Exhibit 4.02
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UNITHOLDERS AGREEMENT
Dated as of April 9, 2004
By and Among
KH LLC,
KINETIC SYSTEMS, INC.,
CELERITY GROUP, INC.
and
THE UNITHOLDERS OF KH LLC
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UNITHOLDERS AGREEMENT
UNITHOLDERS AGREEMENT (this "Agreement"), dated as of April 9,
2004, by and among KH LLC, a Delaware limited liability company (the "Company"),
Kinetic Systems, Inc., a California Corporation ("KSI") for purposes of Sections
2.6 and 2.7 and Articles III, IV, V, VI and VII, Celerity Group, Inc. formerly
known as Kinetics Holdings Corporation, a Delaware corporation, ("KHC") for
purposes of Sections 2.6 and 2.7, Articles IV, V, VI and VII, MidOcean Capital
Investors, L.P., formerly DB Capital Investors, L.P., a Delaware limited
partnership ("MIDOCEAN CAPITAL"), MIDOCEAN CELERITY INVESTMENT PARTNERS, L.P., A
DELAWARE LIMITED PARTNERSHIP ("MIDOCEAN CELERITY" AND, TOGETHER WITH MIDOCEAN
CAPITAL, "MidOcean"). ▇▇▇▇▇▇▇ Capital III L.P., a Delaware limited partnership
("▇▇▇▇▇▇▇"), United States Filter Corporation, a Delaware corporation ("USF"),
the Senior Unitholders, as listed on Schedule I-A attached hereto, the Backstop
Unitholders, as listed on Schedule I-B attached hereto, the TCP Unitholders, as
listed on Schedule I-C attached hereto, the Ares Unitholders listed on Schedule
I-D attached hereto, the Other Financial Investors, as listed on Schedule II
attached hereto, the 2001 Investors, as listed on Schedule III-A attached
hereto, the 2002 Investors, as listed on Schedule III-B attached hereto,
(MidOcean, ▇▇▇▇▇▇▇, USF, the Senior Unitholders, the Backstop Unitholders, the
TCP Unitholders, the Ares Unitholders, the Other Financial Investors, the 2001
Investors and the 2002 Investors, collectively, the "Financial Investors"), the
Management Holders, as listed on Schedule IV attached hereto, the Profits Units
Holders, as listed on Schedule V hereto, Intervivos Trust Dated 10/76 ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ UA 1976 ("▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual residing
in Miami, Florida ("Mandaric" and, together with the Financial Investors, the
Management Holders, the Profits Units Holders and ▇▇▇▇▇▇▇, the "Unitholders").
References herein to the "date hereof" or similar references to the date of this
Agreement are to April 9, 2004.
W I T N E S S E T H :
WHEREAS, the Unitholders were previously securityholders of
KHC and/or are contributing debt obligations for Units;
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
of March 31, 2004, by and among KHC and Knight Acquisition Corporation, which is
a direct, wholly-owned subsidiary of the Company ("Merger Sub"), Merger Sub will
merge with and into KHC, and, in the merger, holders of Common Stock, Series A
Preferred Stock, Series A-1 Preferred Stock, and Series B-1 Preferred Stock of
KHC will be converted as a matter of law into holders of Common Units, Class A
Units, Class A-1 Units, and Class B-1 Units, respectively, of the Company, and
upon effectiveness of such merger, the holders of such capital stock will become
Members, and the Company will become the owner of all of the issued and
outstanding capital stock of KHC (the "Merger");
WHEREAS, (i) the holders of warrants to purchase KHC
securities have agreed to contribute their warrants to the Company in exchange
for Class A-1 Units, Class B-1 Units, Common Units, Common A Units and/or Common
B Units pursuant to the terms of those certain exchange agreements with the
Company, dated the date hereof, (ii) USF has agreed to contribute
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KHC's 11% Junior Subordinated Note and KHC's 11% Convertible Junior Subordinated
Note to the Company in exchange for Class C-1 Units and Class C Units,
respectively, pursuant to the terms of that certain exchange agreement dated the
date hereof, between USF and the Company, (iii) the holders of KHC's 15%
Convertible Senior Subordinated Notes have agreed to contribute such notes to
the Company in exchange for Class D Units pursuant to the terms of that certain
exchange agreement dated the date hereof, between such holders and the Company,
and (iv) the holders of KSI's 12.5% Junior Subordinated Instruments (as may be
(i) amended from time to time or (ii) assumed by, or exchanged for substantially
similar notes with, KGI, the "Junior Subordinated Instruments") have entered
into an exchange option agreement (the "Option Agreement") dated the date hereof
pursuant to which each such holder will have the option to contribute all or
part of such instruments to the Company in exchange for Class E Units;
WHEREAS, the Merger and such exchanges are part of a broader
reorganization of KHC and its Subsidiaries (the "Reorganization"), which
includes a distribution of the capital stock of KSI to the Company as the
stockholder of KHC, a restructuring of certain indebtedness of KHC and its
Subsidiaries in connection with the initial Public Offering of KHC, and certain
other related transactions, all as more fully described in that certain
Restructuring Agreement dated the date hereof (the "Restructuring Agreement");
WHEREAS, KHC has agreed to issue to KSI shares of common stock
of KHC with an aggregate fair market value on the date of issuance of $65
million, or such other amount as determined in accordance with the Restructuring
Agreement (the "KHC Shares of KSI") in exchange for KSI's assumption of $65
million of certain liabilities of the KHC and its Subsidiaries, including the
TCP1 Notes and Mezzanine1 Notes (as such terms are defined in the Restructuring
Agreement) (the "KSI Debt");
WHEREAS, in connection with the Reorganization and the
agreement to issue the KHC Shares of KSI, each of KHC and KSI is granting
certain registration rights with respect to shares of its capital stock as set
forth in this Agreement;
WHEREAS, KHC and certain of the Unitholders have previously
entered into the Fourth Amended and Restated Shareholders Agreement dated August
30, 2000, as amended from time to time, governing various rights as
securityholders of KHC (as amended, the "Shareholders Agreement");
WHEREAS, the Company and the Unitholders each desire to enter
into this Agreement to, inter alia, regulate and limit certain rights relating
to the Equity Securities of the Company and to limit the sale, assignment,
transfer, encumbrance or other disposition of such Equity Securities and to
provide for the consistent and uniform management of the Company as set forth
herein; and
WHEREAS, upon completion of the Merger, the parties to the
Shareholders Agreement intend to terminate such agreement.
NOW, THEREFORE, in consideration of the mutual covenants set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
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ARTICLE I
CERTAIN DEFINITIONS
Section 1.1 Certain Definitions. For purposes of this
Agreement, the following terms shall have the following meanings:
"2001 Investors" means the parties listed on Schedule II-A
attached to this Agreement.
"2001 Investors Filing Date" means (i) with respect to KSI,
the later of (x) the second anniversary of the date on which the registration
statement filed in connection with the initial Public Offering of KSI was
declared effective and (y) the date of the first distribution of KSI Capital
Stock by the Company to Members and (ii) with respect to KHC, the latest of (A)
the KSI Termination Date, (B) the date of the first distribution of KHC Capital
Stock by the Company to Members and (C) the second anniversary of the date on
which the registration statement filed in connection with the initial Public
Offering of KHC was declared effective.
"2002 Investors" means the parties listed on Schedule III-B
attached to this Agreement.
"2002 Investors Filing Date" means (i) with respect to KSI,
the later of (x) the second anniversary of the date on which the registration
statement filed in connection with the initial Public Offering of KSI was
declared effective, and (y) the date of the first distribution of KSI Capital
Stock by the Company to Members and (ii) with respect to KHC, the latest of (A)
the KSI Termination Date, (B) the date of the first distribution of KHC Capital
Stock to Members and (C) the second anniversary of the date on which the
registration statement filed in connection with the initial Public Offering of
KHC was declared effective.
"Additional Designated Director" shall have the meaning set
forth in Section 5.1(i).
"Additional Units Side Agreement" means the Additional Units
Side Agreement, dated as of the date hereof, by and among (1) the Company; (2)
Ares Corporate Opportunities Fund, L.P., for itself and as Mezzanine Agent for
the benefit of each of the purchasers under the Senior Subordinated Purchase
Agreement ("ACOF"), Ares Leveraged Investment Fund II, L.P., Ares III CLO, Ltd.,
Ares IV CLO, Ltd., Ares VII CLO Ltd., Ares VIII CLO Ltd. and Ares Total Value
Fund, L.P.; (3) ▇▇▇▇▇▇▇▇▇▇ Capital Partners, LLC, Special Value Absolute Return
Fund, LLC, Special Value Bond Fund, LLC, Special Value Bond Fund II, LLC, ▇.▇.
▇▇▇▇▇ Family Charitable Lead Annuity Trust -- 2000, and Massachusetts Mutual
Life Insurance Company; (4) MidOcean Celerity; (5) ▇▇▇▇▇▇▇; and (6) Gryphon.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or
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cause the direction of the management or policies of such Person, whether
through the ownership of Voting Securities, by agreement or otherwise.
"Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Applicable Law" means, with respect to any Person, all
provisions of laws, statutes, ordinances, rules, regulations, permits or
certificates of any Governmental Authority applicable to such Person or any of
its assets or property, and all judgments, injunctions, orders and decrees of
all courts, arbitrators or Governmental Authorities in proceedings or actions in
which such Person is a party or by which any of its assets or properties are
bound.
"Acquiring Person" means a holder or holders of stock or
equivalent equity interests of the entity that: (i) merges or combines with the
Company in a Combination Transaction or (ii) owns or controls a majority of the
voting power of the outstanding securities of another entity that merges or
combines with the Company in a Combination Transaction.
"Ares Unitholder Observer" shall have the meaning set forth in
Section 6.2(b) of this Agreement.
"Ares Unitholders" means the parties listed on Schedule I-D
attached hereto and their Permitted Transferees.
"Ares Unitholder Filing Date" means with respect to KSI, the
later of (i) three hundred sixty-five (365) days after the date the registration
statement filed in connection with an initial Public Offering of KSI was
declared effective and (ii) the date of the first distribution of KSI Capital
Stock by the Company to Members.
"Ares Units" means the Units, including Derivative Units, of
the Company held by Ares Unitholders.
"Associated Equity Securities" has the meaning set forth in
the definition of Permitted Debt Securities.
"Backstop Units" means, collectively, the Common Units issued
by the Company upon the exchange of warrants issued to the Backstop Unitholders
in connection with the obligation of MidOcean Capital, ▇▇▇▇▇▇▇ and their
respective Affiliates to purchase the 15% Convertible Subordinated Notes of KHC
in December 2002.
"Backstop Unitholders" means the parties listed on Schedule
I-B attached hereto and their Permitted Transferees.
"▇▇▇▇▇▇▇" shall have the meaning set forth in the preamble to
this Agreement.
"▇▇▇▇▇▇▇ Group" shall have the meaning set forth in Section
2.3(b) of this Agreement.
"▇▇▇▇▇▇▇ Investor Group" means, collectively, Behrman,
Crowley, Mandaric and SEF III.
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"Business Day" means any day except a Saturday, a Sunday and
any day which in New York, New York shall be a legal holiday or a day on which
banking institutions are authorized or required by law or other government
action to close.
"Capital Stock" means the issued and outstanding shares of
capital stock of KHC and KSI that are held by the Company as a result of the
Merger and the Reorganization (subject to stock dividends, stock splits,
recapitalizations and other similar events) and by Members upon distribution of
such capital stock by the Company.
"Capital Stock Equivalents" means for each of KHC and KSI, at
any time, (i) shares of Common Stock issued and outstanding (other than Common
Stock issued upon the exercise of Incentive Securities), (ii) with respect to
Shares of Series A Preferred Stock issued and outstanding, the number of shares
of Common Stock into or for which such shares of Series A Preferred Stock may be
converted at such time, (iii) with respect to shares of Series A-1 Preferred
Stock issued and outstanding, the number of shares of Common Stock into or for
which such shares of Series A-1 Preferred Stock may be converted at such time,
(iv) with respect to shares of Series B-1 Preferred Stock issued and
outstanding, the number of shares of Common Stock into or for which such shares
of Series B-1 Preferred Stock may be converted at such time, and (v) with
respect to other Derivative Capital Stock which is then exercisable,
exchangeable or convertible at an exercise price per share equal to or less than
the fair market value of a share of Common Stock at such time, the number of
shares of Common Stock, if any, into or for which such derivative Capital Stock
may be exercised, exchanged or converted at such time.
"Certificate of Formation" means the Certificate of Formation
of the Company filed on March 5, 2004, as amended from time to time.
"Class" means each class of Units of the Company identified in
this Agreement, together with each future class of Units (if any) that is
authorized by the Company Board, permitted by the LLC Agreement, and designated
by the Company Board as a separate class. Without limiting the foregoing, as of
the date hereof, the Units have been divided into eleven (11) classes,
designated respectively the "Class A Units," the "Class A-1 Units," the "Class
B-1 Units," the "Class C Units," the "Class C-1 Units," the "Class D Units," the
"Class E Units," the "Common A Units," the "Common B Units," the "Common Units"
and the "Profits Units".
"Class Amendment Consent" means (i) with respect to a Class of
Preferred Units, the consent of the Required Unitholders of such Class, (ii)
with respect to the Common Units, the consent of the holders of a majority of
the Voting Securities, (iii) with respect to each of the Class C Units, the
Class C-1 Units, Profits Units and each Class of Derivative Units, the consent
of the holders of a majority of the Units of each such Class, (iv) with respect
to the Class D Units, the consent of the holders of 66-2/3% of the outstanding
Class D Units and (v) with respect to the Class E Units, the Class E Amendment
Consent.
"Class A Unit" means a Class A Unit of the Company.
"Class A-1 Unit" means a Class A-1 Unit of the Company.
"Class B-1 Unit" means a Class B-1 Unit of the Company.
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"Class C Unit" means a Class C Unit of the Company.
"Class C-1 Unit" means a Class C-1 Unit of the Company.
"Class D Unit" means a Class D Unit of the Company.
"Class E Amendment" means any amendment to this agreement
that, pursuant to the terms hereof, must be submitted to the vote of the holders
of Class E Units (including, without limitation, any such amendment that
requires the consent of the holders of Class E Units, voting as a separate
class).
"Class E Amendment Consent" means the consent of (i) the
holders of Class E Units representing a majority of the Class E Unreturned
Capital as of the time of determination and (ii) each holder of Class E Units
whose applicable Reference Junior Subordinated Instrument(s) had an original
principal amount of at least $3,000,000; provided that, notwithstanding the
foregoing, until such time as all of the Junior Subordinated Instruments have
been exchanged for Class E Units pursuant to the Option Agreement, all Class E
Amendments shall be submitted to a vote of the holders of Class E Units
outstanding and the holders of Junior Subordinated Instruments outstanding,
voting together as a single class on a Deemed Exchanged Basis, and the Class E
Amendment Consent shall be the consent of (x) the holders of Class E Units and
the holders of Junior Subordinated Instruments representing a majority of the
Class E Unreturned Capital (measured on a Deemed Exchanged Basis) as of the time
of determination, (y) each holder of Class E Units whose applicable Reference
Junior Subordinated Instrument(s), together with any Junior Subordinated
Instruments then held by such holder, had an original principal amount of at
least $3,000,000 and (z) each holder of Junior Subordinated Instruments (other
than a holder of both Junior Subordinated Instruments and Class E Units) whose
Junior Subordinated Instruments had an original principal amount of at least
$3,000,000.
"Class E Unit" means a Class E Unit of the Company.
"Class E Unreturned Capital" means, with respect to a Class E
Unit, at any time, (i) the Class E Base Value of such Unit (as defined in the
LLC Agreement) less (ii) the aggregate amount of Distributions (as defined in
the LLC Agreement) previously made by the Company in respect of such Class E
Unit, pursuant to Section 8.3(a)(2) or Section 8.4(a)(2) of the LLC Agreement.
"Combination Transaction" means a reorganization,
recapitalization, consolidation, merger, acquisition or similar transaction or
series of related transactions in which the Company is a constituent entity or
is a party.
"Common A Unit" means a Common A Unit of the Company.
"Common B Unit" means a Common B Unit of the Company.
"Common Stock" means for KHC and KSI, as applicable, Common
Stock, $0.0001 par value per share, of such company.
"Common Unit" means a Common Unit of the Company.
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"Common Unit Equivalents" means, at any time, (i) the number
of Common Units issued and outstanding, (ii) with respect to Class A Units
issued and outstanding, the number of Common Units to which such Class A Units
are deemed to be equivalent pursuant to Section 5.2 of the LLC Agreement at such
time, (iii) with respect to Class A-1 Units issued and outstanding, the number
of Common Units to which such Class A-1 Units are deemed to be equivalent to
pursuant to Section 5.2 of the LLC Agreement at such time, (iii) with respect to
Class B-1 Units issued and outstanding, the number of Common Units to which such
Class B-1 Units are deemed to be equivalent pursuant to the provisions of
Section 5.2 of the LLC Agreement at such time, (iv) with respect to Class C
Units issued and outstanding, the number of Common Units into which such Class C
Units are convertible pursuant to Section 5.3 of the LLC Agreement at such time,
(vi) with respect to Class D Units issued and outstanding, the number of Common
Units into or for which such Class D Units are convertible pursuant to Section
5.4 of the LLC Agreement at such time, (vii) with respect to the Derivative
Units, the number of Common Units such Derivative Units are deemed to be
equivalent to pursuant to Article VI of the LLC Agreement at such time, and
(viii) with respect to Vested Profits Units (other than for purposes of
determinations of voting rights), one Common Unit.
"Company" shall have the meaning set forth in the preamble to
this Agreement.
"Company Board" means the Board of Directors of the Company.
"Company Owners" shall have the meaning set forth in Section
5.1(i) of this Agreement.
"Credit Documents" means the following and all documents
entered into in connection therewith: (i) the Credit Agreement, dated as of
August 30, 2000, among KHC, KGI, the subsidiary guarantors party thereto from
time to time, the lenders party thereto from time to time, Bank One, N.A., as
Administrative Agent and as Collateral Agent for the secured parties, Deutsche
Bank Americas, as Syndication Agent, The Bank of Nova Scotia, as Documentation
Agent, Deutsche Bank Securities, Inc., as Lead Arranger and Book Manager, and
Banc One Capital Markets, Inc., as Co-Arranger, as amended (the "Senior Credit
Agreement"), (ii) the Senior Subordinated Purchase Agreement, (iii) the TCP
Purchase Agreement, (iv) any amendment, restatement, extension, replacement,
supplement, restructuring or other modification or refinancing from time to time
of the Senior Credit Agreement, the TCP Purchase Agreement or the Senior
Subordinated Credit Agreement (in whole or in part without limitation as to
terms, extensions of maturities, increasing the amount of borrowings or other
conditions or covenants), and (v) all documents entered into in connection with
any of the documents referred to in clauses (i) through (iv).
"▇▇▇▇▇▇▇" shall have the meaning set forth in the preamble to
this Agreement.
"Current Credit Facility" shall have the meaning set forth in
the definition of Primary Bank Facility.
"Deemed Converted Basis" means, (i) with respect to a
Derivative Unit, that number of Common Units to which such Unit is deemed to be
equivalent in accordance with Section 6.1 of the LLC Agreement, (ii) with
respect to a Vested Profits Unit, one Common Unit
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for purposes of any fully diluted calculation and not for voting purposes and
(iii) with respect to a Preferred Unit, that number of Common Units into which
such Unit is deemed to be convertible in accordance with Section 5.2 of the LLC
Agreement. A Profits Unit that is not a Vested Profits Unit shall not be deemed
to be equivalent to any Common Units.
"Deemed Exchanged Basis" means, for purposes of determining
voting rights of a holder of Junior Subordinated Instruments for purposes of
determining the Class E Amendment Consent, at any time, the number of Class E
Units that such holder of Junior Subordinated Instruments would have held
and/or, as applicable, the Unreturned Capital and Unpaid Class E Preferred
Return of such Class E Units, had such holder exchanged all of such holder's
outstanding Junior Subordinated Instruments for Class E Units, pursuant to the
terms of the Option Agreement, immediately prior to such time of determination.
"Derivative Capital Stock" means with respect to KHC OR KSI,
all shares of capital stock, all securities at any time convertible into or
exchangeable for shares of capital stock, and all options, warrants, and other
rights to purchase or otherwise acquire shares of such capital stock, or
securities convertible into or exchangeable for shares of such capital stock, of
such company.
"Derivative Securities" shall have the meaning set forth in
the definition of New Securities.
"Derivative Unit" means a Common A Unit or a Common B Unit.
"Designated Proxy Agent" means, (i) for purposes of Section
2.6, MidOcean (if MidOcean initially voted in favor of calling such special
meeting or action by written consent to effect such Sale of the Subsidiary
Business) or, if MidOcean did not initially vote in favor of calling such
special meeting or action by written consent to effect such Sale of the
Subsidiary Business, by ▇▇▇▇▇▇▇ or Gryphon, as designated by the Required
Investors and (ii) for purposes of Section 2.7, MIDOCEAN (IF MIDOCEAN INITIALLY
VOTED IN FAVOR OF CALLING SUCH SPECIAL MEETING OF STOCKHOLDERS TO EFFECT SUCH
SALE OF THE SUBSIDIARY BUSINESS) OR, IF MIDOCEAN DID NOT INITIALLY VOTE IN FAVOR
OF CALLING SUCH SPECIAL MEETING OF STOCKHOLDERS TO EFFECT SUCH SALE OF THE
SUBSIDIARY BUSINESS, BY ▇▇▇▇▇▇▇ OR GRYPHON, AS DESIGNATED BY THE REQUIRED
INVESTORS.
"Duly Convened Meeting" means any meeting (including a
telephonic meeting): (y) called in accordance with the governing document of
such entity (which shall be the LLC Agreement for the Company) and (z) if such
Person is entitled to designate at least one director pursuant to Section
5.1(a), in which at least one (1) director designated by each of MidOcean,
▇▇▇▇▇▇▇ and Gryphon (excluding, in the case of a Public Kinetics Entity, any
Additional Designated Director) participate; provided that if none of the
directors designated by any of MidOcean, ▇▇▇▇▇▇▇ or Gryphon attends or
participates in such meeting after receiving notice of such meeting in
accordance with the applicable governing document (excluding any Additional
Designated Directors), the Company shall reschedule such meeting to a later date
and send notice to the directors designated by such non-participant of such
rescheduled meeting and, if after receiving such notice of such rescheduled
meeting none of such directors designated by the non-participant (excluding any
Additional Designated Directors) attends or participates in such
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rescheduled meeting, then such rescheduled meeting shall be a "Duly Convened
Meeting" notwithstanding the failure of any such directors to attend or
participate in such meeting.
"Equity Securities" means all Units of the Company, all
securities at any time convertible into or exchangeable for Units of the
Company, and all warrants, and other rights to purchase or otherwise acquire
from the Company the Units, or securities convertible into or exchangeable for
Units or other equity interests of the Company.
"Excess New Securities" shall have the meaning set forth in
Section 2.8(a) of this Agreement.
"Excess Transferable Securities" shall have the meaning set
forth in Section 2.4(b) of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"Financial Investors" shall have the meaning set forth in the
preamble to this Agreement.
"Governmental Authority" means any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or any foreign country.
"Gryphon" means, collectively, Gryphon Partners II, L.P., a
Delaware limited partnership, and Gryphon Partners II-A, L.P., a Delaware
limited partnership, and any references to Unitholder, Financial Investor, 2001
Investor, and any similar reference herein to holders of Common Unit Equivalents
or Equity Securities shall, with respect to Gryphon, include both Gryphon
Partners II, L.P. and Gryphon Partners II-A, L.P. together, and the Common Unit
Equivalents or Equity Securities, respectively, held by such entities shall be
counted together and aggregated for all purposes under this Agreement.
"Incentive Securities" means (i) all Stock Options and (ii)
all shares of common stock issued upon the exercise of Stock Options.
"Junior Subordinated Instruments" shall have the meaning set
forth in the recitals to this Agreement.
"KHC" shall have the meaning set forth in the preamble to this
Agreement.
"KHC Common Stock" means the common stock, $.0001 par value,
of KHC.
"KHC Demand Notice" shall have the meaning set forth in
Section 4.1(b) of this Agreement.
"KHC Demand Request" shall have the meaning set forth in
Section 4.1(a) of this Agreement.
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"KHC Equity Securities" means all shares of capital stock of
KHC (including, without limitation, all shares of Capital Stock of KHC), all
securities at any time convertible into or exchangeable for capital stock of
KHC, and all options, warrants, and other rights to purchase or otherwise
acquire from KHC the capital stock, or securities convertible into or
exchangeable for capital stock, of KHC.
"KHC Holders' Counsel" shall have the meaning set forth in the
definition of KHC Registration Expenses.
"KHC Incidental Registration" shall have the meaning set forth
in Section 4.2(a) of this Agreement.
