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OPERATING AGREEMENT
OF
ALLIED SECURITY HOLDINGS LLC
Dated August 2, 2004
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TABLE OF CONTENTS
ARTICLE I DEFINED TERMS
Section 1.1 Definitions.....................................................2
Section 1.2 Interpretation.................................................11
ARTICLE II FORMATION AND TERM
Section 2.1 Formation; Continuation........................................12
Section 2.2 Company Name...................................................12
Section 2.3 Term...........................................................12
Section 2.4 Registered Office; Registered Agent............................12
Section 2.5 Place of Business..............................................13
Section 2.6 Purpose; Nature of Business Permitted; Powers..................13
Section 2.7 Business Transactions of a Member with the Company.............13
Section 2.8 Company Property...............................................13
Section 2.9 No State Law Partnership.......................................13
ARTICLE III MEMBERS
Section 3.1 Members........................................................13
Section 3.2 Admission of New Members.......................................13
Section 3.3 No Liability of Members........................................14
Section 3.4 Access to and Confidentiality of Information; Records..........14
Section 3.5 Power to Bind the Company......................................14
Section 3.6 Representations, Warranties, Certain Agreements of the Members.14
ARTICLE IV MANAGEMENT
Section 4.1 Management of the Company......................................16
Section 4.2 Meetings of the Board..........................................16
Section 4.3 OCM Board Observer Right.......................................17
Section 4.4 Power to Bind Company..........................................17
Section 4.5 Tax Matters Partner; Tax Elections.............................17
Section 4.6 Reliance by Third Parties......................................18
Section 4.7 Certain Sales..................................................18
ARTICLE V CAPITAL STRUCTURE AND CONTRIBUTIONS
Section 5.1 Capital Structure..............................................18
Section 5.2 Capital Contributions..........................................18
Section 5.3 Preemptive Rights..............................................19
Section 5.4 No Withdrawal Of Capital Contributions.........................20
Section 5.5 No Other Capital Contributions.................................20
Section 5.6 Maintenance of Capital Accounts................................20
ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS
Section 6.1 Allocations of Net Profits and Net Losses......................21
Section 6.2 Special Allocations............................................22
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Section 6.3 No Right to Distributions......................................24
Section 6.4 Distributions..................................................24
Section 6.5 Withholding....................................................24
Section 6.6 Restrictions on Distributions..................................25
ARTICLE VII REGISTRATION RIGHTS
Section 7.1 Registration Rights............................................25
Section 7.2 Reduction of Offering..........................................25
Section 7.3 Filings, Information...........................................26
Section 7.4 Registration Expenses..........................................29
Section 7.5 Indemnification by the Company Offeror.........................30
Section 7.6 Indemnification by Participating Members.......................31
Section 7.7 Conduct of Indemnification Proceeding..........................31
Section 7.8 Contribution...................................................32
Section 7.9 "Market Stand-Off" Agreement...................................33
Section 7.10 Public Offering Mechanics......................................33
Section 7.11 Survival.......................................................35
ARTICLE VIII BOOKS AND REPORTS
Section 8.1 Books and Records; Financial Statements........................35
Section 8.2 Reporting Requirements.........................................35
ARTICLE IX WITHDRAWAL; TRANSFERS
Section 9.1 No Right to Withdraw...........................................36
Section 9.2 Restriction on Transfers.......................................36
Section 9.3 Ratification...................................................36
Section 9.4 Effect of Transfers............................................36
Section 9.5 Recognition of Transfer by Company.............................36
Section 9.6 Effective Date of Transfer.....................................37
Section 9.7 Additional Transfer Provisions.................................37
Section 9.8 Tag-Along Rights...............................................37
Section 9.9 Transfer by OCM................................................39
ARTICLE X XXXXXX PUT OPTION
Section 10.1 Put Option.....................................................39
Section 10.2 Holding's Obligation to Purchase...............................40
ARTICLE XI OCM HOLDER PUT OPTION
Section 11.1 Put Option.....................................................40
Section 11.2 Holding's Right to Purchase....................................40
ARTICLE XII PUT OPTION UPON SALE OF HOLDCO
Section 12.1 Put Option Upon Sale of Holdco.................................41
Section 12.2 Certain Agreement..............................................42
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ARTICLE XIII DISSOLUTION
Section 13.1 Dissolution....................................................43
Section 13.2 Liquidation....................................................43
Section 13.3 Guaranteed Payment.............................................43
Section 13.4 Certificate of Cancellation....................................44
Section 13.5 Claims of the Members..........................................44
ARTICLE XIV EXCULPATION AND INDEMNIFICATION
Section 14.1 Exculpation....................................................44
Section 14.2 Indemnification................................................44
ARTICLE XV MISCELLANEOUS
Section 15.1 Notices........................................................45
Section 15.2 Public Announcements; Confidentiality..........................46
Section 15.3 Corporate Opportunities........................................46
Section 15.4 Severability; Modification.....................................47
Section 15.5 Cumulative Remedies............................................47
Section 15.6 Binding Effect.................................................47
Section 15.7 Counterparts...................................................47
Section 15.8 Integration....................................................47
Section 15.9 Governing Law; Submission to Jurisdiction......................48
Section 15.10 Further Assurances.............................................48
Section 15.11 Certain Actions in connection with an Initial Public Offering..48
Section 15.12 Amendments and Waivers; Assignment.............................48
Section 15.13 Power of Attorney..............................................50
Section 15.14 No Third Party Beneficiaries...................................50
Section 15.15 Provisions Relating to Mafco...................................50
Exhibit A - Members, Units Held and Aggregate Unit Percentages
Exhibit B - Book Capital
Exhibit C - Tax Sharing Agreement
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OPERATING AGREEMENT
Operating Agreement (this "Agreement") of Allied Security Holdings LLC,
a Delaware limited liability company (the "Company"), dated August 2, 2004, by
and among SpectaGuard Holding Corporation, a Delaware corporation ("SpectaGuard
Holding") and a wholly-owned subsidiary of Mafco (as defined below), Blackstone
SG Mezzanine Corporation, a Delaware corporation (together with SpectaGuard
Holding, "Holding") and a wholly-owned subsidary of SpectaGuard Holding, Xxxxxx
X. Xxxxxx, Xxxxxxx X. Xxxxxxxx, Xx., Xxxxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxx,
Xxxxxxxxxxx X. Xxxxx, Xxxx X. Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxx X.
Xxxxxx and Xxxxx X. Xxxxx (each such natural person, a "Management Member" and,
collectively, the "Management Members"), OCM Specta Holdings, Inc., a Delaware
corporation ("OCM"), Xxxxxx X. Xxxxxxx ("DGD"), Xxxxxx Xxxxxx ("HG"), Xxxxx X.
Xxxxxxxx ("BFS") and Mafco Holdings Inc., a Delaware corporation ("Mafco")
(provided that Mafco is a party to this Agreement solely to the extent expressly
set forth in Section 15.15 hereof).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in connection with the issuance of $180 million aggregate
principal amount of 11.375% Senior Subordinated Notes due 2011 (the "Notes"),
the Company was formed as a Delaware limited liability company on July 16, 2004;
WHEREAS, having consummated the transactions contemplated by the
Capital Contribution Agreement, dated as of the date hereof (the "Capital
Contribution Agreement"), by and among the Company and each Member, the Company
is the sole member of SpectaGuard Acquisition LLC, a Delaware limited liability
company ("SpectaGuard"), and the former members of SpectaGuard are the Members
of the Company (such transactions, the "Holding Company Restructuring");
WHEREAS, as part of the Holding Company Restructuring and in connection
with the issuance of the Notes, the parties hereto intend that this Agreement
effectively amend and restate the Second Amended and Restated Operating
Agreement of SpectaGuard, by, among other things, substituting the Company for
SpectaGuard in accordance with the indenture governing the Notes; and
WHEREAS, the parties hereto desire to operate the Company and to enter
into this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements hereinafter contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINED TERMS
Section 1.1 Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
(i) credit to such Capital Account any amounts which such
Member is obligated to restore or is deemed to be obligated to restore
pursuant to the penultimate sentence of Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) debit to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5)
and 1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Section 1.704-1(b)(2) (ii)(d) of the Regulations
and shall be interpreted consistently therewith.
"Affiliate" means, with respect to any specified Person, (i) any other
Person 50% or more of whose outstanding voting securities are directly or
indirectly owned, controlled or held with the power to vote by such specified
Person or (ii) any other Person directly or indirectly controlling, controlled
by or under direct or indirect common control with such specified Person. For
purposes of this definition, the term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person by virtue of ownership of voting securities, by contract
or otherwise. For purposes of this definition, the Company and its Subsidiaries
shall not be deemed to be an Affiliate of any Member or of such Member's
Affiliates, and each Member and its Affiliates shall not be deemed to be an
Affiliate of the Company and its Subsidiaries or of any other Member or of any
such other Member's Affiliates, in each such case solely by reason of the
existence of this Agreement or such Person's ownership of securities in Holding
and/or the Company.
"Aggregate Unit Percentage" of a Member as of a specified date means
the percentage determined by dividing (A) the sum of the aggregate number of
outstanding Class A Units and Class B Units held by such Member as of such date
and the number of vested and outstanding Class C Units held by such Member as of
such date by (B) the sum of the aggregate number of outstanding Class A Units
and Class B Units as of such date and the aggregate number of vested and
outstanding Class C Units as of such date.
"Auditors" means such independent auditors as may be approved from time
to time by the Board.
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"Xxxxxx Option Period" shall have the meaning ascribed to such term in
Section 10.1 hereof.
"Board" shall have the meaning ascribed to such term in Section 4.1(a)
hereof.
"Book Capital" of a Member means the book capital set forth opposite
such Member's name on Exhibit B hereto, plus capital contributions, if any, made
by such Member after the date hereof and less distributions made to such Member
with respect to such capital pursuant to Section 6.4(a) hereof.
"Business Day" means a Monday, Tuesday, Wednesday, Thursday or Friday
on which banking institutions in the State of New York are not authorized or
obligated by law to close.
"Capital Account" shall have the meaning ascribed to such term in
Section 5.6 hereof.
"Capital Contribution" shall have the meaning ascribed to such term in
Section 5.2 hereof.
"Cash Available for Distribution" means, with respect to any Fiscal
Year or other period, (i) all cash receipts of the Company, including, but not
limited to, amounts previously set aside as reserves which the Board determines
no longer to be necessary for such purpose, less (ii) cash payments disbursed
for operating expenses, capital expenditures, loan repayments and additions to
reserves, but excluding non-cash items such as Depreciation.
"Certificate of Formation" shall have the meaning ascribed to such term
in Section 2.1 hereof.
"Claims" shall have the meaning ascribed to such term in Section 14.2
hereof.
"Class A Unit" shall have the meaning ascribed to such term in Section
5.1 hereof.
"Class B Unit" shall have the meaning ascribed to such term in Section
5.1 hereof.
"Class C Unit" shall have the meaning ascribed to such term in Section
5.1 hereof.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company Offeror" shall have the meaning ascribed to such term in
Section 7.10(a) hereof.
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"Company Minimum Gain" shall have the meaning ascribed to "partnership
minimum gain" in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
"Confidential Information" shall have the meaning ascribed to such term
in Section 15.2(a) hereof.
"Conversion Transaction" shall have the meaning ascribed to such term
in Section 7.10(a) hereof.
"Covered Person" shall have the meaning ascribed to such term in
Section 14.1 hereof.
"Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year for federal income tax purposes, except
that if the Gross Asset Value of an asset differs from its adjusted basis for
federal income tax purposes at the beginning of such Fiscal Year, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the federal income tax depreciation, amortization or other cost
recovery deduction for such Fiscal Year bears to such beginning adjusted tax
basis; provided, however, that if the adjusted basis for federal income tax
purposes of an asset at the beginning of such Fiscal Year is zero, Depreciation
shall be determined with reference to such beginning Gross Asset Value using any
reasonable method selected by the Board.
"Delaware Act" means the Delaware Limited Liability Company Act, 6 Del.
C. Sections 18-101, et seq., as amended from time to time, except that it shall
not include any provision thereof adopted after the date hereof that would only
be applicable to the Company absent a provision in this Agreement to the
contrary unless such provision is approved by the Board.
"EBITDA" means, with respect to the Company for any period of time, the
sum (without duplication) of (i) the net income of the Company (excluding
extraordinary items) and (ii) to the extent such net income has been reduced
thereby, (A) all income taxes of the Company paid or accrued for such period,
(B) interest expense of the Company and (C) all depreciation and amortization
expenses of the Company, all as determined in accordance with GAAP.
"Effective Time" means February 19, 2003.
"Event of Termination" shall have the meaning ascribed to such term in
Section 13.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Fair Market Value" shall mean the fair market value of the Company and
its subsidiaries (taken as a whole) as a going concern. The fact that any
particular Units represent a minority interest or that the Units are illiquid
shall not be taken into account.
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"Fiscal Year" means (i) the twelve month period commencing on January 1
and ending on December 31 or (ii) with respect to the calendar year in which the
Company is dissolved, the period commencing on January 1 and ending upon the
date the Company is dissolved.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Authority" shall mean any federal, state, municipal or
other governmental authority, department, commission, board, agency or other
instrumentality.
"Gross Asset Value" means, with respect to any asset, the adjusted
basis of the asset for federal income tax purposes, except as follows:
(i) with the exception of contributions in the form of cash,
the initial Gross Asset Value of any asset contributed by a Member to
the Company shall be the gross fair market value of such asset, as
reasonably determined by the Board;
(ii) the Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values, as
determined by the Board, immediately prior to the following times: (a)
the acquisition of additional Units or other interests in the Company
by any new or existing Member in exchange for more than a de minimis
capital contribution; (b) the distribution by the Company to a Member
of more than a de minimis amount of Company property as consideration
for Units or other interests in the Company; and (c) the liquidation of
the Company within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to
subsections (a) and (b) of this subclause (ii) shall be made only if
the Board reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interest of the Members in
the Company;
(iii) the Gross Asset Value of any Company asset distributed
to any Member will be adjusted to equal the gross fair market value of
such asset on the date of distribution as reasonably determined by the
Board; and
(iv) the Gross Asset Values of the Company assets shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Sections 734(b) or 743(b) of the Code,
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) and subclause (iii) of the definition of "Net
Profits and Net Losses" or Section 6.2(g) of this Agreement; provided,
however, that such Gross Asset Values shall not be adjusted pursuant to
this subclause (iv) to the extent that the Board determines that an
adjustment pursuant to subclause (ii) above is necessary or appropriate
in connection with a
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transaction that would otherwise result in an adjustment pursuant to
this subclause (iv).
