AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
SNEAKER GUARANTEE LLC
This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
(this "Agreement") of SNEAKER GUARANTEE LLC (the "Company") is effective
as of the 30th day of June, 1998 (the "Effective Date") by and among
each of the Persons (as hereinafter defined) executing this Agreement as
Members (as hereinafter defined) as of the Effective Date and each Person
subsequently admitted as a Member of the Company.
RECITAL
The Members formed a limited liability company in
accordance with the provisions of the Delaware Limited Liability Company
Act, as amended from time to time, and any successor statute (the "Act"),
and desire to enter into a written agreement pursuant to the Act governing
the affairs of the Company and the conduct of its business. On July 13,
1998 THL Equity Advisors III Limited Partnership was elected to replace
▇▇▇▇▇▇ ▇. ▇▇▇ Company as Manager, and the Members authorized an amendment
and restatement of this Agreement to reflect such election. Accordingly,
in consideration of the mutual covenants contained herein and for other
good and valuable consideration, the Members agree as follows:
ARTICLE I
Definitions
1.1 Defined Terms. As used herein, the following terms shall have
the meanings set forth below:
"Additional Member" shall mean a Person who has acquired Units from
the Company after the Effective Date and been admitted as a Member of the
Company pursuant to Section 9.2 hereof.
"Affiliate" shall mean, with respect to any Person, (a) any Person
directly or indirectly controlling, controlled by or under common control
with such Person and (b) any officer or director of such Person. For
purposes of this definition, the term "control" (including without
limitation any derivations thereof) shall mean possession, direct or
indirect, of the power to direct or cause the direction of the management
and policies of a Person or entity, whether through the ownership of voting
securities, by contract or otherwise.
"Agreed Value" shall mean the fair market value of contributed
property, as determined by the Manager using any reasonable method of
valuation.
"Assignee" shall mean a transferee of Units who has not been
admitted as a Substitute Member.
"Bankruptcy" shall mean, with respect to any Person, the occurrence
of any of the following events: (a) the filing by such Person of a
petition in bankruptcy or for relief under applicable bankruptcy laws; (b)
the filing against such Person of any such petition (unless such petition
is dismissed within ninety (90) days from the date of filing thereof); (c)
entry against such Person of an order for relief under applicable
bankruptcy laws; (d) written admission by such Person of its inability to
pay its debts as they mature, or an assignment by such Person for the
benefit of creditors; or (e) appointment of a trustee, conservator or
receiver for the property or affairs of such Person.
"BNP" shall have the meaning set forth in Section 2.3 hereof.
"Business Day" shall mean each day of the calendar year other than
a Saturday, a Sunday or a day on which banks are required or authorized to
close in the State of Delaware.
"Capital Account" shall mean the account maintained for a Member or
Assignee determined in accordance with Article V hereof.
"Capital Contribution" shall mean any contribution of cash or
obligation to contribute cash to the Company made by or on behalf of a
Member.
"Certificate of Formation" shall mean the certificate of formation
of the Company filed in the Office of the Secretary of State of the State
of Delaware pursuant to the Act and through which the Company has been
formed.
"Claims" shall have the meaning set forth in Section 12.2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time (or any corresponding provisions of succeeding law).
"Corporation" shall have the meaning set forth in Section 2.3
hereof.
"Covered Person" and "Covered Persons" shall have the meanings set
forth in Section 12.1 hereof.
"Debt Restructuring Agreement" shall have the meaning set forth in
Section 2.3 hereof.
"Distribution" shall mean a transfer of cash or property by the
Company to a Member on account of Units as described in Article VI hereof.
"Guaranty" shall have the meaning set forth in Section 2.3 hereof.
"Indemnified Person" and "Indemnified Persons" shall have the
meanings set forth in Section 12.2 hereof.
"Initial Members" shall mean those Persons who have executed this
Agreement as Members as of the Effective Date.
"Losses" shall mean, for each Taxable Year, an amount equal to the
Company's taxable loss for such Taxable Year, determined in accordance with
Code Section 703(a).
"Majority of Members" shall mean Members owning a majority of the
issued and outstanding Units.
"Manager" shall mean each Person elected by the Members as a
Manager pursuant to Section 4.1(b) hereof. A Manager need not be a Member.
"Member" shall mean an Initial Member, Substitute Member or
Additional Member, as the case may be; and "Members" shall mean the Initial
Members, Substitute Members and Additional Members, collectively.
"Permitted Transfer" shall have the meaning set forth in Section
8.1 hereof.
"Permitted Transferee" shall mean, with respect to any Member,
(i) an Affiliate of such Member, (ii) a spouse, child or other descendant
of such Member or a trust for the benefit thereof, (iii) upon the death of
such Member, such Member's personal representative, executor,
administrator, testamentary trustees, legatees or beneficiaries, (iv) any
holder of indebtedness of or an equity interest in Sneaker immediately
prior to the closing of the acquisition of Sneaker by the Corporation or
(v) any other Member.
