THL-NORTEK INVESTORS, LLC A Delaware Limited Liability Company AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT Dated as of April 16, 2008
Exhibit
10.1
____________________________________
THL-NORTEK
INVESTORS, LLC
A Delaware Limited
Liability Company
____________________________________
AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT
Dated as of April
16, 2008
THE COMPANY UNITS
REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER
APPLICABLE SECURITIES LAWS. SUCH UNITS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT
AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL
RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.
THE COMPANY UNITS
REPRESENTED BY THIS LIMITED LIABILITY COMPANY AGREEMENT ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE SECURITYHOLDERS AGREEMENT,
DATED AS OF THE DATE HEREOF, AS AMENDED OR MODIFIED FROM TIME TO TIME, AMONG THE
COMPANY AND CERTAIN INVESTORS, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE
TRANSFER OF SUCH UNITS UNTIL SUCH TRANSFER IS IN COMPLIANCE WITH SUCH
SECURITYHOLDERS AGREEMENT. A COPY OF THE SECURITYHOLDERS AGREEMENT
SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER OF SUCH UNITS UPON WRITTEN
REQUEST AND WITHOUT CHARGE.
AMENDED
AND RESTATED
OF
THL-NORTEK
INVESTORS, LLC
A
Delaware Limited Liability Company
THIS AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT of THL-Nortek Investors, LLC (the
“Company”),
dated and effective as of April 16, 2008 (this “Agreement”), amends
and restates in its entirety that certain LIMITED LIABILITY COMPANY AGREEMENT
dated and effective as of August 27, 2004, as amended by the FIRST AMENDMENT
dated as of February 10, 2005 (the “Original Agreement”
and as amended, the “Prior Agreement”), by
and among ▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund V, L.P., ▇▇▇▇▇▇ ▇. ▇▇▇ Parallel Fund V,
L.P., ▇▇▇▇▇▇ ▇. ▇▇▇ Cayman Fund V, L.P., ▇▇▇▇▇▇ ▇. ▇▇▇ Investors Limited
Partnership, 1997 ▇▇▇▇▇▇ ▇. ▇▇▇ Nominee Trust, Great-West Investors, L.P.,
▇▇▇▇▇▇ Investments Employees’ Securities Company I, LLC, ▇▇▇▇▇▇ Investments
Employees’ Securities Company II, LLC and RGIP, LLC (collectively the “THL Holders”), the
Persons listed on Schedule A attached
hereto as of the date hereof, and each other Person who at any time becomes a
Member in accordance with the terms of this Agreement and the
Act. Any reference in this Agreement to the THL Holders or any other
Member shall include such Member’s Successors in Interest to the extent such
Successors in Interest have become Substitute Members in accordance with the
provisions of this Agreement.
WHEREAS, on August
9, 2004, THL formed the Company as a limited liability company under the
Delaware Limited Liability Company Act, Title 6, §§ 18-101, et seq, as it may be
amended from time to time (the “Act”), by filing a
Certificate of Formation with respect thereto with the Delaware Secretary of
State;
WHEREAS, the
parties entered into the Original Agreement on August 27, 2004 (and certain
other Members became Members in September 2004 and thereafter in accordance with
the terms of the Original Agreement);
WHEREAS, the
parties previously amended the Original Agreement upon execution of the First
Amendment on February 10, 2005, in connection with a recapitalization
transaction pursuant to which: (i) the Company transferred to NTK
Holdings, Inc., a new Delaware corporation (“NTK Holdings”), all
of the outstanding shares of Holdings in exchange for the issuance to the
Company of shares of the common stock of NTK Holdings, as a result of which
exchange NTK Holdings became a wholly-owned subsidiary of the Company and
Holdings became a wholly-owned subsidiary of NTK Holdings, and
(ii) NTK Holdings issued and sold certain discount notes, with a
portion of the proceeds from such issuance used to pay a dividend to the Company
which, in turn, made a distribution to its members in accordance with the terms
of the Prior Agreement;
WHEREAS, the
parties desire to amend and restate the Prior Agreement in order to provide for,
among other things, (a) the management of the business and affairs of the
Company, (b) the allocation among the parties of the profits and the losses of
the Company, (c) the respective rights and obligations of the parties to each
other and to the Company, and (d) the issuance of Class D Units.
NOW THEREFORE, in
consideration of the mutual covenants and agreements contained herein, the
parties hereto, each intending to be legally bound, agree as
follows:
ARTICLE
I.
DEFINITIONS
SECTION
1.1 Definitions.
Unless the context
otherwise requires, the following terms shall have the following meanings for
purposes of this Agreement:
“Act” has the meaning
set forth in the preamble above.
“Additional Member”
means any Person that has been admitted to the Company as a Member pursuant to
Section 5.4 by
virtue of having received its Membership Interest from the Company and not from
any other Member or Assignee.
“Adjusted Capital Account
Deficit” means, with respect to any Unitholder, the deficit balance, if
any, in such Unitholder’s Capital Account as of the end of the relevant fiscal
year, after giving effect to the following adjustments:
(i) credit to such
Capital Account any amounts that such Unitholder is obligated to restore
pursuant to this Agreement or is deemed to be obligated to restore pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of
Regulations Sections 1.704-2(i)(5) and 1.704-2(g)(1); and
(ii) debit to such
Capital Account the items described in Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing
definition of Adjusted Capital Account Deficit is intended to comply with the
provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
and applied by the Management Committee consistently therewith.
“Affiliate” when used
with reference to another Person means any Person (other than the Company),
directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with, such other Person. In
addition, Affiliates of a Member shall include all partners, officers, employees
and former partners, officers or employees of, all consultants or advisors to,
and all other Persons who directly or indirectly receive compensation from, such
Member.
“Assignee” means any
transferee to which a Member or another Assignee has transferred its interest in
the Company in accordance with the terms of this Agreement, but who is not a
Member.
“Bankruptcy” means,
with respect to any Person, the occurrence of any of the following
events: (i) the filing of an application by such Person for, or a
consent to, the appointment of a trustee or custodian of his assets; (ii) the
filing by such Person of a voluntary petition in Bankruptcy or the seeking of
relief under Title 11 of the United States Code, as now constituted or hereafter
amended, or the filing of a pleading in any court of record admitting in writing
his inability to pay his debts as they become due; (iii) the failure of such
Person to pay his debts as such debts become due; (iv) the making by such Person
of a general assignment for the benefit of creditors; (v) the filing by such
Person of an answer admitting the material allegations of, or his consenting to,
or defaulting in answering, a Bankruptcy petition filed against him in any
Bankruptcy proceeding or petition seeking relief under Title 11 of the United
States Code, as now constituted or as hereafter amended; or (vi) the entry of an
order, judgment or decree by any court of competent jurisdiction adjudicating
such Person a bankrupt or insolvent or for relief in respect of such Person or
appointing a trustee or custodian of his assets and the continuance of such
order, judgment or decree unstayed and in effect for a period of 60 consecutive
days.
“Capital Account”
means, with respect to any Unitholder, the account maintained for such
Unitholder in accordance with the following provisions:
(a) To each
Unitholder’s Capital Account there shall be added such Unitholder’s Capital
Contributions, such Unitholder’s allocable share of Net Income and any items in
the nature of income or gain which are specially allocated to such Unitholder
pursuant to Section
4.3(c) hereof, and the amount of any Company liabilities assumed by such
Unitholder or which are secured by any property distributed to such
Unitholder.
(b) From each
Unitholder’s Capital Account there shall be subtracted the amount of cash and
the Gross Asset Value of any property distributed to such Unitholder pursuant to
any provision of this Agreement, such Unitholder’s allocable share of Net Losses
and any items in the nature of expenses or losses which are specially allocated
to such Unitholder pursuant to Section 4.3(c)
hereof, and the amount of any liabilities of such Unitholder assumed by the
Company or which are secured by any property contributed by such Unitholder to
the Company.
(c) In the event any
interest in the Company is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the transferor
to the extent it relates to the transferred interest.
(d) In determining the
amount of any liability for purposes of subparagraphs (a) and (b) hereof and
Section 4.3(b)
hereof, there shall be taken into account Code Section 752(c) and any other
applicable provisions of the Code and Regulations.
(e) The foregoing
provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with Code Section 704(b)
and the Regulations promulgated thereunder, and shall be interpreted and applied
by the Management Committee in a manner consistent with such
Regulations.
“Capital Contribution”
means, with respect to any Unitholder, the amount of cash and the initial Gross
Asset Value of any property (other than money) contributed from time to time to
the Company by such Unitholder (it being understood that the Gross Asset Value
with respect to property in respect of a Unitholder’s Initial Capital
Contribution shall be as set forth on Exhibit I
hereto).
“Certificate” has the
meaning set forth in Section
2.1.
“Class A Units” means
the Class A Units of the Company.
“Class B Units” means
the Class B Units of the Company.
“Class C Units” means
the Class C-1 Units and Class C-2 Units of the Company.
“Class D Preferred
Return” means, with respect to each Unitholder of Class D Units as of any
date, the excess of (x) a return of 10% compounded annually on the Unreturned
Class D Capital outstanding from time to time of such Unitholder over (y) the
aggregate amount of all distributions made to such Unitholder pursuant to or in
accordance with Section
4.4(a)(ii).
“Class D Units” means
the Class D Units of the Company.
“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor
statute. Any reference herein to a particular provision of the Code
shall mean, where appropriate, the corresponding provision in any successor
statute.
“Company” means
THL-Nortek Investors, LLC, a Delaware limited liability company.
“Company Minimum Gain”
has the meaning set forth in Regulations Section 1.704- 2(d).
“Depreciation” means,
for each fiscal year or other period, an amount equal to the depreciation,
amortization or other cost recovery deduction allowable with respect to an asset
for such year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for federal income tax purposes at the beginning
of such year or other period, Depreciation shall be an amount which bears the
same ratio to such beginning Gross Asset Value as the federal income tax
depreciation, amortization or other cost recovery deduction for such year or
other period bears to such beginning adjusted tax basis; provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for such year is zero, Depreciation shall be calculated with reference to such
beginning Gross Asset Value using any reasonable method selected by the
Management Committee.
“Distributable Assets”
means, with respect to any fiscal period, all cash receipts and Marketable
Securities (including from any operating, investing, and financing activities)
and (subject to Section 4.4(d) hereof) other assets of the Company from any and
all sources, reduced by operating cash expenses, contributions of capital to
subsidiaries of the Company and payments (if any) required to be made in
connection with any loan to the Company and any reserve for contingencies or
escrow required, in the good faith judgment of the Management Committee, in
connection therewith.
“Economic Interest”
means a Member’s or Assignee’s share of the Company’s net profits, net losses
and distributions pursuant to this Agreement and the Act, but shall not include
any right to participate in the management or affairs of the Company, including
the right to vote in the election of Representatives, vote on, consent to or
otherwise participate in any decision of the Members or Representatives, or any
right to receive information concerning the business and affairs of the Company,
in each case except as expressly otherwise provided in this Agreement or
required by the Act.
