Exhibit 10.4
VESTAR/XXXX INVESTORS LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of
VESTAR/XXXX INVESTORS LLC, a Delaware limited liability company (the "LLC"),
dated as of July 7, 1999, by and among Vestar/SJK Investors LLC, a Delaware
limited liability company (the "VESTAR MEMBER"), the parties listed on Schedule
1 hereto (each a "XXXX MEMBER" and, collectively, the "XXXX MEMBERS") and such
other Persons as shall hereinafter become Members as hereinafter provided.
W I T N E S S E T H
WHEREAS, the LLC was formed pursuant to (i) a Certificate of
Formation dated as of January 29, 1999 (the "CERTIFICATE") and filed for
recordation in the office of the Secretary of State of the State of Delaware on
January 29, 1999 and (ii) a Limited Liability Company Agreement dated as of
January 29, 1999 by the Vestar Member (the "ORIGINAL AGREEMENT"); and
WHEREAS, the parties hereto desire to enter into this Amended and
Restated Limited Liability Company Agreement of the LLC to permit the admission
as Members (as defined below) of the parties listed on Schedule 1 hereto and
further to make the modifications hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein made and intending to be legally bound hereby, the parties
hereto agree to amend and restate the Original Agreement in its entirety to read
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless the context otherwise requires, the
following terms shall have the following meanings for purposes of this
Agreement:
"ACQUISITION" means Pearl Acquisition Corp., a Delaware corporation
and a wholly-owned direct subsidiary of the LLC.
"ACQUISITION MERGER" shall have the meaning set forth in the Merger
Agreement.
"ADDITIONAL DEMAND REGISTRATIONS" shall have the meaning set forth
in Section 9.3(a)(iii).
"AFFILIATE" shall mean, (a) with respect to any Person, (i) any
Person that directly or indirectly controls, is controlled by or is under
common control with, such Person, or (ii) any director, officer, partner,
member or employee of such Person or any Person
2
specified in clause (i) above, or (iii) any Immediate Family Member of any
Person specified in clause (i) or (ii) above; and (b) shall also include, with
respect to any Person who is an individual, a trust the beneficiaries of which,
or a corporation or partnership the stockholders or limited or general partners
of which, include only such individual and such individual's Immediate Family
Members. Notwithstanding the foregoing, the LLC will not be deemed to be an
Affiliate of any Person.
"AGREEMENT" shall mean this Amended and Restated Limited Liability
Company Agreement, as it may be amended, supplemented, modified or
restated from time to time.
"ALLOCATED SHARES" shall mean, in respect of each Member, the number
of Shares initially allocated to each Member, as set forth on Schedule 1
to this Agreement, minus the number of such Shares that have been the
subject of a Transfer (which does not include pledges) and plus the number
of additional shares received by the LLC in respect of such Shares.
"BUSINESS DAY" shall mean a day which is not a Saturday, Sunday or
other day on which banks in New York, New York or Los Angeles, California
are closed.
"CAPITAL ACCOUNT" shall have the meaning set forth in Section 6.3.
"CAPITAL CONTRIBUTION" shall mean the total amount of cash and the
agreed fair market value (net of liabilities) of all other assets
contributed to the LLC by a Member.
"CARRYING VALUE" shall mean, with respect to any asset of the LLC,
the asset's adjusted basis for federal income tax purposes, except that
the Carrying Values of all assets of the LLC shall be adjusted to equal
their respective fair market values, in accordance with the rules set
forth in Regulations section 1.704-1(b)(2)(iv)(f), except as otherwise
provided herein, as of: (a) the date of the acquisition of any additional
Interest by any new or existing Member in exchange for more than a DE
MINIMIS Capital Contribution; (b) the date of the distribution of more
than a DE MINIMIS amount of assets of the LLC to a Member; (c) the date an
Interest is relinquished to the LLC; PROVIDED, HOWEVER, that adjustments
pursuant to clauses (a), (b) and (c) above shall be made only if the
Managing Member reasonably determines that such adjustments are necessary
or appropriate to reflect the relative economic interests of the Members.
The Carrying Value of any asset of the LLC distributed to any Member shall
be adjusted immediately prior to such distribution to equal its fair
market value and depreciation shall be calculated by reference to Carrying
Value, instead of tax basis, once Carrying Value differs from tax basis.
The Carrying Value of any asset contributed (or deemed contributed under
Regulations section 1.704-1(b)(2)(iv)) by a Member to the LLC will be the
fair market value of the asset at the date of its contribution thereto.
"CERTIFICATE" shall have the meaning set forth in the recitals
hereto.
3
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute. Any reference herein to a
particular provision of the Code shall mean, where appropriate, the
corresponding provision in any successor statute.
"COMMON STOCK REQUEST" shall have the meaning set forth in Section
9.3(a)(i).
"COMPANY" shall mean St. Xxxx Knits, Inc., a California corporation.
"COMPANY COMMON STOCK" shall mean the common stock, no par value per
share, of Company.
"DEMAND REQUEST" shall have the meaning set forth in Section
9.3(a)(i).
"DEMANDING MEMBER" shall have the meaning set forth in Section
9.3(a)(i).
"EFFECTIVE TIME" shall have the meaning set forth in the Merger
Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" shall mean, as of any date (the "VALUATION
DATE"), with respect to each Share, prior to a Public Offering, the fair
market value thereof, disregarding any discount for minority interest or
marketability of shares, as determined by an independent appraiser,
accountant or investment banking firm (the "INITIAL APPRAISER") selected
by the Board of Directors of the Parent (and compensated by the Parent)
(the "INITIAL DETERMINATION"); PROVIDED, that if the selling Xxxx
Employee(s) disagree(s), in good faith, with the Initial Determination,
such selling Xxxx Employee(s) shall promptly notify the Parent of such
disagreement, in which event an independent appraiser, accountant or
investment banking firm (the "SECOND APPRAISER") selected by the selling
Xxxx Employee(s) shall make a determination of the fair market value
thereof, disregarding any discount for minority interest or marketability
of shares (the "SECOND DETERMINATION"), and if the Second Determination is
(i) not at least 110% of the Initial Determination, "FAIR MARKET VALUE"
shall be the average of the Initial Determination and the Second
Determination and the selling Xxxx Employee(s) shall pay the cost of the
Second Determination or (ii) 110% of the Initial Determination or greater,
an independent appraiser, accountant or investment banking firm (the
"THIRD APPRAISER"; the Second and Third Appraisers shall not be permitted
to see or otherwise have access to, or be informed of, the results of the
Initial Determination and the Second Determination, as applicable, or any
component of either appraiser's analysis that led to its conclusions and
each of the Parent and the Xxxx Employees agrees to comply with the
foregoing provision) jointly agreed upon and selected by the Initial
Appraiser and the Second Appraiser shall make a determination of the fair
market value thereof, disregarding any discount for minority interest or
marketability of shares (the "THIRD DETERMINATION"), and if the Third
Determination (i) falls within the range of values that is between the
Lower Appraised Amount (as defined below) and the Higher Appraised Amount
(as defined below), "FAIR MARKET VALUE" shall be the Third Determination
and the Parent and the selling Xxxx
4
Employee(s) shall split the cost of the Second Appraiser and the Third
Appraiser, or (ii) is below the Lower Appraised Amount, "FAIR MARKET
VALUE" shall be the Lower Appraised Amount and the selling Xxxx
Employee(s) shall pay the cost of the Second Appraiser and the Third
Appraiser; or (iii) is above the Higher Appraised Amount, "FAIR MARKET
VALUE" shall be the Higher Appraised Amount and the Parent shall pay the
cost of the Second Appraiser and the Third Appraiser. Subsequent to a
Public Offering, the term "FAIR MARKET VALUE" shall mean the price per
share equal to the average of the last sales price of Parent Common Stock
on each of the last thirty trading days prior to the Valuation Date (the
"REPURCHASE CALCULATION PERIOD") on each exchange on which the Parent
Common Stock may at the time be listed or, if there shall have been no
sales on any of such exchanges during the Repurchase Calculation Period,
the average of the closing bid and asked prices on each such exchange on
each day during the Repurchase Calculation Period or, if there are no such
bid and asked prices during the Repurchase Calculation Period on the next
preceding five dates on which such bid and asked prices occurred or, if
the Parent Common Stock shall not be so listed, the average of the closing
sales prices as reported by Nasdaq during the Repurchase Calculation
Period in the over-the-counter market. As used herein, "Lower Appraised
Amount" means the lower of the Initial Determination and the Second
Determination and "Higher Appraised Amount" means the higher of the
Initial Determination and the Second Determination.
"FAMILY GROUP" shall have the meaning set forth in Section 8.2.
"FINANCING DEFAULT" shall mean an event which constitutes (or which
with notice or lapse of time or both would constitute) an event of default
(which event of default has not been cured or waived) under any of the
following as originally entered into or as they may be amended from time
to time: (i) any agreement under which an amount of indebtedness of the
Parent or the Company in excess of $5,000,000 is outstanding as of the
time of the aforementioned event, and any extensions, renewals,
refinancings or refundings thereof in whole or in part; (ii) any provision
of the Parent's or the Company's or any of their subsidiaries'
certificates of incorporation as in effect on the Closing Date; (iii) any
amendment of, supplement to or other modification of any of the
instruments referred to in clauses (i) or (ii) above; and (iv) any of the
securities issued pursuant to or whose terms are governed by the terms of
any of the agreements set forth in clauses (i) and (ii) above, and any
extensions, renewals, refinancings or refundings thereof in whole or in
part.
"FISCAL YEAR" shall mean the calendar year ending on October 31 of
each year.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"XXXX EMPLOYEES" shall have the meaning set forth in Section
9.13(a).
"XXXX MEMBERS" shall have the meaning set forth in the preamble
hereto.
5
"IMMEDIATE FAMILY MEMBER" shall mean, with respect to any Person, a
spouse, parent, child or sibling of such Person.
"INCIDENTAL REGISTRATION" shall have the meaning set forth in
Section 9.2(a).
"INDEMNITEE" shall have the meaning set forth in Section 4.3.
"INITIAL MEMBERS" shall mean the Vestar Member and the Xxxx Members.
"INTEREST" shall mean a limited liability company interest in the
LLC as provided in this Agreement and under the LLC Act and includes any
and all rights and benefits to which the holder of such Interest may be
provided under this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement.
Interests shall be expressed as a number of Units.
"JOINING MEMBER" shall have the meaning set forth in Section
9.3(a)(iv).
"LIQUIDATOR" shall have the meaning set forth in Section 7.3.
"LIQUIDITY EVENT" shall have the meaning set forth in Section
9.13(a).
"LLC" shall have the meaning set forth in the preamble hereto.
"LLC ACT" shall mean the Delaware Limited Liability Company Act, 6
DEL. C. xx.xx. 18-101, ET seq., as it may be amended from time to time,
and any successor to such statute.
"LLC ASSETS" shall mean all right, title and interest of the LLC in
and to all or any portion of the assets and other rights of the LLC and
any property (real or personal) or estate acquired in exchange therefor or
in connection therewith.
"MANAGING MEMBER" shall mean the Vestar Member and its successor or
assign in its capacity as managing member of the LLC.
"MEMBER" shall mean a Person (a) (i) who is an Initial Member or
(ii) who is a transferee of an Interest in accordance with the provisions
of Article VIII and (b) who has not resigned or withdrawn as a Member or
been dissolved. Reference to a "Member" shall be to any one of the
Members.
"MERGER AGREEMENT" shall mean the Agreement and Plan of Merger dated
as of February 2, 1999, among Parent, the Company, SJKAcquisition, Inc.
and Pearl Acquisition Corp., as the same may be amended, supplemented or
otherwise modified from time to time.
6
"NET INCOME (LOSS)" for any Fiscal Period shall mean the taxable
income or loss of the LLC for such period as determined in accordance with
the accounting method used by the LLC for federal income tax purposes with
the following adjustments: (i) any income of the LLC that is exempt from
federal income taxation and not otherwise taken into account in computing
Net Income (Loss) shall be added to such taxable income or loss; (ii) if
the Carrying Value of any asset differs from its adjusted tax basis for
federal income tax purposes, any depreciation, amortization or gain
resulting from a disposition of such asset shall be calculated with
reference to such Carrying Value; (iii) upon an adjustment to the Carrying
Value of any asset, pursuant to the definition of Carrying Value, the
amount of the adjustment shall be included as gain or loss in computing
such taxable income or loss; and (iv) except for items in (i) above, any
expenditures of the LLC not deductible in computing taxable income or
loss, not properly capitalizable and not otherwise taken into account in
computing Net Income (Loss) pursuant to this definition shall be treated
as deductible items.
