opinion of the sole
or managing underwriter, is necessary to facilitate the effectiveness of such
Demand Registration.
(f) Other Registration Rights. Except as provided in this Agreement,
-------------------------
the Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company, or any securities convertible or
exchangeable into or exercisable for such securities, without the prior written
consent of the holders of at least a majority of the Registrable Securities;
provided that the Company may grant rights to other Persons to participate in
--------
Incidental Registrations so long as such rights are subordinate to the rights of
the holders of Registrable Securities with respect to such Incidental
Registrations.
5.2 Incidental Registration.
-----------------------
(a) Requests for Incidental Registration. At any time the Company
------------------------------------
proposes to register any shares of Common Stock under the Securities Act (other
than registrations on such form(s) solely for registration of Common Stock in
connection with any employee benefit plan or dividend reinvestment plan or a
merger or consolidation), including registrations pursuant to Section
-------
-11-
5.1(a), whether or not for sale for its own account, the Company will give
------
written notice to each holder of Registrable Securities at least 30 days prior
to the initial filing of such Registration Statement with the SEC of its intent
to file such registration statement and of such holder's rights under this
Section 5.2. Upon the written request of any holder of Registrable Securities
-----------
made within 20 days after any such notice is given (which request shall specify
the Registrable Securities intended to be disposed of by such holder), the
Company will use its commercially reasonable efforts to effect the registration
(an "Incidental Registration") under the Securities Act of all Registrable
-----------------------
Securities which the Company, as the case may be, has been so requested to
register by the holders thereof; provided, however, that if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the Registration Statement filed in connection with such
Incidental Registration (each an "Incidental Registration Statement"), the
---------------------------------
Company shall determine for any reason not to register or to delay registration
of such securities, the Company may, at its election, give written notice of
such determination to each holder of Registrable Securities and, thereupon, (a)
in the case of a determination not to register, the Company shall be relieved of
its obligation to register any Registrable Securities under this Section 5.2 in
-----------
connection with such registration (but not from its obligation to pay the
expenses incurred in connection therewith) and (b) in the case of a
determination to delay registration, the Company shall be permitted to delay
registering any Registrable Securities under this Section 5.2 during the period
-----------
that the registration of such other securities is delayed.
(b) Priority on Incidental Registration. If the sole or managing
-----------------------------------
underwriter of a registration advises the Company in writing that in its opinion
the number of Registrable Securities and other securities requested to be
included exceeds the number of Registrable Securities and other securities which
can be sold in such offering without adversely affecting the distribution of the
securities being offered, the price that will be paid in such offering or the
marketability thereof, the Company will include in such registration the
Registrable Securities and other securities of the Company in the following
order of priority:
(i) first, the greatest number of securities of the Company proposed
to be included in such registration by the Company for its own
account and by holders of Other Registration Rights that have
priority over the incidental registration rights granted to
holders of Registrable Securities under this Agreement, which in
the opinion of such underwriters can be so sold; and
(ii) second, after all securities that the Company proposes to
register for its own account or for the accounts of holders of
Other Registration Rights that have priority over the incidental
registration rights under this Agreement have been included, the
greatest amount of Registrable Securities and securities having
Other Registration Rights that are pari passu with Registrable
Securities, in each case requested to be registered by the
holders thereof which in the opinion of such underwriters can be
sold in such offering without adversely affecting the
distribution of the securities being offered, the price that will
be paid in such offering or the marketability thereof, ratably
among the holders of Registrable Securities (whether requested to
be registered pursuant to Section 5.1 or 5.2) and securities
------------------
subject to such Other Registration Rights
-12-
based on the respective amounts of Registrable Securities and
securities subject to such Other Registration Rights held by each
such holder.
(c) Upon delivering a request under this Section 5.2, a
-----------
Securityholder (excluding Vestar and its Affiliates, but including any other
Permitted Transferee of any thereof) will, if requested by the Company, execute
and deliver a custody agreement and power of attorney in form and substance
reasonably satisfactory to the Company and one of the Vestar Directors with
respect to such Securityholder's Securities to be registered pursuant to this
Section 5.2 (a "Custody Agreement and Power of Attorney"). The Custody Agreement
----------- ---------------------------------------
and Power of Attorney will provide, among other things, that the Securityholder
will deliver to and deposit in custody with the custodian and attorney-in-fact
named therein (who shall be reasonably satisfactory to one of the Vestar
Directors) a certificate or certificates representing such Securities (duly
endorsed in blank by the registered owner or owners thereof or accompanied by
duly executed stock powers in blank) and irrevocably appoint said custodian and
attorney-in-fact with full power and authority to act under the Custody
Agreement and Power of Attorney on such Securityholder's behalf with respect to
the matters specified therein. Such Securityholder also agrees to execute such
other agreements as the Company may reasonably request to further evidence the
provisions of this Section 5.2.
-----------
5.3 Holdback Agreements.
-------------------
(a) Each holder of Registrable Securities agrees that if requested in
connection with an underwritten offering made pursuant to a Registration
Statement for which such Securityholder has registration rights pursuant to this
Article V by the managing underwriter or underwriters of such underwritten
---------
offering, such holder will not effect any Public Sale or distribution of any of
the securities being registered or any securities convertible or exchangeable or
exercisable for such securities (except as part of such underwritten offering),
during the period beginning10 days prior to, and ending 180 days after, the
closing date of each underwritten offering made pursuant to such Registration
Statement (or for such shorter period as to which the managing underwriter or
underwriters may agree, provided that such shorter period applies equally to all
holders of Registrable Securities).
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 7 days prior to and
during the180-day period beginning on the effective date of any underwritten
Demand Registration (or for such shorter period as to which the managing
underwriter or underwriters may agree), except as part of such Demand
Registration or in connection with any employee benefit or similar plan, any
dividend reinvestment plan, or a business acquisition or combination and (ii) to
use all reasonable efforts to cause each holder of at least 1% (on a fully-
diluted basis) of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, which are or may be purchased
from the Company at any time after the date of this Agreement (other than in a
registered offering) to agree not to effect any sale or distribution of any such
securities during such period (except as part of such underwritten offering, if
otherwise permitted).