"Person" shall mean an individual, trust, estate, corporation,
partnership, limited liability company or any other incorporated or
unincorporated entity permitted to be a member of a limited liability
company under the Act.
"Pledge and Security Agreement" shall have the meaning set forth in
Section 2.3 hereof.
"Profits" shall mean, for each Taxable Year, an amount equal to the
Company's taxable income for such Taxable Year, determined in accordance
with Code Section 703(a).
"Purchase Agreement" shall have the meaning set forth in
Section 2.3 hereof.
"Registration Rights Agreement" shall have the meaning set forth in
Section 2.3 hereof.
"Regulations" shall mean, except where the context indicates
otherwise, the permanent and temporary regulations of the Department of the
Treasury promulgated under the Code, as such regulations may be lawfully
changed from time to time (including without limitation corresponding
provisions of succeeding regulations).
"Sneaker" shall mean Sneaker Stadium, Inc., a Delaware corporation.
"Substitute Member" shall mean an Assignee who has been admitted to
all of the rights of membership pursuant to Section 9.3 hereof.
"Taxable Year" shall mean the taxable year of the Company as
determined for federal income tax purposes.
"Transfer" shall mean, as a noun, any voluntary or involuntary
transfer, sale, assignment, pledge, encumbrance or other disposition; and,
as a verb, voluntarily or involuntarily to sell, assign, transfer, grant,
give away, hypothecate, pledge, encumber or otherwise dispose of, and shall
include any transfer by will, gift or intestate succession.
"Unit" shall mean an equity interest in the Company as described in
Section 5.1 hereof.
ARTICLE II
The Limited Liability Company
2.1 Formation. The Members have formed the Company as a limited
liability company pursuant to the provisions of the Act. A Certificate of
Formation for the Company has been filed in the Office of the Secretary of
State of the State of Delaware in conformity with the Act. The Company
and, if required, each of the Members shall execute or cause to be executed
from time to time all other instruments, certificates, notices and
documents and shall do or cause to be done all such acts and things
(including without limitation keeping books and records and making
publications or periodic filings) as may now or hereafter be required for
the formation, valid existence and, when appropriate, termination of the
Company as a limited liability company under the laws of the State of
Delaware.
2.2 Name. The name of the Company shall be "Sneaker Guarantee
LLC," and its business shall be carried on in such name with such
variations and changes as the Manager shall determine or deem necessary to
comply with requirements of the jurisdictions in which the Company's
operations are conducted.
2.3 Business Purposes. The Company is formed for the purposes of:
(a) entering into (i) a Common Stock and Warrant Purchase Agreement dated
as of July 2, 1998 by and among the Company, Just For Feet, Inc., a
Delaware corporation (the "Corporation") and, for certain limited purposes,
▇▇▇▇▇▇ ▇. ▇▇▇ Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (the "Purchase Agreement") and
(ii) a related Registration Rights Agreement dated as of the same date
among the Company, the Corporation, ▇▇▇▇▇▇ ▇. ▇▇▇ Company, solely in its
capacity as Investors' Agent, and, for limited purposes, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
(the "Registration Rights Agreement"); (b) entering into (i) a Debt
Restructuring Agreement dated as of July 2, 1998 by and among Sneaker, the
Company, Banque Nationale de Paris, for itself and as agent for itself and
for other financial institutions listed therein ("BNP"), and ▇▇▇▇▇▇ ▇. ▇▇▇
Company (the "Debt Restructuring Agreement"), (ii) a related Guaranty in
favor of BNP dated as of the same date (the "Guaranty") and (iii) a related
Pledge and Security Agreement to BNP dated as of the same date (the "Pledge
and Security Agreement"); (c) acquiring, holding and selling or otherwise
disposing of stocks, and options, warrants, rights or other securities
convertible, exchangeable or exercisable for stocks, issued by the
Corporation; and (d) receiving, holding and selling, disbursing or
otherwise disposing of cash or other property received as dividends,
distributions or other passive type of income in connection therewith.