"KHC Registrable Securities" means, at any time:
(i) any outstanding shares of KHC Common Stock
held by a party hereto and any shares of KHC Common Stock issued or
issuable upon exercise, exchange or conversion of any KHC Equity
Securities; and
(ii) any securities issued or issuable in respect
of shares of KHC Common Stock held by a party hereto (including,
without limitation, by way of stock dividend, stock split,
distribution, exchange, combination, merger, recapitalization,
reorganization or otherwise).
As to any particular KHC Registrable Securities once issued,
such KHC Registrable Securities shall cease to be KHC Registrable Securities:
(i) when a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement;
(ii) when such securities shall have been
distributed by the holder thereof to the public pursuant to Rule 144
under the Securities Act (or any successor provision); or
(iii) when such securities shall have ceased to be
outstanding.
"KHC Registrable Securities of KSI" means KHC Shares of KSI as
long as they are KHC Registrable Securities.
"KHC Registration" means each KHC Required Registration and
each KHC Incidental Registration.
"KHC Registration Expenses" means, with respect to KHC, all
expenses incident to KHC's performance of or compliance with Article IV
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the KHC Registrable Securities), expenses of printing certificates for the KHC
Registrable Securities in a form eligible for deposit with the Depository Trust
Company,
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messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), and fees and disbursements of counsel for KHC and
its independent certified public accountants (including the expenses of any
management review, cold comfort letters or any special audits required by or
incident to such performance and compliance), securities acts liability
insurance (if KHC elects to obtain such insurance), the reasonable fees and
expenses of any special experts retained by KHC in connection with such
registration, fees and expenses of other Persons retained by KHC, the fees and
expenses of one (1) counsel (the "KHC Holders' Counsel") for the holders of KHC
Registrable Securities to be included in the relevant KHC Registration, selected
by the holders of a majority of the KHC Registrable Securities to be included in
such KHC Registration (except that, where a KHC Registration is a KHC Required
Registration, such selection may only be made by holders holding a majority of
the KHC Registrable Securities set forth in the relevant KHC Demand Request);
but not including any underwriting fees, discounts or commissions attributable
to the sale of securities or fees and expenses of counsel representing the
holders of KHC Registrable Securities included in such KHC Registration (other
than the KHC Holders' Counsel and applicable local counsel) incurred in
connection with the sale of KHC Registrable Securities.
"KHC Required Registration" shall have the meaning set forth
in Section 4.1(a) of this Agreement.
"KHC Shares of KSI" shall have the meaning set forth in the
recitals to this Agreement.
"KSI" shall have the meaning set forth in the preamble to this
Agreement.
"KSI Common Stock" means the common stock, $.0001 par value,
of KSI.
"KSI Debt" shall have the meaning set forth in the recitals to
this Agreement.
"KSI Debt Repayment" has the meaning set forth in Section
7.1(a) of this Agreement.
"KSI Demand Notice" shall have the meaning set forth in
Section 3.1(c) of this Agreement.
"KSI Demand Request" shall have the meaning set forth in
Section 3.1(b) of this Agreement.
"KSI Equity Securities" means all shares of capital stock of
KSI (including, without limitation, all shares of Capital Stock of KSI), all
securities at any time convertible into or exchangeable for capital stock of
KSI, and all options, warrants, and other rights to purchase or otherwise
acquire from KSI the capital stock, or securities convertible into or
exchangeable for capital stock of KSI.
"KSI Holders" means the holders of KHC Registrable Securities
of KSI.
11
"KSI Holders' Counsel" shall have the meaning set forth in the
definition of KSI Registration Expenses.
"KSI Incidental Registration" shall have the meaning set forth
in Section 3.2(a) of this Agreement.
"KSI Registrable Securities" means, at any time:
(i) any outstanding shares of KSI Common Stock
held by a party hereto and any shares of KSI Common Stock issued or
issuable upon exercise, exchange or conversion of any KSI Equity
Securities; and
(ii) any securities issued or issuable in respect
of shares of KSI Common Stock held by a party hereto (including,
without limitation, by way of stock dividend, stock split,
distribution, exchange, combination, merger, recapitalization,
reorganization or otherwise).
As to any particular KSI Registrable Securities once issued,
such KSI Registrable Securities shall cease to be KSI Registrable Securities:
(i) when a registration statement with respect
to the sale of such securities shall have become effective under the
Securities Act and such securities shall have been disposed of in
accordance with such registration statement;
(ii) when such securities shall have been
distributed by the holder thereof to the public pursuant to Rule 144
under the Securities Act (or any successor provision); or
(iii) when such securities shall have ceased to be
outstanding.
"KSI Registration" means each KSI Required Registration and
each KSI Incidental Registration.
"KSI Registration Expenses" means, with respect to KSI, all
expenses incident to KSI's performance of or compliance with Article III
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the KSI Registrable Securities), expenses of printing certificates for the KSI
Registrable Securities in a form eligible for deposit with the Depository Trust
Company, messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), fees and disbursements of counsel for KSI and its
independent certified public accountants (including the expenses of any
management review, cold comfort letters or any special audits required by or
incident to such performance and compliance), securities acts liability
insurance (if KSI elects to obtain such insurance), the reasonable fees and
expenses of any special experts retained by KSI in connection with such
registration, fees and expenses of other Persons retained by KSI, the fees and
expenses of one (1) counsel (the "KSI Holders' Counsel") for the holders of KSI
Registrable Securities to be included in the relevant KSI Registration, selected
by the holders of a majority of the KSI
12
Registrable Securities to be included in such KSI Registration (except that,
where a KSI Registration is a KSI Required Registration, such selection may only
be made by holders holding a majority of the KSI Registrable Securities set
forth in the relevant KSI Demand Request); but not including any underwriting
fees, discounts or commissions attributable to the sale of securities or fees
and expenses of counsel representing the holders of KSI Registrable Securities
included in such KSI Registration (other than the KSI Holders' Counsel and
applicable local counsel) incurred in connection with the sale of KSI
Registrable Securities.
"KSI Required Registration" shall have the meaning set forth
in Section 3.1(b) of this Agreement.
"KSI Termination Date" means, in the event the KHC Registrable
Securities of KSI have been issued, the date on which KHC shall have received
evidence reasonably satisfactory to it that either there are no KHC Registrable
Securities of KSI or that the holders of 66-2/3% of the KHC Registrable
Securities of KSI have consented to the proposed sale of the KHC Registrable
Securities held by the Company or any Unitholders.
"Liquidation Preference Amount" means, for any Preferred Unit
as of any date, the sum of (i) the Unreturned Capital of such Preferred Unit,
plus (ii) the Unpaid Preferred Return on such Preferred Unit, each as defined in
the LLC Agreement.
"LLC Agreement" means the Amended and Restated Limited
Liability Company Agreement of the Company dated as of the date hereof, as
amended, modified, supplemented or restated from time to time.
"Magnolia" means Magnolia Tree, LLC, a Delaware limited
liability company.
"Magnolia Pledge Agreement" means that certain pledge
agreement, dated as of June 4, 2001, made by Magnolia in favor of KHC.
"Management Holders" means the parties listed on Schedule IV
attached hereto.
"Mandaric" shall have the meaning set forth in the preamble to
this Agreement.
"Member" means a member of the Company
"Merger" shall have the meaning set forth in the recitals to
this Agreement.
"Merger Sub" shall have the meaning set forth in the recitals
to this Agreement.
"MidOcean" shall have the meaning set forth in the preamble to
this Agreement and any references to Unitholder, Financial Investor, 2001
Investor, 2002 Investor, and any similar reference herein to holders of Common
Unit Equivalents or Equity Securities shall, with respect to MidOcean, include
both MidOcean Capital and MidOcean Celerity together, and the Common Unit
Equivalents or Equity Securities, respectively, held by such entities shall be
counted together and aggregated for all purposes under this Agreement.
13
"Midocean Capital" SHALL HAVE THE MEANING SET FORTH IN THE
PREAMBLE TO THIS AGREEMENT.
"Midocean Celerity" SHALL HAVE THE MEANING SET FORTH IN THE
PREAMBLE TO THIS AGREEMENT.
"Midocean Entity" MEANS EACH OF MIDOCEAN CAPITAL AND MIDOCEAN
CELERITY.
"MidOcean Group" shall have the meaning set forth in Section
2.3(b) of this Agreement.
"Nasdaq" means The Nasdaq Stock Market, Inc.
"New Mezzanine Warrants" means those warrants issued pursuant
to, or otherwise contemplated as a condition to closing under, the Senior
Subordinated Purchase Agreement, together with Units issued upon contribution of
the New Mezzanine Warrants to the Company.
"New Securities" means any Common Unit Equivalents, whether
authorized now or in the future, and any rights, options or warrants to purchase
any Common Unit Equivalents ("Derivative Securities"), and securities of any
type whatsoever (including, without limitation, (x) debt obligations (whether or
not convertible into Common Unit Equivalents or Derivative Securities), (y)
contractual rights to receive payments, such as "phantom" stock or stock
appreciation rights, where the amount thereof is determined by reference to fair
market or equity value of the Company or any Units), including any which may
become convertible into or exchangeable for any Common Unit Equivalents or
Derivative Securities and (z) debt obligations of the Company owing to any
holder of more than 10% of the Common Unit Equivalents); provided that "New
Securities" shall not include (i) Common Units, Class A Units, Class A-1 Units,
Class B-1 Units, Class C Units, Class C-1 Units, Class D Units, Derivative Units
or Profits Units issued by the Company on or prior to the date hereof (and
Common Units issued upon the direct or indirect conversion or exercise of any
securities issued by the Company on or prior to the date hereof), (ii) Equity
Securities issued as consideration in any merger of the Company issued to any
Third Party, (iii) Equity Securities issued as consideration for the acquisition
of another Person or all or substantially all of the assets of another Person,
(iv) any issuance of Equity Securities to any Third Party that is determined by
the Company Board to be strategically beneficial to the Company or any of its
Subsidiaries for one or more reasons independent of such Third Party's cash
investment into the Company or its Subsidiaries, (v) Class E Units issuable upon
the conversion of the Junior Subordinated Instruments, (vi) the New Mezzanine
Warrants, New TCP Warrants and Equity Securities issued in connection with
antidilution provisions of the New Mezzanine Warrants and New TCP Warrants,
(vii) Units and other limited liability company interests in the Company issued
in accordance with the Additional Units Side Agreement and (viii) Associated
Equity Securities issued to any Third Party.
"New Securities Price" shall have the meaning set forth in
Section 2.8(a) of this Agreement.
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"New TCP Warrants" means those warrants issued in connection
with the TCP Purchase Agreement and Units issued upon contribution of the New
TCP Warrants to the Company.
"Non-Qualified Person" means any Person who is (i) directly or
indirectly engaged in any business which the Company Board determines, in good
faith, to be directly competing with any business of the Company or any of its
Subsidiaries (provided that the passive investment by a financial investor of
(x) one percent (1%) or less of any class of securities of any Person whose
securities are registered under the Exchange Act or (y) three percent (3%) or
less of any class of securities of any other Person shall not be deemed to be a
competing interest for purposes of this clause (i)), (ii) an adverse party in
any significant (as determined in good faith by the Company Board) legal or
arbitration proceeding with the Company or any of its Subsidiaries, and (iii)
other than for purposes of Section 2.2(a)(iii)(x), an Affiliate of any Person
described in clauses (i) or (ii). For purposes of this definition, a financial
investor shall have made a "passive investment" in another Person if such
financial investor does not (x) actively manage the business or affairs of such
Person, (y) have the right to nominate or appoint one or more directors to the
board of directors of such Person, or (z) have a board observation right with
respect to meetings of the board of directors of such Person.
"Offered Securities" shall have the meaning set forth in
Section 2.3(a) of this Agreement.
"Other Financial Investors" means the parties listed on
Schedule II attached hereto.
"Other Unitholders" shall have the meaning set forth in
Section 2.4(a) of this Agreement.
"Option Agreement" has the meaning set forth in the recitals
to this Agreement.
"Participant" shall have the meaning set forth in Section
2.4(b) of this Agreement.
"Permitted Debt Securities" means (i) debt securities of KGI
or other indebtedness for borrowed money of the Company or KGI, and (ii) Equity
Securities of the Company and/or equity securities of KGI issued in connection
with such debt securities or other indebtedness for borrowed money ("Associated
Equity Securities"); provided that such indebtedness or debt or Associated
Equity Securities (a) is issued as "permitted indebtedness" under the Senior
Subordinated Purchase Agreement or (b) IS in ANY amount AND IS issued or
incurred at any time in a transaction or series of related transactions WHICH a
Third Party (or multiple Third Parties) acquire(s) or fund(s), as applicable, at
least 50% by value of the aggregate amount of Associated Equity Securities
and/or debt securities being issued and/or indebtedness being incurred in such
transaction or series of related transactions.
"Permitted TCP Purchase Agreement Amendment" means an
amendment to the TCP Purchase Agreement permitting the issuance of up to an
additional $15,000,000 in indebtedness and/or Associated Equity Securities.
15
"Permitted Transfer" shall have the meaning set forth in
Section 2.2(a) of this Agreement.
"Permitted Transferee" shall have the meaning set forth in
Section 2.2(a) of this Agreement.
"Person" or "Persons" means any individual, general
partnership, limited partnership, limited liability company, limited liability
partnership, joint venture, firm, corporation, association, trust, or other
enterprise or any governmental or political subdivision or any agency,
department or instrumentality thereof.
"Preemptive Exercise Notice" shall have the meaning set forth
in Section 2.8(a) of this Agreement.
"Preemptive Notice" shall have the meaning set forth in
Section 2.8(a) of this Agreement.
"Preferred Stock" means Series A Preferred Stock, Series A-1
Preferred Stock, Series B-1 Preferred Stock, and any other series of Preferred
Stock authorized or designated by the Board of Directors of KHC or KSI,
respectively.
"Preferred Units" means Class A Units, Class A-1 Units, Class
B-1 Units, and any other class of Preferred Units authorized or designated by
the Company Board pursuant to the LLC Agreement.
"Primary Bank Facility" means the credit facility relating to
the Credit Agreement dated August 30, 2000, as amended and restated as of
December 10, 2002, among The Bank of Nova Scotia, KHC and other named parties,
as amended or waived from time to time (the "Current Credit Facility"), or any
credit facility resulting from any refinancing or replacement of the Current
Credit Facility from commercial banks or other senior lenders that are Third
Parties, as may be amended or waived from time to time.
"Primary Sell-Down Event" means the first to occur of (i) the
date on which the Company together with MidOcean, ▇▇▇▇▇▇▇ and Gryphon cease to
own, in the aggregate, at least 25% of the outstanding Voting Securities of such
Public Kinetics Entity and (ii) the date on which ▇▇▇▇▇▇▇, Gryphon and MidOcean
cease to own, in the aggregate, at least 50% of Voting Securities held by them
as of the date of this Agreement.
"Profits Units" means a Profit Unit of the Company.
"Profits Units Holders" means the parties listed on Schedule V
attached hereto.
"Public Kinetics Entity" means a Subsidiary of the Company
that has consummated its initial Public Offering and has securities registered
pursuant to the Exchange Act.
16
"Public Offering" means a widely distributed sale of common
stock of an issuer in an underwritten public offering pursuant to an effective
registration statement filed with the SEC.
"Qualified Public Offering" means the consummation of a Public
Offering, in which the aggregate public offering price (before deduction of
underwriters' discounts and commissions) equals or exceeds one hundred million
dollars ($100,000,000).
"Reference Junior Subordinated Instrument" means, with respect
to each Class E Unit, the Junior Subordinated Instrument in exchange for which
such Class E Unit was issued pursuant to the Option Agreement.
"Reorganization" shall have the meaning set forth in the
recitals to this Agreement.
"Required Class A/A-1 Holder" means, at any time of
determination, a Holder that (i) held at least 33-1/3% of the outstanding Class
A Units and Class A-1 Units (measured as a single class) on the date hereof and
(ii) on the date of determination holds at least fifty percent (50%) of the
Class A Units and Class A-1 Units such Holder held on the date hereof.
"Required Investors" means at least two of the following: (i)
▇▇▇▇▇▇▇; (ii) Gryphon; and (iii) MidOcean, for so long as the they own, in the
aggregate (whether held directly or as a Unitholder), (x) with respect to
consent rights, approval rights and other rights of the Required Investors in
respect of the Company, at least 50% of Voting Securities of the Company held by
them as of the date of this Agreement or (y) with respect to consent rights,
approval rights and other rights of the Required Investors in respect of KSI or
KHC, an amount of Voting Securities of KSI or KHC, as applicable, that is at
least equal to 50% of the amount of Voting Securities that they are deemed to
own as of the date of this Agreement through their ownership of the Company; and
after such time, such consents and approvals shall no longer be required and
such rights shall terminate and be of no further force and effect.
"Required Unitholders" means, (i) with respect to the Class A
Units and the Class A-1 Units, the holders of 66-2/3 % of the outstanding Class
A Units and Class A-1 Units, voting together as a single class and any Required
Class A/A-1 Holder and (ii) with respect to the Class B-1 Units, the holders of
66-2/3% of the outstanding Class B-1 Units, voting as a separate class.
"Requisite Holders" means, at any time, and with respect to
any registration and related public offering, the holders of at least a majority
of the KSI Registrable Securities or KHC Registrable Securities, as applicable,
proposed to be included in such Public Offering before giving effect to any
cut-back provisions contained herein.
"Response Deadline" shall have the meaning set forth in
Section 2.4(b) of this Agreement.
"Restricted Combination Transaction" means a Combination
Transaction in which, as a result of such Combination Transaction, the Voting
Securities of the Company that are outstanding immediately prior to the
Consummation of such Combination Transaction (other than any such securities
that are held by an Acquiring Person) do not represent, or are not
17
converted into, securities of the surviving entity of such Combination
Transaction (or such surviving entity's parent entity if the surviving entity is
owned by the parent entity) that, immediately after the Consummation of such
Combination Transaction, together possess more than fifty percent (50%) of the
total voting power of all securities of such surviving entity (or its parent
entity, if applicable) that are outstanding immediately after the consummation
of such Combination Transaction.
"Restructuring Agreement" has the meaning set forth in the
recitals to this Agreement.
"Sale Notice" shall have the meaning set forth in Section
2.3(a) of this Agreement.
"Sale of the LLC" means any transaction or series of
transactions that constitutes a Restricted Combination Transaction or sale of
all or substantially all the assets of the Company.
"Sale of the Subsidiary Business" means any transaction or
series of transactions (whether structured as an equity sale, merger,
consolidation, reorganization, asset sale or otherwise), which results in,
directly or indirectly, the sale or transfer of more than a majority of the
assets of KSI or KHC (determined based on value), respectively, or of beneficial
ownership or control of a majority of the outstanding capital stock of KSI or
KHC, respectively, to a Third Party, other than through a Sale of the LLC.
"SEC" means, at any time, the Securities and Exchange
Commission or any other federal agency at such time administering the Securities
Act.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"Secondary Sell-Down Event" means the first to occur of (i)
the date on which Company together with MidOcean, ▇▇▇▇▇▇▇ and Gryphon cease to
own, in the aggregate, at least 15% of the outstanding Voting Securities of such
Public Kinetics Entity and (ii) the date on which ▇▇▇▇▇▇▇, Gryphon and MidOcean
cease to own, in the aggregate, at least 15% of Voting Securities held by them
as of the date of this Agreement.
"SEF III" means Strategic Entrepreneur Fund III L.P.
"Selling Group" shall have the meaning set forth in Section
2.5(a) of this Agreement.
"Senior Credit Agreement" shall have the meaning set forth in
the definition of Credit Documents.
"Senior Subordinated Purchase Agreement" means the Amended and
Restated Securities Purchase Agreement dated as of April 9, 2004 by and among
KGI, KHC, KSI, Ares Corporate Opportunities Fund, L.P., Special Value Absolute
Return Fund, LLC, Special Value Bond Fund, LLC, Special Value Bond Fund II, LLC
and the other parties named therein that
18
memorializes certain rights and understandings with respect to the senior
subordinated notes due 2006 issued by KGI and warrants issued in connection
therewith.
"Senior Unitholders" means the parties listed on Schedule I-A
attached hereto and their Permitted Transferees.
"Senior Unitholder Filing Date" means (i) with respect to KSI,
the later (x) of the second anniversary of the date on which the registration
statement filed in connection with the initial Public Offering of KSI was
declared effective, and the (y) date of the first distribution of KSI Capital
Stock by the Company to Members and (ii) with respect to KHC, the latest of (A)
the KSI Termination Date, (B) the date of the first distribution of KHC Capital
Stock by the Company to Members and (C) the second anniversary of the date on
which the registration statement filed in connection with the initial Public
Offering of KHC was declared effective.
"Senior Units" means the Common B Units held by the Senior
Unitholders.
"Series A Preferred Stock" means for KHC and KSI, as
applicable, Series A Preferred Stock, $0.0001 par value per share.
"Series A-1 Preferred Stock" means for KHC and KSI, as
applicable, Series A-1 Preferred Stock, $0.0001 par value per share.
"Series B-1 Preferred Stock" means for KHC and KSI, as
applicable, Series B-1 Preferred Stock, $0.0001 par value per share.
"Shareholders Agreement" shall have the meaning set forth in
the recitals to this Agreement.
"▇▇▇▇▇▇▇" means (i) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, an individual residing
in Woodside, California, (ii) any member of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇'▇ immediate family,
(iii) any trust or other legal entity for the benefit of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and
his immediate family and (iv) Magnolia for so long as it owned by ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and/or his immediate family.
"▇▇▇▇▇▇▇ Pledge Agreement" means that certain pledge
agreement, dated as of June 4, 2001, made by ▇▇▇▇▇▇▇ in favor of KHC.
"State of Michigan" means the State Treasury department of the
State of Michigan, custodian of the Michigan Public Schools Employees'
Retirement System, State Employees' Retirement System and Michigan State Police
Retirement System.
"State of Michigan Observer" shall have the meaning set forth
in Section 6.2(c) of this Agreement.
"Stock Options" means all options to purchase Common Stock
granted to non-management members of the board of directors, members of
management and key employees of KHC and/or KSI pursuant to the Kinetics Holdings
Corporation 2000 Stock Option Plan and the Celerity Group, Inc. 2002 Stock
Option Plan B, Kinetics Systems, Inc. 2004 Stock Option Plan or any successor or
similar plan.
19
"Stockholder" means each Unitholder that receives shares of
Capital Stock of KHC or KSI, as the case may be, upon a distribution by the
Company.
"Subsidiary" means, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the managers of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at such time.
"TCP Purchase Agreement" means that certain purchase agreement
dated September 26, 2003 between KGI, KHC, TCP and certain other parties, as
amended and restated on ▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇ and the parties named
therein.
"TCP Unitholder Observer" shall have the meaning set forth in
Section 6.2(a) of this Agreement.
"TCP Unitholders" means the parties listed on Schedule I-C
attached hereto and their Permitted Transferees (but which in any event shall
exclude the Ares Unitholders).
"TCP Unitholder Filing Date" means with respect to KSI, the
later of (x) three hundred sixty-five (365) days after the date the registration
statement filed in connection with an initial Public Offering of KSI was
declared effective and (y) the date of the first distribution of KSI Capital
Stock by the Company to Members.
"TCP Units" means the Units, including Derivative Units, of
the Company held by TCP Unitholders.
"Third Party" means any Person that is not (i) an Affiliate of
the Company, (ii) a holder of Units that beneficially owns more than ten percent
(10%) of the Company's COMMON UNIT EQUIVALENTS, or (iii) an Affiliate of such a
holder; provided, however, that, notwithstanding the foregoing definition, (i)
Deutsche Bank AG or any of its subsidiaries that is primarily engaged in the
business of lending money, including Deutsche Bank Americas and Deutsche Bank AG
Cayman Islands Branch and (ii) any lender pursuant to the Primary Bank Facility,
if at the time the lender first advances funds under the Primary Bank Facility
such lender is a Third Party, and any of such lender's Affiliates that would not
be a Third Party due solely to such lender's ownership of capital stock or
Equity Securities of the Company or any of its Subsidiaries, shall be deemed to
be a Third Party.
"TIAA" shall have the meaning set forth in Section 6.2(d) of
this Agreement.
"TIAA Observer" shall have the meaning set forth in Section
6.2(d) of this Agreement.
"Transfer" shall have the meaning set forth in Section 2.1(a)
of this Agreement.
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"Transfer Notice" shall have the meaning set forth in Section
2.4(a).
"Unit" means any Common Unit, Class A Unit, Class A-1 Unit,
Class B-1 Unit, Class C Unit, Class C-1 Unit, Class D Unit, Class E Unit, Common
A Unit, Common B Unit, Profits Unit and any other unit representing equity
interests in the Company created from time to time pursuant to the LLC
Agreement.
"Unitholder" shall have the meaning set forth in the preamble
to this Agreement and includes any other Person that becomes a Unitholder
pursuant to Section 2.2(b) of this Agreement.
"USF" shall have the meaning set forth in the preamble to this
Agreement.
"USF Common B Units" means the Common B Units held by USF.
