EXHIBIT 10.29
(AMG) LLC INTEREST
PURCHASE AGREEMENT
FEBRUARY 5, 2003
TABLE OF CONTENTS
Page
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Section 1. General...........................................................1
Section 2. Definitions.......................................................1
Section 3. Purchase and Sale of (AMG) LLC Points.............................7
Section 4. Closing of the Purchase and Sale..................................7
Section 5. Vesting Schedule..................................................8
Section 6. Representations and Warranties of AMG.............................9
Section 7. Representations and Warranties of Purchasers......................9
Section 8. Forfeiture.......................................................10
Section 9. Repurchase of Vested (AMG) LLC Points............................11
Section 10. Allocations......................................................14
Section 11. Distributions....................................................16
Section 12. (AMG) LLC Point Puts.............................................17
Section 13. Restrictions on Transfer.........................................21
Section 14. Voting Rights....................................................22
Section 15. Miscellaneous....................................................22
EXHIBITS
Exhibit A LLC Agreement
Exhibit B Form of Purchase Note
Exhibit C Form of Non Solicitation/Non Disclosure Agreement
Exhibit D Form of Joinder
SCHEDULES
Form of
Schedule A Purchasers; (AMG) LLC Points; Vesting
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PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "AGREEMENT") made as of February 5, 2003 (the
"EFFECTIVE DATE"), by and among the individuals set forth on the signature pages
hereto from time to time, including by execution of a Joinder (each, a
"PURCHASER" and collectively, the "PURCHASERS"), Affiliated Managers Group,
Inc., a Delaware corporation ("AMG"), and Essex Investment Management Company,
LLC, a Delaware limited liability company (the "LLC").
SECTION 1. GENERAL. Reference is hereby made to the Essex Investment
Management Company, LLC Amended and Restated Limited Liability Company Agreement
dated as of March 20, 1998, as the same has been, and may in the future be, from
time to time amended (the "LLC AGREEMENT"), which LLC Agreement, including all
amendments thereto to date, is attached hereto as EXHIBIT A and incorporated
herein by reference. Each Purchaser is an employee of the LLC and AMG is the
Manager Member of the LLC. AMG and the LLC desire to provide further incentive
the employees of the LLC to grow the business of the LLC, and AMG has, in
accordance with the provisions of Section 6.1(a)(ii) of the LLC Agreement, made
available for purchase by Purchasers, a portion of AMG's LLC Interest
represented by the (AMG) LLC Points. Each Purchaser acknowledges that he, she or
it is not acquiring pursuant to this Agreement, or otherwise, any LLC Points
under the LLC Agreement, but rather is acquiring only an economic interest in
AMG's LLC Interest on the terms and conditions of, and to the extent of the
rights and obligations set forth in, this Agreement. Each Purchaser has read the
terms and provisions of the LLC Agreement, and, subject to the consummation of
the purchase and sale of the (AMG) LLC Points contemplated hereby, each
Purchaser acknowledges the terms and provisions thereof and agrees to become a
"Member" of the LLC (to the extent such Purchaser is not already a Member), as
contemplated by this Agreement. AMG, as Manager Member, and the LLC hereby
consent to the admission of each Purchaser as a Member of the LLC.
SECTION 2. DEFINITIONS.
(a) The following terms as used herein shall have the following
meanings:
"ADJUSTMENT FACTOR" shall mean, as of any date, the fraction, (a) the
numerator of which is 769, and (b) the denominator of which is the number of LLC
Points that AMG owns as of such date. The Adjustment Factor shall initially be
one (1).
"AGREEMENT" shall have the meaning specified in the recitals.
"ALLOCATION OF (AMG) FREE CASH FLOW" shall mean, with respect to any
Purchaser for any period, the product of (a) the (AMG) Free Cash Flow for such
period and (b) a fraction, (i) the numerator of which is such Purchaser's Twelve
Months' (AMG) Free Cash Flow as of the last day of such period, and (ii) the
denominator of which is the sum of the (AMG) Free Cash Flow for the four (4)
most recently completed calendar quarters.
"AMG" shall have the meaning specified in the recitals.
"AMG ENTERPRISE VALUE" shall have the meaning specified in Section
12(d)(vi) hereof.
"(AMG) FAIR VALUE" shall have the meaning specified in Section
12(d)(ii) hereof.
"(AMG) FREE CASH FLOW" shall mean, with respect to any period, the
amount of Free Cash Flow allocated to AMG in accordance with Section
4.2(c)(i)(A) of the LLC Agreement for such period, determined as if the
Guaranteed Payment by the LLC to the Special Non-Manager Member under the LLC
Agreement was instead made to AMG pursuant to Section 4.2(c)(i).
"AMG INDEBTEDNESS" shall have the meaning specified in Section
12(d)(ix) hereof.
"(AMG) LLC CAPITAL ACCOUNT" shall have the meaning specified in
Section 10(a) hereof.
"(AMG) LLC INTEREST" shall mean the Class A (AMG) LLC Interests and
the Class B (AMG) LLC Interests transferred from time to time by AMG to the
Purchasers hereunder.
"(AMG) LLC POINT PURCHASE PRICE" shall mean, with respect to each
(AMG) LLC Point acquired pursuant to this Agreement, the purchase price for such
(AMG) LLC Point set forth on SCHEDULE A hereto.
"(AMG) LLC POINT ACQUISITION DATE" shall mean, (a) with respect to any
Class A (AMG) Purchaser and the Class A (AMG) LLC Points purchased thereby in
accordance with this Agreement, the date of the Purchase and Sale of such Class
A (AMG) LLC Points, and (b) with respect to any Class B (AMG) Purchaser and the
Class B (AMG) LLC Points purchased thereby in accordance with this Agreement,
the date of the Purchase and Sale of such Class B (AMG) LLC Points.
"(AMG) LLC POINTS" shall mean the Class A (AMG) LLC Points and Class B
(AMG) LLC Points transferred from time to time from AMG to Purchasers under this
Agreement.
"(AMG) PERCENTAGE INTEREST" shall mean, with respect to any Purchaser
as of any date, the fraction, (a) the numerator of which is the total number of
(AMG) LLC Points owned by such Purchaser and (b) the denominator of which is the
total number of LLC Points owned by AMG, in each case as of such date.
"AMG MULTIPLE" shall have the meaning specified in Section 12(d)(iv)
hereof.
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"(AMG) PERMITTED TRANSFEREE" shall mean, with respect to any
Purchaser, its transferees pursuant to and in accordance with Section 13 hereof,
to the extent set forth in any consent of AMG and the Management Committee.
"(AMG) PURCHASE DATE" shall have the meaning specified in Section
12(b) hereof.
"(AMG) PUT" shall have the meaning specified in Section 12(a) hereof.
"(AMG) PUT NOTICE" shall have the meaning specified in Section 12(c)
hereof.
"(AMG) PUT NOTICE DEADLINE" shall have the meaning specified in
Section 12(c) hereof.
"(AMG) PUT PRICE" shall have the meaning specified in Section 12(d)
hereof.
"(AMG) REPURCHASE" shall have the meaning specified in Section 9(a)
hereof.
"(AMG) REPURCHASE CLOSING DATE" shall have the meaning specified in
Section 9(c) hereof.
"(AMG) REPURCHASED MEMBER" shall have the meaning specified in Section
9(a) hereof.
"(AMG) REPURCHASE PRICE" shall have the meaning specified in Section
9(b) hereof.
"AMG'S CAPITAL ACCOUNT BALANCE" shall mean the positive difference
between (a) AMG's Capital Account and (b) the sum of the (AMG) LLC Capital
Accounts of the Purchasers.
"AMG'S RUN RATE EBITDA" shall have the meaning specified in Section
12(d)(viii) hereof.
"AMG'S SHARE" shall mean with respect to allocations and distributions
to the Members under the LLC Agreement at any time or for any period, the amount
allocated or distributed, as applicable, to AMG in respect of its LLC Points as
of such time or for such period.
"BANKRUPTCY EVENT" shall have the meaning specified in Section 9(f)
hereof.
"CLASS A (AMG) FAIR MARKET VALUE" shall have the meaning specified in
Section 12(d)(i) hereof.
"CLASS A (AMG) LLC INTEREST" shall mean a Class A (AMG) Purchaser's
interest in AMG's LLC Interest, which shall include the Class A (AMG) LLC
Points, (AMG) Capital Account and other rights, in each case as expressly
provided in this Agreement.
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"CLASS A (AMG) LLC POINTS" shall mean, as of any date, with respect to
any Class A (AMG) Purchaser, the number of Class A (AMG) LLC Points of such
Class A (AMG) Purchaser set forth on SCHEDULE A hereto, as may be amended from
time to time in accordance with this Agreement.
"CLASS A (AMG) PURCHASER" shall mean each purchaser of Class A (AMG)
LLC Points under this Agreement from time to time.
"CLASS A (AMG) PUT PARTICIPATION THRESHOLD" shall mean the product of
(a) $72,705,476 and (b) one divided by the Adjustment Factor.
