EXHIBIT 10.7

 

EAGLE FAMILY FOODS HOLDINGS, INC.

 

AMENDED AND RESTATED

STOCKHOLDERS AGREEMENT

 

AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this “Agreement”), dated as of this
23rd day of November, 2004, by and among GE Investment Private Placement
Partners II, a Limited Partnership (“GEI”), Warburg, Pincus Ventures, L.P., a
Delaware limited partnership (“Warburg”), Dairy Farmers of America Inc. (“DFA”
and, together with GEI and Warburg, the “Institutional Investors”); the
individuals whose names and addresses appear from time to time on Schedule I
hereto (the “Management Investors” and, together with the Institutional
Investors, the “Investors”); and Eagle Family Foods Holdings, Inc., a Delaware
corporation (the “Company”). Certain capitalized terms used in this Agreement
are defined in Section 6 hereof.

 

R E C I T A L S

 

WHEREAS, the Company, certain of the Investors and certain other parties entered
into a Stockholders Agreement, dated as of January 23, 1998, as amended on
September 27, 1999 (the “Original Agreement”);

 

WHEREAS, certain of the Investors have agreed pursuant to the terms of
Contribution and Exchange Agreements dated as of even date herewith
(collectively, the “Contribution and Exchange Agreement”) to contribute to the
Company all of their shares of Common Stock of the Company, par value $0.01 per
share (“Common Stock”), all of their shares of Series A Non-Voting Preferred
Stock of the Company, par value $0.01 per share (the “Series A Preferred”), and
all of their shares of Series B Non-Voting Preferred Stock of the Company, par
value $0.01 per share (the “Series B Preferred”), in exchange for the issuance
by the Company of new shares of Common Stock.

 

WHEREAS, one of the Investors has agreed pursuant to the terms of an Asset
Purchase Agreement dated as of even date herewith (the “Purchase Agreement” and,
together with the Contribution and Exchange Agreement, the “Transaction
Agreements”) to purchase shares of Common Stock and shares of Series I
Non-Voting Preferred Stock, par value $0.01 per share (the “the “Preferred
Stock”).

 

WHEREAS, the Company has granted the Investors certain registration rights with
respect to the Common Stock held by them pursuant to an amended and restated
registration rights agreement, dated as of the date hereof (the “Registration
Rights Agreement”); and

 

WHEREAS, the Investors and the Company desire to amend and restate the Original
Agreement to promote their mutual interests by agreeing to certain matters
relating to the operations of the Company and the disposition and voting of the
shares of Common Stock and Preferred Stock purchased or received by the
Investors pursuant to the Transaction Agreements, as applicable, together with
any other shares of Common Stock or Preferred Stock acquired by them
(collectively, the “Shares”).

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NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the parties hereto hereby agree as follows:

 

1. COVENANTS OF THE PARTIES

 

(a) Legends. The certificates evidencing the Shares acquired by the Investors
pursuant to the Transaction Agreements or their permitted transferees will bear
the following legend reflecting the restrictions on the transfer of such
securities contained in this Agreement:

 

“The securities evidenced hereby are subject to the terms of that certain
Amended and Restated Stockholders Agreement, dated as of November 23, 2004, by
and among the Company and certain holders of the Company’s Common Stock and
Preferred Stock, including certain preemptive rights, restrictions on transfer
and rights of co-sale. A copy of such Amended and Restated Stockholders
Agreement has been filed with the Secretary of the Company and is available upon
request.”

 

(b) Election of Directors.

 

