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THE SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GROVE INVESTORS LLC
(a Delaware limited liability company)
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Dated as of June 27, 1998
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS; CONSTRUCTION . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Cross References. . . . . . . . . . . . . . . . . . . . . . .12
1.3 Usage Generally . . . . . . . . . . . . . . . . . . . . . . .13
ARTICLE II FORMATION; NAME; TERM . . . . . . . . . . . . . . . . . . . .13
2.1 Formation . . . . . . . . . . . . . . . . . . . . . . . . . .13
2.2 Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2.3 Effective Date; Term. . . . . . . . . . . . . . . . . . . . .14
2.4 Principal Place of Business . . . . . . . . . . . . . . . . .14
2.5 Registered Office . . . . . . . . . . . . . . . . . . . . . .14
2.6 Registered Agent. . . . . . . . . . . . . . . . . . . . . . .14
2.7 Filings . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2.8 Authorized Person . . . . . . . . . . . . . . . . . . . . . .14
2.9 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2.10 Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE III INTERESTS; CLOSING; CONTRIBUTIONS . . . . . . . . . . . . . .17
3.1 Initial Capital Contributions . . . . . . . . . . . . . . . .17
3.2 Contribution Closing. . . . . . . . . . . . . . . . . . . . .17
3.3 Class A Units.. . . . . . . . . . . . . . . . . . . . . . . .17
3.4 Return of Capital Contributions . . . . . . . . . . . . . . .17
ARTICLE IV CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS. . . . . . . . .18
4.1 Capital Accounts. . . . . . . . . . . . . . . . . . . . . . .18
4.2 Allocation of Net Income. . . . . . . . . . . . . . . . . . .18
4.3 Allocation of Net Loss. . . . . . . . . . . . . . . . . . . .18
4.4 Class A Units . . . . . . . . . . . . . . . . . . . . . . . .19
4.5 Adjustments to Class B Percentage Interests . . . . . . . . .19
4.6 Interim Allocations Due to Percentage Interest Adjustment . .21
4.7 Certain Tax Matters . . . . . . . . . . . . . . . . . . . . .21
4.8 Reimbursement of Expenses . . . . . . . . . . . . . . . . . .23
4.9 Distributions . . . . . . . . . . . . . . . . . . . . . . . .23
4.10 Distributions in Kind . . . . . . . . . . . . . . . . . . . .24
4.11 Restrictions on Distributions . . . . . . . . . . . . . . . .24
4.12 Tax Withholding . . . . . . . . . . . . . . . . . . . . . . .24
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ARTICLE V MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . . . .25
5.1 Members . . . . . . . . . . . . . . . . . . . . . . . . . . .25
5.2 Admission of New Members. . . . . . . . . . . . . . . . . . .26
5.3 Resignation . . . . . . . . . . . . . . . . . . . . . . . . .26
5.4 Power of Members. . . . . . . . . . . . . . . . . . . . . . .26
5.5 Members' Right to Make Certain Additional Investment. . . . .26
5.6 Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.7 Voting. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.8 Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . .27
5.9 Actions Without a Meeting . . . . . . . . . . . . . . . . . .27
ARTICLE VI MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . .27
6.1 Management of the Company . . . . . . . . . . . . . . . . . .27
6.2 Powers of the Management Committee. . . . . . . . . . . . . .28
6.3 Governance. . . . . . . . . . . . . . . . . . . . . . . . . .30
6.4 No Management by Other Persons or Entities. . . . . . . . . .31
6.5 By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . .31
6.6 Reliance by Third Parties . . . . . . . . . . . . . . . . . .31
ARTICLE VII ACCOUNTING; FINANCIAL AND TAX MATTERS . . . . . . . . . . . .31
7.1 Accounting Method . . . . . . . . . . . . . . . . . . . . . .31
7.2 Accounting Records. . . . . . . . . . . . . . . . . . . . . .31
7.3 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . .32
7.4 Financial Statements. . . . . . . . . . . . . . . . . . . . .32
7.5 Bank and Investment Accounts. . . . . . . . . . . . . . . . .32
7.6 Tax Matters Partner . . . . . . . . . . . . . . . . . . . . .33
7.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
7.8 Classification as a Partnership . . . . . . . . . . . . . . .33
7.9 Accounting Decisions. . . . . . . . . . . . . . . . . . . . .34
ARTICLE VIII LIABILITY; EXCULPATION; INDEMNIFICATION . . . . . . . . . . .34
8.1 Liability of Members. . . . . . . . . . . . . . . . . . . . .34
8.2 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . .34
8.3 Duties and Liabilities of Covered Persons . . . . . . . . . .34
8.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . .35
8.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .36
ARTICLE IX TRANSFERS . . . . . . . . . . . . . . . . . . . . . . . . . .37
9.1 General Restrictions. . . . . . . . . . . . . . . . . . . . .37
9.2 Permitted Transfers . . . . . . . . . . . . . . . . . . . . .37
9.3 Drag-Along Right. . . . . . . . . . . . . . . . . . . . . . .37
9.4 Tag Along Right . . . . . . . . . . . . . . . . . . . . . . .38
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9.5 Conditions to Transfers . . . . . . . . . . . . . . . . . . .38
9.6 Effect of Permitted Transfer. . . . . . . . . . . . . . . . .39
ARTICLE X REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . .40
10.1 Demand Registration Rights. . . . . . . . . . . . . . . . . .40
10.2 Registration Procedures . . . . . . . . . . . . . . . . . . .42
10.3 Conditions to Offerings . . . . . . . . . . . . . . . . . . .45
10.4 Registration Expenses . . . . . . . . . . . . . . . . . . . .45
10.5 Indemnification; Contribution . . . . . . . . . . . . . . . .46
10.6 Holdback. . . . . . . . . . . . . . . . . . . . . . . . . . .48
ARTICLE XI TERMINATION CALL RIGHTS . . . . . . . . . . . . . . . . . . .49
11.1 Call Rights . . . . . . . . . . . . . . . . . . . . . . . . .49
ARTICLE XII TERMINATION; DISSOLUTION; LIQUIDATION AND WINDING-UP. . . . .50
12.1 Termination of the Company. . . . . . . . . . . . . . . . . .50
12.2 Events of Dissolution . . . . . . . . . . . . . . . . . . . .51
12.3 Notice of Dissolution Event . . . . . . . . . . . . . . . . .51
12.4 Liquidation and Winding-Up. . . . . . . . . . . . . . . . . .51
12.5 Survival of Rights, Duties and Obligations. . . . . . . . . .52
12.6 Claims of the Members . . . . . . . . . . . . . . . . . . . .52
ARTICLE XIII REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MEMBERS. . .53
13.1 Representations . . . . . . . . . . . . . . . . . . . . . . .53
13.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . .53
ARTICLE XIV GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . .53
14.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .53
14.2 Entire Agreement; Non-Waiver. . . . . . . . . . . . . . . . .54
14.3 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . .54
14.4 No Waivers. . . . . . . . . . . . . . . . . . . . . . . . . .54
14.5 Applicable Law. . . . . . . . . . . . . . . . . . . . . . . .55
14.6 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
SELECTION OF FORUM. . . . . . . . . . . . . . . . . . . . . .55
14.7 Further Assurances. . . . . . . . . . . . . . . . . . . . . .55
14.8 Assignment of Contracts and Rights. . . . . . . . . . . . . .55
14.9 No Right to Partition . . . . . . . . . . . . . . . . . . . .55
14.10 No Third Party Rights . . . . . . . . . . . . . . . . . . . .56
14.11 Successors and Assigns. . . . . . . . . . . . . . . . . . . .56
14.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . .56
14.13 Remedies Not Exclusive. . . . . . . . . . . . . . . . . . . .56
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14.14 Representation by Counsel . . . . . . . . . . . . . . . . . .56
14.15 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .56
14.16 Attachments . . . . . . . . . . . . . . . . . . . . . . . . .56
14.17 Table of Contents and Headings. . . . . . . . . . . . . . . .57
14.18 Competing Business. . . . . . . . . . . . . . . . . . . . . .57
14.19 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . .57
14.20 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . .57
14.21 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . .58
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THE SECOND AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
GROVE INVESTORS LLC
This Second Amended and Restated Limited Liability Company
Agreement (this "AGREEMENT") of GROVE INVESTORS LLC, a Delaware limited
liability company (the "COMPANY"), is made as of June 27, 1998, by and
between the Persons set forth on the signature pages hereto.
WHEREAS, the Company was formed under the laws of the State of
Delaware by filing a certificate of formation with the Secretary of State of
the State of Delaware pursuant to an Operating Agreement, dated as of January
15, 1998.
WHEREAS, the members wish to admit Xxxxxxxxx X. Xxxxxxx, Xxxx Bust,
Xxxxxx Xxxxx, Xxxxx Xxxxxxxx, Xxx Xxxxxxxxxx and Xxxx Xxxxxxx as Employee
Members.
WHEREAS, the Members wish to amend and restate the Amended and
Restated Limited Liability Company Agreement of the Company dated as of April
29, 1998 as set forth below.
NOW, THEREFORE, in consideration of the agreements and obligations
set forth herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Members hereby agree as
follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
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 specified below.
2
"ADJUSTED CAPITAL ACCOUNT" shall mean, with respect to any Member,
such Member's Capital Account balance, increased by such Member's share of
Company Minimum Gain and Member Minimum Gain.
"AFFILIATE" shall mean, with respect to any Person, any other
Person who, directly or indirectly, controls, is controlled by, or is under
direct or indirect common control with, such Person. For the purposes of
this definition "control," when used with respect to any specified Person,
shall mean the power to direct or cause the direction of the management and
policies of such Person, directly or indirectly, whether through ownership of
voting securities or partnership or other ownership interests, by contract or
otherwise; and the terms "controlling" and "controlled" shall have
correlative meanings.
"AGREEMENT" shall mean this Second Amended and Restated Limited
Liability Company Agreement of the Company as amended, modified, supplemented
and/or restated from time to time.
"ANCILLARY LETTER" shall mean that certain letter dated as of April
29, 1998, by and between XX Xxxxx, Strategic and GGEP.
"ANNUAL EBITDA ACTUAL" shall mean, for the prior 12 month period,
the net profit of the Company and its Subsidiaries after all expenses, but
before any (a) interest, (b) income taxes or other taxes based on profits,
(c) amortization of goodwill, (d) depreciation, (e) cash expenses directly
associated with the implementation of the operations improvement program,
including consulting fees under the Consulting Agreement, and (f) to the
extent determined by the Management Committee, any nonrecurring or unbudgeted
extraordinary items of income or loss.
"ANNUAL EBITDA ACTUAL IMPROVEMENT" shall mean the excess, if any,
of (a) the Annual EBITDA Actual, over (b) the Annual EBITDA Baseline.
"ANNUAL EBITDA BASELINE" shall mean, for any year described in the
Ancillary Letter, for any revenue level, the amounts calculated from the
formula described in the Ancillary Letter for such year for such revenue
level.
"ANNUAL EBITDA INCREASE" shall mean, for any year described in the
Ancillary Letter for any revenue level, (a) the lesser of (i) one or (ii) (x)
the Annual EBITDA Actual Improvement, (y) divided by the Annual EBITDA
Promised Improvement, multiplied by (b) 18.75% of the Total Promote
Percentage.
"ANNUAL EBITDA PROMISED IMPROVEMENT" shall mean, for any year
described in the Ancillary Letter, for any revenue level, the excess of (a)
the Annual EBITDA Target, over (b) the Annual EBITDA Baseline.
3
"ANNUAL EBITDA TARGET" shall mean, for any year described in the
Ancillary Letter, for any revenue level, the amounts calculated from the
formula described in the Ancillary Letter for such year for such revenue
level.
"BENEFICIAL OWNERSHIP" shall have the meaning ascribed to such term
in Rule 13d-3, as in effect on the date hereof, promulgated under the
Exchange Act; "BENEFICIALLY OWNED," "OWNED BENEFICIALLY" and like terms shall
have correlative meanings.
"BUSINESS" shall mean the business of designing, manufacturing,
selling and providing customer support for mobile hydraulic cranes, aerial
work platforms and truck mounted cranes and similar devices.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
a day when banks in New York City are authorized or required by law to be
closed.
"CAPITAL ACCOUNT" shall mean, with respect to any Member, the
capital account of such Member, maintained in accordance with Section 4.1.
"CAPITAL CONTRIBUTION" shall mean, with respect to any Member, the
aggregate amount of money and the initial Gross Asset Value of any property
(other than money) contributed to the capital of the Company with respect to
such Member's Interest.
"CERTIFICATE" shall mean the certificate of formation of the
Company and any amendments thereto and restatements thereof filed on behalf
of the Company with the office of the Secretary of State of the State of
Delaware pursuant to the Act.
"Change in Control" shall mean (a) the closing of any transaction
whereby any Person other than XX Xxxxx Coinvestors, L.P., Keystone, Inc.
(including funds sponsored by Keystone, Inc.), FW Strategic Partners, L.P.,
Xxxxxxx X. Xxxxxx or the Xxxxxx Group, Inc. or any of their respective
Affiliates shall have become the beneficial owner of more than 50% of the
Equity Securities of the Company or a reorganization, merger, consolidation,
acquisition or other similar transaction, after which all or substantially
all of the assets of the Company are controlled by an entity other than XX
Xxxxx Coinvestors, L.P., Keystone, Inc. (including investment funds sponsored
by Keystone, Inc.), Xxxxxxx X. Xxxxxx, the Xxxxxx Group Inc. and/or FW
Strategic Partners, L.P. or their respective Affiliates or (b) if the Company
has been reconstituted as a corporation, the consummation of any public
offering after which more than 50% of the Company's stock is publicly traded.
"CLASS A PERCENTAGE INTERESTS" shall mean, with respect to any
Member, at any time, a fraction, the numerator of which equals the number of
Class A Units
4
held by such Member at such time, and the denominator of which equals the
aggregate number of Class A Units held by all the Members at such time.
"CLASS A SHARE" shall mean a fraction, (a) the numerator of which
equals the number of Class A Units outstanding, and (b) the denominator of
which equals the greater of (x) the sum of (i) the number of Class A Units
outstanding, (ii) 69,500, and (iii) the Class B New Interest Amount, or (y)
the sum of (i) 75,000 plus (ii) the Class B New Interest Amount.
"CLASS A UNITS" shall mean the denomination of Interests in the
Company of the Employee Members; PROVIDED that the Company shall not issue
Class A Units that would cause the Class A Share to exceed 12.579%; PROVIDED
FURTHER that if the Company is unable to issue Class A Units by reason of the
preceding proviso, it may issue Class B Interests to Employee Members.
"CLASS B NEW INTEREST AMOUNT" means (a) 69,500 multiplied by (b)
the New Class B Percentage Interests as of such date, divided by (c) (i) 100%
minus (ii) the New Class B Percentage Interests.
"CLASS B PERCENTAGE INTEREST" shall mean with respect to a Member
as of any date the sum, with respect to each Class B Interest that it holds,
of:
(i) (x) in the case of interests not resulting from the
operation of Section 4.5, the Class B Percentage Interest of such Class B
Interest on the date acquired, multiplied by (y) 100% minus the Class B
Percentage Interests attributable to any Class B Interest issued subsequently
thereto (including increases in GGEP's Class B Interests pursuant to Section
4.5), and
(ii) in the case of GGEP, (x) the cumulative gross amount by
which its Class B Percentage Interests have been increased pursuant to
Section 4.5 (determined without regard to paragraph (e) thereof), multiplied
by (y) 100% minus the New Class B Percentage Interests.
"CLASS B SHARE" shall mean the excess of (a) 100% minus (b) the
Class A Share.
"CODE" shall mean the Internal Revenue Code of 1986, as the same
may be amended from time to time.
"COMPANY MINIMUM GAIN" shall mean "partnership minimum gain," as
defined in Section 1.704-2(b)(2) of the Treasury Regulations, and shall be
determined in accordance with Section 1.704-2(d) of the Treasury Regulations.
