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EXHIBIT 10.3
PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A CONFIDENTIAL
TREATMENT REQUEST FILED WITH THE COMMISSION. ASTERISKS (*) IDENTIFY WHERE SUCH
CONFIDENTIAL INFORMATION HAS BEEN OMITTED. THE OMITTED PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE COMMISSION.
FORM OF
GEOCAPITAL, LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
_________, 1997
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GEOCAPITAL, LLC
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS..................................................... 1
Section 1.1 Definitions................................................ 1
ARTICLE II - ORGANIZATION AND GENERAL PROVISIONS............................ 13
Section 2.1 Continuation............................................... 13
Section 2.2 Name....................................................... 13
Section 2.3 Term....................................................... 13
Section 2.4 Registered Agent and Registered Office..................... 13
Section 2.5 Principal Place of Business................................ 14
Section 2.6 Qualification in Other Jurisdictions....................... 14
Section 2.7 Purposes and Powers........................................ 14
Section 2.8 Title to Property.......................................... 15
ARTICLE III - MANAGEMENT OF THE LLC......................................... 15
Section 3.1 Management in General...................................... 15
Section 3.2 Management Board of the LLC................................ 16
Section 3.3 Officers of the LLC........................................ 18
Section 3.4 Employees of the LLC....................................... 19
Section 3.5 Operation of the Business of the LLC....................... 19
Section 3.6 Compensation and Expenses of the Members................... 23
Section 3.7 Other Business of the Manager Member and its Affiliates.... 23
Section 3.8 Non-Manager Members and Non Solicitation Agreements........ 24
Section 3.9 Non Solicitation and Non Disclosure by Non-Manager Members
and Employee Stockholders................................. 24
Section 3.10 Additional Permitted Outside Advisory Clients.............. 28
Section 3.11 Remedies Upon Breach....................................... 31
Section 3.12 Repurchase Upon Termination of Employment or Transfer by
Operation of Law........................................... 32
Section 3.13 No Employment Obligation................................... 37
Section 3.14 Miscellaneous.............................................. 37
Section 3.15 Capitalization of Excess Operating Cash Flow............... 37
ARTICLE IV - CAPITAL CONTRIBUTIONS;CAPITAL ACCOUNTS
AND ALLOCATIONS; DISTRIBUTIONS.......................................... 38
Section 4.1 Capital Contributions...................................... 38
Section 4.2 Capital Accounts; Allocations.............................. 38
Section 4.3 Distributions.............................................. 41
(i)
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Section 4.4 Distributions Upon Dissolution; Establishment of a Reserve
Upon Dissolution............................................... 43
Section 4.5 Proceeds from Capital Contributions and the Sale of Securities;
Insurance Proceeds; Certain Special Allocations................ 43
Section 4.6 Federal Tax Allocations........................................ 44
ARTICLE V - TRANSFER OF LLC INTERESTS BY NON-MANAGER
MEMBERS; RESIGNATION, REDEMPTION AND WITHDRAWAL BY
NON-MANAGER MEMBERS; ADMISSION OF ADDITIONAL
NON-MANAGER MEMBERS........................................................ 45
Section 5.1 Assignability of Interests..................................... 45
Section 5.2 Substitute Non-Manager Members................................. 46
Section 5.3 Allocation of Distributions Between Assignor and Assignee;
Successor to Capital Accounts.................................. 46
Section 5.4 Resignation, Redemptions and Withdrawals....................... 47
Section 5.5 Issuance of Additional LLC Interests........................... 47
Section 5.6 Additional Requirements........................................ 48
Section 5.7 Representation of Members...................................... 48
ARTICLE VI - TRANSFER OF LLC INTERESTS BY THE
MANAGER MEMBER; REDEMPTION, REMOVAL
AND WITHDRAWAL............................................................. 49
Section 6.1 Assignability of Interest...................................... 49
Section 6.2 Resignation, Redemption, and Withdrawal........................ 50
ARTICLE VII - PUT OF LLC INTERESTS........................................... 50
Section 7.1 Mandatory Puts................................................. 50
Section 7.2 Election Rights of Non-Manager Members to Receive AMG Stock.... 53
Section 7.3 Registration Rights............................................ 55
Section 7.4 Restrictions................................................... 57
Section 7.5 Limitation of Registration Rights. ............................ 58
ARTICLE VIII - DISSOLUTION AND TERMINATION................................... 58
Section 8.1 No Dissolution................................................. 58
Section 8.2 Events of Dissolution.......................................... 58
Section 8.3 Notice of Dissolution.......................................... 59
Section 8.4 Liquidation.................................................... 59
Section 8.5 Termination.................................................... 60
Section 8.6 Claims of the Members.......................................... 60
ARTICLE IX - RECORDS AND REPORTS............................................. 60
Section 9.1 Books and Records.............................................. 60
Section 9.2 Accounting..................................................... 60
(ii)
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Section 9.3 Financial and Compliance Reports........................ 60
Section 9.4 Meetings................................................ 61
Section 9.5 Tax Matters............................................. 62
ARTICLE X - LIABILITY, EXCULPATION AND INDEMNIFICATION..................... 62
Section 10.1 Liability............................................... 62
Section 10.2 Exculpation............................................. 62
Section 10.3 Fiduciary Duty.......................................... 63
Section 10.4 Indemnification......................................... 64
Section 10.5 Notice; Opportunity to Defend and Expenses.............. 64
Section 10.6 Miscellaneous........................................... 65
ARTICLE XI - MISCELLANEOUS................................................. 65
Section 11.1 Notices................................................. 65
Section 11.2 Successors and Assigns.................................. 66
Section 11.3 Amendments.............................................. 66
Section 11.4 No Partition............................................ 66
Section 11.5 No Waiver; Cumulative Remedies.......................... 66
Section 11.6 Dispute Resolution...................................... 66
Section 11.7 Prior Agreements Superseded............................. 67
Section 11.8 Captions................................................ 67
Section 11.9 Counterparts............................................ 67
Section 11.10 Applicable Law; Jurisdiction............................ 67
Section 11.11 Interpretation.......................................... 67
Section 11.12 Severability............................................ 67
Section 11.13 Creditors............................................... 67
EXHIBITS
Exhibit A - Form of Non Solicitation/Non Disclosure Agreement for Employee
Stockholders
Exhibit B - Form of Promissory Note for Repurchases
SCHEDULES
Schedule A - LLC Points and Capital Accounts
Schedule B - Pro Forma Minnesota Calculations
Schedule C - Model Permitted Outside Advisory Client Calculation
Schedule D - Model Repurchase Calculation
(iii)
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GEOCAPITAL, LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
This Amended and Restated Limited Liability Company Agreement (the
"Agreement") of GeoCapital, LLC (the "LLC" or the "Company") is made and entered
into as of __________, 1997 (the "Effective Date"), by and among the persons
identified as the Manager Member and the Non-Manager Members on Schedule A
attached hereto as members of the LLC, and the Persons who become members of the
LLC in accordance with the provisions hereof.
WHEREAS, a limited liability company has been formed pursuant to the
Delaware Limited Liability Company Act, 6 Del. C Section 18-101, et seq., as it
may be amended from time to time and any successor to such Act (the "Act"), by
filing a Certificate of Formation of the LLC with the office of the Secretary of
State of the State of Delaware on August ___, 1997, and entering into a Limited
Liability Company Agreement of the LLC, dated as of August ___, 1997; and
WHEREAS, pursuant to the Merger Agreement, GeoCapital Corporation, a
Delaware corporation, is being merged with and into AMG Merger Sub, Inc., a
wholly owned subsidiary of Affiliated Managers Group, Inc. ("Merger Sub"),
effective as of the Closing (as defined in the Merger Agreement) and the Members
desire to continue the LLC as a limited liability company under the Act with
Merger Sub as Manager Member, and to amend and restate the Limited Liability
Company Agreement of the LLC, dated as of August ___, 1997 in its entirety.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration of the mutual
covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I - DEFINITIONS.
SECTION 1.1 DEFINITIONS. Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement, have
the meanings herein specified.
"1940 Act" shall mean the Investment Company Act of 1940, as it may be
amended from time to time, and any successor to such act.
"Act" shall mean the Delaware Limited Liability Company Act, 6 Del. C
Section 18-101, et seq., as it may be amended from time to time and any
successor to such act.
"Additional Interest" shall have the meaning specified in Section 3.8
hereof.
"Additional Non-Manager Members" shall have the meaning specified in
Section 5.5.
"Advisers Act" shall mean the Investment Advisers Act of 1940, as it
may be amended from time to time, and any successor to such act.
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"Affiliate" shall mean, with respect to any person or entity (herein
the "first party"), any other person or entity that directly or indirectly
controls, or is controlled by, or is under common control with, such first
party. The term "control" as used herein (including the terms "controlled by"
and "under common control with") means the possession, directly or indirectly,
of the power to (a) vote fifty percent (50%) or more of the outstanding voting
securities of such person or entity, or (b) otherwise direct the management or
policies of such person or entity by contract or otherwise.
"Agreement" shall mean this Amended and Restated Limited Liability
Company Agreement, as it may from time to time be amended, supplemented or
restated.
"AMG" shall mean Affiliated Managers Group, Inc., a Delaware
corporation, and any successors or assigns thereof.
"AMG Stock" shall have the meaning specified in Section 7.2(a) hereof.
"Asset Transfer" shall have the meaning ascribed thereto in the Merger
Agreement.
"Asset Transfer Agreement" shall have the meaning ascribed thereto in
the Merger Agreement.
"Board Vote" shall have the meaning specified in Section 3.2(b)(iv)
hereof.
"Capital Account" shall mean the capital account maintained by the LLC
with respect to each Member in accordance with the capital accounting rules
described in Section 4.2 hereof.
"Capital Contribution" shall mean, as to each Member, the amount of
money and/or the agreed fair market value of any property (net of any
liabilities encumbering such property that the LLC is considered to assume or
take subject to) contributed to the capital of the LLC by such Member.
"Carried Interest" shall have the meaning specified in Section 3.10(c)
hereof.
"Certificate" shall mean the original Certificate of Formation of the
LLC required under the Act, as such Certificate may be amended and/or restated
from time to time.
"Client" shall mean all Past Clients, Present Clients and Potential
Clients, subject to the following general rules: (i) with respect to each
Client, the term shall also include any persons or entities which are known to
the Employee Stockholder to be Affiliates of such Client or persons who are
members of the Immediate Family of such Client or any of its Affiliates; and
(ii) with respect to so-called "wrap programs," both the sponsor of the program
and the underlying participants in the program (or clients who have selected the
LLC or a Controlled Affiliate under their contract with the sponsor) shall be
included as Clients.
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"Code" or "Internal Revenue Code" shall mean the United States Internal
Revenue Code of 1986, as from time to time amended, and any successor thereto,
together with all regulations promulgated thereunder.
"Collective Investment Vehicle" shall mean any limited partnership,
limited liability company, trust or any other issuer that would be an investment
company (within the meaning of the 0000 Xxx) but for the exceptions contained in
Section 3(c)(1) or Section 3(c)(7) of such Act.
"Controlled Affiliate" shall mean, with respect to a Person, any
Affiliate of such Person under its "control", as the term "control" is defined
in the definition of Affiliate, but shall include, with respect to the LLC,
[___________], [__________] and [____________] etc.
"Controlling Person" shall have the meaning specified in Section 7.3(e)
hereof.
"Covered Person" shall mean a Member, any Affiliate of a Member, any
officer, director, shareholder, partner, employee or member of a Member or any
of its Affiliates, or any Officer.
"Effective Date" shall have the meaning specified in the preamble of
this Agreement.
"Eligible Person" shall have the meaning specified in Section 3.2(b)(i)
hereof.
"Employee Stockholder" shall mean (a) in the case of a Non-Manager
Member which is not an individual, that certain employee of the LLC who is the
owner of all the issued and outstanding capital stock of such Non-Manager
Member, and is listed as such on Schedule A hereto, and (b) in the case of a
Non-Manager Member which is an individual, such Non-Manager Member.
"Employment Agreement" shall have the meaning ascribed thereto in the
Merger Agreement.
"Encumbrances" shall mean any restrictions, liens, claims, charges,
pledges or encumbrances of any kind or nature whatsoever.
"Fair Market Value" shall mean the fair market value as reasonably
determined by the Manager Member or, for purposes of Section 4.4 hereof, if
there shall be no Manager Member, the Liquidating Trustee.
"For Cause" shall mean, with respect to the termination of an Employee
Stockholder's employment with the LLC, any of the following:
(a) The Employee Stockholder has engaged in any criminal offense
which involves a violation of federal or state securities laws or regulations
(or equivalent laws or regulations of any country or political subdivision
thereof), embezzlement, fraud, wrongful taking or misappropriation of property,
theft, or any other crime involving dishonesty and (i) has been convicted
(whether or not subject to appeal) or pled nolo contendere or any similar plea
to any criminal offense in connection with or relating to such act; (ii) has
entered into a settlement with or consented to the issuance of an order by any
Governmental Authority in connection with or relating to such act; or (iii) as
a result of or in relation to such act, an event has occurred which requires an
affirmative answer to any of the questions in Item 11 of Part I of the LLC's
Form ADV (or any similar or successor provision or form);
(b) The Employee Stockholder has persistently and willfully failed to
perform his or her duties or failed to devote substantially all of his or her
working time to the performance of such duties except, in the case of an
Employee Stockholder who is a party to an Employment Agreement or a
Non-Solicitation Agreement, as may be specifically permitted by the terms of
such Employment Agreement or a Non-Solicitation Agreement; or
(c) The Employee Stockholder has (i) engaged in a Prohibited
Competition Activity, (ii) violated or breached any material provision of his
or her Employment Agreement or Non-Solicitation Agreement or (iii) engaged in
any of the activities prohibited by Section 3.9 hereof and either (i) the
activity of the Employee Stockholder has harmed or would reasonably be expected
to harm the LLC or the Manager Member (which harm would not be immaterial), or
(ii) the Employee Stockholder fails to or is unable to cease such activity and
cause any harm to the LLC and/or the Manager Member within ten (10) days after
such Employee Stockholder becomes aware that, or the Manager Member gives such
Employee Stockholder notice that he or she has engaged in a Prohibited
Competition Activity, or violated or breached any material provision of his or
her Employment Agreement or Non-Solicitation Agreement, or engaged in any of
the activities prohibited by Section 3.7 hereof.
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"Free Cash Flow" shall mean, for any period, ********** percent (**%)
of the Revenues From Operations of the LLC for such period, subject to
adjustment as contemplated in Section 3.15.
"Free Cash Flow Expenditure" shall have the meaning specified in
Section 3.3(c) hereof.
"Governmental Authority" shall mean any foreign, federal, state or
local court, governmental authority or regulatory body.
"Guaranteed Interest" shall have the meaning specified in Section
3.10(c) hereof.
"Holders" shall have the meaning specified in Section 7.3(a) hereof.
"Immediate Family" shall mean, with respect to any person, such
person's spouse, parents, grandparents, children, grandchildren and siblings.
"Indebtedness" shall mean, with respect to a Person, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under any financing leases, (d) all obligations of such person in respect of
acceptances issued or created for the account of such Person, (e) all
obligations of such Person under noncompetition agreements reflected as
liabilities on a balance sheet of such Person in accordance with generally
accepted accounting principles, (f) all liabilities secured by any Lien on any
property owned by such Persons even though such Person has not assumed or
otherwise become liable for the payment thereof, and (g) all net obligations of
such Person under interest rate, commodity, foreign currency and financial
markets swaps, options, futures and other hedging obligations.
"Independent Public Accountants" shall mean any independent certified
public accountant satisfactory to the Manager Member and retained by the LLC.
"Initial Members" shall mean those Persons which are Members on the
Effective Date after the effectiveness of the Merger.
"Initial LLC Points" means, with respect to a Non-Manager Member
(including his (or its) Related Non-Manager Members) and their respective
Permitted Transferees, those LLC Points held by such Non-Manager Member and his
(or its) Related Non-Manager Members in the LLC on the Effective Date, provided
that LLC Points shall cease to be Initial LLC Points from and after the date on
which they are acquired by the Manager Member (or its assignee) pursuant to
Section 3.12 or Article VII hereof.
"Intellectual Property" shall have the meaning specified in Section
3.7(c) hereof.
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"Investment Management Services" shall mean any services which involve
(a) the management of an investment account or fund (or portions thereof or a
group of investment accounts or funds), or (b) the giving of advice with respect
to the investment and/or reinvestment of assets or funds (or any group of assets
or funds).
"IRS" shall mean the Internal Revenue Service of the United States
Department of the Treasury.
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
financing lease having substantially the same economic effect as any of the
foregoing).
"Liquidating Trustee" shall have the meaning specified in Section 8.4
hereof.
"LLC" means GeoCapital, LLC, the limited liability company heretofore
formed and continued under and pursuant to the Act and this Agreement, as the
same may be amended and/or restated from time to time.
"LLC Interest" means a Member's limited liability company interest in
the LLC, which includes such Member's LLC Points as well as such Member's
Capital Account and other rights under this Agreement and the Act.
"LLC Points" shall mean, as of any date, with respect to a Member, the
number of LLC Points of such Member as set forth on Schedule A hereto, as
amended from time to time in accordance with the terms hereof, and as in effect
on such date.
"LLC Repurchase" shall have the meaning specified in Section 3.11(a)
hereof.
"Majority Vote" shall mean the affirmative approval, by vote or written
consent, of Non-Manager Members holding two-thirds of the outstanding Vested LLC
Points then held by all Non-Manager Members. For purposes of determining a
Majority Vote, all LLC Points held by a Related Non-Manager Member of Xxxxx
Xxxxxx shall be voted by Xxxxx Xxxxxx, and all LLC Points held by a Related
Non-Manager Member of Xxxxx X. Xxxxxxxxx shall be voted by Xxxxx X. Xxxxxxxxx.
"Management Board" shall have the meaning specified in Section 3.2(a)
hereof.
"Manager Member" shall mean Merger Sub, and any Person who becomes a
successor Manager Member as provided herein.
"Members" shall mean any Person admitted to the LLC as a "member"
within the meaning of the Act, which includes the Manager Member and the
Non-Manager Members, unless otherwise indicated, and includes any Person
admitted as an Additional Non-Manager Member or a substitute
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Non-Manager Member pursuant to the provisions of this Agreement, in such
Person's capacity as a member of the LLC, unless otherwise indicated. For
purposes of the Act, the Members shall constitute one (1) class or group of
members.
"Merger Agreement" shall mean that certain Agreement and Plan of
Reorganization dated as of August __, 1997, by and among Affiliated Managers
Group, Inc., Merger Sub, GeoCapital Corporation, the LLC and all the
Stockholders of GeoCapital Corporation, as the same has been amended from time
to time.
"Minnesota Agreement" shall mean that certain Investment Advisory
Agreement dated as of July 1, 1993, by and between GeoCapital Corporation and
the Minnesota State Board of Investment, as the same may be amended from time to
time, and/or restated or replaced, with the prior written consent of the Manager
Member.
"NASD" shall have the meaning specified in Section 7.3(d) hereof.
"Non-Manager Member" shall mean any Person who is or becomes a
Non-Manager Member pursuant to the terms hereof, unless otherwise indicated.
"Non Solicitation Agreement" shall have the meaning set forth in
Section 3.8 hereof.
"Notice Deadline" shall have the meaning specified in Section 7.1(d)
hereof.
"Officers" shall have the meaning specified in Section 3.3(a).
"Operating Cash Flow" shall mean, for any period, an amount equal to
the positive difference, if any, between Revenues From Operations of the LLC for
such period and Free Cash Flow for such period.
"Past Client" shall mean at any particular time, any Person who at any
point prior to such time had been an advisee or investment advisory customer of,
or recipient of Investment Management Services from, the LLC (including, without
limitation, its predecessor, GeoCapital Corporation) but at such time is not an
advisee or investment advisory customer or client of, or recipient of Investment
Management Services from, the LLC.
"Permanent Incapacity" shall mean, with respect to an Employee
Stockholder, that such Employee Stockholder has been permanently and totally
unable, by reason of injury, illness or other similar cause (determined pursuant
to the process set forth in the following sentence) to have performed his or her
substantial and material duties and responsibilities for a period of three
hundred sixty-five (365) consecutive days, which injury, illness or similar
cause (as determined pursuant to such process) would render such Employee
Stockholder incapable of operating in a similar capacity in the future. The
foregoing determination shall be made reasonably by a licensed physician
selected by the Manager Member; provided, however, that if the LLC has purchased
lump-sum key-man disability insurance with respect to such Employee Stockholder,
which policy is then in effect, then such determination shall be made reasonably
either (i) by an agreement
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between such physician and a physician selected by the insurance company with
which the LLC has entered into a lump-sum key-man disability policy with respect
to such Employee Stockholder, or, if the two physicians cannot arrive at an
agreement, a third physician will be chosen by the first two physicians, and the
majority decision of the three physicians will then be binding), or (ii) if the
LLC has entered into a lump-sum key-man disability policy with respect to such
Employee Stockholder, and a different procedure is then required under such
policy, then by using such other procedure as may then be required by such
insurance company.