"CLASS A (AMG) REPURCHASE PRICE" shall mean, with respect to any (AMG)
Repurchased Member, the product of (a) the Class A (AMG) Fair Market Value and
(b) a fraction, the numerator of which is the number of Vested Class A (AMG) LLC
Points owned by such (AMG) Repurchased Member as of the applicable (AMG)
Repurchase Closing Date (before giving effect to any repurchases on such (AMG)
Repurchase Closing Date), and the denominator of which is the total number of
LLC Points held by AMG as of the applicable (AMG) Repurchase Closing Date
(before giving effect to any repurchases on such (AMG) Repurchase Closing Date).
"CLASS A/B (AMG) INCOME PARTICIPATION THRESHOLD" shall mean the
product of (a) $12,796,164 and (b) one divided by the Adjustment Factor.
"CLASS A/B (AMG) EQUITY PARTICIPATION THRESHOLD" shall mean
$130,000,000; PROVIDED, HOWEVER, that the Class A/B (AMG) Equity Participation
Threshold shall be appropriately adjusted from time to time to give effect to
any change in AMG's Capital Account resulting from the purchase by AMG of any
LLC Points (and related Capital Account) from Non-Manager Members pursuant to
and in accordance with the LLC Agreement; PROVIDED, FURTHER that the Class A/B-1
Equity Participation Threshold shall NOT be adjusted as a result of any
adjustments to AMG's Capital Account made pursuant to and in accordance with
Sections 5.1 and 5.5(c) of the LLC Agreement.
"CLASS B (AMG) FAIR MARKET VALUE" shall have the meaning specified in
Section 12(d)(i) hereof.
"CLASS B (AMG) LLC INTEREST" shall mean a Class B (AMG) Purchaser's
interest in AMG's LLC Interest, which shall include the Class B (AMG) LLC
Points, (AMG) Capital Account and other rights, in each case as expressly
provided in this Agreement.
"CLASS B (AMG) LLC POINTS" shall mean, as of any date, with respect to
any Class B (AMG) Purchaser, the number of Class B (AMG) LLC Points of such
Class B (AMG) Purchaser set forth on SCHEDULE A hereto, as may be amended from
time to time in accordance with this Agreement. Class B (AMG) LLC Points may be
issued in any number of series from time to time in accordance with this
Agreement and shall have the relative rights, preferences and restrictions as
set forth in this Agreement. The Class B (AMG) LLC Points issued under this
Agreement on the Effective Date shall be designated Class B-1 (AMG) LLC Points.
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"CLASS B (AMG) PURCHASER" shall mean each purchaser of Class B (AMG)
LLC Points under this Agreement from time to time.
"CLASS B (AMG) REPURCHASE PRICE" shall mean, with respect to any (AMG)
Repurchased Member, the product of (a) the Class B (AMG) Fair Market Value and
(b) a fraction, the numerator of which is the number of Vested Class B (AMG) LLC
Points owned by such (AMG) Repurchased Member as of the applicable (AMG)
Repurchase Closing Date (before giving effect to any repurchases on such (AMG)
Repurchase Closing Date), and the denominator of which is the total number of
LLC Points held by AMG as of the applicable (AMG) Repurchase Closing Date
(before giving effect to any repurchases on such (AMG) Repurchase Closing Date).
"CLASS B-1 (AMG) PUT PARTICIPATION THRESHOLD" shall mean the product
of (a) $94,517,118 and (b) one divided by the Adjustment Factor.
"CLOSING" shall have the meaning specified in Section 4 hereof.
"EBITDA" shall mean earnings before interest, taxes, depreciation and
amortization determined in accordance with generally accepted accounting
principles, consistently applied.
"EFFECTIVE DATE" shall have the meaning specified in the recitals.
"FAIR MULTIPLE" shall have the meaning specified in Section 12(d)(iv)
hereof.
"FAIR VALUE DETERMINATION DATE" shall mean (i) with respect the
calculation of (AMG) Fair Value in connection with an (AMG) Put, the March 31
prior to the applicable (AMG) Purchase Date or (ii) with respect to the
calculation of (AMG) Fair Value in connection with an (AMG) Repurchase or any
other payment, the last day of the calendar quarter in which a Purchaser's
termination of employment with the LLC or Permanent Incapacity has occurred, and
which is prior to the applicable (AMG) Repurchase Closing Date or any other
payment date.
"FORFEITURE" shall have the meaning specified in Section 8(a) hereof.
"JOINDER" shall mean a joinder to this Agreement in substantially the
form of EXHIBIT D attached hereto.
"LLC" shall have the meaning specified in the recitals.
"LLC AGREEMENT" shall have the meaning specified in Section 1 hereof.
"LOCK-UP PERIOD" shall mean, (a) with respect to any Class A (AMG)
Purchaser and such Class A (AMG) Purchaser's Class A (AMG) LLC Points, two (2)
years from such Class A (AMG) Purchaser's (AMG) LLC Point Acquisition Date, and
(b) with respect to any Class B (AMG) Purchaser and such Class B (AMG)
Purchaser's Class B (AMG) LLC Points, five (5) years from such Class B (AMG)
Purchaser's (AMG) LLC Point Acquisition Date.
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"MANAGEMENT AGREEMENT" shall mean the Agreement dated February 3, 2003
by and among AMG, the LLC and certain of the members of the Management Committee
of the LLC as identified therein.
"MANAGEMENT DEFAULT" shall have the meaning specified in Section 8(d)
hereof.
"PURCHASE AND SALE" shall have the meaning specified in Section 3
hereof.
"PURCHASE NOTE" shall mean a promissory note issued in favor of AMG by
Purchaser with respect to the Purchase and Sale of Purchaser's (AMG) LLC Points
substantially in the form attached hereto as EXHIBIT B.
"PURCHASER" shall have the meaning specified in the recitals, and
shall include, without limitation, each Class A (AMG) Purchaser and Class B
(AMG) Purchaser.
"PUT (AMG) LLC POINTS" shall have the meaning specified in Section
12(c) hereof.
"RUN RATE FREE CASH FLOW" shall have the meaning specified in Section
12(d)(vii) hereof.
"SECURITIES ACT" shall have the meaning specified in Section 7(f)(iii)
hereof.
"SYNTHETIC LEASE OBLIGATION" shall have the meaning specified in
Section 12(d)(ix) hereof.
"TERMINATION DATE" shall have the meaning specified in Section 8(b)
hereof.
"TOTAL DEBT" shall have the meaning specified in Section 12(d)(v)
hereof.
"TWELVE MONTHS' (AMG) FREE CASH FLOW" shall mean, with respect to each
Purchaser, as of any date, the product of (a) the extent to which the sum of the
(AMG) Free Cash Flow for the four (4) most recently completed calendar quarters
exceeds the Class A/B-1 (AMG) Income Participation Threshold and (b) such
Purchaser's (AMG) Percentage Interest as of such date; PROVIDED, HOWEVER, that
with respect to the first four (4) quarters following the Effective Date of this
Agreement, "Twelve Months' (AMG) Free Cash Flow" shall mean, with respect to any
Purchaser, as of any date, the product of (a) the extent to which the sum of (i)
the aggregate (AMG) Free Cash Flow for all completed calendar quarters to date
in such four-quarter period, and (ii) the product of (A) the number of quarters
remaining in such four-quarter period and (B) one-quarter (1/4) of the Class
A/B-1 (AMG) Income Participation Threshold, exceeds the Class A/B-1 (AMG) Income
Participation Threshold, and (b) such Purchaser's (AMG) Percentage Interest as
of such date.
"UNVESTED" shall mean, at any time and with respect to any Purchaser
and the (AMG) LLC Points held thereby, the portion of such (AMG) LLC Points held
by such Purchaser which has not yet vested at such time in accordance with
Section 5 hereof.
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"VESTED" shall mean, at any time and with respect to Purchaser and the
(AMG) LLC Points held thereby, the portion of such (AMG) LLC Points held by such
Purchaser which has vested at such time, in accordance with Section 5 hereof.
"VOTING PERCENTAGE" shall mean for each Purchaser as of any date, a
number expressed as a percentage equal to the quotient of (A) the sum of (x) the
Class A (AMG) LLC Points held by such Purchaser PLUS (y) one-tenth (1/10th) of
the number of Class B (AMG) LLC Points held by such Purchaser divided by (B) the
total number of LLC Points owned by AMG as of such date.
(b) Capitalized terms used herein and not defined shall have the
meanings given to them in the LLC Agreement.
SECTION 3. PURCHASE AND SALE OF (AMG) LLC POINTS. Subject to the terms,
provisions and conditions contained in this Agreement, and on the basis of the
representations, warranties and covenants herein set forth, AMG agrees,
effective on the date hereof, to sell, transfer and deliver to each Purchaser,
free and clear of any Liens whatsoever (other than those contained in this
Agreement, or those arising out of that certain Credit Agreement dated as of
August 7, 2002 by and among AMG and the Agent and Lenders identified therein, or
the other agreements contemplated thereby, in each case as amended from time to
time), the (AMG) LLC Interest, represented by a number of (AMG) LLC Points as
set forth opposite such Purchaser's name on SCHEDULE A hereto. Subject to the
terms, provisions and conditions contained in this Agreement, and on the basis
of the representations, warranties and covenants herein set forth, each
Purchaser, severally and not jointly, hereby agrees, effective on the date
hereof, to purchase from AMG the (AMG) LLC Points for the (AMG) LLC Point
Purchase Price, in each case as set forth opposite such Purchaser's name on
SCHEDULE A hereto. The transactions contemplated by this Section 3 are referred
to herein as the "PURCHASE AND SALE."
