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EXHIBIT 10.1
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A CONFIDENTIAL TREATMENT
REQUEST FILED WITH THE COMMISSION. ASTERISKS (*) IDENTIFY WHERE SUCH
CONFIDENTIAL INFORMATION HAS BEEN OMITTED. THE OMITTED PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION.
BRICOLEUR CAPITAL MANAGEMENT
LIMITED LIABILITY COMPANY
AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement" is made
and entered into as of the commencement of business on February 27, 1998 (the
"Effective Date") by and among the Persons who become signatories hereto and who
are identified from time to time on Schedule A hereto as Members.
WHEREAS, Asset Alliance Bricoleur Merger Co. Inc. ("Newco"), a
Delaware corporation wholly owned by Asset Alliance Corporation ("AAC"), has
formed Bricoleur Capital Management LLC (the "Company") as a limited liability
company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. ss.
18-101 et seq and has filed a Certificate of Formation (the "Certificate") of
the Company with the Office of the secretary of State of the State of Delaware;
WHEREAS, Newco has merged with Bricoleur Capital Management Inc.
and is the surviving corporation in such merger;
WHEREAS Newco has transferred substantially all of its assets to the
Company in exchange for all of the membership interests in the Company and the
assumption by the Company of certain liabilities of Newco; and
WHEREAS, Newco wishes to admit Asset Alliance Management Corp., a
Delaware corporation wholly owned by AAC, as the managing member (the "Manager")
and to have the Manager admit as Members those individuals identified on
Schedule A hereto as Non-Manager Members and Newco, the Manager and the
foregoing individuals wish to provide for the operation, governance, delegation
of day-to-day management to a management committee initially consisting of the
individuals identified on Schedule B hereto, allocation and distribution of
profits and losses and other matters as among the Members;
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NOW, THEREFORE, in consideration of the mutual premises contained
herein and for good and valuable consideration the receipt and adequacy of which
is hereby acknowledged, the parties hereto hereby agrees as follows:
ARTICLE 1
GENERAL
1.1 Definitions. For purposes of this Agreement, the following capitalized
terms shall have the following meanings:
"AAC" is defined in the recitals.
"Act" means the Delaware Limited Liability Company Act.
"Adjusted Capital Account Deficit" is defined in Appendix B.
"Advisers Act" means the Investment Advisers Act of 1940, as
amended, and all rules and regulations of the SEC thereunder.
"Affiliate" means any corporation, partnership, entity or other
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.
"Agreement" means this Limited Liability Company Agreement, as it
may be further amended, supplemented or amended from time to time in accordance
with the terms hereof.
"Allocation Year" means (i) the period beginning on the Effective
Date and ending on December 31, 1998 or (ii) any subsequent twelve (12) month
period commencing on January 1 and ending on December 31.
"Applicable Law" means any statute, law, ordinance, rule, public
administrative interpretation, regulation, order, writ, injunction, directive,
judgment, decree or other requirement of any governmental authority or
self-regulating organization applicable to the Compa-
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ny, any client, any Member or any of their respective properties, assets,
officers, directors, employees or agents.
"Assignment" means any sale, assignment, transfer, exchange,
charge, pledge, gift, hypothecation, conveyance or encumbrance (such meaning to
be equally applicable to verb and noun forms of such term), or any offer to do
any of the foregoing, of all or any portion of a Membership Interest. "Assignor"
means a Person who makes an Assignment and "Assignee" means a Person who
receives an Assignment.
"Bankruptcy" or "Bankrupt" means, with respect to any Member, such
Member making an assignment for the benefit of creditors, becoming a party to
any liquidation or dissolution action or proceeding with respect to such Member
or any bankruptcy, reorganization, insolvency or other proceeding for the relief
of financially distressed debtors with respect to such Member, or a receiver,
liquidator, custodian or trustee being appointed for such Member or a
substantial part of such Member's assets and, if any of the same occur
involuntarily, the same not being dismissed, stayed or discharged within 90
days; or the entry of an order for relief against such Member under Title 11 of
the United States Bankruptcy Code. A Member shall be deemed bankrupt if the
Bankruptcy of such Member shall have occurred and be continuing.
"Capital Account" means an account established and maintained for
each Member as provided in Section 3.1.
"Capital Contribution" shall mean, as to each Member, the aggregate
amount of cash and the Gross Asset Value of any property (net of liabilities
assumed or taken subject to by the Company, without duplication) contributed to
the capital of the Company by or in the name of such Member (or any prior
holders of the Capital Account of such Member) in connection with the issuance
of Membership Interests or otherwise.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor code thereto.
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"Competition" means engaging in, or being an owner, part-owner,
shareholder, partner, member, director, officer, trustee, employee, agent or
consultant, or in any other capacity, on behalf of himself or any firm,
corporation or other business organization other than the Company or permitting
his name to be used in connection with the activities of any other business or
organization, or providing any services whatsoever which compete, directly or
indirectly, with the services provided by the Company as the same shall be
constituted at any time during, or as to which the Company had definitive
documented plans for commencement within six months from termination of, such
Person's employment.
"Covered Person" shall mean a Member, any Affiliate of a Member, any
officer, director, shareholder, partner, employee or member of a Member of any
of its Affiliates, or any officer of the Company.
"Effective Date" is defined in the opening paragraph.
"Fair Market Value" shall mean the fair market value as agreed upon
by the Manager and the Management Board (or, for purposes of Section 3.4 hereof,
if there shall be no Manager, the Liquidating Trustee and the Management Board)
or, in the absence of such agreement, as determined by an appraiser selected by
the Manager and the Management Board (or, for purposes of Section 3.4 hereof, if
there shall be no Manager, the Liquidating Trustee) with the prior consent of
the Management Board, which consent will not be unreasonably withheld.
"For Cause" shall mean, with respect to the termination of a
Member's employment with the Company, any of the following:
****[The remainder of this definition (approximately half a page)
has been omitted pursuant to the confidential treatment request referenced on
the cover page hereto. The omitted portion has been filed separately with the
Commission.]****
"Gross Asset Value" is defined in Appendix B.
"Immediate Family" shall mean, with respect to any individual, such
individual's spouse, parents and
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children (and estates, trusts, partnerships and other entities and legal
relationships of which a substantial majority in interest of the beneficiaries,
owners, investors, members or participants at all times in question are,
directly or indirectly, one or more of the Persons described above and/or such
individual).
"Indebtedness" shall mean, with respect to a Person (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under any financing leases, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such Persons, and (e) all other
obligations or liabilities treated as indebtedness under the most senior debt
instruments of AAC outstanding from time to time.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
financing lease having substantially the same economic effect as any of the
foregoing).
"Liquidating Trustee" is defined in Section 3.4 hereof.
"Management Board" is defined in Section 2.2(a) hereof.
"Manager" is defined in the recitals, subject to change in
accordance with Article 4 hereof.
"Mandatory Investments" is defined in Section 3.3(a)(ii) hereof.
"Member" shall mean any Person admitted to the Company as a "member"
within the meaning of the Act, which includes Newco, the Manager and the
Non-Manager
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Members (excluding, for this purpose, Assignees until admitted as Members
pursuant to the provisions hereof), and includes any Person admitted as an
additional or substitute Non-Manager Member pursuant to the provisions of this
Agreement, in such Person's capacity as a Member of the Company, in each case
unless otherwise indicated. For purposes of the Act, the Members shall
constitute one (1) class or group of members.
"Membership Interest" means the limited liability company interest
of a Member in the Company at any particular time, including any and all rights
and benefits to which such Member is entitled under this Agreement and the
Act, together with the obligations of such Member under this Agreement and the
Act.
"Net Income" and "Net Loss" are defined in Appendix B.