“Exit Event” means (i)
the sale or other disposition (other than a disposition described in clause (ii)
below) by the Company, in one or more transactions, of an aggregate of at least
90% of the investment of the Company in NTK Holdings in exchange for cash or
Marketable Securities (or a combination of cash and Marketable Securities) or
(ii) following the IPO (as defined in the Securityholders Agreement), the
occurrence of both (A) the distribution, in one or more transactions, pursuant
to Section 4.4 and/or Section 5.2 of this Agreement to Unitholders of at least
90% of the assets of the Company representing the investment of the Company in
NTK Holdings (each such transaction, an “Asset Distribution”) and (B) the
distribution promptly thereafter to the investors in each THL Third Party
Investment Fund of its portion of each Asset Distribution (whether such portion
is initially received directly or indirectly by another THL
Holder).
“First Amendment”
means the first amendment, dated February 10, 2005, to the Original
Agreement.
“First Merger” means
the merger of THL Buildco, Inc., a Delaware corporation, with and into Nortek
Holdings, Inc., a Delaware corporation, in accordance with the terms of the
Stock Purchase Agreement by and among THL Buildco, Inc., THL Buildco Holdings,
Inc., ▇▇▇▇▇ Investment Associates VI, L.P. and certain other sellers named
therein, dated as of July 15, 2004.
“First Performance
Hurdle” means that the Target Holders shall have received (i) aggregate
distributions and proceeds (including proceeds of a sale of Units) with respect
to their Class A Units and Class B Units, collectively, equal to 200% of the
aggregate Capital Contributions of the Target Holders in respect of their Class
A Units and Class B Units and (ii) aggregate distributions and proceeds
(including proceeds of a sale of Units) with respect to their Class A Units and
Class B Units, collectively, equal to an amount that would produce a Target
Holders’ IRR equal to or in excess of 17%.
“Gross Asset Value”
means, with respect to any asset, the asset’s adjusted basis for federal income
tax purposes, except as follows:
(a) The initial Gross
Asset Value of any asset contributed by a Unitholder to the Company shall be the
gross fair market value of such asset on the date of the contribution, as
determined by the contributing Unitholder and the Company.
(b) The Gross Asset
Values of all Company assets shall be adjusted to equal their respective gross
fair market values, as determined by the Management Committee, as of the
following times:
(i) the acquisition of
an additional interest in the Company after the date hereof by a new or existing
Unitholder in exchange for more than a de minimis Capital Contribution, if the
Management Committee reasonably determines that such adjustment is necessary or
appropriate to reflect the relative Economic Interests of the Unitholders in the
Company;
(ii) the distribution by
the Company to a Unitholder of more than a de minimis amount of Company property
as consideration for an interest in the Company, if the Management Committee
reasonably determines that such adjustment is necessary or appropriate to
reflect the relative Economic Interests of the Unitholders in the
Company;
(iii) the liquidation of
the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g);
(iv) the grant of an
interest in the Company (other than a de minimis interest) as consideration for
the provision of services to or for the benefit of the Company by an existing
Member acting in a Member capacity or by a new Member acting in a Member
capacity or in anticipation of being a Member; and
(v) such other times as
the Management Committee shall reasonably determine necessary or advisable in
order to comply with Regulations Sections 1.704-1(b) and 1.704-2.
(c) The Gross Asset
Value of any Company asset distributed to a Unitholder shall be the gross fair
market value of such asset on the date of distribution, as reasonably determined
by the Management Committee taking into account the following proviso; provided
that, in the case of such assets which are securities, the fair market value
thereof shall be reduced (a) if and to the extent that a block sale of all of
such securities is reasonably likely, in the good faith judgment of a registered
broker-dealer affiliated with a reputable, nationally recognized brokerage
house, to depress the trading price of such securities, (b) if and to the extent
appropriate, in the good faith judgment of the Management Committee, due to
illiquidity of such securities and (c) for any sales or other commissions
reasonably likely to be incurred or applied in a sale of such
securities.
(d) The Gross Asset
Values of Company assets shall be increased (or decreased) to reflect any
adjustments to the adjusted basis of such assets pursuant to Code Section 734(b)
or Code Section 743(b), but only to the extent that such adjustments are taken
into account in determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m); provided, however,
that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d)
to the extent that the Management Committee determines that an adjustment
pursuant to subparagraph (b) of this definition of Gross Asset Value is
necessary or appropriate in connection with a transaction that would otherwise
result in an adjustment pursuant to this subparagraph (d).
“Holdings” means
Nortek Holdings, Inc., formerly known as THL Buildco Holdings, Inc., a Delaware
corporation.
“Initial Capital
Contribution” has the meaning set forth in Section
4.1.
“Management Committee”
means the Management Committee established pursuant to Section
3.2.
“Management Holders”
means the holders of the Units, other than the THL Holders, set forth on
Schedule A hereto, any Successors in Interest to the extent such Successors in
Interest have become Substitute Members in accordance with the provisions of
this Agreement and any Additional Members that are designated as “Management
Holders” by the Management Committee at the time of their admission to the
Company.
“Management Unit Subscription
Agreements” means the Management Unit Subscription Agreements entered
into by certain Members to purchase Units in the Company, dated as of the date
hereof.
“Marketable
Securities” means securities of a class listed on a United States
national securities exchange or on the NASDAQ National Market that are freely
tradeable or for which demand or re-sale S-3 registration rights are
available.
“Member” means each
THL Holder and the Management Holders and each other Person who is hereafter
admitted as a Member in accordance with the terms of this Agreement and the Act.
The Members shall constitute the “members” (as that term is defined in the Act)
of the Company. Except as otherwise set
forth herein or in the Act, the Members shall constitute a single class or group
of members of the Company for all purposes of the Act and this
Agreement.
“Member Minimum Gain”
means minimum gain attributable to Member Nonrecourse Debt determined in
accordance with Regulations Section 1.704- 2(i).
“Member Nonrecourse
Debt” has the meaning set forth in Regulations Section
1.704-2(b)(4).
“Member Nonrecourse
Deduction” has the meaning set forth in Regulations Section 1.704-
2(i)(2).
“Membership Interest”
means, with respect to each Member, such Member’s Economic Interest and rights
as a Member.
“Net Income” or “Net Loss” means for
each fiscal year of the Company, an amount equal to the Company’s taxable income
or loss for such fiscal year, determined in accordance with Code Section 703(a)
(for this purpose, all items of income, gain, loss, or deduction required to be
stated separately pursuant to Code Section 703(a)(1) shall be included in
taxable income or loss), with the following adjustments:
(a) Any income of the
Company that is exempt from federal income tax and not otherwise taken into
account in computing Net Income or Net Loss pursuant to this definition of Net
Income or Net Loss shall be added to such taxable income or loss;
(b) Any expenditures of
the Company described in Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Net Income or Net Loss
pursuant to this definition of Net Income or Net Loss shall be subtracted from
such taxable income or loss;
(c) In the event the
Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (b)
or (c) of the definition of Gross Asset Value, the amount of such adjustment
shall be taken into account as gain (if the adjustment increases the Gross Asset
Value of the asset) or loss (if the adjustment decreases the Gross Asset Value
of the asset) from the disposition of such asset for purposes of computing Net
Income or Net Loss;
(d) Gain or loss
resulting from any disposition of property with respect to which gain or loss is
recognized for federal income tax purposes shall be computed by reference to the
Gross Asset Value of the property disposed of, notwithstanding that the adjusted
tax basis of such property differs from its Gross Asset Value;
(e) In lieu of the
depreciation, amortization, and other cost recovery deductions taken into
account in computing such taxable income or loss, Depreciation shall be taken
into account for such fiscal year;
(f) To the extent an
adjustment to the adjusted tax basis of any Company asset pursuant to Code
Section 734(b) or 743(b) is required pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) to be taken into account in determining Capital Accounts as
a result of a distribution other than in liquidation of a Unitholder’s interest
in the Company, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases the basis of the asset) from the disposition of the asset
and shall be taken into account for purposes of computing Net Income or Net
Loss; and
(g) Notwithstanding any
other provision of this definition of Net Income or Net Loss, any items which
are specially allocated pursuant to Section 4.3(c) hereof
shall not be taken into account in computing Net Income or Net
Loss. The amounts of the items of Company income, gain, loss, or
deduction available to be specially allocated pursuant to Section 4.3(c) hereof
shall be determined by applying rules analogous to those set forth in this
definition of Net Income or Net Loss.
“Nonrecourse/
Deductions” has the meaning set forth in Regulations Section 1.704-
2(b).
“Nortek” means Nortek,
Inc., a Delaware corporation.
“NTK Holdings” means
NTK Holdings, Inc., a Delaware corporation.
“Officer” means each
Person designated as an officer of the Company pursuant to and in accordance
with the provisions of Section 3.7, subject
to any resolution of the Management Committee appointing such Person as an
officer or relating to such appointment.
“Original Agreement”
has the meaning set forth in the Introduction to this Agreement.
“Prior Agreement” has
the meaning set forth in the Introduction to this Agreement.
“Proceeding” has the
meaning set forth in Section
3.11.
“Regulations” means
the Income Tax Regulations, including temporary Regulations, promulgated under
the Code, as such Regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
“Regulatory
Allocations” has the meaning set forth in Section 4.3(c) of
this Agreement.
“Representative” has
the meaning set forth in Section 3.2(a) of
this Agreement.
“Second Performance
Hurdle” means that the Target Holders shall have received (i) aggregate
distributions and proceeds (including proceeds of a sale of Units) with respect
to their Class A Units and Class B Units, collectively, equal to 400% of the
aggregate Capital Contributions of the Target Holders in respect of their Class
A Units and Class B Units and (ii) aggregate distributions and proceeds
(including proceeds of a sale of Units) with respect to their Class A Units and
Class B Units, collectively, equal to an amount that would produce a Target
Holders’ IRR equal to or in excess of 17%.
“Securities” means any
debt or equity securities of any issuer, including common and preferred stock
and interests in limited liability companies (including warrants, rights, put
and call options and other options relating thereto or any combination thereof),
notes, bonds, debentures, trust receipts and other obligations, instruments or
evidences of indebtedness, other property or interests commonly regarded as
securities, interests in real property, whether improved or unimproved,
interests in oil and gas properties and mineral properties, short-term
investments commonly regarded as money market investments, bank deposits and
interests in personal property of all kinds, whether tangible or
intangible.
“Securityholders
Agreement” means the Securityholders Agreement dated as of the date
hereof among the Company and each Member, as it may be amended or supplemented
from time to time.
“Substitute Member”
means any Person that has been admitted to the Company as a Member pursuant to
Section 5.4 by
virtue of such Person receiving all or a portion of a Membership Interest from a
Member or its Assignee and not from the Company.