SECTION 4. CLOSING OF THE PURCHASE AND SALE.
(a) The initial closing of the Purchase and Sale under this
Agreement (a "CLOSING") shall take place at the offices of AMG, 000 Xxxx Xxxxxx,
Xxxxxx Xxxxxxxx, Xxxxxxxxxxxxx (or remotely via the exchange of documents and
signatures) on the Effective Date. Subsequent Closings shall take place from
time to time at a date, time and place to mutually agreed upon by AMG and any
Purchasers participating in such Closing. At each Closing, AMG shall record the
transfer of the (AMG) LLC Points in the name of each Purchaser to whom such
(AMG) LLC Points are being transferred, against payment to AMG by each Purchaser
of such Purchaser's (AMG) LLC Point Purchase Price by wire transfer, check,
delivery of a Purchase Note or other method acceptable to AMG.
(b) Each Purchaser shall deliver the following to AMG at or
prior to each Closing:
(i) Full payment to AMG of such Purchaser's (AMG) LLC
Point Purchase Price as provided in Section 4(a) above;
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(ii) A Non Solicitation/Non Disclosure Agreement in the
form attached as EXHIBIT C hereto (or, if such Purchaser is already a
party to such a Non Solicitation Agreement/Non Disclosure Agreement, a
written confirmation that such Non Solicitation Agreement/Non
Disclosure Agreement is in full force and effect as of the date
hereof);
(iii) A counterpart signature page to the Assignment of
(AMG) LLC Points and Admission of Member;
(iv) A counterpart signature page to the Special
Repurchase Payment Agreement;
(v) A counterpart signature page or joinder to this
Agreement; and
(vi) Such other supporting documents, instruments and
certificates as the AMG may reasonably request and as required
pursuant to this Agreement and the transactions contemplated hereby.
(c) At each Closing, AMG shall deliver to each Purchaser (i) an
assignment of (AMG) LLC Points and (ii) a certificate evidencing the (AMG) LLC
Points subject to the Purchase and Sale hereunder.
SECTION 5. VESTING SCHEDULE. The (AMG) LLC Points purchased hereunder
are, as of the applicable (AMG) LLC Point Acquisition Date, all Unvested (AMG)
LLC Points, and shall be subject to the vesting schedule set forth on SCHEDULE A
hereto and in this Section 5. Notwithstanding SCHEDULE A hereto, in no event
shall a Purchaser's (AMG) LLC Points which are Unvested as of the date such
Purchaser's employment by the LLC terminates, for any reason, become Vested
(AMG) LLC Points after such date (except as provided in Section 9(g) hereto);
and PROVIDED, HOWEVER, that in no event shall any Unvested (AMG) LLC Points held
by such Purchaser (or any (AMG) Permitted Transferees) as of the date of the
occurrence of a Bankruptcy Event with respect to such Purchaser (or such (AMG)
Permitted Transferee, as applicable) become Vested (AMG) LLC Points after the
date of such event; PROVIDED, FURTHER, that in no event shall any Unvested (AMG)
LLC Points as of the date of a Management Default become Vested (AMG) LLC Points
after the date of such event. Notwithstanding anything herein to the contrary,
upon (i) a merger, reorganization or consolidation of the LLC in which the
outstanding LLC Points are converted into or exchanged for a different kind of
securities of the successor entity and the holders of the LLC's outstanding
voting power immediately prior to such transaction do not own a majority of the
outstanding voting power of the successor entity immediately upon completion of
such transaction, (ii) the sale of all or a majority of the outstanding LLC
Points of the LLC to an unrelated person or entity or (iii) any other
transaction in which the owners of the LLC's outstanding voting power
immediately prior to such transaction do not own at least a majority of the
outstanding voting power of the successor entity immediately upon completion of
the transaction, all of the Unvested (AMG) LLC Points held by the Purchasers
shall be deemed Vested (AMG) LLC Points.
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SECTION 6. REPRESENTATIONS AND WARRANTIES OF AMG. As a material
inducement to Purchaser entering into this Agreement and consummating the
Purchase and Sale, AMG represents and warrants to Purchaser that AMG has all
requisite power and authority to execute, deliver and perform this Agreement and
the agreements, documents and instruments to be executed, delivered and
performed in connection herewith and the transactions contemplated hereby and
thereby. This Agreement and each other agreement, document and instrument to be
executed, delivered and performed in connection herewith, has been duly and
validly approved by all necessary action of AMG, and this Agreement and each
such other agreement, document or instrument represents, or, when executed will
represent, the valid and legally binding obligation of AMG, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. As a material
inducement to AMG entering into this Agreement and consummating each Purchase
and Sale hereunder, each Purchaser, severally, not jointly, makes each of the
representations, warranties and agreements contained in this Section 7.
(a) Such Purchaser has not relied upon AMG, the LLC, or any
employees, principals or agents of AMG or the LLC for investment, tax or other
legal or financial advice in connection with the Purchase and Sale of such
Purchaser's (AMG) LLC Points. Such Purchaser has consulted his or her own
attorney, accountant or investment advisor with respect to the Purchase and Sale
of such Purchaser's (AMG) LLC Points and its suitability for such Purchaser. Any
specific acknowledgement below with respect to any statement or information
furnished to such Purchaser shall not be deemed to limit the generality of this
representation and warranty.
(b) Such Purchaser has full right, authority and power to enter
into this Agreement, and each agreement, document and instrument to be executed
and delivered pursuant to or as contemplated hereby or thereby. The execution,
delivery and performance by such Purchaser of this Agreement and each such other
agreement, document and instrument have been duly authorized by all necessary
action of such Purchaser and no other action is required in connection
therewith, and constitute the legal, valid and binding obligations of such
Purchaser, enforceable against such Purchaser in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights.
(c) Such Purchaser is not subject to any disqualification under
the provisions of Section 203(e) of the Investment Advisers Act of 1940, as
amended, and is not otherwise ineligible to serve as an associated person to a
registered investment adviser.
(d) Such Purchaser has or will have as of the date hereof
executed a Non Solicitation/Non Disclosure Agreement in the form attached as
EXHIBIT C hereto.
(e) To his/her knowledge, such Purchaser is in good health.
(f) (i) The (AMG) LLC Points that such Purchaser is
acquiring hereunder is being acquired by him/her for his/her own account for
investment only and not with a view to or for sale in connection with any
distribution thereof or with any present intention of selling or distributing
all or any part thereof.
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(ii) Such Purchaser is sufficiently knowledgeable and
experienced in the making of investments of this type so as to be able to
evaluate the risks and merits of Purchaser's investment and is able to bear
the economic risk of Purchaser's investment in the (AMG) LLC Points for an
indefinite period of time or to lose the entire investment made hereby.
Purchaser has received and read all documents required by Purchaser to make
an informed decision with regard to the purchase of the (AMG) LLC Points.
Such Purchaser acknowledges that he, she or it has been given an
opportunity to ask questions and receive information regarding the (AMG)
LLC Points from AMG, the LLC, and its respective officers, and that he/she
and his/her advisers have reviewed all such information as they deem
necessary or appropriate for making an investment decision. Such Purchaser
acknowledges that the (AMG) LLC Points are illiquid, that no market for the
(AMG) LLC Points exists and that none is contemplated to be created.
(iii) Such Purchaser understands and acknowledges that
(A) the securities that he/she is purchasing hereunder are characterized as
"restricted securities" under the federal securities laws insomuch as they
have not been registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), or under any applicable federal securities or state
blue-sky securities laws and (B) such securities cannot be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed
of without registration under, pursuant to an exemption from or in a
transaction not subject to any applicable state blue-sky or federal
securities laws. Such Purchaser acknowledges and agrees that the securities
acquired by such Purchaser hereunder are subject to the terms and
conditions set forth in this Agreement, and that no transfer of such
securities will be made unless accompanied by evidence of compliance with
the terms of this Agreement.
SECTION 8. FORFEITURE.
(a) The forfeiture arrangements contemplated by this Section 8
are referred to herein as a "FORFEITURE." The provisions relating to a
Forfeiture set forth in this Agreement shall, except as set forth in Section
8(d) below, only apply to the Unvested (AMG) LLC Points as of any time.
(b) Subject to the provisions of Section 9(g), in the event that
a Purchaser's employment with the LLC terminates for any reason, such Purchaser,
and his, her or its respective (AMG) Permitted Transferees, if any, shall
forfeit to AMG all of the Unvested (AMG) LLC Points held by such Purchaser (and
such (AMG) Permitted Transferees, if any), as of the date of such termination of
employment (the "TERMINATION DATE"), with no further obligation (including no
obligation to make any payment) on the part of AMG with respect thereto to such
Purchaser (or any (AMG) Permitted Transferee).