"Newco's Unpaid Preferred Distribution" means an amount equal to the
excess of (i) 50% of Revenues From Operations (but excluding any such amounts
which constitute Received Catch-Up Revenues) for all periods of the Company
since the Effective Date over (ii) the aggregate distributions made to Newco
pursuant to Section 3.3(a)(ii).
"Non-Manager Member" shall mean any Person who is or becomes a
Member pursuant to the terms hereof other than Newco, the Manager or any of
their Affiliates.
"Non-Manager Member Percentage Interest" means, for each Non-Manager
Member, the percentage obtained by dividing such Non-Manager Member's Percentage
Interest by the sum of the Percentage Interest held by all Non-Manager Members,
and multiplying such quotient by 100%.
"Non-Manager Member Pool" for any Allocation Year shall mean the
excess of 50% of Revenues From Operations over Operations Expenses of the
Company for such Allocation Year other than compensation of the Non-Manager
Members.
"Non-Manager Members Unpaid Preferred Distribution" means an amount
equal to the excess of (i) 100% of Received Catch-Up Revenues for all periods of
the Company
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since the Effective Date over (ii) the aggregate distributions made to the
Non-Manager Members pursuant to Section 3.3(a)(i).
"Non-Manager Members Unpaid Subordinated Distribution" means an amount
equal to the excess of (i) 100% of Revenues From Operations for all periods of
the Company since the Effective Date over (ii) the sum of (A) 100% of Operating
Expenses for all periods of the Company since the Effective Date, (B) Newco's
Unpaid Preferred Distribution, (C) the Non-Manager Members Unpaid Preferred
Distribution and (D) the aggregate distributions made to Newco and the
Non-Manager Members pursuant to Section 3.3(a)(i) and 3.3(a)(ii).
"Operating Expense" means, for any period, any expenditure,
liability or other item made or incurred during such period that is treated as
an expense of the Company (as opposed to a capital expenditure) for such period
under generally accepted accounting principles, consistently applied, but in no
event shall Operating Expenses include (i) any amount for amortization or
depreciation for such period, (ii) any compensation to any Members, (iii) any
payments on any Indebtedness or liability of Newco outstanding on the Effective
Date that is assumed by the Company in each case as of the Effective Date
(including any Indebtedness or liability of Newco attributable to the operations
of Bricoleur Capital Management, Inc. ("BCMI") and properly accrued on the books
of BCMI prior to the Effective Time in accordance with generally accepted
accounting principles) or (iv) any net decline in the aggregate value of all the
capital interests of the Company in investment funds for which the Company acts
as investment advisor, general partner or the like. Operating Expense shall be
reduced by any recoveries of previously incurred Operating Expense including
proceeds of insurance paid for out of Operating Expense. Any recoveries in
excess of Operating Expense for a particular period will be carried over to the
next period as a credit to Operating Expense.
"Percentage Interest" means the percentage set forth on Schedule A
for each Member as amended from time to time by the Manager in accordance with
the terms hereof.
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"Person" shall mean any individual, partnership (limited or
general), corporation, limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization or any similar
entity.
"Received Catch-Up Revenues" shall mean ****[The remainder of this
definition (approximately one and a half pages) has been omitted pursuant to the
confidential treatment request referenced on the cover page hereto. The omitted
portion has been filed separately with the Commission.]****
"Regulations" means the Regulations promulgated under the Code.
"Revenues From Operations" shall mean, for any period, the gross
revenues (without reduction to reflect expenses) of the Company (except as set
forth herein and except as otherwise agreed by the Manager and the Management
Board in a writing making reference to this definition), determined on an
accrual basis in accordance with generally accepted accounting principles
consistently applied, but (i) adjusted upward (but only to the extent not
duplicative) for the following items; (A) the sum of the increase, if any,
during such period in the Company's capital accounts in any partnership (or
similar investment entity) on account of such capital and (B) the sum of all
cash withdrawals received during such period by the Company with respect to any
such partnership (or similar investment entity), and (ii) adjusted downward (but
only to the extent not duplicative) for the following items: (A) the sum of the
decrease, if any, during such period in the Company's capital account in any
partnership (or similar investment entity) on account of such capital, (B) the
sum of all Company cash contributed during such period to any such partnership
(or similar investment entity) and (C) the sum of all amounts by which any items
previously included in Revenues From Operations become partly or entirely
uncollectible or are collected at less than the amount previously included. For
the foregoing purposes gross revenues allocable to the capital accounts of the
Company in any partnership (or similar investment entity) other than on account
of capital (i.e. incentive or performance allocations) shall
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be measured on an account by account basis and shall consist, for each such
account at any given point in time, of the amount thereof that would be
allocated to the Company's account if the date for calculation and allocation or
obligation to pay such allocation or fee were such point in time, the effect of
the foregoing being that at any particular time other than the point in time
that such fee or allocation is actually calculated and allocated or payable the
calculation required hereunder may result in a positive addition to Revenues
From Operations or a negative deduction from Revenues From Operations for the
period since the most recent calculation thereof hereunder; and (iii) gross
revenues from periodic investment advisory and management fees shall be accrued
on a daily, weekly, monthly or calendar quarterly basis. Notwithstanding the
foregoing, Revenues From Operations shall not include (i) proceeds (including
any gain) on the disposition of any asset of the Company, (ii) Capital
Contributions by a Member to the Company during such period, and (iii) proceeds
received in respect of any insurance policy (other than business interruption
insurance).
"Taxable Income" and "Taxable Loss" are defined in Appendix B.
1.2 Continuation of Company. The Manager shall from time to time take all
such actions as may be deemed by it to be necessary or appropriate to effectuate
and permit the continuation of the Company as a limited liability company under
the Act and qualify the Company to act in any other state or country where the
Manager deems qualification necessary or desirable. The Members shall execute
such certificates, documents and instruments and take such other action as may
be necessary to enable the Manager to fulfill its responsibility under this
Section 1.2.
1.3 Offices. The Company's registered agent and office in the State of
Delaware shall be as set forth in the Certificate, subject to change at any time
by the Manager. The principal offices of the Company shall be at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other or supplemental
location or locations as the Management Board shall determine from time to
time.
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1.4 Purpose and Powers. The Company is organized for the purpose of acting
as an investment manager and providing investment management and advisory,
consulting, marketing, administrative and other services ancillary thereto or
useful in connection therewith. The Company may also engage in any other lawful
business or activity permitted by the Act which is agreed to in writing by the
Manager and the Management Board. In pursuing such purposes, the Company shall
possess and may exercise all of the powers and privileges permitted by the Act,
together with any powers incidental thereto, including the following:
(a) to open, maintain and close bank, brokerage and other financial
accounts and to draw checks or other orders for the payment of money;
(b) to engage attorneys, accountants and such other persons as may be
necessary or advisable in connection with the foregoing objects and purposes;
(c) to purchase and sell property, to lease property, to borrow or lend
money, to make contracts, incur liabilities and give guarantees;
(d) to employ and terminate employees, consultants and other agents; and
(e) to present, defend and settle legal actions or arbitration
proceedings.
1.5 Term. The Company shall continue in perpetuity until the Company is
dissolved in accordance with the provisions of this Agreement.
1.6 Members; Limited Authority and Liability.
(a) The names and addresses of the Members, the amount of the initial
Capital Account of each Member and the Percentage Interest of each Member are
set forth in Schedule A hereto, which Schedule may be amended from time to time
to reflect any change in the identity of Members and any changes in the
Percentage Interest of the Members, it being understood that changes in Capital
Accounts shall be recorded in the books and records of the Company and not in
Schedule A. The initial Capital Account balance of Newco shall be equal to the
aggregate
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value of the Merger Consideration (as defined in the Merger Agreement dated
February 20, 1998 by and among AAC, Newco, the initial Non-Manager Members and
Bricoleur Capital Management, Inc.), as such value may be adjusted to reflect
changes in the Merger Consideration pursuant to Section 2.8 of such Merger
Agreement, less the fair market value of any assets obtained by Newco in the
Merger and not contributed to the Company. Such aggregate fair market value
shall be allocated among such contributed assets by the Manager and the
Management Board.