5
"CONSULTING AGREEMENT" shall mean the Consulting Agreement, dated
as of April 29, 1998, by and between the Operating Company and Xxxxxx Group,
Inc.
"CUMULATIVE EBITDA ACTUAL" shall mean the sum of Annual EBITDA
Actual for the following four one-year periods; (i) September 28, 1998 -
September 25, 1999, (ii) September 26, 1999 - September 30, 2000, (iii)
October 1, 2000 -September 29, 2001, and (iv) September 30, 2001 - September
28, 2002.
"CUMULATIVE EBITDA ACTUAL IMPROVEMENT" shall mean, the excess of
(a) the Cumulative EBITDA Actual, over (b) the Cumulative EBITDA Baseline.
"CUMULATIVE EBITDA BASELINE" shall mean $467.2 million.
"CUMULATIVE EBITDA INCREASE" shall mean, (a) the lesser of (i) one
or (ii) the Cumulative EBITDA Actual Improvement, (y) divided by the excess
of (1) $524.7 million, over (2) the Cumulative EBITDA Baseline, multiplied by
(b)75% of the Total Promote Percentage.
"DEPRECIATION" shall mean, with respect to any Taxable Year, an
amount equal to the depreciation, amortization or other cost recovery
deduction allowable with respect to an asset for Federal income tax purposes,
except that if the Gross Asset Value of the asset differs from its adjusted
tax basis, Depreciation shall be determined in accordance with the methods
used for Federal income tax purposes and shall equal the amount that bears
the same ratio to the Gross Asset Value of such asset as the depreciation,
amortization or other cost recovery deduction computed for Federal income tax
purposes with respect to such asset bears to the adjusted Federal income tax
basis of such asset; PROVIDED, HOWEVER, that if any such asset that is
depreciable or amortizable has an adjusted federal income tax basis of zero,
the rate of Depreciation shall be as determined by the "tax matters partner".
"EMPLOYEE MEMBERS" shall mean (i) any employee of the Operating
Company or any of its Subsidiaries who purchases Interests subsequent to the
date hereof, (ii) any other Person, who is not a Member on the date hereof,
designated as an Employee Member by the Management Committee and (iii) all
Permitted Transferees of such Persons that become parties to this Agreement
in accordance with Article IX.
"EQUITY SECURITIES" has the meaning ascribed to such term in Rule
405 promulgated under the Securities Act as in effect on the date hereof, and
in any event includes any limited partnership interest, any limited liability
company interest and any other interest or security having the attendant
right to vote for directors or similar representatives.
6
"EXCHANGE ACT" shall mean the United States Securities Exchange Act
of 1934, as amended.
"EXERCISE PRICE" shall mean, with respect to any Option holder, the
amount set forth in the Management Option Plan.
"EXERCISE PRICE EQUIVALENT" shall mean, (a) in the case of GGEP the
product of (i) the excess, of (x) $75,000,000 over (y) the cumulative amounts
distributed pursuant to Section 4.9(c) and (ii) the gross increase in GGEP's
Class B Percentage Interest pursuant to Section 4.5 (determined without
regard the clause (e) thereof) divided by (iii) 100% minus the amount set
forth in clause (a)(ii) of this definition, and (b) in the case of an
Employee Member the product of (i) $1,000 (or such other amount set forth in
the award of such Units), and (ii) the aggregate number of Class A Units
awarded to such Employee Member pursuant to the Management Incentive Plan.
"FAIR MARKET VALUE" shall mean, with respect to any property
(including, without limitation, any Interest), the price at which such
property is likely to be sold in an arm's-length transaction between a
willing and able buyer and a willing and able seller, neither of which is an
Affiliate or an officer, director, shareholder, partner, member or agent of a
Member or an Affiliate of a Member of the other, based on the then prevailing
market conditions; PROVIDED, HOWEVER, that for purposes of determining
Internal Rate of Return and Net Value of the Company, Fair Market Value shall
be determined with reference to a recent or imminent actual arm's length
transaction (including a public offering of interests or a recent or imminent
sale of all or part of the Company or its direct or indirect subsidiaries);
and PROVIDED, FURTHER, that if no such actual arm's length transaction has
occurred or is imminent, then Fair Market Value shall be determined in
accordance with Section 14.20.
"FISCAL YEAR" shall mean the accounting fiscal year of the Company
(or portion thereof) which shall end on the last Saturday of September in
each year unless changed by the Management Committee as provided hereunder;
PROVIDED, HOWEVER, that upon termination of the Company, "FISCAL YEAR" shall
mean the period from the first day of the Fiscal Year immediately preceding
such termination to the date thereof.
"GAAP" shall mean generally accepted accounting principles as in
effect in the United States from time to time.
"GROSS ASSET VALUE" shall mean, with respect to any asset, such
asset's adjusted basis for Federal income tax purposes, except that (i) the
initial Gross Asset Value of any asset contributed to the Company shall be
its gross Fair Market Value (as
7
determined by the tax matters partner) at the time such asset is contributed
or deemed contributed for purposes of computing Capital Accounts, (ii) upon a
change in the Members' Percentage Interests, the Gross Asset Value of all of
the assets of the Company shall be adjusted to equal their respective gross
Fair Market Values (as determined by the tax matters partner), (iii) the
Gross Asset Value of any asset distributed in kind to any Member shall be the
gross Fair Market Value of such asset (as determined by the tax matters
partner) on the date of such distribution, and (iv) the Gross Asset Value of
any asset determined pursuant to clauses (i) or (ii) above shall thereafter
be adjusted from time to time by the Depreciation taken into account with
respect to such asset for purposes of determining Net Income or Net Loss.
"INTEREST" shall mean the entire ownership interest of a Member in
the Company at any time, including such Member's share of Net Income and Net
Loss, such Member's rights to receive distributions and other benefits to
which such Member may be entitled hereunder and under the Act, and the
obligations of such Member to comply with the applicable terms and provisions
of this Agreement; PROVIDED, HOWEVER, that in no event shall any issued and
outstanding Option be considered an Interest for any purpose of this
Agreement.
"INTERNAL RATE OF RETURN" shall be calculated as though (i) all
assets of the Company were sold as a going concern to a third party for cash
in the amount of the Fair Market Value thereof as of the date of the event
("VALUATION EVENT") requiring such determination (the "EVENT DATE"), (ii) all
obligations of the Company, including the costs, expenses, claims, and
liabilities of any type or kind, whether contingent or otherwise, of the
Company in connection with such hypothetical liquidation were satisfied and
(iii) the remaining assets of the Company were distributed to the Members in
accordance with Article XII.
"INVENTORY TURN ACTUAL" shall mean, as of any test date described
in the Ancillary Letter, (a) the cost of goods sold by the Operating Company
for the last 12 months prior to such test date, divided by (b) the inventory
per the closing balance sheet for such 12 month period.
"INVENTORY TURN ACTUAL IMPROVEMENT" shall mean, as of any test date
described in the Ancillary Letter, the excess of (a) the Inventory Turn
Actual for such test date, over (b) the Inventory Turn Hurdle for such test
date.
"INVENTORY TURN HURDLE" shall mean, as of any test date described
in the Ancillary Letter, the amount set forth under the heading "Turn Hurdle"
in the Ancillary Letter.
"INVENTORY TURN INCREASE" shall mean, as of any test date described
in the Ancillary Letter, (a) the lesser of (i) one or (ii) the Inventory Turn
Actual
8
Improvement for such test date, divided by the Inventory Turn Promised
Improvement for such test date, multiplied by (b) 6.25% of the Total Promote
Percentage.
"INVENTORY TURN PROMISED IMPROVEMENT" shall mean, as of any test
date described in the Ancillary Letter, the excess of (a) the Inventory Turn
Target for such date, over (b) the Inventory Turn Hurdle for such date.
"INVENTORY TURN TARGET" shall mean, as of the dates described in
the Ancillary Letter, the targets set forth under the heading "Turn Target."
"INVESTMENT BANKING FIRM" shall mean any nationally recognized
investment banking firm that is not an Affiliate of any Member.
"IPO PRICE" shall mean the public offering price per share as set
forth on the cover of the registration statement of the Company as declared
effective by the SEC.
"MAJORITY MEMBERS" shall mean Members holding more than 66% of the
Interests held by all Members (measured in terms of Percentage Interests).
"MANAGEMENT COMMITTEE" means the Management Committee referred to
in Section 6.1.
"MANAGEMENT OPTION PLAN" means the Management Option Plan of the
Company as in effect from time to time.
"MEMBER" means each of the Persons described in the Ancillary
Letter, the Employee Members admitted on the date hereof, any Person
hereafter admitted as a Member hereunder and Permitted Transferees of such
Members, individually, when acting in the capacity of each as a member of the
Company and "Members" means any Person hereafter admitted as a Member
hereunder and Permitted Transferees of such Members, collectively, when
acting in their capacities as members of the Company.
"MEMBER MINIMUM GAIN" shall mean "partner nonrecourse debt minimum
gain," as defined in Section 1.704-2(i)(2) of the Treasury Regulations, and
shall be determined in accordance with Section 1.704-2(i)(3) of the Treasury
Regulations.
"MEMBER NONRECOURSE DEBT" shall mean "partner nonrecourse debt," as
defined in Section 1.704-2(b)(4) of the Treasury Regulations.
"MEMBER NONRECOURSE DEDUCTIONS" shall mean "partner nonrecourse
deductions," as defined in Section 1.704-2(i)(1) of the Treasury Regulations,
and shall be determined in accordance with Section 1.704-2(i)(2) of the
Treasury Regulations.
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"MODIFIED CAPITAL ACCOUNT" shall mean, at any time (i) with respect
to GGEP and each Employee Member, the sum of its Capital Account balance at
such time plus its Exercise Price Equivalent, and (ii) with respect to the
other Members, such Member's Capital Account balance at such time.
"NET INCOME" or "NET LOSS" shall mean, with respect to any Taxable
Year, an amount equal to the taxable income or loss of the Company as
determined for federal income tax purposes, with the following adjustments:
(i) Such taxable income or loss shall be increased by
the amount, if any, of tax-exempt income received or accrued by the Company;
(ii) Such taxable income or loss shall be reduced by
the amount, if any, of all expenditures of the Company described in Section
705(a)(2)(B) of the Code, including expenditures treated as described therein
under Section 1.704(b)(2)(iv)(i) of the Treasury Regulations;
(iii) items of income, gain, deductions or losses
specially allocated pursuant to Section 4.7(c) through (h) in any year shall
be excluded from the calculation of such taxable income or loss for such year;
(iv) If the Gross Asset Value of any asset is adjusted
pursuant to clause (ii) or (iii) of the definition of Gross Asset Value, the
amount of such adjustment shall be taken into account, immediately prior to
the event giving rise to such adjustment, as gain or loss from the
disposition of such asset for purposes of computing Net Profit or Net Loss;
(v) Gain or loss resulting from any disposition of any
asset with respect to which gain or loss is recognized for Federal income tax
purposes shall be computed by reference to the Gross Asset Value of the asset
disposed of, notwithstanding that such Gross Asset Value differs from the
adjusted tax basis of such asset; and
(vi) In lieu of the depreciation, amortization, or
other cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for such
Taxable Year.
"NET VALUE OF THE COMPANY" shall mean the aggregate amount of cash
payable to the Members upon the liquidation of the Company if (i) all assets
of the Company were sold as a going concern to a third party for cash in the
amount of the Fair Market Value thereof as of the date of the event requiring
such determination, (ii) all obligations of the Company, including the costs,
expenses, claims, and liabilities of any type or kind, whether contingent or
otherwise, of the Company in connection
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with such hypothetical liquidation were satisfied and (iii) the remaining
assets of the Company were distributed to the Members thereafter in
accordance with Article XII.
"NEW CLASS B PERCENTAGE INTERESTS" as of any date shall mean the
aggregate Class B Percentage Interests of all Class B Interests issued after
the date hereof, other than pursuant to Section 4.5.
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Section 1.704-2(b)(1) of the Treasury Regulations. The amount of
Nonrecourse Deductions for any year equals the excess, if any, of the net
increase in the amount of Company Minimum Gain during such year over the
aggregate amount of any distributions during such year of proceeds of a
Nonrecourse Liability that are allocable to an increase in Company Minimum
Gain, determined in accordance with Section 1.704-2(c) of the Treasury
Regulations.
"NONRECOURSE LIABILITY" shall have the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.
"OPERATING COMPANY" shall mean Grove Worldwide LLC, a Delaware
limited liability company.
"OPTION" shall mean an Option which will have a Exercise price and
be exercisable for a number of Interests, pursuant to the Management Option
Plan.
"PARENT" shall mean with respect to any Person, any other Person
that controls such Person directly or indirectly through any Subsidiary of
such other Person or owns directly or indirectly through any Subsidiary of
such other Person more than 50% of the outstanding common stock or
outstanding Equity Securities ordinarily entitled to vote of such Person.
"PERCENTAGE INTEREST" shall mean, as of any date, with respect to
any Member, the sum of (a) the product of (i) such Member's Class A
Percentage Interest, multiplied by (ii) the Class A Share, and (b) the
product of (i) such Member's Class B Percentage Interest, multiplied by (ii)
the Class B Share.
"PERSON" shall mean any individual, partnership, company,
corporation, limited liability company, trust, estate, unincorporated
association, syndicate, joint venture or unincorporated organization, any
government or any department, agency or political subdivision thereof, or any
other entity.
"PUBLIC COMPANY" shall mean a Person required to make periodic
filings with the SEC under Section 13 or 15(d) of the Exchange Act with
respect to its Equity Securities.
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"RELATIVE INTEREST" of any Member, as compared to any other Member
or Members, shall mean the proportion that such Member's Percentage Interest
bears to such other Member's or Members' Percentage Interests.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the United States Securities Act of
1933, as amended.
"STOCK AND ASSET PURCHASE AGREEMENT" shall mean the Stock and Asset
Purchase Agreement, dated March 10, 1998, among Xxxxxx Funding (G) Ltd.,
Grove Europe Ltd., Deutsche Grove Corp., Kidde Industries, Inc. and Grove
Worldwide LLC, as in effect from time to time.
"SUBSIDIARY" shall mean, with respect to any Person, any
corporation, partnership, limited liability company or other business entity
controlled by such Person directly or indirectly through any other Subsidiary
of such Person or in which such Person owns directly or indirectly through
any other Subsidiary of such Person more than 50% of the outstanding common
stock or other outstanding Equity Securities ordinarily entitled to vote in
such Person.
"TAX AMOUNT" shall mean, with respect to any Member, the product of
(i) the taxable income allocated to such Member pursuant to this Agreement,
and (ii) the maximum combined Federal, state and local income tax rates
applicable to an individual resident of New York City or California,
whichever is higher, PROVIDED, HOWEVER, that in determining the Tax Amount,
the effect thereon of any net operating loss carryforwards or other
carryforwards or tax attributes attributable to the Company, such as
alternative minimum tax carryforwards shall be taken into account, and
adjusted to take into account any applicable credits, deductions or other
adjustments allowed under both New York and California law to a direct or
indirect owner of an Interest in the Company for state and local income tax
purposes based on the assumption that such carryforwards and other tax
attributes have not been utilized against income not attributable to the
Company.
"TAX MATTERS PARTNER" shall have the meaning set forth in Section
8.6.
"TAXABLE YEAR" shall mean the taxable year of the Company (or
portion thereof) which shall end on December 31 in each year; PROVIDED,
HOWEVER, that upon termination of the Company, "TAXABLE YEAR" shall mean the
period from January 1 immediately preceding such termination to the date
thereof.
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"TOTAL PROMOTE PERCENTAGE" shall have the meaning set forth in the
Ancillary Letter.
"TRANSFER" shall mean any transfer, sale, assignment, pledge,
lease, hypothecation, mortgage, gift or creation of security interest, lien
or trust (voting or otherwise) or other encumbrance or other disposition of
any Interests. "TRANSFEROR" and "TRANSFEREE" have correlative meanings.
"TREASURY REGULATIONS" shall mean the income tax regulations,
including temporary regulations, promulgated under the Code, as such
regulations may be amended from time to time.