-13-
5.4 Registration Procedures. In connection with the registration of
-----------------------
any Registrable Securities, the Company shall effect such registrations to
permit the sale of such Registrable Securities in accordance with the intended
method or methods of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on a form available for the sale of the Registrable
Securities by the holders thereof in accordance with the intended method of
distribution thereof, and use its commercially reasonable efforts to cause each
such Registration Statement to become effective;
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for a period ending on the earlier
of (i) 90 days from the effective date and (ii) such time as all of such
securities have been disposed of in accordance with the intended method of
disposition thereof; cause the related prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the Securities Act; and
comply with the provisions of the Securities Act, the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to it with respect
to the disposition of all securities covered by such Registration Statement as
so amended or in such prospectus as so supplemented.
(c) Notify the selling holders of Registrable Securities promptly
(but in any event within 2 business days), and confirm such notice in writing,
(i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any post-
effective amendment, when the same has become effective, (ii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, (iii) if at any time when a prospectus is required by the Securities
Act to be delivered in connection with sales of Registrable Securities the
Company becomes aware that the representations and warranties of the Company
contained in any agreement (including any underwriting agreement) contemplated
by Section 5.4(h) below cease to be true and correct in all material respects,
-------------
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Securities for offer or sale in
any jurisdiction, (v) if the Company becomes aware of the happening of any event
that makes any statement made in such Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in such Registration Statement, prospectus or documents so that, in the
case of such Registration Statement, it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the prospectus, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(d) Use its commercially reasonable efforts to prevent the issuance
of any order suspending the effectiveness of a Registration Statement or of any
order preventing or suspending
-14-
the use of a prospectus or suspending the qualification (or exemption from
qualification) of any of the Registrable Securities for sale in any
jurisdiction, and, if any such order is issued, to obtain the withdrawal of any
such order at the earliest possible moment.
(e) Deliver to each selling holder of Registrable Securities and the
underwriters, if any, without charge, as many copies of the prospectus or
prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such prospectus and each amendment or supplement
thereto by each of the selling holders of Registrable Securities and the
underwriters or agents, if any, in connection with the offering and sale of the
Registrable Securities covered by such prospectus and any amendment or
supplement thereto.
(f) Prior to any public offering of Registrable Securities, to use
its commercially reasonable efforts to register or qualify, and cooperate with
the selling holders of Registrable Securities, the underwriters, if any, the
sales agents and their respective counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or "blue sky"
laws of such jurisdictions within the United States as any selling holder or the
managing underwriters reasonably request in writing; provided, however, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where it is not then so qualified or (ii) take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject.
(g) Upon the occurrence of any event contemplated by Section
-------
5.4(c)(v) above, as promptly as practicable prepare a supplement or post-
---------
effective amendment to the Registration Statement or a supplement to the related
prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities being sold thereunder, such
prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(h) Enter into an underwriting agreement in form, scope and substance
as is customary in underwritten offerings and take all such other actions as are
reasonably requested by the managing or sole underwriter in order to expedite or
facilitate the registration or the disposition of such Registrable Securities,
and in such connection, (i) make such representations and warranties to the
underwriters, with respect to the business of the Company and its subsidiaries,
and the Registration Statement, prospectus and documents, if any, incorporated
or deemed to be incorporated by reference therein, in each case, in form,
substance and scope as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested, (ii) obtain
opinions of counsel to the Company and updates thereof (which counsel and
opinions (in form, scope and substance) shall be reasonably satisfactory to the
managing underwriters), addressed to the underwriters covering the matters
customarily covered in opinions requested in underwritten offerings and such
other matters as may be reasonably requested by underwriters, (iii) obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any Subsidiary
-15-
of the Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each of the underwriters, such letters to
be in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings and (iv) if an
underwriting agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the holders of Registrable
Securities than those set forth in Section 5.6 hereof (or such other provisions
and procedures acceptable to holders of a majority of the Registrable Securities
covered by such Registration Statement and the managing underwriters or agents)
with respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or as and
to the extent required thereunder.
(i) Comply with all applicable rules and regulations of the SEC and
make generally available to its Securityholders earnings statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effectiveness of a Registration
Statement, which statements shall cover said 12-month periods.
(j) (i) Use its commercially reasonable efforts to cause all such
Registrable Securities covered by such registration statement to be listed on
the principal securities exchange on which Common Stock is then listed (if any),
if the listing of such Registrable Securities is then permitted under the rules
of such exchange, or (ii) if no Common Stock is then so listed, use its
commercially reasonable efforts to, either (as the Company may elect) (x) cause
all such Registrable Securities to be listed on a national securities exchange
or (y) secure designation of all such Registrable Securities as a NASDAQ
"national market system security" within the meaning of Rule 11Aa2-1 or, failing
that, to secure NASDAQ authorization for such shares and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such shares with the National Association of
Securities Dealers, Inc. ("NASD").
----
The Company may require each holder of Registrable Securities as to which any
registration is being effected to furnish to the Company such information
regarding such holder and the distribution of such Registrable Securities as the
Company may, from time to time, reasonably request in writing; provided that
--------
such information shall be used only in connection with such registration. The
Company may exclude from such registration the Registrable Securities of any
holder who unreasonably fails to furnish such information promptly after
receiving such request. Each holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section
-------
5.4(c)(ii), 5.4(c)(iv) or 5.4(c)(v), such holder will forthwith discontinue
-----------------------------------
disposition of such Registrable Securities covered by such Registration
Statement or prospectus until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 5.4, or until it is
-----------
advised in writing by the Company that the use of the applicable prospectus may
be resumed, and has received copies of any amendments or supplements thereto.
-16-
5.5 Registration Expenses. Subject to Section 5.1(b)(i), all fees
--------------------- -----------------
and expenses incident to the performance of or compliance with this Agreement by
the Company shall be borne by the Company, whether or not any Registration
Statement is filed or becomes effective, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the NASD in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or "blue sky" laws), (ii) reasonable messenger, telephone and
delivery expenses, (iii) fees and disbursements of counsel for the Company, (iv)
fees and disbursements of all independent certified public accountants referred
to in Section 5.4(h), (v) underwriters' fees and expenses (excluding discounts,
--------------
commissions, or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of the
Registrable Securities), (vi) Securities Act liability insurance, if the Company
so desires such insurance, (vii) internal expenses of the Company, (viii) the
expense of any annual audit, (ix) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange
and (x) the fees and expenses of any Person, including special experts, retained
by the Company. In connection with any Demand Registration or Incidental
Registration hereunder, the Company shall reimburse the holders of the
Registrable Securities being registered in such registration for the reasonable
fees and disbursements of not more than one counsel (together with appropriate
local counsel) chosen by the Requesting Holders, and other reasonable out-of-
pocket expenses of the holders of Registrable Securities incurred in connection
with the registration of the Registrable Securities.