(b) Although a Non-Manager Member may be required to make Capital
Contributions pursuant to Section 4.4 hereof to fund certain Operating Expenses
of the Company, and accordingly bears a substantial economic risk of loss with
respect to the operations of the Company, a Non-Manager Member is not required
to make an initial Capital Contribution to acquire Membership Interests.
Accordingly, the initial Capital Account balance of each Non-Manager Member
will be zero. The Company and each member intend that the issuance of Interests
to the Non-Manager Members be governed by the guidelines set forth in Rev. Proc.
93-27 regarding the non-taxable issuance of a "profits interest" to a service
provider. Accordingly, the Company agrees not to claim a compensation deduction
upon the issuance of such Interest or otherwise to treat the issuance of such
Interest as a compensatory transaction for income tax purposes. Notwithstanding
the fore going, if the Internal Revenue Service asserts and prevails in an
audit or other proceeding that a Non-Manager Member must report taxable
compensation income upon receipt of the Interest, (i) such Member will
immediately notify the Company of this action, and (ii) the Company will, to the
extent permitted under applicable law, specially allocate to such Member (in his
capacity as a Member) in accordance with the special allocation provisions in
Appendix B any resulting compensation deduction that the Company would be
entitled to as a consequence of the Service's proposed treatment of the issuance
of the Interest as a compensatory transaction (in whole or in part). Such Member
and the Company will cooperate and coordinate to challenge such assertion.
(c) Article 2 grants authority to the Members to take certain actions as
specified therein. Except as provided in Article 2, no Member, in its capacity
as
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such, has the authority or the power to act for or on behalf of the Company, to
do any act that would be binding on the Company, or incur any expenditures on
behalf of the Company. No Member shall be liable for the debts, obligations or
liabilities of the Company, including under a judgment, decree or order of a
court.
1.7 No State-Law Partnership. No provisions of this Agreement (including,
without limitation, the provisions of Article 2) shall be deemed or construed
to constitute the Company a partnership (including, without limitation, a
limited partnership) or joint venture, or any Member or Manager a partner or
joint venturer of or with any other Member or Manager, for any purposes other
than tax purposes.
1.8 Status. No Member shall take any action that would require termination
of the Company for Federal or state tax purposes or registration of the Company
or any class of its securities under the Investment Company Act of 1940 or the
Securities Exchange Act of 1934 or result in the Company being taxable as a
corporation for Federal or state tax purposes.
ARTICLE 2
MANAGEMENT
2.0 Management in General. It is understood and agreed that the Management
Board provided for in Section 2.2 shall irrevocably be delegated and have the
authority to manage the day-to-day business of the Company, that certain
actions, but only to the extent expressly specified hereinafter, that are
material to the business or that affect the interests of the Manager and its
Affiliates may only be taken by the Management Board with the consent of the
Manager, that certain activities, but only to the extent expressly specified
hereinafter, in the financial and compliance areas require coordination between
the Management Board and the Manager and that for regulatory reasons the Manager
shall have the ability to alter the foregoing structure but that except in
narrowly defined circumstances any such alteration will subject the Manager to
substantial penalties.
2.1 Manager. (a) Subject to the other terms of this Agreement, including
the reservations and delega-
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tions of power and authority set forth in Section 2.2 and elsewhere herein, (i)
the management and control of the business of the Company shall be vested
generally in the Manager, who shall be a Member and a "manager" of the Company
within the meaning of the Act; (ii) the Manager, as specified or limited, as the
case may be, in Section 2.2 and elsewhere, shall have exclusive power and
authority, in the name of and on behalf of the Company, to perform all acts and
do all things which in its sole discretion it deems necessary or desirable to
conduct the business of the Company, without the vote or consent of any of the
other Members; and (iii) any action taken by the Manager, and the signature of
the Manager (or any authorized representative) on any instrument on behalf of
the Company, shall conclusively evidence the authority of the Company with
respect thereto and shall bind the Company. Notwithstanding the foregoing, the
Manager shall have no power or authority whatsoever to make recommendation with
respect to or to determine which transactions the Company shall cause or
recommend any investment advisory client of the Company to enter into, or the
time at which, the party with which or the terms on which any right, power or
privilege of the Company is exercised or performed with respect to the account
of any such client or the assets in the account of any such client.
(b) The Manager shall have the specific power and authority in its
reasonable discretion, after consultation with the Management Board to take any
of the following actions: (i) such actions as may be necessary to cause the
Company, any of its controlled Affiliates or any of its Members, employees or
agents to comply with any Applicable Law or this Agreement; (ii) such actions as
the Manager is specifically authorized by this Agreement to take (subject to
having obtained any required Management Board approval); (iii) such actions as
are necessary to prevent actions that require the Manager's consent pursuant to
the terms of this Agreement if such consent has not been given; and (iv)
termination of any Member of the Company upon termination of such Member's
employment "For Cause" after all actions and determinations required by the
definition thereof have been taken and made.
(c) The Manager shall be obligated to devote only such time to the
business and affairs of the Company as
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it deems necessary in its sole discretion for the performance of its duties
under this Agreement.
(d) The Manager and its Affiliates may engage in other business ventures
of every nature and description, including the creation, acquisition, financing,
operation and disposition of investment managers or interests therein that are
or may be competitive with the Company's businesses. The Manager shall not be
obligated to present any opportunity to the Company even if such opportunity
would be suitable for the Company or arose because of the Manager's interest in
or operation of the Company. Neither the Company nor any of the Members other
than the Manager shall have any right in or to any such other ventures and no
such activity by the Manager or its Affiliates shall be deemed improper or
result in any liability to the Manager or its Affiliates.
(e) Any consent of the Manager required hereunder shall be in writing,
shall be obtained prior to the action sought to be taken, and shall, except as
otherwise set forth, be given or withheld in the reasonable discretion of the
Manager. The Manager shall designate in writing to the Management Board from
time to time one or more persons who shall serve as authorized representatives
of the Manager to provide such written consent and two or more alternate
representatives who are so authorized in the event the primary authorized
person is not available.
2.2 Management Board. (a) ****[This subsection (approximately half a page)
has been omitted pursuant to the confidential treatment request referenced on
the cover page hereto. The omitted portion has been filed separately with the
Commission.]****
(b) ****[This subsection (approximately one page) has been omitted
pursuant to the confidential treatment request referenced on the cover page
hereto. The omitted portion has been filed separately with the Commission.]****
(c) The Company shall not do, and the Management Board shall use all
reasonable efforts to prevent the Company from doing, any of the following
without the consent of the Manager:
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(i) take any action (including with respect to legal actions,
arbitrations and administrative proceedings and including with respect to
capital expenditures) or enter into, amend, take any action under or
terminate any agreement or understanding that could reasonably be expected
to conflict with this Agreement, prevent the Company from being able to
distribute to Newco any of the distributions contemplated hereunder or
have a materially adverse effect on the condition (financial or
otherwise), operations, assets, liabilities, business, opera tions or
prospects of the Company;
(ii) create, incur, assume or suffer to exist any Indebtedness of
the Company or any Lien upon any assets of the Company;
(iii) take or omit any action which could reasonably be expected to
result in the termination of employment of any Member of the Company or
enter into, amend, take any action under or terminate any employment
agreement or noncompetition agreement with any Member of the Company;
(iv) enter into any line of business other than that set forth in
the first sentence of Section 1.4 of this Agreement or alter materially
its in vestment style (e.g., from arbitrage to short selling);
(v) except as permitted by Section 4.3(a), admit any Person as a
Member, issue or acquire any Membership Interests or other equity
interests in the Company or remove any Member;
(vi) sell or purchase any material amount of assets or any other
business, merge or consolidate the Company with any other Person or
liquidate, dissolve or terminate the Company;
(vii) invest any of the Company's assets in general partner
interests (except as required by the partnership agreements of the
partnerships of which the Company acts as the general partner from time to
time) or in securities other than high quality money market instruments;
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(viii) use as accountants for the Company any firm other than the
independent public accountants for the Manager and its Affiliates; or
(ix) take any action which may be taken only by the Manager or
requires the consent of the Manager.
