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Exhibit 10.4
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LIMITED LIABILITY COMPANY AGREEMENT
OF
GFI CAMINUS LLC
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS; CONSTRUCTION.............................................................................. 1
1.1 Definitions..................................................................................... 1
1.2 Directly or Indirectly.......................................................................... 6
1.3 Captions........................................................................................ 6
1.4 Interpretation.................................................................................. 6
1.5 References to this Agreement.................................................................... 6
ARTICLE II FORMATION.............................................................................................. 6
2.1 Formation....................................................................................... 6
2.2 Name............................................................................................ 6
2.3 Registered Office; Principal Office; Other Offices.............................................. 6
2.4 Agent........................................................................................... 7
2.5 Purpose; Powers................................................................................. 7
2.6 Term of the Company............................................................................. 7
ARTICLE III MEMBERS AND MEMBERSHIP INTERESTS; WARRANT AND OPTIONS................................................. 7
3.1 Initial Members; Additional Members............................................................. 7
3.2 Option Plan; GFI Option......................................................................... 7
3.3 Representations and Warranties.................................................................. 8
3.4 Voting Rights; Approval Required................................................................ 9
3.5 Meetings of Members............................................................................. 9
3.6 Disposition of Interests....................................................................... 10
3.7 Amendment of Agreement to Reflect New Members.................................................. 11
3.8 Interest in Member............................................................................. 11
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3.9 No Resignation or Removal...................................................................... 11
3.10 No Liability to Third Parties.................................................................. 11
3.11 Indemnification by and of Members.............................................................. 11
3.12 Rights of Assignees............................................................................ 11
ARTICLE IV CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS; LOAN...................................................... 12
4.1 Capital Contributions.......................................................................... 12
4.2 No Return of Capital Contribution; No Interest................................................. 13
4.3 Capital Accounts............................................................................... 13
4.4 No Obligation to Restore Deficits.............................................................. 13
ARTICLE V ALLOCATIONS AND DISTRIBUTIONS.......................................................................... 14
5.1 Allocations of Net Profits and Net Losses...................................................... 14
5.2 Special Allocations............................................................................ 14
5.3 Allocation of Net Profits and Net Losses in Respect of a Transferred Interest.................. 15
5.4 Distributions.................................................................................. 15
5.5 Form of Distributions.......................................................................... 16
ARTICLE VI MANAGEMENT AND OPERATION.............................................................................. 16
6.1 Management: Limitations on Management Committee's Rights and Powers............................ 16
6.2 Managers: Management Committee................................................................. 17
6.3 Officers....................................................................................... 19
6.4 Acts of Officers as Conclusive Evidence of Authority........................................... 20
6.5 Payments to Members............................................................................ 20
6.6 Nature of Relationship......................................................................... 20
ARTICLE VII TAX MATTERS.......................................................................................... 21
7.1 Tax Returns.................................................................................... 21
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7.2 "Tax Matters Member"........................................................................... 21
7.3 Tax Elections.................................................................................. 21
7.4 Withholding.................................................................................... 22
ARTICLE VIII BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS.......................................................... 22
8.1 Maintenance of Books........................................................................... 22
8.2 Financial Information; Budget and Operating Forecasts; Access.................................. 22
8.3 Confidentiality................................................................................ 23
8.4 Publicity...................................................................................... 23
ARTICLE IX DISSOLUTION AND WINDING UP............................................................................ 23
9.1 Conditions of Dissolution...................................................................... 23
9.2 Liquidation and Termination.................................................................... 24
9.3 Cancellation of Filings........................................................................ 25
ARTICLE X INDEMNIFICATION AND INSURANCE.......................................................................... 25
10.1 Indemnification by Company..................................................................... 25
ARTICLE XI GENERAL PROVISIONS.................................................................................... 26
11.1 Notices........................................................................................ 26
11.2 Entire Agreement; Waivers and Modifications.................................................... 26
11.3 Binding Effect; No Third-Party Beneficiaries................................................... 27
11.4 Governing Law.................................................................................. 27
11.5 Further Assurances............................................................................. 27
11.6 Waiver of Certain Rights....................................................................... 28
11.7 Multiple Counterparts; Facsimile Transmission.................................................. 28
11.8 Arbitration.................................................................................... 28
11.9 Attorney's Fees................................................................................ 28
11.10 Submission to Jurisdiction..................................................................... 28
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This Limited Liability Company Agreement of GFI Caminus LLC (the
"Agreement") is made and entered into as of May 12, 1998 by and among the
Members and the Company.
For and in consideration of the mutual covenants, rights, and
obligations set forth herein, the benefits to be derived therefrom, and other
good and valuable consideration, the receipt and sufficiency of which each
Member acknowledges and confesses, the Members and the Company agree as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
1.1 Definitions. When used herein, the following capitalized terms
shall have the meanings indicated:
"Act" means the Delaware Limited Liability Company Act and any
successor statute, as amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member'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
Member is obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to the penultimate sentences of
Treas. Reg. Sections 1.704-2(g)(1) and 1.704-2(i)(5);
(ii) Credit to such Capital Account the amount of the
deductions and losses referable to any outstanding recourse liabilities owed by
the Company to such Member for which no other Member bears any economic risk of
loss and the amount of the deductions and losses referable to such Member's
share (determined in accordance with the Member's Percentage Interest) of
outstanding recourse liabilities owed by the Company to non-members for which no
Member bears any economic risk of loss; and
(iii) Debit to such Capital Account the items described in
Treas. Reg. Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Treas. Reg. Sections
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
"Adjusted Capital Contribution" means a Series A Adjusted Capital
Contribution, Series B Adjusted Capital Contribution or Series C Adjusted
Capital Contribution, as applicable.
"Affiliate" means as to any Person any other Person who, directly or
indirectly, through one or more intermediaries, Controls or is Controlled by or
under common Control with that Person (except that the Company shall not be
considered an Affiliate of any Member or any equity holder of any Member).
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"Aggregate Series B Percentage Interests" means, at any time, the
aggregate Percentage Interests attributable to the Series B Membership
Interests.
"Agreement" means this Limited Liability Company Agreement, as
originally executed and, except where the context requires otherwise, as amended
from time to time as herein provided.
"Caminus" means Caminus Energy Limited, a Company organized under the
laws of England and wholly-owned by the Company.
"Caminus Options" means the options to acquire Series B Membership
Interests in the Company granted pursuant to the Purchase Agreement and as set
forth in Section 5.1 of Appendix B attached to this Agreement. In addition to
other approval rights set forth in this Agreement, the Company shall not agree
or consent to any amendment to the Caminus Options if such amendment would
adversely affect the interests of any Member (other than the holder of such
Caminus Options) in any material respect, unless each such affected Member shall
have consented to such amendment.
"Capital Account" means the capital account established and maintained
for a Member pursuant to Section 4.3. The initial Capital Accounts of the
Members, after giving effect to the transaction contemplated by the Purchase
Agreement and the License Agreement, are as reflected on Appendix A attached
hereto.
"Capital Contribution" means the cumulative sum of money, if any, and
the fair market value (net of assumed debt) of any other property contributed or
deemed contributed by a Member to the capital of the Company as provided herein.
"Capital Members" means all Members with respect to their Capital
Contributions (if any) and Adjusted Capital Contributions (if any) to the
Company.
"Certificate" or "Certificate of Formation" means the Certificate of
Formation of the Company filed on April 29, 1998 in accordance with the Act and
as amended from time to time.
"Code" means the Internal Revenue Code of 1986 and any successor
statute, as amended from time to time.
"Company" means GFI Caminus LLC, the Delaware limited liability company
formed pursuant to the Certificate.
"Company Minimum Gain" has the meaning provided in Treas. Reg. Section
1.704-2(b)(2) and Section 1.704-2(d).
"Control," or "Controls," or "Controlled" (and derivations thereof)
means as to a corporation the right to exercise, directly or indirectly, more
than 50% of the voting rights in the corporation, and as to any other Entity the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the same.
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"Dispose", "Disposing", or "Disposition" means a sale, assignment,
transfer, exchange, mortgage, pledge, grant of a security interest, or other
disposition or encumbrance (including, without limitation, by operation of law),
or the acts thereof.
"Dissolution Event" means as to any Member the Member's resignation,
removal or withdrawal as provided in this Agreement (other than in connection
with a Disposition in accordance with the terms of this Agreement), the
voluntary filing of bankruptcy by any Member or the involuntary filing of a
bankruptcy petition against any Member which is not dismissed within sixty (60)
days after the filing thereof, or the making by any Member of an assignment for
the benefit of its creditors, or dissolution of any Member other than an
individual.
"Distributable Cash" means the amount of money on hand of the Company
and available for distribution to the Members, taking into account all accrued
debts, liabilities, and obligations of the Company and any amounts necessary or
advisable to reserve, designate, or set aside for actual or anticipated costs,
payments, liabilities, obligations, and claims with respect to the Company's
business, all as determined by the Management Committee.
"Entity" means any association, corporation, estate, limited liability
company, limited partnership, partnership, venture, or other entity.
"GAAP" means U.S. generally accepted accounting principles applied on a
consistent basis.
"GFI" means GFI Energy Ventures LLC, a limited liability company
organized under the laws of the State of California.
"GFI Option" means the option to acquire a Series C Membership Interest
in the Company as set forth in Section 5.3 of Appendix B attached to this
Agreement.
"License Agreement" means, collectively, the two separate Distributor
Agreements between the Company and SS&C dated as of the date hereof.
"Management Committee" has the meaning set forth in Article VI.
"Majority in Interest" of the Members means a Member or Members whose
aggregate Percentage Interests exceed 50% of the total Percentage Interests.
"Members" means the initial Members as provided in Section 3.1 and all
other Persons subsequently admitted as additional Members in accordance with the
terms of this Agreement, but shall not include any Person who has ceased to be a
Member pursuant to the terms of this Agreement. References to a "Member" means
any of the Members.
"Member Nonrecourse Debt" has the meaning ascribed to the term "Partner
Nonrecourse Debt" in Treas. Reg. Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such
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member Nonrecourse Debt were treated as a Nonrecourse Liability determined in
accordance with Treas. Reg. Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" means items of Company loss, deduction
or Code section 705(a)(2)(B) expenditures which are attributable to Member
Nonrecourse Debt, or as to any other loans by a Member to the Company for which
no other Member bears the economic risk of loss.
"Membership Interest" means a Member's allocable share of the Company's
Net Profits and Net Losses, the Member's allocable share of other items of
income and deductions and voting and management participation rights as
described herein and the Member's rights to receive distributions from the
Company, together with all obligations of such Member to comply with the
provisions of this Agreement. As of the effective date of this Agreement, the
Membership Interests of the Company are classified into Series A, Series B and
Series C Membership Interests.
"Net Profits" and "Net Losses" means the book income, gain loss,
deductions, and credits of the Company in the aggregate or separately stated, as
appropriate, for any relevant period (excluding special allocations in
accordance with Section 5.2).
"Nonrecourse Deductions" has the meaning set forth in Treas. Reg.
Section 1.704-2(b)(1).
"Nonrecourse Liability" has the meaning set forth in Treas. Reg.
Section 1.752-1(a)(2).
"Officer" means any Person designated as an Officer of the Company as
provided in Section 6.3.
"Option Plan" means each of (i) the Caminus Options, (ii) the SS&C
Warrant and (iii) any other equity incentive plan duly adopted by the Management
Committee of the Company and approved by the Members that provides for the
issuance of options to acquire Series B Membership Interests that may be granted
to employees or other service providers to the Company.
"Percentage Interest" means, prior to the issuance of Series B
Membership Interests pursuant to an Option Plan and the issuance of Series C
Membership Interests pursuant to the GFI Option, the percentage set forth
opposite a Member's name on Appendix A hereto as amended from time to time.
Following the issuance of any Series B Membership Interests upon the exercise of
options under an Option Plan, the "Percentage Interest" of a Series B Capital
Member shall be equal to (i) 0.00001% (subject to reduction for dilution as set
forth in Section 3.1 and any Option Plan), times (ii) the total number of Shares
(as defined in the Option Plan or as set forth in Section 5.1 (in the case of
the Caminus Options) or Section 5.2 (in the case of SS&C Warrant) of Appendix B
attached hereto) owned by such Member pursuant to the exercise of options under
the Option Plan; and the "Percentage Interest" of a Member (other than a Series
B Capital Member and a Series C Capital Member) at any time shall be equal to
(i) the percentage set forth opposite a Member's name on Appendix A hereto as
amended from time to time, times (ii) one minus the Aggregate Series B
Percentage Interests at such time. At all times, the aggregate Percentage
Interests of all of the Members shall be equal to 100%.
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"Person" means any individual or Entity.
"Purchase Agreement" means the Stock Purchase Agreement among the
Company, Caminus and the former owners of Caminus dated as of the date hereof.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Securities Act" has the meaning set forth in Section 3.3.
"Series A Adjusted Capital Contribution" means as to any Member's
Series A Membership Interest the Capital Contribution corresponding to such
Series A Membership Interest, if any, reduced by all prior distributions to such
Member in respect of such Membership Interest.
"Series B Adjusted Capital Contribution" means as to any Member's
Series B Membership Interest the Capital Contribution corresponding to such
Series B Membership Interest, if any, reduced by all prior distributions to such
Member in respect of such Membership Interest.
"Series C Adjusted Capital Contribution" means as to any Member's
Series C Membership Interest the Capital Contribution corresponding to such
Series C Membership Interest, if any, reduced by all prior distributions to such
Member in respect of such Membership Interest.
"Series A Capital Member" means a Capital Member with respect to its
Series A Membership Interest and Series A Adjusted Capital Contribution.
"Series B Capital Member" means a Capital Member with respect to its
Series B Membership Interest and Series B Adjusted Capital Contribution.
"Series C Capital Member" means a Capital Member with respect to its
Series C Membership Interest and Series C Adjusted Capital Contribution.
"SS&C" means SS&C Technologies, Inc., a Delaware corporation.
"SS&C Warrant" means the right to acquire a Series B Membership
Interest in the Company granted pursuant to the License Agreement and as set
forth in Section 5.2 of Appendix B attached to this Agreement. In addition to
other approval rights set forth in this Agreement, the Company shall not agree
or consent to any amendment to the SS&C Warrant if such amendment would
adversely affect the interests of any Member (other than the holder of such SS&C
Warrant) in any material respect, unless each such affected Member shall have
consented to such amendment.
"ZAI*NET" means ZAI*NET Software, L.P., a Delaware limited partnership
majority-owned by the Company as of the date hereof.
"ZAI*NET Conversion Right" means the right to convert the limited
partnership interests
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in ZAI*NET into Membership Interests in the Company pursuant to the Amended and
Restated Limited Partnership Agreement of ZAI*NET (the "Partnership Agreement")
and as set forth in Section 5.5 of Appendix B attached to this Agreement. In
addition to other approval rights set forth in this Agreement, the Company shall
not agree or consent to any amendment to the ZAI*NET Conversion Right if such
amendment would adversely affect the interests of any Member, in any material
respect, unless at least 90% in interest of the Members so affected shall have
consented thereto.
1.2 Directly or Indirectly. Any provision of this Agreement which
refers to an action which many be taken by any Person, or which a Person is
prohibited from taking, shall include any such action taken directly or
indirectly by or on behalf of such Person, including by or on behalf of any
Affiliate or agent of such Person.
1.3 Captions. All captions in this Agreement are inserted for reference
only and are not to be considered in the construction or interpretation of any
provision hereof.
1.4 Interpretation. In the event any claim is made by any Person
relating to any conflict, omission or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular
Person or its counsel.
1.5 References to this Agreement. References to numbered or lettered
articles, sections, and subsections refer to articles, sections, and
subsections, respectively, of this Agreement unless otherwise expressly stated.
All references to this Agreement include, whether or not expressly referenced,
the Appendices attached hereto.
ARTICLE II
FORMATION
2.1 Formation. The Company has been formed as a Delaware limited
liability company under and pursuant to the Act by the execution and filing of
the Certificate with the Secretary of State. The rights and obligations of the
Members shall be as provided in the Act, except as otherwise provided herein. In
the event of any inconsistency between any terms of this Agreement and any
provisions of the Act that are not mandatory, the terms of this Agreement shall
govern.