5.6 Indemnification; Contribution.
-----------------------------
(a) Indemnification by the Company. The Company shall, without
------------------------------
limitation as to time, indemnify and hold harmless, to the full extent permitted
by law, each holder of Registrable Securities, the officers, directors, agents
and employees of each of them, each Person who controls each such holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act), the officers, directors, agents and employees of each such controlling
person and any financial or investment adviser (each, an "Indemnified Party"),
-----------------
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, actions or proceedings (whether commenced or threatened)
reasonable costs (including, without limitation, reasonable costs of preparation
and reasonable attorneys' fees) and reasonable expenses (including reasonable
expenses of investigation) (collectively, "Losses"), as incurred, arising out of
------
or based upon (i) any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, prospectus or form of prospectus or in
any amendment or supplements thereto or in any preliminary prospectus, or
arising out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except to the extent that the same arise out of or are based upon
information furnished in writing to the Company by such Indemnified Party or the
related holder of Registrable Securities expressly for use therein or (ii) any
violation by the Company of any federal, state or common law rule or regulation
applicable to the Company and relating to action required of or inaction by the
Company in connection with any such registration; provided, however, that the
-------- -------
Company shall not be liable to any Person who participates as an underwriter in
the offering or sale of Registrable Securities or any other Person, if any, who
controls such underwriters within the meaning of the Securities Act to the
extent that any such Losses arise out of or are based upon an untrue statement
or alleged untrue statement or omission or alleged
-17-
omission made in any preliminary prospectus if (i) such Person failed to send or
deliver a copy of the prospectus with or prior to the delivery of written
confirmation of the sale by such Person to the Person asserting the claim from
which such Losses arise, (ii) the prospectus would have corrected such untrue
statement or alleged untrue statement or such omission or alleged omission, and
(iii) the Company has complied with its obligations under Section 5.4(c). Each
--------------
indemnity and reimbursement of costs and expenses shall remain in full force and
effect regardless of any investigation made by or on behalf of such indemnified
party.
(b) Indemnification by Holders. In connection with any Registration
--------------------------
Statement in which a holder of Registrable Securities is participating, such
holder, or an authorized officer of such holder, shall furnish to the Company in
writing such information as the Company reasonably requests for use in
connection with any Registration Statement or prospectus and agrees, severally
and not jointly, to indemnify, to the full extent permitted by law, the Company,
its directors, officers, agents and employees, each Person who controls the
Company (within the meaning of Section 15 of the Securities Act and Section 20
of the Exchange Act), and the directors, officers, agents or employees of such
controlling persons, from and against all Losses arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus, or form of prospectus, or arising out of or
based upon any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent, but only to the extent, that such untrue or alleged untrue statement
is contained in, or such omission or alleged omission is required to be
contained in, any information so furnished in writing by such holder to the
Company expressly for use in such Registration Statement or prospectus and that
such statement or omission was relied upon by the Company in preparation of such
Registration Statement, prospectus or form of prospectus; provided, however,
-------- -------
that such holder of Registrable Securities shall not be liable in any such case
to the extent that the holder has furnished in writing to the Company within a
reasonable period of time prior to the filing of any such Registration Statement
or prospectus or amendment or supplement thereto information expressly for use
in such Registration Statement or prospectus or any amendment or supplement
thereto which corrected or made not misleading, information previously furnished
to the Company, and the Company failed to include such information therein. In
no event shall the liability of any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the proceeds (net of
payment of all expenses) received by such holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such indemnified party.
(c) Conduct of Indemnification Proceedings. If any Person shall be
--------------------------------------
entitled to indemnity hereunder (an "indemnified party"), such indemnified party
-----------------
shall give prompt notice to the party or parties from which such indemnity is
sought (the "indemnifying parties") of the commencement of any action, suit,
--------------------
proceeding or investigation or written threat thereof (a "Proceeding") with
----------
respect to which such indemnified party seeks indemnification or contribution
pursuant hereto; provided, however, that the failure to so notify the
-------- -------
indemnifying parties shall not relieve the indemnifying parties from any
obligation or liability except to the extent that the indemnifying parties have
been prejudiced by such failure. The indemnifying parties shall have the right,
exercisable by giving written notice to an indemnified party promptly after the
receipt of written notice from such indemnified party of such Proceeding, to
assume, at the indemnifying
-18-
parties' expense, the defense of any such Proceeding, with counsel reasonably
satisfactory to such indemnified party; provided, however, that an indemnified
-------- -------
party or parties (if more than one such indemnified party is named in any
Proceeding) shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless: (i) the indemnifying parties agree to pay such fees and expenses; (ii)
the indemnifying parties fail promptly to assume the defense of such Proceeding
or fail to employ counsel reasonably satisfactory to such indemnified party or
parties; or (iii) the named parties to any such Proceeding (including any
impleaded parties) include both such indemnified party or parties and the
indemnifying parties or an affiliate of the indemnifying parties or such
indemnified parties, and there may be one or more defenses available to such
indemnified party or parties that are different from or additional to those
available to the indemnifying parties, in which case, if such indemnified party
or parties notifies the indemnifying parties in writing that it elects to employ
separate counsel at the expense of the indemnifying parties, the indemnifying
parties shall not have the right to assume the defense thereof and such counsel
shall be at the expense of the indemnifying parties, it being understood,
however, that, unless there exists a conflict among indemnified parties, the
indemnifying parties shall not, in connection with any one such Proceeding or
separate but substantially similar or related Proceedings in the same
jurisdiction, arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified party
or parties. Whether or not such defense is assumed by the indemnifying parties,
such indemnifying parties or indemnified party or parties will not be subject to
any liability for any settlement made without its or their consent (but such
consent will not be unreasonably withheld). The indemnifying parties shall not
consent to entry of any judgment or enter into any settlement which (i) provides
for other than monetary damages without the consent of the indemnified party or
parties (which consent shall not be unreasonably withheld or delayed) or (ii)
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party or parties of a release, in form and
substance satisfactory to the indemnified party or parties, from all liability
in respect of such Proceeding for which such indemnified party would be entitled
to indemnification hereunder.