"Held Unit Purchase Price" shall have the meaning ascribed to such term
in Section 12.1(a) hereof.
"Held Units" shall have the meaning ascribed to such term in Section
12.1(a) hereof.
"Holdco" means Holding and any legal entity that is a direct or
indirect Affiliate of Holding to which Units may be transferred from time to
time.
"Holdco Offer" shall have the meaning ascribed to such term in Section
12.1(a) hereof.
"Holdco Put Notice" shall have the meaning ascribed to such term in
Section 12.1(a) hereof.
"Holdco Put Option" shall have the meaning ascribed to such term in
Section 12.1(b) hereof.
"Holdco Put Period" shall have the meaning ascribed to such term in
Section 12.1(b) hereof.
"Incorporation Value" shall have the meaning ascribed to such term in
Section 7.10(f) hereof.
"Indemnified Party" shall have the meaning ascribed to such term in
Section 7.7 hereof.
"Indemnifying Party" shall have the meaning ascribed to such term in
Section 7.7 hereof.
"Independent Appraiser" means a nationally recognized investment bank
jointly selected by the Board, on the one hand, and the OCM Holders
participating in the related put, on the other hand, to determine the Fair
Market Value of the Company pursuant to Section 11.1 hereof. In the event that
the Board and such OCM Holders cannot agree on an investment bank to act as the
Independent Appraiser within five Business Days of the end of the applicable OCM
Option Period, then such OCM Holders, collectively, and the Board shall each
appoint one nationally recognized investment bank and those two investment banks
shall within 10 Business Days appoint a third investment bank to act as the
Independent Appraiser. The Company, on the one hand, and such OCM Holders, on
the other hand, shall each pay 50% of the fees, costs and expenses of the
Independent Appraiser. Notwithstanding the foregoing, in the event that such OCM
Holders do not appoint an investment bank within the aforementioned five
Business Day period, then the Board shall, in its sole discretion, select the
Independent Appraiser.
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"Inspectors" shall have the meaning ascribed to such term in Section
7.3(l) hereof.
"Lien" shall mean any and all mortgages, pledges, liens, security
interests, conditional sale agreements, charges, encumbrances and restrictions
of any kind or nature.
"Liquidation Appraiser" means an independent third party with
experience in appraising businesses.
"Management Rights Agreement" means the Management Rights Agreement,
dated as of the date hereof, by and between the Company and an affiliate of OCM.
"Managers" shall have the meaning ascribed to such term in Section
4.1(b) hereof.
"Member" means Holding, each Management Member, OCM, DGD, HG, BFS and
any Person admitted as a Member in accordance with the provisions of this
Agreement, in each case, in such Person's capacity as a member of the Company.
"Member Nonrecourse Debt" has the meaning ascribed to "partner
nonrecourse debt" in Regulations Section 1.704-2(b)(4).
"Member Nonrecourse Debt Minimum Gain" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Regulations Section 1.704-2(i)(3).
"Member Nonrecourse Deductions" has the meaning ascribed to "partner
nonrecourse deductions" in Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2).
"Net Profits and Net Losses" means, for each Fiscal Year, an amount
equal to the Company's taxable income or loss for such period, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss and deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net
Profits and Net Losses pursuant hereto shall be taken into account in
computing such taxable income or losses as if it were taxable income;
(ii) any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Net Profits or Net Losses pursuant
hereto shall be taken
7
into account in computing such taxable income or losses as if they were
deductible items;
(iii) to the extent an adjustment to the adjusted tax basis of
any asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be
taken into account in determining Capital Accounts as a result of a
distribution (other than in liquidation of a Member's interest in the
Company), the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if
the adjustment decreases the basis of the asset) from the disposition
of the asset and shall be taken into account for purposes of computing
Net Profits or Net Losses;
(iv) in the event the Gross Asset Value of any Company asset
is adjusted pursuant to subclause (i) or (ii) of the definition of
Gross Asset Value above, the amount of such adjustment shall be taken
into account as gain or loss from the disposition of such asset for
purposes of computing Net Profits and Net Losses;
(v) gain or loss resulting from the disposition of property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the adjusted tax basis of
such property differs from its Gross Asset Value;
(vi) in lieu of depreciation, amortization or other cost
recovery deductions taken into account in computing taxable income or
loss, there shall be taken into account Depreciation for such period;
and
(vii) the amount of items of Company income, gain, deduction
and loss available to be specially allocated pursuant to Section 6.2
hereof shall be determined by applying rules analogous to those in
subclauses (i) through (vi) above. Notwithstanding any other provision
of this definition, Net Profits shall be decreased or Net Losses shall
be increased by the amount of items of Company income and gain
specially allocated under Section 6.2 hereof and Net Profits shall be
increased or Net Losses shall be decreased by the amount of items of
Company loss and deduction specially allocated under Section 6.2
hereof.
"1933 Act" shall have the meaning ascribed to such term in Section
3.6(a)(iv) hereof.
"Nonrecourse Deductions" has the meaning set forth in Regulations
Section 1.704-2(b)(1).
"Nonrecourse Liability" has the meaning set forth in Regulations
Section 1.704-2(b)(3).
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"OCM Holders" means OCM and those Persons to whom OCM transfers Units
pursuant to Section 9.9 hereof and their respective Permitted Transferees.
"OCM Observer" means the non-voting observer appointed pursuant to the
Management Rights Agreement.
"OCM Option Period" means the 60 day period following the date of
delivery to OCM Holders of audited financial statements for the Company for the
2007 Fiscal Year, 2008 Fiscal Year, 2009 Fiscal Year and 2010 Fiscal Year.
"OCM Purchase Price" shall have the meaning ascribed to such term in
Section 11.1 hereof.
"OCM Shares" means the capital stock of OCM.
"Participating Member" shall have the meaning ascribed to such term in
Section 7.3 hereof.
"Permitted Transferee" means: (i) with respect to any Member that is
not a natural person (and any Permitted Transferee of such Member to whom Units
have previously been conveyed in accordance with the terms of this Agreement),
(A) any of such Member's direct or indirect Affiliates, (B) the Company and (C)
any Member; (ii) with respect to any Member that is a natural person (and any
Permitted Transferee of such Member to whom Units have previously been conveyed
in accordance with the terms of this Agreement), (A) any of such Member's direct
or indirect Affiliates, (B) the Company, (C) any Member, (D) such Member's
immediate family, including his or her spouse, ex-spouse, children,
step-children and their respective lineal descendants and (E) any trust or other
legal entity the beneficiary of which is a Member's immediate family, including
his or her spouse, ex-spouse, children, step-children or their respective lineal
descendants and which is controlled by the Member (an entity shall be deemed to
be controlled by a Member if such Member has the power to direct the disposition
and voting of the Unit transferred to such trust); (iii) with respect to any
Member (and any Permitted Transferee of such Member to whom Units have
previously been conveyed in accordance with the terms of this Agreement), any
Person approved by the Board; (iv) in the case of OCM, a person to whom OCM is
permitted to Transfer Units in accordance with Section 9.9 hereof; and (v) in
the case of Holding, Bear Xxxxxxx Corporate Lending Inc., as administrative
agent (the "Agent") for the several banks and other financial institutions or
entities from time to time parties to the Credit Agreement, dated as of August
2, 2004, among the Company, Bear Xxxxxxx Corporate Lending Inc., as
administrative agent, and the other Lenders (as defined in the Credit Agreement)
party thereto, or any Person designated by the Agent as a Permitted Transferee
of Holding upon a foreclosure of the Pledged LLC Interests (as defined in the
Pledge Agreement, dated as of August 2, 2004 (the "Pledge Agreement"), made by
Holding in favor of the Agent) by the Agent in accordance with the terms of the
Pledge Agreement; provided that the Agent or such Person agrees to be bound by
all of the provisions of this Agreement pursuant to Section 9.2 hereof.
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"Person" means any individual, corporation, partnership, limited
partnership, limited liability company, joint venture, trust, unincorporated
organization, Governmental Authority or any agency or political subdivision
thereof.
"Piggy-Back Registration" shall have the meaning ascribed to such term
in Section 7.1 hereof.
"Preemptive Right" shall have the meaning ascribed to such term in
Section 5.3 hereof.
"Preemptive Rights Notice" shall have the meaning ascribed to such term
in Section 5.3 hereof.
"Preemptive Rights Offer" shall have the meaning ascribed to such term
in Section 5.3 hereof.
"Purchase Agreement" means that certain Amended and Restated Purchase
Agreement, dated as of December 19, 2003, by and among SpectaGuard and the
Guarantors named therein.
"Records" shall have the meaning ascribed to such term in Section
7.3(l) hereof.
"Registrable Securities" means all common stock (or other comparable
equity security of a Company Offeror that is not a corporation) of a Company
Offeror that are now owned or hereafter acquired pursuant to this Agreement,
including as a result of a Conversion Transaction. For purposes of this
Agreement, a Registrable Security shall cease to be a Registrable Security when
(i) a registration statement covering such security has been declared effective
by the SEC and it has been disposed of pursuant to such effective registration
statement or (ii) it has been sold under Rule 144 of the 1933 Act (or any
comparable successor provision).
"Registration Expenses" shall have the meaning ascribed to such term in
Section 7.4 hereof.
"Regulations" means the income tax regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended from
time to time.
"SEC" means the Securities and Exchange Commission.
"Shelf Registration" shall have the meaning ascribed to such term in
Section 7.1 hereof.
"Subsidiary" of any specified Person means any other Person in which
such specified Person holds (directly or indirectly) an amount of such other
Person's equity securities which is sufficient to elect at least a majority of
such other Person's board of directors (or comparable governing body); provided,
however, that if such
10
equity securities are held indirectly by such specified Person, each Person in
the chain between such specified Person and such other Person also has an amount
of its equity securities held (directly or indirectly) by such specified Person
which is sufficient to elect at least a majority of its board of directors (or
comparable governing body).
"Tax Matters Partner" shall have the meaning ascribed to such term in
Section 4.5 hereof.
"Tax Sharing Agreement" means the Tax Sharing Agreement attached hereto
as Exhibit C.
"Third Party" means any Person (other than a Person who is a Permitted
Transferee of any Member by way of clause (i) or (ii) of the definition
thereof).
"Transfer" means the voluntary or involuntary sale, assignment,
transfer, pledge, grant of a security interest in, hypothecation or other
disposition or conveyance of legal or beneficial or economic interest, directly
or indirectly, whether in one transaction or in a series of related transactions
and whether by operation of law or otherwise; provided, however, that any
pledge, grant of security interest in, hypothecation or similar encumbrance
permitted by any of HG, DGD, BFS or Holding of any or all of his or its Units
from time to time in connection with a bona fide financing transaction shall not
be deemed to be a "Transfer" for purposes of this Agreement.
"Transferee" means any Permitted Transferee of a Member's Units in the
Company, or part thereof, after consummation of the Transfer of such Units in
accordance with the terms of this Agreement.
"Units" means, collectively, the Class A Units, Class B Units and Class
C Units.
Section 1.2 Interpretation.
(a) When a reference is made in this Agreement to a section, article,
paragraph, clause, annex or exhibit, such reference shall be to a reference to
this Agreement unless otherwise clearly indicated to the contrary. The
descriptive article and section headings herein are intended for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "herewith" and
words of similar import shall, unless otherwise stated, be construed to refer to
this Agreement as a whole and not to any particular provision of this Agreement.
The meaning assigned to each term used in this Agreement shall be equally
applicable to both the singular and the plural forms of such term, and words
denoting either gender shall include both genders. Where a word or phrase is
defined herein, each of its other grammatical forms shall have a corresponding
meaning.
(b) The parties have participated jointly in the negotiation and
drafting of this Agreement. Consequently, in the event an ambiguity or question
of intent or
11
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
ARTICLE II
FORMATION AND TERM
Section 2.1 Formation; Continuation. On July 16, 2004, the Company was
formed as a Delaware limited liability company pursuant to a Certificate of
Formation (the "Certificate of Formation") executed and filed in the Office of
the Secretary of State of the State of Delaware pursuant to the provisions of
the Delaware Act. Notwithstanding anything to the contrary contained herein,
this Agreement shall become effective with respect to any Member at such time as
such Member delivers an executed signature page hereto to the Company and the
other Members who theretofore have already executed this Agreement. The Company
shall be governed by the Delaware Act at all times prior to the time this
Agreement becomes effective as to the first Member to become party hereto (as
determined in accordance with the immediately preceding sentence). The Members
hereby agree to operate the Company as a limited liability company pursuant to
the provisions of the Delaware Act, and all other pertinent laws of the State of
Delaware, for the purposes and upon the terms and conditions hereinafter set
forth. The Members agree that the rights and liabilities of the Members shall be
as provided in the Delaware Act except as otherwise herein expressly provided.
Each Member is hereby admitted as a member of the Company as of the date of this
Agreement and, by such Member's execution and delivery of this Agreement, agrees
to be bound by the Certificate of Formation and the terms and provisions of this
Agreement. The Company and, if required, each of the Members shall execute or
cause to be executed from time to time all other instruments, certificates,
notices and documents and shall do or cause to be done all such acts and things
(including keeping books and records and making publications or periodic
filings) as may now or hereafter be required for the formation, valid existence
and, when appropriate, termination of the Company as a limited liability company
under the laws of the State of Delaware.
Section 2.2 Company Name. The business of the Company shall be
conducted under the name of "Allied Security Holdings LLC" in the State of
Delaware and under such name or such assumed names as the Board deems necessary
or appropriate to comply with the requirements of any other jurisdiction in
which the Company may be required to qualify.
Section 2.3 Term. The existence of the Company commenced on July 16,
2004, and shall continue in full force and effect until terminated as
hereinafter provided.
Section 2.4 Registered Office; Registered Agent. Until such time as the
Board has appointed a different person to act in the State of Delaware as the
agent of the Company for service of process, the Company's agent for service of
process in the
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State of Delaware shall be The Xxxxxxxx-Xxxx Corporation System, Inc., 0000
Xxxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000.