"VALUATION DATE" shall mean any date the assets of the Company are
valued for any reason.
1.2 CROSS REFERENCES. Each of the following terms shall have the
meaning assigned thereto in the Section of this Agreement set forth below
opposite such term:
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Agents . . . . . . . . . . . . . . . . . . . . . . . 10.2(f)
Amended and Restated Agreement . . . . . . . . . . .Preamble
Buyout Notice. . . . . . . . . . . . . . . . . . . . . . 9.3
Chosen Court . . . . . . . . . . . . . . . . . . . . . .13.6
Class B Interest . . . . . . . . . . . . . . . . . . . . 3.1
Company. . . . . . . . . . . . . . . . . . . . . . .Preamble
Contribute . . . . . . . . . . . . . . . . . . . . 4.4(a)(i)
Contribution Closing . . . . . . . . . . . . . . . . . . 3.2
Contribution Closing Date. . . . . . . . . . . . . . . . 3.2
Converted Securities . . . . . . . . . . . . . . . . 2.10(b)
Covered Person . . . . . . . . . . . . . . . . . . . .8.2(a)
Deficit Member . . . . . . . . . . . . . . . . . . . .4.6(g)
Demand Member. . . . . . . . . . . . . . . . . . . .10(a)(i)
Demand Notice. . . . . . . . . . . . . . . . . . .10.1(a)(i)
Dissolution Event. . . . . . . . . . . . . . . . . . . .12.2
EBITDA Target. . . . . . . . . . . . . . . . . . . . . . 9.5
Effective Transfer Time. . . . . . . . . . . . . . . . . 9.5
Family Members . . . . . . . . . . . . . . . . . . . .9.2(b)
Family Trust . . . . . . . . . . . . . . . . . . . . .9.2(b)
Initial Class B Percentage Interests . . . . . . . . . . 3.3
Inventory Turn Targets . . . . . . . . . . . . . . . .4.5(a)
Offered Securities . . . . . . . . . . . . . . . .10.1(a)(i)
Offering Members . . . . . . . . . . . . . . . . .10.1(c)(i)
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Participating Member . . . . . . . . . . . . . . .10.1(c)(i)
Participation Request. . . . . . . . . . . . . . .10.1(c)(i)
Permitted Transfer . . . . . . . . . . . . . . . . . . . 9.2
Permitted Transferee . . . . . . . . . . . . . . . . . . 9.2
Reconstituted Company. . . . . . . . . . . . . . . . 2.10(b)
Reconstitution . . . . . . . . . . . . . . . . . . . 2.10(b)
Records. . . . . . . . . . . . . . . . . . . . . . . 10.2(f)
Registration Statement . . . . . . . . . . . . . . . 10.2(a)
Regulatory Allocations . . . . . . . . . . . . . . . .4.6(h)
Selling Member . . . . . . . . . . . . . . . . . . 9.3(a)(i)
Tag Along Exercise Notice. . . . . . . . . . . . . . . . 9.4
Tag Along Interest . . . . . . . . . . . . . . . . . . . 9.4
Tag Along Notice . . . . . . . . . . . . . . . . . . . . 9.4
Tag Along Price. . . . . . . . . . . . . . . . . . . . . 9.4
Tag Along Right. . . . . . . . . . . . . . . . . . . . . 9.4
Tax Distributions. . . . . . . . . . . . . . . . . . .4.8(a)
Termination Called Interest. . . . . . . . . . . . . 11.2(b)
Termination Call Notice. . . . . . . . . . . . . . . 11.2(b)
Termination Call Right . . . . . . . . . . . . . . . 11.2(a)
Third Party Purchaser. . . . . . . . . . . . . . . . . . 9.3
Unvested Class A Units . . . . . . . . . . . .10.1(a)(ii)(a)
Unvested Class B Interests . . . . . . . . . .10.1(a)(ii)(b)
1.3 USAGE GENERALLY. The definitions in this Article I shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. All references herein to Articles,
Sections, and Schedules shall be deemed to be references to Articles and
Sections of, and Schedules to, this Agreement unless the context shall
otherwise require. All Schedules attached hereto shall be deemed
incorporated herein as if set forth in full herein and, unless otherwise
defined therein, all terms used in any Schedule shall have the meaning
ascribed to such term in this Agreement. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation". All accounting terms not defined in this Agreement shall have
the meanings determined by GAAP. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. Unless otherwise expressly provided herein, any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including (in
the case of agreements or instruments) by waiver or consent and (in the case
of statutes) by succession of comparable successor statutes and references to
all attachments thereto and instruments incorporated therein. Unless
otherwise expressly specified herein, any allocation to be made among all
14
Members or a group of Members "on a pro-rata basis" or "ratably" shall be
made in proportion to the Relative Interests of such Members or group of
Members immediately prior to the transaction with respect to which such
allocation is being made.
ARTICLE II
FORMATION; NAME; TERM
2.1 FORMATION. The Company was formed on January 15, 1998
pursuant to the provisions of the Delaware Limited Liability Company Act, as
amended from time to time upon the filing of a Certificate of Formation with
the Secretary of State of Delaware (the "ACT"). The Members hereby agree
that the Company shall be governed by, and the rights, duties and liabilities
of the Members shall be as provided in, the Act and this Agreement.
2.2 NAME. The name of the Company shall be "Grove Investors LLC".
The business of the Company may be conducted upon compliance with all
applicable laws under any other name designated by the Management Committee
2.3 EFFECTIVE DATE; TERM. This Agreement shall become effective
upon the execution of this Agreement by the Members. The Company shall
continue in existence until it is dissolved and its affairs wound up in
accordance with the Act and this Agreement or until it is terminated as
provided in the Act or this Agreement.
2.4 PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Company shall be at 1565 Xxxxxxxx Trail East, X.X. Xxx 00, Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000 or at such other or additional place or places as
the Management Committee shall determine from time to time. The Company may
have other offices, either within or outside of the State of Delaware, at
such place or places as the Management Committee may from time to time
designate or the business of the Company may require.
2.5 REGISTERED OFFICE. The address of the Company's registered
office in Delaware shall be Corporation Service Company, 0000 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000.
2.6 REGISTERED AGENT. The name and address of the registered
agent of the Company for service of process on the Company in the State of
Delaware initially is Corporation Service Company, 1013 Centre Road,
Wilmington, Delaware
15
19805. The Management Committee may at any time and from time to time
designate another registered agent.
2.7 FILINGS. The Members promptly shall cause the execution and
delivery of such documents and performance of such acts consistent with the
terms of this Agreement as may be necessary to comply with the requirements
of law for the formation, qualification and operation of a limited liability
company under the laws of each jurisdiction in which the Company shall
conduct business. All expenses of such filings shall be borne by the Company.
2.8 AUTHORIZED PERSON. The Chief Executive Officer or any officer
designated by the Management Committee is hereby designated as an authorized
person, within the meaning of the Act, to execute, deliver and file the
certificate of formation of the Company, and any amendments and/or
restatements thereof.
2.9 PURPOSE. The Company is formed for the purpose of, directly
or indirectly, engaging in the Business and in any and all activities and
transactions which are necessary, convenient, desirable or incidental to the
foregoing and in any lawful business, act or activity related thereto as the
Management Committee may determine from time to time and for which a limited
liability company may be organized under the Act, and in any and all
activities necessary, convenient, desirable or incidental to the foregoing.
2.10 POWERS. Except as otherwise limited in this Agreement,
(a) the Company shall have the power and authority to do any
and all acts necessary, appropriate, proper, advisable, convenient or
incidental to or for the furtherance of the purpose set forth in Section 2.9,
including:
(i) to conduct its business, carry on its operations
and have and exercise the powers granted to a limited liability company
by the Act in any state, territory, district or possession of the United
States, or in any foreign country that may be necessary, convenient or
incidental to the accomplishment of the purpose of the Company;
(ii) to acquire by purchase, lease, contribution of
property or otherwise, own, hold, operate, maintain, finance, improve,
lease, sell, convey, mortgage, transfer, demolish or dispose of any real
or personal property that may be necessary, convenient or incidental to
the accomplishment of the purpose of the Company;
(iii) to enter into, perform and carry out contracts of
any kind, including, without limitation, contracts with any Member or
any
16
Affiliate thereof, or any agent of the Company necessary to, in
connection with, convenient to, or incidental to the accomplishment of
the purposes of the Company;
(iv) to purchase, take, receive, subscribe for or
otherwise acquire, own, hold, vote, use, employ, sell, mortgage, lend,
pledge, or otherwise dispose of, and otherwise use and deal in and with,
shares or other interests in or obligations of domestic or foreign
corporations, associations, general or limited partnerships (including
the power to be admitted as a partner thereof and to exercise the rights
and perform the duties created thereby), trusts, limited liability
companies (including the power to be admitted as a member or appointed
as a manager thereof and to exercise the rights and perform the duties
created thereby), or individuals or direct or indirect obligations of
the United States or of any government, state, territory, governmental
district or municipality or of any instrumentality of any of them;
(v) to lend money for any proper purpose, to invest
and reinvest funds and to take and hold real and personal property for
the payment of funds so loaned or invested;
(vi) to xxx and be sued, complain and defend and
participate in administrative or other proceedings, in its name;
(vii) to appoint employees and agents of the Company,
define their duties and fix their compensation;
(viii) to indemnify any Person in accordance with the
Delaware Act and to obtain any and all types of insurance;
(ix) to cease its activities and cancel its Certificate;
(x) 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 Company;
(xi) to borrow money and issue evidences of
indebtedness, and to secure the same by a mortgage, pledge or other lien
on the assets of the Company;
(xii) to pay, collect, compromise, litigate, arbitrate
or otherwise adjust or settle any and all other claims or demands of or
against the
17
Company or to hold such proceeds against the payment of contingent
liabilities; and
(xiii) to make, execute, acknowledge and file any and all
documents or instruments necessary, convenient or incidental to the
accomplishment of the purpose of the Company.
(b) The Company upon the approval of the Management
Committee, may merge with, or consolidate into, another Delaware limited
liability company or other business entity (as defined in Section 18-209(a)
of the Act) or take such action as is necessary to cause the Company to be
reconstituted into a corporation or other business entity (the "RECONSTITUTED
COMPANY") organized under the laws of the State of Delaware, or any other
jurisdiction selected by the Majority Members (including without limitation
through a merger of the Company with and into a direct or indirect
Subsidiary, including Crane Acquisition Corp.) (the "RECONSTITUTION"), and to
convert each Member's Interest into Equity Securities with a Fair Market
Value (determined at the IPO Price, if applicable) equal to the amount such
Member would receive upon the distribution described in clause (iii) of the
definition of Net Value of the Company assuming, in the case of a
Reconstitution of the Company in connection with an IPO, that the aggregate
amount so distributed equals the IPO Price multiplied by the aggregate number
of shares received by the Company or its Members in the Reconstitution (with
the Management Committee determining any adjustments required in the event
that the Reconstituted Company issues more than one class of securities
and/or other issues arising with respect to such determinations) (such equity
securities being referred to herein as "CONVERTED SECURITIES"). If the
Company's business is reconstituted in corporate form, the principal features
of Options granted under the Management Option Plan and any partnership
Interests acquired upon exercise thereof (including any call or other right
related thereto), shall be applied to the successor Options and stock, as
determined by the Committee.
ARTICLE III
INTERESTS; CLOSING; CONTRIBUTIONS
3.1 MANAGEMENT CONTRIBUTIONS. On the date hereof, each of the
Employee Members shall contribute, transfer, assign and convey (collectively,
"CONTRIBUTE"), or cause to be contributed, to the capital of the Company, an
amount in cash equal to the amount set forth opposite their respective names
and beneath the column headed "Initial Capital Contributions" as found in the
Ancillary Letter in exchange for an interest in the Company (a "CLASS A
UNITS").
18
3.2 CONTRIBUTION CLOSING. The actions required to be taken
pursuant to Section 3.1 shall take place at a closing (the "CONTRIBUTION
CLOSING") to be held on June 26, 1998 at the office of the Company or at such
other time and place as the is mutually agreed to by the parties. The time
and date upon which the Contribution Closing occurs is herein called the
"CONTRIBUTION CLOSING DATE."
3.3 CLASS A UNITS. Each Member's Class A Units shall entitle such
Member to an interest in the income, loss and distributions of the Company in
accordance with Article IV. The number of Class A Units of purchased by each
Employee Member of the Company shall be set forth opposite such Employee
Member's name in the Ancillary Letter.
3.4 RETURN OF CAPITAL CONTRIBUTIONS.
(a) Except as otherwise provided herein, all or a portion of
a Member's Capital Contribution may be returned to it at any time, but only
with the consent of the Management Committee. Any such returns of Capital
Contributions shall be made to all Members in the same proportions as
distributions are made pursuant to Section 4.8; and provided that no return
shall be made of a Member's Capital Contribution if such distribution would
violate applicable law. No Member shall have the right to demand or receive
property other than cash as a return of his Capital Contribution, except as
may be specifically provided in this Agreement.
(b) A Member's Interest shall for all purposes be personal
property. A Member has no interest in specific Company property.
ARTICLE IV
CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS
4.1 CAPITAL ACCOUNTS. A separate capital account (a "CAPITAL
ACCOUNT") shall be maintained for each Member. Each Member's Capital Account
shall be credited with (i) the amount of such Member's Capital Contribution
(including, without limitation, the payment of a Exercise price) made in
cash, (ii) such Member's allocated share of Net Income of the Company and
(iii) any items of income or gain allocated to such Member pursuant to
Sections 4.7(c) through 4.7(h). Each Member's Capital Account shall be
reduced by (i) the amount of any cash distributions to such Member and the
Fair Market Value (net of liabilities assumed or taken subject to) of all
property distributed in kind to such Member, (ii) such Member's allocated
share of Net Loss of the Company and (iii) any items of deduction or loss
allocated to such Member pursuant to Sections 4.7(c) through (h).
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4.2 ALLOCATION OF NET INCOME.
Except as otherwise provided in the further provisions of this
Article IV, Net Income of the Company for any Taxable Year shall be allocated
as follows and in the following order of priority:
(i) FIRST, to the Members in proportion to and to the
extent of any deficit balances in their respective Adjusted Capital
Accounts;
(ii) NEXT, to the Members in the manner necessary to
cause, the maximum extent possible, the ratio of their respective Modified
Capital Account balances to equal the ratio of their respective Percentage
Interests; and
(iii) THEREAFTER, to the Members in accordance with their
respective Percentage Interests.
4.3 ALLOCATION OF NET LOSS.
Except as otherwise provided in the further provisions of this
Article IV, Net Loss of the Company for any Taxable Year shall be allocated
as follows and in the following order of priority:
(i) FIRST, to the Members in the manner necessary to
cause, the maximum extent possible, the ratio of their respective Modified
Capital Account balances to equal the ratio of their respective Percentage
Interests;
(ii) NEXT, to the Members in proportion to and to the
extent of their respective positive Capital Account balances; and
(iii) THEREAFTER, to the Members in accordance with their
respective Percentage Interests.
4.4 CLASS A UNITS. The Company may from time to time sell for
consideration Class A Units to Employee Members. Pursuant to and in
accordance with the Management Option Plan, the Company may issue Options.
Each Option holder shall have the right to purchase Interests in the Company
in an amount equal to the number of Interests set forth in the Management
Option Plan, by payment to the Company of Capital Contributions equal to
their respective Exercise prices upon the exercise of such Options in
accordance with the terms thereof. Upon exercise of an Option by such
payment, a holder shall receive allocations and distributions as set forth in
Articles IV and XII hereof.
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4.5 ADJUSTMENTS TO CLASS B PERCENTAGE INTERESTS.
(a) INVENTORY TURN TARGETS.
(i) Subject to subsection (ii), below, if as of each
test date described in the Ancillary Letter, the Inventory Turn Actual is
greater than the Inventory Turn Hurdle, then the Class B Percentage
Interest of GGEP shall be increased by adding to it the Inventory Turn
Increase for such test date.