(i) As of the date hereof, the Board of Directors of the Company (the “Board”)
will consist of Craig A. Steinke (“Steinke”), Andreas T. Hildebrand, Kewsong
Lee, David A. Barr, Mark J. Strelecki, Donald W. Torey, Jeffrey G. Goldfaden,
and Gerald L. Bos. From and after the date hereof, the Investors and the Company
shall take all action within their respective power, including but not limited
to, the voting of all shares of capital stock of the Company owned by them,
required to cause the Board to consist of eight members or such other number as
the Board may from time to time establish, and at all times throughout the term
of this Agreement to include (A) as long as Warburg owns beneficially (within
the meaning of Rule 13d-3 under the Exchange Act) (1) at least twenty percent
(20%) of the Common Stock, three (3) representatives designated by Warburg, (2)
at least fifteen percent (15%) of the Common Stock, two (2) representatives
designated by Warburg and (3) at least ten percent (10%) of the Common Stock,
one (1) representative designated by Warburg (each, a “Warburg Director”), (B)
as long as GEI owns beneficially (within the meaning of Rule 13d-3 under the
Exchange Act) (1) at least twenty percent (20%) of the Common Stock, three (3)
representatives designated by GEI, (2) at least fifteen percent (15%) of the
Common Stock, two (2) representatives designated by GEI and (3) at least ten
percent (10%) of the Common Stock, one (1) representative designated by GEI
(each, a “GEI Director”), (C) as long as DFA owns beneficially (within the
meaning of Rule 13d-3 under the Exchange Act), at least ten percent (10%) of the
Common Stock, one (1) representative designated by DFA (the “DFA Director” and,
together with each Warburg Director and each GEI Director, the “Institutional
Directors”), (D) as long as Warburg and GEI collectively own beneficially
(within the meaning of Rule 13d-3 under the Exchange Act) at least fifty percent
(50%) of the Common Stock, Warburg and GEI shall collectively have the right to
designate that number of representatives as shall constitute a majority of the
Board, and (E) Steinke, who shall be entitled to be a member of the Board in
accordance with the terms of his employment agreement with the Company as in
effect from time to time.

 

(ii) In the event that any Institutional Director is unable to serve, or once
having commenced to serve, is removed or withdraws from the Board (a
“Withdrawing Director”), such Withdrawing Director’s replacement (the
“Substitute Director”) will be

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designated by the Institutional Investor having nominated such Institutional
Director. An Institutional Director may be removed, with or without cause, by
the Institutional Investor having nominated such Institutional Director, and
such Institutional Investor shall thereafter have the right to nominate a
replacement for such Institutional Director. The Investors and the Company agree
to take all action within their respective power, including but not limited to,
the voting of all shares of capital stock of the Company owned by them, to cause
the election of such Substitute Director promptly following his or her
nomination pursuant to this Section 1(b)(ii).

 

(iii) Without the consent of a majority of the Board, which majority shall
include, as long as GEI is entitled to designate a director pursuant to this
Section 1, at least one (1) GEI Director and, as long as Warburg is entitled to
designate a director pursuant to this Section 1, at least one (1) Warburg
Director and, as long as DFA is entitled to designate a director pursuant to
this Section 1, at least one (1) DFA Director, the Company, other than with
respect to transactions contemplated under Sections 1(b)(iv)(A) and (B) herein,
shall not, and shall cause Eagle Family Foods, Inc. and each of their respective
Subsidiaries not to:

 

(A) approve any annual budget (the “Budget”) or any material amendment or
modification thereto;

 

(B) make or incur any capital expenditures or investments not contemplated by
the Budget in excess of $500,000;

 

(C) (1) liquidate or dissolve, (2) file, or consent by answer or otherwise to
the filing against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any
jurisdiction, (3) make an assignment for the benefit of its creditors, or (4)
consent to the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any substantial part
of its property;

 

(D) acquire any business (whether by acquisition of assets, stock or otherwise);

 

(E) issue any equity securities other than Plan Stock (each, as defined in
Section 1(c)(i) hereof);

 

(F) incur any indebtedness for borrowed money, other than indebtedness
outstanding on the date hereof (including additional borrowings permitted under
the facilities in effect on the date hereof);

 

(G) enter into any new line of business;

 

(H) enter into any joint venture or strategic alliance with any Person;

 

(I) enter into any agreement having a duration in excess of one (1) year and
cumulative obligations in excess of $1,000,000;

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(J) sell or contribute, other than sales of inventory in the ordinary course of
business or a sale of all or substantially all of the assets of the Company,
assets in excess of $500,000.

 

(K) pay or declare any dividend, or repurchase or redeem any shares of capital
stock;

 

(L) amend or modify the Company’s Certificate of Incorporation or bylaws;

 

(M) amend, modify or terminate any employment agreement between the Company and
any executive officer of the Company;

 

(N) grant any stock options or other equity-based awards, or authorize any
senior management compensation plans or arrangements;

 

(O) hire or fire any executive officer of the Company;

 

(P) enter into any transaction with any officer, director or Affiliate of the
Company (including, without limitation, GEI, Warburg or DFA);

 

(Q) make any loan or guarantee the indebtedness of any Person, except in the
ordinary course of business;

 

(R) enter into, amend, modify or terminate any agreement, including any
collective bargaining agreement, with any union;

 

(S) approve or adopt, amend, modify or terminate any stock plan, 401(k) plan,
defined benefit or defined contribution plan or similar employee benefit plan;
or

 

(T) enter into any agreement to do any of the foregoing.