(d) ****[This subsection (approximately one page) has been omitted
pursuant to the confidential treatment request referenced on the cover page
hereto. The omitted portion has been filed separately with the Commission.]****
2.3 Operations of the Business of the Company. (a) The Management Board
shall exercise its reasonable best efforts so that ****[The remainder of this
subsection has been omitted pursuant to the confidential treatment request
referenced on the cover page hereto. The omitted portion has been filed
separately with the Commission.]****
(b) The Company will maintain in full force and effect such insurance as
is customarily maintained by companies of similar size in the same or similar
businesses (including, without limitation, errors and omissions liability
insurance but excluding key-man life insurance). The Company or the Manager may
maintain key-man life insurance and disability insurance policies on each
Member, from time to time, and the Members will use all commercially reasonable
efforts to cooperate with the Manager and the Company to effectuate the
foregoing; provided, however, that neither the Company nor the Manager shall be
obligated to maintain such insurance.
(c) Notwithstanding any of the provisions of this Agreement to the
contrary, all accounting, financial reporting and bookkeeping procedures of the
Company shall be established in conjunction with policies and procedures
determined under the supervision of the Manager. The Company shall have a
continuing obligation to keep the Manager's chief financial officer informed of
material financial developments with respect to the Company. Notwithstanding
any of the provisions of this Agreement to the contrary, all legal, compliance
and regulatory matters of the Company shall be coordinated with the
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Manager, and the Company shall have an ongoing obligation to keep the Manager
informed of all significant legal, compliance and related activities, in
accordance with procedures to be established by the Manager and the Management
Board.
2.4 Compensation and Expenses of the Manager. The Manager and its
Affiliates may receive reimbursement of expenses and compensation for services
provided to the Company only to the extent approved by the Management Board.
2.5 Non-Competition, Non-Solicitation and Non-Disclosure.
(a) ****[This subsection (approximately one page) has been omitted
pursuant to the confidential treatment request referenced on the cover page
hereto. The omitted portion has been filed separately with the Commission.]****
(b) Each Member agrees that any and all presently existing investment
advisory businesses of the Company and all business developed by the Company,
including by such Member or any other employee of the Company, including
without limitation, all investment methodologies, all investment advisory
contracts, fees and fee schedules, commissions, records, data, client lists,
agreements, trade secrets, and any other incident of any business developed by
the Company or earned or carried on by the Member for the Company other than any
such matters that are in the public record (unless they are so available by
virtue of a breach of the provisions of this Section 2.5), and all trade names,
service marks and logos under which the Company does business, and any
combinations or variations thereof and all related logos, are and shall be the
exclusive property of the Company, for its sole use, and (where applicable)
shall be payable directly to the Company. In addition, each Member acknowledges
and agrees that the investment performance of the accounts managed by the
Company was attributable to the efforts of the team of professionals of the
Company and not to the efforts of any single individual, and that therefore, the
performance records of the accounts managed by the Compa ny are and shall be the
exclusive property of the Compa ny. Notwithstanding the foregoing, such Member
may be permitted to identify with such performance where in fact
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such Member exercised the sole final decision making authority resulting in
such performance. Each Member acknowledges that, in the course of performing
services hereunder and otherwise the Member has had, and will from time to time
have, access to information of a confidential or proprietary nature, as
commonly and generally understood, including without limitation, confidential or
proprietary investment methodologies, trade secrets, proprietary or confidential
plans, client identities and information, client lists, business operations or
techniques, records and data ("Intellectual Property") owned or used in the
course of business by the Company. Each Member agrees always to keep secret and
not ever publish, divulge, furnish, use or make accessible to anyone (otherwise
than in the regular business of the Company) any Intellectual Property of the
Company that is not other wise publicly available (other than Intellectual
Property that is publicly available by virtue of a breach of the provisions of
this Section 2.5). At the termination of the Member's services to the Company,
all data, memoranda, client lists, notes, programs and other papers, items and
tangible media, and reproductions thereof relating to the foregoing matters in
the Member's possession or control, shall be returned to the Company and remain
in the Company's possession (except where the return of such items shall be
unreasonable or impracticable in relation to the importance or confidentiality
of such items).
(c) As a further condition and material inducement to admission as a
Member, each Member (other than the Manager) agrees, for the benefit of the
Company and the other Members, to enter into Non-disclosure and Non-solicitation
agreements to substantially the same effect as the provisions of Sections 2.5(a)
and (b) hereof, or into an employment agreement containing such provisions. The
provisions of this Section 2.5 shall not be deemed to limit any of the rights of
the Company or the Manager under any of such agreements or under Applicable Law,
but shall be in addition to the rights set forth in each of such agreements and
those which arise under Applicable Law.
2.6 Remedies Upon Breach.
(a) Each Member agrees that any breach of the provisions of Section 2.5 of
this Agreement or of the provisions of any agreement referred to in Section
2.5(c)
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by such Member could cause irreparable damage to the Company and the other
Members. The Company and the Manager shall have the right to seek an injunction
or other equitable relief (in addition to other legal remedies) to prevent any
violation of a Member's obligations hereunder or thereunder.
(b) In the event that a Member is terminated pursuant to Section
2.1(b)(iv), then such Member and any member of his Immediate Family shall be
obligated to sell to the other Non-Manager Members of the Company, at the
election of each of them made within 30 days after such Member's termination
becomes effective or, to the extent any such other Non-Manager Member shall fail
to make such election, at the election of the Company made within 30 days after
receiving notice of the results of elections by the other Non-Manager Members,
all of such Member's Membership Interests and to pay to the Company the
after-tax proceeds of any sale or other transfer of any portion of his
Membership Interest or any interest therein to any Person during the two
preceding years. The price at which the other Non-Manager Members or the Company
shall be entitled to purchase such Member's Membership Interest shall be (i) in
the case of termination For Cause in whole or in part on account of a violation
of Section 2.5 of this Agreement or the parallel provisions of such Member's
employment or noncompetition agreement with the Company, an amount equal to such
Member's tax basis in such Member's Membership Interests and (ii) in the case of
a termination For Cause for any reason entirely other than on account of a
violation of Section 2.5 of this Agreement or the parallel provisions of such
Member's employment or noncompetition agreement with the Company, an amount
equal to the sum of (A) the product of such Member's Percentage Interest prior
to such termination times the Non-Manager Member Pool for the Allocation Year
during which such termination occurs plus (B) the product of such Member's
Percentage Interest prior to such termination times the Non-Manager Member Pool
for the Allocation Year following the Allocation Year during which such
termination occurs. Such purchase price shall be paid as promptly as practicable
after determination thereof.
(c) Each Member agrees that the enforcement of the provisions of Sections
2.5 and 2.6 hereof, and the enforcement of the provisions of any agreement
referred to in Section 2.5(c) are necessary to ensure the protection
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and continuity of the business, goodwill and confidential business information
of the Company for the benefit of each of the Members. Each Member agrees that,
due to the proprietary nature of the Company's business, the restrictions set
forth in Section 2.5 hereof and in such agreements are reasonable as to duration
and scope. If any provision contained in this Article 2 shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Article 2. It is the intention of the parties hereto that if any of the
restrictions or covenants contained herein is held to cover a geographic area or
to be for a length of time that is not permitted by Applicable Law, or is in any
way construed to be too broad or to any extent invalid, such provision shall not
be construed to be null, void and of no effect, but to the extent such provision
would then be valid or enforceable under applicable law, such provision shall be
construed and interpreted or reformed to provide for a restriction or covenant
having the maximum enforce able geographic area, time period and other
provisions as shall be valid and enforceable under Applicable Law.