“Successor in
Interest” means any (i) trustee, custodian, receiver or other Person
acting in any Bankruptcy or reorganization proceeding with respect to; (ii)
assignee for the benefit of the creditors of; (iii) trustee or receiver, or
current or former officer, director or partner, or other fiduciary acting for or
with respect to the dissolution, liquidation or termination of; or (iv) other
executor, administrator, committee, legal representative or other successor or
assign of, any Unitholder, whether by operation of law or
otherwise.
“Target Holders” means
the THL Holders and any Assignees that are Affiliates thereof.
“Target Holders’ IRR”
shall mean the cumulative internal rate of return of the Target Holders in
respect of the Class A Units and Class B Units of the Target Holders (calculated
as provided below), as of any date, where the internal rate of return for such
Target Holders shall be the annually compounded rate of return which results in
the following amount having a net present value equal to zero: (i) the aggregate
amount of cash and the value (as determined in accordance with Section 4.4(e)) of
any assets distributed to such Target Holders in respect of the Class A Units
and Class B Units of the Target Holders pursuant to Sections 4.4 and
5.2 of this
Agreement from time to time on a cumulative basis through such date (provided that, in no
circumstances shall any fees paid to such Target Holders or expenses reimbursed
to such Target Holders from time to time under this Agreement or otherwise be
included in this clause (i)), minus (ii) the aggregate amount of the Capital
Contributions made by such Target Holders in respect of the Class A Units and
Class B Units of the Target Holders from time to time on a cumulative basis
through such date. In determining the Target Holders’ IRR, the
following shall apply: (a) any Capital Contributions under
clause (ii) above shall be deemed to have been made on the last day of the month
in which they are actually made (except for the Initial Capital Contribution (as
such term is defined herein), which shall be deemed to have been made on August
24, 2004); (b) distributions under clause (i) above shall be deemed to have been
made on the last day of the month in which they are actually made; (c) all
distributions shall be based on the amount distributed prior to the application
of any U.S. federal, state, local, or foreign income taxation to the Target
Holders; and (d) the rates of return shall be per annum rates and all amounts
shall be calculated on an annually compounded basis, and on the basis of a
365-day year.
“Tax Matters Member”
has the meaning set forth in Section
6.4(b).
“THL” means ▇▇▇▇▇▇ ▇.
▇▇▇ Partners, L.P., a Delaware limited partnership.
“THL Third Party Investment
Fund” means ▇▇▇▇▇▇ ▇. ▇▇▇ Equity Fund V, L.P., a Delaware limited
partnership, and each other investment fund affiliated with THL which includes
investors not affiliated with THL and which holds directly or indirectly and
Economic Interest.
“Unitholder” means a
Member, Assignee or Successor in Interest who holds an Economic Interest in
Class A Units, Class B Units, Class C Units and Class D Units.
“Units” means Class A
Units, Class B Units, Class C Units and Class D Units.
“Unreturned Class A and Class
B Capital” with respect to each Unitholder means the excess, if any,
of (i) such Unitholder’s aggregate Capital Contributions in respect of Class A
Units and Class B Units over (ii) the
aggregate amount of all distributions made to such Unitholder pursuant to or in
accordance with Section 4.4(a)(iii)
(including, for this purpose, all distributions made pursuant to or in
accordance with Section 4.4(a)(i) of the Prior Agreement).
“Unreturned Class D
Capital” with respect to each Unitholder means the excess, if any,
of (i) such Unitholder’s aggregate Capital Contributions in respect of Class D
Units over (ii)
the aggregate amount of all distributions made to such Unitholder pursuant to or
in accordance with Section
4.4(a)(i).
“Vested Class C-1
Units” means with respect to a given holder a number of Class C-1 Units
(rounded up to the nearest thousandth of a Unit) equal to (i) the total number
of C-1 Units held by such holder multiplied by (ii) the lesser
of (A) 100% or (B) a percentage equal to (a) 8.333333% multiplied by (b) the number
of quarterly periods that have elapsed since the issuance of the Class C-1
Units; provided, that, all unvested Class C-1 Units held by such holder shall
become Vested Class C-1 Units automatically upon the earlier to occur of (1) an
Exit Event and (2) at such time as all the Class C-2 Units shall
vest. In the case of a holder of Class C-1 Units who has received
issuances of such Units on different dates, the calculation set forth in the
prior sentence shall be carried out for each such issuance and the results of
each such calculation shall be added to arrive at the total Vested Class C-1
Units for such holder. At such time as the employment or engagement
of a holder of Class C-1 Units with NTK Holdings and its subsidiaries
terminates, such holder shall forfeit all Class C-1 Units held by such holder
that are not vested at such time and such forfeited Units shall be deemed
cancelled.
“Vested Class C-2
Units” means with respect to a given holder a number of Class C-2 Units
equal to: (i) until such time as the First Performance Hurdle is reached, 0;
(ii) following the attainment of the First Performance Hurdle and prior to the
attainment of the Second Performance Hurdle, (a) the total number of Class C-2
Units held by such holder multiplied by (b) a fraction,
(1) the numerator of which is the aggregate distributions made on the Target
Holders’ Class A Units and Class B Units plus the aggregate proceeds
received by the Target Holders upon any sale of their Class A Units and Class B
Units less $722,600,000 and (2) the
denominator of which is $722,600,000; and (iii)
following the attainment of the Second Performance Hurdle, all of the Class C-2
Units held by such holder. For avoidance of doubt, immediately prior
to any distribution by the Company that will result in the vesting of any C-2
Units, the Company will determine how many of the C-2 Units will vest as a
result of such distribution (after taking into account the reduction in the
amount of such distribution to be made with respect to the Class B Units as a
result of the need to make distributions to such newly vested Class C-2 Units),
and such distribution will be made to the Unitholders in the manner provided in
Section 4.4(a)
below, treating such newly vested Class C-2 Units as Vested Class C-2
Units. At such time as the employment or engagement of a holder of
Class C-2 Units with NTK Holdings or its subsidiaries terminates, such holder
shall forfeit all Class C-2 Units held by such holder that are not vested at
such time and such forfeited Units shall be deemed cancelled.
SECTION
1.2 Terms
Generally. The definitions in Section 1.1 shall apply equally
to both the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The term “person” or “Person” includes
individuals, partnerships (whether general or limited), joint ventures,
corporations, limited liability companies, trusts, estates, custodians,
nominees, governments (or agencies or political subdivisions thereof) and other
associations, entities or groups (as defined in the Securities Exchange Act of
1934, as amended). The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without
limitation.” All terms herein that relate to accounting matters shall
be interpreted in accordance with generally accepted accounting principles from
time to time in effect. All references to “Sections” and “Articles”
shall refer to Sections and Articles of this Agreement unless otherwise
specified. The words “hereof” and “herein” and similar terms shall
relate to this Agreement.
ARTICLE
II.
GENERAL
PROVISIONS
SECTION
2.1 Formation. The
Company has been organized as a Delaware limited liability company by the
execution and filing of a Certificate of Formation (the “Certificate”) by THL,
as an initial Member, under and pursuant to the Act. The rights,
powers, duties, obligations and liabilities of the Members shall be determined
pursuant to the Act and this Agreement. To the extent that the rights, powers,
duties, obligations and liabilities of any Member are different by reason of any
provision of this Agreement than they would be in the absence of such provision,
this Agreement shall, to the extent permitted by the Act, control.
SECTION
2.2 Name. The
name of the Company is “THL-Nortek Investors, LLC,” and all Company business
shall be conducted in that name or in such other names that comply with
applicable law as the Management Committee may select from time to
time.
SECTION
2.3 Term. The
term of the Company commenced on the date the Certificate was filed with the
office of the Secretary of State of the State of Delaware and shall continue in
existence perpetually until termination or dissolution in accordance with the
provisions of Section 5.2.
SECTION
2.4 Purpose;
Powers.
(a) General
Powers. The nature of the business or purposes to be conducted
or promoted by the Company is to engage in any lawful act or activity for which
limited liability companies may be organized under the Act. The Company may
engage in any and all activities necessary, desirable or incidental to the
accomplishment of the foregoing. Notwithstanding anything herein to the
contrary, nothing set forth herein shall be construed as authorizing the Company
to possess any purpose or power, or to do any act or thing, forbidden by law to
a limited liability company organized under the laws of the State of
Delaware.
(b) Company
Action. Subject to the provisions of this Agreement and except
as prohibited by applicable law (i) the Company may, with the approval of
the Management Committee, enter into and perform any and all documents,
agreements and instruments contemplated thereby, all without any further act,
vote or approval of any Member and (ii) the Management Committee may authorize
any Person (including any Member or Officer) to enter into and perform any
document on behalf of the Company.
(c) Merger. Subject
to the provisions of this Agreement, the Company may, with the approval of the
Management Committee and without the need for any further act, vote or approval
of any Member, merge with, or consolidate into, another limited liability
company (organized under the laws of Delaware or any other state), a corporation
(organized under the laws of Delaware or any other state) or other business
entity (as defined in Section 18-209(a) of the Act), regardless of whether the
Company is the survivor of such merger or consolidation.
SECTION
2.5 Foreign
Qualification. Prior to the Company’s conducting business in
any jurisdiction other than Delaware, the Management Committee shall cause the
Company to comply, to the extent procedures are available and those matters are
reasonably within the control of the Officers, with all requirements necessary
to qualify the Company as a foreign limited liability company in that
jurisdiction.
SECTION
2.6 Registered Office;
Registered Agent; Principal Office; Other Offices. The
registered office of the Company required by the Act to be maintained in the
State of Delaware shall be the office of the initial registered agent named in
the Certificate or such other office (which need not be a place of business of
the Company) as the Management Committee may designate from time to time in the
manner provided by law. The registered agent of the Company in the State of
Delaware shall be the initial registered agent named in the Certificate or such
other Person or Persons as the Management Committee may designate from time to
time in the manner provided by law. The principal office of the Company shall be
at such place as the Management Committee may designate from time to time, which
need not be in the State of Delaware, and the Company shall maintain records at
such place. The Company may have such other offices as the Management
Committee may designate from time to time.
SECTION
2.7 No State-Law
Partnership. The Unitholders intend that the Company shall not
be a partnership (including a limited partnership) or joint venture, and that no
Unitholder, Representative or Officer shall be a partner or joint venturer of
any other Unitholder, Representative or Officer by virtue of this Agreement, for
any purposes other than as set forth in the last sentence of this Section 2.7,
and this Agreement shall not be construed to the contrary. The Unitholders
intend that the Company shall be treated as a partnership for federal and, if
applicable, state or local income tax purposes, and each Unitholder and the
Company shall file all tax returns and shall otherwise take all tax and
financial reporting positions in a manner consistent with such
treatment.
SECTION
2.8 Ownership of Units and
Issuance of Additional Units. Schedule A to this
Agreement, as amended from time to time in accordance with the terms hereof,
sets forth the Members’ ownership of Units. Subject to Article X of
the Securityholders Agreement, the Management Committee shall have the right to
issue additional Units from time to time and to amend Schedule A
accordingly.
ARTICLE
III.