"Permitted Outside Advisory Client" shall mean:
(a) With respect to Xxxxx Xxxxxx, Xxxxx X. Xxxxxxxxx, Xxxx Xxxxxx
and Xxxxxxxx Xxxxxx, the following: (i) Applewood Associates, L.P., a New York
limited partnership, (ii) Xxxxxxxx Partners, L.P., a Delaware limited
partnership, (iii) Xxxxxxxx Foreign Partners, L.P., a Delaware limited
partnership, and (iv) 21st Century Communications Partners, L.P., a Delaware
limited partnership; provided, however, that if the LLC is no longer providing
Investment Management Services for compensation with respect to any Partnerships
in clause (i), (ii) or (iii), such Partnership shall cease to be a Permitted
Outside Advisory Client.
(b) With respect to Xxxxx Xxxxxx, Xxxxx X. Xxxxxxxxx, Xxxx Xxxxxx
and Xxxxxxxx Xxxxxx and, to the extent agreed to by the Manager Member, other
Non-Manager Members of the LLC, the following: each Collective Investment
Vehicle which is a client of the LLC as contemplated by Section 3.10(c), and in
which the Manager Member or an Affiliate of the Manager Member has received its
Guaranteed Interest in accordance with the provisions of Section 3.10(d) hereof,
and with respect to which the Manager Member or an Affiliate of the Manager
Member has had an opportunity to purchase its Additional Interest in accordance
with the provisions of Section 3.10(e) hereof.
"Permitted Transferee" shall mean, with respect to any Non-Manager
Member, its transferees pursuant to the provisions of Sections 5.1(b) and 5.1(c)
hereof and, to the extent set forth in any consent of the Manager Member
pursuant to Section 5.1(a), its transferees pursuant to Section 5.1(a) hereof.
"Person" means any individual, partnership (limited or general),
corporation, limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization or any similar
entity.
"Potential Client" shall mean, at any particular time, any Person to
whom the LLC (including, without limitation, its predecessor, GeoCapital
Corporation) or any of its Controlled Affiliates, through any of their officers,
employees, agents or consultants (or persons acting in any similar capacity),
has, within five years prior to such time, offered (by means of a personal
meeting, telephone call, or a letter or a written proposal specifically directed
to the particular Person) to serve as investment adviser or otherwise provide
Investment Management Services, but who is not at such time an advisee or
investment advisory customer of, or recipient of Investment Management Services
from, the LLC or any of its Controlled Affiliates. The preceding sentence is
meant to exclude form letters and blanket mailings.
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"Present Client" shall mean, at any particular time, any Person who is
at such time an advisee or investment advisory customer of, or recipient of
Investment Management Services from, the LLC or any of its Controlled
Affiliates.
"Pro Forma Minnesota Allocation" shall mean, with respect to any period
in which a performance fee would be payable if earned (previously any
twelve-month period ended June 30), an amount equal to the difference between
(a) the Pro Forma Performance Fee, and (b) the Actual Performance Fee.
Appropriate adjustments will be made to the period and date set forth above to
correspond to any amendment in the Minnesota Agreement. As provided in Section
3.5(d), no amendment or modification may be made to the Minnesota Agreement
(other than with respect to resetting the Option Limitation (as such term is
defined in the Minnesota Agreement)) without the prior written consent of the
Manager Member.
For purposes of this definition,
the term "Actual Performance Fee" shall mean the performance fee
actually payable to the LLC under the Minnesota Agreement in
respect of a twelve-month period ended June 30 as calculated
pursuant to the provisions of Exhibit C to the Minnesota
Agreement; and
the term "Pro Forma Performance Fee" shall mean the performance
fee that would be payable to the LLC under the Minnesota Agreement
in respect of that same twelve-month period ended June 30 as
calculated pursuant to the provisions of Exhibit C to the
Minnesota Agreement, but calculated as if (i) the so-called
"Residual" described in Part B of such Exhibit C (being the
residual negative performance fee from periods ended on or prior
to June 30, 1997) were zero as of the end of the twelve-month
period ended June 30, 1997, and (ii) there were no so-called
"Debits" (as such term is used in Part B of said Exhibit C) from
or attributable to any measurement periods ended on or prior to
June 30, 1997.
Set forth on Schedule B hereto are sample calculations under this definition of
Pro Forma Minnesota Allocation.
From and after the effective date of the first purchase by AMG (or its
assignee) of Initial LLC Points (whether pursuant to Section 3.12 or Article
VII), the Pro Forma Minnesota Allocation shall, with respect to any subsequent
end of a period, be equal to the Pro Forma Minnesota Allocation (determined as
set forth above) multiplied by a fraction, (x) the numerator of which is the
number of Initial LLC Points outstanding on the Effective Date (i.e. **********
LLC Points) minus the total number of Initial LLC Points purchased by the
Manager Member (or its assignee) since the Effective Date (whether pursuant to
Section 3.12 or Article VII) but prior to the effective date of the purchase
with respect to which such determination is being made, and (y) the denominator
of which is the number of Initial LLC Points outstanding on the Effective Date
(i.e. ********** LLC Points).
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"Prohibited Competition Activity" shall mean any of the following
activities:
(a) directly or indirectly, whether as owner, part owner, member,
director, officer, trustee, employee, agent or consultant for or on behalf of
any Person other than the LLC: (i) diverting or taking away any funds or
investment accounts with respect to which the LLC or any Controlled Affiliate of
the LLC is performing investment management or advisory services; or (ii)
soliciting any Person to divert or take away any such funds or investment
accounts; or
(b) directly or indirectly, whether as owner, part owner,
partner, member director, officer, trustee, employee, agent or consultant, for
or on behalf of any Person other than the LLC or any Controlled Affiliate of the
LLC, performing any Investment Management Services (provided that an Employee
Stockholder who directly performs Investment Management Services for a member of
his or her Immediate Family shall not be considered to have engaged in a
Prohibited Competition Activity);
except, in the case of an Employee Stockholder who is a party to an Employment
Agreement or a Non Solicitation Agreement, with respect to the provision of
Investment Management Services to a Permitted Outside Advisory Client to the
extent (and only to the extent) specifically excluded from this definition of
Prohibited Competition Activity by the terms and conditions of such Employment
Agreement or Non Solicitation Agreement.
"Prospect" shall have the meaning set forth in Section 3.9(b) hereof.
"Public Offering" shall have the meaning specified in Section 7.1(f)
hereof.
"Purchase Date" shall have the meaning specified in Section 7.1(b)
hereof.
"Put" shall have the meaning specified in Section 7.1(a) hereof.
"Put LLC Points" shall have the meaning specified in Section 7.1(d)
hereof.
"Put Notice" shall have the meaning specified in Section 7.1(d) hereof.
"Put Price" shall have the meaning specified in Section 7.1(e) hereof.
"Registrable Securities" shall have the meaning specified in Section
7.3(b) hereof.
"Registration" shall have the meaning specified in Section 7.3(a)
hereof.
"Registration Expenses" shall have the meaning specified in Section
7.3(d) hereof.
"Registration Statement" shall have the meaning specified in Section
7.3(a) hereof.
"Related Entity" shall have the meaning specified in Section 3.10(b)
hereof.
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"Related Non-Manager" shall mean, (a) with respect to Xxxxx Xxxxxx, the
following: Xxxx X. Xxxxxx and _____________; and (b) with respect to Xxxxx X.
Xxxxxxxxx, the following: Xxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxxxxx and
_______________ . [other e.g. trusts?].
"Remaining Minnesota Carryover Amount" shall mean, as of any date of
determination, the difference, if any, between the Actual Residual and the Pro
Forma Residual as of such date. Appropriate adjustments will be made to this
definition to correspond to any amendments in the Minnesota Agreement.
For purposes of this definition,
the term "Actual Residual" shall mean the so-called "Residual"
described in Part B of Exhibit C to the Minnesota Agreement (being the
residual negative performance fee from periods ended on or prior to the
date of determination); and
the term "Pro Forma Residual" shall mean the so-called "Residual"
attributable to performance for periods ended on or prior to the date
of determination, but calculated as if the Residual were zero (0) as of
the end of the twelve-month period ended June 30, 1997.
Set forth on Schedule B hereto are sample calculations under this definition of
Remaining Minnesota Carryover Amount.
From and after the effective date of the first purchase by AMG (or its
assignee) of Initial LLC Points (whether pursuant to Section 3.12 or Article
VIII), the Remaining Minnesota Carryover Amount shall, as of any subsequent date
of determination be equal to the Remaining Minnesota Carryover Amount
(determined as set forth above) multiplied by a fraction, (x) the numerator of
which is the number of Initial LLC Points outstanding on the Effective Date
(i.e., ********** LLC Points) minus the total number of Initial LLC Points which
were purchased by AMG (or its assignee) since the Effective Date (whether
pursuant to Section 3.12 or Article VII) but prior to the effective date of the
purchase with respect to which such determination is being made, and (y) the
denominator of which is the number of Initial LLC Points outstanding on the
Effective Date (i.e., ********** LLC Points).
"Remaining Minnesota Cumulative Debits" shall mean, as of any date of
determination, the difference, if any, between the Actual Debits as of such date
and the Pro Forma Debits as of such date. Appropriate adjustments will be made
to this definition to correspond to any amendments to the Minnesota Agreement.
For purposes of this definition,
the term "Actual Debits" shall mean the sum of all so-called "Debits"
and "Credits" as such terms are used in Part B of Exhibit C to the
Minnesota Agreement (being the Debits and Credits attributable to
performance prior to the date of determination); and
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the term "Pro Forma Debits" shall men the sum of all so-called Debits
and Credits attributable to performance prior to the date of
determination, but calculated as if there were no Debits or Credits as
of the end of the twelve-month period ended June 30, 1997.
Set forth on Schedule B hereto are sample calculations under this definition of
Remaining Minnesota Cumulative Debits.
From and after the effective date of the first purchase by AMG (or its
assignee) of Initial LLC Points (whether pursuant to Section 3.12 or Article
VII), the Remaining Minnesota Cumulative Debits shall, as of any subsequent date
of determination, be equal to the Remaining Minnesota Cumulative Debits
(determined as set forth above) multiplied by a fraction, (x) the numerator of
which is the number of Initial LLC Points outstanding on the Effective Date
(i.e. ********** LLC Points) minus the cumulative number Initial LLC Points
which were purchased by AMG (or its assignee) since the Effective Date (whether
pursuant to Section 3.12 or Article VII) but prior to the effective date of the
purchase with respect to which such determination is being made, and (y) the
denominator of which is the number of Initial LLC Points outstanding on the
Effective Date (i.e. ********** LLC Points).
"Repurchase" shall mean a purchase or repurchase of LLC Interests made
pursuant to Section 3.12(a).
"Repurchase Closing Date" shall have the meaning specified in Section
3.12 hereof.
"Repurchased Member" shall have the meaning specified in Section
3.12(a).
"Repurchase Price" shall have the meaning specified in Section 3.12(c).
"Retirement" shall mean, with respect to an Employee Stockholder, the
termination by such Employee Stockholder of such Employee Stockholder's
employment with the LLC and its Affiliates: (a) after the date such Employee
Stockholder shall have been continuously employed by the LLC for a period of
fifteen (15) years commencing with the later of the Effective Date or the date
such Employee Stockholder commenced his or her employment with the LLC (not
including its predecessor, GeoCapital Corporation), as applicable, and (b)
pursuant to a written notice given to the LLC not less than one (1) year prior
to the date of such termination. Notwithstanding the foregoing, with respect to
(i) Xx. Xxxxx Xxxxxx, the term "Retirement" shall mean the termination by him of
his employment with the LLC after the seventh anniversary of the Effective Date
and pursuant to a written notice given to the LLC not less than one (1) year
prior to the date of such termination, and (ii) Xx. Xxxxx X. Xxxxxxxxx, the term
"Retirement" shall mean the termination by him of his employment with the LLC
after the ninth anniversary of the Effective Date and pursuant to a written
notice given to the LLC not less than one (1) year prior to the date of such
termination.
"Revenues From Operations" shall mean, for any period, the gross
revenues of the LLC (except as set forth herein), determined on an accrual basis
in accordance with generally accepted
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accounting principles consistently applied; provided, however, that Revenues
From Operations shall be determined without regard to (a) proceeds during such
period from the sale, exchange or other disposition of all, or a substantial
portion of, the assets of the LLC, (b) revenues from the issuance by the LLC of
additional LLC Points, other LLC Interests, or other securities issued by the
LLC, and (c) payments received pursuant to any insurance policies other than
with respect to business interruption insurance.
"SEC" shall mean the Securities and Exchange Commission, and any
successor Governmental Authority thereto.
"Securities Act" shall mean the Securities Act of 1933, as it may be
amended from time to time, and any successor thereto.
"Suspension Period" shall have the meaning specified in Section 7.4(c)
hereof.
"Transfer" shall have the meaning specified in Section 5.1 hereof.
"Unsatisfactory Performance" shall mean a written determination by a
Majority Vote with the written consent of the Manager Member, that an Employee
Stockholder has failed to meet minimum requirements of satisfactory performance
of his or her job, after such Employee Stockholder has received written notice
that the Non-Manager Members were considering such a determination and the
Employee Stockholder has had a reasonable opportunity to respond in writing or
in person (at such Employee Stockholder's request) after his or her receipt of
such notice.
In addition to the foregoing, other capitalized terms used in this
Agreement shall have the meaning ascribed thereto in the text of this Agreement.
ARTICLE II - ORGANIZATION AND GENERAL PROVISIONS.
SECTION 2.1 CONTINUATION.
(a) The Members hereby agree to continue the LLC as a limited
liability company under and pursuant to the provisions of the Act, and agree
that the rights, duties and liabilities of the Members shall be as provided in
the Act, except as otherwise provided herein.
(b) Upon the execution of this Agreement or a counterpart of
this Agreement, the Initial Members shall continue as members of the LLC.
(c) The name, LLC Points and Capital Contribution of each
Member (including the agreed value of such Capital Contribution) shall be listed
on Schedule A attached hereto. The Manager Member shall update Schedule A from
time to time as it deems necessary, to accurately reflect the information to be
contained therein. Any amendment or revision to Schedule A shall
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not be deemed an amendment to this Agreement. Any reference in this Agreement to
Schedule A shall be deemed to be a reference to Schedule A as amended and in
effect from time to time.
(d) The Manager Member, as an authorized person within the meaning of
the Act, shall execute, deliver and file any certificates required or permitted
by the Act to be filed in the office of the Secretary of State of the State of
Delaware.
SECTION 2.2 NAME. The name of the LLC heretofore formed and continued
hereby is GeoCapital, LLC. At any time, the Manager Member may, with a Majority
Vote, change the name of the LLC. The business of the LLC may be conducted upon
compliance with all applicable laws under any other name designated by the
Manager Member.
SECTION 2.3 TERM. The term of the LLC commenced on the date the
Certificate was filed in the Office of the Secretary of State of the State of
Delaware and shall continue until the LLC is dissolved in accordance with the
provisions of this Agreement.
SECTION 2.4 REGISTERED AGENT AND REGISTERED OFFICE. The LLC's
registered agent and registered office in Delaware shall be The Corporation
Trust Company, Corporation Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000. At any time, the Manager Member may designate another registered
agent and/or registered office.
SECTION 2.5 PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the LLC shall be at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx. At any
time, the Manager Member may change the location of the LLC's principal place of
business; provided, however, that if the principal place of business is to be
located outside of Manhattan, New York, New York, such action must be approved
by a Majority Vote.
SECTION 2.6 QUALIFICATION IN OTHER JURISDICTIONS. The Members shall
cause the LLC to be qualified or registered (under assumed or fictitious name if
necessary) in any jurisdiction in which the LLC transacts business or in which
such qualification, formation or registration is required.
SECTION 2.7 PURPOSES AND POWERS. The principal business activity and
purposes of the LLC shall initially be to engage in the investment advisory and
investment management business and any businesses related thereto or useful in
connection therewith. However, the business and purposes of the LLC shall not be
limited to its initial principal business activities and, unless the Manager
Member otherwise determines, it shall have authority to engage in any lawful
business, purpose or activity permitted by the Act, and it shall possess and may
exercise all of the powers and privileges granted by the Act or which may be
exercised by any Person, together with any powers incidental thereto, so far as
such powers or privileges are necessary or convenient to the conduct, promotion
or attainment of the business purposes or activities of the LLC, including
without limitation the following powers:
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(a) to conduct its business and operations and to have and
exercise the powers granted to a limited liability company by the Act in any
state, territory or possession of the United States or in any foreign country or
jurisdiction;
(b) to purchase, receive, take, lease or otherwise acquire, own,
hold, improve, maintain, use or otherwise deal in and with, sell, convey, lease,
exchange, transfer or otherwise dispose of, mortgage, pledge, encumber or create
a security interest in all or any of its real or personal property, or any
interest therein, wherever situated;
(c) to borrow or lend money or obtain or extend credit and other
financial accommodations, to invest and reinvest its funds in any type of
security or obligation of or interest in any public, private or governmental
entity, and to give and receive interests in real and personal property as
security for the payment of funds so borrowed, loaned or invested;
(d) to make contracts, including contracts of insurance, incur
liabilities and give guaranties, including without limitation, guaranties of
obligations of other Persons who are interested in the LLC or in whom the LLC
has an interest;
(e) to employ Officers, employees, agents and other persons, to
fix the compensation and define the duties and obligations of such personnel, to
establish and carry out retirement, incentive and benefit plans for such
personnel, and to indemnify such personnel to the extent permitted by this
Agreement and the Act;
(f) to make donations irrespective of benefit to the LLC for the
public welfare or for community, charitable, religious, educational, scientific,
civic or similar purposes;
(g) to institute, prosecute, and defend any legal action or
arbitration proceeding involving the LLC, and to pay, adjust, compromise,
settle, or refer to arbitration any claim by or against the LLC or any of its
assets;
(h) to indemnify any Person in accordance with the Act and to
obtain any and all types of insurance;
(i) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other action
with respect to any lease, contract or security agreement in respect of any
assets of the LLC;
(j) to form, sponsor, organize or enter into joint ventures,
general or limited partnerships, limited liability companies, trusts and any
other combinations or associations formed for investment purposes;
(k) to make, execute, acknowledge and file any and all documents
or instruments necessary, convenient or incidental to the accomplishment of the
purposes of the LLC; and
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(l) to cease its activities and cancel its Certificate.
SECTION 2.8 TITLE TO PROPERTY. All property owned by the LLC, real or
personal, tangible or intangible, shall be deemed to be owned by the LLC as an
entity, and no Member, individually, shall have any ownership of such property.
ARTICLE III - MANAGEMENT OF THE LLC.
SECTION 3.1 MANAGEMENT IN GENERAL.
(a) The management and control of the business of the LLC shall
be vested exclusively in the Manager Member, and the Manager Member shall have
exclusive power and authority, in the name of and on behalf of the LLC, to
perform all acts and do all things which, in its sole discretion, it deems
necessary or desirable to conduct the business of the LLC; with or without the
vote or consent of the Members in their capacity as such, except as specifically
provided in this Agreement; provided, however, that the Manager Member shall not
have the power to execute, or cause the execution of, transactions in, or
exercise any powers or privileges with respect to, securities and other
instruments in accounts of clients of the LLC, which powers and privileges are
hereby delegated exclusively to the Management Board pursuant to Section 3.3
hereof. Members, in their capacity as such, shall have no right to amend or
terminate this Agreement or to appoint, select, vote for or remove the Manager
Member, the Officers or their agents or to exercise voting rights or call a
meeting of the Members, except as specifically provided in this Agreement. No
Member other than the Manager Member shall have the power to sign for or bind
the LLC to any agreement or document in its capacity as a Member, but the
Manager Member may delegate the power to sign for or bind the LLC to one or more
Officers.
(b) The Manager Member shall, subject to all applicable
provisions of this Agreement and the Act, be authorized in the name of and on
behalf of the LLC: (i) to enter into, execute, amend, supplement, acknowledge
and deliver any and all contracts, agreements, leases or other instruments for
the operation of the LLC's business; and (ii) in general to do all things and
execute all documents necessary or appropriate to conduct the business of the
LLC as set forth in Section 2.7 hereof, or to protect and preserve the LLC's
assets. The Manager Member may delegate any or all of the foregoing powers to
one or more of the Officers.
(c) The Manager Member is required to be a Member, and shall
hold office until its resignation or removal in accordance with the provisions
hereof. The Manager Member is a "manager" (within the meaning of the Act) of the
LLC. The Manager Member shall devote such time to the business and affairs of
the LLC as it deems necessary, in its sole discretion, for the performance of
its duties, but in any event, shall not be required to devote full time to the
performance of such duties and may delegate its duties and responsibilities as
provided in Section 3.3.