"Vested Profits Unit" means any outstanding Profits Unit that
has vested (i) in accordance with the Profits Unit purchase agreement pursuant
to which such Profits Unit, or security exchanged for a Profits Unit, was
issued, (ii) pursuant to the terms of any applicable Profits Unit plan adopted
by the Company Board or (iii) pursuant to the LLC Agreement.
"Voting Securities" means, (i) with respect to the Company,
collectively, at any time, the Units entitled to vote at such time pursuant to
Section 4.3 of the LLC Agreement (which, in no event, shall include any Profits
Unit) and (ii) with respect to any other entity, collectively, at any time, the
securities of such entity entitled to vote at such time pursuant to the
governing documents of such entity.
"Whitney" means, collectively, ▇. ▇. ▇▇▇▇▇▇▇ Mezzanine Fund,
L.P., a Delaware limited partnership, and any successor thereof.
ARTICLE II
TRANSFER OF EQUITY SECURITIES
Section 2.1 Transfer Restrictions. (a) No Unitholder shall,
directly or indirectly, sell, assign, pledge or in any manner transfer any
Equity Securities or any right or interest therein to any Person (each such
action, a "Transfer"), except in compliance with the requirements of (and
subject to the limitations contained in) the LLC Agreement and this Agreement.
(b) All certificates or other instruments (if any)
representing Equity Securities shall bear a legend which shall substantially
state as follows:
"The securities represented by this certificate are subject to a
Limited Liability Company Agreement and Unitholders Agreement of the
issuer, each dated as of April 9, 2004, as the same may be amended from
time to time, pursuant to the terms of which the transfer of such
securities is restricted. Such agreements also provide for various
other limitations and obligations, and all of the terms thereof are
incorporated by reference herein. A copy of each such agreement will be
furnished without charge by the issuer to the holder hereof upon
written request."
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(c) In addition to the legend required by Section 2.1(b)
above, all certificates or other instruments (if any) representing Equity
Securities shall bear a legend which shall substantially state as follows:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or any state
securities laws and may not be offered for sale, sold, pledged,
transferred or otherwise disposed of until the holder hereof provides
evidence reasonably satisfactory to the issuer (which, in the
discretion of the issuer, may include an opinion of counsel reasonably
satisfactory to the issuer) that such offer, sale, pledge, transfer or
other disposition will not violate applicable federal or state
securities laws."
(d) Without limiting the foregoing, no Unitholder shall,
directly or indirectly, Transfer any Equity Securities, except pursuant to a
Permitted Transfer.
(e) The Company agrees that it will not cause or permit
any Transfer of any Equity Securities to be made on its books unless such
Transfer is permitted by this Agreement and the LLC Agreement and has been made
in accordance with the terms hereof and the LLC Agreement.
(f) Each Unitholder agrees that it will not effect any
Transfer of Equity Securities unless such Transfer is made in accordance with
any applicable federal or state securities laws.
Section 2.2 Permitted Transfers. (a) Subject to Section 2.1
and the requirements of the LLC Agreement regarding Transfers of Units by
Members, a holder of Units may at any time effect any of the following Transfers
(each a "Permitted Transfer," and each transferee of such Unitholder in respect
of such Transfer, a "Permitted Transferee"):
(i) any Transfer of any or all Equity Securities held by a
Unitholder who is an individual following such Unitholder's death by
will or intestacy to such Unitholder's legal representative, heir or
legatee;
(ii) any Transfer of any or all Equity Securities held by a
Unitholder who is an individual as a gift or gifts during such
Unitholder's lifetime to such Unitholder's spouse, children,
grandchildren or a trust or other legal entity for the benefit of such
Unitholder or any of the foregoing;
(iii) any Transfer of any or all Equity Securities by a
Financial Investor to any Affiliate of such Person; provided that the
transferee of any such Financial Investor is a Person who (x) is not a
Non-Qualified Person, and (y) is a "qualified institutional buyer", an
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act) or an entity in which all of the equity
owners are "accredited investors" (as defined in Rule 501(a)(1), (2),
(3) or (7) under the Securities Act); and, provided further that any
such Affiliate shall Transfer such Equity Securities to the Unitholder
from whom the Equity Securities were originally received or acquired
within five (5) days after ceasing to be an Affiliate of such
transferring Unitholder;
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(iv) any Transfer by a MidOcean Entity (y) so long as Section
2.4 is complied with or (z) upon any liquidation or any other
distribution to the partners or any other holder of a direct or
indirect beneficial interest of such MidOcean Entity; provided that, in
each case, such Person is a "qualified institutional buyer" or an
"accredited investor" (as defined in Rule 501(a) under the Securities
Act);
(v) any Transfer of any or all Equity Securities held by a
Unitholder to any Person which is made in connection with (x) Section
2.4, (y) Section 2.5 or (z) Section 2.6 of this Agreement;
(vi) any Transfer by ▇▇▇▇▇▇▇ or SEF III upon any liquidation
or any other distribution to the partners or any other holder of a
direct or indirect beneficial interest of ▇▇▇▇▇▇▇ or SEF III; provided
that, in each case, such Person is a "qualified institutional buyer" or
an "accredited investor" (as defined in Rule 501(a) under the
Securities Act);
(vii) any Transfer by (w) USF of the USF Common B Units, Class
C Units and Class C-1 Units, and (x) the Senior Unitholders of the
Senior Units, in each case to any Person who (A) is not a Non-Qualified
Person and (B) is a "qualified institutional buyer", an "accredited
investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) or an entity in which all of the equity owners are
"accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act);
(viii) any Transfer not described in any of clauses (i)
through (vii) above or (ix) through (xix) below if permitted by a
majority of the members of the Company Board who are not officers,
directors, managers or employees of, or partners in, the Person that
proposes such Transfer or the proposed Transferee;
(ix) any Transfer of any or all of the Equity Securities held
by the State of Michigan to any successor or additional trustee or
custodian of the assets of the State of Michigan as may be duly
appointed and qualified under the laws of such State;
(x) a Transfer of Equity Securities by Magnolia pursuant to
the Magnolia Pledge Agreement;
(xi) a Transfer of Equity Securities by ▇▇▇▇▇▇▇ pursuant to
the ▇▇▇▇▇▇▇ Pledge Agreement;
(xii) any Transfer by Gryphon upon any liquidation or any
other distribution to the partners or any other holder of a direct or
indirect beneficial interest of Gryphon; provided that, in each case,
such Person is a "qualified institutional buyer" or an "accredited
investor" (as defined in Rule 501(a) under the Securities Act);
(xiii) any Transfer of an indirect interest in those Equity
Securities held by MidOcean Capital to MidOcean Celerity and the
partners in MidOcean Celerity;
(xiv) any Transfer by a TCP Unitholder of TCP Units to any
Person who (A) is not a Non-Qualified Person and (B) is a "qualified
institutional buyer", an "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) or an
23
entity in which all of the equity owners are "accredited investors" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act);
(xv) any Transfer by a TCP Unitholder or an Ares Unitholder
pursuant to a pledge, lien or other encumbrance or any guaranty or
realization thereof;
(xvi) any Transfer by a TCP Unitholder upon any liquidation or
any other distribution to the partners or any other holder of a direct
or indirect beneficial interest of such TCP Unitholder; provided that,
in each case, such Person is a "qualified institutional buyer" or an
"accredited investor" (as defined in Rule 501(a) under the Securities
Act);
(xvii) any Transfer by an Ares Unitholder of Ares Units to any
Person who (A) is not a Non-Qualified Person and (B) is a "qualified
institutional buyer", an "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act) or an entity in
which all of the equity owners are "accredited investors" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act);
(xviii) any Transfer by an Ares Unitholder upon any
liquidation or any other distribution to the partners or any other
holder of a direct or indirect beneficial interest of such Ares
Unitholder; provided that, in each case, such Person is a "qualified
institutional buyer" or an "accredited investor" (as defined in Rule
501(a) under the Securities Act);
(xix) any transfer of any or all Equity Securities which is
made pursuant to an effective registration statement filed pursuant to
the Securities Act or pursuant to Rule 144 under the Securities Act in
an unsolicited brokerage transaction to the public; and
(xx) any Transfer by the Senior Unitholders upon any
liquidation or any other distribution to the partners or any other
holder of a direct or indirect beneficial interest of the Senior
Unitholders; provided that, in each case, such Person is a "qualified
institutional buyer" or an "accredited investor" (as defined in Rule
501(a) under the Securities Act).
(b) In any Transfer referred to above in Section 2.2(a),
(other than clauses (iv) (y) (to the extent such Transfer is made as part of a
transaction with is a Sale of the LLC), (v)(y), (v)(z) and (xix) thereof), the
Permitted Transferee shall agree in writing to be bound by all the provisions of
this Agreement and the LLC Agreement and shall execute and deliver to the
Company a counterpart to this Agreement and the LLC Agreement. Each Permitted
Transferee (other than a Permitted Transferee who received the relevant Equity
Securities in a Transfer pursuant to clauses (iv) (y) (to the extent such
Transfer is made as part of a transaction with is a Sale of the LLC), (v)(y),
(v)(z) or (xix) thereof) shall hold such shares of Equity Securities subject to
the provisions of this Agreement as a "Unitholder" which may become a Unitholder
hereunder as if such Permitted Transferee were an original signatory hereto and
shall be deemed to be a party to this Agreement.
(c) In any Transfer, in its capacity as such, by a
Management Holder, a Profits Units Holder, a Senior Unitholder, TCP Unitholder,
Ares Unitholder or USF to a Permitted Transferee who is subject to Section
2.2(b), such Permitted Transferee shall thereafter be a
24
"Management Holder," "Profits Units Holder," "Senior Unitholder," "TCP
Unitholder," "Ares Unitholder" or, as the case may be, "USF" for purposes of
this Agreement with respect to the Units so Transferred; provided that this
provision shall not apply to the right of USF to be subject to the provisions of
Section 8.11 with respect to non-public information received by it prior to
August 30, 2000, in each case to the extent such Permitted Transferee is not an
Affiliate of USF. In any Transfer by MidOcean or, as the case may be, ▇▇▇▇▇▇▇ or
SEF III to a Permitted Transferee which is made pursuant to Section 2.2(a)(iii),
Section 2.2(a)(iv), Section 2.2(a)(vi) or part of a transaction which is a Sale
of the LLC, such Permitted Transferee shall thereafter be referred to
collectively with MidOcean (so long as MidOcean holds any Equity Securities
after such Transfer) as "MidOcean" or, as the case may be, referred to
collectively with ▇▇▇▇▇▇▇ (so long as ▇▇▇▇▇▇▇ holds any Equity Securities after
such Transfer) as "▇▇▇▇▇▇▇" or "SEF III", respectively. Any employee or director
of the Company or any of its Subsidiaries who holds Incentive Securities shall,
if requested, agree in writing to be bound by all the provisions of this
Agreement and shall execute and deliver to the Company a counterpart to this
Agreement and shall be deemed to be a "Management Holder" for purposes of this
Agreement. Any employee or director of the Company or any of its Subsidiaries
who holds Profits Units shall, if requested, agree in writing to be bound by all
the provisions of this Agreement and shall execute and deliver to the Company a
counterpart to this Agreement and shall be deemed to be a "Profits Units Holder"
for purposes of this Agreement.
Section 2.3 Right of First Refusal. (a) Prior to any Transfer
by USF pursuant to Section 2.2(a)(vii)(w) to any Person of Equity Securities
held by it from time to time, USF shall give written notice (the "Sale Notice")
to the Company, MidOcean and the ▇▇▇▇▇▇▇ Investor Group. The Sale Notice shall
(x) disclose in reasonable detail the identity of the prospective Transferee(s),
the number and type of Equity Securities to be Transferred (collectively, the
"Offered Securities"), and the terms and conditions of the proposed Transfer,
(y) have attached to it a copy of the bona fide written offer pursuant to which
the proposed Transfer is to be consummated and (z) confirm that the offer to
purchase such Offered Securities is irrevocable for a period of at least thirty
(30) days. Subject to Sections 2.3(b) and (c), USF shall not consummate any
Transfer until thirty (30) days after the Sale Notice has been given to the
Company, MidOcean and the ▇▇▇▇▇▇▇ Investor Group.
(b) The Company may elect to purchase all, or any
portion, of the Offered Securities to be Transferred upon the same terms and
conditions as those set forth in the Sale Notice by delivering a written notice
of such election to USF and to MidOcean and the ▇▇▇▇▇▇▇ Investor Group within
ten (10) days after the Sale Notice has been delivered to the Company. If the
Company has not elected to purchase all of the Offered Securities to be
Transferred, MidOcean or its designees (the "MidOcean Group") and the ▇▇▇▇▇▇▇
Investor Group or its designees (the "▇▇▇▇▇▇▇ Group") may elect to purchase
their respective pro rata share (based on Common Unit Equivalents owned) of all
or any portion of the Offered Securities not purchased by the Company upon the
same terms and conditions as those set forth in the Sale Notice by giving
written notice of such election to USF within twenty (20) days after the Sale
Notice has been delivered to MidOcean and the ▇▇▇▇▇▇▇ Investor Group.
(c) If the Company, the MidOcean Group and the ▇▇▇▇▇▇▇
Group have not collectively given notice pursuant to Section 2.3(b) of their
intent to purchase all of the Offered Securities specified in the Sale Notice,
USF shall be entitled to Transfer, during the sixty (60) day
25
period beginning on the earlier of (i) the date that is twenty-one (21) days
after the date USF delivered the Sale Notice and (ii) the date on which USF has
been advised by the Company, the MidOcean Group and/or the ▇▇▇▇▇▇▇ Group that
they have collectively elected to purchase less than all of the Offered
Securities, all of the Offered Securities, to any Person who (x) is not a
Non-Qualified Person, and (y) is a "qualified institutional buyer" or an
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act) at a price and on terms no more favorable to the Transferee(s)
thereof than those specified in the Sale Notice and the bona fide written offer
attached thereto. If the Offered Securities are not so Transferred during such
sixty (60) day period, they shall again be subject to the provisions of this
Section 2.3 upon a subsequent proposed Transfer by USF.
(d) If the Company, the MidOcean Group and/or the ▇▇▇▇▇▇▇
Group have agreed to purchase all of the Offered Securities pursuant to Section
2.3(b), the closing of such purchase shall occur within ten (10) Business Days
from the date the Company, the MidOcean Group and/or the ▇▇▇▇▇▇▇ Group have
notified USF of their intention to purchase all of the Offered Securities.
2.4 Sales by MidOcean Subject to Tag-Along Rights. (a) Subject
to Section 2.4(g), in the event that MidOcean proposes to effect a Transfer
(other than a Permitted Transfer described in Section 2.2(a)(iii), Section
2.2(a)(iv)(z), Section 2.2(a)(v)(y) or (z), Section 2.2(a)(xiii) or Section
2.2(a)(xix)), MidOcean shall promptly give written notice (the "Transfer
Notice") to the Company, the ▇▇▇▇▇▇▇ Investor Group, the Senior Unitholders, the
Ares Unitholders, the TCP Unitholders, the Profits Units Holders and each other
Unitholder owning at least one and one half percent (1.5%) of the then
outstanding Common Unit Equivalents (each such Unitholder, together with the
▇▇▇▇▇▇▇ Investor Group, the Senior Unitholders, the Ares Unitholders, the TCP
Unitholders and the Profits Units Holders, the "Other Unitholders") at least
twenty (20) days prior to the closing of such Transfer. The Transfer Notice
shall (i) describe in reasonable detail the proposed Transfer including, without
limitation, the class and number of Equity Securities to be sold, the identity
of the prospective Transferee, the number of Common Unit Equivalents (assuming
all Derivative Units included in the Transfer constitute Common Unit
Equivalents) represented thereby, the purchase price of each such Equity
Security to be sold and the date such proposed sale is expected to be
consummated and (ii) have attached thereto an executed copy of the agreement
pursuant to which the proposed Transfer is to be consummated.
(b) Each of the Other Unitholders shall have the right,
exercisable upon delivery of an irrevocable written notice to MidOcean within
ten (10) Business Days after receipt of the Transfer Notice (the "Response
Deadline"), to participate in such proposed Transfer on the same terms and
conditions that apply to MidOcean as set forth in the Transfer Notice including,
without limitation, the same price on a Common Unit Equivalent basis, the making
of all representations and warranties (provided that the Senior Unitholders, the
TCP Unitholders, the Ares Unitholders, USF, the Other Financial Investors, the
2001 Investors and the 2002 Investors shall only be required to make
representations and warranties concerning their respective existence and
authority to participate in such Sale of the LLC, their ownership of their
respective Equity Securities and their ability to Transfer such Equity
Securities free and clear of all liens and other encumbrances and, unless there
is a reasonable basis to believe that such representations and warranties would
not be true, the enforceability of terms pursuant to which such Sale of the LLC
is to be conducted against them and the compliance of such Sale of the
26
LLC under laws applicable to them and all agreements to which they or their
assets may be subject) and the granting of all indemnifications and the
execution of all agreements (including participating in any escrow arrangements)
to the extent of their respective "pro rata portion" (as defined in clause (c)
below) in the Transfer of such Equity Securities; provided that (x) the
indemnification obligation of MidOcean and each Participant (as defined below)
provided to the proposed transferee with respect to the breach of any
representation or warranty concerning the Company (other than the breach of
those representations and warranties that are not subject to any "cap" as
provided for in the sale agreement) shall be limited to the gross proceeds
received by each such Unitholder in connection with the Transfer and (y) the
liability of each Participant to the proposed transferee for the failure of such
Transfer to be consummated shall be limited to the last arms-length purchase
price paid for the Equity Securities proposed to be sold pursuant to this
Section 2.4, if the reason for the failure of such proposed Transfer to be
consummated does not in any manner result from a breach by such Participant of
any of its obligations or representations and warranties; and provided further
that USF, the Ares Unitholders, the TCP Unitholders and ▇▇▇▇▇▇▇ shall not be
required to become a party to any non-competition arrangement or agreement. Each
Other Unitholder electing to participate in the Transfer described in the
Transfer Notice (each, a "Participant") shall indicate in its notice of election
to MidOcean the number of Common Unit Equivalents it desires to Transfer up to
the maximum amount allowed. MidOcean and each Other Unitholder shall be entitled
to Transfer a number of Common Unit Equivalents equal to the amount obtained
when the amount of Common Unit Equivalents to be Transferred, as set forth in
the Transfer Notice, is multiplied by a fraction, the numerator of which is the
number of Common Unit Equivalents held by such Unitholder immediately prior to
the Transfer proposed in the Transfer Notice and the denominator of which is the
total number of Common Unit Equivalents held by MidOcean and all Other
Unitholders immediately prior to the Transfer proposed in the Transfer Notice.
In the event that any Other Unitholder elected to not participate in such
Transfer or any Participant elected to Transfer less than the maximum number of
Common Unit Equivalents it was eligible to Transfer pursuant to the immediately
preceding sentence (the total number of Common Unit Equivalents that such Other
Unitholder or, as the case may be, Participant has declined to Transfer are
referred to collectively as "Excess Transferable Securities"), then MidOcean
and, as the case may be, each Participant who indicated in its notice of
election that it desired to Transfer the maximum number of Common Unit
Equivalents it was eligible to Transfer pursuant to the immediately preceding
sentence shall be entitled to sell an additional number of Common Unit
Equivalents equal to the amount obtained when the amount of Excess Transferable
Shares is multiplied by a fraction, the numerator of which is the number of
Common Unit Equivalents held by MidOcean or, as the case may be, such
Participant immediately prior to the Transfer proposed in the Transfer Notice
and the denominator of which is the total number of Common Unit Equivalents held
by MidOcean and all such Participants immediately prior to the Transfer proposed
in the Transfer Notice. No holder of Equity Securities (other than Common Unit
Equivalents) shall be entitled to sell Equity Securities (other than Common Unit
Equivalents) pursuant to this Section 2.4.
(c) Each Participant shall effect its participation in
the Transfer by delivering to MidOcean at least three (3) Business Days prior to
the date scheduled for such Transfer as set forth in the Transfer Notice, one or
more certificates or other instruments, as applicable, in proper form for
transfer, which represent the number of Common Unit Equivalents which such
Participant is entitled to Transfer in accordance with Section 2.4(b). Such
certificate or
27
certificates or other instruments, as applicable, shall be delivered by MidOcean
to such Permitted Transferee on the date scheduled for such Transfer in
consummation of the Transfer pursuant to the terms and conditions specified in
the Transfer Notice and such Permitted Transferee shall remit to each such
Participant its pro rata portion of the net sale proceeds (taking into account
any transaction costs and expenses incurred by MidOcean in connection with such
Transfer including, without limitation, the fees described in Section 2.4(d)) to
which such Participant is entitled by reason of its participation in such sale.
For purposes of Section 2.4(b) and this Section 2.4(c), "pro rata portion" shall
mean for each Participant a fraction, the numerator of which is the number of
Common Unit Equivalents to be Transferred by such Participant pursuant to this
Section 2.4 and the denominator of which is the total number of Common Unit
Equivalents to be Transferred pursuant to this Section 2.4.
(d) It is understood and agreed that in consideration of
investment banking services provided by an investment banking group (which may
consist of or include MidOcean or any of its Affiliates) a reasonable fee may be
paid in an amount that is customary and equivalent to a fee arrangement
negotiated on an "arms-length" basis.
(e) The exercise or non-exercise of the rights of any of
the Other Unitholders hereunder to participate in one or more Transfers of
Equity Securities made by MidOcean shall not adversely affect their rights to
participate in subsequent Transfers of Equity Securities subject to this Section
2.4.
(f) Notwithstanding anything contained in this Section
2.4 to the contrary, there shall be no liability on the part of MidOcean (or any
of its Affiliates and Permitted Transferees) to any Other Unitholder in the
event no Common Unit Equivalents are sold even if the provisions of this Section
2.4 have been triggered.
(g) Notwithstanding any other provision contained in this
Agreement, the provisions of this Section 2.4 shall terminate upon the
consummation of an initial Public Offering of any of the Company, KSI or KHC.
Section 2.5 Grant to Selling Group of Drag-Along Rights for
Sale of the LLC. (a) At any time at the written request of the Required
Investors (for purposes of this Section 2.5, the "Selling Group"), each other
Unitholder agrees to vote all of its Voting Securities, at any meeting of
Unitholders or by written consent in lieu of a meeting, and shall sell its
Equity Securities in an amount proportionate to the total Equity Securities to
be sold in such Sale of the LLC transaction based upon its percentage ownership
of such Equity Securities along with the Selling Group, in connection with a
Sale of the LLC. In order to effect the foregoing covenant, each other
Unitholder hereby grants to the Selling Group with respect to all of such
holder's Voting Securities, an irrevocable proxy (which is deemed to be coupled
with an interest) for the term of this Section 2.5 with respect to any vote or
action by written consent of Members solely to effect such Sale of the LLC in
compliance with this Section 2.5.
(b) The Company and the other Unitholders each hereby
agree to reasonably cooperate (including by waiving any appraisal rights to
which such Unitholder may be entitled under Applicable Law and each such
Unitholder does hereby waive all such appraisal rights) with the Selling Group
and the purchaser in any such Sale of the LLC and, to execute and deliver
28
all documents (including purchase agreements) and instruments as the Selling
Group and such purchaser reasonably request to effect such Sale of the LLC
including, without limitation, the making of all representations and warranties
(provided that the Senior Unitholders, the TCP Unitholders, the Ares
Unitholders, USF, the Other Financial Investors, the 2001 Investors and the 2002
Investors shall only be required to make representations and warranties
concerning their respective existence and authority to participate in such Sale
of the LLC, their ownership of their respective Equity Securities and their
ability to Transfer such Equity Securities free and clear of all liens and other
encumbrances and, unless there is a reasonable basis to believe that such
representations and warranties would not be true, the enforceability of terms
pursuant to which such Sale of the LLC is to be conducted against them and the
compliance of such Sale of the LLC under laws applicable to them and all
agreements to which they or their assets may be subject) the granting of all
indemnifications and the execution of all agreements (including participating in
any escrow arrangements) to the extent of their respective "pro rata portion" of
the proceeds based upon amounts received by such parties pursuant to Section 8.3
or 8.4, as applicable, of the LLC Agreement with respect to the net proceeds
received from such Sale of the LLC; provided that the indemnification obligation
of the Unitholder provided to the proposed transferee with respect to the breach
of any representation or warranty concerning the Company shall be limited to no
more than 15% of the net proceeds received by each such Unitholder in connection
with such Sale of the LLC; provided further that USF, ▇▇▇▇▇▇▇, the TCP
Unitholders and the Ares Unitholders shall not be required to become party to
any non-competition arrangement or agreement; and provided further that no
Financial Investor holding less than five percent (5%) of the then outstanding
Common Unit Equivalents shall be required to become party to any non-competition
arrangement or agreement if (i) such Financial Investor would be in violation of
such non-competition arrangement or agreement upon its execution due to other
investments held by such Financial Investor on the date of such Sale of the
Subsidiary Business, respectively or (ii) the execution of such non-competition
arrangement or agreement would unreasonably impede the ability of such Financial
Investor to make future non-controlling equity investments in accordance with
its investment policies and procedures. Upon such Sale of the LLC, each
Unitholder shall receive such amounts as it is entitled to receive pursuant to
Article VIII of the LLC Agreement from the net proceeds after any transaction
costs and expenses incurred by the Company, MidOcean, ▇▇▇▇▇▇▇ or Gryphon, in
connection with such Sale of the LLC including, without limitation, the fees
described in Section 2.5(c) and, except as otherwise set forth in this Section
2.5(b), such sale shall be on the same terms and conditions as afforded to
MidOcean, ▇▇▇▇▇▇▇ or Gryphon, as the case may be. Notwithstanding anything to
the contrary in this Section 2.5, the holders of Class A Units, Class A-1 Units,
and Class B-1 Units shall not be obligated to participate, vote in favor of or
consent to any Sale of the LLC transaction in compliance with this Section 2.5
unless the terms and conditions of such transaction provide that the holders of
such Class of Preferred Units receive an amount that is equal to or greater than
the respective Liquidation Preference Amount applicable to such class of Units,
as set forth in the LLC Agreement.