(c) Upon the occurrence of a Bankruptcy Event with respect to
any Purchaser (or an (AMG) Permitted Transferee of such Purchaser), then such
Purchaser (or (AMG) Permitted Transferee, as applicable ) shall forfeit to AMG
all of the Unvested (AMG) LLC Points held by such Purchaser (or (AMG) Permitted
Transferee, as applicable) as of the date of the occurrence of such Bankruptcy
Event, with no further obligation (including no obligation to
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make any payment)on the part of AMG with respect thereto to such Purchaser (or
any (AMG) Permitted Transferee, as applicable).
(d) In the event of (i) a breach by the LLC of the terms and
provisions of Section 3(a) of the Management Agreement or (ii) a breach by any
Committee Member (as defined in the Management Agreement) of the terms and
provisions of Section 3(b) of the Management Agreement which is reasonably
likely to lead to a breach by the LLC of the terms and provisions of Section
3(a) of the Management Agreement (either event, a "MANAGEMENT DEFAULT"), then,
at the option of each Purchaser (and each Purchaser's (AMG) Permitted
Transferees, if any), (i) such Purchaser (and such (AMG) Permitted Transferees,
if any) shall forfeit to AMG all of the Class A (AMG) LLC Points held by such
Purchaser (and such (AMG) Permitted Transferees, if any) as of the date of such
Management Default, Vested or Unvested, with no further obligation (including no
obligation to make any payment) on the part of AMG with respect thereto to such
Purchaser (and such (AMG) Permitted Transferees, if any), or (ii) such Purchaser
(and such (AMG) Permitted Transferees, if any) may in lieu of such forfeiture of
such Class A (AMG) LLC Points pay to AMG, in cash, within thirty (30) days of
the date of such Management Default, the fair market value of the Class A (AMG)
LLC Points (as determined pursuant to Section 12(d)(i), as applicable), Vested
or Unvested, held by such Purchaser (and such (AMG) Permitted Transferees, if
any) as of the date of such Management Default. If a Purchaser (or (AMG)
Permitted Transferees, if any) does not elect to pay to AMG the fair market
value of such Purchaser's (or (AMG) Permitted Transferee's, if any) Class A
(AMG) LLC Points within thirty (30) days of the date of such Management Default
as provided above, then such Class A (AMG) LLC Points shall be deemed to have
been forfeited as of the date of such Management Default.
(e) Subject to the provisions of Sections 8(d) and 9(g), without
any action on the part of any of the parties to this Agreement or any other
Members of the LLC, the closing of any Forfeiture shall take place immediately
and automatically upon the occurrence of (i) the termination of employment of
Purchaser, (ii) the Bankruptcy Event, or (iii) the Management Default, as
applicable, and AMG shall record such Forfeiture and transfer on SCHEDULE A to
this Agreement. Upon any Forfeiture, AMG shall be deemed to have acquired all of
the Unvested (AMG) LLC Points (and, with respect to a Management Default, all of
the Vested (AMG) LLC Points) of the applicable Purchaser, including the entire
(AMG) LLC Interest with respect thereto (including such Purchaser's (and its
(AMG) Permitted Transferees', as applicable) (AMG) LLC Capital Account with
respect thereto). Such Purchaser (and his, her or its (AMG) Permitted
Transferees, as applicable) shall, upon such a Forfeiture, cease to have any
rights hereunder and under the LLC Agreement in respect of the Unvested (AMG)
LLC Points (and with respect to a Forfeiture contemplated by Section 8(d) above)
and the related (AMG) LLC Interest. AMG shall, within a reasonable period of
time, provide notice to the Purchasers of any Forfeiture under this Section
8(e).
SECTION 9. REPURCHASE OF VESTED (AMG) LLC POINTS.
(a) In the event that a Purchaser's employment by the LLC
terminates for any reason, then, subject to any provisions on Vesting and
Forfeiture set forth in Sections 5 and 8 hereof, AMG shall purchase, and such
Purchaser, and such Purchaser's (AMG) Permitted
11
Transferees, if any (each an "(AMG) REPURCHASED MEMBER"), shall sell to AMG all
(but not less than all) of the Vested (AMG) LLC Points held by such (AMG)
Repurchased Member, in each case, pursuant to the terms of this Section 9 (such
purchase and sale, an "(AMG) REPURCHASE"). In connection with the closing of any
(AMG) Repurchase, AMG or its assignees shall be deemed to have purchased all of
such Purchaser's (and any (AMG) Permitted Transferees', as applicable) (AMG) LLC
Points, including the (AMG) Repurchased Member's entire (AMG) LLC Interest and
(AMG) LLC Capital Account with respect thereto.
(b) The purchase price (the "(AMG) REPURCHASE PRICE") for the
(AMG) Repurchase with respect to the Vested (AMG) LLC Points held by such (AMG)
Repurchased Member and to be repurchased therefrom by AMG hereunder shall be an
amount in cash equal to (i) with respect to the Vested Class A (AMG) LLC Points
held by such (AMG) Repurchase Member, the Class A (AMG) Repurchase Price, and
(ii) with respect to the Vested Class B (AMG) LLC Points held by such (AMG)
Repurchased Member, the Class B (AMG) Repurchase Price, in each case less any
amounts outstanding under any Purchase Note with respect to the Purchase and
Sale of such (AMG) LLC Points.
(c) The closing of the (AMG) Repurchase will take place on a
date set by AMG (the "(AMG) REPURCHASE CLOSING DATE") which shall be a date
within ninety (90) calendar days after the end of the quarter in which
Purchaser's termination of employment with the LLC or Permanent Incapacity
occurred; PROVIDED, HOWEVER, in no event shall AMG consummate such (AMG)
Repurchase prior to the date which is six (6) months after the applicable (AMG)
LLC Point Acquisition Date. In connection with the closing of any (AMG)
Repurchase, AMG shall be deemed to have purchased the (AMG) LLC Interest with
respect to such (AMG) LLC Points, including a ratable share of such Repurchased
Member's (AMG) LLC Capital Account with respect thereto, and AMG shall revise
SCHEDULE A hereto to reflect such (AMG) Repurchase.
(d) The rights of AMG and its assignees hereunder are in
addition to and shall not affect any other rights which AMG or its assigns may
otherwise have to repurchase the Vested (AMG) LLC Points (or any Forfeiture of
(AMG) LLC Points) of a Purchaser.
(e) On the (AMG) Repurchase Closing Date, AMG (or its respective
assignees, as applicable) shall pay to each (AMG) Repurchased Member the
applicable (AMG) Repurchase Price for the Vested (AMG) LLC Points repurchased in
the manner set forth in this Section 9, and upon such payment the (AMG)
Repurchased Member shall cease to hold any (AMG) LLC Points or (AMG) LLC
Interest and shall no longer have any rights hereunder or under the LLC
Agreement with respect thereto. On the (AMG) Repurchase Closing Date, the (AMG)
Repurchased Member and AMG (or its assignees) shall, if AMG so requests, execute
an agreement reasonably acceptable to AMG in which the (AMG) Repurchased Member
represents and warrants to AMG (or its assignees) that it has sole record and
beneficial title to the (AMG) LLC Points subject to the (AMG) Repurchase, free
and clear of any Liens as of such date other than those imposed by this
Agreement or incurred by AMG. Payment of the applicable aggregate (AMG)
Repurchase Price shall be made on the (AMG) Repurchase Closing Date by check or
wire-transfer of immediately available funds to an account designated in writing
by the
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(AMG) Repurchased Member at least three (3) business days prior to the (AMG)
Repurchase Closing Date.
(f) In the event that any Purchaser (or any (AMG) Permitted
Transferee) (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 such Purchaser's (or (AMG) Permitted Transferee's) (AMG) LLC Points,
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 (AMG) LLC Points, by court order or decree or by
operation of law (the events detailed in clauses (i)-(iii), each a "BANKRUPTCY
EVENT"), then AMG shall repurchase all of the Vested (AMG) LLC Points held by
such Purchaser (or (AMG) Permitted Transferee, as applicable) pursuant to the
terms of this Section 9(f), as if Purchaser was a (AMG) Repurchased Member with
the purchase price determined pursuant to Section 9(b) and the date of the
closing to take place within thirty (30) days following the delivery by AMG of
written notice to that effect. Furthermore, upon the occurrence of any
Bankruptcy Event, the entire Unvested (AMG) LLC Points shall be subject to the
Forfeiture provisions of Section 8 hereof. In order to give effect to clause
(iii) above, if any portion of a Purchaser's (or (AMG) Permitted Transferee's)
(AMG) LLC Points becomes subject to transfer (or purport to be or have been
transferred) by a court order or decree or by operation of law, such Purchaser
(or (AMG) Permitted Transferee) 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 of the LLC, and AMG shall have the right to purchase from such Purchaser
(or (AMG) Permitted Transferee), all of such Purchaser's Vested (AMG) LLC Points
as set forth in this Section 9.