"90 DAY PERIOD" shall have the meaning set forth in Section
9.3(a)(iii).
"NON-DEMANDING MEMBERS" shall have the meaning set forth in Section
9.3(a)(ii).
"OFFER" shall have the meaning set forth in Section 9.7.
"OFFEREE" shall have the meaning set forth in Section 9.7.
"OFFEROR" shall have the meaning set forth in Section 9.7.
"ORGANIZATIONAL EXPENSES" shall mean all costs and expenses of the
LLC and the Managing Member arising out of or relating to this Agreement,
the Merger, the Merger Agreement or the transactions contemplated hereby
and thereby, including all fees and expenses of counsel to the LLC and the
Managing Member.
"ORIGINAL AGREEMENT" shall have the meaning set forth in the
recitals hereto.
"PARENT" shall mean St. Xxxx Knits International, Incorporated, a
Delaware corporation.
"PARENT COMMON STOCK" shall mean the common stock, $.01 par value
per share, of Parent.
"PERCENTAGE INTEREST" shall mean, with respect to any Member, such
Member's Interest expressed as a percentage of all Interests of all
Members, determined by dividing the number of Allocated Shares allocated
to such Member by the total number of Allocated Shares then outstanding
and allocated to all Members. The Percentage Interests of the Members
initially will be determined by reference to Schedule 1.
"PERMITTED TRANSFEREE" shall have the meaning set forth in Section
8.2.
7
"PERSON" shall mean any individual, company, joint venture,
corporation, partnership, limited liability company, trust, unincorporated
organization or government or any department or agency thereof.
"POST OFFERING PURCHASE" shall have the meaning set forth in Section
9.3(a)(iii).
"PROCEEDS" shall have the meaning set forth in Section 5.2(a).
"PUBLIC OFFERING" shall mean the sale of Parent Common Stock to the
public pursuant to an effective registration statement filed under the
Securities Act, which results in an active trading market in such
securities (it being understood that such an active trading market shall
be deemed to exist if, without limitation, such securities are listed on a
national securities exchange or on the NASDAQ National Market).
"REGULATIONS" shall mean the regulations promulgated under the Code.
"RULE 144 REQUEST" shall have the meaning set forth in Section 9.8.
"SALE NOTICE" shall have the meaning set forth in Section 9.7.
"SEC" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act or the
Exchange Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SHARE PERMITTED TRANSFEREE" shall have the meaning set forth in
Section 9.9.
"SHARES" shall mean the Shares of Parent Common Stock owned by the
LLC following the Effective Time of the Acquisition Merger and shall
include the shares or other securities of Parent that are distributed in
respect of such Common Stock and the shares or other securities of any
other issuer for which such shares of Common Stock shall be exchanged or
into which such shares of Common Stock shall be converted.
"STOCKHOLDERS' AGREEMENT" shall mean that certain Stockholders'
Agreement dated as of the date hereof among the LLC, the Parent, the
Company, Vestar/SJK Investors LLC and the Xxxx Members.
"TAGGING STOCKHOLDER" shall have the meaning set forth in Section
9.4(a).
"TAGGING UNITHOLDER" shall have the meaning set forth in Section
8.3(a).
"TAX MATTERS MEMBER" shall have the meaning set forth 6.2.ection
"THIRD PARTY" shall mean any Person other than the Members, Parent,
the Company and their respective Affiliates.
8
"TRANSFER" shall have the meaning set forth in Section 8.1.
"TRANSFER" shall have the meaning set forth in Section 9.1(a).
"TRANSFERRING STOCKHOLDER" shall have the meaning set forth in
Section 9.4(a).
"TRANSFERRING UNITHOLDER" shall have the meaning set forth in
Section 8.3(a).
"UNIT" shall mean a fractional share of the Interests of all
Members. The number of Units outstanding and the holders thereof are set
forth on Schedule 1, as such Schedule may be amended from time to time
pursuant to Section 3.1.
"VESTAR MEMBER" shall have the meaning set forth in the preamble
hereto.
ARTICLE II
GENERAL PROVISIONS
SECTION 2.1 FORMATION. The LLC was formed under the provisions of
the LLC Act. The Vestar Member is hereby appointed the Managing Member of the
LLC. The Members hereby agree to continue the LLC as a limited liability company
pursuant to the LLC Act, upon the terms and subject to the conditions set forth
in this Agreement. The Managing Member is hereby designated as an authorized
person, within the meaning of the LLC Act, to execute, deliver and file any
amendments and/or restatements of the Certificate and any other certificates
necessary for the LLC to qualify to do business in a jurisdiction in which the
LLC may wish to conduct business. The execution by the Managing Member alone of
any of the foregoing certificates (and any amendments and/or restatements
thereof) shall be sufficient.
SECTION 2.2 NAME. The LLC shall conduct its activities under the
name of Vestar/Xxxx Investors LLC or such other name as the Managing Member
shall determine in accordance with this Section 2.2. The Managing Member shall
have the power at any time to change the name of the LLC; PROVIDED, that the
name shall always contain the words "Limited Liability Company" or the letters
"LLC". Prompt notice of any such change shall be given to each Member.
SECTION 2.3 TERM. The term of the LLC commenced on the date of the
filing of the Certificate and shall continue until the earlier of (a) December
31, 2009 and (b) such time as the Vestar Member does not own at least 10% of the
total number of Allocated Shares allocated to such Vestar Member immediately
following the Effective Time of the Acquisition Merger, unless sooner dissolved,
wound up and terminated in accordance with Article VII.
SECTION 2.4 PURPOSE; POWERS. (a) The purposes of the LLC shall be to
(i) acquire Shares of Company Common Stock from the Xxxx Members, (ii) hold
Shares that may be issued in exchange for Shares of Company Common Stock in the
Reorganization Merger
9
referred to in the Merger Agreement, (iii) purchase and acquire 100% of the
capital stock of Acquisition, (iv) hold Shares that may be issued in exchange
for Shares of the capital stock of Acquisition in the Acquisition Merger
referred to in the Merger Agreement and (v) do all things necessary or
incidental to the foregoing, including exercising the rights of a holder of
shares of Company Common Stock and its rights under the Stockholders' Agreement.
(b) In furtherance of its purposes, the LLC shall have all powers
necessary, suitable or convenient for the accomplishment of its purposes, alone
or with others, including the following, subject to the terms of this Agreement:
(i) to receive, hold and otherwise exercise all rights, powers,
privileges and other incidents of ownership or possession with respect to
the Shares held by the LLC, including, but not limited to (A) exercising
all voting and other corporate governance rights available to holders of
Shares, (B) receiving and investing any cash dividends declared and paid
by Parent in respect of the Shares owned from time to time by the LLC or
any other cash or cash equivalents owned by the LLC from time to time and
(C) selling, pledging, transferring or otherwise disposing of the Shares
held by the LLC;
(ii) to open, maintain and close bank accounts and draw checks and
other orders for the payment of moneys;
(iii) to engage accountants, custodians, attorneys, investment
bankers and other advisors as may be necessary or advisable for the due
and proper administration of the LLC Assets, and to compensate them as may
be reasonably necessary or advisable;
(iv) to enter into, make and perform all contracts, agreements and
other undertakings as may be necessary or advisable or incident to
carrying out its purposes; and
(v) to distribute at any time and from time to time to Members cash
or investments or other property of the LLC, or any combination thereof.
SECTION 2.5 PLACE OF BUSINESS. The LLC shall maintain a registered
office at CT Corporation System, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000, or such other office within the State of Delaware as the
Managing Member determines. The LLC shall maintain an office and principal place
of business at 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000 or at such
other place as the Managing Member may from time to time determine to be its
principal place of business. The name and address of the LLC's registered agent
as of the date of this Agreement is CT Corporation System, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
SECTION 2.6 BUSINESS TRANSACTIONS OF A MEMBER WITH THE LLC. In
accordance with section 18-107 of the LLC Act, and except as otherwise provided
in this Agreement, a Member may (but shall be under no obligation to) lend money
to, borrow money from, act as surety, guarantor or endorser for, guarantee or
assume one or more specific obligations of,
10
provide collateral for, and transact other business with, the LLC and, subject
to applicable law, shall have the same rights and obligations with respect to
any such matter as a person who is not a Member.
SECTION 2.7 FISCAL YEAR. The fiscal year of the LLC (the "FISCAL
YEAR") for financial statement and Federal income tax purposes shall, except as
otherwise required in accordance with the Code, end on October 31 of each year.
SECTION 2.8 NO STATE-LAW PARTNERSHIP. The Members intend that the
LLC not be a partnership (including, without limitation, a limited partnership)
or joint venture and that no Member be an agent, partner or joint venturer of
any other Member for any purposes other than Federal and state tax purposes, and
this agreement shall not be construed to suggest otherwise.
ARTICLE III
MEMBERS AND INTERESTS
SECTION 3.1 MEMBERS. Each Member's Interest in the LLC shall be
represented by Units. Schedule 1 hereto contains the name and address and number
of Units owned by each Member as of the date of this Agreement. Schedule 1 shall
be revised by the Managing Member from time to time to reflect the admission or
withdrawal of a Member or the issuance, transfer, assignment, redemption,
relinquishment to the LLC or other cancellation of Units in the LLC in
accordance with the terms of this Agreement and other modifications to or
changes in the information set forth therein.
SECTION 3.2 CERTIFICATES. Interests in the LLC may be evidenced by a
certificate of limited liability company interest issued by the LLC. Such
Certificates shall bear the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
OR ASSIGNED TO ANY PERSON EXCEPT IN ACCORDANCE WITH ARTICLE VIII OF
THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF
VESTAR/XXXX INVESTORS LLC DATED AS OF JULY 7, 1999."
SECTION 3.3 LIABILITY OF MEMBERS. Except as otherwise expressly
required by law, all debts, obligations and liabilities of the LLC, whether
arising in contract, tort or otherwise, shall be solely the debts, obligations
and liabilities of the LLC, and no Member shall be obligated personally for any
such debt, obligation or liability of the LLC solely by reason of being a
Member.
SECTION 3.4 ACCESS TO AND CONFIDENTIALITY. (a) Each Member shall
have the right to obtain from the LLC from time to time upon reasonable demand
for any purpose
11
reasonably related to the Member's interest as a Member of the LLC the documents
and other information described in section 18-305(a) of the LLC Act.
(b) Any demand by a Member pursuant to this Section 3.4 shall be in
writing and shall state the purpose of such demand.
ARTICLE IV
MANAGEMENT AND OPERATION OF THE LLC
SECTION 4.1 MANAGEMENT. (a) Except as set forth in Section 4.1(b),
the management, control and operation of the LLC shall be vested exclusively in
the Managing Member, and no other Member shall have any right to participate in
or exercise control or management power over the business and affairs of the
LLC. Except as set forth in Section 4.1(b), the Managing Member shall have full
power and authority and absolute discretion to do all things deemed necessary or
desirable by it to conduct the business of the LLC on behalf and in the name of
the LLC.
(b) Notwithstanding anything in this Agreement to the contrary, the
Managing Member shall not take any of the following actions on behalf of the LLC
without the prior written consent of the Xxxx Members:
(i) the conduct of any business by the LLC other than in accordance
with the purposes of the LLC enumerated in Section 2.4;
(ii) any Transfer of the Xxxx Members' Allocated Shares except
pursuant to this Agreement;
(iii) any voting of the Xxxx Members' Allocated Shares except
pursuant to this Agreement; and
(iv) the amendment of this Agreement other than pursuant to Section
10.8.
SECTION 4.2 CERTAIN DUTIES AND OBLIGATIONS OF THE MEMBERS. No Member
shall take any action so as to cause the LLC to be classified for federal income
tax purposes as an association taxable as a corporation and not as a
partnership.