2.7 No Employment Obligation. Each Member acknowledges that neither this
Agreement nor the provisions of any agreement referred to in Section 2.5(c)
create an obligation on the part of the Company to continue the employment of
such Member with the Company, and that such Member, unless he is a party to an
Employment Agreement, is an employee at will of the Company. Notwithstanding the
foregoing, the Management Board or its delegate shall have general authority
regarding personnel decisions and the employment status of employees.
Each Member acknowledges that the obligations and rights under Sections
2.5 and 2.6 hereof shall survive the termination of the employment of such
Member with the Company and/or the withdrawal or removal of such Member from the
Company, regardless of the manner of such termination, withdrawal or removal in
accordance with the provisions hereof and of the relevant agreements of the type
referred to in Section 2.5(c).
2.8 Liability and Indemnification
(a) No Liability
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(i) No Covered Person shall be personally liable to the Company or
other Members in acting on behalf of the Company or in its, his or her capacity
as a Covered Person in a manner believed in good faith by such Covered Person to
be within the scope of authority granted to such Covered Person hereunder,
except as otherwise required by applicable law, provided that its, his or her
actions or omissions did not constitute fraud, bad faith, gross negligence or
willful misconduct.
(ii) Each Covered Person shall be fully protected in relying in
good faith upon information, opinions, reports or statements furnished by any
Person as to matters such Covered Person reasonably believes are within such
other Person's professional or expert competence and who has been selected with
reasonable care, including information, opinions, reports or statements as to
the value and amount of assets, liabilities, profits or losses of the Company,
the valuation of transactions in which the Company engages or contemplates
engaging, the reasonableness of the terms of a transaction, and any other facts
pertinent to the existence and amount of assets from which a distribution to
Members and Assignees might properly be paid.
(b) Right to Indemnification. Subject to the limitations and conditions as
provided in this Section 2.8, each Person who was or is made a party or is
threatened to be made a party to or is involved in any threatened, pending or
contemplated action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (a "Proceeding"), or any appeal in
such a Proceeding, by reason of the fact that such Person is or was a Covered
Person shall be indemnified by the Company against all costs and expenses,
including reasonable attorney's fees, the costs and expenses of investigation,
and judgments and amounts paid in settlement actually and reasonably incurred in
connection with such action, suit or proceeding, if such Covered Member acted in
good faith and in a manner in which such Covered Person believed in good faith
to be in the best interest of the Company.
(c) Advance Payment. The right to indemnification conferred in this
Section 2.8 shall include the right to be paid or reimbursed by the Company the
reasonable expenses incurred by a Covered Person who was, is or is threatened to
be made a named defendant or respondent in
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a proceeding in advance of the final disposition of the proceeding and without
any determination as to the Covered Person's ultimate entitlement to
indemnification; provided, however, that the payment of such expenses incurred
by any such Person in advance of the final disposition of a Proceeding shall be
made only upon delivery to the Company of a written affirmation by such Covered
Person of such Covered Person's good faith belief that he has met the standard
of conduct necessary for indemnification under this Section 2.8 and a written
undertaking, by or on behalf of such Covered Person, to repay all amounts so
advanced if it shall ultimately be determined that such Covered Person is not
entitled to be indemnified under this Section 2.8 or otherwise.
(d) Indemnification of Employees and Agents. With the consent of the
Manager, the Company may indemnify and advance expenses to any employee or agent
of the Company to the same extent and subject to the same conditions under which
it is required to indemnify and advance expenses to Covered Persons under
Sections 2.8(b) and (c).
(e) Limitation on Indemnification. Notwithstanding anything to the
contrary contained in this Section 2.8, no Person shall be entitled to
indemnification under Section 2.8 if any such indemnification shall be deter
mined to be contrary to Applicable Law or if it is deter mined by a court of
competent jurisdiction that such Person is not entitled to indemnification
because it, he or she (i) did not act in good faith, (ii) engaged in conduct
constituting gross negligence, willful misconduct or fraud, or (iii) did not act
in a manner that it, he or she believed in good faith to be in the best interest
of the Company.
2.9 Non-Manager Member Investment and Trading Accounts. For so long as
Newco or an Affiliate of Newco is a Member of the Company, the Non-Manager
Members shall maintain investments (other than through their interests in the
Company) in investment vehicles managed by the Company in an aggregate amount
for all Non-Manager Members of at least $10 million less any reduction
attributable to market depreciation. The Non-Manager Members may also maintain
brokerage and investment accounts that are not managed by the Company so long as
(a) the aggregate amount of funds of the Non-Manager Members managed
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by the Company is at least $10 million (less any reduction attributable to
market depreciation), (b) the maintenance and operation of such accounts
complies with Applicable Law and the Company's compliance policies and (c) the
Manager is provided reasonable opportunity to examine such accounts as required
by Applicable Law.
ARTICLE 3
CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS
3.1 Capital Accounts. (a) A single capital account ("Capital Account")
shall be maintained for each Member in accordance with the capital accounting
rules of Section 704(b) of the Code. No Member shall have the right to withdraw
any part of his Capital Account until the dissolution and winding up of the
Company, except as distributions pursuant to this Article 3 may represent
returns of capital, in whole or in part. No Member shall be entitled to receive
any interest on any Capital Account balance. No Member shall have any personal
liability for the repayment of any Capital Contribution of any other Member.
Except as may be agreed to in connection with the issuance of additional
Membership Interests, as specifically set forth herein or as may be required
under Applicable Law, no Member shall be required to make any further Capital
Contributions to the Company.
(b) Each Member's opening Capital Account shall be as stated in Schedule A
hereto. Thereafter, a Member's Capital Account shall be credited with (i) such
Member's subsequent Capital Contributions; (ii) such Member's share of the Net
Income or other income and gain of the Company as provided herein; and (iii)
such other amounts as may be required in order for the Capital Account to be
considered to be determined and maintained in accordance with the rules under
Regulation Section 1.704-1(b)(2)(iv) or any successor section of similar import.
A Member's Capital Account shall be debited with (i) such Member's share of the
Net Loss or other deductions and losses of the Company as provided herein, (ii)
distributions made to such Member (including liquidating distributions), and
(iii) such other amounts as may be required for the Capital Account to be
considered to be determined and maintained in accordance with the rules under
Regulation
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Section 1.704-1(b)(2)(iv) or any successor section of similar import.
3.2 Allocations.
(a) Net Income and Net Loss. After giving effect to the special
allocations set forth in Section 3.2(b), Net Income and Net Loss will be
allocated among the Members as follows:
(i) Net Income for any period will be allocated among the Members
first to restore any prior allocations of Net Loss to such Members (in
proportion to the amount of Net Loss previously allocated to each such Member),
and then to the Members in accordance with their Percentage Interests; and
(ii) Net Loss for any period will be allocated among the Members in
the proportion that the positive balance in each Member's Capital Account bears
to the sum of all Capital Accounts having positive balances until all such
positive Capital Account balances have been reduced to zero.
(b) ****[This subsection (approximately half a page) has been omitted
pursuant to the confidential treatment request referenced on the cover page
hereto. The omitted portion has been filed separately with the Commission.]****
(c) Periods. The allocations provided in this Agreement shall be made as
of the end of each calendar quarter, and allocations for any subsequent quarter
in the same Allocation Year shall appropriately take into account adjustments
made to the Company's reported financial performance in any such prior calendar
quarter.
(d) Transferred Interests. For purposes of this Section 3.2, if any Member
transfers any Interest in the Company during any quarter of any Allocation Year,
Net Income or Net Loss attributable to such transferred Interest for that
quarter will be divided and allocated between the Transferor and Transferee in
proportion to the number of days during the quarter that each was the owner of
the Interest transferred.