(c) It is understood and agreed that in consideration of
investment banking services provided by an investment banking group (which may
consist of or include MidOcean, ▇▇▇▇▇▇▇ and Gryphon or any of their Affiliates)
a reasonable fee may be paid in an amount that is customary and equivalent to a
fee arrangement negotiated on an "arms-length" basis.
29
(d) Notwithstanding anything contained in this Section
2.5 to the contrary, there shall be no liability on the part of the Selling
Group (or their respective Affiliates and Permitted Transferees) to any other
Unitholder in the event no Equity Securities are sold even if the provisions of
this Section 2.5 have been triggered.
(e) Notwithstanding any other provision contained in this
Agreement, the provisions of this Section 2.5 shall terminate upon the
consummation of an initial Public Offering of any of the Company, KSI or KHC.
2.6 Sale of the Subsidiary Business by the Company. (a) The
Required Investors may cause the Company Board to consider for approval, and as
necessary under the LLC Agreement or Applicable Law, to cause a vote of Members
by meeting or action by written consent, as necessary, on or after August 30,
2006 for the purpose of effecting a Sale of the Subsidiary Business. Each holder
of Voting Securities agrees to vote all of its Voting Securities at any meeting
of Members, or by written consent in lieu of a meeting, in connection with such
Sale of the Subsidiary Business. In order to effect the foregoing covenant, each
Unitholder hereby grants to the Designated Proxy Agent with respect to all of
such holder's Voting Securities an irrevocable proxy (which is deemed to be
coupled with an interest) for the term of this Agreement (subject to Section
2.6(e)) with respect to any vote or action by written consent of Members solely
to effect such Sale of the Subsidiary Business in compliance with this Section
2.6.
(b) The Company, KSI and the Unitholders each hereby
agree to reasonably cooperate (including by waiving any appraisal rights to
which such holder may be entitled under Applicable Law and such holder does
hereby waive all such appraisal rights) with the Designated Proxy Agent and the
purchaser in any such Sale of the Subsidiary Business and to execute and deliver
all documents (including purchase agreements) and instruments as the Designated
Proxy Agent and such purchaser reasonably request to effect such Sale of the
Subsidiary Business including, without limitation, the granting of all
indemnifications and the execution of all agreements (including participating in
any escrow arrangements) to the extent of their respective "pro rata portion" of
the proceeds based upon amounts received by such parties pursuant to Section 8.3
or 8.4, as applicable, of the LLC Agreement with respect to the net proceeds
received from such Sale of the Subsidiary Business; provided that the
indemnification obligation of the Designated Proxy Agent, the Company, KSI and
each other Unitholder provided to the proposed transferee with respect to the
breach of any representation or warranty concerning the Company shall be limited
to the net proceeds received by the Company, KSI or each such Unitholder in
connection with such Sale of the Subsidiary Business; provided further that USF,
▇▇▇▇▇▇▇, the TCP Unitholders and the Ares Unitholders shall not be required to
become party to any non-competition arrangement or agreement; and provided
further that no Financial Investor holding less than five percent (5%) of the
then outstanding Common Unit Equivalents shall be required to become party to
any non-competition arrangement or agreement if (i) such Financial Investor
would be in violation of such non-competition arrangement or agreement upon its
execution due to other investments held by such Financial Investor on the date
of such Sale of the Subsidiary Business, respectively or (ii) the execution of
such non-competition arrangement or agreement would unreasonably impede the
ability of such Financial Investor to make future non-controlling equity
investments in accordance with its investment policies and procedures. Upon such
Sale of the Subsidiary Business, each Unitholder shall receive such amounts as
it is entitled to receive
30
pursuant to Article VIII of the LLC Agreement from the net proceeds after any
transaction costs and expenses incurred by the Company, MidOcean, ▇▇▇▇▇▇▇ or
Gryphon, in connection with such Sale of the Subsidiary Business including,
without limitation, the fees described in Section 2.6(c) and, except as
otherwise set forth in this Section 2.6(b), such sale shall be on the same terms
and conditions as afforded to MidOcean, ▇▇▇▇▇▇▇ or Gryphon, as the case may be.
Notwithstanding anything to the contrary in this Section 2.6, the holders of
Class A Units, Class A-1 Units, and Class B-1 Units shall not be obligated to
participate, vote in favor of or consent to any Sale of the Subsidiary Business
transaction in compliance with this Section 2.6 unless the terms and conditions
of such transaction provide that the holders of such series of Preferred Units
receive an amount that is equal to or greater than the respective Liquidation
Preference Amount applicable to such class of Units, as set forth in the LLC
Agreement.
(c) It is understood and agreed that in consideration of
investment banking services provided to the Company, KSI or KHC by an investment
banking group (which may consist of any one or more of or include MidOcean,
▇▇▇▇▇▇▇, Gryphon or any of their respective Affiliates) a reasonable fee may be
paid by the Company, KSI or KHC in an amount that is customary and equivalent to
a fee arrangement negotiated on an "arms-length" basis.
(d) Notwithstanding anything contained in this Section
2.6 to the contrary, there shall be no liability on the part of the Designated
Proxy Agent (or its Affiliates and Permitted Transferees) to any other
Unitholder or recipient of Voting Securities in a distribution by the Company in
the event that no Sale of the Subsidiary Business occurs even if the provisions
of this Section 2.6 have been triggered.
(e) Notwithstanding any other provision contained in this
Agreement, upon the consummation of an initial Public Offering of KSI or KHC,
sales by the Company of Capital Stock of the Public Kinetics Entity shall not be
deemed to be a Sale of the Subsidiary Business, and the provisions of this
Section 2.6 shall terminate with respect to such Public Kinetics Entity.
Section 2.7 Sale of the Subsidiary Business by Stockholders.
(a) Following a distribution of KHC Capital Stock or KSI Capital Stock to the
Unitholders in accordance with the LLC Agreement, the Required Investors may
cause the Board of Directors of KHC or KSI, as applicable, to call a special
meeting of Stockholders of such entity to be held on August 30, 2006 or to
distribute a written consent in lieu of a meeting for the purpose of effecting a
Sale of the Subsidiary Business, and each Stockholder agrees to vote all of its
shares of capital stock at such special meeting of Stockholders or by written
consent in lieu of a meeting and shall sell the "pro rata portion" of its
Derivative Capital Stock in connection with such Sale of the Subsidiary
Business. In order to effect the foregoing covenant, each other Stockholder
hereby grants to the Designated Proxy Agent with respect to all of such
Stockholder's shares of capital stock an irrevocable proxy (which is deemed to
be coupled with an interest) for the term of this Agreement with respect to any
stockholder vote or action by written consent solely to effect such Sale of the
Subsidiary Business in compliance with this Section 2.7.
(b) KHC or KSI, as the case may be, and the other
Stockholders each hereby agree to reasonably cooperate (including by waiving any
appraisal rights to which such Stockholder may be entitled under Applicable Law
and each such Stockholder does hereby waive all such appraisal rights) with the
Designated Proxy Agent and the purchaser in any such
31
Sale of the Subsidiary Business and to execute and deliver all documents
(including purchase agreements) and instruments as the Designated Proxy Agent
and such purchaser reasonably request to effect such Sale of the Subsidiary
Business including, without limitation, the making of all representations and
warranties (provided that the Senior Unitholders, the TCP Unitholders, the Ares
Unitholders, USF, the Other Financial Investors, the 2001 Investors and the 2002
Investors shall only be required to make representations and warranties
concerning their respective existence and authority to participate in such Sale
of the Subsidiary Business, their ownership of their respective Derivative
Capital Stock and their ability to Transfer such Derivative Capital Stock free
and clear of all liens and other encumbrances and, unless there is a reasonable
basis to believe that such representations and warranties would not be true, the
enforceability of terms pursuant to which such Sale of the Subsidiary Business
is to be conducted against them and the compliance of such Sale of the
Subsidiary Business under laws applicable to them and all agreements to which
they or their assets may be subject) and the granting of all indemnifications
and the execution of all agreements (including participating in any escrow
arrangements) to the extent of their respective "pro rata portion"; provided
that the indemnification obligation of the Designated Proxy Agent and each other
Stockholder provided to the proposed transferee with respect to the breach of
any representation or warranty concerning KHC or KSI, as the case may be, shall
be limited to the net proceeds received by each such Stockholder in connection
with such Sale of the Subsidiary Business; provided further that USF, ▇▇▇▇▇▇▇,
the TCP Unitholders and the Ares Unitholders shall not be required to become
party to any non-competition arrangement or agreement; and provided further that
no Financial Investor holding less than five percent (5%) of the then
outstanding Common Stock Equivalents shall be required to become party to any
non-competition arrangement or agreement if (i) such Financial Investor would be
in violation of such non-competition arrangement or agreement upon its execution
due to other investments held by such Financial Investor on the date of such
Sale of the Subsidiary Business or (ii) the execution of such non-competition
arrangement or agreement would unreasonably impede the ability of such Financial
Investor to make future non-controlling equity investments in accordance with
its investment policies and procedures. MidOcean, ▇▇▇▇▇▇▇ and Gryphon agree that
upon such Sale of the Subsidiary Business each Stockholder shall receive its
"pro rata portion" of the net proceeds (taking into account (x) the exercise or
conversion price of any Equity Security to be Transferred and (y) any
transaction costs and expenses incurred by MidOcean, ▇▇▇▇▇▇▇ or Gryphon, in
connection with such Sale of the Subsidiary Business including, without
limitation, the fees described in Section 2.7(c)) and, except as otherwise set
forth in this Section 2.7(b), such sale shall be on the same terms and
conditions as afforded to MidOcean, ▇▇▇▇▇▇▇ or Gryphon, as the case may be. For
purposes of Sections 2.7(a) and (b), "pro rata portion" shall mean for each
Stockholder a fraction, the numerator of which is the number of Capital Stock
Equivalents held by such Stockholder immediately prior to such Sale of the
Subsidiary Business and the denominator of which is the total number of Capital
Stock Equivalents outstanding immediately prior to such Sale of the Subsidiary
Business that are held by parties bound by this Agreement or who otherwise
participate in such Sale of the Subsidiary Business transaction. For purposes of
this Section 2.7(b), the computation of Common Stock Equivalents shall include
Equity Securities that would become Common Stock Equivalents in accordance with
their terms immediately after the consummation of the transactions contemplated
by this Section 2.7. Notwithstanding anything to the contrary in this Section
2.7, the holders of Series A Preferred Stock, Series A-1 Preferred Stock and
Series B-1 Preferred Stock shall not be obligated to participate, vote in favor
32
of or consent to any Sale of the Subsidiary Business transaction in compliance
with this Section 2.7 unless the terms and conditions of such transaction
provide that the holders of such series of Preferred Stock receive an amount
that is equal to or greater than the liquidation preference applicable to the
such series of Preferred Stock, as set forth in the certificate of incorporation
of KHC or KSI, as applicable.
(c) It is understood and agreed that in consideration of
investment banking services provided by an investment banking group (which may
consist of any one or more of or include MidOcean, ▇▇▇▇▇▇▇, Gryphon or any of
their respective Affiliates) a reasonable fee may be paid in an amount that is
customary and equivalent to a fee arrangement negotiated on an "arms-length"
basis.
(d) Notwithstanding anything contained in this Section
2.7 to the contrary, there shall be no liability on the part of the Designated
Proxy Agent (or its Affiliates and Permitted Transferees) to any other
Stockholder in the event no Equity Securities are sold even if the provisions of
this Section 2.7 have been triggered.
(e) Notwithstanding any other provision contained in this
Agreement, upon the consummation of an initial Public Offering of KSI or KHC,
sales by the Stockholders of Capital Stock of the Public Kinetics Entity shall
not be deemed to be a Sale of the Subsidiary Business, and the provisions of
this Section 2.7 shall terminate with respect to such Public Kinetics Entity.
Section 2.8 Grant of Preemptive Rights to Unitholders. (a) In
the event that, at any time, the Company shall decide to undertake an issuance
of New Securities, the Company shall at such time deliver to the ▇▇▇▇▇▇▇
Investor Group, the Senior Unitholders, the Ares Unitholders, the TCP
Unitholders and each other Unitholder (other than USF) holding at such time
Common Unit Equivalents representing not less than one percent (1%) of all
Common Unit Equivalents, written notice of the Company's decision, describing
the amount, type and terms (including the exercise price and expiration date
thereof in the case of any Derivative Securities) of such New Securities, the
purchase price per New Security (the "New Securities Price") to be paid by the
purchasers of such New Securities and the other terms upon which the Company has
decided to issue the New Securities including, without limitation, the expected
timing of such issuance which will in no event be more than sixty (60) days or
less than thirty (30) days after the date upon which such notice is given (the
"Preemptive Notice"). Each such Unitholder (other than USF) shall have fifteen
(15) days from the date on which it receives the Preemptive Notice to agree by
written notice to the Company (a "Preemptive Exercise Notice") to purchase up to
its proportional share of such New Securities at the New Securities Price and
upon the general terms specified in the Preemptive Notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased by any such Unitholder. In the event that in connection with such a
proposed issuance of New Securities, such Unitholder shall for any reason fail
or refuse to give such written notice to the Company within such fifteen (15)
day period, such Unitholder shall, for all purposes of this Section 2.8, be
deemed to have refused (in that particular instance only) to purchase any of
such New Securities and to have waived (in that particular instance only) all of
its rights under this Section 2.8 to purchase any of such New Securities. For
purposes of this Section 2.8, a Unitholder's "proportional share" means, at any
time, the quotient obtained by dividing the number of Common Unit Equivalents
held by such
33
Unitholder at such time by the aggregate number of Common Unit Equivalents held
by all Unitholders entitled to preemptive rights under this Section 2.8(a) at
such time. In the event that any such Unitholder does not elect to purchase all
of its respective proportional share, the New Securities which were available
for purchase by such non-electing Unitholders (the "Excess New Securities")
shall automatically be deemed to be accepted for purchase by such Unitholders
who indicated in their Preemptive Exercise Notice a desire to participate in the
purchase of New Securities in excess of their proportional share. Unless
otherwise agreed by all such Unitholders participating in the purchase, each
Unitholder who indicated to purchase more than its proportional share shall
purchase a number of Excess New Securities equal to the lesser of (i) the number
of Excess New Securities indicated in the Preemptive Exercise Notice, if any,
and (ii) an amount equal to the product of (x) the number of Excess New
Securities and (y) a fraction, the numerator of which is the number of Common
Unit Equivalents held at such time by such Unitholder and the denominator of
which is the aggregate number of Common Unit Equivalents held at such time by
all Unitholders who participate in the purchase of Excess New Securities.
(b) In the event and to the extent that, subsequent to
the procedure set forth in Section 2.8(a), any New Securities to be issued by
the Company are not subject to an agreement by and between the Company and any
Unitholder to purchase such New Securities, the Company shall be free to issue
such New Securities to any Person, provided that (i) the price per New Security
at which such New Securities are being issued to and purchased by such Person is
not less than the New Securities Price and (ii) the other terms and conditions
pursuant to which such Person purchases such New Securities are substantially
equivalent to the terms set forth in the Preemptive Notice. Any New Securities
not issued or sold within one hundred eighty (180) days after the date of the
Preemptive Notice shall again be subject to the provisions of this Section 2.8.
ARTICLE III
KSI REGISTRATION RIGHTS
Section 3.1 KSI Required Registration.
(a) Company Demand Rights. Prior to the completion of the
initial Public Offering of KSI, the Company has the right to compel a Public
Offering of KSI at its discretion at any time.
(b) Post-IPO Demand Rights. If a written request shall be
made to KSI, which request shall specify the KSI Registrable Securities to be
sold and the intended method of disposition thereof (a "KSI Demand Request"), at
any time after the date that is
(i) after the date the registration statement filed in
connection with an initial Public Offering of KSI was declared effective, by the
Company, or
(ii) if KSI Capital Stock has been distributed by the Company
to Members,
34
(A) one hundred eighty (180) days after the date the
registration statement filed in connection with an initial Public Offering of
KSI was declared effective, by MidOcean, or ▇▇▇▇▇▇▇,
(B) the Senior Unitholder Filing Date, by the Senior
Unitholders holding a majority of then outstanding Senior Units on a Deemed
Converted Basis,
(C) the TCP Unitholder Filing Date, by the TCP
Unitholders holding a majority of then outstanding TCP Units on a Deemed
Converted Basis,
(D) the Ares Unitholder Filing Date, by the Ares
Unitholders holding a majority of then outstanding Ares Units on a Deemed
Converted Basis,
(E) the 2001 Investors Filing Date, by the 2001
Investors holding a majority of then outstanding aggregate Class A Units and
Class A-1 Units on a Deemed Converted Basis held by the 2001 Investors, or
(F) the 2002 Investors Filing Date, by the 2002
Investors holding a majority of then outstanding Class B-1 Units on a Deemed
Converted Basis held by the 2002 Investors,
to effect a registration under the Securities Act of KSI Registrable Securities
held by such Unitholders (each, a "KSI Required Registration"), then KSI shall
promptly use its reasonable efforts to effect such KSI Required Registration;
provided that each of MidOcean and ▇▇▇▇▇▇▇ may only make one (1) KSI Demand
Request for a "long-form" KSI Required Registration and one (1) KSI Demand
Request for a "short form" KSI Required Registration; provided further that in
lieu of the KSI Demand Request for a "long form" KSI Required Registration, each
of MidOcean and ▇▇▇▇▇▇▇ may instead elect to have an additional "short form" KSI
Required Registration; provided further that the Senior Unitholders may not make
a KSI Demand Request for a "long-form" KSI Required Registration and may only
make one (1) KSI Demand Request for a "short form" KSI Required Registration and
only if, at any time after the Senior Unitholder Filing Date, any Senior
Unitholder is unable to sell all of its KSI Common Stock received in connection
with its ownership of Senior Units pursuant to Rule 144 under the Securities Act
free of the volume restrictions thereof; provided further that the TCP
Unitholders may not make a KSI Demand Request for a "long-form" KSI Required
Registration and may only make one (1) KSI Demand Request for a "short form" KSI
Required Registration unless KSI is not then eligible to effect a "short form"
KSI Required Registration, in which case the TCP Unitholders may make a KSI
Demand Request for a "long-form" KSI Required Registration; provided further
that the Ares Unitholders may not make a KSI Demand Request for a "long-form"
KSI Required Registration and may only make one (1) KSI Demand Request for a
"short form" KSI Required Registration unless KSI is not then eligible to effect
a "short form" KSI Required Registration, in which case the Ares Unitholders may
make a KSI Demand Request for a "long-form" KSI Required Registration; provided
further that the 2001 Investors may not make a KSI Demand Request for a
"long-form" KSI Required Registration and may only make two (2) KSI Demand
Requests for a "short form" KSI Required Registration and only if, at any time
after the 2001 Investor Filing Date, each 2001 Investor is unable to sell all of
its KSI Common Stock received in a distribution by the Company with respect to
its ownership of Class A or Class A-1
35
Units pursuant to Rule 144 under the Securities Act free of the volume
restrictions thereof; provided further that the 2002 Investors may not make a
KSI Demand Request for a "long-form" KSI Required Registration and may only make
one (1) KSI Demand Request for a "short form" KSI Required Registration and only
if, at any time after the 2002 Investor Filing Date, each 2002 Investor is
unable to sell all of its KSI Common Stock received in a distribution from the
Company with respect to its ownership of Class B-1 Units pursuant to Rule 144
under the Securities Act free of the volume restrictions thereof; provided
further that the registration rights of the 2002 Investors shall be in addition
to the registration rights granted to ▇▇▇▇▇▇▇ and MidOcean under Section
3.1(b)(ii); and provided further that KSI shall not be required to comply with
more than two (2) KSI Demand Requests during any twelve (12) month period.
(c) Piggyback Rights. Upon receipt by KSI of any KSI
Demand Request, other than in respect of its initial Public Offering, KSI shall
deliver a written notice (a "KSI Demand Notice") to the Company and to each
Unitholder who holds KSI Registrable Securities obtained through a distribution
of such securities by the Company who did not make such KSI Demand Request
stating that KSI intends to comply with a KSI Demand Request and informing the
Company and each such Unitholder of its right to include KSI Registrable
Securities in such KSI Required Registration. Within ten (10) Business Days
after receipt of a KSI Demand Notice, the Company and each such Unitholder shall
have the right to request in writing that KSI include all or a specific portion
of the KSI Registrable Securities held by the Company or such Unitholder in such
KSI Required Registration.
(d) Postponement. KSI may postpone any KSI Required
Registration for a reasonable period of time, not to exceed one hundred eighty
(180) days, if the KSI Board of Directors determines in good faith that such KSI
Required Registration would (i) require the disclosure of a material transaction
or other matter and such disclosure would be disadvantageous to KSI or (ii)
adversely affect a material financing, acquisition, disposition of assets or
stock, merger or other transaction to which KSI may enter into; provided that
KSI may postpone a KSI Required Registration only once during any twelve (12)
month period.
(e) Time for Filing and Effectiveness. On or before the
date which is sixty (60) days after the KSI Demand Request, KSI shall file with
the SEC the KSI Required Registration with respect to all KSI Registrable
Securities to be so registered, and shall use its reasonable efforts to cause
such KSI Required Registration to become effective as promptly as practicable
after the filing thereof, but in no event later than the day which is one
hundred twenty (120) days after the date of the KSI Demand Request.
(f) Selection of Underwriters. In the event that the KSI
Registrable Securities to be registered pursuant to a KSI Required Registration
are to be disposed of in an underwritten Public Offering, the underwriters of
such Public Offering shall be one or more underwriting firms of nationally
recognized standing selected by KSI and reasonably acceptable to the Company and
Unitholders that together hold a majority of the KSI Registrable Securities to
be included in such KSI Required Registration.
(g) Priority on KSI Required Registrations. In the event
that, in the case of any KSI Required Registration, the managing underwriter for
the Public Offering contemplated by Section 3.1(f) shall advise KSI in writing
(with a copy to each holder of KSI Registrable
36
Securities requesting sale) that, in such underwriter's opinion, the amount of
securities requested to be included in such KSI Required Registration would
adversely affect the Public Offering and sale (including pricing) of such KSI
Registrable Securities (such writing to state the basis of such opinion and the
approximate number of KSI Registrable Securities that may be included in such
Public Offering without such effect), KSI will include in such KSI Required
Registration the number of KSI Registrable Securities that KSI is so advised can
be sold in such Public Offering in the following amounts:
(i) first, all KSI Registrable Securities requested
to be sold by the Company,
(ii) second, pro rata among MidOcean, the ▇▇▇▇▇▇▇
Investor Group, the 2001 Investors, the 2002 Investors, the Senior
Unitholders, the TCP Unitholders, the Ares Unitholders and the holders
of Profits Units on the basis of the number of KSI Registrable
Securities requested to be registered by such holders;
(iii) third, all KSI Registrable Securities requested
to be sold by all other holders of KSI Registrable Securities pursuant
to this Section 3.1 pro rata among such holders on the basis of the
number of KSI Registrable Securities requested to be registered by such
holders; provided however that if such managing underwriter shall
advise KSI that, in such underwriter's opinion, the inclusion of KSI
Registrable Securities held by Management Holders would adversely
affect the Public Offering and sale (including pricing) of such
securities, then the number of KSI Registrable Securities held by such
Management Holders (other than ▇▇▇▇▇▇▇) to be included in such Public
Offering may be disproportionately reduced to avoid such adverse
result; and
(iv) fourth, securities proposed to be sold by KSI
for its own account or for other holders of KSI Equity Securities with
registration rights with respect to such securities.
(h) Additional KSI Demand Requests. In the event that KSI
postpones any KSI Required Registration in accordance with Section 3.1(d) by
more than sixty (60) days, the KSI Demand Request pursuant to which such KSI
Required Registration was to have been made may be withdrawn by the Unitholder
who initiated such KSI Demand Request and shall not be deemed to be a KSI Demand
Request pursuant to Section 3.1(b).
Section 3.2 KSI Incidental Registration.