2.4 Company Powers. The Company and the Manager (acting on behalf
of the Company) shall possess and may exercise all of the powers and
privileges granted by the Act or by any other law or by this Agreement,
together with any powers incidental thereto, so far as such powers and
privileges are necessary or convenient to the conduct, promotion or
attainment of the business purposes of the Company specified in Section 2.3
hereof, including without limitation the power:
(a) to acquire, hold, manage, own, sell, transfer, convey,
assign, exchange, license, pledge or otherwise dispose of the Company's
interest in assets or any property held by the Company, including without
limitation stocks, bonds, notes or other similar interests issued by the
Corporation and, upon the consent of a Majority of Members, by any other
Person;
(b) to engage personnel and to establish, have, maintain or
close one or more offices within or without the State of Delaware and in
connection therewith to rent or acquire office space;
(c) to open, maintain and close bank and brokerage accounts,
including without limitation the power (i) to set up escrow accounts, (ii)
to draw checks or other orders for the payment of moneys and (iii) to
invest such funds as are temporarily not otherwise required for Company
purposes;
(d) to bring and defend actions and proceedings at law or in
equity or before any governmental, administrative or other regulatory
agency, body or commission;
(e) to hire consultants, custodians, attorneys, accountants
and such other agents, officers and employees of the Company as it may deem
necessary or advisable and to authorize each such agent or employee to act
for and on behalf of the Company;
(f) to make all elections, investigations, evaluations and
decisions, binding the Company thereby, that may, in the sole judgment of
the Manager, be necessary or appropriate to further the business purposes
of the Company;
(g) to enter into, perform and carry out contracts and
agreements of every kind necessary or incidental to the accomplishment of
the Company's business purposes (including without limitation the Purchase
Agreement, the Registration Rights Agreement, the Debt Restructuring
Agreement, the Guaranty and the Pledge and Security Agreement) and to take
or omit to take such other action in connection with the business of the
Company as may be necessary or desirable to further the business purposes
of the Company; and
(h) to carry on any other activities necessary to, in
connection with or incidental to any of the foregoing or the Company's
business.
2.5 Registered Office and Agent. The location of the registered
office of the Company shall be ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇. The Company's registered agent at such address shall be
Corporation Service Company. The Manager may, from time to time, change
the Company's registered office or registered agent and shall forthwith
amend the Certificate of Formation to reflect such change.
2.6 Term. The existence of the Company commenced on the date of
the filing of the Certificate of Formation in the Office of the Secretary
of State of the State of Delaware in accordance with the Act and, subject
to the provisions of Articles X and XI below, the Company shall have
perpetual existence.
2.7 Principal Place of Business. The principal place of business
of the Company shall be located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇ or at such other location as the Manager may, from time to time,
select.
2.8 Title to Company Property. Legal title to all property of the
Company shall be held, vested and conveyed in the name of the Company, and
no real or other property of the Company shall be deemed to be owned by the
Members individually. The Units of each Member shall constitute personal
property.
2.9 Business Transactions of the Members and Managers with the
Company. In accordance with Section 18-107 of the Act, each Member and
Manager may lend money to, borrow money from, act as a surety, guarantor or
endorser for, guarantee or assume one or more obligations of, provide
collateral for and transact other business with the Company and, subject to
applicable law, shall have the same rights and obligations with respect to
any such matter as a Person who is not a Member or Manager.
2.10 Fiscal Year. The fiscal year of the Company (the "Fiscal
Year") for financial statement purposes shall end on December 31 of each
year, or such other date as may be determined by the Manager from time to
time.
ARTICLE III
The Members
3.1 The Members. The name, address, facsimile number and Capital
Contribution of, and number of Units held by, each Member are set forth on
Schedule A hereto, which shall be amended from time to time to reflect (a)
the admission of each Additional Member or Substitute Member, (b) any
additional Capital Contribution or acquisition of additional Units by an
existing Member or (c) the cessation of a Member pursuant to Section 9.4
hereof.
3.2 Member Meetings.
(a) Actions by the Members; Meetings. The Members may vote,
approve a matter or take any action by the vote of Members at a meeting, in
person or by proxy, or without a meeting by the written consent of Members
pursuant to subparagraph (b) below. Meetings of the Members may be called
by the Manager and shall be held upon at least two (2) days' prior written
notice of the time and place of such meeting given by the Manager. Notice
of any meeting may be waived by any Member before or after any meeting.
Meetings of the Members may be conducted in person or by conference
telephone facilities.
(b) Action by Written Consent. Any action required or
permitted under the Act or this Agreement to be taken by the Members, and
any action otherwise referred to the Members for their approval by the
Manager, may be taken by the Members without a meeting if authorized by the
written consent of Members holding such number of Units as would be
required to approve such action under the Act or this Agreement if such
action had been approved at a duly convened meeting of Members. In no
instance where action is authorized by written consent shall a meeting of
Members be called or notice be given; however, a copy of the action taken
by written consent shall be sent promptly to all Members and filed with the
records of the Company.
(c) Quorum; Voting. For any meeting of Members, the presence
in person or by proxy of a Majority of Members shall constitute a quorum
for the transaction of any business. Except as otherwise provided in this
Agreement, the affirmative vote of a Majority of Members shall constitute
approval of any action. Except as set forth in this Agreement, each Member
shall be entitled to vote on all matters upon which Members have the right
to vote ratably in proportion to the number of Units held by such Member.
3.3 No Liability of Members. All 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 shall be obligated personally for any such debt, obligation or
liability of the Company solely by reason of being a Member.
3.4 Power to Bind the Company. No Member (acting in its capacity
as such) shall have any authority to bind the Company to any third party
with respect to any matter, except pursuant to a resolution expressly
authorizing such action which resolution is duly adopted by the Manager.