MANAGEMENT
SECTION
3.1 The Management Committee;
Delegation of Authority and Duties.
(a) Members and Management
Committee. The Members shall possess all rights and powers as
provided in the Act and otherwise by law. Except as otherwise expressly provided
for herein, the Members hereby consent to the exercise by the Management
Committee of all such powers and rights conferred on them by the Act with
respect to the management and control of the Company. Notwithstanding
the foregoing and except as explicitly set forth in this Agreement, if a vote,
consent or approval of the Members is required by the Act or other applicable
law with respect to any act to be taken by the Company or matter considered by
the Management Committee, each Member agrees that it shall be deemed to have
consented to or approved such act or voted on such matter in accordance with a
vote of the Management Committee on such act or matter. No Member, in
its capacity as a Member, shall have any power to act for, sign for or do any
act that would bind the Company. The Members, acting through the
Management Committee, shall devote such time and effort to the affairs of the
Company as they may deem appropriate for the oversight of the management and
affairs of the Company. Each Member acknowledges and agrees that,
except as otherwise agreed in writing, no Member shall, in its capacity as a
Member, be bound to devote all of such Member’s business time to the affairs of
the Company, and that each Member and such Member’s Affiliates do and will
continue to engage for such Member’s own account and for the account of others
in other business ventures.
(b) Delegation by Management
Committee. Except as provided in Section 3.1(c) below, the
Management Committee shall not have the power and authority to delegate to one
or more other Persons the Management Committee’s rights and powers to manage and
control the business and affairs of the Company; provided, however that the
Management Committee may authorize any Person (including, without limitation,
any Member, Officer or Representative) to enter into and perform under any
document authorized by the Management Committee on behalf of the
Company.
(c) Committees. The
Management Committee may, from time to time, designate one or more committees,
each of which shall be comprised of at least two Representatives and shall have
such membership as is required by Article VIII of the Securityholders Agreement.
Any such committee, to the extent provided in the enabling resolution and until
dissolved by the Management Committee, shall have and may exercise any or all of
the authority of the Management Committee. At every meeting of any
such committee, the presence of a majority of all the representatives thereof
shall constitute a quorum, and the affirmative vote of a majority of the
representatives present shall be necessary for the adoption of any resolution.
The Management Committee may dissolve any committee at any time, unless
otherwise provided in the Certificate or this Agreement.
SECTION
3.2 Establishment of Management
Committee.
(a) Representatives. In
accordance with the terms of the Securityholders Agreement, there shall be
established a Management Committee composed of between five (5) and eleven (11)
Persons (as determined by the holders of a majority of the Class B Units) all of
whom shall be individuals (“Representatives”) who
shall be elected by a majority vote of the holders of Class B Units and each
such Member shall have one vote for each Class B Unit held by such
Member. Subject to the terms of the Securityholders Agreement, any
Representative may be removed from the Management Committee at any time by the
holders of a majority of the total voting power of the outstanding Class B
Units. Each Representative shall remain in office until his or her
death, resignation or removal, and in the event of death, resignation or removal
of a Representative, the party or parties, as applicable, which designated such
Representative shall fill the vacancy created. From August 26, 2004
through the completion of the First Merger, the members of the Management
Committee shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ and each of them shall
be authorized to execute documents on behalf of the
Company. Immediately following the completion of the First Merger,
the members of the Management Committee shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and thereafter the Management Committee shall be appointed and composed
in accordance with the terms of the Securityholders Agreement.
(b) Duties. The
Representatives, in the performance of their duties, shall owe to the Company
and the Members duties of loyalty and due care of the type owed by the directors
of a corporation to such corporation and its stockholders under the laws of the
State of Delaware; provided, that to the maximum extent permitted from time to
time under the law of the State of Delaware applying to corporations, this
Company renounces any interest or expectancy of the Company in, or in being
offered an opportunity to participate in, business opportunities that are from
time to time presented to its Representatives, other than those Representatives
who are employees of NTK Holdings, Holdings or Nortek.
(c) Absence. A
Representative may, in isolated instances arising from exigent circumstances,
designate a Person to act as his or her substitute and in his or her place at
any meeting of the Management Committee. Such Person shall have all
power of the absent Representative, and references herein to a “Representative”
at a meeting shall be deemed to include his or her substitute. Notwithstanding
anything in this Agreement to the contrary, Representatives, in their capacities
as such, shall not be deemed to be “members” or “managers” (as such terms are
defined in the Act) of the Company; provided that, for
the purpose of clarity and the avoidance of doubt, nothing contained in this
sentence shall relieve or diminish any Representative’s duties under Section 3.2(b)
hereof.
(d) No Individual
Authority. No Representative has the authority or power to act
for or on behalf of the Company, to do any act that would be binding on the
Company or to make any expenditures or incur any obligations on behalf of the
Company or authorize any of the foregoing, other than acts that are expressly
authorized by the Management Committee.
(e) Conflict. Each
provision of this Section 3.2 is
subject to the terms and provisions of the Securityholders Agreement, and to the
extent any such provisions apply, they are then to be construed as being
incorporated in this Agreement and made a part hereof.
SECTION
3.3 Management Committee
Meetings.
(a) Quorum. A
majority of the total number of Representatives shall constitute a quorum for
the transaction of business of the Management Committee and, except as otherwise
provided in this Agreement, the act of a majority of the Representatives present
at a meeting of the Management Committee at which a quorum is present shall be
the act of the Management Committee. A Representative who is present at a
meeting of the Management Committee at which action on any matter is taken shall
be presumed to have assented to the action unless his dissent shall be entered
in the minutes of the meeting or unless he shall file his written dissent to
such action with the Person acting as secretary of the meeting before the
adjournment thereof or shall deliver such dissent to the Company immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Representative who voted in favor of such action.
(b) Place, Waiver of
Notice. Meetings of the Management Committee may be held at
such place or places as shall be determined from time to time by resolution of
the Management Committee. At all meetings of the Management Committee, business
shall be transacted in such order as shall from time to time be determined by
resolution of the Management Committee. Attendance of a Representative at a
meeting shall constitute a waiver of notice of such meeting, except where a
Representative attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
(c) Regular
Meetings. Regular meetings of the Management Committee shall
be held at such times and places as shall be designated from time to time by
resolution of the Management Committee. Notice of such meetings shall not be
required.
(d) Special
Meetings. Special meetings of the Management Committee may be
called on at least 24 hours notice to each Representative by the chairman or any
two Representatives. Such notice need not state the purpose or
purposes of, nor the business to be transacted at, such meeting, except as may
otherwise be required by law or provided for in this Agreement.
(e) Notice. Notice
of any special meeting of the Management Committee or other committee may be
given as provided in Section 7.6.
SECTION
3.4 Chairman. The
Management Committee shall designate a Representative to serve as chairman. The
chairman shall preside at all meetings of the Management Committee. If the
chairman is absent at any meeting of the Management Committee, a majority of the
Representatives present shall designate another Representative to serve as
interim chairman for that meeting. Except as authorized by the Management
Committee, the chairman shall have no authority or power to act for or on behalf
of the Company, to do any act that would be binding on the Company or to make
any expenditure or incur any obligations on behalf of the Company or authorize
any of the foregoing. The chairman shall initially be ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and shall continue to be ▇▇. ▇▇▇▇▇▇ for the period during which he is a
Representative of the Company.
SECTION
3.5 Approval or Ratification of
Acts or Contracts. Any act or contract that shall be approved
or be ratified by the Management Committee on behalf of the Company shall be as
valid and as binding upon the Company and upon all the Members (in their
capacity as Members) as if it shall have been approved or ratified by every
Member of the Company; provided, that no action taken under this Section 3.5
shall bind any party other than the Company with respect to the Securityholders
Agreement, the Senior Management Unit Subscription Agreements (as defined in the
Securityholders Agreement) and the Option Cancellation Agreements (as defined in
the Securityholders Agreement).
SECTION
3.6 Action by Written Consent or
Telephone Conference. Any action permitted or required by the
Act, the Certificate or this Agreement to be taken at a meeting of the
Management Committee or any committee designated by the Management Committee may
be taken without a meeting if a consent in writing, setting forth the action to
be taken, is signed by a majority of the Representatives or members of such
other committee, as the case may be. Such consent shall have the same
force and effect as a vote at a meeting and may be stated as such in any
document or instrument filed with the Secretary of State of the State of
Delaware, and the execution of such consent shall constitute attendance or
presence in person at a meeting of the Management Committee or any such other
committee, as the case may be. Subject to the requirements of this Agreement for
notice of meetings, the Representatives, or representatives of any other
committee designated by the Management Committee, may participate in and hold a
meeting of the Management Committee or any such other committee, as the case may
be, by means of a conference telephone or similar communications equipment by
means of which all Persons participating in the meeting can hear each other, and
participation in such meeting shall constitute attendance and presence in person
at such meeting, except where a Person participates in the meeting for the
express purpose of objecting to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
SECTION
3.7 Officers.
(a) Designation and
Appointment. The Management Committee may, from time to time,
employ and retain Persons as may be necessary or appropriate for the conduct of
the Company’s business (subject to the supervision and control of the Management
Committee), including employees, agents and other Persons (any of whom may be a
Member or Representative) who may be designated as Officers of the Company, with
titles including “chief executive officer,” “chairman,” “president,” “vice
president,” “treasurer,” “secretary,” “general manager,” “director” and “chief
financial officer,” as and to the extent authorized by the Management Committee.
Any number of offices may be held by the same Person. In its
discretion, the Management Committee may choose not to fill any office for any
period as it may deem advisable. Officers need not be residents of the State of
Delaware or Members. Any Officers so designated shall have such
authority and perform such duties as the Management Committee may, from time to
time, delegate to them. The Management Committee may assign titles to particular
Officers. Each Officer shall hold office until his successor shall be
duly designated and shall qualify or until his death or until he shall resign or
shall have been removed in the manner hereinafter provided. The
salaries or other compensation, if any, of the Officers of the Company shall be
fixed from time to time by the Management Committee.
(b) Resignation/Removal. Any
Officer may resign as such at any time. Such resignation shall be made in
writing and shall take effect at the time specified therein, or if no time is
specified, at the time of its receipt by the Management
Committee. The acceptance of a resignation shall not be necessary to
make it effective, unless expressly so provided in the
resignation. Subject to clauses (d), (e) and (f) of this Section 3.7, any
Officer may be removed as such, either with or without cause at any time by the
Management Committee. Designation of an Officer shall not of itself
create any contractual or employment rights.
(c) Duties of Officers
Generally. The Officers, in the performance of their duties as
such, shall owe to the Company duties of loyalty and due care of the type owed
by the officers of a corporation to such corporation and its stockholders under
the laws of the State of Delaware; provided, that to the maximum extent
permitted from time to time under the law of the State of Delaware applying to
corporations, this Company renounces any interest or expectancy of the Company
in, or in being offered an opportunity to participate in, business opportunities
that are from time to time presented to its Officers, other than those Officers
who are employees of NTK Holdings, Holdings or Nortek.