(g) Notwithstanding the vesting provisions of Section 5, upon
the death of any Purchaser, if the fair market value of such Purchaser's (or
(AMG) Permitted Transferee's) Vested (AMG) LLC Points (as determined pursuant to
Section 12(d)(i), as applicable) shall be insufficient to satisfy any
outstanding balance on such Purchaser's (or (AMG) Permitted Transferee's)
Purchase Note, then a number of such Purchaser's (or (AMG) Permitted
Transferee's) Unvested (AMG) LLC Points up to the number of (AMG) LLC Points
having a fair market value (as determined pursuant to Section 12(d)(i), as
applicable) equal to the outstanding balance of such Purchaser's (or (AMG)
Permitted Transferee's) Purchase Note shall immediately become Vested (AMG) LLC
Points, and such Vested (AMG) LLC Points shall be subject to an (AMG) Repurchase
pursuant to and in accordance with this Section 9, and the Unvested (AMG) LLC
Points shall be subject to Forfeiture pursuant to Section 8 hereof.
(h) In the event that a Purchaser (or (AMG) Permitted
Transferee) is required to sell its, his or her Vested (AMG) LLC Points pursuant
to the provisions of this Section 9, and in the further event that such
Purchaser (or (AMG) Permitted Transferee) refuses to, is unable to, or for any
reason fails to, execute and deliver the agreements required by this Section 9,
AMG (or its assigns) may deposit the applicable (AMG) Repurchase Price, if any,
therefor in cash with any bank doing business within fifty (50) miles of the
LLC's principal place of business, as agent or trustee, or in escrow, for such
Purchaser (or (AMG) Permitted Transferee), to be held by such bank for the
benefit of and for delivery to Purchaser (or
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(AMG) Permitted Transferee). Upon such deposit by AMG (or its assigns) and upon
notice thereof given to such Purchaser (or (AMG) Permitted Transferee), such
Purchaser's (or (AMG) Permitted Transferee) Vested (AMG) LLC Points shall be
deemed to have been sold, transferred, conveyed and assigned to AMG (or its
assigns) and such Purchaser (or (AMG) Permitted Transferee) shall have no
further rights with respect thereto (other than the right to withdraw the
payment therefor, if any, held in escrow).
SECTION 10. ALLOCATIONS.
(a) GENERAL. From and after April 1, 2003, the (AMG) LLC Points
acquired by each Purchaser hereunder shall entitle such Purchaser to the rights,
and subject such Purchaser to the obligations, in respect of the allocation of
items of income, gain, loss and deduction under the LLC Agreement as provided in
this Section 10. As part of each Purchaser's (AMG) LLC Interest, such Purchaser
is acquiring an equitable interest in a portion of AMG's interest in its Capital
Account, such interest referred to herein as such Purchaser's "(AMG) LLC CAPITAL
ACCOUNT", which (AMG) LLC Capital Account shall initially be equal to the (AMG)
LLC Point Purchase Price for the (AMG) LLC Points; PROVIDED, HOWEVER, that
nothing herein shall be construed to transfer or reduce AMG's Capital Account
under the LLC Agreement. All items of income, gain, loss and deduction allocated
to a Purchaser hereunder shall be allocated to such Purchaser's (AMG) LLC
Capital Account in respect of such Purchaser's (AMG) LLC Points. In addition,
upon any adjustment to AMG's Capital Account as provided in Sections 5.1 and
5.5(c) of the LLC Agreement (including as a result of any Purchase and Sale
hereunder), each Purchaser's (AMG) LLC Capital Account shall be appropriately
adjusted to give effect to such adjustment in a manner which is consistent with
the allocation provisions of Section 10(d) below (i.e., each Purchaser shall not
share in such adjustment to the Capital Account until such time as AMG's Capital
Account is equal to the Class A/B-1 Equity Participation Threshold).
The LLC acknowledges that this Section 10 transfers to
each Purchaser a portion of the amounts otherwise allocable to AMG under the LLC
Agreement as provided herein, and agrees to make such allocations as if such
provisions were a part of the LLC Agreement. The parties further acknowledge
that such transfer of economic rights, and the allocation provisions of this
Section 10, shall only apply for the period commencing on the (AMG) LLC Point
Acquisition Date, with proportionate adjustments to be made for partial periods
under the LLC Agreement. The allocations made in respect of the (AMG) LLC Points
under this Section 10 shall not in any way affect allocation in respect of the
LLC Points for prior completed quarters.
(b) ALLOCATION OF INCOME AND GAIN.
(i) Each Purchaser shall be allocated a portion of the
amount of income and gain to be allocated to AMG each quarter pursuant
to Section 4.2(c)(i) of the LLC Agreement equal to such Purchaser's
Allocation of (AMG) Free Cash Flow for such quarter.
(ii) In addition to the amounts allocated to each
Purchaser pursuant to Section 10(b)(i) above, each Purchaser shall be
allocated a ratable (as among all Purchasers in proportion to such
Purchaser's respective Allocation of (AMG) Free
14
Cash Flow for such period) portion of the items of income and gain to
be allocated to AMG pursuant to Section 4.2(c)(ii) of the LLC
Agreement for such quarter in excess of the cumulative amount of loss
and deduction allocated to AMG pursuant to Sections 4.2(d)(ii) and
4.2(d)(iii) of the LLC Agreement (less the amounts of such loss and
deduction allocated to the Purchasers pursuant to Section 10(c) of
this Agreement), until such time as each Purchaser has been allocated
cumulative income and gain under this Section 10(b)(ii) equal to such
Purchaser's share of the cumulative amount of losses and deductions
allocable to AMG under Sections 4.2(d)(ii) and 4.2(d)(iii) of the LLC
Agreement, as such losses and deductions are allocated to Purchaser
pursuant to Section 10(c) below.
(c) ALLOCATION OF LOSS AND DEDUCTION.
(i) In the event items of loss and deduction are to be
allocated to AMG for any quarter pursuant to Section 4.2(d)(ii) of the
LLC Agreement, then all of such items of loss and deduction shall (A)
FIRST, be allocated to the Purchasers in proportion to, and only to
the extent of, such Purchaser's allocation of gain and income pursuant
to Section 10(b) above, until such time as each such Purchaser's (AMG)
LLC Capital Account is equal to zero (0), and (B) SECOND, any
remaining items of such loss and deduction shall be allocated ratably
to the Purchasers in accordance with their respective number of (AMG)
LLC Points as of the first day of such quarter until such time as each
such Purchaser's (AMG) LLC Capital Account is reduced to zero (0).
(ii) In the event items of loss and deduction are to be
allocated to AMG for any quarter pursuant to Section 4.2(d)(iii) of
the LLC Agreement, then each Purchaser shall be allocated items of
loss and deduction for such quarter, pro rata with each other
Purchaser, based on each Purchaser's respective (AMG) Percentage
Interest as of the first day of such quarter.
(d) ALLOCATION OF NET GAIN UPON A SALE, ETC. In connection with
the allocation of net gain from any sale, exchange or other disposition of all,
or substantially all, of the assets of the LLC, each Purchaser shall be
allocated a portion of such net gain as follows:
(i) With respect to amounts of net gain to be
allocated to AMG pursuant to Section 4.2(e)(i) of the LLC Agreement,
each Purchaser shall be allocated a ratable share of the amount of
gain in excess of the amount of the cumulative amount of loss and
deduction allocated to AMG pursuant to Sections 4.2(d)(ii) and
4.2(d)(iii) of the LLC Agreement (less amounts of such loss and
deduction allocated to the Purchasers pursuant to Section 10(c) of
this Agreement), until such Purchaser has received, together with
items of income and gain allocated pursuant to Section 10(b)(ii)
above, allocations equal to the cumulative amount of losses and
deductions allocated to such Purchaser under Section 10(c) above.
15
(ii) With respect to items of net gain to be allocated
to AMG pursuant to Section 4.2(e)(iii) of the LLC Agreement, each
Purchaser shall not be allocated any amount of such items of net gain
until AMG's Capital Account is equal to the Class A/B-1 (AMG) Equity
Participation Threshold, after which each Purchaser shall be allocated
a ratable amount of AMG's Share of all remaining amounts of net gain
allocated pursuant to Section 4.2(e)(iii) of the LLC Agreement, based
on each Purchaser's respective (AMG) Percentage Interest as of the
date of such sale or other transaction.
(e) ALLOCATION OF NET LOSS UPON A SALE, ETC. In connection with
the allocation of net loss from any sale, exchange or other disposition of all,
or substantially all, of the assets of the LLC pursuant to Section 4.2(f) of the
LLC Agreement, each Purchaser shall be allocated a ratable amount of AMG's Share
of the net loss to be allocated under said Section 4.2(f), based on each
Purchaser's respective (AMG) Percentage Interest as of the date of such sale or
other transaction, until each Purchaser's (AMG) LLC Capital Account is reduced
to zero (0). In the event AMG is to be allocated additional items of net loss
pursuant to Section 4.2(f) of the LLC Agreement after such time as AMG's Capital
Account is reduced to zero (0) (and all (AMG) LLC Capital Accounts of the
Purchasers are reduced to zero (0)) as contemplated by said Section 4.2(f), then
each Purchaser shall also be allocated a ratable amount of AMG's Share of such
additional items of net loss, based on such Purchaser's respective (AMG)
Percentage Interest as of the date of such sale or other transaction.