(d) Contribution. If the indemnification provided for in this Section
------------ -------
5.6 is unavailable to an indemnified party or is insufficient to hold such
---
indemnified party harmless for any Losses in respect of which this Section 5.6
-----------
would otherwise apply by its terms, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the amount paid or payable by such indemnified party
as a result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party, on the one hand,
and indemnified party, on the other hand, shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been taken by, or relates to information supplied by,
such indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a
result of any Losses shall be deemed to include any legal or
-19-
other fees or expenses incurred by such party in connection with any Proceeding,
to the extent such party would have been indemnified for such expenses if the
indemnification provided for in Section 5.6(a) or 5.6(b) was available to such
------------------------
party. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.6(d) were determined by pro-rata
--------------
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in this Section 5.6(d). Notwithstanding
--------------
the provisions of this Section 5.6(d), an indemnifying party that is a selling
--------------
holder of Registrable Securities shall not be required to contribute any amount
in excess of the amount by which the net proceeds received by such indemnifying
party exceeds the amount of any damages that such indemnifying party has
otherwise been required to pay by reasons of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
5.7 Rule 144. At all times after the Company effects its first
--------
Public Offering, the Company shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
promulgated thereunder, and will take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144. Upon the request of any holder of Registrable Securities,
the Company shall deliver to such holder a written statement as to whether it
has complied with such requirements.
5.8 Underwritten Registrations. No holder of Registrable Securities
--------------------------
may participate in any underwritten registration hereunder unless such holder
(a) agrees to sell such holder's Registrable Securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
5.9 No Inconsistent Agreements. The Company has not and will not,
--------------------------
enter into any agreement with respect to the Company's securities that is
inconsistent with the rights granted to the holders of Registrable Securities in
this Article V or otherwise conflicts with the provisions hereof.
---------
ARTICLE VI
PRE-EMPTIVE RIGHTS
6.1 Issuance of New Securities to Affiliates.
----------------------------------------
(a) If at any time after the date of this Agreement the Company
proposes to issue or sell any Common Units, Common Stock, Common Stock
Equivalents or Preferred Stock of the Company or Holdings proposes to issue or
sell any of its securities (collectively, "New Securities"), in each case to
--------------
Vestar or any Affiliate of Vestar, the Company shall, and in the case of a
proposed
-20-
issuance of Holdings' securities, will cause Holdings to, first offer to sell to
the holders of Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and Employee
Securities a portion of each type of such New Securities equal to the quotient
determined by dividing (x) the number of Fully-Diluted Units (which are Class A
Units and Class B Units and which are held or beneficially owned by such holder
of Marathon Securities, ▇▇▇▇▇▇▇ Family Securities or Employee Securities), by
(y) the total number of Fully-Diluted Class A and B Units outstanding
immediately prior to such issuance or sale. The holders of Marathon Securities,
▇▇▇▇▇▇▇ Family Securities and Employee Securities shall be entitled to purchase
such New Securities at the most favorable price and on the most favorable terms
as such New Securities are to be offered to Vestar or any Affiliate of Vestar.
(b) In order to exercise its purchase rights hereunder, each holder
of Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and Employee Securities must,
within 30 days after receipt of written notice from the Company describing in
reasonable detail the New Securities being offered, the purchase price thereof,
the payment terms and the percentage of the New Securities available to such
holder pursuant to Section 6.1(a), deliver a written notice to the Company
--------------
describing its election to exercise its purchase rights hereunder.
(c) Upon the expiration of the offering periods described above,
the Company shall be entitled to sell such New Securities which the holders of
Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and Employee Securities have not
elected to purchase during the180 days following such expiration on terms and
conditions no more favorable to the purchasers thereof than those offered to the
holders of Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and Employee
Securities. Any New Securities to be sold by the Company or Holdings to Vestar
or any Affiliate of Vestar after such 180-day period must be reoffered to the
holders of Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and Employee
Securities pursuant to the terms of this Section 6.1.
-----------
(d) The provisions of this Section 6.1 will not apply to the
-----------
following issuances of New Securities:
(i) any New Securities issued upon the conversion or exercise of
any Common Stock Equivalents not issued in violation of this
Section 6.1;
-----------
(ii) any issuance of New Securities incident to the exercise,
conversion or exchange of any securities of the Company or
Holdings that were not issued in violation of this Section 6.1,
-----------
a subdivision of shares (including any stock dividend or stock
split), any combination of shares (including any reverse stock
split) or any recapitalization, reorganization or
reclassification of the Company or Holdings; or
(iii) any New Securities issued to a seller(s)in connection with the
acquisition by the Company or Holdings of another Person that
is not an Affiliate of Vestar (whether by acquisition of stock
or by merger or consolidation, or the acquisition of all or
substantially all of such Person's assets).
-21-
(e) Nothing in this Section 6.1 shall be deemed to prevent Vestar or
-----------
any Affiliate of Vestar from purchasing for cash any New Securities without
first complying with the provisions of this Section 6.1; provided, that in
----------- --------
connection with such purchase, (a) the Company's management committee or board
of directors has determined in good faith (1) that the Company needs an
immediate cash investment, (2) that no alternative financing on terms no less
favorable to the Company in the aggregate than such purchase is available which
is of a type that could be obtained without having to comply with this Section
-------
6.1 and (3) that the delay caused by compliance with the provisions of this
---
Section 6.1 in connection with such investment would be reasonably likely to
-----------
cause severe and immediate harm to the Company, (b) the Company gives prompt
notice to the holders of Marathon Securities, ▇▇▇▇▇▇▇ Family Securities and
Employee Securities of the Purchasing Holder's investment, which notice shall
describe in reasonable detail the New Securities being purchased by the Person
making such purchase (for purposes of this Section 6.1, the "Purchasing Holder")
----------- -----------------
and the purchase price thereof and (c) the Purchasing Holder and the Company
take all steps necessary to enable the holders of Marathon Securities, ▇▇▇▇▇▇▇
Family Securities and Employee Securities to effectively exercise their
respective rights under this Section 6.1 with respect to their purchase of a
-----------
pro-rata share of the New Securities issued to the Purchasing Holder after such
purchase by the Purchasing Holder on the terms specified in Section 6.1(a).
--------------
ARTICLE VII
AMENDMENT AND TERMINATION
7.1 Amendment and Waiver. Except as otherwise provided herein, no
--------------------
modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Securityholders unless such modification,
amendment or waiver is approved in writing by each of the Company, Vestar, the
Marathon Majority Holders, the ▇▇▇▇▇▇▇ Family Majority Holders and the Employee
Majority Holders. The failure of any party to enforce any of the provisions of
this Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
7.2 Termination of Certain Provisions. The provisions of Article II
--------------------------------- ----------
shall terminate upon the consummation of the Company's first Public Offering if,
and only to the extent, required by the managing underwriter of such Public
Offering.
