Exhibit 3.2
__________________________________________________
THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
COMPLETEL LLC
__________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
GENERAL PROVISIONS; DEFINITIONS.................................................. 2
Section 1.1 Formation of the Company; Term.................................. 2
Section 1.2 Limited Liability Company Agreement............................. 2
Section 1.3 Name............................................................ 2
Section 1.4 Purpose and Powers.............................................. 2
Section 1.5 Principal Office; Registered Office and Agent................... 3
Section 1.6 No State-Law Partnership........................................ 3
Section 1.7 No UBTI......................................................... 3
Section 1.8 Definitions..................................................... 3
ARTICLE II
CAPITAL CONTRIBUTIONS AND ACCOUNTS............................................... 12
Section 2.1 Authorized Units................................................ 12
Section 2.2 Capital Contributions and Issuance of Units..................... 13
Section 2.3 Capital Accounts................................................ 15
Section 2.4 Negative Capital Accounts....................................... 16
Section 2.5 No Interest..................................................... 16
Section 2.6 No Withdrawal................................................... 16
ARTICLE III
DISTRIBUTIONS AND ALLOCATIONS.................................................... 16
Section 3.1 Distributions................................................... 16
Section 3.2 Allocations..................................................... 19
Section 3.3 Special Allocations............................................. 20
Section 3.4 Tax Allocations................................................. 21
Section 3.5 Curative Allocations............................................ 22
ARTICLE IV
THE PREFERRED UNITS.............................................................. 22
Section 4.1 Conversion...................................................... 22
Section 4.2 Purchase Rights................................................. 29
Section 4.3 Acceleration upon Occurrence of Certain Proceedings............. 30
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TABLE OF CONTENTS
Page
ARTICLE V
MANAGEMENT....................................................................... 30
Section 5.1 Management Authority............................................ 30
Section 5.2 Delegation of Authority......................................... 31
Section 5.3 Composition; Meetings; Actions.................................. 31
Section 5.4 Indemnification of Members, Representatives, Officers,
and Others..................................................... 32
ARTICLE VI
MEMBERS.......................................................................... 33
Section 6.1 Limitation of Liability......................................... 33
Section 6.2 Lack of Authority of Individual Members......................... 33
Section 6.3 Transfer of Company Interests; Withdrawal and Removal........... 33
Section 6.4 No Right of Partition........................................... 35
Section 6.5 Indemnification and Reimbursement for Payments on
Behalf of a Member............................................. 35
Section 6.6 Certain Duties of Representatives and Officers.................. 35
Section 6.7 Confidentiality................................................. 35
Section 6.8 Voting Rights................................................... 36
ARTICLE VII
DISSOLUTION AND LIQUIDATION...................................................... 36
Section 7.1 Dissolution..................................................... 36
Section 7.2 Liquidation of Company Interests................................ 37
Section 7.3 Valuation....................................................... 38
ARTICLE VIII
BOOKS OF ACCOUNT................................................................. 39
Section 8.1 Records and Accounting.......................................... 39
Section 8.2 Bank Accounts................................................... 39
Section 8.3 Fiscal Year..................................................... 39
Section 8.4 Tax Elections................................................... 39
Section 8.5 Tax Reports..................................................... 39
Section 8.6 Tax Controversies............................................... 40
Section 8.7 Subpart F Income................................................ 40
ARTICLE IX
POWER OF ATTORNEY................................................................ 40
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TABLE OF CONTENTS
Page
ARTICLE X
MISCELLANEOUS.................................................................... 41
Section 10.1 Conversion of the Company into a "C" Corporation................ 41
Section 10.2 Further Action.................................................. 42
Section 10.3 Title to Company Assets......................................... 42
Section 10.4 Creditors....................................................... 42
Section 10.5 Amendments, Modifications, or Waivers........................... 42
Section 10.6 Successors and Assigns.......................................... 43
Section 10.7 Remedies........................................................ 43
Section 10.8 Governing Law................................................... 43
Section 10.9 Severability.................................................... 43
Section 10.10 Counterparts.................................................... 43
Section 10.11 Descriptive Headings; Interpretation............................ 43
Section 10.12 Notices......................................................... 44
Section 10.13 Complete Agreement.............................................. 46
Section 10.14 Business Days................................................... 46
Section 10.15 [Intentionally Omitted]......................................... 46
Section 10.16 Delivery by Facsimile........................................... 46
Section 10.17 Effectiveness of Agreement...................................... 46
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THIRD AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
COMPLETEL LLC
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THIS THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this "Agreement") is made as of November 23, 1999, by and among the Persons
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listed as Members on the signature pages hereto, as well as each other Person
hereafter admitted as a Member (as defined herein) pursuant to the terms of this
Agreement. Certain capitalized terms used herein are defined in Section 1.8.
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇. ▇▇▇▇▇ ("Dovey"), ▇▇▇▇▇▇▇
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▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇"), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇▇") were originally
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parties to a Limited Liability Company Agreement, dated as of January 8, 1998
(the "Prior Agreement"), governing the affairs and the conduct of business of a
---------------
limited liability company (the "Company") in accordance with the terms of the
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Act. On May 18, ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, and Madison Dearborn
Capital Partners II, L.P. ("MDCP") entered into an Amended and Restated Limited
----
Liability Company Agreement of CableTel Europe LLC (the "First Amended
-------------
Agreement"), amending and restating the Prior Agreement in its entirety. As of
---------
January 28, 1998, the then-current Members of the Company entered into a Second
Amended and Restated Limited Liability Company Agreement of CompleTel LLC (the
"Second Amended Agreement"), amending and restating the First Amended Agreement
------------------------
in its entirety.
Prior to the date hereof, the Members (other than Meritage Private
Equity Fund, L.P. ("Meritage"), Haj LLC ("▇▇▇▇▇▇▇ LLC #2"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------- --------------
("Karafiol"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇"), Northwestern University
---------- ------
("Northwestern"), and Silver Cross Investors LLC ("SCI")) have acquired from the
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Company the respective numbers of Preferred Units and Common Units set forth
opposite their names under the captions "Number of Common Units (Non-
Performance-Vesting)," "Number of Common Units (Performance Vesting)," and
"Number of Series A Preferred Units (as of immediately prior to date hereof)" on
the attached Schedule of Units. All of the Preferred Units purchased prior to
-----------------
the date hereof are sometimes referred to herein as the "Series A Preferred
------------------
Units."
-----
As of the date hereof, the Members have amended and restated the
Equity Purchase Agreement, pursuant to which amendment the Members (including
Meritage, ▇▇▇▇▇▇▇ LLC #2, Karafiol, Kirsch, Northwestern, and SCI) will purchase
from the Company the respective numbers of additional Preferred Units set forth
opposite their names under the caption "Number of Series B Preferred Units
(issued as of date hereof)" on the attached Schedule of Units. The Preferred
-----------------
Units purchased pursuant to such amendment are sometimes referred to herein as
the "Series B Preferred Units."
------------------------
The parties hereto desire that, effective as of the date hereof, each
of Meritage, ▇▇▇▇▇▇▇ LLC #2, Karafiol, Kirsch, Northwestern, and SCI shall be
admitted as a Member of the
Company and the Second Amended Agreement shall be amended and restated in its
entirety as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises made herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
GENERAL PROVISIONS; DEFINITIONS
Section 1.1 Formation of the Company; Term. The Company was formed
------------------------------
as of January 8, 1998, by the execution and filing of a certificate of formation
of the Company with the Secretary of State of the State of Delaware setting
forth the information required by the Act (the "Certificate"). The term of the
-----------
Company commenced upon the filing of the Certificate and shall continue in
perpetuity until the dissolution and termination of the Company in accordance
with the provisions of Article VII hereof.
-----------
Section 1.2 Limited Liability Company Agreement. The Members have
-----------------------------------
entered into this Agreement for the purpose of establishing the affairs of the
Company and the conduct of its business in accordance with the provisions of the
Act. The Members hereby agree that during the term of the Company set forth in
Section 1.1 the rights and obligations of the Members with respect to the
-----------
Company will be determined in accordance with the terms and conditions of this
Agreement and, except where the Act provides that such rights and obligations
specified in the Act shall apply "unless otherwise provided in a limited
liability company agreement" or words of similar effect and such rights and
obligations are set forth in this Agreement, the Act. The Members hereby
incorporate Section 18-210 of the Act (entitled "Contractual Appraisal Rights")
such that dissenting Members shall have contractual appraisal rights in
accordance with such Section with respect to any merger or consolidation in
which the Company is a constituent party to the merger or consolidation or any
sale of all or substantially all of the Company's assets.
Section 1.3 Name. The name of the Company shall be "CompleTel LLC"
----
or such other name or names as may from time to time be designated by the Board
of Managers. The Company's business may be conducted under its name and/or any
other name or names as the Board of Managers may deem advisable.
Section 1.4 Purpose and Powers. The Company is organized for the
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object and purpose of engaging in all such lawful transactions and business
activities as may be determined by the Board of Managers. The Company shall
have any and all powers necessary or desirable to carry out the purposes and
business of the Company, to the extent that the same may be lawfully exercised
by limited liability companies under the Act.
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Section 1.5 Principal Office; Registered Office and Agent.
---------------------------------------------
(a) The principal office of the Company shall be located at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other place
(whether inside or outside the State of Delaware) as the Board of Managers may
from time to time designate. The Company may have such other offices (whether
inside or outside the State of Delaware) as the Board of Managers may from time
to time designate.
(b) The registered office of the Company in the State of Delaware is
located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The registered agent of the Company for service of process at
such address is The Corporation Trust Company. The Board of Managers may, in
its discretion, change the registered office and/or registered agent from time
to time by (i) filing the address of the new registered office and/or the name
of the new registered agent with the Secretary of State of the State of Delaware
pursuant to the Act and (ii) giving notice of such change to each of the
Members.
Section 1.6 No State-Law Partnership. The Members intend that the
------------------------
Company not be a partnership (including, without limitation, a limited
partnership) or joint venture, and that no Member be a partner or joint venturer
of any other Member by virtue of this Agreement, for any purposes other than as
set forth in the immediately following sentence, and neither this Agreement nor
any document entered into by the Company or any Member shall be construed to
suggest otherwise. The Members intend that the Company shall be treated as a
partnership for federal and, if applicable, state or local income tax purposes,
and the Company and each Member shall file all tax returns and shall otherwise
take all tax and financial reporting positions in a manner consistent with such
treatment.
Section 1.7 No UBTI. Notwithstanding anything herein to the
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contrary, the Company shall not, and no Member or Representative (or delegate
thereof) shall (or shall have the power or authority to) cause, permit, or
suffer the Company to: (i) invest directly in any Person considered a flow-
through entity for federal income tax purposes (other than an intermediate
holding company where such investment would not cause any Tax Exempt Partner to
recognize UBTI); (ii) create, incur, assume or suffer to exist any Indebtedness
of the Company; or (iii) knowingly enter into any other transaction that could
cause a Tax Exempt Partner to recognize UBTI as a result of its investment in
any Member, provided, however, that if such a transaction is specifically
------------------
contemplated by this Agreement or the Equity Purchase Agreement or any of the
other agreements contemplated by the exhibits thereto to which the Company is a
party, the Members agree to amend this Agreement or such other agreements (to
the extent they are parties thereto) to the extent necessary to avoid causing a
Tax Exempt Partner to recognize UBTI.
Section 1.8 Definitions. Capitalized terms used but not otherwise
-----------
defined herein shall have the following meanings:
"Act" means the Delaware Limited Liability Company Act, 6 Del.L. (S)
---
18-101, et seq., as it may be amended from time to time, and any successor
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thereto.
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"Adjusted Capital Account Deficit" means with respect to any Capital
--------------------------------
Account as of the end of any Taxable Year, the amount by which the balance in
such Capital Account is less than zero. For this purpose, such Person's Capital
Account balance shall be
(i) reduced for any items described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5), and (6), and
(ii) increased for any amount such Person is obligated to contribute
or is treated as being obligated to contribute to the Company
pursuant to Treasury Regula tion Section 1.704-1(b)(2)(ii)(c)
(relating to partner liabilities to a partnership) or 1.704-
2(g)(1) and 1.704-2(i) (relating to minimum gain).
"Affiliate" of any particular Person means (i) any other Person
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controlling, controlled by or under common control with such particular Person,
where "control" means the possession, directly or indirectly, of the power to
direct the management and policies of a Person whether through the ownership of
voting securities, by contract or otherwise, and (ii) if such Person (other than
the Company) is a partnership, any partner thereof.
"Agreement" has the meaning set forth with respect thereto in the
---------
preamble.
"Board of Managers" means the board of managers of the Company
-----------------
described in Article V.
---------
"Book Value" means, with respect to any Company property, the
----------
Company's adjusted basis for federal income tax purposes, adjusted from time to
time to reflect the adjustments required or permitted (in the case of permitted
adjustments, to the extent the Company makes such permitted adjustments) by
Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g).
"Capital Account" has the meaning set forth with respect thereto in
---------------
Section 2.3(a).
--------------
"Capital Contributions" means any cash, cash equivalents, promissory
---------------------
obligations, or the Fair Market Value of other property which a Member
contributes or is deemed to have contributed to the Company with respect to the
issuance of any Unit pursuant to Section 2.2, or (in the case of any Preferred
-----------
Units) pursuant to the Equity Purchase Agreement, or (in the case of any Senior
Units) pursuant to the Executive Securities Agreements, the Performance Vesting
Agreement, or the Equity Purchase Agreement.
"Certificate" has the meaning set forth with respect thereto in
-----------
Section 1.1.
-----------
"Class A Senior Unit" means a Unit representing a fractional part of
-------------------
the Members' interests in the Profits, Losses, and Distributions of the Company
and having the rights and obligations specified with respect to Class A Senior
Units in this Agreement.
-4-
"Class B Senior Unit" means a Unit representing a fractional part of
-------------------
the Members' interests in the Profits, Losses, and Distributions of the Company
and having the rights and obligations specified with respect to Class B Senior
Units in this Agreement.
"Class B Senior Value" of any Class B Senior Unit as of any particular
--------------------
date shall be equal to (i) the aggregate Liquidation Value of the Preferred
Unit(s) (including fractional Units) in respect of the forfeiture of which under
the Performance Vesting Agreement such Class B Senior Unit was issued, as in
effect on the date of such forfeiture, minus (ii) the aggregate Distributions of
-----
Class B Senior Value made pursuant to Sections 3.1(c)(ii) and 3.1(f)(ii) with
------------------- ----------
respect to such Class B Senior Unit from the date of issuance prior to such
particular date.
"Class B Senior Yield," with respect to each Class B Senior Unit,
--------------------
shall accrue on a daily basis at the rate of 8% per annum of the sum of the
Class B Senior Value plus all accumulated (as provided below) and unpaid Class B
Senior Yield thereon from and including the date of issuance of such Class B
Senior Unit (and with respect to accumulated Class B Senior Yield, from and
including the Yield Reference Dates on which such Class B Senior Yield was
accumulated) to and including the date on which the Class B Senior Value of such
Class B Senior Unit (plus all accrued but unpaid Class B Senior Yield thereon)
is paid. The date on which the Company initially issues any Class B Senior Unit
shall be deemed its "date of issuance" regardless of the number of times
transfer of such Class B Senior Unit is made on the records of the Company and
regardless of the number of certificates (if any) which may be issued to
evidence such Class B Senior Unit. To the extent not distributed on March 31,
June 30, September 30, and December 31 of each year, commencing after the date
of issuance, (the "Yield Reference Dates"), all Class B Senior Yield which has
---------------------
accrued on each Class B Senior Unit outstanding during the three-month period
ending on such Yield Reference Date and, with respect to the first Yield
Reference Date, during the period from the date of issuance of each Class B
Senior Unit through such first Yield Reference Date, shall be accumulated (and
shall be referred to herein as "accumulated Class B Senior Yield") and shall
remain accumulated Class B Senior Yield with respect to such Class B Senior Unit
until paid.