(ii) In the event a Change in Control occurs prior to
September 28, 2002 in which the Members other than GGEP and Xxxxxxx X.
Xxxxxx collectively, after giving effect to the transaction giving rise to
such a Change in Control, have received an Internal Rate of Return on their
investment in the Company of greater than or equal to 20%, then immediately
prior to such Change in Control the Class B Percentage Interests of GGEP
shall be increased by adding to it the excess, if any, of 25% of the Total
Promote Percentage over the amount by which GGEP's Interest has previously
been increased pursuant to Section 4.5(a)(i).
(b) EBITDA TARGET.
(i) Subject to subsection (iii) below, if on each of the
last day of Fiscal Years 1999, 2000, 2001 and 2002, the Annual EBITDA
Actual is greater than the Annual EBITDA Baseline set forth for such date,
then the Class B Percentage Interest of GGEP shall be increased by adding
to it the Annual EBITDA Increase.
(ii) Subject to subsection (iii) below, if on
September 30, 2002, the Cumulative EBITDA Actual is greater than the
Cumulative EBITDA Baseline, then the Class B Percentage Interest of GGEP
shall be increased by adding to it the excess, if any, of (A) the
Cumulative EBITDA Increase, over (B) the aggregate Annual EBITDA Increases
previously added to the Class B Percentage Interest of GGEP pursuant to
Section 4.5(b)(i).
(iii) In the event a Change in Control occurs prior to
September 30, 2002 and all the Members other than GGEP and Xxxxxxx X.
Xxxxxx collectively, after giving effect to the transaction giving rise to
such a Change in Control, have received an Internal Rate of Return on their
investment in the Company of greater than or equal to 20%, then immediately
prior to such Change in Control the Class B Percentage Interests of GGEP
shall be increased by adding to it the excess of (A) 75% of the Total
Promote Percentage over, (B) the aggregate Annual EBITDA Increases
previously added to the Class B Percentage Interest of GGEP pursuant to
Section 4.5(b)(i).
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(c) (i) In the event that a Change of Control occurs on a
date other than the last day of a Fiscal Year and the Internal Rate of Return
is less than 20%, then the calculation of the Inventory Turn Increase shall
be calculated on the basis of the next Test Date, and if the target for such
Test Date is achieved, the Percentage Interests of GGEP shall be increased by
the Inventory Turn Increase multiplied by a fraction, the numerator of which
is the number of days from the last Test Date through the Change of Control
and the denominator of which is 365.
(ii) In the event that a Change of Control occurs on a date
other than the last day of a Fiscal Year and the Internal Rate of Return is
less than 20%, then the calculation of the Annual EBITDA Increase shall be
calculated on the basis of a 12-month period preceding the Change of
Control and compared to the subsequent Annual EBITDA target date and if the
target for such target year is achieved, the Percentage Interests of GGEP
shall be increased by the Annual EBITDA Increase multiplied by a fraction,
the numerator of which is the number of days from the last Annual EBITDA
target date through the Change of Control and the denominator of which is
365.
(d) If the Class B Percentage Interests of GGEP is adjusted
pursuant to this Section 4.5, no Member shall have the right to modify,
rectify, or undo such adjustments thereafter, and such adjustments shall be
made without the need for any further act or writing to effect any such
adjustment. Each Member hereby appoints the Management Committee as its duly
authorized agent and attorney-in-fact for purposes of preparing and executing
any amendments to this Agreement necessary or desirable to reflect any
adjustment of Class B Percentage Interests under this Section 4.5. The
rights granted to any Member under this Section 4.5 shall be such Member's
sole and exclusive remedy for seeking relief with respect to any adjustment
pursuant to this Section 4.5.
(e) The Total Promote Percentage is based upon aggregate
Capital Contributions by all Members of $75 million. Notwithstanding
anything contained herein to the contrary, in the event that additional
Capital Contributions were made by or to the Members on a particular date,
other than Capital Contributions referred to in Section 4.9(c), then as of
such date, the Total Promote Percentage shall be decreased by subtracting
from it an amount equal to the product of the Total Promote Percentage
multiplied by a fraction, with a numerator equal to the additional Capital
Contributions made on such date, and a denominator equal to the Net Value of
the Company on such date (inclusive of the value of the addition Capital
Contributions made on such date). For example, if $20 million of additional
Capital Contributions are made on a date when the Net Value of the Company
(including the value of such additional Capital Contributions) is $95 million,
then the Total Promote Percentage shall for all purposes be reduced by
subtracting from it an amount equal to the product of the Total Promote
Percentage multiplied by a fraction equal to 20 million/95 million.
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(f) This Section 4.5 shall terminate upon the termination of
the Consulting Agreement. GGEP shall retain any adjustments to their
Percentage Interests made in accordance with Section 4.5 to the extent that
such adjustments were made prior to the termination of the Consulting
Agreement.
4.6 INTERIM ALLOCATIONS DUE TO PERCENTAGE INTEREST ADJUSTMENT. In
the event of a change in the Members' Percentage Interests during any year or
a Transfer of an Interest in the Company, the Company's Net Income or Net
Loss shall be allocated among the Members for the periods before and after
the change or transfer based on an interim closing of the books or any lawful
equitable alternative method as determined by the Management Committee. This
Section 4.6 shall apply both for purposes of computing a Member's Capital
Account and for Federal income tax purposes.
4.7 CERTAIN TAX MATTERS.
(a) Except as otherwise provided herein, all items of Company
income, gain, deduction and loss shall be allocated among the Members in the
same proportion as they share in the Net Income and Net Loss to which such
items relate. Any credits against income tax shall be allocated in
accordance with the Members' Percentage Interests.
(b) Income, gain, loss or deductions of the Company shall,
solely for income tax purposes, be allocated among the Members in accordance
with Section 704(c) of the Code and the Treasury Regulations promulgated
thereunder, so as to take account of any difference between the adjusted
basis of the assets of the Company and their respective Gross Asset Values in
accordance with the traditional method set forth in Section 1.704-3(c) of
the Treasury Regulations.
(c) Notwithstanding any other provision of this Article IV,
if there is a net decrease in Company Minimum Gain during any year, each
Member shall be specially allocated items of income and gain for such year
(and, if necessary, subsequent years) in an amount equal to the portion of
such Member's share of the net decrease in Company Minimum Gain, determined
in accordance with Section 1.704-2(g) of the Treasury Regulations. Allocations
pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant thereto.
The items to be so allocated shall be determined in accordance with
Section 1.704-2(f)(6) of the Treasury Regulations. This Section 4.7(c) is
intended to comply with the minimum gain chargeback requirement in
Section 1.704-2(f) of the Treasury Regulations and shall be interpreted
consistently therewith.
(d) Notwithstanding any other provisions of this Article IV
except Section 4.7(c), if there is a net decrease in Member Minimum Gain
attributable
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to a Member Nonrecourse Debt during any year, each Member who has a share of
the Member Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Section 1.704-2(i)(5) of the Treasury
Regulations, shall be specially allocated items of income and gain for such
year (and, if necessary, subsequent years) in an amount equal to the portion
of such Member's share of the net decrease in Member Minimum Gain
attributable to such Member Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(4) of the Treasury Regulations. Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be so
allocated shall be determined in accordance with Section 1.704-2(i)(4) of the
Treasury Regulations. This Section 4.7(d) is intended to comply with the
minimum gain chargeback requirement in Section 1.704-2(i) of the Treasury
Regulations and shall be interpreted consistently therewith.
(e) Nonrecourse Deductions for any year shall be allocated as
Net Loss pursuant to Section 4.3.
(f) Any Member Nonrecourse Deductions for any year shall be
specially allocated to the Member who bears the economic risk of loss with
respect to the Member Nonrecourse Debt to which such Member Nonrecourse
Deductions are attributable in accordance with Section 1.704-2(i)(1) of the
Treasury Regulations.
(g) Notwithstanding any other provision of this Article IV,
no Member shall be allocated in any Taxable Year of the Company any Net Loss
to the extent such allocation would cause or increase a deficit balance in
such Member's Adjusted Capital Account, taking into account all other
allocations to be made for such year pursuant to this Article IV and the
reasonably expected adjustments, allocations and distributions described in
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations. Any such Net Loss
that would be allocated to a Member (the "DEFICIT MEMBER") shall instead be
allocated to the other Members. Moreover, if a Deficit Member unexpectedly
receives an adjustment, allocation or distribution described in
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations which creates or
increases a deficit balance in such Member's Adjusted Capital Account
(computed after all other allocations to be made for such year pursuant to
this Article IV have been tentatively made as if this Section 4.7(g) were not
in this Agreement), such Deficit Member shall be allocated items of Gross
Income in an amount equal to such deficit balance. This Section 4.7(g) is
intended to comply with the qualified income offset requirement of
Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be
interpreted consistently therewith.
(h) The allocations set forth in Sections 4.7(c) through
4.7(g) (the "REGULATORY ALLOCATIONS") are intended to comply with Section 704(b)
of the Code and the Treasury Regulations thereunder and shall be taken into
account in allocating items of income, gain, loss and deduction among the
Members so that, to the extent
24
possible, the net amount of such allocations of other items and the Regulatory
Allocations to each Member shall be equal to the net amount that would have
been allocated to each such Member if the Regulatory Allocations had not
occurred.
4.8 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Members for all ordinary and necessary expenses reasonably incurred (as
determined by the Management Committee) by the Members on behalf of the
Company, upon presentation of copies of invoices or other documents
reasonably evidencing the amount and nature of such expenses. Such
reimbursed amounts shall be treated as expenses of the Company that shall be
deducted in calculating Net Income and shall not be deemed to constitute a
distributive share of Net Income or a distribution or return of capital to
any Member.
4.9 DISTRIBUTIONS.
(a) Subject to Sections 4.9(c) and 4.10, the Company shall,
to the extent the Management Committee determines the Company has cash
available to do so, make quarterly advances of cash or other property to the
Members in proportion and to the extent of their respective Tax Amounts ("TAX
DISTRIBUTIONS"). Such Tax Distributions shall be treated as non-interest
bearing advances recoverable from future distributions from the Company
pursuant to Sections 4.9(b) and 12.4.
(b) Subject to Sections 4.9(c) and 4.10, after provision for
sufficient working capital consistent with good fiscal operating policy and
such other needs as the Management Committee, in its sole discretion, shall
deem appropriate, distributions (other than distributions pursuant to
Section 12.4) of the net funds remaining after payment or provision for
payment of current obligations and operating expenses of the Company and
after distributions pursuant to the preceding paragraph, shall be made to the
Members in accordance with their respective Percentage Interests, at such
times as the Management Committee, in its sole discretion, shall determine.
(c) Upon Capital Contributions by the Employee Members in
exchange for the first 5,500 Class A Units issued by the Company, not
including Class A Units issued pursuant to the Management Incentive Plan,
such Capital Contributions shall be distributed within 90 days following such
contribution to the Members in proportion to their Initial Class B Percentage
Interests.
4.10 DISTRIBUTIONS IN KIND. Distributions made pursuant to this
Agreement may be made in cash or in assets in kind in the discretion of the
Management Committee; provided, however, that any distribution in kind shall
be made to all Members proportionately in accordance with their Percentage
Interests.
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4.11 RESTRICTIONS ON DISTRIBUTIONS. Notwithstanding any provision
to the contrary contained in this Agreement, the Company shall not make a
distribution to any Member with respect to such Member's Interest if such
distribution would violate Section 18-607 of the Act or other applicable law.
In addition, except as specifically determined by the Management Committee,
the Company shall not make a distribution to any Member if such distribution
would be prohibited by the terms of, or would cause any obligation of the
Company to become due prior to the final maturity date of, or would cause the
net worth or assets of the Company to be less than the minimum amount (or
less in relation to another amount than the minimum ratio of such amounts)
required to be maintained by the Company under, or otherwise would conflict
with, any agreement or other instrument to which the Company is a party or by
which it is bound which relates to borrowed money.
4.12 TAX WITHHOLDING.
(a) If requested by the Company, each Member shall deliver to
the Company (i) an affidavit in form satisfactory to the Company that the
applicable Member is not subject to withholding under the provisions of any
federal, state, local, foreign or other law, (ii) any certificate that the
Company may reasonably request with respect to any such laws, (iii) any other
form reasonably requested by the Company relating to any Member's status
under any such law, and/or (iv) a copy of any tax return or similar document
of the applicable Member that the Company may reasonably request with respect
to any such law.
(b) To the extent that the Company is required by any
applicable law to withhold or to make tax payments on behalf of or with
respect to distributions to, allocations to, or otherwise for any Member
(each a "TAX LIABILITY"), the Company may make such tax payments (each a "TAX
ADVANCE") as so required; PROVIDED, that at least ten (10) days, if
commercially possible, prior to making a Tax Advance on behalf of or with
respect to a Member, the Company shall first notify such affected Member.
Such tax payments shall be deducted from concurrent distributions, if any,
from the Company to such Member pursuant to Sections 4.9 and 12.4. For the
avoidance of doubt, to the extent that such tax payments are recovered from
Tax Distributions, such Tax Distributions shall continue to be recoverable
from future distributions from the Company pursuant to Sections 4.9(b) and
12.4. To the extent a Tax Advance is greater than a concurrent distribution
(a "TAX EXCESS"), such Tax Excess shall be deemed to be a recourse loan to
such Member by the Company and shall be due and payable immediately after
such Tax Excess is made by the Company, and if not repaid within three (3)
days after the Tax Excess is made by the Company, the Tax Excess shall bear
interest at a rate equal to the lesser of (i) fifteen percent (15%) per
annum, or (ii) the maximum rate permitted by law until repaid. Notwithstanding
anything to the contrary contained herein or in any other agreement between
or among Members, each Member hereby agrees to indemnify, defend, and
26
hold harmless the Company and its Affiliates from and against any Tax
Liability of or with respect to such Member, at any time, and this indemnity
and hold harmless provision shall survive this Agreement and the termination
of the Company. In the event of any claimed over-withholding, such Member
shall be limited to an action against the applicable government agencies for
refund and hereby waives any claim or right of action against the Company on
account of such withholding. The Company may, and is hereby authorized to,
withhold from any distributions or payments otherwise due to a Member from
the Company under this Agreement the amount of any Tax Excess made on behalf
of such Member that as of such date has neither been repaid to the Company
nor been previously offset hereunder, any amount withheld under this
Section 4.12 shall be deemed for all purposes of this Agreement to have been
distributed or paid to such Member. Any Member who does not repay a Tax
Excess after a written final demand has been given by the Management
Committee shall pay, in addition to the Tax Excess and applicable interest,
all expenses, including without limitation reasonable attorney's fees,
incurred by the Company and/or any other Member in collecting the Tax Excess
plus interest and/or pursuing any other remedy provided in the Section 4.12
and otherwise in this Agreement.
ARTICLE V
MEMBERS
5.1 MEMBERS. The names and addresses of the Members are set forth
on the signature page hereto.
5.2 ADMISSION OF NEW MEMBERS. New members may be admitted by the
Management Committee or in accordance with the transfer provisions contained
in Article IX.
5.3 RESIGNATION. A Member may not resign from the Company prior
to the dissolution and winding up of the Company. A resigning Member shall
not be entitled to receive any distribution except as expressly provided in
this Agreement.
5.4 POWER OF MEMBERS. The Members shall have the power to
exercise any and all rights or powers granted to Members pursuant to the
express terms of this Agreement. The Members shall elect the Management
Committee in accordance with Section 6.3(b). Except as otherwise
specifically provided by this Agreement or required by the Act, no Member
shall have the power to act for or on behalf of, or to bind, the Company.
Notwithstanding the foregoing sentence, all Members shall constitute one
class or group of members for purposes of the Act.
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5.5 MEMBERS' RIGHT TO MAKE CERTAIN ADDITIONAL INVESTMENT. Each of
the Members shall have a right to purchase additional interests in the
Company, Grove Holdings LLC ("Holdings"), or the Operating Company pro rata
in accordance with their respective Percentage Interests in the event any
such company sells interests therein to any other Member or to an Affiliate
of such Member, or to an officer, director, shareholder, partner, member, or
agent of such Member of Affiliate or any family member of such Affiliate.