(a) Filing of Registration Statement. If KSI proposes to
register any of its securities (x) for its own account in its initial Public
Offering and includes in such registration any securities to be sold for the
account of any other Person; or (y) for its own account or for the account of
any other Person at any time after its initial Public Offering (other than a KSI
Required Registration) (any such proposed registration being a "KSI Incidental
Registration") under the Securities Act (other than pursuant to a registration
statement on Form ▇-▇, ▇▇▇▇ ▇-▇, or Form S-3 in the case of a registration
solely for resale of securities issued as consideration in an acquisition of a
Person by KSI, or any successor forms thereto or Section 3.1 hereof) for sale in
a Public Offering, it will at each such time give prompt written notice to the
holders of all KSI
37
Registrable Securities of its intention to do so, which notice shall be given at
least thirty (30) days prior to the date that a registration statement relating
to such registration is proposed to be filed with the SEC. Upon the written
request of the Company or any Unitholder holding KSI Registrable Securities to
include KSI Registrable Securities held by it under such registration statement
(which request shall (i) be made within fifteen (15) days after the receipt of
any such notice, and (ii) specify the KSI Registrable Securities intended to be
included by such holder), KSI will use its reasonable efforts to effect the
registration of all KSI Registrable Securities that KSI has been so requested to
register; 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 registration, KSI shall
determine for any reason to terminate such registration statement and not to
register such securities, KSI may, at its election, give written notice of such
determination to each such holder and, thereupon, shall be relieved of its
obligation to register any KSI Registrable Securities of such Persons in
connection with such registration.
(b) Selection of Underwriters. Notice of KSI's intention
to register such securities shall designate the proposed underwriters of such
Public Offering (which shall be one or more underwriting firms of nationally
recognized standing) and shall contain KSI's agreement to use its reasonable
efforts, if requested to do so, to arrange for such underwriters to include in
such underwriting the KSI Registrable Securities that KSI has been so requested
to sell pursuant to this Section 3.2, it being understood that the holders of
KSI Registrable Securities shall have no right to select different underwriters
for the disposition of their KSI Registrable Securities.
(c) Priority on KSI Incidental Registrations. If the
managing underwriter for the Public Offering contemplated by this Section 3.2
shall advise KSI in writing that, in such underwriter's opinion, the number of
securities requested to be included in such KSI Incidental Registration would
adversely affect the Public Offering and sale (including pricing) of such
securities (such writing to state the basis of such opinion and the approximate
number of securities that may be included in such Public Offering without such
effect), KSI shall include in such KSI Incidental Registration the number of
securities that KSI is so advised can be sold in such Public Offering, in the
following amounts and order of priority:
(i) first, securities proposed to be sold by KSI for its own
account and any securities proposed to be offered by KSI for the
account of such Person who has exercised its demand registration rights
other than pursuant to this Agreement, as the case may be; provided
that such other Person is not an owner of ten percent (10%) or more of
the KSI Equity Securities or an Affiliate of KSI, in which case such
other Person's priority shall be governed by clause (iii) below;
provided further that for the purposes of this Section 3.2, any
underwriter acting in its capacity as such shall not be deemed an
Affiliate of KSI;
(ii) second, the KSI Registrable Securities requested to be
registered by the Company pursuant to this Section 3.2;
(iii) third, the KSI Registrable Securities requested to be
registered by the Unitholders pro rata among such Unitholders on the
basis of the number of KSI Registrable Securities requested to be sold
by such Unitholders pursuant to this Section
38
3.2; provided however that if such managing underwriter shall advise
KSI that, in such underwriter's opinion, the inclusion of KSI
Registrable Securities held by Management Holders would adversely
affect the Public Offering and sale (including pricing) of such
securities, then the number of KSI Registrable Securities held by such
Management Holders (other than ▇▇▇▇▇▇▇) to be included in such Public
Offering may be disproportionately reduced to avoid such adverse
result; and
(iv) fourth, pro rata among all other holders of KSI Equity
Securities having registration rights with respect to such securities.
Section 3.3 Registration Procedures. KSI will use its
reasonable efforts to effect each KSI Required Registration pursuant to Section
3.1 and each KSI Incidental Registration pursuant to Section 3.2, and to
cooperate with the sale of such KSI Registrable Securities in accordance with
the intended method of disposition thereof as quickly as possible, and KSI will
as expeditiously as possible:
(a) subject, in the case of a KSI Incidental
Registration, to the proviso to Section 3.2(a), prepare and file with the SEC
the registration statement and use its reasonable efforts to cause the
Registration to become effective; provided however that, to the extent
practicable, at least ten (10) Business Days prior to filing any registration
statement or prospectus or any amendments or supplements thereto, KSI will
furnish to the holders of the KSI Registrable Securities covered by such
registration statement and their counsel, copies of all such documents proposed
to be filed and any such holder shall have the opportunity to comment on any
information pertaining solely to such holder and its plan of distribution that
is contained therein and KSI shall make the corrections reasonably requested by
such holder with respect to such information prior to filing any such
registration statement or amendment;
(b) subject, in the case of a KSI Incidental
Registration, to the proviso to Section 3.2(a), prepare and file with the SEC
such amendments and post-effective amendments to any registration statement and
any prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all KSI Registrable Securities
covered by such registration statement until such time as all of such KSI
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement and cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;
(c) furnish, upon request, to each holder of KSI
Registrable Securities to be included in such KSI Registration and the
underwriter or underwriters, if any, without charge, one signed copy of the
registration statement and any post-effective amendment thereto, and such number
of conformed copies thereof and such number of copies of the prospectus
(including each preliminary prospectus and each prospectus filed under Rule 424
under the Securities Act), any amendments or supplements thereto and any
documents incorporated by reference therein, as such holder or underwriter may
reasonably request in order to facilitate the disposition of the KSI Registrable
Securities being sold by such holder (it being understood that KSI consents to
the use of the prospectus and any amendment or supplement thereto by each
39
holder of KSI Registrable Securities covered by such registration statement and
the underwriter or underwriters, if any, in connection with the Public Offering
and sale of the KSI Registrable Securities covered by the prospectus or any
amendment or supplement thereto);
(d) notify each holder of the KSI Registrable Securities
to be included in such KSI Registration and the underwriter or underwriters, if
any:
(i) of any stop order or other order suspending the
effectiveness of any registration statement, issued or threatened by
the SEC in connection therewith, and take all reasonable actions
required to prevent the entry of such stop order or to remove it or
obtain withdrawal of it at the earliest possible moment if entered;
(ii) when such registration statement or any
prospectus used in connection therewith, or any amendment or supplement
thereto, has been filed and, with respect to such registration
statement or any post-effective amendment thereto, when the same has
become effective;
(iii) of any written request by the SEC for
amendments or supplements to such registration statement or prospectus;
and
(iv) of the receipt by KSI of any notification with
respect to the suspension of the qualification of any KSI Registrable
Securities for sale under the applicable securities or blue sky laws of
any jurisdiction;
(e) if requested by the managing underwriter or
underwriters or any holder of KSI Registrable Securities to be included in such
KSI Registration in connection with any sale pursuant to a registration
statement, promptly incorporate in a prospectus supplement or post-effective
amendment such information relating to such underwriting as the managing
underwriter or underwriters or such holder reasonably requests to be included
therein; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters incorporated in such prospectus supplement or post-effective amendment;
(f) on or prior to the date on which a KSI Registration
is declared effective, use its reasonable efforts to register or qualify, and
cooperate with the holders of KSI Registrable Securities to be included in such
KSI Registration, the underwriter or underwriters, if any, and their counsel in
connection with the registration or qualification of the KSI Registrable
Securities covered by such KSI Registration, for offer and sale under the
securities or "blue sky" laws of each state and other jurisdiction of the United
States as any such holder or underwriter reasonably requests in writing; use its
reasonable efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period such
registration statement is required to be kept effective; and do any and all
other acts or things necessary or advisable to enable the disposition of the KSI
Registrable Securities in all such jurisdictions reasonably requested to be
covered by such KSI Registration; provided however that KSI shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;
40
(g) in connection with any sale pursuant to a KSI
Registration, cooperate with the holders of KSI Registrable Securities to be
included in such KSI Registration and the managing underwriter or underwriters,
if any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing securities to be sold under such
KSI Registration, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
such holders may request;
(h) use its reasonable efforts to cause the KSI
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities within the United States and having
jurisdiction over KSI, the Company or any Subsidiary as may be necessary to
enable the seller or sellers thereof or the underwriter or underwriters, if any,
to consummate the disposition of such securities;
(i) use its reasonable efforts to obtain:
(A) at the time of effectiveness of each KSI
Registration, a "cold comfort letter" from KSI's independent certified
public accountants covering such matters of the type customarily
covered by "cold comfort letters" as the holders of a majority of the
KSI Registrable Securities to be included in such KSI Registration and
the underwriters reasonably request; and
(B) at the time of any underwritten sale pursuant to
the registration statement, a "bring-down comfort letter," dated as of
the date of such sale, from KSI's independent certified public
accountants covering such matters of the type customarily covered by
"bring-down comfort letters" as the Requisite Holders and the
underwriters reasonably request;
(j) use its reasonable efforts to obtain, at the time of
effectiveness of each KSI Registration and at the time of any sale pursuant to
each KSI Registration, an opinion or opinions addressed to the holders of the
KSI Registrable Securities to be included in such KSI Registration and the
underwriter or underwriters, if any, in customary form and scope from counsel
for KSI (who may be its internal counsel);
(k) notify each seller of KSI Registrable Securities
covered by such KSI Registration, upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in such KSI
Registration, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and promptly prepare and file
with the SEC and furnish to such seller or holder a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers or prospective purchasers of
such securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they are made;
(l) otherwise comply with all applicable rules and
regulations of the SEC, and make generally available to its security holders (as
contemplated by Section 11(a) under the Securities Act) an earnings statement
satisfying the provisions of Rule 158 under the Securities
41
Act no later than ninety (90) days after the end of the twelve (12) month period
beginning with the first month of KSI's first fiscal quarter commencing after
the effective date of the registration statement, which statement shall cover
said twelve (12) month period;
(m) provide and cause to be maintained a transfer agent
and registrar for all KSI Registrable Securities covered by each KSI
Registration from and after a date not later than the effective date of such KSI
Registration;
(n) use its reasonable efforts to cause all KSI
Registrable Securities covered by each KSI Registration to be listed subject to
notice of issuance, prior to the date of first sale of such KSI Registrable
Securities pursuant to such KSI Registration, on each securities exchange on
which the KSI Common Stock is then listed, and admitted to trading on Nasdaq, if
the KSI Common Stock or any such other securities of KSI are then admitted to
trading on Nasdaq; and
(o) enter into such agreements (including underwriting
agreements in customary form) and take such other actions as the Requisite
Holders shall reasonably request in order to expedite or facilitate the
disposition of such KSI Registrable Securities. KSI may require each holder of
KSI Registrable Securities that will be included in such KSI Registration to
furnish KSI with such information in respect of such holder as KSI may
reasonably request in writing and as is required by Applicable Law.
Section 3.4 Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement
registering KSI Registrable Securities under the Securities Act, KSI shall give,
upon reasonable notice and during normal business hours, the holders of such KSI
Registrable Securities so registered, their underwriters, if any, and their
respective counsel and accountants access to its books and records and an
opportunity to discuss the business of KSI with its officers and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' or such underwriters' to conduct a
reasonable investigation within the meaning of Section 11(b)(3) of the
Securities Act.
Section 3.5 Rights of Requesting Holders. Each holder of KSI
Registrable Securities to be included in a KSI Registration which makes a
written request therefor in Section 3.1 or 3.2, as the case may be, shall have
the right to receive within thirty (30) days of receipt by KSI of such request
copies of the information, notices and other documents described in Section
3.3(l) and Section 3.3(o).
Section 3.6 KSI Registration Expenses. KSI will pay all KSI
Registration Expenses in connection with each registration of KSI Registrable
Securities, including, without limitation, any such registration not effected by
KSI; provided first if the Ares Unitholders make a KSI Demand Request at any
time that the Ares Unitholders own three percent (3%) or less of the KSI Common
Stock and are able to immediately sell all of its KSI Common Stock pursuant to
Rule 144 under the Securities Act free of volume restrictions, then the Ares
Unitholders shall be required to pay for their proportionate share of all KSI
Registration Expenses; and provided second if the TCP Unitholders make a KSI
Demand Request at any time that the TCP Unitholders own three percent (3%) or
less of the KSI Common Stock and are able to
42
immediately sell all of its KSI Common Stock pursuant to Rule 144 under the
Securities Act free of volume restrictions, then the TCP Unitholders shall be
required to pay for their proportionate share of all KSI Registration Expenses.
Section 3.7 Indemnification; Contribution. (a) KSI shall
indemnify, to the fullest extent permitted by law, each holder of KSI
Registrable Securities, its officers, directors, partners, employees and agents,
if any, and each Person, if any, who controls such holder within the meaning of
Section 15 of the Securities Act, against all losses, claims, damages,
liabilities (or proceedings in respect thereof) and expenses (under the
Securities Act or common law or otherwise), joint or several, resulting from any
violation by KSI of the provisions of the Securities Act or any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus (and as amended or supplemented if amended or
supplemented) or any preliminary prospectus or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any prospectus, in
light of the circumstances under which they were made) not misleading, except to
the extent that such losses, claims, damages, liabilities (or proceedings in
respect thereof) or expenses are caused by any untrue statement or alleged
untrue statement contained in or by any omission or alleged omission from
information concerning any holder of KSI Registrable Securities furnished in
writing to KSI by such holder expressly for use therein. If the Public Offering
pursuant to any registration statement provided for under this Article III is
made through underwriters, no action or failure to act on the part of such
underwriters (whether or not such underwriter is an Affiliate of any holder of
KSI Registrable Securities) shall affect the obligations of KSI to indemnify any
holder of KSI Registrable Securities or any other Person pursuant to the
preceding sentence. If the Public Offering pursuant to any registration
statement provided for under this Article III is made through underwriters, KSI
agrees to enter into an underwriting agreement in customary form with such
underwriters and KSI agrees to indemnify such underwriters, their officers,
directors, employees and agents, if any, and each Person, if any, who controls
such underwriters within the meaning of Section 15 of the Securities Act to the
same extent as herein before provided with respect to the indemnification of the
holders of KSI Registrable Securities; provided that KSI shall not be required
to indemnify any such underwriter, or any officer, director or employee of such
underwriter or any Person who controls such underwriter within the meaning of
Section 15 of the Securities Act, to the extent that the loss, claim, damage,
liability (or proceedings in respect thereof) or expense for which
indemnification is claimed results from such underwriter's failure to send or
give a copy of an amended or supplemented final prospectus to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of KSI Registrable
Securities to such Person if such statement or omission was corrected in such
amended or supplemented final prospectus prior to such written confirmation and
the underwriter was provided with such amended or supplemented final prospectus.
(b) In connection with any registration statement in
which a holder of KSI Registrable Securities is participating, each such holder,
severally and not jointly, shall indemnify, to the fullest extent permitted by
law, KSI, each underwriter and their respective officers, directors, employees
and agents, if any, and each Person, if any, who controls KSI or such
underwriter within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages, liabilities (or proceedings in respect thereof) and
expenses resulting from any untrue statement or alleged untrue statement of a
material fact, or any omission or alleged
43
omission of a material fact required to be stated in the registration statement
or prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case of any
prospectus, in light of the circumstances under which they were made) not
misleading, but only to the extent that such untrue statement is contained in or
such omission is from information so concerning a holder furnished in writing by
such holder expressly for use therein; provided that such holder's obligations
hereunder shall be limited to an amount equal to the net proceeds to such holder
of the KSI Registrable Securities sold pursuant to such registration statement;
and provided further that, without such holder's consent, such holder shall not
be required to indemnify KSI, any such underwriter, or any of their officers,
directors or employees or any Person who controls KSI or such underwriter within
the meaning of Section 15 of the Securities Act, to the extent that the loss,
claim, damage, liability (or proceedings in respect thereof) or expense for
which indemnification is claimed results from such underwriter's failure to send
or give a copy of an amended or supplemented final prospectus to the Person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission at or prior to the written confirmation of the sale of KSI Registrable
Securities to such Person if such statement or omission was corrected in such
amended or supplemented final prospectus prior to such written confirmation and
the underwriter was provided with such amended or supplemented final prospectus.
(c) Any Person entitled to indemnification under the
provisions of this Section 3.7 shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, permit such indemnifying party to assume the defense of such claim, with
counsel reasonably satisfactory to the indemnified party; and if such defense is
so assumed, such indemnifying party shall not enter into any settlement without
the consent of the indemnified party if such settlement attributes liability to
the indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent (which shall not be
unreasonably withheld); and any underwriting agreement entered into with respect
to any registration statement provided for under this Article III shall so
provide. In the event an indemnifying party shall not be entitled, or elects
not, to assume the defense of a claim, such indemnifying party shall not be
obligated to pay the fees and expenses of more than one counsel or firm of
counsel for all parties indemnified by such indemnifying party in respect of
such claim, unless in the reasonable judgment of any such indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties in respect to such claim.
(d) If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other or (ii) if the allocation provided by clause (i)
above is not permitted by Applicable Law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, no holder of KSI Registrable
44
Securities shall be required to contribute any amount in excess of the amount
such holder would have been required to pay to an indemnified party if the
indemnity under Section 3.7(b) was available. 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. The obligation of any Person to contribute
pursuant to this Section 3.7 shall be several and not joint.
(e) An indemnifying party shall make payments of all
amounts required to be made pursuant to the foregoing provisions of this Section
3.7 to or for the account of the indemnified party from time to time promptly
upon receipt of bills or invoices relating thereto or when otherwise due or
payable.
(f) The indemnity and contribution agreements contained
in this Section 3.7 shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of KSI Registrable
Securities, its officers, directors, members, agents or any Person, if any, who
controls such holder as aforesaid, and shall survive the Transfer of Equity
Securities by such holder and the termination of this Agreement.
Section 3.8 Holdback Agreements; Registration Rights to
Others. In the event and to the extent requested by the managing underwriter or,
if the KSI Registrable Securities are not being disposed of in an underwritten
Public Offering, if requested by KSI, the Company and each Unitholder agrees not
to sell, make any short sale of, grant any option for the purchase of, or
otherwise dispose of any securities other than those KSI Registrable Securities
included in such KSI Registration pursuant to Section 3.1(a), 3.1(b) or 3.2(a)
for the thirty (30) days prior to and up to one hundred eighty (180) days after
the effectiveness of the registration statement pursuant to which such Public
Offering shall be made (or such shorter period of time as is sufficient and
appropriate, in the opinion of the managing underwriter or, as the case may be,
KSI in order to complete the sale and distribution of the securities included in
such Public Offering); provided that the limitations contained in this Section
3.8 shall not apply to the extent a Unitholder is prohibited by Applicable Law
from so withholding such securities from sale during such period; provided,
further, that in the event that the underwriters or KSI, as the case may be,
release the Company, MidOcean, any member of the ▇▇▇▇▇▇▇ Group or Gryphon from
the restrictions set forth in this Section 3.8, each of the other holders of KSI
Registrable Securities distributed by the Company with respect to Preferred
Units, pro rata on a Deemed Converted Basis (assuming all such Units were
convertible), shall be similarly released with respect to the percentage of
securities that is equal to the percentage of securities as to which the
Company, MidOcean, any such member of the ▇▇▇▇▇▇▇ Group or Gryphon, as the case
may be, was released (as determined by dividing the number of securities
released by the aggregate number of securities held by such holder).
Section 3.9 Availability of Information. Following KSI's
initial Public Offering, KSI shall comply with the reporting requirements of
Sections 13 and 15(d) of the Exchange Act and with all other public information
reporting requirements of the SEC as from time to time in effect, and cooperate
with the Company and Members who are holders of KSI Registrable Securities, so
as to permit disposition of the KSI Registrable Securities pursuant to an
exemption from the Securities Act for the sale of any KSI Registrable Securities
(including, without limitation, the current public information requirements of
Rule 144(c) and Rule 144A under the
45
Securities Act). KSI shall cooperate with holders of any KSI Registrable
Securities in supplying such information as may be necessary for such holder to
complete and file any information reporting forms presently or hereafter
required by the SEC as a condition to the availability of an exemption from the
Securities Act for the sale of any KSI Registrable Securities.
ARTICLE IV
KHC REGISTRATION RIGHTS
Section 4.1 KHC Required Registration. (a) If a written
request shall be made to KHC, which request shall specify the KHC Registrable
Securities to be sold and the intended method of disposition thereof (a "KHC
Demand Request"), at any time (subject to any contractual lock-up restrictions
entered into by such holder of KHC Registrable Securities) after the date that
is
(i) the date on which the registration statement filed in
connection with an initial Public Offering of KHC was declared effective, by the
holders of a majority of the KHC Registrable Securities of KSI then outstanding,
(ii) the later of (x) the KSI Termination Date and (y) the
date on which the registration statement filed in connection with an initial
Public Offering of KHC was declared effective, by the Company, or
(iii) after distribution of KHC Capital Stock by the Company
to its Members, (A) the later of (x) the KSI Termination Date and (y) one
hundred eighty (180) days after the date the registration statement filed in
connection with an initial Public Offering of KHC was declared effective, by
MidOcean, or ▇▇▇▇▇▇▇, or (B) the Senior Unitholder Filing Date, by the Senior
Unitholders holding a majority of then outstanding Senior Units on a Deemed
Converted Basis; (C) by the TCP Unitholders holding a majority of then
outstanding TCP Units on a Deemed Converted Basis, (D) by the Ares Unitholders
holding a majority of then outstanding Ares Units on a Deemed Converted Basis,
(E) the 2001 Investors Filing Date, by the 2001 Investors holding a majority of
then outstanding Class A Units and Class A-1 Units on a Deemed Converted Basis
held by the 2001 Investors, or (F) the 2002 Investors Filing Date, by the 2002
Investors holding a majority of then outstanding Class B-1 Units on a Deemed
Converted Basis held by the 2002 Investors, to effect a registration under the
Securities Act of KHC Registrable Securities held by such Unitholders (each, a
"KHC Required Registration"), then KHC shall promptly use its reasonable efforts
to effect such KHC Required Registration; provided that the holders of KHC
Registrable Securities of KSI may collectively only make one (1) KHC Demand
Request for a "long-form" KHC Required Registration and one (1) KHC Demand for a
"short-form" KHC Required Registration; provided further than such holders of
KHC Registrable Securities of KSI may in lieu of the KHC Demand Request for a
"long-form" KHC Required Registration request an additional KHC Demand Request
for a "short-form" KHC Required Registration; provided further that the Company
may only make two (2) KHC Demand Requests for a "long-form" KHC Required
Registration and an unlimited number of KHC Demand Requests for a "short-form"
KHC Required Registration; provided further, that each of MidOcean and ▇▇▇▇▇▇▇
may only make one (1) KHC Demand Request for a "long-form" KHC Required
Registration and one (1) KHC Demand Request for a "short form" KHC Required
Registration; provided further that in lieu of the KHC Demand Request for a
"long form" KHC Required Registration, each of MidOcean and ▇▇▇▇▇▇▇ may instead
elect to have an additional "short form" KHC Required
46
Registration; and provided further that the Senior Unitholders may not make a
KHC Demand Request for a "long-form" KHC Required Registration and may only make
one (1) KHC Demand Request for a "short form" KHC Required Registration and only
if, at any time after the Senior Unitholder Filing Date, any Senior Unitholder
is unable to sell all of its KHC Common Stock received in a distribution by the
Company with respect to its ownership of Senior Units pursuant to Rule 144 under
the Securities Act free of the volume restrictions thereof; provided further
that the TCP Unitholders may not make a KHC Demand Request for a "long-form" KHC
Required Registration and may only make one (1) KHC Demand Request for a "short
form" KHC Required Registration unless KHC is not then eligible to effect a
"short form" KHC Required Registration, in which case the TCP Unitholders may
make a KHC Demand Request for a "long-form" KHC Required Registration; provided
further that the Ares Unitholders may not make a KHC Demand Request for a
"long-form" KHC Required Registration and may only make one (1) KHC Demand
Request for a "short form" KHC Required Registration unless KHC is not then
eligible to effect a "short form" KHC Required Registration, in which case the
Ares Unitholders may make a KHC Demand Request for a "long-form" KHC Required
Registration; provided further that the 2001 Investors may not make a KHC Demand
Request for a "long-form" KHC Required Registration and may only make two (2)
KHC Demand Requests for a "short form" KHC Required Registration and only if, at
any time after the 2001 Investor Filing Date, each 2001 Investor is unable to
sell all of its KHC Common Stock received in a distribution by the Company with
respect to its ownership of Class A or Class A-1 Units pursuant to Rule 144
under the Securities Act free of the volume restrictions thereof; provided
further that the 2002 Investors may not make a KHC Demand Request for a
"long-form" KHC Required Registration and may only make one (1) KHC Demand
Request for a "short form" KHC Required Registration and only if, at any time
after the 2002 Investor Filing Date, each 2002 Investor is unable to sell all of
its KHC Common Stock received in a distribution by the Company with respect to
its ownership of Class B-1 Units pursuant to Rule 144 under the Securities Act
free of the volume restrictions thereof; provided further that the registration
rights of the 2002 Investors shall be in addition to the registration rights
granted to ▇▇▇▇▇▇▇ and MidOcean under Section 4.1(a)(ii); and provided further
that KHC shall not be required to comply with more than two (2) KHC Demand
Requests during any twelve (12) month period.