7.3 Termination of Agreement. This Agreement will terminate in
------------------------
respect of all Securityholders (a) with the written consent of the Company, the
Vestar Majority Holders, the Marathon Majority Holders, the ▇▇▇▇▇▇▇ Family
Majority Holders and the Employee Majority Holders, (b) upon the dissolution,
liquidation or winding-up of the Company or (c) upon the consummation of a Sale
of the Company (except with respect to the rights to Incidental Registration
under Article V, which shall survive). The termination of this Agreement will
---------
not affect any indemnification or contribution obligations under Section 5.6,
-----------
which shall survive such termination.
7.4 Termination as to a Party. Any Person who ceases to hold any
-------------------------
Securities shall cease to be a Securityholder and shall have no further rights
or obligations under this Agreement
-22-
(except with respect to any indemnification and contribution obligations under
Section 5.6, which shall survive).
-----------
ARTICLE VIII
MISCELLANEOUS
8.1 Certain Defined Terms. As used in this Agreement, the following
---------------------
terms shall have the meanings set forth or as referenced below:
"Affiliate" of any particular Person means any other Person
---------
Controlling, Controlled by or under common Control with such particular Person
or, in the case of a natural Person, any other member of such Person's Family
Group.
"Agreement" has the meaning set forth in the preamble.
---------
"Agreement of Merger" means the Agreement and Plan of Merger dated as
-------------------
of December __, 2000 by and among Holdings, Protein Acquisition Corp. and
▇▇▇▇▇▇▇ Foods, Inc.
"Allocable Shares" has the meaning set forth in Section 3.2(a).
---------------- --------------
"Call Option" has the meaning given to such term in the Management
-----------
Contribution Agreements.
"CEO Designated Director" has the meaning given such term in Section
----------------------- -------
2.1(a)(v).
---------
"Class A Units" has the meaning set forth in the LLC Agreement.
-------------
"Class B Units" has the meaning set forth in the LLC Agreement.
-------------
"Closing Date" has the meaning given such term in the Agreement of
------------
Merger.
"Common Stock" means, collectively, following the conversion of the
------------
Company into a corporation or the Company being merged into, or otherwise
succeeded by, a corporation, the common stock of the Company and any other class
or series of authorized capital stock of the Company which is not limited to a
fixed sum or percentage of par or stated value in respect to the rights of the
holders thereof to participate in dividends or in the distribution of assets
upon any liquidation, dissolution or winding up of the successor to the Company.
"Common Stock Equivalents" means (without duplication with any Units,
------------------------
Common Stock or other Common Stock Equivalents) rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Units, Common Stock or securities exercisable for or convertible or
exchangeable into Units or Common Stock, as the case may be, whether at the time
of issuance or upon the passage of time or the occurrence of some future event.
-23-
"Company" has the meaning set forth in the preamble.
-------
"Control" (including, with correlative meaning, all conjugations
-------
thereof) means with respect to any Person, the ability of another Person to
control or direct the actions or policies of such first Person, whether by
ownership of voting securities, by contract or otherwise.
"Custody Agreement and Power of Attorney" has the meaning given to
---------------------------------------
such term in Section 5.2(c).
--------------
"Demand Registration" has the meaning given to such term in Section
-------------------- -------
5.1(a).
------
"Employee(s)" has the meaning given to such term in the preamble.
-----------
"Employee Majority Holders" means the Person or Persons having
-------------------------
beneficial ownership of a majority of the securities constituting Employee
Securities.
"Employee Securities" means (a) the Preferred Units, Class A Units,
-------------------
Class B Units and Class C Units acquired by the Employees on or after the date
of this Agreement under the Management Contribution Agreements, (b) any Units,
Common Stock, Common Stock Equivalents or Preferred Stock hereafter acquired by
any holder of Employee Securities and (c) any securities of the Company issued
with respect to the securities referred to in clauses (a) or (b) above by way of
a payment-in-kind, stock dividend or stock split or in connection with a
combination of shares, exchange, conversion, recapitalization, merger,
consolidation or other reorganization.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the SEC promulgated thereunder.
"Excluded Securities" has the meaning set forth in Section 3.2(c).
------------------- --------------
"Exempt Transfer" means a Transfer of Marathon Securities, ▇▇▇▇▇▇▇
---------------
Family Securities and Employee Securities (a) pursuant to an exercise of tag-
along rights as an Other Holder under Section 3.2, (b) pursuant to a Sale of the
-----------
Company under Section 4.1 or other transaction approved under Section 2.2, (c)
----------- -----------
in the case of Employee Securities, to the Company pursuant to a Call Option
under a Management Contribution Agreement, (d) pursuant to a Public Sale
(including pursuant to the provisions of Article V hereof), (e) upon the death
of the holder pursuant to the applicable laws of descent and distribution, (f)
solely to or among such Person's Family Group, (g) incidental to the exercise,
conversion or exchange of such securities in accordance with their terms, any
combination of shares (including any reverse stock split) or any
recapitalization, reorganization or reclassification of, or any merger or
consolidation involving, the Company or (h) in the case of ▇▇▇▇▇▇▇ Family
Securities, (1) any Transfer by a ▇▇▇▇▇▇▇ Family Securityholder to one or more
of its partners who is a descendent of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or a spouse of such
decedent or (2) after the third anniversary of the date hereof, subject to the
right of first offer sets forth in Exhibit A attached hereto.
---------
-24-
"Exempt Individual Transfer" means a Transfer of Vestar Securities
--------------------------
held by a natural person (a) upon the death of the holder pursuant to the
applicable laws of descent and distribution, (b) solely to or among such
Person's Family Group or (c) to the Company incidental to the exercise,
conversion or exchange of such securities in accordance with their terms, any
combination of shares (including any reverse stock split) or any
recapitalization, reorganization or reclassification of, or any merger or
consolidation involving, the Company.
"Family Group" means, with respect to any individual, such
------------
individual's spouse and descendants (whether natural or adopted) and any trust,
partnership, limited liability company or similar vehicle established and
maintained solely for the benefit of (or the sole members or partners of which
are) such individual, such individual's spouse and/or such individual's
descendants.
"Fully-Diluted Units" means, as of any date of determination, the
-------------------
number of shares of Common Stock outstanding, plus (without duplication) all
Units or, as the case may be, shares of Common Stock issuable, whether at such
time or upon the passage of time or the occurrence of future events, upon the
exercise, conversion or exchange of all then-outstanding Common Stock
Equivalents.