Section 2.5 Place of Business. The business address of the Company
shall be determined by the Board. The Company may from time to time have such
other place or places of business within or without the State of Delaware as the
Board may deem advisable.
Section 2.6 Purpose; Nature of Business Permitted; Powers. The Company
has been organized for the purpose of (a) providing security services, including
guard and electronic security, and toll collection services, directly or through
Subsidiaries or other Persons and (b) engaging in any other business or activity
necessary, incidental, proper, advisable or convenient to accomplish the
foregoing purpose. The Company shall possess and may exercise all the powers and
privileges granted by the Delaware Act or by any other law or by this Agreement,
together with any powers incidental thereto, insofar as such powers and
privileges are necessary or convenient to the conduct, promotion or attainment
of the business purposes or activities of the Company.
Section 2.7 Business Transactions of a Member with the Company. In
accordance with Section 18-107 of the Delaware Act, a Member may lend money to,
borrow money from, act as surety, guarantor or endorser for, guarantee or assume
one or more obligations of, provide collateral for, and transact other business
with, the Company and, subject to applicable law, shall have the same rights and
obligations with respect to any such matter as a Person who is not a Member.
Section 2.8 Company Property. No real or other property of the Company
shall be deemed to be owned by any Member individually, but shall be owned by
and title shall be vested solely in the Company. The interests of the Members in
the Company shall constitute personal property.
Section 2.9 No State Law Partnership. The Members intend that the
Company not be a partnership (including a limited partnership) or joint venture
and that no Member or Manager be a partner or joint venturer of any other Member
or Manager for any purposes other than applicable tax laws. This Agreement may
not be construed to suggest otherwise.
ARTICLE III
MEMBERS
Section 3.1 Members. The name and address of, and number and type of
Units held by, each Member is set forth on Exhibit A hereto, which shall be
amended from time to time by the Board to reflect any changes to such
information, including in respect of the admission of new Members.
Section 3.2 Admission of New Members. Except as may be expressly
provided in Article IX hereof, no Person shall be admitted as a Member of the
Company without the approval of the Board.
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Section 3.3 No Liability of Members. All debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Member shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Member.
Section 3.4 Access to and Confidentiality of Information; Records. Each
Member shall have the right to obtain from the Company from time to time upon
reasonable demand for any purpose reasonably related to the Member's interest as
a Member of the Company, the documents and other information described in
Section 18-305(a) of the Delaware Act.
Section 3.5 Power to Bind the Company. No Member (acting in its
capacity as such) shall have any authority to bind the Company to any third
party with respect to any matter except pursuant to a resolution expressly
authorizing such action which resolution is adopted by the Board.
Section 3.6 Representations, Warranties, Certain Agreements of the
Members.
(a) Each Member hereby represents and warrants to the Company and each
other Member as follows:
(i) With respect to any Member that is not a natural person:
(i) such Member is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and has
the corporate (or other legal entity, as the case may be) power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder; and (ii) all requisite corporate (or other legal
entity, as the case may be) action necessary for the due authorization,
execution, delivery and performance of this Agreement by such Member
have been duly taken.
(ii) Such Member has duly executed and delivered this
Agreement. Assuming the due execution and delivery of this Agreement by
each party hereto (other than such Member), this Agreement constitutes
a valid and binding obligation of such Member enforceable against such
Member in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, or similar laws of general
application and by the effect of general principles of equity
regardless of whether such matter is considered at law or in equity.
(iii) Such Member's authorization, execution, delivery and
performance of this Agreement does not: (i) conflict with, or result in
a breach, default or violation of (A) with respect to any Member that
is not a natural person, the certificate or articles of incorporation
and by-laws (or comparable organizational documents) of such Member,
(B) any material contract or agreement to which that Member is a party
or is otherwise subject, or (C) any law,
14
order, judgment, decree, writ, injunction, or arbitration award to
which that Member is subject; or (ii) require any consent, approval, or
authorization from, or filing or registration with, or notice to, any
Governmental Authority or other Person, other than those that have
already been obtained or made and other than those which if not
obtained or made would not, individually or in the aggregate, have a
material adverse effect upon such Member.
(iv) Such Member is familiar with the proposed business,
financial condition, properties, operations and prospects of the
Company; has asked such questions and conducted such due diligence
concerning such matters and concerning its acquisition of Units as it
has desired to ask and conduct, and all such questions have been
answered to its full satisfaction. Such Member has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of an investment in the Company. Such
Member understands that owning Units involves various risks, including
the restrictions on transferability set forth in this Agreement, the
lack of any public market for Units, the risk of owning its Units for
an indefinite period of time, and the risk of losing its entire
investment in the Company. Such Member is able to bear the economic
risk of such investment; is acquiring its Units for investment and not
with a view to or any present intention of directly or indirectly
selling, transferring, offering to sell or transfer, participating in
any distribution, or otherwise disposing of all or a portion of its
Units in a transaction in violation of applicable securities laws; and
such Member acknowledges that the Units have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), or any other
applicable federal or state securities laws. ---------
(b) OCM represents and warrants (and OCM agrees) that (i) it does not
own (and shall not acquire or own) any assets other than its Units and any
proceeds thereof, distributions thereon and other securities and other assets
received in connection therewith (other than rights under this Agreement), (ii)
it does not (and shall not) engage in any business or other activity other than
acting as a holding company for such Units and other assets and activities
incidental thereto, (iii) it neither owns nor is otherwise subject to (and shall
not acquire, own, or otherwise be subject to) any indebtedness and (iv) it
neither owns nor is otherwise subject to (and shall not acquire, own, or
otherwise be subject to) any liabilities or obligations (other than: (x)
liabilities and obligations under this Agreement and the Tax Sharing Agreement;
and (y) liabilities incurred in connection with the ownership of Units which,
individually and in the aggregate, are not material). OCM represents and
warrants that it was formed on February 12, 2003.
(c) Holding represents and warrants (and Holding agrees) that (i) it
does not own (and shall not acquire or own) any assets other than its Units and
any proceeds thereof, distributions thereon and other securities and other
assets received in connection therewith (other than rights under this Agreement
and rights and assets relating solely to the business of the Company), (ii) it
does not (and shall not) engage in any business or other activity other than
acting as a holding company for such Units and other assets and activities
incidental thereto, and (iii) it neither owns nor is otherwise subject to (and
shall not acquire, own, or otherwise be subject to) any liabilities or
15
obligations (other than: (x) liabilities and obligations under this Agreement
and the Tax Sharing Agreement; (y) liabilities and obligations entered into
solely in connection with the business of the Company); and (z) liabilities
incurred in connection with the ownership of Units which, individually and in
the aggregate, are not material). SpectaGuard Holding represents and warrants
that it was formed on February 23, 2000.
ARTICLE IV
MANAGEMENT
Section 4.1 Management of the Company.
(a) The business and affairs of the Company shall be managed by a Board
of Managers (the "Board"). Without limiting the generality of the foregoing, the
Board shall have (i) the responsibility for setting Company policy, approving
the overall direction of the Company, managing the day-to-day business
operations and affairs of the Company and supervising its officers and employees
and (ii) the authority to appoint and terminate officers of the Company and
retain and terminate employees of the Company and to delegate duties to such
persons as well as other service providers, including an individual appointed as
a Manager.
(b) The Board shall consist of six individuals (the "Managers").
(c) Six Managers shall be designated by Holding. Any Manager designated
by Holding may be removed only by Holding, with or without cause. Any vacancy
caused by the death, removal or resignation of a Manager designated by Holding
shall only be filled by Holding.
(d) Notwithstanding Section 4.1(c) hereof:
(i) until the earlier of (x) Xxxxxx X. Xxxxxx ceasing to be a
Member and (y) Xx. Xxxxxx ceasing to be employed by Holding, Holding
shall designate Xx. Xxxxxx as one of the six Managers that may be
designated by Holding; and
(ii) until the earlier of (x) Xxxxxxx X. Xxxxxxxx, Xx. ceasing
to be a Member and (y) Xx. Xxxxxxxx ceasing to be employed by Holding,
Holding shall designate Xx. Xxxxxxxx as one of the six Managers that
may be designated by Holding.
Section 4.2 Meetings of the Board.
(a) The Board shall meet at such times as may be necessary for the
Company's business on at least two calendar days' prior written notice of the
time and place of such meeting given by any Manager to the other Managers and
the OCM Observer. Four Managers shall constitute a quorum for the transaction of
business by the Board.
16
(b) Each Manager shall be entitled to one vote upon all matters
submitted to the Board. The affirmative vote of four Managers shall constitute
approval of an action by the Board.
(c) The Board shall have the right, power and authority to do or cause
to be done any and all acts deemed by the Board to be necessary or appropriate
to effectuate the business, purposes and objectives of the Company (including in
respect of its subsidiaries).
(d) Notice of any Board meeting may be waived by any Manager and the
OCM Observer before or after such meeting.
(e) Meetings of the Board may be conducted in person or by conference
telephone facilities. Any action required or permitted to be taken at any
meeting of the Board may be taken without a meeting if members of the Board
sufficient to approve the action pursuant to the terms of this Agreement consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board.
Section 4.3 OCM Board Observer Right. OCM shall have the rights set
forth in the Management Rights Agreement.
Section 4.4 Power to Bind Company. No Manager (acting in his capacity
as such) shall have any authority to bind the Company with respect to any matter
except pursuant to a resolution expressly authorizing such action which
resolution is duly adopted by the Board.
Section 4.5 Tax Matters Partner; Tax Elections. Holding (the "Tax
Matters Partner") is hereby designated as the Company's "Tax Matters Partner"
under Section 6231(a)(7) of the Code and shall have all the powers and
responsibilities of such position as provided in the Code and the Regulations.
The Tax Matters Partner is specifically directed and authorized to take whatever
steps are necessary or desirable to perfect such designation, including filing
any forms or documents with the Internal Revenue Service and taking such other
action as may from time to time be required under the Code and the Regulations.
The Tax Matters Partner shall cause to be prepared and shall sign all tax
returns of the Company, make any tax elections for the Company allowed under the
Code, the Regulations or the tax laws of any state or other jurisdiction having
taxing jurisdiction over the Company and monitor any governmental tax authority
in any audit that such authority may conduct of the Company's books and records
or other documents; provided, however, notwithstanding the foregoing, no
election shall be made by the Company or any Members for the Company to be taxed
as a corporation without the consent of all Members other than in connection
with a Conversion Transaction. The Tax Matters Partner shall keep the Members
and the Board informed of any administrative and judicial proceedings affecting
tax matters of the Company. Notwithstanding anything herein to the contrary, the
Tax Matters Partner shall have no authority to settle, terminate or otherwise
compromise any material administrative or judicial proceeding affecting tax
matters of the Company or the Members without the prior consent of the Board.
17
Section 4.6 Reliance by Third Parties. Persons dealing with the Company
are entitled to rely conclusively upon the power and authority of the Board
herein set forth.
Section 4.7 Certain Sales. Notwithstanding anything in this Agreement
to the contrary, no transaction pursuant to which any party or parties acquire
(i) Units representing a majority in interest (whether by sale of Units or
merger or otherwise) or (ii) all or substantially all of the Company's assets,
determined on a consolidated basis, shall occur without OCM's approval unless
such transaction is structured in such a manner that the shareholders of OCM
have the option to sell the OCM Shares to such party (or, at the option of
Holding, to Holding) in lieu of Units (and/or immediately prior to any such
asset sale) at the same price as would be applicable to OCM's Units.
ARTICLE V
CAPITAL STRUCTURE AND CONTRIBUTIONS
Section 5.1 Capital Structure.
(a) The capital structure of the Company shall consist of three classes
of interests to be designated, respectively, "Class A Units," "Class B Units"
and "Class C Units." The total number of Units which the Company is authorized
to issue shall be 10,000,000. Units which are authorized but unissued under this
Agreement may be issued to such Persons upon such terms and conditions as the
Board may determine and such Persons shall be admitted as Members of the Company
provided that they executed a counterpart signature page to this Agreement
agreeing to be bound by the terms of this Agreement. It is not necessary that
all authorized Units be issued or outstanding or vested.
(b) The total number of Class A Units that the Company shall have the
authority to issue is 9,500,000. Class A Units shall not have any voting,
approval or consent rights as to any matter.
(c) The total number of Class B Units that the Company shall have the
authority to issue is 200,000. Class B Units shall not have any voting, approval
or consent rights as to any matter.
(d) The total number of Class C Units that the Company shall have the
authority to issue is 300,000. Class C Units shall not have any voting, approval
or consent rights as to any matter.
Section 5.2 Capital Contributions.
(a) Each Member has contributed, as capital contributions ("Capital
Contributions") to the Company, Class A units, Class B units and Class C units
of SpectaGuard pursuant to the Capital Contribution Agreement.
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(b) In exchange for the Capital Contributions and for other good and
valuable consideration, each Member has received the number of Units set forth
opposite the name of such Member on Exhibit A hereto.
Section 5.3 Preemptive Rights.
(a) Each Member shall have a right of first refusal (the "Preemptive
Right") to purchase, with respect to the sale by the Company of additional Units
or other interests in the Company to any of its officers, Managers, employees,
Members or Affiliates, a number of such additional Units or other interests in
the Company as may be necessary in order to permit such Member to maintain its
then current Aggregate Unit Percentage. Such right of first refusal will be
offered to each Member (such offer, the "Preemptive Rights Offer") pursuant to a
written notice from the Company offering such Member the Units or other
interests on the same terms and conditions as offered to the other offeree(s)
(such written notice, the "Preemptive Rights Notice"). The Preemptive Rights
Notice will specify the material terms and conditions of the offering, including
(i) the aggregate offering amount and offering price per Unit or other interest,
(ii) the identity of each proposed purchaser in the offering, (iii) the number
of Units or other interests proposed to be acquired by each proposed purchaser,
and (iv) all written financial information and other disclosures provided by the
Company to any other proposed investor in the offering. Each Member will have 30
days from the date of the Preemptive Rights Notice to notify the Company in
writing of its binding acceptance of such Preemptive Rights Offer with respect
to all or any portion of the Units or other interests which are offered to such
Member pursuant to the Preemptive Rights Offer.
(b) In the event that any Member elects to purchase Units or other
interests pursuant to this Section 5.3, the closing of the applicable Preemptive
Rights Offer shall be consummated concurrently with the respective issuance of
additional Units or other interests to the other investors in such offering.