(d) Any action taken by the Manager Member, and the signature
of the Manager Member (or an authorized representative thereof) on any
agreement, contract, instrument or other
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document on behalf of the LLC, shall be sufficient to bind the LLC and shall
conclusively evidence the authority of the Manager Member and the LLC with
respect thereto.
(e) Any Person dealing with the LLC, the Manager Member or any
Member may rely upon a certificate signed by the Manager Member as to (i) the
identity of the Manager Member or any Member; (ii) any factual matters relevant
to the affairs of the LLC; (iii) the Persons who are authorized to execute and
deliver any document on behalf of the LLC; or (iv) any action taken or omitted
by the LLC or the Manager Member.
SECTION 3.2 MANAGEMENT BOARD OF THE LLC.
(a) The LLC shall have a Management Board (the "Management Board").
The Manager Member has delegated power and authority under Section 3.5(b) of
this Agreement to the Management Board to conduct the day-to-day operations,
business and activities of the LLC.
(b) The Management Board shall consist of Non-Manager Members
determined as follows:
(i) The Management Board shall initially have two (2) members and
shall initially consist of Xxxxx Xxxxxx and Xxxxx X. Xxxxxxxxx.
The number of members of the Management Board may be increased by
the Management Board, with the written consent of the Manager
Member at any time. In addition, in the event that the Management
Board is deadlocked and unable to resolve any issue that is
material in the judgement of the Manager Member or the Management
Board for a period of five business days or more, the Manager
Member may consent or vote with respect to such issue. No Person
who is not both an active employee of the LLC and a Non-Manager
Member (an "Eligible Person") may be, become or remain a member
of the Management Board.
(ii) Any vacancy in the Management Board however occurring (including
a vacancy resulting from the increase in size of the Management
Board) may be filled by any other Eligible Person elected by a
Majority Vote, with the written consent of the Manager Member. In
lieu of filling any such vacancy, the Management Board, with the
consent of the Manager Member, may determine to reduce the number
of members of the Management Board, but not to a number less than
two (2), provided that if at any time there are fewer than two
(2) members of the Management Board, such vacancies must be
filled and no consent or vote may be taken on any matter during
the existence of such a vacancy.
(iii) Members of the Management Board shall remain members of the
Management Board until their resignation, removal or death. Any
member of the Management Board may resign by delivering his or
her written resignation to any member of the Management Board and
the Manager Member. At any time that there are more than two
members of the Management Board, any member of the Management
Board may be removed from such position with cause at any time or
without cause
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at any time after the date that is 270 days following such
Member's appointment: (A) by the Management Board acting by a
Board Vote (with such Board Vote being calculated for all
purposes as if the member of the Management Board whose removal
is being considered were not a member of the Management Board)
with the prior written consent of the Manager Member, or (B) by
the Non-Manager Members acting by a Majority Vote, with the prior
written consent of the Manager Member. Any Non-Manager Member
shall be deemed to have resigned from the Management Board and
shall no longer be a member of the Management Board immediately
upon such Non-Manager Member ceasing to be an active employee of
the LLC or otherwise ceasing to be a Non-Manager Member, in each
case, for whatever reason.
(iv) At any meeting of the Management Board, presence in person or by
telephone (or other electronic means) of a majority of the
members of the Management Board shall constitute a quorum. At any
meeting of the Management Board at which a quorum is present, a
majority of the members of the Management Board may take any
action on behalf of the Management Board (any such action taken
by such members of the Management Board is sometimes referred to
herein as a "Board Vote"). Any action required or permitted to be
taken at any meeting of the Management Board may be taken without
a meeting of the Management Board, if (A) a written consent
thereto is signed by all the members of the Management Board and
(B) the Manager Member has been given a copy of such written
consent not less than forty-eight (48) hours prior to such
action. Notice of the time, date and place of all meetings of the
Management Board shall be given to all members of the Management
Board and, upon request, to the Manager Member at least
forty-eight (48) hours in advance of the meeting. A
representative of the Manager Member shall be entitled to attend
each meeting of the Management Board. Notice need not be given to
any member of the Management Board or the Manager Member if a
waiver of notice is given (orally or in writing) by such member
of the Management Board or the Manager Member (as applicable),
before, at or after the meeting. Members of the Management Board
are not "managers" (within the meaning of the Act) of the LLC.
(c) Without a Board Vote and the prior written consent of the Manager
Member, the LLC will not (and will not permit any of its subsidiaries to):
(i) amend its Certificate of Formation or this Agreement, or other
organizational documents;
(ii) incur any indebtedness for borrowed money, guarantee any such
indebtedness or issue or sell any debt securities, in excess of
$10,000 in the aggregate, or prepay or refinance any indebtedness
for borrowed money;
(iii) engage in any Interested Party Transaction;
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(iv) acquire any assets or properties for cash or otherwise for an
amount in excess of $25,000 in the aggregate in one year;
(v) enter into any transaction involving in excess of $10,000 other
than in the ordinary course of business;
(vi) sell or otherwise dispose of assets material to the Company and
its subsidiaries taken as a whole; or
(vii) enter into any agreement with respect to the foregoing.
SECTION 3.3 OFFICERS OF THE LLC. The Management Board may designate
employees of the LLC as officers of the LLC (the "Officers") as it deems
necessary or desirable to carry on the business of the LLC. Any two or more
offices may be held by the same Person. New offices may be created and filled by
the Management Board. Each Officer shall hold office until his or her successor
is designated by the Management Board or until his or her earlier death,
resignation or removal. Any Officer may resign at any time upon written notice
to the LLC and the Manager Member. Any Officer designated by the Management
Board may be removed from his or her office (with or without a concurrent
termination of employment) by the Management Board (excluding the Person being
considered) or by the Manager Member For Cause or not For Cause at any time,
subject to the terms of such Officer's Employment Agreement with the LLC, if
any. A vacancy in any office occurring because of death, resignation, removal or
otherwise may be filled by the Management Board. Any designation of Officers, a
description of any duties delegated to such Officers, and any removal of such
Officers shall be approved by the Management Board in writing, which shall be
delivered to the Manager Member. The Officers are not "managers" (within the
meaning of the Act) of the LLC.
SECTION 3.4 EMPLOYEES OF THE LLC.
(a) The terms of employment of any employee of the LLC who is not a
Non-Manager Member (including, without limitation, with respect to hiring,
promoting, demoting and terminating of such employees), shall be determined by
the Management Board or such Person or Persons to whom the Management Board may
delegate such power and authority (subject, in all instances, to the power of
the Management Board to revoke such delegation in whole or in part (by a Board
Vote that excludes any Person to whom such power and authority has been
delegated)), subject, in all cases, to compliance with all applicable laws,
rules and regulations and, in the case of compensation, to the provisions of
Section 3.5 hereof. Notwithstanding the foregoing, the Manager Member may
terminate the employment by the LLC of any employee who has engaged in any
activity included in the definition of "For Cause," with notice to the
Management Board specifying the reasons for such decision.
(b) The granting or Transferring of LLC Interests in connection with
any hiring or promotion of an employee shall be subject to the terms and
conditions set forth in Articles V and VI hereof.
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(c) Any Person who is a Non-Manager Member may have his or her
employment with the LLC terminated by the LLC only: (i) in the case of a
termination For Cause, either by the Manager Member or by the Management Board
(excluding the Person whose termination is being considered), with the prior
written consent of the Manager Member, or (ii) in the case of any other
termination by the LLC, by the Management Board (excluding for all purposes the
Person whose termination is being considered), with the prior written consent of
the Manager Member.
SECTION 3.5 OPERATION OF THE BUSINESS OF THE LLC.
(a) Subject to the terms hereof, the Management Board is hereby
given the exclusive power and authority to execute, or cause the execution of,
transactions in, and to exercise all rights, powers and privileges with respect
to, securities and other instruments in accounts of clients of the LLC, which
power and authority may be delegated to the Officers of the LLC from time to
time in the discretion of the Management Board.
(b) Subject to the Manager Member's rights, duties and
obligations set forth in the Act and in Section 3.1 above, the Officers are
hereby delegated the power and authority from the Manager Member to manage the
day-to-day operations, business and activities of the LLC; including, without
limitation, the power and authority, in the name of and on behalf of the LLC,
to:
(i) determine the use of the Operating Cash Flow as set
forth in Section 3.5(c) below;
(ii) execute such documents and do such acts as are
necessary to register (or provide or qualify for exemptions from
any such registrations) or qualify the LLC under applicable
Federal and state securities laws;
(iii) enter into contracts and other agreements with respect
to the provision of Investment Management Services and execute
other instruments, documents or reports on behalf of the LLC in
connection therewith; and
(iv) act for and on behalf of the LLC in all matters
incidental to the foregoing and other day-to-day matters.
(c) The Operating Cash Flow of the LLC for any period shall be
used by the LLC to provide for and pay its business expenses and expenditures as
determined by the Management Board; including, without limitation, compensation
and benefits to its employees, including the Officers. Without the prior written
consent of the Manager Member (which written consent makes specific reference to
this Section 3.5(c)), the LLC shall not incur (and the Employee Stockholders
shall use their best efforts to prevent the LLC from incurring) any expenses or
take any action to incur other obligations which expenses and obligations are
reasonably expected to exceed the ability of the LLC to pay or provide for them
out of its Operating Cash Flow on a current or previously reserved basis. Except
to the extent otherwise required by applicable law, the LLC shall only make
payments of compensation (including
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bonuses) to its employees (including any Officers) out of the balance of its
Operating Cash Flow remaining after the payment (or reservation for payment) of
all the other business expenses and expenditures for the applicable period. Any
excess Operating Cash Flow remaining for any fiscal year following the payment
(or reservation for payment) of all business expenses and expenditures may be
used by the LLC in such fiscal year and/or in future fiscal years in accordance
with the preceding sentence. Free Cash Flow may be used to provide for and pay
the business expenses of the LLC only to the extent specified in Section 3.5(e)
with respect to key-man life insurance and disability insurance, Section 4.3
with respect to certain extraordinary expenses and as otherwise agreed to in
writing by the Manager Member and the Non-Manager Members acting by a Majority
Vote (any such use being referred to herein as a "Free Cash Flow Expenditure").
(d) The LLC shall not do, and the Employee Stockholders shall use
their best efforts to prevent the LLC from doing, any of the following without
the prior written consent of the Manager Member (which written consent makes
specific reference to this Section 3.5(d)):
(i) enter into, amend, modify or terminate any contract,
agreement or understanding (written or oral) if such action or the
resulting contract, agreement or understanding could reasonably be
expected to conflict with the provisions of this Section 3.5;
(ii) enter into, amend, modify or terminate any contract,
agreement or understanding (written or oral) if such action or the
resulting contract, agreement or understanding (individually or in
the aggregate) could reasonably be expected to have a material
adverse impact on the availability of Operating Cash Flow of the
LLC in future periods (including, without limitation, long-term
leases or employment contracts);
(iii) enter into, amend, modify or terminate any contract,
agreement or understanding (written or oral) if such action or the
resulting contract, agreement or understanding has the effect of
creating a Lien upon any of the assets of the LLC or upon any of
that portion of the revenues of the LLC which is included in Free
Cash Flow (other than with respect to permitted Free Cash Flow
Expenditures hereunder);
(iv) take any action (or omit to take any action) if such
action (or omission) could reasonably be expected to result in the
termination of the employment by the LLC of any Employee
Stockholder (provided, that the foregoing shall not impose any
limitation on the ability of an Employee Stockholder to terminate
his or her employment with the LLC in accordance with the
provisions hereof);
(v) create, incur, assume, or suffer to exist any
Indebtedness;
(vi) establish or modify any significant compensation
arrangement (other than salary and cash bonuses in the ordinary
course) or program (whether cash or
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non-cash benefits) applicable to any employee, which is subject to
ERISA, which requires qualification under the Code, or which
otherwise (A) requires the Manager Member or any of its Affiliates
to take any action which it would not take but for the action
contemplated by the LLC or the Employee Stockholders or Officers
or (B) prevents the Manager Member or any of its Affiliates from
taking any action which it would otherwise have been able to take
but for the action contemplated by the LLC or the Employee
Stockholders or Officers (and in addition, each Employee
Stockholder will use his or her commercially reasonable efforts to
cause the LLC to give the Manager Member not less than thirty (30)
days prior written notice before the LLC establishes or modifies
any significant compensation arrangement (other than salary and
cash bonuses in the ordinary course) or program);
(vii) enter into any line of business other than the
provision of Investment Management Services;
(viii) amend or modify the Minnesota Agreement (other than
with respect to resetting the Option Limitation (as such term is
defined in the Minnesota Agreement)) or amend or modify any
agreement between the LLC and any Permitted Outside Advisory
Client; or
(ix) (A) take any action which pursuant to any provision of
this Agreement other than Section 3.1 may be taken by the Manager
Member with or without the consent of the Non-Manager Members or
the Employee Stockholders, or (B) take any action which requires
the approval or consent of the Manager Member pursuant to any
provision of this Agreement.
(e) The LLC will maintain (and the Employee Stockholders shall
use their best efforts to cause the LLC to maintain), in full force and effect,
such insurance as is customarily maintained by companies of similar size in the
same or similar businesses (including, without limitation, errors and omissions
liability insurance), the premiums on which will be paid out of Operating Cash
Flow. The LLC will maintain such key-man life insurance and disability insurance
policies on each Employee Stockholder as the Manager Member shall deem necessary
or desirable, from time to time, and the Employee Stockholders will use their
reasonable best efforts to effectuate the foregoing. The LLC will receive the
proceeds of the above-referenced insurance policies, and the Members agree with
each other and the LLC that the LLC will pay the premiums on such key-man life
and disability policies, as well as any reasonable additional insurance policies
that the Manager Member deems necessary, out of Free Cash Flow.
(f) In addition to, and not in limitation of, the Manager
Member's powers and authority under this Agreement (including, without
limitation, pursuant to Section 3.1(a) hereof), the Manager Member shall also
have the power, in its sole discretion, whether or not they involve day-to-day
operations, business and activities of the LLC, to take any or all of the
following actions:
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(i) such actions as it deems necessary or appropriate to
cause the LLC or any Affiliate of the LLC, or any officer,
employee, member, partner, or agent thereof, to comply with
applicable laws, rules or regulations;
(ii) any other action that the Manager Member is authorized
to take pursuant to the terms of this Agreement and any other
action necessary or appropriate to prevent actions that require
the Manager Member's consent pursuant to the terms of this
Agreement if such consent has not then been given;
(iii) such actions as it deems necessary or appropriate to
coordinate any initiative which could materially affect the
Manager Member, AMG and/or any of its Affiliates; and
(iv) such actions as it deems necessary or appropriate to
cause the LLC to fulfill its obligations and exercise its rights
under the Merger Agreement.
(g) Notwithstanding any of the provisions of this Agreement to
the contrary, all accounting, financial reporting and bookkeeping procedures of
the LLC shall be established in conjunction with policies and procedures
determined under the supervision of the Manager Member. The LLC shall have a
continuing obligation to keep AMG's chief financial officer informed of material
financial developments with respect to the LLC. Notwithstanding any of the
provisions of this Agreement to the contrary, all legal, compliance and
regulatory matters of the LLC shall be coordinated with the Manager Member
and/or its Affiliates, and the LLC's legal compliance activities shall be
conducted and established in conjunction with policies and procedures determined
under the supervision of the Manager Member.
(h) Notwithstanding any of the provisions of this Agreement to
the contrary, the Manager Member shall have the power to establish and mandate
that the LLC participate in employee benefit plans which are subject to ERISA or
require qualification under Section 401 of the Internal Revenue Code in order to
make the expenses of such plans deductible and may establish or modify the terms
of any such plan.
(i) Notwithstanding any of the provisions of this Agreement to
the contrary, the Management Board and Officers of the LLC will cooperate with
the Manager Member and its Affiliates in implementing any initiative generally
involving a number of such Affiliates.
SECTION 3.6 COMPENSATION AND EXPENSES OF THE MEMBERS. The Manager
Member may receive compensation for services provided to the LLC to the extent
approved by a Majority Vote. The LLC shall, however, pay and/or reimburse the
Manager Member for all reasonable travel expenses incurred by the Manager Member
or AMG in accordance with Section 9.4 as well as any extraordinary expenses
incurred by the Manager Member or AMG directly in connection with the operation
of the LLC. Without limiting the generality of the foregoing, the Manager
Member's and AMG's general overhead items (including, without limitation,
salaries and rent) shall not be reimbursed by the LLC. Stockholders, officers,
directors, Members and agents of Members may serve as employees of the LLC and
be compensated therefor out of Operating Cash Flow as
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determined by the Management Board (or its delegate(s)) pursuant to Section
3.5(c). Except in respect of their provision of services as employees of the LLC
for which they may be compensated out of Operating Cash Flow as contemplated by
the preceding sentence, Non-Manager Members may not receive compensation on
account of the provision of services to the LLC.
SECTION 3.7 OTHER BUSINESS OF THE MANAGER MEMBER AND ITS AFFILIATES.
The Manager Member, AMG and their respective Affiliates may engage,
independently or with others, in other business ventures of every nature and
description, including the acquisition, creation, financing, trading in, and
operation and disposition of interests in, investment managers and other
businesses that may be competitive with the LLC's business. Neither the LLC nor
any of the Non-Manager Members shall have any right in or to any other such
ventures by virtue of this Agreement or the limited liability company created or
continued hereby, nor shall any such activity by the Manager Member, AMG or such
Affiliates be deemed wrongful or improper or result in any liability to the
Manager Member, AMG or such Affiliates. Neither the Manager Member nor any of
its Affiliates (including, without limitation, AMG) shall be obligated to
present any opportunity to the LLC even if such opportunity is of such a
character which, if presented to the LLC, would be suitable for the LLC.
Notwithstanding any provision of this Section 3.7 to the contrary, neither the
Manager Member, AMG nor any Affiliate of AMG or the Manager Member shall solicit
or induce, whether directly or indirectly, any Person for the purpose (which
need not be the sole or primary purpose) of causing any funds with respect to
which the LLC provides Investment Management Services to be withdrawn from such
management.
SECTION 3.8 NON-MANAGER MEMBERS AND NON SOLICITATION AGREEMENTS. Each
Employee Stockholder and, if there is one, the Non-Manager Member of which it is
a stockholder (its Non-Manager Member) other than Xxxxx Xxxxxx and Xxxxx X.
Xxxxxxxxx, has provided the LLC with a Non Solicitation/Non Disclosure Agreement
in form and substance substantially similar to Exhibit A hereto (the "Non
Solicitation Agreement") (and, in the case of any substitute Non-Manager Member
(pursuant to Section 5.2 hereof) or Additional Non-Manager Member (as defined in
Section 5.5 hereof) which is not already bound by a Non Solicitation Agreement,
it shall, prior to and as a condition precedent to becoming a Non-Manager
Member, provide the LLC with such an agreement (together with any changes or
modifications thereto as the Manager Member may deem necessary or desirable) and
such agreements do and shall, at all times, provide that each of the LLC and the
Manager Member shall be entitled to enforce the provisions of such agreements on
its own behalf and that the Manager Member shall be entitled to enforce the
provisions of such agreements on behalf of the LLC. Each of Xxxxx Xxxxxx and
Xxxxx X. Xxxxxxxxx has entered into an Employment Agreement with the LLC.
SECTION 3.9 NON SOLICITATION AND NON DISCLOSURE BY NON-MANAGER MEMBERS
AND EMPLOYEE STOCKHOLDERS.
(a) Each Non-Manager Member and each Employee Stockholder
agrees, for the benefit of the LLC and the other Members, that such Non-Manager
Member and such Employee Stockholder shall not, while employed by the LLC or any
of its Affiliates, engage in any Prohibited Competition Activity.
