Exhibit 10.27
EXECUTION COPY
XXXXXX ASSOCIATES, LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
DATED AS OF AUGUST 28, 2001
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS......................................................2
Section 1.1. Definitions.............................................2
ARTICLE II - ORGANIZATION AND GENERAL PROVISIONS............................20
Section 2.1. Continuation...........................................20
Section 2.2. Name...................................................21
Section 2.3. Term...................................................21
Section 2.4. Registered Agent and Registered Office.................21
Section 2.5. Principal Place of Business............................21
Section 2.6. Qualification in Other Jurisdictions...................21
Section 2.7. Purposes and Powers....................................21
Section 2.8. Title to Property......................................23
ARTICLE III - MANAGEMENT OF THE LLC.........................................23
Section 3.1. Management in General..................................23
Section 3.2. Management Committee of the LLC........................24
Section 3.3. Officers of the LLC....................................26
Section 3.4. Employees of the LLC...................................30
Section 3.5. Operation of the Business of the LLC...................31
Section 3.6. Compensation and Expenses of the Members...............39
Section 3.7. Other Business of the Manager Member and its
Affiliates............................................40
Section 3.8. Non-Manager Members and Non-Solicitation Agreements....40
Section 3.9. Non-Solicitation and Non-Disclosure by Non-Manager
Members and Employee Stockholders.....................41
Section 3.10. Remedies Upon Breach...................................45
Section 3.11. Purchase Provisions....................................46
Section 3.12. No Employment Obligation...............................57
Section 3.13. Capitalization of Excess Operating Cash Flow...........57
Section 3.14. Miscellaneous..........................................57
ARTICLE IV - CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS AND ALLOCATIONS;
DISTRIBUTIONS.........................................................58
Section 4.1. Capital Contributions..................................58
Section 4.2. Capital Accounts; Allocations..........................58
Section 4.3. Distributions..........................................63
Section 4.4. Distributions Upon Dissolution; Establishment of a
Reserve Upon Dissolution..............................64
Section 4.5. Proceeds from Capital Contributions and the Sale of
Securities; Insurance Proceeds; Certain Special
Allocations...........................................65
(i)
Page
Section 4.6. Tax Allocations........................................68
Section 4.7. Other Allocation Provisions............................68
Section 4.8. Withholding............................................68
ARTICLE V - TRANSFER OF LLC INTERESTS BY NON-MANAGER MEMBERS; RESIGNATION,
REDEMPTION AND WITHDRAWAL BY NON-MANAGER MEMBERS; ADMISSION OF
ADDITIONAL NON-MANAGER MEMBERS........................................68
Section 5.1. Transferability of Interests...........................68
Section 5.2. Substitute Non-Manager Members.........................71
Section 5.3. Allocation of Distributions Between Transferor and
Transferee; Successor to Capital Accounts.............72
Section 5.4. Resignation, Redemptions and Withdrawals...............72
Section 5.5. Issuance of Additional LLC Interests...................72
Section 5.6. Additional Requirements for Transfer or for Issuance...74
Section 5.7. Registration of LLC Interests..........................74
Section 5.8. Representation of Members..............................75
Section 5.9. Conversion of LLC Points...............................75
Section 5.10. Purchase Program Points................................76
ARTICLE VI - TRANSFER OF LLC INTERESTS BY THE MANAGER MEMBER; REDEMPTION,
REMOVAL AND WITHDRAWAL................................................77
Section 6.1. Transferability of Interest............................77
Section 6.2. Resignation, Redemption, and Withdrawal................79
ARTICLE VII - PUT OF LLC INTERESTS..........................................79
Section 7.1. Non-Manager Member Puts................................79
ARTICLE VIII - DISSOLUTION AND TERMINATION..................................85
Section 8.1. No Dissolution.........................................85
Section 8.2. Events of Dissolution..................................85
Section 8.3. Notice of Dissolution..................................86
Section 8.4. Liquidation............................................86
Section 8.5. Termination............................................86
Section 8.6. Claims of the Members..................................86
ARTICLE IX - RECORDS AND REPORTS............................................86
Section 9.1. Books and Records......................................86
Section 9.2. Accounting.............................................87
Section 9.3. Financial and Compliance Reports.......................87
Section 9.4. Meetings...............................................88
Section 9.5. Tax Matters............................................88
ARTICLE X - LIABILITY, EXCULPATION AND INDEMNIFICATION......................89
(ii)
Page
Section 10.1. Liability.............................................89
Section 10.2. Exculpation...........................................89
Section 10.3. Fiduciary Duty........................................89
Section 10.4. Indemnification.......................................90
Section 10.5. Notice; Opportunity to Defend and Expenses............90
Section 10.6. Miscellaneous.........................................91
ARTICLE XI - MISCELLANEOUS..................................................92
Section 11.1. Notices...............................................92
Section 11.2. Successors and Assigns................................92
Section 11.3. Amendments............................................92
Section 11.4. No Partition..........................................93
Section 11.5. No Waiver; Cumulative Remedies........................93
Section 11.6. Dispute Resolution....................................93
Section 11.7. Prior Agreements Superseded...........................94
Section 11.8. Captions..............................................94
Section 11.9. Counterparts..........................................94
Section 11.10. Applicable Law; Jurisdiction..........................94
Section 11.11. Interpretation........................................94
Section 11.12. Severability..........................................94
Section 11.13. Creditors.............................................95
Section 11.14. References to this Agreement..........................95
Section 11.15. Exhibits, Schedules and Annexes.......................95
Section 11.16. Additional Documents and Acts.........................95
Section 11.17. Managers..............................................95
Section 11.18. Guaranty of AMG.......................................96
EXHIBITS
Exhibit A - Equity Purchase Program
Exhibit B - Form of Non-Solicitation Agreement
Exhibit C - Form of Promissory Note for Purchases
Exhibit D - Form of Make-Whole Agreement
SCHEDULES
Schedule A - LLC Points and Capital Contributions
Schedule B - Designated Initial Member Matters
Schedule C - Model Purchase Calculation
(iii)
XXXXXX ASSOCIATES, LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
============================
This Amended and Restated Limited Liability Company Agreement (the
"Agreement") of Xxxxxx Associates, LLC (the "LLC" or the "Company") is made and
entered into as of August 28, 2001, to become effective as of (and subject to
the occurrence of) the Effective Time (as defined herein), by and among the
Persons identified as the Manager Member and the Non-Manager Members on SCHEDULE
A attached hereto as members of the LLC, and any Persons who may become members
of the LLC in the future in accordance with the provisions hereof.
WHEREAS, a limited liability company has been formed pursuant to the
Delaware Limited Liability Company Act, 6 DEL. C ss.18-101, ET SEQ., as it may
be amended from time to time and any successor to such Act (the "Act"), by
filing a Certificate of Formation of the LLC with the office of the Secretary of
State of the State of Delaware on May 1, 2001, and entering into a Limited
Liability Company Agreement of the LLC, dated as of June 1, 2001; and
WHEREAS, pursuant to the Purchase Agreement, AMG has agreed, in each case
on the terms and subject to the conditions set forth in the Purchase Agreement,
to cause FA (WY) Acquisition Company, Inc. ("FA (WY) Acquisition") to purchase
(i) from Xxxxxx Associates, Inc. ("FAI") (A) at the Closing, all of the LLC
Interests owned by FAI, other than those LLC Points to be held by FAI as of
immediately following the Effective Time (including the Preferred Capital
Account Balance associated with such retained LLC Points as of immediately
following the Effective Time) as set forth on SCHEDULE A hereto, and (B) at the
Subsequent Closing, certain additional LLC Points owned by FAI, and (ii) from
each of The Community Foundation of Xxxxxxx Hole and NCCF Support Inc. (each a
"Charity") at the Closing, all of the LLC Interests owned by such Charity; and
WHEREAS, pursuant to the Management Owner Purchase Agreement, AMG has
agreed, on the terms and subject to the conditions set forth in the Management
Owner Purchase Agreement, to cause FA (WY) Acquisition to purchase from the
Management Owners (other than Xxxxxx Xxxxxx) at the Closing all of the LLC
Interests owned by such Management Owners; and
WHEREAS, the Members desire to continue the LLC as a limited liability
company under the Act and to amend and restate the Limited Liability Company
Agreement of the LLC, dated as of June 1, 2001, in its entirety as herein set
forth, such amendment and restatement to become effective as of, and subject to
the occurrence of, the Effective Time; and
WHEREAS, prior to the Effective Time and pursuant to the Purchase
Agreement, the LLC will enter into a services agreement with the DE LLC (the
"Services Agreement") pursuant to which, from and after the Effective Time, the
DE LLC will perform various sub-advisory, sub-administrative and other
investment management-related services for the LLC (all as more fully described
in the Services Agreement) and be compensated for said services from and after
the Effective Time in the manner provided for in the Services Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration of the mutual
covenants hereinafter set forth, the parties hereby agree as follows:
ARTICLE I - DEFINITIONS.
SECTION 1.1. DEFINITIONS. Unless the context otherwise requires, the terms
defined in this Article I shall, for the purposes of this Agreement, have the
meanings herein specified.
"1940 ACT" shall mean the Investment Company Act of 1940, as it may be
amended from time to time, and any successor to such act.
"ACT" shall have the meaning specified in the recitals hereto.
"ADDITIONAL NON-MANAGER MEMBERS" shall have the meaning specified in
Section 5.5 hereof.
"ADVISERS ACT" shall mean the Investment Advisers Act of 1940, as it may
be amended from time to time, and any successor to such act.
"AFFILIATE" shall mean, with respect to any person or entity (herein the
"first party"), any other person or entity that directly or indirectly controls,
or is controlled by, or is under common control with, such first party. The term
"control" as used herein (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to (a)
vote twenty-five percent (25%) or more of the outstanding voting securities of
such person or entity, or (b) otherwise direct the management or policies of
such person or entity by contract or otherwise. For purposes of this Agreement,
the LLC is not an Affiliate of any Member; provided, however, that the LLC and
the DE LLC shall be deemed Affiliates of each other for purposes of this
Agreement. For purposes of this Agreement, FAI and FAID shall at all times be
deemed Affiliates of each other and of Xxxxxx Xxxxxx.
"AGREEMENT" shall have the meaning specified in the preamble hereto.
"AMG" shall mean Affiliated Managers Group, Inc., a Delaware corporation,
and any successors or assigns thereof.
"AMG SHARES" shall mean shares of AMG's common stock, par value $.01 per
share.
"APPLICABLE AGGREGATE NON-MANAGER MEMBER ALLOCATION PERCENTAGE" shall
mean, as of the date of any transaction described in Section 4.2(e) hereof, the
quotient (expressed as a percentage) obtained by dividing (i) the aggregate
number of Vested LLC Points held by the Non-Manager Members (other than FAI) as
of the date of such transaction by (ii) the number of Vested LLC Points
outstanding as of the date of such transaction.
"APPLICABLE CASH FLOW" shall have the meaning specified in Section
3.11(c)(i)(B) hereof.
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"APPLICABLE MANAGER MEMBER ALLOCATION PERCENTAGE" shall mean, as of the
date of any transaction described in Section 4.2(e) hereof, the quotient
(expressed as a percentage) obtained by dividing (i) the aggregate number of
Vested LLC Points held by the Manager Member and its Affiliates as of the date
of such transaction by (ii) the number of Vested LLC Points outstanding as of
the date of such transaction.
"APPLICABLE FAI ALLOCATION PERCENTAGE" shall mean, as of the date of any
transaction described in Section 4.2(e) hereof, the quotient (expressed as a
percentage) obtained by dividing (i) the number of Vested LLC Points held by FAI
as of the date of such transaction by (ii) the number of Vested LLC Points
outstanding as of the date of such transaction.
"APPLICABLE NEW INVESTED FUNDS" shall mean the one hundred and fifty five
million dollars ($155,000,000) newly invested by FAI, FAID, Xxxxxx Xxxxxx and
Xxxxxxxx Xxxxxx at the Effective Time in registered investment companies
sponsored and managed by the LLC pursuant to Section 1.6(b) of the Purchase
Agreement, together with all appreciation/depreciation, capital gains/losses,
dividends, interest and other earnings thereon from and after the Effective Time
(other than any "Tax Withdrawals" (as defined in the Purchase Agreement)).
"APPLICABLE SERIES A AGGREGATE NON-MANAGER MEMBER ALLOCATION PERCENTAGE"
shall mean, as of the date of any transaction described in Section 4.2(e)
hereof, the quotient (expressed as a percentage) obtained by dividing (i) the
aggregate number of Vested Series A LLC Points held by the Non-Manager Members
holding Series A LLC Points (other than FAI) as of the date of such transaction
by (ii) the number of Vested LLC Points outstanding as of the date of such
transaction.
"ASSERTED LIABILITY" shall have the meaning specified in Section 10.5(a)
hereof.
"AVERAGE AMG STOCK PRICE" shall have the meaning specified in Section
7.1(i) hereof.
"BASE OWNERS' ALLOCATION" shall mean, for any period, the Owners'
Allocation for that period minus the Performance Owners' Allocation for that
period (determined on an accrual basis in accordance with GAAP consistently
applied); PROVIDED, HOWEVER, that, for purposes of all calculations and
valuations required to be performed pursuant to (i) Section 3.11 hereof, (ii)
Section 7.1 hereof, (iii) any "Put Option Agreements" (or similar agreements)
entered into between the Manager Member and any Employee Stockholder or
Non-Manager Member, or (iv) any "Make-Whole Bonus Agreements" (or similar
agreements) entered into between the Manager Member and any Employee Stockholder
or Non-Manager Member, the "Base Owners' Allocation" shall be adjusted downward
to exclude in all respects any revenues derived by the LLC, the DE LLC or any of
their respective Controlled Affiliates from management of Applicable New
Invested Funds during all applicable periods (and, for the avoidance of doubt,
all purchase prices and other payments made pursuant to any such section of this
Agreement or other agreement shall thereby be reduced by virtue of the exclusion
of such revenues derived from management of Applicable New Invested Funds).
"CAPITAL ACCOUNT" shall mean the capital account maintained by the LLC
with respect to each Member in accordance with the capital accounting rules
described in Section 4.2 hereof.
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"CAPITAL CONTRIBUTION" shall mean, as to each Member, the amount of money
and/or the agreed fair market value of any property (net of any liabilities
encumbering such property that the LLC is considered to assume or take subject
to) contributed to the capital of the LLC by such Member.
"CARRYING VALUE" shall mean, with respect to any LLC asset, the asset's
adjusted basis for federal income tax purposes, except that the Carrying Values
of all LLC assets shall be adjusted to equal their respective Fair Market Values
in accordance with the rules set forth in Treasury Regulations Section
1.704-1(b)(2)(iv)(f), except as otherwise provided herein, immediately prior to:
(a) the date of the acquisition of any additional LLC Interest by any new or
existing Member in exchange for more than a de minimis Capital Contribution; (b)
the date of the distribution of more than a de minimis amount of LLC property
(other than a pro rata distribution) to a Member; or (c) the date of the
termination of the LLC under Section 708(b)(1)(B) of the Code, provided that
adjustments pursuant to clauses (a) and (b) above shall be made only if the
Manager Member reasonably determines that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Members. The
Carrying Value of any LLC asset distributed to any Member shall be adjusted
immediately prior to such distribution to equal its Fair Market Value.
"CEO" shall have the meaning specified in Section 3.3 hereof.
"CERTIFICATE" shall mean the Certificate of Formation of the LLC filed
under the Act, as the same may be amended and/or restated from time to time in
accordance with the terms hereof.
"CHARITY" shall have the meaning specified in the recitals hereto.
"CLAIMS NOTICE" shall have the meaning specified in Section 10.5(a)
hereof.
"CLIENT" shall mean all Past Clients, Present Clients and Potential
Clients, subject to the following general rules: (i) with respect to each
Client, the term shall also include any Persons which are known to the Employee
Stockholder to be Affiliates of such Client, directors, officers or employees of
such Client or any such Affiliates thereof, or Persons who are members of the
Immediate Family of any of the foregoing Persons or Affiliates of any of them;
(ii) with respect to any Client that is a collective investment vehicle
(provided that, for the avoidance of doubt, a 401(k) retirement plan shall not
itself be considered a "collective investment vehicle" except to the extent a
particular Employee Stockholder or Non-Manager Member (as applicable) has actual
knowledge of the identities of investors therein), the term shall also include
any investor or participant in such Client (provided that, in the case of any
collective investment vehicle that is a registered investment company, an
investor or participant therein shall not be deemed a "Client" hereunder unless
such investor or participant has in the aggregate at least $500,000 under
management by the LLC and its Controlled Affiliates (whether through investments
in registered investment companies or otherwise)); and (iii) with respect to any
Client that is a trust or similar entity, the term shall include the settlor and
each of the beneficiaries of such Client and the Affiliates and Immediate Family
members of any such Persons.
"CLOSING" shall have the meaning specified in the Purchase Agreement.
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"CODE" OR "INTERNAL REVENUE CODE" shall mean the United States Internal
Revenue Code of 1986, as from time to time amended, and any successor thereto,
together with all regulations promulgated thereunder.
"COMMITTEE VOTE" shall have the meaning specified in Section 3.2(b)(iv)
hereof.
"COMPANY" shall have the meaning specified in the preamble hereto.
"CONSENTING PERCENTAGE" shall have the meaning specified in the Purchase
Agreement (PROVIDED, HOWEVER, that, solely for purposes of the use of such term
in this Agreement and any "Put Option Agreements" (or similar agreements)
entered into between the Manager Member and any Employee Stockholder or
Non-Manager Member, the Consenting Percentage shall be recalculated as of the
Closing True-Up Date (as defined in the Purchase Agreement) to take into account
any increase thereto resulting from the inclusion of any Applicable Excluded
Contracts as of such date).
"CONTINGENT CONSIDERATION" shall mean, with respect to the Manager
Member's (or its assignee's) purchase of LLC Points pursuant to Section 3.11 or
Section 7.1 (as applicable), an obligation on the part of the Manager Member (or
its successor or assigns) to pay to the Selling Member (or its successors or
assigns) on the Liquidation Date, an amount equal to the lesser of:
(i) the portion of the Purchase Price indicated in Section
3.11(f)(i)(D), Section 3.11(f)(ii), Section 3.11(f)(iii)(B) or Section
7.1(f)(ii)(B), as applicable; or
(ii) the amount calculated in clause (i) of this definition,
multiplied by a fraction, (A) the numerator of which is the Applicable
Cash Flow measured for the twenty-four (24) months (in the case of Base
Owners' Allocation), or the thirty-six (36) months (in the case of Earned
Performance Owners' Allocation), ending on the last day of the most
recently completed calendar quarter prior to the Liquidation Date, and (B)
the denominator of which is the Applicable Cash Flow measured for the
twenty-four (24) months (in the case of Base Owners' Allocation), or the
thirty-six (36) months (in the case of Earned Performance Owners'
Allocation), ending on the last day of the calendar quarter in which the
termination of the Selling Member's (or its related Employee
Stockholder's, as applicable) employment with the LLC occurred.
Notwithstanding any provision of this Agreement to the contrary
(including, without limitation, the provision of Section 3.11(f) hereof), the
Manager Member may (without the need for any vote or consent of any Member or
Members) assign and delegate its obligation to pay the Contingent Consideration
(including, by way of example and not of limitation, to a transferee of LLC
Interests pursuant to Section 6.1(a)).
In the event that a change is made in the definition of Applicable Cash
Flow following the date on which a Contingent Consideration obligation initially
is outstanding, an appropriate adjustment will be made to that Contingent
Consideration obligation to give effect to that change in definition. Such an
adjustment will be made by the Manager Member in its sole discretion, and such
adjustment will be binding on all parties absent a mathematical error. The
Manager
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Member will notify all persons who owe or are owed Contingent Consideration of
any such adjustment.
"CONTROLLED AFFILIATE" shall mean, with respect to a Person, any Affiliate
of such Person with respect to which such Person possesses (directly or
indirectly) the power to direct the management or relevant policies of such
Affiliate (by ownership of voting securities, by contract or otherwise);
PROVIDED, HOWEVER, that no bona fide collective investment vehicle in which at
least a majority in interest of the economic interests are held by third parties
shall be deemed a Controlled Affiliate of the LLC. For the avoidance of doubt,
the DE LLC shall not be deemed a Controlled Affiliate of the LLC.
"CONVERT" shall have the meaning specified in Section 5.9, hereof, and
"Conversion" shall have the corresponding meaning.
"COVERED PERSON" shall mean a Member, any Affiliate of a Member, any
officer, director, shareholder, partner, employee or member of a Member or any
of its Affiliates, any member of the Management Committee or any Officer.
"DE LLC" shall mean Xxxxxx Associates of Delaware, LLC, a Delaware limited
liability company.
"DE LLC AGREEMENT" shall mean the Amended and Restated Limited Liability
Company Agreement of the DE LLC of even date herewith, as the same may be
amended from time to time in accordance with the terms thereof.
"DE LLC INTEREST" shall have the meaning specified in the DE LLC
Agreement.
"DE LLC MANAGER MEMBER" shall mean the "Manager Member" of the DE LLC, as
such term is defined in the DE LLC Agreement.
"DE LLC POINTS" shall have the meaning specified in the DE LLC Agreement.
"DESIGNATED INITIAL MEMBER" shall mean each of FAI, Xxxxxxx X'Xxxxxx, Xxxx
Xxxxxx and Xxx Xxxx.
"EARNED PERFORMANCE OWNERS' ALLOCATION" shall mean, with respect to a
calendar quarter in which any fees or other payments falling within the
definition of Performance Owners' Allocation have been definitively allocated to
or earned by the LLC and are no longer subject to any offset, reduction or
return, an amount equal to such definitively allocated or earned Performance
Owners' Allocation.
"EFFECTIVE TIME" shall mean the time of the Closing under the Purchase
Agreement.
"ELIGIBLE PERSON" shall have the meaning specified in Section 3.2(b)(i)
hereof.
"EMPLOYEE STOCKHOLDER" shall mean (a) in the case of any Non-Manager
Member which is a natural person, such Non-Manager Member, and (b) in the case
of any Non-Manager Member which is not a natural person, that certain employee
of the LLC or the DE LLC who is
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the settlor of or the owner of issued and outstanding capital stock of, or other
equity interests in, such Non-Manager Member and is listed as such on SCHEDULE A
hereto (including any such employee after such employee has transferred any of
his or her interest in such Non-Manager Member to a Permitted Transferee) (and
each such Employee Stockholder agrees to cause his or her related Non-Manager
Member to comply with the provisions of this Agreement applicable to such
Non-Manager Member).
"EMPLOYMENT AGREEMENT" shall have the meaning ascribed thereto in the
Purchase Agreement.
"EQUITY PURCHASE PROGRAM" shall mean the LLC's Equity Purchase Program in
the form attached hereto as EXHIBIT A.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor to such Act.
"FA (WY) ACQUISITION" shall have the meaning specified in the recitals
hereto.
"FAI" shall have the meaning specified in the recitals hereto.
"FAID" shall mean Xxxxxx Associates of Delaware, Inc., a Delaware
corporation.
"FAIR MARKET VALUE" shall mean the fair market value as reasonably
determined by the Manager Member or, for purposes of Section 4.4 hereof, if
there shall be no Manager Member, the Liquidating Trustee.
"FOR CAUSE" shall mean, with respect to the termination of an Employee
Stockholder's employment with the LLC or with the DE LLC, or his or her removal
from the Management Committee or from his or her position as an Officer, any of
the following:
(a) The Employee Stockholder has engaged in any criminal act
which is or involves a violation of federal or state securities laws or
regulations (or equivalent laws or regulations of any country or political
subdivision thereof), embezzlement, fraud, wrongful taking or
misappropriation of property, theft or any other crime involving
dishonesty or other serious felony offense and has been convicted (whether
or not subject to appeal) or pled nolo contendre (or any similar plea) to
any criminal offense in connection with or relating to such act;
(b) The Employee Stockholder has (i) persistently and
willfully failed to perform his or her duties or (ii) failed to devote
substantially all of his or her working time to the performance of such
duties, and in either such case such failure has continued for a period of
not less than thirty (30) days following written notice (provided that the
Manager Member shall consult with the Management Committee to the extent
practicable prior to making a determination that the actions of an
Employee Stockholder constitute "Cause" under this paragraph (b)), except,
in the case of an Employee Stockholder who is a party to an Employment
Agreement or a Non-Solicitation Agreement, as may be specifically
permitted by the terms of such Employment Agreement or Non-Solicitation
Agreement; or
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(c) The Employee Stockholder has (i) engaged in a Prohibited
Competition Activity, (ii) violated or breached any material provision of
his or her Employment Agreement or Non-Solicitation Agreement or of this
Agreement or the DE LLC Agreement, or (iii) engaged in any of the
activities prohibited by Section 3.9 hereof resulting (or reasonably
likely to result) (solely in the case of this clause (iii)) in harm that
is not immaterial or insignificant to AMG, the Manager Member, the LLC,
the DE LLC or any of their respective Controlled Affiliates.
"GAAP" shall mean U.S. generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY" shall mean any foreign, federal, state or local
court, governmental authority or regulatory body.
"IMMEDIATE FAMILY" shall mean, with respect to any natural person, (a)
such person's spouse, parents, grandparents, children, grandchildren and
siblings, (b) such person's former spouse(s) and current spouses of such
person's children, grandchildren and siblings and (c) estates, trusts,
partnerships and other entities of which a majority of the interests are held
directly or indirectly by the foregoing.
"INDEBTEDNESS" shall mean, with respect to a Person, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price of property
or services (other than current trade liabilities incurred in the ordinary
course of business and payable in accordance with customary practices), (b) any
other indebtedness of such Person which is evidenced by a note, bond, debenture
or similar instrument, (c) all obligations of such Person under any financing
leases, (d) all obligations of such person in respect of acceptances issued or
created for the account of such Person, (e) all obligations of such Person under
non-competition agreements reflected as liabilities on a balance sheet of such
Person in accordance with GAAP, (f) all liabilities secured by any Lien on any
property owned by such Persons even though such Person has not assumed or
otherwise become liable for the payment thereof, and (g) all net obligations of
such Person under interest rate, commodity, foreign currency and financial
markets swaps, options, futures and other hedging obligations.
"INDEPENDENT PUBLIC ACCOUNTANTS" shall mean PricewaterhouseCoopers, or
such other independent certified public accountant as may be retained by the LLC
in the future with the prior written approval of the Manager Member.
"INITIAL DE LLC POINTS" shall mean "Initial LLC Points," as defined in the
DE LLC Agreement.
"INITIAL LLC POINTS" means, with respect to a Non-Manager Member and its
Permitted Transferees, those Series B LLC Points held by such Non-Manager Member
in the LLC at the Effective Time together with any Series A LLC Points resulting
from the Conversion of such Series B LLC Points and, with respect to FAI, the
Subsequent Purchase LLC Points, provided that LLC Points shall cease to be
Initial LLC Points from and after the date on which they are acquired by the
Manager Member (or its assignee) or Transferred to any other Person who is not a
Permitted Transferee of the transferor.
"INITIAL MEMBERS" shall mean those Persons who are Members at the
Effective Time.
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"INITIAL PUT LLC POINTS" shall have the meaning specified in Section
7.1(d) hereof.
"INTELLECTUAL PROPERTY" shall have the meaning specified in Section 3.9(d)
hereof.
"INVESTMENT MANAGEMENT SERVICES" shall mean any services which involve (a)
the management of an investment account or fund (or portions thereof or a group
of investment accounts or funds) for compensation, (b) the giving of advice with
respect to the investment and/or reinvestment of assets or funds (or any group
of assets or funds) for compensation or (c) otherwise acting as an "investment
adviser" within the meaning of the Advisers Act, and performing activities
related or incidental thereto.
"IRS" shall mean the Internal Revenue Service of the United States
Department of the Treasury, and any successor Governmental Authority thereto.
"LIEN" shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing) or any
other restrictions, liens or claims of any kind or nature whatsoever, excluding
liens of lessors under operating leases that do not extend beyond the property
leased. Notwithstanding the foregoing, the following items shall not constitute
Liens under this Agreement (i) Liens for taxes, assessments, governmental
charges or claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which an
adequate reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; (ii) statutory Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
similar Liens arising in the ordinary course of business and with respect to
amounts not yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which an
adequate reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made; and (iii) statutory Liens incurred in
the ordinary course of business in connection with workers' compensation,
unemployment insurances and other types of social security.
"LIQUIDATION DATE" shall mean (a) the date upon which the final
distribution is made to the Members under Section 4.4 hereof, or (b) the date of
the closing of a transaction under the second paragraph of Section 6.1(a).
"LIQUIDATION PREFERENCE" shall mean, as of any time of determination, an
amount equal to the sum of (i) the aggregate positive Capital Account balances
of those Members holding Series A LLC Points and/or Series B-1 LLC Points as of
such time of determination (or an allocable portion thereof, in the case of any
Member holding both Series A LLC Points and Series B-1 LLC Points, on the one
hand, and Series B-2 LLC Points, on the other hand, at such time of
determination), plus (ii) one hundred million dollars ($100,000,000), plus (iii)
accretion at a rate of ten percent (10%) per annum, calculated from the
Effective Time through such time of determination, on a principal amount equal
to the aggregate positive Capital Account balances as
9
of the Effective Time of those Members holding Series A LLC Points and/or Series
B-1 LLC Points plus one hundred million dollars ($100,000,000) (compounded
annually).
"LIQUIDATING TRUSTEE" shall have the meaning specified in Section 8.4
hereof.
"LLC" shall have the meaning specified in the preamble hereto.
"LLC INTEREST" means a Member's limited liability company interest in the
LLC, which includes such Member's LLC Points (whether vested or unvested) as
well as such Member's Capital Account and other rights under this Agreement and
the Act.
"LLC POINTS" shall mean, collectively, the Series A LLC Points and the
Series B LLC Points (including the Series B-1 LLC Points and the Series B-2 LLC
Points) authorized by the LLC pursuant hereto, entitling the holders thereof to
the relative rights, title and interests in the profits, losses, deductions and
credits of the LLC at any particular time as are set forth in this Agreement,
and any and all other benefits to which a holder thereof may be entitled as a
Member as provided in this Agreement (including, without limitation, certain
voting rights as set forth herein). With respect to a particular Member as of
any date, "LLC Points" shall mean the aggregate number of Series A LLC Points,
Series B-1 LLC Points and Series B-2 LLC Points belonging to such Member as set
forth on SCHEDULE A hereto, as amended from time to time in accordance with the
terms hereof, and as in effect on such date.
"LOSSES" shall have the meaning specified in Section 10.4 hereof.
"MAJORITY VOTE" shall mean the affirmative approval, by vote or written
consent, of Non-Manager Members holding a majority of the outstanding LLC Points
then held by all Non-Manager Members.
"MANAGEMENT COMMITTEE" shall have the meaning specified in Section 3.2(a)
hereof.
"MANAGEMENT OWNER PURCHASE AGREEMENT" shall mean that certain Management
Owner Purchase Agreement, dated as of August 28, 2001, by and among AMG and each
of the Management Owners (other than Xxxxxx Xxxxxx), as the same may be amended
from time to time.
"MANAGEMENT OWNERS" shall have the meaning ascribed thereto in the
Purchase Agreement.
"MANAGER MEMBER" shall mean FA (WY) Acquisition, and any Person who
becomes a successor Manager Member as provided herein; PROVIDED, HOWEVER, that
if any Affiliate of the Manager Member shall at any time hold LLC Points, such
LLC Points shall be treated in the identical manner as LLC Points held by the
Manager Member for all purposes under this Agreement (including without
limitation the allocation provisions contained in Section 4.2 hereof, the
distribution provisions contained in Sections 4.3 and 4.4 hereof, and the
transfer provisions contained in Section 6 hereof).
"MEMBERS" shall mean any Person admitted to the LLC as a "member" within
the meaning of the Act, which includes the Manager Member and the Non-Manager
Members (unless otherwise indicated), and includes any Person admitted as a
substitute Non-Manager
10
Member or an Additional Non-Manager Member pursuant to the provisions of this
Agreement, in such Person's capacity as a member of the LLC (unless otherwise
indicated). For purposes of the Act, the Members shall constitute one (1) class
or group of members.
"NON-MANAGER MEMBER" shall mean any Person admitted to the LLC as a Member
pursuant to the terms hereof, other than the Manager Member.
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Treasury
Regulations Section 1.704-2(b). The amount of Nonrecourse Deductions for a
partnership taxable year equals the net increase, if any, in the amount of
Partnership Minimum Gain during that partnership taxable year, reduced (but not
below zero) by the aggregate distributions made during the year of proceeds of a
nonrecourse liability that are allocable to an increase in Partnership Minimum
Gain, determined according to the provisions of Treasury Regulations Section
1.704-2(c).
"NON-SOLICITATION AGREEMENT" shall have the meaning ascribed thereto in
the Purchase Agreement.
"NOTICE DEADLINE" shall have the meaning specified in Section 7.1(d)
hereof.
"NOTICES" shall have the meaning specified in Section 11.1 hereof.
"OFFICERS" shall have the meaning specified in Section 3.3 hereof.
"OPERATING ALLOCATION" shall mean, for any period, an amount equal to the
sum of (i) the difference between Revenues From Operations for such period and
the Owners' Allocation for such period plus (ii) any amounts expressly required
by the proviso to the definition of "Revenues From Operations" to be added in
their entirety directly to the Operating Allocation for such period (rather than
constituting Revenues From Operations for such period).
"OWNERS' ALLOCATION" shall mean, for any period, the sum of (i) the
Owners' Allocation Percentage multiplied by the Revenues From Operations for
such period plus (ii) any amounts expressly required by the proviso to the
definition of "Revenues From Operations" to be added in their entirety directly
to the Owners' Allocation for such period (rather than constituting Revenues
From Operations for such period); PROVIDED, HOWEVER, that, for purposes of all
calculations and valuations required to be performed pursuant to (i) Section
3.11 hereof, (ii) Section 7.1 hereof, (iii) any "Put Option Agreements" (or
similar agreements) entered into between the Manager Member and any Employee
Stockholder or Non-Manager Member, or (iv) any "Make-Whole Bonus Agreements" (or
similar agreements) entered into between the Manager Member and any Employee
Stockholder or Non-Manager Member, the "Owners' Allocation" shall be adjusted
downward to exclude in all respects any revenues derived by the LLC, the DE LLC
or any of their respective Controlled Affiliates from management of Applicable
New Invested Funds during all applicable periods (and, for the avoidance of
doubt, all purchase prices and other payments made pursuant to any such section
of this Agreement or other agreement shall thereby be reduced by virtue of the
exclusion of such revenues derived from management of Applicable New Invested
Funds).