"▇▇▇▇▇▇▇▇▇" has the meaning set forth with respect thereto in the
---------
preamble.
"Code" means the United States Internal Revenue Code of 1986, as
----
amended. Such term shall, at the Board of Managers' sole discretion, be deemed
to include any future amendments to the Code and any corresponding provisions of
succeeding Code provisions (whether or not such amendments and corresponding
provisions are mandatory or discretionary; provided, however, that if they are
--------
discretionary, the term "Code" shall not include them if including them would
have a material adverse effect on any Member).
"Common Unit" means a Unit representing a fractional part of the
-----------
Members' interests in the Profits, Losses, and Distributions of the Company and
having the rights and obligations specified with respect to Common Units in this
Agreement; provided that with respect to Article IV hereof, "Common Units" shall
-------- ----------
include any securities of any class of the Company's equity securities hereafter
authorized which is not limited to a fixed sum or percentage of par or stated
value with
-5-
respect to the rights of the holders thereof to participate in dividends or
other interim distributions or in the distribution of assets upon any
liquidation, dissolution or winding up of the Company.
"Common Units Deemed Outstanding" means, at any given time, the number
-------------------------------
of Common Units actually outstanding at such time, plus the number of Common
Units deemed to be outstanding pursuant to Section 4.1(c)(i) and (ii), whether
----------------- ----
or not the Options or Convertible Securities are actually exercisable or
convertible at such time, in each case, without duplication.
"Company" has the meaning set forth with respect thereto in the
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preamble, and, where the context requires, any successor entity described in
Section 10.1.
------------
"Confidential Information" has the meaning set forth with respect
------------------------
thereto in Section 6.7.
-----------
"Conversion Price" means the respective conversion price of each
----------------
series of Preferred Units as determined pursuant to Section 4.1.
-----------
"Conversion Security" means a Common Unit of the Company; provided
------------------- --------
that if there is a change such that the securities issuable upon conversion of
the Preferred Units are issued by an entity other than the Company or there is a
change in the type or class of securities so issuable, then the term "Conversion
Security" shall mean one share of the security issuable upon conversion of the
Preferred Units if such security is issuable in shares, or shall mean the
smallest unit in which such security is issuable if such security is not
issuable in shares.
"Convertible Securities" means any stock or securities directly or
----------------------
indirectly convertible into or exchangeable for Common Units.
"▇▇▇▇▇▇▇▇" has the meaning set forth with respect thereto in the
--------
preamble.
"Distribution" means each distribution made by the Company to a
------------
Member, whether in cash, property or securities of the Company and whether by
liquidating distribution, redemption, repurchase or otherwise; provided that a
--------
Distribution shall not include any recapitalization or exchange of securities of
the Company, or any subdivision (by Unit split or otherwise) or any combination
(by reverse Unit split or otherwise) of any outstanding Units.
"Dovey" has the meaning set forth with respect thereto in the
-----
preamble.
"Equity Purchase Agreement" means that certain Second Amended and
-------------------------
Restated Equity Purchase Agreement dated as of the date hereof, by and between
the Company, the Investors, and the other Persons listed on the signature pages
thereto, as amended from time to time in accordance with its terms.
-6-
"Event of Withdrawal" means the death, retirement, resignation,
-------------------
expulsion, bankruptcy or dissolution of a Member or the occurrence of any other
event that terminates the continued membership of a Member in the Company.
"Executive Securities Agreements" has the meaning ascribed to such
-------------------------------
term in the Equity Purchase Agreement.
"Executives" means the Original Executives, ▇▇▇▇▇ ▇. ▇▇▇▇▇, and each
----------
other holder of the Company's Common Units issued pursuant to the Executive
Securities Agreements.
"Fair Market Value" means, with respect to any asset, its fair market
-----------------
value determined according to Section 7.3.
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"First Amended Agreement" has the meaning set forth with respect
-----------------------
thereto in the preamble.
"Fiscal Period" means any interim accounting period within a Taxable
-------------
Year established by the Board of Managers and which is permitted or required by
Code Section 706.
"Fiscal Year" means the Company's annual accounting period established
-----------
pursuant to Section 8.3.
-----------
"Indebtedness" means at a particular time, without duplication, (i)
------------
any indebtedness for borrowed money or indebtedness issued in substitution for
or exchange of indebtedness for borrowed money, (ii) any indebtedness evidenced
by any note, bond, debenture or other debt security, (iii) any indebtedness for
the deferred purchase price of property or services with respect to which a
Person is liable, contingently or otherwise, as obligor or otherwise (other than
trade payables and other current liabilities incurred in the ordinary course of
business which are not more than six months past due), and (iv) any commitment
by which a Person assures a creditor against loss (including, without
limitation, contingent reimbursement obligations with respect to letters of
credit).
"Indemnified Person" has the meaning set forth with respect thereto in
------------------
Section 5.4.
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"Investors" has the meaning set forth with respect thereto in the
---------
Equity Purchase Agreement.
"Karafiol" has the meaning set forth with respect thereto in the
--------
preamble.
"Key Employee" has the meaning set forth with respect thereto in
------------
Section 2.2(c)(ii).
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"▇▇▇▇▇▇" has the meaning set forth with respect thereto in the
------
preamble.
"Liquidating Distributions" has the meaning set forth with respect
-------------------------
thereto in Section 3.1(c).
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"Liquidation Value" of any Preferred Unit as of any particular date
-----------------
shall be equal to (i) the initial price paid to the Company for such Preferred
Unit on its date of issuance, plus (ii) the aggregate additional Capital
----
Contributions to the Company made with respect to such Preferred Unit from the
date of issuance until and including such particular date, and minus (iii) the
-----
aggregate Distributions of Liquidation Value made pursuant to Sections
--------
3.1(c)(ii) and 3.1(f)(ii) with respect to such Preferred Unit from the date of
---------- ----------
issuance prior to such particular date.
"Losses" means items of Company loss and deduction determined in
------
accordance with Section 2.3(b).
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"MDCP" has the meaning set forth with respect thereto in the preamble.
----
"Member" means each of the Persons listed on the signature pages
------
hereto as Members and each Person who is admitted to the Company as a Member
pursuant to Section 6.3 or Section 2.2, in each case so long as such Person
----------- -----------
continues to hold any Units.
"Meritage" has the meaning set forth with respect thereto in the
--------
preamble.
"Minimum Gain" means the partnership minimum gain determined pursuant
------------
to Treasury Regulation Section 1.704-2(d).
"Non-Performance-Vesting Securities" means Common Units other than
----------------------------------
Performance Vesting Securities.
"Northwestern" has the meaning set forth with respect thereto in the
------------
preamble.
"Options" means any rights, warrants or options to subscribe for or
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purchase Common Units or Convertible Securities.
"Organic Change" has the meaning set forth with respect thereto in
--------------
Section 4.1(e).
--------------
"Original Executives" means Dovey, Pearson, and ▇▇▇▇▇▇▇▇▇.
-------------------
"Other Business" has the meaning set forth with respect thereto in
--------------
Section 6.6.
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"▇▇▇▇▇▇▇" has the meaning set forth with respect thereto in the
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preamble.
"▇▇▇▇▇▇▇ LLC #2" has the meaning set forth with respect thereto in the
--------------
preamble.
"Performance Vesting Agreement" means that certain Second Amended and
-----------------------------
Restated Performance Vesting Agreement dated as of the date hereof, by and
between the Company, the Investors, and certain of the Executives, as amended
from time to time in accordance with its terms.
-8-
"Performance-Vesting Securities" means Common Units of the Company
------------------------------
that are subject to performance vesting under the provisions of the Performance
Vesting Agreement.
"Person" means an individual, a partnership, a corporation, a limited
------
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Unit" means a Unit representing a fractional part of the
--------------
Members' interests in the Profits, Losses, and Distributions of the Company and
having the rights and obligations specified with respect to Preferred Units in
this Agreement. The Preferred Units issued prior to the date hereof are
sometimes referred to as the "Series A Preferred Units." The Preferred Units
------------------------
issued contemporaneously with the date hereof are sometimes referred to as the
"Series B Preferred Units." The Series A Preferred Units and the Series B
-------------------------
Preferred Units shall be pari passu in all respects and, except as expressly set
forth in this Agreement, shall have identical rights and privileges.
"Preferred Yield," with respect to each Preferred Unit, shall accrue
---------------
on a daily basis at the rate of 8% per annum of the sum of the Liquidation Value
plus all accumulated (as provided below) and unpaid Preferred Yield thereon from
and including the date of issuance of such Preferred Unit (and with respect to
accumulated Preferred Yield, from and including the Yield Reference Dates on
which such Preferred Yield was accumulated) to and including the date on which
the Liquidation Value of such Preferred Unit (plus all accrued but unpaid
Preferred Yield thereon) is paid. The date on which the Company initially
issues any Preferred Unit shall be deemed its "date of issuance" regardless of
the number of times transfer of such Preferred Unit is made on the records of
the Company and regardless of the number of certificates (if any) which may be
issued to evidence such Preferred Unit. To the extent not distributed on March
31, June 30, September 30, and December 31 of each year, commencing after the
date of issuance (the "Yield Reference Dates"), all Preferred Yield which has
---------------------
accrued on each Preferred Unit outstanding during the three-month period ending
on such Yield Reference Date and, with respect to the first Yield Reference
Date, during the period from the date of issuance of each Preferred Unit through
such first Yield Reference Date, shall be accumulated (and shall be referred to
herein as "accumulated Preferred Yield") and shall remain accumulated Preferred
Yield with respect to such Preferred Unit until paid.
"Prior Agreement" has the meaning set forth with respect thereto in
---------------
the preamble.
"Proceedings" has the meaning set forth with respect thereto in
-----------
Section 4.3.
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"Profits" means items of Company income and gain determined according
-------
to Section 2.3(b).
--------------
"Public Offering" means any underwritten sale of the Company's common
---------------
stock pursuant to an effective registration statement under the Securities Act
filed with the Securities and Exchange Commission on Form S-1 (or a successor
form adopted by the Securities and Exchange Commission); provided that the
--------
following shall not be considered a Public Offering: (i) any issuance of common
stock as consideration for a merger or acquisition, and (ii) any issuance of
common stock
-9-
or rights to acquire common stock to existing securityholders or to employees of
the Company or its Subsidiaries on Form S-4 or Form S-8 (or a successor form
adopted by the Securities and Exchange Commission) or otherwise.
"Purchase Rights" has the meaning set forth with respect thereto in
---------------
Section 4.2.
-----------
"Qualified Public Offering" means a Public Offering where both (i) the
-------------------------
proceeds (net of underwriting discounts and commissions) received by the Company
in exchange for its issuance of shares of common stock in such Public Offering
equal or exceed $60 million, and (ii) the price per share of common stock paid
---
to the Company in such Public Offering equals or exceeds the product of (x) 3.0
times (y) the quotient of (A) the aggregate capital contributions to the Company
-----
under the Equity Purchase Agreement (including the initial purchase price and
all subsequent contributions) made on or prior to the date of such Public
Offering with respect to all "Purchaser Securities" then outstanding which are
derived from the Series A Preferred Units, divided by (B) the number of shares
----------
of the Company's common stock represented by all "Purchaser Securities" (on a
fully diluted, as-if-converted basis) outstanding immediately prior to the
consummation of such Public Offering which are derived from the Series A
Preferred Units. For purposes of this definition, "Purchaser Securities" has
the meanings set forth with respect thereto in the Equity Purchase Agreement.
"Regulatory Allocations" has the meaning ascribed to such term in
----------------------
Section 3.5.
-----------
"Replication Securities" has the meaning ascribed to such term in
----------------------
Section 2.2(c).
--------------
"Representative" means a representative duly elected to the Board of
--------------
Managers as provided in Section 5.3.
-----------
"Required Vote" shall mean the affirmative vote of the holders of a
-------------
majority of the Common Units (including the Preferred Units, on an as-if-
converted basis) outstanding as of the record date for such vote.
"Sale of the Company" means the arm's length sale of the Company to a
-------------------
third party or group of third parties acting in concert, pursuant to which such
party or parties acquire (i) equity securities of the Company possessing the
voting power under normal circumstances to control the Company, or (ii) all or
substantially all of the Company's assets determined on a consolidated basis (in
either case, whether by merger, consolidation, sale or transfer of the Company's
equity securities, or sale or transfer of the Company's consolidated assets).
"SCI" has the meaning set forth with respect thereto in the preamble.
---
"Second Amended Agreement" has the meaning set forth with respect
------------------------
thereto in the preamble.
-10-
"Securities Act" means the Securities Act of 1933, as amended, and
--------------
applicable rules and regulations thereunder, and any successor to such statute,
rules or regulations. Any reference herein to a specific section of, or any
rule, regulation, or form promulgated under, the Securities Act shall be deemed
to include any corresponding provisions of future law.
"Securities and Exchange Commission" means the U.S. Securities and
----------------------------------
Exchange Commission and any successor governmental agency or regulatory body.
"Securityholders Agreement" means that certain Second Amended and
-------------------------
Restated Securityholders Agreement dated as of the date hereof, by and between
the Company and certain of its securityholders, as amended from time to time in
accordance with its terms.
"Senior Units" means the Class A Senior Units and the Class B Senior
------------
Units.
"Subsidiary" means, with respect to any Person, any corporation,
----------
limited liability company, partnership, association or business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity (other than
a corporation), a majority of partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity (other than a corporation) if such Person or Persons shall
be allocated a majority of limited liability company, partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such limited liability company, partnership,
association or other business entity. For purposes hereof, references to a
"Subsidiary" of any Person shall be given effect only at such times that such
-----------
Person has one or more Subsidiaries, and, unless otherwise indicated, the term
"Subsidiary" refers to a Subsidiary of the Company.
-----------
"Tax Exempt Partner" means any equityholder of a Member (or, with
------------------
respect to any equityholder of a Member that is taxed as a partnership for
federal income tax purposes (a "flow-through entity"), any equityholder of such
flow-through entity) which is exempt from income taxation under (S)501(a) of the
Code.
"Tax Matters Member" has the meaning set forth with respect thereto in
------------------
Section 8.6.
-----------
"Taxable Year" means the Company's accounting period for federal
------------
income tax purposes determined pursuant to Section 8.4.
-----------
"Transfer" has the meaning set forth with respect thereto in Section
-------- -------
6.3.
---
-11-
"Treasury Regulations" means the income tax regulations promulgated
--------------------
under the Code and effective as of the date hereof. Such term shall, at the
Board of Managers' sole discretion, be deemed to include any future amendments
to such regulations and any corresponding provisions of succeeding regulations
(whether or not such amendments and corresponding provisions are mandatory or
discretionary; provided, however, that if they are discretionary, the term
--------
"Treasury Regulations" shall not include them if including them would have a
material adverse effect on any Member).
"UBTI" means unrelated business taxable income as defined in (S)512
----
and (S)514 of the Code.
"Unit" means a Member's interest in the Profits, Losses and
----
Distributions of the Company representing a fractional part of the aggregate
interests in the Profits, Losses, and Distributions of the Company of all
Members and shall include Common Units, Preferred Units, and Senior Units;
provided that any class or group of Units issued shall have the relative rights,
--------
powers, duties, and obligations specified with respect to such class or group of
Units in this Agreement, and the interest of such class or group of Units in the
Profits, Losses, and Distributions of the Company shall be determined in
accordance with such relative rights, powers, duties, and obligations.
"Unit Ownership Ledger" has the meaning set forth with respect thereto
---------------------
in Section 2.2(f).
--------------
ARTICLE II
CAPITAL CONTRIBUTIONS AND ACCOUNTS
Section 2.1 Authorized Units. The total authorized Units which the
----------------
Company has authority to issue consist of:
(a) 84,070 Preferred Units (consisting of 65,750 Series A Preferred
Units and 18,320 Series B Preferred Units);
(b) 131,494 Common Units;
(c) an unlimited number of Class A Senior Units, provided that all
--------
authorized but unissued Class A Senior Units shall be reserved for issuance in
exchange for other Units pursuant to the terms of the Executive Securities
Agreements, and such Class A Senior Units may be issued only in exchange for
other Units pursuant to the terms of the Executive Securities Agreements and
under no other circumstances; and
(d) an unlimited number of Class B Senior Units, provided that all
--------
authorized but unissued Class B Senior Units shall be reserved for issuance in
exchange for other Units pursuant to the terms of the Performance Vesting
Agreement, and such Class B Senior Units may be issued
-12-
only in exchange for other Units pursuant to the terms of the Performance
Vesting Agreement and under no other circumstances.
Section 2.2 Capital Contributions and Issuance of Units.
-------------------------------------------
(a) Initial Issuances of Common Units. Prior to or contemporaneously
---------------------------------
with the execution of this Agreement, each Member set forth on the attached
Schedule of Units as holding Common Units has made Capital Contributions to the
-----------------
Company in the aggregate amount set forth opposite such Member's name on the
attached Schedule of Units in exchange for, and the Company has issued to such
-----------------
Member, the number of Common Units set forth opposite such Member's name on the
attached Schedule of Units.
-----------------
(b) Initial Issuances of Preferred Units. Prior to or
------------------------------------
contemporaneously with the execution of this Agreement, each Member set forth on
the attached Schedule of Units as holding Preferred Units has, pursuant to the
-----------------
Equity Purchase Agreement, made Capital Contributions to the Company in the
aggregate amounts set forth opposite such Member's name on the attached Schedule
--------
of Units with respect to, and the Company has issued to such Member, the
--------
respective number of Series A Preferred Units and Series B Preferred Units set
forth opposite such Member's name on the attached Schedule of Units.
-----------------
(c) Additional Issuances of Common Units to Key Employees.
-----------------------------------------------------
(i) 100 of the Company's authorized but unissued Common Units (30
of which shall be Performance-Vesting Securities and 70 of which shall be
Non-Performance-Vesting Securities) are reserved for issuance pursuant to
this Section 2.2(c).
--------------
(ii) From time to time on or after the date hereof, the Board of
Managers may approve the offer and issuance of such authorized but unissued
Common Units to management or other key employees (each a "Key Employee")
------------
of the Company and its Subsidiaries. The Company's senior management shall
make recommendations to the Board of Managers concerning, and the Board of
Managers shall have sole and complete power and discretion to approve and
determine, which Key Employees shall be offered such Common Units, the
number of Common Units to be offered and issued to each such purchasing Key
Employee, and the purchase price to be paid for the Common Units issued to
each such purchasing Key Employee. None of the Common Units reserved for
issuance pursuant to this Section 2.2(c) shall be offered or issued to any
--------------
Person without the prior approval of the Board of Managers; provided that
--------
the Board of Managers shall not cause or suffer the Company to issue any of
such Common Units to any Person other than a Key Employee of the Company or
its Subsidiaries.
(iii) [Intentionally Omitted].
---------------------
(iv) In connection with any issuance of Common Units to a Key
Employee of the Company and its Subsidiaries pursuant to this Section
-------
2.2(c), (A) such purchasing Key
------
-13-
Employee shall make Capital Contributions to the Company in exchange for
such purchased Common Units in the aggregate amount equal to the purchase
price therefor (as determined by the Board of Managers); (B) such Key
Employee shall execute a counterpart hereto (or joinder and rights
agreement) accepting and agreeing to be bound by all of the terms and
conditions hereof, and shall enter into such other documents and
instruments to effect such purchase as are required by the Board of
Managers (including, without limitation, an Executive Securities Agreement,
a joinder and rights agreement (pursuant to which such purchasing Key
Employee shall become a party to the Securityholders Agreement, the
Registration Agreement, and (to the extent any of such Common Units
constitute Performance Vesting Securities) the Performance Vesting
Agreement), and such other documents, instruments, or certificates as are
determined by the Board of Managers); and (C) such Key Employee's Executive
Securities Agreement shall specify which portion of the Common Units issued
to such Key Employee (if any) shall constitute Performance-Vesting
Securities and which portion shall constitute Non-Performance-Vesting
Securities, and the Performance-Vesting Securities shall be subject to
performance vesting under the terms of the Performance Vesting Agreement
(it being understood that in general such Common Units will be issued in
"strips" consisting of Non-Performance-Vesting Securities and Performance-
Vesting Securities in the ratio of 7:3, but that the Board of Managers may
decide to issue such Common Units in such other amounts or ratios as it
shall determine in its sole discretion).
(v) In connection with any issuance of Common Units to a Key
Employee of the Company and its Subsidiaries pursuant to this Section
-------
2.2(c), the Board of Managers may in its sole discretion (in lieu of
------
issuing Performance Vesting Securities or in the event there are no
remaining authorized and unissued Performance Vesting Securities) replicate
the issuance of Performance Vesting Securities to such Key Employee by
causing a portion of the Non-Performance-Vesting Securities issued to such
Key Employee (such portion, the "Replication Securities") to be issued with
----------------------
additional vesting restrictions which track the performance thresholds set
forth in the Performance Vesting Agreement. Notwithstanding anything to
the contrary in the foregoing sentence, any such Replication Securities
will (regardless of such additional vesting restrictions) remain Non-
Performance-Vesting Securities and will not be considered Performance
Vesting Securities for any purpose under this Agreement, the Performance
Vesting Agreement, or any of the other agreements contemplated hereby or
thereby (including, without limitation, that (A) upon vesting of such
Replication Securities, no "Forfeitable Purchaser Securities" (as defined
in the Performance Vesting Agreement) will be forfeited under the terms of
the Performance Vesting Agreement, and (B) upon forfeiture or repurchase of
such Replication Securities, no "Forfeitable Purchaser Securities" will
cease to be "Forfeitable Purchaser Securities" under the terms of the
Performance Vesting Agreement).
(d) Additional Issuances of Units. Subject to the reservation of
-----------------------------
Units pursuant to the terms of this Agreement or pursuant to any resolution of
the Board of Managers and to the other restrictions on issuance set forth herein
and in the other agreements to which the Company is a party (including, without
limitation, in Section 6J (Preemptive Rights) of the Equity Purchase
-14-
Agreement), the Company shall issue authorized but unissued Units at such times
and from time to time, to such Persons, in such amounts, at such price and on
such other terms and conditions as shall be determined and approved by the Board
of Managers in its sole discretion. If any Units are repurchased, redeemed, or
otherwise reacquired by the Company, such Units shall be returned to authorized
but unissued Units, and such Units shall be available for reissuance in
accordance with the terms of this Section 2.2(d). Other than as set forth in
--------------
this Section 2.2, the Company shall not offer or issue any Units to any Person.
-----------
(e) Certificates. All Units issued hereunder shall be uncertificated;
------------
provided that the Board of Managers may approve a specie form of certificate and
--------
issue to the Members such certificates specifying the number and type of Units
held by each such Member.
(f) Unit Ownership Ledger. The Company shall create and maintain a
---------------------
ledger (the "Unit Ownership Ledger") setting forth the name of each Member and
---------------------
the number of each class of Units held by each such Member. Upon any change in
the number or ownership of outstanding Units (whether upon an issuance of Units,
a transfer of Units, a cancellation of Units or otherwise), the Company shall
amend and update the Unit Ownership Ledger and shall deliver a copy of such
updated ledger to each holder of Units. The requirements of this paragraph (f)
shall terminate upon a Public Offering.
Section 2.3 Capital Accounts.
----------------
(a) The Company shall establish and maintain a separate "Capital
-------
Account" for each Member according to the rules of Treasury Regulation Section
-------
1.704-1(b)(2)(iv). For this purpose, the Company may (in the discretion of the
Board of Managers), upon the occurrence of the events specified in Treasury
Regulation Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital
Accounts in accordance with the rules of such regulation and Treasury Regulation
Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of Company property.
(b) For purposes of computing the amount of any item of Company
income, gain, loss or deduction to be allocated pursuant to Article III and to
be reflected in the Capital Accounts, the determination, recognition and
classification of any such item shall be the same as its determination,
recognition and classification for U.S. federal income tax purposes (including
any method of depreciation, cost recovery or amortization used for this
purpose), provided that:
-------- ----
(i) The computation of all items of income, gain, loss and
deduction shall include those items described in Code Section 705(a)(l)(B)
or Code Section 705(a)(2)(B) and Treasury Regulation Section 1.704-
1(b)(2)(iv)(i), without regard to the fact that such items are not
includable in gross income or are not deductible for federal income tax
purposes.
(ii) If the Book Value of any Company property is adjusted
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the
amount of such adjustment shall be taken into account as gain or loss from
the disposition of such property.
-15-
(iii) Items of income, gain, loss or deduction attributable to
the disposition of Company property having a Book Value that differs from
its adjusted basis for tax purposes shall be computed by reference to the
Book Value of such property.
(iv) Items of depreciation, amortization and other cost recovery
deductions with respect to Company property having a Book Value that
differs from its adjusted basis for tax purposes shall be computed by
reference to the property's Book Value in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(g).
(v) To the extent an adjustment to the adjusted tax basis of any
Company asset pursuant to Code Sections 732(d), 734(b) or 743(b) is
required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to
be taken into account in determining Capital Accounts, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases such basis).
(vi) Items of income, gain, loss and deduction of the Company
shall be computed as if the Company had sold any property distributed to a
Member on the date of such distribution at a price equal to its Fair Market
Value at that date.
Section 2.4 Negative Capital Accounts. No Member shall be required
-------------------------
to pay to any other Member or the Company any deficit or negative balance which
may exist from time to time in such Member's Capital Account (including upon and
after dissolution of the Company).
Section 2.5 No Interest. Except as otherwise expressly provided
-----------
herein, no Member shall be entitled to receive interest from the Company in
respect of any positive balance in its Capital Account, and no Member shall be
liable to pay interest to the Company in respect of any negative balance in its
Capital Account.
Section 2.6 No Withdrawal. No Person shall be entitled to withdraw
-------------
any part of such Person's Capital Contributions or Capital Account or to receive
any Distribution from the Company, except as expressly provided in this
Agreement.
ARTICLE III
DISTRIBUTIONS AND ALLOCATIONS
Section 3.1 Distributions
-------------
(a) Except as otherwise provided herein, the Company shall make
Distributions to the Members in respect of their Units at any time and from time
to time as determined by the Board of Managers in its sole discretion.
-16-
(b) The Company shall distribute to each Member within 75 days after
the close of each Taxable Year (or at such earlier times and in such amounts as
determined in good faith by the Board of Managers to be appropriate to enable
such Member to pay estimated income tax liabilities) an amount equal to the
anticipated taxes payable on the share of taxable income allocated to such
Member for such Taxable Year (after taking into account such Member's share of
income, credits, deductions and other items as reported on such Members Schedule
K-1 (Form 1065)), assuming for such determination the highest applicable
marginal United States federal, state, and local income tax rates applicable to
any Member; provided that such distributions shall be subject to the
--------
availability of cash after the setting aside by the Board of Managers of
appropriate reserves for anticipated or contingent obligations, losses and
commitments of the Company. Tax distributions to a Member pursuant to this
Section 3.1(b) shall be treated as an advance on distributions to which such
Member is entitled under Section 3.1 (other than this Section 3.1(b)) and
Section 7.2, and shall be offset against and reduce the amounts that such Member
would otherwise receive under the provisions of Section 3.1 (other than Section
3.1(b)) and Section 7.2 in the order that such amounts would otherwise be
received.
(c) All Distributions in connection with the liquidation, dissolution
or winding up of the Company ("Liquidating Distributions") shall be made to the
-------------------------
Members in the following order of priority:
(i) first, to the holders of Class A Senior Units (pro rata among
such holders based upon the aggregate Capital Contributions made in respect
of all Class A Senior Units held by each such holder immediately prior to
such Liquidating Distribution (together with simple yield thereon at a rate
of 8% per annum from the date of issuance to the date of such
Distribution)), until the aggregate amount distributed pursuant to this
subparagraph (i) with respect to the Class A Senior Units is equal to the
aggregate Capital Contributions made in respect of all Class A Senior Units
outstanding immediately prior to such Distribution (together with simple
yield thereon at a rate of 8% per annum from the date of issuance to the
date of such Distribution);
(ii) second, to the holders of Preferred Units and the holders of
Class B Senior Units (pro rata among such holders based on the aggregate
Liquidation Value (together with all accrued but unpaid Preferred Yield
thereon) and Class B Senior Value (together with all accrued but unpaid
Class B Senior Yield thereon) of all Preferred Units and Class B Senior
Units held by each such holder immediately prior to such Liquidating
Distribution), until the aggregate amount distributed pursuant to this
paragraph (ii) is equal to the aggregate Liquidation Value (together with
all accrued but unpaid Preferred Yield thereon) and Class B Senior Value
(together with all accrued but unpaid Class B Senior Yield thereon) of all
Preferred Units and Class B Senior Units outstanding immediately prior to
such Liquidating Distribution;
(iii) third, to the holders of Common Units (pro rata among such
holders based on the total number of Common Units held by each such holder
immediately prior to such Liquidating Distribution); provided, however,
--------
that the holders of Preferred Units shall
-17-
participate in Distributions pursuant to this clause (iii) such that
holders of Preferred Units receive aggregate Distributions equal to the
greater of (x) the amounts such holders are entitled to receive pursuant to
clause (ii) above or (y) the amounts such holders would have received
pursuant to this clause (iii) as holders of Common Units on an as-converted
basis.
(d) The Company shall be required to redeem each Class A Senior Unit
upon the first to occur of a Qualified Public Offering, a Sale of the Company,
or the fourth anniversary of the issuance of such Class A Senior Unit, for an
amount equal to the aggregate Capital Contributions made in respect of such
Class A Senior Unit on or prior to the date of such redemption (together with
simple yield thereon at a rate of 8% per annum from the date of issuance to the
date of such Distribution). After such Distribution has been paid in redemption
of such Class A Senior Unit, such Class A Senior Unit shall be retired by the
Company, and the holder thereof shall have no further rights (including any
rights to receive Profits, Losses, or Distributions from the Company) with
respect to such Class A Senior Unit. Except as set forth in this Section 3.1(d)
--------------
or with respect to Liquidating Distributions under Section 3.1(c)(i) or with
-----------------
respect to tax distributions under Section 3.1(b), no Distributions shall be
--------------
made by the Company with respect to any Class A Senior Units.
(e) [Intentionally Omitted].
---------------------
(f) All Distributions (other than Liquidating Distributions, tax
distributions made pursuant to Section 3.1(b), or redemptions of Class B Senior
Units pursuant to Section 4.1(a)) with respect to the Preferred Units and the
--------------
Class B Senior Units shall be made to all holders of Preferred Units and Class B
Senior Units: (i) first, pro rata among such holders based on the total accrued
but unpaid Preferred Yield and Class B Senior Yield on all Preferred Units and
Class B Senior Units held by each such holder on the record date for such
Distribution, until the full amount of accrued Preferred Yield and Class B
Senior Yield on all Preferred Units and Class B Senior Units then outstanding
has been paid, and (ii) after all accrued Preferred Yield and Class B Senior
Yield has been paid, pro rata among such holders based on the aggregate
Liquidation Value and Class B Senior Value of all Preferred Units and Class B
Senior Units held by each such holder on the record date for such Distribution.
(g) All Distributions (other than Liquidating Distributions and tax
distributions made pursuant to Section 3.1(b)) with respect to the Common Units
shall be made to all holders of Common Units, pro rata among such holders based
on the total number of Common Units held by each such holder on the record date
for such Distribution; provided that no Distributions shall be made with respect
--------
to any Common Units if at the time of or immediately after any such Distribution
the Company has failed to pay the full amount of accrued Preferred Yield and
Class B Senior Yield on the Preferred Units and Class B Senior Units or make any
redemption of Preferred Units or Class B Senior Units required hereunder.
(h) The Members shall look solely to the assets of the Company for any
Distributions, whether Liquidating Distributions or otherwise. If the assets of
the Company remaining after the payment or discharge, or the provision for
payment or discharge, of the debts, obligations, and other liabilities of the
Company are insufficient to make any Distributions, no
-18-
Member shall have any recourse against the separate assets of any other Member
(except as otherwise expressly provided herein).
(i) If the Company has, pursuant to any clear and manifest accounting
or similar error, paid any Member an amount in excess of the amount to which it
is entitled pursuant to this Article III, such Member shall reimburse the
-----------
Company to the extent of such excess, without interest, within 30 days after
demand by the Company. The Company may set off and apply any amount otherwise
payable to a Member against the amounts due from the Member under this Section
3.1(i).
(j) Notwithstanding the foregoing, in the event that the Company's
ownership interest in any Subsidiary of the Company shall consist of publicly
traded securities, the Company shall make a Distribution of such securities to
the Members (valued for such purpose at Fair Market Value determined in
accordance with Section 7.3) in accordance with the provisions of Section 3.1,
----------- -----------
which Distribution shall be effected as soon as practicable following the
expiration of any contractual underwriter "holdback" period applicable to such
securities. In the event that such securities are issued by a Subsidiary that
meets the definition of a "foreign private issuer" under the Securities Act, the
Company shall cause such securities to be represented by depositary receipts
listed on a national securities exchange and shall distribute such depositary
receipts in lieu of the underlying securities. Any Distribution to a Member
pursuant to this Section 3.1(j) shall be treated as an advance on distributions
--------------
to which such Member is entitled under the provisions of Section 3.1 (other than
-----------
Section 3.1(b)) and Section 7.2 in the order that such amounts would otherwise
-------------- -----------
be received.
Section 3.2 Allocations.
-----------
(a) Except as otherwise provided in Section 3.3, Profits and Losses
-----------
for any Fiscal Year shall be allocated among the Members in such a manner that,
as of the end of such Fiscal Year, the sum of (i) the Capital Account of each
Member, (ii) such Member's share of Minimum Gain (as determined according to
Treasury Regulation Section 1.704-2(g)), and (iii) such Member's partner
nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-
2(i)(3)) shall be equal to the respective net amounts, positive or negative,
which would be distributed to them or for which they would be liable to the
Company under the Act, determined as if the Company were to (i) liquidate the
assets of the Company for an amount equal to their Book Value and (ii)
distribute the proceeds of such liquidation pursuant to Section 7.2.
-----------
(b) For purposes of this Section 3.2, if Profits exceed Losses for a
-----------
Fiscal Year, (i) Losses shall first be allocated to Members whose Capital
Accounts are reduced as a result of the allocations under Section 3.2(a), in an
--------------
amount equal to the amount by which such Capital Accounts have been reduced and
(ii) Profits and any remaining Losses shall be allocated to Members whose
Capital Accounts are increased as a result of the allocations under Section
-------
3.2(a), in the proportion that the amount of the increase in such Member's
------
Capital Accounts as a result of the allocations under Section 3.2(a) bears to
--------------
the aggregate amount of the increase in all such Members' Capital Accounts as a
result of the allocations under Section 3.2(a).
--------------
-19-
(c) For purposes of this Section 3.2, if Losses exceed Profits for a
-----------
Fiscal Year, (i) Profits shall first be allocated to Members whose Capital
Accounts are increased as a result of the allocations under Section 3.2(a), in
--------------
an amount equal to the amount by which such Capital Accounts have been increased
and (b) Losses and any remaining Profits shall be allocated to Members whose
Capital Accounts are reduced as a result of the allocations under Section
-------
3.2(a), in the proportion that the amount of the reduction in such Member's
------
Capital Accounts as a result of the allocations under Section 3.2(a) bears to
--------------
the aggregate amount of the reduction in all such Members' Capital Accounts as a
result of the allocations under Section 3.2(a).
--------------
(d) If deemed appropriate by the Board of Managers in its discretion
in order to cause the allocations pursuant to this Section 3.2 to more closely
-----------
reflect the actual economic arrangement among the Members, all Preferred Units
shall be treated as converted under Section 4.1(a) (and all Class B Senior Units
--------------
shall be treated as being entitled to their redemption proceeds under Section
-------
4.1(a)) immediately prior to any hypothetical liquidation of the Company under
------
Section 3.2(a) if such conversion (and related redemption of Class B Senior
--------------
Units) would entitle the holders of the Preferred Units to receive a larger
hypothetical distribution (in respect of the Preferred Units, the Class B Senior
Units, and the Conversion Securities into which such Preferred Units are deemed
converted) in connection with such hypothetical liquidation of the Company (such
hypothetical liquidation determined according to Section 3.2(a) as if the
--------------
Company were to (i) liquidate the assets of the Company for an amount equal to
their Book Value and (ii) distribute the proceeds of such liquidation pursuant
to Section 7.2). Whether the Preferred Units shall be treated as converted (and
-----------
the Class B Senior Units redeemed) shall be determined separately by the Board
of Managers any time an allocation is required under this Section 3.2.
-----------
Section 3.3 Special Allocations.
-------------------
(a) Losses attributable to partner nonrecourse debt (as defined in
Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner
required by Treasury Regulation Section 1.704-2(i). If there is a net decrease
during a Taxable Year in partner nonrecourse debt minimum gain (as defined in
Treasury Regulation Section 1.704-2(i)(3)), Profits for such Taxable Year (and,
if necessary, for subsequent Taxable Years) shall be allocated to the Members in
the amounts and of such character as determined according to Treasury Regulation
Section 1.704-2(i)(4).
(b) Nonrecourse deductions (as determined according to Treasury
Regulation Section 1.704-2(b)(1)) for any Taxable Year shall be allocated to
each Member ratably among such Members based upon the number of outstanding
Units held by each such Member immediately prior to such allocation. Except as
otherwise provided in Section 4.3(a), if there is a net decrease in the Minimum
Gain during any Taxable Year, each Member shall be allocated Profits for such
Taxable Year (and, if necessary, for subsequent Taxable Years) in the amounts
and of such character as determined according to Treasury Regulation Section
1.704-2(f). This Section 3.3(b) is intended to be a minimum gain chargeback
provision that complies with the requirements of Treasury Regula tion Section
1.704-2(f), and shall be interpreted in a manner consistent therewith.
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(c) If any Member that unexpectedly receives an adjustment, allocation
or distribution described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the
end of any Taxable Year, computed after the application of Sections 3.3(a) and
3.3(b) but before the application of any other provision of this Article III,
then Profits for such Taxable Year shall be allocated to such Member in
proportion to, and to the extent of, such Adjusted Capital Account Deficit.
This Section 3.3(c) is intended to be a qualified income offset provision as
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be
interpreted in a manner consistent therewith.
(d) Profits and Losses described in Section 2.3(b)(v) shall be
allocated in a manner consistent with the manner that the adjustments to the
Capital Accounts are required to be made pursuant to Treasury Regulation Section
1.704-1(b)(2)(iv)(j), (k) and (m).
(e) If, and to the extent that, any Member is deemed to recognize any
item of income, gain, loss, deduction or credit as a result of any transaction
between such Member and the Company pursuant to Code Sections 1272-1274, 7872,
483, 482, 83 or any similar provision now or hereafter in effect, and the Board
of Managers determines that any corresponding Profit or Loss of the Company
should be allocated to the Members who recognized such item in order to reflect
the Members' economic interests in the Company, then the Company may so allocate
such Profit or Loss.
Section 3.4 Tax Allocations
---------------
(a) Except as provided in Sections 3.4(b), (c) and (d), the income,
--------------- --- ---
gains, losses, deductions and credits of the Company will be allocated, for
federal, state and local income tax purposes, among the Members in accordance
with the allocation of such income, gains, losses, deductions and credits among
the Members for computing their Capital Accounts; except that if any such
allocation is not permitted by the Code or other applicable law, the Company's
subsequent income, gains, losses, deductions and credits will be allocated among
the Members so as to reflect as nearly as possible the allocation set forth
herein in computing their Capital Accounts.
(b) Items of Company taxable income, gain, loss and deduction with
respect to any property contributed to the capital of the Company shall be
allocated among the Members in accordance with Code Section 704(c) so as to take
account of any variation between the adjusted basis of such property to the
Company for federal income tax purposes and its Book Value.
(c) If the Book Value of any Company asset is adjusted pursuant to the
requirements of Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f),
subsequent allocations of items of taxable income, gain, loss and deduction with
respect to such asset shall take account of any variation between the adjusted
basis of such asset for federal income tax purposes and its Book Value in the
same manner as under Code Section 704(c).
(d) Allocations of tax credits, tax credit recapture, and any items
related thereto shall be allocated to the Members according to their interests
in such items as determined by the
-21-
Board of Managers taking into account the principles of Treasury Regulation
Section 1.704-1(b)(4)(ii).
(e) Allocations pursuant to this Section 3.4 are solely for purposes
-----------
of federal, state and local taxes and shall not affect, or in any way be taken
into account in computing, any Member's Capital Account or share of Profits,
Losses, Distributions or other Company items pursuant to any provision of this
Agreement.
(f) The Board of Managers may, but shall not be obligated to, elect to
adjust the basis of the assets of the Company for federal income tax purposes in
accordance with Code Section 754.
Section 3.5 Curative Allocations. The allocations set forth in
--------------------
Section 3.3 (the "Regulatory Allocations") are intended to comply with certain
----------- ----------------------
requirements of Sections 1.704-1(b) and 1.704-2 of the Treasury Regulations.
The Regulatory Allocations may not be consistent with the manner in which the
Members intend to allocate Profit and Loss of the Company or make Company
distributions. Accordingly, notwithstanding the other provisions of this
Article III, but subject to the Regulatory Allocations, income, gain, deduction,
and loss shall be reallocated among the Members so as to eliminate the effect of
the Regulatory Allocations and thereby cause the respective Capital Accounts of
the Members to be in the amounts (or as close thereto as possible) they would
have been if Profit and Loss (and such other items of income, gain, deduction
and loss) had been allocated without reference to the Regulatory Allocations.
In general, the Members anticipate that this will be accomplished by specially
allocating other Profit and Loss (and such other items of income, gain,
deduction and loss) among the Members so that the net amount of the Regulatory
Allocations and such special allocations to each such Member is zero. In
addition, if in any Taxable Year or Fiscal Period there is a decrease in
partnership minimum gain, or in partner nonrecourse debt minimum gain, and
application of the minimum gain chargeback requirements set forth in Section
-------
3.3(a) or Section 3.3(b) would cause a distortion in the economic arrangement
------ --------------
among the Members, the Members may, if they do not expect that the Company will
have sufficient other income to correct such distortion, request the Internal
Revenue Service to waive either or both of such minimum gain chargeback
requirements. If such request is granted, this Agreement shall be applied in
such instance as if it did not contain such minimum gain chargeback requirement.
ARTICLE IV
THE PREFERRED UNITS
Section 4.1 Conversion.
----------
(a) Conversion Procedure.
--------------------
(i) At any time and from time to time, any holder of Preferred
Units may convert all or any portion of the Preferred Units (including any
fraction of a Unit) held by
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such holder into a number of Conversion Securities determined as follows:
(A) in the case of Series A Preferred Units, a number of Conversion
Securities computed by multiplying the number of Series A Preferred Units
to be converted by $1,000 and dividing the result by the Conversion Price
then in effect for the Series A Preferred Units, and (B) in the case of
Series B Preferred Units, a number of Conversion Securities computed by
multiplying the number of Series B Preferred Units to be converted by
$2,300 and dividing the result by the Conversion Price then in effect for
the Series B Preferred Units.
(ii) If any converting holder holds any Class B Senior Units, a
portion of such Class B Senior Units shall be redeemed simultaneously with,
and contingent upon, the consummation of a conversion of Preferred Units by
such holder equal to the product of (x) the number of Class B Senior Units
held by such converting holder immediately prior to such conversion times
-----
(y) the percentage of the Preferred Units held by such converting holder
immediately prior to such conversion that are being converted in such
conversion, at a price per Class B Senior Unit equal to the accrued but
unpaid Class B Senior Yield on such Class B Senior Unit (which price shall
be paid pursuant to Section 4.1(a)(v)(B)).
--------------------
(iii) Except as otherwise provided herein, each conversion of
Preferred Units shall be deemed to have been effected as of the close of
business on the date on which the certificate or certificates representing
the Preferred Units to be converted have been surrendered for conversion
(or, if none, the date on which a written notice of such conversion has
been presented) at the principal office of the Company. At the time any
such conversion has been effected, the rights of the holder of the
Preferred Units converted as a holder of Preferred Units shall cease and
the Person or Persons in whose name or names any certificate or
certificates for Conversion Securities are to be issued (or, if none, in
whose name or names such Conversion Securities are to be recorded in the
Company's records) upon such conversion shall be deemed to have become the
holder or holders of record of the Conversion Securities represented
thereby.
(iv) Notwithstanding any other provision hereof, if a conversion
of Preferred Units is to be made in connection with any transaction or
proposed transaction affecting the Company (including, without limitation,
a public offering of the Company's securities, change of control, or a
liquidation or dissolution), the conversion of any Preferred Units may, at
the election of the holder thereof, be conditioned upon the consummation of
such transaction, in which case such conversion shall be deemed to be
effective upon the consummation of such transaction or immediately prior
thereto (at the election of such holder).
(v) As soon as possible after a conversion has been effected (but
in any event within five business days in the case of subparagraph (A)
below), the Company shall deliver to the converting holder:
(A) if the Conversion Securities are certificated, a
certificate or certificates representing the number of Conversion
Securities issuable by reason of
-23-
such conversion in such name or names and such denomination or
denominations as the converting holder has specified;
(B) payment in cash of an amount equal to all accrued but
unpaid Preferred Yield with respect to each Preferred Unit converted
(plus, if applicable, the accrued but unpaid Class B Senior Yield with
respect to each Class B Senior Unit redeemed in connection with such
conversion); provided that if such conversion is in connection with a
--------
public offering of the Company's equity securities, all or any portion
of such Preferred Yield (and, if applicable, Class B Senior Yield) may
at the option of the converting holder be payable in the form of a
number of Common Units (or equivalent common equity securities of the
Company) equal to the quotient of (x) the amount of Preferred Yield
(and, if applicable, Class B Senior Yield) to be paid in the form of
Common Units (or other common equity securities), divided by (y) the
----------
gross offering price per Common Unit (or equivalent common equity
security) in such public offering); and
(C) if the Preferred Units are certificated, a certificate
representing any Preferred Units which were represented by the
certificate or certificates delivered to the Company in connection
with such conversion but which were not converted (and, if the Class B
Senior Units are certificated and any Class B Senior Units are
redeemed in connection with such conversion, a certificate
representing any Class B Senior Units which were represented by the
certificate or certificates delivered to the Company in connection
with such redemption but which were not redeemed).
(vi) The issuance of certificates (if any) for Conversion
Securities upon conversion of Preferred Units shall be made without charge
to the holders of such Preferred Units for any issuance tax in respect
thereof or other cost incurred by the Company in connection with such
conversion and the related issuance of Conversion Securities. Upon
conversion of each Preferred Unit, the Company shall take all such actions
as are necessary in order to insure that the Conversion Securities issuable
with respect to such conversion shall be validly issued, fully paid and
nonassessable, free and clear of all taxes, liens, charges and encumbrances
with respect to the issuance thereof.
(vii) The Company shall not close its books against the transfer
of Preferred Units or of Conversion Securities issued or issuable upon
conversion of Preferred Units in any manner which interferes with the
timely conversion of the Preferred Units. The Company shall assist and
cooperate with any holder of Preferred Units required to make any
governmental filings or obtain any governmental approval prior to or in
connection with any conversion of Preferred Units hereunder (including,
without limitation, making any filings required to be made by the Company).
(viii) The Company shall at all times reserve and keep available
out of its authorized but unissued shares of Conversion Securities, solely
for the purpose of issuance upon the conversion of the Preferred Units,
such number of Conversion Securities issuable
-24-
upon the conversion of all outstanding Preferred Units. All Conversion
Securities which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be necessary to
assure that all such shares of Conversion Securities may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which Conversion
Securities may be listed (except for official notice of issuance which
shall be immediately delivered by the Company upon each such issuance). The
Company shall not take any action which would cause the number of
authorized but unissued Conversion Securities to be less than the number of
such securities required to be reserved hereunder for issuance upon
conversion of the Preferred Units.
(b) Conversion Price.
----------------
(i) The initial Conversion Price for the Series A Preferred Units
shall be $796.97. The initial Conversion Price for the Series B Preferred
Units shall be $1,833.03. In order to prevent dilution of the conversion
rights granted under this Section 4.1, the Conversion Price for each series
-----------
of Preferred Units shall be subject to adjustment from time to time
pursuant to this Section 4.1(b).
--------------
(ii) If and whenever the Company issues or sells, or in
accordance with Section 4.1(c) is deemed to have issued or sold, any Common
--------------
Units for a consideration per Unit less than the Conversion Price for any
series of Preferred Units in effect as of the date of such issue or sale,
then immediately upon such issue or sale or deemed issue or sale the
Conversion Price for such series of Preferred Units shall be reduced to a
new Conversion Price determined by dividing (A) the sum of (1) the number
of Common Units Deemed Outstanding immediately prior to such issue or sale
multiplied by the Conversion Price for such series of Preferred Units in
-------------
effect as of the date of such issue or sale, plus (2) the consideration, if
----
any, received by the Company upon such issue or sale, by (B) the number of
--
Common Units Deemed Outstanding immediately after such issue or sale.
(iii) Notwithstanding the foregoing, there shall be no adjustment
to the Conversion Price hereunder with respect to (A) the issuance of
Common Units pursuant to Section 2.2(a) or (c) hereof, or (B) the granting
-------------- ---
of securities to Key Employees of the Company and its Subsidiaries, or the
issuance of Common Units upon exercise thereof, pursuant to the Company's
Permitted Securities Plan (as defined in the Equity Purchase Agreement).
(c) Effect on Conversion Price of Certain Events. For purposes of
--------------------------------------------
determining the adjusted Conversion Price under Section 4.1(b), the following
--------------
shall be applicable:
(i) Issuance of Rights or Options. If the Company in any manner
-----------------------------
grants or sells any Options and the price per Unit for which Common Units
are issuable upon the exercise of such Options, or upon conversion or
exchange of any Convertible Securities issuable upon exercise of such
Options, is less than the Conversion Price for any series of
-25-
Preferred Units in effect immediately prior to the time of the granting or
sale of such Options, then the total maximum number of Common Units
issuable upon the exercise of such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon
the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or sale of
such Options for such price per Unit. For purposes of this paragraph, the
"price per Unit for which Common Units are issuable" shall be determined by
dividing (A) the total amount, if any, received or receivable by the
Company as consideration for the granting or sale of such Options, plus the
minimum aggregate amount of additional consideration payable to the Company
upon exercise of all such Options, plus in the case of such Options which
relate to Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the issuance
or sale of such Convertible Securities and the conversion or exchange
thereof, by (B) the total maximum number of Common Units issuable upon the
exercise of such Options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such Options. No
further adjustment of the Conversion Price shall be made when Convertible
Securities are actually issued upon the exercise of such Options or when
Common Units are actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any
----------------------------------
manner issues or sells any Convertible Securities and the price per Unit
for which Common Units are issuable upon conversion or exchange thereof is
less than the Conversion Price for any series of Preferred Units in effect
immediately prior to the time of such issue or sale, then the maximum
number of Common Units issuable upon conversion or exchange of such
Convertible Securities shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per Unit. For the purposes of this
paragraph, the "price per Unit for which Common Units are issuable" shall
be determined by dividing (A) the total amount received or receivable by
the Company as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration,
if any, payable to the Company upon the conversion or exchange thereof, by
(B) the total maximum number of Common Units issuable upon the conversion
or exchange of all such Convertible Securities. No further adjustment of
the Conversion Price shall be made when Common Units are actually issued
upon the conversion or exchange of such Convertible Securities, and if any
such issue or sale of such Convertible Securities is made upon exercise of
any Options for which adjustments of the Conversion Price had been or are
to be made pursuant to other provisions of this Section 4.1, no further
-----------
adjustment of the Conversion Price shall be made by reason of such issue or
sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
-----------------------------------------
price provided for in any Options, the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities or
the rate at which any Convertible Securities are convertible into or
exchangeable for Common Units changes at any time, the Conversion
-26-
Price for each series of Preferred Units in effect at the time of such
change shall be immediately adjusted to the applicable Conversion Price
which would have been in effect for such series of Preferred Units at such
time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued or sold.
For purposes of this Section 4.1(c), if the terms of any Option or
--------------
Convertible Security which was outstanding as of the date of issuance of
the Preferred Units are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the Common
Units deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such change; provided that
--------
no such change shall at any time cause the Conversion Price hereunder for
any series of Preferred Units to be increased.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option or the termination of any
----------
right to convert or exchange any Convertible Security without the exercise
of any such Option or right, the Conversion Price for each series of
Preferred Units then in effect hereunder shall be adjusted immediately to
the applicable Conversion Price which would have been in effect for such
series of Preferred Units at the time of such expiration or termination had
such Option or Convertible Security, to the extent outstanding immediately
prior to such expiration or termination, never been issued. For purposes
of this Section 4.1(c), the expiration or termination of any Option or
--------------
Convertible Security which was outstanding as of the date of issuance of
the Preferred Units shall not cause the Conversion Price hereunder for any
series of Preferred Units to be adjusted unless, and only to the extent
that, a change in the terms of such Option or Convertible Security caused
it to be deemed to have been issued after the date of issuance of the
Preferred Units.
(v) Calculation of Consideration Received. If any Common Unit,
-------------------------------------
Option or Convertible Security is issued or sold or deemed to have been
issued or sold for cash, the consideration received therefor shall be
deemed to be the amount received by the Company therefor (net of discounts,
commissions and related expenses). If any Common Unit, Option or
Convertible Security is issued or sold for a consideration other than cash,
the amount of the consideration other than cash received by the Company
shall be the Fair Market Value of such consideration. If any Common Unit,
Option or Convertible Security is issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the surviving
entity, the amount of consideration therefor shall be deemed to be the Fair
Market Value of such portion of the net assets and business of the non-
surviving entity as is attributable to such Common Unit, Option or
Convertible Security, as the case may be. The Fair Market Value of such
consideration shall be determined in accordance with the provisions of
Section 7.3.
-----------
(vi) Integrated Transactions. In case any Option is issued in
-----------------------
connection with the issue or sale of other securities of the Company,
together constituting one integrated
-27-
transaction in which no specific consideration is allocated to such Option
by the parties thereto, the Option shall be deemed to have been issued
without consideration.
(vii) Treasury Securities. The number of Common Units
-------------------
outstanding at any given time shall not include securities owned or held by
or for the account of the Company or any Subsidiary, and the disposition of
any Units so owned or held shall be considered an issue or sale of Common
Units.
(viii) Record Date. If the Company takes a record of the holders
-----------
of Common Units for the purpose of entitling them (A) to receive a dividend
or other distribution payable in Common Units, Options or in Convertible
Securities or (B) to subscribe for or purchase Common Units, Options or
Convertible Securities, then such record date shall be deemed to be the
date of the issue or sale of the Common Units deemed to have been issued or
sold upon the declaration of such dividend or upon the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
(d) Subdivision or Combination of Common Units. If the Company at any
------------------------------------------
time subdivides (by any securities split, securities dividend, recapitalization
or otherwise) one or more classes of its outstanding Common Units into a greater
number of Units, the Conversion Price for each series of Preferred Units in
effect immediately prior to such subdivision shall be proportionately reduced,
and if the Company at any time combines (by reverse securities split, securities
combination or otherwise) one or more classes of its outstanding Common Units
into a smaller number of Units, the Conversion Price for each series of
Preferred Units in effect immediately prior to such combination shall be
proportionately increased.
(e) Reorganization, Reclassification, Consolidation, Merger or Sale.
---------------------------------------------------------------
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Company's assets or other transaction,
in each case which is effected in such a manner that the holders of Common Units
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Units, is
referred to herein as an "Organic Change". Prior to the consummation of any
--------------
Organic Change, the Company shall make appropriate provisions (in form and
substance satisfactory to the holders of a majority of the Preferred Units then
outstanding, in their good faith judgment) to insure that each of the holders of
Preferred Units shall thereafter have the right to acquire and receive, in lieu
of or in addition to (as the case may be) the Conversion Securities immediately
theretofore acquirable and receivable upon the conversion of such holder's
Preferred Units, such shares of stock, securities or assets as such holder would
have received in connection with such Organic Change if such holder had
converted its Preferred Units immediately prior to such Organic Change. In each
such case, the Company shall also make appropriate provisions (in form and
substance satisfactory to the holders of a majority of the Preferred Units then
outstanding, in their good faith judgment) to insure that the provisions of this
Section 4.1 and Section 4.2 hereof shall thereafter be applicable to the
----------- -----------
Preferred Units (including, in the case of any such consolidation, merger or
sale in which the successor entity or purchasing entity is other than the
Company, an immediate adjustment of the Conversion Price for
-28-
each series of Preferred Units and a corresponding immediate adjustment in the
number of Conversion Securities acquirable and receivable upon conversion of
such series of Preferred Units, if the value for the Common Units reflected by
the terms of such consolidation, merger, or sale is less than the Conversion
Price for such series of Preferred Units in effect immediately prior to such
consolidation, merger or sale). The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the holders of a majority of the Preferred
Units then outstanding, in their good faith judgment) the obligation to deliver
to each such holder such shares of stock, securities or assets as, in accordance
with the foregoing provisions, such holder may be entitled to acquire.
(f) Certain Events. If any event occurs of the type contemplated by
--------------
the provisions of this Section 4.1, but not expressly provided for by such
-----------
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the
Board of Managers shall make an appropriate adjustment in the Conversion Price
for each series of Preferred Units so as to protect the rights of the holders of
Preferred Units; provided that no such adjustment shall increase the Conversion
--------
Price for any series of Preferred Units as otherwise determined pursuant to this
Section 4.1 or decrease the number of Conversion Securities issuable upon
-----------
conversion of each Preferred Unit.
(g) Notices.
-------
(i) Immediately upon any adjustment of the Conversion Price for
any series of Preferred Units, the Company shall give written notice
thereof to all holders of Preferred Units, setting forth in reasonable
detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to all holders of
Preferred Units at least 20 days prior to the date on which the Company
closes its books or takes a record (a) with respect to any Distribution
upon Common Units, (b) with respect to any pro rata subscription offer to
holders of Common Units, or (c) for determining rights to vote with respect
to any Organic Change, dissolution or liquidation.
(iii) The Company shall also give written notice to the holders
of Preferred Units at least 20 days prior to the date on which any Organic
Change shall take place.
(h) No Avoidance. If the Company shall enter into any transaction for
------------
the purpose of avoiding the application of the provisions of this Section 4.1,
-----------
the benefits provided by such provisions shall nevertheless apply and be
preserved.
(i) Mandatory Conversion. All holders of Preferred Units shall be
--------------------
required to convert the Preferred Units held by each such holder in accordance
with the provisions of this Section 4.1 (A) contemporaneously with any Qualified
-----------
Public Offering, or (B) upon the affirmative
-29-
vote of the holders of at least 80% of the Preferred Units then outstanding. Any
mandatory conversion under clause (A) of the immediately preceding sentence
shall only be effected at the time of and subject to the closing of the sale of
shares pursuant to such Qualified Public Offering and upon written notice of
such mandatory conversion delivered by the Company to all holders of Preferred
Units at least seven days prior to such closing.
Section 4.2 Purchase Rights. If at any time the Company grants,
---------------
issues, distributes or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Units (the "Purchase Rights"), then each holder
---------------
of Preferred Units shall be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of Conversion Securities acquirable
upon conversion of such holder's Preferred Units immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or if no such record is taken, the date as of which the record holders of Common
Units are to be determined for the grant, issue or sale of such Purchase Rights.
Section 4.3 Acceleration upon Occurrence of Certain Proceedings.
---------------------------------------------------
The Preferred Units and the Class B Senior Units shall not be redeemable, except
as set forth in this Section 4.3 (and, in the case of Class B Senior Units,
-----------
Section 4.1). If at any time the Company makes an assignment for the benefit of
-----------
creditors or admits in writing its inability to pay its debts generally as they
become due; or an order, judgment or decree is entered adjudicating the Company
bankrupt or insolvent; or any order for relief with respect to the Company is
entered under the Federal Bankruptcy Code; or the Company petitions or applies
to any tribunal for the appointment of a custodian, trustee, receiver or
liquidator of the Company or of any substantial part of the assets of the
Company, or commences any proceeding (other than a proceeding for the voluntary
liquidation and dissolution of a Subsidiary) relating to the Company under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the Company
and either (a) the Company or any such Subsidiary by any act indicates its
approval thereof, consent thereto or acquiescence therein or (b) such petition,
application or proceeding is not dismissed within 60 days (any of the foregoing,
a "Proceeding"), then the holders of a majority of the Preferred Units then
----------
outstanding may demand (by written notice delivered to the Company) immediate
redemption of all or any portion of the Preferred Units and Class B Senior Units
owned by such holders at a price per Unit equal to the Liquidation Value (or
Class B Senior Value, as applicable) thereof (plus all accrued and unpaid
Preferred Yield (or Class B Senior Yield, as applicable) thereon).
-30-
ARTICLE V
MANAGEMENT
The provisions of this Article V are subject to certain voting agreements and
provisions relating to the composition of, and the election, term, resignation,
removal, and replacement of representatives to, the Board of Managers and other
matters set forth in the Securityholders Agreement (as defined herein).
Section 5.1 Management Authority. Except as otherwise expressly
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provided in this Agreement, (i) the Board of Managers shall conduct, direct, and
exercise full control over all activities of the Company, (ii) all management
powers over the business and affairs of the Company shall be exclusively vested
in the Board of Managers, and (iii) the Board of Managers shall have the sole
power to bind or take any action on behalf of the Company, or to exercise any
rights and powers (including, without limitation, the rights and powers to take
certain actions, give or withhold certain consents or approvals, or make certain
determinations, opinions, judgments, or other decisions) granted to the Company
under this Agreement or any other agreement, instrument, or other document to
which the Company is a party. No Representative shall individually have the
authority to bind the Company in any way, to take any action that would be (or
could be construed as) binding on the Company, or to make any expenditures on
behalf of the Company, unless such authority has been granted to such
Representative by the Board.