SECTION 4.3 INDEMNIFICATION OF THE MANAGING MEMBER. The LLC shall
indemnify and hold harmless the Managing Member, its Affiliates and its
respective officers, directors, employees, partners and agents and the heirs,
executors, successors and assigns of each of the foregoing (individually, an
"INDEMNITEE") from and against any and all losses, claims, demands, costs,
damages, liabilities, joint and several, expenses of any nature (including
reasonable attorneys' fees and disbursements), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative, in which
the Indemnitee was involved or may be involved, or
12
threatened to be involved, as a party or otherwise, arising out of or in
connection with the business of the LLC, the Managing Member's status as
Managing Member or any action taken by the Managing Member under this Agreement
or otherwise on behalf of the LLC, regardless of whether the Indemnitee
continues to be the Managing Member, an Affiliate, or an officer, director,
employee or agent of the Managing Member at the time any such liability or
expense is paid or incurred, to the fullest extent permitted by the LLC Act and
all other applicable laws; PROVIDED, that an Indemnitee shall be entitled to
indemnification hereunder only to the extent that such Indemnitee's conduct did
not constitute gross negligence or willful misconduct. The termination of any
proceeding by settlement, judgment, order, conviction, or upon a plea of NOLO
CONTENDERE or its equivalent shall not, of itself, create a presumption that
such Indemnitee's conduct constituted gross negligence or willful misconduct.
The right of any Indemnitee to the indemnification provided herein shall be
cumulative of, and in addition to, any and all rights to which such Indemnitee
may otherwise be entitled by contract or as a matter of law or equity and shall
extend to such Indemnitee's successors, assigns and legal representatives. Any
indemnification under this Section 4.3 (unless ordered by a court) shall be made
by the LLC except only in the specific case upon a determination, upon clear and
convincing evidence that indemnification of the Managing Member, officer,
director, employee, partner or agent is not proper in the circumstances because
he has not met the applicable standard of conduct as set forth in this Section
4.3.
SECTION 4.4 EXPENSES. Expenses incurred by an Indemnitee in
defending any claim, demand, action, suit or proceeding subject to Section 4.3
shall, from time to time, be advanced by the LLC prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by the LLC of an
undertaking reasonably acceptable in form and substance to the Managing Member
by or on behalf of the Indemnitee to repay such amount if it shall be determined
that such Person is not entitled to be indemnified as authorized in Section 4.3.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the Managing Member
deems appropriate.
SECTION 4.5 INDEMNIFICATION RIGHTS NON-EXCLUSIVE. The
Indemnification provided by Section 4.3 shall be in addition to any other rights
to which those indemnified may be entitled under any agreement as a matter of
law or equity or otherwise, both as to action in the Indemnitee's capacity as
the Managing Member, as an Affiliate or as an officer, director, employee or
agent of the Managing Member and as to any action in another capacity, and shall
continue as to an Indemnitee who has ceased to serve in such capacity and shall
inure to the benefit of the heirs, successors, assigns and administrators of the
Indemnitee.
SECTION 4.6 INSURANCE. The LLC may purchase and maintain insurance,
at the LLC's expense, on behalf of the Managing Member and such other Persons as
the Managing Member shall determine, against any liability that may be asserted
against, or any expense that may be incurred by, such Person in connection with
the activities of the LLC and/or the Managing Member's acts or omissions as the
Managing Member of the LLC regardless of whether the LLC would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.
13
SECTION 4.7 ASSETS OF THE LLC. Any indemnification under Section 4.3
shall be satisfied solely out of the assets of the LLC. No Member shall be
subject to personal liability or required to fund or cause to be funded any
obligation by reason of these indemnification provisions.
SECTION 4.8 LOANS TO THE LLC. In the event the Managing Member
determines at any time or from time to time that the LLC requires or will
shortly require additional funds to pay any costs and expenses of the LLC, the
Managing Member may advance funds to the LLC in the form of a loan, which loan
shall bear interest at the Vestar Member's cost of funds. Notwithstanding
anything in this Agreement to the contrary, all such loans shall be repaid in
full (including any interest accrued thereon) prior to the LLC making any cash
distributions to the Members pursuant this Agreement, including pursuant to
Section 5.2 or 7.3.
SECTION 4.9 VOTING OF SHARES
(a) PROPORTIONAL VOTING. Subject to Section 4.9(b), the Managing Member
shall vote the Shares and/or exercise any consents relating to the Shares as
directed in writing by the Members in proportion to their Percentage Interests.
(b) ELECTION OF DIRECTORS.
(A) The Managing Member hereby agrees that so long as this Agreement
shall remain in effect, it will vote all of the Shares so as to elect and,
during such period, to continue in office a Board of Directors of the Parent and
the Company, each consisting solely of the following:
(i) 3 designees of the Vestar Member (so long as the Vestar Member
and its Affiliates are allocated an aggregate number of
Allocated Shares not less than one-half (1/2) of the number of
Allocated Shares allocated to the Vestar Member on the date of
execution and delivery of this Agreement) or, if the foregoing
condition is not satisfied, 2 designees of the Vestar Member
(so long as the Vestar Member and its Affiliates are allocated
an aggregate number of Allocated Shares not less than
one-third (1/3) of the total number of Allocated Shares
allocated to the Vestar Member on the date of its execution
and delivery of this Agreement) or, if the foregoing condition
is not satisfied, 1 designee of the Vestar Member (so long as
the Vestar Member and its Affiliates are allocated an
aggregate number of Allocated Shares not less than one-tenth
(1/10) of the total number of Allocated Shares allocated to
the Vestar Member immediately following the Effective Time of
the Acquisition Merger), PROVIDED, HOWEVER, that so long as
the Xxxx Members have the right to appoint at least 1 designee
and the Vestar Member (and its Affiliates) has more Allocated
Shares allocated to it than the aggregate number of Allocated
Shares allocated to the Xxxx Members (and their Permitted
Transferees) the Vestar Member
14
shall have the right to appoint at least as many designees as
the Xxxx Members; and
(ii) 2 designees of the Xxxx Members (so long as the Xxxx Members
and their respective Affiliates are allocated an aggregate
number of Allocated Shares not less than one-half (1/2) of the
number of Allocated Shares allocated to the Xxxx Members on
the date of their execution and delivery of this Agreement)
or, if the foregoing condition is not satisfied, 1 designee of
the Xxxx Members (so long as the Xxxx Members and their
respective Affiliates are allocated an aggregate number of
Allocated Shares not less than one-fifth (1/5) of the number
of Allocated Shares allocated to the Xxxx Members immediately
following the Effective Time of the Acquisition Merger).
(B) If at any time during the period specified in paragraph (A)
above, the Vestar Member or the Xxxx Members shall notify the other Stockholders
of its or their desire to remove, with or without Cause, any director of the
Parent or of the Company previously designated by it or them, each Member shall
vote all of the Allocated Shares attributable to it so as to remove such
director.
(C) If at any time during the period specified in paragraph (A)
above, any director previously designated by the Vestar Member or the Xxxx
Members ceases to serve on the Board of Directors of the Parent or the Company
(whether by reason of death, resignation, removal or otherwise), the Member who
designated such director shall be entitled to designate a successor director to
fill the vacancy created thereby.
(D) The parties hereto hereby acknowledge that any individual
designated as a director of the Parent or of the Company may be removed for
Cause pursuant to the Parent's (or the Company's) by-laws and applicable law
with or without the consent of the Member which designated such individual. No
such removal of an individual designated pursuant to this Section 4.9 shall
affect any of the Stockholders' rights to designate a different individual
pursuant to this Section 4.9.
(E) No fees shall be paid by the Parent or any of its subsidiaries
to any member of the Board of Directors in his capacity as such; PROVIDED that
the foregoing shall not limit reimbursement of expenses in accordance with the
expense reimbursement policy of the Parent and its subsidiaries; and PROVIDED
FURTHER, that it is understood that the Parent shall pay an advisory fee to
Vestar Capital Partners, an affiliate of the Vestar Member, in the amount of
$500,000 per year pursuant to an advisory agreement to be entered into between
Vestar Capital Partners and Parent.
(c) OTHER VOTING MATTERS. Each Member agrees that, so long as this
Agreement shall remain in effect and (i) the Vestar Member and its Affiliates
beneficially own not less than 50% of the Percentage Interest held by them on
the date hereof and (ii) the LLC holds Shares representing not less than 25% of
the voting power of Parent, each Member will direct the LLC
15
to vote all of the Allocated Shares allocated to such Member to ratify, approve
and adopt any and all actions adopted or approved by the Board of Directors of
the Parent.
(d) Upon instruction received from any Member, the Managing Member, unless
the Managing Member reasonably believes that any such action would be unlawful,
or would have a material adverse effect upon the LLC, shall exercise, in
accordance with such Member's instructions, any rights of a stockholder with
respect to the Allocated Shares allocated to such Member, other than voting
(which is dealt with in Section 4.9(a), (b) and (c)) or transfer (which is dealt
with in Articles VIII and IX).
ARTICLE V
CAPITAL CONTRIBUTIONS; DISTRIBUTIONS
SECTION 5.1 CAPITAL CONTRIBUTIONS. No Member shall be required to
make a Capital Contribution to the LLC except as set forth in Schedule 2. No
Member shall have any obligation to restore any negative balance in the Member's
Capital Account upon liquidation of the LLC. No Member shall be entitled to
withdraw all or any part of its Capital Contributions except as expressly
provided in this Agreement. No interest shall be payable by the LLC on the
Capital Contributions of any Member except as otherwise provided herein.
SECTION 5.2 DISTRIBUTIONS.
(a) DISTRIBUTIONS WITH RESPECT TO ALLOCATED SHARES With respect to
any Transfer of Shares by the LLC pursuant to Article IX hereof, the LLC shall
distribute the proceeds it receives from such Transfer and any reimbursements it
receives in connection with such Transfer less any and all unreimbursed costs,
fees and expenses incurred and paid for by the LLC in connection with such
Transfer (the "PROCEEDS") to the Member(s) whose Allocated Shares were included
in such Transfer, PRO RATA on the basis of the number of Allocated Shares
actually included in such Transfer, and with respect to cash and any other
property received by the LLC as a distribution in respect of the Allocated
Shares (including any property received as consideration in respect of the
Shares in a merger or other business combination), the LLC shall distribute such
cash or other property PRO RATA to the Members to which such Allocated Shares
were allocated as of the date upon which the LLC received such distribution. All
distributions to be made pursuant to this Section 5.2(a) shall be made by the
LLC within three Business Days of its receipt of the Proceeds.
(b) OTHER PROPERTY. Distributions of property other than those
described in Section 5.2(a) shall be made if, as and when determined by the
Managing Member in its sole and absolute discretion. Each distribution of such
property shall be distributed to the Members in proportion to their respective
Percentage Interests at the time the cash or other property being distributed is
received by the LLC.
16
(c) The parties hereto acknowledge and agree that notwithstanding
that the provisions of this Article V and Article VII hereof make reference only
to Members, the distributions and allocations provided for in this Article V and
Article VII hereof shall also apply to Permitted Transferees.
SECTION 5.3 LIMITATIONS ON DISTRIBUTIONS. The LLC shall not make a
distribution to a Member if such distribution would violate the LLC Act.
ARTICLE VI
BOOKS AND REPORTS; TAX MATTERS; CAPITAL ACCOUNTS; ALLOCATIONS
SECTION 6.1 GENERAL ACCOUNTING MATTERS. (a) Each Member shall be
supplied with the LLC information necessary to enable such Member to prepare in
a timely manner its Federal, state and local income tax returns and such other
financial or other statements and reports that the Managing Member deems
appropriate.
(b) The Managing Member shall keep or cause to be kept books and
records pertaining to the LLC's business showing all of its assets and
liabilities, receipts and disbursements, realized profits and losses, Members'
Capital Accounts and all transactions entered into by the LLC. Such books and
records of the LLC shall be kept at the office of the LLC and the Members and
their representatives shall at all reasonable times have free access thereto for
the purpose of inspecting or copying the same. The LLC's books of account shall
be kept on an accrual basis or as otherwise provided by the Managing Member and
otherwise in accordance with GAAP, except that for income tax purposes such
books shall be kept in accordance with applicable tax accounting principles.
(c) All determinations, valuations and other matters of judgment
required to be made for accounting and tax purposes under this Agreement shall
be made by or under the direction of the Managing Member and shall be conclusive
and binding on all Members, former Members, their successors or legal
representatives and any other Person except for manifest errors or fraud, and to
the fullest extent permitted by law no such Person shall have the right to an
accounting or an appraisal of the assets of the LLC or any successor thereto
except for manifest errors or fraud.
(d) The LLC shall promptly supply each Member with copies of all
information distributed to it by the Parent pursuant to Section 5.14 of the
Stockholders' Agreement.