2.2 Name. The name of the Company is "GFI Caminus LLC". The business of
the Company shall be conducted under such name or any other name or names
selected by the Management Committee.
2.3 Registered Office; Principal Office; Other Offices. The registered
office of the Company in the State of Delaware shall be the registered office
designated 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 principal office of the Company shall be
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx X.X.X. 90025, or
such other office as the Management Committee may designate from time to time.
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The Company also may have such other offices as the Management Committee may
from time to time determine.
2.4 Agent. The registered agent for service of process in the State of
Delaware shall be as stated in the Certificate or as otherwise may be determined
from time to time by the Management Committee in the manner provided by law.
2.5 Purpose; Powers. The business and purpose of the Company is to own
equity ownership interests in and manage the business and affairs of Caminus and
ZAI*NET. To this end, the Company may exercise all rights, powers, privileges,
and other incidents of ownership of its properties and assets and may engage in
any activities and transactions that may be necessary, suitable, or proper to
accomplish or further the Company's business and purpose and do any and all
other acts incidental to, arising from, or connected with its business and
purpose. The Company may also conduct directly or through interests in other
Entities such other activities and businesses (including, without, limitation,
add-on businesses complimentary to the Company's business) as the Management
Committee may approve from time to time.
2.6 Term of the Company. The Company was formed on April 29, 1998 and
the Company shall continue in existence until the 30th annual anniversary of
such date, or such earlier time as specified in or pursuant to this Agreement.
ARTICLE III
MEMBERS AND MEMBERSHIP INTERESTS; WARRANT AND OPTIONS
3.1 Initial Members; Additional Members. The initial Members of the
Company are as set forth on Appendix A attached hereto. No Person may be
admitted as an additional Member of the Company (including, without limitation,
upon the exercise of an option granted pursuant to an Option Plan) except in
accordance with the provisions of this Agreement. The Company may also admit one
or more new Members with the approval of a Majority in Interest of the Members
and the approval of the Management Committee (except that no such approval shall
be required in the case of exercise of rights granted pursuant to an Option Plan
or the GFI Option). The Members acknowledge that the admission of such new
Members or the issuance of additional Membership Interests to pre-existing
Members may dilute the Percentage Interests of the Members and the Percentage
Interests represented by Membership Interests that may be acquired upon exercise
of rights granted pursuant to an Option Plan.
3.2 Option Plan; GFI Option.
3.2.1 The Members hereby consent to the future admission of
any Person satisfying the terms of each Option Plan as a Series B Capital Member
of the Company upon valid exercise of options granted pursuant to an Option
Plan. Each of the Members acknowledges that the options granted pursuant to an
Option Plan provide each of the option holders with the right to exercise its
option and upon the exercise thereof obtain an interest in the Company (in the
percentage provided for in the option). Immediately prior to the exercise of any
such option, the Company's assets shall be adjusted in accordance with Treas.
Reg. Section 1.704-1(b)(2)(iv)(g)(1) to reflect their aggregate gross fair
market value, as determined by the Management Committee in its reasonable
discretion. The Capital Account of each of the
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Members who was a Member immediately prior to the exercise of any such option
(collectively, the "Prior Members") shall be adjusted taking into account Treas.
Reg. Sections 1.704-1(b)(2)(iv)(f) and (g)(1) to reflect the amount of gain or
loss that would have been allocated to such Member if the assets of the Company
had been disposed of for an amount equal to their fair market value as of the
exercise date. Immediately thereafter, a portion of the adjusted aggregate
Capital Accounts of the Prior Members, as determined pursuant to the immediately
preceding sentence, shall be transferred to the Member exercising the option, in
an amount determined in accordance with the following formula: (i) the sum of
(A) the adjusted aggregate Capital Accounts of the Prior Members plus (B) the
exercise price paid by the exercising Member shall be multiplied by (ii) the
percentage interest in the Company acquired by the Members upon the exercise of
the option, and the resulting product shall be reduced by (iii) the exercise
price paid by the exercising Member. Each of the Prior Member's Capital Accounts
shall be reduced by such Prior Member's proportionate share of the amount so
transferred to the Capital Account of the exercising Member. In addition, upon
the exercise of any such option, the exercising Member's Capital Account shall
be credited with the exercise price paid upon the exercise of the option. The
Members hereby consent to the admission of exercising Members upon the proper
exercise of such options, subject to the other provisions of this Agreement.
3.2.2 The Members hereby consent to the future admission of
the holder of the GFI Option as a Series C Capital Member of the Company upon
valid exercise of the GFI Option. Upon exercise of the GFI Option through
payment of the applicable exercise price, the provisions of Section 3.2.1
(including, without limitation, with respect to the "booking up" of Capital
Accounts) shall be applied as if such exercise was the exercise of an option
granted under an Option Plan.
3.3 Representations and Warranties. To induce the other Members to
enter into this Agreement, each Member represents and warrants to the Company
and to the other Members that (i) it is acquiring its Membership Interest for
investment purposes for its own account and not with a view to or for resale in
connection with any distribution of all or any part of the Membership Interest;
(ii) with respect to Members residing or with a legal presence in the United
States, it (or each of its equity owners) is an "accredited investor" as defined
in Rule 501(c) promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), and as such has the financial ability to bear the economic
risk of its investment in the Company, has adequate means of providing for its
current needs and contingencies, and has no need for liquidity with respect to
its investment in the Company; (iii) it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Company and has obtained, in its judgment,
sufficient information regarding the Company's business and prospects to
evaluate the merits and risks of its investment; (iv) in making its decision to
purchase its Membership Interest, it has been advised by its own business, tax,
and legal advisers and is not relying on the Company or the other Members with
respect to the business, tax or legal considerations involved in its investment;
(v) it understands and agrees that it must bear the economic risk of its
investment for an indefinite period of time because, among other reasons, the
Membership Interest has not been registered under the Securities Act or under
the securities laws of certain states and, therefore, cannot be resold,
assigned, or otherwise Disposed of unless it is subsequently registered under
the Securities Act and qualified under applicable securities laws of such states
or an exemption from such registration and qualification
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is available; (vi) if an Entity, it is duly formed, validly existing, and in
good standing under the laws of its jurisdiction of organization and is duly
qualified and in good standing in each other jurisdiction where the nature of
its business requires such qualification, except where the failure to do so
would not have a material adverse effect on it or the Company; (vii) it has full
power and authority to enter into this Agreement and to perform its obligations
hereunder and all corporate (if applicable) and other actions necessary for its
due authorization, execution, delivery, and performance of this Agreement have
been duly taken; (viii) the authorization, execution, delivery, and performance
of this Agreement by it do not and will not conflict with any other agreement or
arrangement to which it is a party or by which it is bound; and (ix) this
Agreement constitutes a valid and binding agreement, enforceable against it in
accordance with its terms.
3.4 Voting Rights; Approval Required. The Members shall not be entitled
to vote on or consent to any matter affecting the Company except as specifically
provided in this Agreement or in the Act. Except as otherwise specifically
provided in this Agreement or in the Act, the vote, consent, or approval of a
Majority in Interest of the Members shall be required as to all matters as to
which the vote, consent, or approval of the Members is required or permitted
under this Agreement or in the Act.
3.5 Meetings of Members.
3.5.1 No annual or regular meetings of the Members as such
shall be required; if convened, however, meetings of the Members may be held at
such date, time, and place as the Management Committee or as the Member or
Members who properly noticed such meeting, as the case may be, may fix from time
to time. At any meeting of the Members, the Chairman of the Management Committee
shall preside at the meeting and shall appoint another Person to act as
secretary of the meeting. The secretary of the meeting shall prepare written
minutes of the meeting, which shall be maintained in the books and records of
the Company.
3.5.2 A meeting of the Members may be called at any time by
the Management Committee, or by any Member or Members whose aggregate Percentage
Interests exceed 10% of the total Percentage Interests of the Company, for the
purpose of addressing any matter on which the vote, consent, or approval of the
Members is required or permitted under this Agreement.
3.5.3 Notice of any meeting of the Members shall be sent or
otherwise given by the Management Committee to the Members in accordance with
this Agreement not less than 10 nor more than 60 days before the date of the
meeting. The notice shall specify the place, date, and hour of the meeting and
the general nature of the business to be transacted. Except as the Members may
otherwise agree, no business other than that described in the notice may be
transacted at the meeting.
3.5.4 Attendance in person of a Member at a meeting shall
constitute a waiver of notice of that meeting, except when the Member objects,
at the beginning of the meeting, to the transaction of any business because the
meeting is not duly called or convened, and except that attendance at a meeting
is not a waiver of any right to object to the consideration of matters not
included in the notice of the meeting if that objection is expressly made at the
meeting. Neither the business to be transacted nor the purpose of any meeting of
Members need be
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specified in any written waiver of notice. The Members may participate in any
meeting of the Members by means of conference telephone or similar means as long
as all Members can hear one another. A Member so participating shall be deemed
to be present in person at the meeting.
3.5.5 Any action that can be taken at a meeting of the Members
may be taken without a meeting if a consent in writing setting forth the action
so taken is signed and delivered to the Company by Members representing not less
than the minimum Percentage Interest necessary under this Agreement to approve
the action. The Management Committee shall notify Members of all actions taken
by such consents, and all such consents shall be maintained in the books and
records of the Company.
3.6 Disposition of Interests.
3.6.1 No Member shall Dispose of all or any part of its
Membership Interest except in compliance with the provisions of this Agreement,
including, without limitation, Article II of Appendix B. Any attempted
Disposition of a Membership Interest, or any part thereof, other than in
accordance with this Section 3.6.1 shall be, and hereby is declared, null and
void ab initio. No Disposition of a Member's Membership Interest, whether
consented to or otherwise, shall result in the dissolution of the Company on
account of the Disposing Member ceasing to be a Member of the Company.
3.6.2 Provided that the requirements of this Agreement are
complied with in connection with a proposed Disposition of a Membership Interest
by a Member, and provided that the Disposing Member purports to grant the Person
to which the Membership Interest is Disposed the right to be admitted as a
Member, such Person shall have the right to be so admitted (and each of the
other Members hereby consents to such admission), provided further that the
other Members receive a document (i) executed by both the Member effecting such
Disposition and the Person to which the Membership Interest is Disposed, (ii)
including the notice and payment address and facsimile number of the Person to
be admitted to the Company as a Member and the written acceptance by such Person
of all the terms and provisions of this Agreement and an agreement by such
Person to perform and discharge timely all of the obligations and liabilities in
respect of the Membership Interest being acquired, (iii) setting forth the
respective Percentage Interests in Company allocations after the Disposition of
the Member effecting the Disposition and the Person to which the Membership
Interest is Disposed, which together shall total the Percentage Interest in
Company allocations of the Member effecting such Disposition prior thereto, (iv)
containing a representation and warranty by the Member effecting the Disposition
and the Person to which the Membership Interest is Disposed to the effect that
such Disposition was made in accordance with all laws and regulations, including
securities laws, applicable to such Member or Person, as appropriate, (v)
containing representations and warranties by the Person to which such interest
is Disposed that are substantially equivalent to those contained in Section 3.3
(it being understood that in connection with any Disposition constituting a
Permitted Transfer pursuant to Appendix B hereof that is implemented for estate
planning purposes, the transferee shall not be required to make such
representations and warranties), and (vi) setting forth the effective date of
the Disposition.
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3.7 Amendment of Agreement to Reflect New Members. If a Person is to be
admitted to the Company as an additional member as provided in this Agreement,
the Members and the Person to be admitted as an additional member shall
negotiate in good faith to make any necessary or appropriate amendments to this
Agreement to take into account the Person's admission as a new member.
3.8 Interest in Member. Without the prior approval of all of the other
Members, no Member shall Dispose of all or any part of its Membership Interest,
or cause or permit an interest, direct or indirect, in itself to be Disposed of,
in such a manner, in either case, that after the Disposition the Company would
be considered to be a publicly traded partnership within the meaning of Section
7704 of the Code.
3.9 No Resignation or Removal. Except as otherwise specifically
provided in this Agreement, a Member does not have the right or power to resign
or withdraw from the Company as a Member and shall be entitled to do so only
with the approval of the other Members. A Member also may not be removed or
expelled as a Member, except upon the sale of the Member's entire Membership
Interest as provided in this Agreement.
3.10 No Liability to Third Parties. No Member shall have any personal
obligation for any liabilities of the Company, whether such liabilities arise in
contract, tort or otherwise, except to the extent that any such liabilities are
expressly assumed in a separate writing by the Member. No Member nor any of its
representatives on the Management Committee shall be liable to the other
Members, their respective representatives on the Management Committee or the
Company for errors in judgment or for any actions taken in connection with or
relating to the Company, including for its own simple, full, partial or
concurrent negligence, unless constituting gross negligence, bad faith, fraud,
willful misconduct or breach of the provisions of this Agreement.
3.11 Indemnification by and of Members. To the fullest extent permitted
by law, each Member shall indemnify the Company, the other Members, each
Manager, and their respective partners, members, officers, directors,
shareholders, employees, associates, agents, and Affiliates, and hold them
harmless from and against, any and all losses, costs, liabilities, damages, and
expenses (including, without limitation, costs of suit and reasonable attorneys'
fees) they may incur on account of any material breach by the Member of any
provision of this Agreement.
3.12 Rights of Assignees. In the event the Company is required to
recognize the validity of a Disposition notwithstanding the provisions of this
Article III to the contrary, the assignee of a Membership Interest who has not
been admitted as a Member of the Company in accordance with this Article III
shall be entitled only to allocations and distributions with respect to such
Membership Interest as provided in this Agreement, but shall have no right to
any information or accounting of the affairs of the Company, or to inspect the
books or records of the Company, and shall not have any right of a Member under
the Act or this Agreement.
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ARTICLE IV
CAPITAL CONTRIBUTIONS AND CAPITAL ACCOUNTS; LOAN
4.1 Capital Contributions.
4.1.1 Concurrently with the execution of this Agreement, each
Member's Capital Account shall be in the amount shown on Appendix A, which
amount each Member agrees represents the net fair market value of such Member's
Capital Contributions as of the date hereof. All Capital Contributions by the
Members made after the date hereof shall be made in cash, by certified check or
wire funds transfer to a bank or custodial account established for the Company
by the Management Committee, or in other property with a net fair market value
established by the Management Committee, and shall be reflected by an
appropriate entry on the Company's books and records and on Appendix A hereto.
4.1.2 The Members acknowledge that the Company's interest in
ZAI*NET was acquired pursuant to a Purchase Agreement dated as of the date
hereof, and that such agreement provides for possible additional cash payments
to ZAI*NET Software, Inc. in consideration of the purchase based upon
achievement of criteria specified therein (the "Additional Payments"). Each of
GFI, OCM Caminus Investment, Inc., RIT Capital Partners plc, Durham Enterprises
Limited, SS&C and Xx. Xxxxxx X. Xxxxxxxxxxxx ("Hesmondhalgh") (individually,
each an "Investor Member" and collectively, the "Investor Members") agrees that,
pursuant to a written call notice provided to such Investor Members at least ten
(10) days prior to a required funding date by the Management Committee or its
authorized designee, such Investor Members shall be required to make additional
Capital Contributions to the Company in order to fund such Additional Payments;
provided, however, Hesmondhalgh shall not be required to contribute an aggregate
total Capital Contribution to the Company in excess of $200,000 without her
prior written consent. The amount of each such Investor Member's mandatory
Capital Contribution shall equal such Investor Member's proportionate share of
the aggregate cash Capital Contributions made by all such Investor Members as of
the date of this Agreement multiplied by the aggregate amount of each call;
provided, however, that in the event of a default in making such additional
Capital Contribution by any Investor Member or Hesmondhalgh does not consent to
contributing in excess of $200,000, each of the nondefaulting Investor Members
shall be obligated to fund its proportionate share of such default amount. The
Management Committee shall not be required to make capital calls to fund
Additional Payments; the Management Committee shall determine to call capital
and the amount thereof in connection with the making of Additional Payments in
its sole discretion (provided, that no call shall exceed the amount of the
related Additional Payment). All of the Members acknowledge that the Capital
Accounts of the Investor Members subject to capital calls, as reflected on
Appendix A, reflect a credit for the maximum amount of potential Additional
Payments; consequently, the funding of such capital calls shall not entitle a
contributing Investor Member to any adjustment in its Capital Account. If any
Member subject to a mandatory capital call pursuant to this Section 4.1.2
defaults in its obligation to make a Capital Contribution as provided herein
(notwithstanding the funding of the default amount by the other Investor Members
as hereinabove provided), or if the mandatory capital calls are for less funds
than the maximum Additional Payments, then the Capital Account and Percentage
Interest of such Member shall be subject to adjustment as reasonably determined
by the Management Committee (provided, however, that such adjustments shall be
without
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prejudice to the rights of the Company and the other Members arising as a result
of such failure to make a Capital Contribution by the defaulting Member). Except
as expressly provided in this Section 4.1.2, no Member shall be required to make
any additional Capital Contribution.