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(e) Acknowledgment of Tax Consequences. The Members are aware of the
income tax consequences of the allocations made by this Section 3.2 and Appendix
B, and hereby agree to be bound by the provisions of this Agreement in
reporting their share of Taxable Income or Loss for income tax purposes.
3.3 Distributions.
(a) ****[This subsection (approximately one and a half pages) has been
omitted pursuant to the confidential treatment request referenced on the cover
page hereto. The omitted portion has been filed separately with the
Commission.]****
(b) Distributions Concerning Interests Transferred. Distributions made
under this Section 3.3 with respect to any transferred Interest will be made
only to Members of record (or assignees as provided herein) on the record date
designated by the Company.
(c) No Violations. Notwithstanding anything in this Agreement to the
contrary, the Company will not be obligated to, and will not, make any
distribution that would (i) render the Company insolvent, (ii) violate the Act
or other Applicable Law or (iii) cause any Member to have an Adjusted Capital
Account Deficit as of the end of the current Allocation year (as defined in
Appendix B).
(d) Distributions in Kind. If any assets of the Company are distributed in
kind, such assets will be distributed on the basis of the then fair market value
thereof, as reasonably determined by the Manager and the Management Board. All
such distributions will be in the same proportion as if such distribution had
been made in cash.
3.4 Distributions Upon Dissolution; Establishment of a Reserve Upon
Dissolution. (a) Upon the dissolution of the Company, after payment (or the
making of reason able provision for the payment) of all liabilities of the
Company owing to creditors, the Company, or if there is none, the Liquidating
Trustee appointed as set forth in Section 6.2 hereof, shall set up such reserves
as it deems reasonably necessary for any contingent, conditional or unmatured
liabilities or other obligations of the Company. Such reserves may be paid over
by the Company
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or Liquidating Trustee to a bank (or other third party), to be held in escrow
for the purpose of paying any such contingent, conditional or unmatured
liabilities or other obligations. The remaining assets of the Company shall be
distributed to the Members (i) in accordance with the positive balance (if any)
in their respective Capital Accounts (as determined immediately prior to each
such distribution) until all such positive Capital Account balances have been
reduced to zero (0), and (ii) thereafter, among the Members as of the date of
dissolution in accordance with their respective Percentage Interests as of the
date of dissolution.
(b) Timing of Liquidation Distributions. Distributions in liquidation
will be made by the end of the taxable year in which the liquidation occurs or,
if later, within 90 days of the liquidating event and will otherwise comply with
Regulations Section 1.704-1(b); provided, however, that the distribution of any
assets held in reserve as provided above shall be distributed at the expiration
of such time as the Company or the Liquidating Trustee deems advisable.
(c) Limitations on Payments made in Dissolution. Except as otherwise
specifically provided in this Agreement, including Section 4.4 hereof, each
Member will be entitled to look solely to the assets of the Company for the
return of his or her positive Capital Account balance and will have no recourse
for his or her Capital Contribution and/or share of Net Income, or other items
of income and gain, against the Manager or any other Member.
(d) If any assets of the Company are to be distributed in kind in
connection with such liquidation, such assets shall be distributed on the basis
of their Fair Market Value net of any liabilities encumbering such assets and,
to the greatest extent possible, shall be distributed pro-rata in accordance
with the total amounts to be distributed to each Member. Immediately prior to
the effectiveness of any such distribution-in-kind, each item of gain and loss
that would have been recognized by the Company had the property being
distributed been sold at Fair Market Value shall be determined and allocated in
accordance with Section 3.2 hereof to the Capital Accounts of those Persons who
were Members immediately prior to the effectiveness of such distribution.
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(e) Actions by the Company under this Section 3.4 shall be taken based
upon agreement by the Manager and the Management Board.
3.5 Proceeds from Key-Man Insurance. In the event the Company acquired any
key-man life insurance on the life of a Non-Manager Member, the premium expense
and any proceeds of such insurance shall be allocated, distributed and
reflected in Members' Capital Accounts as agreed by the Manager and the
Management Board.
ARTICLE 4
TRANSFER AND ISSUANCE OF INTERESTS
4.1 Limitation on Transfer of Membership Interests.
(a) ****[This subsection (approximately one page) has been omitted
pursuant to the confidential treatment request referenced on the cover page
hereto. The omitted portion has been filed separately with the Commission.]****
(b) Notwithstanding any other provision in this Article 4, no Assignment
or Admission shall be valid or effective unless the Assignor gives the Company
written notice before making any Assignment and, with such notice, provides the
Company with such evidence as the Company may require that such Assignment or
Admission will not violate this Agreement or Applicable Law.
(c) The Company or the Manager may require as a condition of any
Assignment that the Assignee assume all costs incurred by the Company in
connection therewith, including, but not limited to, legal fees and cost of
preparation and filing of any amendment to this Agreement if necessary or
desirable in connection therewith, and the Assignee shall execute, acknowledge
and deliver to the Company such documents or instruments in form and substance
satisfactory to the Company and the Manager as the Company and the Manager shall
deem necessary or desirable to effectuate such Assignment and to confirm the
agreement of the Assignee to be bound by all of the terms and provisions of this
Agreement. Any Assignment in contravention of any of the provisions of this
Section 4.1 shall be void ab initio and of no effect and shall not bind or be
recognized by the Company.
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(d) No Assignee shall be admitted as a Member unless: (i) the consent
requirements set forth in Section 4.1(a) shall have been satisfied, (ii) the
Assignee shall have indicated such intention in the instrument effecting the
Assignment and the Assignee expressly agrees to be bound, to the same extent as
the other Members, by the provisions of this Agreement, and any other documents
required in connection therewith and to assume the obligations of the Assignor
hereunder and become a signatory to this Agreement, (iii) the Assignor and the
Assignee shall have executed or delivered such other instruments as the Company
may deem necessary or desirable to effectuate such admission, and (iv) the
Assignee shall have agreed to pay (to the extent the Assignor shall not have
paid such costs under Section 4.1(c) hereof), as the Management Board may
determine, all reasonable expenses and legal fees relating to the Assignment and
the Assignee's Admission, including, but not limited to, the cost of any
required counsel's opinion and the preparation, filing and/or publishing of any
amendment to this Agreement necessary to effect such Admission. Upon the
Admission of the Assignee as a Member, Schedule A attached hereto shall be
amended to reflect the name and address of such Member and its Percentage
Interest and, if the Assignor has Assigned all of its Membership Interest, to
eliminate the name and address of the Assignor.
(e) No Person shall be Admitted as a Member with a Membership Interest
providing such Member with any interest in any items allocated to Newco without
the prior written consent of the Manager. No Person shall be admitted as a
Member with a Membership Interest providing such Member with any interest in any
items allocated to the Non-Manager Members without the consent of the Management
Board.
4.2 Assignees.
(a) Any Person who acquires in any manner whatsoever any Membership
Interest or portion thereof, irrespective of whether such Person has accepted
and adopted in writing the terms and provisions of this Agreement, shall be
deemed by the acceptance of the benefit of the acquisition thereof to have
agreed to be subject to and bound by all the obligations of this Agreement that
any predecessor in interest of such Person was subject to or bound by. A Person
acquiring any Membership Interest, includ-
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ing the personal representative and heirs of a deceased Member, shall have only
such rights, and shall be subject to all the obligations as are set forth in
this Agreement; and, without limiting the generality of the forego ing such
Person shall not have any right to have the value of its Membership Interest
ascertained or receive the value of such Membership Interest or, in lieu there
of, profits attributable to any right in the Company, except as herein set
forth.