(f) OTHER ALLOCATION PROVISIONS. Notwithstanding the foregoing,
a reduction in any quarter to the amounts of income and gain to be allocated to
AMG under the LLC Agreement pursuant to Section 4.2(h) thereof shall
proportionately reduce the amounts otherwise allocated to each Purchaser
hereunder (but not below zero (0)), based on such Purchaser's respective
Allocation of (AMG) Free Cash Flow for such quarter.
SECTION 11. DISTRIBUTIONS.
(a) GENERAL. From and after April 1, 2003, the (AMG) LLC Points
acquired by each Purchaser hereunder shall entitle each Purchaser to the rights,
and subject each Purchaser to the obligations, in respect of distributions under
the LLC Agreement as provided in this Section 11. Each Purchaser's (AMG) LLC
Capital Account in respect of such Purchaser's (AMG) LLC Points shall be
appropriately adjusted in respect of any such distributions. The LLC
acknowledges that this Section 11 transfers to each Purchaser the right to
receive distributions otherwise to be made to AMG under the LLC Agreement as
provided herein, and agrees to make such distributions as if such provisions
were a part of the LLC Agreement. Such transfer of the right to receive
distributions under the LLC Agreement in respect of (AMG) LLC Points shall only
apply to periods commencing on the (AMG) LLC Point Acquisition Date with respect
to such (AMG) LLC Points, with proportionate adjustments to be made for partial
periods under the LLC Agreement. In no event shall any Purchaser be entitled to
any distributions under the LLC Agreement in respect of AMG's LLC Points for
allocations of gain, income, loss and deduction made or otherwise with respect
to periods prior to the applicable (AMG) LLC Point Acquisition Date.
16
(b) DISTRIBUTIONS. In the event the LLC makes a distribution to
AMG in any quarter pursuant to Section 4.3(a)(i) of the LLC Agreement, then each
Purchaser shall be entitled to receive a ratable portion of such distribution
based on such Purchaser's respective Allocation of (AMG) Free Cash Flow for such
quarter up to and including the amount allocated to such Purchaser pursuant to
Section 10(b)(i) above for such quarter and any previous calendar quarter to the
extent not then distributed, LESS such Purchaser's ratable share (based on such
Purchaser's Allocation of (AMG) Free Cash Flow for such quarter) of any
reservation from Free Cash Flow made in respect of such amount otherwise
distributable to AMG as contemplated by Section 4.3(a)(i) of the LLC Agreement,
and LESS any amounts of loss and deduction allocated to such Purchaser in such
quarter pursuant to Section 10(c) above.
(c) OTHER DISTRIBUTIONS.
(i) Each Purchaser shall be entitled to receive a
portion of AMG's Share of distributions attributable to a sale of all,
or substantially all, of the assets of the LLC in accordance with (and
in proportion to) the positive balance, if any, of such Purchaser's
(AMG) LLC Capital Account (as determined immediately prior to such
distribution); and
(ii) Each Purchaser shall be entitled to receive a
ratable portion of AMG's Share of any other distributions made to the
Members under Section 4.3(c) of the LLC Agreement based on such
Purchaser's respective (AMG) Percentage Interest as of the date of
such distribution.
(d) DISTRIBUTIONS UPON DISSOLUTION. Each Purchaser shall be
entitled to receive a ratable portion of any distributions to AMG of amounts
reserved in connection with the dissolution of the LLC as provided in Section
4.4 of the LLC Agreement, in proportion to the positive balance (if any) in such
Purchaser's (AMG) LLC Capital Account, until Purchaser's (AMG) LLC Capital
Account is reduced to zero (0); PROVIDED, HOWEVER, each Purchaser shall be
entitled to receive a portion of any additional distributions to be made to AMG
pursuant to Section 4.4 of the LLC Agreement following such time as AMG's
Capital Account is reduced to zero (0) (and the (AMG) LLC Capital Account of
each Purchaser is reduced to zero (0)), ratably based on such Purchaser's
respective (AMG) Percentage Interest as of the date of such distribution.
(e) MISCELLANEOUS DISTRIBUTIONS. Each Purchaser shall be
entitled to receive a ratable portion of AMG's Share of distributions to be made
to the Members pursuant to Section 4.5 of the LLC Agreement based on such
Purchaser's respective (AMG) Percentage Interest (immediately prior to the
applicable measurement date of LLC Points used for purposes of making such
distributions to Members under Section 4.5 of the LLC Agreement).
SECTION 12. (AMG) LLC POINT PUTS.
(a) Each Purchaser may, at such Purchaser's option, subject to
the terms and conditions set forth in this Section 12 and subject to the
vesting, forfeiture, repurchase and other provisions set forth in this
Agreement, cause AMG to purchase a portion of the (AMG) LLC
17
Points held by such Purchaser (an "(AMG) PUT"); PROVIDED, HOWEVER, that in no
event shall Purchaser cause a (AMG) Put of any Unvested (AMG) LLC Points as of
such date.
(b) Each Purchaser may, subject to the terms and conditions set
forth in this Agreement, cause AMG to purchase up to ten percent (10%) of the
(AMG) LLC Points of such Purchaser (and/or any (AMG) Permitted Transferees of
such Purchaser) as of the applicable (AMG) LLC Point Acquisition Date for such
(AMG) LLC Points, on the first business day following May 1 (each an "(AMG)
PURCHASE DATE")) but only up to an aggregate of fifty percent (50%) of the (AMG)
LLC Points of such Purchaser (and any (AMG) Permitted Transferees, if any) on
any five (5) separate (AMG) Purchase Dates starting on the first (AMG) Purchase
Date which is, with respect to such Purchaser's Class A (AMG) LLC Points, at
least two (2) years following the applicable (AMG) LLC Point Acquisition Date
with respect to such (AMG) LLC Points and ending on the first Class A (AMG)
Purchase Date which is at least fifteen (15) years following the Class A (AMG)
LLC Point Acquisition Date with respect to such Class A (AMG) LLC Points, and
with respect to such Purchaser's Class B (AMG) LLC Points, at least five (5)
years following the applicable (AMG) LLC Point Acquisition Date with respect to
such Class B (AMG) LLC Points and ending on the first (AMG) Purchase Date which
is at least fifteen (15) years following the (AMG) LLC Point Acquisition Date
with respect to such Class B (AMG) LLC Points. For the avoidance of doubt, to
the extent a Purchaser acquires both Class A (AMG) LLC Points and Class B (AMG)
LLC Points, or multiple series of Class B (AMG) LLC Points, the provisions of
this Section 12, including the limitations on the maximum number of (AMG) LLC
Points that may be put to AMG by each Purchaser, shall apply separately to each
class or series of (AMG) LLC Points, as applicable.
(c) If a Purchaser desires to exercise his, her or its rights
under Section 12(b) above, such Purchaser shall give AMG irrevocable written
notice (an "(AMG) PUT NOTICE") on or prior to the preceding December 31 (the
"(AMG) PUT NOTICE DEADLINE"), stating that such Purchaser is electing to
exercise such rights and the number of each class or series of (AMG) LLC Points
(not to exceed ten percent (10%) of each class or series of such Purchaser's
(AMG) LLC Points as of the applicable (AMG) LLC Point Acquisition Date for such
(AMG) LLC Points) (the "PUT (AMG) LLC POINTS") to be sold in the (AMG) Put.
(AMG) Puts in any given calendar year for which (AMG) Put Notices are received
before the (AMG) Put Notice Deadline for that calendar year shall be completed
as follows: at a closing on the respective (AMG) Purchase Date, AMG shall
purchase from such Purchaser and its (AMG) Permitted Transferees, if any, the
Put (AMG) LLC Points as designated in the (AMG) Put Notice, up to the maximum
amount permitted by Section 12(b) above with respect to that year and the
aggregate amount that may be put by such Purchaser (and his, her or its (AMG)
Permitted Transferees).
(d) The purchase price per Put (AMG) LLC Point (the "(AMG) PUT
PRICE") shall be, (i) with respect to Class A (AMG) LLC Points, the quotient
obtained by dividing the Class A (AMG) Fair Market Value by the total number of
LLC Points held by AMG on the (AMG) Purchase Date, before giving effect to any
(AMG) Puts on such date (the "CLASS A (AMG) PUT PRICE"), and (ii) with respect
to Class B (AMG) LLC Points, the quotient obtained by dividing the Class B (AMG)
Fair Market Value by the total number of LLC Points held by AMG on the (AMG)
Purchase Date, before giving effect to any (AMG) Puts on such date (the "CLASS B
(AMG) XXX XXXXX").
00
(x) Xxx xxxxxxxx xxxxxx, (X) the "CLASS A (AMG) FAIR
MARKET VALUE" shall be equal to the positive difference, if any,
between (I) the (AMG) Fair Value and (II) the Class A (AMG) Put
Participation Threshold and (B) the "CLASS B (AMG) FAIR MARKET VALUE"
shall be equal to the positive difference, if any, between (I) the
(AMG) Fair Value and (II) the Class B-1 (AMG) Put Participation
Threshold.