4.2 No Return of Capital Contribution; No Interest. Except as otherwise
specifically provided in this Agreement, a Member shall not be entitled to
demand or receive the return of all or any portion of the Member's Capital
Contribution or to be paid interest in respect of either its Capital Account or
Capital Contribution. Under circumstances permitting or requiring a return of a
Member's Capital Contribution, the Member shall have no right to receive
property other than cash. No Member shall be required to contribute or to lend
any money or property to the Company to enable the Company to return any other
Member's Capital Contribution.
4.3 Capital Accounts. The Company shall establish on its books and
maintain for each Member a separate Capital Account. The initial Capital
Accounts of the Members as of the date of this Agreement are as set forth on
Appendix A attached to this Agreement. Each Member's Capital Account (a) shall
be increased by (i) the amount of money contributed or deemed contributed by
that Member to the Company, (ii) the fair market value of property contributed
by that Member to the Company (net of liabilities secured by such contributed
property that the Company is considered to assume or take subject to under
section 752 of the Code), and (iii) allocations to that Member of Net Profit or
other items of Company book income and gain, including income and gain exempt
from tax and income and gain described in Treas. Reg. Section
1.704-1(b)(2)(iv)(g), and (b) shall be decreased by (i) the amount of money
distributed to that Member by the Company, (ii) the fair market value of
property distributed to that Member by the Company (net of liabilities secured
by the distributed property that the Member is considered to assume or take
subject to under section 752 of the Code), (iii) allocations to that Member of
expenditures of the Company described in section 705(a)(2)(B) of the Code, and
(iv) allocations of Net Loss and other items of Company book loss and deduction,
including loss and deduction described in Treas. Reg. Section
1.704-1(b)(2)(iv)(g), but excluding items described in clause (b)(iii) of this
sentence. The Capital Accounts shall also be maintained and adjusted as
permitted by the provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(f) and as
required by the other provisions of Treas. Reg. Sections 1.704-1(b)(2)(iv) and
1.704-1(b)(4). On the transfer of all or part of a Membership Interest, the
Capital Account of the transferor that is attributable to the transferred
Membership Interest or part thereof shall carry over to the transferee in
accordance with the provisions of Treas. Reg. Section 1.704-1(b)(2)(iv)(l).
4.4 No Obligation to Restore Deficits. No Member shall have any
liability or obligation to the Company, the other Members or any creditor of the
Company to restore at any time any deficit balance in such Member's Capital
Account.
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ARTICLE V
ALLOCATIONS AND DISTRIBUTIONS
5.1 Allocations of Net Profits and Net Losses. For each taxable year,
Net Profits and Net Losses shall be allocated to the Members in proportion to
their respective Percentage Interests.
5.2 Special Allocations.
5.2.1 Notwithstanding the provisions of Section 5.1, if there
is a net decrease in Company Minimum Gain during any taxable year, each Member
shall be specially allocated items of Company income and gain for such year
(and, if necessary, in subsequent years) in an amount equal to the portion of
such Member's share of the net decrease in Company Minimum Gain, which share of
such net decrease shall be determined in accordance with Treas. Reg. Section
1.704-2(g)(2). Allocations pursuant to this Section 5.2.1 shall be made in
proportion to the amounts required to be allocated to each Member pursuant
thereto. The items to be so allocated shall be determined in accordance with
Treas. Reg. Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 5.2.1
is intended to comply with the minimum gain chargeback requirement contained in
Treas. Reg. Section 1.704-2(f) and shall be interpreted consistently therewith.
5.2.2 Notwithstanding the provisions of Section 5.1, if there
is a net decrease in Member Nonrecourse Debt Minimum Gain attributable to a
Member Nonrecourse Debt during any taxable year, each Member who has a share of
Member Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse
Debt (which share shall be determined in accordance with Treas. Reg. Section
1.704-2(i)(5)) shall be specially allocated items of Company income and gain for
such taxable year (and, if necessary, in subsequent years) in an amount equal to
that portion of such Member's share of the net decrease in Member Nonrecourse
Debt Minimum Gain attributable to such Member Nonrecourse Debt (which share of
such net decrease shall be determined in accordance with Treas. Reg.
Section 1.704-2(i)(4)). Allocations pursuant to this Section 5.2.2 shall be made
in proportion to the amounts required to be allocated to each Member pursuant
thereto. The items to be so allocated shall be determined in accordance with
Treas. Reg. Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 5.2.2
is intended to comply with the minimum gain chargeback requirement contained in
Treas. Reg. Sections 1.704-2(i)(4) and shall be interpreted consistently
therewith.
5.2.3 Notwithstanding the provisions of Section 5.1, any
Nonrecourse Deductions for any taxable year or other period shall be specially
allocated to the Members in accordance with their respective Percentage
Interests.
5.2.4 Notwithstanding the provisions of Section 5.1, Member
Nonrecourse Deductions shall be specially allocated to the Member who bears the
economic risk of loss with respect to the Member Nonrecourse Debt to which such
items are attributable in accordance with Treas. Reg. Section 1.704-2(i).
5.2.5 Notwithstanding the provisions of Section 5.1, if a
Member unexpectedly receives any adjustments, allocations, or distributions
described in Treas. Reg. Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), or any
other event creates for each Member an Adjusted Capital
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Account Deficit, items of Company income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate such Adjusted
Capital Account Deficit as quickly as possible. Any special allocations of items
of income and gain pursuant to this Section 5.2.5 shall be taken into account in
computing subsequent allocations of income and gain pursuant to this Article V
so that the net amount of any item so allocated and the income, gain, and losses
allocated to each Member pursuant to this Article V to the extent possible,
shall be equal to the net amount that would have been allocated to each such
Member pursuant to the provisions of this Article V if such unexpected
adjustments, allocations, or distributions had not occurred.
5.2.6 Notwithstanding any other provision in this Article V,
in accordance with section 704(c) of the Code, income, gain, loss, and deduction
with respect to any property contributed to the capital of the Company shall,
solely for tax purposes, be allocated among the Members so as to take account of
any variation between the adjusted basis of such property to the Company for
federal income tax purposes and its fair market value on the date of
contribution. Allocations pursuant to this Section 5.2.5 are solely for purposes
of federal, state, and local taxes; as such, they shall not affect or in any way
be taken into account in computing a Member's Capital Account or share of Net
Profits, Net Losses, or items of distribution pursuant to any provision of this
Agreement. If the book value of Company property is adjusted in the discretion
of the Management Committee in accordance with the principles of Treas. Reg.
Section 1.702-1(b)(iv)(f), Treas. Reg. Section 1.704-1(b)(iv)(f)(4) shall apply
to items of income, gain, deduction and loss related to such property. In
applying the allocation provisions of this Agreement, unrealized items reflected
in the Capital Account adjustments required by Treas. Reg. Section
1.704-1(b)(2)(iv)(f)(2) shall be deemed to have been allocated to the Members
pursuant to such allocation provisions.
5.2.7 Notwithstanding Section 5.1, Net Loss shall not be
allocated to a Member to the extent that such allocation would create or
increase an Adjusted Capital Account Deficit for such Member. Any Net Loss that
would have been allocated to a Member pursuant to Section 5.1.4(c) but for this
Section 5.2.7 shall be allocated instead to the other Members. To the extent
that any Net Loss is allocated to the other Members rather than to an affected
Member pursuant to the preceding sentence, an equal amount of Net Profits shall
be allocated to the other Members out of the first Net Profits that would
otherwise have been allocated to the affected Member under Section 5.1.
5.3 Allocation of Net Profits and Net Losses in Respect of a
Transferred Interest.
5.3.1 If any Membership Interest is transferred, or is
increased or decreased by reason of the admission of a new Member or otherwise,
during any taxable year of the Company, each item of income, gain, loss,
deduction or credit of the Company for such taxable year shall be allocated
among the Members as determined by the Management Committee in accordance with
any method permitted by Code Section 706(d) and the regulations promulgated
thereunder in order to take account of the Members varying Percentage Interests
during the year.
5.4 Distributions. Subject to any restrictions under applicable law,
the Company may periodically distribute Distributable Cash to the Members, with
the amount and timing of such
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distributions to be determined by the Management Committee. Except as provided
in Article IX, all distributions of cash shall be made as follows:
(a) first, to the Members in respect of their issued
Membership Interests, in proportion to and to the extent of their respective
Adjusted Capital Contributions, until their respective Adjusted Capital
Contributions have been reduced to zero; and
(b) the balance to the Members in respect of their
issued Membership Interests in proportion to their Percentage Interests.
5.5 Form of Distributions. A Member has no right to demand or receive
any distribution from the Company in any form other than cash. Likewise, except
in connection with the dissolution of the Company and as provided in Section
9.2.1, no Member shall be compelled to accept from the Company a distribution of
any asset in kind.
ARTICLE VI
MANAGEMENT AND OPERATION
6.1 Management: Limitations on Management Committee's Rights and
Powers.
6.1.1 Except for matters as to which this Agreement
specifically reserves to the Members the authority to act, or to grant or
withhold their consent or approval of an action, the Management Committee shall
have full, complete, and exclusive authority to manage and control the business,
affairs, and properties of the Company, to make all decisions regarding the same
and to perform any and all other acts or activities customary or incident to the
management of the Company's business.
6.1.2 Notwithstanding any provision of this Agreement, the
Management Committee shall not have the authority under this Agreement to cause
the Company to undertake or engage in any of the following transactions without
first obtaining the approval of a Majority in Interest of the Members (which may
take the form of the approval of the requisite Members through the approval of
their representatives on the Management Committee, without the requirement of a
separate approval by the requisite vote or consent of Members):
(a) any change in the amount or character of a
Member's Capital Contribution, establishment of different classes of Members or
issuance of additional Membership Interests or other securities of the Company
after the effective date of this Agreement (except for any issuances of
Membership Interests pursuant to an exercise under the Option Plan or GFI Option
Plan);
(b) the acquisition or Disposition of material assets
or properties of the Company outside of the ordinary course of the Company's
business, except for Dispositions in connection with the orderly liquidation and
winding up of the business of the Company upon its dissolution as provided
herein;
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(c) except in accordance with an operating budget
duly adopted by the Management Committee, any material change to the nature of
the Company's business, or in any other way do anything which is materially
inconsistent therewith;
(d) the creation or issuance of any material
mortgage, lien, encumbrance or security interest on the Company's properties or
assets, except such as arise by operation of law or are reflected in an
operating budget duly adopted by the Management Committee;
(e) the appointment (except for the reappointment of
its existing auditors) or removal of the Company's auditors;
(f) the adoption of any material new accounting
policy or practice of the Company, or any material change to any of the
Company's accounting policies and practices, except as required by law or to
comply with new accounting standards;
(g) any contract or transaction, or the making of any
payments or incurrence of any commitments of any material nature other than in
the ordinary course of the Company's business;
(h) any transaction between the Company and any
Member, or any Affiliate of such a Member, or in which a Member, or any
Affiliate of such a Member has a material financial interest separate and apart
from its interest as a Member;
(i) any loan or other borrowing (other than trade
credit on an open-account basis customarily extended in connection with the
Company's purchase of goods or services in the ordinary course of its business);
(j) any guarantee or indemnity other than in the
ordinary course of the Company's business;
(k) the commencement or settlement of any litigation
or similar proceeding involving the Company, or the confession of a judgment
against the Company;
(l) any transaction outside the ordinary course of
the Company's business; or
(m) the grant or modification of any option to
acquire a Membership Interest.
6.2 Managers: Management Committee.
6.2.1 The Company shall be "manager managed" within the
meaning of the Act. The Members hereby appoint a Management Committee of the
Company whose responsibilities shall consist of the matters specifically
described in this Agreement as requiring the consent or approval of the
Management Committee. The Management Committee shall at all times consist of one
designee of the former owners of Caminus (so long as either Dr. Xxxxx Xxxxx or
Dr.
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Xxxxxxx Xxxxxxxx shall remain a Member), one designee of ZAI*NET Software, Inc.
(so long as it (or an assignee permitted under Section 5.1 of Appendix B to the
Partnership Agreement) shall remain a Member or retain the ZAI*NET Conversion
Right), one designee of SS&C and four (4) designees of GFI. The initial
designees to the Management Committee consist of the following individuals:
Xxxxxxxx X. Xxxxxx (GFI)
Xxxxxxx X. Xxxxxxx (GFI)
Xxxxxxxxxxx X. Brothers (GFI)
Xxxxxxx X. Xxxxx (GFI)
Xx. Xxxxx X. Xxxxx (Caminus)
Xxxxx X. Xxxxxxx (ZAI*NET Software, Inc.)
Xxxxxxx X. Xxxxx (SS&C)
Any representative on the Management Committee may resign or may be removed by
the party(ies) that designated him 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 party(ies) that designated such
representative. The acceptance of a resignation shall not be necessary to make
it effective. If a vacancy should occur in a representative position (through
death, removal, resignation or otherwise), the party(ies) that designated the
former representative may fill such vacancy by designating a replacement
representative. Except with respect to a Management Committee member who is
unaffiliated with and otherwise has no financial interest in any Member, the
Company or any Affiliate thereof, the Management Committee representatives shall
not be compensated by the Company for their services.
6.2.2 At every meeting of the Management Committee, the
presence of four representatives of the Management Committee shall constitute a
quorum for the transaction of business at the meeting, and the affirmative vote
of at least four representatives shall be necessary for the adoption of any
resolution, the making of any decision, the delegation of any authority or the
taking of any action by the Management Committee.
6.2.3 Meetings of the Management Committee may be held at such
place or places and at such times as shall be determined from time to time by
resolution of the Management Committee. Notice of regular meetings established
by resolution of the Management Committee shall not be required. Special
meetings of the Management Committee may be called by any member of the
Management Committee on at least ten days prior notice to the other
representatives serving on the Management Committee. Such notice need not state
the purpose or purposes of, nor the business to be transacted at, such meeting.
At all meetings of the Management Committee, business shall be transacted in
such order as shall from time to time be determined by the Chairperson.
Attendance in person or by proxy of a Management Committee 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, at the
beginning of such meeting, to the transaction of any business on the ground that
the meeting is not lawfully called or convened. Minutes of all meetings of the
Management Committee shall be kept and retained in the records of the Company.
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6.2.4 The Management Committee shall designate a Chairperson,
who initially shall be Xxxxxxxx X. Xxxxxx. The Chairperson shall preside over
all meetings of the Management Committee and shall have such other power,
authority and responsibility as the Management Committee may, from time to time,
delegate to such Chairperson.