ARTICLE IV
Management of the Company
4.1 Management by Manager.
(a) Subject to such matters as are expressly reserved
hereunder or under the Act to the Members for decision, the business and
affairs of the Company shall be managed by a Manager who or which shall be
responsible for policy-setting, approving the overall direction of the
Company and making all decisions affecting the business and affairs of the
Company. In furtherance, and not in limitation, of the foregoing, the
Manager shall have the power to acquire, hold, manage, own, sell, transfer,
convey, assign, exchange, license, pledge or otherwise dispose of the
Company's interest in assets or any property held by the Company, including
without limitation stocks, and options, warrants, rights or other
securities convertible, exchangeable or exercisable for stocks, issued by
the Corporation. The Manager shall be THL Equity Advisors III Limited
Partnership, a Massachusetts limited partnership, to serve in accordance
with Section 4.1(b) hereof.
(b) Each Manager shall be elected by a Majority of Members and
shall serve until its successor has been duly elected and qualified, or
until its earlier removal, resignation, death, dissolution, Bankruptcy or
disability. A Majority of Members may remove any Manager from any capacity
with the Company at any time, with or without cause. A Manager may resign
at any time upon written notice to the Members.
(c) In the event of the resignation, removal, death,
dissolution, Bankruptcy or disability of a Manager, a Majority of Members
shall elect its successor.
4.2 Power to Bind Company. The Manager (acting in its capacity as
such) shall have the authority to bind the Company with respect to any
matter.
ARTICLE V
Capital Structure and Contributions
5.1 Authorized Units. Subject to the provisions of this
Agreement, the Company is authorized to issue equity interests in the
Company designated as "Units" at varying prices per Unit as the Manager
shall approve. The total number of Units which the Company shall have
authority to issue is one thousand (1,000) Units. Each Unit shall be
identical in all respects (including without limitation with regard to the
rights of Members to vote, to receive Distributions from time to time and
to receive Distributions on liquidation of the Company) with each other
Unit.
5.2 Issuance of Units. The Company is authorized to issue Units
in exchange for Capital Contributions in such amount as may be determined
by the Manager. The Capital Contribution of, and number of Units issued
to, the Initial Members and the address for notice purposes hereunder of
each Member are listed on Schedule A hereto, which shall be amended from
time to time by the Manager as required to reflect (a) issuances of Units
to new Members, (b) changes in the number of Units held by Members, (c)
additional Capital Contributions from any Member and (d) the addition or
withdrawal of Members. The number of Units held by each Member shall not
be affected by either (i) any issuance by the Company of Units to other
Members or (ii) any change in the Capital Account of such Member (other
than such changes to reflect additional Capital Contributions from such
Member in exchange for new Units). Fractional Units may be issued, as
determined by the Manager.
5.3 Capital Contributions. No interest shall accrue on any
Capital Contribution, and no Member shall have the right to withdraw or be
repaid any Capital Contribution, except as provided in this Agreement. If
any Member withdraws from the Company pursuant to Section 9.5 hereof, such
Member shall remain obligated for any unpaid Capital Contributions and
shall not be entitled to a return of its Capital Contribution. The value
of any Additional Member's Capital Contribution and the terms upon which
such Capital Contribution shall be made shall be as agreed upon by the
Manager.
5.4 Additional Contributions. From time to time, the Manager may
determine that the Company requires additional capital and may request each
Member to make an additional Capital Contribution in an amount determined
by the Manager. Notwithstanding the foregoing, no Member shall be
obligated to make an additional Capital Contribution.
5.5 Maintenance of Capital Accounts.
(a) The Company shall establish and maintain Capital Accounts
for each Member and Assignee in accordance with the provisions of
Section 1.704-1(b) of the Regulations, which provides generally that:
(i) to each Member's Capital Account there shall
be credited (A) such Member's Capital Contributions, (B) such Member's
distributive share of Profits and any items in the nature of income or
gain which are specially allocated to it and (C) the amount of any
Company liabilities assumed by such Member or which are secured by any
property distributed to such Member; and
(ii) to each Member's Capital Account there shall
be debited (A) the amount of money and the fair market value of any
property distributed to such Member, (B) such Member's distributive
share of Losses and any items in the nature of expenses or losses
which are allocated to it and (C) the amount of any liabilities of
such Member assumed by the Company or which are secured by any
property contributed by such Member to the Company.
(b) This Section and other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Section 1.704-1(b) of the Regulations and shall be interpreted and applied
in a manner consistent with such Regulations. Notwithstanding that a
particular adjustment is not set forth in this Section, the Capital
Accounts of the Members shall be adjusted as required by, and in accordance
with, the capital account maintenance rules of Section 1.704-1(b) of the
Regulations.
5.6 Negative Capital Accounts. No Member shall be required to
make up a Capital Account deficit balance nor pay to any Member the amount
of any such deficit in any such account.
5.7 Sale or Exchange of Units. In the event of a Transfer of some
or all of a Member's Units, the Capital Account of the Transferring Member
(as hereinafter defined) shall become the capital account of the Assignee,
to the extent it relates to the Member's Units so Transferred.