(ii) For purposes hereof, the "(AMG) FAIR VALUE" shall
be an amount equal to the product of (A) the Fair Value of the LLC and
(B) a fraction, the numerator of which is equal to the number of LLC
Points held by AMG as of the (AMG) Purchase Date and the denominator
of which is the total number of outstanding LLC Points as of the (AMG)
Purchase Date, in each case before giving effect to any (AMG) Puts,
Calls, issuances or redemptions of LLC Points on such date, as
applicable.
(iii) For purposes hereof, the "FAIR VALUE OF THE LLC"
shall equal (A) the product of the Fair Multiple and the Run Rate Free
Cash Flow of the LLC (net of Free Cash Flow Expenditures) as of the
applicable Fair Value Determination Date, PLUS (B) all cash and cash
equivalents of the LLC, and MINUS (C) the Total Debt of the LLC, in
each case as of the Fair Value Determination Date.
(iv) For purposes hereof, the term "FAIR MULTIPLE"
shall equal the quotient obtained by dividing (A) the AMG Enterprise
Value by (B) AMG's Run Rate EBITDA as of the Fair Value Determination
Date (the "AMG MULTIPLE"), with such quotient discounted by between
thirty percent (30%) and fifty percent (50%). Within that range, the
discount to the AMG Multiple will be measured by subtracting from
fifty percent (50%) five percent (5%) for each of the following four
conditions that have been met as of the Fair Value Determination Date:
(1) positive net client cash flows of the LLC for the six (6) months
prior to the Fair Value Determination Date, (2) positive net client
cash flows of the LLC for the eighteen (18) months prior to the Fair
Value Determination Date, (3) performance in excess of applicable
benchmarks for the six months prior to the Fair Value Determination
Date for the LLC's investment products that generated greater than
fifty percent (50%) of the LLC's Run Rate Free Cash Flow in such
period, and (4) performance in excess of applicable benchmarks for the
eighteen (18) months prior to the Fair Value Determination Date for
the LLC's investment products that generated greater than fifty
percent (50%) of the LLC's Run Rate Free Cash Flow in such period. The
discount to the AMG Multiple for any calculation of the Fair Multiple
shall be reasonably determined by AMG, using the foregoing criteria,
whose determination shall be binding on Purchaser, subject to Section
12(e) below.
(v) For purposes hereof, the term "TOTAL DEBT" shall
be determined by AMG and shall include, in each case as of the Fair
Value Determination Date, all Indebtedness and long-term acquisition
debt of the LLC determined in accordance with generally accepted
accounting principles, consistently applied and reflected
19
on the books of account of the LLC, as well as all undistributed
profits of the LLC and Indebtedness of AMG or any other Controlled
Affiliate of AMG incurred directly on behalf of the LLC with the
consent of the Management Committee determined in accordance with
generally accepted accounting principles, consistently applied and
reflected on the books of account of AMG.
(vi) For purposes hereof, the term "AMG ENTERPRISE
VALUE" shall mean the sum of (A) the product of (x) the average
closing price per share of AMG Stock over the ninety (90) calendar
days prior to, but not including, the Fair Value Determination Date
and (y) the average number of shares of AMG Stock outstanding over the
ninety (90) calendar days prior to, but not including, the Fair Value
Determination Date and (B) the actual amount of total AMG Indebtedness
as of the Fair Value Determination Date, MINUS all holding company
cash and cash equivalents on AMG's balance sheet.
(vii) For purposes hereof, the term "RUN RATE FREE CASH
FLOW" shall mean the Maintenance Fees for the quarter ending on the
Fair Value Determination Date multiplied by four (4), MINUS the
amount, if any, by which the operating expenses for the LLC for the
four (4) calendar quarters ending on the Fair Value Determination Date
exceeded the Operating Cash Flow of the LLC for such four (4) calendar
quarters.
(viii) For purposes hereof, the term "AMG'S RUN RATE
EBITDA" shall mean (A) AMG's EBITDA for the quarter ended on the Fair
Value Determination Date (as publicly reported by AMG in supplemental
disclosure), pro forma for acquisitions and divestitures made by AMG
in such quarter (calculated by adding to or subtracting from EBITDA,
as the case may be, AMG's contractual revenue share of the acquired or
divested entity's revenue for such quarter, prior to such acquisition
or after such divestiture, respectively), multiplied by (B) four (4).
(ix) For purposes hereof, the term "AMG INDEBTEDNESS"
shall mean (A) all indebtedness of AMG 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 AMG which is evidenced by a note, bond, debenture or
similar instrument (the amount of which shall be measured, with
respect to publicly-traded indebtedness, as the lesser of the book
value or the market value of such debt), (C) all obligations of AMG in
respect of acceptances issued or created for the account of AMG, (D)
all obligations of AMG under noncompetition agreements reflected as
liabilities on a balance sheet of AMG in accordance with generally
accepted accounting principles, (E) all liabilities secured by any
Lien on any property owned by AMG even though AMG has not assumed or
otherwise become liable for the payment thereof, and (F) all net
obligations of AMG under interest rate, commodity, foreign currency
and financial markets swaps, options, futures and other hedging
obligations. For the avoidance of doubt, the term "Indebtedness" shall
not include (i) any so-called
20
synthetic, off-balance sheet or tax retention lease (including the
lease of AMG's headquarters entered into in connection with the
Participation Agreement dated as of December 1, 2000 among Realty
Facility Holdings XII LLC, AMG, the Provident Bank and Cornerstone
Funding Corporation I) (each a "SYNTHETIC LEASE OBLIGATION"), (ii) any
guarantee in respect of Synthetic Lease Obligations, (iii) any
liabilities secured by any lien in connection with Synthetic Lease
Obligations, or (iv) unsecured Indebtedness of AMG owing to any
Affiliate of AMG, related to AMG's cash management program with its
Affiliates.
(e) AMG shall have the right (but not the obligation) to
request, at the expense of AMG, that the Fair Value of the LLC be determined by
a third party appraiser if the Fair Value of the LLC as of the Fair Value
Determination Date calculated in accordance with Section 12(d) is greater than
nine (9) times the LLC's Run Rate Free Cash Flow (net of Free Cash Flow
Expenditures) as of the end of the calendar quarter immediately prior to the
quarter in which the (AMG) Purchase Date occurs. Each Purchaser exercising an
(AMG) Put hereunder shall have the right to request, at the expense of such
Purchaser, that the Fair Value of the LLC with respect to such (AMG) Put be
determined by a third party appraiser if the Fair Value of the LLC as of the
Fair Value Determination Date calculated in accordance with Section 12(d) is
less than six (6) times the LLC's Run Rate Free Cash Flow (net of Free Cash Flow
Expenditures) as of the end of the calendar quarter immediately prior to the
quarter in which the (AMG) Purchase Date occurs. Any party requesting such
appraisal shall do so in writing no later than twenty-one (21) calendar days
prior to the proposed (AMG) Purchase Date. The third party appraiser shall be
selected by the Management Committee with the approval of AMG. The third party
appraiser shall complete its appraisal prior to the (AMG) Purchase Date, and its
determination of Fair Value of the LLC shall be final and binding on each of
AMG, the applicable Purchaser and his, her or its (AMG) Permitted Transferees,
if any.
(f) At the closing of the (AMG) Put on the (AMG) Purchase Date,
the applicable Purchaser will receive the applicable (AMG) Put Price with
respect to such Put (AMG) LLC Points less a portion of the outstanding amount
under any Purchase Note issued with respect to such Put (AMG) LLC Points equal
to the product of (i) the total amount outstanding under the Purchase Note, and
(ii) the percentage of the aggregate (AMG) LLC Points purchased by the Purchaser
with the Purchase Note represented by the Put (AMG) LLC Points. In connection
with any (AMG) Put, AMG shall be deemed to be repurchasing a ratable share of
such Purchaser's (AMG) LLC Interest, including a ratable share of such
Purchaser's (AMG) LLC Capital Account with respect to the Put (AMG) LLC Points,
and AMG shall revise SCHEDULE A to reflect the foregoing.
SECTION 13. RESTRICTIONS ON TRANSFER. Each Purchaser and each (AMG)
Permitted Transferee agrees and shall agree not to sell or otherwise transfer or
dispose of any (AMG) LLC Points or any portion of the (AMG) LLC Interest
purchased hereunder and held by them for the applicable Lock-up Period with
respect thereto. In addition, and not in limitation of the foregoing, the (AMG)
LLC Interest may be Transferred if and only if AMG and the Management Committee
consents in writing to the transfer in advance thereof, which consent may be
withheld by either party in its sole discretion.