6.2.5 Any consent or approval reserved by this Agreement to
the Management Committee, may be taken without a meeting if a consent in
writing, setting forth the action to be taken, is signed by at least four
Management Committee representatives. Such consent shall have the same force and
effect as a unanimous vote at a duly convened meeting of the Management
Committee, and the execution of such consent shall constitute attendance or
presence in person at a meeting of the Management Committee. Subject to the
requirements of this Agreement for notices of special meetings, Management
Committee representatives may participate in and hold a meeting of the
Management Committee by means of a conference telephone or similar
communications equipment by means of which all representatives 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
representative participates in the meeting for the express purpose of objecting,
at the beginning of such meeting, to the transaction of any business on the
ground that the meeting is not properly called or convened. Each of the Members
and the respective representatives of the Management Committee retroactively
ratify and authorize any and all action taken by Xxxxxxxx X. Xxxxxx, in
connection with the filing of the Certificate, the Application for Employer
Identification Number on Form SS-4, the application and establishment of any
bank accounts and any other action necessary or incidental to the formation of
the Company, the consummation of the transactions contemplated by the Purchase
Agreement and the formation and acquisition of the business of ZAI*NET, and the
operation of the Company, prior to the date of this Agreement.
6.3 Officers.
6.3.1 Concurrently with the execution of this Agreement, each
of the following individuals is named to the indicated Officer titles:
Xxxxxxxx X. Xxxxxx - President
Xxxxxxx X. Xxxxxxx - Secretary
Xxx X. Xxxxxxxx - Treasurer
The Management Committee also may, from time to time designate one or more other
individuals to be Officers of the Company, with such titles as the Management
Committee may assign to such individuals. Officers so designated shall have such
authority and perform such duties as the Management Committee may, from time to
time, delegate to them. Any number of offices may be held by the same
individual.
6.3.2 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 be specified, at the time of its receipt by the
Management Committee. The acceptance of a resignation shall not be necessary to
make it effective. Any Officer may be removed as such, either with or without
cause, by the Management Committee whenever in its judgment the best interests
of the
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Company will be served thereby. Designation of an Officer hereunder shall not of
itself create any contract rights. Any vacancy occurring in any office of the
Company may be filled by the Management Committee.
6.4 Acts of Officers as Conclusive Evidence of Authority. Any note,
mortgage, evidence of indebtedness, contract, agreement, certificate (including,
without limitation, the Certificate), statement, conveyance, or other instrument
in writing, and any assignment or endorsement thereof, executed or entered into
between the Company and any other Person, when signed by any Officer, shall not
be rendered invalid as to the Company solely by any lack of authority unless the
other Person had actual knowledge that the Officer had no authority to execute
the same. In this respect, each Officer shall be an "authorized person" within
the meaning of the Act.
6.5 Payments to Members.
6.5.1 The Company shall reimburse each of the Members and
their respective Affiliates for out-of-pocket expenses (including, without
limitation, legal and accounting fees and costs) reasonably incurred in
connection with the formation of the Company and preparation of the Certificate
and this Agreement.
6.5.2 In consideration of financial, tax and general
administrative services to be provided to the Company by GFI, the Company shall
pay GFI an annual fee, payable in monthly installments, in an amount equal to
one percent (1%) of the Members' aggregate Adjusted Capital Contributions from
time to time.
6.5.3 Except as specifically provided in this Section 6.5 or
as authorized by the Management Committee, no Member is entitled to remuneration
for services rendered to the Company.
6.6 Nature of Relationship.
6.6.1 The Management Committee and each Officer shall conduct
the affairs of the Company in the best interests of the Company and the mutual
best interests of the Members, including, without limitation, the safekeeping
and use of all Company funds and assets and the use thereof for the benefit of
the Company. Each Member and Officer at all times shall act with integrity and
in good faith and utilize all reasonable efforts in all activities relating to
the conduct of the business of the Company and in resolving conflicts of
interest arising in connection therewith. During the existence of the Company,
the members of the Management Committee shall devote such time and effort to the
Company business and operations as shall be necessary to promote fully the
interests of the Company and the mutual best interests of the Members; however,
it is specifically understood and agreed that the members of the Management
Committee shall not be required to devote full time to Company business, and
further, (i) unless otherwise restricted pursuant to contractual provisions in
favor of the Company or another Member, the Members and their respective
Affiliates at any time and from time to time may engage in and possess interests
in other business ventures of any and every type and description, independently
or with others, and (ii) no Member nor any Affiliate thereof shall have any
obligation to make any opportunity or investment with respect to any other
business venture
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available to the Company or any other Member, or to advise the Company or any
other Member of the existence thereof.
6.6.2 Notwithstanding anything to the contrary in this
Agreement, nothing in this Agreement or any Option Plan or any options issued
thereunder shall be construed as an agreement by the Company, express or
implied, to employ an optionee or Series B Member or contract for the services
of an optionee or Series B Member, to restrict the right of the Company to
discharge an optionee or Series B Member or cease contracting for the services
of an optionee or Series B Member or to modify, extend or otherwise affect in
any manner whatsoever, the terms of any employment agreement or contract for
services which may exist between the Company and an optionee or Series B Member.
ARTICLE VII
TAX MATTERS
7.1 Tax Returns. The Company shall prepare or cause to be prepared and
filed all necessary federal, state and local income tax returns for the Company.
The Company shall furnish to each Member copies of all returns that are actually
filed and shall keep them informed of any and all pending or threatened tax
proceedings regarding the Company.
7.2 "Tax Matters Member". GFI shall be the "tax matters partner" of the
Company pursuant to section 6231(a)(7) of the Code. GFI shall take such
commercially reasonable actions as may be necessary to cause each other Member
to become a "notice partner" within the meaning of section 6231(a)(8) of the
Code, shall inform each other Member of all significant matters that may come to
its attention in its capacity as "tax matters partner," and shall forward to
each Member copies of all significant written communications it may receive in
such capacity. GFI shall not take any action contemplated by sections 6222
through 6231 of the Code without the consent of the other Members.
7.3 Tax Elections. The Company shall make the following elections on
the appropriate tax returns:
7.3.1 to adopt the calendar year as the Company's fiscal year;
7.3.2 to adopt an appropriate method of accounting and to keep
the Company's books and records on that method;
7.3.3 if (i) a distribution of Company property as described
in Section 734 of the Code occurs or (ii) a transfer of a Membership Interest as
described in Section 743 of the Code occurs, an election, in the discretion of
the Management Committee, pursuant to Section 754 of the Code, to adjust the
basis of the Company properties; and
7.3.4 any other election the Management Committee deems
appropriate and in the best interests of the Company and the Members. It is the
intent of the Members that the Company be treated as a partnership for federal
income tax purposes and, to the extent permitted by applicable law, for state
and local franchise and income tax purposes. Neither the Company nor any Member
may make an election for the Company to be excluded from the application
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of the provisions of subchapter K of chapter 1 of subtitle A of the Code or any
similar provisions of applicable state or local law, and no provision in this
Agreement shall be construed to sanction or approve such an election.
7.4 Withholding. With respect to any Member who is not a "United States
person" within the meaning of the Code, any tax required to be withheld under
section 1446 or other provisions of the Code, or under state law, shall be
treated as a distribution of cash to be charged against future distributions to
which such Member would otherwise have been entitled (or, in the discretion of
the Management Committee, as a demand loan) to such Member for all purposes of
this Agreement.
ARTICLE VIII
BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
8.1 Maintenance of Books. The books of account for the Company shall be
maintained on an accrual basis in accordance with the terms of this Agreement,
except that Capital Accounts shall be maintained in accordance with Article IV.
The calendar year shall be the accounting year of the Company, unless the
Management Committee selects a different accounting year.
8.2 Financial Information; Budget and Operating Forecasts; Access.
8.2.1 The Company shall maintain a comparative system of
accounts in accordance with generally accepted accounting principles, keep full
and complete financial records and shall: (a) furnish to the Members within 90
days after the end of each fiscal year, beginning with the 1998 fiscal year, a
copy of the consolidated balance sheet of the Company as at the end of such
year, together with a consolidated statement of income and retained earnings
(net loss) of the Company for such year, audited and certified by independent
public accountants of recognized national standing selected by the Management
Committee, prepared in accordance with generally accepted accounting principles
and practices consistently applied; and (b) furnish to the Members within 45
days after the end of each of the first three quarters of each year commencing
with the quarter ending June 30, 1998 a consolidated unaudited balance sheet of
the Company as at the end of such quarter and a consolidated unaudited statement
of income and retained earnings (net loss) for the Company for such quarter and
for the year to date prepared in accordance with generally accepted accounting
principles (except for normal year end adjustments) and practices consistently
applied. The Company also shall prepare such other reports as the Management
Committee may reasonably request.
8.2.2 The Company shall permit, upon reasonable request and
notice and during normal business hours and without undue disruption to the
Company's business, each Member or any employees, agents or representatives
thereof, access to such information and records as set forth in and in
accordance with Section 18-305 of the Act and to examine and make copies of and
extracts from the records and books of account of, and visit and inspect the
properties of the Company, and to discuss the affairs, finances and accounts of
the Company with any of its Officers, key employees, attorneys and independent
accountants; provided, however, each
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Member, employee, agent or representative thereof, as the case may be, agrees to
hold all information so received in accordance with Section 8.3.
8.3 Confidentiality. Unless the Members agree otherwise, each Member
shall hold in strict confidence any Proprietary Information (as hereinafter
defined) it receives regarding the Company, or any Proprietary Information
regarding the business or affairs of any other Member, whether such information
is received from the Company, another Member or Affiliate of a Member or another
Person. "Proprietary Information" means any information that derives independent
economic value, actual or potential, from not being generally known to the
public or to other Persons who can obtain economic value from its disclosure or
use, and includes information of the Company, any Member, and any Person with
whom the Company or any Member does business; provided, however, that
Proprietary Information shall not include (a) information that is or becomes
available to the public generally without breach of this Section 8.3; (b)
disclosures required to be made by applicable laws and regulations or stock
exchange requirements or requirements of the National Association of Securities
Dealers, Inc.; (c) disclosures required to be made pursuant to an order,
subpoena or legal process; (d) disclosures to members, partners, officers,
directors or Affiliates of such Member (and the members, partners, officers or
directors of such Affiliates), and to auditors, counsel, and other professional
advisors to such Persons or the Company (provided, however, that such Persons
have been informed of the confidential nature of the information, and, in any
event, the Member disclosing such information shall be liable for any failure by
such Persons to abide by the provisions of this Section 8.3), or (e) disclosures
in connection with any litigation or dispute among the Members, the General
Member, and the Company; and provided further that any disclosure pursuant to
clause (b), (c), (d) or (e) of this sentence shall be made only subject to such
procedures the Member making such disclosure determines in good faith are
reasonable and appropriate in the circumstances, taking into account the need to
maintain the confidentiality of such information and the availability, if any,
of procedures under laws, regulations, subpoenas, or other legal process. Each
Member acknowledges that disclosure of information in violation of the
provisions of this Section 8.3 may cause irreparable injury to the Company and
the Members for which monetary damages are inadequate, difficult to compute, or
both. Accordingly, each Member agrees that its obligations under this Section
8.3 may be enforced by specific performance and that breaches or prospective
breaches of this Section 8.3 may be enjoined.
8.4 Publicity. Any public announcement or disclosure relating to the
transactions contemplated by this Agreement, by the Company or subsequent
transactions of the Company, will be made by the Officers only with the approval
of the Management Committee, except to the extent such disclosure is, in the
opinion of counsel to the Company, required by law.
ARTICLE IX
DISSOLUTION AND WINDING UP
9.1 Conditions of Dissolution. The Company shall be dissolved, its
assets shall be disposed of, and its affairs wound up on the first to occur of
the following:
(a) the vote, consent or approval of all the Members at any
time prior to the date specified in Section 2.6 to dissolve the Company;
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(b) the occurrence of a Dissolution Event, if within 90 days
after the occurrence the Members (other than the Member as to which such
Dissolution Event occurred) owning in the aggregate more than 50% of both the
profits interest and the capital interest in the Company elect to dissolve the
Company;
(c) the Disposition of all of the property and assets of the
Company;
(d) the entry of a decree of judicial dissolution under the
Act; or
(e) the expiration of the term of existence of the Company as
stated in Section 2.6.
9.2 Liquidation and Termination.
9.2.1 Upon the dissolution of the Company as provided in
Section 9.1, the Company shall continue solely for the purpose of winding up its
affairs in an orderly manner, liquidating its assets, and satisfying the claims
of its creditors. The Management Committee shall act as liquidator or may
appoint one or more other Persons to act as liquidator. The liquidator shall
oversee the winding up and liquidation of the Company, take full account of the
liabilities of the Company and assets, either cause the Company's assets to be
sold as promptly as is consistent with obtaining fair market value therefor (or,
with the consent of the Members, distributed to the Members) and, if sold, shall
cause the proceeds therefrom, to the extent sufficient therefor, to be applied
and distributed as provided in paragraph (c) below. Until final distribution,
the liquidator shall manage the Company's business and other property and assets
with all of the power and authority of the Members. The steps to be accomplished
by the liquidator are as follows:
(a) as promptly as possible after dissolution and again after
final liquidation, the liquidator shall cause a proper accounting to be made by
a recognized firm of certified public accountants of the Company's assets,
liabilities, and operations through the last day of the calendar month in which
the dissolution shall occur or the final liquidation shall be completed, as
applicable;
(b) during the period commencing on the first day of
dissolution pursuant to Section 9.1 hereof and ending on the date on which all
of the assets of the Company have been distributed to the Members in accordance
with this Section 9.2, the Members shall continue to share Net Profits, Net
Losses, and other items of Company income, gain, loss or deduction in the manner
provided in Article V, provided that no distributions shall be made pursuant to
Section 5.4;
(c) the liquidator shall pay or discharge from Company funds
all of the debts, liabilities and obligations of the Company (including, without
limitation, but subject to the provisions of applicable law, all expenses
incurred in liquidation) or otherwise make reasonably adequate provision
therefor (including, without limitation, the establishment of a cash escrow fund
for contingent liabilities in such amount and for such terms as the liquidator
may reasonably determine, or the distribution of property to the Members in kind
subject to debts, liabilities or other obligations); and
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(d) all remaining assets of the Company shall be distributed
to the Members as follows:
(i) the liquidator may sell any or all Company
property, including to Members, and any resulting gain or loss from each sale
shall be computed and allocated to the Members in accordance with Section 5.1;
(ii) with respect to any Company property that has
not been sold, the fair market value of such property shall be determined and
the Members' Capital Accounts shall be adjusted to reflect the manner in which
the unrealized gain and unrealized income, gain, loss, and deduction inherent in
that property (and that has not been reflected in the Capital Accounts
previously) would be allocated among the Members if there were a taxable
disposition of that property for the fair market value of that property on the
date of distribution; and
(iii) all liquidation proceeds, as well as any
Company property that is to be distributed to the Members, shall be distributed
in accordance with Section 5.4 of this Agreement, after taking into account all
Capital Account adjustments for the taxable year of the Company during which the
liquidation of the Company occurs (other than those made by reason of this
Section 9.2.1(d)(iii)).
9.2.2 Any distributions in kind to the Members may, in the
discretion of the liquidator, be made in the form of property subject to debts,
liabilities or obligations related to such property, which debts, liabilities or
other obligations shall be allocated to such distributee pursuant to this
Section 9.2. The distribution of cash or property to a Member in accordance with
the provisions of this Section 9.2 constitutes a complete return to the Member
of its Capital Contributions and a complete distribution to the Member of its
Membership Interest and all the Company's property and constitutes a compromise
to which all Members have agreed.
9.3 Cancellation of Filings. Upon completion of the distribution of
Company assets as provided herein, the Company is terminated, and the liquidator
shall file a certificate of cancellation with the Secretary of State and take
such other actions as may be necessary to terminate the Company.
ARTICLE X
INDEMNIFICATION AND INSURANCE
10.1 Indemnification by Company.
10.1.1 The Company shall indemnify and defend each Member or
Officer who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (a "Proceeding") by
reason of the fact that it is or was a Member, Officer, or other agent of the
Company or that, being or having been such a Member, Officer, or agent, it is or
was serving at the request of the Company as a director, officer, employee, or
other agent of another Person (each of such Persons being referred to
hereinafter as an "Agent"), to the fullest extent permitted by applicable law in
effect on the date hereof and to such greater extent as applicable law may
hereafter from time to time permit; provided, however, that no Person
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shall be entitled to indemnification hereunder for any act or omission
constituting gross negligence, wilful misconduct or material breach of this
Agreement. Furthermore, the Company may, but shall not be obligated to, upon the
approval of Members, that own, in the aggregate, not less than eighty percent
(80%) of all of the profits interests in the Company and eighty percent (80%) of
the capital interests in the Company indemnify any other Person who was or is a
party or is threatened to be made a party to, or otherwise becomes involved in,
a Proceeding by reason of the fact that such person is or was an agent to the
same extent as is provided for in the preceding sentence with respect to a
Member of Officer.