ARTICLE VI
Allocations of Profits and Losses; Distributions
6.1 Allocations of Profits and Losses from Operations. Profits
and Losses shall be allocated among the Members ratably in proportion to
their respective number of Units. Notwithstanding anything herein to the
contrary, the Manager shall have the authority to allocate Profits and
Losses among the Members so that the allocations of Profits and Losses
hereunder have "substantial economic effect" within the meaning of Section
1.704-1 of the Regulations. Solely for federal income tax purposes,
allocations of income, gain, loss and deduction with respect to property
that has a tax basis that differs from its basis for book purposes shall be
allocated in accordance with Code Section 704(c) and the Regulations
thereunder.
6.2 Distributions. The Manager shall determine, in its sole and
absolute discretion, cash available for distribution to Members and the
amount, if any, to be distributed to Members and shall authorize and
distribute to the Members pro rata in proportion to the number of Units
held by each Member, the determined amount when, as and if declared by the
Manager. Available cash, as referred to herein, shall mean the net profits
of the Company after appropriate provision for expenses and liabilities,
including without limitation liabilities that are not deductible for
federal income tax purposes, as determined by the Manager in its sole and
absolute discretion.
6.3 Withholding Taxes. The Company is authorized to withhold from
Distributions to a Member, or with respect to allocations to a Member, and
to pay over to a federal, state or local government, any amounts required
to be withheld pursuant to the Code or any provisions of any other federal,
state or local law. Any amounts so withheld shall be treated as having
been distributed to such Member pursuant to this Article VI for all
purposes of this Agreement and shall be offset against the amounts
otherwise distributable to such Member. If it is determined that the
Company was obligated to withhold any amount in accordance with the
preceding sentence and that the Company failed to do so, then the Member
receiving the Distribution or allocation from which such amounts were
obligated to be withheld will indemnify and hold the Company harmless
against any claim, loss and expenses (including without limitation interest
and penalties, if any) incurred by the Company as a result of its failure
to withhold.
6.4 Limitations on Distributions. No Distribution to Members
shall be declared or paid unless, after giving effect to such Distribution,
the fair market value of all assets of the Company exceeds all liabilities
of the Company, other than liabilities to Members on account of their
Capital Accounts.
6.5 Qualified Income Offset. If any Member unexpectedly receives
any adjustments, allocations or distributions described in Section 1.704-
1(b)(2)(ii)(d)(4), (5) or (6) of the Regulations, items of Company income
and gain shall be specially allocated to each such Member in an amount and
manner sufficient to eliminate, to the extent required by the Regulations,
the Capital Account deficit balance of such Member as quickly as possible,
provided that an allocation pursuant to this Section 6.5 shall be made only
if and to the extent that such Member would have a Capital Account deficit
balance after all other allocations provided for in this Section 6.5 have
been tentatively made as if this Section 6.5 were not in the Agreement.
ARTICLE VII
Accounts
7.1 Books. The Manager shall cause to be maintained complete and
accurate books of account of the Company's affairs at the Company's
principal place of business. Such books shall be kept on such method of
accounting as the Manager shall select.
7.2 Reports. The books of account of the Company shall be closed
after the close of each Fiscal Year, and there shall be prepared and sent
to each Member a statement of the Profits and Losses of the Company for
that period and a statement of such Member's distributive share of income,
gain, loss, deduction and credit for tax purposes.
7.3 Federal Tax Matters. THL/CCI Limited Partnership shall be the
Tax Matters Member, who shall be considered the tax matters partner for
purposes of Section 6231 of the Code. The Tax Matters Member shall cause
to be prepared and shall sign all tax returns of the Company, make any tax
elections for the Company allowed under the Code or the tax laws of any
state or other jurisdiction having taxing jurisdiction over the Company and
monitor any governmental tax authority in any audit that such authority may
conduct of the Company's books and records or other documents.
7.4 Special Basis Adjustment. The Tax Matters Member shall,
without any further consent of the Members being required (except as
specifically required herein), have discretion to make an election for
federal income tax purposes to adjust the basis of property pursuant to
Sections 754, 734(b) and 743(b) of the Code, or comparable provisions of
state, local or foreign law, in connection with Transfers of Units and
Distributions.
ARTICLE VIII
Transfers of Units
8.1 Prohibition; Procedures.
(a) No Member may Transfer all or any portion of its Units,
other than (i) to a Permitted Transferee and (ii) in a transaction effected
in accordance with subsection (b) of this Section 8.1 in which Units are
being transferred by a Majority of Members and which transaction is
approved, prior to the consummation thereof, in writing by the Manager
(each of (i) and (ii) above being referred to herein as a "Permitted
Transfer").