This right shall terminate immediately prior, and shall not be applicable, to
a Public Offering (an "Additional Investment") or a public offering of
Holdings or the Operating Company. Any Additional Investment which any
Member desires to make shall be made through the same entity (i.e. the
investment shall not increase the number of PTP Slots as provided for
hereunder) in which Members electing to invest have invested hereunder
(except as otherwise permitted by the Management Committee) and all Members
shall have the right to invest pro rata in accordance with their respective
Percentage Interests on the same basis as every other Member. The Management
Committee shall give notice to each Member that additional funds are needed
for the Additional Investment. If a Member desires to make an Additional
Investment, and the other Members elect not to participate in the Additional
Investment, then the Members may make the Additional Investment free of the
obligations of this Section 5.5. Sales of Interests to Members, and other
transactions with Members and their Affiliates, shall be on an arms length
basis.
5.6 MEETINGS.
(a) Meetings of the Members shall be held at such times as
the Majority Members or the Management Committee shall from time to time
determine or as otherwise required by law.
(b) The Members may hold meetings at the Company's principal
place of business or such other place as the Management Committee may
designate.
(c) Any Member may participate in a meeting of the Members by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting by such means shall constitute presence in person
at such meeting.
(d) At each meeting of the Members, a person designated by
the Management Committee shall act as chairman of the meeting and preside.
The Secretary, or any person whom the Chairman of the meeting shall appoint
shall act as Secretary of such meeting and keep the minutes thereof.
5.7 VOTING. The Members shall vote in accordance with their
Percentage Interests, to the extent such Interest are entitled to vote.
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5.8 QUORUM. A quorum of any meeting of the Members shall require
the presence of the Majority Members. No action at any meeting may be taken
by the Members unless a quorum is present. No action may be taken by the
Members at any meeting at which a quorum is present without the affirmative
vote of the Majority Members.
5.9 ACTIONS WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Members may be taken without a meeting,
without prior notice and without a vote, if a consent in writing, setting
forth the action so taken, shall be signed by the Majority Members and such
consent is filed with the minutes of the proceedings of the Members.
ARTICLE VI
MANAGEMENT
6.1 MANAGEMENT OF THE COMPANY.
(a) The Company shall be managed by a Management Committee.
The following persons are hereby appointed and elected to serve as a member
of the Management Committee, each until his successor shall be appointed and
elected or his earlier death, resignation, removal or termination: X. Xxxxxx
Xxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx. The
Management Committee shall manage the Company in accordance with this Agreement
and the actions of the Management Committee taken in such capacity and in
accordance with this Agreement shall bind the Company.
(b) The Management Committee shall have full, exclusive and
complete discretion to manage and control the business and affairs of the
Company, to make all decisions affecting the business and affairs of the
Company and to take all such actions as it deems necessary or appropriate to
accomplish the purpose of the Company as set forth herein. The Management
Committee shall be the sole person or entity with the power to bind the
Company, except and to the extent that such power is expressly delegated to
any other person, committee or entity by the Management Committee, and such
delegation shall not cause the Management Committee to cease being the
Management Committee. There shall not be a "manager" (within the meaning of
the Act) of the Company.
(c) The Management Committee may appoint individuals with or
without such titles as it may elect, including the titles of President, Vice
President, Treasurer, Secretary, and Assistant Secretary, to act on behalf of
the Company with
29
such power and authority as the Management Committee may delegate in writing
to any such persons, and otherwise such officers shall have all the powers
and authority customarily exercised by such officers.
(d) The Management Committee may adopt the By-laws of the
Company consistent with this Agreement and the Act.
6.2 POWERS OF THE MANAGEMENT COMMITTEE. The Management Committee
shall have the right, power and authority, in the management of the business
and affairs of the Company, to do or cause to be done, at the expense of the
Company, any and all acts deemed by the Management Committee to be necessary
or appropriate to effectuate the business, purposes and objectives of the
Company.
Without limiting the generality of the foregoing, the Management
Committee shall have the power and authority to:
(a) issue from time to time in one or more series of any
number of Interests, and with such powers, preferences, rights and
qualifications, limitations or restrictions thereof, and such distinctive
serial designations, all as shall hereafter be stated and expressed in the
resolution or resolutions adopted by the Management Committee. Each series
of Interests (a) may have such voting rights or powers, full or limited, or
may be without voting rights or powers; (b) may be subject to redemption at
such time or times and at such prices; (c) may be entitled to receive
allocations and distributions (which may be cumulative or non-cumulative) at
such rate or rates, on such conditions and at such times, and allocable and
payable in preference to, or in such relation to, the allocations and
distributions allocable and payable to any other class or classes or series
of Interests; (d) may have such rights upon the voluntary or involuntary
liquidation, winding up or dissolution of, or upon any distribution of the
assets of, the Company; (e) may be made convertible into or exchangeable for,
Interests of any other class or classes or of any other series of the same or
any other class or classes of interests of the Company at such price or
prices or at such rates of exchange and with such adjustments; (f) may be
entitled to the benefit of a sinking fund to be applied to the purchase or
redemption of Interests of such series in such amount or amounts; (g) may be
entitled to the benefit of conditions and restrictions upon the creation of
indebtedness of the Company or any subsidiary, upon the issue of any
additional Interests (including additional Interests of such series or of any
other series) and upon the making of allocations or distributions on, and the
purchase, redemption or other acquisition by the Company or any subsidiary
of, any outstanding Interests of the Company and (h) may have such other
relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof; all as shall be stated in said
resolution or resolutions providing for the issue of such Interests;
30
(b) cause the Interests of the Company to be represented by
certificates in such form and on the basis of such procedure as shall be
approved by the Management Committee, including with respect to the issuance
of new certificates to replace lost, destroyed, stolen or mutilated
certificates.
(c) establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including with
respect to allocations and distributions;
(d) bring and defend on behalf of the Company actions and
proceedings at law or in equity before any court or governmental, administrative
or other regulatory agency, body or commission or otherwise; and
(e) execute all documents or instruments, perform all duties
and powers and do all things for and on behalf of the Company in all matters
necessary, desirable, convenient or incidental to the purpose of the Company,
including, without limitation, all documents, agreements and instruments
related to the making of investments of Company funds.
In connection with the issuance of any Interests as contemplated
under Subsection (a) above, the Management Committee is hereby authorized to
enter into such amendments or supplements to this Agreement as the Management
Committee determines to be necessary or advisable to give effect to such
issuance, including to make appropriate adjustments to the total number of
Interests outstanding, the Percentage Interests and Relative Interests of
the Members; provided, however, that such adjustments shall not treat Members
differently and adversely from the manner in which other Members holding
similar Interests are treated.
The expression of any power or authority of the Management
Committee in this Agreement shall not in any way limit or exclude any other
power or authority of the Management Committee which is not specifically or
expressly set forth in this Agreement.
Notwithstanding anything in this Agreement to the contrary,
all transactions between the Company or any Subsidiary and any Member, its
Affiliates or any officer, director, shareholder, partner, member, employee
or agent of a Member or an Affiliate of a Member or family members of the
foregoing shall be on an arms length basis.
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6.3 GOVERNANCE.
(a) NUMBER. The Management Committee shall consist of one or
more members. Each Management Committee member shall hold office until a
successor is elected and qualified or until such member's death, resignation
or removal.
(b) ELECTION. Management Committee members shall be elected
by the Majority Members from time to time.
(c) RESIGNATION. Any Management Committee member may resign
at any time upon written notice to the Company.
(d) REMOVAL. Any or all of the Management Committee members
may be removed with or without cause by the Majority Members.
(e) TIMES AND PLACES OF MEETINGS. The times and places for
fixing meetings may be fixed from time to time by the Management Committee.
(f) QUORUM. A majority of the Management Committee members
shall be necessary and sufficient to constitute a quorum for the transaction
of business at any meeting of the Management Committee.
(g) ACTION BY MAJORITY VOTE. The act of a majority of the
Management Committee members present at a meeting at which a quorum is present
shall be the act of the Management Committee.
(h) ACTION WITHOUT A MEETING. Any action or permitted action
required to be taken at any meeting of the Management Committee may be taken
without a meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by a majority of
the Management Committee members and such consent is filed with the minutes
of the proceedings of the Company.
6.4 NO MANAGEMENT BY OTHER PERSONS OR ENTITIES. Except and only
to the extent expressly delegated by the Management Committee, no person or
entity other than the Management Committee shall be an agent of the Company
or have any right, power or authority to transact any business in the name of
the Company or to act for or on behalf of or to bind the Company.
6.5 BY-LAWS. The Members or the Management Committee may adopt
by-laws consistent with this Agreement and the Act.
32
6.6 RELIANCE BY THIRD PARTIES. Any person or entity dealing with
the Company or the Management Committee or a Member, in his capacity as a
Member, may rely upon a certificate signed by the Management Committee as to:
(a) the identity of the Management Committee or the Member;
(b) the existence or non-existence of any fact or facts which
constitute a condition precedent to acts by the Management Committee or the
Member or are in any other manner germane to the affairs of the Company;
(c) the persons who or entities which are authorized to execute
and deliver any instrument or document of or on behalf of the Company; or
(d) any act or failure to act by the Company as to any other
matter whatsoever involving the Company or the Member.
ARTICLE VII
ACCOUNTING; FINANCIAL AND TAX MATTERS
7.1 ACCOUNTING METHOD. The Company shall keep its accounting
records and shall report Net Income or Net Losses on the accrual method of
accounting in accordance with the principles used by the Company for Federal
income tax purposes and otherwise in accordance with GAAP consistently
applied and, to the extent inconsistent therewith, in accordance with this
Agreement.
7.2 ACCOUNTING RECORDS. The Company shall keep complete and
accurate business and accounting records reflecting all transactions of the
Company. Such accounting records shall be kept in accordance with the principles
set forth in Section 7.1. The Company shall also keep all records required
to be kept pursuant to the Act. The Company's records, together with a copy
of this Agreement and of the Certificate, shall be maintained at the principal
place of business of the Company and shall be subject to inspection or
examination by each Member and its duly authorized representative at all
reasonable times for any purpose reasonably related to such Member's interest
as a member of the Company.
7.3 FISCAL YEAR. The Fiscal Year initially shall end on the last
Saturday of September of each year. The Fiscal Year may be changed by the
Management Committee. If the Fiscal Year is changed by the Management
Committee as provided hereunder, any Target Date and/or measurement periods
as provided in
33
Section 4.5, shall be adjusted in an equitable manner as reasonably determined
by the Management Committee and GGEP.
7.4 FINANCIAL STATEMENTS.
(a) As soon as practicable but in any event within 60 days
after the end of each of the first three quarters of each Fiscal Year of the
Company, the Management Committee or the financial officers of the Company
shall prepare and distribute to each Member quarterly financial statements of
the Company (which need not be examined or reported on by an independent
certified public accountant), which shall include a balance sheet of the
Company as of the end of such fiscal quarter, a statement of Net Income and
Net Loss for such fiscal quarter and a statement of cash flows of the Company
for such fiscal quarter, all in reasonable detail, setting forth in each case
in comparative form the information for the corresponding period (or periods)
of the previous Fiscal Year.
(b) As soon as practicable but in any event within 90 days
after the close of each Fiscal Year of the Company, the Company shall cause
to be prepared and delivered to each Member the following financial
statements, accompanied by the audited report thereon of the independent
accountants for the Company: (i) a balance sheet of the Company as at the
end of such Fiscal Year; (ii) a statement of Net Income and Net Loss for such
Fiscal Year; (iii) a statement of cash flows of the Company for such Fiscal
Year; and (iv) a statement of the Members' Capital Accounts and changes
therein for such Fiscal Year, all in reasonable detail, setting forth in each
case in comparative form all the information for the corresponding period (or
periods) of the previous Fiscal Year.
(c) Notwithstanding the foregoing, in the event that the
Company becomes a reporting company under the Securities Exchange Act of
1934, and so long as it shall remain a reporting company thereunder, it shall
only be required to provide the Members with copies of any quarterly or
annual financial statements of the Company filed with the Securities and
Exchange Commission.
7.5 BANK AND INVESTMENT ACCOUNTS. All funds of the Company shall
be deposited in its name, or in such name as may be designated by the
Management Committee, in such checking, savings or other accounts, or held in
its name in the form of such other investments as shall be designated by the
Management Committee. The funds of the Company shall not be commingled with
the funds of any Person. All withdrawals of such deposits or liquidations of
such investments by the Company shall be made exclusively upon the signature
or signatures of such officer or officers of the Company as Management
Committee may designate.
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7.6 TAX MATTERS PARTNER. The "TAX MATTERS PARTNER" (as such term
is defined in Section 6231(a)(7) of the Code) of the Company shall be XX Xxxxx
Coinvestors, L.P. or any successor "tax matters partner" designated by the
Management Committee in accordance with this agreement. Each Member, by its
execution of this Agreement, consents to such designation of the Tax Matters
Partner, and agrees to execute, certify, acknowledge, deliver, swear to, file
and record at the appropriate public offices such documents as may be
necessary or appropriate to evidence such consent.
7.7 TAXES.
(a) The Company shall prepare, or cause to be prepared, and
shall file all tax returns, be they information returns or otherwise, which
are required to be filed with the Internal Revenue Service, state and local
tax authorities and foreign tax jurisdictions, if any.
(b) The Company shall furnish the Members with all Company
information required to be reported in the tax returns of the Members for tax
jurisdictions in which the Company is considered to be doing business,
including a report indicating each Member's share for income tax purposes of
the Company's income, gain, credits, losses and deductions within 90 days
after the end of the Company's Taxable Year.
(c) All determinations as to tax elections shall be made by
the Tax Matters Partner.
7.8 CLASSIFICATION AS A PARTNERSHIP. The Members intend that the
Company be classified as a partnership for Federal tax purposes effective as
of the date of this Agreement. The Tax Matters Partner shall not file an
election for the Company to be taxable as an association for federal income
tax purposes and shall, for and on behalf of the Company, take all steps as
may be required to maintain the Company's classification as a partnership for
Federal tax purposes. By executing this Agreement, each of the parties
hereto consents to the authority of the Tax Matters Partner to make any such
election and shall cooperate in the making of such election and shall
cooperate in the making of such election (including providing consents and
other authorizations that may be required). Nothing in this Section 7.8
shall limit the power of the Company as specified in Section 2.10(c) of this
Agreement.
7.9 ACCOUNTING DECISIONS. All determinations as to accounting
principles shall be made by the Management Committee.
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ARTICLE VIII
LIABILITY; EXCULPATION; INDEMNIFICATION
8.1 LIABILITY OF MEMBERS. A Member shall not be personally liable
for any debt, obligation or other liability of the Company, whether arising
in contract, tort or otherwise, except that a Member shall remain personally
liable for the payment of any Capital Contributions required by Article III,
and as otherwise provided in this Agreement, the Act and any other applicable
law.
8.2 EXCULPATION. (a) For purposes of this Agreement, "COVERED
PERSON" shall mean any Member, any Affiliate of a Member, any Management
Committee member, and any officer, director, shareholder, partner, member,
employee or agent of a Member or any Affiliate thereof, and any officer,
employee or expressly authorized agent of the Company or its Affiliates.
(b) No Covered Person shall be liable to the Company 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 Company 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 such Covered Person's gross negligence, fraud or
willful misconduct.
(c) A Covered Person shall be fully protected in relying in
good faith upon the records of the Company and upon such information,
opinions, reports or statements presented to the Company 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 Company, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets
from which distributions to Members might properly be paid.
8.3 DUTIES AND LIABILITIES OF COVERED PERSONS.
(a) To the extent that, at law or in equity, any Covered
Person has duties (including fiduciary duties) and liabilities related
thereto to the Company or to any other Covered Person, a Covered Person
acting under this Agreement shall not be liable to the Company or to any
other Covered Person 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
36
otherwise existing at law or in equity, are agreed by the Members to replace
such other duties and liabilities of such Covered Person.