10.1.2 The indemnification provided by, or granted pursuant
to, the provisions of this Article X shall not be deemed exclusive of any other
rights to which any Person seeking indemnification may be entitled under any
agreement, vote of the Management Committee or the Members, or otherwise, both
as to action in such Person's capacity as an agent of the Company and as to
action in another capacity while serving as such an agent. All rights to
indemnification under this Article X shall be deemed to be provided by a
contract between the Company, each Member, Officer, and agent who serves in such
capacity at any time while this Agreement and relevant provisions of the Act and
other applicable law, if any, are in effect. Any repeal or modification hereof
or thereof shall not affect any such rights then existing.
ARTICLE XI
GENERAL PROVISIONS
11.1 Notices. All notices and other communications provided for or
permitted to be given under this Agreement shall be in writing and shall be
given by depositing the notice in the United states mail, addressed to the
Person to be notified, postage paid, and registered or certified with return
receipt requested, or by such notice being delivered in person or by facsimile
communication to such party. Notices given or served pursuant hereto shall be
effective upon receipt by the Person to be notified. All notices to be sent to a
Member shall be sent to or made at, and all payments hereunder shall be made at,
the address given for that member on Appendix A hereto or such other address as
that Member may specify by notice to the Company and the other Members. Any
notice to the Company or the Management Committee also shall be given to the
Management Committee representatives. The address of an Management Committee
representative shall, unless notice to the contrary is given by the Management
Committee representative to the Company and the Members, be the same as the
address of the Member that designated such Management Committee representative,
except that notices to such Management Committee member shall specify that they
are directed to the attention of such Management Committee representative.
11.2 Entire Agreement; Waivers and Modifications.
11.2.1 The Certificate and this Agreement constitute
the entire agreement of the Members and their respective Affiliates relating to
the Company and supersedes any and all prior contracts, understandings,
negotiations, and agreements with respect to the Company and the subject matter
hereof, whether oral or written.
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11.2.2 Subject to Section 11.2.3, the Certificate and this
Agreement may be amended or modified from time to time only by a written
instrument executed by Members having at least the minimum voting interests
necessary to approve such amendment as provided in this Agreement; provided,
however, that if any such amendment or modification would have a material
adverse impact on the Membership Interest of any Member that is different in
character or proportionate impact from the impact on any other Member (for the
avoidance of doubt, excluding proportionate dilution in Membership Interests as
a result of admission of new Members or other transactions contemplated by this
Agreement), then the approval of each Member so adversely affected shall also be
required.
11.2.3 In the event of an inconsistency or conflict between
the provisions of this Agreement and any resolution adopted by the Members, such
resolution shall be deemed an amendment to this Agreement and a waiver by the
Members of the inconsistent or conflicting provision of this Agreement. Any
waiver or consent, express, implied or deemed to or of any breach or default by
any Person in the performance by that Person of its obligations with respect to
the Company or any action inconsistent with this Agreement is not a consent or
waiver to or of any other breach or default in the performance by that Person of
the same or any other obligations of that Person with respect to the Company or
any other such action. Failure on the part of a Person to complain of any act of
any Person or to declare any Person in default with respect to the Company,
irrespective of how long that failure continues, does not constitute a waiver by
that Person of its rights with respect to that default until the applicable
statute-of-limitations period has run. Except with respect to the matters
described in the first sentence of this Section 11.2.3, all waivers and consents
hereunder shall be in writing and shall be delivered to the Company and the
Members in the manner set forth in Section 11.1. A Member may grant or withhold
any waiver or consent in its absolute sole discretion.
11.3 Binding Effect; No Third-Party Beneficiaries. Subject to the
restrictions on Dispositions set forth herein, this Agreement is binding on and
inures to the benefit of the Members and their respective heirs, legal
representatives, successors and assigns. Nothing in this Agreement shall provide
any benefit to any third party or entitle any third party to any claim, cause of
action, remedy or right of any kind, it being the intent of the parties that
this Agreement shall not be construed as a thirty-party beneficiary contract.
11.4 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
construction of this agreement to the law of another jurisdiction. 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 greater extent permitted by law.
11.5 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
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11.6 Waiver of Certain Rights. Each Member irrevocably waives any right
it might have to maintain any action for partition of the property of the
Company.
11.7 Multiple Counterparts; Facsimile Transmission. This Agreement may
be executed in multiple counterparts with the same effect as if the signing
parties had signed the same document. All counterparts shall be construed
together and constitute the same instrument. Delivery of an executed counterpart
of this Agreement by facsimile shall be equally as effective as delivery of a
manually executed counterpart of this Agreement. Upon the request of any party,
any party who shall have delivered an executed counterpart of this Agreement by
facsimile shall deliver a manually executed counterpart as well, but the failure
to so deliver a manually executed counterpart shall not affect the validity,
enforceability and binding effect of this Agreement.
11.8 Arbitration. The Members agree that any and all legal disputes,
controversies or claims arising out of or relating to this Agreement shall be
resolved by agreement among the Members or, if notice is given by any Member as
provided below and the matter is not settled within 30 days thereafter, by
resort to arbitration in accordance with the Commercial Arbitration Rules, as
amended from time to time, of the American Arbitration Association and the
following provisions. Each Member shall within 30 days after the giving of
notice by a Member to another Member or Members of its desire to refer the
matter in dispute to arbitration, appoint one arbitrator, and both of the
arbitrators so appointed shall within 20 days after the second of their
respective appointments appoint a third arbitrator as a neutral and impartial
arbitrator, and the three arbitrators so appointed shall constitute the
arbitration panel over which the third arbitrator shall preside. If any Member
or Members fail to appoint its or their arbitrator within said 30-day period,
the other Member or Members may petition the Chancery Court for the State of
Delaware to compel the appointment of such arbitrator. If the two arbitrators so
appointed fail to agree on a third arbitrator, either Member may petition the
Court for appointment of said third arbitrator, and the Members shall be bound
by the selection of the Court. Any such arbitration proceedings shall be held in
Wilmington, Delaware, at a location to be determined by the arbitrators. The
written decisions and conclusions of a majority of the arbitration panel with
respect to the matters referred to them pursuant hereto shall be final and
binding on the Members, and confirmation and enforcement thereof may be rendered
thereon by any court having jurisdiction upon application of any Member that is
a party to the arbitration proceeding; provided, however, that the arbitration
panel shall have no power or authority under this Agreement or otherwise to
award or provide for the award of punitive damages against any party. The costs
and expenses incurred in the course of such arbitration shall be borne by the
Member or Members against whose favor the decisions and conclusions of the
arbitration panel are rendered or apportioned between or among the Members, as
provided in the arbitrators' decision.
11.9 Attorney's Fees. Subject to Section 11.8, in the event of any
arbitration, litigation, or other legal proceeding involving the interpretation
of this Agreement or enforcement of the rights or obligations of the parties
hereto, the prevailing party or parties shall be entitled to recover reasonable
attorney's fees and costs as determined by the arbitrator or other adjudicator.
11.10 Submission to Jurisdiction. Each of the Members hereby consents
to the jurisdiction of any state or federal court located within the State of
Delaware, and, subject to the provisions of Section 11.8, irrevocably agrees
that all actions or proceedings relating to this
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Agreement shall be instituted and heard by the courts of such jurisdiction. Each
Member hereby waives any objection that it may have based on improper venue or
forum non conveniens to the conduct of any proceeding in any such court and
personal service of any and all process upon it, and consents to any such
service of process made in the manner provided herein for the giving of notices
under this Agreement.
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IN WITNESS WHEREOF, the parties hereto executed this Agreement
effective as of the date first above written.
COMPANY:
GFI Caminus LLC
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Its: President
MEMBERS:
GFI Energy Ventures LLC
By: /s/ Xxxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Its: President
OCM Caminus Investment, Inc.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Its: President
By: /s/ Xxxxxxxxxxx X. Brothers
-----------------------------------------
Name: Xxxxxxxxxxx X. Brothers
Its: Vice President
RIT Capital Partners plc
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
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Its: Authorized Signatory
Durham Enterprises Limited
By: /s/ Xxxxxxxxxxx P.M. Xxxxxx
-----------------------------------------
Name: Xxxxxxxxxxx P.M. Xxxxxx
Its: Director
/s/ Xx. Xxxxx X. Xxxxx
------------------------------------------
Xx. Xxxxx X. Xxxxx
/s/ Xx. Xxxxxxx X. Xxxxxxxx
------------------------------------------
Xx. Xxxxxxx X. Xxxxxxxx
/s/ Xx. Xxxxxx X. Xxxxxxxxxxxx
------------------------------------------
Xx. Xxxxxx X. Xxxxxxxxxxxx
SS&C Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxx
Its: Chief Executive Officer
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APPENDIX A
(PRIOR TO DILUTION)
SCHEDULE OF MEMBERS PERCENTAGE INTERESTS
----------------------------------------
NAME AND ADDRESS CAPITAL SERIES A SERIES B SERIES C
OF MEMBER ACCOUNT PERCENT. INTEREST(1) PERCENT. INTEREST(2) PERCENT. INTEREST
GFI Energy Ventures LLC $ 500,000 2.20% -- --
00000 Xxxxxxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
(000) 000-0000
OCM Caminus Investment, Inc. $11,050,000 48.57% -- --
000 Xx. Xxxx Xx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
(000) 000-0000
RIT Capital Partners plc $ 2,000,000 8.79% -- --
Xxxxxxx Xxxxx
00 Xx. Xxxxx' Xxxxx
Xxxxxx, XX0X0XX
Xxxxxx Xxxxxxx
011 44 171 493 8111
Durham Enterprises Limited $ 500,000 2.20% -- --
Xxxxxxx Xxxxxx & Partners
Oak Walk St. Xxxxx
Jersey JE37EF
Channel Islands
United Kingdom
011 44 153 444 291
Xx. Xxxxx X. Xxxxx $ 1,800,000 7.91% -- --
c/o Caminus Energy Limited
Xxxxxxx Xxxxx, Xxxxxx Xxxx
Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
011-44-1223-322-736
A-1
37
SCHEDULE OF MEMBERS PERCENTAGE INTERESTS
----------------------------------------
NAME AND ADDRESS CAPITAL SERIES A SERIES B SERIES C
OF MEMBER ACCOUNT PERCENT. INTEREST(1) PERCENT. INTEREST(2) PERCENT. INTEREST
Xx. Xxxxxxx X. Xxxxxxxx $ 1,200,000 5.28% -- --
c/o Caminus Energy Limited
Xxxxxxx Xxxxx, Xxxxxx Xxxx
Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
011-44-1223-322-736
SS&C Technologies, Inc. $ 5,500,000 24.18% -- --
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
(000) 000-0000
Xx. Xxxxxx Xxxxxxxxxxxx $ 200,000 0.88% -- --
c/o Caminus Energy Limited
Xxxxxxx Xxxxx, Xxxxxx Xxxx
Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
011-44-1223-322-736........
--------------------------------------------------------------------------
$22,750,000 100% -- --
(1) Percentages not adjusted to reflect dilution from exercise of Caminus
Options, SS&C Warrant and GFI Option.
(2) Percentages not adjusted to reflect dilution from exercise of GFI Option.
A-2
38
APPENDIX A-1
(FULLY DILUTED WITH CAMINUS OPTIONS,
SS&C WARRANT AND GFI OPTION)
SCHEDULE OF MEMBERS PERCENTAGE INTERESTS
----------------------------------------
NAME AND ADDRESS CAPITAL SERIES A SERIES B SERIES C
OF MEMBER ACCOUNT PERCENT. INTEREST PERCENT. INTEREST PERCENT. INTEREST
--------- ------- ----------------- ----------------- -----------------
GFI Energy Ventures LLC $ 500,000(1) 1.68%
00000 Xxxxxxxx Xxxx. -- 10.00%
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
(000) 000-0000
OCM Caminus Investment, Inc. $11,050,000 37.18% -- --
000 Xx. Xxxx Xx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
(000) 000-0000
RIT Capital Partners plc $ 2,000,000 6.73% -- --
Xxxxxxx House
00 Xx. Xxxxx' Xxxxx
Xxxxxx, XX0X0XX
011 44 171 493 8111
Durham Enterprises Limited $ 500,000 1.68% -- --
Xxxxxxx Xxxxxx & Partners
Oak Walk St. Xxxxx
Jersey JE37EF
Channel Islands
011 44 153 444 291
Xx. Xxxxx X. Xxxxx $ 1,800,000(2) 6.06% 3.03%(2) --
c/o Caminus Energy Limited
Xxxxxxx Xxxxx, Xxxxxx Xxxx
Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
011-44-1223-322-736
Xx. Xxxxxxx X. Xxxxxxxx $ 1,200,000(2) 4.04% 2.02%(2) --
c/o Caminus Energy Limited
Xxxxxxx Xxxxx, Xxxxxx Xxxx
Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
011-44-1223-322-736
A-1-1
39
SCHEDULE OF MEMBERS PERCENTAGE INTERESTS
----------------------------------------
NAME AND ADDRESS CAPITAL SERIES A SERIES B SERIES C
OF MEMBER ACCOUNT PERCENT. INTEREST PERCENT. INTEREST PERCENT. INTEREST
--------- ------- ----------------- ----------------- -----------------
SS&C Technologies, Inc. $ 5,500,000 18.50% 8.41% --
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
(000) 000-0000
Xx. Xxxxxx Xxxxxxxxxxxx $ 200,000 0.67% -- --
c/o Caminus Energy Limited
Xxxxxxx Xxxxx, Xxxxxx Xxxx
Xxxxxxxxx XX0 0XX
Xxxxxx Xxxxxxx
011-44-1223-322-736
==================================================================================
$22,750,000 (1),(2) 76.54% + 13.46% + 10.00% = 100%
(1) Capital Account will be credited upon exercise of GFI Option in amount
equal to exercise price paid.
(2) Capital Accounts will be credited upon exercise of Caminus Options in
amount(s) equal to exercise price paid.
X-0-0
00
XXXXXXXX X
ADDITIONAL PROVISIONS
ARTICLE I
DEFINITIONS
Section 1.1 General. This Appendix B is attached to and made part of
the Limited Liability Company Agreement dated as of May 12, 1998 (the
"Agreement") of GFI Caminus LLC, a Delaware limited liability company (the
"Company"), and sets forth additional provisions governing the ownership of
Membership Interests and other agreements between or among the Members. All
references to the Company in this Appendix B shall include any successor Entity
to the Company (including, without limitation, any successor Entity organized in
preparation for a Qualified Public Offering).
Section 1.2 Terms Not Defined. Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Agreement.
Section 1.3 Defined Terms. The following capitalized terms, as used in
this Agreement, shall have the meanings set forth below.
(a) "Appraised Value" means, with respect to the Company and
as of any applicable valuation date, the equity valuation (computed on a fully
diluted basis) of the Company valued as a going concern and without minority or
liquidity discount, as determined by an Independent Financial Expert selected by
the Management Committee. The Company shall cooperate with and shall make
available to the Independent Financial Expert all information reasonably
requested by it to determine Appraised Value. Notwithstanding the foregoing, the
Company and the beneficiary of any payment to be based upon Appraised Value may
determine the Appraised Value by mutual agreement and without retaining any
Independent Financial Expert. Such mutual agreement or the determination of
Appraised Value by the Independent Financial Expert shall be conclusive and
binding upon the Company, all other interested parties and the respective
Affiliates of the foregoing for all purposes of the Agreement.