 

(iv) Without the consent of a majority of the Board, which majority shall
include, as long as GEI is entitled to designate a director pursuant to this
Section 1, at least one (1) GEI Director and, as long as Warburg is entitled to
designate a director pursuant to this Section 1, at least one (1) Warburg
Director, the Company shall not, and shall cause Eagle Family Foods, Inc. and
each of their respective Subsidiaries not to (A) merge or consolidate with any
other Person (other than a merger or consolidation with a wholly owned
subsidiary of the Company) and (B) sell or contribute all or substantially all
of the assets of the Company.

 

(c) Subscription Right.

 

(i) If at any time after the date hereof, the Company proposes to sell in any
non-public offering equity securities of any kind (the term “equity securities”
shall include for these purposes any warrants, options or other rights to
acquire equity securities and debt securities convertible into equity
securities, voting or other rights, and derivative securities of equity
securities) of the Company (except (A) for grants or issuances after the date
hereof pursuant to the Transaction Agreements, (B) for grants or issuances of
equity securities pursuant

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to any incentive plan for the Company’s or any of its Subsidiaries’ directors or
employees (collectively, “Plan Stock”), (C) to the public in a firm commitment
underwriting pursuant to a registration statement filed under the Securities
Act, or (D) pursuant to the acquisition of another corporation by the Company by
merger, purchase of substantially all of the assets or other form of
reorganization), then, as to each Investor who then holds shares of capital
stock of the Company, the Company shall:

 

(1) give written notice setting forth in reasonable detail (I) the designation
and all of the terms and provisions of the equity securities proposed to be
issued (the “Proposed Securities”), including, where applicable, the voting
powers, preferences and relative participating, optional or other special
rights, and the qualifications, limitations or restrictions thereof and interest
or dividend rate and maturity; (II) the price and other terms of the proposed
sale of such Proposed Securities; (III) the amount of the Proposed Securities
proposed to be issued; and (IV) such other information as may be reasonably
required in order to evaluate the proposed issuance; and

 

(2) offer to sell to each such Investor a portion of the Proposed Securities
equal to a percentage determined by dividing (I) the number of shares of Common
Stock then held by such Investor (other than Plan Stock) by (II) the total
number of shares of Common Stock then outstanding (other than Plan Stock).

 

(ii) Each such Investor must exercise its purchase rights hereunder within ten
(10) days after receipt of such notice from the Company. If all of the Proposed
Securities offered to such Investors are not fully subscribed by such Investors,
such remaining Proposed Securities will be reoffered to those Investors
purchasing their full allotment upon the terms set forth in this Section 1(c)
(with an allocation based on the respective percentages of the aggregate number
of shares of Common Stock held by such Investors), until all such Proposed
Securities are fully subscribed for or until all such Investors have subscribed
for all such Proposed Securities which they desire to purchase, except that such
Investors must exercise their purchase rights within five (5) days after receipt
of all such reoffers. To the extent that the Company offers two (2) or more
equity securities in units, Investors must purchase such units as a whole and
will not be given the opportunity to purchase only one of the equity securities
making up such unit.

 

(iii) Upon the expiration of the offering periods described above, the Company
will be free to sell such Proposed Securities that the Investors have not
elected to purchase during the ninety (90) days following such expiration on
terms and conditions no more favorable to the purchasers thereof than those
offered to such Investors. Any Proposed Securities offered or sold by the
Company after such 90-day period must be reoffered to the Investors pursuant to
this Section 1(c). The election by an Investor not to exercise its subscription
rights under this Section 1(c) in any one instance shall not affect its right
(other than in respect of a reduction in its percentage holdings) as to any
subsequent proposed issuance. Any sale of equity securities by the Company
without first giving the Investors the rights described in this Section 1(c)
shall be void and of no force and effect and the Company shall cause any
correction required to be fully effected.

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(iv) Notwithstanding anything contained in this Section 1(c), in the event that
the issuance and sale of the Proposed Securities to any Investor would require
either a registration under the Securities Act or the preparation of a
disclosure document pursuant to Regulation D under the Securities Act (or any
successor regulation) or a similar provision of any state securities law, then,
at the option of the Board, such Investor or Investors may be excluded from the
rights provided by this Section 1(c).