"Holdings" means M-Foods Holdings, Inc., a Delaware corporation.
--------
"Incidental Registration" has the meaning given such term in Section
----------------------- -------
5.2(a).
------
"Indemnified Party" has the meaning given such term in Section 5.6(a).
----------------- --------------
"Limited Partner" means a limited partner of Vestar.
---------------
"Losses" has the meaning given such term in Section 5.6(a).
------ --------------
"Management Contribution Agreements" mean the stock purchase and unit
----------------------------------
subscription agreements between the Company and the respective Employees.
"Marathon" has the meaning given such term in the preamble.
--------
"Marathon Demand Right" has the meaning given such term in Section
--------------------- -------
5.1(a).
------
"Marathon Director" has the meaning given such term in Section
----------------- -------
2.1(a)(ii).
----------
"Marathon Majority Holders" means the Person or Persons holding a
-------------------------
majority of the securities constituting Marathon Securities.
"Marathon Securities" means (a) Marathon Units, (b) Units, Common
-------------------
Stock, Common Stock Equivalents or Preferred Stock hereafter acquired by
Marathon and (c) any securities of the Company issued with respect to the
securities referred to in clauses (a) or (b) above by way of a payment-in-kind,
stock dividend or stock split or in connection with a combination of shares,
exchange, conversion, recapitalization, merger, consolidation or other
reorganization.
-25-
"Marathon Units" means the Class A Units issued to Marathon on the
--------------
Closing Date.
"▇▇▇▇▇▇▇ Family Demand Right" has the meaning given such term in
---------------------------
Section 5.1(a).
--------------
"▇▇▇▇▇▇▇ Family Directors" has the meaning given such term in Section
------------------------ -------
2.1(a)(iii).
-----------
"▇▇▇▇▇▇▇ Family Majority Holders" means the Person or Persons holding
-------------------------------
a majority of the securities constituting ▇▇▇▇▇▇▇ Family Securities.
"▇▇▇▇▇▇▇ Family Securities" means (a) ▇▇▇▇▇▇▇ Family Units, (b)
-------------------------
Units, Common Stock, Common Stock Equivalents or Preferred Stock hereafter
acquired by the ▇▇▇▇▇▇▇ Family Securityholders and (c) any securities of the
Company issued with respect to the securities referred to in clauses (a) or (b)
above by way of a payment-in-kind, stock dividend or stock split or in
connection with a combination of shares, exchange, conversion, recapitalization,
merger, consolidation or other reorganization.
"▇▇▇▇▇▇▇ Family Securityholders" means 4J2R1C Limited Partnership and
------------------------------
3J2R Limited Partnership.
"▇▇▇▇▇▇▇ Family Units" means the Class A Units issued to the ▇▇▇▇▇▇▇
---------------------
Family Securityholders on the Closing Date.
"NASD" has the meaning given such term in Section 5.4(j).
---- --------------
"NASDAQ" means the National Association of Securities Dealers
------
Automated Quotation System.
"New Securities" has the meaning given to such term in Section 6.1(a).
-------------- --------------
"Offered Securities" has the meaning given to such term in Section
------------------ -------
3.2(a).
------
"LLC Agreement" means the Amended and Restated Limited Liability
-------------
Company Agreement dated as of _________ __, 2001 among the Company, Vestar,
Marathon, the ▇▇▇▇▇▇▇ Family Securityholders and the other parties thereto.
"Other Holder" has the meaning given such term in Section 3.2(a).
------------ --------------
"Other Registration Rights" has the meaning given such term in Section
------------------------- -------
5.1(a)(iii).
-----------
"Ownership Percentage" means, for each Securityholder and with respect
--------------------
to a type and class of Security, the percentage obtained by dividing the number
of units or shares of such Security held by such Securityholder by the total
number of units or shares of such Security (other than Excluded Securities)
outstanding.
-26-
"Person" means an individual, a partnership, a joint venture, a
------
corporation, an association, a joint stock company, a limited liability company,
a trust, an unincorporated organization or a government or any department or
agency or political subdivision thereof.
"Preferred Stock" means collectively, following the conversion of the
---------------
Company into a corporation or the Company being merged into, or otherwise
succeeded by, a corporation, the classes or series of authorized capital stock
of the Company that is limited to a fixed sum or percentage of par value or
stated value in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary or involuntary
liquidation, dissolution or winding up of the successor to the Company.
"Preferred Units" means the Preferred Units of the Company which may
---------------
be issued pursuant to Section 8.1of the Management Contribution Agreements.
"Priority Right" has the meaning given such term in Section 5.1(c)(i).
-------------- -----------------
"Proceeding" has the meaning given such term in Section 5.6(c).
---------- --------------
"Public Offering" means a sale of Common Stock to the public in an
---------------
offering pursuant to an effective registration statement filed with the SEC
pursuant to the Securities Act, as then in effect, provided that a Public
Offering shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
"Public Sale" means a sale of Securities pursuant to a Public Offering
-----------
or a Rule 144 Sale.
"Purchasing Holder" has the meaning given such term in Section 6.1(e).
----------------- --------------
"Registrable Securities" means any Securities that are of the same
----------------------
type and class as the Vestar Securities (it being understood upon the occurrence
of any event which gives rise to a Securityholder's ability to transfer such
Securityholder's interests in the Company or a Subsidiary of the Company to a
third party in exchange for consideration pursuant to this Agreement or pursuant
to a registration right, at the election of such Securityholder, the Company
shall take, and shall cause its Subsidiaries to take, all actions necessary to
convert Securities (other than the Class C Units) then held by such
Securityholder into the appropriate type of security to permit the
Securityholder to transfer such Securities). As to any particular Registrable
Securities, such securities will cease to be Registrable Securities when they
have been (i) Transferred in a Public Sale, (ii) unless Vestar otherwise elects,
have been distributed to the limited partners of Vestar or (iii) otherwise
Transferred and new certificates not bearing the legend set forth in Section
-------
8.2(b) hereof shall have been delivered by the Company and subsequent
------
disposition of such securities shall not require registration or qualification
of such securities under the Securities Act or such state securities or blue sky
laws then in force. For purposes of this Agreement, a Person will be deemed to
be a holder of Registrable Securities whenever such Person has the right to
acquire such Registrable Securities (upon conversion or exercise in connection
with a Transfer of securities or
-27-
otherwise, but disregarding any restrictions or limitations upon the exercise of
such right), whether or not such acquisition has actually been affected.