(b) Whenever in this Agreement a Covered Person is permitted
or required to make a decision (a) in its "discretion" or under a grant of
similar authority or latitude, the Covered Person shall be entitled to
consider only 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 Company or any other Person, or
(b) in its "good faith" or under another express standard, the Covered Person
shall act under such express standard and shall not be subject to any other
or different standard imposed by this Agreement or other applicable law.
8.4 INDEMNIFICATION.
(a) To the fullest extent permitted by applicable law, the
Company shall indemnify any Covered Person who was or is made a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding brought by or against the Company or otherwise, whether
civil, criminal, administrative or investigative, including, without
limitation, an action by or in the right of the Company to procure a judgment
in its favor, by reason of the fact that such Covered Person is or was a
Member, Affiliate, officer, employee or agent of the Company, or that such
Covered Person is or was serving at the request of the Company as an
Affiliate partner, member, director, officer, trustee, employee or agent of
another Person, against all expenses, including attorneys' fees and
disbursements, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such Covered Person in connection with such action,
suit or proceeding. Notwithstanding the foregoing, no indemnification shall
be provided to or on behalf of any Covered Person if a judgment or other
final adjudication adverse to such Covered Person establishes that his or her
acts constituted intentional misconduct, fraud or gross negligence.
(b) Any indemnification under subsection (a) of this Section
(unless ordered by a court) shall be made by the Company only as authorized
in the specific case upon a determination that the indemnification of the
Covered Person is proper under the circumstances because he or she has met
the applicable standard of conduct set forth in subsection (a) of this
Section 8.4. Such determination shall be made by the Management Committee or
the Majority Members or, if the Management Committee or Majority Members so
direct, by independent legal counsel in a written opinion. Any indemnification
payment shall be payable only out of and to the extent of the Company's assets,
and no Covered Person shall have any liability therefor.
(c) The Company shall, in the discretion of the Majority
Members, pay expenses incurred in defending any action, suit or proceeding
described in subsection (a) above (including reasonable legal fees and
expenses of counsel and
37
other experts) in advance of the final disposition of such action, suit or
proceeding upon receipt by the Company of an undertaking, in form satisfactory
to the Management Committee or the Company's legal counsel, to repay such
amount if it shall be determined that the Covered Person is not entitled to
be indemnified as authorized by paragraph (a) above.
(d) The indemnification provided by this Section 8.4 shall
not be deemed exclusive of any other rights to indemnification to which those
seeking indemnification may be entitled under any agreement, or otherwise.
The rights to indemnification and reimbursement or advancement of expenses
provided by, or granted pursuant to, this Section 8.4 shall continue as to a
Covered Person who has ceased to be a Member, officer, employee or agent (or
other person indemnified hereunder) and shall inure to the benefit of the
executors, administrators, legatees and distributees of such person.
(e) The provisions of this Section 8.4 shall be a contract
between the Company, on the one hand, and each Covered Person who served in
such capacity at any time while this Section 8.4 is in effect, on the other
hand, pursuant to which the Company and each such Covered Person intend to be
legally bound. No repeal or modification of this Section 8.4 shall affect
any rights or obligations with respect to any state of facts then or
theretofore existing or thereafter arising or any proceeding theretofore or
thereafter brought or threatened based in whole or in part upon such state of
facts.
8.5 INSURANCE. The Company may purchase and maintain insurance,
to the extent and in such amounts as the Management Committee shall, in its
sole discretion, deem reasonable, on behalf of Covered Persons and such other
persons or entities as the Management Committee shall determine, against any
liability that may be asserted against or expenses that may be incurred by
any such person or entity in connection with the activities of the Company or
such indemnities, regardless of whether the Company would have the power to
indemnify such person or entity against such liability under the provisions
of this Agreement. The Management Committee, on behalf of the Company,
and/or the Company may enter into indemnity contracts with Covered Person and
adopt written procedures pursuant to which arrangements are made for the
advancement of expenses and the funding of obligations under Section 8.4
hereof and containing such other procedures regarding indemnification as are
appropriate.
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ARTICLE IX
TRANSFERS
9.1 GENERAL RESTRICTIONS. Except as otherwise permitted in this
Article IX, no Member shall Transfer, directly or indirectly, all or any
portion of its Interest, or rights to income or other attributes with respect
to its Interest, it being understood that any such Transfer or issuance will
be deemed to constitute a Transfer by such Member in violation of this
Agreement, shall be void AB INITIO and the Company shall not recognize any
such Transfer.
9.2 PERMITTED TRANSFERS. Except as otherwise specified herein and
subject to Section 9.5, the provisions of Section 9.1 shall not apply to the
following Transfers by a Member (each of which shall be deemed to constitute
a "PERMITTED TRANSFER", each Transferee of a Permitted Transfer of Interests
being referred to herein as a "PERMITTED TRANSFEREE"):
(a) any Transfer upon the death of a Member that is an
individual, through testamentary or intestate disposition.
(b) any Transfer with the consent of the Management Committee;
which shall be granted or withheld in its sole discretion.
(c) any Transfer of Interests in accordance with the provisions
of Sections 9.3 and 9.4, Article X or Article XI.
9.3 DRAG-ALONG RIGHT. Subject to the prior approval of the
Management Committee, if at any time prior to the Company first becoming a
Public Company, the Majority Members (the "SELLING MEMBER") desire to sell
all or any portion of such Selling Member's Interest pursuant to a bona fide
offer from a third party which is not an Affiliate of such Selling Member (a
"THIRD PARTY PURCHASER") to purchase all or any portion of its Interests then
such Selling Member shall have the right to require all of the other Members
to sell a pro rata portion of their Interests to such Third Party Purchaser
in connection with such sale. Such right shall be exercisable by written
notice (a "BUYOUT NOTICE") given to each Member which shall state (i) that
the Selling Member proposes to effect the sale of the PRO RATA portion of the
Interests of every Member of the Company to such Third Party Purchaser,
(ii) the proposed purchase price per unit to be paid by the Third Party
Purchaser for the Interests of all of the Members, and (iii) the name of the
Third Party Purchaser, and to which shall be attached a copy of all writings
between such Selling Member and the other parties to such transaction
necessary to establish the terms of such transaction. Each such Member
agrees that, upon receipt of a Buyout Notice, each such Member shall be
obligated to sell a PRO RATA portion of its Interests upon the other terms
and
39
conditions of such transaction (and otherwise take all reasonably necessary
action to cause consummation of the proposed transaction, including voting
such Interest in favor of such transaction); PROVIDED, HOWEVER, that each
such Member shall only be obligated as provided above in this Section 9.3 if
(x) each Member receives the same pro rata consideration as the Selling
Member for Interests of the same class and series as the Interests to be sold
by the Selling Member, and (y) the Third Party Purchaser shall have furnished
evidence reasonably satisfactory to the Management Committee to the effect
that it has the financial ability to consummate the proposed purchase of the
Interests of all of the Members.
9.4 TAG ALONG RIGHT. In the event of a sale of an Interest by a
Member that would cause a Change of Control, each Member shall have the right
(but not the obligation) (such right, the "TAG ALONG RIGHT") to require the
Selling Member to cause the Third Party Purchaser to purchase a pro rata
portion of such Member's Interest (the "TAG ALONG INTEREST") for the amount
equal to the pro rata amount being paid by the Third Party Purchaser to the
Selling Member (the "TAG ALONG PRICE"). If a Change of Control occurs, the
Company shall promptly give notice in writing to the Members setting forth
the date and circumstances of the Change of Control, the identity of the
Third Party Purchaser that has offered to purchase Selling Member's Interests
and the Tag Along Price (the "TAG ALONG NOTICE"). Each of the Members may
exercise its Tag Along Right by delivering written notice of its election to
sell its Interest (the TAG ALONG EXERCISE NOTICE") to the Company and the
Selling Members within 5 days of receipt of the Tag Along Notice. Delivery
of such notice shall constitute an agreement by the Member delivering the
same to sell its Interest to the Third Party Purchaser and an agreement by
the Selling Member to cause the Third Party Purchaser to purchase such
Interest at the price and upon the other terms set forth herein.
9.5 CONDITIONS TO TRANSFERS. In addition to all other terms and
conditions contained in this Agreement, no Transfers to which the provisions
of Section 9.2 would apply shall be completed or effective for any purpose
unless prior thereto:
(a) the Transferor shall have provided to the Company (i) at
least five Business Days' prior notice of such Transfer or in the case of
Transfer by reason of death pursuant to 9.2(a), at least five Business Days'
notice prior to the proposed effectiveness of such Transfer for purposes of
this Agreement, (ii) a certificate of the Transferor, delivered with such
notice, containing a statement as to which provision of Section 9.2 is
applicable to such Transfer, together with such information as is reasonably
necessary for the Management Committee to determine whether such Transfer is
permitted thereby, and (iii) such other information and documents as may be
reasonably requested by the Management Committee such notice in order for it
to make such determination; and
40
(b) the Transferee of such Interests shall have executed and
delivered to each recipient of the notice required by Section 9.5(a) an
agreement by which it shall become a party to and be bound by the applicable
terms and provisions of this Agreement.
(c) counsel to the Transferee of such Interests shall have
delivered to the Company an opinion reasonably satisfactory in form and
substances to the Company, to the effect that: (i) such Transfer would not
violate the Securities Act or any state securities or "blue sky" laws
applicable to the Company or the Interest to be Transferred, (ii) such
Transfer would not, individually or together with other concurrently proposed
Transfers, cause the Company to be regarded as an "investment company" or a
"subsidiary investment company" under the Investment Company Act of 1940, as
amended, and (iii) in the case of a Transfer pursuant to Sections 9.2(a) or
(b), such Transfer would not, individually or together with all other
Transfers by such Transferor, its predecessors, their prior Transferees, and
their indirect owners, if any, cause the Company to have more partners for
purposes of Treasury Regulation section 1.7704-1(h), determined without
regard to section 1.7704-1(h)(3)(ii), as a result of the ownership of such
Transferor, its predecessors, their prior Transferees, and their indirect
owners than the number opposite such Transferor's name under the heading "PTP
Slots" as described in the Ancillary Letter or in Section 13.2(a) of this
Agreement.
9.6 EFFECT OF PERMITTED TRANSFER. Upon consummation of any
Permitted Transfer of an Interest in accordance with the provisions of this
Agreement, (a) the Permitted Transferee shall be admitted as a Member (if not
already a Member) and for purposes of this Agreement such Permitted Transferee
shall be deemed a Member, (b) the Transferred Interest shall continue to be
subject to all the provisions of this Agreement and (c) the Capital Account
(or applicable portion thereof in the case of a Transfer of less than all of
a Transferor's Interest) of the Transferor shall be transferred to the name
of such Permitted Transferee at the close of business on the effective date
of such Permitted Transfer (the "EFFECTIVE TRANSFER TIME"). Unless the
Transferor and Transferee otherwise agree in writing, and give written notice
of such agreement to the Company at least five days prior to such Effective
Transfer Time, all distributions declared to be payable to the Transferor at
or prior to such Effective Transfer Time shall be made to the Transferor. No
Permitted Transfer shall relieve the Transferor (or any of its Affiliates) of
any of their obligations or liabilities under this Agreement arising prior to
the closing of the consummation of such Permitted Transfer.
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ARTICLE X
REGISTRATION RIGHTS
10.1 DEMAND REGISTRATION RIGHTS.
(a) (i) INITIAL PUBLIC OFFERING. The Management Committee
may in its sole discretion, and shall at the demand of the Majority Members
(the Majority Members demanding such registration hereunder are referred to
as the "DEMAND MEMBER") cause the Company to (A) effect a Reconstitution,
if such action has not already been taken, and/or (B) register under the
Securities Act and under the securities or "Blue Sky" laws of any
jurisdiction reasonably designated by the Management Committee, all or any
portion of the Converted Securities held by the Demand Member and/or any
Equity Securities proposed to be registered and sold by the Company (the
"OFFERED SECURITIES"). Promptly following any such determination to
register Equity Securities, the Company shall provide written notice
thereof to each Member (the "DEMAND NOTICE"). The Company shall enter into
a Registration Rights Agreement with the Majority Members to provide for
demand and piggyback registration rights for the period subsequent to any
initial Public Offering consistent with the provisions of this Article X.
(ii) SPECIAL INTERESTS - Upon a Reconstitution:
(A) EMPLOYEE MEMBERS. To the extent the Employee
Members have not had the opportunity to obtain certain additional Class A
Units (the "UNVESTED CLASS A UNITS") pursuant to the Management Incentive
Plan because the date of such opportunity has not yet arisen as of the date
of the Reconstitution, the Reconstituted Company shall enter into a plan
with such Employee Members to replace such Unvested Class A Units with
options to purchase Equity Securities in the Reconstituted Company, which
will have exercise prices comparable to the price inherent in such employee
Member's Exercise Price Equivalent.
(B) GGEP. To the extent the GGEP has not had the
opportunity to obtain a portion of the Total Promote Percentage (the
"UNVESTED CLASS B INTERESTS") pursuant to Section 4.5 because the date of
such opportunity has not yet arisen as of the date of the Reconstitution,
the Reconstituted Company shall enter into a plan with GGEP, reasonably
acceptable to GGEP and the Company, to replace such Unvested Class B
Interests with options to purchase Equity Securities in the Reconstituted
Company, which will have exercise prices comparable to the price inherent
in GGEP's Exercise Price Equivalent.
42
(iii) MANAGING UNDERWRITER. In connection with a
registration effected pursuant to this Section 10.1(a), an Investment
Banking Firm shall be designated by the Management Committee to act as
managing underwriter of the Equity Securities to be sold.
(iv) WITHDRAWAL. The Management Committee or the Demand
Member, as the case may be, may, at any time prior to the effective date of
the Registration Statement, withdraw the Registration Statement and abandon
the offering process.
(b) REGISTRATION. In connection with any such determination by
the Management Committee or Demand Member, as the case may be, and in accordance
with the procedure described below, the Company shall use its reasonable best
efforts (i) to effect the reconstitution and conversion described in
Section 10.1(a)(i)(A), (ii) to effect the registration under the Securities Act
and the securities or "Blue Sky" laws of applicable jurisdictions of all Offered
Securities, and (iii) to keep such registration statement continuously effective
from the date such registration statement is declared effective until the
earlier of (a) 120 days from the effective date for such registration statement
and (b) such time as all Members whose Equity Interests are included in such
Registration Statements notified the Company in writing that the distribution of
the Offered Securities has been completed. The Company further agrees to
supplement or make amendments to such registration statement, if required by
(x) the registration form utilized by the Company for such registration or by
the instructions applicable to such registration form or (y) the Securities Act
or the rules and regulations thereunder. The Company agrees to furnish to all
Members whose Equity Interests are included in such Registration Statement
copies of any such supplement or amendment prior to its being used or filed with
the SEC.
(c) PIGGY-BACK RIGHTS.
(i) Other than in an initial Public Offering, in the
event the Company files a registration statement for the sale of Equity
Securities for the Majority Members or on behalf of the Company, the
Company shall send prompt notice thereof to all other Members (the
"PIGGYBACK NOTICE"). Any Member may request that Equity Securities owned
by such Member (a "PARTICIPATING MEMBER" and, together with the Demand
Member, the "OFFERING MEMBERS") be included in a registration statement by
delivering notice to the Company within ten Business Days after the receipt
of the Piggyback Notice, specifying the number of Converted Securities
intended to be included in such registration by such Participating Member,
such securities being included within the definition of Offered
Securities). The Company shall use all reasonable efforts to effect the
registration under the Securities Act of all
43
such Offered Securities which the Company has been requested to
register; PROVIDED, that prior to the effective date of the registration
statement filed in connection with such registration, each Participating
Member shall have the right to withdraw its Equity Securities included
in such registration statement at any time prior to 5 Business Days
before the effective date of such registration statement.