(b) Upon notice from the Manager of a proposed Permitted
Transfer under subsection (a)(ii) of this Section 8.1, all Members shall be
entitled to, and upon request by the Manager each Member will, Transfer in
such Permitted Transfer, on the same terms as those on which the Majority
of Members are Transferring Units, the same portion of such Member's Units
as the portion of the Units held by the Majority of Members being
transferred in such Permitted Transfer; provided, however, that if the
purchaser(s) in such Permitted Transfer (the "Permitted Transfer
Purchasers") desire to purchase less than all of the Units to be sold by
the Members in accordance with this Section 8.1(b), the number of Units to
be sold by the Members shall be reduced to the number of such Units to be
purchased by the Permitted Transfer Purchasers, on a pro rata basis with
respect to each Member, based on the number of Units then held by such
Member relative to the number of Units then held by all Members.
(c) Any attempted Transfer of Units, other than in strict
accordance with this Article VIII, shall be null and void and the purported
transferee shall have no rights as a Member or Assignee hereunder.
8.2 Conditions to Permitted Transfers. A Member shall be entitled
to make a Permitted Transfer of all or any portion of its Units only upon
satisfaction of each of the following conditions:
(a) such Transfer does not cause a termination of the Company
for federal or state income tax purposes;
(b) such Transfer does not require the registration or
qualification of such Units pursuant to any applicable federal or state
securities laws;
(c) such Transfer does not result in a violation of
applicable laws; and
(d) the Manager receives written instruments that are in a
form satisfactory to the Manager, as determined in its sole and absolute
discretion (including without limitation (i) copies of any instruments of
Transfer, (ii) such Assignee's consent to be bound by this Agreement as an
Assignee and (iii) if requested by the Manager, an opinion of counsel to
such Assignee, in form and substance reasonably acceptable to the Manager,
to the effect that the conditions set forth in subsections (a), (b) and (c)
of this Section 8.2 have been satisfied).
8.3 Effect of Transfers. Upon any Permitted Transfer, the
Assignee of the Units Transferred shall be entitled to receive the
Distributions and allocations of income, gain, loss, deduction, credit or
similar items to which the Transferring Member would be entitled with
respect to such Units and shall not be entitled to exercise any of the
other rights of a Member with respect to the Transferring Member's Units,
including without limitation the right to vote, unless and until such
Assignee is admitted to the Company as a Substitute Member pursuant to
Section 9.3 hereof.
ARTICLE IX
Additional and Substitute Members;
Withdrawal of Members
9.1 Admissions; Withdrawals. No Person (other than the Initial
Members) shall be admitted to the Company as a Member except in accordance
with Section 9.2 or 9.3 hereof. Except as otherwise specifically set forth
in Section 9.5 hereof, no Member shall be entitled to withdraw from the
Company. Any purported admission or withdrawal which is not in accordance
with this Article IX shall be null and void. Upon admission of any
Additional or Substitute Member, or upon any Member ceasing to be a Member,
Schedule A hereto shall be revised accordingly to reflect such admission or
cessation.
9.2 Admission of Additional Members. A Person shall become an
Additional Member pursuant to the terms of this Agreement only if and when
each of the following conditions is satisfied:
(a) the Manager, in its sole and absolute discretion,
determines the nature and amount of the Capital Contribution to be made by
such Person;
(b) the Manager has received, on behalf of the Company, such
Person's Capital Contribution as so determined;
(c) a Majority of Members consents in writing to such
admission, which consent may be given or withheld in each Member's sole and
absolute discretion; and
(d) the Manager receives written instruments (including
without limitation such Person's consent to be bound by this Agreement as a
Member) that are in a form satisfactory to the Manager, as determined in
its sole and absolute discretion.
9.3 Admission of Assignees as Substitute Members. An Assignee of
all or any portion of a Member's Units shall become a Substitute Member of
the Company only if and when both of the following conditions are
satisfied:
(a) a Majority of Members consents in writing to such
admission, which consent may be given or withheld in each Member's sole and
absolute discretion; and
(b) the Manager receives written instruments (including
without limitation such Assignee's consent to be bound by this Agreement as
a Member) that are in a form satisfactory to the Manager, as determined in
its sole and absolute discretion.
9.4 Cessation of Member.
(a) Events Resulting in Cessation of Member. Any Member
shall cease to be a Member of the Company upon the earliest to occur of any
of the following events:
(i) such Member's withdrawal from the Company
pursuant to Section 9.5 hereof;
(ii) as to any Member that is not an individual,
the filing of a certificate of dissolution, or its equivalent, for
such Member; or
(iii) the Bankruptcy of such Member.
Upon the death of a Member, his estate shall succeed to his interest in and
as a Member of the Company until an appropriate Permitted Transfer can be
effected in accordance with Article VIII hereof.
(b) Upon any Member ceasing to be a Member pursuant to
subsection (a) of this Section 9.4, such Member or its successor in
interest shall become an Assignee of its Units, entitled to receive the
Distributions and allocations of income, gain, loss, deduction, credit or
similar item to which such Member would have been entitled and shall not be
entitled to exercise any of the other rights of a Member in, or have any
duties or other obligations of a Member with respect to, such Units. No
such Member shall have a right to a return of its Capital Contribution.
9.5 Withdrawal of Members.
(a) Withdrawal Upon Transfer. If a Member has Transferred
all of its Units in one or more Permitted Transfers, then such Member shall
withdraw from the Company on the date upon which each Assignee of such
Units has been admitted as a Substitute Member in accordance with Section
9.3 hereof, and such Member shall no longer be entitled to exercise any
rights or powers of a Member under this Agreement.
(b) Voluntary Withdrawal. In addition to a withdrawal
pursuant to subsection (a) of this Section 9.5, each Member shall have the
right to withdraw from the Company at any time by providing written notice
of withdrawal to the Manager. A withdrawing Member shall have no right to
a return of its Capital Contribution.
ARTICLE X
Events of Dissolution
10.1 Dissolution. The Company shall be dissolved upon the
occurrence of either of the following events (each, an "Event of
Dissolution"):
(a) a Majority of Members votes for dissolution; or
(b) a judicial dissolution of the Company pursuant to Section
18-802 of the Act.
No other event, including without limitation the retirement, withdrawal,
insolvency, liquidation, dissolution, insanity, resignation, expulsion,
Bankruptcy, death, incapacity or adjudication of incompetency of a Member,
shall cause the dissolution of the Company.
ARTICLE XI
Termination
11.1 Liquidation. In the event that an Event of Dissolution shall
occur, the Company shall be liquidated and its affairs shall be wound up.
All proceeds from such liquidation shall be distributed as set forth below,
in accordance with the provisions of Section 18-804 of the Act:
(a) to creditors, including without limitation Members who
are creditors to the extent permitted by law, in satisfaction of the
Company's liabilities; and
(b) to Members in accordance with their positive Capital
Account balances, taking into account all Capital Account adjustments for
the Company's Taxable Year in which the liquidation occurs. Liquidation
proceeds shall be paid within sixty (60) days of the end of the Company's
Taxable Year or, if later, within ninety (90) days after the date of
liquidation. Such Distributions shall be in cash or property (which need
not be distributed proportionately) or partly in both, as determined by the
Manager.
11.2 Final Accounting. In the event of the dissolution of the
Company, prior to any liquidation, a proper accounting shall be made to the
Members from the date of the last previous accounting to the date of
dissolution.
11.3 Cancellation of Certificate. Upon the completion of the
Distribution of the Company's assets upon dissolution, the Company shall be
terminated, all Units shall be cancelled and the Manager shall cause the
Company to execute and file a Certificate of Cancellation in accordance
with Section 18-203 of the Act.
ARTICLE XII
Exculpation and Indemnification
12.1 Exculpation. Notwithstanding any other provisions of this
Agreement, whether express or implied, or obligation or duty at law or in
equity, no Manager and none of the Members, or any officers, directors,
stockholders, partners, employees, representatives, consultants or agents
of either of the foregoing, nor any officer, employee, representative,
consultant or agent of the Company or any of its Affiliates (individually,
a "Covered Person" and, collectively, the "Covered Persons") shall be
liable to the Company or any other Person for any act or omission (relating
to the Company and the conduct of its business, this Agreement, any related
document or any transaction contemplated hereby or thereby) taken or
omitted by a Covered Person in the reasonable belief that such act or
omission was in or was not contrary to the best interests of the Company;
provided, however, that such act or omission does not constitute fraud,
willful misconduct, bad faith, or gross negligence.
12.2 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless each Manager, Member and officer
of the Company and each officer or director of any Member (individually, an
"Indemnified Person" and, collectively, the "Indemnified Persons") from and
against any and all losses, claims, demands, liabilities, expenses,
judgments, fines, settlements and other amounts arising from any and all
actions, suits or proceedings, whether civil, criminal, administrative or
investigative ("Claims"), in which such Indemnified Person may be involved,
or threatened to be involved, as a party or otherwise, by reason of its
management of the affairs of the Company or which relates to or arises out
of the Company or its property, business or affairs. Notwithstanding the
foregoing, an Indemnified Person shall not be entitled to indemnification
under this Section 12.2 with respect to any Claim in which it has engaged
in fraud, willful misconduct, bad faith or gross negligence. Expenses
incurred by an Indemnified Person in investigating or defending any Claim
shall be paid by the Company in advance of the final disposition of such
Claim upon receipt by the Company of an undertaking by or on behalf of such
Indemnified Person to repay such amount if it shall be ultimately
determined that such Indemnified Person is not entitled to be indemnified
by the Company as authorized by this Section 12.2. The Company, upon a
determination by the Manager, may, but shall not be obligated to, provide
indemnification to any stockholders, partners, employees, representatives,
consultants or agents of the Company to the same extent provided to
Indemnified Persons pursuant to this Section 12.2.
ARTICLE XIII
Amendment to Agreement
13.1 Amendments. Amendments to this Agreement shall be approved in
writing upon the consent of a Majority of Members; provided, however, that
during the time any of the Debt Restructuring Agreement, the Guaranty or
the Pledge and Security Agreement remain outstanding and effective, no
amendment of Section 2.3 hereof shall be effected without the consent of
BNP (or, if applicable, any successor or assign of BNP). An amendment
shall become effective as of the date specified in the Members' approval
or, if none is specified as of the date of such approval, as otherwise
provided in the Act.