(d) Chief Executive
Officer. Subject to the powers of the Management Committee,
the chief executive officer of the Company shall be in general and active charge
of the business and affairs of the Company, and shall be its chief policy making
officer. The chief executive officer shall initially be ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and shall continue to be ▇▇. ▇▇▇▇▇▇ during the period during which he is
the Chief Executive Officer of Nortek.
(e) President. The
president shall, subject to the powers of the Management Committee and chief
executive officer, have general and active authority for the management of the
business of the Company; and shall see that all orders and resolutions of the
Management Committee are carried into effect. The president shall have such
other powers and perform such other duties as may be prescribed by the chief
executive officer or the Management Committee. The president shall
initially be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and shall continue to be
▇▇. ▇▇▇▇▇▇ during the period during which he is the President of
Nortek.
(f) Chief Financial
Officer. The chief financial officer shall keep and maintain,
or cause to be kept and maintained, proper books and records of accounts of the
properties and business transactions of the Company, including accounts of its
assets, liabilities, receipts, disbursements, gains, losses and capital. The
chief financial officer shall have the custody of the funds and securities of
the Company, and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Company, and shall deposit all moneys
and other valuable effects in the name and to the credit of the Company in such
depositories as may be designated by the Management Committee. The chief
financial officer shall have such other powers and perform such other duties as
may from time to time be prescribed by the chief executive officer or the
Management Committee. The chief financial officer shall initially be
▇▇▇▇▇ ▇. ▇▇▇▇ and shall continue to be ▇▇. ▇▇▇▇ during the period during which
he is the Chief Financial Officer of Nortek.
(g) Vice
President(s). The vice president(s) shall perform such duties
and have such other powers as the chief executive officer or the Management
Committee may from time to time prescribe.
(h) Secretary.
(i) The secretary shall
attend all meetings of the Management Committee, and shall record all the
proceedings of the meetings in a book to be kept for that purpose, and shall
perform like duties for the standing committees of the Management Committee when
required. The secretary shall initially be ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
shall continue to be ▇▇. ▇▇▇▇▇▇▇▇ for the period during which he is the
Secretary of Nortek.
(ii) The secretary shall
keep a record of all actions of the Members and the Management Committee and a
record of such other matters as may be required under the Act. The secretary
shall perform such other duties and have such other authority as may be
prescribed elsewhere in this Agreement or from time to time by the chief
executive officer or the Management Committee. The secretary shall have the
general duties, powers and responsibilities of a secretary of a
corporation.
(iii) If the
Management Committee chooses to appoint an assistant secretary or assistant
secretaries, the assistant secretaries, in the order of their seniority, in the
absence, disability or inability to act of the secretary, shall perform the
duties and exercise the powers of the secretary, and shall perform such other
duties as the chief executive officer or the Management Committee may from time
to time prescribe.
SECTION
3.8 Management
Matters.
(a) Transfer of
Property. All property owned by the Company shall be
registered in the Company’s name, in the name of a nominee or in “street name”
as the Management Committee may from time to time determine. Any
corporation, brokerage firm or transfer agent called upon to transfer any
Securities to or from the name of the Company shall be entitled to rely on
instructions or assignments signed or purported to be signed by any Officer
without inquiry as to the authority of the Person signing or purporting to sign
such instructions or assignments or as to the validity of any transfer to or
from the name of the Company. At the time of any such transfer, any
such corporation, brokerage firm or transfer agent shall be entitled to assume
that (i) the Company is then in existence and (ii) that this Agreement is in
full force and effect and has not been amended, in each case unless such
corporation, brokerage firm or transfer agent shall have received written notice
to the contrary.
(b) Existence and Good
Standing. The Management Committee may take all action which
may be necessary or appropriate (i) for the continuation of the Company’s valid
existence as a limited liability company under the laws of the State of Delaware
(and of each other jurisdiction in which such existence is necessary to enable
the Company to conduct the business in which it is engaged) and (ii) for the
maintenance, preservation and operation of the business of the Company in
accordance with the provisions of this Agreement and applicable laws and
regulations. The Management Committee may file or cause to be filed
for recordation in the office of the appropriate authorities of the State of
Delaware, and in the proper office or offices in each other jurisdiction in
which the Company is formed or qualified, such certificates (including
certificates of limited liability companies and fictitious name certificates)
and other documents as are required by the applicable statutes, rules or
regulations of any such jurisdiction or as are required to reflect the identity
of the Members and the amounts of their respective capital
contributions.
(c) Investment Company
Act. The Management Committee shall use its best efforts to
assure that the Company shall not be subject to registration as an investment
company pursuant to the Investment Company Act of 1940, as amended.
(d) No UBTI;
ECI. The Company shall not, directly or through any
pass-through entity in which it holds an interest, engage in any transaction or
activity that shall cause its Unitholders, or any of such Unitholder’s limited
partners, which, in the case of clause (i), are exempt from income taxation
under Section 501(a) of the Code, or, in the case of clause (ii), are non-U.S.
persons, to recognize (i) unrelated business taxable income, as defined in
Section 512 and Section 514 of the Code, that is taxable to such Persons under
Section 511 of the Code or (ii) income that is or is deemed to be “effectively
connected” with a U.S. trade or business, as defined in Section 864(b) of the
Code or income received directly or indirectly from a commercial activity within
the meaning of Section 892(a)(2) of the Code.
SECTION
3.9 Securities in NTK
Holdings. The Company shall vote all of the securities it
holds in NTK Holdings as directed by the Management Committee.
SECTION
3.10 Liability of
Unitholders.
(a) No Personal
Liability. Except as otherwise required by applicable law and
as expressly set forth in this Agreement, no Unitholder shall have any personal
liability whatsoever in such Person’s capacity as a Unitholder, whether to the
Company, to any of the other Unitholders, to the creditors of the Company or to
any other third party, for the debts, liabilities, commitments or any other
obligations of the Company or for any losses of the Company. Each Unitholder
shall be liable only to make such Unitholder’s Initial Capital Contribution to
the Company, if applicable, and the other payments provided expressly
herein.
(b) Return of
Distributions. In accordance with the Act and the laws of the
State of Delaware, a member of a limited liability company may, under certain
circumstances, be required to return amounts previously distributed to such
member. It is the intent of the Members that no distribution to any Member
pursuant to Article
V hereof shall be deemed a return of money or other property paid or
distributed in violation of the Act. The payment of any such money or
distribution of any such property to a Member shall be deemed to be a compromise
within the meaning of the Act, and the Member receiving any such money or
property shall not be required to return to any Person any such money or
property. However, if any court of competent jurisdiction holds that,
notwithstanding the provisions of this Agreement, any Member is obligated to
make any such payment, such obligation shall be the obligation of such Member
and not of any Representative or other Member.
SECTION
3.11 Indemnification and
Exculpation by the Company. Subject to the limitations and
conditions provided in this Section 3.11, 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 completed action, suit or proceeding, whether civil, criminal, administrative
or arbitrative (hereinafter a “Proceeding”), or any appeal in such a Proceeding
or any inquiry or investigation that could lead to such a Proceeding, by reason
of the fact that he, she, or it, or a Person of which he, she or it is the legal
representative, is or was a Unitholder, Officer or Representative shall be
indemnified by the Company to the fullest extent permitted by applicable law, as
the same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the Company to provide
broader indemnification rights than said law permitted the Company to provide
prior to such amendment) against all judgments, penalties (including excise and
similar taxes and punitive damages), fines, settlements and reasonable expenses
(including reasonable attorneys’ fees and expenses) actually incurred by such
Person in connection with such Proceeding, appeal, inquiry or investigation if
such Person acted in Good Faith, and indemnification under this Section 3.11
shall continue as to a Person who has ceased to serve in the capacity which
initially entitled such Person to indemnity hereunder. A
Representative shall not be liable to the Company or its Members for monetary
damages for breach of fiduciary duty as a Representative if such Person acted in
Good Faith, except to the extent that exculpation from liability is not
permitted under applicable law as in effect at the time such liability is
determined. The rights granted pursuant to this Section 3.11 shall be
deemed contract rights, and no amendment, modification or repeal of this Section
3.11 shall have the effect of limiting or denying any such rights with respect
to actions taken or Proceedings, appeals, inquiries or investigations arising
prior to any amendment, modification or repeal. It is expressly acknowledged
that the indemnification provided in this Section 3.11 could involve
indemnification for negligence or under theories of strict liability. “Good
Faith” shall mean a Person having acted in good faith and in a manner such
Person reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to a criminal proceeding, having had no reasonable
cause to believe such Person’s conduct was unlawful.
ARTICLE
IV.
CAPITAL CONTRIBUTIONS;
ALLOCATIONS; DISTRIBUTIONS
SECTION
4.1 Capital
Contributions. The Members listed on Exhibit I hereto have
made initial Capital Contributions to the Company in the amounts and of the type
set forth in Exhibit I hereto in respect of Units other than Class D Units (with
respect to each Member, an “Initial Capital Contribution”). The
Members listed on Exhibit II hereto have made additional Capital Contributions
to the Company in the amounts set forth on Exhibit II hereto in respect of Class
D Units.
SECTION
4.2 Capital
Accounts.
(a) Creation. There
shall be established for each Unitholder on the books of the Company a Capital
Account which shall be increased or decreased in the manner set forth in this
Agreement.
(b) Negative
Balance. A Unitholder shall not have any obligation to the
Company or to any other Unitholder to restore any negative balance in the
Capital Account of such Unitholder.
SECTION
4.3 Allocations of Net Income
and Net Loss.
(a) Timing and Amount of
Allocations of Net Income and Net Loss. Net Income and Net
Loss of the Company shall be determined and allocated with respect to each
fiscal year of the Company as of the end of each such year or as circumstances
otherwise require or allow. Subject to the other provisions of this
Section 4.3, an
allocation to a Unitholder of a share of Net Income or Net Loss shall be treated
as an allocation of the same share of each item of income, gain, loss or
deduction that is taken into account in computing Net Income or Net
Loss.
(b) General
Allocations.
(i) Net Income and Net
Loss. After giving effect to the special allocations provided
in Sections
4.3(c) all Net Income and Net Loss of the Company for a fiscal year shall
be allocated to the Unitholders as follows:
(A) first, Net Income
will be allocated to the Unitholders having deficit balances in their Capital
Accounts (computed after giving effect to all contributions, distributions,
allocations and other Capital Account adjustments for all taxable years (other
than the items comprising the Net Income or Net Loss of the Company being
allocated to the Unitholders for the current fiscal year), after adding back
each Unitholder’s share of Company Minimum Gain and Member Minimum Gain as
provided in Regulations Sections 1.704-2(g) and 1.704-2(i)(5)), to the extent
of, and in proportion to, those deficits, unless satisfied by allocations under
Section 4.3(c)
hereof; and
(B) second, Net Income
and Net Loss not allocated under Section 4.3(b)(i)(A)
will be allocated so as to cause the credit balance in each Unitholder’s Capital
Account (computed in the same manner as provided parenthetically in Section 4.3(b)(i)(A)
hereof) to equal, as nearly as possible, the amount such Unitholder would
receive if the Company sold all of its assets for the Gross Asset Value of each
such asset and distributed the proceeds thereof (after satisfaction of any
liabilities of the Company) in accordance with the provisions of Section 4.4
hereof.