11
"OWNERS' ALLOCATION EXPENDITURE" shall have the meaning specified in
Section 3.5(c) hereof.
"OWNERS' ALLOCATION PERCENTAGE" shall mean sixty two and one-half percent
(62.5%).
"PARTNER NONRECOURSE DEBT MINIMUM GAIN" shall mean an amount with respect
to each partner nonrecourse debt (as defined in Treasury Regulations Section
1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such
partner nonrecourse debt were treated as a nonrecourse liability (as defined in
Treasury Regulations Section 1.752-1(a)(2)) determined in accordance with
Treasury Regulations Section 1.704-2(i)(3).
"PARTNER NONRECOURSE DEDUCTIONS" shall have the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2).
"PARTNERSHIP MINIMUM GAIN" shall have the meaning set forth in Treasury
Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
"PAST CLIENT" shall mean at any particular time, any Person who at any
point prior to such time had been an advisee or investment advisory customer of,
or otherwise a recipient of Investment Management Services from, the LLC or the
DE LLC (including, without limitation, either of their predecessors, FAI and
FAID, or any predecessor thereto) or a Controlled Affiliate of the LLC, the DE
LLC or any such predecessor, but at such time is not an advisee or investment
advisory customer or client of, or recipient of Investment Management Services
from, the LLC, the DE LLC or any of their Controlled Affiliates (directly or
indirectly).
"PERFORMANCE OWNERS' ALLOCATION" shall mean the product of (i) the sum of
(a) all "carried interests" and other items of gain allocated (directly or
indirectly) to the LLC, the DE LLC and any Controlled Affiliates of the LLC or
the DE LLC (other than allocations which are made pro rata based on contributed
capital to all partners, members, beneficiaries or other holders of similar
economic interests in a Client) and (b) all "performance fee" and other payments
based, in whole or in part, on the investment performance of a Client or
Client's account, multiplied by (ii) the Owners' Allocation Percentage);
PROVIDED, HOWEVER, that, for purposes of all calculations and valuations
required to be performed pursuant to (i) Section 3.11 hereof, (ii) Section 7.1
hereof, (iii) any "Put Option Agreements" (or similar agreements) entered into
between the Manager Member and any Employee Stockholder or Non-Manager Member,
or (iv) any "Make-Whole Bonus Agreements" (or similar agreements) entered into
between the Manager Member and any Employee Stockholder or Non-Manager Member,
the "Performance Owners' Allocation" shall be adjusted downward to exclude in
all respects any revenues derived by the LLC, the DE LLC or any of their
respective Controlled Affiliates from management of Applicable New Invested
Funds during all applicable periods (and, for the avoidance of doubt, all
purchase prices and other payments made pursuant to any such section of this
Agreement or other agreement shall thereby be reduced by virtue of the exclusion
of such revenues derived from management of Applicable New Invested Funds).
"PERMANENT INCAPACITY" shall mean, with respect to an Employee
Stockholder, that such Employee Stockholder has been permanently and totally
unable, by reason of injury, illness or other similar cause (determined pursuant
to the process set forth in the following sentence) to
12
have performed his or her substantial and material duties and responsibilities
for a period of three hundred sixty-five (365) consecutive days, which injury,
illness or similar cause (as determined pursuant to such process) also would
render such Employee Stockholder incapable of operating in a similar capacity
during the twelve-month period following such three hundred sixty-five (365)
days. The foregoing determination shall be made by a licensed physician selected
jointly by the Management Committee and the Manager Member (in the case of a
termination of an Employee Stockholder's employment with the LLC, if such
Employee Stockholder is employed by the LLC), or in the manner provided for in
the definition of "Permanent Incapacity" contained in the DE LLC Agreement (in
the case of a termination of an Employee Stockholder's employment with the DE
LLC, if such Employee Stockholder is employed by the DE LLC); PROVIDED, HOWEVER,
that if such Employee Stockholder is employed by the LLC and the Manager Member
or the LLC (with the prior written consent of the Manager Member granted after
the Effective Time) has purchased lump-sum key-man disability insurance with
respect to such Employee Stockholder, which policy is then in effect, then such
determination shall be made either (i) by an agreement between such physician
and a physician selected by the insurance company with which the Manager Member
or the LLC has entered into such insurance policy, or, if the two physicians
cannot arrive at an agreement, a third physician will be chosen by the first two
physicians, and the majority decision of the three physicians will then be
binding, or (ii) if a different procedure is then required under such insurance
policy, then by using such other procedure as may then be required by the
insurance company issuing such policy.
"PERMITTED TRANSFEREE" shall mean, with respect to any Non-Manager Member,
its transferees pursuant to the provisions of Sections 5.1(b) and 5.1(c) hereof
and, solely to the extent expressly so provided in any consent of either the
Management Committee or the Manager Member pursuant to Section 5.1(a), its
transferees pursuant to Section 5.1(a) hereof (and in the absence of such an
express provision, transferees pursuant to the provisions of Section 5.1(a)
shall not be deemed "Permitted Transferees" of the transferor Non-Manager Member
hereunder).
"PERSON" means any individual, partnership (limited or general),
corporation, limited liability company, limited liability partnership,
association, trust, joint venture, unincorporated organization or other entity.
"POTENTIAL CLIENT" shall mean, at any particular time, any Person to whom
the LLC or the DE LLC (including, without limitation, either of their
predecessors, FAI and FAID, or any predecessors thereto), a Controlled Affiliate
of the LLC or the DE LLC or any such predecessor, or any director, officer
employee, agent or consultant (or persons acting in any similar capacity) of any
such Person (acting on their behalf), has, within two (2) years prior to such
time, offered (whether by means of a personal meeting or by telephone call,
letter, written proposal or otherwise) to provide Investment Management
Services, but who is not at such time an investment advisory customer of, or
otherwise a recipient of Investment Management Services from, the LLC, the DE
LLC or any of their Controlled Affiliates (directly or indirectly). The
preceding sentence is meant to exclude (i) advertising, if any, through mass
media in which the offer, if any, is available to the general public, such as
magazines, newspapers and sponsorships of public events and (ii) "cold calls"
and mass-mailing form letters, in each case to the extent not directed towards
any particular Person and not resulting in an indication of interest or a
request for further information.
13
"PREFERRED CAPITAL ACCOUNT BALANCE" shall mean (i) with respect to the
Manager Member, (A) the WY LLC Closing Purchase Price plus (B) from and after
the date of the Subsequent Purchase, the WY LLC Subsequent Purchase Price, (ii)
with respect to FAI, (A) the WY LLC Closing Purchase Price multiplied by 49/51,
minus (B) from and after the date of the Subsequent Purchase, the dollar amount
determined in clause (A) multiplied by 19/49, and (iii) with respect to each
other Non-Manager Member, $0.
"PRESENT CLIENT" shall mean, at any particular time, any Person who is at
such time an advisee or investment advisory customer of, or otherwise a
recipient of Investment Management Services from, the LLC, the DE LLC or any of
their Controlled Affiliates (directly or indirectly).
"PROGRAM PUT LLC POINTS" shall have the meaning specified in Section
7.1(d) hereof.
"PROGRAM TRANSFER" shall have the meaning specified in Section 7.1(c)
hereof.
"PROHIBITED COMPETITION ACTIVITY" shall mean any of the following
activities:
(a) directly or indirectly, whether as owner, part owner,
member, director, officer, trustee, employee, agent or consultant for or
on behalf of any Person other than the LLC, the DE LLC or any of their
Controlled Affiliates: (i) diverting or taking away any funds or
investment accounts with respect to which the LLC, the DE LLC or any of
their Controlled Affiliates is performing Investment Management Services
(other than funds of which the applicable Employee Stockholder or
Non-Manager Member and/or members of its Immediate Family are the sole
beneficial owners, subject to any applicable restrictions relating thereto
set forth in the Purchase Agreement); or (ii) soliciting any Person to
divert or take away any such funds or investment accounts (other than
funds of which the applicable Employee Stockholder or Non-Manager Member
and/or members of its Immediate Family are the sole beneficial owners,
subject to any applicable restrictions relating thereto set forth in the
Purchase Agreement); or
(b) directly or indirectly, whether as owner, part owner,
partner, member, director, officer, trustee, employee, agent or consultant
for or on behalf of any Person other than the LLC, the DE LLC or any of
their Controlled Affiliates, performing any Investment Management Services
(provided that an Employee Stockholder who directly performs Investment
Management Services for his or her own account or a member of his or her
Immediate Family without a fee or other remuneration, shall not be
considered to have engaged in a Prohibited Competition Activity).
"PURCHASE" shall have the meaning specified in Section 3.11(a).
"PURCHASE AGREEMENT" shall mean that certain Purchase Agreement, dated as
of August 28, 2001, by and among AMG, FAI and its stockholders, FAID and its
stockholders and the Charities, as the same may be amended from time to time.
"PURCHASE AGREEMENTS" shall mean, collectively, the Purchase Agreement and
the Management Owner Purchase Agreement.
"PURCHASE CLOSING DATE" shall have the meaning specified in Section
3.11(b).
14
"PURCHASE PRICE" shall have the meaning specified in Section 3.11(c).
"PURCHASE PROGRAM POINTS" shall mean Series B-2 LLC Points that have been
sold and transferred pursuant to the Equity Purchase Program, together with any
Series A LLC Points resulting from the Conversion of such Series B-2 LLC Points
following their sale and transfer pursuant to the Equity Purchase Program;
provided that LLC Points shall cease to be Purchase Program Points at such time
as they are purchased by the Manager Member (or its assignee) pursuant to
Section 3.11 or Section 7.1 of this Agreement from a Member who acquired such
Purchase Program Points in a sale and transfer pursuant to the Equity Purchase
Program (but thereafter shall continue to be LLC Points notwithstanding such
purchase).
"PURCHASE PROGRAM POINTS FMV" shall have the meaning set forth in Section
3.11(c)(iv).
"PURCHASE PROGRAM PUT LLC POINTS" shall have the meaning specified in
Section 7.1(d).
"PURCHASE PROGRAM SALE" shall have the meaning specified in Section
7.1(c).
"PURCHASE RESERVE" shall mean the number of Series B-2 LLC Points
available for sale and transfer pursuant to the Equity Purchase Program at any
time. At the Effective Time, there are 5,000 Series B-2 LLC Points in the
Purchase Reserve (all of which are outstanding and held by FAI as of the
Effective Time (subject to subsequent Conversion to Series A LLC Points on the
fifth (5th) anniversary of the Effective Time if such LLC Points continue to be
held by FAI), subject to Conversion to Series B-2 LLC Points pursuant to Section
5.9 hereof upon sale and transfer pursuant to the Equity Purchase Program).
"PUT" shall have the meaning specified in Section 7.1(a) hereof.
"PUT LLC POINTS" shall have the meaning specified in Section 7.1(d)
hereof.
"PUT NOTICE" shall have the meaning specified in Section 7.1(d) hereof.
"PUT PRICE" shall have the meaning specified in Section 7.1(e) hereof.
"PUT PURCHASE DATE" shall have the meaning specified in Section 7.1(b)
hereof.
"REGULATORY ALLOCATIONS" shall have the meaning specified in Section
4.5(f) hereof.
"REMOVAL FOR ACTING CONTRARY TO THE BEST INTERESTS OF THE LLC" shall mean,
with respect to a Non-Manager Member, a determination by (i) the Management
Committee (excluding for all purposes the Non-Manager Member whose removal is
being considered (or its related Employee Stockholder, as applicable), other
than in the case of any Designated Initial Member, who shall be permitted to
participate in such determination in accordance with Section 3.3 hereof), with
the prior written consent of the Manager Member granted after the Effective
Time, or (ii) the Manager Member, in either such case to remove such Non-Manager
Member as a member of the LLC following a termination of the employment of such
Non-Manager Member (or the Employee Stockholder which is related to such
Non-Manager Member, as applicable) after the Non-Manager Member (or its related
Employee Stockholder, as applicable) has engaged in
15
conduct falling within the definition of For Cause hereunder or been found to
have engaged in Unsatisfactory Performance hereunder.
"REMOVAL UPON THE INSTRUCTION OF THE MANAGEMENT COMMITTEE" shall mean,
with respect to a Non-Manager Member, a determination by the Management
Committee (excluding for all purposes the Non-Manager Member whose removal is
being considered (or its related Employee Stockholder, as applicable) other than
in the case of any Designated Initial Member, who shall be permitted to
participate in such determination in accordance with Section 3.3 hereof), with
the prior written consent of the Manager Member granted after the Effective
Time, to remove such Non-Manager Member as a member of the LLC following a
termination of the employment of such Non-Manager Member (or the Employee
Stockholder which is related to such Non-Manager Member, as applicable) with the
LLC for any reason other than those described in the definition of Removal For
Acting Contrary to the Best Interests of the LLC (and, for the avoidance of
doubt, any Purchase under Section 3.11 hereof following a termination at the
election of the LLC of the employment of a Non-Manager Member (or its related
Employee Stockholder) for any reason other than those described in the
definition of Removal For Acting Contrary to the Best Interests of the LLC shall
be deemed a Removal Upon the Instruction of the Management Committee).
"RETIREMENT" shall mean (i) with respect to an Employee Stockholder who is
employed by the LLC, the termination by such Employee Stockholder of such
Employee Stockholder's employment with the LLC (a) after the date such Employee
Stockholder shall have been continuously employed by the LLC for a period of
fifteen (15) years commencing with the later of the Effective Time or the date
such Employee Stockholder commenced his or her employment with the LLC (not
including its predecessors, FAI and FAID), as applicable, except to the extent a
period shorter than fifteen (15) years has been expressly specified (with the
Manager Member's prior written consent granted after the Effective Time in its
sole discretion, provided that the Manager Member also shall be deemed to have
consented after the Effective Time to those Retirement dates expressly set forth
in the Employment Agreements and Non-Solicitation Agreements of even date
herewith that have been executed by FA (WY) Acquisition or FA (DE) Acquisition)
in any Employment Agreement or Non-Solicitation Agreement entered into between
the LLC and such Employee Stockholder (in which case such shorter period shall
apply in lieu of such fifteen (15) year period), and (b) pursuant to a written
notice given to the LLC and the Manager Member not less than one (1) year prior
to the date of such termination (or such longer notice period as may be
expressly specified in such Employee Stockholder's Employment Agreement or
Non-Solicitation Agreement with the Manager Member's prior written consent
granted after the Effective Time in its sole discretion), and (ii) with respect
to an Employee Stockholder who is employed by the DE LLC, such Employee
Stockholder's retirement in accordance with the provisions therefor included in
the definition of "Retirement" contained in the DE LLC Agreement.
"REVENUES FROM OPERATIONS" shall mean, for any period, the sum of (i) the
consolidated gross revenues of the LLC and any Controlled Affiliates thereof
(excluding any portion of the gross revenues of a Controlled Affiliate of the
LLC attributable to minority equity interests therein held by Persons other than
the LLC, the DE LLC, the Non-Manager Members or any of their respective
Affiliates or Immediate Family members, in each case except to the extent
otherwise agreed to in writing by the Management Committee and the Manager
Member after
16
the Effective Time), and (ii) the consolidated gross revenues of the DE LLC and
any Controlled Affiliates thereof (to the extent not already included pursuant
to clause (i) of this definition) (excluding any portion of the gross revenues
of a Controlled Affiliate of the DE LLC attributable to minority equity
interests therein held by Persons other than the DE LLC, the LLC, the Members or
any of their respective Affiliates or Immediate Family members, and excluding
Services Payments received by the DE LLC), in each case determined on an accrual
basis in accordance with GAAP consistently applied (but including other income
such as interest, dividend income and proceeds from the sale of assets, except
to the extent otherwise expressly provided in the following proviso); PROVIDED,
HOWEVER, that Revenues From Operations shall not include (a) proceeds from the
sale, exchange or other disposition of all, or substantially all, of the assets
of the LLC and its Controlled Affiliates and the DE LLC and its Controlled
Affiliates (and any such proceeds shall be allocated in accordance with Sections
4.2(e) and 4.2(f) hereof), (b) revenues from the issuance by the LLC of
additional LLC Points, other LLC Interests or other securities issued by the LLC
or any of its Controlled Affiliates (and any such proceeds shall be utilized in
accordance with Section 4.5(g) hereof), (c) payments received pursuant to
insurance policies the premiums on which were paid from Operating Allocation (or
the ratable portion attributable to those premiums paid out of the Operating
Allocation, if not entirely paid out of the Operating Allocation) (and any such
payments shall be added directly to the Operating Allocation for the period in
which they are received), other than payments received pursuant to business
interruption or similar insurance (payments on which shall constitute Revenues
From Operations), (d) payments received pursuant to key-man life or disability
insurance policies the premiums on which were paid from Owners' Allocation (or
the ratable portion attributable to those premiums paid out of the Owners'
Allocation, if not entirely paid out of the Owners' Allocation) (and any such
payments shall be distributed in accordance with Section 4.5(h) hereof), (e)
payments received from third parties (other than FAI, FAID, either of the
Charities or any of the Management Owners) to the extent constituting direct
reimbursements of expenses previously paid from the Operating Allocation (and
any such payments shall be added directly to the Operating Allocation for the
period in which they are received), (f) payments received from FAI, FAID, either
of the Charities or any of the Management Owners by reason of indemnification
obligations under the Purchase Agreement or the Management Owner Purchase
Agreement (as applicable) (however provided, including pursuant to one of the
offset mechanisms specified in Section 13 of the Purchase Agreement or Section
10 of the Management Owner Purchase Agreement resulting in such funds being
retained by the LLC instead of being paid to any such Person) (and any such
payments shall be deemed an adjustment to the Purchase Price under the Purchase
Agreement and a corresponding Capital Contribution to the LLC by the Manager
Member, and shall be utilized in accordance with the last paragraph of Section
3.5(c)), (g) proceeds from the sale of any tangible asset of the LLC, the DE LLC
or any of their respective Controlled Affiliates (other than in connection with
a sale, exchange or other disposition of all, or substantially all, of the
assets of the LLC and its Controlled Affiliates and the DE LLC and its
Controlled Affiliates) (i) for a sale price of at least $25,000 and (ii) solely
to the extent such proceeds are (or are reasonably expected to be) used to
purchase a similar replacement asset of the LLC, the DE LLC or any of their
respective Controlled Affiliates within a reasonable period of time following
such sale (and any such proceeds shall, to that extent, be added directly to the
Operating Allocation for the period in which they are used for the purchase of
such similar replacement asset, provided that such proceeds shall be returned to
Revenues From Operations if not so used within a reasonable period of time), (h)
solely to the extent the
17
Manager Member and the Management Committee have (in their respective sole
discretions) each agreed in writing following the Effective Time to such an
exclusion from Revenues From Operations in connection with the establishment of
a particular distribution fee arrangement relating to a registered investment
company, any fees received pursuant to a written distribution plan established
under Rule 12b-1 under the Investment Company Act of 1940 or a written agreement
providing for payment of "service fees" (within the meaning of Rule 2830 of the
National Association of Securities Dealers), in each case solely to the extent
such distribution or service fees are directly offset by payments made to third
parties (other than the LLC, the DE LLC, any Member or any of their respective
Affiliates or Immediate Family members) in respect of distribution services
provided to such registered investment company (and any such fees shall, to that
extent, be added directly to the Operating Allocation for the period in which
they are used to make such offsetting payments to third parties) and (i)
interest payments made by the LLC or the DE LLC to the other in respect of any
Working Capital Loans outstanding from time to time (and any such payments shall
be added directly to the Operating Allocation for the period in which they are
accrued).
"SEC" shall mean the Securities and Exchange Commission, and any successor
Governmental Authority thereto.
"SECURITIES ACT" shall mean the Securities Act of 1933, as it may be
amended from time to time, and any successor thereto.
"SELLING MEMBER" shall have the meaning specified in Section 3.11(a).
"SERIES A LLC POINTS" shall mean, as of any date, with respect to a
Member, the number of Series A LLC Points of such Member as set forth on
Schedule A hereto, as amended from time to time in accordance with the terms
hereof, and as in effect on such date. Series A LLC Points shall have the rights
and preferences set forth in this Agreement, but except where otherwise
specified shall be treated as one class of LLC Points with the Series B-1 LLC
Points and the Series B-2 LLC Points.
"SERIES B LLC POINTS" shall mean, as of any date, with respect to a
Member, the aggregate number of Series B-1 LLC Points and Series B-2 LLC Points
of such Member as set forth on Schedule A hereto, as amended from time to time
in accordance with the terms hereof, and as in effect on such date. Series B LLC
Points shall have the rights and preferences set forth in this Agreement, but
except where otherwise specified shall be treated as one class of LLC Points
with the Series A LLC Points.
"SERIES B-1 LLC POINTS" shall mean, as of any date, with respect to a
Member, the number of Series B-1 LLC Points of such Member as set forth on
Schedule A hereto, as amended from time to time in accordance with the terms
hereof, and as in effect on such date. Series B-1 LLC Points shall have the
rights and preferences set forth in this Agreement, but except where otherwise
specified shall be treated as one class of LLC Points with the Series B-2 LLC
Points and the Series A LLC Points.
"SERIES B-2 LLC POINTS" shall mean, as of any date, with respect to a
Member, the number of Series B-2 LLC Points of such Member as set forth on
Schedule A hereto, as amended
18
from time to time in accordance with the terms hereof, and as in effect on such
date. Series B-2 LLC Points shall have the rights and preferences set forth in
this Agreement, but except where otherwise specified shall be treated as one
class of LLC Points with the Series B-1 LLC Points and the Series A LLC Points.
"SERVICES AGREEMENT" shall have the meaning specified in the recitals
hereto.
"SERVICES PAYMENTS" shall mean payments required to be made to the DE LLC
pursuant to the Services Agreement.
"STOCK PRICE" shall have the meaning specified in Section 7.1(i) hereof.
"SUBSEQUENT CLOSING" shall have the meaning specified in the Purchase
Agreement.
"SUBSEQUENT PURCHASE" shall have the meaning specified in the Purchase
Agreement.
"SUBSEQUENT PURCHASE LLC POINTS" shall mean those Series A LLC Points held
by FAI to be purchased in the Subsequent Purchase pursuant to the Purchase
Agreement.
"TRANSFER" shall have the meaning specified in Section 5.1 hereof, and
"Transferred" shall have the correlative meaning.
"UNSATISFACTORY PERFORMANCE" shall mean (i) in the case of a termination
of an Employee Stockholder's employment with the LLC (if such Employee
Stockholder is employed by the LLC), a written determination by the CEO, with
the written consent of the Manager Member granted after the Effective Time, that
an Employee Stockholder has failed to meet minimum requirements of satisfactory
performance of his or her job, after such Employee Stockholder has received
written notice (with a copy to the Manager Member) that the Management Committee
was considering such a determination and the Employee Stockholder has had a
reasonable opportunity to respond in writing or in person (at such Employee
Stockholder's request) after his or her receipt of such notice, and (ii) in the
case of a termination of an Employee Stockholder's employment with the DE LLC
(if such Employee Stockholder is employed by the DE LLC), a determination of
unsatisfactory performance made in accordance with the provisions therefor
included in the definition of "Unsatisfactory Performance" contained in the DE
LLC Agreement.
"VESTED DE LLC POINTS" shall have the meaning specified in the DE LLC
Agreement.
"VESTED LLC POINTS" shall mean, at any time and with respect to any
Member, the number of LLC Points held by such Member which have vested at such
time, as determined pursuant to an agreement among the LLC, the Manager Member
and such Member in connection with the issuance or transfer of such LLC Points,
and "Vested Series A LLC Points", "Vested Series B LLC Points", "Vested Series
B-1 LLC Points" and "Vested Series B-2 LLC Points" shall have the corresponding
meanings. The number of Vested LLC Points held by each member and the vesting
schedule with respect to LLC Points which are not vested, shall be indicated on
SCHEDULE A hereto, which Schedule shall be updated by the Manager Member as
additional LLC Points are issued and/or vest from time to time. For the
avoidance of doubt, (i) all of the Initial LLC Points shall be deemed Vested LLC
Points as of the Effective Time (including any such Initial LLC Points that are
subsequently Transferred pursuant to the Equity Purchase Program),
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(ii) any outstanding LLC Points held by the Manager Member or any of its
Affiliates shall be deemed Vested LLC Points while held by any of such Persons,
and (iii) any outstanding LLC Points which have not yet vested as of any time of
determination shall nonetheless be deemed outstanding LLC Points (but not
"Vested LLC Points") as of such time of determination for all purposes under
this Agreement.
"WORKING CAPITAL LOAN" shall mean a loan made by the LLC to the DE LLC, or
by the DE LLC to the LLC, in either case on arms' length terms either (i) in the
reasonable discretion of the Management Committee and the "Management Committee"
of the DE LLC, if such loan is to be made out of the Operating Allocation, or
(ii) with the prior written consent of the Manager Member and the Management
Committee granted after the Effective Time (in each of their sole discretion),
if such loan is to be made out of the Owners' Allocation of the LLC, PROVIDED
that, in either such case, the documentation relating to such loan shall be
written and shall be in form and substance reasonably satisfactory to the
Manager Member and the Management Committee (and to the "Manager Member" and the
"Management Committee" of the DE LLC) and approved by each of them in writing
after the Effective Time.
"WY LLC CLOSING PURCHASE PRICE" shall have the meaning specified in the
Purchase Agreement.
"WY LLC SUBSEQUENT PURCHASE PRICE" shall have the meaning specified in the
Purchase Agreement.
In addition to the foregoing, other capitalized terms used in this
Agreement shall have the meaning ascribed thereto in the text of this Agreement.
ARTICLE II - ORGANIZATION AND GENERAL PROVISIONS.
SECTION 2.1. CONTINUATION.
(a) Effective as of (and subject to the occurrence of) the
Effective Time, the Members hereby agree to continue the LLC as a limited
liability company under and pursuant to the provisions of the Act, and
agree that the rights, duties and liabilities of the Members shall be as
provided in the Act, except as otherwise provided herein; PROVIDED,
HOWEVER, that, in the event that an Employee Stockholder's employment with
FAI, FAID and all of their Affiliates (including without limitation the
LLC) is terminated for any reason prior to the Effective Time, such
Employee Stockholder (and its related Non-Manager Member, if any) shall
cease to be a party hereto upon such termination of employment (and shall
not have any rights, duties or liabilities hereunder). In the event that
the Purchase Agreement is terminated in accordance with its terms prior to
the Effective Time, this Agreement shall have no effect and shall be null
and void without any Person being required to take any action.
(b) Upon the execution of this Agreement or a counterpart of
this Agreement, the Initial Members shall continue as members of the LLC.
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(c) The name, LLC Points and Capital Contribution of each
Member (including the agreed value of such Capital Contribution) shall be
listed on SCHEDULE A attached hereto. The Manager Member shall update
SCHEDULE A from time to time as it deems necessary in accordance with this
Agreement, to accurately reflect the information to be contained therein.
Any amendment or revision to SCHEDULE A shall not be deemed an amendment
to this Agreement. Any reference in this Agreement to SCHEDULE A shall be
deemed to be a reference to SCHEDULE A as amended and in effect from time
to time.
(d) The Manager Member, as an authorized person within the
meaning of the Act, shall execute, deliver and file any certificates
required or permitted by the Act to be filed in the office of the
Secretary of State of the State of Delaware.
SECTION 2.2. NAME. The name of the LLC heretofore formed and continued
hereby is Xxxxxx Associates, LLC. At any time the Management Committee, with the
written consent of the Manager Member granted after the Effective Time, may
change the name of the LLC. The business of the LLC (and of any Controlled
Affiliate of the LLC) may be conducted (upon compliance with all applicable
laws) under any other name designated by the Management Committee with the prior
written consent of the Manager Member granted after the Effective Time (and the
LLC and its Controlled Affiliates shall in no event conduct business under other
names without such agreement of the Management Committee and the Manager Member,
subject to Section 2.6).
SECTION 2.3. TERM. The term of the LLC commenced on the date the
Certificate was filed in the Office of the Secretary of State of the State of
Delaware and shall continue until the LLC is dissolved in accordance with the
provisions of this Agreement.
SECTION 2.4. REGISTERED AGENT AND REGISTERED OFFICE. The LLC's registered
agent and registered office in Delaware shall be Corporation Service Company,
0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000. At any time,
the Manager Member may designate another registered agent and/or registered
office.
SECTION 2.5. PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the LLC (and any Controlled Affiliates of the LLC) shall be at 000 Xxxx Xxxx
Xxxx Xxxxxx, Xxxxxxx, XX 00000. At any time the Management Committee may change
the location of the LLC's (or any Controlled Affiliate's) principal place of
business (and the LLC's and its Controlled Affiliates' principal place of
business shall in no event be changed without the written agreement of the
Management Committee and, if such location is to be changed to outside of
Jackson, Wyoming, the written agreement of the Manager Member).
SECTION 2.6. QUALIFICATION IN OTHER JURISDiCTIONS. The Management
Committee shall cause the LLC (and any Controlled Affiliates thereof) to be
qualified or registered (under assumed or fictitious names if necessary) in any
jurisdiction in which they transact business or in which such qualification or
registration otherwise is required.
SECTION 2.7. PURPOSES AND POWERS. The principal business activity and
purposes of the LLC (and any Controlled Affiliates thereof) shall be to engage
in the investment advisory and investment management business and any businesses
related thereto or useful in connection
21
therewith (including the provision of trust and other fiduciary services).
However, the business and purposes of the LLC (and any Controlled Affiliates
thereof) shall not be limited to such initial principal business activities if
the Management Committee and the Manager Member otherwise agree in writing, and
in such event, the LLC (and any Controlled Affiliates thereof) shall have
authority to engage in any other lawful business, purpose or activity permitted
by the Act. The LLC shall possess and may exercise all of the powers and
privileges granted by the Act, together with any powers incidental thereto,
including such powers or privileges that are necessary or convenient to the
conduct, promotion or attainment of the business purposes or activities of the
LLC, including without limitation the following powers:
(a) to conduct its business and operations and to have and
exercise the powers granted to a limited liability company by the Act in
any state, territory or possession of the United States or in any foreign
country or jurisdiction;
(b) to purchase, receive, take, lease or otherwise acquire,
own, hold, improve, maintain, use or otherwise deal in and with, sell,
convey, lease, exchange, transfer or otherwise dispose of, mortgage,
pledge, encumber or create a security interest in all or any of its real
or personal property, or any interest therein, wherever situated;
(c) to borrow or lend money or obtain or extend credit and
other financial accommodations, to invest and reinvest its funds in any
type of security or obligation of or interest in any public, private or
governmental entity, and to give and receive interests in real and
personal property as security for the payment of funds so borrowed, loaned
or invested;
(d) to make contracts, including contracts of insurance, incur
liabilities and give guaranties, including without limitation, guaranties
of obligations of other Persons who are interested in the LLC or in whom
the LLC has an interest;
(e) to employ Officers, employees, agents and other persons,
to fix the compensation and define the duties and obligations of such
personnel, to organize committees of the Management Committee, to delegate
to such personnel and committees the Management Committee's power and
authority, to establish and carry out retirement, incentive and benefit
plans for such personnel, and to indemnify such personnel to the extent
permitted by this Agreement and the Act;
(f) to make donations irrespective of benefit to the LLC for
the public welfare or for community, charitable, religious, educational,
scientific, civic or similar purposes;
(g) to institute, prosecute, and defend any legal action or
arbitration proceeding involving the LLC, and to pay, adjust, compromise,
settle, or refer to arbitration any claim by or against the LLC or any of
its assets;
(h) to indemnify any Person in accordance with the Act and to
obtain any and all types of insurance;
22
(i) to negotiate, enter into, renegotiate, extend, renew,
terminate, modify, amend, waive, execute, acknowledge or take any other
action with respect to any lease, contract or security agreement in
respect of any assets of the LLC;
(j) to form, sponsor, organize or enter into joint ventures,
general or limited partnerships, limited liability companies, trusts and
any other combinations or associations formed for investment purposes;
(k) to make, execute, acknowledge and file any and all
documents or instruments necessary, convenient or incidental to the
accomplishment of the purposes of the LLC; and
(l) to cease its activities and cancel its Certificate.
SECTION 2.8. TITLE TO PROPERTY. All property owned by the LLC, real or
personal, tangible or intangible, shall be deemed to be owned by the LLC as an
entity, and no Member, individually, shall have any ownership of such property.
ARTICLE III - MANAGEMENT OF THE LLC.
SECTION 3.1. MANAGEMENT IN GENERAL.
Subject to the other terms and conditions of this Agreement,
including the delegations of power and authority set forth herein, the
management and control of the business of the LLC shall be vested exclusively in
the Manager Member, and the Manager Member shall have exclusive power and
authority, in the name of and on behalf of the LLC, to perform all acts and do
all things which, in its sole discretion, it deems necessary or desirable to
conduct the business of the LLC, with or without the vote or consent of the
other Members in their capacity as such; PROVIDED, HOWEVER, that the Manager
Member's power and authority over those matters delegated exclusively to the
Management Committee pursuant to Section 3.5 of this Agreement shall be limited
to (i) the Manager Member's power and authority under Section 3.2(b)(v) to
designate members of the Management Committee and (ii) such other power and
authority as is expressly granted or reserved to the Manager Member by other
provisions of this Agreement (other than this Section 3.1(a)). Members, in their
capacity as such, shall have no right to amend or terminate this Agreement or to
appoint, select, vote for or remove the Manager Member, the Officers or their
agents or to exercise voting rights or call a meeting of the Members, except as
specifically provided in this Agreement. No Member other than the Manager Member
shall have the power to sign for or bind the LLC in its capacity as a Member,
but the Manager Member may delegate the power to sign for or bind the LLC to one
or more Officers (including without limitation through delegation to the
Management Committee).
(a) The Manager Member shall, subject to all applicable
provisions of this Agreement and the Act, be authorized in the name of and
on behalf of the LLC (subject to the limitations on the authority of the
Manager Member set forth herein): (i) to enter into, execute, amend,
supplement, acknowledge and deliver any and all contracts, agreements,
leases or other instruments for the operation of the LLC's business; and
(ii)
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in general to do all things and execute all documents necessary or
appropriate to conduct the business of the LLC as set forth in Section 2.7
hereof, or to protect and preserve the LLC's assets. The Manager Member
may delegate any or all of the foregoing powers to one or more of the
Officers (including without limitation through delegation to the
Management Committee).
(b) The Manager Member is required to be a Member, and shall
hold office until its resignation in accordance with the provisions
hereof. The Manager Member is the "manager" (within the meaning of the
Act) of the LLC. The Manager Member shall devote such time to the business
and affairs of the LLC as it deems necessary, in its sole discretion, for
the performance of its duties, but in any event, shall not be required to
devote full time to the performance of such duties and may delegate its
duties and responsibilities as provided herein.
(c) Any action taken by the Manager Member, and the signature
of the Manager Member (or an authorized representative thereof) on any
agreement, contract, instrument or other document on behalf of the LLC,
shall be sufficient to bind the LLC and shall conclusively evidence the
authority of the Manager Member and the LLC with respect thereto (in each
case subject to the limitations on the authority of the Manager Member set
forth herein).
(d) Any Person dealing with the LLC, the Manager Member or any
Member may rely upon a certificate signed by the Manager Member as to (i)
the identity of the Manager Member or any other Member; (ii) any factual
matters relevant to the affairs of the LLC; (iii) the Persons who are
authorized to execute and deliver any document on behalf of the LLC; or
(iv) any action taken or omitted by the LLC or the Manager Member.
SECTION 3.2. MANAGEMENT COMMITTEE OF THE LLC.
(a) The LLC shall have a Management Committee (the "Management
Committee") which shall have the power and authority delegated to it under
this Section 3.2 and under Sections 3.5(a) and 3.5(b) of this Agreement to
conduct the day-to-day operations, business and activities of the LLC.
Each Non-Manager Member hereby grants to the Management Committee (acting
by a Committee Vote), a revocable proxy to vote the LLC Points held by
such Member in connection with any election pursuant to Section 3.2(b)(ii)
hereof to fill a vacancy in the Management Committee, and such proxy may
only be revoked by written notice from a Member to the Management
Committee and the Manager Member, which written notice must expressly
reference this Section of this Agreement.
(b) The Management Committee shall be comprised as follows:
(i) The Management Committee shall initially have five (5)
members and consist of Xxxxxx Xxxxxx, Xxxxxxx X'Xxxxxx, Xxx Xxxx,
Xxxx Xxxxxx and Xxxxxxxxxxx Xxxx. The number of members of the
Management Committee may be increased or decreased by the Management
Committee at any time with the
24
written consent of the Manager Member granted after the Effective
Time, such consent not to be unreasonably withheld (but, subject to
clause (ii) below, not decreased to a number less than three (3)
members). No person who is not both (A) an active employee of either
the LLC or the DE LLC and (B) an Employee Stockholder (an "Eligible
Person") may be, become or remain a member of the Management
Committee (subject to clause (v) below). The Employee Stockholders
and the Non-Manager Members shall ensure that the Management
Committee of the LLC shall at all times be comprised of the same
persons as the "Management Committee" of the DE LLC (as such term is
defined in the DE LLC Agreement).
(ii) Any vacancy in the Management Committee however occurring
(including a vacancy resulting from an increase in the size of the
Management Committee) may be filled by any Eligible Person
reasonably acceptable to the Manager Member and elected by a
majority vote of all Members holding LLC Points, with each LLC Point
(regardless of whether such LLC Point is a Series A LLC Point or a
Series B LLC Point) being counted equally in such vote. In lieu of
any such vacancy being filled, the Management Committee may
determine to reduce the size of the Management Committee in
accordance with clause (i) above (but not, without the prior written
consent of the Manager Member granted after the Effective Time, to a
number less than three (3) members); provided that if at any time
there are fewer than three (3) members of the Management Committee,
such vacancies must be filled and, if they remain unfilled for a
period of greater than five days, shall be filled by any Eligible
Person reasonably acceptable to the Manager Member and elected by a
majority vote of all Members holding LLC Points, with each LLC Point
(regardless of whether such LLC Point is a Series A LLC Point or a
Series B LLC Point) being counted equally in such vote.
(iii) Members of the Management Committee shall remain members
of the Management Committee until their resignation, removal or
death. Any member of the Management Committee may resign by
delivering his or her written resignation to the CEO (or, in the
case of a resignation of the CEO, to the other members of the
Management Committee) and the Manager Member. At any time that there
are more than three (3) members of the Management Committee, any
member of the Management Committee may be removed from such
position: (A) With or without cause, by the Management Committee
acting by a Committee Vote (with such Committee Vote being
calculated for all purposes as if the member of the Management
Committee whose removal is being considered were not a member of the
Management Committee) with the written consent of the Manager Member
granted after the Effective Time, or (B) For Cause by the Manager
Member, with prior or concurrent notice to the Management Committee
specifying the reasons for the decision. Any Employee Stockholder
who is a member of the Management Committee shall be deemed to have
resigned from the Management Committee and shall no longer be a
member of the Management Committee immediately upon such Employee
Stockholder ceasing to be an Eligible Person for any reason.
25
(iv) At any meeting of the Management Committee, presence in
person or by telephone (or other electronic means) of a majority of
the members of the Management Committee shall constitute a quorum.
At any meeting of the Management Committee at which a quorum is
present, a majority of the total members of the Management Committee
may take any action on behalf of the Management Committee (any such
action taken by such members of the Management Committee is
sometimes referred to herein as a "Committee Vote"). Any action to
be taken by the Management Committee may be taken without a meeting
of the Management Committee only if (A) a written consent thereto is
signed by all the members of the Management Committee and (B) the
Manager Member has been given a copy of such written consent not
less than forty-eight (48) hours prior to such action (or such
shorter period as to which the Manager Member shall consent in
writing). Notice of the time, date and place of any meeting of the
Management Committee shall be given to all members of the Management
Committee and the Manager Member at least forty-eight (48) hours in
advance of the meeting. A representative of the Manager Member shall
be entitled to attend each meeting of the Management Committee.
Notice need not be given to any member of the Management Committee
or the Manager Member if a waiver of notice is given (orally or in
writing) by such member of the Management Committee or the Manager
Member (as applicable), before, at or after the meeting. Members of
the Management Committee are not "managers" (within the meaning of
the Act) of the LLC (except to the extent otherwise expressly
provided in Section 11.17 hereof).
(v) The Manager Member hereby grants to the Management
Committee (acting by a Committee Vote) a revocable proxy to vote the
LLC Points held by the Manager Member in connection with any
majority vote pursuant to Section 3.2(b)(ii) hereof to fill a
vacancy in the Management Committee. Notwithstanding any other
provisions of this Agreement to the contrary, the Manager Member
shall have full power and authority at any time in its sole
discretion (and without the consent or approval of the Management
Committee or the Non-Manager Members) (i) to increase the number of
members of the Management Committee and to fill the vacancies
created by any such increase with one or more other Employee
Stockholders or with any other persons selected by the Manager
Member and/or (ii) to revoke the proxy granted by the Manager Member
to the Management Committee in the immediately preceding sentence,
provided that any such increase and/or proxy revocation may only be
effected by written notice from the Manager Member to the Management
Committee, which written notice must expressly reference this
Section of this Agreement.
SECTION 3.3. OFFICERS OF THE LLC. In each case subject to the immediately
following paragraph relating to the CEO, the Management Committee may designate
employees of the LLC as officers of the LLC (the "Officers") as it deems
necessary or desirable to carry on the business of the LLC. The Management
Committee may delegate any of its power or authority to an Officer or Officers
subject to modification and withdrawal of such delegated power and authority by
the Management Committee. Any two or more offices may be held by the same
26
person. New offices may be created and filled by the Management Committee. Each
Officer shall hold office until his or her successor is designated by the
Management Committee or until his or her earlier death, resignation or removal.
Any Officer may resign at any time upon written notice to the CEO (or, in the
case of a resignation of the CEO, to the other members of the Management
Committee) and the Manager Member. Any Officer designated by the Management
Committee may be removed from his or her office (i) with or without cause by the
Management Committee (excluding for all purposes the Person being considered),
with the prior written consent of the Manager Member granted after the Effective
Time in the case of a removal of the CEO from his or her position as CEO, or
(ii) For Cause by the Manager Member (with prior or concurrent notice to the
Management Committee specifying the reasons for the decision), in each case at
any time, subject to any applicable terms of such Officer's Employment Agreement
with the LLC, if any. Any removal of an Officer from his or her position as such
shall not have any effect on the employment status of such Employee Stockholder
with the LLC or any Controlled Affiliate thereof (except as expressly provided
in the immediately following paragraph with respect to a removal of the CEO from
his or her position as such). A vacancy in any office occurring because of
death, resignation, removal or otherwise may be filled by the Management
Committee. Any designation of Officers, a description of any duties delegated to
such Officers, and any removal of such Officers by the Management Committee,
shall be approved by the Management Committee in writing, which approval shall
be delivered to the Manager Member. The Officers are not "managers" (within the
meaning of the Act) of the LLC (except to the extent otherwise expressly
provided in Section 11.17 hereof).
The Management Committee shall (with the prior written consent of
the Manager Member granted after the Effective Time, such consent not to be
unreasonably withheld) appoint a Chief Executive Officer (the "CEO") of the LLC
who shall be an Officer and shall have principal responsibility (delegated from
the Management Committee) for the day-to-day management and operations of the
LLC, including the hiring and firing of the Officers and employees of the LLC
and its Controlled Affiliates (other than with respect to Designated Initial
Members and their related Employee Stockholders) and the power and authority to
make (or to make recommendations with respect to) transactions in securities and
other instruments in Client accounts, in each case subject to the same
limitations and other requirements set forth herein that would be applicable to
the Management Committee if it were conducting such management and operations of
the LLC; PROVIDED, HOWEVER, that Xxxxxx Xxxxxx shall be the CEO as of the
Effective Time and for up to the first six (6) months following the Effective
Time (provided that he remains an Eligible Person during such period), subject
to his removal from such position in accordance with the provisions below
relating to a removal of the CEO, and commencing at the end of such initial
period, Xxxxxxx X'Xxxxxx shall become the CEO (provided that he is an Eligible
Person at that time), subject to his subsequent removal from such position in
accordance with the provisions below relating to a removal of the CEO. Whenever
this Agreement provides that the Management Committee has the power and
authority or is required to take an action, the CEO shall have the exclusive
power and authority (as between the CEO and the Management Committee) to take
such action (except as otherwise expressly provided in this paragraph), provided
that the Management Committee shall retain the power and authority to take such
action (or to delegate to any other Officer the power and authority to take such
action) in the event that the CEO is unable or unwilling to act in a manner
that, in the reasonable determination of the Management Committee, is timely
(and in the event of a dispute with respect to any such
27
intervention by the Management Committee which has not been resolved within a
reasonable period of time by the CEO and the Management Committee, the Manager
Member shall be authorized to resolve such dispute in its reasonable
discretion); PROVIDED, HOWEVER, that the Management Committee shall have the
power and authority (and, for the avoidance of doubt, the CEO shall not
individually have such power and authority), in each case subject to the other
limitations set forth in this Agreement:
(i) Upon a Committee Vote (and for the avoidance of doubt, the CEO
shall be entitled to participate in the vote on the matter of his or her
own removal) to remove the CEO from his or her position as CEO with or
without cause (with the prior written consent of the Manager Member
granted after the Effective Time in its sole discretion);
(ii) upon a Committee Vote (and for the avoidance of doubt, the CEO
shall be entitled to participate in such vote), following consultation
with the CEO, to determine (A) the compensation of the CEO by the LLC from
time to time and (B) any allocations of Purchase Program Points to the CEO
for purchase pursuant to the Equity Purchase Program (provided that such
compensation and any such allocations of Purchase Program Points shall be
reasonable under the circumstances, including without limitation in light
of the operating margins of the LLC at the time such decisions are made
and the compensation to be paid, and Purchase Program Points to be
allocated, to the other Employee Stockholders, and in the event of a
dispute with respect to such matters which has not been resolved within a
reasonable period of time by the CEO and the Management Committee, the
Manager Member shall be authorized to resolve such dispute in its good
faith discretion, and such resolution shall be final and binding upon all
parties hereto);
(iii) subject to Section 3.3(vi) hereof, upon a Committee Vote (and
for the avoidance of doubt, such Employee Stockholder whose removal (or
the removal of whose related Non-Manager Member, as applicable) is being
considered shall be entitled to participate in such vote) to make
determinations with respect to any Removal For Acting Contrary to the Best
Interests of the LLC, Removal Upon the Instruction of the Management
Committee, termination of employment For Cause, termination of employment
other than For Cause or determination of Unsatisfactory Performance, in
each case with respect to the CEO (or his or her related Non-Manager
Member, as applicable) or any Designated Initial Member (or its related
Employee Stockholder, as applicable), and in each case only with the prior
written consent of the Manager Member granted after the Effective Time in
its sole discretion;
(iv) upon a Committee Vote (and for the avoidance of doubt, the CEO
shall be entitled to participate in such vote) to (A) change the size of
the Management Committee and appoint and remove members of the Management
Committee (in each case in the manner provided for in Section 3.2(b)
hereof) and (B) make those determinations required to be made by the
Management Committee with respect to the selection of physicians as
contemplated by the definition of Permanent Incapacity hereunder;
(v) upon a Committee Vote, to appoint any successor CEO upon a
vacancy occurring in the office of CEO for any reason; and
28
(vi) upon a Committee Vote (and for the avoidance of doubt, such
Employee Stockholder with respect to which such matter is being decided
shall be entitled to participate in such vote, and if he is not then a
member of the Management Committee, shall nonetheless be permitted to
participate as if he were a member of the Management Committee at such
time), to determine those additional matters with respect to Designated
Initial Members (and their related Employee Stockholders) specified in
items 2-4 set forth on SCHEDULE B hereto (including without limitation the
scope of the duties of each Designated Initial Member and his reporting
obligations, in each case subject to the terms of such Designated Initial
Member's Employment Agreement); PROVIDED, HOWEVER, that, to the extent the
consent of a Designated Initial Member is required by the provisions set
forth on SCHEDULE B hereto for such determination to be effective with
respect to such Designated Initial Member, any such determination shall be
effective with respect to such Designated Initial Member (or its related
Employee Stockholder, as applicable) only if he has affirmatively voted in
favor of such determination as part of such Committee Vote.
Following consultation with the Management Committee (and after reflecting the
reasonable views of the Management Committee with respect thereto), the CEO
shall determine (A) the compensation of the Officers and employees of the LLC
and its Controlled Affiliates from time to time and (B) any allocations of
Purchase Program Points to the Officers and employees of the LLC and its
Controlled Affiliates for purchase pursuant to the Equity Purchase Program;
PROVIDED, HOWEVER, that, solely in the case of Designated Initial Members (or
their related Employee Stockholders, as applicable), such compensation and any
such allocations of Purchase Program Points shall be reasonable under the
circumstances, including without limitation in light of the operating margins of
the LLC at the time such decisions are made and the compensation to be paid, and
Purchase Program Points to be allocated, to the other Employee Stockholders, and
in the event of a dispute with respect to such matters which has not been
resolved within a reasonable period of time by the CEO and an applicable
Designated Initial Member, the Manager Member shall be authorized to resolve
such dispute in its good faith discretion, and such resolution shall be final
and binding upon all parties hereto; and PROVIDED, FURTHER, that the reduction
of a Designated Initial Member's (or its related Employee Stockholder's, as
applicable) compensation in the circumstances specified in item 1 set forth on
SCHEDULE B hereto shall only be effective with respect to such Designated
Initial Member (or its related Employee Stockholder) if he has consented to such
reduction. The CEO also may be removed from his or her position as CEO by the
Manager Member at any time For Cause (with prior or concurrent notice to the
Management Committee specifying the reasons for the decision). Any removal of
the CEO from his or her position as CEO by the Management Committee or the
Manager Member (but, for the avoidance of doubt, not by a resignation of the CEO
or any other termination of the CEO's status as CEO) shall result in the
automatic concurrent termination of the CEO's employment with the LLC, the DE
LLC and their respective Controlled Affiliates (except to the extent the CEO,
the Manager Member and the Management Committee may otherwise agree in writing
in connection with the termination of the CEO's status as CEO, in their
respective sole discretions). The Management Committee shall ensure that the CEO
of the LLC (if any) shall at all times be the same person as the "CEO" of the DE
LLC (as such term is defined in the DE LLC Agreement). The CEO shall at all
times be a member of the Management Committee. No person who is not an Eligible
Person may be, become or remain the CEO of the LLC (and any person who is CEO
shall be deemed to have resigned as CEO
29
immediately upon such person ceasing to be an Eligible Person). If at any time
the person serving as CEO of the LLC ceases to serve as CEO for any reason, the
Management Committee shall (with the prior written consent of the Manager Member
granted after the Effective Time, such consent not to be unreasonably withheld)
promptly appoint a new CEO of the LLC (unless the Manager Member and the
Management Committee shall otherwise consent in writing). If at any time there
is no CEO of the LLC, the Management Committee shall have the power and
authority to take such actions as are specified in this Agreement to be taken by
the CEO. The CEO is not a "manager" (within the meaning of the Act) of the LLC
(except to the extent otherwise expressly provided in Section 11.17 hereof).
SECTION 3.4. EMPLOYEES OF THE LLC.
(a) The decision to employ and the terms of employment of any
employee of the LLC (or any Controlled Affiliates thereof) who is not an
Employee Stockholder (including, without limitation, with respect to the
hiring, all aspects of compensation, promoting, demoting and terminating
of such employees) shall be determined by the CEO, subject, in all cases,
to compliance with all applicable laws, rules and regulations and with the
provisions of Section 3.5 hereof. Notwithstanding the foregoing, the
Manager Member may terminate the employment by the LLC (or any Controlled
Affiliate thereof) of any employee who has engaged in any activity
included in the definition of "For Cause" with prior or concurrent notice
to the Management Committee specifying the reasons for such decision.
(b) The granting or Transferring of LLC Interests in
connection with any hiring or promotion of an employee shall be subject to
the terms and conditions set forth in Articles V and VI hereof.
(c) Any Person who is an Employee Stockholder and is employed
by the LLC may have his or her employment with the LLC terminated by the
LLC only: (i) in the case of a termination For Cause, either by the
Manager Member (with prior or concurrent notice to the Management
Committee specifying the reasons for the decision) or by the Management
Committee (excluding for all purposes the Person whose termination is
being considered (other than in the case of any Designated Initial Member,
who shall be permitted to participate in such determination in accordance
with Section 3.3 hereof)) with the prior written consent of the Manager
Member granted after the Effective Time, (ii) in the case of any other
termination by the LLC, by the Management Committee (excluding for all
purposes the Person whose termination is being considered (other than in
the case of any Designated Initial Member, who shall be permitted to
participate in such determination in accordance with Section 3.3 hereof))
with the prior written consent of the Manager Member granted after the
Effective Time, or (iii) solely in the case of the CEO, upon an automatic
termination of employment resulting from the removal of the CEO from his
or her status as CEO to the extent expressly provided for in the second
paragraph of Section 3.3 hereof. With respect to any Employee Stockholder
who is employed by the DE LLC, the LLC shall at no time employ such
Employee Stockholder without the prior written consent of the Manager
Member granted after the Effective Time (such consent not to be
unreasonably withheld) (provided that an
30
Employee Stockholder who is an employee of the DE LLC may act as a member
of the Management Committee and/or an Officer of the LLC without being an
employee of the LLC).
(d) Upon termination for any reason of the employment with the
LLC, the DE LLC and their respective Controlled Affiliates of any Employee
Stockholder who serves as a director or trustee of any Client of the LLC,
the DE LLC or any of their respective Controlled Affiliates if such Client
is a registered investment company or a pooled investment vehicle
sponsored by the LLC, the DE LLC or any of their respective Controlled
Affiliates (or any predecessor to any such Person, including without
limitation FAI and FAID), such Employee Stockholder shall resign from such
director or trustee position unless otherwise requested in writing by the
Management Committee and the Manager Member to remain in such position
(provided that no such Employee Stockholder shall be obligated to remain
in any such position following such a written request except in his or her
sole discretion).
SECTION 3.5. OPERATION OF THE BUSINESS OF THE LLC.
(a) Subject to the terms hereof, the Management Committee is
hereby delegated the exclusive power and authority to make recommendations
with respect to transactions in securities and other instruments in
accounts of Clients, and to execute (or cause the execution of)
transactions in, and to exercise all other rights, powers and privileges
with respect to, securities and other instruments in accounts of Clients,
which power and authority may be delegated to the Officers of the LLC from
time to time in the discretion of the Management Committee.
(b) Subject to the limitations expressly set forth elsewhere
in this Agreement (including without limitation in the other provisions of
this Section 3.5), and subject to such power and authority as is expressly
granted or reserved to the Manager Member by other provisions of this
Agreement (e.g., Section 3.5(f)), the Management Committee is hereby
irrevocably delegated (to the greatest extent permitted by applicable law)
the exclusive power and authority from the Manager Member to manage the
day-to-day operations, business and activities of the LLC (without the
vote or consent of any Member in its capacity as such), including, without
limitation, the power and authority, in the name of and on behalf of the
LLC, to:
(i) determine the use of the Operating Allocation as set forth
in Section 3.5(c) below;
(ii) execute such documents and do such acts as are necessary
to register (or provide or qualify for exemptions from any such
registrations) or qualify the LLC (or any Controlled Affiliates
thereof) under applicable federal and state securities laws;
(iii) enter into contracts and other agreements with respect
to the provision of Investment Management Services and execute other
instruments,
31
documents or reports on behalf of the LLC (and any Controlled
Affiliates thereof) in connection therewith;
(iv) enter into contracts, agreements and commitments with
respect to the operation of the business of the LLC (and any
Controlled Affiliates thereof) as are consistent with the other
provisions of this Agreement and the Act; and
(v) act for and on behalf of the LLC (and any Controlled
Affiliates thereof) in all matters incidental to the foregoing and
other day-to-day matters.
(c) The Operating Allocation for any period (plus any unused
amounts previously reserved from prior period Operating Allocations) shall
be used to provide for and pay the LLC's (and any Controlled Affiliates'
thereof) and the DE LLC's (and any Controlled Affiliates' thereof)
expenses, obligations and other costs (including without limitation (i)
the payment of premiums during such period with respect to any insurance
coverages maintained (other than key-man life or disability insurance
purchased by the LLC in accordance with Section 3.5(e) hereof, the
premiums for which shall be paid out of the Owners' Allocation), (ii) all
capital expenditures and capital contributions made by the LLC (or any
Controlled Affiliate thereof) or the DE LLC (or any Controlled Affiliate
thereof) during such period, except to the extent that Owners' Allocation
has been retained therefor as an Owners' Allocation Expenditure, (iii) the
satisfaction of any net worth, working capital or similar requirements
imposed by applicable laws and regulations in connection with the
businesses conducted and registrations held by the LLC (or any Controlled
Affiliate thereof) or the DE LLC (or any Controlled Affiliate thereof) or
otherwise reasonably necessary in connection with the conduct of the
businesses of the LLC, the DE LLC and any respective Controlled Affiliates
thereof, (iv) the payment of the ten percent (10%) profit margin to the DE
LLC provided for in the Services Agreement, and payments of interest and
repayments of principal to the DE LLC in respect of any loans made by the
DE LLC to the LLC (to the extent then due under the terms of such loans),
(v) compensation and benefits payable to employees (including the Officers
and the Employee Stockholders, and the "Officers" and the "Employee
Stockholders" of the DE LLC (as such terms are defined in the DE LLC
Agreement)) and (vi) at the discretion of the Management Committee,
establishing reserves for future such payments (as determined by the
Management Committee)), and all such expenses, obligations and other costs
of the LLC (and any Controlled Affiliates thereof) shall be paid out of
the Operating Allocation (except to the extent that any such expenses,
obligations or other costs are to be paid for using Owners' Allocation
Expenditures, with the written consent of the Manager Member and the
Management Committee granted after the Effective Time). Without the prior
written consent of the Manager Member granted after the Effective Time
(which written consent makes specific reference to this Section 3.5(c)),
neither the LLC, the DE LLC nor any of their respective Controlled
Affiliates shall incur (and the Employee Stockholders shall (including
without limitation in their capacity as members of the DE LLC) use their
reasonable best efforts to prevent them from incurring) any expenses,
obligations or other costs, or take any action to incur any expenses,
obligations or other costs, which expenses, obligations and other costs in
the aggregate exceed the ability of the LLC to pay or provide for them out
of the Operating Allocation on a current or previously reserved basis.
Except to the
32
extent otherwise required by applicable law, the LLC, the DE LLC and their
respective Controlled Affiliates shall only make payments of compensation
(including bonuses) to employees (including the Officers and the Employee
Stockholders and the "Officers" and the "Employee Stockholders" of the DE
LLC) out of the balance of the Operating Allocation remaining after the
payment (or reservation for payment) of all the other expenses,
obligations and other costs for the applicable period (including without
limitation the prior payment of all Services Payments required to be made
under the terms of the Services Agreement). Any excess Operating
Allocation remaining for any fiscal year following the payment (or
reservation for payment) of all expenses, obligations and other costs
(including any such amount established as a reserve in a prior period that
is reasonably determined by the Management Committee to have been in
excess of what was necessary for such reserve) may be used by the LLC in
such fiscal year or, if not so used, shall be automatically reserved
(without any action being required by any Person) for use in future fiscal
years in accordance with this Section 3.5(c). The Owners' Allocation shall
in no event be used to provide for or pay the expenses, obligations or
other costs of the LLC (or any Controlled Affiliate thereof), except to
the extent expressly permitted by Section 3.5(e), the penultimate sentence
of Section 4.3(a) or as otherwise agreed to in writing by the Manager
Member and the Management Committee following the Effective Time
(including without limitation in connection with the making of a Working
Capital Loan out of the Owners' Allocation) (any such permitted use of the
Owners' Allocation being referred to herein as an "Owners' Allocation
Expenditure"). To the extent cash is available therefor at the DE LLC or
any of its Controlled Affiliates and is necessary for the operation of the
business of the LLC and its Controlled Affiliates or to fund distributions
required to be made to the Members by the provisions of Section 4.3(a)
hereof, the Non-Manager Members shall (in their capacity as members of the
DE LLC) cause the DE LLC and its Controlled Affiliates to lend such cash
to the LLC (and the LLC to borrow such cash) on arms' length terms,
provided that the documentation relating to such loan shall be written and
shall be in form and substance reasonably satisfactory to the Manager
Member and approved by the Manager Member in writing after the Effective
Time.
For purposes of this Agreement (and notwithstanding any contrary treatment
required by the LLC or AMG for financial reporting purposes), (i) any business
expenses or other costs of the LLC (or any Controlled Affiliate thereof) to the
extent paid utilizing funds provided to the LLC by FAI, FAID, either of the
Charities or any of the Management Owners by reason of indemnification
obligations under the Purchase Agreement or the Management Owner Purchase
Agreement (as applicable) (including without limitation pursuant to one of the
offset mechanisms specified in Section 13 of the Purchase Agreement or Section
10 of the Management Owner Purchase Agreement resulting in such funds being
retained by the LLC) shall be deemed not to be paid for from the Operating
Allocation (and if previously so paid or reserved for, such calculation and
treatment shall be reversed) and shall be deemed not to be business expenses or
other costs of the LLC (or any Controlled Affiliate thereof) for purposes of the
required uses of the Operating Allocation pursuant to the provisions of this
Agreement, and (ii) such funds provided to the LLC by any of the foregoing
Persons shall be deemed an adjustment to the "Purchase Price" under the Purchase
Agreement or the "Minority Purchase Price" under the Management Owner Purchase
Agreement (as applicable) and a corresponding
33
Capital Contribution to the LLC by the Manager Member, and shall not be deemed
Revenues From Operations hereunder or constitute income or gain of the LLC.
(d) The LLC shall not (nor shall any Controlled Affiliate of
the LLC) do or commit to do, and the Employee Stockholders and Non-Manager
Members shall use their reasonable best efforts to prevent the LLC (or any
Controlled Affiliate thereof) from doing or committing to do (including
without limitation by not taking any such action in their capacity as
Officers of the LLC), any of the following without the prior written
consent of the Manager Member granted after the Effective Time (which
written consent makes specific reference to this Section 3.5(d)):
(i) enter into, amend, modify or terminate any contract,
agreement or understanding (written or oral) if such action or the
resulting contract, agreement or understanding could reasonably be
expected to conflict with the provisions of this Section 3.5;
(ii) enter into, amend, modify or terminate any contract,
agreement or understanding (written or oral) if such action or the
resulting contract, agreement or understanding (individually or in
the aggregate) would reasonably be expected to have a material
adverse impact on the availability of the Operating Allocation in
future periods (including, without limitation, long-term leases or
employment contracts);
(iii) enter into, amend, modify or terminate any contract,
agreement or understanding (written or oral) if such action or the
resulting contract, agreement or understanding has the effect of
creating a Lien upon any of the assets of the LLC (other than Liens
securing indebtedness of the LLC incurred to finance the acquisition
of fixed or capital assets (whether pursuant to a deferred purchase
agreement with a vendor, a loan, a financing lease or otherwise),
provided that (A) such Liens shall be created substantially
simultaneously with the acquisition of such fixed or capital assets,
(B) such Liens do not at any time encumber any property other than
property financed by such indebtedness, (C) the amount of
indebtedness secured thereby is not thereafter increased and (D) the
principal amount of indebtedness secured by such Lien shall at no
time exceed the purchase price of such property) or upon any portion
of the Owners' Allocation;
(iv) take any action (or omit to take any action) if such
action (or omission) would reasonably be expected to result in the
termination of the employment by the LLC of any Employee Stockholder
as a result of a material reduction in his or her compensation,
responsibilities or other material aspects of his or her employment
conditions (other than any termination For Cause or Unsatisfactory
Performance), provided that the foregoing shall not impose any
limitation on the ability of an Employee Stockholder to terminate
his or her employment with the LLC in accordance with the provisions
hereof and any applicable Employment Agreement and shall not require
the LLC to pay increased compensation to retain the services of any
Employee Stockholder;
34
(v) create, incur, assume, or suffer to exist any
Indebtedness, other than (A) Indebtedness (I) incurred to finance
the acquisition of fixed or capital assets (whether pursuant to a
deferred purchase arrangement with a vendor, a loan, a financing
lease or otherwise) at any time not to exceed $350,000 in the
aggregate outstanding (including any then-outstanding Indebtedness
of the DE LLC and its Controlled Affiliates) and (II) that consists
of obligations to be repaid solely out of Operating Allocation and
(B) Working Capital Loans otherwise permitted or required by the
terms of this Agreement;
(vi) establish or modify any material compensation arrangement
(other than salary and cash bonuses in the ordinary course) or
program (whether cash or non-cash benefits) applicable to any
employee, in any such case which is subject to ERISA, which requires
qualification under the Code, or which otherwise (A) requires the
Manager Member (other than in its capacity as Manager Member) or any
of its Affiliates to take any action which it would not take but for
the establishment or modification of such compensation arrangement
or program or (B) prevents the Manager Member or any of its
Affiliates from taking any action which it would otherwise have been
able to take but for the establishment or modification of such
compensation arrangement or program (and the Management Committee
shall give the Manager Member not less than thirty (30) days prior
written notice before the LLC (or any Controlled Affiliate thereof)
establishes or modifies any material compensation arrangement (other
than salary and cash bonuses in the ordinary course) or program);
(vii) enter into, amend, modify or terminate any contract,
agreement or understanding (written or oral) (A) containing
severance or termination payment arrangements, other than severance
or termination payment arrangements with bona fide employees of the
LLC or its Controlled Affiliates (other than any Employee
Stockholder or Non-Manager Member or an Immediate Family member
thereof) which do not exceed $250,000 individually to any one such
employee or represent potential liabilities at any one time
outstanding (taking into account such contract, agreement or
understanding and all other such contracts, agreements and
understandings of the LLC, the DE LLC and their respective
Controlled Affiliates then in effect) in excess of $1,000,000 in the
aggregate, (B) which could reasonably be expected to cause the
Manager Member or any of its Affiliates to be liable for termination
or severance payments or other contractual payments upon a
termination of any employee's employment with the LLC (or any
Controlled Affiliate thereof) or (C) which is with an Employee
Stockholder, a Non-Manager Member, an Affiliate of an Employee
Stockholder or a Non-Manager Member, or a partner, shareholder,
director, officer, employee or Immediate Family Member of any of the
foregoing;
(viii) (A) enter into any line of business other than the
provision of Investment Management Services, (B) acquire, form or
otherwise establish any subsidiary or Controlled Affiliate of the
LLC or otherwise make any investment (other than cash management
activities in the ordinary course of business) in, or otherwise
conduct business through, any other Person, (C) acquire any material
35
assets or other properties, other than capital expenditures made out
of Operating Allocation in the ordinary course of business
consistent with past practice and not involving the acquisition of
any Person as a going concern, (D) sell, transfer or otherwise
dispose of any material assets or other properties, other than sales
of worn-out or obsolete equipment made in the ordinary course of
business consistent with past practice, or (E) permit any of the
Employee Stockholders, Non-Manager Members or Immediate Family
members of any of the foregoing (or any Affiliate of any such
Person) to have a direct or indirect economic interest in any
collective investment vehicle or other product sponsored or
otherwise managed by the LLC or any of its Controlled Affiliates
(other than as a result of the economic interests of the LLC and its
Controlled Affiliates in such collective investment vehicle or other
product, and other than bona fide investments made by any such
Person in any such collective investment vehicle or other product);
(ix) (A) make any change in the Certificate (or the
constituent documents of any Controlled Affiliate of the LLC),
modify, amend or terminate, or otherwise waive or fail to diligently
enforce any rights under, the Services Agreement, or fail to make
any payment of Services Payments when due under the terms of the
Services Agreement, (B) authorize or issue any membership or other
equity or ownership interests or other securities of any type of the
LLC (or any Controlled Affiliate thereof), (C) repurchase, redeem or
otherwise acquire any outstanding membership or other equity or
ownership interests or other securities of the LLC (or any
Controlled Affiliate thereof), (D) make any dividend or other
distribution in respect of its membership or other equity or
ownership interests (other than as expressly required by other
provisions of this Agreement), (E) settle or compromise any material
litigation, arbitration, investigation, audit or other proceeding,
(F) terminate its existence or voluntarily file for or otherwise
commence proceedings with respect to bankruptcy, reorganization,
receivership or similar status, (G) except to the extent any of the
following actions described in this clause (G) (I) relate solely to
a tax period ending on or prior to the Effective Time and (II) would
not have an adverse effect (economic or otherwise) on any Person who
became a Member at the Effective Time or at any time thereafter or
otherwise affect tax periods commencing on or after the Effective
Time, make or change any tax election, waive or extend the statute
of limitations in respect of taxes, amend any tax return, enter into
any closing agreement with respect to taxes, settle any tax claim or
assessment or surrender any right to a claim for a tax refund, (H)
change any method or principle of accounting in a manner
inconsistent with past practice or change regular independent
accountants, (I) cause or permit the DE LLC or any Controlled
Affiliate thereof at any time to have any source of gross revenues
other than Services Payments and income received in respect of
balances maintained by the DE LLC or any Controlled Affiliate
thereof in short-term, high quality investment accounts or bank
accounts, (J) materially change or otherwise modify the scope of the
business functions and other activities conducted by the LLC and its
Controlled Affiliates in the State of Wyoming from those conducted
by the LLC and its Controlled Affiliates in the State of Wyoming as
of immediately following the Effective Time, cease to do business in
the State of Wyoming or transfer any Employee Stockholder who is a
36
party to an Employment Agreement out of the State of Wyoming, or (K)
make any loan or advance to any Person, other than advances of
business expenses and Working Capital Loans in the ordinary course
of business consistent with past practice;
(x) voluntarily terminate any investment advisory agreement
with (or otherwise relating to) a Client that is a registered
investment company (or series thereof) (unless, in the joint written
determination of the Management Committee and the Manager Member
following the Effective Time, such termination is in the best
interests of the LLC); or
(xi) (A) take any action which pursuant to any provision of
this Agreement (other than Section 3.1) may be taken only by the
Manager Member with or without the consent of the Non-Manager
Members or the Employee Stockholders, or (B) take any action which
requires the approval or consent of the Manager Member pursuant to
any provision of this Agreement.
(e) The LLC (and each Controlled Affiliate thereof) shall
maintain (and the Employee Stockholders and Non-Manager Members shall use
their reasonable best efforts to cause the LLC (and each Controlled
Affiliate thereof) to maintain), in full force and effect, such insurance
as is customarily maintained by companies of similar size in the same or
similar businesses (including, without limitation, errors and omissions
liability insurance), the premiums on which will be paid out of the
Operating Allocation (and the beneficiary of which shall be the LLC and/or
its applicable Controlled Affiliates, as applicable); PROVIDED, HOWEVER,
that this sentence shall not require the LLC or any Controlled Affiliate
thereof to maintain key-man life or disability insurance policies. With
the prior written consent of the Manager Member and the Management
Committee granted after the Effective Time, the LLC also may elect to
maintain key-man life and/or disability insurance policies with respect to
any Employee Stockholder, in which event the premiums on such policies
will be paid out of the Owners' Allocation (and the beneficiary of any
such policy shall be the LLC). In the event that the Manager Member or any
of its Affiliates shall determine (at its own expense) to maintain
separate key-man life and/or disability insurance policies with respect to
any Employee Stockholder (of which the Manager Member or any of its
Affiliates may be the beneficiary), and in connection with any such
policies maintained by the LLC for its own benefit, such Employee
Stockholder shall cooperate with the Manager Member, its Affiliates and
the LLC (as applicable) in connection with obtaining and maintaining such
insurance policies (including without limitation by submitting to any
customary examinations and truthfully answering any questions asked by the
insurer in connection with obtaining such policies).
(f) In addition to, and not in limitation of, the Manager
Member's powers and authority under this Agreement (including, without
limitation, pursuant to Section 3.1(a) hereof), the Manager Member shall
also have the power (after consultation with the Management Committee, to
the extent practicable), whether or not they involve day-to-day
operations, business and activities of the LLC (or any Controlled
Affiliate thereof), to take any or all of the following actions:
37
(i) such actions as it deems necessary or appropriate to cause
the LLC or, insofar as it is within the power and authority of the
LLC, any Controlled Affiliate of the LLC, or any officer, employee,
member, partner, or agent thereof, to comply with all laws, rules
and regulations applicable to such Person in connection with the
businesses and other activities of the LLC, the DE LLC and their
respective Affiliates;
(ii) such actions as it deems necessary or appropriate to
cause the LLC to fulfill its obligations and exercise its rights
under the Purchase Agreement and this Agreement; and
(iii) any other action necessary or appropriate to prevent
actions that require the Manager Member's consent pursuant to the
terms of this Agreement if such consent has not then been given.
(g) Notwithstanding any of the provisions of this Agreement to
the contrary, all accounting, financial reporting and bookkeeping
procedures of the LLC (and any Controlled Affiliates thereof) shall be
established in conjunction with policies and procedures determined under
the supervision of the Manager Member and in a manner consistent with the
corresponding policies and procedures of the DE LLC. The Management
Committee shall have a continuing obligation to keep AMG's chief financial
officer informed of material financial developments with respect to the
LLC (and any Controlled Affiliates thereof). Notwithstanding any other
provisions of this Agreement to the contrary, all legal, compliance and
regulatory matters of the LLC (and any Controlled Affiliates thereof)
shall be coordinated with the Manager Member and AMG, and the LLC's (and
any of its Controlled Affiliates') legal compliance activities shall be
conducted and established in conjunction with policies and procedures
determined under the supervision of the Manager Member to the extent such
policies and procedures are consistent with "best practices" in the
investment management industry (and in a manner consistent with the
corresponding activities of the DE LLC).
(h) Each Employee Stockholder and Non-Manager Member covenants
and agrees that such Employee Stockholder or Non-Manager Member, as the
case may be, will at all times conduct its activities in connection with
the LLC and the DE LLC (and any Controlled Affiliates thereof), and any
services provided to the LLC or the DE LLC (or to any Controlled
Affiliates thereof), in accordance with all applicable laws, rules and
regulations, and that it will use its reasonable best efforts (i) to
ensure that the business and activities of the LLC and the DE LLC (and any
Controlled Affiliates thereof) are conducted in compliance with all
applicable laws, rules and regulations in all material respects and (ii)
to preserve the goodwill and franchise value of the LLC and the DE LLC
(and any Controlled Affiliates thereof).
(i) Notwithstanding any of the provisions of this Agreement to
the contrary, the Manager Member shall have the power to establish and
mandate that the LLC (and any of its Controlled Affiliates) participate in
employee benefit plans which are subject to ERISA or require qualification
under Section 401 of the Internal Revenue Code to the extent necessary in
order to make the expenses of any such plan(s) deductible
38
or otherwise to comply with ERISA or the Code, and may establish or modify
the terms of any such plan to the extent necessary in connection therewith
(to the extent that such terms are required by law or necessary to make
such expenses deductible or to comply with ERISA or the Code), provided
that any such action taken by the Manager Member shall treat the
Affiliates of the Manager Member subject to such action in an equitable
manner (i.e., a manner not materially more disadvantageous to one
Affiliate than to other Affiliates of the Manager Member) to the extent
permissible under ERISA and the Code and consistent with achieving tax
deductibility.
(j) Notwithstanding any other provisions of this Agreement to
the contrary, the Management Committee, each Employee Stockholder and each
Non-Manager Member shall cooperate with the Manager Member and its
Affiliates in implementing any initiative generally involving the LLC
(and/or any Controlled Affiliates thereof) and a number of such
Affiliates, but only on such terms and conditions as the participation of
the LLC (and any Controlled Affiliates thereof) in such initiative has
been approved by the Management Committee.
(k) Notwithstanding any other provisions of this Agreement to
the contrary (and in addition to the separate approval of the Management
Committee with respect thereto, to the extent such Management Committee
approval is required by other provisions of this Agreement), any (i)
voluntary liquidation of the LLC, (ii) sale, exchange or other disposition
of all, or a substantial portion of, the assets of the LLC and its
Controlled Affiliates, or (iii) Transfer by the Manager Member of all its
interests in the LLC in a single transaction or series of related
transactions (subject to the same exceptions set forth in the proviso to
the first paragraph of Section 6.1 hereof), shall require a majority vote
of all Members holding LLC Points, with each LLC Point (regardless of
whether such LLC Point is a Series A LLC Point or a Series B LLC Point)
being counted equally in such vote.
(l) Each Employee Stockholder that serves as a member of the
Management Committee (for so long as such Employee Stockholder serves as a
member of the Management Committee) agrees to use its reasonable best
efforts (to the extent within his or her power to do so) to cause the
following to be true regarding each Mutual Fund (other than a Subadvised
Fund) (each as defined in the Purchase Agreement): (i) For a period of not
less than three years following the Effective Time, no more than
twenty-five percent (25%) of the members of the board of directors of such
Mutual Fund shall be "interested persons" (as defined in the Investment
Company Act of 1940) of AMG, FAI, FAID, the LLC or the DE LLC; and (ii)
for a period of not less than two years following the Effective Time, the
LLC shall not have any express or implied understanding, arrangement or
intention to impose an "unfair burden" (as defined in the Investment
Company Act of 1940) on such Mutual Fund as a result of the transactions
contemplated by the Purchase Agreements.
SECTION 3.6. COMPENSATION AND EXPENSES OF THE MEMBERS. The Manager Member
may receive compensation for services provided to the LLC (or any Controlled
Affiliate thereof) only to the extent approved by the Management Committee. The
LLC shall, however, pay and/or reimburse the Manager Member for extraordinary
expenses reasonably incurred by the
39
Manager Member or AMG directly in connection with the operation of the LLC (and
any Controlled Affiliates thereof). It is expressly understood by the parties
hereto that the Manager Member's general overhead items and expenses (including,
without limitation, salaries, rent and travel expenses) shall not be reimbursed
by the LLC. Stockholders, officers, directors, Members and agents of Members may
serve as employees of the LLC (or any Controlled Affiliate thereof) and be
compensated therefor out of the Operating Allocation as determined by the
Management Committee (or its delegate(s)) pursuant to Section 3.5(c). Except in
respect of their provision of services as employees of the LLC (or any
Controlled Affiliate thereof) for which they may be compensated out of the
Operating Allocation as contemplated by the preceding sentence, Employee
Stockholders, Non-Manager Members and members of their Immediate Family may not
receive compensation on account of the provision of services to the LLC (or any
Controlled Affiliate thereof).
SECTION 3.7. OTHER BUSINESS OF THE MANAGER MEMBER AND ITS AFFILIATES. The
Manager Member, AMG and their respective Affiliates may engage, independently or
with others, in other business ventures of every nature and description,
including the acquisition, creation, financing, trading in, and operation and
disposition of interests in, investment managers and other businesses that may
be competitive with the LLC's (or any of its Controlled Affiliates') business.
Neither the LLC (or any Controlled Affiliate thereof) nor any of the Employee
Stockholders or Non-Manager Members shall have any right in or to any other such
ventures by virtue of this Agreement or the limited liability company created or
continued hereby, nor shall any such activity by the Manager Member, AMG or such
Affiliates in and of itself be deemed wrongful or improper or result in any
liability of the Manager Member, AMG or such Affiliates. None of the Manager
Member, AMG or any of their Affiliates shall be obligated to present any
opportunity to the LLC (or any Controlled Affiliate thereof) even if such
opportunity is of such a character which, if presented to the LLC (or a
Controlled Affiliate thereof), would be suitable for the LLC (or such a
Controlled Affiliate thereof). Neither the Manager Member nor AMG shall disclose
any Intellectual Property owned or used in the course of business by the LLC (or
any Controlled Affiliate thereof) to any Person, including, without limitation,
any other of their Affiliates, and each of the Manager Member and AMG agrees
always to keep secret and not ever to publish, divulge, furnish, use or make
accessible to anyone any Intellectual Property that is not otherwise publicly
available (other than as a result of a breach of the provisions of this Section
3.7), in each case other than in connection with the conduct of the business of
the LLC and its Controlled Affiliates, as required by court order or by law or
in connection with the enforcement of this Agreement or the Purchase Agreement.
SECTION 3.8. NON-MANAGER MEMBERS AND NON-SOLICITATION AGREEMENTS. Each
Employee Stockholder as of the Effective Time and, if there is one, the
Non-Manager Member of which it is a stockholder (its Non-Manager Member), has
provided the LLC with either (a) an Employment Agreement or (b) a
Non-Solicitation Agreement that is in full force and effect as of the Effective
Time. Any substitute Non-Manager Member (pursuant to Section 5.2 hereof) or
Additional Non-Manager Member (as defined in Section 5.5 hereof), as well as any
Employee Stockholder related thereto, which is not already bound by an
Employment Agreement or a Non-Solicitation Agreement at the time it becomes a
substitute Non-Manager Member, Additional Non-Manager Member or Employee
Stockholder, as applicable, shall, prior to and as a condition precedent to
becoming a Non-Manager Member or Employee Stockholder (as applicable), provide
the LLC with an agreement that is substantially identical to the form of
Non-Solicitation
40
Agreement attached hereto as EXHIBIT B (together with any changes or
modifications thereto as the Manager Member may deem necessary or desirable at
such time) (which shall thereafter be deemed a "Non-Solicitation Agreement"
hereunder), and such agreements shall, at all times, provide that each of the
LLC and the Manager Member shall be entitled to enforce the provisions of such
agreements on its own behalf and that the Management Committee or the Manager
Member shall be entitled to enforce the provisions of such agreements on behalf
of the LLC. At the time any purchaser of Purchase Program Points pursuant to the
Equity Purchase Program becomes a Member of the LLC, the Manager Member and AMG
shall enter into with such purchaser (if such purchaser is not already a party
to such an agreement with the Manager Member) an agreement that is substantially
identical to a Make-Whole Bonus Agreement in the form attached hereto as EXHIBIT
D, unless the Manager Member and the Management Committee shall otherwise agree
in writing.
SECTION 3.9. NON-SOLICITATION AND NON-DISCLOSURE BY NON-MANAGER MEMBERS
AND EMPLOYEE STOCKHOLDERS.
(a) Each Non-Manager Member and each Employee Stockholder
agrees, for the benefit of the LLC, the other Members and their respective
Affiliates, that such Non-Manager Member or Employee Stockholder (as the
case may be) shall not, while employed by the LLC or any of its
Affiliates, engage in any Prohibited Competition Activity.
(b) In addition to, and not in limitation of, the provisions
of Section 3.9(a) hereto, each Non-Manager Member and each Employee
Stockholder agrees, for the benefit of the LLC, the other Members and
their respective Affiliates, that such Non-Manager Member or Employee
Stockholder (as the case may be) shall not, during the period beginning on
the date such Non-Manager Member becomes a Non-Manager Member or Employee
Stockholder becomes an Employee Stockholder (as applicable), and until the
date which is two (2) years after the termination of such Non-Manager
Member's status as a Non-Manager Member or Employee Stockholder's
employment with the LLC and all of its Affiliates (as applicable) (unless
a shorter period is agreed to by the Manager Member, the Management
Committee and the Employee Stockholder or Non-Manager Member (as
applicable) in writing following the Effective Time), without the express
written consent of the Manager Member and the Management Committee granted
after the Effective Time, directly or indirectly, whether as owner,
part-owner, shareholder, partner, member, director, officer, trustee,
employee, agent or consultant, or in any other capacity, on behalf of
itself or any firm, corporation or other business organization other than
the LLC, the DE LLC and their Controlled Affiliates:
(i) provide Investment Management Services to any Person that
is a Past, Present or Potential Client; PROVIDED, HOWEVER, that this
clause (i) shall not be applicable to Clients (including Potential
Clients) who are also members of the Immediate Family of the
Employee Stockholder or Non-Manager Member (as the case may be);
(ii) solicit or induce, whether directly or indirectly, any
Person for the purpose (which need not be the sole or primary
purpose) of (A) causing any funds
41
(other than funds of which such Employee Stockholder or Non-Manager
Member and/or members of its Immediate Family are the sole
beneficial owners, subject to any applicable restrictions relating
thereto set forth in the Purchase Agreement) with respect to which
the LLC, the DE LLC or any of their respective Controlled Affiliates
provides Investment Management Services to be withdrawn from such
management, or (B) causing any Client (including any Potential
Client) not to engage the LLC, the DE LLC or any of their respective
Controlled Affiliates to provide Investment Management Services for
any additional funds, PROVIDED, HOWEVER, that this clause (ii)(B)
shall not be applicable to Clients (including (Potential Clients)
who are also members of the Immediate Family of the Employee
Stockholder or Non-Manager Member.
(iii) contact or communicate with, whether directly or
indirectly, any Past, Present or Potential Clients in connection
with Investment Management Services; provided, HOWEVER, that this
clause (iii) shall not be applicable to Clients (including Potential
Clients) who are also members of the Immediate Family of the
Employee Stockholder or Non-Manager Member; or
(iv) (A) solicit or induce, or attempt to solicit or induce,
directly or indirectly, any employee or agent of, or consultant to,
the LLC, the DE LLC or any of their respective Controlled Affiliates
to terminate its, his or her relationship therewith, (B) hire any
employee, external researcher or similar agent or consultant, or
former employee, external researcher or similar agent or consultant,
of the LLC, the DE LLC or any of their respective Controlled
Affiliates who was employed by or acted as an external researcher or
similar agent or consultant of the LLC or the DE LLC (or either of
their predecessors, FAI and FAID or any predecessor thereto) or
their respective Controlled Affiliates at any time during the two
(2) year period preceding such hiring of such Person, or (C) work in
any enterprise involving Investment Management Services with any
employee, external researcher or similar agent or consultant, or
former employee, external researcher or similar agent or consultant,
of the LLC, the DE LLC or any of their respective Controlled
Affiliates who was employed by or acted as such an agent or
consultant to the LLC or the DE LLC (or either of their
predecessors, FAI and FAID or any predecessor thereto) or their
respective Controlled Affiliates at any time during the two (2) year
period preceding the termination of the Employee Stockholder's
employment or Non-Manager Member's status as a member of the LLC, as
applicable (excluding for all purposes of this sentence, secretaries
and persons holding other similar positions);
PROVIDED, HOWEVER, that this Section 3.9(b) shall not prohibit any firm,
corporation or other business organization of which such Non-Manager Member or
Employee Stockholder (as applicable) is an employee (but of which he or she is
not a holder of any equity or other ownership interests therein, other than
holdings of publicly traded stock which (in the aggregate with the holdings of
his or her Affiliates and Immediate Family members) constitute less than five
percent (5%) of the outstanding stock of such entity) from engaging in such
activities so long as such Non-Manager Member or Employee Stockholder can
affirmatively demonstrate that he or she did not cause or induce such
activities, has no participation or other involvement in
42
such activities whatsoever and does not assist or facilitate in such activities
in any manner (whether through the provision of information or otherwise); and
PROVIDED, FURTHER, that Section 3.9(b)(iv)(C) shall not prohibit a Non-Manager
Member or Employee Stockholder (as applicable) from working at any firm,
corporation or other business organization of which such Non-Manager Member or
Employee Stockholder (as applicable) is an employee (but of which he or she is
not a holder of any equity or other ownership interests therein, other than
holdings of publicly traded stock which (in the aggregate with the holdings of
his or her Affiliates and Immediate Family members) constitute less than five
percent (5%) of the outstanding stock of such entity) provided that (I) such
firm, corporation or other business organization has at least one hundred (100)
employees as of the date such Non-Manager Member or Employee Stockholder (as
applicable) becomes an employee thereof and (II) such Non-Manager Member or
Employee Stockholder can affirmatively demonstrate that he or she does not
personally work (directly or indirectly) with any employee, external researcher
or similar agent or consultant (or former employee, external researcher or
similar agent or consultant) described in Section 3.9(b)(iv)(C).
For purposes of this Section 3.9(b), (x) the term "Past Client" shall be
limited to those Past Clients who were recipients of Investment Management
Services from the LLC or the DE LLC (including either of their predecessors, FAI
and FAID or any predecessor thereto) and/or their respective Controlled
Affiliates at the date of termination of the Employee Stockholder's employment
or Non-Manager Member's status as a member of the LLC (as applicable) or at any
time during the two (2) years immediately preceding the date of such termination
and (y) the term "Potential Client" shall be limited to those Persons to whom an
offer (as described in the definition of "Potential Client") to provide
Investment Management Services was made within two (2) years prior to the date
of termination of the Employee Stockholder's employment or Non-Manager Member's
status as a member of the LLC (as applicable).
Notwithstanding the provisions of Sections 3.9(a) and 3.9(b), any Employee
Stockholder may make passive personal investments in any enterprise (including,
without limitation, any enterprise which is competitive with AMG, the LLC or the
DE LLC) the shares or other equity interests of which are publicly traded,
provided his holding therein together with any holdings of his Affiliates and
members of his Immediate Family, are less than five percent (5%) of the
outstanding shares or comparable interests in such entity.
(c) Each Member and each Employee Stockholder agrees that any
and all presently existing investment advisory businesses of the LLC, the
DE LLC and their respective Controlled Affiliates (including business of
either of their predecessors, FAI and FAID, or any predecessor thereto),
and all businesses developed by the LLC, the DE LLC, any of their
respective Controlled Affiliates or any predecessor thereto, including by
such Employee Stockholder or any other employee of the LLC, the DE LLC or
any of their respective Controlled Affiliates or any predecessor thereto,
including without limitation, all investment methodologies, all investment
advisory contracts, fees and fee schedules, commissions, records, data,
client lists, agreements, trade secrets, and any other incident of any
business developed by the LLC, the DE LLC, their respective Controlled
Affiliates or any predecessor thereto, or earned or carried on by the
Employee Stockholder for the LLC, the DE LLC, any of their respective
Controlled Affiliates or any predecessor thereto, and all trade names,
service marks and logos under which the
43
LLC, the DE LLC or their respective Controlled Affiliates (or any
predecessor thereto) do or have done business, and any combinations or
variations thereof and all related logos, are and shall be the exclusive
property of the LLC , the DE LLC or such Controlled Affiliate, as
applicable, for its or their sole use, and (where applicable) shall be
payable directly to the LLC, the DE LLC or such Controlled Affiliate (as
applicable). In addition, each Member and each Employee Stockholder
acknowledges and agrees that the investment performance of the accounts
managed by the LLC, the DE LLC or any Controlled Affiliate of either of
them (or any predecessor thereto, including without limitation FAI or
FAID, and any predecessors thereto) was attributable to the efforts of the
team of professionals of the LLC, the DE LLC, such Controlled Affiliate or
such predecessor thereto, and not to the efforts of any single individual
or subset of such team of professionals, and that therefore, the
performance records of the accounts managed by the LLC, the DE LLC or any
of their respective Controlled Affiliates (or any predecessor to any of
them) are and shall be the exclusive property of the LLC, the DE LLC or
such Controlled Affiliate, as applicable (and not of any other Person or
Persons).
(d) Each Non-Manager Member and each Employee Stockholder
acknowledges that, in the course of performing services hereunder and
otherwise (including, without limitation, for the LLC's and the DE LLC
predecessors, FAI and FAID or any predecessor thereto), such Member or
Employee Stockholder (as applicable) has had, and will from time to time
have, access to information of a confidential or proprietary nature,
including without limitation, all confidential or proprietary investment
methodologies, trade secrets, proprietary or confidential plans, client
identities and information, client lists, service providers, business
operations or techniques, records and data ("Intellectual Property") owned
or used in the course of business by the LLC, the DE LLC or their
respective Controlled Affiliates. Each Non-Manager Member and each
Employee Stockholder agrees always to keep secret and not ever publish,
divulge, furnish, use or make accessible to anyone (otherwise than in the
regular business of the LLC, the DE LLC and their respective Controlled
Affiliates or as required by court order or by law (after consultation
with outside counsel)) any Intellectual Property of the LLC, the DE LLC or
any Controlled Affiliate of either of them unless such information can be
shown to be publicly available other than by reason of a breach of this
Section 3.9 by such Non-Manager Member or Employee Stockholder (as
applicable). At the termination of the Employee Stockholder's services to
the LLC, the DE LLC and their respective Controlled Affiliates or the
Non-Manager Member's status as a member of the LLC and the DE LLC (as
applicable), all data, memoranda, client lists, notes, programs and other
papers, items and tangible media, and reproductions thereof relating to
the foregoing matters in the Non-Manager Member's or Employee
Stockholder's possession or control, shall be returned to the LLC or the
DE LLC and remain in its possession. The Management Committee shall ensure
that any Person who becomes a Non-Manager Member of the LLC, the DE LLC,
or who acquires a beneficial interest in an entity which is a Non-Manager
Member of the LLC or the DE LLC, and has not entered into a
Non-Solicitation Agreement, shall not be provided access to any
confidential or proprietary information of the LLC, the DE LLC or any of
their respective Controlled Affiliates (except to the extent as may be
otherwise required by applicable law).
44
(e) Each Non-Manager Member and each Employee Stockholder
acknowledges that, in the course of entering into this Agreement, the
Non-Manager Member or Employee Stockholder (as applicable) has had and, in
the course of the operation of the LLC, the DE LLC and any Controlled
Affiliates thereof, the Non-Manager Member or Employee Stockholder will
from time to time have, access to Intellectual Property owned by or used
in the course of business by AMG. Each Non-Manager Member and each
Employee Stockholder agrees, for the benefit of the LLC, the DE LLC and
their Members, and for the benefit of the Manager Member and AMG, always
to keep secret and not ever publish, divulge, furnish, use or make
accessible to anyone (otherwise than at the Manager Member's request or as
required by court order or by law (after consultation with outside
counsel)) any knowledge or information regarding Intellectual Property
(including, by way of example and not of limitation, the transaction
structures utilized by AMG) of AMG unless such information can be shown to
be publicly available other than by reason of a breach of this Section 3.9
by such Non-Manager Member or Employee Stockholder (as applicable). At the
termination of the Employee Stockholder's service to the LLC, the DE LLC
and their respective Controlled Affiliates or the Non-Manager Member's
status as a member of the LLC and the DE LLC (as applicable), all data,
memoranda, documents, notes and other papers, items and tangible media,
and reproductions thereof relating to the foregoing matters in the
Non-Manager Member's or Employee Stockholder's possession or control shall
be returned to AMG and remain in its possession.
(f) The provisions of this Section 3.9 shall not be deemed to
limit any of the rights of the LLC, the DE LLC or the Members under any of
the Employment Agreements or Non-Solicitation Agreements or under
applicable law, but shall be in addition to the rights set forth in each
of the Employment Agreements and Non-Solicitation Agreements, and those
which arise under applicable law.
(g) Notwithstanding the foregoing provisions of this Section
3.9, the application of this Section 3.9 to any Non-Manager Member or
Employee Stockholder may be modified or waived by a writing executed by
the Manager Member and such Non-Manager Member or Employee Stockholder (as
applicable) following consultation with the Management Committee.
SECTION 3.10. REMEDIES UPON BREACH.
(a) In the event that a Non-Manager Member or its related
Employee Stockholder (i) breaches any of the provisions of Section 3.9
hereof (or otherwise violates any of the stated terms of any such
provisions), (ii) breaches any of the provisions of Section 3.9 of the DE
LLC Agreement (or otherwise violates any of the stated terms of any such
provisions), or (iii) breaches any of the non-competition or
non-solicitation provisions of the Employment Agreement or
Non-Solicitation Agreement to which it or he is a party (or otherwise
violates any of the stated terms of any such provisions) (in each such
case, including without limitation following the termination of his or her
employment with the LLC and its Affiliates), and in any such case such
breach or violation has resulted or is reasonably likely to result in harm
that is not immaterial or insignificant to (x) AMG or any of its
Controlled Affiliates (other than the LLC, the DE
45
LLC and their respective Controlled Affiliates), or (y) the LLC, the DE
LLC and their respective Controlled Affiliates (taken as a whole), then in
any such case (A) such Non-Manager Member shall forfeit its right to
receive any payment for its LLC Interests under Section 3.11 or Section
7.1 hereof, although it shall cease to be a Non-Manager Member in
accordance with the provisions of Section 3.11 (PROVIDED that this clause
(A) shall not apply, at any time or under any circumstances, to Subsequent
Purchase LLC Points), (B) AMG (and any of its assignees thereunder) shall
have no further obligations under any promissory note theretofore issued
to such Non-Manager Member pursuant to Section 3.11, (C) the Manager
Member (and any of its assignees thereunder) shall have no further
obligations under any Contingent Consideration theretofore issued to such
Non-Manager Member pursuant to Section 3.11 or 7.1, and (D) the LLC shall
be entitled to withhold any other payments to which such Non-Manager
Member or its related Employee Stockholder otherwise would be entitled to
offset damages resulting from such breach; PROVIDED, HOWEVER, that the LLC
shall not be permitted to withhold any compensation, distribution or other
payments that such Non-Manager Member or its related Employee Stockholder
is otherwise entitled to receive out of the Operating Allocation or the
Owners' Allocation absent either an admission of such breach by such
Non-Manager Member or Employee Stockholder or the rendering of a
settlement, judgment or arbitral decision establishing such breach.
(b) Each Non-Manager Member and each Employee Stockholder
agrees that any breach of the provisions of Section 3.9 of this Agreement
or of the provisions of the Employment Agreement or Non-Solicitation
Agreement to which it is a party by such Non-Manager Member or Employee
Stockholder (as applicable) could cause irreparable damage to the LLC and
the other Members, and that the LLC (by action of the Management
Committee) and the Manager Member shall have the right to an injunction or
other equitable relief (in addition to other legal remedies) to prevent
any violation of a Member's or Employee Stockholder's obligations
hereunder or thereunder.
SECTION 3.11. PURCHASE PROVISIONS.
The Members of the LLC having agreed that it is in the best
interests of the LLC not to have ex-employees who were (or were related
persons of, as applicable) Non-Manager Members remain as Non-Manager
Members (or have their related Non-Manager Members remain as Non-Manager
Members, as applicable) following the termination of such employment,
therefore the Members agree among themselves as follows:
(a) In the event that an Employee Stockholder's employment (i)
by the LLC, if the LLC employs such Employee Stockholder, or (ii) by the
DE LLC, if the DE LLC employs such Employee Stockholder, in either case
terminates for any reason, then the Manager Member shall purchase, and
such Employee Stockholder (or the Non-Manager Member of which such
Employee Stockholder is an owner, if such Employee Stockholder is not
itself the Non-Manager Member) and each of its Permitted Transferees (such
selling Persons, collectively, a "Selling Member") shall sell to the
Manager Member (such purchases, collectively, a "Purchase", and the LLC
Interests purchased pursuant thereto, collectively, the "Purchased
Interest"), all of the LLC
46
Interests held by the Selling Member for the Purchase Price (as defined in
Section 3.11(c) hereof) and otherwise pursuant to the terms of this
Section 3.11;
PROVIDED, HOWEVER, that, notwithstanding the fact that Xxxxxx Xxxxxx'
employment by the LLC or the DE LLC (as applicable) has terminated for any
reason prior to the consummation of the Subsequent Purchase, the
Subsequent Purchase LLC Points shall not be purchased by the Manager
Member from FAI pursuant to this Section 3.11 (but, for the avoidance of
doubt, all of FAI's other LLC Interests shall be purchased in accordance
with the provisions of this Section 3.11, subject to the immediately
following proviso) until such time as it has become objectively
determinable that AMG will not be required to consummate the Subsequent
Purchase pursuant to Section 12 of the Purchase Agreement, at which time
the Subsequent Purchase LLC Points shall be purchased by the Manager
Member from FAI pursuant to this Section 3.11 (i) as if Xxxxxx Xxxxxx'
employment by the LLC or the DE LLC (as applicable) had terminated on the
date it became objectively determinable that AMG would not be required to
consummate the Subsequent Purchase pursuant to Section 12 of the Purchase
Agreement and (ii) with the Purchase Price and manner of payment for the
purchase of the Subsequent Purchase LLC Points pursuant to this Section
3.11 to be determined based upon the manner in which Xxxxxx Xxxxxx'
employment with the LLC or the DE LLC (as applicable) actually terminated;
and PROVIDED, FURTHER, that, notwithstanding the fact that Xxxxxx Xxxxxx'
employment by the LLC or the DE LLC (as applicable) has terminated for any
reason prior to three (3) months after the tenth (10th) anniversary of the
Effective Time, any Series A LLC Points in the Purchase Reserve that
continue at that time to be held by FAI shall not be purchased by the
Manager Member from FAI pursuant to this Section 3.11 (but, for the
avoidance of doubt, all of FAI's other LLC Interests shall be purchased in
accordance with the provisions of this Section 3.11 (including without
limitation any Series B-1 LLC Points then held by FAI, whether or not in
the Purchase Reserve), subject to the immediately preceding proviso) until
three months after the tenth (10th) anniversary of the Effective Time, at
which time any remaining LLC Points in the Purchase Reserve that continue
at that time to be held by FAI shall be purchased by the Manager Member
from FAI pursuant to this Section 3.11(i) as if Xxxxxx Xxxxxx' employment
by the LLC or the DE LLC (as applicable) had terminated three (3) months
after the tenth (10th) anniversary and (ii) with the Purchase Price and
manner of payment for the purchase of such LLC Points pursuant to this
Section 3.11 to be determined based upon the manner in which Xxxxxx
Xxxxxx' employment with the LLC or the DE LLC (as applicable) actually
terminated;
and PROVIDED, FURTHER, that, solely in the event that Xxxx Xxxxxx'x or
Xxxxxxx X'Xxxxxx'x employment by the LLC or the DE LLC (as applicable) has
terminated as a result of such Employee Stockholder's Retirement on the
eleventh (11th) anniversary of the Effective Time, two-thirds of the
aggregate number of LLC Points held by such applicable Designated Initial
Member and its Permitted Transferees shall not be purchased by the Manager
Member from such Designated Initial Member and its Permitted Transferees
pursuant to this Section 3.11 in connection with such Retirement (but, for
the avoidance of doubt, all of such Designated Initial Member's and its
Permitted Transferees' other
47
LLC Interests shall be purchased in accordance with the provisions of this
Section 3.11 in connection with such Retirement) until the thirteenth
(13th) anniversary of the Effective Time, at which time all remaining LLC
Interests of such Designated Initial Member and its Permitted Transferees
shall be purchased by the Manager Member from such Designated Initial
Member and its Permitted Transferees pursuant to this Section 3.11 (to the
extent such LLC Interests have not previously been Put pursuant to Section
7.1 hereof) as if such applicable Employee Stockholder's employment by the
LLC or the DE LLC (as applicable) had terminated by reason of his
Retirement on the thirteenth (13th) anniversary of the Effective Time;
and PROVIDED, FURTHER, that, solely in the event that Xxxx Xxxxxx'x or
Xxxxxxx X'Xxxxxx'x employment by the LLC or the DE LLC (as applicable) has
terminated as a result of such Employee Stockholder's Retirement on the
twelfth (12th) anniversary of the Effective Time, one-half of the
aggregate number of LLC Points held by such applicable Designated Initial
Member and its Permitted Transferees shall not be purchased by the Manager
Member from such Designated Initial Member and its Permitted Transferees
pursuant to this Section 3.11 in connection with such Retirement (but, for
the avoidance of doubt, all of such Designated Initial Member's and its
Permitted Transferees' other LLC Interests shall be purchased in
accordance with the provisions of this Section 3.11 in connection with
such Retirement) until the thirteenth (13th) anniversary of the Effective
Time, at which time all remaining LLC Interests of such Designated Initial
Member and its Permitted Transferees shall be purchased by the Manager
Member from such Designated Initial Member and its Permitted Transferees
pursuant to this Section 3.11 as if such applicable Employee Stockholder's
employment by the LLC or the DE LLC (as applicable) had terminated by
reason of his Retirement on the thirteenth (13th) anniversary of the
Effective Time;
and PROVIDED, FURTHER, that, solely in the event that Xxxx Xxxxx'
employment by the LLC or the DE LLC (as applicable) has terminated as a
result of such Employee Stockholder's Retirement prior to the fifth (5th)
anniversary of the Effective Time, the LLC Interests held by such Employee
Stockholder and his Permitted Transferees shall not be purchased by the
Manager Member pursuant to this Section 3.11 in connection with such
Retirement until the fifth (5th) anniversary of the Effective Time, at
which time all LLC Interests of such Employee Stockholder and his
Permitted Transferees shall be purchased by the Manager Member pursuant to
this Section 3.11 as if such applicable Employee Stockholder's employment
by the LLC or the DE LLC (as applicable) had terminated by reason of his
Retirement on the fifth (5th) anniversary of the Effective Time, PROVIDED
that, in the event that following the actual Retirement of such Employee
Stockholder from employment with the LLC such Employee Stockholder (i)
dies or (ii) experiences Permanent Incapacity, all remaining LLC Interests
of such Employee Stockholder and its Permitted Transferees shall be
purchased pursuant to this Section 3.11 promptly following the discovery
by the Manager Member of such occurrence, with the Purchase Price and
manner of payment for the purchase of such LLC Interests to be determined
as if such Employee Stockholder's employment with the LLC or the DE LLC
(as applicable) had terminated as a result of death or Permanent
Incapacity, respectively.
48
(b) The closing of the Purchase will take place on a date set
by the Manager Member (the "Purchase Closing Date") which shall be after
the last day of the calendar quarter in which the applicable Employee
Stockholder's employment with the LLC or the DE LLC (as applicable)
terminated (or, if later, after the last day of the sixth (6th) full
calendar month following the Effective Time), but which is not more than
one hundred twenty (120) days after the date such termination of
employment occurred (or, if later, not more than one hundred twenty (120)
days after the last day of the sixth (6th) full calendar month following
the Effective Time); PROVIDED, HOWEVER, that the Manager Member shall
select the same date for the Purchase Closing Date hereunder as has been
selected by the DE LLC Manager Member for the "Purchase Closing Date"
under the DE LLC Agreement (as such term is defined in the DE LLC
Agreement) for purposes of its repurchase of the Selling Member's (and/or
its Affiliates', as applicable) DE LLC Interests; and PROVIDED, FURTHER,
that the Manager Member shall be permitted in its sole discretion (but
shall not be required) to delay the consummation of the Purchase hereunder
(thereby delaying the Purchase Closing Date) until such time as the
Selling Member (and/or its Affiliates, as applicable) simultaneously sells
its DE LLC Interests to the Manager Member (or the DE LLC Manager Member)
pursuant to the provisions of Section 3.11 of the DE LLC Agreement.
(c) The aggregate purchase price payable by the Manager Member
(or its assignee) for a Purchase (the "Purchase Price") shall be
determined as follows:
(i) Series A LLC Points shall be valued at the fair value
thereof, which shall be conclusively determined as follows:
(A) seven (7.0), multiplied by
(B) the "Applicable Cash Flow", which shall be defined
as the positive difference (if any) of (x) the sum of (I)
fifty percent (50%) of the Base Owners' Allocation for the
twenty four (24) months ending on the last day of the calendar
quarter in which the termination of such Employee
Stockholder's employment occurs (or, if later, the last day of
the sixth (6th) full calendar month following the Effective
Time), plus (II) thirty three and one-third percent (33-1/3%)
of the Earned Performance Owners' Allocation for the thirty
six (36) months ending on the last day of the calendar quarter
in which the termination of such Employee Stockholder's
employment occurs (or, if later, the last day of the sixth
(6th) full calendar month following the Effective Time), minus
(y) the amount by which the combined actual expenses of the
LLC, the DE LLC and any Controlled Affiliates of the LLC or
the DE LLC (determined on a basis consistent with the
determination of the permitted uses of the Operating
Allocation under this Agreement and the DE LLC Agreement)
(other than any premiums on key-man life and/or disability
insurance paid out of the Owners' Allocation, and other than
expenses of the LLC consisting of payments made by the LLC to
the DE LLC under the Services Agreement, PROVIDED that the ten
percent margin payable by the LLC to the DE LLC under the
Services Agreement shall be included in such determination as
49
an expense of the LLC) exceeded the Operating Allocation
(including any previously reserved Operating Allocation)
during the twelve (12) months ending the last day of the
calendar quarter in which the termination of such Employee
Stockholder's employment occurs (or, if later, the last day of
the sixth (6th) full calendar month following the Effective
Time), multiplied by
(C) a fraction, the numerator of which is the number of
Vested Series A LLC Points being purchased in the Purchase,
and the denominator of which is the number of LLC Points
outstanding on the date of the closing of the Purchase (before
giving effect to any issuances or redemptions of LLC Points on
such date)
; PROVIDED, HOWEVER, that the Purchase Price determined
pursuant to this clause (i) shall be reduced by the amount of
the "Purchase Price" determined under clause (i) of Section
3.11(c) of the DE LLC Agreement in connection with the
corresponding purchase of DE LLC Points priced pursuant to
such provision of the DE LLC Agreement;
(ii) Series B-1 LLC Points shall be valued at the fair value
thereof, which shall be conclusively determined as follows:
(A) seven (7.0), multiplied by
(B) the "Applicable Cash Flow", multiplied by
(C) a fraction, the numerator of which is the number of
Vested Series B-1 LLC Points being purchased in the Purchase
and the denominator of which is the number of LLC Points
outstanding on the date of the closing of the Purchase (before
giving effect to any issuances or redemptions of LLC Points on
such date)
; PROVIDED, HOWEVER, that the Purchase Price determined
pursuant to this clause (ii) shall be reduced by the amount of
the "Purchase Price" determined under clause (ii) of Section
3.11(c) of the DE LLC Agreement in connection with the
corresponding purchase of DE LLC Points priced pursuant to
such provision of the DE LLC Agreement;
(iii) Series B-2 LLC Points shall be valued at the fair value
thereof, which shall be conclusively determined as follows:
(A) the positive difference, if any, between (x) seven
(7.0) multiplied by the "Applicable Cash Flow", and (y) the
Liquidation Preference, multiplied by
(B) a fraction, the numerator of which is the number of
Vested Series B-2 LLC Points being purchased in the Purchase
and the denominator of which is the number of LLC Points
outstanding on the
50
date of the closing of the Purchase (before giving effect to
any issuances or redemptions of LLC Points on such date)
; PROVIDED, HOWEVER, that the Purchase Price determined
pursuant to this clause (iii) shall be reduced by the amount
of the "Purchase Price" determined under clause (iii) of
Section 3.11(c) of the DE LLC Agreement in connection with the
corresponding purchase of DE LLC Points priced pursuant to
such provision of the DE LLC Agreement; and
(iv) Notwithstanding any other provision hereof to the
contrary, Purchase Program Points (whether Series A LLC Points,
Series B-1 LLC Points or Series B-2 LLC Points) shall be valued at
the Fair Market Value of such LLC Points (the "Purchase Program
Points FMV")
; PROVIDED, HOWEVER, that the Purchase Program Points FMV determined
pursuant to this clause (iv) shall be reduced by the amount of the
"Purchase Program Points FMV" determined under clause (iv) of
Section 3.11(c) of the DE LLC Agreement in connection with the
corresponding purchase of DE LLC Points priced pursuant to such
provision of the DE LLC Agreement.
Sample calculations under Sections 3.11(c)(i), 3.11(c)(ii),
3.11(c)(iii) and 3.11(c)(iv) are attached as SCHEDULE C hereto.
If a Purchase Price must be determined prior to (i) twenty four (24)
months after the Effective Time, then the amount of the Base Owners' Allocation
for the portion of the relevant twenty-four (24) month period before the
Effective Time shall be calculated on a pro-forma basis such that the Base
Owners' Allocation for the relevant period prior to the Effective Time shall be
deemed to be equal to the product of (A) the Owners' Allocation Percentage,
multiplied by (B) the combined Revenues From Operations of the LLC's
predecessors, FAI and FAID, for such period, multiplied by (C) the lesser of (x)
one (1) or (y) the Consenting Percentage, and (ii) thirty six (36) months after
the Effective Time, then the amount of the Earned Performance Owners' Allocation
for the portion of the relevant thirty-six (36) month period before the
Effective Time shall be zero.
(d) The rights of the Manager Member and its assignees
hereunder are in addition to and shall not affect any other rights which
AMG, the Manager Member, the LLC or their assigns may otherwise have to
purchase LLC Interests (including without limitation pursuant to any
agreement entered into by a Non-Manager Member or an Additional
Non-Manager Member which provides for the vesting of LLC Points).
(e) On the Purchase Closing Date, the Manager Member (or its
assignee, as applicable) shall pay to the Selling Member the Purchase
Price for the LLC Interests purchased in the manner set forth in this
Section 3.11, and upon such payment the Selling Member shall cease to hold
any LLC Interests, and such Selling Member automatically shall be deemed
to have withdrawn from the LLC and shall cease to be a Member of the LLC
and shall no longer have any rights hereunder; PROVIDED, HOWEVER, that the
provisions of this Article III shall continue to be binding upon such
Selling
51
Member and any related Employee Stockholder as provided in Section 3.14
hereof; and PROVIDED, FURTHER, that, in the event that any Designated
Initial Member or other Employee Stockholder (or its related Non-Manager
Member, in the case of an Employee Stockholder that is not a natural
person) continues to hold LLC Points pursuant to the provisos to Section
3.11(a) hereof following such time as its Purchased Interest has otherwise
been purchased pursuant to this Section 3.11, such Designated Initial
Member or Employee Stockholder (as applicable) shall continue to be a
Member of the LLC until such time as it no longer holds such LLC Points
(as a result of the purchase of such LLC Points in the Subsequent Purchase
pursuant to the Purchase Agreement (in the case of Subsequent Purchase LLC
Points), the purchase of such LLC Points subsequently pursuant to this
Section 3.11 or pursuant to a Put under Section 7.1, or otherwise), and at
that time such Designated Initial Member or Employee Stockholder (as
applicable) automatically shall be deemed to have withdrawn from the LLC
and shall cease to be a Member of the LLC and shall no longer have any
rights hereunder (except as provided in the immediately preceding
proviso). On the Purchase Closing Date, the Selling Member and the Manager
Member (or its assignee) shall, if the Manager Member so requests, execute
an agreement reasonably acceptable to the Manager Member (i) in which the
Selling Member (including each Person included therein) represents and
warrants to the Manager Member (or its assignee), that it has sole record
and beneficial title to the Purchased Interest, free and clear of any
Liens other than those imposed by this Agreement, and (ii) addressing such
other customary matters as to authority, enforceability and similar
subjects as the Manager Member reasonably requests.
(f) Payment of the Purchase Price with respect to any
Purchased Interest shall be made as follows:
(i) In the case of a Purchase of Series A LLC Points which are
not Purchase Program Points,
(A) in the case of such a Purchase following a
termination of the employment of the applicable Employee
Stockholder with the LLC (if the LLC employed such Employee
Stockholder) or the DE LLC (if the DE LLC employed such
Employee Stockholder) in conjunction with a Removal Upon
Instruction of the Management Committee, on the Purchase
Closing Date by wire-transfer of immediately available funds
to an account designated to the Manager Member by the Selling
Member at least three (3) business days prior to the Purchase
Closing Date;
(B) in the case of such a Purchase following a
termination of the employment of the applicable Employee
Stockholder resulting from the death of such Employee
Stockholder, on the Purchase Closing Date either (in the sole
discretion of the Manager Member) (I) by wire-transfer of
immediately available funds in an amount equal to one hundred
percent (100%) of the Purchase Price to an account designated
to the Manager Member by the Selling Member at least three (3)
business days prior to the Purchase Closing Date or (II) by
(x) wire-transfer of immediately available funds in an amount
equal to fifty percent (50%) of the Purchase
52
Price to an account designated to the Manager Member by the
Selling Member at least three (3) business days prior to the
Purchase Closing Date and (y) delivery of AMG Shares having a
value equal to fifty percent (50%) of the Purchase Price as
determined under the procedures set forth in Section 7.1(i)
hereof;
(C) in the case of such a Purchase following a
termination of the employment of the applicable Employee
Stockholder resulting from the Retirement or Permanent
Incapacity of such Employee Stockholder, on the later to occur
of (I) the Purchase Closing Date or (II) the date which is the
first business day after the third anniversary of the
Effective Time, in either such case either (in the sole
discretion of the Manager Member) (x) by wire-transfer of
immediately available funds in an amount equal to one hundred
percent (100%) of the Purchase Price to an account designated
to the Manager Member by the Selling Member at least three (3)
business days prior to the date such payment is due, (y) by
(1) wire-transfer of immediately available funds in an amount
equal to fifty percent (50%) of the Purchase Price to an
account designated to the Manager Member by the Selling Member
at least three (3) business days prior to the Purchase Closing
Date and (2) delivery of AMG Shares having a value equal to
fifty percent (50%) of the Purchase Price as determined under
the procedures set forth in Section 7.1(i) hereof, or (z) in
the case of a Purchase of Series A LLC Points which are not
Initial LLC Points, by delivery of a promissory note of AMG,
in the form attached hereto as EXHIBIT C, having an initial
principal amount equal to the Purchase Price, the principal
amount of which promissory note is payable in four (4) equal
annual installments (subject to the terms and conditions of
this Agreement and such promissory note), with the first
installment payable on the date such promissory note is
delivered pursuant hereto; or
(D) in the case of any other such Purchase (including
without limitation a termination of the employment of the
applicable Employee Stockholder in conjunction with a Removal
For Acting Contrary to the Best Interests of the LLC), on the
later to occur of (I) the Purchase Closing Date or (II) the
date which is the first business day after the second
anniversary of the Effective Time, in either such case (x)
53.571% in Contingent Consideration and (y) 46.429% (in the
sole discretion of the Manager Member) either (1) by
wire-transfer of immediately available funds to an account
designated to the Manager Member by the Selling Member at
least three (3) business days prior to the date such payment
is due, (2) by (R) wire-transfer of immediately available
funds in an amount equal to 23.215% of the Purchase Price to
an account designated to the Manager Member by the Selling
Member at least three (3) business days prior to the Purchase
Closing Date and (S) delivery of AMG Shares having a value
equal to 23.214% of the Purchase Price as determined under the
procedures set forth in Section 7.1(i) hereof, or (3) in the
case of a Purchase of Series A LLC Points which are not
Initial LLC Points, by
53
delivery of a promissory note of AMG, in the form attached
hereto as EXHIBIT C, having an initial principal amount equal
to 46.429% of the Purchase Price, the principal amount of
which promissory note is payable in four (4) equal annual
installments (subject to the terms and conditions of this
Agreement and such promissory note), with the first
installment payable on the date such promissory note is
delivered pursuant hereto;
(ii) In the case of a Purchase of Series B-1 LLC Points which
are not Purchase Program Points or Series B-2 LLC Points which are
not Purchase Program Points, on the later to occur of (A) the
Purchase Closing Date or (B) the date which is the first business
day after the third anniversary of the Effective Time, in either
such case one hundred percent (100%) in Contingent Consideration;
(iii) In the case of a Purchase of Series A LLC Points or
Series B LLC Points which are Purchase Program Points,
(A) in the case of any such Purchase where the Purchase
Program Points FMV determined pursuant to Section 3.11(c)(iv)
is less than or equal to the amount that would have been
calculated under Section 3.11(c)(i) (in the case of Purchase
Program Points which are Series A LLC Points), Section
3.11(c)(ii) (in the case of Purchase Program Points which are
Series B-1 LLC Points) or Section 3.11(c)(iii) (in the case of
Purchase Program Points which are Series B-2 LLC Points) if
such LLC Points had not been Purchase Program Points, then in
the manner set forth in Section 3.11(f)(i) (in the case of
Purchase Program Points which are Series A LLC Points) or
Section 3.11(f)(ii) (in the case of Purchase Program Points
which are Series B LLC Points); or
(B) in the case of any such Purchase where the Purchase
Program Points FMV determined pursuant to Section 3.11(c)(iv)
is greater than the amount that would have been calculated
under Section 3.11(c)(i) (in the case of Purchase Program
Points which are Series A LLC Points), Section 3.11(c)(ii) (in
the case of Purchase Program Points which are Series B-1 LLC
Points) or Section 3.11(c)(iii) (in the case of Purchase
Program Points which are Series B-2 LLC Points) if such LLC
Points had not been Purchase Program Points, then (I) that
portion of the Purchase Program Points FMV equal to such
calculation under Section 3.11(c)(i), Section 3.11(c)(ii) or
Section 3.11(c)(iii) (as applicable) shall be paid in the
manner set forth under Section 3.11(f)(i) (in the case of
Purchase Program Points which are Series A LLC Points) or
Section 3.11(f)(ii) (in the case of Purchase Points which are
Series B LLC Points), and (II) the excess shall be paid one
hundred percent (100%) in Contingent Consideration at the same
time payment is made pursuant to clause (I) of this Section
3.11(f)(iii)(B).
54
(g) The Manager Member may (i) assign any or all of its rights
and obligations under this Section 3.11, in one or more instances, to any
other direct or indirect wholly-owned subsidiary of AMG or (ii) with the
written consent of the Management Committee (excluding any member thereof
whose interest is being repurchased), assign any or all of its rights and
obligations under this Section 3.11, in one or more instances, to the LLC;
PROVIDED, HOWEVER, that no such assignment shall relieve the Manager
Member of its obligation to make payment of a Purchase Price (to the
extent not paid by any such assignee); and PROVIDED, FURTHER, that, in the
event such assignee is a wholly-owned subsidiary of AMG and thereafter
ceases to be so owned, such assignee shall reassign to the Manager Member
(or another direct or indirect wholly-owned subsidiary of AMG) all LLC
Interests so acquired.
(h) In the event that a Non-Manager Member, its related
Employee Stockholder or any Permitted Transferee thereof holding LLC
Interests or DE LLC Interests (or any other holder of LLC Interests or DE
LLC Interests, other than the Manager Member or any Affiliate thereof) (i)
has filed a voluntary petition under the bankruptcy laws or a petition for
the appointment of a receiver or makes any assignment for the benefit of
creditors, (ii) is subject involuntarily to such a petition or assignment
or to an attachment or other legal or equitable interest with respect to
any of its LLC Interests or DE LLC Interests or, in the case of an
Employee Stockholder which is not a Non-Manager Member, its interests in
the Non-Manager Member which it owns, and such involuntary petition or
assignment or attachment is not discharged within sixty (60) days after
its effective date, or (iii) otherwise is subject to a Transfer of any of
its LLC Interests or DE LLC Interests or, in the case of an Employee
Stockholder which is not a Non-Manager Member, its interests in the
Non-Manager Member which it owns, by court order or decree or by operation
of law, then the Manager Member shall in its sole discretion be entitled
to purchase (or permit its assignee to purchase) all of the LLC Interests
and DE LLC Interests held by such Non-Manager Member (or other holder of
LLC Interests or DE LLC Interests, other than the Manager Member or any
Affiliate thereof) pursuant to the terms of this Section 3.11 (with
respect to LLC Interests) and pursuant to the terms of Section 3.11 of the
DE LLC Agreement (with respect to DE LLC Interests) as if such Non-Manager
Member (or other holder of LLC Interests or DE LLC Interests) was a
Selling Member (with respect to LLC Interests purchased hereunder) or a
"Selling Member" under the terms of the DE LLC Agreement (with respect to
DE LLC Interests purchased thereunder), with the purchase price for such
purchase to be determined pursuant to Section 3.11(c)(ii) (in the case of
purchased LLC Interests) and paid in accordance with Sections
3.11(f)(i)(D) or 3.11(f)(iii) (as applicable), and pursuant to the terms
of Section 3.11(c)(ii) of the DE LLC Agreement (in the case of purchased
DE LLC Interests) and paid in accordance with Sections 3.11(f)(i)(D) or
3.11(f)(iii) of the DE LLC Agreement, and the date of the closing to be
determined by the Manager Member in its discretion. In order to give
effect to clause (iii) of the prior sentence, if any of the interests of a
Non-Manager Member in the LLC, or of an Employee Stockholder in a
Non-Manager Member, become subject to Transfer (or purport to be or have
been Transferred) by a court order or decree or by operation of law, the
Non-Manager Member (or other holder of LLC Interests, other than the
Manager Member or any Affiliate thereof) whose interests in the LLC, or
the interests in which (as applicable), are subject to such Transfer shall
cease to be a Member of the LLC, and the
55
transferee by court order or decree or by operation of law shall not
become a Member, and the Manager Member (or its assignee) shall have the
right in its sole discretion to purchase from the Non-Manager Member which
has ceased to be a Non-Manager Member (or other holder of LLC Interests)
all of his, her or its interests in the LLC in the manner set forth in the
preceding sentence (and the corresponding provisions of the DE LLC
Agreement shall apply with respect to DE LLC Interests in such
circumstances). In the event that the Manager Member in its sole
discretion determines not to purchase (or permit another assignee of the
Manager Member to purchase) the LLC Interests held by a Non-Manager Member
(or other holder of LLC Interests, other than the Manager Member or any
Affiliate thereof) pursuant to the foregoing provisions of this Section
3.11(i), the Manager Member shall assign its right to make such purchase
to any one or more other Non-Manager Members who desire to make such
purchase for their own accounts (and who the Management Committee shall
have authorized in writing to make such purchase, with the Management
Committee determining the respective percentages such other Non-Manager
Members shall be permitted to purchase), and such other Non-Manager
Member(s) shall be entitled to purchase such LLC Interests on the same
terms that would have been applicable to the Manager Member had it elected
to make such purchase pursuant to the foregoing provisions of this Section
3.11(i) (and the corresponding provisions of the DE LLC Agreement shall
apply with respect to DE LLC Interests in such circumstances, provided
that the same Person or Persons purchasing such LLC Interests shall also
purchase the corresponding DE LLC Interests pursuant to the provisions of
the DE LLC Agreement).
(i) In the event that a Non-Manager Member (or other holder of
LLC Interests, other than the Manager Member or any Affiliate thereof) is
required to sell its LLC Interests pursuant to the provisions of this
Section 3.11 and for any reason fails to execute and deliver the
agreements required by this Section 3.11 and otherwise to consummate such
sale in accordance with the provisions of this Section 3.11 (including
without limitation as a result of being unable for any reason to comply
with the requirements hereof), the Manager Member (or its assignee, as
applicable) may deposit the Purchase Price therefor (including cash and/or
promissory notes) with any bank doing business within fifty (50) miles of
the LLC's principal place of business, or with the LLC's accounting firm,
as agent for such Non-Manager Member (or such other holder of LLC
Interests), to be held by such bank or accounting firm for the benefit of
and for delivery to such Non-Manager Member (and the corresponding
provisions of the DE LLC Agreement shall apply with respect to the sale of
DE LLC Interests under Section 3.11 of the DE LLC Agreement). Upon such
deposit by the Manager Member (or its assignee, as applicable) and upon
notice thereof given to such Non-Manager Member (or such other holder of
LLC Interests), such Non-Manager Member's (or such other holder's) LLC
Interests automatically shall be deemed to have been sold, transferred,
conveyed and assigned to the Manager Member (or its assignee, as
applicable), such Non-Manager Member (or such other holder) shall cease to
hold any LLC Interests, shall cease to be a Member of the LLC (if
previously a Member) and shall have no further rights with respect thereto
(other than the right to withdraw the payment therefor, if any, held by
the agent described in the preceding sentence), and the Manager Member
shall record such transfer on SCHEDULE A hereto.
56
SECTION 3.12. NO EMPLOYMENT OBLIGATION. Each Non-Manager Member and each
Employee Stockholder acknowledges that neither this Agreement nor the provisions
of any Non-Solicitation Agreement to which it is a party creates an obligation
on the part of the LLC (if the LLC employs such Employee Stockholder) or the DE
LLC (if the DE LLC employs such Employee Stockholder) to continue the employment
of an Employee Stockholder or any other Person with the LLC or the DE LLC, and
that such Employee Stockholder is an employee at will of the LLC or the DE LLC
(as applicable) (except to the extent otherwise provided in any Employment
Agreement to which such Employee Stockholder is a party).
SECTION 3.13. CAPITALIZATION OF EXCESS OPERATING CASH FLOW. If the
Management Committee advises the Manager Member that, in its reasonable judgment
(taking into account the anticipated revenue and expenses bases of the LLC, the
DE LLC and their respective Controlled Affiliates), the Operating Allocation
will exceed the foreseeable expenses of the LLC, the DE LLC and their respective
Controlled Affiliates on a sustained basis (taking into account business
conditions at the time and including both a reasonable allowance for either loss
of business or a change in margins in the business), the Manager Member shall
discuss in good faith with the Management Committee whether the Manager Member
concurs in that view, and if the Manager Member after such discussion concurs in
that view in its sole discretion, the Manager Member will further discuss (and
may, in its sole discretion, agree) with the Management Committee whether to
capitalize a portion of such excess cash flow, the amount of any such excess
that it is potentially appropriate to capitalize, and who the recipients of such
capitalized excess cash flow should be from the management group.
SECTION 3.14. MISCELLANEOUS. Each Member and each Employee Stockholder
agrees that the enforcement of the provisions of Sections 3.8, 3.9, 3.10 and
3.11 hereof, and the enforcement of the provisions of the Employment Agreements
and Non-Solicitation Agreements, are necessary to ensure the protection and
continuity of the business, goodwill and confidential business information of
the LLC (and any Controlled Affiliates thereof) for the benefit of each of the
Members. Each Member and each Employee Stockholder agrees that, due to the
proprietary nature of the LLC's (and any of its Controlled Affiliates')
business, the restrictions set forth in Section 3.9 hereof and in the Employment
Agreements and the Non-Solicitation Agreements are reasonable as to duration and
scope. If any provision contained in this Article III shall for any reason be
held invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Article III. It is the intention of the parties hereto that if any of the
restrictions or covenants contained herein is held to cover a geographic area or
to be for a length of time that is not permitted by applicable law, or is in any
way construed to be too broad or to any extent invalid, such provision shall not
be construed to be null, void and of no effect, but to the extent such provision
would then be valid or enforceable under applicable law, such provision shall be
construed and interpreted or reformed to provide for a restriction or covenant
having the maximum enforceable geographic area, time period and other provisions
as shall be valid and enforceable under applicable law. Each Member and Employee
Stockholder acknowledges that the obligations and rights under Sections 3.8,
3.9, 3.10 and 3.11 and this Section 3.14 shall survive the termination of the
employment of an Employee Stockholder with the LLC (and with the DE LLC and any
applicable Controlled Affiliates thereof, to the extent any such Person employs
such Employee Stockholder) and/or the withdrawal or removal of a Member from the
LLC (and as a member of the DE LLC), regardless of the manner of such
termination, withdrawal or removal, in accordance with the provisions
57
hereof and of the relevant Employment or Non-Solicitation Agreement. Moreover,
each Member agrees that the remedies provided herein are reasonably related to
the anticipated loss that the LLC (and any Controlled Affiliates thereof) and
the Members (including, without limitation, the Manager Member, which would be
purchasing LLC Interests from a Non-Manager Member) would suffer upon a breach
of such provisions. Except as agreed to following the Effective Time by the
Manager Member in advance in a writing making specific reference to this Article
III, no Employee Stockholder or Non-Manager Member shall enter into any
agreement or arrangement which is inconsistent with the terms and provisions
hereof.
ARTICLE IV - CAPITAL CONTRIBUTIONS;
CAPITAL ACCOUNTS AND ALLOCATIONS; DISTRIBUTIONS.
SECTION 4.1. CAPITAL CONTRIBUTIONS.
(a) As of June 1, 2001, (i) FAI contributed to the LLC
substantially all of its assets, properties, rights, powers, privileges
and business (and the goodwill associated therewith) (and the LLC assumed
certain of the liabilities of FAI) and (ii) FAID contributed to the LLC
certain of its assets, properties, rights, powers, privileges and business
(and the goodwill associated therewith) (and the LLC assumed certain of
the liabilities of FAID), and the Members agree that such Capital
Contributions had an aggregate value equal to the aggregate Preferred
Capital Account Balances of the Manager Member and FAI (as a Non-Manager
Member) set forth on SCHEDULE A hereto as of immediately following the
Effective Time. Except as may be agreed to following the Effective Time in
connection with the issuance of additional LLC Interests, as specifically
set forth herein, or as may be required under applicable law, the Members
shall not be required to make any further capital contributions to the
LLC. No Member shall make any capital contribution to the LLC without the
prior consent of the Manager Member.
(b) No Member shall have the right to withdraw any part of
his, her or its (or his, her or its predecessors in interest) Capital
Contribution until the dissolution and winding up of the LLC (except as
distributions otherwise expressly provided for in this Article IV may
represent returns of capital, in whole or in part). No Member shall be
entitled to receive any interest on any Capital Contribution made by it
(or its predecessors in interest) to the LLC. No Member shall have any
personal liability for the repayment of any Capital Contribution of any
other Member.
SECTION 4.2. CAPITAL ACCOUNTS; ALLOCATIONS.
(a) There shall be established for each Member a Capital
Account (a "Capital Account") which, in the case of each Member, shall
initially be equal to the Capital Contribution of such Member as of
immediately following the Effective Time as set forth on SCHEDULE A
hereto.
(b) The Capital Account of each Member shall be adjusted in
the following manner. Each Capital Account shall be increased by such
Member's allocable
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share of income and gain, if any, of the LLC (as well as the Capital
Contributions made by a Member after the Effective Time (including without
limitation any Capital Contributions deemed to have been made to the LLC
by the Manager Member pursuant to the operation of the last paragraph of
Section 3.5(c) hereof)) and shall be decreased by such Member's allocable
share of deductions and losses, if any, of the LLC and by the amount of
all distributions made to such Member. The amount of any distribution of
assets other than cash shall be deemed to be the Fair Market Value of such
assets (net of any liabilities encumbering such property that the
distributee Member is considered to assume or take subject to). Capital
Accounts shall also be adjusted upon the issuance of additional LLC
Interests as set forth in Section 5.5(c) and upon the transfer of LLC
Interests as set forth in Section 5.1. To the extent not otherwise
provided for in this Agreement, the Capital Accounts of the Members shall
be adjusted and maintained in accordance with the rules of Treasury
Regulations Section 1.704-1(b)(2)(iv), as the same may be amended or
revised. Any references in any section of this Agreement to the Capital
Account of a Member shall be deemed to refer to such Capital Account as
the same may be credited or debited from time to time as set forth above.
(c) Subject to Sections 4.2(e), 4.2(g) and 4.5 hereof, all
items of LLC income and gain shall be allocated among the Members' Capital
Accounts at the end of every calendar quarter (or portion thereof, in the
case of the first calendar quarter end following the Effective Time, if
the Effective Time did not fall on the first day of a calendar quarter) as
follows:
(i) first, items of income and gain (if any) shall be
allocated to the Manager Member in an amount equal to the product of
(A) the Owners' Allocation for such calendar quarter (net of any
Owners' Allocation Expenditures for such calendar quarter),
multiplied by (B) a fraction (I) the numerator of which is the
number of LLC Points held by the Manager Member as of the first day
of such calendar quarter and (II) the denominator of which is the
number of Vested LLC Points outstanding as of the first day of such
calendar quarter;
(ii) second, items of income and gain (if any) shall be
allocated to the Manager Member until the Manager Member has been
allocated cumulative income and gain under this Section 4.2(c)(ii)
which, together with income and gain previously allocated to the
Manager Member under Section 4.2(e)(i) hereof, equals the cumulative
amount of losses and deductions allocated to the Manager Member
under Sections 4.2(d)(ii), 4.2(d)(iii) and 4.2(f) in prior periods
(if any);
(iii) third, solely to the extent (if any) that FAI's Capital
Account balance is less than its then-applicable Preferred Capital
Account Balance, items of income and gain (if any) shall be
allocated to FAI until FAI has been allocated cumulative income and
gain under this Section 4.2(c)(iii) which, together with income and
gain previously allocated to FAI under Section 4.2(e)(ii) hereof,
equals the cumulative amount of losses and deductions allocated to
FAI under Sections 4.2(d)(i)(B), 4.2(d)(iii) and 4.2(f) in prior
periods (if any);
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(iv) fourth, items of income and gain (if any) shall be
allocated to each Non-Manager Member in an amount equal to the
product of (I) the Owners' Allocation for such calendar quarter (net
of any Owners' Allocation Expenditures for such calendar quarter),
multiplied by (II) a fraction (x) the numerator of which is the
number of Vested LLC Points held by such Non-Manager Member as of
the first day of such calendar quarter and (y) the denominator of
which is the number of Vested LLC Points outstanding as of the first
day of such calendar quarter, until the aggregate amount of such
items of income and gain allocated to the Members (including both
the Manager Member and the Non-Manager Members) pursuant to Sections
4.2(c)(i), 4.2(c)(ii), 4.2(c)(iii) and this 4.2(c)(iv) for such
calendar quarter equals the total amount of the Owners' Allocation
(net of any Owners' Allocation Expenditures) for such calendar
quarter; and
(v) finally, all remaining items of LLC income and gain shall
be allocated among the Non-Manager Members in accordance with (and
in proportion to) each Non-Manager Member's respective number of
Vested LLC Points on the first day of such calendar quarter.
(d) Subject to Sections 4.2(f), 4.2(g) and 4.5 hereof, all
items of LLC loss and deduction shall be allocated among the Members'
Capital Accounts at the end of every calendar quarter (or portion thereof,
in the case of the first calendar quarter end following the Effective
Time, if the Effective Time did not fall on the first day of a calendar
quarter) as follows:
(i) first, all items of LLC loss and deduction for such
calendar quarter shall be allocated: (A) first, among the
Non-Manager Members in accordance with (and in proportion to) each
Non-Manager Member's respective number of Vested LLC Points on the
first day of such calendar quarter, until the aggregate amount of
such items of loss and deduction allocated to the Non-Manager
Members pursuant to this clause (A) equals the aggregate amount of
allocations of income and gain to the Non-Manager Members pursuant
to Section 4.2(c)(v) for such calendar quarter and (B) second, among
the Non-Manager Members in accordance with (and in proportion to)
each Non-Manager Member's respective numbers of Vested LLC Points on
the first day of such calendar quarter, until the Capital Accounts
of all of the Non-Manager Members shall have been reduced to zero
(0) (after giving effect to the allocations of income and gain for
such calendar quarter under Section 4.2(c)); provided that no
additional loss or deduction shall be allocated to any Non-Manager's
Capital Account pursuant to this Section 4.2(d)(i) once such Capital
Account has been reduced to zero (0) (but items of loss and
deduction shall continue to be allocated to the Capital Accounts of
the other Non-Manager Members pursuant to this Section 4.2(d)(i)
until all such Non-Manager Members' Capital Accounts have been
reduced to zero (0));
(ii) second, any remaining items of LLC loss and deduction for
such calendar quarter not allocated to the Non-Manager Members under
Section 4.2(d)(i) shall be allocated to the Manager Member until its
Capital Account shall have been reduced to zero (0); and
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(iii) finally, any remaining items of LLC loss and deduction
for such calendar quarter not allocated to the Members under
Sections 4.2(d)(i) and 4.2(d)(ii) shall be allocated among all
Members in accordance with (and in proportion to) each Member's
respective number of Vested LLC Points as of the first day of such
calendar quarter.
(e) If the LLC has a net gain from the sale, exchange or other
disposition of all, or substantially all (as determined by the Manager
Member), of the assets of the LLC and its Controlled Affiliates and the DE
LLC and its Controlled Affiliates, then that net gain shall be allocated
among the Members as follows:
(i) first, to the Manager Member until the Manager Member has
been allocated cumulative gain which, together with income and gain
previously allocated to the Manager Member under Section 4.2(c)(ii)
and this Section 4.2(e)(i), equals the cumulative amount of losses
and deductions allocated to the Manager Member under Sections
4.2(d)(ii), 4.2(d)(iii) and 4.2(f) in prior periods;
(ii) second, solely to the extent (if any) that FAI's Capital
Account balance is less than its then-applicable Preferred Capital
Account Balance, to FAI until FAI has been allocated cumulative gain
which, together with income and gain previously allocated to FAI
under Section 4.2(c)(iii) and this Section 4.2(e)(ii), equals the
cumulative amount of losses and deductions allocated to FAI under
Sections 4.2(d)(i)(B), 4.2(d)(iii) and 4.2(f) in prior periods;
(iii) third, an aggregate amount of gain equal to the positive
difference between (A) the Liquidation Preference and (B) the
aggregate positive Capital Account balances of those Members holding
Series A LLC Points and/or Series B-1 LLC Points as of the date of
the transaction (or an allocable portion thereof, in the case of any
Member holding both Series A LLC Points and/or Series B-1 LLC
Points, on the one hand, and Series B-2 LLC Points, on the other
hand, as of the date of such transaction) to those Members holding
Vested Series A LLC Points and/or Vested Series B-1 LLC Points as of
the date of the transaction in accordance with (and in proportion
to) their respective number of Vested Series A LLC Points and Vested
Series B-1 LLC Points as of the date of the transaction; PROVIDED,
HOWEVER, that if any gain would be allocable to the Non-Manager
Members holding Series A LLC Points (other than FAI) pursuant to
this Section 4.2(e)(iii), any gain allocable to FAI pursuant to this
Section 4.2(e)(iii) shall instead be allocated to the Non-Manager
Members holding Series A LLC Points (other than FAI) in accordance
with (and in proportion to) their respective number of Vested Series
A LLC Points as of the date of the transaction until the ratio of
(I) the aggregate Capital Account balances of the Non-Manager
Members holding Series A LLC Points (other than FAI) arising as a
result of allocations made pursuant to this Section 4.2(e)(iii) and
4.2(e)(iv), on the one hand, to (II) the aggregate Preferred Capital
Account Balances of the Manager Member and FAI, on the other hand,
is equal to the ratio of (X) the Applicable Series A Aggregate
Non-Manager Member Allocation Percentage, on the one hand, to (Y)
the sum of
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the Applicable Manager Member Allocation Percentage plus the
Applicable FAI Allocation Percentage, on the other hand;
(iv) fourth, with respect to each remaining dollar of gain,
(A) to the Manager Member that percentage of such dollar of gain
equal to the Applicable Manager Member Allocation Percentage and (B)
to the Non-Manager Members (other than FAI) the remaining portion of
such dollar of gain (with such portion to be allocated among the
Non-Manager Members (other than FAI) in accordance with (and in
proportion to) their respective number of Vested LLC Points as of
the date of the transaction), until the ratio of (I) the aggregate
Capital Account balances of the Non-Manager Members (other than FAI)
arising as a result of allocations made pursuant to Section
4.2(e)(iii) and this Section 4.2(e)(iv), on the one hand, to (II)
the aggregate Preferred Capital Account Balances of the Manager
Member and FAI, on the other hand, is equal to the ratio of (X) the
Applicable Aggregate Non-Manager Member Allocation Percentage, on
the one hand, to (Y) the sum of the Applicable Manager Member
Allocation Percentage plus the Applicable FAI Allocation Percentage,
on the other hand; and
(v) thereafter, among the Members in accordance with (and in
proportion to) their respective number of Vested LLC Points as of
the date of the transaction.
(f) If the LLC has a net loss from any sale, exchange or other
disposition of all, or substantially all (as determined by the Manager
Member), of the assets of the LLC and its Controlled Affiliates and the DE
LLC and its Controlled Affiliates, then that net loss shall be allocated
among the Members in accordance with (and in proportion to) their
respective number of Vested LLC Points as of the date of the transaction;
provided that no additional losses shall be allocated to a Member once its
Capital Account has been reduced to zero (0) (but losses shall continue to
be allocated to the Capital Accounts of the other Members pursuant to this
Section 4.2(f)) until all Members' Capital Accounts have been reduced to
zero (0), and thereafter any remaining amount of such losses shall be
allocated among all Members pursuant to this Section 4.2(f) in accordance
with (and in proportion to) each Member's respective number of Vested LLC
Points as of the date of the transaction.
(g) Upon the making of an indemnification payment pursuant to
Article 13 of the Purchase Agreement (or offset of such a required payment
against an amount owed to an indemnitor as permitted under the Purchase
Agreement), which payment is treated as an adjustment to the WY LLC
Closing Purchase Price, (i) the Manager Member's and FAI's respective
Preferred Capital Account Balances and (ii) the Capital Account balances
of each of the Members shall be adjusted on a pro forma basis to such
levels as would have been in effect at the time of such indemnification
payment if the WY LLC Closing Purchase Price had instead been reduced by
the amount of such indemnification payment as of the Effective Time.
(h) Following (and not including) the date on which the
Effective Time occurs, in the event that during any calendar quarter (or
any fiscal year of the LLC)
62
there is any change of Members or LLC Points held by the Members (whether
as a result of the admission of an Additional Non-Manager Member, the
redemption by the LLC of all (or any portion of) any Member's LLC Points,
an issuance or transfer of any LLC Points or otherwise), such transfer
shall be deemed to have occurred as of the end of the last day of the
calendar quarter in which such change occurred; PROVIDED, HOWEVER, that
allocations in respect of Subsequent Purchase LLC Points for periods prior
to the Subsequent Closing shall be made to FAI (with FAI and the Manager
Member to receive respective allocations in respect of such LLC Points for
the calendar quarter in which the Subsequent Closing occurs ratably based
upon the number of days in such quarter that each of them held such LLC
Points).
SECTION 4.3. DISTRIBUTIONS.
(a) Subject to Section 4.4 hereof, from and after the
Effective Time, within thirty (30) days after the end of each calendar
quarter, the LLC shall, to the extent cash is available therefor at the
LLC or any of its Controlled Affiliates or at the DE LLC or any of its
Controlled Affiliates (and the LLC shall cause its Controlled Affiliates
to distribute any such available cash to the LLC and/or obtain a Working
Capital Loan from the DE LLC, in each case to the extent required for
distributions pursuant hereto and not in violation of any laws applicable
to such Controlled Affiliates or the DE LLC), and based on the unaudited
financial statements for such calendar quarter prepared in accordance with
Section 9.3 hereof (after approval of such financial statements by the
Manager Member), (i) first, distribute to the Manager Member an amount
equal to the allocations of income and gain to the Manager Member pursuant
to Sections 4.2(c)(i) and 4.2(c)(ii) for such calendar quarter and any
previous calendar quarter to the extent not then distributed (less the
Manager Member's pro rata portion of any reservation from the Owners'
Allocation for future Owners' Allocation Expenditures) and (ii) second,
distribute to each Non-Manager Member (and each Person who was a
Non-Manager Member at any time during such calendar quarter) an amount
equal to the allocation of income and gain to such Non-Manager Member
pursuant to Section 4.2(c)(iv) for such calendar quarter and any previous
calendar quarter to the extent not then distributed, less an amount equal
to the allocation of losses and deductions to such Non-Manager Member
pursuant to Sections 4.2(d)(i)(B) and 4.2(d)(iii) for such calendar
quarter (and less an amount equal to each such Person's pro rata portion
of any reservation from the Owners' Allocation for future Owners'
Allocation Expenditures). Within sixty (60) days after the end of each
fiscal year of the LLC, the LLC shall, based on the audited financial
statements prepared in accordance with Section 9.3 hereof, make a
distribution of the remaining amounts (if any) for such completed fiscal
year which were allocated pursuant to Sections 4.2(c)(i), 4.2(c)(ii) and
4.2(c)(iv) (but not previously distributed) and any previous fiscal year
to the extent not then distributed (less each applicable recipient's pro
rata portion of any reservation from the Owners' Allocation for future
Owners' Allocation Expenditures), such distribution to be made in
accordance with clauses (i) and (ii) of the prior sentence, whenever and
to the extent cash is available therefor at the LLC or any of its
Controlled Affiliates (and the LLC shall cause its Controlled Affiliates
to distribute any such available cash to the LLC and/or obtain a Working
Capital Loan from the DE LLC, in each case to the extent required for such
distributions and not in violation of any laws applicable to such
Controlled Affiliates or the DE LLC). Notwithstanding
63
the foregoing provisions of this Section 4.3(a), the LLC may, with the
prior written approval of the Manager Member and the Management Committee,
from time to time reserve and not distribute portions of the Owners'
Allocation for LLC purposes (including without limitation to increase the
net worth of the LLC, to make capital expenditures (such as the creation
of or investment in a Controlled Affiliate), to create a reserve for
anticipated repurchases of LLC Interests) or to make a Working Capital
Loan to the DE LLC to be used for any such purpose, provided that any such
reservation shall be made from all Members pro-rata in proportion to
Vested LLC Points as of the first day of the quarter in which such
reservation is made. To the extent that cash is for any reason not
available to make a distribution to the Manager Member pursuant to this
Section 4.3(a) at the time such distribution otherwise would have been
required by this Section 4.3(a) to be made to the Manager Member if cash
were available therefor (or in the event that the LLC for any other reason
does not make a required distribution to the Manager Member within thirty
(30) days following a calendar quarter end or sixty (60) days following a
fiscal year end, as applicable), then such distribution shall be made to
the Manager Member by the LLC as promptly as possible following the date
it was otherwise required to be made under this Section 4.3(a), together
with interest thereon calculated from the thirtieth (30th) day following
such calendar quarter end or the sixtieth (60th) day following such fiscal
year end (as applicable) at a rate per annum equal to the prime lending
rate then in effect as reported by The Chase Manhattan Bank, which
interest shall be borne by the LLC as an operating expense payable out of
the Operating Allocation.
(b) Except to the extent distributions are provided for in
Section 4.3(a) hereof, any other amounts or proceeds available for
distribution to the Members (if any) (after taking into account the use or
reservation of Operating Allocation pursuant to Section 3.5(c)) shall be
distributed to the Members at such times as may be determined by the
Manager Member, provided that any such distribution shall be made among
the Members (i) if attributable to a sale of all, or substantially all (as
determined by the Manager Member), of the assets of the LLC and its
Controlled Affiliates and the DE LLC and its Controlled Affiliates, in the
same manner and order as such distribution would have been made under
Section 4.4 upon a dissolution, and (ii) if otherwise attributable, in
accordance with (and in proportion to) their respective numbers of Vested
LLC Points at the time of such distribution (PROVIDED, HOWEVER, that if a
Member has made a Capital Contribution after the Effective Time (other
than a Capital Contribution deemed to have been made by the Manager Member
pursuant to the operation of the last paragraph of Section 3.5(c) hereof
with respect to indemnification payments), the Manager Member may cause
the LLC first to make a priority return of such Capital Contribution in
the case of a distribution described in this clause (ii)).
(c) Notwithstanding any other provision of this Agreement, the
LLC shall not make a distribution to any Member on account of its LLC
Interest if such distribution would violate the Act or other applicable
law.
SECTION 4.4. DISTRIBUTIONS UPON DISSOLUTION; ESTABLISHMENT OF A RESERVE
UPON DISSOLUTION. Upon any dissolution of the LLC, the assets of the LLC shall
first go toward the payment (or the making of reasonable provision for the
payment) of all liabilities of the LLC owing to creditors, including without
limitation the establishment of such reserves as the
64
Manager Member (or if there is none, the Liquidating Trustee) deems necessary or
advisable to provide for any liabilities or other obligations of the LLC. The
Manager Member (or if there is none, the Liquidating Trustee) may cause the LLC
to pay any such reserves over to a bank (or other third party) to be held in
escrow for the purpose of paying any such liabilities or other obligations. At
the expiration of such period(s) as the Manager Member (or Liquidating Trustee,
if there is no Manager Member) may deem necessary or advisable, any remaining
amount of such reserves (if any), and any other assets available for
distribution, or a portion thereof (as determined by the Manager Member or, if
there is none, the Liquidating Trustee), shall be distributed among the Members
in accordance with the positive balances (if any) in their respective Capital
Accounts (as determined immediately prior to such distribution after taking into
account all Capital Account adjustments for the period in which the dissolution
occurs) until all such positive Capital Account balances have been reduced to
zero. If any assets of the LLC are to be distributed in kind in connection with
such liquidation, such assets shall be distributed on the basis of their Fair
Market Values (net of any liabilities encumbering such assets) and, to the
greatest extent practicable under the circumstances (as determined by the
Manager Member or, if there is none, the Liquidating Trustee), shall be
distributed pro-rata in accordance with the total amounts to be distributed to
each Member. In the event that a distribution referenced in the preceding
sentence is not distributed pro-rata, the Members understand and acknowledge
that a Member may be compelled to accept a distribution of any asset in kind
from the LLC despite the fact that the percentage of the asset distributed to
such Member exceeds the percentage of that asset which is equal to the
percentage in which such Member shares in distributions from the LLC.
Immediately prior to the effectiveness of any such distribution-in-kind, each
item of gain and/or loss that would have been recognized by the LLC had the
property being distributed instead been sold by the LLC for its Fair Market
Value shall be determined and allocated to those Persons who were Members
immediately prior to the effectiveness of such distribution in accordance with
Sections 4.2(e) and 4.2(f).
SECTION 4.5. PROCEEDS FROM CAPITAL CONTRIBUTIONS AND THE SALE OF
SECURITIES; INSURANCE PROCEEDS; CERTAIN SPECIAL ALLOCATIONS.
(a) MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision in this Article IV, if there is a net decrease in Partnership
Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined in
accordance with the principles of Treasury Regulations Sections 1.704-2(d)
and 1.704-2(i)) during any taxable year, the Members shall be specially
allocated items of LLC income and gain for such year (and, if necessary,
subsequent years) in an amount equal to their respective shares of such
net decrease during such year, determined pursuant to Treasury Regulations
Sections 1.704-2(g)(2) and 1.704-2(i)(5). The items to be so allocated
shall be determined in accordance with Treasury Regulations Section
1.704-2(f). This Section 4.5(a) is intended to comply with the minimum
gain chargeback requirements in such Treasury Regulations Sections and
shall be interpreted consistently therewith; including that no chargeback
shall be required to the extent of the exceptions provided in Treasury
Regulations Sections 1.704-2(f) and 1.704-2(i)(4).
(b) QUALIFIED INCOME OFFSET. In the event any Member
unexpectedly receives any adjustments, allocations, or distributions
described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6), items of LLC income and gain shall be
65
specially allocated to such Member in an amount and manner sufficient to
eliminate the deficit balance in his Capital Account created by such
adjustments, allocations or distributions as promptly as possible.
(c) 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, if any,
pursuant to any provision of this Agreement, and (ii) the amount such
Member is deemed to be obligated to restore pursuant to the penultimate
sentences of Treasury Regulations Section 1.704-2(g)(1) and 1.704-2(i)(5),
each such Member shall be specially allocated items of LLC income and gain
in the amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 4.5(c) shall be made only if and to
the extent that a Member would have a deficit Capital Account in excess of
such sum after all other allocations provided for in this Article IV have
been tentatively made as if Section 4.5(b) and this Section 4.5(c) were
not in this Agreement.
(d) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions shall be
allocated among the Members in accordance with their respective numbers of
Vested LLC Points.
(e) PARTNER NONRECOURSE DEDUCTIONS. Partner Nonrecourse
Deductions for any taxable period shall be allocated to the Member who
bears the economic risk of loss with respect to the liability to which
such Partner Nonrecourse Deductions are attributable in accordance with
Treasury Regulations Section 1.704-2(j).
(f) CURATIVE ALLOCATIONS. The allocations set forth in
Sections 4.5(a), (b), (c), (d), and (e) hereof (the "Regulatory
Allocations") are intended to comply with certain requirements of the
Treasury Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of LLC
income, gain, loss or deduction pursuant to this Section 4.5(f), and to
the extent Regulatory Allocations are necessary, it is the intent of the
Members that they be made in as consistent a manner with the provisions of
Section 4.2 hereof as practicable, subject to compliance with the Treasury
Regulations. Therefore, notwithstanding any other provision of this
Article IV (other than the Regulatory Allocations), the Manager Member
shall make such offsetting special allocations of LLC income, gain, loss
or deduction in whatever manner it determines appropriate so that, after
such offsetting allocations are made, each Member's Capital Account is, to
the extent possible, equal to the Capital Account balance such Member
would have had if the Regulatory Allocations were not a part of this
Agreement and all LLC items were allocated pursuant to Section 4.2. In
exercising its discretion under this Section 4.5(f), the Manager Member
shall take into account future Regulatory Allocations under Section 4.5(a)
that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Sections 4.5(d) and (e).
(g) Capital Contributions (other than any Capital
Contributions deemed to have been made to the LLC by the Manager Member
pursuant to the operation of the last paragraph of Section 3.5(c) hereof)
made by any Member after the Effective
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Time, and any proceeds from the issuance of securities by the LLC, may in
the sole discretion of the Manager Member be used for the benefit of the
LLC (including without limitation provision for the purchase or redemption
of any LLC Interests to be purchased or redeemed by the LLC), or may be
distributed by the LLC to the Members in the sole discretion of the
Manager Member, in which case any such proceeds shall be allocated and
distributed among the Members in accordance with their respective Vested
LLC Points immediately prior to the date of such contribution or issuance
of securities (it being understood that in the event the proceeds are a
promissory note or other receivable, any such distribution shall only
occur (if at all) upon receipt by the LLC of cash in respect thereof).
(h) In the event of the death or Permanent Incapacity of an
Employee Stockholder covered by key-man life or disability insurance the
premiums on which have been paid out of the Owners' Allocation (or the
ratable portion attributable to those premiums paid out of the Owners'
Allocation, if not entirely paid out of the Owners' Allocation), the
proceeds of any such policy (net of any expected tax liability to be
incurred by the LLC or any Controlled Affiliate thereof as a result of the
receipt of such proceeds, and any such tax liability shall be paid out of
such proceeds) shall be allocated (to the extent items of income and gain
have resulted therefrom) and distributed among the Members in accordance
with their respective number of Vested LLC Points immediately following
the Purchase of LLC Interests from such Employee Stockholder (or its
related Non-Manager Member) under Section 3.11 hereof (except to the
extent that the Manager Member and the Management Committee agree in
writing to otherwise make use of such proceeds for the benefit of the LLC
(e.g., the making of capital expenditures)).
(i) All items of depreciation or amortization (as calculated
for book purposes in accordance with GAAP, consistently applied) on
account of the tangible items of property of the LLC at the Effective Time
shall be allocated to the Non-Manager Members pursuant to Section
4.2(d)(i); in no event shall items of intangible property resulting from
the purchases of LLC Interests occurring pursuant to the Purchase
Agreement and the Management Owner Purchase Agreement be depreciated or
amortized for Capital Account purposes under this Agreement (but any items
of depreciation or amortization (as calculated for book purposes in
accordance with GAAP, consistently applied) on account of intangible items
of property of the LLC otherwise existing as of immediately prior to the
Effective Time shall be specially allocated to the Manager Member and the
Non-Manager Members in accordance with (and in proportion to) the amounts
of their respective Preferred Capital Account balances). All items of
depreciation or amortization (as calculated for book purposes in
accordance with GAAP, consistently applied) on account of property
(whether tangible or intangible) purchased out of the Operating Allocation
shall be allocated to the Non-Manager Members pursuant to Section
4.2(d)(i), and all items of depreciation or amortization (as calculated
for book purposes in accordance with GAAP, consistently applied) on
account of property (whether tangible or intangible) purchased out of the
Owners' Allocation (or on account of Services Payments made to the DE LLC
in respect of expenses of the DE LLC consisting of repayments of principal
by the DE LLC under a Working Capital Loan made to the DE LLC out of the
Owners' Allocation of the LLC) shall be allocated among
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the Members in accordance with their respective numbers of Vested LLC
Points on the date the property was purchased. All items of depreciation
or amortization (as calculated for book purposes in accordance with GAAP,
consistently applied) or deduction on account of property (whether
tangible or intangible) purchased out of funds received from FAI, FAID,
either of the Charities or any of the Management Owners by reason of
indemnification obligations under the Purchase Agreement or the Management
Owner Purchase Agreement (as applicable) shall be specially allocated to
the Manager Member.
SECTION 4.6. TAX ALLOCATIONS. For income tax purposes only, each item of
income, gain, loss and deduction of the LLC shall be allocated among the Members
in the same manner as the corresponding items of income, gain, loss and
deduction and specially allocated items are allocated for Capital Account
purposes, provided that in the case of any LLC asset the Carrying Value of which
differs from its adjusted tax basis for federal income tax purposes, income,
gain, loss and deduction with respect to such asset shall be allocated solely
for income tax purposes in accordance with the traditional method of allocation
pursuant to Treasury Regulations Section 1.704-3(b) so as to take account of the
difference between the Carrying Value and the adjusted basis of such asset.
SECTION 4.7. OTHER ALLOCATION PROVISIONS. The foregoing provisions and the
other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Treasury Regulations Section 1.704-1(b) and
shall be interpreted and applied in a manner consistent with such regulations.
Sections 4.2(c) to 4.2(f), and Sections 4.5 and 4.6 may be amended at any time
by the Manager Member if necessary, in the opinion of tax counsel to the LLC or
the Manager Member, to comply with such regulations, so long as any such
amendment (a) does not materially change the relative economic interests of the
Members and (b) to the extent practicable in the Manager Member's reasonable
judgment, applies consistently to all Non-Manager Members.
SECTION 4.8. WITHHOLDING. The Manager Member is authorized to cause the
LLC to withhold from distributions to a Member, or with respect to allocations
to a Member, and to pay over to a federal, state or local government, any
amounts required to be withheld pursuant to the Code or any other provisions of
federal, state or local law. Any amounts so withheld shall be treated as
distributed to such Member pursuant to this Article IV for all purposes of this
Agreement and, if withheld from amounts allocated but not distributed, shall be
offset against the next amounts otherwise distributable to such Member.
ARTICLE V - TRANSFER OF LLC INTERESTS BY NON-MANAGER
MEMBERS; RESIGNATION, REDEMPTION AND WITHDRAWAL BY
NON-MANAGER MEMBERS;
ADMISSION OF ADDITIONAL NON-MANAGER MEMBERS.
SECTION 5.1. TRANSFERABILITY OF INTERESTS. No interest of a Non-Manager
Member (or transferee thereof) in the LLC (including without limitation LLC
Interests) may, directly or indirectly, be sold, assigned, transferred, gifted
or exchanged, nor may any Non-Manager Member (or transferee thereof) offer to do
any of the foregoing (each, a "Transfer"), nor may any
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direct or indirect interest in any Non-Manager Member be, directly or
indirectly, Transferred by any holder thereof, nor may any stockholder or other
holder of an ownership interest in any Non-Manager Member which is not a natural
person offer to do any of the foregoing, and no Transfer by a Non-Manager Member
(or transferee thereof) or holder of an ownership interest in a Non-Manager
Member shall be binding upon the LLC or any Non-Manager Member, in each case
unless (i) such Transfer is expressly permitted by this Article V and (ii) the
Management Committee and the Manager Member each receive an executed copy of the
documents effecting such Transfer and such documents are in compliance with the
requirements of this Article V and otherwise in form and substance satisfactory
to the Management Committee and the Manager Member (each acting reasonably);
PROVIDED, HOWEVER, that the provisions of this Article V shall not be applicable
to the Subsequent Purchase (which shall be expressly permitted hereunder). The
transferee of an interest in the LLC may become a substitute Non-Manager Member,
and a Non-Manager Member which is not a natural person may remain a Member of
the LLC following the Transfer of an ownership interest in such Non-Manager
Member, in each case only upon the terms and conditions set forth in Section
5.2. If a transferee of an interest of a Non-Manager Member in the LLC does not
become (and until any such transferee becomes) a substitute Non-Manager Member,
or if a Non-Manager Member in which an ownership interest has been Transferred
does not remain a Member of the LLC following such Transfer, in either case in
accordance with the provisions of Section 5.2, such Person shall not be entitled
to exercise or receive any of the rights, powers or benefits of a Non-Manager
Member other than the right to receive allocations of income, gain, loss and
deduction and distributions which the assigning Non-Manager Member has
Transferred to such Person. Each Employee Stockholder and Non-Manager Member
agrees to comply, and to cause its owners and transferees to comply (as
applicable), with the provisions of this Article V.
A Non-Manager Member's LLC Interests or, in the case of a
Non-Manager Member which is not a natural person, direct ownership interests in
such Non-Manager Member (but in no event indirect ownership interests in such
Non-Manager Member without the prior written consent of both the Management
Committee and the Manager Member granted after the Effective Time in their
respective sole discretion) may be Transferred solely:
(a) (i) with the prior written consent of the Management
Committee and the Manager Member granted after the Effective Time or (ii)
with respect to Program LLC Points held by FAI as of the Effective Time,
Transfers of such Program LLC Points made pursuant to the terms of the
Equity Purchase Program;
(b) upon (i) the death of such Non-Manager Member (in the case
of a Non-Manager Member who is a natural person), with respect to LLC
Interests held by such Non-Manager Member, or (ii) upon the death of a
direct holder of ownership interests in such Non-Manager Member (in the
case of a Non-Manager Member which is not a natural person), with respect
to the direct ownership interests in such Non-Manager Member held by such
deceased holder, in either such case such specified ownership interests
may be Transferred by will or the laws of descent and distribution,
without the consent of the Manager Member but subject in all cases to the
provisions of Section 3.11 hereof, which shall continue to be binding upon
the LLC Interests of such Non-Manager Member (and the holders thereof)
notwithstanding such death; PROVIDED, HOWEVER, that no Transfer of LLC
Points (or an interest in a Non-Manager Member holding LLC Points)
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shall be permitted pursuant to this Section 5.1(b) unless accompanied by a
simultaneous Transfer by the same transferor (or by its Affiliated
"Non-Manager Member" under the DE LLC Agreement, as applicable) to the
same transferee of an equal number of DE LLC Points (or an equal
proportionate direct interest in such "Non-Manager Member" under the DE
LLC Agreement holding such DE LLC Points, as applicable); or
(c) (i) an Employee Stockholder who is a Non-Manager Member
may Transfer his or her LLC Interests, or (ii) direct ownership interests
in a Non-Manager Member which is not a natural person may be Transferred
by its related Employee Stockholder, in either such case to members of
such Employee Stockholder's Immediate Family (or trusts for their benefit
and of which the exclusive beneficial owner is such Employee Stockholder
and/or any such Immediate Family members), provided that any such trust
does not require or permit distribution of such interests other than (A)
to such Employee Stockholder or its related original Non-Manager Member
that is a party hereto or (B) to such Immediate Family members who are
beneficiaries thereof with such distribution being contingent upon the
compliance by such Immediate Family members with the documentation and
other requirements of this Agreement applicable to transferees of LLC
Interests), without the consent of the Management Committee or the Manager
Member but subject in all cases to the provisions of Section 3.11 hereof,
which shall continue to be binding upon the LLC Interests of such
Non-Manager Member (and the holders thereof) notwithstanding such
Transfer; PROVIDED, HOWEVER, that no Transfer of LLC Points (or an
interest in a Non-Manager Member holding LLC Points) shall be permitted
pursuant to this Section 5.1(c) unless accompanied by a simultaneous
Transfer by the same transferor (or by its Affiliated "Non-Manager Member"
under the DE LLC Agreement, as applicable) to the same transferee of an
equal number of DE LLC Points (or an equal proportionate direct interest
in such "Non-Manager Member" under the DE LLC Agreement holding such DE
LLC Points, as applicable);
provided that in the case of (b) or (c) above, (i) the transferee first enters
into an agreement with the LLC in form and substance reasonably satisfactory to
the Manager Member (including without limitation with respect to any subsequent
distribution of LLC Interests to beneficiaries being contingent upon them
entering into such an agreement with the LLC, in the case of a transferee that
is a trust or similar vehicle) agreeing to be bound by the provisions of this
Agreement (and if such transferee is not already a party to a Non-Solicitation
Agreement and becomes (or any related Person thereof, in the event such
transferee is not a natural person, becomes) an employee of the LLC, the
transferee (and each such related person) enters into a Non-Solicitation
Agreement), and (ii) whether or not the transferee enters into such an
agreement, such LLC Interests and ownership interests in such Non-Manager Member
(as applicable) shall thereafter remain subject to this Agreement (and the
transferee (and any related person thereof, in the event such transferee is not
a natural person) shall become subject to the transferring Employee
Stockholder's Non-Solicitation Agreement if such transferee (or a related person
thereof) becomes an employee of the LLC). LLC Points which are Transferred
pursuant to Section 5.1(a)(i) shall thereafter have such Put rights under
Article VII of this Agreement as may be agreed to in writing following the
Effective Time by the Manager Member in its sole discretion in connection with
such Transfer.
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Notwithstanding the foregoing, without the prior written consent of the
Manager Member granted after the Effective Time, no Non-Manager Member's
interest in the LLC may be Transferred (and no ownership interest in a
Non-Manager Member which is not a natural person may be Transferred) (i) if
after giving effect to such Transfer, the total number of Members of the LLC
would be deemed to exceed one hundred (100) (as determined in accordance with
Treasury Regulations ss. 1.7704-1(h)), unless either (A) such Transfer is a
Transfer described in Treasury Regulations ss. 1.7704-1(e) or (B) such Transfer
is pursuant to a Put right under Article VII and the sum of the percentage
interests in profits or capital of the LLC Transferred during the taxable year
of the LLC (other than in Transfers described in Treasury Regulations ss.
1.7704-1(e)) would, taking the Transfer in question into account and assuming
the maximum exercise of the Non-Manager Members' Put rights under Article VII,
exceed ten percent (10%) of the total interests in profits or capital of the
LLC, or (ii) if such Transfer (A) is required to be registered under the
Securities Act, or (B) is not required to be registered under the Securities Act
by reason of Regulation S thereunder, but would have been required to be
registered under the Securities Act if the Transfer had been made within the
United States, or if such Transfer would otherwise violate the securities or
other laws of any jurisdiction.
For all purposes of this LLC Agreement, any Transfers of LLC Interests
shall be deemed to occur as of the end of the last day of the calendar quarter
in which any such Transfer would otherwise have occurred. Upon any Transfer of
LLC Interests in accordance with the provisions hereof, the Manager Member shall
make the appropriate revisions to SCHEDULE A hereto.
Each time LLC Interests (including without limitation additional LLC
Points) are Transferred (including without limitation pursuant to a Put) or
Purchased, the Manager Member may in its sole discretion elect to revalue the
Capital Accounts of all the Members. If the Manager Member so elects, then the
Capital Accounts of all the Members shall be adjusted as follows: (i) The
Manager Member shall determine the proceeds which would be realized if the LLC
sold all its assets at such time for a price equal to the Fair Market Value of
such assets, and (ii) the Manager Member shall allocate amounts equal to the
gain or loss which would have been realized upon such a sale to the Capital
Accounts of all the Members immediately prior to such Transfer in accordance
with Sections 4.2(e) and 4.2(f) hereof.
No interests of a Non-Manager Member in the LLC (including without
limitation LLC Interests) may be pledged, hypothecated, optioned or encumbered,
nor may any direct or indirect ownership interests in a Non-Manager Member be
pledged, hypothecated, optioned or encumbered, nor may any offer to do any of
the foregoing be made, without the prior written consent of the Management
Committee and the Manager Member granted after the Effective Time in their
respective reasonable discretion.