 

(d) No Inconsistent Agreements. Each of the Investors and the Company agrees
that it will not and will not permit any Affiliate to grant any proxy or enter
into or agree to be bound by any voting trust with respect to its shares of
capital stock of the Company or enter into any stockholder agreements or
arrangements of any kind with any person with respect to its shares of capital
stock of the Company, in any such case in a manner that is inconsistent with the
provisions of this Agreement.

 

2. TRANSFER OF STOCK BY MANAGEMENT INVESTORS. Without the approval of the Board,
no Management Investor shall Transfer any Shares, or any beneficial interest
therein, other than Permitted Transfers between such Management Investor and the
Company. Notwithstanding the foregoing, if, pursuant to the Registration Rights
Agreement, a Management Investor is prevented by the Company’s underwriter or
underwriters from Transferring Shares in a public offering of Shares by the
Company in which the Institutional Investors Transferred Shares, then following
such public offering, and after the expiration of any applicable restrictions on
the Transfer of such Management Investor’s Shares under agreements not to sell,
“lock-up” agreements or similar agreements to which the Management Investor is
bound, such Management Investor shall be entitled to Transfer his pro rata
portion of Shares (to be calculated pursuant to the following sentence) that he
would otherwise have been entitled to Transfer in such public offering without
the approval of the Board, provided that (a) such Management Investor informs
the Board in writing of his intention to Transfer Shares at least seven days in
advance of the proposed Transfer, such notice to include the number of Shares he
intends to Transfer and (b) such Management Investor complies with all
applicable securities laws, including, without limitation, compliance with the
volume and time limitations imposed by Rule 144 under the Securities Act. For
purposes of the foregoing sentence, such Management Investor’s pro rata portion
of Shares shall be equal to (a) the product of (i) the aggregate number of
Shares Transferred by the Institutional Investors in such public offering and
(ii) the aggregate number of Shares beneficially owned by such Management
Investor at the time of such public offering divided by (b) the aggregate number
of Shares held by the Institutional Investors at the time of such public
offering; provided, however, that the pro rata portion as so calculated shall be
adjusted downward to the extent the Board shall have approved a Transfer of
Shares by such Management Investor prior to such Management Investor’s
notification to the Board of his intention to avail himself of this provision.
Any Transfer or purported Transfer made in violation of this Section 2 shall be
null and void and of no effect.

 

3. TRANSFER RIGHTS

 

(a) Right of Co-Sale. In the event that any Investor intends to Transfer (i)
shares of Common Stock which, together with any previous sales of shares of
Common Stock by such Investor, represent more than twenty percent (20%) of its
shares of Common Stock on a cumulative basis or (ii) shares of Preferred Stock
which, together with any previous sales of

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Preferred Stock by such Investor represent twenty (20%) of its shares of
Preferred Stock on a cumulative basis (in each case other than to an Affiliate
of such Investor), such Investor (the “Co-Sale Triggering Investor”) shall
notify each other Investor holding shares of such class of stock, in writing, of
such Transfer and its terms and conditions (the “Proposed Sale”). Within ten
(10) days after the date of such notice, each Investor holding shares of such
class of stock that wishes to participate in the Proposed Sale (the “Co-Sale
Investors”) shall so notify the Co-Sale Triggering Investor in writing (a
“Transfer Notice”). In the event the Co-Sale Triggering Investor fails to
receive a Transfer Notice from any Investor within such 10-day period, such
Investor shall be deemed to have declined to participate in-the Proposed Sale.
Each Co-Sale Investor shall have the right to sell, at the same price and on the
same terms as the Co-Sale Triggering Investor, that number of shares of Common
Stock or Preferred Stock, as the case may be, equal to the number of shares of
Common Stock or Preferred Stock, as the case may be the third party proposes to
purchase multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock or Preferred Stock (other than Plan Stock), as the case
may be, issued and owned by such Co-Sale Investor and the denominator of which
shall be the aggregate number of shares of Common Stock or Preferred Stock
(other than Plan Stock), as the case may be, issued and owned by the Co-Sale
Triggering Investor and each other Co-Sale Investor (including such Co-Sale
Investor) exercising its rights pursuant to this Section 3. Nothing contained
herein shall obligate the Co-Sale Triggering Investor to consummate the Proposed
Sale or limit the Co-Sale Triggering Investor’s right to amend or modify the
terms of the Proposed Sale in any respect; provided that the Investors are
offered the opportunity to participate in the Proposed Sale on such amended or
modified terms.

 

(b) Drag Along Right.

 

(i) If at any time and from time to time after the date of this Agreement,
Warburg and GE (collectively, the “Majority Holders”) wish to (i) Transfer in a
bona fide arms’ length sale all of their Shares to any Person or Persons who are
not Affiliates of the Company or the Majority Holders, (ii) approve any merger
of the Company with or into any other Person who is not an Affiliate of the
Company or the Majority Holders, or (iii) approve any sale of all or
substantially all of the Company’s assets to any Person or Persons who are not
Affiliates of the Company or the Majority Holders (for purposes of this Section
3(b), such Person or Persons is referred to as the “Proposed Transferee”), the
Majority Holders shall have the right (for purposes of Section 3(b), the
“Drag-Along Right”) to (x) in the case of a Transfer of the type referred to in
clause (i), require each other Investor to sell to the Proposed Transferee all
of his or its Shares (including any warrants or options to acquire Shares) for
the same per share consideration as proposed to be received by the Majority
Holders (less, in the case of options or warrants, the exercise price for such
options or warrants) then Owned by such Investor or (y) in the case of a merger
or sale of assets referred to in clauses (ii) or (iii), require each other
Investor to vote all shares then Owned by such other Investor in favor of such
transaction and to waive any dissenter or appraisal right such Investor may have
under applicable law. Each Investor agrees to take all steps necessary to enable
him or it to comply with the provisions of this Section 3(b) to facilitate the
Majority Holders’ exercise of a Drag-Along Right.

 

(ii) To exercise a Drag-Along Right, the Majority Holders shall give each
Investor a written notice (for purposes of this Section 3(b), a “Drag-Along
Notice”) containing (1) the name and address of the Proposed Transferee and (2)
the proposed purchase price, terms

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of payment and other material terms and conditions of the Proposed Transferee’s
offer. Each Investor shall thereafter be obligated to sell or vote his or its
Shares (including any warrants or options Owned by such Investor), provided that
the sale to the Proposed Transferee is consummated within ninety (90) days of
delivery of the Drag-Along Notice. If the sale or merger is not consummated
within such ninety (90)-day period, then each Investor shall no longer be
obligated to sell such Investor’s Shares pursuant to that specific Drag-Along
Right but shall remain subject to the provisions of this Section 3(b).

 

(iii) Each Investor shall execute and deliver such instruments of conveyance and
transfer and take such other action, including executing any purchase agreement,
merger agreement, indemnity agreement, escrow agreement or related documents, as
may be reasonably required by the Majority Holders or the Company in order to
carry out the terms and provisions of this Section 3(b). If the transaction is
structured as a merger or consolidation, each Investor shall waive any
dissenters’ rights, appraisal rights or similar rights in connection with the
proposed transaction. If any Investor fails or refused to vote or sell his, her
or its Shares as required by, or votes his, her or its Shares in contravention
of, this Section 3(b), then such Investor hereby grants to the Secretary of the
Company an irrevocable proxy, coupled with an interest, to vote such Shares in
accordance with the provisions of this Section 3(b), and hereby appoints the
Secretary of the Company his, her or its attorney in fact, to sell such Shares
in accordance with the provisions of this Section 3(b). At the closing of the
proposed transaction, each Investor shall deliver, against receipt of the
consideration payable in such transaction, certificates representing the Shares
which the Investor owns, together with executed stock powers or other
instruments of transfer acceptable to the Majority Holders.

 

Notwithstanding anything contained in this Section 3(b), in the event that all
or a portion of the purchase price consists of securities and the sale of such
securities to the Investors would require either a registration under the
Securities Act or the preparation of a disclosure document pursuant to
Regulation D under the Securities Act (or any successor regulation) or a similar
provision of any state securities law, then, at the option of the Majority
Holders, any one or more of the Investors may receive, in lieu of such
securities, the fair market value of such securities in cash, as determined in
good faith by the Board.

 

4. INFORMATION AS TO COMPANY AND RELATED COVENANTS

 

(a) Investor Financial Information. From and after the date hereof, the Company
shall deliver to each Investor owning beneficially (within the meaning of Rule
13d-3 under the Exchange Act) more than five percent (5%) of the issued and
outstanding shares of Common Stock (except for the annual reports referred to in
(a)(ii) below, which shall be delivered to each Investor as long as such
Investor owns any shares of Common Stock):

 

(i) Quarterly Statements. As soon as practicable, and in any event within
forty-five (45) days after the close of each of the first three (3) fiscal
quarters of each fiscal year of the Company, a consolidated balance sheet,
statement of income and statement of changes in cash flow of the Company and its
Subsidiaries as of the close of such quarter and the portion of the Company’s
fiscal year ending on the last day of such quarter, all in reasonable detail and
prepared in accordance with U.S. generally accepted accounting principles,
consistently applied, subject to audit and year end adjustments, setting forth
in each case in comparative form the figures for the comparable period of the
previous year;

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(ii) Annual Statements. As soon as practicable after the end of each fiscal year
of the Company, and in any event within 120 days thereafter, a copy of the
consolidated balance sheet, and consolidated statements of income, stockholders’
equity and changes in cash flow of the Company and its Subsidiaries for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail and accompanied by an opinion
thereon of independent certified public accountants of recognized national
standing selected by the Company, which opinion shall state that such financial
statements fairly present the financial position and results of operations of
the Company and its Subsidiaries on a consolidated basis and have been prepared
in accordance with U.S. generally accepted accounting principles consistently
applied (except for changes in application in which such accountants concur) and
that the examination of such accountants has been made in accordance with
generally accepted auditing standards, and accordingly included such tests of
the accounting records and such other auditing procedures as were considered
necessary in the circumstances.

 

(b) Director Materials. The Company shall prepare and deliver to each director
of the Company:

 

(i) Monthly Financial Statements. As soon as practicable, and in any event
within 30 days after the close of each of month of each fiscal year of the
Company, a consolidated balance sheet, statement of income and statement of
changes in cash flow of the Company and its Subsidiaries as of the close of each
month and the portion of the Company’s fiscal year ending on the last day of
such month, all in reasonable detail and prepared in accordance with U.S.
generally accepted accounting principles, consistently applied, subject to audit
and year end adjustments, setting forth in each case in comparative form the
figures for the comparable period of the previous year;

 

(ii) Business Plan; Projections. Sixty (60) days after the commencement of each
fiscal year of the Company, an annual business plan of the Company and
projections of operating results, prepared on a monthly basis, and a three-year
business plan of the Company and projections of operating results. Within 45
days of the close of each fiscal quarter of the Company, the Company shall
provide its directors with a comparison of actual year-to-date results with the
corresponding budgeted figures;

 

(iii) Audit Reports. Promptly upon receipt thereof, one copy of each other
financial report and internal control letter submitted to the Company by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Company and its Subsidiaries; and

 

(iv) Requested Information. With reasonable promptness, the Company shall
furnish each director with such other data and information as from time to time
may be reasonably requested.

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The Company acknowledges that its obligations under this Section 4(b) shall not
limit the rights of its directors under applicable law to obtain information and
other materials from the Company.

 

(c) Inspection. From and after the date hereof, the Company will permit each
Investor owning beneficially (within the meaning of Rule 13d-3 under the
Exchange Act) more than five percent (5%) of the issued and outstanding shares
of Common Stock or Preferred Stock, its nominee, assignee or its representative
to visit and inspect any of the properties of the Company, to examine all its
books of account, records, reports and other papers not contractually required
of the Company to be confidential or secret, to make copies and extracts
therefrom, and to discuss its affairs, finances and accounts with its officers,
directors, key employees and independent public accountants or any of them (and
by this provision the Company authorizes said accountants to discuss with said
Investor, its nominee, assign and representatives the finances and affairs of
the Company and its Subsidiaries), all at such reasonable times and as often as
may be reasonably requested.

 

(d) Limitation to Access. Notwithstanding the rights and obligations set forth
in Sections 4(a) and (b) herein, such rights and obligations relating to
information constituting or containing confidential business, financial or other
information of the Company or its Subsidiaries shall not apply to any Management
Investor who, directly or indirectly, whether as an individual or on his or her
own account, or as a shareholder, partner, joint venturer, director, officer,
employee, consultant and/or independent contractor of any person, firm or
organization or otherwise, owns, manages, controls or participates in the
ownership, management or control of, or is employed or engaged by or otherwise
affiliated or associated with, a corporation, partnership, proprietorship, firm,
association or other business entity or otherwise engages in any business that
is engaged in any manner in, or otherwise competes with, the business of the
Company.

 

(e) Confidentiality. As to so much of the information and other material
furnished under or in connection with this Agreement (whether furnished before,
on or after the date hereof) as constitutes or contains confidential business,
financial or other information of the Company or its Subsidiaries, each Investor
covenants for itself and its directors, officers, partners and stockholders that
it will use due care to prevent its respective officers, directors, employees,
counsel, accountants and other representatives from disclosing such information
to persons other than their respective authorized employees, counsel,
accountants, stockholders, partners, limited partners and other authorized
representatives; provided, however, that the Investor may disclose or deliver
any information or other material disclosed to or received by the Investor
should such disclosure or delivery be required by law.

 

5. TERMINATION. The Agreement shall terminate:

 

(a) upon the closing of the Initial Public Offering, except for the provisions
of Sections 1(b), 2 and 4(d), which shall remain in full force and effect
following the closing of the Initial Public Offering; or

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(b) on the date on which (i) a majority of the Institutional Investors, and (ii)
the holders of a majority of the shares of Common Stock held by Management
Investors shall have agreed in writing to terminate this Agreement.

 

6. INTERPRETATION OF THIS AGREEMENT

 

(a) Terms Defined. As used in this Agreement, the following terms have the
respective meaning set forth below:

 

Affiliate: any person or entity, directly or indirectly, controlling, controlled
by or under common control with such person or entity.

 

Exchange Act: the Securities Exchange Act of 1934, as amended.

 

Initial Investors: the Institutional Investors and the individuals whose names
appear on Schedule I hereto on the date hereof.

 

Initial Public Offering: the completion of an underwritten initial public
offering for shares of Common Stock pursuant to a registration statement under
the Securities Act resulting in net proceeds to the Company and/or any selling
stockholders of not less than $25,000,000.

 

Owns, Own or Owned: shall mean beneficial ownership, assuming the conversion of
all outstanding securities convertible into Common Stock and the exercise of all
outstanding options and warrants to acquire Common Stock.

 

Permitted Transferee: shall mean, in the case of a Management Investor, members
of such Management Investor’s family, heirs, executors or legal representatives
or trusts for the benefit of such Management Investor or such Management
Investor’s family, provided in each instance that such transferee agrees to be
bound by the provisions of this Agreement as if such transferee were an original
signatory hereto.

 

Person: an individual, partnership, joint-stock company, corporation, limited
liability company, trust or unincorporated organization, and a government or
agency or political subdivision thereof.

 

Security Securities: as defined in Section 2(1) of the Securities Act.

 

Securities Act: the Securities Act of 1933, as amended.

 

Subsidiary: a Person of which the Company owns, directly or indirectly, more
than fifty percent 50% of the Voting Stock.

 

Transfer: any sale, assignment, pledge, hypothecation, or other disposition or
encumbrance, whether or not for consideration.

--------------------------------------------------------------------------------

Voting Stock: securities of any class or classes of a Person the holders of
which are ordinarily, in the absence of contingencies, entitled to elect a
majority of the directors (or Persons performing similar functions).

 

(b) Accounting Principles. Where the character or amount of any asset or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, this shall be done in accordance
with U.S. generally accepted accounting principles at the time in effect, to the
extent applicable, except where such principles are inconsistent with the
requirements of this Agreement.

 

(c) Directly or Indirectly. Where any provision in this Agreement refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.

 

(d) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.

 

(e) Section Headings. The headings of the sections and subsections of this
Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.

 

7. MISCELLANEOUS

 

(a) Notices.

 

(i) All communications under this Agreement shall be in writing and shall be
delivered by hand or by facsimile or mailed by overnight courier or by
registered or certified mail, postage prepaid:

 

(A) if to any of the Management Investors, at the address or facsimile number of
such Management Investor shown on Schedule I, or at such other address or
facsimile number as the Management Investor may have furnished the other parties
hereto in writing;

 

(B) if to GEI, at 3003 Summer Street, Stamford, CT 06905, Attention: Andreas
Hildebrand (Fax No.: (203) 326-2495), or at such other address as GEI may have
furnished the other parties hereto in writing;

 

(C) if to Warburg, at 466 Lexington Avenue, New York, New York 10017, Attention:
Kewsong Lee (Fax No.: (212) 878-6162), or at such other address or facsimile
number as Warburg may have furnished the other parties hereto in writing;

 

(D) if to the Company, to Eagle Family Foods Holdings, Inc., 735 Taylor Road,
Suite 200, Gahanna, OH 43230, Attention: Craig Steinke. (Fax No.: (614)
501-4423), or at such other address or facsimile numbers as it may have
furnished the other parties hereto in writing;

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(E) if to DFA, at 10220 N. Ambassador Drive, Kansas City, Missouri 64153,
Attention Gerald L. Bos (Fax No.: (816) 801-6593, or at such other address or
facsimile numbers as it may have furnished the other parties hereto in writing,
and

 

(ii) Any notice so addressed shall be deemed to be given: if delivered by hand
or by facsimile, on the date of such delivery, if a business day, otherwise the
first business day thereafter; if mailed by courier, on the first business day
following the date of such mailing; and if mailed by registered or certified
mail, on the third business day after the date of such mailing.

 

(b) Reproduction of Documents. This Agreement and all documents relating
thereto, including, without limitation, (i) consents, waivers and modifications
relating hereto which may hereafter be executed, (ii) documents received by each
Investors pursuant hereto and (iii) financial statements, certificates and other
information previously or hereafter furnished to each Investor, may be
reproduced by each Investor by an photographic, photostatic, microfilm,
microcard, miniature photographic or other similar process and each Investor may
destroy any original document so reproduced. All parties hereto agree and
stipulate that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by each
Investor in the regular course. of business) and that any enlargement, facsimile
or further reproduction of such reproduction shall likewise be admissible in
evidence.

 

(c) Successors and Assigns; No Third Party Beneficiaries. This Agreement shall
inure to the benefit of and be binding upon the successors and assigns of each
of the parties. Nothing in this Agreement shall confer upon any Person not a
party to this Agreement any rights or remedies of any nature or kind whatsoever
under or by reason of this Agreement.

 

(d) Entire Agreement; Amendment and Waiver. This Agreement, the Registration
Rights Agreement, the Transaction Agreements and the Certificate of
Incorporation of the Company constitute the entire understanding of the parties
hereto relating to the subject matter hereof and supersede all prior
understandings among such parties. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, with (and only with) the
written consent of (i) each of the Institutional Investors and (ii) the holder
or holders of a majority of the shares of Common Stock (other than Plan Stock
and other than those shares held by the Institutional Investors or their
respective Affiliates), which shall include Management Investors holding a
majority of such shares held by Management Investors. .

 

(e) Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.

 

(f) Injunctive Relief. It is acknowledged that it will be impossible to measure
in money the damages that would be suffered if the parties fail to comply with
certain of the obligations imposed on them by this Agreement, including, without
limitation, those obligations set forth in Sections 1 and 2, and that in the
event of any such failure, an aggrieved person will be irreparably damaged and
will not have an adequate remedy at law. Any such person shall, therefore, be
entitled to injunctive relief and/or specific performance to enforce such
obligations, and if any action should be brought in equity to enforce any of
such provisions of this Agreement, none of the parties hereto shall raise the
defense that there is an adequate remedy at law.

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IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement
as of the date first above written.

 

EAGLE FAMILY FOODS HOLDINGS, INC.

By:

 

/s/ Craig A. Steinke

--------------------------------------------------------------------------------

Name:

  Craig A. Steinke

Title:

  Chief Executive Officer and President GE INVESTMENT PRIVATE PLACEMENT PARTNERS
II, A LIMITED PARTNERSHIP

By:

  GE Investment Management Incorporated,     its General Partner

By:

 

/s/ Andreas Hildebrand

--------------------------------------------------------------------------------

Name:

  Andreas Hildebrand

Title:

  Vice President

WARBURG, PINCUS VENTURES, L.P.

By:

  Warburg, Pincus & Co.,     its General Partner

By:

 

/s/ David A. Barr

--------------------------------------------------------------------------------

Name:

  David A. Barr

Title:

  Managing Director

DAIRY FARMERS OF AMERICA INC.

By:

   

By:

 

Gerald L. Bos

--------------------------------------------------------------------------------

Name:

  Gerald L. Bos

Title:

  Chief Financial Officer and Corporate     Vice President/Finance

MANAGEMENT INVESTOR:

[Signature on following pages]

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Signature Page to Stockholders Agreement, dated as of November 23, 2004, among
Eagle Family Foods Holdings, Inc., GE Investment Private Placement Partners II,
A Limited Partnership, Warburg, Pincus Ventures, L.P., Dairy Farmers of America
Inc. and the Management Investor set forth below.

 

/s/ Craig Steinke

--------------------------------------------------------------------------------

Craig Steinke

--------------------------------------------------------------------------------

SCHEDULE I

 

Management Investors

 

Craig Steinke

19 Norfield Road

Westin, CT 06883

Tel: 203-454-5745