(c) Additional Allocation
Provisions. Notwithstanding the foregoing provisions of this
Section 4.3:
(i)
(A) If there is a net
decrease in Company Minimum Gain or Member Minimum Gain during any fiscal year,
the Unitholders shall be allocated items of Company income and gain for such
fiscal year (and, if necessary, for subsequent fiscal years) in accordance with
Regulations Section 1.704-2(f) or 1.704-2(i)(4), as applicable. It is
intended that this Section 4.3(c)(i)(A)
qualify and be construed as a “minimum gain chargeback” and a “chargeback of
partner nonrecourse debt minimum gain” within the meaning of such Regulations,
which shall be controlling in the event of a conflict between such Regulations
and this Section
4.3(c)(i)(A).
(B) Any Nonrecourse
Deductions for any fiscal year shall be specially allocated to the holders of
Class A Units in accordance with the number of Class A Units held by each such
Unitholder. Any Member Nonrecourse Deductions for any fiscal year
shall be specially allocated to the Unitholder(s) who bears the economic risk of
loss with respect to the Member Nonrecourse Debt to which such Member
Nonrecourse Deductions are attributable, in accordance with Regulations Section
1.704- 2(i).
(C) If any Unitholder
unexpectedly receives an adjustment, allocation or distribution described in
Regulations Section 1.704- 1(b)(2)(ii)(d)(4), (5) or (6), items of Company
income and gain shall be allocated, in accordance with Regulations Section
1.704- 1(b)(2)(ii) (d), to the Unitholder in an amount and manner sufficient to
eliminate, to the extent required by such Regulations, the Adjusted Capital
Account Deficit of the Unitholder as quickly as possible. It is
intended that this Section 4.3(c)(i)(C)
qualify and be construed as a “qualified income offset” within the meaning of
Regulations 1.704- 1(b)(2)(ii)(d), which shall be controlling in the event of a
conflict between such Regulations and this Section
4.3(c)(i)(C).
(D) The allocations set
forth in Sections
4.3(c)(i)(A), (B) and (C) (the “Regulatory
Allocations”) are intended to comply with certain regulatory
requirements, including the requirements of Regulations Sections 1.704-1(b) and
1.704-2. Notwithstanding the provisions of Section 4.3(b), the
Regulatory Allocations shall be taken into account in allocating other items of
income, gain, loss and deduction among the Unitholders so that, to the extent
possible, the net amount of such allocations of other items and the Regulatory
Allocations to each Unitholder shall be equal to the net amount that would have
been allocated to each such Unitholder if the Regulatory Allocations had not
occurred.
(ii) For any fiscal year
during which a Unitholder’s interest in the Company is assigned by such
Unitholder, the portion of the Net Income and Net Loss of the Company that is
allocable in respect of such Unitholder’s interest shall be apportioned between
the assignor and the assignee of such Unitholder’s interest using any
permissible method under Code Section 706 and the Regulations thereunder, as
determined by the Management Committee.
(iii) In the event that any amount claimed by the
Company to constitute a deductible expense in any fiscal year is treated for
federal income tax purposes as a distribution made to a Unitholder in its
capacity as a partner of the Company and not a payment to a Unitholder not
acting in its capacity as a partner under Code Section 707(a), then the
Unitholder who is deemed to have received such distribution shall first be
allocated an amount of Company gross income equal to such payment, its Capital
Account shall be reduced to reflect the distribution, and for purposes of Section 4.3, Net
Income and Net Loss shall be determined after making the allocation required by
this Section
4.3(c)(iii).
(iv) In the event that any amount claimed by the
Company to constitute a distribution made to a Unitholder in its capacity as a
partner of the Company is treated for federal income tax purposes as a
deductible expense of the Company for a payment to a Unitholder not acting in
its capacity as a partner of the Company, then the Unitholder who is deemed to
have received such payment shall first be allocated the Company expense item
attributable to such payment, its Capital Account shall be reduced to reflect
the allocation, and for purposes of Section 4.3, Net
Income and Net Loss shall be determined after making the allocation required by
this Section
4.3(c)(iv).
(d) Required Tax
Allocations. All items of income, gain, loss, deduction and
credit for federal income tax purposes shall be allocated to each Unitholder in
the same manner as the Net Income or Net Loss (and each item of income, gain,
loss and deduction related thereto) that is allocated to such Unitholder
pursuant to Section 4.3(a), (b) and (c) to which such tax items
relate. Notwithstanding the foregoing provisions of this Section 4.3,
income, gain, loss, deduction, and credits with respect to property contributed
to the Company by a Unitholder shall be allocated among the Unitholders for
federal and state income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take account of the variation, if any,
between the adjusted basis for federal income tax purposes of the property to
the Company and its initial Gross Asset Value at the time of
contribution. In the event the Gross Asset Value of any Company asset
is adjusted pursuant to subparagraph (b), (c), or (d) of the definition of Gross
Asset Value, subsequent allocations of income, gain, loss, deduction, and
credits with respect to such asset shall take account of the variation, if any,
between the adjusted basis of such asset for federal income tax purposes and its
Gross Asset Value in the same manner as under Code Section 704(c) and the
applicable Regulations consistent with the requirements of Regulations Section
1.704-1(b)(2)(iv)(g). Allocations pursuant to this Section 4.3(d) are
solely for purposes of federal, state and local income taxes and shall not
affect, or in any way be taken into account in computing, any Unitholder’s
Capital Account or share of Net Income, Net Loss, other tax items or
distributions pursuant to any provision of this Agreement.
(e) Unitholders’ Tax
Reporting. The Unitholders acknowledge and are aware of the
income tax consequences of the allocations made by this Section 4.3 and,
except as may otherwise be required by applicable law or regulatory
requirements, hereby agree to be bound by the provisions of Section 4.3 in
reporting their shares of Company income, gain, loss, deductions, and credits
for federal, state and local income tax purposes.
(f) Withholding. Each
Unitholder hereby authorizes the Company to withhold and to pay over any taxes
payable by the Company or any of its Affiliates as a result of the participation
by such Unitholder (or any Assignee of, or Successor in Interest to, such
Unitholder) in the Company. If and to the extent that the Company
shall be required to withhold any taxes, such Unitholder shall be deemed for all
purposes of this Agreement to have received a payment from the Company as of the
time such withholding is required to be paid, which payment shall be deemed to
be a distribution to such Unitholder under Section 4.4(a) or
Section 5.2 to
the extent that the Unitholder is entitled to receive a distribution and shall
be taken into account in determining the amount of future distributions to such
Unitholder. To the extent that the aggregate of such payments to a
Unitholder for any period exceeds the distributions to which such Unitholder is
entitled for such period, the amount of such excess shall be considered a demand
loan from the Company to such Unitholder, with interest at an interest rate of
9% compounded annually, which interest shall be treated as an item of Company
income until discharged by such Unitholder by repayment, which may be made in
the sole discretion of the Management Committee out of distributions to which
such Unitholder would otherwise be subsequently entitled. The
withholdings referred to in this Section 4.3 shall be
made at the maximum applicable statutory rate under applicable tax law unless
the Management Committee receives documentation, satisfactory to the Management
Committee, to the effect that a lower rate is applicable, or that no withholding
is applicable.
SECTION
4.4 Distributions.
(a) Priority. Distributable
Assets will be distributed at such time and in such amounts as is determined by
the Management Committee, subject to Sections 4.4(b), (c) and (d) as
follows:
(i) First, 100% of the
Distributable Assets shall be distributed to the holders of Class D Units in
proportion to each such Unitholder’s Unreturned Class D Capital until each such
Unitholder’s Unreturned Class D Capital has been reduced to zero;
(ii) Second, after the
required distributions pursuant to subparagraph (i) above, 100% of the
Distributable Assets shall be distributed to the holders of Class D Units in
proportion to each such Unitholder’s Class D Preferred Return until each such
Unitholder’s Class D Preferred Return has been reduced to zero;
(iii) Third, after the
required distributions pursuant to subparagraph (ii) above, 100% of the
Distributable Assets shall be distributed to the holders of Class A Units and
Class B Units in proportion to each such Unitholder’s Unreturned Class A and
Class B Capital until each such Unitholder’s Unreturned Class A and Class B
Capital has been reduced to zero;
(iv) Fourth, after the
required distributions pursuant to subparagraph (iii) above, 100% of
Distributable Assets shall be distributed to the holders of Class C-1 Units and
Class C-2 Units that were outstanding but unvested at the time the Company made
one or more previous distributions under Section 4.4(a)(v)
below (and that consequently did not share in such one or more previous
distributions), but that became vested subsequent to such one or more previous
distributions, in an amount and in such proportions between such newly-vested
Class C-1 Units and Class C-2 Units so that the sum of (x) the amount
distributed under this Section 4.4(a)(iv)
plus (y) the aggregate amount distributed in such one or more previous
distributions under Section 4.4(a)(v)
shall be distributed with respect to the Class B Units and vested Class C Units
(including such newly vested Class C-1 Units and Class C-2 Units) in the same
amounts and the same proportions as if such newly-vested Class C-1 Units and
Class C-2 Units had been vested at the time of such one or more previous
distributions (provided that if the Distributable Assets available for
distribution under this Section 4.4(a)(iv)
are insufficient to permit the newly-vested Class C-1 Units and Class C-2 Units
to receive the full amounts to which they would have been entitled if they had
been vested at the time of such one or more previous distributions, the
Distributable Assets shall be shared between the newly-vested Units in the same
proportions as if sufficient Distributable Assets had been
available);
(v) Fifth, after the
required distributions, if any, pursuant to subparagraph (iv) above, 100% of
Distributable Assets shall be distributed to the holders of Class B Units,
Vested Class C-1 Units and Vested Class C-2 Units, pro rata in accordance with
the number of Class B Units, Vested Class C-1 Units and Vested Class C-2 Units
held by such Unitholder;
provided that, if the
Distributable Assets being distributed consist of more than one kind of asset,
all Distributable Assets consisting of cash must be distributed before any other
kind of asset is distributed; and
provided further
that, the terms of this Section 4.4(a) shall not require the return of any
distributions made in accordance with the terms of the Prior Agreement and
distributions made in accordance with the terms of the Prior Agreement shall be
given effect for purposes of calculating future distributions to be made under
Section 4.4.
(b) Successors. For
purposes of determining the amount of distributions under this Section 4.4,
each Unitholder shall be treated as having received amounts received by its
predecessors in respect of any of such Unitholder’s Units.