(b) Piggyback Rights. Upon receipt by KHC of any KHC
Demand Request, KHC shall deliver a written notice (a "KHC Demand Notice") to
the Company and to each Unitholder who holds KHC Registrable Securities obtained
through a distribution of such securities by the Company who did not make such
KHC Demand Request stating that KHC intends to comply with a KHC Demand Request
and informing the Company and each such Unitholder of its right to include KHC
Registrable Securities in such KHC Required Registration. Within ten (10)
Business Days after receipt of a KHC Demand Notice, the Company and each such
Unitholder shall have the right to request in writing that KHC include all or a
specific portion of the KHC Registrable Securities held by the Company or such
Unitholder in such KHC Required Registration.
(c) Postponement. KHC may postpone any KHC Required
Registration for a reasonable period of time, not to exceed one hundred eighty
(180) days, if the KHC Board of Directors determines in good faith that such KHC
Required Registration would (i) require the disclosure of a material transaction
or other matter and such disclosure would be disadvantageous to KHC or (ii)
adversely affect a material financing, acquisition, disposition of
47
assets or stock, merger or other transaction to which KHC may enter into;
provided that KHC may postpone a KHC Required Registration only once during any
twelve (12) month period.
(d) Time for Filing and Effectiveness. On or before the
date which is sixty (60) days after the KHC Demand Request, KHC shall file with
the SEC the KHC Required Registration with respect to all KHC Registrable
Securities to be so registered, and shall use its reasonable efforts to cause
such KHC Required Registration to become effective as promptly as practicable
after the filing thereof, but in no event later than the day which is one
hundred twenty (120) days after the date of the KHC Demand Request.
(e) Selection of Underwriters. In the event that the KHC
Registrable Securities to be registered pursuant to a KHC Required Registration
are to be disposed of in an underwritten Public Offering, the underwriters of
such Public Offering shall be one or more underwriting firms of nationally
recognized standing selected by KHC and reasonably acceptable to the Company and
Unitholders that together hold a majority of the KHC Registrable Securities to
be included in such KHC Required Registration.
(f) Priority on KHC Required Registrations. In the event
that, in the case of any KHC Required Registration, the managing underwriter for
the Public Offering contemplated by Section 4.1(e) shall advise KHC in writing
(with a copy to each holder of KHC Registrable Securities requesting sale) that,
in such underwriter's opinion, the amount of securities requested to be included
in such KHC Required Registration would adversely affect the Public Offering and
sale (including pricing) of such KHC Registrable Securities (such writing to
state the basis of such opinion and the approximate number of KHC Registrable
Securities that may be included in such Public Offering without such effect),
KHC will include in such KHC Required Registration the number of KHC Registrable
Securities that KHC is so advised can be sold in such Public Offering in the
following amounts:
(i) first, prior to the KSI Termination Date, all KHC
Registrable Securities of KSI requested to be sold by KSI;
(ii) second, all KHC Registrable Securities requested
to be sold by the Company;
(iii) third, pro rata among MidOcean, the ▇▇▇▇▇▇▇
Investor Group, the 2001 Investors, the 2002 Investors, the Senior
Unitholders, the TCP Unitholders, the Ares Unitholders and the holders
of Profits Units on the basis of the number of KHC Registrable
Securities requested to be registered by such holders;
(iv) fourth, all KHC Registrable Securities requested
to be sold by all other holders of KHC Registrable Securities pursuant
to this Section 4.1 pro rata among such holders on the basis of the
number of KHC Registrable Securities requested to be registered by such
holders; provided however that if such managing underwriter shall
advise KHC that, in such underwriter's opinion, the inclusion of KHC
Registrable Securities held by Management Holders would adversely
affect the Public Offering and sale (including pricing) of such
securities, then the number of KHC Registrable Securities
48
held by such Management Holders (other than ▇▇▇▇▇▇▇) to be included in
such Public Offering may be disproportionately reduced to avoid such
adverse result; and
(v) fifth, securities proposed to be sold by KHC for
its own account or for other holders of KHC Equity Securities with
registration rights with respect to such securities.
(g) Additional KHC Demand Requests. In the event that KHC
postpones any KHC Required Registration in accordance with Section 4.1(c) by
more than sixty (60) days, the KHC Demand Request pursuant to which such KHC
Required Registration was to have been made may be withdrawn by the Unitholder
who initiated such KHC Demand Request and shall not be deemed to be a KHC Demand
Request pursuant to Section 4.1(a).
Section 4.2 KHC Incidental Registration.
(a) Filing of Registration Statement. If KHC proposes to
register any of its securities (x) for its own account in its initial Public
Offering and includes in such registration any securities to be sold for the
account of any other Person; or (y) for its own account or for the account of
any other Person at any time after its initial Public Offering (other than a KHC
Required Registration) (any such proposed registration being a "KHC Incidental
Registration") under the Securities Act (other than pursuant to a registration
statement on Form S-4, or Form S-8, or Form S-3 in the case of a registration
solely for resale of securities issued as consideration in an acquisition of a
Person by KHC, or any successor forms thereto or Section 4.1 hereof) for sale in
a Public Offering, it will at each such time give prompt written notice to the
holders of all KHC Registrable Securities of its intention to do so, which
notice shall be given at least thirty (30) days prior to the date that a
registration statement relating to such registration is proposed to be filed
with the SEC. Upon the written request of the Company or any Unitholder holding
KHC Registrable Securities to include KHC Registrable Securities held by it
under such registration statement (which request shall (i) be made within
fifteen (15) days after the receipt of any such notice, and (ii) specify the KHC
Registrable Securities intended to be included by such holder), KHC will use its
reasonable efforts to effect the registration of all KHC Registrable Securities
that KHC has been so requested to register; 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 registration, KHC shall determine for any reason to terminate such
registration statement and not to register such securities, KHC may, at its
election, give written notice of such determination to each such holder and,
thereupon, shall be relieved of its obligation to register any KHC Registrable
Securities of such Persons in connection with such registration.
(b) Selection of Underwriters. Notice of KHC's intention
to register such securities shall designate the proposed underwriters of such
Public Offering (which shall be one or more underwriting firms of nationally
recognized standing) and shall contain KHC's agreement to use its reasonable
efforts, if requested to do so, to arrange for such underwriters to include in
such underwriting the KHC Registrable Securities that KHC has been so requested
to sell pursuant to this Section 4.2, it being understood that the holders of
KHC Registrable Securities shall have no right to select different underwriters
for the disposition of their KHC Registrable Securities.
49
(c) Priority on KHC Incidental Registrations. If the
managing underwriter for the Public Offering contemplated by this Section 4.2
shall advise KHC in writing that, in such underwriter's opinion, the number of
securities requested to be included in such KHC Incidental KHC Registration
would adversely affect the Public Offering and sale (including pricing) of such
securities (such writing to state the basis of such opinion and the approximate
number of securities that may be included in such Public Offering without such
effect), KHC shall include in such KHC Incidental Registration the number of
securities that KHC is so advised can be sold in such Public Offering, in the
following amounts and order of priority:
(i) first, securities proposed to be sold by KHC for
its own account and any securities proposed to be offered by KHC for
the account of such Person who has exercised its demand registration
rights other than pursuant to this Agreement; provided that such other
Person is not an owner of ten percent (10%) or more of the KHC Equity
Securities or an Affiliate of KHC, in which case such other Person's
priority shall be governed by clause (iv) below; provided further that
for the purposes of this Section 4.2, any underwriter acting in its
capacity as such shall not be deemed an Affiliate of KHC;
(ii) second, if prior to the KSI Termination Date,
the KHC Registrable Securities of KSI proposed to be registered by the
KSI Holders pro rata among such KSI Holders on the basis of the number
of KHC Registrable Securities of KSI requested to be sold by such
stockholders pursuant to this Section 4.2, then the KHC Registrable
Securities requested to be registered by the Company pursuant to this
Section 4.2;
(iii) third, the KHC Registrable Securities requested
to be registered by the Unitholders pro rata among such Unitholders on
the basis of the number of KHC Registrable Securities requested to be
sold by such Unitholders pursuant to this Section 4.2; provided however
that if such managing underwriter shall advise KHC that, in such
underwriter's opinion, the inclusion of KHC Registrable Securities held
by Management Holders would adversely affect the Public Offering and
sale (including pricing) of such securities, then the number of KHC
Registrable Securities held by such Management Holders (other than
▇▇▇▇▇▇▇) to be included in such Public Offering may be
disproportionately reduced to avoid such adverse result; and
(iv) fourth, pro rata among all other holders of KHC
Equity Securities with registration rights with respect to such
securities.
Section 4.3 Registration Procedures. KHC will use its
reasonable efforts to effect each KHC Required Registration pursuant to Section
4.1 and each KHC Incidental Registration pursuant to Section 4.2, and to
cooperate with the sale of such KHC Registrable Securities in accordance with
the intended method of disposition thereof as quickly as possible, and KHC will
as expeditiously as possible:
(a) subject, in the case of a KHC Incidental
Registration, to the proviso to Section 4.2(a), prepare and file with the SEC
the registration statement and use its reasonable efforts to cause the KHC
Registration to become effective; provided however that, to the extent
practicable, at least ten (10) Business Days prior to filing any registration
statement or prospectus or any amendments or supplements thereto, KHC will
furnish to the holders of the
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KHC Registrable Securities covered by such registration statement and their
counsel, copies of all such documents proposed to be filed and any such holder
shall have the opportunity to comment on any information pertaining solely to
such holder and its plan of distribution that is contained therein and KHC shall
make the corrections reasonably requested by such holder with respect to such
information prior to filing any such registration statement or amendment;
(b) subject, in the case of a KHC Incidental
Registration, to the proviso to Section 4.2(a), prepare and file with the SEC
such amendments and post-effective amendments to any registration statement and
any prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all KHC Registrable Securities
covered by such registration statement until such time as all of such KHC
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement and cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;
(c) furnish, upon request, to each holder of KHC
Registrable Securities to be included in such KHC Registration and the
underwriter or underwriters, if any, without charge, one signed copy of the
registration statement and any post-effective amendment thereto, and such number
of conformed copies thereof and such number of copies of the prospectus
(including each preliminary prospectus and each prospectus filed under Rule 424
under the Securities Act), any amendments or supplements thereto and any
documents incorporated by reference therein, as such holder or underwriter may
reasonably request in order to facilitate the disposition of the KHC Registrable
Securities being sold by such holder (it being understood that KHC consents to
the use of the prospectus and any amendment or supplement thereto by each holder
of KHC Registrable Securities covered by such registration statement and the
underwriter or underwriters, if any, in connection with the Public Offering and
sale of the KHC Registrable Securities covered by the prospectus or any
amendment or supplement thereto);
(d) notify each holder of the KHC Registrable Securities
to be included in such KHC Registration and the underwriter or underwriters, if
any:
(i) of any stop order or other order suspending the
effectiveness of any registration statement, issued or threatened by
the SEC in connection therewith, and take all reasonable actions
required to prevent the entry of such stop order or to remove it or
obtain withdrawal of it at the earliest possible moment if entered;
(ii) when such registration statement or any
prospectus used in connection therewith, or any amendment or supplement
thereto, has been filed and, with respect to such registration
statement or any post-effective amendment thereto, when the same has
become effective;
(iii) of any written request by the SEC for
amendments or supplements to such registration statement or prospectus;
and
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(iv) of the receipt by KHC of any notification with
respect to the suspension of the qualification of any KHC Registrable
Securities for sale under the applicable securities or blue sky laws of
any jurisdiction;
(e) if requested by the managing underwriter or
underwriters or any holder of KHC Registrable Securities to be included in such
KHC Registration in connection with any sale pursuant to a registration
statement, promptly incorporate in a prospectus supplement or post-effective
amendment such information relating to such underwriting as the managing
underwriter or underwriters or such holder reasonably requests to be included
therein; and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters incorporated in such prospectus supplement or post-effective amendment;
(f) on or prior to the date on which a KHC Registration
is declared effective, use its reasonable efforts to register or qualify, and
cooperate with the holders of KHC Registrable Securities to be included in such
KHC Registration, the underwriter or underwriters, if any, and their counsel in
connection with the registration or qualification of the KHC Registrable
Securities covered by such KHC Registration, for offer and sale under the
securities or "blue sky" laws of each state and other jurisdiction of the United
States as any such holder or underwriter reasonably requests in writing; use its
reasonable efforts to keep each such registration or qualification effective,
including through new filings, or amendments or renewals, during the period such
registration statement is required to be kept effective; and do any and all
other acts or things necessary or advisable to enable the disposition of the KHC
Registrable Securities in all such jurisdictions reasonably requested to be
covered by such KHC Registration; provided however that KHC shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;
(g) in connection with any sale pursuant to a KHC
Registration, cooperate with the holders of KHC Registrable Securities to be
included in such KHC Registration and the managing underwriter or underwriters,
if any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing securities to be sold under such
KHC Registration, and enable such securities to be in such denominations and
registered in such names as the managing underwriter or underwriters, if any, or
such holders may request;
(h) use its reasonable efforts to cause the KHC
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities within the United States and having
jurisdiction over KHC or any Subsidiary as may be necessary to enable the seller
or sellers thereof or the underwriter or underwriters, if any, to consummate the
disposition of such securities;
(i) use its reasonable efforts to obtain:
(A) at the time of effectiveness of each KHC
Registration, a "cold comfort letter" from KHC's independent certified
public accountants covering such matters of the type customarily
covered by "cold comfort letters" as the holders of a
52
majority of the KHC Registrable Securities to be included in such KHC
Registration and the underwriters reasonably request; and
(B) at the time of any underwritten sale pursuant to
the registration statement, a "bring-down comfort letter," dated as of
the date of such sale, from KHC's independent certified public
accountants covering such matters of the type customarily covered by
"bring-down comfort letters" as the Requisite Holders and the
underwriters reasonably request;
(j) use its reasonable efforts to obtain, at the time of
effectiveness of each KHC Registration and at the time of any sale pursuant to
each KHC Registration, an opinion or opinions addressed to the holders of the
KHC Registrable Securities to be included in such KHC Registration and the
underwriter or underwriters, if any, in customary form and scope from counsel
for KHC (who may be its internal counsel);
(k) notify each seller of KHC Registrable Securities
covered by such KHC Registration, upon discovery that, or upon the happening of
any event as a result of which, the prospectus included in such KHC
Registration, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, and promptly prepare and file
with the SEC and furnish to such seller or holder a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers or prospective purchasers of
such securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances under which they are made;
(l) otherwise comply with all applicable rules and
regulations of the SEC, and make generally available to its security holders (as
contemplated by Section 11(a) under the Securities Act) an earnings statement
satisfying the provisions of Rule 158 under the Securities Act no later than
ninety (90) days after the end of the twelve (12) month period beginning with
the first month of KHC's first fiscal quarter commencing after the effective
date of the registration statement, which statement shall cover said twelve (12)
month period;
(m) provide and cause to be maintained a transfer agent
and registrar for all KHC Registrable Securities covered by each KHC
Registration from and after a date not later than the effective date of such KHC
Registration;
(n) use its reasonable efforts to cause all KHC
Registrable Securities covered by each KHC Registration to be listed subject to
notice of issuance, prior to the date of first sale of such KHC Registrable
Securities pursuant to such KHC Registration, on each securities exchange on
which the KHC Common Stock is then listed, and admitted to trading on Nasdaq, if
the KHC Common Stock or any such other securities of KHC are then admitted to
trading on Nasdaq; and
53
(o) enter into such agreements (including underwriting
agreements in customary form) and take such other actions as the Requisite
Holders shall reasonably request in order to expedite or facilitate the
disposition of such KHC Registrable Securities.
KHC may require each holder of KHC Registrable Securities that will be included
in such KHC Registration to furnish KHC with such information in respect of such
holder as KHC may reasonably request in writing and as is required by Applicable
Law.
Section 4.4 Preparation; Reasonable Investigation. In
connection with the preparation and filing of each registration statement
registering KHC Registrable Securities under the Securities Act, KHC shall give,
upon reasonable notice and during normal business hours, the holders of such KHC
Registrable Securities so registered, their underwriters, if any, and their
respective counsel and accountants access to its books and records and an
opportunity to discuss the business of KHC with its officers and the independent
public accountants who have certified its financial statements as shall be
necessary, in the opinion of such holders' or such underwriters' to conduct a
reasonable investigation within the meaning of Section 11(b)(3) of the
Securities Act.
Section 4.5 Rights of Requesting Holders. Each holder of KHC
Registrable Securities to be included in a KHC Registration which makes a
written request therefor in Section 4.1 or 4.2, as the case may be, shall have
the right to receive within thirty (30) days of receipt by KHC of such request
copies of the information, notices and other documents described in Section
4.3(l) and Section 4.3(o).
Section 4.6 KHC Registration Expenses. KHC will pay all KHC
Registration Expenses in connection with each registration of KHC Registrable
Securities, including, without limitation, any such registration not effected by
KHC; provided first if the Ares Unitholders make a KHC Demand Request at any
time that the Ares Unitholders own three percent (3%) or less of the KHC Common
Stock and is able to immediately sell all of its KHC Common Stock pursuant to
Rule 144 under the Securities Act free of volume restrictions, then the Ares
Unitholders shall be required to pay for their proportionate share of all KHC
Registration Expenses; and provided second if the TCP Unitholders make a KHC
Demand Request at any time that the TCP Unitholders own three percent (3%) or
less of the KHC Common Stock and is able to immediately sell all of its KHC
Common Stock pursuant to Rule 144 under the Securities Act free of volume
restrictions, then the TCP Unitholders shall be required to pay for their
proportionate share of all KHC Registration Expenses.
Section 4.7 Indemnification; Contribution. (a) KHC shall
indemnify, to the fullest extent permitted by law, each holder of KHC
Registrable Securities, its officers, directors, partners, employees and agents,
if any, and each Person, if any, who controls such holder within the meaning of
Section 15 of the Securities Act, against all losses, claims, damages,
liabilities (or proceedings in respect thereof) and expenses (under the
Securities Act or common law or otherwise), joint or several, resulting from any
violation by KHC of the provisions of the Securities Act or any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus (and as amended or supplemented if amended or
supplemented) or any preliminary prospectus or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements
54
therein (in the case of any prospectus, in light of the circumstances under
which they were made) not misleading, except to the extent that such losses,
claims, damages, liabilities (or proceedings in respect thereof) or expenses are
caused by any untrue statement or alleged untrue statement contained in or by
any omission or alleged omission from information concerning any holder of KHC
Registrable Securities furnished in writing to KHC by such holder expressly for
use therein. If the Public Offering pursuant to any registration statement
provided for under this Article IV is made through underwriters, no action or
failure to act on the part of such underwriters (whether or not such underwriter
is an Affiliate of any holder of KHC Registrable Securities) shall affect the
obligations of KHC to indemnify any holder of KHC Registrable Securities or any
other Person pursuant to the preceding sentence. If the Public Offering pursuant
to any registration statement provided for under this Article IV is made through
underwriters, KHC agrees to enter into an underwriting agreement in customary
form with such underwriters and KHC agrees to indemnify such underwriters, their
officers, directors, employees and agents, if any, and each Person, if any, who
controls such underwriters within the meaning of Section 15 of the Securities
Act to the same extent as herein before provided with respect to the
indemnification of the holders of KHC Registrable Securities; provided that KHC
shall not be required to indemnify any such underwriter, or any officer,
director or employee of such underwriter or any Person who controls such
underwriter within the meaning of Section 15 of the Securities Act, to the
extent that the loss, claim, damage, liability (or proceedings in respect
thereof) or expense for which indemnification is claimed results from such
underwriter's failure to send or give a copy of an amended or supplemented final
prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of KHC Registrable Securities to such Person if such
statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was provided
with such amended or supplemented final prospectus.
(b) In connection with any registration statement in
which a holder of KHC Registrable Securities is participating, each such holder,
severally and not jointly, shall indemnify, to the fullest extent permitted by
law, KHC, each underwriter and their respective officers, directors, employees
and agents, if any, and each Person, if any, who controls KHC or such
underwriter within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages, liabilities (or proceedings in respect thereof) and
expenses resulting from any untrue statement or alleged untrue statement of a
material fact, or any omission or alleged omission of a material fact required
to be stated in the registration statement or prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein (in the case of any prospectus, in light of the
circumstances under which they were made) not misleading, but only to the extent
that such untrue statement is contained in or such omission is from information
so concerning a holder furnished in writing by such holder expressly for use
therein; provided that such holder's obligations hereunder shall be limited to
an amount equal to the net proceeds to such holder of the KHC Registrable
Securities sold pursuant to such registration statement; and provided further
that, without such holder's consent, such holder shall not be required to
indemnify KHC, any such underwriter, or any of their officers, directors or
employees or any Person who controls KHC or such underwriter within the meaning
of Section 15 of the Securities Act, to the extent that the loss, claim, damage,
liability (or proceedings in respect thereof) or expense for which
indemnification is claimed results from such underwriter's failure to send or
give a copy of an amended or supplemented final
55
prospectus to the Person asserting an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of KHC Registrable Securities to such Person if such
statement or omission was corrected in such amended or supplemented final
prospectus prior to such written confirmation and the underwriter was provided
with such amended or supplemented final prospectus.
(c) Any Person entitled to indemnification under the
provisions of this Section 4.7 shall (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist in respect of such
claim, permit such indemnifying party to assume the defense of such claim, with
counsel reasonably satisfactory to the indemnified party; and if such defense is
so assumed, such indemnifying party shall not enter into any settlement without
the consent of the indemnified party if such settlement attributes liability to
the indemnified party and such indemnifying party shall not be subject to any
liability for any settlement made without its consent (which shall not be
unreasonably withheld); and any underwriting agreement entered into with respect
to any registration statement provided for under this Article IV shall so
provide. In the event an indemnifying party shall not be entitled, or elects
not, to assume the defense of a claim, such indemnifying party shall not be
obligated to pay the fees and expenses of more than one counsel or firm of
counsel for all parties indemnified by such indemnifying party in respect of
such claim, unless in the reasonable judgment of any such indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties in respect to such claim.
(d) If for any reason the foregoing indemnity is
unavailable, then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other or (ii) if the allocation provided by clause (i)
above is not permitted by Applicable Law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, in such proportion as
is appropriate to reflect not only the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other but
also the relative fault of the indemnifying party and the indemnified party as
well as any other relevant equitable considerations. Notwithstanding the
foregoing, no holder of KHC Registrable Securities shall be required to
contribute any amount in excess of the amount such holder would have been
required to pay to an indemnified party if the indemnity under Section 4.7(b)
was available. 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. The obligation of any Person to contribute pursuant to this
Section 4.7 shall be several and not joint.
(e) An indemnifying party shall make payments of all
amounts required to be made pursuant to the foregoing provisions of this Section
4.7 to or for the account of the indemnified party from time to time promptly
upon receipt of bills or invoices relating thereto or when otherwise due or
payable.
56
(f) The indemnity and contribution agreements contained
in this Section 4.7 shall remain in full force and effect regardless of any
investigation made by or on behalf of a participating holder of KHC Registrable
Securities, its officers, directors, members, agents or any Person, if any, who
controls such holder as aforesaid, and shall survive the Transfer of Equity
Securities by such holder and the termination of this Agreement.
Section 4.8 Holdback Agreements; Registration Rights to
Others. (a) In the event and to the extent requested by the managing underwriter
or, if the KHC Registrable Securities are not being disposed of in an
underwritten Public Offering, if requested by KHC, the Company, the KSI Holders
and each Unitholder agrees not to sell, make any short sale of, grant any option
for the purchase of, or otherwise dispose of any securities other than those KHC
Registrable Securities included in such KHC Registration pursuant to Section
4.1(a), 4.1(b) or 4.2(a) for the thirty (30) days prior to and up to one hundred
eighty (180) days after the effectiveness of the registration statement pursuant
to which such Public Offering shall be made (or such shorter period of time as
is sufficient and appropriate, in the opinion of the managing underwriter or, as
the case may be, KHC in order to complete the sale and distribution of the
securities included in such Public Offering); provided that the limitations
contained in this Section 4.8 shall not apply to the extent a Unitholder is
prohibited by Applicable Law from so withholding such securities from sale
during such period; provided, further, that in the event that the underwriters
or KHC, as the case may be, release the Company, MidOcean, any member of the
▇▇▇▇▇▇▇ Group or Gryphon from the restrictions set forth in this Section 4.8,
each of the holders of KHC Registrable Securities distributed by the Company
with respect to Preferred Units, pro rata on a Deemed Converted Basis, shall be
similarly released with respect to the percentage of securities that is equal to
the percentage of securities as to which the Company, MidOcean, any such member
of the ▇▇▇▇▇▇▇ Group or Gryphon, as the case may be, was released (as determined
by dividing the number of securities released by the aggregate number of
securities held by such holder).