SECTION 6.2 CERTAIN TAX MATTERS. The taxable year of the LLC shall
be the same as its Fiscal Year. The Tax Matters Member shall cause to be
prepared all federal, state and local tax returns of the LLC for each year for
which such returns are required to be filed and shall cause such returns to be
timely filed. The Tax Matters Member shall determine the appropriate treatment
of each item of income, gain, loss, deduction and credit of the LLC and the
accounting methods and conventions under the tax laws of the United States, the
several states
17
and other relevant jurisdictions as to the treatment of any such item or any
other method or procedure related to the preparation of such tax returns. The
Tax Matters Member shall make the election to amortize Organizational Expenses
pursuant to section 709 of the Code and the regulation promulgated thereunder.
In addition, the Tax Matters Member, in its sole and absolute discretion, may
cause the LLC to make or refrain from making any and all other elections
permitted by the tax laws of the United States, the several states and other
relevant jurisdictions (including, but not limited to, the election provided for
in section 754 of the Code). The "tax matters partner" for purposes of section
6231(a)(7) of the Code (the "TAX MATTERS MEMBER") shall be the Managing Member.
The Tax Matters Member shall have all of the rights, duties, powers and
obligations provided for in sections 6221 through 6234 of the Code with respect
to the LLC.
SECTION 6.3 CAPITAL ACCOUNTS. There shall be established for each
Member on the books of the LLC as of the date hereof, or such later date on
which such Member is admitted to the LLC, a capital account (each being a
"CAPITAL ACCOUNT"). Each Capital Contribution shall be credited to the Capital
Account of such Member on the date such contribution of capital is paid to the
LLC. In addition, each Member's Capital Account shall be (a) credited with such
Member's allocable share of any Net Income of the LLC, (b) debited with (i)
distributions to such Member of cash or the fair market value of other property
and (ii) such Member's allocable share of Net Loss of the LLC and expenditures
of the LLC described or treated under section 704(b) of the Code as described in
section 705(a)(2)(B) of the Code and (c) otherwise maintained in accordance with
the provisions of the Code. Any other item which is required to be reflected in
a Member's Capital Account under section 704(b) of the Code or otherwise under
this Agreement shall be so reflected. Capital Accounts shall be appropriately
adjusted to reflect transfers of part (but not all) of a Member's Interest.
Interest shall not be payable on Capital Account balances. Notwithstanding
anything to the contrary contained in this Agreement, the LLC shall maintain the
Capital Accounts of the Members in accordance with the principles and
requirements set forth in section 704(b) of the Code and Regulations section
1.704-1(b)(2)(iv).
SECTION 6.4 ALLOCATIONS. (a) Net Income and Losses shall be
allocated among the Members in accordance with their Percentage Interests
PROVIDED, HOWEVER, that Net Income and Losses with respect to any Transfer of
Allocated Shares shall be allocated to the Member(s) whose Allocated Shares were
included in such Transfer, PRO RATA on the basis of the number of such Allocated
Shares included in such Transfer.
(b) For income tax purposes only, each item of income, gain, loss
and deduction of the LLC shall be allocated among the Members in the same manner
as the corresponding items of Net Income (Loss) and specially allocated items
are allocated for Capital Account purposes; PROVIDED that in the case of any
asset of the LLC the Carrying Value of which differs from its adjusted tax basis
for U.S. federal income tax purposes, income, gain, loss and deduction with
respect to such asset shall be allocated solely for income tax purposes in
accordance with the principles of sections 704(b) and (c) of the Code (in any
manner determined by the Managing Member) so as to take account of the
difference between Carrying Value and adjusted basis of such asset.
18
ARTICLE VII
DISSOLUTION
SECTION 7.1 DISSOLUTION. (a) No Member shall have the right to
terminate this agreement or dissolve the LLC or withdraw or otherwise retire or
resign as a Member except pursuant to the prior written consent of (i) the
Managing Manager and (ii) Members representing more than 85% of the Percentage
Interests. Any purported withdrawal, retirement or resignation without such
prior written consent shall be void and of no effect. Except as expressly
provided for herein, a Member may not withdraw capital from the LLC.
(b) The LLC shall be dissolved and, except as specifically provided
herein, this Agreement shall terminate, upon the first to occur of any of the
following:
(i) December 31, 2009;
(ii) the bankruptcy, dissolution, resignation, or expulsion of the
Managing Member;
(iii) the sale, in one transaction or in a series of directly
related transactions, of all of the assets of the LLC;
(iv) the unanimous agreement of the Managing Member and the Xxxx
Members to dissolve the LLC; or
(v) on or after the earlier of (A) the consummation of a Public
Offering and (B) the fifth anniversary of the date hereof, upon the
request of the Vestar Member or the Xxxx Members.
Except as expressly set forth above, there are no other events pursuant to which
the LLC shall be dissolved and its affairs wound up. Furthermore, no Member,
except pursuant to the written consent of the Managing Member, shall wind up or
attempt to wind up the LLC. The LLC shall not be dissolved upon the bankruptcy,
any other bankruptcy event, if any, described in the LLC Act, dissolution,
death, insanity, retirement, resignation or expulsion of any Member which is not
the Managing Member. Each Member agrees not to apply for judicial dissolution
pursuant to Section 18-802 of the LLC Act prior to June 30, 2004.
SECTION 7.2 VOTES OF MEMBERS. If an act or other event described in
Section 7.1(b)(ii) hereof occurs and the Members owning a majority of the
profits interests and a majority of the capital interests owned by all the
Members (excluding the Managing Member) within 90 days of the date of such act
or event elect in writing to continue the business of the LLC, such event or
other act shall not constitute a dissolution of the LLC.
SECTION 7.3 WINDING-UP; FINAL DISTRIBUTIONS. (a) When the LLC is
dissolved, the business and property of the LLC shall be wound up and liquidated
by the Managing
19
Member or, by such liquidating trustee as may be appointed by the Managing
Member (the Managing Member or such liquidating trustee, as the case may be,
being hereinafter referred to as the "LIQUIDATOR"). In the event of a
dissolution under the circumstances described in any of Section 7.1(b)(i), (iv)
or (v), after satisfying the obligations of clauses (i), (ii), (iii) and (iv)
below, the Shares shall be distributed pro rata to the Members in accordance
with their respective Percentage Interests. In all other circumstances, the
Liquidator shall use its best efforts to reduce to cash and cash equivalent
items such assets of the LLC as the Liquidator shall deem it advisable to sell,
subject to obtaining fair value for such assets and any tax or other legal
considerations. The Liquidator shall be responsible for winding up and
terminating the affairs of the LLC and shall determine all matters in connection
therewith (including, without limitation, the arrangements to be made with
creditors, to what extent and under what terms the assets of the LLC are to be
sold, and the amount or necessity of cash reserves to cover contingent
liabilities) as the Liquidator deems advisable and proper; and all decisions of
the Liquidator shall be made in accordance with the fiduciary duty owed by the
Liquidator to the LLC and each of the Members, and any disposition of the
properties of the LLC shall be by auction with prior notice to all Persons who
were Members at the time of the dissolution. The Liquidator shall thereafter
liquidate the assets of the LLC as promptly as is consistent with obtaining the
fair market value thereof, and the proceeds therefrom, to the extent sufficient
therefor, shall be applied and distributed in the following manner and order:
(i) to the payment of the expenses of the winding-up,
liquidation and dissolution of the LLC;
(ii) to pay all creditors of the LLC, other than Members,
either by the payment thereof or the making of reasonable provision
therefor;
(iii) to establish reserves, in amounts established by the
Members or such Liquidator, to meet other liabilities of the LLC;
and
(iv) to pay, in accordance with the provisions of this
agreement applicable to such loans or in accordance with the terms
agreed among them and otherwise on a PRO RATA basis, all creditors
of the LLC that are Members, either by the payment thereof or the
making of reasonable provisions therefor.
The remaining assets of the LLC shall be applied and distributed in
accordance with Section 5.2.
(b) Notwithstanding anything to the contrary in Section 7.3(a)
hereof, the Liquidator shall not sell any Allocated Shares of a Member without
the express written consent of such Member. Without such consent, any Allocated
Shares of such Member shall be distributed to such Member.
(c) After all of the assets of the LLC have been distributed, the
LLC shall terminate; if at any time thereafter any funds in any cash reserves
referred to in Section 7.3(a) hereof are released because the need for such cash
reserves has ended, such funds shall be
20
distributed to the Members in the same manner as if such distribution had been
made pursuant to clauses (i) through (iv) of Section 7.3(a) hereof.
SECTION 7.4 FURTHER ASSURANCES. Following the dissolution of the LLC
other than under the circumstances described in Section 7.1(b)(iii), the Shares
shall be distributed to the Members in accordance with their respective
Percentage Interests, and the Member's rights thereto shall be governed by the
Stockholders' Agreement, and each Member agrees that so long as the
Stockholders' Agreement remains in effect, it will take all actions and execute
all amendments or modifications to the Stockholders' Agreement and all other
certificates, agreements or other documents reasonably necessary to effect the
intentions of this Agreement and to ensure that each Member shall remain bound
by the terms of the Stockholders' Agreement with respect to the Allocated Shares
allocated to such Member to the same extent as it is bound by this Agreement.
ARTICLE VIII
TRANSFER OF MEMBER'S UNITS
SECTION 8.1 TRANSFERS TO BE MADE ONLY AS PERMITTED OR REQUIRED BY
THIS AGREEMENT. Subject to Section 8.2, the Xxxx Members may not, directly or
indirectly, sell, assign, transfer, pledge or otherwise encumber or dispose of
(for purposes of this Article VIII, a "TRANSFER") any Interests, except as
specifically permitted or required by this Article VIII; any other purported
transfer shall be void and of no effect. The Vestar Member may transfer any
Interests freely, subject to Section 8.3 and, in the case of transfers to its
Affiliates, subject to written agreement by the transferee (in form and
substance reasonably satisfactory to the Managing Member) to be bound by this
Agreement as if the transferee were the transferring Member.
SECTION 8.2 PERMITTED TRANSFERS. The Xxxx Members may transfer any
of their Interests to (i) their respective beneficiaries, spouses, parents or
descendants or any executor, estate, trustee of the Xxxx Family Trust or the
Xxxxx Xxxx Trust (as applicable), guardian, committee, trustee or other
fiduciary acting as such on behalf or for the benefit of any such spouse, parent
or descendant (the Xxxx Members' "FAMILY GROUP") or (ii) any trust, corporation,
partnership or limited liability company, all of the beneficial interests in
which shall be held, directly or indirectly, by the Xxxx Members and/or one or
more of the Family Group of the Xxxx Members; PROVIDED, HOWEVER, that during the
period that any such trust, corporation, partnership or limited liability
company holds any right, title or interest in any Interest, no person other than
the Xxxx Members or the Family Group of the Xxxx Members may be or become
beneficiaries, stockholders or general partners or members thereof. No transfer
pursuant to this Section 8.2 shall be valid unless the transferee agrees in
writing (in form and substance reasonably satisfactory to the Managing Member)
to be bound by this Agreement as if the transferee were the transferring Member.
A transferee under Section 8.1 or 8.2 is referred to as a "PERMITTED
TRANSFEREE."
21
SECTION 8.3 TAG-ALONG RIGHTS. (a) So long as this Agreement shall
remain in effect, unless a Public Offering shall have occurred, with respect to
any proposed transfer by the Vestar Member or any of its Affiliates (in such
capacity, a "TRANSFERRING UNITHOLDER") of Units (excluding any transfers by the
Vestar Member to its Affiliates), the Transferring Unitholder shall have the
obligation, and each other Member and its Permitted Transferees shall have the
right (such Member and its Permitted Transferees that exercise such right being
a "TAGGING UNITHOLDER") to require the proposed transferee to purchase from each
holder of Units a number of Units up to the product (rounded up to the nearest
whole number) of (i) the quotient determined by dividing (A) the aggregate
number of Units beneficially owned by such Tagging Unitholder and sought by the
Tagging Unitholder to be included in the contemplated transfer by (B) the
aggregate number of Units beneficially owned by the Transferring Unitholder and
the aggregate number of Units beneficially owned by all Tagging Unitholders and
sought by all Tagging Unitholders to be included in the contemplated transfer
and (ii) the total number of Units proposed to be acquired by the transferee in
the contemplated transfer, and at the same price per Unit and upon the same
terms and conditions (including, without limitation, time of payment and form of
consideration) as to be paid and given to the Transferring Unitholder, PROVIDED
that in order to be entitled to exercise its right to sell Units to the proposed
transferee pursuant to this Section 8.3, a Tagging Unitholder must agree to make
to the transferee the same representations, warranties, covenants, indemnities
and agreements as the Transferring Unitholder agrees to make in connection with
the proposed transfer of the Units by the Transferring Unitholder (except that
in the case of representations and warranties pertaining specifically to the
Transferring Unitholder, a Tagging Unitholder shall make the comparable
representations and warranties pertaining specifically to itself, and except
that in the case of covenants or agreements capable of performance only by
certain holders of Units, such covenants or agreements shall be made only by
such certain holders of Units); and PROVIDED FURTHER that all representations,
warranties, covenants, agreements and indemnities made by the Transferring
Unitholder and the Tagging Unitholders pertaining specifically to themselves
shall be made by each of them severally and not jointly; and PROVIDED FURTHER
that each of the Transferring Unitholder and each Tagging Unitholder shall be
severally (but not jointly) liable for breaches of representations, warranties,
covenants and agreements of or (in the case of representations and warranties)
pertaining to the LLC or Parent and its subsidiaries, as the case may be, and
for indemnification obligations arising out of or relating to any such breach or
otherwise pertaining to the LLC, on a pro rata basis, such liability of each
such Unitholder not to exceed such Unitholder's pro rata portion of the gross
proceeds of the sale.