(c) In the event that any Member does not accept any Preemptive Rights
Offer within the applicable 30 day period, the Company shall have the right to
issue the Units or other interests on terms and conditions not materially more
favorable (in the aggregate) to the other offerees than those set forth in the
Preemptive Rights Notice, pursuant to a definitive agreement to be entered into
no later than 180 days after such date.
(d) Notwithstanding anything to the contrary contained herein, no
rights shall be granted pursuant to this Section 5.3 to subscribe for Units or
other interests to be issued pursuant to an underwritten initial (and any
subsequent) public offering of interests (or any securities issued in place
thereof).
(e) Notwithstanding anything to the contrary contained herein, no
rights shall be granted pursuant to this Section 5.3 to subscribe for
Performance Units. The Company shall not issue any Performance Units if,
immediately following (and after giving effect to) such issuance of Performance
Units, the aggregate number of outstanding Performance Units exceeds 20% of the
Company's then outstanding vested
19
and unvested Units. For purposes of this Agreement, the term "Performance Unit"
means any Unit or other interest to be issued in connection with any
compensation or benefit plan, agreement or arrangement in respect of Managers,
management, officers or employees of the Company or its subsidiaries or in
respect of employees of any other Person, provided that, in any such case, the
person awarded such Performance Units devotes a substantial amount of his or her
time to the business of the Company or its subsidiaries.
Section 5.4 No Withdrawal Of Capital Contributions. Except upon a
dissolution and liquidation of the Company effected in accordance with Article
XIII hereof, no Member shall have the right to withdraw its capital
contributions from the Company.
Section 5.5 No Other Capital Contributions. Except as provided in
Section 5.2 hereof, no Member shall be obligated to make any cash or non-cash
contribution to the Company's capital. Except with the approval of the Board, no
Member shall be permitted to make any cash or non-cash contribution to the
Company's capital.
Section 5.6 Maintenance of Capital Accounts.
(a) The Company shall establish and maintain a capital account
("Capital Account") for each Member in accordance with the following provisions:
(i) to each Member's Capital Account there shall be credited
(x) such Member's contributions of cash and the Gross Asset Value of
other properties and assets contributed to the Company, (y) such
Member's distributive share of Net Profits and (z) the amount of any
Company liabilities assumed by such Member or which are secured by any
property distributed to such Member; and
(ii) to each Member's Capital Account there shall be debited
(x) the amount of money and the Gross Asset Value of any property
distributed to such Member pursuant to any provision of this Agreement,
(y) such Member's distributive share of Net Losses and (z) the amount
of any liabilities of such Member assumed by the Company or which are
secured by any property contributed by such Member to the Company.
(b) This Section 5.6 and other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Regulations. Notwithstanding that a particular adjustment is not set
forth in this Section 5.6, the Capital Accounts of the Members shall be adjusted
as required by, and in accordance with, the Capital Account maintenance rules of
Regulations Section 1.704-1(b).
20
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
Section 6.1 Allocations of Net Profits and Net Losses.
(a) Net Profits and Net Losses shall be determined and allocated with
respect to each Fiscal Year of the Company as of the end of such Fiscal Year and
at such times as the Gross Asset Value of any Company property is adjusted
pursuant to Section 1.1. Subject to the other provisions of this Agreement, an
allocation to a Member of a share of Net Profits or Net Losses shall be treated
as an allocation of the same share of each item of income, gain, loss or
deduction that is taken into account in computing Net Profits or Net Losses.
(b) In General. After the Company makes all allocations required by
Section 6.2 hereof, Net Profits and Net Losses for any Fiscal Year or other
period shall be allocated to the Members in proportion to their Aggregate Unit
Percentage; provided, however, that allocations of Net Profit made with respect
to Class B Units or Class C Units held by any Member shall not exceed the amount
of Cash Available for Distribution distributed or to be distributed to such
Member pursuant to Section 6.4(b) in respect of such Fiscal Year and any excess
Net Profits otherwise allocable in respect of Class B Units or Class C Units
shall be allocated to Class A Units.
(c) Allocations upon Termination. Notwithstanding Section 6.1(b), in
the event of a termination of the Company, after the Company makes all
allocations required under Section 6.2 hereof, Net Profits and Net Losses for
such Fiscal Year or other period shall be allocated to the Members to the extent
of and in proportion to the amount required to cause the Capital Account balance
of each Member to equal the amount distributable to such Member in accordance
with Section 13.2(c)(ii) hereof; provided, however, that, in the event that
allocations of Net Profit in such Fiscal Year are insufficient to cause the
Capital Account balance of a Member to equal the amount distributable to such
Member under Section 13.2(c)(ii), such shortfall shall be eliminated or reduced
through (i) a reallocation of Net Profits relating to prior Fiscal Years to the
extent permitted by law and (ii) a special allocation of items of Company gross
income, gain, deduction and loss.
(d) Limitation on Loss Allocations. The Net Losses allocated pursuant
to Section 6.1 hereof shall not exceed the maximum amount of Net Losses that can
be so allocated without causing any Member to have an Adjusted Capital Account
Deficit at the end of any Fiscal Year. To the extent some but not all of the
Members would have Adjusted Capital Account Deficits as a consequence of an
allocation of Net Losses pursuant to Section 6.1 hereof, such amount of Net Loss
(or items thereof) shall be allocated to the other Members to the extent of and
in proportion to their Capital Account balances and, after the Capital Account
of each Member has been reduced to zero, to the Members pro rata in accordance
with their Aggregate Unit Percentages.
21
Section 6.2 Special Allocations. The following special allocations
shall be made in the following order prior to any allocations pursuant to
Section 6.1 hereof:
(a) Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(f) and notwithstanding any other provision of this
Article VI, if there is a net decrease in Company Minimum Gain during any Fiscal
Year, each Member shall be specially allocated items of Company income and gain
for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an amount
equal to such Member's share of the net decrease in Company Minimum Gain,
determined in accordance with Regulations Section 1.704-2(g). 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 Regulations Sections
1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.2(a) is intended to comply with
the minimum gain chargeback requirement in Regulations Section 1.704-2(f) and
shall be interpreted consistently therewith.
(b) Member Minimum Gain Chargeback. Except as otherwise provided in
Regulations Section 1.704-2(i)(4) and notwithstanding any other provision of
this Article VI, if there is a net decrease in Member Nonrecourse Debt Minimum
Gain attributable to a Member Nonrecourse Debt during any Fiscal Year, each
Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable
to such Member Nonrecourse Debt, determined in accordance with Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Company income and
gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to such Member's share of the net decrease in Member Nonrecourse
Debt Minimum Gain attributable to such Member Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). 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 Regulations Sections 1.704-2(i)(4) and
1.704-2(j)(2). This Section 6.2(b) is intended to comply with the minimum gain
chargeback requirement in Regulations Section 1.704-2(i)(4) and shall be
interpreted consistently therewith.
(c) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described in Regulations
Section 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or
1.704-1(b)(2)(ii)(d)(6), items of income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of such Member
as quickly as possible, provided that an allocation pursuant to this Section
6.2(c) shall be made only if and to the extent that such Member would have an
Adjusted Capital Account Deficit after all other allocations provided for in
this Article VI have been tentatively made as if this Section 6.2(c) were not
applicable.
(d) Gross Income Allocation. In the event any Member has a deficit
Capital Account at the end of any Fiscal Year which is in excess of the sum of
(i) the amount such Member is obligated to restore pursuant to any provision of
this Agreement and (ii) the amount such Member is deemed to be obligated to
restore pursuant to the
22
penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5),
such Member shall be specially allocated items of income and gain in the amount
of such excess as quickly as possible, provided that an allocation pursuant to
this Section 6.2(d) shall be made only if and to the extent that such Member
would have a deficit Capital Account in excess of such sum after all other
allocations provided for in this Article VI have been made as if Section 6.2(c)
hereof and this Section 6.2(d) were not applicable.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year
shall be allocated in accordance with each Member's Aggregate Unit Percentage.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any Fiscal 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 Regulations
Section 1.704-2(i)(2).
(g) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code
Section 743(b) is required, pursuant to Regulations Section
1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts,
the amount of such adjustment to Capital Accounts shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be specially
allocated to the Members in a manner consistent with the manner in which their
Capital Accounts are required to be adjusted pursuant to such Regulation.
(h) Other Allocation Rules.
(i) Generally, all Net Profits and Net Losses shall be
allocated among the Members as provided in this Article VI. If Members
are admitted to the Company on different dates during any Fiscal Year,
the Net Profits or Net Losses shall be allocated among the Members for
such Fiscal Year in accordance with Code Section 706, using any
convention determined by the Board and permitted by law.
(ii) The Members are aware of the income tax consequences of
the allocations made by this Article VI and hereby agree to be bound by
the provisions of this Article VI in reporting their shares of income
and loss for income tax purposes.
(i) Tax Allocations: Code Section 704(c). In accordance with Code
Section 704(c) and the Regulations thereunder, income, gain, loss and deduction
with respect to any property contributed to the capital of the Company shall,
solely for tax purposes, be allocated among the Members so as to take account of
any variation between the adjusted basis of such property to the Company for
federal income tax purposes and its initial Gross Asset Value. Allocations
pursuant to this Section 6.2(i) are solely for purposes of federal, state and
local taxes and shall not affect, or in any way be
23
taken into account in computing, any Member's Capital Account or share of Net
Profits, Net Losses, other items, or distributions pursuant to any provision of
this Agreement.
Section 6.3 No Right to Distributions. No Member shall have the right
to demand or receive distributions of any amount, except as expressly provided
in this Article VI.
Section 6.4 Distributions. The Board shall meet at least annually to
determine the amount of Cash Available for Distribution. If the Board determines
that the Company has Cash Available for Distribution, then the Board may
determine (in its sole discretion) to distribute part or all of such cash to the
Members in the following order and priority:
(a) first, among the (A) Class A Units, (B) Class B Units and (C)
vested Class C Units, in proportion to and to the extent of the aggregate Book
Capital attributable to each class of Units (excluding any Book Capital
attributable to unvested Class C Units), and the amount distributed to each
class of Units pursuant to this Section 6.4(a) shall be distributed to each
Member within such class of Units in proportion to and to the extent of the Book
Capital of such Member with respect to such class (excluding any Book Capital
attributable to unvested Class C Units), until all Book Capital has been
returned; and
(b) the balance, if any, to the Members in proportion to each Member's
Aggregate Unit Percentage.
Notwithstanding the foregoing and except in the case of an Event of Termination,
the Board shall make special distributions (the "Tax Distributions") to the
Members to enable each Member to satisfy its tax liability arising in connection
with its ownership interest in the Company (other than arising in connection
with its disposition of any interest in the Company), which, in the case of
Holding, shall include Holding's obligation to Mafco under the Tax Sharing
Agreement (the "Member Tax Liability") as set forth herein. Tax Distributions
shall be made to the Members, at such times as is necessary to enable each
Member to satisfy its Member Tax Liability (but in no event less frequently than
quarterly), pari passu to the extent of and in proportion to the excess of (i)
the Member's Member Tax Liability over (ii) distributions made to such Member
under Section 6.4(b), for the relevant period. Any Tax Distributions shall be
credited against and shall offset future distributions pursuant to Section
6.4(b).
Section 6.5 Withholding. The Company is hereby authorized and directed
to withhold from any distribution made to a Member the amount of taxes required
to be withheld or paid by the Company with respect any allocations or
distributions to such Member as levied by any federal, state, local or foreign
taxing authority. Any amount so withheld shall be treated as a distribution
under Section 6.4 hereof and shall reduce the amount otherwise distributable to
such Member hereunder. In the event that distributions under Section 6.4 hereof
are insufficient to cover the amount of taxes required to be withheld or paid by
the Company pursuant to this Section 6.5, the
24
Member to which such taxes relate shall be obligated to indemnify the Company
for such taxes in excess of distributions.
Section 6.6 Restrictions on Distributions. The foregoing provisions of
this Article VI to the contrary notwithstanding, no distribution shall be made
if, and for so long as, such distribution would violate any law, rule,
regulation, order or directive of any Governmental Authority then applicable to
the Company.
ARTICLE VII
REGISTRATION RIGHTS
Section 7.1 Registration Rights. If the Company Offeror proposes to (i)
file a registration statement under the 1933 Act with respect to an underwritten
public offering by the Company Offeror for its own account or for the account of
any of its respective security holders of any class of equity security (other
than a registration statement (1) on Form S-4 or S-8 (or any substitute or
comparable successor form that may be adopted by the SEC), (2) filed in
connection with an exchange offer or offering of securities solely to the
Company Offeror's existing security holders or (3) filed to make effective a
registration statement for an offering of capital securities on a continuous or
delayed basis in the future pursuant to Rule 415(a)(1)(x) under the 1933 Act or
any successor provisions (a "Shelf Registration")) or (ii) offer any capital
securities for sale pursuant to an effective Shelf Registration, then the
Company Offeror shall give written notice of such proposed filing or offer to
the Members (or the holders of interests in the Company Offeror) as soon as
practicable (but in no event less than ten days before the anticipated filing or
offer date), and such notice shall offer to the Members the opportunity to
register such number of Registrable Securities as each such holder may request
(a "Piggy-Back Registration"). The Company Offeror shall use its reasonable best
efforts to cause the managing underwriters of a proposed underwritten offering
to permit the Registrable Securities requested to be included in a Piggy-Back
Registration to be included in such offering on the same terms and conditions as
any similar securities of the Company Offeror included therein.
Section 7.2 Reduction of Offering. Notwithstanding anything contained
in this Agreement to the contrary, if the managing underwriter(s) of an offering
described in Section 7.1 hereof advises the Company Offeror in writing that the
success of the offering would be materially and adversely affected by inclusion
of all the Registrable Securities requested to be included in such registration
because of the size of such offering, then the amount of securities to be
offered for the accounts of the Participating Members shall be reduced to the
extent necessary to reduce the total amount of securities to be included in such
offering to the amount recommended by such managing underwriter(s) and the
Company Offeror will include in the registration the maximum number of
securities which it is so advised can be sold without such material and adverse
effect, allocated, on a pro rata basis (based upon the number of Registrable
Securities owned) within each following order of priority, as follows:
25
(a) FIRST, any securities proposed to be registered by the
Company Offeror for its own account;
(b) SECOND, any securities proposed to be registered for the
account of Participating Members in a Piggy-Back Registration as
contemplated by Section 7.1 hereof; and
(c) THIRD, any securities proposed to be registered for the account of
other holder(s) pursuant to a registration rights agreement entered into between
such other holder(s) who are exercising "piggy-back" registration rights and the
Company Offeror.
Section 7.3 Filings, Information. In the event that any Member (or the
holders of interests in a Company Offeror) requests that any Registrable
Securities be registered pursuant to Section 7.1 hereof (each, a "Participating
Member"), the Company Offeror will use its reasonable best efforts to effect the
registration and facilitate the sale of such Registrable Securities in
accordance with the intended method of disposition thereof as promptly as
practicable, and in connection with any such request:
(a) in the event that the Company Offeror files a registration
statement for the sale of Registrable Securities with the SEC, the Company
Offeror will: (i) use its reasonable best efforts to cause such filed
registration statement to become and remain effective for a period of not less
than 180 days (90 days in the case of a fully underwritten offering other than
pursuant to Rule 415 under the 0000 Xxx); and (ii) prepare and file with the SEC
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities proposed to be registered in such registration
statement so long as such registration statement is required to remain effective
in accordance with preceding clause (i).
(b) the Company Offeror will, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
furnish and allow a reasonable time for review and comment to the Participating
Members and each underwriter of the Registrable Securities covered by such
registration statement copies of such registration statement as proposed to be
filed, and thereafter furnish to the Participating Members and each underwriter
such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
the Participating Members or the underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by the
Participating Members;
(c) after the filing of the registration statement, the Company Offeror
will promptly notify the Participating Members of any stop order issued or
threatened by
26
the SEC and take all reasonable actions required to prevent the entry of such
stop order or to remove it if entered;
(d) the Company Offeror will use its reasonable best efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States as the Participating
Members reasonably (in light of the intended plan of distribution) requests and
(ii) cause such Registrable 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 and do any and all other acts and things
that may be reasonably necessary or advisable to enable the Participating
Members to consummate the disposition of the Registrable Securities owned by the
Participating Members; provided, however, that the Company Offeror will not be
required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (d), (B)
subject itself to taxation in any such jurisdiction, (C) consent to general
service of process in any such jurisdiction or (D) consent to any restrictions
on the conduct of its business or any restrictions on payments to any
stockholders or members, as applicable, of the Company Offeror; provided
further, however, that the Participating Members will not be required to take
any action pursuant to this paragraph (d);
(e) the Company Offeror will: (i) promptly notify the Participating
Members, at any time when a prospectus relating thereto is required to be
delivered under the 1933 Act, of the occurrence of an event as a result of which
the prospectus included in such registration statement, as then in effect,
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading; and (ii)
promptly prepare, file and furnish to the Participating Members a reasonable
number of copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of the Registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
are made, not misleading;
(f) the Company Offeror will notify the Participating Members, promptly
after it shall receive notice thereof, of the date and time such registration
statement and any post-effective amendment thereto has become effective or a
supplement to any prospectus forming a part of such registration statement
(including any documents incorporated by reference) has been filed;
(g) the Company Offeror will provide a transfer agent and registrar for
such Registrable Securities and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration;
(h) the Company Offeror will notify the Participating Members promptly
of any request by the SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;
27
(i) the Company Offeror will advise the Participating Members, promptly
after it shall receive notice thereof, of the issuance of any stop order by the
SEC or a state securities authority suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding for
that purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order shall
be issued;
(j) cooperate with the Participating Members to facilitate timely
preparation and delivery of certificates representing Registrable Securities to
be sold;
(k) the Company Offeror and the Participating Members will enter into
customary agreements (including an underwriting agreement in usual and customary
form containing usual and customary representations and warranties (which, in
the case of the Participating Members, shall only concern matters as to itself
and its ownership of shares), covenants, opinions, certificates,
cross-indemnification and contribution provisions) and take such other actions
as are reasonably required in order to expedite or facilitate the disposition of
such Registrable Securities; provided that in no event shall OCM be required to
become a party to any such agreement which is more onerous than that of any
other Member;
(l) the Company Offeror will make available for inspection by the
Participating Members, any underwriter participating in any disposition pursuant
to such registration statement and by any attorney, accountant or other
professional retained by the Participating Members or underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company Offeror (collectively, the "Records") as
shall be reasonably necessary to conduct due diligence, and cause the Company
Offeror's officers, directors, managers and employees to supply all information
reasonably requested by any Inspectors in connection with such registration
statement. The Participating Members shall cause such Records which the Company
Offeror designates as confidential and which the Company Offeror notifies the
Inspectors are confidential to be kept confidential by the Inspectors and not
used for any purpose other than such registration of Registrable Securities, and
the Participating Members shall cause the Inspectors not to disclose the Records
unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such registration statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Information obtained by the Participating Members and
the Inspectors hereunder as a result of such inspections shall be deemed
confidential and shall be kept confidential by the Participating Members and may
not be used by the Participating Members for any purpose other than such
registration of Registrable Securities. The Participating Members will, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company Offeror and allow the Company Offeror,
at its expense, to undertake appropriate action to prevent disclosure of the
Records designated as confidential;
(m) the Company Offeror will furnish to the Participating Members and
to each underwriter, a signed counterpart, addressed to the Participating
Members or the underwriter, on the date or dates reasonably requested by the
Participating Member,
28
of (i) an opinion or opinions, dated of such date, of counsel representing the
Company Offeror for the purposes of such registration, and (ii) a comfort letter
or comfort letters, dated of such date, from the Company Offeror's independent
certified public accountants, each in customary form and covering such matters
of the type customarily covered by opinions or comfort letters, as the case may
be, as the Participating Members or the managing underwriter reasonably
requests;
(n) the Company Offeror will otherwise use its reasonable best efforts
to comply with all applicable rules and regulations of the SEC and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering a period of twelve (12) months, beginning within
three (3) months after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the 1933
Act;
(o) the Company Offeror will use its reasonable best efforts to cause
all such Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company Offeror are then listed;
(p) each Participating Member will promptly furnish in writing to the
Company Offeror such information regarding the distribution of the Registrable
Securities as the Company Offeror may from time to time reasonably request and
such other information as may be legally required in connection with such
registration; and
(q) upon receipt of any notice from the Company Offeror of the
happening of any event of the kind described in Section 7.3(e) hereof, each
Participating Member will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Participating Member's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 7.3(e) hereof, and,
if so directed by the Company Offeror, each Participating Member will deliver to
the Company Offeror all copies, other than permanent file copies, then in such
Participating Member's possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event the
Company Offeror shall give such notice, the Company Offeror shall extend the
period during which such registration statement shall be maintained effective
(including the period referred to in Section 7.3(a) hereof) by the number of
days during the period from and including the date of the giving of notice
pursuant to Section 7.3(e) hereof to the date when the Company Offeror shall
make available to the Participating Members a prospectus supplemented or amended
to conform with the requirements of Section 7.3(e) hereof.
Section 7.4 Registration Expenses. In connection with any registration
statement filed hereunder, the Company Offeror shall pay the following
registration expenses incurred in connection with the registration hereunder
(the "Registration Expenses"): (i) all registration and filing fees; (ii) fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities); (iii) printing expenses; (iv)
internal expenses (including all salaries and expenses of its officers and
29
employees performing legal or accounting duties); (v) the fees and expenses
incurred in connection with the listing of the Registrable Securities; and (vi)
reasonable fees and disbursements of counsel for the Company Offeror and one
counsel retained (collectively) by the Participating Members (the identity of
such counsel shall be subject to the approval of the Company Offeror, not to be
unreasonably withheld), and customary fees and expenses for independent
certified public accountants retained by the Company Offeror (including the
expenses of any comfort letters or costs associated with the delivery by
independent certified public accountants of a comfort letter or comfort letters
requested pursuant to Section 7.3(m) hereof). Notwithstanding anything to the
contrary contained herein, the Company Offeror shall have no obligation to pay
any underwriting discounts or transfer fees attributable to the sale of
Registrable Securities. Each Participating Member's transfer fees and
underwriting discounts shall be paid promptly by such Participating Member.
Section 7.5 Indemnification by the Company Offeror. The Company Offeror
will indemnify and hold harmless each Participating Member, its officers,
directors and agents, and each person, if any, who controls each Participating
Member within the meaning of Section 15 of the 1933 Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages, liabilities
(joint or several), obligations and expenses (including reasonable costs of
investigation and attorneys fees or actions in respect thereof) (including any
of the foregoing incurred in settlement of any litigation commenced or
threatened) that arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement relating to the Registrable Securities, including any preliminary
prospectus or final prospectus contained therein, offering circular or other
document or in any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) any violation or alleged violation
by the Company Offeror in connection with such Registrable Securities of the
Securities Act, the Exchange Act, or any federal or state securities law or
common law or any rule or regulation promulgated under the Securities Act, the
Exchange Act or any federal or state securities law in each case; and the
Company Offeror will pay to such Participating Members and their respective
officers, directors, agents and controlling persons, as incurred, any legal or
other expenses incurred by them in connection with investing, preparing or
defending any such loss, claim, damage, liability or action; provided, however,
insofar as such losses, claims, damages, liabilities, obligations or expenses
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information furnished in writing to the Company Offeror
by such Participating Member or on such Participating Member's behalf for the
use therein; provided further, however, that with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity contained in this paragraph shall not
apply to the extent that any such loss, claim, damage, liability or expense
results from the fact that a current copy of the prospectus was not sent or
given to the person asserting any such loss, claim, damage, liability or expense
at or prior to the written confirmation of the sale of the Registrable
Securities concerned to such person if it is determined that it was the
responsibility of
30
such Participating Member to provide such person with a current copy of the
prospectus and such current copy of the prospectus would have cured the defect
giving rise to such loss, claim, damage, liability or expense. The Company
Offeror also will indemnify any underwriters of the Registrable Securities,
their officers and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of Participating
Members provided in this Section 7.5.
Section 7.6 Indemnification by Participating Members. Each
Participating Member will indemnify and hold harmless the Company Offeror, its
officers, directors and agents and each Person, if any, who controls the Company
Offeror within the meaning of either Section 15 of the 1933 Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
Offeror to Participating Members, but only with respect to information furnished
in writing by such Participating Member or on such Participating Member's behalf
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus; and provided, that the liability of such Participating
Member under the foregoing indemnity shall be limited to an amount equal to the
public offering price of the Registrable Securities sold by such Participating
Member, less the applicable underwriting discounts and commissions. Each
Participating Member also will indemnify and hold harmless underwriters of the
Registrable Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Company Offeror provided in this Section 7.6.
Section 7.7 Conduct of Indemnification Proceeding. If any action or
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 7.5 or 7.6 hereof, such person (an "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (an "Indemnifying
Party") in writing and the Indemnifying Party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Party, and shall assume the payment of all expenses. Such Indemnified Party
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof, 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 action or proceeding
(including any with pleaded parties) include both such Indemnified Party and the
Indemnifying Party and 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 one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time 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. The Indemnifying Party shall not be liable for any
settlement of any such action
31
or proceeding effected without its written consent, but if settled with its
written consent (which consent shall not be unreasonably withheld) or if there
be a final judgment for the plaintiff in any such action or proceeding, the
Indemnifying Party shall indemnify and hold harmless such Indemnified Parties
from and against any loss or liability (to the extent stated above) 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 with any Indemnified Party is a party and
indemnity has been sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability arising out of such proceeding.
Section 7.8 Contribution.
(a) If the indemnification provided for in this Article VII is
unavailable to the Indemnified Parties in respect of any losses, claims, damages
or liabilities referred to herein but otherwise applicable in accordance with
its terms, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities as
between the Company Offeror, on the one hand, and a Participating Member, on the
other hand, in such proportion as is appropriate to reflect the relative fault
of the Company Offeror and of such Participating Member in connection with such
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company Offeror, on the one hand, and of a Participating
Member, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by such party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(b) The Company Offeror and each Participating Member agree that it
would not be just and equitable if contribution pursuant to this Section 7.8
were determined by pro rata allocation (even if the underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in Section 7.8(a)
hereof. The amount paid or payable by an Indemnified Party as a result of the
losses, claim, damages or liabilities referred to in Section 7.8(a) hereof shall
be deemed to include, subject to the limitation set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7.8, no underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and no Participating Member shall be required to
contribute any amount in excess of the amount by which the total price at which
the securities of such Participating Member were offered to the public exceeds
the amount of any damages which such Participating
32
Member has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(c) Notwithstanding anything to the contrary contained in this Section
7.8, no Participating Member shall be obligated to contribute an amount in
excess of the offering price of such Participating Member's Registrable
Securities less any underwriting discounts.
Section 7.9 "Market Stand-Off" Agreement.
(a) Each Member hereby agrees that for seven days prior to and up to
180 days following the effective date of the first registration statement of the
Company Offeror covering Registrable Securities filed on Form S-1 under the 1933
Act, such Member shall not, to the extent requested by the Company Offeror or
the underwriter, directly or indirectly sell, offer to sell, contract to sell
(including any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company Offeror held by it at any time during such period
except Registrable Securities included in such registration.
(b) Each Member hereby agrees that for seven days prior to and up to 90
days following the effective date of any registration statement (other than the
first) of the Company Offeror covering Registrable Securities filed on Form S-1
or Form S-3 under the 1933 Act, such Member shall not, to the extent requested
by the Company Offeror or the underwriter, directly or indirectly sell, offer to
sell, contract to sell (including any short sale), grant any option to purchase
or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any securities of the Company Offeror held by it at any time
during such period except Registrable Securities included in such registration
statement; provided, however, that, subject to the approval of the underwriter
(which may be withheld in its sole discretion), each Member may effect sales of
Company Offeror securities pursuant to Rule 144 of the Securities Act.
(c) In order to enforce the foregoing covenants in this Section 7.9,
the Company Offeror may impose stop-transfer instructions with respect to the
Registrable Securities of each Member until the end of such period.
Section 7.10 Public Offering Mechanics
Notwithstanding anything to the contrary in this Agreement, including
without limitation Article VII:
(a) In the event the Board determines to commence an initial public
offering or otherwise determines that the business activities of the Company
should be conducted by a corporation, it shall in consultation with OCM
reorganize the Company into OCM or, with OCM's consent, into Holding or another
Delaware corporation (any such surviving or successor corporation is hereinafter
referred to as "Company Offeror") in such manner as the Company and OCM deem
appropriate, efficient (including in terms
33
of tax treatment) and in the best interests of the Members, subject to the
requirements of this Section 7.10 (such reorganization, including by way of
merger, recapitalization, asset and liability transfer, or equity exchange, the
"Conversion Transaction").
(b) In the event that the Company is reorganized into OCM, subject to
the following sentence, OCM shall cause any and all of its obligations and
liabilities to be extinguished and discharged. OCM and its equityholders may
effect alternate arrangements whereby such obligations and liabilities of OCM
become the obligations and liabilities of the equityholders of OCM, provided
that, in such case, any such arrangements shall be subject to approval (which
may be withheld in their sole discretion) by the underwriters involved in such
initial public offering and by the Board.
(c) Notwithstanding the foregoing, Holding shall have the right to
verify the accuracy of (and OCM's compliance with) Section 3.6(b) hereof and
OCM's compliance with Section 7.10(b) hereof. OCM shall cooperate with Holding
in connection therewith.
(d) In the event that OCM has not complied with Section 7.10(b) or
Section 7.10(c) in any respect, then the Company may effect the Conversion
Transaction in such manner that the Board deems appropriate, efficient
(including in terms of tax treatment) and in the best interests of the Members,
subject to the requirements of this Section 7.10.
(e) This Agreement shall, upon consummation of the Conversion
Transaction, be replaced by an agreement (or agreements) executed by the Company
Offeror and the Members containing terms and conditions substantially similar to
those set forth herein. The certificate of incorporation and by-laws of the
Company Offeror shall be in such form as is approved by the Board, provided that
they not conflict with the terms and conditions of the replacement agreement (or
agreements) described in the preceding sentence.
(f) Prior to consummating the Conversion Transaction, the Board shall
obtain a valuation of the Company (the "Incorporation Value"). The Incorporation
Value shall be determined in good faith by the Board. As a result of the
Conversion Transaction, the Units of the Company shall be transformed (by
exchange, agreement, operation of law or otherwise) into voting common stock of
the Company Offeror prior to the consummation of the initial public offering so
that each Member's Units shall be transformed into a number of shares of Company
Offeror common stock equal to (i) the Incorporation Value multiplied by the
Aggregate Unit Percentage represented by such Units, divided by (ii) the
quotient obtained by dividing (1) the Incorporation Value by (2) the number of
shares of Company Offeror common stock to be issued and outstanding on a fully
diluted basis immediately after the consummation of the Conversion Transaction.
(g) Fractional shares of Company Offeror common stock issuable pursuant
to the Conversion Transaction shall be rounded or cashed out in an equitable
manner, as determined by the Board; provided that the Board shall use its good
faith efforts to minimize fractional shares.
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Section 7.11 Survival. The obligations of the Company Offeror and the
Participating Members under this Article VII shall survive until the first
anniversary of the expiration of all applicable statutes of limitation or
extensions of such statutes.
ARTICLE VIII
BOOKS AND REPORTS
Section 8.1 Books and Records; Financial Statements.
(a) At all times during the existence of the Company, the Company shall
maintain separate books of account for the Company that shall show a true and
accurate record of all costs and expenses incurred, all charges made, all
credits made and received and all income derived in connection with the
operation of the Company's business in accordance with GAAP consistently
applied. Such books of account, together with a certified copy of this Agreement
and of the Certificate of Formation, shall at all times be maintained at the
principal place of business of the Company and shall be open to inspection and
examination at reasonable times by each Member or its duly authorized
representatives for any purpose reasonably related to such Member's interest in
the Company. The books of account and the records of the Company shall be
examined by and reported upon as of the end of each Fiscal Year by the Auditors.
Any Member shall have the right to have a private audit of the Company books and
records conducted at reasonable times for any purpose related to such Member's
interest in the Company, but any such private audit shall be at the expense of
the Member desiring it, and it shall not be paid for out of Company funds.
(b) Each Member shall provide to the Board upon request tax basis
information about contributed assets and other tax information reasonably
requested by the Board.
(c) For so long as an OCM Holder is a Member, such OCM Holder shall be
entitled to such financial and other information from the Company as is provided
under Section 5.32 of the Purchase Agreement (except that for purposes of this
Agreement, such provision shall be read to substitute the Company in the place
of SpectaGuard) assuming that such agreement was in effect and such OCM Holder
was a holder of subordinated notes sold thereunder.
Section 8.2 Reporting Requirements. The Company shall use its best
efforts to furnish or cause to be furnished to each Member a copy of Schedule
K-1 of Federal Form 1065 reporting such Member's allocable share of net profits,
net losses and other items of income, gain, deductions or loss for such Fiscal
Year and any comparable state, local or foreign form and such additional
information as the Member may reasonably require for tax purposes within 90 days
after the end of such Fiscal Year.
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ARTICLE IX
WITHDRAWAL; TRANSFERS
Section 9.1 No Right to Withdraw. No Member shall have the right to
resign or withdraw from the Company except as a result of a Transfer made in
accordance with this Article IX, Article X, Article XI or Article XII hereof or
upon dissolution of the Company in accordance with Article XIII hereof. If any
Member withdraws from the Company or resigns as a Member in breach of this
provision, such withdrawal or resignation shall be of no force or effect.
Section 9.2 Restriction on Transfers. Other than as expressly provided
pursuant to this Article IX, Article X, Article XI and Article XII hereof, no
Member shall have the right to Transfer all or any part of its Units, other than
to a Permitted Transferee of such Member that agrees to be bound by all of the
provisions of this Agreement pursuant to an agreement acceptable in form to the
Board; provided, however, that no such assignment and assumption shall relieve
any Member from its obligations hereunder (unless a resolution expressly stating
such is adopted by the Board). All Transfers in violation of this Section 9.2
are null and void. Each Member shall notify the Company promptly following any
Transfer of Units.
Section 9.3 Ratification. Each Person that becomes a Member after the
date hereof, by becoming a Member, accepts, ratifies and agrees to be bound by
all actions duly taken pursuant to the terms and provisions of this Agreement by
the Company prior to the date such Person became a Member and, without limiting
the generality of the foregoing, specifically ratifies and approves all
agreements and other instruments as may have been executed and delivered on
behalf of the Company prior to such date and which are in force and effect on
such date.
Section 9.4 Effect of Transfers. Each Transfer of all or a part of a
Unit to a Transferee shall entitle such Transferee to share in such Net Profits
and Net Losses, to receive such distributions, and to receive such allocations
of income, gain, loss, deduction or credit or similar item to which the
transferor was entitled, but only to the extent of the transferred Unit. Such
Transfer shall not give a Transferee the right to participate in the management
of the Company through voting or otherwise or any other rights exercisable by a
Member unless such rights have been expressly assigned to such Transferee and
such assignment has been approved by the Board.
Section 9.5 Recognition of Transfer by Company. No Transfer of a Unit,
or any part thereof, that is in violation of this Article IX, Article X, Article
XI or Article XII shall be valid or effective, and neither the Company nor the
Members shall recognize the same for the purpose of making distributions
pursuant to Article VI hereof with respect to such Unit or part thereof. Neither
the Company nor the non-transferring Members shall incur any liability as a
result of refusing to make any such distributions to the Transferee of any such
invalid Transfer.
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Section 9.6 Effective Date of Transfer. Any valid Transfer of a Unit,
or part thereof, shall be effective as of the close of business on the day upon
which such Transfer occurs or, if such Transfer does not occur on a Business
Day, upon the close of business of the next succeeding Business Day. The Company
shall, from the effective date of such Transfer, thereafter pay all further
distributions on account of the Unit (or part thereof) so transferred, to the
Transferee of such Unit, or part thereof. As between any Member and its
Transferee, Net Profits and Net Losses for the Fiscal Year of the Company in
which such Transfer occurs shall be apportioned for federal income tax purposes
in accordance with any convention permitted under Section 706(d) of the Code and
selected by the Board.
Section 9.7 Additional Transfer Provisions. In the case of any Transfer
under this Article IX, Article X, Article XI or Article XII:
(a) The Transferee shall be required to pay any and all filing and
recording fees, fees of counsel and accountants and other costs and expenses
reasonably incurred by the Company as a result of such Transfer.
(b) No such Transfer of a Unit shall be made except upon terms which
would not, in the opinion of counsel to the Company, result in a violation of
the 1933 Act or any "blue sky" laws or other securities laws of any state of the
United States applicable to the Company or the Unit to be Transferred.
(c) Notwithstanding any other provision of this Article IX, Article X,
Article XI or Article XII no Transfer of a Unit will be permitted (i) unless and
until any and all necessary regulatory approvals and third party approvals have
been obtained, including, without limitation, expiration of any applicable
waiting periods under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, (ii) if such Transfer would cause the Company to become subject to
any statute, rule, regulation, order or injunction that would impose limitations
or restrictions on the ability of the Company to conduct its business or (iii)
if such Transfer would cause the Company to be taxable as a corporation for
federal income tax purposes.
Section 9.8 Tag-Along Rights.
(a) Provided that the Company Offeror has not previously consummated an
initial public offering, in the event that Holding proposes to effect a sale of
(whether directly as a sale of Units or indirectly through a merger,
consolidation, reorganization, business combination or comparable transaction
involving the Company) all or a part of its outstanding Units to a Third Party
(a "Tag-Along Offer"), Holding shall cause the Third Party's offer to be reduced
to writing (which writing shall include an offer to purchase Units from the
other Members according to the terms and conditions of this Section 9.8) and the
Third Party shall send written notice of the Third Party's offer (the "Tag-Along
Notice") to the other Members not later than the 20th Business Day prior to the
date of the consummation of the sale contemplated by the Tag-Along Offer. The
Tag-Along Notice shall also set forth the consideration per Unit to be paid by
the Third Party and the other material terms and conditions of the Tag-Along
Offer.
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Notwithstanding anything to the contrary contained herein, in the event that
Holding or any of its Affiliates sells Units to a Third Party with the primary
purpose of making such Third Party a Member such that subsequent sales to such
Third Party would not be subject to this Section 9.8, then, solely for purposes
of this Section 9.8, such sale shall not result in such Third Party becoming a
Member.
(b) The purchase of Units by a Third Party from the Members pursuant to
this Section 9.8 shall be on the same terms and conditions, including the per
Unit price and date of sale, as applicable to Holding and stated in the
Tag-Along Notice.
(c) At any time within ten Business Days after receipt of a Tag-Along
Notice by a Member, a Member may accept the offer included in the Tag-Along
Notice for up to such number of Units as is determined in accordance with the
provisions of Section 9.8(d) below by furnishing written notice of such
acceptance and delivering to Holding the certificates representing the Units to
be sold pursuant to the Tag-Along Offer, together with a limited
power-of-attorney authorizing Holding to sell such Member's Units.
(d) If a Member elects to sell Units pursuant to a Tag-Along Offer, a
Member shall have the right to sell up to that number of vested and outstanding
Units equal to the product of (A) the number of Units proposed to be acquired by
the Third Party and (B) such Member's Aggregate Unit Percentage. In determining
whether Units are vested for purposes of the calculation in the preceding
sentence, the sale which is the subject of this Section 9.8 shall be deemed to
have been consummated.
(e) If, within 90 days following the receipt of the Tag-Along Notice by
the other Members, Holding has not completed the sale of Units in accordance
with the terms of the Tag-Along Notice, Holding must again comply with the terms
of this Section 9.8.
(f) If within five Business Days after the receipt of the Tag-Along
Notice by a Member, such Member has not accepted the offer contained in therein,
such Member shall be deemed to have waived any and all rights under this Section
9.8 with respect to the sale of Units described in the Tag-Along Notice.
(g) Notwithstanding the foregoing, in lieu of OCM's right to
participate in any such Tag-Along Offer, at the option of OCM, OCM shall have
the right to require the purchaser to purchase OCM Shares from its holders. In
the event that OCM exercises this right, the number of OCM Shares to be acquired
by the purchaser shall bear the same proportion to the aggregate outstanding OCM
Shares as the number of Units that would otherwise have been sold by OCM
pursuant to subsection (d) bears to the total number of Units held by OCM. The
price to be paid by purchaser for such OCM Shares shall be the same as the price
that would have been paid for the corresponding Units pursuant to subsection
(b). Without limiting the foregoing, if OCM elects to exercise its rights under
this paragraph (g) then, at the option of Holding, Holding may purchase the OCM
Shares at the price that would have been paid by purchaser for such OCM Shares
as determined pursuant to this paragraph (g).
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Section 9.9 Transfer by OCM(a) . OCM shall have the right to Transfer
all or a portion of its Units to up to 5 Persons who are not Permitted
Transferees of OCM (pursuant to clauses (i) and (ii) of the definition of
"Permitted Transferee") in accordance with the terms of this Agreement. OCM
shall notify the Company in writing promptly following any such Transfer and
such transferee shall thereafter become a "Member" subject to the terms and
conditions of this Agreement.
ARTICLE X
XXXXXX PUT OPTION
Section 10.1 Put Option. (a) Provided that the Company Offeror has not
previously consummated an initial public offering, beginning on the third
anniversary of the date upon which the Effective Time occurs and ending 90 days
thereafter (the "Xxxxxx Option Period"), Xxxxxx X. Xxxxxx shall have the right
to cause the Company to purchase all (but not less than all) of his then
outstanding Class B Units. To exercise such right, Xx. Xxxxxx must notify the
Company in writing prior to the end of the Xxxxxx Option Period that he wishes
to sell all (but not less than all) of his Class B Units to the Company. In the
event that Xx. Xxxxxx delivers to the Company the notice specified in the
immediately preceding sentence within the Xxxxxx Option Period, the Company
shall effect such purchase no earlier than 10 and no later than 60 days
following the expiration of the Xxxxxx Option Period. The purchase price for all
of Xx. Xxxxxx'x then outstanding Class B Units shall be an amount equal to the
"Xxxxxx Price" calculated as follows:
Xxxxxx Price = ( ( 7.9925 x 2005 EBITDA) - Debt Amount ) x BAUP, where:
"2005 EBITDA" equals the EBITDA of the Company and its wholly-owned subsidiaries
for the 2005 Fiscal Year;
"Debt Amount" equals the sum of (i) the aggregate amount of Indebtedness of the
Company and its wholly-owned subsidiaries and all accrued but unpaid interest
thereon and (ii) the aggregate "liquidation preference" of all preferred shares
of the Company and its subsidiaries and all accumulated but unpaid dividends
thereon (for the avoidance of doubt, "preferred shares" shall not include the
Class A Units);
"BAUP" equals the percentage determined by dividing (A) the number of
outstanding Class B Units held by Xx. Xxxxxx by (B) the sum of the aggregate
number of outstanding vested Class A Units, Class B Units, Class C Units and any
other Units held by Members; and
"Indebtedness" means all indebtedness that matures more than one year from the
date of its creation.
(b) If (x) the Xxxxxx Option Period shall have expired and Xx. Xxxxxx
shall not have delivered to the Company the notice specified in this Section
10.1 or (y) at the scheduled closing of the sale of the Units to the Company
pursuant to this Section 10.1, Xx. Xxxxxx fails to consummate the sale, then the
right granted to Xx. Xxxxxx pursuant to this Section 10.1 shall expire and
become null and void.
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Section 10.2 Holding's Obligation to Purchase. Holding shall be jointly
and severally liable with the Company with respect to the Company's obligation
to pay the purchase price under Section 10.1.
ARTICLE XI
OCM HOLDER PUT OPTION
Section 11.1 Put Option. Provided that the Company Offeror has not
previously consummated an initial public offering, during any OCM Option Period,
OCM Holders holding Units which (collectively) constitute an Aggregate Unit
Percentage of at least one percent shall have the right to cause the Company to
purchase all (but not less than all) of the Units held by such OCM Holders;
provided, however, that, notwithstanding anything to the contrary in this
Article XI, the rights contained in this Section 11.1 may only be exercised in
three Fiscal Years (regardless of the number of OCM Holders that participate in
any such Fiscal Year); provided further, that OCM Holders may not exercise the
rights contained in this Section 11.1 more than once in any Fiscal Year
(regardless of the number of OCM Holders that participate in such Fiscal Year).
To exercise such right, an OCM Holder must notify the Company in writing during
an OCM Option Period that it wishes to sell all (but not less than all) of its
Units to the Company; and, upon receipt of such a notice, the Company shall
notify the other OCM Holders that an OCM Holder has exercised its rights under
this Section 11.1. In the event that an OCM Holder delivers to the Company the
notice specified in the immediately preceding sentence within the OCM Option
Period, the Company shall (i) engage the Independent Appraiser to prepare a
written report setting forth the Fair Market Value of the Company and its
subsidiaries (taken as a whole) and (ii) no earlier than 10 and no later than 60
days following the preparation of the written report specified in the
immediately preceding subclause, effect such purchase. The Independent Appraiser
shall be instructed to deliver its report as to Fair Market Value within 20
Business Days of its engagement. The purchase price for each participating OCM
Holder's Units shall be the amount such OCM Holder would receive under Section
13.2(c)(ii) and 6.4 hereof if the Company were liquidated for its Fair Market
Value (assuming the vesting of all then unvested outstanding Units, if any) (the
"OCM Purchase Price"). If at the scheduled closing of the sale of the Units to
the Company pursuant to this Section 11.1, an OCM Holder fails to consummate the
sale, then the right granted to such OCM Holder pursuant to this Section 11.1
shall expire and become null and void. Notwithstanding the foregoing, in lieu of
OCM's right to put its Units, OCM may instead require the Company to purchase
all of the outstanding OCM Shares from its holders for the OCM Purchase Price.
Section 11.2 Holding's Right to Purchase. In the event that an OCM
Holder delivers to the Company the notice specified in the second sentence of
Section 11.1 hereof, Holding shall have the right to cause the Company to
delegate to Holding (or its designee) the obligation to purchase such OCM
Holder's Units (or, in the case of OCM, OCM Shares if applicable) (or, in any
case, a portion thereof). To exercise such right, Holding must notify the
Company in writing no later than five days after the preparation of the written
report specified in subclause (ii) of the third sentence of
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Section 11.1 hereof that it wishes to purchase such Units, (or, in the case of
OCM, OCM Shares if applicable) (or, in any case, a portion thereof). In the
event that Holding timely delivers to the Company the notice specified in the
immediately preceding sentence, Holding (or its designee) shall effect such
purchase no earlier than 10 and no later than 60 days following the delivery by
Holding of such notice. Nothing in this Section 11.2 shall relieve the Company
of its obligations under Section 11.1 hereof.
ARTICLE XII
PUT OPTION UPON SALE OF HOLDCO
Section 12.1 Put Option Upon Sale of Holdco.
(a) Provided that the Company Offeror has not previously consummated an
initial public offering, in the event that Mafco proposes to effect a sale
(whether directly as a sale of equity securities of Holdco or indirectly through
a merger, consolidation, reorganization, business combination or comparable
transaction involving Holdco) of all or a portion of its equity securities in
Holdco (a "Holdco Offer") to any Third Party, Mafco shall cause the Third
Party's offer to be reduced to writing, which writing shall specify the number
of Units which the Third Party would indirectly acquire through the acquisition
of equity securities of Holdco (for example, if the Third Party proposed to
acquire 50% of the equity securities of Holdco and Holdco held 80 Units, the
Third Party would indirectly acquire 40 Units) (the "Held Units"). Mafco shall
send written notice of the Holdco Offer (the "Holdco Put Notice") to the Members
not later than the 20th Business Day prior to the date of the consummation of
the sale contemplated by the Holdco Offer. The Holdco Put Notice shall set forth
the consideration that would be indirectly paid by the Third Party on a per Held
Unit basis (the "Held Unit Purchase Price") and the other material terms and
conditions of the Holdco Offer. Notwithstanding anything to the contrary
contained herein, in the event that Mafco or any of its Affiliates sells equity
securities of Holdco to a Third Party with the primary purpose of making such
Third Party an Affiliate of Holdco such that subsequent sales to such Third
Party would not be subject to this Section 12.1, then, solely for purposes of
this Section 12.1, such sale shall not result in such Third Party becoming an
Affiliate of Holdco.
(b) At any time within ten Business Days after receipt of the Holdco
Put Notice by a Member (such Member's "Holdco Put Period"), each Member (other
than Holdco) shall have the right (the "Holdco Put Option") to cause Holdco to
purchase up to the number of Units as is determined in accordance with the
provisions of Section 12.1(c) hereof. To exercise such right, a Member must
notify Holdco in writing prior to the end of the Holdco Put Period specifying
the number of Units such Member wishes Holdco to purchase from it. In the event
that a Member delivers to Mafco the notice specified in the immediately
preceding sentence within the Holdco Put Period, Mafco shall cause Holdco (or
its designee) to effect such purchase concurrently with the consummation of the
sale contemplated by the Holdco Offer at the Held Unit Purchase Price. If at the
scheduled closing of the sale contemplated by the Holdco Offer such Member fails
to consummate the sale, then the right granted to such Member pursuant to
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this Section 12.1 with respect to such Holdco Offer shall expire and become null
and void. If the Holdco Offer is not consummated, Holdco (or its designee) shall
have no obligation to purchase any Member's Units pursuant to this Section 12.1.
(c) If a Member elects to sell Units to Holdco (or its designee)
pursuant to the Holdco Put Option, such Member shall have the right to sell up
to that number of vested and outstanding Units equal to the product of (A) the
number of Held Units and (B) such Member's Aggregate Unit Percentage. In
determining whether Units are vested for purposes of the calculation in the
preceding sentence, the Holdco Offer which is the subject of this Section 12.1
shall be deemed to have been consummated.
(d) If within ten Business Days after the receipt of the Holdco Put
Notice by a Member, such Member has not provided to Mafco the notice specified
in the second sentence of Section 12.1(b) hereof, such Member shall be deemed to
have waived any and all rights under this Section 12.1 with respect to the
Holdco Offer which is the subject thereof.
(e) Each Member exercising its Holdco Put Option pursuant to this
Section 12.1 shall pay its pro rata share (based on the number of Held Units
sold) of the expenses incurred by Holdco in connection with the Holdco Offer and
shall be obligated to join on a pro rata basis (based on the number of Held
Units sold) in the indemnification or other obligations that Holdco agrees to
provide in connection with such Holdco Offer (other than any such obligations
that relate specifically to a particular Member such as indemnification with
respect to representations and warranties given by another Member regarding such
Member's title to and ownership of such Member's Units).
(f) Notwithstanding the foregoing, in lieu of OCM's right to cause
Holdco to purchase its Units, at OCM's option, OCM may instead require Holdco to
purchase OCM Shares from its holders. In the event that OCM exercises this
right, the number of OCM Shares to be acquired by Holdco shall bear the same
proportion to the aggregate outstanding OCM Shares as the number of Units that
would otherwise have been sold by OCM pursuant to subsection (c) bears to the
total number of Units held by OCM. The price to be paid by Holdco for such OCM
Shares shall be the same as the price that would have been paid for the
corresponding Units pursuant to subsection (b).
Section 12.2 Certain Agreement. Mafco shall not sell capital securities
of any entity that directly or indirectly holds capital securities of
SpectaGuard Holding to any Third Party.
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ARTICLE XIII
DISSOLUTION
Section 13.1 Dissolution. The Company shall be dissolved in accordance
with Section 13.2 hereof upon the occurrence of any of the following events
(each, an "Event of Termination"):
(a) a determination by Holding to dissolve the Company; or
(b) the entry of a decree of judicial dissolution under Section 18-802
of the Delaware Act.
Section 13.2 Liquidation.
(a) Upon an Event of Termination pursuant to Section 13.1 hereof, the
Board shall wind up the Company's affairs; provided, however, that a reasonable
time shall be allowed for the orderly liquidation of the Company and the
satisfaction of all liabilities to creditors so as to enable the Members to
minimize the normal losses attendant upon a liquidation. The Members shall
continue to share Net Profits and Net Losses during liquidation, as specified in
Section 6.1 and Section 6.2 hereof. Each Member shall be furnished with a
statement audited by the Auditors that shall set forth the assets and
liabilities of the Company as of the date of dissolution. Each Member shall pay
to the Company all amounts then owing by it to the Company.
(b) Upon dissolution of the Company, Holding may, in the name of, and
for and on behalf of, the Company, prosecute and defend suits, whether civil,
criminal or administrative, settle and close the Company's business, dispose of
and convey the Company's property, discharge or make reasonable provision for
the Company's liabilities, and distribute to the Members in accordance with
Section 13.2(c) hereof any remaining assets of the Company, all without
affecting or increasing any liability or obligation of the Members, including
any Member participating in the winding up of the Company's affairs, and shall
comply with the provisions of Section 18-804(b) of the Delaware Act.
(c) Proceeds shall be distributed:
(i) to creditors of the Company, including Members who are
creditors, to the extent permitted by law, in satisfaction of
liabilities of the Company, whether by payment or by establishment of
adequate reserves, other than liabilities for distributions to Members
and former members under Section 18-601 or Section 18-604 of the
Delaware Act; and
(ii) the balance, if any, to the Members in accordance with
Section 6.4 hereof.
Section 13.3 Guaranteed Payment. In the event that the amount
distributed to any Member pursuant to Section 13.2(c)(ii) hereof is in excess of
such
43
Member's Capital Account balance (after the Company has made all allocations
under Section 6.1 and 6.2 hereof for the current Fiscal Year or portion
thereof), such excess shall be treated as a guaranteed payment by the Company to
such Member for federal income tax purposes and any deduction associated with
such guaranteed payment shall be specially allocated among the Members who have
Capital Account balances (after the Company has made all other allocations under
Section 6.1 and 6.2 hereof for the current Fiscal Year or portion thereof) in
excess of the amount distributed to them pursuant to Section 13.2(c)(ii) hereof,
in proportion to such excess.
Section 13.4 Certificate of Cancellation. Within ninety (90) days
following the dissolution and the commencement of winding up of the Company, or
at any time there are no Members, certificates of cancellation shall be filed
with the Secretary of State of the State of Delaware under Section 18-203 of the
Delaware Act.
Section 13.5 Claims of the Members. The Members shall look solely to
the Company's assets for the return of their capital contributions, 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
capital contributions, the Members shall have no recourse against the Company or
any other Member or any other Person. No Member with a negative balance in such
Member's Capital Account shall have any obligation to the Company or to the
other Members or to any creditor or other Person to restore such negative
balance upon dissolution or termination of the Company or otherwise.
ARTICLE XIV
EXCULPATION AND INDEMNIFICATION
Section 14.1 Exculpation. Notwithstanding any other provisions of this
Agreement, whether express or implied, or obligation or duty at law or in
equity, no Manager or Member, nor any officer, director, stockholder, partner,
employee, representative or agent of the Company or any of its Subsidiaries or
of any Manager or Member, or of any of their respective Affiliates
(individually, a "Covered Person" and, collectively, the "Covered Persons")
shall be liable to the Company or any other Person for any act or omission
(relating to the Company and the conduct of its business, this Agreement, any
related document or any transaction contemplated hereby or thereby) taken or
omitted to be taken in good faith by a Covered Person in the reasonable belief
that such act or omission was in or not opposed to the best interests of the
Company, provided that such act or omission is not found by a court of competent
jurisdiction to constitute fraud, willful misconduct, bad faith or gross
negligence.
Section 14.2 Indemnification. To the fullest extent permitted by law,
the Company shall indemnify and hold harmless each Covered Person from and
against any and all losses, claims, demands, liabilities, expenses, judgments,
fines, settlements and other amounts arising from any and all claims, demands,
actions, suits or proceedings, civil, criminal, administrative or investigative
("Claims"), in which the Covered Person may be involved, or threatened to be
involved, as a party or otherwise, by reason of its
44
management of the affairs of the Company or any of its Subsidiaries or which
relates to or arises out of the Company or any of its Subsidiaries or any of
their respective properties, businesses or affairs. A Covered Person shall not
be entitled to indemnification under this Section 14.2 with respect to any Claim
in which such Covered Person is found by a court of competent jurisdiction to
have engaged in fraud, willful misconduct, bad faith or gross negligence.
Expenses incurred by a Covered Person in investigating or defending any Claim
shall be paid by the Company in advance of the final disposition of such Claim
upon receipt by the Company of an undertaking by or on behalf of such Covered
Person to repay such amount if it shall be ultimately determined that such
Covered Person is not entitled to be indemnified by the Company as authorized by
this Section 14.2.
ARTICLE XV
MISCELLANEOUS
Section 15.1 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(i) when delivered personally or by private courier, (ii) when actually
delivered by registered or certified United States mail, return receipt
requested, or (iii) when sent by telecopy (provided that it is confirmed by a
means specified in clause (i) or (ii)), addressed as follows:
If to the Company to:
Allied Security Holdings LLC
0000 Xxxxxxx Xxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Xxxxxxxxxxx X. Xxxxx
If to Mafco or Holding, to:
Mafco Holdings Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
45
With a copy (in the case of the Company, Holding and
Mafco) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq. and
Xxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to any Management Member, to the address of such
Management Member specified on Exhibit A hereto;
If to DGD, HG, BFS or OCM, to the address specified
for such person on Exhibit A hereto;
or to such other address as such party may indicate by a written notice
delivered to the other parties hereto.
Section 15.2 Public Announcements; Confidentiality.
(a) No Member shall disclose or permit the disclosure of any of the
terms of this Agreement or of any other confidential, non-public or proprietary
information relating to the other Members, the Company, the Company's
Subsidiaries, or the business of the Company or its Subsidiaries (collectively,
"Confidential Information"); provided, however, that such disclosure may be made
(i) to any Person who is a partner, officer, director or employee of such Member
or counsel to or accountants of such Member, provided that such Persons are
notified of the Members' confidentiality obligations hereunder, (ii) subject to
Section 15.2(b) hereof, pursuant to a subpoena or order issued by a court,
arbitrator or governmental body, agency or official, (iii) to any lender (and
its partners, officers, directors, employees, counsel and accountants) providing
financing to the Member or its Affiliates, or (iv) as may be required under law
or the rules of any stock exchange upon which the securities of any Member (or
its direct or indirect parent company) are listed.
(b) In the event that a Member shall receive a request to disclose any
Confidential Information under a subpoena or order, such Member shall (i)
promptly notify the Board thereof, (ii) consult with the Board on the
advisability of taking steps to resist or narrow such request and (iii) if
disclosure is required or deemed advisable by the Member, cooperate with the
Board in any attempt it may make to obtain an order or other assurance that
confidential treatment will be accorded the Confidential Information that is
disclosed. In the event such Member is compelled to disclose such Confidential
Information, such Member shall use all reasonable efforts to cause disclosure
only of such minimal amount of Confidential Information as is required to be so
disclosed.
Section 15.3 Corporate Opportunities. Each Member acknowledges and
agrees that Mafco and its Affiliates will have substantial business interests
and business
46
opportunities outside of the Company and Mafco and its Affiliates (other than
Holding) may be afforded the opportunity to purchase, invest or otherwise
participate in other businesses and business opportunities, entirely for each of
their own respective accounts or with other Persons, some or all of which may be
deemed similar or related to or compatible or competitive with one or more of
the business activities conducted by the Company. Each Member agrees that Mafco
and its Affiliates shall be under no duty or obligation to disclose or offer to
the Company or any Member any opportunity to purchase, invest or otherwise
participate in any other businesses or business opportunities, whether or not
similar or related to or compatible or competitive with any of the present or
future business activities of the Company, and in no event shall Mafco or its
Affiliates be liable to any Member or its Affiliates by reason of their
purchase, investment or other participation in any other such business or
business opportunity.
Section 15.4 Severability; Modification. If any provision(s) of this
Agreement shall for any reason be invalid or unenforceable in any jurisdiction,
such provision(s) shall be ineffective in such jurisdiction to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. Without limiting the
generality of the immediately preceding sentence, in the event that a court of
competent jurisdiction determines that the provisions of this Agreement would be
unenforceable as written because they cover too extensive a geographic area, too
broad a range of activities, or too long a period of time, or otherwise, then
such provisions will automatically be modified to cover the maximum geographic
area, range of activities, and period of time as may be enforceable, and, in
addition, such court is hereby expressly authorized so to modify this Agreement
and to enforce it as so modified.
Section 15.5 Cumulative Remedies. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.
Section 15.6 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of all of the parties and, to the extent permitted by this
Agreement, their successors, executors, administrators, heirs, legal
representatives and assigns.
Section 15.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
Section 15.8 Integration. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto,
including, without limitation, the Second Amended and Restated Operating
Agreement of SpectaGuard.
47
Section 15.9 Governing Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof.
(b) Each of the parties hereto irrevocably and unconditionally submits
to the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York or, if such court will not accept jurisdiction,
the Supreme Court of the State of New York, New York County or any court of
competent civil jurisdiction sitting in New York County, New York. In any
action, suit or other proceeding, each of the parties hereto irrevocably and
unconditionally waives and agrees not to assert by way of motion, as a defense
or otherwise any claims that it is not subject to the jurisdiction of the above
courts, that such action or suit is brought in an inconvenient forum or that the
venue of such action, suit or other proceeding is improper. Each of the parties
hereto also agrees that any final and unappealable judgment against a party
hereto in connection with any action, suit or other proceeding shall be
conclusive and binding on such party and that such award or judgment may be
enforced in any court of competent jurisdiction, either within or outside of the
United States. A certified or exemplified copy of such award or judgment shall
be conclusive evidence of the fact and amount of such award or judgment.
(c) EACH OF THE MEMBERS IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS AGREEMENT OR THE
ENFORCEMENT OF ANY PROVISION OF THIS AGREEMENT.
Section 15.10 Further Assurances. The Members and the Company shall
execute and deliver such further instruments and do such further acts and things
as may be required to carry out the intent and purpose of this Agreement.
Section 15.11 Certain Actions in connection with an Initial Public
Offering. In connection with and in order to facilitate an initial public
offering by a Company Offeror, each Member will take all such action as is
necessary (including the voting of all equity interests in the Company Offeror
owned by such person) in order to effect amendments to the Company Offeror's
organizational documents as are customary for a company which is to engage in an
initial public offering of its equity securities and which are reasonably
requested by the managing underwriters or by the Company or Holding in order to
expedite or facilitate the disposition of the equity securities of the Company
Offeror in connection with such offering, provided, however, that no Member
shall be required to take any actions not required from the other Members.
Section 15.12 Amendments and Waivers; Assignment.
(a) Except as provided below, any provision of this Agreement may be
amended or waived, in the case of an amendment, by the Board, or in the case of
a
48
waiver, by the party or parties against whom the waiver is to be effective;
provided, however, that the prior written consent of each Member shall be
required to amend:
(i) Section 2.8 hereof (Company Property);
(ii) Section 2.9 hereof (No State Law Partnership);
(iii) Section 3.3 hereof (No Liability of Members);
(iv) Section 3.4 hereof (Access to and Confidentiality of
Information; Records);
(v) Section 3.6 hereof (Representations, Warranties, Certain
Agreements of the Members);
(vi) Section 4.3 hereof (OCM Board Observer Right);
(vii) Section 5.2 hereof (Capital Contributions);
(viii) Section 5.3 hereof (Preemptive Rights);
(ix) Section 5.4 hereof (No Withdrawal of Capital
Contributions);
(x) Section 5.5 hereof (No Other Capital Contributions);
(xi) Section 5.6 hereof (Maintenance of Capital Accounts);
(xii) Article VI hereof (Allocations and Distributions);
provided, however, that the Board may amend Section 6.4 hereof in
connection with the issuance of additional Units or other interests of
the Company so long as such amendment does not adversely affect the
rights of holders of Series B Units and Series C Units under such
Section 6.4 hereof;
(xiii) Article VII hereof (Registration Rights);
(xiv) Section 8.2 hereof (Reporting Requirements);
(xv) Article IX hereof (Withdrawal; Transfers);
(xvi) Article X hereof (Xxxxxx Put Option);
(xvii) Article XI hereof (OCM Holder Put Option);
(xviii) Article XII hereof (Put Option Upon Sale of Holdco);
(xix) Article XIII hereof (Dissolution);
(xx) Article XIV hereof (Exculpation and Indemnification);
49
(xxi) Section 15.5 hereof (Cumulative Remedies);
(xxii) Section 15.6 hereof (Binding Effect);
(xxiii) Section 15.9 hereof (Governing Law; Submission to
Jurisdiction);
(xxiv) this Section 15.12; and
(xxv) Section 15.15 (Provisions Relating to Mafco).
(b) Notwithstanding Section 15.12(a) hereof, the prior written consent
of Mafco shall be required to amend Article XII hereof and this Section
15.12(b).
(c) No failure or delay by any party in exercising any right, power or
privilege hereunder (other than a failure or delay beyond a period of time
specified herein) shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
(d) Except as expressly provided in this Agreement, neither this
Agreement nor any rights or obligations hereunder may be assigned by the Members
and no such assignment shall relieve the assigning party of its obligations
hereunder if such assignee does not perform such obligations.
Section 15.13 Power of Attorney. By signing this Agreement, each Member
designates and appoints the Board as its true and lawful attorney, in its name,
place and stead, to make, execute, sign and file such instruments, documents or
certificates which may from time to time be required by the laws of the United
States of America and the State of Delaware and any political subdivision
thereof or any other state or political subdivision in which the Company shall
do business to carry out the purposes of this Agreement. The Board shall provide
to the Members copies of all documents executed pursuant to the power of
attorney contained in this Section 15.13.
Section 15.14 No Third Party Beneficiaries. Notwithstanding anything to
the contrary contained in this Agreement, no Person (other than a party hereto)
shall have any rights or remedies under this Agreement.
Section 15.15 Provisions Relating to Mafco. Mafco shall be a party to
this Agreement solely with respect to:
(a) Article XII hereof (Put Option Upon Sale of Holdco);
(b) Section 15.1 hereof (Notices);
(c) Section 15.12(b) hereof (Amendments and Waivers; Assignment); and
50
(d) Section 15.15 hereof (Provisions Relating to Mafco).
51
IN WITNESS WHEREOF, each party which is a natural person has
duly executed this Operating Agreement, and each other party has caused this
Operating Agreement to be duly executed on its behalf by their respective
authorized officers as of the date first above written.
SPECTAGUARD HOLDING CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
MAFCO HOLDINGS INC.
(in accordance with Section 15.15 hereof)
By: /s/ Xxxx X. Xxxxxxx
--------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
/s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
/s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
OCM SPECTA HOLDINGS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
/s/ Xxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
/s/ Xxxx X. Xxxxxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxxxxx
/s/ Xxxxxxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
/s/ Xxxxxx Xxxxxx
------------------------------
Name: Xxxxxx Xxxxxx
/s/ Xxxx Xxxxxx
------------------------------
Name: Xxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
BLACKSTONE SG MEZZANINE
CORPORATION
By: /s/ Xxxxxx Xxxxx
---------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
EXHIBIT A
MEMBERS, UNITS HELD AND AGGREGATE UNIT PERCENTAGES
AS OF AUGUST 2, 2004
Units Held
----------
Class C
Units Held
Class A Class B ----------
Member Units Held Units Held Vested Unvested
------ ---------- ---------- ------ --------
SpectaGuard Holding
Corporation 739,175.04 0 0 0
Blackstone SG Mezzanine
Corporation 13,779.14 0 0 0
Xxxxxx X. Xxxxxx 2,033.35 46,097.17 6,666 13,334
Xxxxx X. Xxxxx 0 0 1,500 6,000
Xxxx X. Xxxxxxxxxx 104.74 750.58 2,000 8,000
Xxxxxxxxxxx X. Xxxxx 0 0 0 7,500
Xxxxxxx Xxxxxx 87.28 625.48 1,500 6,000
Xxxxx X. Xxxxxxx 21.51 154.16 1,500 6,000
Xxxxxx Xxxxxx 122.89 880.61 1,500 6,000
Xxxx Xxxxxx 97.76 700.59 1,500 6,000
Xxxxxxx Xxxxxxxxx 73.18 524.40 2,000 8,000
Xxxxxxx X. Xxxxxxxx, Xx. 2,721.74 27,893.99 8,000 32,000
OCM Specta Holdings, Inc. 22,316.82 0 0 0
DGD 67,970.00 0 0 0
HG 25,489.00 0 0 0
BFS 16,993.00 0 0 0
TOTAL 890,985.45 77,626.98 26,166 98,834
Aggregate Unit
Member Percentages
------ -----------
SpectaGuard Holding
Corporation 74.3055%
Blackstone SG Mezzanine
Corporation 1.3851%
Xxxxxx X. Xxxxxx 5.5084%
Xxxxx X. Xxxxx 0.1508%
Xxxx X. Xxxxxxxxxx 0.2870%
Xxxxxxx Xxxxxx 0.2224%
Xxxxxxxxxxx X. Xxxxx 0.0000%
Xxxxx X. Xxxxxxx 0.1684%
Xxxxxx Xxxxxx 0.2517%
Xxxx Xxxxxx 0.2310%
Xxxxxxx X. Xxxxxxxxx 0.2611%
Xxxxxxx X. Xxxxxxxx, Xx. 3.8818%
OCM Specta Holdings, Inc. 2.2434%
DGD 6.8327%
HG 2.5623%
BFS 1.7082%
TOTAL 100.0000%
EXHIBIT B
BOOK CAPITAL
Member Amount Percentage
------ ------ ----------
SpectaGuard Holding
Corporation $112,889,851.39 83.9818%
Blackstone SG Mezzanine
Corporation $1,644,443.44 1.2233%
DGD $10,035,052.63 7.4653%
HG $3,763,183.28 2.7995%
BFS $2,508,836.32 1.8164%
OCM $2,709,826.01 2.0159%
Xxxxxx X. Xxxxxx $336,357.88 0.2502%
Xxxxxxx X. Xxxxxxxx, Xx. $432,865.93 0.3220%
Xxxxxxx X. Xxxxxxxxx $14,467.47 0.0108%
Xxxxxxxxxxx X. Xxxxx $5,000.00 0.0037%
Xxxxx X. Xxxxxxx $5,772.88 0.0043%
Xxxx X. Xxxxxxxxxx $19,269.12 0.0143%
Xxxxxx Xxxxxx $21,197.21 0.0158%
Xxxx Xxxxxx $17,374.91 0.0129%
Xxxxxxx Xxxxxx $15,780.53 0.0117%
Xxxxx X. Xxxxx $2,500.00 0.0019%
TOTAL $134,421,779.00 100.0000%