(b) "Independent Financial Expert" means any reputable
national investment bank, accounting firm, or appraiser that (i) is experienced
in making determinations such as the Appraised Value, (ii) does not (and whose
directors, officers, employees, Affiliates and shareholders do not) have a
material direct or indirect financial interest in any of the Members or members
of the Management Committee or any of their respective Affiliates, (iii) has not
been, and at the time it is called upon to give independent financial advice or
determine valuation pursuant to this Appendix B, is not (and all of whose
directors, officers, employees, Affiliates and shareholders are not) a promoter,
director, or officer of any of the Members, members of the Management Committee
or any of their respective Affiliates, or an equity investor in any Member and
(iv) does not at the time of its engagement hereunder (and did not at any time
in the one hundred eighty (180) days preceding the date of such engagement)
provide any advice or opinions or other financial services to any of the Members
or members of the Management Committee or any Affiliates thereof, except
pursuant to this Appendix B as an Independent Financial Expert.
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(c) "Permitted Transfer" means (i) a Disposition by any Member
to any equity holder of such Member as of the date of the Agreement (which shall
include any optionholders of such a Member as of the date of the Agreement), or
by any Member or any such equity holder to any Affiliate of such Member or such
equity holder (collectively, "Equity Holders"); (ii) a Disposition by a Member
or an Equity Holder to a trust established by such Person for the benefit of
such Person during his lifetime and/or for the benefit of such Person's spouse
and descendants, provided that such Person is the sole trustee of such trust
during his lifetime with sole power of Disposition of securities held by the
trust; (iii) a Disposition by an Equity Holder of a Member as of the date of the
Agreement to another Equity Holder of the same Member of an interest in the
Company or in a Member; and (iv) any Dispositions to the Company or any designee
or assignee thereof that is a Member of the Company.
(d) "Pro Rata Part" means, in any particular instance pursuant
to the right of first refusal provisions of Section 2.2, the tag-along
provisions of Section 2.3 or the preemptive right provisions of Article III
hereof, the proportion which the amount of Securities or New Securities, as the
case may be, owned by a Securityholder eligible to purchase Securities or New
Securities pursuant to the right of first refusal or preemptive rights, or sell
Securities pursuant to the tag-along rights bears to the aggregate amount of
Securities owned by all Securityholders which are eligible to purchase
Securities or New Securities pursuant to the right of first refusal or the
preemptive rights or sell Securities pursuant to the tag-along rights, as the
case may be. All computations to calculate each Securityholder's Pro Rata Part
shall be made on a fully diluted basis.
(e) "Qualified Public Offering" means an underwritten public
offering of Company equity securities pursuant to an effective registration
statement under the Securities Act.
(f) "Sale" means (i) a transfer, sale, lease or other
Disposition, whether directly or indirectly, of all or substantially all of the
assets of the Company and its subsidiaries taken as a whole to any "person" or
"group" (as such terms are used under Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), whether or not
applicable), excluding any such Disposition to or among the Company and/or one
or more of its subsidiaries, or (ii) that any "person" or "group" (as such terms
are used under Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable), excluding OCM Caminus Investment, Inc., GFI, RIT Capital Partners
plc, Durham Enterprises Limited and their respective Affiliates, is or becomes,
whether by means of any issuance or direct or indirect transfer of securities,
merger, consolidation, liquidation, dissolution or otherwise, the "beneficial
owner" (as that term is used under Rules 13d and 13d-5 under the Exchange Act,
whether or not applicable), directly or indirectly through one or more
intermediaries, of 50% or more of the total voting power represented by all of
the voting securities of the Company.
(g) "Securities" means the Membership Interests and all
interests or other securities of any class resulting from the reclassification,
split, combination or other change thereof, dividends of securities paid thereon
and securities of any other issuer received in exchange for such Membership
Interests in connection with any merger, consolidation,
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reorganization or acquisition involving the Company (including, without
limitation, such a reorganization preceding a Qualified Public Offering).
(h) "Securityholders" means the holders of Securities as of
the date hereof, as well as, in accordance with the terms of the Agreement and
this Appendix B, their respective successors and assigns.
ARTICLE II
DISPOSITIONS OF SECURITIES; RIGHT OF FIRST
REFUSAL; TAG-ALONG PROVISIONS AND PURCHASE OPTION
Section 2.1 Dispositions of Securities. Except for Permitted Transfers,
no Securityholder shall be permitted to Dispose of all or any portion of the
Securities now owned or hereafter acquired by it until the date that is two (2)
years after the date of the Agreement (the "Transfer Blockage Date"). Following
the Transfer Blockage Date, Dispositions shall be permitted but must strictly
comply with the terms and provisions of the Agreement (including this Appendix
B).
Section 2.2 Right of First Refusal. Excluding Permitted Transfers, in
the event that any of the Securityholders, including any of their transferees
permitted pursuant to the terms of the Agreement (the "Offeror"), proposes,
following the Transfer Blockage Date, to Dispose of all or any portion of the
Securities held by such Securityholder (the offer pursuant to which such
Disposition is to take place is hereinafter called the "Transaction Offer") to
any Person, such Securityholder may, subject to the provisions of Section 2.3
hereof, Dispose of such Securities pursuant to and in accordance with the
following provisions of this Section 2.2. Any Securityholder may Dispose of its
interest in Securities in a transaction qualifying as a Permitted Transfer,
subject only to compliance with Section 3.6 of the Agreement. No such
Disposition may be made except as provided in the preceding sentence or unless
such Disposition is proposed to be made to a bona fide, unrelated third party
for cash, cash equivalents (to the extent approved by the Management Committee)
or securities traded on a national securities exchange or national automated
quotation system, provided that such securities, in the determination of the
Management Committee, have a liquid trading market sufficient to provide a
readily determinable fair market value, in which case such Disposition shall be
subject to the balance of this Article II. Each of the Members and the Company
shall reasonably cooperate to structure any exercise of the right of first
refusal described herein to achieve the most efficient tax and ownership
structure that is practicable under the circumstances.
(a) Transfer Notice. If, upon compliance with the provisions
set forth in this Agreement, a Securityholder or such Securityholder's estate or
other legal representative or transferee (the "Selling Securityholder") proposes
to make any Disposition (excluding Permitted Transfers) of all or any portion of
its Securities pursuant to a bona fide third party cash offer, such Selling
Securityholder shall so inform the other Members (each, a "Remaining
Securityholder") by notice in writing (the "Transfer Notice") stating the amount
of Securities that are the subject of such proposed Disposition (the "Offered
Securities"), the name and address of the proposed transferee and all other
terms and conditions of such proposed Disposition, including the cash amount
proposed to be received for the Offered Securities. By giving the
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Transfer Notice, the Selling Securityholder shall be deemed to have granted to
the Remaining Securityholders an option to purchase the Offered Securities if
such Disposition is pursuant to a bona-fide third party offer, for the same cash
amount (or the equivalent amount in cash, if the Transaction Offer is for
consideration other than cash) and on the same payment terms as are set forth in
the Transfer Notice.
(b) Intention to Exercise by the Remaining Securityholders.
Within fifteen (15) days of receipt of any Transfer Notice, each Remaining
Securityholder shall have the right to purchase any Offered Securities, in
accordance with each such Remaining Securityholder's Pro Rata Part (including a
right of over subscription by each electing Remaining Securityholder, allocated
in the same manner, to the extent that one or more Remaining Securityholders
elect to purchase less than their Pro Rata Parts). The Remaining Securityholders
shall notify the Selling Securityholder of the amount of the Offered Securities
that such Remaining Securityholder desires to purchase on the terms set forth in
the Transfer Notice. The failure of any Remaining Securityholder to submit any
notice within the applicable period shall constitute an election on the part of
such Remaining Securityholder not to purchase any of the Offered Securities to
which the requisite Transfer Notice pertained. In the event that electing
Remaining Securityholders elect to purchase all or more than all of the Offered
Securities, then the Offered Securities shall be allocated to the electing
Remaining Securityholders on the same basis as their Pro Rata Parts, or as
otherwise agreed among the electing Remaining Securityholders.
(c) Requirement to Purchase All Offered Securities.
Notwithstanding any other provision of this Section 2.2, in no event shall any
Selling Securityholder be required to sell any of the Offered Securities to the
Remaining Securityholders unless, within the period provided, the Selling
Securityholder has been notified that all the Offered Securities will be
purchased by the Remaining Securityholders.
(d) Closing. The closing of the purchase and sale of
Securities that are being purchased and sold under this Section 2.2 shall take
place at the Company's principal executive offices on the 10th day following the
last notification from a Remaining Securityholder pursuant to Section 2.2(b) (or
if such date is a Saturday, Sunday or legal holiday in the state where such
offices are located, the first day thereafter that is not a Saturday, Sunday or
legal holiday) at 10:00 a.m., local time. At the closing, the parties shall take
all action necessary to convey such Securities to be transferred in accordance
with this Agreement, free of all liens and encumbrances.
(e) Failure to Exercise. If the Remaining Securityholders do
not elect to purchase all of the Offered Securities within the fifteen (15) day
period provided, then all of such Offered Securities may be disposed of by the
Selling Securityholder (subject to the provisions of Section 2.3) to the
proposed transferee named in the Transfer Notice, for the price and on the terms
and conditions no more favorable to the proposed transferee than those set forth
in the Transfer Notice, at any time within one hundred twenty (120) days after
the expiration of the period provided for in the notice of the Remaining
Securityholders to be delivered pursuant to Section 2.2(b) herein. Any
Securities not so disposed of within such one hundred twenty (120) day period
shall remain subject to all of the provisions of this Agreement.
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Section 2.3 Tag-Along Rights. Excluding any Disposition qualifying as a
Permitted Transfer, in the event that any Selling Securityholder receives a
Transaction Offer, such Selling Securityholder may proceed with such Disposition
only pursuant to and in accordance with the following provisions of this Section
2.3.
(a) Each Remaining Securityholder shall have the right to
participate in the Transaction Offer on the terms and conditions herein stated,
which right shall be exercisable upon written notice to the Selling
Securityholder and the Company within ten (10) days after delivery to it of the
Transfer Notice.
(b) Each of the Remaining Securityholders shall have the right
to sell a portion of its Securities pursuant to the Transaction Offer which is
equal to the product obtained by multiplying (i) the total amount of Securities
subject to the Transaction Offer by (ii) a fraction, the numerator of which is
the total amount of Securities held by such Remaining Securityholder (calculated
on a fully diluted basis) on the date of the Transfer Notice, and the
denominator of which is the total amount of Securities then held by all
Remaining Securityholders and the Selling Securityholder (calculated on a fully
diluted basis) on the date of the Transfer Notice. To the extent one or more
Remaining Securityholders elect not to sell, or fail to exercise their right to
sell, the full amount of such Securities which they are entitled to sell
pursuant to this Section 2.3, the other Remaining Securityholders' rights to
sell Securities shall be increased proportionately (in accordance with their Pro
Rata Parts) and the other Remaining Securityholders shall have an additional ten
(10) days from the date upon which they are notified of such election or failure
to exercise in which to increase the amount of Securities to be sold by them
hereunder.
(c) Within fifteen (15) days after the date by which the
Remaining Securityholders were first required to notify the Selling
Securityholder of their intent to participate, the Company shall notify each
participating Remaining Securityholder of the amount of Securities held by such
Remaining Securityholder that will be included in the sale and the date on which
the Transaction Offer will be consummated, which shall be no later than the
later of (i) thirty (30) days after the date by which the Remaining
Securityholders were required to notify the Company of their intent to
participate and (ii) the satisfaction of any governmental approval or filing
requirements, if any.
(d) Each of the participating Remaining Securityholders may
effect its participation in any Transaction Offer hereunder by delivering to the
Selling Securityholder for delivery to the Offeror, of one or more instruments
or certificates, properly endorsed for transfer, representing the Securities it
elects to sell therein (which may be in the form of an amended Agreement). At
the time of consummation of the Transaction Offer, the Offeror shall remit
directly to each Remaining Securityholder that portion of the sale proceeds to
which each Remaining Securityholder is entitled by reason of its participation
therein (less any adjustments due to the conversion of any convertible
securities or the exercise of any exercisable securities).
(e) In the event that the Transaction Offer is not consummated
within the period required by subsection (c) hereof or the Offeror fails timely
to remit to each participating Remaining Securityholder its portion of the sale
proceeds, the Transaction Offer shall be deemed
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to lapse, and any Dispositions of Securities pursuant to such Transaction Offer
shall be deemed to be in violation of the provisions of this Agreement unless
the Selling Securityholder once again complies with the provisions of Section
2.2 and this Section 2.3 hereof with respect to such Transaction Offer.
Section 2.4 Purchase Option. Excluding any Disposition qualifying as a
Permitted Transfer, in the event of the death of a Securityholder that is a
natural person prior to the completion of a Qualified Public Offering, the
Company shall have the right and option, in the discretion of the Management
Committee of the Company, to give notice of an election to purchase (the
"Purchase Option"), at any time during the ninety (90) days following the later
of the occurrence of the death of such Securityholder or notice of such event
being provided to the Management Committee, all of the Securities then owned by
the Securityholder, including such Securities acquired by any other Person
pursuant to a Permitted Transfer and including any legal representative, estate,
executor, administrator or trustee of the Securityholder (the "Representative").
The price to exercise the Purchase Option shall be determined as the applicable
percentage of the Appraised Value of all of the equity interests in the Company
(calculated on a fully diluted basis). The exercise of such Purchase Option
shall be by means of a written notice of exercise (the "Purchase Notice")
delivered by the Company to the Representative. Payment for such Securities
shall be made in cash in three (3) equal installment, with the first installment
payable on the closing date of the exercise of the Purchase Option, which date
shall be no later than thirty (30) days following the Purchase Notice or such
longer period as may be reasonably necessary to determine the Appraised Value,
and the two (2) subsequent payments payable on the first and second anniversary
dates of such closing date. Each of the latter two payments shall include
interest computed at the rate of eight percent (8%) simple interest per annum,
payable in arrears on the unpaid amount of the purchase price.
Section 2.5 Prohibited Transfers. If any Disposition is made or
attempted contrary to the provisions of the Agreement, such purported
Disposition shall be void ab initio; the Company, or the Securityholders, as
appropriate, shall have, in addition to any other legal or equitable remedies
which they may have, the right to enforce the provisions of the Agreement by
actions for specific performance (to the extent permitted by law), and the
Company shall have the right to refuse to recognize any transferee as one of its
Securityholders for any purpose.
Section 2.6 Termination. The rights and obligations of the
Securityholders under this Article II shall terminate immediately prior to the
effectiveness of a Qualified Public Offering but such termination shall be
expressly conditioned on the consummation of the Qualified Public Offering.
Section 2.7 Assignment of Rights. Each Securityholder may assign and
delegate its rights and obligations under this Article II to a transferee
permitted pursuant to the terms of the Agreement (including this Appendix B).
ARTICLE III
PREEMPTIVE RIGHTS
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Section 3.1 The Preemptive Right. The Company shall not issue, sell or
exchange, agree or obligate itself to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange (herein collectively referred to as a
"Sale"), any New Securities, unless in each case the Company shall have first
offered to sell such securities (the "Offered New Securities") to the
Securityholders. For purposes of this Article III, "New Securities" shall mean
(i) any Membership Interests; (ii) any shares of any other equity security of
the Company, including without limitation, shares of any securities of any type
that are convertible into or exchangeable for equity securities of the Company,
or (iii) any option, warrant or other right to subscribe for, purchase or
otherwise acquire any such equity security of the Company; provided, however,
that "New Securities" does not include (a) securities issued in connection with
an acquisition by the Company of another Entity or merger with another Entity,
(b) securities issued, or options or rights to purchase such securities granted
to employees, consultants, agents, managers or officers of the Company pursuant
to any Option Plan or the GFI Option, (c) common equity securities issued in
connection with a Qualified Public Offering, (d) securities issued as a result
of any split, dividend, reclassification or reorganization of the Company's
equity securities, distributable on a pro rata basis to all holders of such
equity securities or (e) securities issued pursuant to a capital call in
accordance with Section 4.1.2 of the Agreement.