(b) The Transferring Unitholder shall give notice to all relevant
holders of Units and their Permitted Transferees of each proposed transfer
giving rise to the rights of the Tagging Unitholders set forth in the first
sentence of Section 8.3(a) at least 30 days prior to the proposed consummation
of such transfer, setting forth the name of the Transferring Unitholder, the
number of Units proposed to be so transferred, the name and address of the
proposed transferee, the proposed amount and form of consideration and other
terms and conditions offered by the proposed transferee, and a representation
that the proposed transferee has been informed of the tag-along rights provided
for in this Section 8.3 and has agreed to purchase Units in accordance with the
terms hereof. The tag-along rights provided by this Section 8.3 must be
exercised by each Tagging Unitholder within 15 days following receipt of the
notice required by the preceding
22
sentence, by delivery of a written notice to the Transferring Unitholder as the
case may be, indicating such Tagging Unitholder's desire to exercise its rights
and specifying the number of Units it desires to sell. If the proposed
transferee fails to purchase Units from any Tagging Unitholder that has properly
exercised its tag-along rights, then the Transferring Unitholder shall not be
permitted to make the proposed transfer, and any such attempted transfer shall
be void and of no effect.
(c) If any of the Tagging Unitholders exercise their rights under
Section 8.3(a), the closing of the purchase of Units with respect to which such
rights have been exercised shall take place concurrently with the closing of the
sale of the Transferring Unitholder's Units. No transfer shall occur pursuant to
this Section 8.3 unless the transferee shall agree in writing to become a party
to, and be bound by this Agreement to the same extent as its transferor.
SECTION 8.4 DRAG-ALONG RIGHTS. So long as this Agreement shall
remain in effect, if the Vestar Member or any of its Affiliates receives an
offer from a Third Party to purchase (whether pursuant to a sale of units, a
merger or otherwise) all, but not less than all, outstanding Units subject to
this Agreement and such offer is accepted by the Vestar Member, then each holder
of Units hereby agrees that it will, if requested by the Vestar Member, transfer
all Units owned by it to such Third Party on the terms of the offer so accepted
by the Vestar Member, including making the same representations, warranties,
covenants, indemnities and agreements that the Vestar Member agrees to make
(except that, in the case of representations and warranties pertaining
specifically to the Vestar Member, each other holder of Units shall make the
comparable representations and warranties pertaining specifically to itself, and
except that, in the case of covenants or agreements capable of performance only
by certain holders of Units, such covenants or agreements shall be made only by
such certain holders of Units, and provided that all representations,
warranties, covenants, agreements and indemnities made by the holders of Units
pertaining specifically to themselves shall be made by each of them severally
and not jointly and provided further that each holder of Units shall be
severally (but not jointly) liable for breaches of representations, warranties,
covenants and agreements of or (in the case of representations and warranties)
pertaining to the LLC, or the Parent and its subsidiaries, as the case may be,
and for indemnification obligations arising out of or relating to any such
breach or otherwise pertaining to the LLC, on a pro rata basis, such liability
of each such holder of Units not to exceed such holder of Units' pro rata
portion of the gross proceeds of the sale).
SECTION 8.5 NO TRANSFERS. Other than as set forth in this agreement,
no Member, without the prior written consent of the Managing Member (which
consent may be withheld in the sole discretion of the Managing Member), shall
(i) transfer all or any part of its direct or indirect Interest in the LLC or
(ii) resign as a Member. Without limiting the limitations set forth in this
Section 8.5, no transfer of any Interest in the LLC may be made unless the
transferring Member delivers to the LLC an opinion of counsel stating, or other
evidence satisfactory to the LLC, that (i) registration of the transferred
Interest in the LLC is not required under the Securities Act, and such transfer
shall not violate applicable state securities or blue sky registration
requirements in any respect and (ii) such transfer shall not cause the LLC to be
treated as an association taxable as a corporation rather than as a partnership
subject to the provisions of Subchapter K of the Code. Any such opinion of
counsel shall be rendered by
23
counsel, and shall be in form and substance, reasonably acceptable to the
Managing Member and all costs and expenses thereof shall be borne by the
transferring Member. In no event shall any Interest in the LLC be transferred to
a minor (except pursuant to a bequest by a Member, PROVIDED that any right
exercised pursuant to this Agreement shall be exercised on behalf of such minor
by an appropriately appointed custodian under the Uniform Transfers to Minors
Act) or an incompetent or in violation of any state or Federal law. No consent
to a transfer pursuant to this Section 8.5 shall be construed as a consent to
any other transfer of the same or any other Interest or Member.
SECTION 8.6 OTHER TRANSFER PROVISIONS. If any Interest is
transferred during any accounting period pursuant to this Agreement, each item
of income, gain, loss, expense, deduction and credit and all other items
attributable to such Interest for such period shall be divided and allocated
between the transferor and the transferee by taking into account their varying
Interests during such period in accordance with section 706(d) of the Code,
using any conventions permitted by law and selected by the Managing Member. All
distributions on or before the date of such transfer shall be made to the
transferor, and all distributions thereafter shall be made to the transferee.
ARTICLE IX
THE LLC'S REGISTRATION RIGHTS RELATING TO
SHARES OF PARENT COMMON STOCK AND RELATED RULE 144 SALES
SECTION 9.1 STOCKHOLDERS' AGREEMENT; TRANSFERS OF SHARES.
(a) The provisions of this Article IX are intended to govern the
LLC's exercise of its registration rights under the Stockholders' Agreement and
the sale or other disposition by the LLC (any such sale, assignment, transfer,
pledge or other encumbrance or disposition of Shares or any interest therein,
whether pursuant to a registration or otherwise a "TRANSFER") of the Shares.
(b) The LLC shall exercise its rights under the Stockholders'
Agreement and shall effect Transfers of Shares, only as provided in this Article
IX. Notwithstanding any other provision of this Agreement to the contrary, (i)
the rights and obligations of the Members and the LLC pursuant to this Article
IX with respect to the Stockholders' Agreement are subject to the provisions of
the Stockholders' Agreement and (ii) the rights and obligations of the Members
and the LLC with respect to the Stockholders' Agreement and all Transfers of
Shares shall be subject to all applicable laws including, without limitation,
the Securities Act, the Exchange Act and applicable state securities or blue sky
laws.
(c) Subject to Section 9.5, the rights of any Member to request the
registration or the Transfer of any Shares shall be limited to the Allocated
Shares allocated to such Member, and upon the Transfer by the LLC of all the
Allocated Shares allocated to such Member, and the
24
distribution to such Member of any Proceeds relating to the Transfer of such
shares, all rights of such Member under this Article IX shall cease.
(d) Notwithstanding any provision in this Agreement to the contrary,
if the LLC receives advice from the Parent, or if the Managing Member determines
in its reasonable judgment, at the time that the LLC receives a request to
effect a registration or a Transfer (other than a Transfer to the Parent
pursuant to Section 9.13(a) or 9.13(b)), that, as a result of any such
registration or Transfer, (i) there would be an adverse effect on a then
contemplated public offering of Parent's securities, (ii) the registration and
offering would interfere with any material financing, acquisition, corporate
reorganization or other material corporate transaction or development involving
the Parent that is pending or imminent, (iii) the disclosures that would be
required to be made by Parent in connection with such registration or Transfer
would be materially harmful to Parent because of transactions then being
considered by, or other events then concerning, Parent or (iv) registration at
the time would require the inclusion of pro forma or other information, which
requirement Parent is reasonably unable to comply with, and the LLC promptly
gives notice of that determination to each Member that has requested such
registration or Transfer, which may be a general notice, then the LLC may defer
requesting such registration or effecting such Transfer. If the LLC shall so
postpone requesting a registration statement, the Demanding Member, in the case
of any registration referred to in Section 9.3 hereof, shall have the right to
withdraw its or his Demand Request by giving written notice to the LLC within 30
days after the receipt of the notice of the postponement and, in the event of
the withdrawal, the Demand Request that was withdrawn shall not be deemed to
have been made.
(e) Notwithstanding the fact that Sections 9.2, 9.3 and 9.4 pertain
only to Members, to the extent that any Member has transferred any Interests to
a Permitted Transferee, (i) such Permitted Transferee shall be deemed for the
purpose of this Article IX to have been apportioned a PRO RATA share of the
Allocated Shares allocated to such Member (based upon the amount of the Interest
transferred), (ii) all such Permitted Transferees shall receive any notice to be
provided under this Article IX to the Member and (iii) any notice given or
action to be taken by a Member other than an action under Section 9.4 or 9.5,
which action shall not require the majority referred to in this clause (iii) may
be given or taken by such Member and the Permitted Transferees of such Member
that have been apportioned a majority of the Allocated Shares of the Member and
the Permitted Transferees of such Member. Whenever this Article IX shall make a
PRO RATA allocation based upon the number of Allocated Shares allocated to a
Member, such allocation shall be made upon the basis of the Allocated Shares
allocated to such Member and the Permitted Transferees of such Member.
(f) When this Article IX states that the LLC shall cause the Parent
to take any action, it shall be interpreted to mean that the LLC shall take such
actions as the Managing Member reasonably believes is appropriate to cause the
Parent to take such action.
SECTION 9.2 EXERCISE OF INCIDENTAL REGISTRATION RIGHTS.
(a) RIGHT TO INCIDENTAL REGISTRATION. Whenever the LLC receives
notice that the Parent proposes to register any of its common stock (or
securities convertible into or
25
exchangeable or exercisable for common stock) under the Securities Act for its
own account or the account of any stockholder of the Parent (other than
offerings pursuant to employee plans, a dividend reinvestment plan or a business
combination transaction, recapitalization or exchange offer) (an "INCIDENTAL
REGISTRATION"), the LLC shall give prompt written notice to each Member of the
intention of the Parent to effect such a registration and, subject to Section
9.2(c), shall use all reasonable efforts to cause the Parent to include in such
registration all the Shares with respect to which the LLC has received written
request specifying the number of Allocated Shares of a Member for inclusion
therein within 20 days after receipt of the LLC's notice by each Member (12 days
if the Parent gives telephonic notice to the LLC pursuant to Section 4.2(a) of
the Stockholders' Agreement).
(b) DESIGNATION OF PRICING. Any Member exercising its Incidental
Registration rights may designate a minimum offering price and maximum
underwriting or selling discounts at which the Allocated Shares allocated to
such Member may be sold.
(c) PRIORITY. If an Incidental Registration pursuant to this Section
9.2 involves an underwritten offering, the LLC shall not be required to cause
the Parent to register any Allocated Shares of any Member unless such Member
accepts the terms of the underwriting agreement, to the extent applicable to
such Member, and then only in such quantity as shall not, in the opinion of the
managing underwriter, exceed the maximum number of shares (or other securities)
that can be marketed without materially and adversely affecting the offering, if
any, by Parent or the stockholders of Parent, as the case may be. If the
managing underwriter advises the LLC in good faith that in its opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in such offering without having an adverse effect on
such offering, including the price at which such securities can be sold, then
the LLC shall cause Parent to include in such registration the maximum number of
Shares that such underwriter advises can be so sold, allocated as follows:
(i) if such registration was initiated by Parent, (x) first,
to the securities Parent proposes to sell, (y) second, among the Shares
requested to be included in such registration by the Members, PRO RATA, on
the basis of the number of Allocated Shares allocated to each Member, and
(z) third, among other securities, if any, requested and otherwise
eligible to be included in such registration; and
(ii) if such registration was initiated by the LLC at the
request of any Demanding Member pursuant to Section 9.3, (x) first, among
the Allocated Shares requested to be included in such registration by the
Members, PRO RATA, on the basis of the number of Allocated Shares
allocated to each Member (y) second, to any securities the Parent proposes
to sell, and (z) third, among other securities, if any, requested and
otherwise eligible to be included in such registration.