21
SECTION 14. VOTING RIGHTS. Each Purchaser shall, by virtue of its
ownership of the (AMG) LLC Points, have the right to direct AMG to vote, and AMG
shall vote, its (AMG) LLC Points in a manner requested by each Purchaser from
time to time on all matters subject to voting by the Manager Member under the
LLC Agreement; PROVIDED, HOWEVER, that the scope and extent of such direction
shall be in proportion to such Purchaser's Voting Percentage. Each Purchaser
will be promptly notified of any matter that requires the vote by or written
consent of the Manager Member under the LLC Agreement. Upon the prompt
notification of such matter to be voted upon, each Purchaser will deliver to
AMG, at least twenty-four (24) hours prior to the meeting at which such vote is
to be taken or a written consent is required to be delivered, a written notice
directing AMG to vote such Purchaser's Voting Percentage in the manner indicated
on such notice. In the event that the written notice is not timely delivered to
AMG by a Purchaser, then such Purchaser shall be deemed to have waived its
voting rights with respect to such matter and granted AMG with full discretion
to vote its (AMG) LLC Points. Except as set forth in this Section 14 and in
Section 15(h) hereof, no Purchaser shall have any other right to vote in respect
of the (AMG) LLC Interest, including under the LLC Agreement, and no class or
series of (AMG) LLC Points shall have the right to any separate class or series
vote.
SECTION 15. MISCELLANEOUS.
(a) EQUITABLE RELIEF. The parties hereto agree and declare that
legal remedies are inadequate to enforce the provisions of this Agreement and
that equitable relief, including specific performance and injunctive relief, may
be used to enforce the provisions of this Agreement.
(b) SAVING CLAUSE. If any provision(s) of this Agreement shall
be determined to be illegal or unenforceable, such determination shall in no
manner affect the legality or enforceability of any other provision hereof.
(c) NOTICES. All notices, requests, consents and other
communications shall be in writing and be deemed given when delivered
personally, by facsimile transmission or on the first business day after the
date mailed if mailed by a nationally recognized over night carrier service, or
three business days after the date mailed if mailed by first class registered or
certified mail, postage prepaid. Notices to AMG, the LLC or Purchaser shall be
addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other.
(d) BENEFIT AND BINDING EFFECT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, their respective
successors, assigns, and legal representatives. Transferees of any portion of an
(AMG) LLC Interest or successors of any Purchaser shall become parties to this
Agreement by executing a counterpart hereto; PROVIDED, HOWEVER, that such
transferees and successors shall, to the extent provided in this Agreement, be
bound by and subject to the provisions of this Agreement regardless of whether
they execute such a counterpart. This Agreement shall be binding on any
Transferees of all or significantly all of AMG's LLC Points, regardless of any
agreement to the contrary; PROVIDED, HOWEVER, that no transfer of a lesser
amount of LLC Points shall interfere with the (AMG) LLC Interests of any
Purchaser hereunder. Without limitation of the foregoing, upon any
stock-for-stock merger in
22
which the LLC is not the surviving entity, equity interests of the LLC's
successor issued in respect of the LLC Points underlying the (AMG) LLC Interests
transferred hereunder shall remain subject to vesting and the Forfeiture and
Repurchase provisions applicable to such (AMG) LLC Points.
(e) NO RETENTION RIGHTS. Nothing in this Agreement shall confer
upon any Purchaser any right to employment or the continuance of employment with
the LLC for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the LLC (or any parent or subsidiary employing
or retaining Purchaser) or of any Purchaser, which rights are hereby expressly
reserved by each, to terminate Purchaser's service relationship with the LLC at
any time and for any reason, with or without cause.
(f) DISPUTE RESOLUTION. Any dispute arising out of or relating
to this Agreement or the breach, termination or validity hereof shall be finally
settled by binding arbitration conducted expeditiously in accordance Section
11.6 of the LLC Agreement.
(g) AMENDMENTS. This Agreement may not be amended nor any term
hereof changed, modified, waived or terminated, except to the extent the same is
effected and evidenced by the written consent of each of AMG and a
majority-in-interest of the Voting Percentage of the Purchasers voting as a
single class; PROVIDED, HOWEVER, that this Agreement may not be amended nor any
term hereof changed, modified, waived or terminated, except to the extent the
same is approved by the written consent of a two-thirds interest of the voting
power of the holders of Class B (AMG) LLC Points, if such amendment, change,
modification, waiver or termination would materially and adversely affect any
right, preference, privilege or voting power of the Class B (AMG) LLC Points or
the holders thereof in a manner that does not also similarly affect such right,
preference, privilege or voting power of the other classes of (AMG) LLC Points;
PROVIDED FURTHER, HOWEVER, that AMG shall be permitted to amend SCHEDULE A
hereto as expressly permitted in this Agreement without the consent of any other
Person. Notwithstanding anything to the contrary in this Section 15(g), each
Purchaser acknowledges and agrees that AMG may transfer additional Class B (AMG)
LLC Points to Purchasers under this Agreement from time to time, with such
additional Class B (AMG) LLC Points to be issued in one or more series as
determined by AMG and the Management Committee. Furthermore, in accordance with
such transfers, AMG shall be permitted, to the extent required, to amend or make
provision for the amendment of this Agreement upon the issuance of such new
series of Class B (AMG) LLC Points to implement the rights, preferences and
privileges of the additional Class B (AMG) LLC Points, including, without
limitation, amending Sections 9 and 10 hereof and adding new participation
thresholds, including to the definitions of "Allocation of (AMG) Free Cash
Flow", "Class A (AMG) Fair Market Value" and "Class B (AMG) Fair Market Value"
and otherwise to reflect the intent of the parties to this Agreement in such
form and substance as is reasonably determined to be necessary by the Manager
Member for such purpose.
(h) CONVERSION OF CORPORATE FORM. In the event the LLC is
converted into one or more corporations, AMG will use its commercially
reasonable efforts to ensure that each Purchaser receives such economic and
equity rights, preferences, and privileges which are equivalent to such
Purchaser's (AMG) LLC Points set forth in this Agreement, subject to equivalent
restrictions and limitations.
23
(i) FURTHER ASSURANCES. Each of the parties hereto agrees to
execute all such further instruments and documents and take such further action
as any party may reasonably require in order to effectuate the terms and
purposes of this Agreement.
(j) GOVERNING LAW. This Agreement shall be construed under and
governed by the internal laws of the Commonwealth of
Massachusetts, without
giving effect to the choice or conflict of laws provisions thereof. This
Agreement shall be binding on, enforceable by and shall inure to the benefit of,
the parties hereto and their respective successors, heirs, executors,
administrators, and assigns.
(k) COUNTERPARTS. For the convenience of the parties and to
facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
(l) ENTIRE AGREEMENT. This Agreement and the LLC Agreement
represent the entire agreement among the parties hereto with respect to the
subject matter hereof; PROVIDED, that in any case where a conflict exists
between the terms of this Agreement and the terms of the LLC Agreement, the
terms of this Agreement shall govern and control.
[End of Text]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument as of the date set forth above by such parties
or their duly authorized representatives.
LLC:
ESSEX INVESTMENT MANAGEMENT
COMPANY, LLC
By: /s/ Xxxxxxxxxxx X. XxXxxxxxx
----------------------------
Name: Xxxxxxxxxxx X. XxXxxxxxx
Title: Chief Financial Officer
000 Xxxx Xxxxxx
Xxxxxx, XX 00000
AMG:
AFFILIATED MANAGERS GROUP, INC.
By: /s/ Xxxxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Executive Vice President
000 Xxxx Xxxxxx
Xxxxxx Xxxxxxxx, XX 00000
PURCHASERS:
/s/ R. Xxxxxx Xxxxxxx
-------------------------------
R. Xxxxxx Xxxxxxx
Address:
/s/ Xxxxxxx XxxXxxx
-------------------------------
Xxxxxxx XxxXxxx
Address:
/s/ Xxxxxxxxxxx X. XxXxxxxxx
-------------------------------
Xxxxxxxxxxx X. XxXxxxxxx
Address:
/s/ Xxxxx Xxxxx
-------------------------------
Xxxxx Xxxxx
Address:
/s/ Xxxxx X. Xxxx
-------------------------------
Xxxxx X. Xxxx
Address:
/s/ Xxxxx Xxxxxxxx
-------------------------------
Xxxxx Xxxxxxxx
Address:
FORM OF SCHEDULE A
Purchasers and (AMG) LLC Points
(AMG) LLC
Point (AMG) LLC Class A Class B-1
Acquisition Point (AMG) LLC (AMG)LLC
Purchaser Name and Address Date Purchase Price Points Points
------------------------------------------------------------------------------------------------------
$ * * *
Vesting:
All Class (A) (AMG) LLC Points purchased hereunder vest in equal twenty
percent (20%) increments on each of the second, third, fourth, fifth and sixth
anniversaries of the applicable (AMG) LLC Point Acquisition Date.
All Class B-1 (AMG) LLC Points vest as follows: fifty percent (50%) of the
Class B-1 (AMG) LLC Points purchased hereunder shall vest on the fifth
anniversary of the applicable (AMG) LLC Point Acquisition Date, and twenty-five
percent (25%) of the Class B-1 (AMG) LLC Points shall vest on each of the sixth
and seventh anniversaries of the applicable (AMG) LLC Point Acquisition Date.
* Under this Agreement, the Purchasers have purchased, in the aggregate,
118.325 Class A (AMG) LLC Points and 39 Class B-1 (AMG) LLC Points for a
total purchase price of $372,485.59.