"Registration Expenses" means all amounts payable by the Company
---------------------
pursuant to Section 5.5.
-----------
"Registration Notice" has the meaning given such term in Section
------------------- -------
5.1(a).
------
"Registration Request" has the meaning given such term in Section
-------------------- -------
5.1(a).
------
"Registration Statement" means any registration statement of the
----------------------
Company under which any of the Registrable Securities are included therein
pursuant to the provisions of this Agreement, including the prospectus,
amendments and supplements to such registration statement, including post-
effective amendments, all exhibits, and all material incorporated by reference
or deemed to be incorporated by reference in such registration statement.
"Requesting Holder" has the meaning given such term in Section 5.1(a).
----------------- --------------
"Rule 144" means Rule 144 adopted under the Securities Act (or any
--------
successor rule or regulation).
"Rule 144 Sale" means a sale of Securities to the public through a
-------------
broker, dealer or market-maker pursuant to the provisions of Rule 144 (other
than Rule 144(k) prior to a Public Offering) adopted under the Securities Act
(or any successor rule or regulation).
"Sale of the Company" means the consummation of a transaction, whether
-------------------
in a single transaction or in a series of related transactions that are
consummated contemporaneously (or consummated pursuant to contemporaneous
agreements), with any other Person or Persons on an arm's-length basis other
than an Affiliate of Vestar, pursuant to which such party or parties (a) acquire
(whether by merger, stock purchase, recapitalization, reorganization,
redemption, issuance of capital stock or otherwise) more than 50% of either the
Fully Diluted Units or the voting stock of Holdings or (b) acquire assets
constituting all or substantially all of the assets of the Company and its
Subsidiaries on a consolidated basis; provided, however, that in no event shall
a Sale of the Company be deemed to include any transaction effected for the
purpose of (i) changing, directly or indirectly, the form of organization or the
organizational structure of the Company or any of its Subsidiaries or (ii)
contributing stock to entities controlled by the Company.
"Sale Notice" has the meaning given such term in Section 3.2(a).
----------- --------------
"SEC" means the Securities and Exchange Commission.
---
"Securities" means, collectively, the Vestar Securities, the Marathon
----------
Securities, the ▇▇▇▇▇▇▇ Family Securities and the Employee Securities.
"Securityholder(s)" has the meaning given such term in the preamble.
-----------------
-28-
"Securities Act" means the Securities Act of 1933, as amended from
--------------
time to time.
"Selling Holder" has the meaning given such term in Section 3.2(a).
-------------- --------------
"Subsidiary" means any corporation with respect to which another
----------
specified corporation has the power to vote or direct the voting of sufficient
securities to elect directors having a majority of the voting power of the board
of directors of such corporation.
"Tag-Along Notice" has the meaning given such term in Section 3.2(a).
---------------- --------------
"Transfer" means (in either the noun or the verb form, including with
--------
respect to the verb form, all conjugations thereof within their correlative
meanings) with respect to any security, the gift, sale, assignment, transfer,
pledge, hypothecation or other disposition (whether for or without
consideration, whether directly or indirectly, and whether voluntary,
involuntary or by operation of law) of such security or any interest therein.
"Units" has the meaning set forth in the LLC Agreement.
-----
"Vestar" has the meaning given such term in the preamble.
------
"Vestar Demand Right" has the meaning given such term in Section
------------------- -------
5.1(a).
------
"Vestar Directors" has the meaning given such term in Section
---------------- -------
2.1(a)(i).
---------
"Vestar Majority Holders" means the Person or Persons holding a
-----------------------
majority of the securities constituting Vestar Securities.
"Vestar Securities" means (a) Vestar Units, (b) Units, Common Stock,
-----------------
Common Stock Equivalents or Preferred Stock hereafter acquired by Vestar and (c)
any securities of the Company issued with respect to the securities referred to
in clauses (a) or (b) above by way of a payment-in-kind, stock dividend or stock
split or in connection with a combination of shares, exchange, conversion,
recapitalization, merger, consolidation or other reorganization.
"Vestar Units" means the Class A Units issued to Vestar on the Closing
------------
Date.
8.2 Legends.
-------
(a) Securityholders Agreement. Each certificate or instrument
-------------------------
evidencing Securities and each certificate or instrument issued in exchange for
or upon the Transfer of any such Securities (if such securities remain subject
to this Agreement after such Transfer) shall be stamped or otherwise imprinted
with a legend (as appropriately completed under the circumstances) in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE CONSTITUTE ["VESTAR
SECURITIES"], ["MARATHON
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SECURITIES"], ["▇▇▇▇▇▇▇ FAMILY SECURITIES"], ["EMPLOYEE SECURITIES"]
UNDER A CERTAIN SECURITYHOLDERS AGREEMENT DATED AS OF _____________,
2001 AMONG THE ISSUER OF SUCH SECURITIES (THE "COMPANY") AND CERTAIN
OF THE COMPANY'S SECURITYHOLDERS AND, AS SUCH, ARE SUBJECT TO CERTAIN
VOTING PROVISIONS, PURCHASE RIGHTS AND RESTRICTIONS ON TRANSFER SET
FORTH IN THE SECURITYHOLDERS AGREEMENT. A COPY OF SUCH SECURITYHOLDERS
AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE
HOLDER HEREOF UPON WRITTEN REQUEST."
(b) Restricted Securities. Each instrument or certificate
---------------------
evidencing Securities and each instrument or certificate issued in exchange or
upon the Transfer of any Securities shall be stamped or otherwise imprinted with
a legend substantially in the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR
SOLD UNLESS IT HAS BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS
AN EXEMPTION FROM REGISTRATION IS AVAILABLE (AND, IN SUCH CASE, AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SHALL HAVE
BEEN DELIVERED TO THE COMPANY TO THE EFFECT THAT SUCH OFFER OR SALE IS
NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT)."
(c) Removal of Legends. Whenever in the opinion of the Company and
------------------
counsel reasonably satisfactory to the Company (which opinion shall be delivered
to the Company in writing) the restrictions described in any legend set forth
above cease to be applicable to any Securities, the holder thereof shall be
entitled to receive from the Company, without expense to the holder, a new
instrument or certificate not bearing a legend stating such restriction.