(d) DISTRIBUTION OF ALLOCATED SHARES. In the event that the Managing
Member determines in good faith that it would be in the best interests of the
LLC or of any of the Members that, in lieu of the LLC exercising its rights
under this Section 9.2 or Section 9.3 for the benefit of such Member, the shares
allocable to such Member should be distributed to such
26
Member so that such Member may exercise such rights directly under Section 4 of
the Stockholders' Agreement, the Managing Member shall do so, provided that such
Member shall have first delivered a bona fide exercise of its rights under this
Section 9.2 or Section 9.3.
SECTION 9.3 EXERCISE OF DEMAND REGISTRATION RIGHTS.
(a) RIGHT TO DEMAND.
(i) At any time when the LLC is permitted by the Stockholders'
Agreement, any of (A) the Vestar Member or (B) no earlier than twelve
months following the consummation of a Public Offering, any Xxxx Member or
its Permitted Transferees (in each case a "DEMANDING MEMBER") may request
the LLC to exercise a "Common Stock Request" under the Stockholders'
Agreement (a "DEMAND REQUEST"), PROVIDED that in the case of a Xxxx
Member, either (x) such Demanding Member shall have proposed to register
together with all other Shares proposed to be registered at such time by
any other Demanding Member at least 10% of the outstanding Shares, or (y)
such Demanding Member shall have proposed to register, together with all
of the Shares proposed to be registered at such time by any other
Demanding Member, shares having an aggregate Fair Market Value of at least
$50 million.
(ii) Within 10 days after receipt of any Demand Request, the
Managing Member shall give written notice of the Demand Request to the
other Members (collectively, the "NON-DEMANDING MEMBERS") and shall,
subject to the provisions of the last paragraph of this Section 9.3(a),
use all reasonable efforts to exercise the Demand Registration Right with
respect to the Allocated Shares specified in the Demand Request and,
subject to Section 9.3(b), to cause the Parent to include in the
registration all the additional Shares with respect to which the LLC has
received written requests for inclusion therein within 60 days after the
receipt of the Demand Request by the Non-Demanding Members.
(iii) The LLC shall cause the Parent to effect not more than
four Demand Registrations on behalf of the Vestar Member and two Demand
Registrations in the aggregate on behalf of the Xxxx Members or their
Permitted Transferees pursuant to paragraph (i) of this Section 9.3(a),
PROVIDED that if for any reason the number of Demand Registrations
available to the LLC under the Stockholders' Agreement is not reduced as a
result of any Demand Request, such Demand Request shall not reduce the
number of Demand Requests that such Demanding Member may request under
this Section 9.3(a), PROVIDED, FURTHER, that in the event that any of the
Xxxx Employees is terminated without "Cause" by the Company or the Parent
or resigns for "Good Reason" from the Company and the Parent, as such
terms are defined in their current respective employment contracts with
the Company, then such Xxxx Employee, together with all other such
terminated or resigning Xxxx Employees, shall have the right, beginning
six months following the consummation of a Public Offering, to four
additional Demand Registrations (the "ADDITIONAL DEMAND REGISTRATIONS"),
which may be used no more often than once in any 12-month period following
such termination or resignation, and in which 25% of the
27
Allocated Shares allocated to all such terminated or resigning Xxxx
Employees (or allocated to a trust of which such Xxxx Employee is a
beneficiary) on the date of their respective terminations or resignations,
in the aggregate, shall have first priority alone (without sharing such
priority with the Vestar Member); PROVIDED, FURTHER, that the Additional
Demand Registrations shall not be subject to the restrictions contained in
Section 9.3(a)(i) hereof, PROVIDED, FURTHER, that if a registration
statement filed pursuant to an Additional Demand Registration is not
effective within 90 days (the "90 DAY PERIOD") of the receipt by the
Parent of such Additional Demand Registration request, if the terminated
or resigning Xxxx Employee so elects, then, to the extent such Xxxx
Employee exercises its rights under Section 4.1(e) of the Stockholders'
Agreement and such Allocated Shares allocated to such Xxxx Employee are to
be acquired by the Parent (or, at the option of such Xxxx Employee, the
Company, to the extent that the Parent is precluded due to regulatory or
state law reasons) or exchanged for shares of preferred stock pursuant to
Section 3.12 of the Stockholders' Agreement, the LLC will distribute to
such Xxxx Employee such Allocated Shares, and the Parent or the Company
will purchase from such Xxxx Employee (a "POST OFFERING PURCHASE") the
Shares being registered in accordance with Section 4.1(e) of the
Stockholders' Agreement.
(iv) The LLC confirms and agrees that a Demanding Member (the
"JOINING MEMBER") that joins in a Demand Registration initiated by another
Demanding Member shall not by reason thereof be deemed to have used any of
the Demand Registrations provided herein for such Joining Member.
(b) PRIORITY. If a Demand Request pursuant to this Section 9.3
involves an underwritten offering, the LLC shall not be required to cause Parent
to register any Allocated Shares allocated to any Non-Demanding Member unless
such Non-Demanding Member accepts the terms of the underwriting agreement, to
the extent applicable to it, and then, only in such quantity as shall not, in
the written opinion of the managing underwriter, exceed the maximum shares of
common stock or other securities that can be marketed without materially
adversely affecting the offering, if any, by the Demanding Member. If the
managing underwriter advises the LLC in good faith that in its opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without having an adverse effect on
such offering, including the price at which such securities can be sold, then
the LLC shall cause the Parent to include in such registration the maximum
number of Shares that such underwriter advises can be so sold, allocated (x)
first, among the Allocated Shares requested to be included in such registration
by the Members, PRO RATA, on the basis of the number of Allocated Shares
allocated to each such Member, (y) second, to any securities that Parent
proposes to sell and (z) third, among other securities, if any, requested and
otherwise eligible to be included in such registration.
(c) SELECTION OF UNDERWRITERS. In connection with any Demand
Registration involving an underwritten offering, the Parent shall select a
managing underwriter or underwriters, which underwriter or underwriters shall be
nationally recognized and shall be reasonably acceptable to the Demanding
Member.
28
SECTION 9.4 TAG-ALONG RIGHTS. (a) So long as this Agreement or the
Stockholders Agreement shall remain in effect and the Vestar Member (and its
Affiliates) has more Allocated Shares allocated to it than the aggregate number
of Allocated Shares allocated to the Xxxx Members and their Permitted
Transferees, unless a Public Offering shall have occurred, with respect to any
proposed Transfer by the LLC of the Vestar Member's or any of its Affiliates'
(in such capacity, a "TRANSFERRING STOCKHOLDER") Allocated Shares (excluding any
Transfers by the Vestar Member to its Affiliates), the Transferring Stockholder
shall have the obligation, and each other Member and its Permitted Transferees
shall have the right (such Member and its Permitted Transferees that exercise
such right shall be referred to as a "TAGGING STOCKHOLDER"), to require the LLC
to sell and the proposed transferee to purchase from the LLC a number of its
Allocated Shares up to the product (rounded up to the nearest whole number) of
(i) the quotient determined by dividing (A) the aggregate number of Allocated
Shares allocated to such Tagging Stockholder and sought by the Tagging
Stockholder to be included in the contemplated Transfer by (B) the sum of the
aggregate number of Allocated Shares allocated to such Transferring Stockholder
and the aggregate number of Allocated Shares allocated to such Tagging
Stockholders and sought by all Tagging Stockholders to be included in the
contemplated Transfer and (ii) the total number of Allocated Shares proposed to
be acquired by the transferee in the contemplated Transfer, and at the same
price per Allocated Share and upon the same terms and conditions (including
without limitation time of payment and form of consideration) as to be paid and
given to the Transferring Stockholder, PROVIDED that in order to be entitled to
exercise its right to sell Allocated Shares to the proposed transferee pursuant
to this Section 9.4, a Tagging Stockholder must agree to make to the transferee
the same representations, warranties, covenants, indemnities and agreements as
the Transferring Stockholder agrees to make in connection with the proposed
transfer of the Allocated Shares of the Transferring Stockholder (except that in
the case of representations and warranties pertaining specifically to the
Transferring Stockholder, a Tagging Stockholder shall make the comparable
representations and warranties pertaining specifically to itself, and except
that in the case of covenants or agreements capable of performance only by
certain Members, such covenants or agreements shall be made only by such certain
Members); and PROVIDED FURTHER that all representations, warranties, covenants,
agreements and indemnities made by the Transferring Stockholder and the Tagging
Stockholders pertaining specifically to themselves shall be made by each of them
severally and not jointly; and PROVIDED FURTHER that each of the Transferring
Stockholder and each Tagging Stockholder shall be severally (but not jointly)
liable for breaches of representations, warranties, covenants and agreements of
or (in the case of representations and warranties) pertaining to the LLC or
Parent and its subsidiaries, as the case may be, and for indemnification
obligations arising out of or relating to any such breach or otherwise
pertaining to the LLC, Parent and its subsidiaries, on a pro rata basis, such
liability of each such Stockholder not to exceed such Stockholder's pro rata
portion of the gross proceeds of the sale.
(b) The Transferring Stockholder shall give notice to each other
Member and their Permitted Transferees of each proposed Transfer giving rise to
the rights of the Tagging Stockholders set forth in the first sentence of
Section 9.4(a) at least 30 days prior to the proposed consummation of such
Transfer, setting forth the name of the Transferring Stockholder, the number of
Allocated Shares proposed to be so Transferred, the name and address of the
proposed transferee, the proposed amount and form of consideration and other
terms and conditions
29
offered by the proposed transferee, and a representation that the proposed
transferee has been informed of the tag-along rights provided for in this
Section 9.4 and has agreed to purchase Allocated Shares in accordance with the
terms hereof. The tag-along rights provided by this Section 9.4 must be
exercised by each Tagging Stockholder within 15 days following receipt of the
notice required by the preceding sentence, by delivery of a written notice to
the Transferring Stockholder indicating such Tagging Stockholder's desire to
exercise its rights and specifying the number of Allocated Shares it desires to
sell. If the proposed transferee fails to purchase Allocated Shares from any
Tagging Stockholder that has properly exercised its tag-along rights, then the
Transferring Stockholder shall not be permitted to make the proposed Transfer,
and any such attempted Transfer shall be void and of no effect.
(c) If any of the Tagging Stockholders exercise their rights under
Section 9.4(a), the closing of the purchase of the Allocated Shares with respect
to which such rights have been exercised shall take place concurrently with the
closing of the sale of the Transferring Stockholder's Allocated Shares. No
Transfer shall occur pursuant to this Section unless the transferee shall agree
to become a party to, and be bound to the same extent as its transferor by the
terms of the Stockholders' Agreement.
SECTION 9.5 DRAG-ALONG RIGHTS. So long as this Agreement or the
Stockholders Agreement shall remain in effect and the Vestar Member (and its
Affiliates) has more Allocated Shares allocated to it than the aggregate number
of Allocated Shares allocated to the Xxxx Members or their Permitted
Transferees, if the Vestar Member or any of its Affiliates receives an offer
from a Third Party to purchase (whether pursuant to a sale of stock, a merger or
otherwise) all, but not less than all, of the Allocated Shares allocated to the
Vestar Member and its Affiliates (other than shares, if any, not being purchased
in order to preserve the availability of recapitalization accounting treatment)
and such offer is accepted by the Vestar Member or such Affiliate, then each
Member other than the Vestar Member hereby agrees that it will, if requested by
the Vestar Member, allow the LLC to Transfer all the Allocated Shares allocated
to such Member to such Third Party on the terms of the offer so accepted by the
Vestar Member, including making the same representations, warranties, covenants,
indemnities and agreements that the Vestar Member agrees to make (except that,
in the case of representations and warranties pertaining specifically to the
Vestar Member, each other Member shall make the comparable representations and
warranties pertaining specifically to itself, and except that, in the case of
covenants or agreements capable of performance only by certain Members, such
covenants or agreements shall be made only by such certain Members, and provided
that all representations, warranties, covenants, agreements and indemnities made
by the Members pertaining specifically to themselves shall be made by each of
them severally and not jointly and provided further that each Member shall be
severally (but not jointly) liable for breaches of representations, warranties,
covenants and agreements of or (in the case of representations and warranties)
pertaining to the LLC, or Parent or its subsidiaries, as the case may be, and
for indemnification obligations arising out of or relating to any such breach or
otherwise pertaining to the LLC, the Parent or its subsidiaries, on a pro rata
basis, such liability of each such Member not to exceed such Member's pro rata
portion of the gross proceeds of the sale.