Notwithstanding the foregoing provisions of this subsection (i), (a) no
Member shall transfer any Equity Securities in contravention of any
lock-up or similar agreement requested by the managing underwriter of
the Equity Securities to be sold, (b) for the period ending on the fifth
anniversary of the initial Public Offering, no Member shall sell Equity
Securities in excess of the percentage of Equity Securities being sold
by the Majority Members in such registration, unless the Management
Committee specifically consents to the sale of a greater percentage of
Equity Securities by a particular Member. If a Change of Control has
occurred, piggy-back rights apply to initially purchased Interests by
Employee Members as well as Interests acquired by Employee Members upon
Option exercise; however, if a Change of Control has not occurred, such
piggy-back rights only apply to initially purchased Interests by
Employee Members and do not apply to Interests acquired by Employee
Members upon Option exercise.
(ii) If the Company proposes to register any Offered
Securities under the Securities Act as contemplated by this Section 10.1
and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by a Participating Member, use
its reasonable best efforts to arrange for such underwriters to include all
the Offered Securities to be sold by such Participating Member among the
securities of the Company to be distributed by such underwriters, subject
to the provisions of this Section 10.1.
(d) CUT-BACK. If the managing underwriter (selected in
accordance with Section 10.1(a)(ii)) of any underwritten offering pursuant to
this Section 10.1 shall inform the Company and the Demand Member that, in its
reasonable opinion, the number of Offered Securities requested to be included in
such registration by the Demand Member and the Participating Members would
adversely affect such offering, then the managing underwriter of such offering
shall limit the number of Converted Securities included in such offering so as
to eliminate such adverse effect by reducing the number of Offered Securities to
be included by each Participating Member on a pro rata basis (based on the
proportion its Percentage Interest bears to the Percentage Interests of all
other Offering Members).
10.2 REGISTRATION PROCEDURES. In connection with the registration of
Offered Securities pursuant to Section 10.1, the Company shall as expeditiously
as possible:
44
(a) furnish to each Member prior to the filing of the requisite
registration statement (the "REGISTRATION STATEMENT"), copies of drafts and
final conformed versions of such Registration Statement as is proposed to be
filed, and thereafter such number of copies of such Registration Statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in such Registration Statement (including each
preliminary prospectus) and such other documents in such quantities as an
Offering Member may reasonably request from time to time in order to facilitate
the disposition of the Offered Securities;
(b) use all reasonable efforts to register or qualify the
Offered Securities under such other securities or "Blue Sky" laws of such
jurisdictions as the Offering Members request and do any and all other acts and
things as may be reasonably necessary or advisable to enable the Company and the
Offering Members to consummate the disposition in such jurisdictions of the
Offered Securities; PROVIDED that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subsection (b), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction;
(c) use all reasonable efforts to cause the Offered Securities
to be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Company to enable the Company and the Offering Members to consummate the
disposition of such Offered Securities (provided that the Company shall not be
required to incur any expenses to satisfy regulatory requirements applicable to
a particular purchaser of such Offered Securities);
(d) notify the Offering Members, at any time when a prospectus
relating to the proposed sale is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such Registration Statement or amendment contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and the Company will prepare a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers of the Offered Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required to be
stated therein to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(e) enter into customary agreements (including, without
limitation, an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Offered Securities;
45
(f) make available for inspection by the Offering Members, any
managing or co-managing underwriter participating in any disposition pursuant to
such registration, and any attorney, accountant or other agent retained by the
Company, the Offering Members or any managing or co-managing underwriter
(collectively, the "AGENTS"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "RECORDS")
as shall be necessary to enable them to exercise their due diligence
responsibility, and cause the officers, directors and employees of the Company
to supply all information reasonably requested by any such Agent in connection
with such registration; PROVIDED that (i) Records and information obtained
hereunder shall be used by such persons only to fulfill their due diligence
responsibility and (ii) Records or information which the Company determines, in
good faith, to be confidential shall not be disclosed by the Agents unless
(x) the Company determines that the disclosure of such Records or information is
necessary to avoid or correct a material misstatement or omission in the
Registration Statement or (y) the release of such Records or information is
ordered pursuant to a subpoena or other order from a court or governmental
authority of competent jurisdiction. Each Offering Member further agrees that
it will, upon learning that disclosure of such Records or information is sought
by a court or governmental authority, give notice to the Company and allow the
Company to undertake appropriate action to prevent disclosure of the Records or
information deemed confidential;
(g) use all reasonable efforts to furnish to the underwriters in
such offering (i) at the effective date of such Registration Statement and the
date of the closing of the sale of the Offered Securities to the underwriters in
such offering, a "comfort" letter signed by the independent certified public
accountants who have certified the financial statements included or incorporated
by reference in such registration statement, covering such matters as are
customarily covered in "comfort letters" for similar offerings and (ii) at the
date of closing of the sale of the Offered Securities to the underwriters in
such offering, a signed opinion of counsel for the Company, dated the closing
date of such offering, covering such matters as are customarily covered in
opinion letters of counsel to the issuer for similar offerings;
(h) otherwise use all reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders, as soon as reasonably practicable, an earnings statement
covering a period of twelve months, beginning within three months after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; and
(i) use all reasonable efforts to cause all Offered
Securities to be listed on a securities exchange or authorized for quotation on
a national quotation system, as determined by the Demand Member.
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10.3 CONDITIONS TO OFFERINGS.
(a) The obligations of the Company to take the actions
contemplated by Sections 10.1 and 10.2 hereof with respect to an offering of
Offered Securities shall be subject to the following conditions and limitations:
(i) Each Offering Member shall conform to all applicable
requirements of the Securities Act and the Exchange Act with respect to the
offering and sale of securities and shall advise each underwriter, broker
or dealer through which any of the Offered Securities are offered that the
Offered Securities are part of a distribution that is subject to the
prospectus delivery requirements of the Securities Act.
(ii) Each Offering Member shall provide such information
regarding itself as may be required by law, including the Securities Act,
and, in connection with any underwritten offering, shall complete and
execute all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents (including with respect to the holdback
arrangement described in Section 10.6) reasonably required under the terms
of such underwriting arrangements.
(iii) Each Offering Member, upon receipt of any notice
from the Company of the happening of any event of the kind described in
Section 10.2(d), shall forthwith discontinue disposition of Offered
Securities pursuant to the registration statement covering such securities
until its receipt of the copies of the supplemented or amended prospectus
contemplated by Section 10.2(d) hereof.
10.4 REGISTRATION EXPENSES. All expenses incident to the performance
of or compliance with this Article X by the Company, including all fees and
expenses of compliance with securities or "Blue Sky" laws (including fees and
disbursements of counsel in connection with blue sky qualifications of the
Offered Securities), registration or filing fees payable under any state or
federal securities or "Blue Sky" laws, rating agency fees, printing expenses,
messenger and delivery expenses, internal expenses (including all salaries and
expenses of its officers and employees performing legal or accounting duties),
fees and expenses incurred in connection with the listing of the securities to
be offered on each securities exchange or over-the-counter market on which
similar securities issued by the Company are then listed, fees and disbursements
of counsel for the Company and its independent certified public accountants
(including the expenses of any comfort letters required by or incident to such
performance), securities act liability insurance (if the Company elects to
obtain such insurance), the fees and expenses of any special experts retained by
the Company in connection with such registration and the fees and expenses of
other persons retained by the Company
47
shall be borne and paid by the Company. The Company shall not have any
responsibility for any of the expenses of any Offering Member incurred in
connection with any registration hereunder (except that the Company shall pay
for one legal counsel of the Demand Member), including fees and disbursements
of counsel to such Offering Member and underwriting fees, discounts and
commissions and transfer taxes, if any, attributable to the sale of Offered
Securities.
10.5 INDEMNIFICATION; CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify, to the fullest extent permitted by law, the Offering Members, their
directors and officers and each person who controls the Offering Member (within
the meaning of either the Securities Act or the Exchange Act) and each
underwriter of Offered Securities against any and all losses, claims, damages,
liabilities and expenses (including attorneys' fees and expenses) caused by any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, prospectus or preliminary prospectus or other document
incident to any registration, qualification or compliance, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, or any
violation of any rule or regulation promulgated under the Securities Act
relating to any action or inaction required of the Company in connection with
any such registration, qualification or compliance, and the Company shall
reimburse each Offering Member, its officers, directors, controlling persons and
underwriters for any legal and any other expenses in connection with
investigating or defending any such claim, loss, damage, liability or expense as
they are incurred; PROVIDED that the Company shall not be required to indemnify
any Offering Member or its officers, directors or controlling persons or any
underwriter for any losses, claims, damages, liabilities or expenses resulting
from any such untrue statement or omission if such untrue statement or omission
is made in reliance on and in conformity with any information with respect to
such person furnished to the Company by such person in writing expressly for use
in such Registration Statement, prospectus, amendment or supplement thereto, or
preliminary prospectus.
(b) INDEMNIFICATION BY THE OFFERING MEMBERS. In connection with
any registration in which an Offering Member is participating, such Offering
Member will furnish to the Company in writing such information with respect to
the Offering Member as the Company reasonably requests for use in connection
with any Registration Statement, prospectus, or amendments or supplements
thereto, and preliminary prospectus and agrees to indemnify the Company, its
directors, its officers who sign the Registration Statement and each person, if
any, who controls the Company (within the meaning of either the Securities Act
or of the Exchange Act) and each underwriter of Offered Securities to the same
extent as the foregoing indemnity
48
from the Company to the Offering Members, but only with respect to
information relating to such Offering Member furnished to the Company in
writing by such Offering Member expressly for use in such Registration
Statement, prospectus, amendment or supplement thereto, or preliminary
prospectus.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 10.5(a) or Section 10.5(b) hereof, such person (hereinafter called the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (hereinafter called the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and the indemnified party shall have been advised by counsel
that representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
indemnified parties, such firm shall be designated in writing by the indemnified
parties with the consent of the indemnifying party, which consent shall not be
unreasonably withheld. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its prior written consent, but if
settled with such consent or if there shall be a final non-appealable judgment
for the plaintiff, the indemnifying party agrees to indemnify the indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could reasonably be expected to
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) CONTRIBUTION. If the indemnification provided for in this
Section 10.5 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages, liabilities or expenses
referred to in this Section 10.5, then the indemnifying party, in lieu of
indemnifying such
49
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 (i) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and indemnified parties in connection with
the statement or omission which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the indemnifying and indemnified
party from the offering of Securities covered by such registration statement;
PROVIDED that for the purposes of this clause (ii) the relative benefits
received by an Offering Member shall be deemed not to exceed the amount of
proceeds received by such Offering Member. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether any matter in question, including any untrue
or alleged untrue statement of a material fact or omission or alleged
omission to state 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, subject to the limitations set
forth in Section 10.5(c) hereof, any 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 10.5(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
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 10.5, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 10.5(a) and 10.5(b) hereof without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 10.5(d).
10.6 HOLDBACK. Other than pursuant to the Registration Statement, and
subject to Article IX hereof, each Member and the Company shall not Transfer any
Converted Securities or Interests for a period commencing 10 days prior to the
execution of the definitive underwriting agreement in respect of any
registration hereunder and ending no later than 120 days thereafter (or such
shorter period as may be requested by the managing underwriter in respect of
such registration).
50
ARTICLE XI
TERMINATION CALL RIGHTS
11.1 CALL RIGHTS.
(a) BREACH OF NONCOMPETITION AND CONFIDENTIALITY AGREEMENT. If
an individual breaches any of the provisions of the Noncompetition and
Confidentiality Agreement (to the extent applicable), whether or not during the
term of his employment by the Company and its Affiliates, any Option theretofore
granted to him under the Management Option Plan, whether or not yet vested on
the date of such breach, shall thereupon terminate in all respects. Any
Interests theretofore acquired by a such individual, under the Plan or
otherwise, shall be subject to a Call Right at a repurchase price equal to the
lower of the exercise price paid with respect to such Interests and the Fair
Market Value.
(b) TERMINATION OF EMPLOYMENT
(i) In the event that an Employee Member's employment
with the Company and all of its Subsidiaries is terminated for any reason,
including death or disability, or if, while employed, an Employee Member is
adjudged incompetent or insane, declares bankruptcy or is the subject of
any petition for involuntary bankruptcy, the Company shall have the
assignable right (but not the obligation) to purchase all of such Employee
Member's Interests for an amount equal to the Fair Market Value of such
interests as determined in good faith by the Management Committee, taking
into account the amount recoverable pursuant to Section 4.9(a) with respect
to such Interests, unless the Employee Member is terminated for Cause (as
defined in the Management Plan) or by voluntary resignation.
(ii) If an Employee Member's employment is terminated for
Cause, the Company shall have the assignable right (but not the obligation)
to purchase all of such Employee Member's Interests for an amount equal to
the lower of (x) the Fair Market Value of such Interests as determined in
good faith by the Management Committee, taking into account the amount
recoverable pursuant to Section 4.9(a) with respect to such Interests or
(y) the amount actually received by the Company in connection with such
Employee Member's purchase of the Interest, in either case minus all prior
distributions made to such Employee Member or Permitted Transferee (other
than Tax Distributions permitted under this Agreement).
(iii) If an Employee Member's employment is terminated by
voluntary resignation of such Employee Member, the Company
51
shall have the assignable right (but not the obligation) to purchase all
of such Employee Member's interests for an amount equal to the lower of
(x) the Fair Market Value of such interests as determined in good faith
by the Management Committee, taking into account the amount recoverable
pursuant to Section 4.9(a) with respect to such Interests or (y) the
amount actually received by the Company in connection with such Employee
Member's purchase of the Interest plus interest accrued but unpaid for
any note outstanding for the purchase of stock in either case minus all
prior distributions made to such Employee Member or permitted Transferee
(other than Tax Distributions permitted under this Agreement), provided
that if the call right is being exercised subsequent to a Change of
Control, the price paid shall be the Fair Market Value of the Interests.
(iv) The Company's rights to purchase under (i) - (iii)
above are herein referred to as the "TERMINATION CALL RIGHT".
(c) EXERCISE OF CALL RIGHT. The Committee may, if it deems
appropriate given the then circumstances, at its sole discretion, exercise any
call right at Fair Market Value which would otherwise be exercisable at cost
paid for such Common Interests.
(d) CALL NOTICE. The Company may exercise its Termination Call
Right by delivering written notice (the "Termination Call Notice") of its
election to purchase the Employee Member's Interests (the "Termination Called
Interest") at any time after the Employee Member's termination.
(e) CLOSING. The closing of the purchase of the Termination
Called Interest shall be held at the principal office of Company at 11:00 a.m.
local time on the date set forth in the Termination Call Notice, or at such
other times and places as the parties to the transaction agree. At the closing,
the Company shall pay to such Employee Member the relevant termination call
price, in cash or by certified check or wire transfer of funds or any
combination of the foregoing. All of the parties to the transaction shall
execute such additional documents as are otherwise necessary or appropriate to
effectuate the intent of the foregoing.
ARTICLE XII
TERMINATION; DISSOLUTION; LIQUIDATION AND WINDING-UP
12.1 TERMINATION OF THE COMPANY. In the event of the occurrence of a
Dissolution Event (as defined in Section 12.2), the Company shall be terminated
on the
52
90th day after the occurrence of such event unless the remaining Members
prior to the close of business on such 90th day elect to continue the business
of the Company by the affirmative agreement of the Majority Members.
12.2 EVENTS OF DISSOLUTION. The Company shall be dissolved upon any
of the following (each a "DISSOLUTION EVENT"):
(a) the entry of a decree of judicial dissolution under Section
18-802 of the Act;
(b) the written consent to a dissolution by the Majority
Members;
(c) the expiration of 60 days after the assignment, sale,
transfer or other disposition of all or substantially all of the assets,
properties and business of the Company other than as provided in Article IX.
Notwithstanding any provision of the Act to the contrary, the Company shall
continue and shall not be dissolved as a result of the death, retirement,
resignation, expulsion, bankruptcy or dissolution of any Member or any other
event that terminates the continued membership of a Member.
12.3 NOTICE OF DISSOLUTION EVENT. The Management Committee shall
promptly notify the other Members of any such Dissolution Event.