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(b) In addition to, and not in limitation of, the provisions of
Section 3.9(a) hereto, each Non-Manager Member and each Employee Stockholder
agrees, for the benefit of the LLC and the other Members, that such Non-Manager
Member and such Employee Stockholder shall not, during the period beginning on
the date such Non-Manager Member becomes a Non-Manager Member, and until the
date which is two (2) years after the termination of such Employee Stockholder's
employment with the LLC and its Affiliates, without the express written consent
of the Manager Member, directly or indirectly, whether as owner, part-owner,
shareholder, partner, member, director, officer, trustee, employee, agent or
consultant, or in any other capacity, on behalf of himself or any firm,
corporation or other business organization other than the LLC and its Controlled
Affiliates:
(i) provide Investment Management Services to any Person
that is a Past, Present or Potential Client of the LLC (other than a Present
Client of the LLC to the extent such Present Client is also a Permitted Outside
Advisory Client of the LLC); provided, however, that this clause (i) shall not
be applicable to clients of the LLC (including Potential Clients) who are also
members of the Immediate Family of the Employee Stockholder;
(ii) solicit or induce, whether directly or indirectly, any
Person for the purpose (which need not be the sole or primary purpose) of (A)
causing any funds with respect to which the LLC provides Investment Management
Services to be withdrawn from such management, or (B) causing any Client of the
LLC (including any Potential Clients) not to engage the LLC or any of its
Affiliates to provide Investment Management Services for any or additional
funds;
(iii) contact or communicate with, in either case in
connection with Investment Management Services, whether directly or indirectly,
any Past, Present or Potential Clients of the LLC (other than a Present Client
of the LLC to the extent such Present Client is also a Permitted Outside
Advisory Client of the LLC); provided, however, that this clause (iii) shall not
be applicable to clients of the LLC (including Potential Clients) who are also
members of the Immediate Family of the Employee Stockholder; or
(iv) solicit or induce, or attempt to solicit or induce,
directly or indirectly, any employee or agent of, or consultant to, the LLC or
any of its Controlled Affiliates to terminate its, his or her relationship
therewith, hire any such employee, agent or consultant, or former employee,
agent or consultant, or work in any enterprise involving investment advisory
services with any employee, agent or consultant or former employee, agent or
consultant, of the LLC or its Controlled Affiliates who was employed by or acted
as an agent or consultant to the LLC or its Controlled Affiliates at any time
preceding the termination of the Employee Stockholder's employment (excluding
for all purposes of this sentence, secretaries and persons holding other similar
positions).
For purposes of this Section 3.9(b), (x) the term "Past Client" shall be limited
to those past Clients who were advisees or investment advisory customers of, or
recipients of Investment Management Services from, the LLC and its Controlled
Affiliates (including its predecessor, GeoCapital Corporation) at the date of
termination of the Employee Stockholder's employment or at any time
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during the twelve (12) months immediately preceding the date of such
termination; and (y) the term "Potential Client" shall be limited to those
Persons to whom an offer was made within two years prior to the date of
termination of the Employee Stockholder's employment.
Notwithstanding the provisions of Sections 3.9(a) and 3.9(b), any Employee
Stockholder may make passive investments in an enterprise which is competitive
with the Manager Member (certain examples of which have been provided to the
Non-Manager Members by the Manager Member) the shares or other equity interests
of which are publicly traded provided his holding therein together with any
holdings of his Affiliates and members of his Immediate Family, do not, at the
time such investments are made, exceed four and nine-tenths of one percent
(4.9%) of the outstanding shares of comparable interests in such entity. Subject
to the foregoing, an employee, Member or Employee Stockholder may engage in
investing for his personal account if (i) each such investment is made in
accordance with the Code of Ethics of the LLC, and (ii) if the aggregate amount
of any actual or proposed investment by such Person, members of his Immediate
Family and accounts for the benefit of any of the foregoing, collectively, in a
single issuer exceeds Five Hundred Thousand Dollars ($500,000) then such
investment shall be disclosed in writing to the Managing Member promptly.
Notwithstanding any other provision of this Agreement, the Members agree that
the Non-Management Members and Employee Stockholders shall be entitled to
continue to serve in their respective present capacities on the boards of
companies set forth in Schedule 3.9 of this Agreement, and to serve on the
boards of directors of private companies and of public companies that are not,
at the time such position is accepted or while such position is held, reasonably
likely to be considered by the LLC for investment by the LLC or by any Person or
account (excluding any Controlled Affiliates) for which the LLC provides
Investment Management Services and may receive and retain individually (and not
for the benefit of the LLC or any other Member) compensation from such companies
for such service as a member of the Board of Directors, provided that (x) prior
to the acceptance of such position or the receipt of any compensation, the
Non-Manager Member or Employee Stockholder notifies the Management Board and the
Manager Member in writing of the terms and conditions of the prospective
position and compensation, including a brief description of the Company and
explanation why it is not reasonably likely to be considered for investment as
contemplated herein, and the Management Board and the Manager Member consent in
writing to the acceptance of such position and compensation and (y) at no time
during such service shall the LLC make or recommend (for itself or any Person or
account for which the LLC directly provides Investment Management Services
excluding any Controlled Affiliates) an acquisition of any securities issued by
such company.
(c) Each Member and each Employee Stockholder agrees that any and
all presently existing investment advisory businesses of the LLC and its
Controlled Affiliates (including its predecessor, GeoCapital Corporation), and
all businesses developed by the LLC and its Controlled Affiliates, including by
such Employee Stockholder or any other employee of the LLC (including, without
limitation, employees of its predecessor, GeoCapital Corporation), including
without limitation, all investment methodologies, all investment advisory
contracts, fees and fee schedules, commissions, records, data, client lists,
agreements, trade secrets, and any other incident of any business developed by
the LLC (or its predecessor, GeoCapital Corporation)
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or its Controlled Affiliates or earned or carried on by the Employee Stockholder
for the LLC or its predecessor, GeoCapital Corporation or their respective
Controlled Affiliates, and all trade names, service marks and logos under which
the LLC or its Affiliates do business, and any combinations or variations
thereof and all related logos, are and shall be the exclusive property of the
LLC or such Controlled Affiliate, as applicable, for its or their sole use, and
(where applicable) shall be payable directly to the LLC or such Controlled
Affiliate, except that the LLC has authorized another entity to use the name
"GeoCapital" for limited purposes as described in that certain Letter Agreement
dated August __, 1997, between GeoCapital Corporation and __________. In
addition, each Member and each Employee Stockholder acknowledges and agrees that
the investment performance of the accounts managed by the LLC (and its
predecessor, GeoCapital Corporation) was attributable to the efforts of the team
of professionals of the LLC (or its predecessor, GeoCapital Corporation, as
applicable) and not to the efforts of any single individual, and that therefore,
the performance records of the accounts managed by the LLC (and its predecessor,
GeoCapital Corporation) are and shall be the exclusive property of the LLC. Each
Member and each Employee Stockholder acknowledges that, in the course of
performing services hereunder and otherwise (including, without limitation, for
the LLC's predecessor, GeoCapital Corporation), such Member and Employee
Stockholder has had, and will from time to time have, access to information of a
confidential or proprietary nature, including without limitation, all
confidential or proprietary investment methodologies, trade secrets, proprietary
or confidential plans, client identities and information, client lists, service
providers, business operations or techniques, records and data ("Intellectual
Property") owned or used in the course of business by the LLC or its Controlled
Affiliates. Each Non-Manager Member and each Employee Stockholder agrees always
to keep secret and not ever publish, divulge, furnish, use or make accessible to
anyone (otherwise than in the regular business of the LLC and its Controlled
Affiliates or unless compelled by judicial or administrative process) any
Intellectual Property of the LLC or any Controlled Affiliate thereof unless such
information can be shown to be (i) previously known on a nonconfidential basis
by such Non-Manager Member or Employee Stockholder, (ii) in the public domain
through no fault of such Non-Manager Member or Employee Stockholder or (iii)
lawfully acquired by such Non-Manager Member or Employee Stockholder from other
sources. At the termination of the Employee Stockholder's services to the LLC,
all data, memoranda, client lists, notes, programs and other papers, items and
tangible media, and reproductions thereof relating to the foregoing matters in
the Non-Manager Member's or Employee Stockholder's possession or control, shall
be returned to the LLC and remain in its possession (except where the return of
such items shall be unreasonable or impractical in relation to the importance or
confidentiality of such items). In addition, the Manager Member acknowledges
that in its capacity as Manager Member it will from time to time have access to
Intellectual Property owned or used in the business by the LLC or its Controlled
Affiliates relating to (i) investment analysis and decisions and to (ii) clients
or accounts of the LLC or its Controlled Affiliates. The Manager Member agrees
always to keep secret and not ever publish, diverge, furnish, use or make
accessible to anyone (otherwise than in the regular business of the Manager
Member or the LLC and its Controlled Affiliates) any such Intellectual Property
unless such information can be shown to be (i) previously known on a
nonconfidential basis by the Manager Member or its Affiliates, (ii) in the
public domain through no fault of the Manager Member or its Affiliates or (iii)
lawfully acquired by the Manager Member or its Affiliates from other sources;
provided, however, that nothing in this Section 3.9(c) shall prevent the Manager
Member from making such disclosures regarding the LLC and its Controlled
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Affiliates as may be necessary or appropriate either at the request of the
Manager Member's lenders or other financing sources or under applicable law
(including pursuant to judicial or administrative process).
(d) Each Non-Manager Member and each Employee Stockholder
acknowledges that, in the course of entering into this Agreement, the
Non-Manager Member and the Employee Stockholder have had and, in the course of
the operation of the LLC, the Non-Manager Member and Employee Stockholder will
from time to time have, access to Intellectual Property owned by or used in the
course of business by AMG. Each Non-Manager Member and each Employee Stockholder
agrees, for the benefit of the LLC and its Members, and for the benefit of the
Manager Member and AMG, always to keep secret and not ever publish, divulge,
furnish, use or make accessible to anyone (otherwise than at the Manager
Member's request) any knowledge or information regarding Intellectual Property
(including, by way of example and not of limitation, the transaction structures
utilized by the Manager Member) of AMG unless such information can be shown to
be (i) previously known on a nonconfidential basis by such Non-Manager Member or
Employee Stockholder, (ii) in the public domain through no fault of such
Non-Manager Member or Employee Stockholder or (iii) lawfully acquired by such
Non-Manager Member or Employee Stockholder from other sources. At the
termination of the Employee Stockholder's service to the LLC, all data,
memoranda, documents, notes and other papers, items and tangible media, and
reproductions thereof relating to the foregoing matters in the Non-Manager
Member's or Employee Stockholder's possession or control shall be returned to
the Manager Member and remain in its possession.
(e) The provisions of this Section 3.9 shall not be deemed to
limit any of the rights of the LLC or the Members under any of the Employment
Agreements, Non Solicitation Agreements or under applicable law, but shall be in
addition to the rights set forth in each of the Employment Agreements and Non
Solicitation Agreements, and those which arise under applicable law.
SECTION 3.10 ADDITIONAL PERMITTED OUTSIDE ADVISORY CLIENTS. If an
Employee Stockholder wishes to cause a Collective Investment Vehicle to become a
Permitted Outside Advisory Client of such Employee Stockholder under the
provisions of paragraph (b) of the definition of Permitted Outside Advisory
Client, then such Employee Stockholder shall so notify the Manager Member and
such Collective Investment Vehicle shall be designated as a "Permitted Outside
Advisory Client"of that Employee Stockholder, provided that the Employee
Stockholder and the Collective Investment Vehicle comply with the conditions set
forth in this Section 3.10. Each Employee Stockholder hereby covenants and
agrees to take no action as a partner, member, equityholder or other Affiliate
of a Permitted Outside Advisory Client that would authorize or permit the
termination of any agreement between such Permitted Outside Advisory Client (or
between a partner, member or manager of such Permitted Outside Advisory Client)
and the LLC or the Manager Member or Affiliates of the Manager Member; provided,
however, that each Employee Stockholder may take such action as may be required
by applicable law if such Employee Stockholder provides the Manager Member with
an opinion of counsel, reasonably satisfactory in form and substance to the
Manager Member, to the effect that such action is required under applicable law.
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(a) Such Employee Stockholder and such Collective Investment
Vehicle shall provide the LLC and the Manager Member and AMG with such
information regarding the Collective Investment Vehicle as the Manager Member or
AMG may reasonably request (including, by way of example and not of limitation,
the organizational documents, financial statements (if any) and offering
materials of the Collective Investment Vehicle and any other material or related
documents and agreements), as well as such evidence as the Manager Member or AMG
may reasonably request (including, without limitation, opinions of counsel
reasonably acceptable to the Manager Member or AMG) regarding the compliance of
such Collective Investment Vehicle with applicable laws, rules and regulations
(including, by way of example and not of limitation, the compliance of the
Collective Investment Vehicle after giving effect to the arrangements
contemplated by this Section 3.10).
(b) If, after the date hereof, any Employee Stockholder or any
entity in which such Employee Stockholder is or becomes an owner, part-owner,
shareholder, partner, member, director, officer, trustee, employee, agent or
consultant (or with respect to which he serves in any similar capacity) (a
"Related Entity"), is or becomes entitled to receive from such Collective
Investment Vehicle any consulting, administrative, advisory, management or
similar fee or allocation (other than a Carried Interest (as defined below)),
then such fee or allocation shall be transferred or assigned to the LLC on such
terms and conditions (which shall be substantially similar to the terms and
conditions applicable to the Employee Stockholder and Related Entity) and
pursuant to such agreements, documents and instruments, all as may be reasonably
satisfactory to the Employee Stockholder or Related Entity and the Manager
Member or AMG.
(c) If, after the date hereof, any one or more Employee
Stockholder(s) or any Related Entities is or becomes entitled to receive any
"carried interest" or other items of gain allocated (directly or indirectly) to
such Employee Stockholder(s) or Related Entities (other than allocations which
are made pro-rata based on contributed capital to all partners, members,
beneficiaries or other holders of similar economic interests in the Collective
Investment Vehicle (together a "Carried Interest"), then, unless the Manager
Member waives the provisions of this Section 3.10(c) with respect to that
Collective Investment Vehicle, ten percent (10%) of the rights with respect to
such Carried Interest (the "Guaranteed Interest") shall be issued, transferred,
assigned or allocated to the Manager Member (or an Affiliate of the Manager
Member which is selected by the Manager Member and of which the Employee
Stockholder is given notice) for nominal consideration or other remuneration and
otherwise on such other terms and conditions presented to the Manager Member
(which shall be substantially similar to the other terms and conditions
applicable to the Employee Stockholder and Related Entity) and pursuant to such
agreements, documents and instruments as, all as may be reasonably satisfactory
to the Employee Stockholder or Related Entity and the Manager Member, provided
that such terms and conditions (i) shall permit the Manager Member (or such
selected Affiliate) to retain limited liability (with no liability for any
"clawback," deficit restoration or similar obligation), and (ii) shall not
require the Manager Member to devote any specified resources to, perform any
obligations for, or be bound by any restriction covenants for the benefit of,
such Collective Investment Vehicle; provided, however, that if the conditions
contemplated by this Section 3.10 with respect to issuance, transfer, assignment
or allocation of the Guaranteed Interest to the order of the Manager Member are
not satisfied, then no Non-Manager Member, Employee Stockholder or Related
Entity
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shall be permitted to acquire a Carried Interest in such Collective Investment
Vehicle and such Collective Investment Vehicle shall not be a Permitted Outside
Advisory Client.
(d) The Manager Member (or an Affiliate of the Manager Member
which is selected by the Manager Member and of which the Employee Stockholder is
given notice) shall be granted an option to purchase additional portions of the
Carried Interest (its "Additional Interest") on such terms and conditions
presented to the Manager Member and pursuant to such agreements, documents and
instruments, all as may be reasonably satisfactory to the Employee Stockholder
or Related Entity and the Manager Member in accordance with the following:
(i) Prior to any Employee Stockholder or Related Entity
receiving (or being granted the option or right to receive) a
Carried Interest in a Collective Investment Vehicle, the Employee
Stockholder shall give notice to the Manager Member (which notice
shall be acknowledged by the Collective Investment Vehicle) of the
terms (including any amendments or modifications thereto) on which
the Carried Interest and any other interests in the Collective
Investment Vehicle are expected to be received by or granted to
the Employee Stockholder or a Related Entity (including, without
limitation, a complete description of the Carried Interest and
such other interests, and the price, if any, being paid for such
Carried Interest and such other interests) which notice shall
constitute an irrevocable offer by the Collective Investment
Vehicle to transfer or issue to the Manager Member such portion of
the Carried Interest and other such interests as is equal to:
(A x B) - C
where
A = (i) a fraction, the numerator of which is the number of LLC
Points held by the Manager Member on the date Carried
Interests in that Collective Investment Vehicle are first
received by or granted to such Employee Stockholder and his
Related Entities, and the denominator of which is the total
number of LLC Points then outstanding, multiplied by (ii)
that percentage Free Cash Flow then constitutes of Revenues
From Operations;
B = the Carried Interest which is then held (or being received)
by or granted to the Employee Stockholder and his Related
Entities (or which such Employee Stockholder and his Related
Entities have (or will receive) the option or right to
acquire) before giving effect to the Guaranteed Interest that
may then be held (or is to be received) by the Manager Member
(or a Related Entity) pursuant to the provisions of paragraph
(c) above; and
C = the Guaranteed Interest then to be held (or to be received)
by the Manager Member (or an Affiliate of the Manager Member)
pursuant to the provisions of paragraph (c) above.
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at a price (the "Purchase Price") equal to the cash purchase price
which is proportionate to the price which the Employee Stockholder
or his or her Related Entity would have to pay for the Carried
Interest and such other related interests in the Collective
Investment Vehicle which the Employee Stockholder or his or her
Related Entity would have to purchase in order to receive the
Carried Interest, based on the portion of the Carried Interest
being offered to the Manager Member under this Section 3.10(d).
(ii) At any time within thirty (30) days after the date on
which the Manager Member receives the notice described in clause
(i) above, the Manager Member (or any Affiliate of the Manager
Member selected by the Manager Member with notice to the Employee
Stockholder) may accept the offer set forth in the notice by
agreeing to pay the Collective Investment Vehicle the Purchase
Price at the same time and in the same proportionate amounts as
the Employee Stockholder or a Related Entity. Notwithstanding the
foregoing sentence, if the Manager Member has been kept apprised
of all negotiations and has been provided all drafts relating to
the terms of the offer, and the offer contained in the notice
described in clause (i) is substantially the same as that
contained in prior drafts and the initial draft of the terms was
distributed to the Manager Member not less than twenty-one (21)
days before the date of the notice described in clause (i), then
the Manager Member shall have ten (10) days to accept the offer
set forth in the notice.
(iii) At any time when subsequent interests are granted or
made available to any Employee Stockholder or Related Entity, and
at any time when the terms and conditions upon which interests are
granted or made available to any Employee Stockholder or Related
Entity change or are modified in any respect, appropriate
provisions will be made to give effect to the intent of this
Section 3.10, in order to permit the relevant Collective
Investment Vehicle to remain a Permitted Outside Advisory Client
under this Section 3.10 and, if appropriate provisions are not
made to the reasonable satisfaction of the Manager Member, then
either (x) such change or modification shall not be made at all or
(y) if any change or modification is made, then such Collective
Investment Vehicle shall cease to be a Permitted Outside Advisory
Client effective upon the effectiveness of such change or
modification.
(iv) It is agreed and acknowledged, in furtherance and not
in limitation of the foregoing, that if the Manager Member (or an
Affiliate of the Manager Member as contemplated by this paragraph
(d)) exercises its option under this paragraph (d) to acquire any
additional Carried Interest (and any other interests in the
Collective Investment Vehicle), such acquisition shall be on the
same terms (including any amendments or modifications thereto) on
which the Carried Interest and any other interests in the
Collective Investment Vehicle are received by or granted to the
Employee Stockholder or a Related Entity and the Purchase Price
paid by the Manager Member (or such Affiliate) shall be a cash
purchase price which is proportionate to the price paid by the
Employee Stockholder or Related
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Entity based on the portion of the Carried Interest acquired
pursuant to such option under this Section 3.10(d).
Attached hereto as Schedule C are sample calculations under this
Section 3.10.
SECTION 3.11 REMEDIES UPON BREACH.
(a) In the event that a Member or its Employee Stockholder (i)
breaches any of the provisions of Section 3.9 or 3.10 hereof, or (ii) breaches
any of the provisions of the Employment Agreement or Non Solicitation Agreement
to which it or he is a party (in each case, including, without limitation,
following the termination of his or her employment with the LLC), then (A) such
Non-Manager Member shall forfeit its right to receive any payment for its LLC
Interests under Section 3.12, and (B) AMG (or its assignees) shall have no
further obligations under any promissory note theretofore issued to such
Non-Manager Member pursuant to Section 3.12(e).
(b) Each Member and each Employee Stockholder agrees that any
breach of the provisions of Section 3.9 of this Agreement or of the provisions
of the Employment Agreement or Non Solicitation Agreement by such Member or
Employee Stockholder could cause irreparable damage to the LLC and the other
Members. The LLC and/or the applicable Member, shall have the right to an
injunction or other equitable relief (in addition to other legal remedies) to
prevent any violation of a Member's or Employee Stockholder's obligations
hereunder or thereunder.
SECTION 3.12 REPURCHASE UPON TERMINATION OF EMPLOYMENT OR TRANSFER BY
OPERATION OF LAW.
(a) In the event that the employment by the LLC of any Employee
Stockholder terminates for any reason, then:
(i) if the termination of the Employee Stockholder occurred
because of the death or Permanent Incapacity of such Employee
Stockholder, the LLC shall purchase and the Non-Manager Member (or
the Non-Manager Member of which such Employee Stockholder was the
owner, as applicable) (as indicated on Schedule A hereto) and his
(or its) Related Non-Manager Members (and their respective
Permitted Transferees, if any) (each a "Repurchased Member") shall
sell to the LLC for cash, LLC Points up to the portion of the
Repurchase Price (as such term is defined below) which is equal to
the cash proceeds of any key-man life insurance policies or
lump-sum disability insurance policies, as applicable, maintained
by the LLC on the life or health of such Employee Stockholder (an
"LLC Repurchase"), and
(ii) in each other such case (and, in the case of the death
or Permanent Incapacity of an Employee Stockholder, to the extent
the Repurchase Price (as such term is defined in Section 3.12(c)
below) exceeds the proceeds described in clause (i) of this
Section 3.12(a) (determined after all such proceeds have been
collected)),
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AMG shall purchase and the Non-Manager Member (or the Non-Manager
Member of which such Employee Stockholder was the owner, as
applicable) (as indicated on Schedule A hereto) and his (or its)
Related Non-Manager Members (and their respective Permitted
Transferees) (each a "Repurchased Member") shall sell (each a
"Manager Member Repurchase") all (or, in the case of the death or
Permanent Incapacity of an Employee Stockholder, such portion as
is not required to be purchased by the LLC under clause (i) of
this Section 3.12(c)) of the LLC Interests held by the Repurchased
Member, in each case, pursuant to the terms of this Section 3.12.
For purposes hereof, each LLC Repurchase and each Manager Member
Repurchase together with the related LLC Repurchase, if any, is
referred to as a "Repurchase."
(b) The closing of the Repurchase will take place on a date set
by the Manager Member (the "Repurchase Closing Date") which shall be after the
last day of the calendar quarter in which the Employee Stockholder's employment
with the LLC is terminated but which is not more than one hundred eighty (180)
days after the date on which the termination of the employment by the LLC of the
relevant Employee Stockholder occurred; provided, however, that (i) if the
employment by the LLC of such Employee Stockholder is terminated because of the
death or Permanent Incapacity of such Employee Stockholder, then the Repurchase
Closing Date shall be a date set by the Manager Member which is as soon as
reasonably practicable after the later of (A) one hundred eighty (180) days
after the death or Permanent Incapacity, as applicable, of such Employee
Stockholder or (B) ninety (90) days after the LLC has received the proceeds of
all key-man life insurance policies or disability insurance policies, as
applicable, maintained by the LLC on the life or health of such Employee
Stockholder.
(c) The purchase price for the Repurchase (the "Repurchase
Price") shall be determined as follows:
(i) If the Employee Stockholder's employment with the LLC is
terminated because of the death, Permanent Incapacity or
Retirement of the Employee Stockholder or if such Employee
Stockholder's employment with the LLC was terminated by the LLC on
such date other than For Cause, then the Repurchase Price shall
equal *** [The remainder of this subparagraph has been omitted
pursuant to the confidential treatment request referenced on the
cover page hereto. The omitted portion has been filed separately
with the Commission.] ***
(ii) In all other cases, (including, without limitation, the
resignation of an Employee Stockholder or the termination of such
Employee Stockholder For Cause or for Unsatisfactory Performance),
the Repurchase Price shall equal *** [The remainder of this
subparagraph has been omitted pursuant to the confidential
treatment request referenced on the cover page hereto. The omitted
portion has been filed separately with the Commission.] ***
If a Repurchase Price must be determined prior to ********** after the
Effective Date, then the amount of the LLC's Free Cash Flow for the portion of
the relevant ********** period
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before the Effective Date shall be calculated on a pro-forma basis such that the
Free Cash Flow of the LLC shall be deemed to be equal to ********** percent
(**%) of the Revenues From Operations of the LLC's predecessor, GeoCapital
Corporation attributable to the assets transferred to the LLC pursuant to the
Asset Transfer.
(d) The rights of AMG, the Manager Member, the LLC and their
assignees hereunder are in addition to and shall not affect any other rights
which AMG, the Manager Member, the LLC or their assigns may otherwise have to
repurchase LLC Interests (including, without limitation, pursuant to any
agreement entered into by an Additional Non-Manager Member which provides for
the vesting of LLC Points).
(e) On the Repurchase Closing Date, AMG and/or the LLC or their
respective assignees (as applicable) shall pay to the Repurchased Member the
Repurchase Price for the LLC Interests repurchased in the manner set forth in
this Section 3.12, and upon such payment the Repurchased Member shall cease to
hold any LLC Interests, and such Repurchased Member shall be deemed to have
withdrawn from the LLC and shall cease to be a Member of the LLC and shall no
longer have any rights hereunder; provided, however, that the provisions of this
Article III shall continue as set forth in Section 3.12 below. On the Repurchase
Closing Date, the Repurchased Member and the LLC (and if AMG is purchasing LLC
Interests from the Repurchased Member, AMG) (or their assignees) shall execute
an agreement reasonably acceptable to the Repurchased Member and the Manager
Member in which the Repurchased Member represents and warrants to the Manager
Member and/or AMG and/or the LLC, as applicable (or their assignees), that it
has sole record and beneficial title to the Repurchased Interest, free and clear
of any Encumbrances other than those imposed by this Agreement. Payment of the
Repurchase Price shall be made on the Repurchase Closing Date as follows: (i) in
the case of termination of employment because of death or Permanent Incapacity
(to the extent of the collected proceeds of any disability insurance policies
under which the LLC is the beneficiary upon the permanent incapacity of such
Employee Stockholder), by wire-transfer of immediately available funds to an
account designated by the Repurchased Member at least three (3) business days
prior to the Repurchase Closing Date, and (ii) in the case of any other
termination of employment other than a Retirement (but including a termination
of employment because of Permanent Incapacity to the extent the obligation
exceeds the proceeds of any key-man disability insurance policies described
above), (A) in the case of a termination by the LLC other than For Cause, on the
Repurchase Date; and (B) in the case of any other termination, on the later to
occur of (x) the Repurchase Date or (y) the date which is the first business day
after the fifth anniversary of the Effective Date (provided, that such
obligation shall bear interest at a rate equal to that set forth in Section 1(b)
of Exhibit B, from and after the Repurchase Date) provided that for each
Non-Manager Member that is not a Member as of the date of this Agreement, such
payment may be made with a promissory note in the form attached hereto as
Exhibit B, the principal of which promissory note would be paid in four (4)
equal (except as contemplated by Section 3.12(f)) installments, the first
installment would be paid (A) in the case of a termination by the LLC other than
For Cause, on the Repurchase Date; and (B) in the case of any other termination,
on the later to occur of (x) the Repurchase Date or (y) the date which is the
first business day after the fifth anniversary of the Effective Date, and the
second, third and fourth
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installments would be paid fourteen (14) months, twenty-six (26) months and
thirty-eight (38) months, respectively, after the first installment.
(f) If an Employee Stockholder's employment with the LLC is
terminated because such Employee Stockholder has resigned or was terminated For
Cause or for Unsatisfactory Performance, then the amounts of the second, third
and fourth installments of the promissory note set forth in Section 3.12(e)
above shall equal the lesser of (i) twenty-five percent (25%) of the Repurchase
Price (determined as set forth in Section 3.12(c) hereof) on the Repurchase
Closing Date, or (ii) twenty-five percent (25%) of the Repurchase Price,
determined as if the Repurchase Closing Date were taking place on the second,
third or fourth anniversary of the Repurchase Closing Date, respectively (in
each case, together with interest computed on the principal amount of such
promissory note (determined as set forth in this Section 3.12(f)) from the date
of issuance of such promissory note through the date of payment of such
installment as set forth on Exhibit B). At least forty-five (45) days prior to
the date an installment to which this Section 3.12(f) applies would be paid, the
Manager Member shall cause the LLC to certify to the Repurchased Member who is
to receive such installment, in writing, a calculation setting forth the amount
of such installment based on clauses (i) and (ii) in the preceding sentence.
Each Repurchased Member to whom this Section 3.12(f) applies, may defer receipt
of an installment on one (1) occasion, by written notice received by the LLC and
the Manager Member not less than fifteen (15) days prior to the date an
installment is due to be paid. If a Repurchased Member defers an installment,
the due date of each remaining installment of the promissory note issued to such
Repurchased Member pursuant to Section 3.12(e) above shall be extended by twelve
(12) months.
(g) AMG may assign and/or delegate any or all of its rights and
obligations under this Section 3.12, in one or more instances, to the Manager
Member; provided, however, that no such assignment or delegation shall relieve
AMG of its obligation to make payment of a Repurchase Price. AMG may, with a
Majority Vote (excluding, for purposes of determining such Majority Vote, the
Non-Manager Member whose interest is being repurchased), assign any or all of
its rights and obligations under this Section 3.12, in one or more instances, to
the LLC; provided, that (i) AMG shall guarantee the performance of such
obligations by the LLC, and (ii) the foregoing limitation shall have no effect
on the LLC's obligation set forth in Section 3.12(a)(i) regarding the use of the
proceeds of a key-man life or disability insurance policy.
(h) In the event that a Non-Manager Member or Employee Stockholder
(i) has filed a voluntary petition under the bankruptcy laws or a petition for
the appointment of a receiver or makes any assignment for the benefit of
creditors, (ii) is subject involuntarily to such a petition or assignment or to
an attachment or other legal or equitable interest with respect to any of its
LLC Interests or, in the case of an Employee Stockholder which is not a
Non-Manager Member, its interests in the Non-Manager Member which it owns, and
such involuntary petition or assignment or attachment is not discharged within
sixty (60) days after its effective date, or (iii) is subject to a transfer of
any of its LLC Interests or, in the case of an Employee Stockholder which is not
a Non-Manager Member, its interests in the Non-Manager Member which it owns, by
court order or decree or by operation of law, then AMG shall purchase all the
LLC Interests held by such Non-Manager Member (including the Non-Manager Member
through which such
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Employee Stockholder holds his or her interest in the LLC) pursuant to the terms
of this Section 3.12 as if such Non-Manager Member was a Repurchased Member with
the purchase price determined pursuant to Section 3.12(c)(ii) and the date of
the closing to be determined by the Manager Member in its discretion. In order
to give effect to clause (iii) of the foregoing, if any of the interests of a
Non-Manager Member in the LLC, or of an Employee Stockholder in a Non-Manager
Member, become subject to transfer (or purport to be or have been transferred)
by a court order or decree or by operation of law, the Non-Manager Member (whose
interest in the LLC or the interests in which are subject to such transfer)
shall cease to be a Member of the LLC, and the transferee by court order or
decree or by operation of law shall not become a Member, and AMG shall have the
right to purchase from the Non-Manager Member which has ceased to be a
Non-Manager Member, all his, her or its interest in the LLC as set forth in the
preceding sentence.
(i) In the event that a Non-Manager Member is required to sell its
LLC Interests pursuant to the provisions of this Section 3.12, and in the
further event that such Non-Manager Member refuses to, is unable to, or for any
reason fails to, execute and deliver the agreements required by this Section
3.12, the LLC or AMG, as applicable (or their respective assigns) may deposit
the purchase price, if any, therefor (including cash and/or promissory notes)
with any bank doing business within fifty (50) miles of the LLC's principal
place of business, or with the LLC's accounting firm, as agent or trustee, or in
escrow, for the Non-Manager Member, to be held by such bank or accounting firm
for the benefit of and for delivery to such Non-Manager Member. Upon such
deposit by the LLC or AMG (or their respective assigns) and upon notice thereof
given to the Non-Manager Member, such Non-Manager Member's LLC Interests shall
be deemed to have been sold, transferred, conveyed and assigned to the LLC or
AMG (or their assigns), as applicable, the Non-Manager Member shall have no
further rights with respect thereto (other than the right to withdraw the
payment therefor, if any, held in escrow), and the Manager Member shall record
such transfer or repurchase on Schedule A hereto.
SECTION 3.13 NO EMPLOYMENT OBLIGATION. Each Non-Manager Member and each
Employee Stockholder acknowledges that neither this Agreement nor the provisions
of the Non Solicitation Agreement creates an obligation on the part of the LLC
to continue the employment of an Employee Stockholder with the LLC, and that
such Employee Stockholder, unless he or she is a party to an Employment
Agreement, is an employee at will of the LLC.
SECTION 3.14 MISCELLANEOUS. Each Member and each Employee Stockholder
agrees that the enforcement of the provisions of Sections 3.8, 3.9, 3.10, and
3.12 hereof, and the enforcement of the provisions of the Employment Agreements
and Non Solicitation Agreements are necessary to ensure the protection and
continuity of the business, goodwill and confidential business information of
the LLC for the benefit of each of the Members. Each Member and each Employee
Stockholder agrees that, due to the proprietary nature of the LLC's business,
the restrictions set forth in Section 3.9 hereof and in the Employment
Agreements and the Non Solicitation Agreements are reasonable as to duration and
scope. If any provision contained in this Article III shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Article III. It is the intention of the parties hereto that if any of the
restrictions or covenants contained herein is held
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to cover a geographic area or to be for a length of time that is not permitted
by applicable law, or is any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would then be valid or enforceable
under applicable law, such provision shall be construed and interpreted or
reformed to provide for a restriction or covenant having the maximum enforceable
geographic area, time period and other provisions as shall be valid and
enforceable under applicable law.
Each Member and Employee Stockholder acknowledges that the obligations
and rights under Sections 3.8, 3.9, 3.10, 3.11 and 3.12 and this Section 3.14
shall survive the termination of the employment of an Employee Stockholder with
the LLC and/or the withdrawal or removal of a Member from the LLC, regardless of
the manner of such termination, withdrawal or removal in accordance with the
provisions hereof and of the relevant Employment or Non Solicitation Agreement.
Moreover, each Member agrees that the remedies provided herein, are reasonably
related to the anticipated loss that the LLC and the Members (including, without
limitation, the Manager Member which would be purchasing LLC Interests from a
Non-Manager Member) would suffer upon a breach of such provisions. Except as
agreed to by the Manager Member, in advance, in a writing making specific
reference to this Article III, no Employee Stockholder or Non-Manager Member
shall enter into any agreement or arrangement which is inconsistent with the
terms and provisions hereof.
SECTION 3.15 CAPITALIZATION OF EXCESS OPERATING CASH FLOW. At any time
the Management Board believes that the Operating Cash Flow of the LLC will
exceed the actual expenses of the LLC (taking into account business conditions
at the time and including both a reasonable allowance for executive compensation
increases, and a reasonable allowance for either a loss of business or a change
in margins in the business) at the request of the Management Board,
representatives of the Manager Member shall meet with the Management Board for
the purpose of considering an appropriate means to permit the Non-Manager
Members to utilize such excess Operating Cash Flow, while retaining sufficient
Operating Cash Flow (including reserves) to operate the business of the LLC
consistent with past practices. Such appropriate means may include (but shall
not be limited to) the following: an increase in the percentage of Revenues from
Operations that constitutes Free Cash Flow (together with the grant of put
rights applicable to such adjusted Free Cash Flow on terms comparable to those
set forth in Article VII), the purchase of all or a portion of any excess by AMG
or the Manager Member (or its designee(s)) on terms comparable to the terms set
forth in Article VII with respect to Puts or Section 3.10 with respect to
Repurchases or any combination of the foregoing.
ARTICLE IV - CAPITAL CONTRIBUTIONS;
CAPITAL ACCOUNTS AND ALLOCATIONS; DISTRIBUTIONS.
SECTION 4.1 CAPITAL CONTRIBUTIONS.
(a) On ________, 1997, GeoCapital Corporation contributed to the
LLC certain of its assets, properties, rights, powers, privileges and business
(and the goodwill associated therewith), and the Members agree that such Capital
Contribution had a value of $24,000,000.
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Except as may be agreed to in connection with the issuance of additional LLC
Points, as specifically set forth herein, or as may be required under applicable
law, the Members shall not be required to make any further contributions to the
LLC. No Member shall make any contribution to the LLC without the prior consent
of the Manager Member.
(b) No Member shall have the right to withdraw any part of his,
her or its (or their predecessors in interest) Capital Contribution until the
dissolution and winding up of the LLC, except as distributions pursuant to this
Article IV may represent returns of capital, in whole or in part. No Member
shall be entitled to receive any interest on any Capital Contribution made by it
(or its predecessors in interest) to the LLC. No Member shall have any personal
liability for the repayment of any Capital Contribution of any other Member.
(c) Simultaneous with the effectiveness of this Agreement,
Merger Sub is acquiring by means of the Merger all of the right, title and
interest of GeoCapital Corporation in and to interests in the LLC (including all
Capital Account and LLC Points and other LLC Interests), and GeoCapital
Corporation is merging with and into Merger Sub and will cease to exist.
SECTION 4.2 CAPITAL ACCOUNTS; ALLOCATIONS.
(a) There shall be established for each Member a Capital
Account (a "Capital Account") which, in the case of each Member, shall initially
be equal to the Capital Contribution of such Member as set forth on Schedule A
hereto.
(b) The Capital Account of each Member shall be adjusted in the
following manner. Each Capital Account shall be increased by such Member's
allocable share of income and gain, if any, of the LLC (as well as the Capital
Contributions made by a Member after the Effective Date) and shall be decreased
by such Member's allocable share of deductions and losses, if any, of the LLC
and by the amount of all distributions made to such Member. The amount of any
distribution of assets other than cash shall be deemed to be the Fair Market
Value of such assets (net of any liabilities encumbering such property that the
distributee Member is considered to assume or take subject to). Capital Accounts
shall also be adjusted upon the issuance of additional LLC Interests as set
forth in Section 5.5(c) and upon the redemption of LLC Interests.
(c) Subject to Sections 4.2(e), 4.2(g) and 4.5 hereof, all
items of LLC income and gain shall be allocated among the Members' Capital
Accounts at the end of every quarter as follows: *** [The remainder of this
subsection (approximately 2 pages) has been omitted pursuant to the confidential
treatment request referenced on the cover page hereto. The omitted portion has
been filed separately with the Commission.] ***
SECTION 4.3 DISTRIBUTIONS.
**************** [This section (approximately 1 and 1/2 pages) has
been omitted pursuant to the confidential treatment request referred to on the
cover page hereto. The omitted portions have been filed separately with the
Commission.]***************
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SECTION 4.4 DISTRIBUTIONS UPON DISSOLUTION; ESTABLISHMENT OF A RESERVE
UPON DISSOLUTION. Upon the dissolution of the LLC, after payment (or the making
of reasonable provision for the payment) of all liabilities of the LLC owing to
creditors, the Manager Member, or if there is none, the Liquidating Trustee
appointed as set forth in Section 8.4 hereof, shall set up such reserves as it
deems reasonably necessary for any contingent, conditional or unmatured
liabilities or other obligations of the LLC. Such reserves may be paid over by
the Manager Member or Liquidating Trustee to a bank (or other third party), to
be held in escrow for the purpose of paying any such contingent, conditional or
unmatured liabilities or other obligations. At the expiration of such period(s)
as the Manager Member or Liquidating Trustee may deem advisable, such reserves,
if any (and any other assets available for distribution), or a portion thereof,
shall be distributed to the Members (i) in accordance with (and in proportion
to) the positive balance (if any) in their respective Capital Accounts (as
determined immediately prior to each such distribution) until all such positive
Capital Account balances have been reduced to zero, and (ii) thereafter, among
the Members as of the date of dissolution in accordance with their respective
numbers of LLC Points as of the date of dissolution. If any assets of the LLC
are to be distributed in kind in connection with such liquidation, such assets
shall be distributed on the basis of their Fair Market Value net of any
liabilities encumbering such assets and, to the greatest extent possible, shall
be distributed pro-rata in accordance with the total amounts to be distributed
to each Member. Immediately prior to the effectiveness of any such
distribution-in-kind, each
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item of gain and loss that would have been recognized by the LLC had the
property being distributed been sold at Fair Market Value shall be determined
and allocated to those persons who were Members immediately prior to the
effectiveness of such distribution in accordance with Section 4.2(d).
SECTION 4.5 PROCEEDS FROM CAPITAL CONTRIBUTIONS AND THE SALE OF
SECURITIES; INSURANCE PROCEEDS; CERTAIN SPECIAL ALLOCATIONS.
(a) Capital Contributions made by any Member after the
Effective Date, and other proceeds from the issuance of securities by the LLC
may, in the sole discretion of the Manager Member, be used for the benefit of
the LLC (including, without limitation, the repurchase or redemption of LLC
Interests), or, may be distributed by the LLC, in which case, any such proceeds
shall be allocated and distributed among the Members in accordance with their
respective LLC Points immediately prior to the date of such contribution or
issuance of securities; it being understood that in the case the proceeds are a
note receivable, any such distribution shall only occur, if at all, upon receipt
by the LLC of any cash in respect thereof.