30
SECTION 9.6 PUBLIC OFFERINGS, ETC. The provisions of Sections 9.4,
9.5 and 9.7 shall not be applicable to Transfers in a Public Offering or
Transfers pursuant to Section 9.8.
SECTION 9.7 RIGHTS OF FIRST REFUSAL. If, at any time on or after the
date hereof, any Xxxx Member or any of their respective Permitted Transferees
(an "OFFEREE") receives a bona fide offer to purchase any or all of its
Allocated Shares (the "OFFER") (and, pursuant to such Offer, such Stockholder
could, without violating the terms of this Agreement, cause the LLC to Transfer
the Shares that are the subject of such Offer) from a Third Party (the
"OFFEROR") which such Offeree wishes to accept, such Offeree shall cause the
Offer to be reduced to writing and shall notify the Parent in writing of its
wish to accept the Offer (the "SALE NOTICE"). The Sale Notice shall contain an
irrevocable offer to sell such Allocated Shares to the Parent (in the manner set
forth below) at a purchase price equal to the price contained in, and otherwise
on the same terms and conditions of, the Stock Offer, and shall be accompanied
by a true copy of the Offer (which shall identify the Offeror). At any time
within 30 Business Days after the date of the receipt by the Parent of the Sale
Notice, the Parent shall have the right and option to commit to purchase, or to
arrange for one or more third parties designated by the Parent to purchase, all
of the Allocated Shares covered by the Offer either (i) for the same
consideration and on the same terms and conditions as the Offer or (ii) if the
Offer includes any consideration other than cash, then, at the sole option of
the Parent, at the equivalent all cash price, determined in good faith by a
nationally recognized independent investment banking firm, and otherwise on the
same terms and conditions as the Offer. If the option referred to in the
preceding sentence is exercised, on or prior to the 30th Business Day after the
date of receipt by the Parent of the Sale Notice, the Parent (or its designees)
shall pay the relevant cash consideration by delivering a certified bank check
or checks in (or, if the Offeree so elects at least three Business Days prior to
the closing date in a writing specifying the Offeree's bank account and other
wire transfer instructions, by wire transferring) the appropriate amount and
shall deliver the relevant non-cash consideration to the Offeree against
delivery to the Parent by the LLC of certificates representing the Allocated
Shares being purchased, appropriately endorsed by the Offeree. If, at the end of
the aforementioned 30 Business Day period, the Parent (or its designees) has not
exercised its option in the manner set forth above, the Offeree may during the
succeeding 30 Business Day period sell not less than all of the Allocated Shares
covered by the Offer to the Offeror at a price and on terms no less favorable to
the Offeree than those contained in the Offer. Such Offeror shall agree in a
writing in form and substance reasonably satisfactory to the Parent to become a
party hereto and be bound to the same extent as the Offeree by the provisions
hereof other than this Section 9.7. Promptly after such sale, the Offeree shall
notify the Parent of the consummation thereof and shall furnish such evidence of
the completion and time of completion of such sale and of the terms thereof as
may reasonably be requested by the Parent. If, at the end of 30 Business Days
following the expiration of the 30 Business Day period for the Parent (or its
designees) to commit to purchase the aforementioned Allocated Shares, the
Offeree has not completed the sale of such Allocated Shares as aforesaid, all
the restrictions on transfer contained herein shall again be in effect with
respect to such Allocated Shares.
SECTION 9.8 INITIATION OF A RULE 144 SALE. After a Public Offering,
any Member may request that all or any portion of the Allocated Shares of such
Member be the subject of a Transfer by the LLC in accordance with Rule 144 under
the Securities Act (a "RULE
31
144 REQUEST"). A Rule 144 Request shall specify the number of Allocated Shares
that is subject to such request, PROVIDED that a Member shall not request the
inclusion of a number of Shares during any three-month period that is greater
than the maximum number of Shares that the LLC could sell pursuant to Rule 144
multiplied by a fraction, the numerator of which is the number of Allocated
Shares allocated to such Member (or in the case of any of the Xxxx Members or
their Permitted Transferees, all of the Xxxx Members and their Permitted
Transferees) and the denominator of which is the total number of Shares then
held by the LLC. Promptly upon receipt of a Rule 144 Request, the LLC shall give
each other Member notice of the Rule 144 Request and shall use its best efforts
to effect the Transfer of the Allocated Shares in respect of which the LLC
receives written requests for inclusion within 30 days after such Member shall
have received the LLC's notice pursuant to this Section 9.8. Any Transfer
proposed to be made pursuant to this Section 9.8 (i) shall be subject in all
respects to compliance by the LLC with the provisions of Rule 144, (ii) shall be
subject to interruption and termination as a result of any registration of
securities by Parent, regardless of whether initiated pursuant to the
Stockholders' Agreement and (iii) in the event such Transfer is proposed to be
made by a Xxxx Member employed by the Parent or so long as the Xxxx Members have
the right to designate directors, shall be subject to interruption and
termination for any of the reasons set forth in Section 9.1(d).
SECTION 9.9 INDIVIDUAL PRIVATE SALE. (A) In the case of the Xxxx
Members or their Permitted Transferees, after the earlier to occur of (i) a
Public Offering and (ii) the fifth anniversary of the date hereof, the Xxxx
Members may, and (B) in the case of the Vestar Member, at any time the Vestar
Member may, request that, to the extent that it may lawfully do so, the LLC
shall effect a Transfer of all or any portion of the Allocated Shares allocated
to such Member pursuant to any available exemption from the registration
requirement under the Securities Act, subject to written agreement by the
transferee (in form and substance reasonably satisfactory to the Managing
Member) to be bound by this Agreement as if the transferee were the transferring
Member. A transferee under this Section 9.9 is referred to as a "SHARE PERMITTED
TRANSFEREE". No transfer of any such Shares may be made unless such Member
delivers to the LLC an opinion of counsel stating, or other evidence
satisfactory to the LLC, that registration of such Shares is not required under
the Securities Act, and such transfer shall not violate applicable state
securities or blue sky laws. Any such opinion of counsel shall be rendered by
counsel, and shall be in form and substance, reasonably acceptable to the
Managing Member and all costs and expenses thereof shall be borne by such
Member. Notwithstanding the foregoing to the contrary, the LLC shall not take
the action referred to in the first sentence of this Section 9.9 if the Managing
Member reasonably believes that any such action would be unlawful, or could have
an adverse effect on Parent. The LLC agrees to use its reasonable best efforts
to take all actions reasonably requested by any Xxxx Member or its Permitted
Transferee to facilitate a Transfer pursuant to this Section 9.9.
SECTION 9.10 REDUCTION OF ALLOCATED SHARES. Upon the consummation by
the LLC of any Transfer of Shares, (i) the number of Allocated Shares of each
Member shall be reduced by the number of such Member's Allocated Shares that
were actually included in such Transfer, PROVIDED that such reduction shall be
made only on the basis of whole Shares and the LLC shall allocate any fractional
Shares among such Members by lot or pursuant to any other method that the LLC
deems, in its sole judgment, to be just and equitable and (ii) the Percentage
32
Interests of the Members shall be adjusted to reflect the number of remaining
Allocated Shares that are allocated to each such Member.
SECTION 9.11 LIQUIDATION OF THE LLC. Upon the liquidation of the
LLC, (a) the Demand Registration rights provided for in Section 9.3(a) shall be
distributed to the Members and each Share Permitted Transferee to the extent
that such Demand Registration Rights have not been exercised and (b) the
incidental registration rights provided for in Section 9.2(a) hereof shall be
assigned to each Member and each Share Permitted Transferee thereof.
SECTION 9.12 TRANSFERS TO BE MADE ONLY AS PERMITTED OR REQUIRED BY
THIS AGREEMENT. Until the earlier to occur of (i) a Public Offering and (ii) the
fifth anniversary of the date hereof, except as permitted by this Article IX,
the Xxxx Members may not, directly or indirectly, request the Transfer of the
Allocated Shares allocated to each of them, except as specifically permitted or
required by this Article IX; any other purported transfer shall be void and of
no effect. The Vestar Member may request the Transfer of its Allocated Shares at
any time subject only to the restrictions in this Article IX.
SECTION 9.13 LIQUIDITY RIGHT.
(a) Prior to a Public Offering, as long as this Agreement or the
Stockholders' Agreement shall remain in effect, if Xxxxxx X. Xxxx ceases to
serve as Chairman or Chief Executive Officer of the Company or Parent or the
employment with the Company of any of Xxxxx Xxxx or Xxxxx X. Xxxx (together with
Xxxxxx X. Xxxx, the "XXXX EMPLOYEES") ceases for any reason (including, but not
limited to, a cessation under the circumstances set forth in Section 9.13(b)
hereof) (a "LIQUIDITY EVENT"), then, to the extent such Xxxx Employee exercises
its rights under Section 3.11(a) of the Stockholders' Agreement and such
Allocated Shares allocated to such Xxxx Employee are to be acquired by the
Parent (or, at the option of such Xxxx Employee, the Company, to the extent that
the Parent is precluded due to regulatory or state law reasons) or exchanged for
shares of preferred stock pursuant to Section 3.12 of the Stockholders'
Agreement, the LLC will distribute to such Xxxx Employee such Allocated Shares,
and such Xxxx Employee shall have the right to sell to the Parent or the
Company, and the Parent or the Company shall be required to purchase (subject to
the provisions of Section 3.12 of the Stockholders' Agreement), such Allocated
Shares in accordance with Section 3.11(a) of the Stockholders' Agreement.
(b) Prior to a Public Offering, as long as this Agreement or the
Stockholders' Agreement shall remain in effect, in the event that any of the
Xxxx Employees is terminated by the Parent or the Company without "Cause" or
resigns from the Parent and the Company for "Good Reason", as such terms are
defined in their current respective employment contracts with the Company, then,
to the extent such Xxxx Employee exercises its rights under Section 3.11(b) of
the Stockholders' Agreement and such Allocated Shares allocated to such Xxxx
Employee are to be acquired by the Parent (or, at the option of such Xxxx
Employee, the Company, to the extent that the Parent is precluded due to
regulatory or state law reasons) or exchanged for shares of preferred stock
pursuant to Section 3.12 of the Stockholders' Agreement, the LLC will distribute
to such Xxxx Employee such Allocated Shares, and such Xxxx Employee shall have
the right to sell to the Parent or the Company, and the Parent or the Company
shall be required to
33
purchase (subject to the provisions of Section 3.12 and on terms described in
Section 3.11(c) of the Stockholders' Agreement), such Allocated Shares in
accordance with Section 3.11(b) of the Stockholders' Agreement.
(c) Each Xxxx Employee desiring to sell Shares which may be sold
pursuant to this Section 9.13 or 9.3(a)(iii) shall send to the Managing Member
concurrently with its delivery to the Parent and Vestar a copy of such written
notice as is required to be delivered in accordance with Section 3.11(c) of the
Stockholders' Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 EQUITABLE RELIEF. The Members hereby confirm that
damages at law would be an inadequate remedy for a breach or threatened breach
of this Agreement and agree that, in the event of a breach or threatened breach
of any provision hereof, the respective rights and obligations hereunder shall
be enforceable by specific performance, injunction or other equitable remedy,
but, nothing herein contained is intended to, nor shall it, limit or affect any
right or rights at law or by statute or otherwise of a Member aggrieved as
against the other for a breach or threatened breach of any provision hereof, it
being the intention by this Section 10.1 to make clear the agreement of the
Members that the respective rights and obligations of the Members hereunder
shall be enforceable in equity as well as at law or otherwise and that the
mention herein of any particular remedy shall not preclude a Member from any
other remedy it or he might have, either in law or in equity.
SECTION 10.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts executed and to be performed in such State.
SECTION 10.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, their respective
successors and assigns.