SECTION 5.2. SUBSTITUTE NON-MANAGER MEMBERS. No transferee of interests of
a Member in the LLC (including without limitation LLC Interests) shall become a
Member, and no Non-Manager Member in which any direct or indirect ownership
interests have been Transferred shall remain a Member of the LLC, in either case
except in accordance with this Section 5.2. The Management Committee may, with
the prior written consent of the Manager Member granted after the Effective
Time, admit as a substitute or additional Non-Manager Member (with respect to
all or a portion of the LLC Interests held by a Person) any Person that acquires
an LLC Interest by Transfer from a Non-Manager Member in accordance with Section
5.1 hereof. The
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Manager Member may, with the prior written consent of the Management Committee
(such consent not to be unreasonably withheld), admit as a substitute or
additional Non-Manager Member (with respect to all or a portion of the LLC
Interests held by a Person) any Person that acquires an LLC Interest from the
Manager Member in accordance with Section 6.1 hereof. The Management Committee
may, with the prior written consent of the Manager Member granted after the
Effective Time, permit any Non-Manager Member in which ownership interests have
been Transferred to remain a Member of the LLC (and such Non-Manager Member
otherwise automatically shall cease to be a Member of the LLC). The admission of
a transferee as a substitute or additional Non-Manager Member shall, in all
events, be conditioned upon the execution of an instrument satisfactory in form
and substance to the Management Committee and the Manager Member, whereby such
transferee becomes a party to this Agreement as a Non-Manager Member, as well as
compliance by such transferee with the provisions of Section 3.8 hereof. Upon
the admission of a substitute Non-Manager Member in accordance with this Section
5.2, the Manager Member shall make the appropriate revisions to SCHEDULE A
hereto.
SECTION 5.3. ALLOCATION OF DISTRIBUTIONS BETWEEN TRANSFEROR AND
TRANSFEREE; SUCCESSOR TO CAPITAL ACCOUNTS. Upon the Transfer of LLC Interests in
accordance with this Article V, distributions pursuant to Article IV after the
date of such Transfer shall be made to the Person owning the LLC Interest at the
date of distribution, unless the transferor and transferee otherwise agree and
so direct the LLC and the Manager Member in a written statement signed by both
the transferor and transferee; PROVIDED, HOWEVER, that distributions in respect
of allocations made with regard to Subsequent Purchase LLC Points for periods
prior to the Subsequent Closing shall be made to FAI. Subject to Sections 5.9(c)
and 5.9(d) hereof, in connection with a Transfer by a Member of LLC Interests,
the transferee shall succeed to a pro-rata (based on the percentage of such
Person's LLC Interests Transferred) portion of the transferor's Capital Account,
unless the transferor and transferee otherwise agree and so direct the LLC and
the Manager Member in a written statement signed by both the transferor and
transferee and consented to in writing by the Management Committee and the
Manager Member following the Effective Time.
SECTION 5.4. RESIGNATION, REDEMPTIONS AND WITHDRAWALS. No Non-Manager
Member shall have the right to resign as a Member, to cause the redemption of
its interest in the LLC in whole or in part, or otherwise to withdraw as a
Member of the LLC, except (a) with the written consent of the Management
Committee and the Manager Member granted after the Effective Time, (b) as is
expressly provided for in Section 3.11 hereof in connection with a Purchase or
(c) as is expressly provided for in Section 7.1 hereof. Upon any resignation,
redemption or withdrawal as a Member, the Non-Manager Member shall only be
entitled to the consideration (if any) provided for by Section 3.11 or Section
7.1 hereof upon the purchase of its LLC Interest, if and to the extent that one
of such Sections provides for such a purchase (and shall in no event be entitled
to a withdrawal, redemption or distribution of its Capital Account in whole or
in part). Upon the resignation, redemption or withdrawal, in whole or in part,
by a Non-Manager Member, the Manager Member shall make the appropriate revisions
to SCHEDULE A hereto.
SECTION 5.5. ISSUANCE OF ADDITIONAL LLC INTERESTS.
(a) Except as provided in Section 5.2, additional Non-Manager
Members (together with any Person admitted as a substitute or additional
Non-Manager
72
Member pursuant to Section 5.2 hereof, the "Additional Non-Manager
Members") may be admitted to the LLC, and such Additional Non-Manager
Members may be issued LLC Interests, only upon the prior written consent
of the Manager Member and the Management Committee granted after the
Effective Time (and then upon such terms and conditions as may be
established jointly by the Manager Member and the Management Committee,
including without limitation upon such Additional Non-Manager Member's
execution of an instrument in form and substance satisfactory to the
Manager Member whereby such Person becomes a party to this Agreement as a
Non-Manager Member as well as such Person's compliance with the provisions
of Section 3.8 hereof). Unless the Manager Member and the Management
Committee each shall have otherwise granted their prior written consent
after the Effective Time, any issuance of LLC Points pursuant to this
Section 5.5(a) shall be accompanied by a simultaneous issuance of the same
number of DE LLC Points by the DE LLC to the same Person (or to its
Affiliated "Non-Manager Member" under the DE LLC Agreement, as applicable)
receiving LLC Points in such issuance by the LLC.
(b) Existing Non-Manager Members may be issued additional LLC
Points by the LLC only upon the prior written consent of the Manager
Member and the Management Committee granted after the Effective Time (and
then upon such terms and conditions as may be established jointly by the
Manager Member and the Management Committee). The Manager Member or its
Affiliates may only be issued additional LLC Points (or other LLC
Interests) upon the approval of the Management Committee. Unless the
Manager Member and the Management Committee each shall have otherwise
granted their prior written consent after the Effective Time, any issuance
of LLC Points pursuant to this Section 5.5(b) shall be accompanied by a
simultaneous issuance of the same number of DE LLC Points by the DE LLC to
the same Person (or to its Affiliated "Non-Manager Member" under the DE
LLC Agreement, as applicable) receiving LLC Points in such issuance by the
LLC.
(c) Each time additional LLC Interests are issued (including,
without limitation, additional LLC Points), the Capital Accounts of all
the Members shall be adjusted as follows: (i) the proceeds which would be
realized if the LLC sold all its assets at such time for a price equal to
the Fair Market Value of such assets shall be determined as provided in
the definition of Fair Market Value, and (ii) the Manager Member shall
allocate amounts equal to the gain or loss which would have been realized
upon such a sale to the Capital Accounts of all the Members immediately
prior to such issuance in accordance with Sections 4.2(e) and 4.2(f)
hereof.
(d) Upon the issuance of additional LLC Interests in
accordance with the provisions of this Article V, the Manager Member shall
make the appropriate revisions to SCHEDULE A hereto.
(e) Notwithstanding anything in this Agreement to the
contrary, (i) no additional LLC Interests may be issued if, giving effect
to such issuance, the total number of Members would be deemed to exceed
one hundred (100) as determined in accordance with Treasury Regulation
Section 1.7704-1 (h), and (ii) no LLC Interests may be issued (A) in a
transaction that is required to be registered under the Securities Act, or
(B) in a
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transaction that is not required to be registered under the Securities Act
by reason of Regulation S thereunder unless the offering and sale of the
LLC Interests would not have been required to be registered under the
Securities Act if the LLC Interests had been offered and sold within the
United States, or in any transaction that would otherwise violate the
securities or other laws of any jurisdiction.
(f) Until the earlier to occur of (i) the date of the
consummation of the Subsequent Purchase pursuant to Section 12 of the
Purchase Agreement or (ii) such time as it has become objectively
determinable that AMG will not be required to consummate the Subsequent
Purchase pursuant to Section 12 of the Purchase Agreement, any issuance of
LLC Points by the LLC shall require the prior written approval of FAI
(such approval not to be unreasonably withheld).
SECTION 5.6. ADDITIONAL REQUIREMENTS FOR TRANSFER OR FOR ISSUANCE. As
additional conditions precedent to the validity of (x) any Transfer of a
Non-Manager Member's interest in the LLC (or, in the case of a Non-Manager
Member which is not a natural person, direct or indirect ownership interests in
such Non-Manager Member) (pursuant to Section 5.1), or (y) the issuance of
additional LLC Interests (pursuant to Section 5.5 above), such Transfer or
issuance (as applicable) shall not: (i) cause the LLC to become subject to
registration as an "investment company" under the 1940 Act, and the rules and
regulations of the SEC thereunder, (ii) result in the assignment or termination
of any contract to which the LLC (or any Controlled Affiliate thereof) is a
party and which individually or in the aggregate are material (it being
understood and agreed that any contract pursuant to which the LLC or a
Controlled Affiliate thereof provides Investment Management Services is
material), or (iii) result in the treatment of the LLC as an association taxable
as a corporation or as a "publicly traded partnership" for federal or state
income tax purposes.
The Manager Member or the Management Committee in its discretion may
require reasonable evidence as to the foregoing, including, without limitation,
a favorable opinion of counsel in form and substance reasonably acceptable to
the Manager Member and the Management Committee (as applicable), the expense of
which shall be borne by the parties to such transaction (and to the extent the
LLC is such a party, shall be paid from the Operating Allocation).
To the fullest extent permitted by law, any Transfer or issuance that
violates the provisions of this Article V shall be null and void.
SECTION 5.7. REGISTRATION OF LLC INTERESTS. The LLC Interests constitute
"securities," as such term is defined in 6 DEL. C. SS. 8-102(15), governed by
Article 8 of the Uniform Commercial Code as in effect in the State of Delaware
(6 DEL. C. SS. 8-101, ET SEQ.). The LLC shall maintain a record of the ownership
of LLC Interests which shall be set forth on Schedule A hereto (and which shall
be updated from time to time to reflect transfers of ownership of LLC Interests
in accordance with the provisions of this Agreement). Subject to restrictions on
the transferability of LLC Interests as set forth herein, LLC Interests shall be
transferred by delivery to the LLC of an instruction by the registered owner of
an LLC Interest requesting registration of transfer of such LLC Interest and the
recording of such transfer in the records of the LLC.
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SECTION 5.8. REPRESENTATION OF MEMBERS. The Manager Member and each
Non-Manager Member (including any Additional Non-Manager Member) hereby
represents and warrants to the LLC and each other Member, and acknowledges (as
applicable), that (a) it has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the LLC and making an informed investment decision with respect
thereto, (b) it is able to bear the economic and financial risk of an investment
in the LLC for an indefinite period of time, (c) it is acquiring an interest in
the LLC for investment only and not with a view to, or for resale in connection
with, any distribution to the public or public offering thereof, (d) the equity
interests in the LLC have not been registered under the securities laws of any
jurisdiction and cannot be disposed of unless they are subsequently registered
and/or qualified under applicable securities laws and the provisions of this
Agreement have been complied with, and (e) the execution, delivery and
performance of this Agreement, and of each other agreement referenced herein to
which such Member is a party, by such Member have been duly authorized in all
necessary respects, do not require it to obtain any consent or approval that has
not been obtained and do not contravene or result in a default under any
provision of any existing law or regulation applicable to it, any provision of
its charter, by-laws or other governing documents or any agreement or instrument
to which it is a party or by which it is bound, and this Agreement and each such
other agreement referenced herein to which such Member is a party has been duly
executed and delivered by such Member and is enforceable against such Member in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability.
SECTION 5.9. CONVERSION OF LLC POINTS.
(a) Each Series B LLC Point automatically shall convert
("Convert") into one Series A LLC Point as follows:
(i) In the case of a Series B LLC Point which is issued
and outstanding as of the Effective Time, such Series B LLC
Point shall convert into one (1) Series A LLC Point on a date
which is five (5) years from the Effective Time;
(ii) In the case of a Series B LLC Point which is sold
and transferred to a Non-Manager Member pursuant to the Equity
Purchase Program, such Series B LLC Point shall convert into
one (1) Series A LLC Point on the date which is five (5) years
from the date of such sale and transfer pursuant to the Equity
Purchase Program);
(iii) In the case of a Series B LLC Point which is sold
and transferred to a Non-Manager Member pursuant to the
provisions of Section 6.1 hereof, or which is sold and
transferred to such Non-Manager Member pursuant to the
provisions of Section 5.5 hereof, such Series B LLC Point
shall convert into one (1) Series A LLC Point on the date
which is five (5) years from the date of such sale and
transfer; and
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(iv) In the case of a Series B LLC Point which is
purchased by the Manager Member (or its assignee) (whether
pursuant to the provisions of Section 3.11 or otherwise), such
Series B LLC Point shall convert into one (1) Series A LLC
Point immediately following the consummation of such purchase
by the Manager Member (or its assignee).
(b) In addition to the foregoing, each Series B LLC Point
which is held by a Non-Manager Member who (i) dies (or whose related
Employee Stockholder dies, in the case of a Non-Manager Member which is
not itself an Employee Stockholder), (ii) has his or her (or whose related
Employee Stockholder, in the case of a Non-Manager Member which is not
itself an Employee Stockholder, has his or her) employment with the LLC
terminate as a result of Permanent Incapacity, or (iii) is removed as a
Member of the LLC pursuant to a Removal Upon the Instruction of the
Management Committee, shall automatically Convert into one (1) Series A
LLC Point as of immediately prior to such event. In addition to the
foregoing, each Series B LLC Point which is held by a Non-Manager Member
who is an Initial Member shall automatically immediately Convert into one
(1) Series A LLC Point as of immediately following a delivery by the
Manager Member of a written notice expressly exercising its rights
pursuant to Section 3.2(b)(v) of this Agreement.
(c) In connection with any sale and transfer by the Manager
Member (or any of its Affiliates or their respective assignees) of Series
A LLC Points to any Person, the Manager Member may determine in its sole
discretion to convert such Series A LLC Points into an equal number of
Series B-2 LLC Points effective as of immediately prior to such sale and
transfer, and (unless the Manager Member shall otherwise elect in writing
after the Effective Time in its sole discretion) no portion of the Capital
Account of such transferor Member shall be transferred to the Person
receiving such Series B-2 LLC Points.
(d) Upon any sale and transfer of a Purchase Program Point
that is a Series B-1 LLC Point or Series A LLC Point to a Non-Manager
Member pursuant to the Equity Purchase Program, such Series B-1 LLC Point
or Series A LLC Point (as applicable) shall automatically immediately
convert into one (1) Series B-2 LLC Point as of immediately prior to such
sale and transfer (and, in the event of any such Purchase Program Point
that was held by another Member as of immediately prior to such sale and
transfer pursuant to the Equity Purchase Program, no portion of the
Capital Account of such transferor Member shall be transferred to the
Non-Manager Member purchasing such Purchase Program Point).
SECTION 5.10. PURCHASE PROGRAM POINTS. FAI hereby agrees that all of the
Purchase Program Points held by FAI as of the Effective Time (which 5,000
Purchase Program Points constitute the entire Purchase Reserve as of the
Effective Time) shall be subject to subsequent sale and transfer in accordance
with the terms and conditions of the Equity Purchase Program (as the same may be
amended from time to time with the prior written consent of the Manager Member,
FAI and the Management Committee granted after the Effective Time), and
acknowledges and agrees that no consent or other approval of FAI shall be
required for any such sale and transfer pursuant to the Equity Purchase Program.
With respect to each Xxxxxxxx
00
Xxxxxxx Xxxxx held by FAI as of the Effective Time, each of FAI and Xxxxxx
Xxxxxx (as its related Employee Stockholder) covenants and agrees that, from and
after the Effective Time until the earliest of (i) such time as such Purchase
Program Point has been sold and transferred by FAI pursuant to the Equity
Purchase Program, (ii) such time as such Purchase Program Point has been
purchased by the Manager Member (or its assignee) pursuant to Section 3.11
hereof or (iii) three months following the tenth (10th) anniversary of the
Effective Time, FAI shall remain in existence and shall not Transfer (including
without limitation pursuant to the exercise of a Put, and notwithstanding the
Conversion of such Purchase Program Point to a Series A LLC Point) such Purchase
Program Point (other than pursuant to a sale and transfer made under the Equity
Purchase Program), except to the extent that FAI, the Management Committee and
the Manager Member otherwise agree in writing after the Effective Time (and, for
the avoidance of doubt, the other Transfer restrictions set forth in this
Agreement shall thereafter continue to apply to any subsequent Transfer of such
LLC Point). Unless the Manager Member and the Management Committee each shall
have otherwise granted their prior written consent after the Effective Time, any
sale and transfer of Purchase Program Points pursuant to the Equity Purchase
Program shall be accompanied by a simultaneous sale and transfer of the same
number of "Purchase Program Points" (as such term is defined in the DE LLC
Agreement) pursuant to the "Equity Purchase Program" of the DE LLC to the same
Person (or to its Affiliated "Non-Manager Member" under the DE LLC Agreement, as
applicable) purchasing such Purchase Program Points pursuant to the Equity
Purchase Program of the LLC.
ARTICLE VI - TRANSFER OF LLC INTERESTS BY THE
MANAGER MEMBER; REDEMPTION, REMOVAL
AND WITHDRAWAL.
SECTION 6.1. TRANSFERABILITY OF INTEREST.
(a) Except as set forth in this Section 6.1, without the prior
written approval of the Management Committee, (i) none of AMG's direct or
indirect interest in the LLC (including, without limitation, any interest
which has been Transferred to the Manager Member) may be Transferred
(other than as a result of any merger, consolidation, leveraged
recapitalization, sale of all or substantially all of its assets or
similar transaction of AMG (regardless of how structured), which shall in
no event be subject to the restrictions set forth in this Section 6.1 or
require the consent of the Management Committee or any Member of the LLC)
and (ii) the LLC may not undergo any merger, consolidation, conversion,
leveraged recapitalization, sale of all or substantially all of its assets
or similar transaction (any of which transactions described in this clause
(ii) shall also require the prior written consent of the Manager Member
granted after the Effective Time); PROVIDED, HOWEVER, (A) it is understood
and agreed that, in connection with the operation of the business of AMG
and the Manager Member (including, without limitation, the financing of
its interest herein and direct or indirect interests in additional
investment management companies), AMG's direct or indirect interests in
the LLC may be pledged and encumbered and lien holders of AMG's interests
shall have and be able to exercise the rights of secured creditors with
respect to such interests, (B) AMG may, with the prior written approval of
the Management Committee
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(such approval not to be unreasonably withheld), Transfer some (but not a
majority) of its LLC Points to a Person who is not a Member but who is an
Officer or employee of the LLC (or any Controlled Affiliate thereof) or
who becomes an Officer or employee of the LLC (or any Controlled Affiliate
thereof) or a Person majority owned by any such Person, (C) AMG may, with
the prior written approval of the Management Committee (such approval not
to be unreasonably withheld), Transfer some (but not a majority) of its
LLC Points to existing Non-Manager Members, and (D) AMG may Transfer all
or any portion of its LLC Interests to other direct or indirect
wholly-owned subsidiaries of AMG (which shall thereafter be subject to the
provisions of this Agreement applicable to the Manager Member).
Notwithstanding anything else set forth herein, AMG may, with
the prior written approval of the Management Committee, Transfer all of
its direct and indirect interests in the LLC to a bona fide third party
purchaser in a single transaction or a series of related transactions
(whether structured as an equity sale, a merger, a consolidation or
otherwise), and, in any such case, each of the Non-Manager Members shall
be required to Transfer, in the same transaction or transactions, all
their interests in the LLC (and to enter into such customary documentation
in connection therewith as is entered into by AMG); PROVIDED, however,
that the aggregate purchase price (including all forms of consideration,
including without limitation amounts to be received in the form of equity
participation rights) to be received by the Members (other than bona fide
compensation for future services to be performed following such
transaction by any Member) shall be allocated among the Members in the
same manner as the purchase price would have been distributed pursuant to
Section 4.4 following a sale of all or substantially all of the assets of
the LLC and its Controlled Affiliates and the DE LLC and its Controlled
Affiliates (with any net gain or loss from such transaction first having
been allocated among the Members in accordance with Section 4.2(e) or
4.2(f), as applicable).
Until the earlier to occur of (i) the date of the consummation
of the Subsequent Purchase pursuant to Section 12 of the Purchase
Agreement or (ii) such time as it has become objectively determinable that
AMG will not be required to consummate the Subsequent Purchase pursuant to
Section 12 of the Purchase Agreement, any transaction requiring the prior
written approval of the Management Committee under this Section 6.1(a)
shall also require the prior written approval of FAI (other than a
Transfer by AMG described in clause (B) of the proviso to the first
paragraph of this Section 6.1(a), which shall not require the approval of
FAI).
Upon any of the foregoing transactions, the Manager Member
shall make the appropriate revisions to SCHEDULE A hereto.
(b) In the case of a Transfer upon foreclosure pursuant to a
pledge of or lien on AMG's direct or indirect interest in the LLC pursuant
to Section 6.1(a)(A), each transferee shall sign a counterpart signature
page to this Agreement agreeing thereby to become either a Non-Manager
Member or the Manager Member (provided, however, that once one such other
transferee elects to become the Manager Member, no transferee (other than
a subsequent transferee of such new Manager Member) may elect to be a
Manager Member hereunder. If the transferees pursuant to Section 6.1(a)(A)
receive all
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of the Manager Member's LLC Interests and none of such transferees elects
to become the Manager Member, then the Manager Member shall be deemed to
have withdrawn from the LLC. If, however, one of the transferees elects to
become the Manager Member and executes a counterpart signature page to
this Agreement agreeing thereby to become the Manager Member, then
notwithstanding any other provision hereof to the contrary, the old
Manager Member shall thereupon be permitted to withdraw from the LLC as
Manager Member.
(c) In the case of a Transfer pursuant to the second paragraph
of Section 6.1(a), the old Manager Member shall be deemed to have
withdrawn and its transferee shall be deemed to have become the new
Manager Member hereunder.
SECTION 6.2. RESIGNATION, REDEMPTION, AND WITHDRAWAL. To the fullest
extent permitted by law, except as set forth in Section 6.1, without the prior
written consent of the Management Committee, the Manager Member shall not have
the right to resign or withdraw from the LLC as Manager Member. With the prior
written consent of the Management Committee, the Manager Member may resign or
withdraw as Manager Member upon prior written notice to the LLC. Without the
prior written consent of the Management Committee, the Manager Member shall have
no right to have all or any portion of its interest in the LLC redeemed. Any
resigned, withdrawn or removed Manager Member shall retain its interest in the
capital of the LLC and its other economic rights under this Agreement as a
Non-Manager Member having the number of LLC Points held by the Manager Member
prior to its resignation, withdrawal or removal (except as otherwise may be
agreed to in writing following the Effective Time by such Manager Member in
connection with such resignation, withdrawal or removal). If a Manager Member
who has resigned, withdrawn or been removed no longer has any economic interest
in the LLC, then upon such resignation, withdrawal or removal such Person shall
cease to be a Member of the LLC.
ARTICLE VII - PUT OF LLC INTERESTS.
SECTION 7.1. NON-MANAGER MEMBER PUTS.
(a) Each Non-Manager Member may, at such Non-Manager Member's
option and subject to the terms and conditions set forth in this Section
7.1, cause the Manager Member (or its assignee) to purchase portions of
the Vested Series A LLC Points held by such Non-Manager Member (a "Put").
(b) For so long as a Non-Manager Member (or, in the case of a
Non-Manager Member which is not a natural person, its related Employee
Stockholder) remains employed by the LLC or the DE LLC (as applicable),
such Non-Manager Member may (subject to the other terms and conditions set
forth in this Section 7.1) cause the Manager Member (or its assignee) to
purchase up to ten percent (10%) of the Series A LLC Points that are
Initial LLC Points of such Non-Manager Member (together with any such
Series A LLC Points that are Initial LLC Points which previously could
have been sold to the Manager Member by such Non-Manager Member pursuant
to this Section 7.1(b) but were not previously sold) from such Non-Manager
Member (and/or any
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Permitted Transferees of such Non-Manager Member) on the last business day
of the month of March, starting with the last business day of the first
month of March that is at least five (5) years following the Effective
Time (each a "Put Purchase Date"); PROVIDED, HOWEVER, that only up to an
aggregate of fifty percent (50%) of a Non-Manager Member's Series A LLC
Points that are Initial LLC Points may be sold by such Non-Manager Member
pursuant to this Section 7.1(b); and PROVIDED, FURTHER, that the Manager
Member shall in no event be required to purchase in excess of 10% of the
total outstanding LLC Points of the LLC during any single calendar year
pursuant to this Section 7.1 (measured as of the applicable Put Purchase
Date before giving effect to any Puts in that calendar year), and in the
event a greater number of LLC Points have purported to be Put pursuant to
this Section 7.1 during any single calendar year, the number of LLC Points
that are actually Put by Non-Manager Members pursuant to this Section 7.1
in such calendar year shall be reduced to a number that is equal to 10% of
the total outstanding LLC Points of the LLC (as of such Put Purchase Date
before giving effect to any Puts in that calendar year), with such
reduction borne pro rata by the Non-Manager Members exercising Puts in
that calendar year in proportion to the number of LLC Points they have
attempted to Put in such calendar year pursuant to this Section 7.1, and
the remainder of such purported Puts in such calendar year shall be deemed
to have been irrevocably withdrawn for such calendar year; and PROVIDED,
FURTHER, that for purposes of the percentage limitations set forth in this
Section 7.1(b), the number of Initial LLC Points held by FAI shall be
reduced by the number of Purchase Program Points existing as of
immediately following the Effective Time (but, for the avoidance of doubt,
such Purchase Program Points shall nonetheless be deemed to be
"outstanding LLC Points" for purposes of determining the number of
outstanding LLC Points under this Agreement); and PROVIDED, FURTHER, that,
notwithstanding any of the other timing and volume limitations and notice
requirements set forth in this Section 7.1 to the contrary, in the event
that any LLC Points held by either Xxxxxxx X'Xxxxxx or Xxxx Xxxxxx (and
their respective Permitted Transferees) were not purchased pursuant to
Section 3.11 hereof in connection with the Retirement of such applicable
Employee Stockholder on the eleventh (11th) anniversary of the Effective
Time as a result of the operation of the third proviso to Section 3.11(a)
hereof, such Designated Initial Member shall be permitted to Put one-half
(1/2) of the remaining Vested Series A LLC Points held by it and its
Permitted Transferees on the twelfth (12th) anniversary of the Effective
Time by written notice of such Put to the Manager Member delivered not
later than one month prior to the twelfth (12th) anniversary of the
Effective Time (and such written notice shall constitute the Put Notice
for such Put, the twelfth (12th) anniversary shall constitute the Put
Purchase Date for such LLC Points, the Put Price shall be determined in
accordance with Section 7.1(e) hereof and the manner of payment shall be
determined in accordance with Section 7.1(f) hereof)). Notwithstanding any
other provision set forth herein, a Non-Manager Member may only exercise
its rights under this Section 7.1(b) if the Non-Manager Member
simultaneously causes the DE LLC Manager Member to purchase an equal
number of Initial DE LLC Points pursuant to the provisions of Section
7.1(b) of the DE LLC Agreement (and the Manager Member shall be permitted
in its sole discretion (but shall not be required) to delay the
consummation of the purchase of LLC Points pursuant to this Section 7.1(b)
until such time as such Non-Manager Member (or its Affiliated "Non-Manager
Member" under the DE LLC Agreement, as applicable) simultaneously sells
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such Initial DE LLC Points to the DE LLC Manager Member pursuant to the
provisions of Section 7.1(b) of the DE LLC Agreement).
(c) For so long as a Non-Manager Member (or, in the case of a
Non-Manager Member which is not a natural person, its related Employee
Stockholder) remains employed by the LLC or the DE LLC (as applicable),
such Non-Manager Member may (subject to the other terms and conditions set
forth in this Section 7.1) cause the Manager Member (or its assignee) to
purchase up to ten percent (10%) of any Vested Series A LLC Points
resulting from the Conversion of Series B-2 LLC Points sold and
transferred to such Non-Manager Member pursuant to the Equity Purchase
Program (each such sale and transfer of Series B LLC Points to a
Non-Manager Member pursuant to the Equity Purchase Program being referred
to herein as a "Purchase Program Sale") from such Non-Manager Member
(and/or any Permitted Transferees of such Non-Manager Member) on any Put
Purchase Date starting on the first Put Purchase Date which is at least
five (5) years following the date of such Purchase Program Sale, PROVIDED
that, in the case of any Non-Manager Member who was expressly identified
on Annex B to the Equity Purchase Agreement as of the Effective Time as a
designated future purchaser of an expressly specified number of Series B-2
LLC Points pursuant to the Equity Purchase Program and who in fact
purchased all or a portion of such identified Series B-2 LLC Points
pursuant to the Equity Purchase Program in a Purchase Program Sale, on the
first Put Purchase Date which is at least five (5) years following the
date of such Purchase Program Sale such Non-Manager Member may cause the
Manager Member (or its assignee) to purchase up to fifty percent (50%) of
any Vested Series A LLC Points resulting from the Conversion of such
Series B-2 LLC Points sold and transferred to such Non-Manager Member in
such Purchase Program Sale (subject to the second proviso contained in
Section 7.1(b)); PROVIDED, HOWEVER, that only up to an aggregate of fifty
percent (50%) of the Series A LLC Points resulting from the Conversion of
Series B LLC Points sold and transferred to a Non-Manager Member in a
particular Purchase Program Sale may be sold by such Non-Manager Member
pursuant to this Section 7.1(c); and PROVIDED, FURTHER, that any such sale
pursuant to this Section 7.1(c) shall be subject to the second proviso
contained in Section 7.1(b). Notwithstanding any other provision set forth
herein, a Non-Manager Member may only exercise its rights under this
Section 7.1(c) if the Non-Manager Member simultaneously causes the DE LLC
Manager Member to purchase an equal number of Vested DE LLC Points
(acquired pursuant to the same Purchase Program Sale as those Vested LLC
Points being sold by such Non-Manager Member pursuant to this Section
7.1(c)) pursuant to the provisions of Section 7.1(c) of the DE LLC
Agreement (and the Manager Member shall be permitted in its sole
discretion (but shall not be required) to delay the consummation of the
purchase of LLC Points pursuant to this Section 7.1(c) until such time as
such Non-Manager Member (or its Affiliated "Non-Manager Member" under the
DE LLC Agreement, as applicable) simultaneously sells such Vested DE LLC
Points to the DE LLC Manager Member pursuant to the provisions of Section
7.1(c) of the DE LLC Agreement).
(d) If a Non-Manager Member desires to exercise its rights
under Section 7.1(b) or 7.1(c) above, it and its Employee Stockholder
shall give the Manager Member, AMG, each other Employee Stockholder and
the LLC irrevocable written
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notice (a "Put Notice") on or prior to the preceding October 1 (the
"Notice Deadline"), stating that it is electing to exercise such rights,
the number of Vested Series A LLC Points (the "Put LLC Points") to be sold
in the Put, to what extent such Put is a Put of (A) Initial LLC Points
("Initial Put LLC Points") or (B) Series A LLC Points resulting from the
Conversion of Series B-2 LLC Points received upon a Purchase Program Sale)
("Purchase Program Put LLC Points") and, if Purchase Program Put LLC
Points are to be included in such Put, what Purchase Program Sale they are
associated with. Puts in any given calendar year for which Put Notices are
received before the Notice Deadline for that calendar year shall be
completed as follows: AMG shall purchase from each Non-Manager Member
(and/or its Permitted Transferees, as applicable) that number of Put LLC
Points as is equal to the sum of (i) the number of Initial Put LLC Points
to be sold by such Non-Manager Member (and/or its Permitted Transferees,
as applicable) and designated as such in such Non-Manager Member's Put
Notice, up to the maximum number of Initial Put LLC Points permitted by
Section 7.1(b) to be Put by such Non-Manager Member in that year, and (ii)
the number of Purchase Program Put LLC Points to be sold by such
Non-Manager Member (and/or its Permitted Transferees, as applicable) and
designated as such in such Non-Manager Member's Put Notice, up to the
maximum number of Purchase Program Put LLC Points permitted by Section
7.1(c) to be Put by such Non-Manager Member in that year.
(e) The aggregate purchase price payable by the Manager Member
(or its assignee) upon the purchase of Put LLC Points pursuant to a Put
(the "Put Price") on a Put Purchase Date shall be an amount equal to the
aggregate fair market value of the LLC Points purchased pursuant to a Put
hereunder, which shall be conclusively determined as follows:
(i) In the case of Put LLC Points other than Purchase Program
Put LLC Points, an amount equal to the product of
(A) seven (7.0), multiplied by
(B) the positive difference (if any) of (I) the sum of (X)
fifty percent (50%) of the Base Owners' Allocation for the twenty
four (24) months ending on the last day of the calendar quarter
immediately preceding the calendar quarter in which such Put
Purchase Date occurs, plus (Y) thirty three and one-third percent
(33-1/3%) of the Earned Performance Owners' Allocation for the
thirty six (36) months ending on the last day of the calendar
quarter immediately preceding the calendar quarter in which such Put
Purchase Date occurs, minus (II) the amount by which the combined
actual expenses of the LLC, the DE LLC and any Controlled Affiliates
of the LLC or the DE LLC (determined on a basis consistent with the
determination of the permitted uses of the Operating Allocation
under this Agreement and the DE LLC Agreement) (other than any
premiums on key-man life and/or disability insurance paid out of the
Owners' Allocation, and other than expenses of the LLC consisting of
payments made by the LLC to the DE LLC under the Services Agreement,
PROVIDED that the ten percent margin payable by the LLC to the DE
LLC under the Services Agreement shall be included in such
determination as an expense of the LLC) exceeded the Operating
Allocation
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(including any previously reserved Operating Allocation) during the
twelve (12) months ending on the last day of the calendar quarter
immediately preceding the calendar quarter in which such Put
Purchase Date occurs, multiplied by
(C) a fraction, the numerator of which is the number of Put
LLC Points to be purchased from such Non-Manager Member on such Put
Purchase Date pursuant to such Put, and the denominator of which is
the number of LLC Points outstanding on such Put Purchase Date
(before giving effect to any issuances or redemptions of LLC Points
on such date)
; PROVIDED, HOWEVER, that the Put Price determined pursuant to this
clause (i) shall be reduced by the amount of the "Put Price"
determined under clause (i) of Section 7.1(e) of the DE LLC
Agreement in connection with the corresponding purchase of DE LLC
Points priced pursuant to such provision of the DE LLC Agreement;
and
(ii) In the case of Purchase Program Put LLC Points, an amount
equal to their Purchase Program Points FMV
; PROVIDED, HOWEVER, that the Purchase Program Points FMV determined
pursuant to this clause (ii) shall be reduced by the amount of the
"Purchase Program Points FMV" determined under clause (ii) of
Section 7.1(e) of the DE LLC Agreement in connection with the
corresponding purchase of DE LLC Points priced pursuant to such
provision of the DE LLC Agreement.