(b) In the event of the death or Permanent Incapacity of an
Employee Stockholder covered by key-man life or disability insurance, as
applicable, the premiums on which have been paid by the LLC, the proceeds of any
such policy shall first be used by the LLC to fund (to the extent thereof) the
Repurchase of LLC Interests from the Employee Stockholder or Non-Manager Member
through which such Employee Stockholder holds or held his or her interest in the
LLC in accordance with Section 3.12 hereof and, if the proceeds exceed the
amounts so required to effect such Repurchase, then the amount of such excess
proceeds may, in the sole discretion of the Manager Member, be used for the
benefit of the LLC, or, may be distributed by the LLC, in which case, any such
proceeds shall be allocated and distributed among the Members in accordance with
their respective LLC Points immediately following the Repurchase of the LLC
Interests from such Non-Manager Member.
(c) Items of depreciation or amortization (as calculated for
book purposes in accordance with generally accepted accounting principles,
consistently applied) on account of the property of the LLC on the Effective
Date, shall be specially allocated to the Manager Member. All items of
depreciation or amortization (as calculated for book purposes in accordance with
generally accepted accounting principles, consistently applied) on account of
property purchased out of Operating Cash Flow shall be allocated as set forth in
Section 4.2(c)(iii), and all items of depreciation or amortization (as
calculated for book purposes in accordance with generally accepted accounting
principles, consistently applied) on account of property purchased out of Free
Cash Flow shall be allocated among the Members in accordance with their
respective numbers of LLC Points on the date the property was purchased.
SECTION 4.6 FEDERAL TAX ALLOCATIONS. The Manager Member shall, in its
sole discretion, allocate the ordinary income and losses and capital gains and
losses of the LLC as determined for U.S. Federal income tax purposes (and each
item of income, gain, loss, deduction or credit entering into the computation
thereof), as the case may be, among the Members for tax purposes in a manner
that, to the greatest extent possible: (a) reflects the economic arrangement
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of the Members under this Agreement (determined after taking into account the
allocation provisions of Sections 4.2, 4.4 and 4.5 hereof, and the distribution
provisions of Sections 4.3, 4.4 and 4.5 hereof) and (b) is consistent with the
principles of Sections 704(b) and 704(c) of the Code. The Members understand and
agree that, with respect to any item of property (other than cash) contributed
(or deemed to be contributed for U.S. federal income tax purposes) by a Member
to the capital of the LLC, the initial tax basis of such property in the hands
of the LLC will be the same as the tax basis of such property in the hands of
such Member at the time so contributed. The Members further understand and agree
that the taxable income and taxable loss of the LLC is to be computed for
Federal income tax purposes by reference to the initial tax basis to the LLC of
any assets and properties contributed by the Members (and not by reference to
the fair market value of such assets and properties at the time contributed).
The Members also understand that, pursuant to Section 704(c) of the Code, all
taxable items of income, gain, loss and deduction with respect to such assets
and properties shall be allocated among the Members for Federal income tax
purposes so as to take account of any difference between the initial tax basis
of such assets and properties to the LLC and their fair market values at the
time contributed, using any method authorized by the Income Tax Regulations
under Section 704(c) and selected by the Manager Member, in its sole discretion.
For purposes of maintaining the Capital Accounts of the Members, items of
income, gain, loss and deduction relating to any asset or property contributed
to the LLC that are required to be allocated for tax purposes pursuant to
Section 704(c) of the Code shall not be reflected in the Capital Accounts of the
Members.
ARTICLE V - TRANSFER OF LLC INTERESTS BY NON-MANAGER
MEMBERS; RESIGNATION, REDEMPTION AND WITHDRAWAL BY
NON-MANAGER MEMBERS;
ADMISSION OF ADDITIONAL NON-MANAGER MEMBERS.
SECTION 5.1 ASSIGNABILITY OF INTERESTS. No interest of a Non-Manager
Member in the LLC may be sold, assigned, transferred, gifted or exchanged, nor
may any Non-Manager Member offer to do any of them (each, a "Transfer"), nor may
any interest in any Non-Manager Member be Transferred, nor may any stockholder
in any Non-Manager Member which is not an individual offer to do any of them,
and no Transfer by a Non-Manager Member or stockholder of a Non-Manager Member
shall be binding upon the LLC or any Non-Manager Member unless it is expressly
permitted by this Article V and the Manager Member receives an executed copy of
the documents effecting such Transfer, which shall be in form and substance
reasonably satisfactory to the Manager Member. The assignee of such interest in
the LLC may become a substitute Non-Manager Member only upon the terms and
conditions set forth in Section 5.2. If an assignee or transferee of an interest
of a Non-Manager Member in the LLC does not become (and until any such assignee
or transferee becomes) a substitute Non-Manager Member, in accordance with the
provisions of Section 5.2, such Person shall not be entitled to exercise or
receive any of the rights, powers or benefits of a Non-Manager Member other than
the right to receive distributions which the assigning Non-Manager Member has
sold, transferred or assigned to such Person. No Non-Manager Member's interest
in the LLC or, in the case of a Non-Manager Member which is not an individual,
none of the direct and indirect interests of a beneficial owner of such
Non-Manager Member, may be Transferred except:
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(a) with the prior written consent of the Manager Member, which
consent may be granted or withheld by the Manager Member in its sole discretion;
(b) upon the death of such beneficial owner, their interests in
the LLC or in the Non-Manager Member may be Transferred by will or the laws of
descent and distribution (subject, in all cases, to the provisions of Section
3.12 hereof); and
(c) a Non-Manager Member (and its beneficial owners) may Transfer
interests in the LLC or in such Non-Manager Member to members of his or her
Immediate Family (or trusts for their benefit and of which the beneficial owner
is the settlor and/or trustee, provided that any such trust does not require or
permit distribution of such interests).
provided, that in the case of (b) or (c) above, (i) the transferee enters into
an agreement with the LLC agreeing to be bound by the provisions hereof (and if
such transferee is not already a party to a Non Solicitation Agreement, the
transferee enters into a Non Solicitation Agreement) (to the extent such Person
then would hold any interest in the LLC), and (ii) whether or not the transferee
enters into such an agreement, such LLC Interests, and interests in such
Non-Manager Member, shall thereafter remain subject to this Agreement (and, if
applicable, the relevant Non Solicitation Agreement) to the same extent they
would be if held by such Non-Manager Member or beneficial owner, as applicable.
Notwithstanding the foregoing, no Non-Manager Member's interest in the LLC may
be Transferred if, giving effect to such Transfer, the total number of Members
of the LLC would exceed one hundred (100) (as determined in accordance with
Treasury Regulation Section 1.7704-1(h)(3), which provides, in general, that
under certain circumstances a Person owning an interest in (A) a partnership for
federal income tax purposes, (B) a "grantor trust," any portion of which is
treated as owned by the grantor(s) or other person(s) under sections 671-679 of
the Code, or (C) an "S corporation" within the meaning of section 1361(a) of the
Code (each, a "flow-through entity") that owns, directly or through other
flow-through entities, an interest in the LLC shall be treated as a Member),
unless either such Transfer is a Transfer described in Treasury Regulation
Section 1.7704-1(e) or such Transfer is pursuant to a Put right under Article
VII and the sum of the percentage interests in profits or capital of the LLC
Transferred during the taxable year of the LLC (other than in Transfers
described in Treasury Regulation Section 1.7704-1(e)) would, taking the Transfer
in question into account and assuming the maximum exercise of the Non-Manager
Members' Put rights under Article VII, exceed ten percent (10%) of the total
interests in profits or capital of the LLC.
For all purposes of this LLC Agreement, any Transfers of LLC Interests
shall be deemed to occur as of the end of the last day of the calendar month in
which any such Transfer would otherwise have occurred. Upon any Transfer of LLC
Interests, the Manager Member shall make the appropriate revisions to Schedule A
hereto.
No interests of a Non-Manager Member in the LLC may be pledged,
hypothecated, optioned or encumbered, nor may any interests in a Non-Manager
Member be pledged, hypothecated, optioned or encumbered, nor may any offer to do
any of the foregoing be made.
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SECTION 5.2 SUBSTITUTE NON-MANAGER MEMBERS. No transferee of interests
of a Non-Manager Member shall become a Member except in accordance with this
Section 5.2. The Manager Member may admit, in its sole discretion as a
substitute Non-Manager Member (with respect to all or a portion of the LLC
Interests held by a Person), any Person that acquires an LLC Interest by
Transfer from another Non-Manager Member pursuant to Section 5.1 hereof, or that
acquires an LLC Interest from the Manager Member pursuant to Section 6.1 hereof.
The admission of an assignee as a substitute Non-Manager Member shall, in all
events, be conditioned upon the execution of an instrument satisfactory to the
Manager Member whereby such assignee becomes a party to this Agreement as a
Non-Manager Member as well as compliance by such assignee with the provisions of
Section 3.6 hereof. Upon the admission of a substitute Non-Manager Member, the
Manager Member shall make the appropriate revisions to Schedule A hereto.
SECTION 5.3 ALLOCATION OF DISTRIBUTIONS BETWEEN ASSIGNOR AND ASSIGNEE;
SUCCESSOR TO CAPITAL ACCOUNTS. Upon the Transfer of an LLC Interest pursuant to
this Article V, distributions pursuant to Article IV shall be made to the Person
owning the LLC Interest at the date of distribution, unless the assignor and
assignee otherwise agree and so direct the LLC and the Manager Member in a
written statement signed by both the assignor and assignee. In connection with a
Transfer by a Member of LLC Points, the assignee shall succeed to a pro-rata
(based on the percentage of such Person's LLC Points transferred) portion of the
assignor's Capital Account, unless the assignor and assignee otherwise agree and
so direct the LLC and the Manager Member in a written statement signed by both
the assignor and assignee and consented to by the Manager Member.
SECTION 5.4 RESIGNATION, REDEMPTIONS AND WITHDRAWALS. No Non-Manager
Member shall have the right to resign, to cause the redemption of its interest
in the LLC, in whole or in part, or to withdraw from the LLC, except (a) with
the consent of the Manager Member, (b) as is expressly provided for in Section
3.12 hereof; or (c) as is expressly provided for in Section 7.1 hereof. Upon any
resignation, redemption or withdrawal, the Non-Manager Member shall only be
entitled to the consideration, if any, provided for by Section 3.12 or Section
7.1 hereof, if and to the extent that one of such Sections is applicable. Upon
the resignation, redemption or withdrawal, in whole or in part, by a Non-Manager
Member, the Manager Member shall make the appropriate revisions to Schedule A
hereto.
SECTION 5.5 ISSUANCE OF ADDITIONAL LLC INTERESTS.
(a) Additional Non-Manager Members (the "Additional Non-Manager
Members" and each an "Additional Non-Manager Member") may be admitted to the LLC
and such Additional Non-Manager Members may be issued LLC Points, only upon
receipt of a Majority Vote and the consent of the Manager Member and upon such
terms and conditions as may be established by the Manager Member with a Majority
Vote (including, without limitation, upon such Additional Non-Manager Member's
execution of an instrument satisfactory to the Manager Member whereby such
Person becomes a party to this Agreement as a Non-Manager Member as well as such
Person's compliance with the provisions of Section 3.6 hereof).
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(b) Existing Non-Manager Members may be issued additional LLC
Points (or other LLC Interests), only by the LLC with the consent of, and upon
such terms and conditions as may be established by, the Manager Member. The
Manager Member may only be issued new additional LLC Points (or other LLC
Interests) upon the receipt of a Majority Vote.
(c) Each time additional LLC Interests are issued (including,
without limitation, additional LLC Points), the Capital Accounts of all the
Members shall be adjusted as follows: (i) the Manager Member shall determine the
proceeds which would be realized if the LLC sold all its assets at such time for
a price equal to the Fair Market Value of such assets, and (ii) the Manager
Member shall allocate amounts equal to the gain or loss which would have been
realized upon such a sale to the Capital Accounts of all the Members immediately
prior to such issuance in accordance with Section 4.2(d) hereof.
(d) Upon the issuance of additional LLC Interests, the Manager
Member shall make the appropriate revisions to Schedule A hereto.
(e) Notwithstanding anything in this Agreement to the contrary,
(i) no additional LLC Interests may be issued if, giving effect to such
Transfer, the total number of Members would exceed one hundred (100) as
determined in accordance with Treasury Regulation Section 1.7704-1(h)(3)) and
(ii) no LLC Interests may be issued (A) in a transaction that is required to be
registered under the Securities Act or (B) in a transaction that is not required
to be registered under the Securities Act by reason of Regulation S thereunder
unless the offering and sale of the LLC Interests would not have been required
to be registered under the Securities Act if the LLC Interests had been offered
and sold within the United States.
SECTION 5.6 ADDITIONAL REQUIREMENTS. As additional conditions to the
validity of (x) any Transfer of a Non-Manager Member's interest in the LLC (or,
in the case of a Non-Manager Member which is not an individual, the interests of
the direct and indirect beneficial owners of such Non-Manager Member) (pursuant
to Section 5.1 above), or (y) the issuance of additional LLC Interests (pursuant
to Section 5.5 above), such Transfer or issuance shall not: (i) violate the
registration provisions of the Securities Act or the securities laws of any
applicable jurisdiction, (ii) cause the LLC to become subject to regulation as
an "investment company" under the 1940 Act, and the rules and regulations of the
SEC thereunder, including by resulting in there being one hundred (100) or more
beneficial holders of interests in the LLC, (iii) result in the termination of
any contract to which the LLC is a party and which individually or in the
aggregate are material (it being understood and agreed that any contract
pursuant to which the LLC provides Investment Management Services is material),
or (iv) result in the treatment of the LLC as an association taxable as a
corporation or as a "publicly traded partnership" for Federal income tax
purposes.
The Manager Member may require reasonable evidence as to the foregoing,
including, without limitation, a favorable opinion of counsel, which expense
shall be borne by the parties to such transaction (and to the extent the LLC is
such a party, shall be paid from Operating Cash Flow).
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To the fullest extent permitted by law, any Transfer that violates the
conditions of this Section 5.6 shall be null and void.
SECTION 5.7 REPRESENTATION OF MEMBERS. The Manager Member and each
Non-Manager Member (including each Additional Non-Manager Member) hereby
represents and warrants to the LLC and each other Member, and acknowledges, that
(a) it has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of an investment in the LLC and
making an informed investment decision with respect thereto, (b) it is able to
bear the economic and financial risk of an investment in the LLC for an
indefinite period of time, (c) it is acquiring an interest in the LLC for
investment only and not with a view to, or for resale in connection with, any
distribution to the public or public offering thereof, (d) the equity interests
in the LLC have not been registered under the securities laws of any
jurisdiction and cannot be disposed of unless they are subsequently registered
and/or qualified under applicable securities laws and the provisions of this
Agreement have been complied with, and (e) the execution, delivery and
performance of this Agreement by such Member do not require it to obtain any
consent or approval that has not been obtained and do not contravene or result
in a default under any provision of any existing law or regulation applicable to
it, any provision of its charter, by-laws or other governing documents or any
agreement or instrument to which it is a party or by which it is bound.
ARTICLE VI - TRANSFER OF LLC INTERESTS BY THE
MANAGER MEMBER; REDEMPTION, REMOVAL
AND WITHDRAWAL
SECTION 6.1 ASSIGNABILITY OF INTEREST.
(a) Except as set forth in this Section 6.1, without a Majority
Vote the Manager Member's interest in the LLC may not be Transferred; provided,
however, (i) it is understood and agreed that, in connection with the operation
of the business of AMG and the Manager Member (including, without limitation,
the financing of its interest herein and direct or indirect interests in
additional investment management companies), the Manager Member's interest in
the LLC will be pledged and encumbered and lien holders of the Manager Member's
interest shall have and be able to exercise the rights of secured creditors with
respect to such interest, (ii) the Manager Member may sell some (but not all or
substantially all) of its LLC Interests to a Person who is not a Member but who
is an Officer or employee of the LLC or who becomes an Officer or employee of
the LLC in connection with such issuance, or a Person wholly owned by any such
Person, (iii) the Manager Member may sell some (but not all or substantially
all) of its LLC Interests to existing Non-Manager Members, and (iv) the Manager
Member may sell all or any portion of its LLC Interests to an Affiliate of the
Manager Member. Notwithstanding the foregoing, the Manager Member's interest in
the LLC may not be Transferred if, giving effect to such Transfer, the total
number of Members of the LLC would exceed one hundred (100) (as determined in
accordance with Treasury Regulation Section 1.7704-1(h)(3), which provides, in
general, that under certain circumstances a Person owning an interest in (A) a
partnership for federal income tax purposes, (B) a "grantor trust," any portion
of which is treated as owned by the grantor(s) or other
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person(s) under sections 671-679 of the Code, or (C) an "S corporation" within
the meaning of section 1361(a) of the Code (each, a "flow-through entity") that
owns, directly or through other flow-through entities, an interest in the LLC
shall be treated as a Member), unless such Transfer is a Transfer described in
Treasury Regulation Section 1.7704-1(e). Notwithstanding anything else set forth
herein, the Manager Member may, with a Majority Vote, sell or transfer as a
result of a merger or consolidation all its interests in the LLC in a single
transaction or a series of related transactions, and, in any such case, each of
the Non-Manager Members shall be required to sell or transfer, in the same
transaction or transactions, all their interests in the LLC; provided, that the
price to be received by all the Members shall be allocated among the Members as
follows: (a) an amount equal to the sum of the positive balances, if any, in
positive Capital Accounts shall be allocated among the Members having such
Capital Accounts in proportion to such positive balances, and (b) the excess, if
any, shall be allocated among all Members in accordance with their respective
number of LLC Points at the time of such sale. Upon any of the foregoing
transactions, the Manager Member shall make the appropriate revisions to
Schedule A hereto.
(b) In the case of any transfer upon foreclosure pursuant to
Section 6.1(a)(i) above, each transferee shall sign a counterpart signature page
to this Agreement agreeing thereby to become either a Non-Manager Member or a
Manager Member (provided, however, that once one such other transferee elects to
become a Manager Member, no transferee (other than a subsequent transferee of
such new Manager Member) may elect to be a Manager Member hereunder). If the
transferees pursuant to Section 6.1(a)(i) above receive all the Manager Member's
LLC Interests, and none of such transferees elects to become a Manager Member,
then that shall be deemed to be an event of withdrawal by the Manager Member.
If, however, one of the transferees elects to become a Manager Member, and
executes a counterpart signature page to this Agreement agreeing thereby to
become a Manager Member, then notwithstanding any other provision hereof to the
contrary, the old Manager Member shall thereupon be permitted to withdraw from
the LLC as Manager Member.
(c) In the case of a transfer pursuant to the penultimate
sentence of Section 6.1(a) above, the Manager Member shall be deemed to have
withdrawn, and its transferee shall be deemed to have become the Manager Member.
SECTION 6.2 RESIGNATION, REDEMPTION, AND WITHDRAWAL. To the fullest
extent permitted by law, except as set forth in Section 6.1, without a prior
Majority Vote, the Manager Member shall not have the right to resign or withdraw
from the LLC as Manager Member. With a prior Majority Vote, the Manager Member
may resign or withdraw as Manager Member upon prior written notice to the LLC.
Without a prior Majority Vote, the Manager Member shall have no right to have
all or any portion of its interest in the LLC redeemed. Any resigned, withdrawn
or removed Manager Member shall retain its interest in the capital of the LLC
and its other economic rights under this Agreement as a Non-Manager Member
having the number of LLC Points held by the Manager Member prior to its
resignation, withdrawal or removal. If a Manager Member who has resigned,
withdrawn or been removed no longer has any economic interest in the LLC, then
upon such resignation, withdrawal or removal such Person shall cease to be a
Member of the LLC.
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ARTICLE VII - PUT OF LLC INTERESTS
SECTION 7.1 MANDATORY PUTS.
(a) Each Non-Manager Member may, at such Non-Manager Member's
option, subject to the terms and conditions set forth in this Section 7.1, cause
AMG to purchase portions of the LLC Points held by such Non-Manager Member in
the LLC (a "Put").
(b) Each Non-Manager Member (other than Xx. Xxxxx Xxxxxx or
Xx. Xxxxx X. Xxxxxxxxx or their Related Non-Manager Members and their
respective Permitted Transferees) may, subject to the terms and conditions set
forth in this Agreement, cause AMG to purchase up to ten percent (10%) of the
Initial LLC Points of such Non-Manager Member from such Non-Manager Member
(and/or any Permitted Transferee of such Non-Manager Member), on the last
business day in September (each a "Purchase Date") (but only up to an aggregate
of fifty (50%) of such Non-Manager Member's Initial LLC Points) starting with
the last business day in September, 2002 and ending with the last business day
in September, 2012.