(b) At such time as no KHC Registrable Securities of KSI
remain outstanding or issuable, the restrictions set forth in Section 4.1(a) for
the benefit of the KSI Holders shall terminate; provided that nothing herein
shall be deemed to affect any security interest or pledge on the KHC Registrable
Securities.
57
Section 4.9 Availability of Information. Following KHC's
initial Public Offering, KHC shall comply with the reporting requirements of
Sections 13 and 15(d) of the Exchange Act and with all other public information
reporting requirements of the SEC as from time to time in effect, and cooperate
with the Company and Members who are holders of KHC Registrable Securities, so
as to permit disposition of the KHC Registrable Securities pursuant to an
exemption from the Securities Act for the sale of any KHC Registrable Securities
(including, without limitation, the current public information requirements of
Rule 144(c) and Rule 144A under the Securities Act). KHC shall cooperate with
holders of any KHC Registrable Securities in supplying such information as may
be necessary for such holder to complete and file any information reporting
forms presently or hereafter required by the SEC as a condition to the
availability of an exemption from the Securities Act for the sale of any KHC
Registrable Securities.
ARTICLE V
BOARD OF DIRECTORS OF THE COMPANY, KSI AND KHC
Section 5.1 Board of Directors. (a) Subject to Applicable Law,
each holder of Voting Securities agrees to vote, at any time and from time to
time, all of the Voting Securities held by such Person and all other Voting
Securities over which he or it has voting control and shall take all other
necessary or desirable action within his or its control (whether in his or its
capacity as a Member, director or officer of the Company or otherwise), and the
Company shall take all necessary or desirable action within its control, in
order to elect and maintain a twelve (12) member Company Board, which shall
include: (i) three (3) directors designated by MidOcean, (ii) three (3)
directors designated by ▇▇▇▇▇▇▇, (iii) one (1) director who is a member of
senior management of the Company designated from time to time by Persons owning
a majority of Voting Securities issued and outstanding held by all Members, (iv)
three (3) directors designated by Gryphon, (v) unless waived by the TCP
Unitholders, one (1) director selected by the TCP Unitholders and (vi) unless
waived by the Ares Unitholders, one (1) director selected by the Ares
Unitholders. If any of MidOcean, ▇▇▇▇▇▇▇ or Gryphon cease to hold at least 6.5%,
but holds more than 4.5% of the Voting Securities, such Person shall only
designate two (2) directors and the director that ceases to be designed by such
Person shall be designated by a majority of the then current directors. If any
of MidOcean, ▇▇▇▇▇▇▇ or Gryphon cease to hold at least 4.5%, but holds more than
1% of the Voting Securities, such Person shall only designate one director and
the directors that cease to be designated by such Person shall designated by a
majority of the then current directors. If any of MidOcean, ▇▇▇▇▇▇▇, Gryphon,
the TCP Unitholders or the Ares Unitholders ceases to hold at least 1% of the
Voting Securities, such person shall not be allowed to designate any director
and the directors that cease to be designated by such person shall be designated
by a majority of the then current directors. Any change in the number of
directors of the Company Board shall require approval of a majority of directors
then constituting the entire Company Board, so long as such number does not
conflict with the representation requirements of this Section 5.1.
(b) In the event that any director designated by
MidOcean, ▇▇▇▇▇▇▇, Gryphon, TCP Unitholders or Ares Unitholders ceases to serve
as a director during his or her term of office, the resulting vacancy on the
Company Board shall be filled by a director
58
designated by MidOcean, ▇▇▇▇▇▇▇, Gryphon, TCP Unitholders or Ares Unitholders,
as applicable.
(c) So long as MidOcean, ▇▇▇▇▇▇▇, Gryphon, the TCP
Unitholders or the Ares Unitholders, as the case may be, are entitled to
designate directors pursuant to Section 5.1(a), the removal of any director
designated by MidOcean, ▇▇▇▇▇▇▇, Gryphon, the TCP Unitholders or the Ares
Unitholders, as the case may be, the Members may be only at the written request
of MidOcean, ▇▇▇▇▇▇▇, Gryphon, the TCP Unitholders or the Ares Unitholders, as
applicable.
(d) Notwithstanding anything in the Certificate of
Formation or LLC Agreement to the contrary, any action taken by the Company
Board shall only be effective if (i) taken at a Duly Convened Meeting, (ii) for
so long as each of MidOcean, ▇▇▇▇▇▇▇ and Gryphon has the right to designate at
least one board seat pursuant to Section 5.1(a), at least a majority of the
directors designated by at least two (2) of the following three (3) entities
voted in favor of such action or resolution: (A) MidOcean, (B) ▇▇▇▇▇▇▇ and (C)
Gryphon, and (iii) at least a majority of all directors (or such greater number
as shall be required by the Certificate of Formation or LLC Agreement or
Applicable Law) vote in favor of such action or resolution.
(e) The Company Board may, from time to time, delegate to
one or more Persons (including through the creation and establishment of one or
more committees) such authority and duties as the Company Board may deem
advisable in compliance with Applicable Law. Any delegation pursuant to this
Section 5.1(e) may be revoked at any time. Unless otherwise waived by the TCP
Unitholders or the Ares Unitholders, as applicable, the composition of any
committee of the Company Board (including the Executive Committee) shall, for so
long as the TCP Unitholders or the Ares Unitholders, as applicable, have a right
to designate a director pursuant to Section 5.1, include the directors
designated by the TCP Unitholders and the Ares Unitholders.
(f) The Company Board shall (i) create a special board
committee to manage the sale of KSI, which committee shall satisfy the
requirements of Section 5.1(e); (ii) form a special board committee to hire a
Chief Financial Officer of KSI, which committee shall satisfy the requirements
of Section 5.1(e); and (iii) cause the Company to retain an outside consultant
or advisor recommended by a majority of the TCP Unitholders and the Ares
Unitholders holding a majority of the TCP Units and Ares Units, respectively,
voting together as a class, and that is reasonably acceptable to the Company,
who shall report to the Company Board and advise management on cash-flow
forecasting.
(g) The Company Board shall convene meetings at least
quarterly.
(h) The Company Board will, and each Member holding
Voting Securities of KSI or KHC, as applicable, agrees to, exercise its voting
power over the securities of each Subsidiary (other than a Public Kinetics
Entity) to cause the composition of the Board of Directors of each such
Subsidiary to replicate the composition of the Company Board (as determined in
accordance with the terms of this Article V, which for the avoidance of doubt
include a director designated by the TCP Unitholders and a director designated
by the Ares
59
Unitholders) and, in addition to the foregoing provisions of this Section 5.1,
the following shall also apply (other than with respect to a Public Kinetics
Entity):
(i) All decisions and determinations relating to the
compensation, responsibilities and other employment matters of (i) any
officer of KHC or KSI or any of their respective Subsidiaries or (ii)
any employee of KHC or KSI or any of their respective Subsidiaries
earning in excess of $175,000 per annum, including, without limitation,
decisions whether to hire or terminate the employment of any such
Person, shall be made by a majority of the members of the Board of the
Directors of KHC or KSI, as applicable.
(ii) As consideration for their agreement to serve as
members of a Board of Directors of KSI and/or KHC, the entity for which
such individual serves as a director may pay to each director who is
not an employee of KSI, KHC or any of its respective Subsidiaries an
annual fee, in an amount determined from time to time by the Board of
Directors of such entity, and shall reimburse each member of the Board
of Directors for such entity for its reasonable, documented out of
pocket expenses in connection with attending meetings of such Board of
Directors.
(i) Upon the consummation of an initial Public Offering
with respect to KHC or KSI, (1) the foregoing provisions of this Section 5.1
shall cease to apply to such Public Kinetics Entity and (2) the following
provisions shall thereafter apply to such Public Kinetics Entity to the extent
permitted by Applicable Law and the applicable listing standards of Nasdaq or
any such other exchange or quotation service on which the Public Kinetics
Entity's securities are listed or quoted:
(i) For so long as MidOcean, ▇▇▇▇▇▇▇ and
Gryphon have a right to appoint one or more directors to the Board of
Directors of a Public Kinetics Entity, the size of the Board of
Directors of such Public Kinetics Entity shall be no fewer than six
members and no more than nine members, without the consent of MidOcean,
▇▇▇▇▇▇▇ and Gryphon.
(ii) The Company will exercise its voting
power over the Public Kinetics Entity to approve the election of
members of the Board of Directors of KSI or KHC, respectively,
designated as nominees as set forth in this Section 5.1(i).
(iii) At any time prior to a complete
distribution of KSI or KHC securities to the Unitholders,
(1) subject to Section
5.1(i)(iii)(2), at any time prior to a Primary Sell-Down Event, such
Public Kinetics Entity shall take all reasonably necessary action
within its control, to nominate for election by such Public Kinetics
Entity stockholders a Board of Directors, which shall include: (i) two
(2) directors designated by MidOcean, (ii) two (2) directors designated
by ▇▇▇▇▇▇▇, and (iii) two (2) directors designated by Gryphon, one
designee from each of these entities qualifying as an individual who is
"independent" and qualified to serve as a member of the Audit Committee
of the Public Kinetics Entity (but not requiring such individual to
qualify to be determined to be an "audit committee financial expert")
as defined under the listing
60
standards promulgated under Nasdaq listing standards, the SEC rules
promulgated pursuant to Section 301 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, and
Rule 10A-3(b)(1) of the Exchange Act, as amended, or any successor rule
or regulation (such designee, the "Additional Designated Director"),
and
(2) at any time after a Primary
Sell-Down Event but prior to a Secondary Sell-Down Event, such Public
Kinetics Entity shall take all reasonably necessary action within its
control, to nominate for election by such Public Kinetics Entity
stockholders a Board of Directors, which shall include one director
designated by each of MidOcean, ▇▇▇▇▇▇▇ and Gryphon.
(iv) At any time following a complete
distribution of KSI or KHC securities to the Unitholders, such Public
Kinetics Entity shall take all reasonably necessary action within its
control, so that:
(1) subject to Section
5.1(i)(iv)(2), until such time as MidOcean, ▇▇▇▇▇▇▇ and Gryphon,
respectively, cease hold at least 10% of the outstanding Voting
Securities of the Public Kinetics Entity, two (2) directors designated
by MidOcean, ▇▇▇▇▇▇▇ Gryphon, as applicable (one designee from each of
these entities qualifying as an Additional Designated Director), and
(2) for so long as MidOcean,
▇▇▇▇▇▇▇ and Gryphon, respectively, hold at least 5% but less than 10%
of the outstanding Voting Securities of the Public Kinetics Entity, one
director designated by MidOcean, ▇▇▇▇▇▇▇ and Gryphon, as applicable.
(v) In the event that any director of the
Public Kinetics Entity designated by MidOcean, ▇▇▇▇▇▇▇, or Gryphon for
any reason ceases to serve as a director during his or her term of
office, the resulting vacancy on such Board of Directors shall be
filled by the Board of Directors of the Public Kinetics Entity, with
the approval of the director designated by MidOcean, ▇▇▇▇▇▇▇, Gryphon,
as applicable.
(vi) So long as MidOcean, ▇▇▇▇▇▇▇, Gryphon
or, as the case may be, the Members are entitled to designate director
nominees pursuant to this Section 5.1(i), the removal of any director
designated by MidOcean, ▇▇▇▇▇▇▇, Gryphon or, as the case may be, the
Members shall be initiated at the written request of MidOcean, ▇▇▇▇▇▇▇,
or Gryphon and the Public Kinetics Entity shall use its commercially
reasonable efforts to effect the removal or replacement of any such
Investor Designee.
Section 5.2 Major Management Decisions; Consent. (a) The
following acts, expenditures, decisions and obligations made or incurred by the
Company or any Subsidiary of the Company (other than a Public Kinetics Entity or
any Subsidiary of a Public Kinetics Entity) shall require the prior approval of
the Board of Directors of such entity and the Required Investors (it being
understood that approval by a majority of the members of the Board of Directors
designated by at least two (2) of ▇▇▇▇▇▇▇, MidOcean or Gryphon at a meeting or
by written consent shall constitute the approval of the Required Investors for
the purposes of this Section 5.2) at a Duly Convened Meeting:
61
(i) the acquisition of any Person (whether by
consolidation, merger or similar combination of the Company or any of its
Subsidiaries, with or into such Person) which increases the consolidated gross
assets of the Company (computed on a book basis) or annualized consolidated
gross revenue of the Company by more than twenty percent (20%);
(ii) the sale, conveyance, transfer or other disposition
of any type, in one transaction or in a series of related transactions, by the
Company or any of its Subsidiaries, of any assets or property (other than
inventory in the ordinary course of business) that constitute more than twenty
percent (20%) of the consolidated gross assets of the Company (computed on a
book basis) or contribute more than twenty percent (20%) to the annualized
consolidated gross revenue of the Company;
(iii) the Company or any of its Subsidiaries entering into
any line of business that is unrelated to the business of the Company or its
Subsidiaries on the date hereof; and
(iv) in addition to the provisions of the LLC Agreement,
whether or not subject to clause (ii) above, the Transfer of securities held by
the Company, including without limitation, KSI Capital Stock or KHC Capital
Stock held by the Company, and also including without limitation, a distribution
to Members of such securities, except Transfers contemplated by the
Restructuring Agreement (including, but not limited to, the Support Agreement
(as defined therein)).
(b) After the initial Public Offering of KSI or KHC, respectively,
but only for so long as MidOcean, ▇▇▇▇▇▇▇ or Gryphon have a right to designate a
director pursuant to Section 5.1(i)(iii) or Section 5.1(i)(iv), after which time
this Section 5.2(b) shall terminate, the following acts, expenditures, decisions
and obligations made or incurred by each Public Kinetics Entity shall require
the prior approval of the Board of Directors of such entity, including (1) while
each of ▇▇▇▇▇▇▇, MidOcean and Gryphon are entitled pursuant to this Agreement to
designate directors, at least two (2) of the directors designated by ▇▇▇▇▇▇▇,
MidOcean and Gryphon who are not Additional Designated Directors, (2) while two
of ▇▇▇▇▇▇▇, MidOcean and Gryphon are entitled pursuant to this Agreement to
designate directors, at least one (1) of the directors designated by ▇▇▇▇▇▇▇,
MidOcean and Gryphon who are not Additional Designated Directors, and (3) while
one of ▇▇▇▇▇▇▇, MidOcean and Gryphon is entitled pursuant to this Agreement to
designate directors, such one (1) director designated by ▇▇▇▇▇▇▇, MidOcean and
Gryphon who is not an Additional Designated Director:
(i) the acquisition of any Person (whether by
consolidation, merger or similar combination of such Public Kinetics Entity or
any of its Subsidiaries, with or into such Person) which increases the
consolidated gross assets of the Public Kinetics Entity (computed on a book
basis) or annualized consolidated gross revenue of the Public Kinetics Entity by
more than twenty percent (20%); and
(ii) the sale, conveyance, transfer or other disposition
of any type, in one transaction or in a series of related transactions, by the
Public Kinetics Entity or any of its Subsidiaries, of any assets or property
(other than inventory in the ordinary course of business) that constitute more
than twenty percent (20%) of the consolidated gross assets of the Public
62
Kinetics Entity (computed on a book basis) or contribute more than twenty
percent (20%) to the annualized consolidated gross revenue of the Public
Kinetics Entity.
ARTICLE VI
OTHER COVENANTS
Section 6.1 Financial Statements and Other Information. Each
of KSI and KHC agree to, at any time until such company files periodic financial
statements with the SEC pursuant to the Exchange Act, deliver or cause to be
delivered, to (i) the ▇▇▇▇▇▇▇ Investor Group, (ii) each Senior Unitholder and
(iii) each other Unitholder holding at such time one percent (1%) or more of the
Common Unit Equivalents:
(a) within forty five (45) days after the end of each
fiscal month of such company other than the last such month of any fiscal
quarter of such company, consolidated statements of earnings, stockholders'
equity and cash flows of each such company for such fiscal month and
consolidated balance sheets of such company as of the end of such fiscal month,
certified by the chief financial officer or controller of such company;
(b) within forty five (45) days after the end of each of
the first three (3) quarterly accounting periods in each fiscal year,
consolidated statements of earnings, stockholders' equity and cash flows of such
company for such fiscal quarter and consolidated balance sheets of such company
as of the end of such fiscal quarter, certified by the chief financial officer
or controller of such company;
(c) within one hundred twenty (120) days after the end of
each fiscal year, audited consolidated statements of earnings, stockholders'
equity and cash flows of such company for such fiscal year, and consolidated
balance sheets of each such company as of the end of such fiscal year
accompanied by the opinion of a nationally recognized independent accounting
firm selected by such company; and
(d) within sixty (60) days after the commencement of each
fiscal year of such company, a consolidated annual budget of each such company
and its Subsidiaries for such fiscal year (such annual budget to include,
without limitation, budgeted statements of earnings and sources and uses of cash
and balance sheets) accompanied by a certificate of the chief financial officer
or controller of each such company to the effect that, to the best of his or her
knowledge, such budget is a reasonable estimate for the period covered thereby.
Section 6.2 Board Observation Rights. (a) So long as the TCP
Unitholders on such date hold at least a majority of the Common Unit Equivalents
issued to them on the date hereof or at least a majority of the TCP Loans made
by them pursuant to the TCP Purchase Agreement, the holders of a majority of the
outstanding TCP Units (or Common Unit Equivalents issued on conversion thereof),
in each case considered on a Deemed Converted Basis, shall be entitled to
designate one (1) observer (the "TCP Unitholder Observer") to attend, as a
non-voting observer, all meetings (including participation in telephonic
meetings) of the Company Board, the Boards of Directors of each Subsidiary of
the Company and each committee thereof unless the TCP Unitholders have appointed
a director to such board or committee. The TCP ▇▇▇▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ either a principal of or a more senior employee of TCP or a
Person who is reasonably acceptable to the Company at the time of such
observer's appointment as the TCP Unitholder Observer.
(b) So long as the Ares Unitholders on such date hold at
least a majority of the Common Unit Equivalents issued to them on the date
hereof or at least a majority of the Ares Loans made by them pursuant to the
Senior Subordinated Purchase Agreement, the holders of a majority of the
outstanding Ares Units (or Common Unit Equivalents issued on conversion
thereof), in each case considered on a Deemed Converted Basis, shall be entitled
to designate one (1) observer (the "Ares Unitholder Observer") to attend, as a
non-voting observer, all meetings (including participation in telephonic
meetings) of the Company Board, the Boards of Directors of each Subsidiary of
the Company and each committee thereof unless the Ares Unitholders have
appointed a director to such board or committee. The Ares Unitholder Observer
shall be either a principal of or a more senior employee of Ares Management LLC
or a Person who is reasonably acceptable to the Company at the time of such
observer's appointment as the Ares Unitholder Observer.
(c) So long as the State of Michigan holds at least a
majority of the Common Unit Equivalents issued to it on the date hereof, the
State of Michigan shall be entitled to designate one (1) observer (the "State of
Michigan Observer") to attend, as a non-voting observer, all meetings (including
participation in telephonic meetings) of the Company Board and the Boards of
Directors of KSI and KHC. The State of Michigan Observer shall be a Person who
is reasonably acceptable to the Company.
(d) So long as the Teachers Insurance and Annuity
Association of America ("TIAA") holds at least a majority of the Common Unit
Equivalents issued to it on the date of this Agreement, TIAA shall be entitled
to designate one (1) observer (the "TIAA Observer") to attend, as a non-voting
observer, all meetings (including participation in telephonic meetings) of the
Company Board and the Boards of Directors of KSI and KHC. ▇▇▇▇▇▇▇ shall have the
right, in its reasonable discretion and upon prior written notice to TIAA, to
require TIAA to substitute another Person as the TIAA Observer for a Person
previously designated by TIAA as the TIAA Observer.
(e) Each of the Company, KSI and KHC, respectively, shall
provide the TCP Unitholder Observer, the Ares Unitholder Observer the State of
Michigan Observer and the TIAA Observer (such rights being inclusive, and not
duplicative, of rights granted pursuant to the TCP Purchase Agreement and the
Senior Subordinated Purchase Agreement) with (i) notice of all meetings of its
respective Board of Directors and (ii) all information delivered to the members
of such Board of Directors prior to such meetings at the same time such notice
and information is delivered to the members of its Board of Directors.
Notwithstanding the foregoing, the Company, KSI and KHC shall be entitled to (x)
excuse (i) the TCP Unitholder Observer and the Ares Unitholder Observer from any
portion of a Board of Directors meeting when the Board of Directors discusses
any matters directly relating to the Senior Subordinated Credit Agreement and/or
the TCP Purchase Agreement and/or the TCP Loans and/or the TCP Units and/or the
Ares Units and (ii) the TCP Unitholder Observer, the Ares Unitholder Observer,
the State of Michigan Observer and/or the TIAA Observer from any portion of a
Board of Directors meeting if their participation in such meeting would affect
the attorney/client privilege
64
of such company and its legal advisors and (y) withhold information from the TCP
Unitholder, the Ares Unitholder Observer, the State of Michigan Observer and/or
the TIAA Observer delivered to the Board of Directors prior to a meeting of the
Board of Directors if such company believes there is a reasonable likelihood
that the receipt of such information by (i) the TCP Unitholder Observer would
create a conflict of interest for the TCP Unitholder Observer, (ii) the Ares
Unitholder Observer would create a conflict of interest for the Ares Unitholder
Observer or (iii) the TCP Unitholder Observer, State of Michigan Observer and/or
the TIAA Observer would affect the attorney/client privilege of such company and
its legal advisors.
(f) Upon the consummation of an initial Public Offering
with respect to KHC or KSI, the Board of Director observation rights set forth
in this Section 6.2 shall cease to apply to such Public Kinetics Entity, other
than with respect to the TCP Unitholder Observer and the Ares Unitholder
Observer.
Section 6.3 Director and Officer Insurance. The Company, KSI
and KHC shall purchase and maintain customary D&O indemnification insurance
coverage for each of its directors and officers at least for so long as any
provisions of Section 5.1 remain in effect with respect to such entity.
ARTICLE VII
LIQUIDITY COVENANTS
Section 7.1 The Company agrees to:
(a) as promptly as practicable following the initial
Public Offering of KHC, use its commercially reasonable efforts to cause KHC to
consummate a Public Offering of the KHC Registrable Securities of KSI and, upon
consummation of such Public Offering, cause KSI to use the net proceeds thereof
to repay the KSI Debt (the "KSI Debt Repayment");
(b) as promptly as practicable following the KSI Debt
Repayment, (i) use its commercially reasonable efforts to cause KHC to
consummate one or more Public Offerings of KHC Registrable Securities held by
the Company to the extent necessary to generate net proceeds therefrom in an
amount at least equal to the distributions required to cause the Class C Units,
Class C-1 Units, Class D Units and Class E Units to be fully repaid and retired
and cancelled in accordance with the terms of the LLC Agreement, (ii) distribute
such net proceeds to the Members in accordance with the LLC Agreement and (iii)
retire and cancel the Class C Units, Class C-1 Units, Class D Units and Class E
Units in accordance with the terms of the LLC Agreement (the "Senior Units
Repayment"); and
(c) immediately following the Senior Units Repayment (but
subject to pledges of these shares in favor of the lenders, if any), use its
commercially reasonable efforts to distribute to the Members the KHC Equity
Securities held by the Company in accordance with the terms of the LLC
Agreement.
65
Section 7.2 Each Unitholder agrees to, and agrees to use its
commercially reasonable efforts to cause its director nominees of the Company
Board to, take all actions necessary to cause the Company to carry out the
actions set forth in Section 7.1.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Entire Agreement; Termination of Shareholders
Agreement. This Agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
arrangements or understandings (whether written or oral) with respect thereto,
except to the extent such matters are otherwise specifically addressed in the
LLC Agreement. Upon effectiveness of the Merger, the Shareholders Agreement
shall be terminated and shall no longer be in force and effect.
Section 8.2 Captions. The Article and Section captions used
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 8.3 Counterparts. For the convenience of the parties,
any number of counterparts of this Agreement may be executed by the parties
hereto and each such executed counterpart shall be deemed to be an original
instrument.