(c) Tax
Distributions. Subject to the Act, no later than the tenth day
of March the Company shall make a tax distribution in cash to each Unitholder in
an amount equal to 110% of the excess of (i) the product of (A) the cumulative
taxable income allocable to such Unitholder (including any guaranteed payments
for services that are not actually received by such Unitholder in cash) in
excess of the cumulative taxable loss allocable to such Unitholder for all
taxable years prior to the year in which such distribution is being made, as
reported on the Unitholder’s Schedule K-1s delivered by the Company to the
Unitholder or (in the case of the taxable year prior to the year in which the
distribution is made, if no Schedule K-1 has yet been delivered with respect to
such year) as estimated in good faith by the Company and (B) the combined
maximum federal, state and local marginal income tax rate (taking into account
the deductibility of state and local taxes and adjusted appropriately to take
into account the varying rates applicable to capital gains, qualified dividend
income and ordinary income) applicable to individual residents of Providence,
Rhode Island, over (ii) all prior distributions pursuant to this Section
4.4. At the time each tax distribution is made, the Company
shall deliver to each Unitholder a detailed explanation of the manner in which
such tax distribution was calculated, including (if applicable) the Company’s
good faith estimate of the amount of taxable income or loss allocable to the
Unitholder for the taxable year preceding the year in which the distribution was
made. All tax distributions made to a Unitholder pursuant to this
Section 4.4(c)
on account of the taxable income allocated to such Unitholder shall be treated
as advance distributions under Section 4.4(a) or
Section 5.2 and
shall be taken into account in determining the amount of future distributions to
such Unitholder.
(d) Requirements for Certain
Distributions. Other than pursuant to an Exit Event or other
dissolution under Section 5.2, any
distribution of assets other than cash or Marketable Securities pursuant to this
Section 4.4
shall require the approval of (i) all the Representatives constituting the
Management Committee or (ii) THL Holders holding a majority of the Units held by
the THL Holders and Management Holders holding a majority of all Units held by
the Management Holders. In addition, any distribution of Marketable
Securities pursuant to Section 4.4 prior to
an Exit Event or other dissolution under Section 5.2 shall
only be permitted if each THL Third Party Investment Fund that receives such
distribution (whether such distribution is initially received directly or
indirectly by another THL Holder) distributes to its investors promptly
thereafter its portion of such distribution.
(e) Valuation. All
Distributable Assets shall be valued by the Management Committee in good faith,
except as specifically provided in the following sentence with respect to
securities that are publicly traded. In the case of any distribution
of securities that are publicly traded, such securities shall be valued at the
lesser of (i) the average of the last reported trade price of securities of such
class on the 10 most recent trading days prior to the date of distribution and
(ii) the last reported trade price of securities of such class on the trading
day prior to the date of distribution.
SECTION
4.5 Security Interest and Right
of Set-Off. As security for any withholding tax or other
liability or obligation to which the Company may be subject as a result of any
act or status of any Unitholder, or to which the Company may become subject with
respect to the interest of any Unitholder, the Company shall have (and each
Unitholder hereby grants to the Company) a security interest in all
Distributable Assets distributable to such Unitholder to the extent of the
amount of such withholding tax or other liability or obligation. The
Company shall have a right of setoff against such distributions of Distributable
Assets in the amount of such withholding tax or other liability or
obligation. The Company may withhold distributions or portions
thereof if it is required to do so by the Code or any other provision of
federal, state or local tax or other law. Any amount withheld
pursuant to the Code or any other provision of federal, state or local tax or
other law with respect to any distribution to a Unitholder shall be treated as
an amount distributed to such Unitholder for all purposes under this
Agreement.
ARTICLE
V.
WITHDRAWAL; DISSOLUTION;
TRANSFER OF MEMBERSHIP INTERESTS; ADMISSION OF NEW MEMBERS
SECTION
5.1 Unitholder
Withdrawal. No Unitholder shall have the power or right to
withdraw or otherwise resign or be expelled from the Company prior to the
dissolution and winding up of the Company except pursuant to a transfer
permitted under this Agreement of all of such Unitholder’s Units to an Assignee,
a Member or the Company. Notwithstanding anything to the contrary
contained in the Act, in no event shall any Unitholder be deemed to have
withdrawn from the Company or cease to be a Unitholder upon the occurrence of
any of the events specified in this Agreement (other than dissolution pursuant
to Section 5.2), or any events similar thereto, unless the Unitholder, after the
occurrence of any such event, indicates in a written instrument that the
Unitholder has so withdrawn.
SECTION
5.2 Dissolution.
(a) Events. The
Company shall be dissolved and its affairs shall be wound up on the first to
occur of the following:
(i) the unanimous vote
of the Management Committee;
(ii) the written consent
of the holders of a majority of the Units held by the THL Holders and the
holders of a majority of the Units held by the Management Holders;
(iii) the entry of
a decree of judicial dissolution of the Company under Section 18-802 of the
Act;
(iv) upon
consummation of an Exit Event, with the consent of a majority of the Management
Committee; and
(v) upon the
liquidation, dissolution or winding up of the Company or Holdings.
The death,
retirement, resignation, expulsion, incapacity, bankruptcy or dissolution of a
Member, or the occurrence of any other event that terminates the continued
membership of a Member in the Company, shall not cause a dissolution of the
Company, and the Company shall continue in existence subject to the terms and
conditions of this Agreement.
(b) Actions Upon
Dissolution. When the Company is dissolved, the business and
property of the Company shall be wound up and liquidated by the Management
Committee or, in the event of the unavailability of the Management Committee,
such Member or other liquidating trustee as shall be named by the Management
Committee. A reasonable time shall be allowed for the orderly
liquidation of the assets of the Company and the discharge of liabilities to
creditors so as to enable the Members to minimize the normal losses attendant
upon a liquidation.
(c) Priority. Following
completion of the wind up and liquidation process, the assets of the Company
shall be distributed in the following manner and order:
(i) All debts and
obligations of the Company, if any, shall first be paid, discharged or provided
for by adequate reserves in accordance with the Act; and
(ii) The balance shall
be distributed to the Unitholders in accordance with Section
4.4.
(d) Cancellation of
Certificate. On completion of the distribution of Company
assets as provided herein, the Company is terminated, and shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware, cancel any other filings made and take such other actions as may be
necessary to terminate the Company.
(e) Tax Distribution
Clawback. Upon dissolution of the Company, to the extent that
(x) any tax distribution received by a Unitholder pursuant to Section 4.4(c) has
not been applied to reduce a distribution to which such Unitholder would
otherwise be entitled under Section 4.4(a) above (an “Unapplied Tax
Distribution”), and (y) such Unitholder recognizes a loss for tax
purposes attributable to such Unitholder’s Units which results in a reduction of
tax or a tax refund or credit (a “Tax Benefit”), such Unitholder shall be
obligated to contribute to the Company an amount of cash equal to the lesser of
the amount of such Unapplied Tax Distribution or such Tax Benefit, such
contribution to be made promptly upon such Unitholder’s receipt of such Tax
Benefit. In the event that a Unitholder that has received an
Unapplied Tax Distribution contributes less than the full amount of such
Unapplied Tax Distribution to the Company because the Unitholder has not
recognized a Tax Benefit at least equal to such Unapplied Tax Distribution at
the time of the dissolution of the Company, then upon recognition of any Tax
Benefit with respect to any of such Unitholder’s next five tax years (including
the tax year in which the dissolution occurs), which Tax Benefits on a
cumulative basis do not exceed such Unitholder's Unapplied Tax Distribution,
such Unitholder shall pay an amount equal to such Tax Benefit directly to THL
for distribution to the other former Unitholders (or their successors) in the
same proportions that they would have received the proceeds of such distribution
if it had been made at the time of the dissolution of the Company.
SECTION
5.3 Transfer by
Unitholders. Subject to the restrictions
on transfer set forth in the Securityholders Agreement and this
Agreement, a Unitholder may transfer or assign all or part of its interest as a
Unitholder in the Company to any Person that agrees in writing to assume the
responsibility of a Unitholder. Any Member who shall assign any Units
in the Company shall cease to be a Member of the Company with respect to such
Units and shall no longer have any rights or privileges of a Member with respect
to such Units. Any Member or Assignee who acquires in any manner
whatsoever any Units, 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 benefits of the acquisition thereof to have agreed to
be subject to and bound by all of the terms and conditions of this Agreement
that any predecessor in such Units or other interest in the Company was subject
to or by which such predecessor was bound. No Member shall cease to
be a Member upon the collateral assignment of, or the pledging or granting of a
security interest in, its entire interest in the Company.
SECTION
5.4 Admission or Substitution of
New Members.
(a) Admission. The
Management Committee shall have the right, subject to Section 5.3, to admit
as a Substitute Member or an Additional Member, any Person who acquires an
interest in the Company, or any part thereof, from a Member or from the Company;
provided that, the Management
Committee shall admit as a Substitute Member, subject to Section 5.4(b), any
Permitted Transferee (as such term is defined in the Securityholders Agreement)
who acquires an interest in the Company pursuant to a transfer from a
Member. Concurrently with the admission of a Substitute Member or an
Additional Member, the Management Committee shall forthwith cause any necessary
papers to be filed and recorded and notice to be given wherever and to the
extent required showing the substitution of a transferee as a Substitute Member
in place of the transferring Member, or the admission of an Additional Member,
all at the expense, including payment of any professional and filing fees
incurred, of the Substitute Member or the Additional Member.
(b) Conditions. The
admission of any Person as a Substitute or Additional Member shall be
conditioned upon (i) such Person’s written acceptance and adoption of all the
terms and provisions of this Agreement, either by (X) execution and delivery of
a counterpart signature page to this Agreement countersigned by a an authorized
Officer on behalf of the Company or (Y) any other writing evidencing the intent
of such Person to become a Substitute Member or Additional Member and such
writing is accepted by the Management Committee on behalf of the Company and
(ii) (at the request of the Management Committee) such Person’s execution and
delivery of a counterpart to the Securityholders Agreement.
SECTION
5.5 Compliance with
Law. Notwithstanding any provision hereof to the contrary, no
sale or other disposition of an interest in the Company may be made except in
compliance with all federal, state and other applicable laws, including federal
and state securities laws. Nothing in this Section 5.5 shall be
construed to limit or otherwise affect any of the provisions of the
Securityholders Agreement or the Management Unit Subscription Agreements, and to
the extent any such provisions apply, they are then to be construed as being
incorporated in this Agreement and made a part hereof.
ARTICLE
VI.
REPORTS TO MEMBERS; TAX
MATTERS
SECTION
6.1 Access. Each
Member shall have access to all books, records and accounts of the Company as is
required under the Act, in each case, under such conditions and restrictions as
the Management Committee may reasonably prescribe.
SECTION
6.2 Reports.
(a) Tax
Reporting. The Company shall supply to the Unitholders all
information reasonably necessary to enable each Unitholder to prepare its
federal, state, and local income tax returns, which information shall include a
Schedule K-1.