(c) Xx. Xxxxx Xxxxxx (and each of his Related Non-Management
Members) and any of their respective Permitted Transferees may cause AMG to
purchase from them collectively twenty-five percent (25%) of the Initial LLC
Points of Xx. Xxxxx Xxxxxx (and his Related Non-Management Members), on the
Purchase Date occurring on the last business day in September, 2001 or any
Purchase Date thereafter. Xx. Xxxxx X. Xxxxxxxxx and each of his Related
Non-Management Members) and any of their respective Permitted Transferees may
cause AMG to purchase from them collectively twenty percent (20%) of the
Initial LLC Points of Xx. Xxxxx X. Xxxxxxxxx (and his Related Non-Manager
Members), on the Purchase Date occurring on the last business day in September,
2002 or any Purchase Date thereafter.
(d) If a Non-Manager Member desires to exercise its rights
under Section 7.1(b) or 7.1(c) above, it and its Employee Stockholder shall give
the Manager Member, AMG, each other Employee Stockholder and the LLC irrevocable
written notice (a "Put Notice") on or prior to the preceding May 31 (the "Notice
Deadline"), stating that it is electing to exercise such rights and the number
of LLC Points (the "Put LLC Points") to be sold in the Put. Puts in any given
calendar year for which Put Notices are received before the Notice Deadline for
that calendar year shall be completed as follows: AMG shall purchase from each
Non-Manager Member (and his (or its) Related Non-Manager Members) and their
respective Permitted Transferees that number of Put LLC Points as is equal to
the number of Put LLC Points designated in the Put Notice, up to the maximum
number permitted by Section 7.1(b) or Section 7.1(c) above with respect to that
year and the aggregate number of Initial LLC Points that may be Put by the
Non-Manager Member (and his (or its) Related Non-Manager Members) and their
respective Permitted Transferees.
(e) The purchase price for a Put (the "Put Price") shall be an
amount equal to *** [The remainder of this subsection has been omitted pursuant
to the confidential treatment request referenced on the cover page hereto. The
omitted portion has been filed separately with the Commission.] ***
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(f) In the case of any Put pursuant to the provisions of
Section 7.1(b) hereof, the Put Price shall be paid by AMG (or, if AMG shall have
assigned its obligation to the Manager Member or the LLC pursuant to paragraph
(h) below, the Manager Member or the LLC) (or their respective assigns) on the
relevant Purchase Date by certified check issued to such Non-Manager Member, in
each case, against delivery of such documents or instruments of transfer as may
reasonably be requested by AMG, the Manager Member or the LLC, as applicable,
and in each case including representations that the transferring Non-Manager
Member is the record and beneficial owner of the LLC Interests being Put, free
and clear of any Encumbrances other than those imposed by this Agreement. In the
case of any Put pursuant to the provisions of Section 7.1(c) hereof: (i) if AMG
has, at that time, not completed a registration of shares of its common stock
for sale under the Securities Act (other than a registration on Form S-8 (or its
then equivalent form) or a registration affected solely to implement an employee
benefit plan, a transaction under Rule 145 or to which any other similar rule of
the SEC under the Securities Act is applicable or registration on a form not
available for registering securities for sale to the public) (a "Public
Offering"), then the Put Price shall be paid by AMG (or, if AMG shall have
assigned its obligations to the Manager Member or the LLC pursuant to paragraph
(h) below, the Manager Member or the LLC) (or their respective assigns) on the
relevant Purchase Date by certified check issued to such Non-Manager Member, or
(ii) if AMG has, at that time, completed a Public Offering, then the Put Price
shall be paid by AMG on the relevant Purchase Date by issuing to such
Non-Manager Member, that number of shares of AMG Stock (as such term is defined
in Section 7.2(a) hereof) as is equal to the Put Price divided by AMG's Average
Stock Price (as such term is defined in Section 7.2(c) hereof) on the relevant
Purchase Date.
(g) Notwithstanding any other provision of this Section 7.1 to
the contrary, no purchase by AMG pursuant to this Section 7.1 (or, upon
assignment of any of AMG's obligations to the Management Member or the LLC
pursuant to paragraph (h) hereof, purchase by the Manager Member or redemption
by the LLC) shall occur if it would result in the Manager Member and AMG (taken
together) owning, directly or indirectly, in excess of eighty percent (80%)
of the LLC Points outstanding after giving effect to any such sale or
redemption. If some, but not all, of the LLC Points which Non-Manager Members
have requested be purchased can be so purchased without the Manager Member's and
AMG's (taken together) ownership, directly or indirectly, exceeding eighty
percent (80%) of the outstanding LLC Points, then AMG or the Manager Member
shall purchase, or shall assign their obligations to the LLC, and the LLC shall
redeem, LLC Points from the Non-Manager Members having Put LLC Interests in
proportion to the LLC Points then held by such Non-Manager Members up to the
maximum extent that would not cause the Manager Member and AMG (taken together)
to own, directly or indirectly, in excess of eighty percent (80%) of the
outstanding LLC Points (in each case, subject to the maximum amount set forth in
Sections 7.1(b), 7.1(c) and 7.1(d) hereof).
(h) AMG may assign and/or delegate any or all of its rights and
obligations to purchase LLC Points under this Section 7.1, in one or more
instances, to the Manger Member; provided that no such assignment or delegation
shall relieve AMG of its obligation to make the payment for a Put as required by
this Section 7.1 (or the method of payment (i.e., AMG Stock) to be used). The
Manager Member may, only with a Majority Vote, assign any or all of its rights
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and obligations to purchase LLC Points under this Section 7.1, in one or more
instances, to the LLC.
(i) As of any Purchase Date, the Non-Manager Member shall cease
to hold the LLC Points purchased on the Purchase Date, and shall cease to hold a
pro-rata portion of such Non-Manager Member's Capital Account and shall no
longer have any rights with respect to such portion of its LLC Interests.
SECTION 7.2 ELECTION RIGHTS OF NON-MANAGER MEMBERS TO RECEIVE AMG
STOCK.
(a) If AMG has, at the time of a Put, completed a Public
Offering, then the Non-Manager Member which is exercising a Put may elect to
cause AMG to pay all or a portion of the Put Price (as such term is defined in
Section 7.1(e) above) for the relevant Put in shares of AMG's Common Stock, $.01
par value per share (the "AMG Stock") in accordance with the provisions of this
Section 7.2. If the Non-Manager Member elects to cause AMG to pay a portion of
the Put Price in shares of AMG Stock in accordance with the provisions of this
Section 7.2, the portion of the consideration which is paid in AMG Stock shall
reduce the cash portion of the Put Price pursuant to Section 7.1(e) and shall
eliminate any obligation to make any payments under Section 7.1(f).
(b) An election under this Section 7.2 must be made by the
Non-Manager Member at least sixty (60) days prior to the relevant Purchase Date,
by giving written notice to the LLC, AMG and the Manager Member of such
election, which election, once made, shall be irrevocable without the prior
written consent of AMG.
(c) The number of shares of AMG Stock to be issued upon
exercise of the Put shall be determined in accordance with the following
formula:
Number of Shares of AMG Stock =
FCF x Percentage Put x AMG's EBITDA Multiple x .75
--------------------------------------------------
AMG's Average Stock Price
Where:
FCF = ****************[This definition has been omitted
pursuant to the confidential treatment request
referred to on the cover page hereto. The omitted
portions have been filed separately with the
Commission.]***************
Percentage Put = a fraction, the numerator of which is the number of
LLC Points to be purchased from the Non-Manager
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Member on the Purchase Date, and the denominator of
which is the number of LLC Points outstanding on
the Purchase Date before giving effect to any Puts
or any issuances or redemptions of LLC Points on
such date.
AMG's EBITDA Multiple = a fraction, the numerator of which is (a) the
number of shares of AMG Stock issued and
outstanding immediately prior to the closing of the
Put, multiplied by AMG's Average Stock Price, plus
(b) the long-term indebtedness (including the
current portion thereof) of AMG as of the date of
its most recent public financial reports prior to
the closing of the Put, and the denominator of
which is AMG's earnings before interest, taxes,
depreciation and amortization for the twelve (12)
month period ending on December 31 prior to the
date of the closing of the Put.
AMG's Average Stock Price = the average (arithmetic mean) Stock Price of AMG
Stock during the forty (40) trading days prior to
the date of the closing of the Put. The term "Stock
Price" shall mean the closing price for each day
for the AMG Stock which shall be the last sale
price or, in the case no such sale takes place on
such day, the average of the closing bid and asked
prices in either case as reported in the principal
consolidated transaction reporting system with
respect to securities listed on the principal
national securities exchange on which the AMG Stock
is listed or admitted to trading; or, if not listed
or admitted to trading on any national securities
exchange, the last quoted price (or, if not so
quoted, the average of the last quoted high bid and
low asked prices) in the over-the-counter market,
as reported by NASDAQ or such other system then in
use; or, if on any such date no bids are quoted by
any such organization, the average of the closing
bid and asked prices as furnished by a professional
market maker making a market in such security
reasonably selected by the Board of Directors of
AMG.
In the event that there is any stock split (or
reverse stock split), stock dividend or other
similar event, equitable and appropriate
adjustments shall be made in the application of the
foregoing calculation of AMG's Average Stock Price
to take account of such event.
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(d) If AMG completes a Public Offering, AMG shall, as soon as
reasonably practicable, provide notice thereof to each Employee Stockholder.
(e) If requested in writing by the managing underwriter(s), if
any, of any underwritten public offering of AMG Stock, each Non-Manager Member
and each Employee Stockholder agrees not to offer, sell, contract to sell or
otherwise dispose of any shares of AMG Stock (or any securities convertible into
or exchangeable for AMG Stock) except as part of such underwritten public
offering within thirty (30) days before or one hundred and eighty (180) days
after the effective date of the registration statement filed with respect to
said offering.
SECTION 7.3 REGISTRATION RIGHTS.
(a) If at any time or times following the completion of its
initial public offering, AMG shall determine to file a registration statement
("Registration Statement") (which excludes a registration on Form S-8 (or its
then equivalent form) or a registration statement filed solely to implement an
employee benefit plan, a transaction under Rule 145 or to which any other
similar rule of the SEC under the Securities Act is applicable or registration
statement on a form not available for registering securities for sale to the
public) other than on Form S-4 (or its then equivalent form) and other than with
respect to securities to be issued solely in connection with any acquisition of
any securities or assets of any entity or business, then AMG will give written
notice thereof to the Non-Manager Members which are holders of Registrable
Securities (as hereinafter defined) then outstanding (the "Holders") at least
twelve (12) days prior to the filing of a registration statement with the SEC,
and, subject to the terms and conditions of this Section 7.3, will use
commercially reasonable efforts to effect the registration under the Securities
Act (a "Registration") of all Registrable Securities which the Holders request
in a writing delivered to AMG within ten (10) days after the notice given by
AMG. AMG shall have the right to postpone or withdraw any Registration without
any obligation to any Holder.
(b) For the purposes of this Section 7.3, the term "Registrable
Securities" shall mean any AMG Stock held by a Non-Manager Member which was
acquired by such Non-Manager Member pursuant to the Merger Agreement and any
equity securities issued or issuable with respect to such AMG Stock by way of a
stock dividend or stock split or in connection with a combination of shares.
(c) Whenever under the preceding provisions of this Section
7.3, AMG is required hereunder to register Registrable Securities, AMG agrees
that it shall also do the following:
(i) use commercially reasonable efforts to prepare
diligently for filing with the SEC a Registration Statement and such
amendments and supplements to such Registration Statement and the
prospectus used in connection therewith as may be necessary for the
duration of such Registration;
(ii) use commercially reasonable efforts to maintain the
effectiveness of any Registration Statement pursuant to which any of
the Registrable Securities are being sold on a delayed or continuous
basis under Rule 415 (or any successor or similar rule) under the
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Securities Act (other than a registration statement in connection with
an underwritten offering) until the earlier of (A) the completion of
the distribution of all Registrable Securities offered pursuant thereto
or (B) ninety (90) days after the effective date of such Registration
Statement, provided that if a Suspension Period (as defined below) has
occurred during the pendency of a Registration, AMG shall in good faith
use reasonable efforts to extend the effectiveness of such Registration
so that there are ninety (90) days during which such Registration is
effective and a Suspension Period is not in effect; and
(iii) furnish to each selling Holder such copies of each
preliminary and final prospectus and such other documents as such
Holder may reasonably request to facilitate the public offering of its
Registrable Securities in accordance with customary practices.
(d) All reasonable expenses incident to AMG's performance of or
compliance with this Section 7.3, including SEC and securities exchange or
National Association of Securities Dealers, Inc. ("NASD") registration and
filing fees, fees and expenses of compliance with securities or blue sky laws,
printing expenses, fees and disbursements of counsel for AMG and its independent
certified public accountants incurred in connection with each registration
hereunder (excluding any fees or disbursements of counsel for the Holders, or
any underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities, which shall be borne by each applicable Holder) (all
such included expenses being herein called "Registration Expenses"), will be
borne by AMG; provided, however, that if AMG is not selling securities in such
offering, then each Holder shall bear a portion of such expenses equal to such
expenses multiplied by a fraction, the numerator of which is the number of
shares sold by such Holder and the denominator of which is the total number of
shares sold in the offering.
(e) (i) Incident to any registration statement referred to in this
Section 7.3(e), and subject to applicable law, AMG will indemnify each
underwriter, each Holder of Registrable Securities so registered, and
each person controlling any of them ("Controlling Person") against all
claims, losses, damages and liabilities, including legal and other
expenses reasonably incurred in investigating or defending against the
same, arising out of any untrue statement of a material fact contained
therein, or any omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or arising out of any violation by AMG of the Securities
Act, any other federal securities laws, any state securities or
"blue-sky" laws or any rule or regulation thereunder in connection with
such registration, except insofar as the same may have been caused by
an untrue statement or omission based upon information furnished to AMG
by or on behalf of such underwriter, Holder or Controlling Person
expressly for use therein, and with respect to such untrue statement or
omission in the information furnished to AMG by or on behalf of such
underwriter, Holder or Controlling Person, such underwriter, Holder or
Controlling Person so providing such information to AMG (or on whose
behalf such information was so provided) will indemnify AMG, its
directors and officers, and the other underwriters, Holders and
Controlling Persons against any losses, claims, damages, expenses or
liabilities to which any of them may become subject to the same extent.
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(ii) If the indemnification provided for in this Section 7.3(e)
from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any
other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact,
has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result
of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any reasonable legal or other fees or
expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7.3(e) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7.3(e)(ii), no Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities of such Holder were offered to the
public exceeds the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue statement or omission. No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 7.3(e), the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 7.3(e)(i) without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 7.3(e)(ii).
SECTION 7.4 RESTRICTIONS. Notwithstanding anything herein to the
contrary, the parties agree as follows:
(a) In the event that in connection with an underwritten public
offering, the managing underwriter(s) shall in good faith impose a limitation on
the number of securities which may be included in such Registration for
marketing purposes, AMG shall not be required to register Registrable Securities
in excess of such limitation, provided that the reduction in the number of
securities which may be included in such Registration to comply with such
limitation is imposed pro rata (based either (as determined by AMG, in its sole
discretion) on relative number of securities held or relative number of
securities sought to be included in such Registration) with respect to the
Holders and all managers of companies providing Investment Management Services
in which AMG
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may invest after the date hereof and which have so-called incidental or
piggyback registration rights (it being understood that such limitation may be
imposed as to all holders of such securities and the Holders prior to the
imposition of any limitation on other holders of AMG securities).
(b) If requested in writing by the managing underwriter(s), if
any, of any underwritten public offering of AMG Stock, each Non-Manager Member
and each Employee Stockholder agrees not to offer, sell, contract to sell or
otherwise dispose of any shares of AMG Stock (or any securities convertible into
or exchangeable for AMG Stock) except as part of such underwritten public
offering within thirty (30) days before or one hundred and eighty (180) days
after the effective date of the registration statement filed with respect to
said offering.
(c) Following the effectiveness of a Registration (including,
without limitation a Registration for sale on a delayed or continuous basis
under Rule 415 under the Securities Act), each Holder and each Employee
Stockholder agrees not to effect any sales of AMG Stock after they have received
notice from AMG to suspend sales as a result of the commencement of any
Suspension Period. Each Holder may recommence effecting sales of AMG Stock
following further notice to such effect from AMG, which shall be given by AMG
not later than five (5) business days after the conclusion of each Suspension
Period. For purposes hereof, a "Suspension Period" shall mean the pendency or
occurrence of an event that would make it impractical or inadvisable (i) to
cause a Registration Statement to remain in effect or (ii) to permit the sale of
AMG Stock by Holders and by limited partners, members or management employees of
other entities in which AMG is a general partner or manager member (without
prejudice to any particular holder), and shall include, without limitation,
pending negotiations relating to, or consummation of, a transaction or the
pendency or occurrence of any other event that would require additional
disclosure of material information by AMG in a registration statement as to
which AMG has a bona fide business purpose for preserving confidentiality or
which renders AMG unable to comply with applicable legal requirements.
SECTION 7.5 LIMITATION OF REGISTRATION RIGHTS. Notwithstanding the
foregoing, AMG shall not be required to effect a Registration of Registrable
Securities under this Agreement if, in the written opinion of counsel for AMG,
the Holders of Registrable Securities may then sell all the Registrable
Securities proposed to be sold without registration under the Securities Act.
SECTION 7.6 OPTION OF RECEIVING FUTURE PIGGYBACK REGISTRATION RIGHTS.
Notwithstanding any provisions of this Section 7, if AMG offers to any Person
engaged in the business of providing Investment Management Services in which AMG
may invest pursuant to an acquisition or investment transaction closing after
the date hereof any form of piggyback registration rights ("New Registration
Rights"), AMG agrees that at each such occasion it shall provide Holders of
Registrable Securities with the option of either retaining the registration
rights then in force for such Registrable Securities or replacing such
registration rights with the New Registration Rights, subject to the limitation
set forth in Section 7.5.
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ARTICLE VIII - DISSOLUTION AND TERMINATION.
SECTION 8.1 NO DISSOLUTION. The LLC shall not be dissolved by the
admission of Additional Non-Manager Members or substitute Non-Manager Members or
substitute Manager Members in accordance with the Act and the provisions of this
Agreement.
SECTION 8.2 EVENTS OF DISSOLUTION.
(a) The LLC shall be dissolved and its affairs wound up upon
the occurrence of any of the following events:
(i) a date designated in writing by the Manager Member
with the consent of the Non-Manager Members acting by a Majority Vote;
or
(ii) upon the entry of a decree of judicial dissolution
under Section 18-802 of the Act.
(b) Each Non-Manager Member and each Employee Stockholder and
each other Person who accepts LLC Interests constitutes and appoints each of the
Manager Member (and any successor thereof by merger, transfer, election or
otherwise), and each of the Manager Member's authorized officers and
attorneys-in-fact, with full power of substitution, as its, his or her true and
lawful agents and attorneys-in-fact, with full power and authority in its, his
or her name, place and xxxxx to: execute, swear to, acknowledge, deliver, file
and record in the appropriate public offices all certificates and other
instruments including, at the option of the Manager Member, this Agreement and
the Certificate and all amendments and restatements thereof or any of the
foregoing relating to the continuation of the LLC as contemplated by paragraph
(a)(ii) above, that the Manager Member reasonably deems appropriate or necessary
to exercise any powers of the Manager Member or to carry out the purposes of
this Agreement and to continue the existence or operation of the continuing LLC
as a Limited Liability Company in the State of Delaware and under the Act and in
all jurisdictions in which the LLC may or may wish to conduct business or own
property.
The foregoing power of attorney is hereby declared to be irrevocable
and a power coupled with an interest, and it shall survive, and shall not be
affected by, the subsequent death, incompetence, dissolution, disability,
incapacity, bankruptcy or termination of any grantor and the transfer of all or
any portion of his LLC Interest and shall extend to such Person's heirs,
successors and assigns. Each Person who accepts LLC Interests is deemed to
consent to be bound by any representations made by the Manager Member or the
authorized officers and attorneys-in-fact thereof, acting in good faith pursuant
to such power of attorney. Each Person who accepts LLC Interests is deemed to
consent to and waive any and all defenses that may be available to contest,
negate or disaffirm any action of the Manager Member or the authorized officers
and attorneys-in-fact thereof, taken in good faith under such power of attorney.
Each Non-Manager Member shall execute and deliver to the Manager Member within
fifteen (15) days after receipt of the Manager Member's request therefor, such
further designations, powers of attorney and other instruments as the Manager
Member deems necessary to effectuate this Section 8.2(b).
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SECTION 8.3 NOTICE OF DISSOLUTION. Upon the dissolution of the LLC the
Manager Member shall promptly notify the Members of such dissolution.
SECTION 8.4 LIQUIDATION. Upon the dissolution of the LLC, the Manager
Member, or if there is none, the Person or Persons approved by the holders of
more than fifty percent (50%) of the LLC Points then outstanding (including the
Person that was the Manager Member) shall carry out the winding up of the LLC
(in such capacity, the "Liquidating Trustee"), shall immediately commence to
wind up the LLC's affairs; provided, however, that a reasonable time shall be
allowed for the orderly liquidation of the assets of the LLC and the
satisfaction of liabilities to creditors so as to enable the Members to minimize
the normal losses attendant upon a liquidation. The Members shall continue to
share in allocations and distributions during liquidation in the same
proportions, as specified in Article IV hereof, as before liquidation. The
proceeds of liquidation shall be distributed as set forth in Section 4.4 hereof.