(f) In the case of any purchase pursuant to a Put, the Put
Price shall be paid by the Manager Member (or, if the Manager Member shall
have assigned its obligation to any other Person pursuant to paragraph (g)
below, such other Person) on the relevant Put Purchase Date as follows, in
each case against delivery of such documents or instruments of transfer as
may reasonably be requested by the Manager Member (including
representations and warranties from the transferring Non-Manager Member
and any Permitted Transferees thereof which are selling Put LLC Points
pursuant to such Put that they have sole record and beneficial title to
the Put LLC Points, free and clear of any Liens other than those imposed
by this Agreement and addressing such other customary matters as to
authority, enforceability and similar subjects as the Manager Member
reasonably requests):
(i) In the case of a purchase of Put LLC Points other than
Purchase Program Put LLC Points, either (in the sole discretion of
the Manager Member) (A) by certified check issued to the Non-Manager
Member exercising such Put in the amount of the entire Put Price, or
(B) by (I) certified check issued to the Non-Manager Member
exercising such Put in an amount equal to fifty percent (50%) of the
Put Price and (II) delivery of AMG Shares having a value equal to
fifty percent (50%) of the Put Price as determined pursuant to the
procedures set forth in Section 7.1(e)(i) ; or
(ii) In the case of a purchase of Purchase Program Put LLC
Points,
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(A) in the case of any such purchase where the Purchase
Program Points FMV determined pursuant to Section 7.1(e)(ii)
is less than or equal to the amount that would have been
calculated under Section 7.1(e)(i) if such Put LLC Points had
not been Purchase Program Put LLC Points, then in the manner
set forth under Section 7.1(f)(i); or
(B) in the case of any such purchase where the Purchase
Program Points FMV determined pursuant to Section 7.1(e)(ii)
is greater than the amount that would have been calculated
under Section 7.1(e)(i) if such Put LLC Points had not been
Purchase Program Put LLC Points, then (I) that portion of the
Purchase Program Points FMV equal to such calculation under
Section 7.1(e)(i) shall be paid in the manner set forth under
Section 7.1(f)(i), and (II) the excess shall be paid one
hundred percent (100%) in Contingent Consideration at the same
time payment is made pursuant to clause (I) of this Section
7.1(f)(ii)(B).
(g) The Manager Member may (i) assign any or all of its rights
and obligations under this Section 7.1, in one or more instances, to any
other direct or indirect wholly-owned subsidiary of AMG or (ii) with the
written consent of the Management Committee, assign any or all of its
rights and obligations under this Section 7.1, in one or more instances,
to the LLC; PROVIDED, HOWEVER, that if the Manager Member assigns any or
all its rights and obligations under this Section 7.1 to the LLC, then the
Manager Member shall assign the identical and proportional rights and
obligations under the DE LLC Agreement to the DE LLC; and PROVIDED,
FURTHER, that, in the event such assignee is a wholly-owned subsidiary of
AMG and thereafter ceases to be so owned, such assignee shall reassign to
the Manager Member (or another direct or indirect wholly-owned subsidiary
of AMG) all LLC Interests so acquired; and PROVIDED, FURTHER, that no such
assignment shall relieve the Manager Member of its obligation to make
payment of a Put Price (to the extent not paid by any such assignee).
(h) In the case of any Put, as of the applicable Put Purchase
Date, each Non-Manager Member (and each of its applicable Permitted
Transferees) selling Put LLC Points shall cease to hold the Put LLC Points
purchased on the Put Purchase Date and shall cease to hold a pro-rata
portion of such Non-Manager Member's (and each such Permitted
Transferee's) Capital Account (which shall have been transferred to the
Manager Member or its assignee making such purchase of Put LLC Points, or
canceled by the LLC if the LLC is the assignee making such purchase) and
shall no longer have any rights with respect to such portion of its LLC
Interests.
(i) In the event that the Manager Member elects pursuant to
the provisions of this Section 7.1 or pursuant to the provisions of
Section 3.11 hereof (as applicable) to pay a portion of the Put Price or
the Purchase Price under Section 3.11 hereof (as applicable) by the
delivery of AMG Shares, the Manager Member shall give irrevocable written
notice of such election to the Non-Manager Member exercising the Put (or
the Selling Member pursuant to Section 3.11 hereof, as applicable) not
less than twenty three trading days prior to the date on which such AMG
Shares are required to be delivered pursuant to this Section 7.1 or
Section 3.11 hereof (as applicable), and the number of
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AMG Shares required to be delivered by the Manager Member shall be equal
to the quotient obtained by dividing (A) that portion of the Put Price
under this Section 7.1 or the Purchase Price under Section 3.11 hereof (as
applicable) to be paid in AMG Shares by (B) the Average AMG Stock Price,
where:
(i) The "Average AMG Stock Price" is defined to mean the
average (arithmetic mean) Stock Price of AMG Shares during the
twenty consecutive trading days ending on (and including) the third
complete trading day immediately prior to the date on which such AMG
Shares are required to be delivered hereunder; and
(ii) the "Stock Price" is defined to mean, for any trading
day, the closing price for one AMG Share, which shall be the last
sale price or, in the case no such sale takes place on such trading
day, the average of the closing bid and asked prices, in either case
as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national
securities exchange or other market on which AMG Shares is listed or
admitted to trading; or, if not listed or admitted to trading on any
national securities exchange, the last quoted price (or, if not so
quoted, the average of the last quoted high bid and low asked
prices) in the over-the-counter market, as reported by NASDAQ or
such other system then in use; or, if on any such trading day no
bids are quoted by any such organization, the average of the closing
bid and asked prices as furnished by a professional market maker
making a market in such security reasonably selected by the Board of
Directors of AMG.
In the event that there is a stock split (or reverse stock split), stock
dividend or other similar event during the relevant measuring periods
under the foregoing calculations, equitable and appropriate adjustments
shall be made in the application of the foregoing calculations of AMG's
Average Stock Price to take account of such event.
ARTICLE VIII - DISSOLUTION AND TERMINATION.
SECTION 8.1. NO DISSOLUTION. The LLC shall not be dissolved by any
admission of Additional Non-Manager Members, substitute Non-Manager Members or
substitute Manager Members, or by the death, retirement, withdrawal,
resignation, removal or bankruptcy of any Member from the LLC.
SECTION 8.2. EVENTS OF DISSOLUTION. The LLC shall be dissolved and its
affairs wound up upon the occurrence of any of the following events (provided,
however, that, unless the Manager Member and the Management Committee have
otherwise consented in writing following the Effective Time, the LLC shall not
be voluntarily dissolved or wound up unless the DE LLC is simultaneously
dissolved and wound up):
(a) any date approved by the written consent of both the
Management Committee and the Manager Member granted after the Effective
Time (in their respective sole discretion); or
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(b) at any time there are no Members of the LLC, unless the
LLC is continued in accordance with the Act; or
(c) upon the entry of a decree of judicial dissolution
under ss.18-802 of the Act.
SECTION 8.3. NOTICE OF DISSOLUTION. Upon the dissolution of the LLC, the
Manager Member shall promptly notify the other Members of such dissolution.
SECTION 8.4. LIQUIDATION. Upon the dissolution of the LLC, the Manager
Member, or if there is none, a Person or Persons approved by the holders of more
than fifty percent (50%) of the Vested LLC Points then outstanding (including
those held by the Person that was the Manager Member) shall carry out the
winding up of the LLC (in such capacity, the "Liquidating Trustee"), and shall
immediately commence to wind up the LLC's affairs; PROVIDED, HOWEVER, that a
reasonable time shall be allowed for the orderly liquidation of the assets of
the LLC and the satisfaction of liabilities to creditors so as to enable the
Members to minimize the normal losses attendant upon a liquidation. The Members
shall continue to share in allocations and distributions during liquidation in
the same proportions, as specified in Article IV hereof, as before liquidation.
The proceeds of liquidation shall be distributed as set forth in Section 4.4
hereof.
SECTION 8.5. TERMINATION. The LLC shall terminate when all of the assets
of the LLC, after payment of or due provision for all debts, liabilities and
obligations of the LLC, shall have been distributed to the Members in the manner
provided for in Section 4.4 and the Certificate shall have been canceled in the
manner required by the Act.
SECTION 8.6. CLAIMS OF THE MEMBERS. The Members and former Members shall
look solely to the LLC's assets for the return of their Capital Contributions
and Capital Accounts, and if the assets of the LLC remaining after payment of or
due provision for all debts, liabilities and obligations of the LLC are
insufficient to return such Capital Contributions or Capital Accounts, the
Members and former Members shall have no recourse against the LLC or any other
Member (including, without limitation, the Manager Member).
ARTICLE IX - RECORDS AND REPORTS.
SECTION 9.1. BOOKS AND RECORDS. The Management Committee shall (and each
of the Non-Manager Members and Employee Stockholders shall use its reasonable
best efforts to) cause the LLC to keep complete and accurate books of account
with respect to the operations of the LLC, prepared in accordance with GAAP.
Such books shall reflect that the interests in the LLC have not been registered
under the Securities Act, and that the interests may not be sold or transferred
without registration under the Securities Act or exemption therefrom and without
compliance with Article V or Article VI of this Agreement. Such books shall be
maintained at the principal office of the LLC in Jackson, Wyoming or at such
other place as the Management Committee shall determine (with the prior written
consent of the Manager Member granted after the Effective Time).
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SECTION 9.2. ACCOUNTING. The LLC's books of account shall be kept on the
accrual method of accounting (consistently applied), or on such other method of
accounting as the Manager Member may from time to time determine with the advice
of the Independent Public Accountants, and shall be closed and balanced at the
end of each LLC fiscal year and shall be maintained for each fiscal year in a
manner consistent with GAAP and with the principles and/or policies of AMG
applied consistently with respect to its Controlled Affiliates. The taxable year
of the LLC shall be the twelve months ending December 31, or such other taxable
year as the Manager Member may designate with the advice of the Independent
Public Accountants.
SECTION 9.3. FINANCIAL AND COMPLIANCE REPORTS. The Management Committee
shall use its reasonable best efforts (and each of the Non-Manager Members and
Employee Stockholders shall use its reasonable efforts) to cause the LLC to
furnish to the Manager Member each of the following:
(a) Within ten (10) days after the end of each month and each
fiscal quarter, information regarding the consolidated assets under
management of the LLC, the DE LLC and any of their respective Controlled
Affiliates (including the components of any changes from the information
provided with respect to the prior period, information regarding net
client cash flows and information regarding market appreciation and
depreciation in client portfolios), and an unaudited financial report of
the LLC (consolidated with any Controlled Affiliates thereof) prepared in
accordance with GAAP using the accrual method of accounting consistently
applied (except that the financial report may (i) be subject to normal
year-end audit adjustments which are neither individually nor in the
aggregate material and (ii) not contain all notes thereto which may be
required in accordance with GAAP to be included in audited financial
statements), which unaudited financial report shall have been certified by
the most senior financial officer of the LLC to have been so prepared and
shall include the following:
(i) statements of operations, changes in members' capital and
cash flows for such month or quarter, together with a cumulative
income statement from the first day of the then-current fiscal year
to the last day of such month or quarter;
(ii) a balance sheet as of the last day of such month or
quarter; and
(iii) with respect to the quarterly financial report, a
detailed computation of the Owners' Allocation for such quarter.
(b) Within thirty (30) days after the end of each fiscal year
of the LLC, audited financial statements of the LLC (consolidated with any
Controlled Affiliates thereof), which shall include statements of
operations, changes in members' capital and cash flows for such year and a
balance sheet as of the last day thereof, each prepared in accordance with
GAAP, using the accrual method of accounting, consistently applied,
certified by the Independent Public Accountants.
(c) If requested by the Manager Member, within twenty-five
(25) days after the end of each calendar quarter, the LLC's (and any
Controlled Affiliates' thereof)
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operating budget for each of the next four (4) fiscal quarters, in such
form and containing such estimates as may be requested by the Manager
Member from time to time.
(d) If requested by the Manager Member, copies of all
financial statements, reports, notices, press releases and other documents
released to the public during such period.
(e) As promptly as is reasonably possible following request by
the Manager Member from time to time, such other financial, operations,
performance or other information or data as may be requested.
SECTION 9.4. MEETINGS.
(a) The Management Committee and the Officers shall hold such
regular meetings at the LLC's principal place of business with
representatives of the Manager Member as may be reasonably requested by
the Manager Member from time to time. These meetings shall be attended
(either in person or by telephone) by such members of the Management
Committee, Officers and other employees of the LLC as may be requested by
the Manager Member or any of the Officers.
(b) At each meeting described in Section 9.4(a), the Officers
and other employees of the LLC shall discuss such matters regarding the
LLC and its performance, operations and/or budgets as may be reasonably
requested by the Manager Member, and each of the attendees (whether in
person or by telephone) at such meeting shall have the right to submit
proposals and suggestions regarding the LLC, and the attendees at the
meeting shall, in good faith, discuss and consider such proposals and
suggestions.
SECTION 9.5. TAX MATTERS.
(a) The Manager Member shall cause to be prepared and filed on
or before the due date (or any extension thereof) federal, state, local
and foreign tax or information returns required to be filed by the LLC (or
any Controlled Affiliate thereof), and shall provide to the other Members,
as soon as reasonably practicable following the close of each taxable year
of the LLC, any information in the Manager Member's possession which is
necessary to allow the other Members to timely prepare and file any
federal, state or local income tax returns (including IRS Schedule K-1).
The Manager Member, to the extent that funds are available at the LLC (or
at any Controlled Affiliates thereof), shall cause the LLC (or such
Controlled Affiliate thereof) to pay any taxes payable by the LLC (or such
Controlled Affiliate) (it being understood that the expenses of
preparation and filing of such tax returns, and the amounts of such taxes,
are to be treated as operating expenses of the LLC to be paid from the
Operating Allocation), provided that the Manager Member shall not be
required to cause the LLC (or any Controlled Affiliate thereof) to pay any
tax so long as the LLC (or such Controlled Affiliate thereof) is in good
faith and by appropriate legal proceedings contesting the validity,
applicability or amount thereof and such contest does not materially
endanger any right or interest of the LLC (or such Controlled Affiliate)
and adequate reserves therefor have been set aside by the LLC (or such
Controlled Affiliate). Neither the LLC
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nor any Employee Stockholder or Non-Manager Member shall do anything or
take any action which would be inconsistent with the foregoing or with the
Manager Member's actions as authorized by the foregoing provisions of this
Section 9.5(a).
(b) The Manager Member shall be the tax matters partner for
the LLC pursuant to Sections 6221 through 6233 of the Code.
(c) The Manager Member shall, in its sole discretion, make or
cause to be made by the LLC (and any Controlled Affiliates thereof) any
and all elections for federal, state, local and foreign tax matters,
including any election to adjust the basis of the LLC's (or a Controlled
Affiliate's) property pursuant to Section 754 of the Code or any
comparable provision of state, local or foreign law.
ARTICLE X - LIABILITY, EXCULPATION AND INDEMNIFICATION.
SECTION 10.1. LIABILITY. Except as otherwise provided by the Act, the
debts, obligations and liabilities of the LLC (or of any Controlled Affiliate
thereof), whether arising in contract, tort or otherwise, shall be solely the
debts, obligations and liabilities of the LLC (or such Controlled Affiliate),
and no Covered Person shall be obligated personally for any such debt,
obligation or liability of the LLC (or any Controlled Affiliate thereof) solely
by reason of being a Covered Person.
SECTION 10.2. EXCULPATION.
(a) No Covered Person shall be liable to the LLC, any
Controlled Affiliate thereof or any other Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or
omitted by such Covered Person in good faith on behalf of the LLC or any
Controlled Affiliate thereof and in a manner reasonably believed to be
within the scope of authority conferred on such Covered Person by this
Agreement, except that a Covered Person shall be liable for any such loss,
damage or claim incurred by reason of any action or inaction of such
Covered Person which constituted fraud, gross negligence, willful
misconduct or a breach of this Agreement or, in the case of a Non-Manager
Member or Employee Stockholder, the Employment Agreement and/or
Non-Solicitation Agreement to which he, she or it is a party.
(b) A Covered Person shall be fully protected in relying in
good faith upon the records of the LLC (or of any Controlled Affiliate
thereof) and upon such information, opinions, reports or statements
presented to the Covered Person by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or
expert competence and who has been selected with reasonable care by or on
behalf of the LLC (or any Controlled Affiliate thereof).
SECTION 10.3. FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, a Covered Person
has duties (including fiduciary duties) and liabilities relating thereto
to the LLC, any Controlled
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Affiliate thereof or any Member, a Covered Person acting under this
Agreement shall not be liable to the LLC, any Controlled Affiliate thereof
or any Member for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they
restrict the duties and liabilities of a Covered Person otherwise existing
at law or in equity, are agreed by the parties hereto to replace such
other duties and liabilities of such Covered Person.
(b) Whenever in this Agreement the Manager Member is permitted
or required to make a decision (i) in its "discretion" or "sole
discretion" or under a grant of similar authority or latitude (or where no
express standard is provided herein for such decision), the Manager Member
shall be entitled to consider such interests and factors as it desires,
including its own interests, and to reach any decision it may select
regardless of the reasons therefor, or (ii) in its "good faith",
"reasonable discretion" or under another express standard, the Manager
Member shall act under such express standard and shall not be subject to
any other or different standard imposed by this Agreement or other
applicable law.
SECTION 10.4. INDEMNIFICATION. To the fullest extent permitted by
applicable law, a Covered Person shall be entitled to indemnification from the
LLC for any loss, damage or claim (including any amounts paid in settlement of
any such claims) including expenses, fines, penalties and counsel fees and
expenses incurred by such Covered Person ("Losses") by reason of any act or
omission performed or omitted by such Covered Person in good faith on behalf of
the LLC (or any Controlled Affiliate thereof) and in a manner reasonably
believed to be within the scope of authority conferred on such Covered Person by
this Agreement, except that no Covered Person shall be entitled to be
indemnified in respect of any Losses incurred by such Covered Person by reason
of any action or inaction of such Covered Person which constituted fraud, gross
negligence, willful misconduct or a breach of this Agreement, the Purchase
Agreement or, in the case of the Non-Manager Member or Employee Stockholder, the
Employment Agreement and/or Non-Solicitation Agreement to which he, she or it is
a party; PROVIDED, HOWEVER, that any indemnity under this Section 10.4 shall be
provided out of and to the extent of LLC assets only, and no Member or Covered
Person shall have any personal liability to provide indemnity on account
thereof.
SECTION 10.5. NOTICE; OPPORTUNITY TO DEFEND AND EXPENSES.
(a) Promptly after receipt by any Covered Person from any
third party of notice of any demand, claim or circumstance that,
immediately or with the lapse of time, would reasonably be expected to
give rise to a claim or the commencement (or threatened commencement) of
any action, proceeding or investigation (an "Asserted Liability") that
could reasonably be expected to result in any Losses with respect to which
the Covered Person might be entitled to indemnification from the LLC under
Section 10.4, the Covered Person shall give written notice thereof (the
"Claims Notice") to the Management Committee and the Manager Member;
PROVIDED, HOWEVER, that a failure to give such notice shall not prejudice
the Covered Person's right to indemnification hereunder except to the
extent that the LLC, a Controlled Affiliate thereof or the Manager Member
is actually prejudiced thereby. The Claims Notice shall describe the
Asserted Liability in such reasonable detail as is practicable under the
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circumstances, and shall, to the extent practicable under the
circumstances, indicate the amount (estimated, if necessary) of the Loss
that has been or may be suffered by the Covered Person.
(b) The LLC may elect to compromise or defend, at its own
expense and by its own counsel, any Asserted Liability; PROVIDED, HOWEVER,
that if the named parties to any action or proceeding include (or could
reasonably be expected to include) both the LLC (or a Controlled Affiliate
thereof) and a Covered Person, or more than one Covered Persons, and the
LLC is advised by counsel that representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the Covered Person may engage separate counsel at the expense of
the LLC. If the LLC elects to compromise or defend such Asserted
Liability, it shall within twenty (20) business days (or sooner, if the
nature of the Asserted Liability so requires) notify the Covered Person of
its intent to do so, and the Covered Person shall cooperate, at the
expense of the LLC, in the compromise of, or defense against, such
Asserted Liability. If the LLC elects not to compromise or defend the
Asserted Liability, fails to notify the Covered Person of its election as
herein provided, contests its obligation to provide indemnification under
this Agreement, or fails to make or ceases making a good faith and
diligent defense, the Covered Person may pay, compromise or defend such
Asserted Liability all at the expense of the Covered Person (in accordance
with the provisions of Section 10.5(c) below). Except as set forth in the
preceding sentence, neither the LLC nor the Covered Person may settle or
compromise any claim over the objection of the LLC or the Manager Member;
PROVIDED, HOWEVER, that consent to settlement or compromise shall not be
unreasonably withheld. In any event, the LLC and the Covered Person may
participate at their own expense, in the defense of such Asserted
Liability. The Covered Person shall in any event make available to the LLC
any books, records or other documents within its control that are
necessary or appropriate for such defense, all at the expense of the LLC.
(c) If the LLC elects not to compromise or defend an Asserted
Liability, fails to notify the Covered Person of its election as above
provided or fails to defend the Asserted Liability diligently and in good
faith, then, to the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by a Covered Person in defending any
Asserted Liability, shall, from time to time, be advanced by the LLC prior
to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the LLC of an undertaking by or on behalf of the Covered
Person to repay such amount if it shall be determined that the Covered
Person is not entitled to be indemnified as authorized in Section 10.4
hereof. The LLC may, if the Manager Member deems it appropriate, require
any Covered Person for whom expenses are advanced to deliver adequate
security to the LLC for his or her obligation to repay such
indemnification.
SECTION 10.6. MISCELLANEOUS.
(a) The right of indemnification hereby provided shall not be
exclusive of, and shall not affect, any other rights to which a Covered
Person may be entitled at law, under other agreements or otherwise.
Nothing contained in this Article X shall limit any lawful rights to
indemnification existing independently of this Article X.
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(b) The indemnification rights provided by this Article X
shall also inure to the benefit of the heirs, executors, administrators,
successors and assigns of a Covered Person and any officers, directors,
members, partners, shareholders, employees and Affiliates of such Covered
Person (and any former officer, director, member, partner, shareholder or
employee of such Covered Person, if the Loss was incurred while such
Person was an officer, director, member, partner, shareholder or employee
of such Covered Person). The Management Committee or the Manager Member
may extend the indemnification called for by Section 10.4 to non-employee
agents of the LLC (or any Controlled Affiliate thereof), the Manager
Member or any of its Affiliates acting on behalf of the LLC (or any
Controlled Affiliate thereof) (provided that no such indemnification shall
cover any loss, damage or claim incurred by reason of any action or
inaction of such indemnified Person which constituted fraud, gross
negligence, willful misconduct or a breach of any agreement with the LLC
or any of its Affiliates to which he, she or it is a party).
ARTICLE XI - MISCELLANEOUS.
SECTION 11.1. NOTICES. All notices, requests, elections, consents or
demands permitted or required to be made under this Agreement ("Notices") shall
be in writing, signed by the Person or Persons giving such notice, request,
election, consent or demand and shall be delivered personally or by confirmed
facsimile, or sent by registered, certified mail or commercial courier to the
Members at their addresses set forth on the signature pages hereof or on
SCHEDULE A hereto, or to the LLC as described in the next sentence (as
applicable), or at such other addresses as may be supplied by written notice
given in conformity with the terms of this Section 11.1. All Notices to the LLC
shall be made to the Manager Member at the address set forth on the signature
pages hereof or on SCHEDULE A hereto, with a copy (which shall not constitute
notice) to the Management Committee at the principal offices of the LLC. The
date of any such personal or facsimile delivery, or the date of delivery by an
overnight courier, or the date five (5) days after the date of mailing by
registered or certified mail, as applicable, shall be the date of such notice
having been delivered hereunder.
SECTION 11.2. SUCCESSORS AND ASSIGNS. Subject to the restrictions on
Transfer set forth herein, this Agreement shall be binding upon and shall inure
to the benefit of the Members, their respective successors, successors-in-title,
heirs and assigns, and each and every successors-in-interest to any Member,
whether such successor acquires such interest by way of gift, purchase,
foreclosure or by any other method, and each shall hold such interest subject to
all of the terms and provisions of this Agreement.
SECTION 11.3. AMENDMENTS. Amendments may be made to this Agreement with
(i) the prior written consent of the Manager Member granted after the Effective
Time and (ii) the prior written consent of the Management Committee; PROVIDED,
HOWEVER, that, without the vote, consent or approval of any other Member, the
Manager Member shall make such updates and additions to SCHEDULE A hereto as are
required by the provisions hereof; and, provided FURTHER, that, without the
vote, consent or approval of any other Member, the Manager Member may amend this
Agreement to correct any printing, stenographic or clerical errors; and
PROVIDED,
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FURTHER, that any amendment to this Agreement (A) imposing any obligation on a
Non-Manager Member to contribute capital to the LLC shall be effective only with
such Non-Manager Member's consent, (B) reducing the required percentage of LLC
Points held by Members (or any group of Members) for any consent or vote in this
Agreement shall be effective only with the consent or vote of Members (or such
group) having the percentage of LLC Points held by Members theretofore required,
and (C) that materially and adversely affects a particular Non-Manager Member
differently from some other Non-Manager Members (other than a difference solely
as a result of the different proportional LLC Interests of the Members or the
different Officer or other employment roles held by different Non-Manager
Members) shall be effective only with the prior written consent of such
Non-Manager Member (unless such change is expressly provided for by this
Agreement).
SECTION 11.4. NO PARTITION. No Member, nor any successor-in-interest to
any Member, shall have the right while this Agreement remains in effect to have
the property of the LLC partitioned, or to file a complaint or institute any
proceeding at law or in equity to have the property of the LLC partitioned, and
each Member, on behalf of itself, its successors, representatives, heirs and
assigns, hereby waives any such right. It is the intent of the Members that
during the term of this Agreement, the rights of the Members and the Employee
Stockholders, and their respective successors-in-interest, as among themselves,
shall be governed by the terms of this Agreement, and that the right of any
Member or successors-in-interest to assign, Transfer, sell or otherwise dispose
of his interest in the LLC shall be subject to the limitations and restrictions
of this Agreement.
SECTION 11.5. NO WAIVER; CUMULATIVE REMEDIES. The failure of any Member to
insist upon strict performance of a covenant hereunder or of any obligation
hereunder, irrespective of the length of time for which such failure continues,
shall not be a waiver of such Member's right to demand strict compliance in the
future. No consent or waiver, express or implied, to or of any breach or default
in the performance of any obligation hereunder, shall constitute a consent or
waiver to or of any other breach or default in the performance of the same or
any other obligation hereunder. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive its right to use any or all other remedies. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise.
SECTION 11.6. DISPUTE RESOLUTION. All disputes arising in connection with
this Agreement shall be resolved by binding arbitration in accordance with the
applicable rules of the American Arbitration Association. The arbitration shall
be held in Wilmington, Delaware before a single arbitrator selected in
accordance with Section 12 of the American Arbitration Association Commercial
Arbitration Rules who shall have substantial business experience in the
investment advisory industry, and shall otherwise be conducted in accordance
with the American Arbitration Association Commercial Arbitration Rules. The
parties covenant that they will participate in the arbitration in good faith and
that they will share equally its costs except as otherwise provided herein. The
provisions of this Section 11.6 shall be enforceable in any court of competent
jurisdiction, and the parties shall bear their own costs in the event of any
proceeding to enforce this Agreement except as otherwise provided herein. The
arbitrator shall assess costs and expenses (including the reasonable legal fees
and expenses of the prevailing party or parties and any expenses incurred in
connection with compelling arbitration) in favor of
93
the prevailing party or parties against the other party or parties to such
proceeding. Any party unsuccessfully refusing to comply with an order of the
arbitrators shall be liable for costs and expenses, including attorney's fees,
incurred by the other party in enforcing the award.
SECTION 11.7. PRIOR AGREEMENTS SUPERSEDED. This Agreement, together with
the schedules and exhibits hereto, supersede the prior understandings and
agreements among the parties with respect to the subject matter hereof and
thereof, provided that the Purchase Agreement, the Employment Agreements, the
Non-Solicitation Agreements and the other written agreements expressly
contemplated hereby to be in effect as of the Effective Time shall not be
superseded and shall survive in accordance with their respective terms.
SECTION 11.8. CAPTIONS. Titles or captions of Articles or Sections
contained in this Agreement are inserted as a matter of convenience and for
reference, and in no way define, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof.
SECTION 11.9. COUNTERPARTS. This Agreement may be executed in a number of
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the Members notwithstanding that all Members have not
signed the same counterpart.
SECTION 11.10. APPLICABLE LAW; JURISDICTION. This Agreement and the rights
and obligations of the parties hereunder shall be governed by and interpreted,
construed and enforced in accordance with the laws of the State of Delaware,
without applying the choice of law or conflicts of law provisions thereof. Each
of the parties hereby consents to personal jurisdiction, service of process and
venue in the federal or state courts sitting in Wilmington, Delaware for any
claim, suit or proceeding arising under this Agreement to enforce any
arbitration award or obtain equitable relief and hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in such state court or, to the extent permitted by law, in such federal court
(subject to the provisions of Section 11.6 hereof). To the extent permitted by
law, each of the parties hereby irrevocably consents to the service of process
in any such action or proceeding by the mailing by certified mail of copies of
any service or copies of the summons and complaint and any other process to such
party at the address specified in Section 11.1 hereof. The parties agree that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions.
SECTION 11.11. INTERPRETATION. All terms herein using the singular shall
include the plural; all terms using the plural shall include the singular; in
each case, the term shall be as appropriate to the context of each sentence.
Throughout this Agreement, nouns, pronouns and verbs shall be construed as
masculine, feminine and neuter, whichever shall be applicable. Any reference to
the Code, the Act or other statutes or laws will include all amendments,
modifications, or replacements of the specific sections and provisions
concerned. The parties intend that this Agreement and the provisions contained
herein shall not be construed or interpreted for or against any party hereto
because that party drafted or caused that party's legal representative to draft
any of its provisions.
SECTION 11.12. SEVERABILITY. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provision were omitted.
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SECTION 11.13. CREDITORS. None of the provisions of this Agreement shall
be for the benefit of or, to the extent permitted by law, enforceable by any
creditor of (i) any Member, (ii) any Employee Stockholder or (iii) the LLC,
other than a Member who is also a creditor of the LLC.
SECTION 11.14. REFERENCES TO THIS AGREEMENT. Numbered or lettered
articles, sections and subsections herein contained refer to articles, sections
and subsections of this Agreement unless otherwise expressly stated. References
to paragraphs refer to paragraphs in the same Section unless otherwise expressly
stated. References to clauses refer to clauses in the same paragraph unless
otherwise expressly stated.
SECTION 11.15. EXHIBITS, SCHEDULES AND ANNEXES. All Exhibits, Schedules
and Annexes attached to this Agreement are incorporated and shall be treated as
if set forth herein. Only the Manager Member, the CEO and the members of the
Management Committee shall have the right to review SCHEDULE A hereto and ANNEX
B to the Equity Purchase Program, and each of the Non-Manager Members and
Employee Stockholders (in his or her capacity as a Non-Manager Member or
Employee Stockholder, as applicable) expressly waives his or her rights under
the Act (including without limitation under Section 18-305 thereof) to review
SCHEDULE A hereto and ANNEX B to the Equity Purchase Program (and acknowledges
and agrees that such waiver is reasonable in light of the interests of the LLC
and its Members). Each Non-Manager Member shall have the right to receive a copy
of this Agreement and the Exhibits, Schedules and Annexes attached hereto,
provided that SCHEDULE A hereto and ANNEX B to the Equity Purchase Program will
be redacted as to names, LLC Points, Capital Contributions, the LLC Points which
have not yet vested and the vesting schedule with respect to such LLC Points,
and other financial information of the other Members, and such Non-Manager
Member shall have the right to review only that information regarding such
Non-Manager Member's own LLC Points, Capital Contribution, LLC Points which have
not yet vested and the vesting schedule with respect to such LLC Points, as well
as the total number of outstanding LLC Points and Program LLC Points available
for issuance pursuant to the Equity Purchase Program and the total amount of
capital contributed by the Members in the aggregate. Notwithstanding the
foregoing, the Management Committee may in its sole discretion furnish to any
one or more Non-Manager Members (and to the exclusion of any one or more other
Non-Manager Members) such additional information relating to SCHEDULE A hereto
and ANNEX B to the Equity Purchase Program as the Management Committee (in its
sole discretion) determines from time to time.
SECTION 11.16. ADDITIONAL DOCUMENTS AND ACTS. Each Non-Manager Member and
Employee Stockholder agrees to execute and deliver such additional documents and
instruments and to perform such additional acts as may be reasonably requested
by the Manager Member to effectuate, carry out and perform all of the terms,
provisions, and conditions of this Agreement and the actions contemplated
hereby.
SECTION 11.17. MANAGERS. The members of the Management Committee and the
Officers of the LLC shall be deemed to be "managers" within the meaning of
Section 303 of the Act and shall have the protections of such Section (provided
that, for the avoidance of doubt, no such Person shall be deemed a "manager"
within the meaning of the Act for any other purpose hereunder).
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SECTION 11.18. GUARANTY OF AMG. AMG hereby unconditionally and irrevocably
guarantees the timely performance by the Manager Member of its obligations under
Sections 3.11 and 7.1 hereof; PROVIDED, HOWEVER, that the guaranty set forth in
this Section 11.18 may be terminated with the prior written consent of the
Management Committee, PROVIDED, FURTHER, HOWEVER, that such guarantee may not be
terminated if the Manager Member has exercised any of its rights under Section
3.2(b)(v) hereof.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the Initial Non-Manager Members and the Manager Member
have executed and delivered this Amended and Restated Limited Liability Company
Agreement as of the day and year first above written.
MANAGER MEMBER:
FA (WY) ACQUISITION COMPANY, INC.
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
AFFILIATED MANAGERS GROUP, INC.,
solely with respect to its obligations under
Section 11.18 of this Agreement:
By: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
NON-MANAGER MEMBERS:
XXXXXX ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
XXXXXX X. XXXXXX, as the related Employee
Stockholder of Xxxxxx Associates, Inc.
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. X'Xxxxxx
------------------------------------------
Xxxxxxx X. X'Xxxxxx
/s/ Xxxxxx Xxxxxxx
------------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxxxx Xxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxx X. Xxxx
------------------------------------------
Xxx X. Xxxx
/s/ Xxxx X. Xxxxx
------------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxxxxxxxx X. Xxxx
------------------------------------------
Xxxxxxxxxxx X. Xxxx
/s/ Xxxxxxx Xxxxxxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxxxx
/s/ Xxxx X. Xxxxxx
------------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxx Xxxxxxxxx
------------------------------------------
Xxxxx Xxxxxxxxx