(b) Determinations. All
determinations, valuations and other matters of judgment required to be made for
accounting purposes under this Agreement shall be made by the Management
Committee in good faith and, if so made, shall be conclusive and binding on all
Unitholders, their Successors in Interest and any other Person, and to the
fullest extent permitted by law, no such Person shall have the right to an
accounting or an appraisal of the assets of the Company or any successor
thereto.
SECTION
6.3 Fiscal
Year. The fiscal year of the Company shall end on December
31st
of each calendar year unless otherwise determined by the Management Committee in
accordance with Section 706 of the Code.
SECTION
6.4 Certain Tax
Matters.
(a) Preparation of
Returns. The Management Committee shall cause to be prepared
all federal, state and local tax returns of the Company for each year for which
such returns are required to be filed and shall cause such returns to be timely
filed. The Management Committee shall determine the appropriate
treatment of each item of income, gain, loss, deduction and credit of the
Company and the accounting methods and conventions under the tax laws of the
United States, the several states and other relevant jurisdictions as to the
treatment of any such item or any other method or procedure related to the
preparation of such tax returns. The Management Committee may cause
the Company to make or refrain from making any and all elections permitted by
such tax laws. Each Unitholder agrees that it shall not, except as
otherwise required by applicable law or regulatory requirements, (i) treat, on
its individual income tax returns, any item of income, gain, loss, deduction or
credit relating to its interest in the Company in a manner inconsistent with the
treatment of such item by the Company as reflected on the Form K-1 or other
information statement furnished by the Company to such Unitholder for use in
preparing its income tax returns or (ii) file any claim for refund relating to
any such item based on, or which would result in, such inconsistent
treatment. In respect of an income tax audit of any tax return of the
Company, the filing of any amended return or claim for refund in connection with
any item of income, gain, loss, deduction or credit reflected on any tax return
of the Company, or any administrative or judicial proceedings arising out of or
in connection with any such audit, amended return, claim for refund or denial of
such claim, (A) the Tax Matters Member (as defined below) shall be authorized to
act for, and its decision shall be final and binding upon, the Company and all
Unitholders except to the extent a Unitholder shall properly elect to be
excluded from such proceeding pursuant to the Code, (B) all expenses incurred by
the Tax Matters Member in connection therewith (including attorneys’,
accountants’ and other experts’ fees and disbursements) shall be expenses of,
and payable by, the Company, (C) no Unitholder shall have the right to (1)
participate in the audit of any Company tax return, (2) file any amended return
or claim for refund in connection with any item of income, gain, loss, deduction
or credit (other than items which are not partnership items within the meaning
of Section 6231(a)(4) of the Code or which cease to be partnership items under
Section 6231(b) of the Code) reflected on any tax return of the Company, (3)
participate in any administrative or judicial proceedings conducted by the
Company or the Tax Matters Member arising out of or in connection with any such
audit, amended return, claim for refund or denial of such claim, or (4) appeal,
challenge or otherwise protest any adverse findings in any such audit conducted
by the Company or the Tax Matters Member or with respect to any such amended
return or claim for refund filed by the Company or the Tax Matters Member or in
any such administrative or judicial proceedings conducted by the Company or the
Tax Matters Member and (D) the Tax Matters Member shall keep the Unitholders
reasonably apprised of the status of any such
proceeding. Notwithstanding the previous sentence, if a petition for
a readjustment to any partnership item included in a final partnership
administrative adjustment is filed with a District Court or the Court of Claims
and the IRS has elected to assess income tax against a Member with respect to
that final partnership administrative adjustments (rather than suspending
assessments until the District Court or Court of Claims proceedings become
final), such Member shall be permitted to file a claim for refund within such
period of time to avoid application of any statute of limitation provisions
which would otherwise prevent the Member from having any claim based on the
final outcome of that review.
(b) Tax Matters
Member. The Company and each Member hereby designate ▇▇▇▇▇▇ ▇.
▇▇▇ Equity Fund V, L.P. as the “tax matters partner” for purposes of Section
6231(a)(7) of the Code (the “Tax Matters
Member”).
(c) Certain
Filings. Upon the sale of Company assets or a liquidation of
the Company, Unitholders shall provide the Management Committee with certain tax
filings as reasonably requested by the Management Committee and required under
applicable law.
ARTICLE
VII.
MISCELLANEOUS
SECTION
7.1 Schedules. Without
in any way limiting the provisions of Section 6.2, a Representative may from
time to time execute on behalf of the Company and deliver to the Unitholders
schedules which set forth the then current Capital Account balances of each
Unitholder and any other matters deemed appropriate by the Management Committee
or required by applicable law. Such schedules shall be for
information purposes only and shall not be deemed to be part of this Agreement
for any purpose whatsoever.
SECTION
7.2 Governing
Law. THIS AGREEMENT IS GOVERNED BY AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE, EXCLUDING ANY CONFLICT-OF-LAWS
RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE OR THE CONSTRUCTION OF THIS
AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. In the event of a
direct conflict between the provisions of this Agreement and any provision of
the Certificate or any mandatory provision of the Act, the applicable provision
of the Certificate or the Act shall control. If any provision of this Agreement
or the application thereof to any Person or circumstance is held invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of that provision to other Persons or circumstances is not affected thereby and
that provision shall be enforced to the greatest extent permitted by
law.
SECTION
7.3 Successors and
Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective Successors in
Interest; provided that no Person claiming by, through or under a Member
(whether as such Member’s Successor in Interest or otherwise), as distinct from
such Member itself, shall have any rights as, or in respect to, a Member
(including the right to approve or vote on any matter or to notice
thereof).
SECTION
7.4 Confidentiality. By
executing this Agreement, for the longer of three years from the receipt thereof
or the period ending on the second anniversary of the last date when any Member
holds any Units, each Member expressly agrees to maintain the confidentiality
of, and not to disclose to any Person other than the Company, another Member or
a Person designated by the Company or any of their respective financial
planners, accountants, attorneys or other advisors, any information relating to
the business, financial structure, financial position or financial results,
clients or affairs of the Company that shall not be generally known to the
public, except as otherwise required by law or by any regulatory or
self-regulatory organization having jurisdiction and except in the case of any
Member who is employed by any entity controlled by the Company in the ordinary
course of such Person’s duties. Notwithstanding anything to the
contrary set forth herein or in any other agreement to which the parties hereto
are parties or by which they are bound, the obligations of confidentiality
contained herein and therein, as they relate to an investment in Membership
Interests (the “Transaction”), shall not apply to the tax structure or tax
treatment of the Transaction, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the tax structure and tax treatment of
the Transaction and all materials of any kind (including opinions or other tax
analysis) that are provided to such party relating to such tax treatment and tax
structure; provided, however, that such disclosure shall not include the name
(or other identifying information not relevant to the tax structure or tax
treatment) of any person and shall not include information for which
nondisclosure is reasonably necessary in order to comply with applicable
securities laws.
SECTION
7.5 Amendments. The
Management Committee may, to the fullest extent allowable under Delaware law,
amend or modify this Agreement; provided that, if an amendment or modification
adversely affects the Management Holders (including by reason of an effect on
the terms of the Units held by the Management Holders), the Management Holders
holding a majority of all Units held by the Management Holders must approve such
amendment or modification; provided further that, the Management Committee may
amend this Agreement without the consent of Members in order to provide for the
issuance of any Company Units in accordance with Section 2.8 hereof and to make
any such other amendments as it deems necessary or desirable to reflect such
additional issuances provided that, no such amendment shall adversely affect the
relationship among the Class A Units, Class B Units, Class C Units and Class D
Units as set forth herein; provided further that no amendment shall be effective
if such amendment results in Units held by a Member being redesignated to a
different class of Unit than the class of which it is then included, without
such Member’s consent.
SECTION
7.6 Notices. Whenever
notice is required or permitted by this Agreement to be given, such notice shall
be in writing and shall be given to any Unitholder at its address or telecopy
number shown in the Company’s books and records, or, if given to the Company, at
the following address:
c/o ▇▇▇▇▇▇ ▇. ▇▇▇
Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇
Telecopy: (▇▇▇)
▇▇▇-▇▇▇▇
with a copy
to:
Ropes &
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇
▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇
Telecopy: (▇▇▇)
▇▇▇-▇▇▇▇
Each proper notice
shall be effective upon any of the following: (i) personal delivery to the
recipient, (ii) one business day after being sent by telecopier to the recipient
(with hard copy sent to the recipient by reputable overnight courier service
that same day or the next business day (charges prepaid)), (iii) one business
day after being sent to the recipient by reputable overnight courier service
(charges prepaid) or (iv) five business days after being deposited in the mails
(first class or airmail postage prepaid).
SECTION
7.7 Counterparts. This
Agreement may be executed in any number of counterparts (including by means of
telecopied signature pages), all of which together shall constitute a single
instrument.
SECTION
7.8 Power of
Attorney. Each Member hereby irrevocably appoints each
Representative as such Member’s true and lawful representative and
attorney-in-fact, each acting alone, in such Member’s name, place and stead, (i)
to make, execute, sign and file all instruments, documents and certificates
which, from time to time, may be required to set forth any amendment (provided
such Amendment has been adopted in accordance with the terms of this Agreement)
to this Agreement or which may be required by this Agreement or by the laws of
the United States of America, the State of Delaware or any other state in which
the Company shall determine to do business, or any political subdivision or
agency thereof and (ii) to execute, implement and continue the valid and
subsisting existence of the Company or to qualify and continue the Company as a
foreign limited liability company in all jurisdictions in which the Company may
conduct business. Such power of attorney is coupled with an interest
and shall survive and continue in full force and effect notwithstanding the
subsequent withdrawal from the Company of any Member for any reason and shall
survive and shall not be affected by the disability or incapacity of such
Member.
SECTION
7.9 Entire
Agreement. This Agreement, the Securityholders Agreement and
the other documents and agreements referred to herein or entered into
concurrently herewith embody the entire agreement and understanding of the
parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein and therein. This Agreement, the Securityholders
Agreement and such other documents and agreements supersede all prior agreements
and understandings between the parties with respect to such subject
matter.
SECTION
7.10 Jurisdiction. Any suit, action or proceeding under or
with respect to this Agreement, or any judgment entered by any court in respect
of any thereof, shall be brought in any court of competent jurisdiction in the
State of Delaware
and each of the Company and the Members hereby submits to the exclusive
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment. Each of the Company and the Members hereby irrevocably waives any objections
which it may now or hereafter have to the laying of the venue of any suit,
action or proceeding arising out of or relating to this Agreement brought in any
court of competent jurisdiction in the State of Delaware, and hereby further irrevocably waives
any claim that any such suit, action or proceeding brought in any such court has
been brought in any inconvenient forum.
SECTION
7.11 Section
Titles. Section titles and headings are for descriptive
purposes only and shall not control or alter the meaning of this Agreement as
set forth in the text hereof.
IN WITNESS WHEREOF,
the parties have executed this Amended and Restated Limited Liability Company
Agreement as of the day and year first above written.