(b) Any Assignee of a Membership Interest or portion thereof pursuant to
an Assignment satisfying the conditions of Section 4.1(a) hereof shall have the
right to receive the same share of the income, gain, deduction and loss and of
the distributions of the Company to which the Assignor would have been entitled
in respect of such Membership Interest or portion thereof. If such Assignee
desires to make an Assignment of his Membership Interest, it shall be subject to
all the provisions of this Article 4 to the same extent and in the same manner
as any Member desiring to make an Assignment.
(c) Any Member who shall Assign all of its Member ship Interest shall
cease to be a Member and shall no longer have any rights or privileges of a
Member except that, unless and until his Assignee is admitted to the Company as
a substitute Member in accordance with Section 4.1(a) hereof, such Assignor
shall retain all rights and be subject to all obligations under the Act and this
Agreement.
(d) In the event that an Assignment shall be made, there shall be filed
with the Company a duly executed and acknowledged counterpart of the instrument
making such Assignment. Such instrument must evidence the written acceptance of
the Assignee to all the terms and provisions of this Agreement. If such an
instrument is not so filed, the Company need not recognize any such purported
Assignment for any purpose. The instrument so filed insofar as the Company is
concerned shall be construed as the total contract between the Assignor and the
Assignee, and the Company shall not be bound to recognize any terms not
disclosed in the instrument so filed.
4.3 Issuance of Additional Membership Interests.
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(a) ****[This subsection (approximately half a page) has been omitted
pursuant to the confidential treatment request referenced on the cover page
hereto. The omitted portion has been filed separately with the Commission.]****
(b) ****[This subsection has been omitted pursuant to the confidential
treatment request referenced on the cover page hereto. The omitted portion has
been filed separately with the Commission.]****
(c) Upon the repurchase of Membership Interests or the issuance of
additional Membership Interests, the Manager shall make the appropriate
revisions to Schedule A hereto.
(d) ****[This subsection has been omitted pursuant to the confidential
treatment request referenced on the cover page hereto. The omitted portion has
been filed separately with the Commission.]****
4.4 Capital Contributions. ****[This section (approximately half a page)
has been omitted pursuant to the confidential treatment request referenced on
the cover page hereto. The omitted portion has been filed separately with the
Commission.]****
ARTICLE 5
BOOKS AND RECORDS
5.1 Bank Accounts. The bank accounts of the Compa ny shall be maintained
in such banking institutions authorized to do business in such places as the
Management Board shall determine, and withdrawals shall be made on such
signatures as the Management Board shall deter mine.
5.2 Fiscal Year. The fiscal year of the Company (the "Fiscal Year") shall
be the calendar year.
5.3 Books and Records. Complete and accurate books and records required by
Applicable Law shall be kept or caused to be kept by the Management Board. The
Company's financial books shall be kept on the accrual method of
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accounting. All of the Company's books and records, together with an executed
copy of this Agreement and copies of all other agreements, contracts, leases,
insurance policies, employee benefit programs, securities trading records and
other instruments as any officer may execute or obtain for the Company
hereunder, including amendments thereto, shall at all times be kept at the
business office of the Company, and all such books and records shall be
available upon reasonable notice and without interference with the regular
business operations of the Company during normal business hours for inspection
by any Member or its duly authorized representative or, at the expense of any
Member, for audit by it or its duly authorized representative.
5.4 Reports to Members.
(a) Within 15 days after the end of each month and fiscal quarter of the
Company, the Management Board shall send to the Members an unaudited balance
sheet of the Company as of the end of such month and fiscal quarter and
unaudited statements of income (loss) for such fiscal quarter, each prepared in
accordance with generally accepted accounted principles consistently applied
("GAAP") except that monthly reports need not be prepared in accordance with
GAAP so long as they disclose the nature and effect of deviations from GAAP.
Except to the extent inconsistent with the sound operation of the Company's
business or not reasonably within the control of the Management Board, within 45
days after the end of each Fiscal Year or such lesser number of days as the
Manager shall inform the Management Board is necessary for AAC to announce its
financial results for such Fiscal Year, the Management Board shall send to the
Members an balance sheet of the Company as of the end of such Fiscal Year and
statements of income (loss), Members' capital and cash flow of the Company for
such Fiscal Year, all of which shall be audited by the Company's independent
certified public accountants and prepared in accordance with GAAP. In addition
to the above, the Management Board shall provide to the Members any other
reports as are reasonably requested by the Manager from time to time, including
operating budgets for the next succeeding four fiscal quarters, performance data
and any material AAC may need for any reports to shareholders or regulatory
filings.
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(b) To the extent practicable, the Management Board shall provide to each
Member by November 30 of each Fiscal Year an estimate of such Member's share of
the profits and losses for Federal and state income tax purposes for such Fiscal
Year. The Management Board shall, for each Fiscal Year, file on behalf of the
Compa ny a U.S. Federal partnership information tax return within the time
prescribed by law for such filing. The Management Board shall also file on
behalf of the Company such other tax returns and other documents from time to
time as may be required by the Federal government or by the State of Delaware or
any other state or any subdivision thereof. Except as otherwise consented to by
the Manager, all tax returns shall be prepared by the accountants for the
Company. The officers of the Company shall send a copy of the Company's tax
returns and a copy of Schedule K-1 or any successor or replacement form thereof,
and, upon request, such tax return, to each Member as soon after the expiration
of each Fiscal Year as such items are available.
(c) Each of the foregoing reports shall be subject to review and
modification by the Manager and the time periods set forth in the foregoing
provisions shall be subject to modification by the Manager to the extent
necessary to permit it to make required reports and filings on a timely basis.
5.5 Meetings. The Company and its officers shall be available to meet with
the Manager from time to time by telephone or in person to update the Manager as
to the performance, operations, business plans and prospect of the Company and
to discuss matters of mutual interest.
5.6 Tax Matters. Newco shall be the "tax matters partner" for the Company
for purposes of Sections 6221 through 6233 of the Code.
ARTICLE 6
DISSOLUTION AND LIQUIDATION
6.1 Events Causing Dissolution.
(a) The Company shall be dissolved upon the happening of any of the
following events:
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(i) The Company shall be dissolved upon the occurrence of any of the
events specified in Section 18-801 of the Act, including, without
limitation, (A) the written consent of all Members; (B) the death,
retirement, resignation, withdrawal, expulsion, Bankruptcy or dissolution
of a Member or the occurrence of any other event which terminates the
continued membership of a Member in the Company, unless there is at least
one remaining Member and the business of the Company is not discontinued
by consent of Members holding a majority in Percentage Interest within 90
days following the occurrence of the event; or (C) the entry of a decree
of judicial dissolution under Section 18-802 of the Act; or
(ii) Any event which shall make it unlawful for the existence of the
Company to be continued.
(b) In the event of a Bankruptcy of a Member that does not cause the
Company to dissolve as provided in subparagraph (a) of this Section 6.1, such
Member shall cease to be a Member for all purposes hereunder unless upon the
consent of Members holding a majority in Percentage Interest, such Bankrupt
Member is permitted to remain a Member hereunder.
6.2 Liquidation.
(a) Upon the dissolution of the Company, the Compa ny shall be liquidated
in accordance with this Section 6.2 and Sections 18-803 and 18-804 of the Act.
The liquidation shall be conducted and supervised by the Manager and the
Management Board or, if there is no Manager and Management Board, by a person
who shall be designated for such purpose unanimously by the Members (the Manager
and the Management Board, or such person so designated, being hereinafter
referred to as the "Liquidating Trustee"). The Liquidating Trustee shall have
all of the rights in connection with the liquidation and termination of the
Company that the Manager and Management Board would have with respect to the
assets and liabilities of the Company during the term of the Company, and the
Liquidating Trustee is hereby expressly authorized and empowered to effectuate
the liquidation and termination of the Company and the transfer of any assets
and liabilities of the Company. The Liquidating Trustee shall have the right
from time to time, by revocable
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powers of attorney, to delegate to one or more persons any or all of such rights
and powers and the authority and power to execute documents in connection
therewith, and to fix the reasonable compensation of each such person, which
compensation shall be charged as an expense of liquidation. The Liquidating
Trustee is also expressly authorized to distribute the Company's property to
the Members subject to Liens.
(b) During the period of liquidation of the Compa ny, all of the
provisions of this Agreement shall continue in effect. The Capital Accounts of
the Members prior to any distributions pursuant to this Section 6.2(b) shall be
credited or charged and shall be computed in accordance with the provisions of
this Agreement. Upon the dissolution of the Company, the proceeds from the
liquidation of the Company's assets shall be applied as promptly as possible in
the following order:
(i) first, to the payment and discharge of the Company's debts and
liabilities (including loans made to the Company by the Members, and the
establishment of any necessary reserves;
(ii) second, in accordance with Section 3.4 hereof an amount equal
to the liquidation proceeds.
(c) Each Member shall be furnished with a statement prepared by the
Liquidating Trustee which shall set forth the assets and liabilities of the
Company as at the date of complete liquidation, and each Member's share thereof.
Upon compliance with the distribution plan contemplated by Section 6.2(b) and
Section 3.4 hereof, each Member shall cease to be a Member of the Company, and
the Liquidating Trustee shall execute acknowledge and cause to be filed a
certificate of cancellation of the Company.
(d) A reasonable time shall be allowed for the orderly liquidation of the
assets of the Company and the discharge of liabilities so as to minimize the
losses normally attendant upon a liquidation.
(e) At no time during continuation of the Company shall any value ever be
placed on the Company name, or the right to its use, or to the goodwill
appertaining to the company or its business, either as among the Members or for
the purpose of determining the value of any Mem-
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bership Interest, nor shall the legal representatives of any Member have any
right to claim any such value. In the event of a termination and dissolution of
the Company as provided in this Agreement, neither the Company name, nor the
right to its use, nor the aforesaid goodwill, if any, shall be considered as an
asset of the Company and no valuation shall be put thereon for the purpose of
liquidation or distribution, or for any other purpose whatsoever; nor shall any
value ever be placed thereon as between the remaining or surviving Members and
the legal representatives of the estate of any deceased, insane, incompetent,
dissolved, liquidated or Bankrupt Member.
ARTICLE 7
MISCELLANEOUS
7.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed entirely therein, without regard to the conflict of laws
principles thereof.
7.2 Either the Manager or the Management Board shall have the authority to
take such action as may be necessary or appropriate:
(i) To qualify or continue the Company as a limited liability
company;
(ii) Subject to Section 7.10, below, to reflect an amendment of this
Agreement;
(iii) To reflect the dissolution and termination of the Company; or
(iv) To effect Assignments, Admissions and terminations of Members
as specifically provided under the terms of this Agreement, including any
amendment to Schedule A attached hereto necessary to reflect the same.
7.3 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original for all purposes, but all of
which taken together shall constitute only one agreement. The production of any
executed counterpart of this Agreement shall be
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sufficient for all purposes without producing or account ing for any other
counterpart thereof.
7.4 Severability. Each provision of this Agreement shall be considered
separable and if for any reason any provision or provisions herein (a) are
determined to be invalid or contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid, or (b) would cause any Member to be bound by or
liable for the obligations of the Company under the laws of any state or locale
as the same may now or hereafter exist, such provision or provisions shall be
deemed void and of no effect.
7.5 Notices. All notices, demands, solicitations of consent or approval
and other communications hereunder required or permitted shall be in writing and
shall be deemed to have been given when personally delivered or five days after
the date when deposited in the United States mail and sent postage prepaid by
registered or certified mail, return receipt requested, or one day after sent by
overnight mail or courier or transmitted by facsimile, addressed as follows: if
intended for (a) the Company, to its business office or (b) the Members, to
their respective addresses set forth on Schedule A attached hereto, or to such
other address which any Member shall have given to the Company and the other
Member for such purpose by notice hereunder.
7.6 Titles. All section titles or captions contained in this Agreement
are for convenience only and shall not be deemed part of the text of this
Agreement.
7.7 Entire Understanding. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements between and among them respecting the subject matter of this
Agreement.
7.8 Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the heirs, executors, administrators, legal representatives and
permitted successors and assigns of the parties hereto as well as their
Affiliates.
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7.9 Parties in Interest. Nothing herein shall be construed to be to the
benefit of or enforceable by any third party including, but not limited to, any
creditor of the Company.
7.10 Amendments.
(a) This Agreement may be amended by the Manager or the Management Board
without the consent or approval of any Member for ministerial purposes in the
circumstances expressly permitted by this Agreement.
(b) Except as provided in Section 7.10(a) above, this Agreement may not be
amended or modified except with the consent of Members holding a majority in
Percentage Interest: provided, however, that the written consent of all Members
must be obtained to any amendment which would (i) amend this Section 7.10, (ii)
increase or extend the liability or obligation of any Member or (iii) increase
the amount of Capital Contributions payable by any Member; and, provided
further, that no amendment adversely affecting the rights or ownership interests
of the Non-Manager Members under this Agreement (taken as a whole) may be made
without the written consent of Non-Manager Members holding a majority of the
Non-Manager Member Percentage Interests.
(c) Notwithstanding any other provision of this Agreement, no action may
be taken under this Agreement unless such action is taken in compliance with the
provisions of the Act.
7.11 Further Assurances. The Members will execute and deliver such further
instruments and do such further acts and things as may be required to carry out
the intent and purposes of this Agreement.
7.12 Remedies Cumulative. No remedy conferred upon or reserved to the
Company or any Member by this Agreement is intended to be exclusive of any other
remedy. Each and every such remedy shall be cumulative and shall be in addition
to any other remedy given to the Company or any Member hereunder or now or
hereafter existing at law or in equity or by statute.
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7.13 Construction. Each definition or pronoun herein shall be deemed to
refer to the singular, plural, masculine, feminine or neuter as the context
requires.
7.14 Arbitration. Except as provided herein, any dispute, controversy or
claim arising out of or relating to this Agreement or the transactions
contemplated hereby shall be settled and finally determined by arbitration in
New York, New York (if arbitration is initiated by a Non-Manager Member) or Los
Angeles, California (if arbitration is initiated by the Manager) or at such
other location as the parties may agree, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") in force
at the time of such arbitration. Judgment upon any award rendered by such an
arbitration may be rendered in any court having jurisdiction. All fees and
charges of the American Arbitration Association and of the arbitrators and all
arbitration-related costs of the parties shall be borne as the arbitrators shall
determine in their award.
Any arbitration pursuant to this Section 7.14 shall be conducted by a
single arbitrator mutually agreeable to the Manager and the Non-Manager Member.
The written decision of the arbitrator shall be binding, final and conclusive
upon the parties. Any party may apply to a court of competent jurisdiction to
enforce the award of the arbitrators. The procedures specified in this Section
7.14 shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided,
however, that a party may seek a preliminary injunction or other preliminary
judicial relief from a court of competent jurisdiction if in the judgment of
such party such action is necessary to avoid irreparable injury. Despite such
action, the parties will continue to participate in good faith in the procedures
specified in this Section 7.14 (it being understood and agreed that after the
initial decision of such court as to such preliminary injunction or other
preliminary judicial relief and after decision of any appellate body or the
expiration of all time periods for appellate review thereof, the parties shall
thereafter submit the dispute, controversy or claim to arbitration pursuant to
this Section 7.14). The arbitrator shall be empowered to award equitable or
injunctive relief. The award of damages, if any, shall be
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limited to actual damages. The arbitrator is not empowered to award punitive
damages.
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IN WITNESS WHEREOF, the Members have caused this Agreement to be duly
executed and delivered as of the Effective Date.
ASSET ALLIANCE MANAGEMENT CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
ASSET ALLIANCE BRICOLEUR MERGER CO. INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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