(a) The Offer and Sale. The Offer shall have been specified by
the Company in writing and delivered to the Securityholders (the "Offer"), which
Offer by its terms shall remain open and irrevocable for a period of twenty (20)
days from receipt of the Offer. The Offer shall include (i) the amount and type
of Offered New Securities, (ii) the name and address of the Person to which the
Company wishes to sell the Offered New Securities, (iii) the price of the
Offered New Securities and (iv) any other material terms and conditions of the
proposed Sale.
Section 3.2 Notice of Acceptance. Notice of each Securityholder's
intention to accept, in whole or in part, any Offer made pursuant to Section 3.1
shall be evidenced by a writing signed by such Securityholder and delivered to
the Company prior to the end of the twenty (20) day period of such Offer,
setting forth the amount that such Securityholder elects to purchase (the
"Notice of Acceptance"). If the amounts subscribed for by all Securityholders
are more than the total Offered New Securities, the Offered New Securities shall
be allocated to the Securityholders on the basis of their respective Pro Rata
Parts.
Section 3.3 Permitted Sales of Refused Securities. In the event that
Notices of Acceptance are not given by the Securityholders in respect of all the
Offered New Securities, the Company shall have sixty (60) days from the
expiration of the period set forth in Section 3.1 to sell all or any part of
such Offered New Securities as to which a Notice of Acceptance has not been
given by the Securityholders (the "Refused Securities") to the Person or Persons
specified in the Offer, but only for cash and otherwise in all respects upon
terms and conditions, including, without limitation, unit price and interest
rates, which are no more favorable, in the aggregate, to such other Person or
Persons or less favorable to the Company than those set forth in the Offer.
Section 3.4 Further Sale. In each case, any Offered New Securities not
purchased by the Securityholders or other Person or Persons in accordance with
Section 3.3 may not be sold or otherwise disposed of until they are again
offered to the Securityholders under the procedures specified in Sections 3.1,
3.2 and 3.3.
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Section 3.5 Termination of Preemptive Right. The rights and obligations
of the Securityholders under this Article III shall terminate immediately prior
to the effectiveness of a Qualified Public Offering but such termination shall
be expressly conditioned on the consummation of the Qualified Public Offering.
Section 3.6 Assignment of Rights. Each Securityholder may assign and
delegate its rights and obligations under this Article III to a transferee
permitted pursuant to the terms of the Agreement (including this Appendix B).
ARTICLE IV
REGISTRATION RIGHTS
Section 4.1 Reorganization. The Members acknowledge that, prior to a
Qualified Public Offering, the Company will be reorganized into a different form
of Entity. In addition, the Management Committee may determine, in connection
with a Qualified Public Offering or otherwise, that reorganization is in the
best interests of the Company and its Members, including their Affiliates.
Consequently, each of the Members agrees to reasonably cooperate, and cause its
Affiliates to reasonably cooperate, to take such actions and execute such
documents as the Management Committee may reasonably request, in order to
consummate any proposed reorganization in the most tax efficient and
organizationally efficient manner as is practicable under the circumstances;
provided, however, that the relative percentage interests of the Members shall
not be affected by such reorganization and no Member shall be required to assume
any liability or obligation as a result of such reorganization that is different
or disproportionate from any other Member. This Agreement (other than the
provisions of Article IV, which shall survive) shall terminate upon the closing
of a Qualified Public Offering.
Section 4.2 Piggy-Back Registration Rights. If the Company (herein
sometimes referred to as the "Public Entity") proposes to register any units of
common equity securities (referred to in this Article IV as "Common Shares")
under the Securities Act whether for its own account or for the account of other
security holders or both on any form other than X-0, X-0 (or form S-3 if such
registration covers an offering of the type contemplated by Form S-8) or any
successor forms, the Company will give prompt written notice (a "Registration
Notice") to all Securityholders of its intention so to register such shares of
Common Shares. Securityholders may, within thirty (30) days after the receipt of
the Registration Notice, notify the Company in writing of the number of shares
of Common Shares, if any, that each such Securityholder desires to have included
in such registration, and the Company shall use its best efforts to cause such
shares of Common Shares to be included in such registration. The Company shall
not be required to include such shares of Common Shares in any such registration
if and to the extent that, in the opinion of the managing underwriter for such
offering, the inclusion of such shares of Common Shares would adversely affect
the marketing of such proposed offering or if the Securityholders have not
agreed to enter into an underwriting agreement in customary form with the
underwriters and to refrain from selling any additional shares of Common Shares
for such reasonable period following the effective date of the offering as such
managing underwriter may request. If the number of shares of Common Shares to be
offered by the Securityholders is so reduced (but the Securityholders are
permitted to include some shares of Common Shares in such registration), then
the shares that may be included by the Securityholders shall be allocated pro
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rata based on each Securityholder's ownership of Common Shares, as nearly as
practicable. In connection with any such reduction, all Securityholders
(regardless of management positions or other factors) shall be treated equally.
The Public Entity shall not grant any piggy-back or demand registration rights
to any other party after the date hereof that are superior in right or priority
of registration to those set forth herein.
Section 4.3 Registration Procedures.
(1) If and whenever the Public Entity is required by the
provisions of Section 4.2 to effect the registration of Common Shares
(hereinafter referred to as "Registrable Securities") under the Securities Act,
the Public Entity will:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to the Registrable Securities,
and use its best efforts to cause such registration statement to become and
remain effective as promptly as practicable for such period as may be reasonably
necessary to effect the sale of such Registrable Securities, not to exceed six
months;
(b) prepare and file with the Securities and Exchange
Commission such amendments to such registration statement and supplements to the
prospectus contained therein as may be necessary to keep such registration
statement effective for such period as may be reasonably necessary to effect the
sale of the Registrable Securities, not to exceed six months;
(c) furnish to the securityholders participating in
such registration such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
such holders may reasonably request in order to facilitate the public offering
of such securities;
(d) use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such holders may reasonably
request in writing within twenty (20) days following the original filing of such
registration statement, except that the Public Entity shall not for any purpose
be required to execute a general consent to service of process or to qualify to
do business as a foreign corporation in any jurisdiction wherein it is not so
qualified;
(e) notify the securityholders participating in such
registration, promptly after it shall receive notice thereof, of the time when
such registration statement has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;
(f) notify such holders promptly of any request by
the Securities and Exchange Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
(g) prepare and file with the Securities and Exchange
Commission, any amendments or supplements to such registration statement or
prospectus which is required
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under the Securities Act or the rules and regulations thereunder in connection
with the distribution of the Registrable Securities by such holders;
(h) prepare and promptly file with the Securities and
Exchange Commission and promptly notify such holders of the filing of such
amendment or supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions, if any, at the time when a
prospectus relating to such Registrable Securities is required to be delivered
under the Securities Act, any event shall have occurred as the result of which
any such prospectus or any other prospectuses then in effect would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading; and
(i) advise such holders, promptly and after it shall
receive notice or obtain knowledge thereof, of the issuance of any stop order by
the Securities Exchange Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
that purpose and promptly use its best efforts to prevent the issuance of any
stop order or to obtain its withdrawal if such stop order should be issued.
(2) Expenses. All fees, costs and expenses of and incidental
to the registration of Registrable Securities (excluding underwriters' discounts
and commissions) in connection with a registration hereunder shall be borne by
the Public Entity. The fees, costs and expense of registration to be borne by
the Public Entity shall include, without limitation, all registration, filing
and NASD fees, printing expenses, fees and disbursements of counsel and
accountants for the Public Entity, and all legal fees and disbursements and
other expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered and
qualified. Fees and disbursements of one special counsel and accountants for the
selling securityholders shall be borne in all cases by the Public Entity.
(3) Indemnification.
(a) The Public Entity will indemnify and hold
harmless each holder of Registrable Securities which are included in a
registration statement pursuant to the provisions of this Section 4.3, its
directors and officers, and any underwriter (as defined in the Securities Act)
for such holder and each person, if any, who controls such holder or such
underwriter within the meaning of the Securities Act, from and against, any and
all loss, damage, liability, cost and expense to which such holder or any such
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided, however, that
the Public Entity will not be liable in any case to the extent that any such
loss, damage, liability, cost or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished in writing by such holder, such
underwriter or such controlling person for use in the preparation thereof.
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(b) Each holder of Registrable Securities included in
a registration pursuant to the provisions of this Section 4.3 will indemnify and
hold harmless the Public Entity, its directors and officers, any controlling
person and any underwriter from and against, any and all loss, damage,
liability, cost or expense to which the Public Entity or any controlling person
and/or any underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statement therein, in light of the
circumstances in which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon
information furnished in writing by or on behalf of such holder for use in the
preparation thereof.
(c) Promptly after receipt by an indemnified party
pursuant to the provisions of this Section 4.3 of notice of the commencement of
any action involving the subject matter of the foregoing indemnity provisions
such indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of this Section 4.3, promptly
notify the indemnifying party of the commencement thereof, but the omission to
so notify the indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise hereunder. In case such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, provided, however, if
the defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or in addition to those available to the
indemnifying party, or if there is a conflict of interest which would prevent
counsel for the indemnifying party from also representing the indemnified party,
the indemnified party or parties have the right to select separate counsel to
participate in the defense of such action on behalf of such indemnified party or
parties at the Public Entity's reasonable expense. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of this Section 4.3 for any legal or other
expense subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the notice of commencement of the action, or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
Section 4.4 Duties of Securityholders in Connection with Registration.
It shall be a condition precedent to the obligation of the Company or Public
Entity to take any action pursuant to this Agreement in respect of the
securities which are to be registered at the request of any Securityholder that
such Securityholder shall furnish to the Company or Public Entity such
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information regarding the securities held by such Securityholder and the
intended method of disposition thereof as the Company or Public Entity shall
reasonably request and as shall be required in connection with the action taken
by the Company.
Section 4.5 Holdback Agreements. If any registration pursuant to this
Agreement shall be in connection with an underwritten offering, the
Securityholders agree, if so requested in writing by the Company, not to effect
any sale or distribution, including any private placement or any sale pursuant
to Rule 144, or any successor provision, under the Securities Act, of any equity
security of the Company or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (in each case, other than as
part of such underwritten offering) during the seven (7) days prior to, and
during the ninety (90) day period which begins on, the effective date of such
registration statement (except as part of such registration).
Section 4.6 Current Information. The Public Entity agrees to timely
file all forms, reports and documents with the Securities and Exchange
Commission required to be filed by it under the Securities Exchange Act of 1934,
as amended, so as to permit sales of the Common Shares pursuant to Rule 144
promulgated under the Securities Act.
Section 4.7 Assignment of Rights. Each Securityholder may assign and
delegate its rights and obligations under this Article IV to a transferee
permitted pursuant to the terms of the Agreement (including this Appendix B).
ARTICLE V
OPTIONS; WARRANT; CONVERSION RIGHTS; ANTIDILUTION
Section 5.1 Caminus Options.
(a) On the date hereof, the Company grants to the person set
forth in Schedule 5.1 attached hereto, the Caminus Options with respect to the
number of units of Series B Membership Interests ("Shares") set forth on
Schedule 5.1 attached hereto. No interest in the Caminus Options may be
transferred or otherwise Disposed of except pursuant to a Permitted Transfer.
(b) The Caminus Options shall vest and become exercisable only
in connection with a Sale or Qualified Public Offering of the Company (the date
of closing of such a transaction is referred to as the "Exercise Date").
Further, each Caminus Option shall vest and become exercisable on the Exercise
Date only (x) if each of Xx. Xxxxx X. Xxxxx and Xx. Xxxxxxx X. Xxxxxxxx shall
have duly honored his initial Service Agreement with Caminus dated as of even
date herewith as the same be amended, supplemented or superseded, for all
period(s) covered by such service agreement(s) through the Exercise Date
(regardless whether such individuals remain in the employment of the Caminus as
of the Exercise Date), and (y) to the extent indicated in clause (c) below. The
extent of vesting and exercisability of the Caminus Options shall be tested at
the time of the first applicable Sale or Qualified Public Offering transaction
involving the Company; no subsequent event or change in circumstances shall be
considered.
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52
(c) The Caminus Options shall vest and become exercisable
(subject to the other provisions of clause (b) above) as to the full number of
Shares if the IRR (as hereinafter defined) is 25% or more. If the IRR is at
least 20% but less than 25%, then the Caminus Options shall vest and become
exercisable (subject to such other provisions) as to the number of Shares
determined by multiplying the full amount thereof by a fraction, the numerator
of which is the actual IRR minus 20% and the denominator of which is 5%. "IRR"
means the post-dilution internal rate of return realized by the Members who have
made cash Capital Contributions to the capital of the Company as of the date of
this Agreement, measured from the date of this Agreement through and including
the Exercise Date; provided, however, that for this purpose "realized" includes
unrealized appreciation in the value of securities held by such Members as
measured by the (implied or explicit) value of the Company's securities in the
Sale or Qualified Public Offering. The calculation of IRR shall be performed
using assumptions and methods customarily employed for rate-of-return
calculations by financial professionals. In the event of a Sale that does not
involve the Disposition of all of the equity interests in the Company, IRR shall
be calculated on a pro forma basis as if all such equity interests were Disposed
of at the price reflected for the equity of the Company in the Sale transaction.
(d) The exercise price per Share of Caminus Options shall
initially be $1,500,000 (U.S.) divided by the number of Shares subject to the
Caminus Options (regardless of the number of Shares that actually vest and
become exercisable). Such exercise price (i) shall be reduced in the event of
each distribution by the Company of cash or property to the Members (in an
amount equal to the Percentage Interests of the holders of the Caminus Options
in such distribution, calculated as if the Caminus Options and all other then
outstanding rights to acquire Membership Interests in the Company, whether or
not then exercisable (but excluding any Caminus Options or other rights to
acquire Membership Interests that have expired or are cancelled), were exercised
immediately prior to the date of such distribution), but excluding from the
foregoing any such distribution designated by the Management Committee as a "tax
distribution", and (ii) shall increase at an annually compounded rate of nine
percent (9.0%) (prorated on a daily basis for any partial years) from the date
of the Agreement through and including the Exercise Date on the amount of the
exercise price as adjusted from time to time pursuant to clause (i) of this
sentence.
(e) The exercise of the Caminus Options shall be made by
written notice to that effect given at least ten (10) days prior to the Exercise
Date (provided that any such option shall be conditioned upon the closing of the
Sale or Qualified Public Offering, as applicable, on the Exercise Date). Not
later than the Exercise Date, the exercising holder shall pay to the Company the
exercise price in cash or by delivery of such other property as the Management
Committee may approve; provided, however, that (i) in the event of a Sale for
cash, the Company agrees to offset the exercise price payable by such holder to
the Company against the amounts payable to such holder from the cash proceeds of
the Sale, and (ii) in the event of a Qualified Public Offering, the Company
agrees that the exercise price may be payable by such holder (at such holder's
election) on a deferred basis evidenced by a promissory note secured by the
Membership Interests (or successor Securities) granted pursuant to the exercise
of the Caminus Options. Such promissory note shall have a maturity date of three
(3) years (subject to customary events of acceleration) and shall accrue
interest at the rate of eight percent (8%) per annum, with principal and
interest payable quarterly. Each Caminus Option must be exercised, if at all, in
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53
connection with the first applicable Sale or Qualified Public Offering;
thereafter, the Caminus Options shall be null and void. In connection with each
exercise, the Company shall be entitled to require that the exercising holder
pay the amount of withholding and other taxes required by law to be paid or
withheld by the Company in connection therewith.
Section 5.2 SS&C Warrant.
(a) The SS&C Warrant is held by SS&C and with respect to the
number of units of Series B Membership Interests ("Shares") set forth on
Schedule 5.2 attached hereto. No interest in the SS&C Warrant may be transferred
or otherwise Disposed of except pursuant to a Permitted Transfer.