Section 5.2 Delegation of Authority. The Board of Managers may,
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from time to time, (i) appoint one or more Persons to be officers of the Company
and may assign such titles and functions, and delegate such authority and
duties, to such officers as it shall deem necessary or desirable, (ii) appoint,
employ or otherwise contract with such other Persons for the transaction of the
business of the Company or the performance of services for or on behalf of the
Company as it shall determine in its sole discretion, and (iii) delegate to any
Person (including any Member or officer of the Company or any Representative,
and including through the creation of one or more committees) such authority and
powers to act on behalf of the Company as it shall deem advisable in its sole
discretion. Any appointment, employment, or other delegation pursuant to this
Section 5.2 may be revoked at any time and for any or no reason by the Board of
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Managers in its sole discretion.
Section 5.3 Composition; Meetings; Actions.
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(a) The number of Representatives which shall constitute the Board of
Managers as of the date of execution of this Agreement shall be eight (8).
Thereafter, the number of Representatives shall be established from time to time
by a Required Vote. The Representatives shall be elected to the Board of
Managers by a Required Vote. Each Representative shall hold office until a
successor is appointed or until his or her earlier death, resignation or removal
as herein provided. Any Representative or the entire Board of Managers may be
removed at any time, with or without cause, by a Required Vote. Vacancies and
newly created Representative positions resulting from any increase in the
authorized number of Representatives may be filled as determined by a
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Required Vote. Each Representative so chosen shall hold office until a successor
is appointed or until his or her earlier death, resignation or removal as herein
provided.
(b) A majority of the total number of Representatives present in
person or by proxy shall constitute a quorum for the transaction of business.
The vote of a majority of the Representatives present in person or by proxy at a
meeting of the Board of Managers at which a quorum is present shall be the act
of the Board of Managers. Each Representative shall be entitled to one vote on
all matters submitted to a vote of the Board of Managers; provided that so long
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as (and solely to the extent) required by the terms of the Securityholders
Agreement, one of the MDCP Representatives (as such term is defined in the
Securityholders Agreement) (which MDCP Representative shall be designated from
among the MDCP Representations present in person or by proxy for such vote by
the MDCP Representatives present in person (or, if none, by proxy) for such
vote) shall be entitled to two votes (and, during such time as such MDCP
Representative is entitled to two votes, a "majority" of the Representatives
shall for all purposes (including determinations hereunder of the existence of a
quorum or of a majority vote required for action by the Board of Managers) mean
Representatives entitled to cast a majority of the total votes that may be cast
by all Representatives). Notice shall be given at least 48 hours prior to any
meeting of the Board of Managers. Notice may be waived before or after a
meeting or by attendance at such meeting without protest as to the adequacy of
notice. Notice shall be given in the manner described in Section 10.12 and
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shall be deemed received as provided in Section 10.12. Representatives may
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participate in a meeting of the Board of Managers by means of a telephone or
other teleconferencing or videoconferencing equipment, and such participation
shall constitute presence in person at such meeting. Any action required or
permitted to be taken by the Board of Managers at a meeting may be taken without
a meeting with the unanimous written consent of all Representatives serving
thereon. The Board of Managers may adopt such other procedures governing
meetings and the conduct of business as it shall deem appropriate.
Section 5.4 Indemnification of Members, Representatives, Officers,
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and Others.
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(a) The Company hereby agrees to indemnify and hold harmless any
Person (each an "Indemnified Person") to the fullest extent permitted under the
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Act, as the same now exists or may hereafter be amended, substituted or replaced
(but, in the case of any such amendment, substitution or replacement only to the
extent that such amendment, substitution or replacement permits the Company to
provide broader indemnification rights than the Company is providing immediately
prior to such amendment), against all expenses, liabilities and losses
(including attorney fees, judgments, fines, excise taxes or penalties)
reasonably incurred or suffered by such Person (or one or more of such Person's
Affiliates) by reason of the fact that such Person is or was a Member or is or
was serving as a Representative, officer, employee or agent of the Company or is
or was serving at the request of the Company as a representative, officer,
director, principal, member, employee or agent of another partnership,
corporation, joint venture, limited liability company, trust or other
enterprise; provided that (unless the Board of Managers otherwise consents) no
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Indemnified Person shall be indemnified for any expenses, liabilities and losses
suffered that are attributable to such Indemnified Person's or its Affiliates'
gross negligence, willful misconduct or knowing violation of law, or for any
present or future breaches of any representations, warranties or covenants by
such
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Indemnified Person or its Affiliates contained herein or in any other agreement
with the Company, or for any Losses incurred by the Company. Expenses, including
attorney fees, incurred by any such Indemnified Person in defending a proceeding
shall be paid by the Company in advance of the final disposition of such
proceeding, including any appeal therefrom, upon receipt of an undertaking by or
on behalf of such Indemnified Person to repay such amount if it shall ultimately
be determined that such Indemnified Person is not entitled to be indemnified by
the Company.
(b) The right to indemnification and the advancement of expenses
conferred in this Section 5.4 shall not be exclusive of any other right which
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any Person may have or hereafter acquire under any statute, agreement, by-law,
vote of Representatives or otherwise.
(c) The Company may maintain insurance, at its expense, to protect any
Indemnified Person against any expense, liability or loss described in paragraph
(a) above whether or not the Company would have the power to indemnify such
Indemnified Person against such expense, liability or loss under the provisions
of this Section 5.4.
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(d) Notwithstanding anything contained herein to the contrary
(including in this Section 5.4), any indemnity by the Company relating to the
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matters covered in this Section 5.4 shall be provided out of and to the extent
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of Company assets only and no Member (unless such Member otherwise agrees in
writing or is found in a final decision by a court of competent jurisdiction to
have personal liability on account thereof) shall have personal liability on
account thereof or shall be required to make additional Capital Contributions to
help satisfy such indemnity of the Company.
(e) If this Section 5.4 or any portion hereof shall be invalidated on
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any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify and hold harmless each Indemnified Person pursuant to
this Section 5.4 to the fullest extent permitted by any applicable portion of
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this Section 5.4 that shall not have been invalidated and to the fullest extent
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permitted by applicable law.
ARTICLE VI
MEMBERS
Section 6.1 Limitation of Liability. Except as otherwise provided
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by applicable laws, the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and no Member or Representative
shall be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being a Member or acting as a Representative of the
Company; provided that a Member shall be required to return to the Company any
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Distribution made to it in clear and manifest accounting or similar error. The
immediately preceding sentence shall constitute a compromise to which all
Members have consented within the meaning of the Act. Notwithstanding anything
contained herein to the contrary, the failure of the Company to observe any
formalities or requirements relating to the exercise of its powers or management
of its business and affairs under
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this Agreement or the Act shall not be grounds for imposing personal liability
on the Members for liabilities of the Company.
Section 6.2 Lack of Authority of Individual Members. Unless
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delegated such power in accordance with Section 5.2, no Member shall in its
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capacity as such have the authority or power to act for or on behalf of the
Company in any manner, to do any act that would be (or could be construed as)
binding on the Company, or to make any expenditures on behalf of the Company,
and the Members hereby consent to the exercise by the Board of Managers of the
powers and rights conferred upon it by law and this Agreement.
Section 6.3 Transfer of Company Interests; Withdrawal and Removal.
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(a) THE TRANSFER OF INTERESTS IN THE COMPANY ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER CONTAINED IN THE EQUITY PURCHASE AGREEMENT, THE
SECURITYHOLDERS AGREEMENT, THE PERFORMANCE VESTING AGREEMENT, AND THE EXECUTIVE
SECURITIES AGREEMENTS. IN ADDITION, NO MEMBER MAY TRANSFER ALL OR ANY PORTION
OF SUCH MEMBER'S INTEREST IN THE COMPANY WITHOUT THE PRIOR WRITTEN CONSENT OF
THE BOARD OF MANAGERS (WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD) IF SUCH
TRANSFER WOULD CAUSE THE COMPANY TO HAVE MORE THAN 100 PARTNERS WITHIN THE
MEANING OF TREASURY REGULATION 1.7704-1(h).
(b) No Member may sell, assign, pledge, transfer or otherwise dispose
of all or any portion of such Member's Units (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
(a "Transfer"), unless (i) such Transfer complies with the relevant provisions
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of any agreements to which the Company and such Member are parties, and (ii) the
transferee furnishes to the Company (A) a letter of acceptance, in form
reasonably satisfactory to the Board of Managers, of all the terms and
conditions of this Agreement and (B) such other documents, instruments, or
certificates as shall in good faith be deemed necessary or appropriate by the
Board of Managers in order to effect such Person's admission as a Member.
(c) Any attempted Transfer which violates the provisions of this
Section 6.3 shall be void and the purported buyer, assignee, transferee,
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pledgee, mortgagee or other recipient shall have no interest in or rights to
Company assets, profits, losses or distributions, and neither the Members nor
the Company shall be required to recognize any such interest or rights.
(d) A Transfer permitted under this Section 6.3 shall be effective as
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of the date of assignment and compliance with the conditions to such Transfer
set forth herein, and such Transfer shall be shown on the books and records of
the Company. Profits, Losses, and other Company items shall be allocated
between the transferor and the transferee according to Code Section 706.
Distributions made with respect to the transferred Units before the effective
date of such Transfer shall be paid to the transferor, and Distributions made
with respect to such transferred Units after such date shall be paid to the
transferee.
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(e) Any Member who shall transfer any Units shall cease to be the
holder of such Units and, if such Units constitute all of such Member's Company
interests, shall cease to be a Member, and such transferring Member shall no
longer have any rights or privileges hereunder with respect to such transferred
Units; provided that (i) the applicable provisions of Sections 5.4 and 6.1 shall
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continue to inure to such Person's benefit, (ii) such Person shall not be
relieved of any liability of such Person to the Company or the other Members
with respect to the transferred Units that may exist on the transfer date or
that is otherwise specified in the Act and incorporated into this Agreement or
for any present or future breaches of any representations, warranties, or
covenants by such Person contained herein or in the other agreements to which
such Person and the Company are parties.
(f) No Member may, or may be required to, withdraw from the Company,
except upon a Transfer of such Member's Units in accordance with this Section
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6.3 or upon a permitted repurchase or redemption of such Member's Units pursuant
---
to the provisions of this Agreement or any other agreement to which the Company
and such Member are parties.
(g) No Person shall be admitted as a Member of the Company, except
upon a Transfer of Units to such Person in accordance with this Section 6.3 or
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upon the issuance of Units to such Person in accordance with the provisions of
Section 2.2.
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Section 6.4 No Right of Partition. No current or former Member
---------------------
shall have the right to seek or obtain partition by court decree or operation of
law of any Company property, or the right to own or use particular or individual
assets of the Company.
Section 6.5 Indemnification and Reimbursement for Payments on
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Behalf of a Member. Subject to the provisions of the Employment Agreements, if
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the Company is obligated to pay any amount to a governmental body (or otherwise
makes a payment) because of a Member's status or otherwise specifically
attributable to a Member (including, without limitation, federal withholding
taxes with respect to foreign members, state personal property taxes, state
unincorporated business taxes, etc.), then such Member shall indemnify the
Company in full for the entire amount paid (including, without limitation, any
interest, penalties and expenses associated with such payments). The Board of
Managers may offset Distributions to which a Member is otherwise entitled under
this Agreement against such Person's obligation to indemnify the Company under
this section.
Section 6.6 Certain Duties of Representatives and Officers.
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(a) Except as otherwise specifically provided in this Agreement or in
the other agreements contemplated hereby, each of the Company's Representatives
and officers shall owe to the Company and the Members the same duties and
obligations that would be owed to a corporation organized under the Delaware
General Corporation Law by its directors and officers (as such duties and
obligations are defined, described, and explained under the laws of the State of
Delaware); provided that, to the fullest extent permitted by the Delaware
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General Corporation Law as the same exists or may hereafter be amended, a
Representative or officer shall not be liable to the Company
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or its Members for monetary damages for any breach of fiduciary duty as a
Representative or officer, and any repeal or modification of this Section 6.6
shall not adversely affect any right or protection of a Representative or
officer of the Company existing at the time of such repeal or modification.
(b) To the extent that any Representative or officer or Member has
duties (including fiduciary duties) and liabilities relating thereto to the
Company or to any Member, (i) any such Representative, officer or Member acting
under this Agreement shall not be liable to the Company or to any Member for
such Person's good faith reliance on the provisions of this Agreement, the
records of the Company, and such information, opinions, reports, or statements
presented to the Company by any of the Company's officers or employees, by
committees of the Board of Managers, or by any other Person as to matters such
Representative, officer, or Member reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Company, and (ii) the Representative's,
officer's, or Member's duties and liabilities are restricted by the provisions
of this Agreement to the extent that such provisions restrict the duties and
liabilities of the Representatives, officers, or Members otherwise existing at
law or in equity.
Section 6.7 Confidentiality. Each Member recognizes and
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acknowledges that it may receive certain confidential and proprietary
information and trade secrets of the Company and its Subsidiaries, including but
not limited to confidential information of the Company and its Subsidiaries
regarding identifiable, specific and discrete business opportunities being
pursued by the Company or its Subsidiaries (the "Confidential Information").
------------------------
Each Member (on behalf of itself and, to the extent that such Member would be
responsible for the acts of the following persons under principles of agency
law, its directors, officers, shareholders, partners, employees, agents and
members) agrees that it will not, during or after the term of this Agreement,
whether through an Affiliate or otherwise, take commercial or proprietary
advantage of or profit from any Confidential Information or disclose
Confidential Information to any Person for any reason or purpose whatsoever,
except (i) to authorized representatives and employees of the Company or its
Subsidiaries and as otherwise may be proper in the course of performing such
Member's obligations, or enforcing such Member's rights, under this Agreement;
(ii) as part of such Member's normal reporting or review procedure, or in
connection with such Member's or its Affiliates' normal fund raising, marketing,
informational or reporting activities, or to such Member's (or any of its
Affiliates') auditors, attorneys or other agents; (iii) to any bona fide
prospective purchaser of the equity or assets of such Member or its Affiliates
or the Units held by such Member, or prospective merger partner of such Member
or its Affiliates, provided that such purchaser or merger partner agrees to be
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bound by the provisions of this Section 6.7; or (iv) as is required to be
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disclosed by order of a court of competent jurisdiction, administrative body or
governmental body, or by subpoena, summons or legal process, or by law, rule or
regulation, provided that the Member required to make such disclosure shall
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provide to the Board of Managers prompt notice of any such disclosure. For
purposes of this Section, "Confidential Information" shall not include any
information: (x) of which such Person (or its Affiliates) became aware prior to
its affiliation with the Company, (y) of which such Person (or its Affiliates)
learns from sources other than the Company or its Subsidiaries, whether prior to
or after such information is actually disclosed by the Company or its
Subsidiaries, or (z) which is disclosed in a prospectus or other documents
available for dissemination to the
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public. Nothing in this Section 6.7 shall in any way limit or otherwise modify
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any confidentiality covenants entered into by any Member pursuant to any other
agreement to which such Member and the Company or any of its Subsidiaries are
parties.
Section 6.8 Voting Rights. On all matters which are required
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pursuant to this Agreement or the Act or other applicable law to be voted on by
the Company's Members, the holders of Common Units and the holders of Preferred
Units shall be entitled to vote on all such matters voting together as a single
class, with each Common Unit entitled to one vote per Common Unit and each
Preferred Unit entitled to one vote for each Common Unit issuable upon
conversion of such Preferred Unit as of the record date for such vote (or, if no
record date is specified, as of the date of such vote). Except with respect to
the proviso in Section 10.5 or as otherwise required by law, the holders of
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Senior Units shall have no right to vote such Units on any matter submitted to
the Company's Members for a vote.
ARTICLE VII
DISSOLUTION AND LIQUIDATION
Section 7.1 Dissolution. The Company shall be dissolved, and its
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affairs shall be wound up and terminated, upon:
(a) the affirmative vote of the Board of Managers, together with a
Required Vote of the Members, approving such dissolution and liquidation; or
(b) an administrative dissolution or the entry of a decree of judicial
dissolution of the Company under Section 18-802 of the Act.
Except as set forth above or as otherwise required by law, the Company is
intended to have perpetual existence. The Company shall not be dissolved by the
admission of additional or substitute Members or by an Event of Withdrawal, and
upon and after any such admission or event the Company shall continue in
existence subject to the terms and conditions of this Agreement.
Section 7.2 Liquidation of Company Interests.
--------------------------------
(a) Upon dissolution, the Company shall be liquidated in an orderly
manner. The Board of Managers shall act (or it may appoint one or more Members,
Representatives, officers, or other Persons to act) as the liquidators to wind
up the affairs of the Company pursuant to this Agreement and terminate the
Company. The costs of liquidation shall be borne by the Company. Prior to final
distribution and termination, the liquidators shall continue to operate the
Company and its assets with all of the power and authority of the Board. The
steps to be accomplished by the liquidators are as follows:
(i) the liquidators shall pay, satisfy and discharge all debts,
obligations, and other liabilities of the Company to its creditors
(including, without limitation, all sales
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commissions or other expenses incurred in liquidation) or otherwise make
adequate provision for payment and discharge thereof (including, without
limitation, establishing cash reserves to be held in escrow for contingent
or unforeseen liabilities of the Company, in such amounts and for such
holding periods as the liquidators may reasonably determine); and
(ii) after payment or provision for payment of all of the
Company's liabilities has been made in accordance with subparagraph (i),
(A) a final performance vesting determination shall be made under the
Performance Vesting Agreement, if it remains in effect, (B) a final
allocation of all items of income, gain, loss, and expense shall be made in
accordance with Section 3.2 hereof, and (C) all remaining assets of the
-----------
Company shall be distributed to the Members in accordance with Section
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3.1(c). Any non-cash assets distributed to the Members shall first be
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written up or down to their Fair Market Value, thus creating Profit or Loss
(if any), which shall be allocated in accordance with Section 3.2.
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(b) In making distributions, the liquidators shall allocate each type
of Company assets among the Members ratably based upon the aggregate amounts to
be distributed with respect to the Units held by each such Member.
(c) The distribution of cash and/or property to a Member in accordance
with the provisions of this Section 6.2 constitutes a complete return to such
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Member of its Capital Contributions and a complete distribution to the Member of
its interest in the Company and the Company's property. This paragraph
constitutes a compromise to which all Members have consented within the meaning
of the Act.
(d) Upon completion of the distribution of the Company's assets as
provided herein, the Company shall be terminated (and the Company shall not be
terminated prior to such time), and the Board of Managers (or such other Person
or Persons as the Act may require or permit) shall file a certificate of
cancellation with the Secretary of State of Delaware, cancel any other filings
made pursuant to this Agreement that are or should be canceled and take all such
other actions as may be necessary to terminate the Company. The Company shall
be deemed to continue in existence for all purposes of this Agreement until it
is terminated pursuant to this Section 7.2(d).
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(e) A reasonable time shall be allowed for the orderly winding up of
the business and affairs of the Company and the liquidation of its assets
pursuant to this Section 7.2 in order to minimize any losses otherwise attendant
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upon such winding up.
(f) The liquidators shall not be personally liable for the return of
Capital Contributions or any portion thereof to any Member (it being understood
that any such return shall be made solely from Company assets).
Section 7.3 Valuation.
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(a) The "Fair Market Value" of any assets to be valued under this
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Agreement shall be determined in accordance with this Section 7.3.
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(b) The Fair Market Value of any asset constituting cash or cash
equivalents shall be equal to the amount of such cash or cash equivalents.
(c) The Fair Market Value of any asset constituting publicly traded
securities shall be the average, over a period of 21 days consisting of the date
of valuation and the 20 consecutive business days prior to that date, of the
average of the closing prices of the sales of such securities on the primary
securities exchange on which such securities may at that time be listed, or, if
there have been no sales on such exchange on any day, the average of the highest
bid and lowest asked prices on such exchanges at the end of such day, or, if on
any day such securities are not so listed, the average of the representative bid
and asked prices quoted in the Nasdaq System as of 4:00 P.M., New York time, or,
if on any day such securities are not quoted in the Nasdaq System, the average
of the highest bid and lowest asked prices on such day in the domestic over-the-
counter market as reported by the National Quotation Bureau Incorporated, or any
similar successor organization. Notwithstanding the foregoing, in the event that
the publicly traded securities in question cannot be immediately sold in the
public market due to holding period and/or volume limitations under SEC Rule
144, the Fair Market Value of such securities shall be equal to 75% of the value
determined pursuant to the preceding sentence.
(d) The Fair Market Value of any assets other than cash, cash
equivalents, or publicly traded securities shall be the fair value of such
assets, determined on the basis of an orderly, arm's length sale (structured to
produce the highest price for such assets) to a willing, unaffiliated buyer (or
to a willing affiliated strategic buyer, provided that Fair Market Value shall
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not include any premium that such an affiliated strategic buyer would be willing
to pay to the extent such premium is attributable solely to such Person's then-
current affiliation, unless such Person has made a fully financed, firm
commitment offer (with no material conditions) to purchase such assets at a
price that includes such premium), taking into account all relevant factors
determinative of value. Such fair value shall be determined jointly by the
Company, the holders of a majority of the Preferred Units then outstanding, and
the holders of a majority of the Common Units then outstanding. If such parties
are unable to reach agreement within a reasonable period of time, such fair
value shall be determined by an independent appraiser experienced in valuing the
type of assets to be valued, which appraiser shall be jointly selected by the
Company, the holders of a majority of the Preferred Units then outstanding, and
the holders of a majority of the Common Units then outstanding. The
determination of such appraiser shall be final and binding on all parties, and
the fees and expenses of such appraiser shall be borne by the Company.
ARTICLE VII
BOOKS OF ACCOUNT
Section 8.1 Records and Accounting. The Company shall maintain
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complete and accurate books of account of the Company's affairs at the Company's
principal office, which books shall be open to inspection by any Member (or such
Member's authorized representative) at any time during ordinary business hours.
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Section 8.2 Bank Accounts. The Company may establish accounts for
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the deposit of Company funds, in such types and at such institutions, as shall
be determined from time to time by the Board of Managers.
Section 8.3 Fiscal Year. The Fiscal Year of the Company shall be
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the 12-month period ending on December 31 of each calendar year, or such other
annual accounting period as may be established by the Board of Managers.
Section 8.4 Tax Elections. The Taxable Year of the Company shall
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be the same as the Company's Fiscal Year, unless the Board of Managers shall
determine otherwise in its sole discretion and in compliance with applicable
laws. The Board of Managers shall in its sole discretion determine whether to
make or revoke any available election pursuant to the Code. Each Member will
upon request supply any information necessary to give proper effect to any such
election.
Section 8.5 Tax Reports. The Company shall provide to each Member
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within 75 days after the end of each Taxable Year, the Company's tax return and
form K-1 for such Taxable Year, and such other information as may be necessary
for the preparation of each such Member's United States federal and state income
tax returns.
Section 8.6 Tax Controversies. The Member having the right to cast
-----------------
the greatest number of votes in any vote of the Members pursuant to Section 6.8
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shall be designated the Tax Matters Member and shall be authorized and required
to represent the Company (at the Company's expense) in connection with all
examinations of the Company's affairs by tax authorities, including resulting
administrative and judicial proceedings, and to expend Company funds for
professional services and other expenses reasonably incurred in connection
therewith. Each Member agrees to cooperate with the Company and to do or
refrain from doing any or all things reasonably requested by the Company with
respect to the conduct of such proceedings. The Tax Matters Member shall keep
all Members fully informed of the progress of any examinations, audits or other
proceedings, and all Members shall have the right to participate in any such
examinations, audits or other proceedings. Notwithstanding the foregoing, the
Tax Matters Member shall not settle or otherwise compromise any issue in any
such examination, audit or other proceeding without first obtaining approval of
the Board of Managers.
Section 8.7 Subpart F Income. The Company shall use its reasonable
----------------
best efforts to cause its Subsidiaries to avoid recognizing income that would be
includable by the Company and its Members under Code (S)951; provided that the
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Company and its Subsidiaries shall be free to take actions which will result in
income includable by the Company and its Members so long as the Company pays tax
distributions to the Members with respect to such income under Section 3.1(b).
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ARTICLE IX
POWER OF ATTORNEY
Each of the undersigned does hereby constitute and appoint each
Representative and liquidator with full power to act without the others (subject
to the provisions of Article V hereof), as such Member's true and lawful
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representative and attorney-in-fact, in such Member's name, place and stead, to
make, execute, sign, acknowledge and deliver or file in such form and substance
as is approved by the Board of Managers (a) all instruments, documents and
certificates which may from time to time be required by any law to effectuate,
implement and continue the valid and subsisting existence of the Company, or to
qualify or continue the qualification of the Company in the State of Delaware
and in all jurisdictions in which the Company may conduct business or own
property, and any amendment to, modification to, restatement of or cancellation
of any such instrument, document or certificate, (b) all instruments which the
Board of Managers shall deem appropriate to reflect any amendment, change,
modification, or restatement of this Agreement approved in accordance with the
terms hereof, (c) all conveyances and other instruments, documents and
certificates which may be required to effectuate the dissolution and termination
of the Company, and (d) all instruments relating to the admission, withdrawal,
or substitution of any Member in accordance with the terms hereof; provided,
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however, that the foregoing power of attorney is limited to the performance of
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ministerial acts only and shall not extend to material matters of governance or
economic substance. The powers of attorney granted herein shall be deemed to be
coupled with an interest, shall be irrevocable, and shall survive the death,
disability, incompetency, bankruptcy, insolvency or termination of any Member
and the Transfer of all or any portion of such Member's Company interest, and
shall extend to such Member's heirs, successors, assigns, and personal
representatives.
ARTICLE X
MISCELLANEOUS
Section 10. Conversion of the Company into a "C" Corporation. At
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any time after the date hereof, upon the occurrence of a Qualified Public
Offering of the Company's securities, the Company will (unless otherwise
determined by the Board of Managers and the Required Vote of the Members) be
converted (whether by merger, consolidation, or otherwise) into a corporation
(as such term is used in Subchapter C of the Code, (S)(S)301, et seq.).
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Pursuant to such conversion:
(i) each holder of Preferred Units shall receive in exchange for
such Preferred Units a number of shares of convertible preferred stock of
the Company (having rights and preferences substantially identical to the
Preferred Units) equal to the product of (x) the total number of shares of
convertible preferred stock issued in such conversion times (y) a fraction,
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the numerator of which is the number of Preferred Units held by such holder
immediately prior to such conversion, and the denominator of which is the
total number of Preferred Units outstanding immediately prior to such
conversion. Each share of convertible preferred stock received in such
conversion shall, as of immediately after such conversion,
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be deemed to have a liquidation value and accrued, paid, unpaid, and
accumulated dividends thereon equal to the respective Liquidation Value and
the accrued, paid, unpaid, and accumulated Preferred Yield existing as of
immediately prior to such conversion with respect to the Preferred Units
exchanged in such conversion for such share of preferred stock;
(ii) each holder of Common Units shall receive in exchange for
such Common Units a number of shares of common stock of the Company (having
rights and preferences substantially identical to the Common Units) equal
to the product of (x) the total number of shares of common stock issued in
such conversion times (y) a fraction, the numerator of which is the number
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of Common Units held by such holder immediately prior to such conversion,
and the denominator of which is the total number of Common Units
outstanding immediately prior to such conversion;
(iii) each holder of Class A Senior Units shall receive in
exchange for such Class A Senior Units a promissory note of the Company
with the following terms: (A) an aggregate principal amount equal to the
aggregate Capital Contributions made in respect of all Class A Senior Units
held by such holder immediately prior to such conversion, (B) accruing
simple interest at a rate of 8% per annum, (C) all principal and accrued
interest payable upon the first to occur of a Qualified Public Offering, a
Sale of the Company, or the fourth anniversary of the issuance of such
Class A Senior Units, (D) liquidation rights junior to all senior debt
obligations of the Company, and (E) such other terms and conditions as are
substantially identical to the rights and preferences of the Class A Senior
Units hereunder. Each promissory note received in such conversion shall, as
of immediately after such conversion, be deemed to have accrued and unpaid
interest thereon in an amount equal to simple interest on the aggregate
Capital Contributions made in respect of all Class A Senior Units exchanged
in such conversion for such promissory note, at a rate of 8% per annum,
from the date of issuance of such Class A Senior Units to the date of such
conversion);
(iv) each holder of Class B Senior Units shall receive in
exchange for such Class B Senior Units a promissory note of the Company
with the following terms: (A) an aggregate principal amount equal to the
aggregate Class B Senior Value of all Class B Senior Units held by such
holder immediately prior to such conversion, (B) accruing interest in the
same manner and at the same times as the Class B Senior Yield would accrue
on the exchanged Class B Senior Units, (C) principal and accrued interest
payable in the same manner and at the same times as the exchanged Class B
Senior Units would be redeemed pursuant to Section 4.1(a)(ii) and would
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receive distributions pursuant to Sections 3.1(c) and (f), (D) liquidation
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rights junior to all senior debt obligations of the Company and the
promissory notes issued in exchange for the Class A Senior Units, and pari
passu with the payment of the Liquidation Value (and all accrued but unpaid
dividends thereon) of the Company's convertible preferred stock, and (E)
such other terms and conditions as are substantially identical to the
rights and preferences of the Class B Senior Units hereunder. Each
promissory note received in such conversion shall, as of immediately after
such conversion, be deemed to have accrued, paid, unpaid, and accumulated
interest thereon in an amount equal to the accrued, paid, unpaid, and
accumulated Class B Senior Yield,
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respectively, existing as of immediately prior to such conversion with
respect to all Class B Senior Units exchanged in such conversion for such
promissory note.
Section 10.2 Further Action. The parties shall execute and deliver
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all documents, instruments, and certificates, provide all information, and take
or refrain from taking all such further actions as may be necessary or
appropriate to achieve the purposes of this Agreement and effect the provisions
hereof, as determined in good faith by the Board of Managers.
Section 10.3 Title to Company Assets. The Company's assets will be
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deemed to be owned by the Company as an entity, and no Member, individually or
collectively, will have any ownership interest in any Company asset or any
portion thereof.
Section 10.4 Creditors. None of the provisions of this Agreement
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shall be for the benefit of or enforceable by any creditors of the Company or
any of its Affiliates, and no creditor who makes a loan to the Company or any of
its Affiliates may have or acquire at any time as a result of making the loan
any direct or indirect interest in Company Profits, Losses, Distributions,
capital or property other than as a creditor.
Section 10.5 Amendments, Modifications, or Waivers. Any provision
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of this Agreement may be amended, modified or waived upon the prior written
approval of the Members by a Required Vote; provided that any amendment,
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modification, or waiver which adversely affects any Member's rights or
obligations hereunder relative to the Members voting in favor thereof, such
amendment, modification, or waiver shall also require the written consent of
such Member so adversely affected; and provided further that if any such
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amendment, modification, or waiver is to a provision in this Agreement that
requires a specific vote to take an action thereunder or to take an action with
respect to the matters described therein, such amendment, modification, or
waiver shall not be effective unless such vote is obtained with respect to such
amendment, modification or waiver.
Section 10.6 Successors and Assigns. Except as otherwise provided
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herein, this Agreement shall inure to the benefit of and be binding upon the
Members and their respective heirs, executors, administrators, legal
representatives, successors and permitted assigns, whether so expressed or not.
Section 10.7 Remedies. Each Member shall have all rights and
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remedies set forth in this Agreement and all rights and remedies which such
Person has been granted at any time under any other agreement or contract and
all of the rights which such Person has under any law. Any Person having any
rights under any provision of this Agreement or any other agreements
contemplated hereby shall be entitled to enforce such rights specifically
(without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. No failure by any party to insist upon the strict performance
of any covenant, duty, agreement or condition of this Agreement or to exercise
any right or remedy consequent upon a breach thereof shall constitute a waiver
of any such breach or any other covenant, duty, agreement or condition.
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Section 10.8 Governing Law. All issues and questions concerning the
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construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Delaware, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of Delaware.
Section 10.9 Severability. Whenever possible, each provision of
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this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or the effectiveness or validity of any provision
in any other jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
Section 10.10 Counterparts. This Agreement may be executed
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simultaneously in two or more separate counterparts, any one of which need not
contain the signatures of more than one party, but each of which will be an
original and all of which together shall constitute one and the same agreement
binding on all the parties hereto.
Section 10.11 Descriptive Headings; Interpretation. The descriptive
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headings of this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement. Whenever required by the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa. The use of the word
"including" in this Agreement shall be by way of example rather than by
limitation. Reference to any agreement, document or instrument means such
agreement, document or instrument as amended or otherwise modified from time to
time in accordance with the terms thereof, and if applicable hereof. The use of
the words "or," "either" and "any" shall not be exclusive. The parties hereto
have participated jointly in the negotiation and drafting of this Agreement. If
an ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties hereto, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.
Section 10.12 Notices. All notices, demands or other communications
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to be given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given when (a) delivered
personally to the recipient, (b) telecopied to the recipient (with hard copy
sent to the recipient by reputable overnight courier service (charges prepaid)
that same day) if telecopied before 5:00 p.m. Chicago, Illinois time on a
business day, and otherwise on the next business day, or (c) one business day
after being sent to the recipient by reputable overnight courier service
(charges prepaid). Such notices, demands and other communications shall be sent
to the following Persons at the following addresses:
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To MDCP:
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▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
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▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To ▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ Holdings:
---------------------------------
c/o LPL Investment Group Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
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Winthrop, Stimson, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To Meritage:
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Meritage Private Equity Fund, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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To any Executive: at the Company's address, to the attention of such
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Executive
with a copy (which shall not constitute notice) to:
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Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
To any other Member: at the address for such Member listed in the
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Company's records
To the Company:
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▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ , ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or facsimile number or to the attention of such other
Person as the recipient party has specified by prior written notice to the
sending party.
Section 10.13 Complete Agreement. This Agreement, the documents
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expressly referred to herein, and related documents of even date herewith and
therewith embody the complete agreement and understanding among the parties and
terminate, supersede and preempt any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way (including, without limitation, the
Prior Agreement, the First Amended Agreement, and the Second Amended Agreement).
Section 10.14 Business Days. If any time period for giving notice or
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taking action hereunder expires on a day which is a Saturday, Sunday, or legal
holiday in the State of Colorado, the Republic of France, or the jurisdiction in
which the Company's principal office is located, the time period shall
automatically be extended to the business day immediately following such
Saturday, Sunday, or legal holiday.
Section 10.15 [Intentionally Omitted].
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Section 10.16 Delivery by Facsimile. This Agreement, the agreements
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referred to herein, and each other agreement or instrument entered into in
connection herewith or therewith or
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contemplated hereby or thereby, and any amendments hereto or thereto, to the
extent signed and delivered by means of a facsimile machine, shall be treated in
all manner and respects as an original agreement or instrument and shall be
considered to have the same binding legal effect as if it were the original
signed version thereof delivered in person. At the request of any party hereto
or to any such agreement or instrument, each other party hereto or thereto shall
reexecute original forms thereof and deliver them to all other parties. No party
hereto or to any such agreement or instrument shall raise the use of a facsimile
machine to deliver a signature or the fact that any signature or agreement or
instrument was transmitted or communicated through the use of a facsimile
machine as a defense to the formation or enforceability of a contract and each
such party forever waives any such defense.
Section 10.17 Effectiveness of Agreement. This Agreement shall be
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valid, binding, and effective against each Member (including Meritage, ▇▇▇▇▇▇▇
LLC #2, Karafiol, Kirsch, Northwestern, and SCI) when it has been signed by such
Member. Pursuant to Section 10.5 of the Second Amended Agreement, this
Agreement amending and restating the Second Amended Agreement shall be valid,
binding, and effective against all Members when it has been signed by Members
constituting a Required Vote.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this Third Amended and
Restated Limited Liability Company Agreement to be signed as of the date first
above written.
MEMBERS:
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▇▇▇▇▇▇▇▇ HOLDINGS LIMITED PARTNERSHIP
By LPL Investment Group, Inc., its general partner
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, its Chairman
MADISON DEARBORN CAPITAL PARTNERS II, L.P.
By Madison Dearborn Partners II, L.P., its general
partner
By Madison Dearborn Partners, Inc., its general partner
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its Managing Director
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MERITAGE PRIVATE EQUITY FUND, L.P.
By Meritage Investment Partners, LLC, its general
partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Managing Member
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇
DOVEY COMPANY LLC
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, its manager
DOVEY FAMILY PARTNERS LLLP
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇, its general partner
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
HAJ ▇▇▇▇▇▇▇ LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, its manager
HAJ LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, its manager
▇▇▇▇▇▇▇▇▇ COMPANY LLC
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its manager
▇▇▇▇▇▇▇▇▇ FAMILY LLLP
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, its general partner
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
NORTHWESTERN UNIVERSITY
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Its V.P. and C.I.O.
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SILVER CROSS INVESTORS LLC
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its Manager
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OTHER MEMBERS (SIGNATURES OF WHOM ARE
NOT INCLUDED) WHO ARE PARTY TO THIS
AGREEMENT PURSUANT TO THEIR EXECUTIVE
SECURITIES AGREEMENTS (AND/OR JOINDER
AGREEMENTS ENTERED INTO IN CONNECTION
THEREWITH):
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Le Masne
▇▇▇▇-▇▇▇▇▇ Le Monze ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ Bouchaud
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ Lauterslager ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Pierre Wattelier Markus Lackermaier
Hansjorg ▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Van-▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Burlinchon
▇▇▇▇▇▇ Affret
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE OF UNITS
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Capital Capital Total Number
Number of Contributions Contributions of Preferred
Series A with respect Number of made as of Units (after
Number of Number of Total Capital Preferred to Preferred Series B date hereof giving effect
Common Common Contributions Units (as of Units (as of Preferred (with respect to amended
Units (Non- Units with respect immediately immediately Units (issued to newly Equity
Performance (Performance to Common prior to prior to date as of date issued Series B Purchase
Member Vesting) Vesting) Units date hereof) hereof) hereof) Preferred) Agreement)
------ ----------- ------------ ------------- ------------ ------------- ------------- --------------- -------------
MDCP 45,005 $ 45,005,000 8,712.91 $20,039,700 53,717.91
▇▇▇▇▇▇▇▇
Holdings 18,563 $ 18,563,000 3,625 $ 8,337,500 22,188
Meritage Private
Equity Fund,
L.P. 4,575 $10,522,500 4,575
Meritage Private
Equity Parallel
Fund, L.P. 559 $ 1,285,700 559
Meritage
Entrepreneurs
Fund, L.P. 83 $ 190,900 83
▇▇▇▇▇ 125 $ 125 500 $ 500,000 98 $ 225,400 ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇ $ 125 500 $ 500,000 98 $ 225,400 598
▇▇▇▇ 100 $ 100,000 20 $ 46,000 120
▇▇▇▇▇ 75 $ 75,000 15 $ 34,500 90
Karafiol 21.74 $ 50,000 21.74
▇▇▇▇▇▇ 21.74 $ 50,000 21.74
Northwestern 10.87 $ 25,000 10.87
SCI 21.74 $ 50,000 21.74
Dovey 3,374 2,025 $ 5,399
Dovey LLC 530 $ 530,000 210 $ 483,000 ▇▇▇
▇▇▇▇▇ LLLP 500 $ 500
▇▇▇▇▇▇▇ 2,298 2,287 $ 4,585 53 $ 53,000 53
Total Capital
Contributions
with respect
to all
Preferred
Member Units
------ -------------
MDCP $ 65,044,700
▇▇▇▇▇▇▇▇
Holdings $ 26,900,500
Meritage Private
Equity Fund,
L.P. $ 10,522,500
Meritage Private
Equity Parallel
Fund, L.P. $ 1,285,700
Meritage
Entrepreneurs
Fund, L.P. $ 190,900
▇▇▇▇▇ $ 725,400
Holland $ 725,400
▇▇▇▇ $ 146,000
▇▇▇▇▇ $ 109,500
Karafiol $ 50,000
▇▇▇▇▇▇ $ 50,000
Northwestern $ 25,000
SCI $ 50,000
▇▇▇▇▇
▇▇▇▇▇ LLC $ 1,013,000
Dovey LLLP
▇▇▇▇▇▇▇ $ 53,000
Schedule of Units (November 23, 1999) - Page 1
Capital Capital Total Number
Number of Contributions Contributions of Preferred
Series A with respect Number of made as of Units (after
Number of Number of Total Capital Preferred to Preferred Series B date hereof giving effect
Common Common Contributions Units (as of Units (as of Preferred (with respect to amended
Units (Non- Units with respect immediately immediately Units (issued to newly Equity
Performance (Performance to Common prior to prior to date as of date issued Series B Purchase
Member Vesting) Vesting) Units date hereof) hereof) hereof) Preferred) Agreement)
------ ----------- ------------ ------------- ------------ ------------- ------------- --------------- -------------
▇▇▇▇▇▇▇ LLC #1 2,079 $ 2,079
▇▇▇▇▇▇▇ LLC #2 87 $ 200,100 87
▇▇▇▇▇▇▇▇▇ 2,231 1,045 $ 3,276
▇▇▇▇▇▇▇▇▇ LLC 371 $ 371,000 74 $ 170,200 445
▇▇▇▇▇▇▇▇▇ LLLP 2,018 $ 2,018
Lacey 700 300 $ 1,000 53 $ 53,000 87 $ 200,100 140
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 111 48 $ 159
▇▇▇▇ ▇▇▇▇▇▇ 111 48 $ 159
▇▇▇▇-▇▇▇▇▇ Le
Monze 111 48 $ 159
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 500 215 $ 715
▇▇▇▇ ▇▇▇▇▇ 875 375 $ 1250
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ 111 48 $ 159
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 55 24 $ 79
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 111 48 $ 159
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ 55 24 $ 79
▇▇▇▇▇
Lauterslager 55 24 $ 79
▇▇▇▇ ▇▇▇▇ 111 48 $ 159
▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇. 111 48 $ 159
▇▇▇ ▇▇▇▇▇▇▇▇▇ 111 48 $ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 111 48 $ 159
Total Capital
Contributions
with respect
to all
Preferred
Member Units
------ -------------
▇▇▇▇▇▇▇ LLC #1
▇▇▇▇▇▇▇ LLC #2 $ 200,100
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLC $ 541,200
▇▇▇▇▇▇▇▇▇ LLLP
Lacey $ 253,100
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇ Le
Monze
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
Lauterslager
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇
Pierre Wattelier
Schedule of Units (November 23, 1999) - Page 2
Capital Capital Total Number
Number of Contributions Contributions of Preferred
Series A with respect Number of made as of Units (after
Number of Number of Total Capital Preferred to Preferred Series B date hereof giving effect
Common Common Contributions Units (as of Units (as of Preferred (with respect to amended
Units (Non- Units with respect immediately immediately Units (issued to newly Equity
Performance (Performance to Common prior to prior to date as of date issued Series B Purchase
Member Vesting) Vesting) Units date hereof) hereof) hereof) Preferred) Agreement)
------ ----------- ------------ ------------- ------------ ------------- ------------- --------------- -------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 424.9 182.1 $ 607
▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ 111 48 $ 159
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ 424.9 182.1 $ 607
▇▇▇▇ ▇▇▇▇ 56 24 $ 80
▇▇▇▇▇▇ Le Masne 56 24 $ 80
▇▇▇▇ ▇▇▇▇▇▇▇ 111.3 47.7 $ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ 70 30 $ 100
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 35 15 $ 50
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ 111.3 47.7 $ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
Bouchaud 55.3 23.7 $ 79
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 98.7 42.3 $ 141
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ 136.6(1) 4.4 $ 141
▇. ▇▇▇▇▇▇ Grum 141(2) $ 141
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 141(2) $ 141
▇▇▇▇▇ ▇▇▇▇▇ 141(2) $ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ 141(2) $ 141
Markus
Lackermaier 141(2) $ 141
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 10 $ 10
▇▇▇▇▇▇▇ ▇▇▇▇▇ 10 $ 10
▇▇▇▇▇ ▇▇▇▇▇▇ 10 $ 10
Total Capital
Contributions
with respect
to all
Preferred
Member Units
------ -------------
Hansjorg ▇▇▇▇▇▇
▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ Le Masne
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
Bouchaud
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
Markus
Lackermaier
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Schedule of Units (November 23, 1999) - Page 3
Capital Capital Total Number
Number of Contributions Contributions of Preferred
Series A with respect Number of made as of Units (after
Number of Number of Total Capital Preferred to Preferred Series B date hereof giving effect
Common Common Contributions Units (as of Units (as of Preferred (with respect to amended
Units (Non- Units with respect immediately immediately Units (issued to newly Equity
Performance (Performance to Common prior to prior to date as of date issued Series B Purchase
Member Vesting) Vesting) Units date hereof) hereof) hereof) Preferred) Agreement)
------ ----------- ------------ ------------- ------------ ------------- ------------- --------------- -------------
▇▇▇▇-▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ 5 $ 5
▇▇▇▇▇▇▇ ▇▇▇▇▇ 5 $ 5
▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
Boudin 5 $ 5
Van-▇▇▇▇
▇▇▇▇▇▇▇▇ 5 $ 5
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10 $ 10
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 5 $ 5
▇▇▇▇▇▇▇
Burlinchon 10 $ 10
▇▇▇▇▇▇ Affret 5 $ 5
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 5 $ 5
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ 5 $ 5
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 10 $ 10
------ ----- ------- ------ ----------- ------ ----------- ------
TOTAL 18,485 7,422 $25,907 65,750 $65,750,000 18,320 $42,136,000 84,070
====== ===== ======= ====== =========== ====== =========== ======
Total Capital
Contributions
with respect
to all
Preferred
Member Units
------ -------------
▇▇▇▇-▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
Van-▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Burlinchon
▇▇▇▇▇▇ Affret
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------
TOTAL $107,886,000
=============
Schedule of Units (November 23, 1999) - Page 4
-----------------
(1) These 136.6 Non-Performance-Vesting Securities include 37.9 Common Units
which are "Replication Securities" as described in Section 2.2(c)(v).
-----------------
(2) These 141 Non-Performance-Vesting Securities include 42.3 Common Units
which are "Replication Securities" as described in Section 2.2(c)(v).
-----------------