8.3 Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
8.4 Entire Agreement. Except as otherwise expressly set forth
----------------
herein, this document embodies the complete agreement and understanding among
the parties hereto with
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respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
8.5 Successors and Assigns. Except as otherwise provided herein,
----------------------
this Agreement shall bind and inure to the benefit of and be enforceable by the
Company and its successors and assigns and the Securityholders and any
subsequent holders of Securities and the respective successors and assigns of
each of them, so long as they hold Securities.
8.6 Counterparts. This Agreement may be executed in separate
------------
counterparts (including by means of telecopied signature pages) each of which
shall be an original and all of which taken together shall constitute one and
the same agreement.
8.7 Remedies. The Company and the Securityholders shall be entitled
--------
to enforce their rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement (including costs of
enforcement) and to exercise all other rights existing in their favor. The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that the Company
or any Securityholder may in its or his sole discretion apply to any court of
law or equity of competent jurisdiction for specific performance or injunctive
relief (without posting a bond or other security) in order to enforce or prevent
any violation of the provisions of this Agreement.
8.8 Notices. Any notice provided for in this Agreement shall be in
-------
writing and shall be either personally delivered, or mailed first class mail
(postage prepaid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the Company's records, or at such address
or to the attention of such other person as the recipient party has specified by
prior written notice to the sending party. Notices will be deemed to have been
given hereunder when sent by facsimile (receipt confirmed) delivered personally,
5 days after deposit in the U.S. mail and one day after deposit with a reputable
overnight courier service. The Company's address is:
M-Foods Investors, LLC
c/o Vestar Capital Partners IV, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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and
---
c/o Marathon Fund Limited Partnership IV
c/o Goldner ▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
--------------
Vestar Capital Partners IV, L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
---
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
---
Faegre & ▇▇▇▇▇▇
2200 ▇▇▇▇▇ Fargo Center
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
---
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
-▇▇-
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ Ltd.
4100 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Tower
▇▇▇ ▇. ▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
8.9 Governing Law. The Delaware Limited Liability Company Act (and,
-------------
following the conversion of the Company into a corporation or the Company being
merged into, or otherwise succeeded by, a corporation, the relevant state
corporation law) shall govern all questions arising under this Agreement
concerning the relative rights of the Company and its stockholders. All other
questions concerning the construction, validity and interpretation of this
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of Delaware applicable to contracts made and to be performed
in the State of Delaware. The parties hereto hereby irrevocably and
unconditionally submit to the exclusive jurisdiction of any State or Federal
court sitting in Wilmington, Delaware over any suit, action or proceeding
arising out of or relating to this Agreement. The parties hereby agree that
service of any process, summons, notice or document by U.S. registered mail
addressed to any such party shall be effective service of process for any
action, suit or proceeding brought against a party in any such court. The
parties hereto hereby irrevocably and unconditionally waive any objection to the
laying of venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. The parties hereto agree that a final
judgment in any such suit, action or proceeding brought in any such court shall
be conclusive and binding upon any party and may be enforced in any other courts
to whose jurisdiction any party is or may be subject, by suit upon such
judgment.
8.1 Descriptive Headings. The descriptive headings of this Agreement
--------------------
are inserted for convenience only and do not constitute a part of this
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this
Securityholders Agreement on the day and year first above written.
M-FOODS INVESTORS, LLC
By: ____________________________________
Name:
Title:
VESTAR CAPITAL PARTNERS IV, L.P.
By: Vestar Associates IV, L.P.,
its General Partner
By: Vestar Associates Corporation IV,
its General Partner
By: _____________________________
Name:
Title: Managing Director
[Other Securityholders]
Exhibit A
---------
First Offer Rights. Prior to making any transfer pursuant to
------------------
clause (h)(2) of the definition of "Exempt Transfer," a holder of ▇▇▇▇▇▇▇ Family
Securities shall deliver written notice disclosing in reasonable detail the
proposed terms and conditions of the transfer including the number and the price
per security (the "Offer Notice") to the Company which shall promptly submit the
------------
Offer Notice to Vestar, Marathon and the Employees which may then elect to
purchase all (but not less than all) of such ▇▇▇▇▇▇▇ Family Securities to be
transferred upon the same terms and conditions as those set forth in the Offer
Notice by delivering a written notice of such election to such holders of
▇▇▇▇▇▇▇ Family Securities within 20 days after the Offer Notice has been
delivered to the Company. Such holders of ▇▇▇▇▇▇▇ Family Securities shall not
consummate any transfer until 40 days after the Offer Notice has been given to
the Company, unless the parties to the transfer have been finally determined
pursuant to this paragraph prior to the expiration of such 40-day period (the
date of the first to occur of such events is referred to herein as the
"Authorization Date"). If the Company has not elected to purchase all of the
-------------------
▇▇▇▇▇▇▇ Family Securities to be transferred, Vestar, Marathon and the Employees
may elect to purchase all (but not less than all) of the ▇▇▇▇▇▇▇ Family
Securities proposed to be transferred upon the same terms and conditions as
those set forth in the Offer Notice by delivering written notice of such
election to the holders of ▇▇▇▇▇▇▇ Family Securities within 30 days after the
Offer Notice has been given to Vestar, Marathon and the Employees. If more than
one of Vestar, Marathon or the Employees elects to purchase the ▇▇▇▇▇▇▇ Family
Securities, the ▇▇▇▇▇▇▇ Family Securities to be sold shall be allocated among
Vestar, Marathon and the Employees pro rata according to the number of Fully
Diluted Units owned by each of Vestar, Marathon and the Employees. If neither
the Company nor Vestar, Marathon or the Employees elect to purchase all of the
▇▇▇▇▇▇▇ Family Securities, such holders of ▇▇▇▇▇▇▇ Family Securities may
transfer such ▇▇▇▇▇▇▇ Family Securities at a price no less than 95% of the price
per security specified in the Offer Notice and on other terms no more favorable
to the transferee(s) thereof than specified in the Offer Notice during the 90-
day period immediately following the Authorization Date. Any ▇▇▇▇▇▇▇ Family
Securities not transferred within such 90-day period shall be subject to the
provisions of this paragraph upon subsequent transfer. If the Company or any of
Vestar, Marathon or the Employees have elected to purchase ▇▇▇▇▇▇▇ Family
Securities hereunder, the transfer of such ▇▇▇▇▇▇▇ Family Securities shall be
consummated as soon as practical after the delivery of the election notice(s) to
such holder of ▇▇▇▇▇▇▇ Family Securities, but in any event within 15 days after
the expiration of the 40-day period referenced above.
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