(b) The SS&C Warrant shall vest and become exercisable, and
shall be exercised, to the extent otherwise earned pursuant to the terms hereof,
upon the earlier to occur of (x) the date that is thirty-nine months after the
date of the Agreement and (y) a Sale or Qualified Public Offering (the
applicable date is referred to as the "Exercise Date"). The extent to which the
SS&C Warrant shall vest and become exercisable shall be determined as follows:
(i) If Incremental License Revenues (as
hereinafter defined) from the date of the
Agreement through the date that is
thirty-six months after the date of the
Agreement (the "Measurement Date") are at
least $10,000,000 (U.S.), then the full
number of Shares shall vest and become
exercisable.
(ii) If Incremental License Revenues from the
date of this Agreement through the
Measurement Date are at least $5,000,000
(U.S.) but less than $10,000,000 (U.S.),
then the number of Shares that shall vest
and become exercisable shall be determined
by multiplying the full number of Shares by
a fraction, (a) the numerator of which is
the amount of actual Incremental License
Revenues minus $5,000,000 (U.S.), and
(b) the denominator of which is $5,000,000
(U.S.)(such fraction is referred to as the
"Earned Percentage"). If Incremental License
Revenues from the date of this Agreement
through the Measurement Date are less than
$5,000,000 (U.S.), then none of the Shares
shall vest or become exercisable.
(iii) "Incremental License Revenues" means,
consistent with the memo from SS&C to GFI
dated March 9, 1998 (a copy of which is
attached hereto as Exhibit "A") describing
the various products and services to be
provided by SS&C, gross revenues received by
the Company (including any subsidiaries
thereof) from the sale or license of (a)
CAMRA 2000 software products for financial
investment management and energy asset
management as described in the License
Agreement, (b) Finesse 2000 software
products as described in the License
Agreement, (c) Antares software products as
described in the License Agreement, (d)
other
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software products developed by SS&C and
accepted by the Management Committee of the
Company from time to time as qualifying for
Incremental License Revenue credit, and (e)
other products and services of the Company
(including its subsidiaries), to the extent
such sales or licenses are procured from
customers of SS&C in the financial
investment management industry substantially
as a result of utilizing sales and
distribution personnel of SS&C.
In the event of a Sale or Qualified Public Offering of the Company prior to
December 31, 2000, the foregoing criteria (i.e., clauses (i)-(iii)) shall be
adjusted on a pro rata, daily basis, based upon the period from the date of the
Agreement through the closing of such transaction, and the extent of vesting of
the SS&C Warrant shall thereupon be determined in accordance with the revised
criteria and based upon Incremental License Revenues through such date. The
extent of vesting and exercisability of the SS&C Warrant shall be determined as
of the first applicable vesting date; no subsequent event or change in
circumstances shall be considered.
(c) The exercise price for all of the Shares subject to the
SS&C Warrant shall be one cent ($.01).
(d) The SS&C Warrant shall be exercised as to the full number
of Shares subject thereto, and not in part. The exercise shall be made by
written notice to that effect given at least ten (10) days prior to the Exercise
Date (provided that any such exercise in connection with vesting under Section
5.2(b)(y) above shall be conditioned upon the closing of the Sale or Qualified
Public Offering, as applicable, on the Exercise Date). In connection with
exercise, the Company shall be entitled to require that the exercising holder
pay the amount of withholding and other taxes, if any, required by law to be
paid or withheld by the Company in connection therewith.
Section 5.3 Series C Membership Interest.
(a) The GFI Option is held by GFI. No interest in the GFI
Option may be transferred or otherwise Disposed of except pursuant to a
Permitted Transfer.
(b) The GFI Option represents the right to acquire a Series C
Membership Interest in the Company entitled to a ten percent (10.0%) Percentage
Interest; such Percentage Interest shall not be subject to dilution as a result
of the issuance of additional Membership Interests in the Company.
(c) The exercise price for the GFI Option shall equal the sum
of (i) $1,837,500 minus (ii) ten percent (10.0%) of the amount of each
distribution by the Company of cash or property to the Members (but excluding
any distributions designated by the Management Committee as a "tax
distribution") plus (iii) ten percent (10.0%) of the amount of additional cash
Capital Contributions or contributions of property (with a net fair market value
established by the Management Committee) to the Company from its Members,
excluding any such Capital Contributions resulting from the exercise of any
right or option under an Option Plan but
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including any such Capital Contributions resulting from the exercise of
conversion rights as described in Section 5.5 below.
(d) The GFI Option shall be exercised as to the full amount
thereof, and not in part. The exercise shall be made by written notice to that
effect given at least ten (10) days prior to the desired date of exercise. Not
later than the desired date of exercise, the exercising holder shall pay to the
Company the exercise price in cash or by delivery of such other property as the
Management Committee may approve. The GFI Option must be exercised, if at all,
not later than ten (10) years following the date of the Agreement; thereafter,
the GFI Option shall be null and void. In connection with exercise, the Company
shall be entitled to require that the exercising holder pay the amount of
withholding and other taxes, if any, required by law to be paid or withheld by
the Company in connection therewith.
Section 5.4 No Rights as a Member Prior to Exercise. No holder of a
Caminus Option, SS&C Warrant, GFI Option or any other right or option granted
pursuant to an Option Plan shall have any rights (including, without limitation,
any Percentage Interest in Net Profits or distributions) as a Member of the
Company until such time as such right or option has been properly exercised in
accordance with the Agreement, including this Appendix B.
Section 5.5 ZAI*NET Conversion Rights. The Members acknowledge that the
former owner of ZAI*NET (including its equity holders and certain assignees
thereof) have certain conversion rights to acquire Membership Interests in the
Company in exchange for limited partnership interests in ZAI*NET, as detailed in
the Amended and Restated Limited Partnership Agreement of ZAI*NET dated as of
the date hereof. The Members agree that the holders of such conversion rights
shall have the right to be admitted as Members of the Company upon the proper
exercise thereof.
Section 5.6 Antidilution Protection. The Members acknowledge and agree
that in the event that the Company effects a numerical subdivision of the
outstanding Membership Interests into a greater number, the number of Series B
Membership Interests that are issuable upon the exercise of the Caminus Options
and the SS&C Warrant shall be proportionately increased, and, conversely, in the
event that the Company effects a numerical combination of the outstanding
Membership Interests into a smaller number, the number of Series B Membership
Interests that are issuable upon the exercise of the Caminus Options and the
SS&C Warrants shall be proportionately reduced, each such increase or reduction,
as the case may be, to become effective immediately upon such subdivision or
combination. A corresponding adjustment changing the exercise price per Caminus
Option allocated to the unexercised Caminus Options shall be likewise made. Each
adjustment described in this Section 5.6 shall be made in the Management
Committee's reasonable discretion and shall be conclusive and binding on all
parties.
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SCHEDULE 5.1
CAMINUS OPTIONS
Option Holder Shares Percentage Interest(1)
------------- ------ --------------------
Dr. Xxxxx Xxxxx 303,000 3.03%
Dr. Xxxxxxx Xxxxxxxx 202,000 2.02%
(1) If vested Shares reduced pursuant to Section 5.1(c), then Percentage
Interest to be reduced pro rata. Percentage Interests are based on a
fully diluted scenario set forth in Appendix A-1 in the Agreement.
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SCHEDULE 5.2
SS&C WARRANT
Holder Shares Percentage Interest(2)
------ ------ --------------------
SS&C 841,000 8.41%
(2) If vested Shares reduced pursuant to Section 5.2(b), then Percentage
Interest to be reduced pro rata. Percentage Interest is based on a
fully diluted scenario set forth in Appendix A-1 in the Agreement.
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EXHIBIT "A"
SS&C Memo
To: X. Xxxxxx, X. Xxxxxxx, X. Xxxxxxxx
From: X. Xxxxx, X. Xxxxxx
Date: 03/09/98
Re: SS&C's Value Proposition to EIH
--------------------------------------------------------------------------------
SS&C contribution to EIH will provide significant value to the partnership. This
memo discusses the value of SS&C in three categories, two of which invite a
degree of financial forecasting.
1. SS&C's unique strengths and capabilities above and beyond the
freely contributed expertise, experience, and support we bring
to the partnership along with GFI and Caminus.
2. The ability for EIH to be SS&C's exclusive distributor in the
energy utility sector.
3. The ability for EIH to use SS&C as its distribution channel
into the financial market.
1. SS&C's unique capabilities
We acknowledge that SS&C senior management, along with GFI and Caminus, will
freely contribute significant expertise, advice, and support to EIH as a basic
shareholder responsibility.
However, SS&C brings a worldwide software organization to EIH that neither of
the other partners can provide which deserves consideration as much as a
financial investment in EIH.
Access to our technology and the expertise of our people
- Distributed On-line Transaction Processing (OLTP) and On-line
Analytical Processing (OLAP).
- Dynamic date exchange and Active X technology.
- Telecommunications, messaging, queuing, and the requirements
associated with passing critical event-based information on a
reliable real-time basis.
- Integration of third party data feeds from multiple sources on
a global basis.
- Highly performant open database capable of efficiently
processing huge volumes of data.
- Straight through processing systems that accommodate any
financial asset type, regardless of complexity.
Access to our worldwide organization
- Currently 370 (soon 470) software professionals in marketing,
sales, services, and
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development operating in all major business geographies.
Access to our customers
- 400 of the largest financial asset managers spanning all
important financial market sectors and geographies.
Access to our partners
- Major enterprise software vendors like Peoplesoft, SAP, etc.
- Major consulting organizations like Price Waterhouse, Coopers
& Xxxxxxx, etc.
- Technology leaders like Microsoft, Hewlett Packard, IBM, etc.
- Major information providers like Bloomberg, Reuters, etc.
2. EIH distribution of SS&C products
EIH would receive exclusive distribution rights to SS&C products for the energy
market bringing:
- Immediate product for incremental revenue/margin.
- The ability to leverage EIH's distribution channel which it
must build to be successful.
- More entry points into the enterprise.
- Support of the single focused vendor, one-stop shopping
strategy of EIH.
- The strength of SS&C's name and reputation in the financial
market.
Initial products would be:
- CAMRA 2000, as is, for financial investment management.
- Finesse 2000, modified for energy utilities.
- CAMRA 2000, modified to manage energy assets.
CAMRA 2000 for financial investment management is a recently released 32 it
version of the complete asset management and reporting system. CAMRA 2000 and
its predecessors have over 300 man years of effort and represent conservatively,
a $50 million investment. CAMRA 2000:
- Has proven successful by SS&C through past sales with minimal
marketing to the energy sector.
- Can start immediately in Europe with SS&C EMEA/Caminus
effort.
- While not the strategic focus of EIH, it offers near term
incremental revenue/margins.
Finesse 2000 is a dynamic financial analysis tool which SS&C has invested over
$3 million in to date. Finesse is stochastic and has both a graphical palette
and a virtual general ledger. Finesse 2000:
- Requires a very modest effort to build an Excel front-end for
energy utilities.
- Can be marketed quickly by Caminus for near term incremental
revenue/margins.
- Provides a strategic, high level market entry point supporting
EIH's strategy.
- Provides major incremental consulting revenue/margins for
Caminus, etc.
CAMRA 2000 for energy asset management
- We believe it can become the mid/back office engine for energy
investment management.
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- Could be integrated with Zai*Net, possibly future EIH
products.
- Basis for straight through processing systems to this market.
- Will require development, possible customer funded.
3. SS&C distribution of EIH products to the financial markets
SS&C can use it's worldwide channel into the financial markets to distribute EIH
products.
- We have no immediate capability to provide a complete
distribution channel, except product expertise, for Zai*Net in
North America, Europe, and Asia.
- This would provide the potential for immediate incremental
revenue/profit.
- We have over 400 customers, many who are involved in the
energy market.
- We are growing our customer base at over a 50% compounded
growth rate.
- We are rapidly expanding our channels and have the financial
strength to do so.
- We are becoming increasingly known as "the dominant vendor" to
this market.
Estimating the economic value of SS&C's non-cash contribution
There is no way to accurately estimate our total value to EIH because item 1.
above cannot be monetarily valued, and any forecast for items 2. and 3. depend
upon EIH developing an effective channel to the energy market. Nevertheless, the
discussion below is intended to give some basis for GFI to estimate the value
of:
- An exclusive distributorship of SS&C products to the energy
market.
- The revenue/profit potential of selling SS&C products into the
energy market.
- The revenue/profit potential of SS&C of SS&C selling EIH
products into the financial markets.
- Other revenue/profit opportunities generated by the above.
The value of an SS&C exclusive distribution franchise to the energy market
Normally SS&C would require some form of up-front payment to grant a market
exclusive distributorship for its products. Typical industry methods include:
- An up-front, cash fee for the franchise right and/or,
- Prepaid royalties for a number of years (typically one to
three) and/or,
- A guaranteed investment in channel building.
SS&C would receive royalties on license fees in the range of 50% to 60%
depending upon the size and difficulty to enter a new market.
EIH would receive this franchise at no cost and not pay a license royalty to
SS&C.
As EIH builds its distribution channel in this market, it should realize
operating margins on license fees in the 60% to 65% range which is typical of
direct software sales margins. Another way to look at it: if EIH finds
sub-distributors in the market, EIH should receive up to a 50% to 60% royalty if
the sub does all the selling, therefore achieving margins in the same range.
Other revenue/profit sources driven by SS&C license sales:
- Finesse consulting revenue for EIH/Caminus is estimated to be
at least two to three times license revenue.
- CAMRA 2000 consulting revenue is estimated at one-half license
revenue. SS&C
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would probably provide this for the financial version, EIH for
the energy version.
- It's assumed that SS&C would provide maintenance and receive
the revenue for the financial version of CAMRA 2000.
Maintenance support and revenue for the energy version might
be shared.
The value of SS&C distributing other vendor products to the financial market
Normally SS&C would require a share of license revenue based upon the "degree"
of sales responsibility it undertakes in the range of:
- 5% to 10% for providing lead generation, prospecting, and
cooperative selling.
- 10% to 25% for the above plus managing the sales cycle, and
providing all except product expertise.
- 40% to 50% for providing everything including product
expertise.
We assume we would initially provide the first level described above for the
Zai*Net product, and we would provide this at no charge to EIH.
Most of the license revenue would be partly incremental to Zai*Net and would
drive additional consulting and maintenance revenue.
Incremental license revenue forecast
The following is a one way to estimate "ballpark" potential incremental license
revenue due to SS&C products and channels. The logic builds incremental licenses
from Zai*Net's plan only. Incremental consulting revenue can be estimated from
the assumptions above.
X-00
00
Xxxx Xxxx Xxxx Xxxxxx Xxxxxx 0 Year
Zai*Net License Revenue Plan 98 99 00 01 02 Total
---------------------------- -- -- -- -- -- -----
License revenue 8,088 12,670 19,112 28,757 37,460 104,085
Growth rate 57% 51% 40% 40%
Ave. unit sale 250 275 300 325 350
Number of units 32 46 64 82 107
SS&C Assumptions
----------------------------
Average sale
CAMRA financial 250 250 250 250 250
CAMRA energy 0 250 250 250 250
Finesse 100 250 250 250 250
Incremental units per Zai*Net sale
CAMRA2000 for financial 5% 10% 10% 10% 10%
CAMRA2000 for energy 0% 5% 10% 15% 20%
Finesse2000 10% 15% 20% 20% 20%
Zai*Net to financial mkt by SS&C 5% 10% 10% 10% 10%
Incremental Units
----------------------------
CAMRA2000 for financial 2 5 6 8 11 32
CAMRA2000 for energy 0 2 6 12 21 42
Finesse2000 3 7 13 16 21 61
Zai*Net to financial mkt by SS&C 2 5 6 8 11 32
--- ----- ----- ----- ----- ------
6 18 32 45 64 166
Incremental License Revenue
----------------------------
CAMRA2000 for financial 404 1152 1,593 2,058 2,676 7,883
CAMRA2000 for energy 0 576 1,593 3,087 5,351 10,507
Finesse2000 324 1,728 3,185 4,116 5,351 14,704
Zai*Net to financial mkt by SS&C 404 1,267 1,911 2,656 3,746 10,004
--- ----- ----- ----- ----- ------
Incremental License Revenues 1,132 4,122 8,282 11,938 17,124 43,199
B-