SECTION 8.5 TERMINATION. The LLC shall terminate when all of the assets
of the LLC, after payment of or due provision for all debts, liabilities and
obligations of the LLC, shall have been distributed to the Members in the manner
provided for in Section 4.4 and the Certificate shall have been canceled in the
manner required by the Act.
SECTION 8.6 CLAIMS OF THE MEMBERS. The Members and former Members shall
look solely to the LLC's assets for the return of their Capital Contributions,
and if the assets of the LLC remaining after payment of or due provision for all
debts, liabilities and obligations of the LLC are insufficient to return such
Capital Contributions, the Members and former Members shall have no recourse
against the LLC or any other Member.
ARTICLE IX - RECORDS AND REPORTS.
SECTION 9.1 BOOKS AND RECORDS. The Officers and the Manager Member
shall cause the LLC to keep complete and accurate books of account with respect
to the operations of the LLC, prepared in accordance with generally accepted
accounting principles, using the accrual method of accounting, consistently
applied. Such books shall reflect that the interests in the LLC have not been
registered under the Securities Act, and that the interests may not be sold or
transferred without registration under the Securities Act or exemption therefrom
and without compliance with Article V or Article VI of this Agreement. Such
books shall be maintained at the principal office of the LLC in New York, New
York or at such other place as the Manager Member shall determine.
SECTION 9.2 ACCOUNTING. The LLC's books of account shall be kept on the
accrual method of accounting, or on such other method of accounting as the
Manager Member may from time to time determine, with the advice of the
Independent Public Accountants, and shall be closed and balanced at the end of
each LLC fiscal year and shall be maintained for each fiscal year in a manner
consistent with the manner in which the LLC's books were maintained during the
fiscal year ended December 31, 1997, except to the extent otherwise determined
by the Management Board, with the written consent of the Manager Member or as
otherwise required in accordance with changes in generally accepted accounting
principles or policies of AMG applied consistently with respect to its
Controlled
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Affiliates so long as no such change in policies affects the calculation of the
Repurchase Price or the Put Price (or, if it does, only after appropriate
provision is made to hold the Non-Manager Members harmless from the effect of
any such change). The taxable year of the LLC shall be the twelve months ending
December 31 or such other taxable year as the Manager Member may designate, with
the written advice of the Independent Public Accountants.
SECTION 9.3 FINANCIAL AND COMPLIANCE REPORTS. The LLC shall furnish to
the Manager Member, each of the following:
(a) Within five (5) days after the end of each month and each
fiscal quarter, an unaudited financial report of the LLC, which report shall be
prepared in accordance with generally accepted accounting principles using the
accrual method of accounting, consistently applied (except that the financial
report may (i) be subject to normal year-end audit adjustments which are neither
individually nor in the aggregate material and (ii) not contain all notes
thereto which may be required in accordance with generally accepted accounting
principles) and shall be certified by the most senior financial officer of the
LLC to have been so prepared, and which shall include the following:
(i) Statements of operations, changes in members' capital
and cash flows for such month or quarter, together with a cumulative
income statement from the first day of the then-current fiscal year to
the last day of such month or quarter;
(ii) a balance sheet as of the last day of such month or
quarter; and
(iii) with respect to the quarterly financial report, a
detailed computation of Free Cash Flow for such quarter.
(b) Within fifteen (15) days after the end of each fiscal year
of the LLC, audited financial statements of the LLC, which shall include
statements of operations, changes in members' capital and cash flows for such
year and a balance sheet as of the last day thereof, each prepared in accordance
with generally accepted accounting principles, using the accrual method of
accounting, consistently applied, certified by Independent Public Accountants
satisfactory to the Manager Member.
(c) If requested by the Manager Member, within twenty-five (25)
days after the end of each calendar quarter, the LLC's operating budget for each
of the next four (4) fiscal quarters, in such form and containing such estimates
as may be requested by the Manager Member from time to time, certified by the
most senior financial officer of the LLC.
(d) Copies of all financial statements, reports, notices, press
releases and other documents released to the public.
(e) As promptly as is reasonably possible following request by
the Manager Member from time to time, such operations and/or performance data as
may be requested, in each case certified by the most senior financial officer of
the LLC if such a certification is requested by the Manager Member.
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(f) Any other financial or other information available to the
Officers as the Manager Member shall have reasonably requested on a timely
basis.
SECTION 9.4 MEETINGS.
(a) The LLC and its Officers shall hold such regular meetings
at the LLC's principal place of business with representatives of the Manager
Member as may be reasonably requested by the Manager Member from time to time.
These meetings shall be attended (either in person or by telephone) by such of
the Officers and other employees of the LLC as may be requested by the Manager
Member or any of the Officers.
(b) At each meeting, the Officers shall make such presentations
regarding the LLC and its performance, operations and/or budgets as may be
reasonably requested by the Manager Member, and each of the attendees (whether
in person or by telephone) at such meeting shall have the right to submit
proposals and suggestions regarding the LLC, and the attendees at the meeting
shall discuss and consider such proposals and suggestions.
SECTION 9.5 TAX MATTERS.
(a) The Manager Member shall cause to be prepared and filed on
or before the due date (or any extension thereof) Federal, state, local and
foreign tax or information returns required to be filed by the LLC. The Manager
Member, to the extent that LLC funds are available, shall cause the LLC to pay
any taxes payable by the LLC (it being understood that the expenses of
preparation and filing of such tax returns, and the amounts of such taxes, are
to be treated as operating expenses of the LLC to be paid from Operating Cash
Flow); provided that the Manager Member shall not be required to cause the LLC
to pay any tax so long as the Manager Member or the LLC is in good faith and by
appropriate legal proceedings contesting the validity, applicability or amount
thereof and such contest does not materially endanger any right or interest of
the LLC and adequate reserves therefor have been set aside by the LLC. Neither
the LLC nor any Employee Stockholder or Non-Manager Member shall do anything or
take any action which would be inconsistent with the foregoing or with the
Manager Member's actions as authorized by the foregoing provisions of this
Section 9.5(a). Each Non-Manager Member shall cooperate with the Manager Member
in causing the LLC to make an election under Section 754 or the Code with
respect to the LLC's fiscal year ended as of the date of this Agreement.
(b) The Manager Member shall be the tax matters partner for the
LLC pursuant to Sections 6221 through 6233 of the Code.
ARTICLE X - LIABILITY, EXCULPATION AND INDEMNIFICATION.
SECTION 10.1 LIABILITY. Except as otherwise provided by the Act, the
debts, obligations and liabilities of the LLC, whether arising in contract, tort
or otherwise, shall be solely the debts, obligations and liabilities of the LLC,
and no Covered Person shall be obligated personally for any such debt,
obligation or liability of the LLC solely by reason of being a Covered Person.
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SECTION 10.2 EXCULPATION.
(a) No Covered Person shall be liable to the LLC or any other
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Covered Person in good faith on behalf of
the LLC and in a manner reasonably believed to be within the scope of authority
conferred on such Covered Person by this Agreement, except that a Covered Person
shall be liable for any such loss, damage or claim incurred by reason of any
action or inaction of such Covered Person which constituted fraud, gross
negligence, willful misconduct or a breach of this Agreement, the Merger
Agreement or, in the case of a Non-Manager Member or Employee Stockholder, the
Non Solicitation Agreement to which he, she or it is a party.
(b) A Covered Person shall be fully protected in relying in
good faith upon the records of the LLC and upon such information, opinions,
reports or statements presented to the Covered Person by any Person as to
matters the Covered Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the LLC of such Covered Person.
SECTION 10.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, a Covered Person
has duties (including fiduciary duties) and liabilities relating thereto to the
LLC or to any Member, a Covered Person acting under this Agreement shall not be
liable to the LLC or to any Member for its good faith reliance on the provisions
of this Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of a Covered Person otherwise existing at
law or in equity, are agreed by the parties hereto to replace such other duties
and liabilities of such Covered Person.
(b) Unless otherwise expressly provided herein, (i) whenever a
conflict of interest exists or arises between the Manager Member and any other
Member, or (ii) whenever this Agreement or any other agreement contemplated
herein or therein provides that the Manager Member shall act in a manner that
is, or provides terms that are, fair and reasonable to the LLC or any Member,
the Manager Member shall resolve such conflict of interest, take such action or
provide such terms, considering in each case the relative interest of each party
(including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. The resolution, action or term so made, taken or
provided by the Manager Member shall not constitute a breach of this Agreement
or any other agreement contemplated herein or of any duty or obligation of the
Manager Member at law or in equity or otherwise unless the Managing Member did
not act in good faith.
(c) Whenever in this Agreement the Manager Member is permitted
or required to make a decision (i) in its "discretion" or under a grant of
similar authority or latitude, the Manager Member shall be entitled to consider
such interests and factors as it desires, including its own interests, and shall
have no duty or obligation to give any consideration to any interest of or
factors affecting the LLC or any other Person, or (ii) in its "good faith" or
under another express standard, the Manager Member shall act under such express
standard and shall not be subject to any other or
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different standard imposed by this Agreement or other applicable law; provided,
however, that if such standard is qualified by "reasonable," then the Manager
Member shall exercise its discretion or good faith only in a reasonable manner.
(d) Wherever in this Agreement a factual determination is
called for and the applicable provision of this Agreement does not indicate what
party or parties are to make the applicable factual determination, and/or the
applicable standard to be used in making the factual determination, such
determination shall be made by the Manager Member in the exercise of reasonable
discretion.
SECTION 10.4 INDEMNIFICATION. To the fullest extent permitted by
applicable law, a Covered Person shall be entitled to indemnification from the
LLC for any loss, damage or claim (including any amounts paid in settlement of
any such claims) incurred by such Covered Person by reason of any act or
omission performed or omitted by such Covered Person in good faith on behalf of
the LLC and in a manner reasonably believed to be within the scope of authority
conferred on such Covered Person by this Agreement, except that no Covered
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Covered Person by reason of any action or inaction of
such Covered Person which constituted fraud, gross negligence, willful
misconduct or a breach of this Agreement, the Merger Agreement or, in the case
of the Non-Manager Member or Employee Stockholder, the Non Solicitation
Agreement to which he, she or it is a party; provided, however, that any
indemnity under this Section 10.4 shall be provided out of and to the extent of
Company assets only, and no Covered Person shall have any personal liability to
provide indemnity on account thereof.
SECTION 10.5 NOTICE; OPPORTUNITY TO DEFEND AND EXPENSES.
(a) Promptly after receipt by any Covered Person from any third
party of notice of any demand, claim or circumstance that, immediately or with
the lapse of time, would reasonably be expected to give rise to a claim or the
commencement (or threatened commencement) of any action, proceeding or
investigation (an "Asserted Liability") that could reasonably be expected to
result in any loss, damage or claim with respect to which the Covered Person
might be entitled to indemnification from the LLC under Section 10.4, the
Covered Person shall give notice thereof (the "Claims Notice") to the LLC;
provided, however, that a failure to give such notice shall not prejudice the
Covered Person's right to indemnification hereunder except to the extent that
the LLC is actually prejudiced thereby. The Claims Notice shall describe the
Asserted Liability in such reasonable detail as is practicable under the
circumstances, and shall, to the extent practicable under the circumstances,
indicate the amount (estimated, if necessary) of the loss or damage that has
been or may be suffered by the Covered Person.
(b) The LLC may elect to compromise or defend, at its own
expense and by its own counsel, any Asserted Liability; provided, however, that
if the named parties to any action or proceeding include (or could reasonably be
expected to include) both the LLC and a Covered Person, or more than one Covered
Persons, and the LLC is advised that representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the Covered Person may engage separate counsel at the expense of the
LLC. If the LLC elects to compromise or
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defend such Asserted Liability, it shall within twenty (20) business days (or
sooner, if the nature of the Asserted Liability so requires) notify the Covered
Person of its intent to do so, and the Covered Person shall cooperate, at the
expense of the LLC, in the compromise of, or defense against, such Asserted
Liability. If the LLC elects not to compromise or defend the Asserted Liability,
fails to notify the Covered Person of its election as herein provided, contests
its obligation to provide indemnification under this Agreement, or fails to make
or ceases making a good faith and diligent defense, the Covered Person may pay,
compromise or defend such Asserted Liability all at the expense of the Covered
Person. Except as set forth in the preceding sentence, neither the LLC nor the
Covered Person may settle or compromise any claim over the objection of the
other; provided, however, that consent to settlement or compromise shall not be
unreasonably withheld. In any event, the LLC and the Covered Person may
participate at their own expense, in the defense of such Asserted Liability. If
the Covered Person chooses to defend any claim, the Covered Person shall make
available to the LLC any books, records or other documents within its control
that are necessary or appropriate for such defense, all at the expense of the
LLC.
(c) If the LLC elects not to compromise or defend an Asserted
Liability, or fails to notify the Covered Person of its election as above
provided, then, to the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Covered Person in defending any Asserted
Liability, shall, from time to time, be advanced by the LLC prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the LLC of an undertaking by or on behalf of the Covered Person to repay such
amount if it shall be determined that the Covered Person is not entitled to be
indemnified as authorized in Section 10.4 hereof. The LLC may, if the Manager
Member deems it appropriate, require any Covered Person for whom expenses are
advanced, to deliver adequate security to the LLC for his or her obligation to
repay such indemnification.
SECTION 10.6 MISCELLANEOUS.
(a) The right of indemnification hereby provided shall not be
exclusive of, and shall not affect, any other rights to which a Covered Person
may be entitled. Nothing contained in this Article X shall limit any lawful
rights to indemnification existing independently of this Article X.
(b) The indemnification rights provided by this Article X shall
also inure to the benefit of the heirs, executors, administrators, successors
and assigns of a Covered Person and any officers, directors, partners,
shareholders, employees and Affiliates of such Covered Person (and any former
officer, director, member, shareholder or employee of such Covered Person, if
the loss, damage or claim was incurred while such person was an officer,
director, member, shareholder or employee of such Covered Person). The Manager
Member may extend the indemnification called for by Section 10.4 to non-employee
agents of the LLC, the Manager Member or its Affiliates.
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ARTICLE XI - MISCELLANEOUS.
SECTION 11.1 NOTICES. All notices, requests, elections, consents or
demands permitted or required to be made under this Agreement ("Notices") shall
be in writing, signed by the Person or Persons giving such notice, request,
election, consent or demand and shall be delivered personally or by confirmed
facsimile, or sent by registered or certified mail, or by commercial courier to
the other Members, at their addresses set forth on the signature pages hereof or
on Schedule A hereto, or at such other addresses as may be supplied by written
notice given in conformity with the terms of this Section 11.1. All Notices to
the LLC shall be made to the Manager Member at the address set forth on the
signature pages hereof or on Schedule A hereto, with a copy (which shall not
constitute notice) to the Chairman of the LLC at the principal offices of the
LLC. The date of any such personal or facsimile delivery or the date of delivery
by an overnight courier or the date five (5) days after the date of mailing by
registered or certified mail, as the case may be, shall be the date of such
notice.
SECTION 11.2 SUCCESSORS AND ASSIGNS. Subject to the restrictions on
transfer set forth herein, this Agreement shall be binding upon and shall inure
to the benefit of the Members, their respective successors, successors-in-title,
heirs and assigns, and each and every successors-in-interest to any Member,
whether such successor acquires such interest by way of gift, purchase,
foreclosure or by any other method, and each shall hold such interest subject to
all of the terms and provisions of this Agreement.
SECTION 11.3 AMENDMENTS. No amendments may be made to this Agreement
without the prior written consent of (i) the Manager Member and (ii) a Majority
Vote of the Non-Manager Members; provided, however, that, without the vote,
consent or approval of any other Member, the Manager Member shall make such
amendments and additions to Schedule A hereto as are required by the provisions
hereof; and, provided further, that the Manager Member may amend this Agreement
to correct any printing, stenographic or clerical errors or omissions. Except as
otherwise specifically provided for herein, no amendment may be made to this
Agreement which materially and adversely affects a Non-Manager Member in a
manner different from all the other Non-Manager Members, without the prior
written consent of the Non-Manager Member which would be so affected.
SECTION 11.4 NO PARTITION. No Member nor any successor-in-interest to
any Member, shall have the right while this Agreement remains in effect to have
the property of the LLC partitioned, or to file a complaint or institute any
proceeding at law or in equity to have the property of the LLC partitioned, and
each Member, on behalf of himself, his successors, representatives, heirs and
assigns, hereby waives any such right. It is the intent of the Members that
during the term of this Agreement, the rights of the Members and the Employee
Stockholders and their successors-in-interest, as among themselves, shall be
governed by the terms of this Agreement, and that the right of any Member or
successors-in-interest to assign, transfer, sell or otherwise dispose of his
interest in the LLC shall be subject to the limitations and restrictions of this
Agreement.
SECTION 11.5 NO WAIVER; CUMULATIVE REMEDIES. The failure of any Member
to insist upon strict performance of a covenant hereunder or of any obligation
hereunder, irrespective of the length
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of time for which such failure continues, shall not be a waiver of such Member's
right to demand strict compliance in the future. No consent or waiver, express
or implied, to or of any breach or default in the performance of any obligation
hereunder, shall constitute a consent or waiver to or of any other breach or
default in the performance of the same or any other obligation hereunder. The
rights and remedies provided by this Agreement are cumulative and the use of any
one right or remedy by any party shall not preclude or waive its right to use
any or all other remedies. Said rights and remedies are given in addition to any
other rights the parties may have by law, statute, ordinance or otherwise.
SECTION 11.6 DISPUTE RESOLUTION. All disputes arising in connection
with this Agreement shall be resolved by binding arbitration in accordance with
the applicable rules of the American Arbitration Association. The arbitration
shall be held in Massachusetts before a single arbitrator selected in accordance
with Section 12 of the American Arbitration Association Commercial Arbitration
Rules who shall have substantial business experience in the investment advisory
industry, and shall otherwise be conducted in accordance with the American
Arbitration Association Commercial Arbitration Rules.
SECTION 11.7 PRIOR AGREEMENTS SUPERSEDED. This Agreement and the
schedules and exhibits hereto supersede the prior understandings and agreements
among the parties with respect to the subject matter hereof and thereof.
SECTION 11.8 CAPTIONS. Titles or captions of Articles or Sections
contained in this Agreement are inserted as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
SECTION 11.9 COUNTERPARTS. This Agreement may be executed in a number
of counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the Members notwithstanding that all Members have not
signed the same counterpart.
SECTION 11.10 APPLICABLE LAW; JURISDICTION. This Agreement and the
rights and obligations of the parties hereunder shall be governed by and
interpreted, construed and enforced in accordance with the laws of the State of
Delaware, without applying the choice of law or conflicts of law provisions
thereof.
SECTION 11.11 INTERPRETATION. All terms herein using the singular shall
include the plural; all terms using the plural shall include the singular; in
each case, the term shall be as appropriate to the context of each sentence.
Throughout this Agreement, nouns, pronouns and verbs shall be construed as
masculine, feminine and neuter, whichever shall be applicable.
SECTION 11.12 SEVERABILITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
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SECTION 11.13 CREDITORS. None of the provisions of this Agreement shall
be for the benefit of or enforceable by any creditor of (i) any Member, (ii) any
Employee Stockholder or (iii) the LLC, other than a Member who is also a
creditor of the LLC.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the Initial Non-Manager Members and the Manager
Member have executed and delivered this Amended and Restated Limited Liability
Company Agreement as of the day and year first above written.
MANAGER MEMBER
Name and Signature Address
GEOCAPITAL CORPORATION Two International Place, 23rd Floor
(formerly known as Merger Sub) Xxxxxx, XX 00000
By:____________________________________
Name:
Title:
NON-MANAGER MEMBERS
Name and Signature Address
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ACKNOWLEDGMENT
The undersigned is executing this Agreement solely (i) to acknowledge
and agree to be bound by the provisions of Section 3.12, Article VII and the
relevant provisions of Article XI hereof (ii) to represent that the undersigned
is the sole owner of all of the outstanding capital stock of the Managing
Member, and (iii) to agree that, without a Majority Vote, for so long as Merger
Sub is the Managing Member of the LLC, the undersigned shall not in any manner
directly or indirectly sell, transfer, assign, pledge, hypothecate or otherwise
encumber or dispose of any of the capital stock of the Managing Member, subject
to the exceptions set forth in clause (i) and clause (ii) of Section 6.1(a).
AFFILIATED MANAGERS GROUP, INC.
Xxx Xxxxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxxxxx, XX 00000
By:_____________________
Name:___________________
Title:__________________
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