SECTION 10.4 NOTICES. Subject to Section 10.13, whenever notice is
required or permitted by this Agreement to be given, such notice may be in
writing (including facsimile) and if in writing shall be given to any Member at
its address or facsimile number shown in the LLC's books and records (including
Schedule 1 hereto).
SECTION 10.5 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument.
SECTION 10.6 ENTIRE AGREEMENT. This Agreement and the Stockholders'
Agreement embody the entire agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, agreements, representations, warranties, covenants or undertakings
with respect to the subject matter hereof, other than those
34
expressly set forth or referred to herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter hereof.
SECTION 10.7 EFFECTIVENESS OF AGREEMENT. This Agreement shall be and
become effective as of the Effective Time of the Acquisition Merger.
SECTION 10.8 AMENDMENTS. Any amendment to this Agreement shall be
effective only if such amendment is evidenced by a written instrument duly
executed and delivered by (a) the holders of a majority of the Units held by the
Xxxx Members, (b) the Managing Member and (c) the Vestar Member, and with
respect to the Parent, the Company and the relevant Xxxx Member.
SECTION 10.9 SECTION TITLES. Section titles are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text hereof.
SECTION 10.10 REPRESENTATIONS AND WARRANTIES. Each Member
represents, warrants and covenants to each other Member that:
(a) such Member, if not a natural Person, is duly formed and validly
existing under the laws of the jurisdiction of its organization with full
power and authority to conduct its business to the extent contemplated in
this Agreement;
(b) such Member, if a natural Person, has the capacity to enter into
and perform its obligations under this Agreement;
(c) this Agreement has been duly authorized (in the case of Members
that are not natural Persons), executed and delivered by such Member and
constitutes the valid and legally binding agreement of such Member
enforceable in accordance with its terms against such Member except as
enforceability hereof may be limited by bankruptcy, insolvency, moratorium
and other similar laws relating to creditors' rights generally and by
general equitable principles;
(d) the execution and delivery of this Agreement by such Member and
the performance of its duties and obligations hereunder do not result in a
breach of any of the terms, conditions or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, credit agreement,
note or other evidence of indebtedness, or any lease or other agreement,
or any license, permit, franchise or certificate, to which such Member is
a party or by which it is bound or to which its properties are subject, or
require any authorization or approval under or pursuant to any of the
foregoing, or violate any statute, regulation, law, order, writ,
injunction, judgment or decree to which such Member is subject;
(e) no consent, approval or authorization of, or filing,
registration or qualification with, any court or governmental authority on
the part of such Member is
35
required for the execution and delivery of this Agreement by such Member
and the performance of its obligations and duties hereunder.
SECTION 10.11 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL. Each
of the parties hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement, to the non-exclusive general
jurisdiction of the Courts of the State of New York in New York County,
the Courts of the United States of America for the Southern District of
New York and the Central District of California, the Courts in the State
of California in the County of Orange and appellate courts from any
thereof;
(b) consents that any such action or proceeding may be brought in
such courts, and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same to the extent permitted by applicable law;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
party, as the case may be, at its address set forth in Schedule 1 or at
such other address of which the other party shall have been notified
pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to xxx in any other jurisdiction for recognition and enforcement of
any judgment or if jurisdiction in the courts referenced in paragraph (a)
hereof is not available despite the intentions of the parties hereto; and
(e) waives trial by jury in any litigation in any court with respect
to, in connection with, or arising out of this Agreement or any other
instrument or document delivered pursuant hereto, or any other claim or
dispute howsoever arising, to which the parties are party. This waiver is
informed and freely made.
SECTION 10.12 REIMBURSEMENT OF EXPENSES. Promptly after the date of
this Agreement, the LLC, to the extent it does not pay such costs and expenses
directly, will reimburse the Managing Member for Organizational Expenses
incurred by the Managing Member.
SECTION 10.13 XXXX REPRESENTATIVE. Each Xxxx Member hereby
designates and appoints (and each Permitted Transferee of each such Xxxx Member
shall be deemed to have so designated and appointed) Xxxxxx X. Xxxx, with full
power of substitution (the "Xxxx Representative") the representative of each
such Person to perform all such acts as are required, authorized or contemplated
by this Agreement to be performed by any such Person and hereby
36
acknowledges that the Xxxx Representative shall be the only Person authorized to
take any action so required, authorized or contemplated by this Agreement by
each such Person, except that the foregoing shall not apply to the rights of any
Xxxx Employee pursuant to Sections 9.3(a)(iii), 9.13(a) and 9.13(b). Each such
Person further acknowledges that the foregoing appointment and designation shall
be deemed to be coupled with an interest and shall survive the death or
incapacity of such Person. Each such Person hereby authorizes (and each
Permitted Transferee shall be deemed to have authorized) the other parties
hereto to disregard any notice or other action taken by such Person pursuant to
this Agreement on any action so taken or any notice given by the Xxxx
Representative and are and will be entitled and authorized to give notices only
to the Xxxx Representative for any notice contemplated by this Agreement to be
given to any such Person. A successor to the Xxxx Representative may be chosen
by a majority of the Xxxx Employees, PROVIDED that written notice thereof is
given by the successor Xxxx Representative to the LLC. Whenever any action or
consent (but not any forbearance) is required to be taken or given by the Xxxx
Members, the action or consent of the Xxxx Representative shall be considered
the act or consent of all the Xxxx Members, and the Vestar Member and the
Managing Member shall be protected in relying on such act or consent.
SECTION 10.14 ADDITIONAL SECURITIES SUBJECT TO AGREEMENT. Each Member
agrees that any other Shares (or shares of capital stock of the Parent having
voting rights) which it shall hereafter acquire by means of a stock split, stock
dividend, distribution or other similar event (other than pursuant to a Public
Offering) shall be subject to the provisions of this Agreement to the same
extent as if held as Shares on the date hereof, and in the event of any such
stock split, combination, reclassification, reorganization or other similar
event, where appropriate, the numbers and percentages in this Agreement shall be
adjusted accordingly to replicate the intention of the parties on the date
hereof.
37
IN WITNESS WHEREOF, the parties have executed this Amended and
Restated Limited Liability Company Agreement as of the day and year first above
written.
VESTAR/SJK INVESTORS LLC
By: Vestar Capital Partners III, L.P.,
its Managing Member
By: Vestar Associates III, L.P.,
its General Partner
By: Vestar Associates Corporation III,
its General Partner
By:
------------------------------------------
Name:
Title:
------------------------------------------
XXX XXXX
------------------------------------------
XXXXX XXXX
------------------------------------------
XXXXX X. XXXX
------------------------------------------
XXXX FAMILY TRUST
By:
---------------------------------------
Name: Xxx Xxxx
By:
---------------------------------------
Name: Xxxxx Xxxx
XXXXX XXX XXXX TRUST
By:
---------------------------------------
Name: Xxx Xxxx
By:
---------------------------------------
Name: Xxxxx Xxxx
SCHEDULE 1
Number of Allocated
Xxxx Members Units Shares
------------ ----- ------
Vestar Capital Partners III, L.P. 8,409 5,121,222
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Xxxxxx X. Xxxx -- --
St. Xxxx Knits, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxx Xxxx -- --
St. Xxxx Knits, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxx X. Xxxx 587 357,571
St. Xxxx Knits, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxx Family Trust 914 556,772
c/o Xxxxxx X. Xxxx
St. Xxxx Knits, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxx Xxx Xxxx Trust 90 54,640
c/o Xxxxxx X. Xxxx
St. Xxxx Knits, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Totals
SCHEDULE 2
Immediately prior to the Effective Time of the Reorganization Merger, Vestar
will make a capital contribution to the LLC of $153,636,664
EXECUTION COPY
EXHIBIT A
================================================================================
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
OF
VESTAR/XXXX INVESTORS LLC
BY AND AMONG
VESTAR/SJK INVESTORS LLC
XXXXXX X. XXXX
XXXXX XXXX
XXXXX X. XXXX
XXXXX XXX XXXX TRUST
AND
XXXX FAMILY TRUST
Dated as of July 7, 1999
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions...................................................................1
SECTION 1.1 Definitions......................................................1
ARTICLE II
General Provisions............................................................8
SECTION 2.1 Formation........................................................8
SECTION 2.2 Name.............................................................8
SECTION 2.3 Term.............................................................8
SECTION 2.4 Purpose; Powers..................................................8
SECTION 2.5 Place of Business................................................9
SECTION 2.6 Business Transactions of a Member with the LLC...................9
SECTION 2.7 Fiscal Year.....................................................10
SECTION 2.8 No State-Law Partnership........................................10
ARTICLE III
Members and Interests........................................................10
SECTION 3.1 Members.........................................................10
SECTION 3.2 Certificates....................................................10
SECTION 3.3 Liability of Members............................................10
SECTION 3.4 Access to and Confidentiality...................................10
ARTICLE IV
Management and Operation of the LLC..........................................11
SECTION 4.1 Management......................................................11
SECTION 4.2 Certain Duties and Obligations of the Members...................11
SECTION 4.3 Indemnification of the Managing Member..........................11
SECTION 4.4 Expenses........................................................12
SECTION 4.5 Indemnification Rights Non-Exclusive............................12
SECTION 4.6 Insurance.......................................................12
SECTION 4.7 Assets of the LLC...............................................13
SECTION 4.8 Loans to the LLC................................................13
SECTION 4.9 Voting of Shares................................................13
ARTICLE V
Capital Contributions; Distributions.........................................15
SECTION 5.1 Capital Contributions...........................................15
-i-
Page
----
SECTION 5.2 Distributions...................................................15
SECTION 5.3 Limitations on Distributions....................................16
ARTICLE VI
Books and Reports; Tax Matters; Capital Accounts; Allocations................16
SECTION 6.1 General Accounting Matters......................................16
SECTION 6.2 Certain Tax Matters.............................................16
SECTION 6.3 Capital Accounts................................................17
SECTION 6.4 Allocations.....................................................17
ARTICLE VII
Dissolution..................................................................18
SECTION 7.1 Dissolution.....................................................18
SECTION 7.2 Votes of Members................................................18
SECTION 7.3 Winding-up; Final Distributions.................................18
SECTION 7.4 Further Assurances..............................................20
ARTICLE VIII
Transfer of Member's Units...................................................20
SECTION 8.1 Transfers to be Made Only as Permitted or Required by
this Agreement..................................................20
SECTION 8.2 Permitted Transfers.............................................20
SECTION 8.3 Tag-Along Rights................................................21
SECTION 8.4 Drag-Along Rights...............................................22
SECTION 8.5 No Transfers....................................................22
SECTION 8.6 Other Transfer Provisions.......................................23
ARTICLE IX
The LLC's Registration Rights Relating to
Shares of Parent Common Stock and Related Rule 144 Sales.....................23
SECTION 9.1 Stockholders' Agreement; Transfers of Shares....................23
SECTION 9.2 Exercise of Incidental Registration Rights......................24
SECTION 9.3 Exercise of Demand Registration Rights..........................26
SECTION 9.4 Tag-Along Rights................................................28
SECTION 9.5 Drag-Along Rights...............................................29
SECTION 9.6 Public Offerings, etc...........................................30
SECTION 9.7 Rights of First Refusal.........................................30
SECTION 9.8 Initiation of a Rule 144 Sale...................................30
SECTION 9.9 Individual Private Sale.........................................31
SECTION 9.10 Reduction of Allocated Shares..................................31
SECTION 9.11 Liquidation of the LLC.........................................32
SECTION 9.12 Transfers to be Made Only as Permitted or Required by
this Agreement.................................................32
SECTION 9.13 Liquidity Right................................................32
-ii-
Page
----
ARTICLE X
Miscellaneous................................................................33
SECTION 10.1 Equitable Relief...............................................33
SECTION 10.2 Governing Law..................................................33
SECTION 10.3 Successors and Assigns.........................................33
SECTION 10.4 Notices........................................................33
SECTION 10.5 Counterparts...................................................33
SECTION 10.6 Entire Agreement...............................................33
SECTION 10.7 Effectiveness of Agreement.....................................34
SECTION 10.8 Amendments.....................................................34
SECTION 10.9 Section Titles.................................................34
SECTION 10.10 Representations and Warranties................................34
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial..............35
SECTION 10.12 Reimbursement of Expenses.....................................35
SECTION 10.13 Xxxx Representative...........................................35
SECTION 10.14 Additional Securities Subject to Agreement....................36
Schedule 1 Member Information/Allocated Shares
Schedule 2 Vestar's Capital Contribution
-iii-