Section 8.4 Notices. All notices, consents, requests,
instructions, approvals and other communications provided for herein and all
legal process in regard hereto shall be validly given, made or served, if in
writing and delivered by personal delivery, overnight courier, telecopier or
registered or certified mail, return-receipt requested and postage prepaid
addressed as follows:
If to the Company, to:
KH LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to its
counsel:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to KSI, to:
66
Kinetic Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to KHC, to:
Celerity Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to its
counsel:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
67
If to MidOceanCapital, to:
MidOcean Capital Investors, L.P.
c/o MidOcean Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to its
counsel:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Director, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to MidOcean Celerity, to:
MidOcean Celerity Investment Partners, LP
c/o MidOcean Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to its
counsel:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Director, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇▇, to:
▇▇▇▇▇▇▇ Capital III L.P.
c/▇ ▇▇▇▇▇▇▇ Capital
Four Embarcadero Center, Suite 3640
San Francisco, CA 94111
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
68
with a copy (which shall not constitute notice) to its
counsel:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Gryphon, to:
Gryphon Partners II, L.P.
c/o Gryphon Investors
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to its
counsel:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to USF, to:
United States Filter Corporation
▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to its
counsel:
O'Melveny & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
69
If to ▇▇▇▇▇▇▇, to:
▇▇▇▇▇ ▇▇▇▇▇▇▇
Treehouse Ltd.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile:
If to Mandaric, to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
NationsBank Tower
▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile:
If to the TCP Unitholders:
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to its
counsel:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
5 Palo Alto Square, 7th Floor
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Ares Unitholders:
1999 Avenue of the Stars
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to its
counsel:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
70
and if to any of the Senior Unitholders, any of the Backstop Unitholders, any of
the Other Financial Investors, any 2001 Investor, any 2002 Investor, any of the
Management Holders or to any Profits Units Holder, to the addresses set forth
opposite each of their names on Schedule I-A, Schedule I-B, Schedule I-C,
Schedule I-D, Schedule II, Schedule III-A, Schedule III-B, Schedule IV or
Schedule V, respectively, attached hereto, or to such other address as any such
party hereto may, from time to time, designate in writing to all other parties
hereto, and any such communication shall be deemed to be given, made or served
as of the date so delivered or, in the case of any communication delivered by
mail, as of the date so received.
Section 8.5 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Company, KHC, KSI, the Unitholders
and their respective successors, assigns and Permitted Transferees. Any or all
of the rights of a Unitholder under this Agreement may be assigned or otherwise
conveyed by any Unitholder only in connection with a Transfer of Equity
Securities which is in compliance with this Agreement and the LLC Agreement or
if such assignment is otherwise agreed to by the Company Board. Assignment,
conveyance or transfer of Equity Securities will not result in such assignee,
recipient or transferee automatically becoming a member of the Company and shall
require such person to make an "Admission Event" pursuant to the terms of the
LLC Agreement.
Section 8.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO SUCH STATE'S CHOICE OF LAW PROVISIONS.
Section 8.7 Submission to Jurisdiction. (a) Each of the
parties hereto hereby irrevocably acknowledges and consents that any legal
action or proceeding brought with respect to any of the obligations arising
under or relating to this Agreement may be brought in the courts of the State of
New York, County of New York, or if it has or can acquire jurisdiction in the
United States District Court for the Southern District of New York, as the party
bringing such action or proceeding may elect, and each of the parties hereto
hereby irrevocably submits to and accepts with regard to any such action or
proceeding, for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts. Each
party hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such party, and agrees not to plead or claim, in any legal
action or proceeding with respect to this Agreement or the transactions
contemplated hereby brought in any of the aforesaid courts, that any such court
lacks jurisdiction over such party. Each party irrevocably consents to the
service of process in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to such party, at its
address for notices set forth in Section 8.4, such service to become effective
ten (10) days after such mailing. Each party hereby irrevocably waives any
objection to such service of process and further irrevocably waives and agrees
not to plead or claim in any action or proceeding commenced hereunder or under
any other documents contemplated hereby that service of process was in any way
invalid or ineffective. Subject to Section 8.7(b), the foregoing shall not limit
the rights of any party to serve process in any other manner permitted by law.
The foregoing consents to jurisdiction shall not constitute general consents to
service of process in the State of New York for any purpose except as provided
71
above and shall not be deemed to confer rights on any Person other than the
respective parties to this Agreement.
(b) Each of the parties hereto hereby waives any right it
may have under the laws of any jurisdiction to commence by publication any legal
action or proceeding with respect to this Agreement. To the fullest extent
permitted by Applicable Law, each of the parties hereto hereby irrevocably
waives the objection which it may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement in any of the courts referred to in Section 8.7(a) and hereby further
irrevocably waives and agrees not to plead or claim that any such court is not a
convenient forum for any such suit, action or proceeding.
(c) The parties hereto agree that any judgment obtained
by any party hereto or its successors or assigns in any action, suit or
proceeding referred to above may, in the discretion of such party (or its
successors or assigns), be enforced in any jurisdiction, to the extent permitted
by Applicable Law.
(d) The parties hereto agree that the remedy at law for
any breach of this Agreement may be inadequate and that should any dispute arise
concerning any matter hereunder, this Agreement shall be enforceable in a court
of equity by an injunction or a decree of specific performance. Such remedies
shall, however, be cumulative and nonexclusive, and shall be in addition to any
other remedies which the parties hereto may have.
(e) Notwithstanding the foregoing provisions of this
Section 8.7, the State of Michigan shall not be deemed to have made any
particular irrevocable submission to jurisdiction, waiver or, as the case may
be, consent in the event that the State of Michigan has delivered to the Company
prior to the date hereof a certificate of an officer of its plan administrator
stating that any such irrevocable submission to jurisdiction, waiver or consent,
as the case may be, would constitute a violation of Applicable Law.
Section 8.8 Benefits Only to Parties. Nothing expressed by or
mentioned in this Agreement is intended or shall be construed to give any
Person, other than persons indemnified pursuant to Section 3.7 or Section 4.7,
the parties hereto and their respective successors or assigns and Permitted
Transferees, any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained. This Agreement and all
conditions and provisions hereof are intended to be and are for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns and Permitted Transferees, and for the benefit of no other Person.
Section 8.9 Termination. Except for Article III, Article IV
and as otherwise expressly provided in this Agreement as to certain provisions
hereof, this Agreement shall terminate upon the termination of the Company.
Section 8.10 Publicity. Except as otherwise required by
Applicable Law none of the parties hereto shall issue or cause to be issued any
press release or make or cause to be made any other public statement in each
case relating to or connected with or arising out of this Agreement or the
matters contained herein, without obtaining the prior written consent of
MidOcean,
72
▇▇▇▇▇▇▇, Gryphon and the Company to the contents and the manner of presentation
and publication thereof.
Section 8.11 Confidentiality. Each of the parties hereto
hereby agrees that throughout the term of this Agreement it shall keep (and
shall cause its directors, officers, general and limited partners, employees,
representatives and outside advisors and its Affiliates to keep) all non-public
information received as a Unitholder relating to the Company and any of its
Subsidiaries (including any such information received prior to the date hereof;
provided that, in the case of USF, such information received by it prior to
August 30, 2000 shall not be subject to this Section 8.11) confidential except
information which (a) becomes known to such Unitholder from a source, other than
the Company, its directors, officers, employees, representatives or outside
advisors, which source is not obligated to the Company to keep such information
confidential or (b) becomes generally available to the public through no breach
of this Agreement by any party hereto. Each of the parties hereto agrees that
(i) such non-public information may be communicated to the directors, officers,
general and limited partners, employees, representatives, outside advisors and
Affiliates of any of the parties and (ii) it will cause its directors, officers,
general and limited partners, employees, representatives, outside advisors or
Affiliates to keep such non-public information confidential and will not, and
will cause its directors, officers, general and limited partners, employees,
representatives, outside advisors and Affiliates not to, use such non-public
information to either to compete with the Company and any of its Subsidiaries or
to conduct itself in a manner inconsistent with the antitrust laws of the United
States or any state. Notwithstanding the foregoing, a party hereto may disclose
non-public information if required to do so upon request for disclosure pursuant
to a federal or state freedom of information statute or by a court of competent
jurisdiction or by any governmental agency (including, but not limited to,
insurance regulators); provided however that prompt notice of such required
disclosure be given to the Company and MidOcean prior to the making of such
disclosure so that the Company and/or MidOcean may seek a protective order or
other appropriate remedy. In the event that such protective order or other
remedy is not obtained, the party hereto required to disclose the non-public
information will disclose only that portion which such party is advised by
opinion of counsel is legally required to be disclosed and will request that
confidential treatment be accorded such portion of the non-public information.
Notwithstanding the foregoing, (1) so long as a TCP Unitholder holds notes
evidencing the TCP Loans, such TCP Unitholder shall, in lieu of the foregoing
confidentiality provision, be subject to the confidentiality provisions set
forth in the TCP Purchase Agreement and (2) so long as a Ares Unitholder holds
notes evidencing the Ares Loans, such Ares Unitholder shall, in lieu of the
foregoing confidentiality provision, be subject to the confidentiality
provisions set forth in the TCP Purchase Agreement and/or the Senior
Subordinated Purchase Agreement, as applicable to the applicable Ares Loan. A
Unitholder may disclose confidential information to a prospective transferee
only if such prospective transferee enters into a confidentiality agreement with
the Company on terms satisfactory to the Company.
Section 8.12 Expenses. The Company shall reimburse each of the
respective members of its Board who are not employees of the Company or any of
its Subsidiaries, the TCP Unitholder Observer and the Ares Unitholder Observer
for their travel and reasonable out-of-pocket expenses incurred in connection
with their serving on the Board or, as the case may be, attending Board meetings
as an observer. Employees of the Company or any of its Subsidiaries who incur
expenses in connection with their attendance of meetings of the Board in the
73
performance of their duties shall also be reimbursed in accordance with the
Company's or such Subsidiary's, as applicable, usual expense reimbursement
policies.
Section 8.13 Amendments; Waivers. (a) Except as otherwise
expressly provided in this Agreement, no provision of this Agreement may be
amended, modified or waived without the prior written consent of the holders of
more than two thirds of the Voting Securities, voting as a single class on a
Deemed Converted Basis; provided that, in each case, no such amendment,
modification or waiver shall (A) disproportionately adversely affect the right
of any Member or Class of Units hereunder without the prior written consent of
each such Member or Class Amendment Consent of such Class or amend this clause
(A) with respect to any Member without the prior consent of such Member, (B)
amend any right specifically granted to such Unitholder but not to all other
Unitholders without the prior written consent of such Unitholder to which such
right is specifically granted, (C) amend the rights of MidOcean, ▇▇▇▇▇▇▇ and
Gryphon specifically granted to them in Sections 2.5, 2.6, 5.1 and Section 5.2
unless such Unitholder ceases to own 6.5% of the Voting Securities, (D) amend
Article VII without the prior written consent of (i) MidOcean, (ii) ▇▇▇▇▇▇▇,
(iii) Gryphon, (iv) the Ares Unitholders holding a majority of then outstanding
Ares Units on a Deemed Converted Basis and (v) the TCP Unitholders holding a
majority of then outstanding TCP Units on a Deemed Converted Basis, (E) amend
Section 4.1(a)(iii)(D) or the eighth proviso to Section 4.1(a)(iii) without the
prior written consent of the Ares Unitholders holding a majority of then
outstanding Ares Units on a Deemed Converted Basis, (F) amend Section
4.1(a)(iii)(C) or the seventh proviso to Section 4.1(a)(iii) without the prior
written consent of the TCP Unitholders holding a majority of then outstanding
TCP Units on a Deemed Converted Basis; provided, however, that no amendment,
modification or waiver shall adversely affect the rights or obligations of KSI
contained in Section 2.6, Section 2.7, or Articles III, V or VI unless approved
by KSI, and provided further that no amendment, modification or waiver shall
adversely affect the rights or obligations of KHC contained in Section 2.6,
Section 2.7, or Articles IV, V or VI unless approved by KHC. Any amendment to
this Section 8.13 shall require the approval of the holders of more than two
thirds of the Voting Securities, voting as a single class on a Deemed Converted
Basis, and the approval provided for by each Class by the Class Amendment
Consent. Notwithstanding the foregoing, the addition of parties to this
Agreement in accordance with its terms shall not be deemed to be an amendment,
modification or waiver requiring the consent of any Member and may be amended as
set forth in clause (b).
(b) Notwithstanding the foregoing, (1) any provision of
this Agreement that requires the approval of Members holding a percentage of the
voting power of all outstanding Voting Securities that is greater than a
two-thirds of the voting power of all outstanding Voting Securities may be
amended only upon the approval of Members holding at least that percentage of
the voting power of all outstanding Voting Securities, (2) any amendment to this
Agreement that expressly by its terms amends or is in direct contravention of
any provision of the LLC Agreement shall be effective only if approved in the
manner set forth in the LLC Agreement and (3) this Agreement may be amended by
the Company Board without the consent of any Member (i) to correct any printing
or clerical error or omissions and (ii) to amend the Schedules to this Agreement
to reflect a transfer permitted by this Agreement and the LLC Agreement.
74
(c) As to the TCP Unitholders, the consent or approval by
the holders of a majority of Common Unit Equivalents then held by all TCP
Unitholders shall be sufficient to amend, modify or waive any provision of this
Agreement for which their approval is required.
(d) As to the Ares Unitholders, the consent or approval
by the holders of a majority of Common Unit Equivalents then held by all Ares
Unitholders shall be sufficient to amend, modify or waive any provision of this
Agreement for which their approval is required.
(e) As to the Profits Units Holders, the consent or
approval by the holders of a majority of Profits Units then held by all Profits
Units Holders shall be sufficient to amend, modify or waive any provision of
this Agreement for which their approval is required.
Section 8.14 Other Business. MidOcean, ▇▇▇▇▇▇▇, Gryphon and
any of their respective Affiliates may engage in or possess an interest in any
other business venture of any kind, nature or description, independently or with
others, whether or not such ventures are competitive with the Company,
notwithstanding that representatives of MidOcean, ▇▇▇▇▇▇▇, Gryphon or any of
their respective Affiliates are serving on the Company Board. Nothing in this
Agreement shall be deemed to prohibit MidOcean, ▇▇▇▇▇▇▇, Gryphon or any of their
respective Affiliates or ▇▇▇▇▇▇▇ from dealing, or otherwise engaging in
business, with Persons transacting business with the Company. Neither the
Company nor any Unitholder shall have any rights or obligations by virtue of
this Agreement, in or to any independent venture of MidOcean, ▇▇▇▇▇▇▇, Gryphon
or any of their respective Affiliates, or the income or profits or losses or
distributions derived therefrom, and such ventures shall not be deemed wrongful
or improper even if competitive with the business of the Company.
[END OF PAGE]
[SIGNATURE PAGES FOLLOW]
75
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first set forth above.
KH LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
Name:
Title:
For purposes of the provisions set forth in
Sections 2.6 and 2.7 and Articles III, IV,
V, VI and VII hereof:
KINETIC SYSTEMS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
Name:
Title:
For purposes of the provisions set forth in
Sections 2.6 and 2.7 and Articles IV, V, VI
and VII hereof:
CELERITY GROUP, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
MIDOCEAN CAPITAL INVESTORS, L.P.
By: MidOcean Capital Partners, LP
Its: General partner
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
____________________________
Name:
Title:
MIDOCEAN CELERITY INVESTMENT PARTNERS, LP
By: MidOcean Celerity Holdings, LLC
Its: General partner
By:/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
____________________________
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
▇▇▇▇▇▇▇ CAPITAL III, L.P.
By: ▇▇▇▇▇▇▇ Brothers III, LLC
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Member
STRATEGIC ENTREPRENEUR FUND III, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: General Partner
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
UNITED STATES FILTER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
▇. ▇. ▇▇▇▇▇▇▇ MEZZANINE FUND, L.P.
By: ▇▇▇▇▇▇▇ ▇▇, LLC
Its: General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
_________________________________
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
ALBION ALLIANCE MEZZANINE FUND, L.P.
By: Albion Alliance LLC, its general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
_________________________________
Name:
Title:
ALBION ALLIANCE MEZZANINE FUND II, L.P.
By: AA MEZZ II GP, LLC, its general partner
By: Albion Alliance, LLC, its sole member
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
_________________________________
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
▇▇▇▇▇▇ & CO, AS NOMINEE FOR
GOLDENTREE HIGH YIELD OPPORTUNITIES
I, L.P.
By: GoldenTree Asset Management, L.P., as
agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
______________________________________
Name:
Title:
GOLDENTREE HIGH YIELD PARTNERS, L.P.
By: GoldenTree Asset Management, L.P., as
agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
______________________________________
Name:
Title:
DB STRUCTURED PRODUCTS, INC.
By: GoldenTree Asset Management, L.P., as
agent
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
______________________________________
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
SPECIAL VALUE ABSOLUTE RETURN FUND, LLC,
as Purchaser
By: SVAR/MM, LLC
Its: Managing Member
By: ▇▇▇▇▇▇▇▇▇▇ Capital Partners, LLC
Its: Managing Member
By: ▇▇▇▇▇▇▇▇▇▇ & Co., LLC
Its: Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Managing Partner
SPECIAL VALUE BOND FUND, LLC, as Purchaser
By: SVIM/MSM, LLC
Its: Manager
By: ▇▇▇▇▇▇▇▇▇▇ & Co., LLC
Its: Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Managing Partner
SPECIAL VALUE BOND FUND II, LLC,
as Purchaser
By: SVIM/MSM II, LLC
Its: Managing Member
By: ▇▇▇▇▇▇▇▇▇▇ & Co., LLC
Its: Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Managing Partner
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
▇.▇. ▇▇▇▇▇ FAMILY CHARITABLE LEAD
ANNUITY TRUST - 2000
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name:
Title:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇
--------------------------------------
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
ARES LEVERAGED INVESTMENT FUND II,
L.P.
By:_________________________________
Name:
Title:
ARES CORPORATE OPPORTUNITY FUND,
L.P.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
STATE TREASURER OF THE STATE OF MICHIGAN,
CUSTODIAN OF THE MICHIGAN PUBLIC SCHOOLS
EMPLOYEES' RETIREMENT SYSTEM, STATE
EMPLOYEES' RETIREMENT SYSTEM AND MICHIGAN
STATE POLICE RETIREMENT SYSTEM
By: ▇▇▇▇▇▇▇▇▇ Fund, L.P., by power of
attorney
By: ▇▇▇▇▇▇▇▇▇ Managers, LLC, its general
partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
CENTURY PARK CAPITAL PARTNERS, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇. Ruellig
---------------------------------
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
/s/ ▇. ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
GRYPHON PARTNERS II, L.P.
By: Gryphon GenPar II, L.L.C., a Delaware
limited liability company
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
_________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Member and Principal
GRYPHON PARTNERS II-A, L.P.
By: Gryphon GenPar II, L.L.C., a Delaware
limited liability company
Its: General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
_________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Title: Member and Principal
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
_________________________________
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
INTERVIVOS TRUST DATED 10/76 ▇▇▇▇▇
AND ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ UA 1976
By:_________________________________
Name:
Title: Trustee
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
1999 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ REVOCABLE TRUST
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Trustee
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
MAGNOLIA TREE, LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
/s/ ▇▇▇▇ ▇▇▇▇▇
____________________________________
▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇▇▇▇
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
OAKSTONE VENTURES PARTNERS FUND III,
L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
Name:
Title:
[Signature Page for Unitholders Agreement By and Among KH LLC, Kinetics System,
Inc., Celerity Group, Inc. and The Unitholders of KH LLC]
UNITHOLDER:
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
_________________________________
Name:
Schedule I-A
SENIOR UNITHOLDERS
Unitholder Notice Address
---------- --------------
▇. ▇. ▇▇▇▇▇▇▇ Mezzanine Fund, L.P. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ ▇▇, L.P. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Northwestern Mutual Life Insurance ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Company ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Securities Department
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Albion Alliance Mezzanine Fund, L.P. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Albion Alliance Mezzanine Fund II, L.P. 1345 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ & Co, as Nominee for Goldentree High 300 Park Avenue, 25th Floor
Yield Opportunities I, L.P. ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Goldentree High Yield Partners, L.P. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
DB Structured Products, Inc. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇
Schedule I-B
BACKSTOP UNITHOLDERS
Unitholder Notice Address
---------- --------------
MidOcean Capital Investors, L.P. MidOcean Capital Investors, L.P.
c/o MidOcean Capital Partners, LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ Capital III ▇.▇. ▇▇▇▇▇▇▇ Capital III L.P.
c/▇ ▇▇▇▇▇▇▇ Capital
Four Embarcadero Center, Suite 3640
San Francisco, CA 94111
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Strategic Entrepreneur Fund III L.P. Strategic Entrepreneur Fund III L.P.
c/▇ ▇▇▇▇▇▇▇ Capital
Four Embarcadero Center, Suite 3640
San Francisco, CA 94111
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Schedule I-C
TCP UNITHOLDERS
Unitholder Notice Address
---------- --------------
SPECIAL VALUE ABSOLUTE 11100 Santa ▇▇▇▇▇▇ Blvd.,
RETURN FUND, LLC ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SPECIAL VALUE BOND FUND, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SPECIAL VALUE BOND FUND II, 11100 Santa ▇▇▇▇▇▇ Blvd.,
LLC ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇▇▇ FAMILY 11100 Santa ▇▇▇▇▇▇ Blvd.,
CHARITABLE LEAD ANNUITY Suite 210
TRUST - 2000 ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MASSACHUSETTS MUTUAL LIFE c/o ▇▇ ▇▇▇▇▇▇
INSURANCE COMPANY ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NYLIM MEZZANINE PARTNERS c/o NYLCAP Manager LLC
PARALLEL FUND, LP 51 Madison Avenue, Room 3009,
▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
NEW YORK LIFE INVESTMENT c/o NYLCAP Manager LLC
MANAGEMENT MEZZANINE ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
PARTNERS, LP ▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇
UNITED INSURANCE COMPANY OF ▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Schedule I-D
ARES UNITHOLDERS
Unitholder Notice Address
---------- --------------
ARES LEVERAGED INVESTMENT 1999 Avenue of the Stars,
FUND II, L.P. ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARES CORPORATE OPPORTUNITY 1999 Avenue of the Stars,
FUND, L.P. ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARES III CLO LTD. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARES IV CLO LTD. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARES VII CLO LTD. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARES VIII CLO LTD. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ARES TOTAL VALUE FUND, L.P. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule II
OTHER FINANCIAL INVESTORS
Unitholder Notice Address
---------- --------------
1999 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Revocable Trust c/o Plancorp, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
State Treasurer of the State of U.S. Mail:
Michigan, custodian of the Michigan Treasury Building
Public Schools Employees' ▇.▇. ▇▇▇ ▇▇▇▇▇
Retirement System, State Employees' ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Retirement System and Michigan Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
State Police Retirement System Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Overnight Mail:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Century Park Capital Partners, L.P. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
ATTN: ▇.▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ 94105-
2745
Attn: ▇.▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
MidOcean Celerity Investment MidOcean Celerity Holdings,
Partners, L.P. LLC
MidOcean Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Schedule III-A
2001 Investors
Unitholder Notice Address
---------- --------------
Gryphon Partners II, L.P. c/o Gryphon Investors
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Gryphon Partners II, L.P. c/o Gryphon Investors
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Teachers Insurance and Annuity TIAA-CREF
Association of America ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
MidOcean Capital Investors, L.P. MidOcean Capital Investors,
L.P.
c/o MidOcean Capital Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ Capital III ▇.▇. ▇▇▇▇▇▇▇ Capital III L.P.
c/▇ ▇▇▇▇▇▇▇ Capital
Four Embarcadero Center, Suite
3640
San Francisco, CA 94111
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Century Park Capital Partners, L.P. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Unitholder Notice Address
---------- --------------
Strategic Entrepreneur Fund III L.P. Strategic Entrepreneur Fund III L.P
c/▇ ▇▇▇▇▇▇▇ Capital
Four Embarcadero Center, Suite 36
San Francisco, CA 94111
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
The Northwestern Mutual Life ▇▇▇▇ ▇. ▇▇▇▇▇▇
Insurance Assistant General Counsel
The Northwestern Mutual Life
Insurance Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Oakstone Ventures Partners Fund III, Oakstone Ventures Partners Fund
L.P. III, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇, Managing Director
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Schedule III-B
2002 Investors
Unitholder Notice Address
---------- --------------
MidOcean Capital Investors, L.P. Midocean Capital Investors, L.P.
c/o MidOcean Capital Partners,
LP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ Capital III ▇.▇. ▇▇▇▇▇▇▇ Capital III L.P.
c/▇ ▇▇▇▇▇▇▇ Capital
Four Embarcadero Center, Suite
3640
San Francisco, CA 94111
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Strategic Entrepreneur Fund III L.P. Strategic Entrepreneur Fund III
L.P.
c/▇ ▇▇▇▇▇▇▇ Capital
Four Embarcadero Center, Suite
3640
San Francisco, CA 94111
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Schedule IV
MANAGEMENT SHAREHOLDERS
Name and Notice Address
▇▇▇▇▇▇ ▇▇▇ (a/k/a) Hong ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ # ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇. ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ III
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Name and Notice Address
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇-▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇ ▇'▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Name and Notice Address
Intervivos Trusted Dated 10/76 - ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ UA 1976
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ Land
▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Name and Notice Address
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇ ▇. ▇▇▇▇▇▇▇, as JT TEN
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Magnolia Tree LLC
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ 9054
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Name and Notice Address
▇▇▇▇▇▇▇ Cables
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Name and Notice Address
▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ Family Trust u/t/a February 10,1988
c/o ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
Name and Notice Address
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Family Trust dated August 31, 1999
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule V
PROFITS UNITS HOLDERS
Name Notice Address
---- --------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ c/o Plancorp, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
1