ARTICLE XIV
General Provisions
14.1 Notices. Unless otherwise specifically provided in this
Agreement, all notices and other communications required or permitted to be
given hereunder shall be in writing and shall be (i) delivered by hand,
(ii) delivered by a nationally recognized commercial overnight delivery
service, (iii) mailed postage prepaid by first-class mail or (iv) by
facsimile, in any such case directed or addressed to each Member at the
address or facsimile number set forth on Schedule A hereto. Such notices
shall be effective: (a) in the case of hand deliveries when received; (b)
in the case of an overnight delivery service, on the next Business Day
after being placed in the possession of such delivery service, with
delivery charges prepaid; (c) in the case of mail, seven (7) days after
deposit in the postal system, first-class mail, postage prepaid; and (d) in
the case of facsimile notices, when electronic confirmation of receipt is
received. Any Member may change its address and facsimile number for
purposes hereunder by written notice to the Company.
14.2 Entire Agreement, etc. This Agreement constitutes the entire
Agreement among the Members hereto relating to the subject matter hereof
and supersedes all prior contracts, agreements and understandings between
them. No course of prior dealings among the Members shall be relevant to
supplement or explain any term used in this Agreement. Acceptance or
acquiescence in a course of performance rendered under this Agreement shall
not be relevant to determine the meaning of this Agreement even though the
accepting or the acquiescing party has knowledge of the nature of the
performance and an opportunity for objection. No provisions of this
Agreement may be waived, amended or modified orally, but only by an
instrument in writing executed by the waiving party. No waiver of any
terms or conditions of this Agreement in one instance shall operate as a
waiver of any other term or condition or as a waiver in any other instance.
14.3 Construction Principles. As used in this Agreement, words
expressing no gender or either gender shall be deemed to include each and
both genders. The singular shall be deemed to include the plural and vice
versa. The captions and article and section headings in this Agreement are
inserted for convenience of reference only and are not intended to have
significance for the interpretation of or construction of the provisions of
this Agreement. The word "or" is used inclusively, unless other indicated.
14.4 Counterparts. This Agreement may be executed in two or more
counterparts by the parties hereto, each of which when so executed will be
an original, but all of which together will constitute one and the same
instrument.
14.5 Severability. If any provision of this Agreement is held to
be invalid or unenforceable for any reason, such provision shall be
ineffective to the extent of such invalidity or unenforceability; provided,
however, that the remaining provisions will continue in full force without
being impaired or invalidated in any way unless such invalid or
unenforceable provision or clause shall be so significant as to materially
affect the Members' expectations regarding this Agreement. Otherwise, the
Members agree to replace any invalid or unenforceable provision with a
valid provision which most closely approximates the intent and economic
effect of the invalid or unenforceable provision.
14.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without
regard to the principles of conflicts of laws thereof.
14.7 Binding Effect. This Agreement shall be binding upon, and
inure to the benefit of, the Members and their permitted successors and
assigns.
14.8 Additional Documents and Acts. Each Member agrees to execute
and deliver such additional documents and instruments and to perform such
additional acts as may be necessary or appropriate to effectuate, carry out
and perform all of the terms, provisions and conditions of this Agreement
and of the transactions contemplated hereby.
14.9 No Third-Party Beneficiary. This Agreement is made solely for
the benefit of the parties hereto, and no other person shall have any
rights, interest, or claims hereunder or otherwise be entitled to any
benefits under or on account of this Agreement as a third-party beneficiary
or otherwise.
14.10 Limited Liability Company. The parties to this Agreement
agree to form a limited liability company and do not intend to form a
partnership under the laws of the State of Delaware or any other laws;
provided, however, that, to the extent permitted by law, the Company will
be treated as a partnership for federal, state and local income tax
purposes.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, each Member has duly executed this Agreement
as of the day first above written.
▇▇▇▇▇▇ ▇. ▇▇▇ EQUITY FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President
▇▇▇▇▇▇ ▇. ▇▇▇ FOREIGN FUND III, L.P.
By: THL Equity Advisors III Limited
Partnership, as General Partner
By: THL Equity Trust III,
as General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Vice President
THL-CCI LIMITED PARTNERSHIP
By: THL Investment Management Corp.,
as General Partner
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: President of THL Investment
Corp., General Partner
Schedule A
Members of
SNEAKER GUARANTEE LLC
Name, Address and
Facsimile Number of Member Capital Contribution Number of Units
-------------------------- -------------------- ---------------
▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund
III, L.P.
c/o ▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $17,158,415.01 858
▇▇▇▇▇▇ ▇. ▇▇▇ Foreign Fund
III, L.P.
c/o ▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $1,061,709.84 53
THL-CCI Limited Partnership
c/o ▇▇▇▇▇▇ ▇. ▇▇▇ Company
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ $1,779,879.60 89