12.4 LIQUIDATION AND WINDING-UP. If the Company is dissolved pursuant
to Section 12.2 and the Members have not elected to continue the business of the
Company pursuant to Section 12.1, the Company shall be liquidated and wound up
in accordance with the Act and the following provisions:
(a) The financial officers of the Company shall be directed to
prepare a balance sheet, income statement and statement of cash flows of the
Company in accordance with GAAP as of the date of dissolution and for the period
ended on such date, which balance sheet shall be reported upon by the Company's
independent public accountants.
(b) The assets, properties and business of the Company shall be
liquidated by the Management Committee as promptly as possible, but in an
orderly and businesslike manner so as not to involve undue sacrifice.
Notwithstanding the foregoing, if it is determined by the Management Committee
not to sell all or any portion of the properties and assets of the Company, such
properties and assets shall be distributed in kind in the order of priority set
forth in subsection (d); PROVIDED, HOWEVER, that the Fair Market Value of such
properties and assets, as determined in
53
good faith by the Management Committee, shall be used in determining the
extent and amount of a distribution in kind of such properties and assets in
lieu of actual cash proceeds of any sale or other disposition thereof.
(c) Net Income or Net Loss of the Company for the year of
liquidation shall be credited or charged to the Capital Accounts of the Members
in accordance with the allocation provisions set forth in Sections 4.2 and 4.3,
respectively.
(d) The proceeds of sale of all or substantially all of the
properties and assets of the Company and all other properties and assets of the
Company not sold, as provided in subsection (b) above, and valued at the Fair
Market Value thereof as provided in such subsection (b), shall be applied and
distributed as follows, and in the following order or priority:
(i) FIRST, to the payment of all debts and liabilities
of the Company and the expenses of liquidation not otherwise adequately
provided for;
(ii) SECOND, to the setting up of any reserves that are
reasonably necessary for any contingent unforeseen liabilities or
obligations of the Company or of the Members arising out of, or in
connection with, the Company;
(iii) THIRD, to the Members in proportion to the positive
balances of their respective Capital Accounts until the remaining balances
of all such accounts are zero; and
(iv) FOURTH, the remaining proceeds to the Members in
proportion to their Percentage Interests.
(e) A Certificate of Cancellation shall be filed with the
Secretary of State of the State of Delaware by the Members.
12.5 SURVIVAL OF RIGHTS, DUTIES AND OBLIGATIONS. Termination,
dissolution, liquidation or winding up of the Company for any reason shall not
release any party from any liability which at the time of such termination,
dissolution, liquidation or winding up already had accrued to any other party or
which thereafter may accrue in respect to any act or omission prior to such
termination, dissolution, liquidation or winding up.
12.6 CLAIMS OF THE MEMBERS. Members and former Members shall look
solely to the Company's assets for the return of their contributions to the
54
Company, and if the assets of the Company remaining after payment of or due
provision for all debts, liabilities and obligations of the Company are
insufficient to return such contributions, the Members and former Members shall
have no recourse against the Company or any other Member.
ARTICLE XIII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MEMBERS
13.1 REPRESENTATIONS.
(a) PUBLICLY TRADED PARTNERSHIP REPRESENTATION. DLJ, Squam Lake
Investors, II, L.P., and Sunapee Securities, Inc., each hereby certify and
represent that for purposes of Treasury Regulation section 1.7704-1(h), it is
not a partnership, grantor trust or S corporation, substantially all the value
of any Interest in which is attributable to its Interests in the Company.
13.2 COVENANTS.
(a) PRIVATELY TRADED PARTNERSHIP COVENANT. The Members each
hereby agree and covenant that they shall not cause the Company to have more
partners for purposes of Treasury Regulation section 1.7704-1(h), determined
without regard to section 1.7704-1(h)(3)(ii), as a result of the ownership of
such Member, its predecessors, their prior Transferees, and their indirect
owners than the number opposite such Member's name under the heading "PTP Slots"
as described in the Ancillary Letter. In the case of the Employee Members, each
Employee Member shall have one "PTP Slot" allocated to them and for purposes of
this Section 13.2, Options shall be treated as if they were converted into Class
A Units. Each Member hereby agrees and covenants that it will implement
restrictions or rights to reacquire ownership interests upon its own direct and
indirect owners, if any, to ensure compliance with this covenant. Any transfer
in violation of this Section shall be void ab initio.
(b) Squam, Sunapee, DLJ and GGEP hereby agree and covenant that
they shall not materially modify their ownership structure as presented to the
Company on the date hereof except with the consent of the Management Committee
or in the event of the death of a partner of GGEP, subject in all cases to the
restrictions on transfer set forth in Section 9.5(c).
55
ARTICLE XIV
GENERAL PROVISIONS
14.1 NOTICES. Wherever provision is made in this Agreement for the
giving of any notice, such notice shall be in writing and shall be deemed to
have been duly given if mailed by first class United States mail, postage
prepaid, addressed to the party entitled to receive the same or delivered
personally to such party, or telegraphed, telexed, sent by facsimile
transmission or sent by overnight courier, if to the Members, in each case to
the addresses or facsimile telephone numbers therefor set forth on the signature
pages hereto, and if to the Company, to:
GROVE INVESTORS LLC
0000 Xxxxxxxx Xxxxx Xxxx, X.X. Xxx 00
Shady Grove, Pennsylvania 17256
Attention: Xxxxxxxxx X. Xxxxxxx
Fax No.: 000-000-0000
or to such other address, in any such case, as any party hereto shall have last
designated by notice to the other party. Notice shall be deemed to have been
given on the day that it is so delivered personally, telegraphed, telexed or
sent by facsimile transmission and the appropriate answerback or confirmation of
successful transmission is received or, if sent by overnight courier, shall be
deemed to have been given one Business Day after delivery by the courier
company, or if mailed, three Business Days following the date on which such
notice was so mailed. Any Member may change its address for notices by giving
written notice of such change to the other Members and the Company.
14.2 ENTIRE AGREEMENT; NON-WAIVER. This Agreement constitutes the
entire agreement of the parties hereto and supersedes any prior understandings
or written or oral agreements between the parties with respect to the subject
matter hereof.
14.3 AMENDMENTS. Except as provided in Section 6.2, this Agreement or
the Certificate may be amended from time to time only upon the approval of the
Majority Members. Any proposal to amend this Agreement requiring approval of
the Majority Members shall be accompanied by a summary of the proposed
amendment and shall be delivered to all of the Members. The date of adoption of
an amendment shall be the date on which the Company shall have received the
requisite approvals or such other date approved by the Majority Members.
Notwithstanding the above, any amendment that has an adverse effect on the
Capital Account of any Member or on other material rights of a Member hereunder
shall not be effective against such Member without the approval of such Member;
PROVIDED, HOWEVER, that the admittance of new Members or the dilution of the
Percentage Interests or other rights of Members
56
on a non-discriminating basis occasioned by the increase in Interests or the
admittance of new Members shall not constitute an adverse effect on a Member
for purposes of this Section 14.3. The Management Committee may amend this
Agreement to effect any amendments authorized by this Agreement, including
without limitation, effecting a Reconstitution or the issuance of new
Interests.
14.4 NO WAIVERS. No delay on the part of any party in exercising any
right hereunder shall operate as a waiver thereof, nor shall any waiver, express
or implied, by any party of any right hereunder or of any failure to perform or
breach hereof by any other party constitute or be deemed a waiver of any other
right hereunder or of any other failure to perform or breach hereof by the same
or any other Member, whether of a similar or dissimilar nature thereof.
14.5 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (other than its
rules of conflicts of law to the extent that the application of the laws of
another jurisdiction would be required thereby); PROVIDED that, with respect to
matters governed by the Act, the Act shall govern.
14.6 SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; SELECTION OF
FORUM. EACH PARTY HERETO AGREES THAT IT SHALL BRING ANY ACTION OR PROCEEDING IN
RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE
TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT, WHETHER IN TORT OR
CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN (A) THE UNITED STATES DISTRICT
COURT FOR DELAWARE (THE "CHOSEN COURT") OR IN THE EVENT THAT SUCH COURT LACKS
JURISDICTION TO HEAR THE CLAIM, (B) IN THE APPROPRIATE DELAWARE STATE COURT AND
(I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURT,
(II) WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW ANY OBJECTION TO LAYING
VENUE IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURT, (III) WAIVES ANY
OBJECTION THAT THE CHOSEN COURT IS AN INCONVENIENT FORUM OR DOES NOT HAVE
JURISDICTION OVER ANY PARTY HERETO, (IV) IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
A JURY TRIAL AND (V) AGREES THAT SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH
ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH
SECTION 13.1 OF THIS AGREEMENT.
14.7 FURTHER ASSURANCES. Each of the Members hereby agrees, at the
request of any other Member, to execute and deliver all such other and
additional
57
instruments and documents and to do such other acts and things as may
be reasonably necessary or appropriate to carry out the intent and purposes
of this Agreement.
14.8 ASSIGNMENT OF CONTRACTS AND RIGHTS. Except as otherwise
provided herein, no party to this Agreement may assign any of its rights or
remedies or delegate any of its obligations under this Agreement without the
prior written consent of the Management Committee.
14.9 NO RIGHT TO PARTITION. The Members, on behalf of
themselves and their shareholders, partners, members, successors and assigns,
if any, hereby specifically renounce, waive and forfeit all rights, whether
arising under contract or statute or by operation of law, except as otherwise
expressly provided in this Agreement, to seek, bring or maintain any action
in any court of law or equity for partition of the Company or any asset of
the Company, or any interest which is considered to be Company property,
regardless of the manner in which title to such property may be held.
14.10 NO THIRD PARTY RIGHTS. This Agreement is made solely and
specifically between and for the benefit of the parties hereto, and their
respective successors and assigns (subject to the express provisions hereof
relating to successors and assigns), and is not intended to confer any benefits
upon, or create any rights in favor of, any Person other than the parties
hereto.
14.11 SUCCESSORS AND ASSIGNS. Subject to the restrictions on
Transfer set forth herein, and except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the parties hereto and their respective heirs, personal representatives,
successors and permitted assignees under this Agreement.
14.12 SEVERABILITY. If any provision of this Agreement shall be
declared to be invalid, illegal or unenforceable, such provision shall survive
to the extent it is not so declared, and the validity, legality and
enforceability of the other provisions hereof shall not in any way be affected
or impaired thereby, unless such action would substantially impair the benefits
to either party of the remaining provisions of this Agreement.
14.13 REMEDIES NOT EXCLUSIVE. Except as otherwise provided
herein, no remedy herein conferred or reserved is intended to be exclusive of
any other available remedy or remedies, and each and every remedy shall be
cumulative and shall be in addition to every remedy under this Agreement or now
or hereafter existing at law or in equity or by statute.
58
14.14 REPRESENTATION BY COUNSEL. Each of the parties has been
represented by and has had an opportunity to consult legal counsel in connection
with the negotiation and execution of this Agreement. No provision of this
Agreement shall be construed against or interpreted to the disadvantage of any
party by any court or arbitrator or any Governmental Authority by reason of such
party having drafted or being deemed to have drafted such provision.
14.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement shall be
binding when one or more counterparts, individually or taken together, bear the
signatures of each of the parties reflected herein as signatories.
14.16 ATTACHMENTS. All attachments, annexed instruments and
addenda referred to herein shall be considered a part of this Agreement as fully
as if and with the same force and effect as if such attachment, annex or
addendum had been included herein in full.
14.17 TABLE OF CONTENTS AND HEADINGS. The table of contents and
headings in this Agreement are solely for convenience of reference and shall not
affect the interpretation or construction of any of the provisions hereof.
14.18 COMPETING BUSINESS. Notwithstanding any other provision to
the contrary contained in or inferable from this Agreement, the Act or any other
statute or principle of law, neither the Members nor any of their Affiliates
shall be prohibited or restricted in any way from investing in or conducting,
either directly or indirectly, and may invest in and/or conduct, either directly
or indirectly, businesses of any nature whatsoever, including the ownership and
operation of businesses similar to those of the Company. Any investment in or
conduct of any such businesses by a Member or Affiliate of a Member shall not
give rise to any claim for an accounting by the other Members or the Company or
any right to claim any interest therein or the profits therefrom.
14.19 ENTIRE AGREEMENT. This Agreement and the Ancillary Letter
contain the entire agreement among the parties relative to the matters contained
in this Agreement.
14.20 ARBITRATION. For purposes solely of certain determinations
referred to under the definition of Fair Market Value, the following procedure
shall be utilized. The Management Committee shall make such determination in
good faith and shall give notice of such determination by written notice to
GGEP, with appropriate information supporting such determination. If GGEP
objects to such determination, GGEP shall so notify the Management Committee in
writing within five business days
59
of GGEP's receipt of the notice from the Management Committee. The
Management Committee and GGEP shall then negotiate as to the determination
for a period of thirty calendar days. Neither the Management Committee nor
GGEP shall be required in this negotiation to agree to the determination of
the other. If GGEP and the Management Committee fail to agree as to a
determination of Fair Market Value, then GGEP and the Management Committee
shall endeavor to designate a mutually acceptable appraiser to determine such
Fair Market Value. If GGEP and the Management Committee have not agreed on
an appraiser within fifteen days, then each of GGEP and the Management
Committee shall appoint an appraiser within ten days thereafter. The two
appraisers shall within ten days appoint a third appraiser. The third
appraiser shall determine the Fair Market Value of the assets within thirty
days after such appraiser's appointment. The value determined, whether by
agreement of GGEP and the Management Committee or by appraisal, shall be
conclusive. GGEP shall bear the cost of its appointed appraiser and the
Company shall bear the cost of its appointed appraiser and the third
appraiser. Each of GGEP and the Management Committee shall be given
reasonable advance notice of the time and place of any appraisal proceedings
and shall have the right to be present, heard, and represented by counsel and
to put on expert testimony at such proceedings, each at their own expense.
14.21 WAIVER. No consent or waiver, express or implied, by any
Member to or for any breach or default by any other Member in the performance by
such other Member of its obligations under this Agreement shall be deemed or
construed to be a consent or waiver to or of any other breach or default in the
performance by such other Member of the same or any other obligations of such
other Member under this Agreement. Failure on the part of any Member to
complain of any act or failure to act of any of the other Members or to declare
any of the other Members in default, regardless of how long such failure
continues, shall not constitute a waiver by such Member of its rights hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed, by their respective duly authorized officers or partners, on the
date first above written.
MEMBERS
FW STRATEGIC PARTNERS, L.P.
By: FW Strategic Asset
Management, L.P.
By: Strategic Gen Par, Inc.
By: /s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title:
Address: 000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
XX XXXXX COINVESTORS, L.P.
By: FW Group Genpar, Inc.
By: /s/ Xxxxxx Cothamn
-----------------------------------
Name: Xxxxxx Cothamn
Title:
Address: 000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
SUNAPEE SECURITIES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Treasurer
Address: Two Copely Place
Xxxxxx, Xxxxxxxxxxxxx 00000
SQUAM LAKE INVESTORS, II, L.P.
By: GPI, Inc., its General Partner
By: /s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Treasurer
Address: Two Copely Place
Boston, Massachusetts 02116
DLJ CAPITAL CORPORATION
By: /s/ Xxx Xxxxx
-----------------------------------
Name: Xxx Xxxxx
Title:
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
GGEP-GROVE, L.P.
By: Xxxxxx Group Inc.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
Address: One Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
XXXXXXX X. XXXXXX
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Address: One Galleria Tower
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
XXXXXXXXX X. XXXXXXX
/s/ Xxxxxxxxx X. Xxxxxxx
---------------------------------
Address:
XXXX BUST
/s/ Xxxx Bust
---------------------------------
Address:
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
---------------------------------
Address:
XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
---------------------------------
Address:
XXX XXXXXXXXXX
/s/ Xxx Xxxxxxxxxx
---------------------------------
Address:
XXXX XXXXXXX
/s/ Xxxx Xxxxxxx
---------------------------------
Address:
