EXECUTION COPY
UNIT PURCHASE AGREEMENT
THIS UNIT PURCHASE AGREEMENT (this "AGREEMENT") is made as of August 17,
2009, by and among Sterling SC Investor, LLC, a Delaware limited liability
company (the "LLC"); and Clinton Co-Investment LLC, a Delaware limited liability
company (the "PURCHASER"). Capitalized terms used, but not otherwise defined,
herein shall have the meanings set forth in the Limited Liability Company
Agreement of Sterling SC Investor, LLC, in the form attached hereto as Exhibit A
(such agreement, in such form (with such changes thereto as may be agreed to by
the Purchaser, and as amended, modified and waived from time to time, the "LLC
AGREEMENT").
NOW THEREFORE, in consideration of the mutual promises made herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
Section 1. AUTHORIZATION AND CLOSING.
1A. AUTHORIZATION OF THE CLASS B UNITS. The LLC shall authorize the
issuance and sale to the Purchaser of up to the number of Class B Units set
forth opposite the Purchaser's name on SCHEDULE 1, attached hereto. Such
Class B Units shall have the rights and preferences set forth in the LLC
Agreement.
1B. INITIAL CAPITAL CONTRIBUTIONS AND ISSUANCES OF CLASS B UNITS. In the
event that the LLC delivers a written notice (each, a "CLOSING NOTICE") to the
Purchaser that a Closing Date is scheduled to occur, then on or prior to the
Closing Date, subject to the terms and conditions set forth herein, the
Purchaser shall make a capital contribution to the LLC in the amount set forth
opposite the Purchaser's name as its Initial Contribution on SCHEDULE 1 attached
hereto, less the aggregate amount of the capital contributions made by any other
purchasers of Class B Units on the Closing Date (such Purchaser's "INITIAL
CONTRIBUTION"), in exchange for, and on the Closing Date the LLC shall issue to
the Purchaser, the number of Class B Units set forth opposite the Purchaser's
name on SCHEDULE 1 less the number of Class B Units sold to any other purchaser
of Class B Units on the Closing Date PROVIDED, however, that in no event shall
the Purchaser purchase and be issued on the closing Date a number of Class B
Units that represents less than the product of (i) the total number of Class B
Units sold on the Closing Date, multiplied by (ii) the quotient of (a) the
number of shares of common stock of Select (as definited below) beneficially
owned as of July 20, 2009 by the Purchaser and its Affiliates, divided by (b)
the total number of shares of common stock of Select beneficially owned as of
July 20, 2009 by the Purchaser and all other purchasers of Class B Units on the
Closing Date. The Purchaser shall make its Initial Contribution to the LLC by
delivery to the LLC of a cashier's or certified check, or wire transfer of
immediately available funds to an account designated by the LLC, in the
aggregate amount equal to the Purchaser's Initial Contribution. For purposes
hereof, the term "CLOSING DATE" shall have the meaning set forth in the
Securities Purchase Agreement, dated as of May 22, 2009 (the "SELECT PURCHASE
AGREEMENT"), between the LLC and Select Comfort Corporation ("SELECT"). In the
event that the purchase of the Select Shares by the LLC, as contemplated by the
Select Purchase Agreement, is not consummated within ten (10) Business Days of
the scheduled Closing Date set forth on the Closing Notice, the LLC shall
promptly refund to the Purchaser the Initial Contribution funded by the
Purchaser pursuant to this Section 1B; PROVIDED, HOWEVER, that the Purchaser
shall again be obligated to make an Initial Contribution in accordance with this
Section 1B if the LLC delivers to the Purchaser another Closing Notice and
another Closing Date is scheduled thereafter. For purposes of this Agreement,
"BUSINESS DAY" means any day other than Saturday, Sunday or other day on which
commercial banks in the New York City are authorized or required by law to
remain closed.
1C. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. As a material
inducement to the LLC to enter into this Agreement and to issue the Class B
Units to the Purchaser, the Purchaser represents and warrants, as of the date
hereof and as of the Closing Date, that:
(a) the Purchaser is duly organized and validly existing under the laws of
its jurisdiction of organization;
(b) the Purchaser has full power and authority to execute and deliver this
Agreement and the LLC Agreement and to perform its obligations hereunder and
thereunder, and the execution, delivery, and performance by the Purchaser of
this Agreement and the LLC Agreement has been duly authorized by all necessary
action;
(c) no consent, approval, permit, license, order or authorization of,
filing with, or notice or other action to, with or by any court, administrative
agency, commission or other governmental authority or instrumentality (whether
foreign or domestic) of competent jurisdiction (each a "GOVERNMENTAL AUTHORITY")
or any other person or entity, is necessary, on the part of the Purchaser to
perform its obligations hereunder or under the LLC Agreement, or to authorize
the execution, delivery and performance by the Purchaser of its obligations
hereunder or thereunder, except as would not have, and would not reasonably be
expected to have, a material adverse effect on the authority or ability of the
Purchaser to enter into this Agreement or the LLC Agreement or to consummate the
transactions contemplated hereby or thereby;
(d) the Class B Units to be acquired by the Purchaser pursuant to this
Agreement shall be acquired for the Purchaser's own account, as principal, and
not with a view to, or intention of, resale or distribution thereof in violation
of the Securities Act or any applicable state securities laws;
(e) the Purchaser is an "accredited investor" as such term is defined in
Rule 501(a) promulgated under the Securities Act, is sophisticated in financial
matters and is able to evaluate the risks and benefits of the investment in the
Class B Units;
(f) the Purchaser has conducted its own investigation, to the extent that
the Purchaser has determined necessary or desirable, in connection with its
purchase of the Class B Units and is not relying on any statements of, or
information from, the LLC, the Managing Member or any Affiliate, agent or
representative of, or advisor to, the LLC or the Managing Member concerning
Select or its, business, affairs or financial condition. The Purchaser
understands, acknowledges and agrees that, (i) as of the date hereof, the LLC,
the Managing Member and Affiliates, agents and representatives of, and advisors
to, the LLC and the Managing Member may possess material non-public knowledge
and information concerning Select and its business, affairs and financial
condition that has not been made available or disclosed to the Purchaser by the
LLC, the Managing Member or any Affiliate, agent or representative of, or agent
to, the LLC or the Managing Member, (ii) the Purchaser has expressly demanded
that no such material non-public information be made available or disclosed to
the Purchaser by the LLC, the Managing Member or any Affiliate, agent or
representative of, or agent to, the LLC or the Managing Member, and (iii) none
of the LLC, the Managing Member and the Affiliates, agents and representatives
of, and advisors to, the LLC and the Managing Member has made any
representations to the Purchaser concerning Select or its business, affairs or
financial condition. The Purchaser has determined to consummate the purchase of
the Class B Units even though the Purchaser may not have any such information,
having made its own investment decision and not relying on the absence of any
such information or any such representation from the LLC, the Managing Member or
any Affiliate, agent or representative of, or agent to, the LLC or the Managing
Member;
(g) the Purchaser is able to bear the risk of its investment in the Class B
Units for an indefinite period of time and is aware that transfer of the Class B
Units may not be possible because (A) such transfer is subject to contractual
restrictions on transfer set forth in the LLC Agreement, and (B) the Class B
Units have not been registered under the Securities Act or any applicable state
securities laws and, therefore, cannot be sold unless subsequently registered
under the Securities Act and such applicable state securities laws or an
exemption from such registration is available, as set forth in a legal opinion,
in form and substance acceptable to the LLC, of legal counsel acceptable to the
LLC;
(h) the execution, delivery and performance by the Purchaser of this
Agreement and the LLC Agreement and the consummation by the Purchaser of the
transactions contemplated hereby will not, with or without the giving of notice
or lapse of time, or both, (i) violate in any provision of law, statute, rule or
regulation to which the Purchaser is subject, (ii) violate any order, judgment
or decree applicable to the Purchaser, or (iii) conflict with, or result in a
breach or default under, (a) any term or condition of the Purchaser's
organizational documents or (b) any agreement, instrument order, judgment or
decree to which the Purchaser is a party or by which the Purchaser is bound,
except, in the case of clause (iii)(b) of this sentence, as would not have, and
would not reasonably be expected to have, a material adverse effect on the
authority or ability of the Purchaser to enter into this Agreement or the LLC
Agreement or to consummate the transactions contemplated hereby or thereby;
(i) this Agreement, the LLC Agreement and the other agreements contemplated
hereby and thereby of even date herewith and therewith to which the Purchaser is
a party constitute (or, in the case of the LLC Agreement, as of the Closing Date
will constitute) the legal, valid and binding obligations of the Purchaser,
enforceable in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and limitations on the availability of
equitable remedies.
(j) except as set forth on SCHEDULE 2 hereto, neither the Purchaser, nor
any other Person that is a reporting person with the Purchaser on any Schedule
13D or Schedule 13G (or amendment thereto) filed with the SEC, or any Affiliate
of the Purchaser or any such other Person, beneficially owned as of July 20,
2009, the record date for the Company Shareholders Meeting (as defined in the
Select Purchase Agreement), or beneficially owns as of the date of this
Agreement, (i) any shares of common stock of Select, (ii) any options, warrants,
convertible securities, stock appreciation rights or similar rights with an
exercise or conversion privilege or a settlement payment or mechanism at a price
related to any class or series of capital stock of Select or with a value
derived in whole or in part from the value of any class or series of capital
stock of Select, whether or not such instruments or rights are subject to
settlement in the underlying class or series of capital stock of Select, or any
other direct or indirect opportunity to profit or share in any profit derived
from any increase or decrease in the value of capital stock of Select, (iii) any
proxy, contract, arrangement, understanding or relationship pursuant to which
the Purchaser or such other Person has a right to vote any shares of capital
stock or any other security of Select, or (iv) any short interest in any
security of Select (for purposes of this provision, a Person shall be deemed to
have a short interest in a security if such Person directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
the opportunity to profit or share in any profit derived from any decrease in
the value of the subject security). The Purchaser and its Affiliates are
entitled to, and shall, cast, in their own discretion, votes with respect to
4,253,945 shares of common stock of Select at the Company Shareholders Meeting.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE LLC. As a material
inducement to the Purchaser to enter into this Agreement and purchase the Class
B Units hereunder, the LLC hereby represents and warrants, as of the date hereof
and as of the Closing Date, that:
2A. ORGANIZATION AND POWER. The LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware. The
LLC possesses all requisite power and authority and, all material licenses,
permits and authorizations necessary to own and operate its properties, to carry
on its businesses as presently proposed to be conducted and to carry out the
transactions contemplated by this Agreement.
2B. AUTHORIZATION; NO BREACH. The execution, delivery and performance of
this Agreement, the LLC Agreement and all other agreements contemplated hereby
and thereby to which the LLC is a party have been duly authorized by the LLC.
The execution and delivery by the LLC of this Agreement, the LLC Agreement and
all other agreements contemplated hereby to which the LLC is a party and the
consummation of the transactions contemplated hereby and thereby, the offering,
sale and issuance of the Class B Units and the fulfillment of and compliance
with the respective terms hereof and thereof by the LLC, do not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the LLC's securities or assets pursuant to,
(iv) give any third party the right to modify, terminate or accelerate any
obligation under, or (v) result in a violation of, or require any authorization,
consent, approval, exemption or other action by or notice or declaration to, or
filing with, any court or administrative or governmental body or agency pursuant
to the LLC Agreement or any law, statute, rule or regulation to which the LLC is
subject, or any agreement, instrument, order, judgment or decree to which the
LLC is a party, except as would not have, and would not reasonably be expected
to have, a material adverse effect on the business, assets, liabilities,
condition (financial or otherwise) or results of operations of the LLC or on the
authority or ability of the LLC to enter into this Agreement or the LLC
Agreement or to consummate the transactions contemplated hereby or thereby (an
"LLC MAE"). Immediately following the issuance of the Class B Units to Purchaser
pursuant to this Agreement, the LLC will be in compliance in all material
respects with all of the material terms of, and obligations under, the LLC
Agreement.
2C. ENFORCEABILITY. This Agreement, the LLC Agreement and the other
agreements contemplated hereby and thereby of even date herewith and therewith
constitute the legal, valid and binding obligations of the LLC, enforceable in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and limitations on the availability of equitable
remedies.
2D. CAPITALIZATION AND RELATED MATTERS.
(a) SCHEDULE 3 hereto sets forth the membership interests of the LLC that
will be outstanding immediately following the issuance of the Class B Units to
the Purchaser pursuant to this Agreement on the Closing Date. Except as set
forth on SCHEDULE 3 hereto, immediately following the Closing Date, the LLC
shall have no outstanding membership interests or securities convertible or
exchangeable for membership interests or containing any profit participation
features, nor shall it have outstanding any rights or options to subscribe for
or to purchase its membership interests or any membership interests or
securities convertible into or exchangeable for its membership interests or any
stock appreciation rights or phantom stock plans. Immediately following the
issuance of the Class B Units to the Purchaser pursuant to this Agreement on the
Closing Date, all of the outstanding Units of the LLC shall be validly issued,
fully paid and non-assessable.
(b) Neither the Purchaser nor any of its Affiliates is listed on the
Schedule of Buyers attached to the Select Purchase Agreement.
(c) The LLC has not conducted any business prior to the date hereof and has
no, and prior to the Closing Date will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement, the Select Purchase Agreement and the transactions
contemplated hereby and thereby.
2E. NO CONSENTS OR APPROVALS. No consent, approval, permit, license, order
or authorization of, filing with, or notice or other action to, with or by any
Governmental Authority or any other person or entity, is necessary on the part
of the LLC to perform its obligations hereunder or under the LLC Agreement, or
to authorize the execution, delivery and performance by the LLC of its
obligations hereunder or thereunder, except as would not have, and would not
reasonably be expected to have, an LLC MAE.
2F. NO OTHER AGREEMENTS. Neither the Managing Member nor Sterling nor, to
the knowledge of the LLC, any other Member nor any of their respective
Affiliates is a party to any agreements or arrangements with the LLC or its
Affiliates with respect to Select, the Select Shares, the LLC or the Units other
than this Agreement, the LLC Agreement, the limited liability company agreement
of the Managing Member, the Select Purchase Agreement (including all exhibits
thereto), the Management Services Agreement (as defined in the Select Purchase
Agreement) and the other agreements, documents, or instruments entered into in
connection herewith and therewith and the transactions contemplated hereby and
thereby.
2G. NO BROKERS FEES. There is no investment banker, broker, finder,
intermediary or other Person that has been retained by or is authorized to act
on behalf of the LLC or any of its Affiliates who might be entitled to any fee
or commission for which the LLC is liable with respect to the transactions
contemplated by this Agreement.
2H. AMENDMENTS TO CREDIT AGREEMENT. The amendment to the Credit Agreement,
dated as of June 9, 2006, by and among Select, JPMorgan Chase Bank, National
Association, as Administrative Agent, and the other borrowers and lenders
thereto, as amended (the "JPM CREDIT AGREEMENT"), will not be, with respect to
the matters covered by the Indicative Term sheet filed as Exhibit 99.2 to
Select's Form 8-K dated May 26, 2009 (the "INDICATIVE TERM SHEET"), on terms
materially different than those contained in the Indicative Term Sheet.
2I. OTHER MATTERS. There are no statutory or other contractual preemptive
rights or rights of first refusal to which the LLC is bound other than pursuant
to the LLC Agreement or the Select Purchase Agreement. Assuming the accuracy of
the representations and warranties of the Purchaser as set forth herein, the
offer, sale and issuance of the Class B Units to the Purchaser pursuant to this
Agreement are exempt from the registration and prospectus delivery requirements
of the Securities Act and any applicable state securities laws.
Section 3. OTHER AGREEMENTS.
3A. REASONABLE BEST EFFORTS. Each of the parties hereto shall use its
commercially reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things reasonably necessary, proper or
advisable, consistent with applicable law, to consummate, and to make effective
the transactions contemplated by this Agreement and the LLC Agreement.
3B. MOST FAVORED NATION. Following the Closing Date, the Managing Member
will provide the Purchaser with a copy of all written agreements entered into at
any time (any such agreement, a "CLASS B AGREEMENT") with respect to the
acquisition or disposition of, or modification of the rights or obligations with
respect to, Class B Units (provided that the Managing Member may redact the name
of, and any other identifying information with respect to, any Class B Member
party thereto or referenced therein). The Purchaser shall be entitled to receive
substantially the same rights granted to any such Class B Member in any Class B
Agreement, provided that the Purchaser notifies the Managing Member in writing
to that effect within fifteen (15) days of the date it first receives a copy of
such Class B Agreement. In the event that any rights the Purchaser seeks are
subject to any obligations set forth in a Class B Agreement, then the grant of
such rights to the Purchaser will be contingent on its agreement to be bound by
any such obligations. Notwithstanding the foregoing, any rights granted in a
Class B Agreement relating to (a) consent to the transfer of an interest in the
LLC, (b) the admission of a substitute Class B Member, or (c) the sale of
securities on behalf of a Member in lieu of a distribution of such securities in
kind to such Member, shall be applicable only to the potential investor or Class
B Member to which such Class B Agreement is addressed and shall not be subject
to the second sentence of this Section 3B.
Section 4. CLOSING DELIVERIES.
4A. PURCHASER CLOSING DELIVERIES. At or prior to the Closing Date, the
Purchaser shall deliver to the LLC:
(a) a cashier's or certified check, or wire transfer of immediately
available funds to an account designated by the LLC, in the aggregate amount
equal to the Purchaser's Initial Contribution;
(b) a copy of the LLC Agreement, duly executed by the Purchaser; and
(c) copies of resolutions duly adopted by the Purchaser authorizing the
execution, delivery and performance by the Purchaser of its obligations under
this Agreement and the LLC Agreement, and the transactions contemplated hereby
and thereby.
4B. LLC CLOSING DELIVERIES. The LLC shall deliver to the Purchaser, at or
prior to the Closing Date, a copy of the LLC Agreement, duly executed by the LLC
and the Managing Member.
Section 5. CONDITIONS TO THE LLC'S OBLIGATION TO ISSUE CLASS B UNITS TO THE
PURCHASER. The obligation of the LLC to issue and sell the Class B Units to the
Purchaser on the Closing Date and admit the Purchaser as a Class B Member is
subject to the satisfaction, at or before the Closing Date, of each of the
following conditions:
5A. The representations and warranties of the Purchaser herein shall be
true and correct as of the date when made and as of the Closing Date as though
made at that time and the Purchaser shall have performed, satisfied and complied
with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Purchaser at or prior to the
Closing Date.
5B. The purchase by the LLC of the Select Shares pursuant to the Select
Purchase Agreement is consummated on or about the Closing Date in accordance
with the terms of the Select Purchase Agreement.
5C. The LLC shall have received the closing deliveries described in Section
4A.
5D. There shall not be in effect any judgment, order, writ, injunction,
decree, stipulation, agreement, determination or award issued by or with any
Governmental Authority restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement or the LLC
Agreement.
Section 6. CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE CLASS B
UNITS FROM THE LLC. The obligation of the Purchaser to purchase the Class B
Units from the LLC on the Closing Date is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions:
6A. The representations and warranties of the LLC herein shall be true and
correct as of the date when made and as of the Closing Date as though made at
that time and the LLC shall have performed, satisfied and complied with the
covenants, agreements and conditions required by this Agreement to be performed,
satisfied or complied with by the LLC at or prior to the Closing Date.
6B. The Select Purchase Agreement (including all exhibits and schedules
thereto) shall not have been amended to increase the Purchase Price (as defined
in the Select Purchase Agreement) per Select Share or in any manner that would
be reasonably expected to have a material adverse effect on the Purchaser or any
of its Affiliates under the MBCA (as such term is defined in the Select Purchase
Agreement) or otherwise or would be reasonably expected to have an LLC MAE, nor
shall any condition set forth in the Select Purchase Agreement to the closing of
the issuance of the Select Shares to the LLC pursuant to the Select Purchase
Agreement have been waived by the LLC, if such waiver would be reasonably
expected to have a material adverse effect on the Purchaser or any of its
Affiliates under the MBCA or otherwise or would be reasonably expected to have
an LLC MAE, in any event without the consent of the Purchaser and the purchase
by the LLC of the Select Shares pursuant to the Select Purchase Agreement shall
be consummated on the Closing Date in accordance with the terms thereof.
6C. The Purchaser shall have received the closing deliveries described in
Section 5B and the LLC Agreement shall be in full force and effect.
6D. There shall not be in effect any judgment, order, writ, injunction,
decree, stipulation, agreement, determination or award issued by or with any
Governmental Authority restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement or the LLC
Agreement.
6E. The LLC shall issue to the Purchaser a number of Class B Units that
represents no less than the product of (i) the total number of Class B Units
sold on the Closing Date, multiplied by (ii) the quotient of (a) the number of
shares of common stock of Select beneficially owned as of July 20, 2009 by the
Purchaser and its Affiliates, divided by (b) the total number of shares of
common stock of Select beneficially owned as of July 20, 2009 by the Purchaser
and all other purchasers of Class B Units on the Closing Date.
6F. The Class A Member shall have purchased the number of Class A Units set
forth on Schedule A to the LLC Agreement.
6G. The amendment to the JPM Credit Agreement shall have been, with respect
to the matters covered by the Indicative Term Sheet, executed on terms not
materially different than those contained in the Indicative Term Sheet.
Section 7. TERMINATION.
(a) This Agreement, and the respective obligations hereunder of each of the
parties hereto, shall terminate automatically, without any action of any of the
parties hereto, upon the termination of the Select Purchase Agreement in
accordance with its terms.
(b) This Agreement may be terminated by the Purchaser upon written notice
to the LLC in the event of a breach in any material respect of any
representation or warranty or failure to perform in any material respect any
covenant or agreement on the part of the LLC set forth in this Agreement, which
breach or failure to perform would result in the failure of any of the
conditions set forth in Section 6 and any such breach or failure to perform is
not cured or is incapable of being cured within 30 calendar days following the
date upon which the LLC receives written notice from the Purchaser of such
breach or failure to perform.
(c) This Agreement may be terminated by the LLC upon written notice to the
Purchaser in the event of a breach in any material respect of any representation
or warranty or failure to perform in any material respect any covenant or
agreement on the part of the Purchaser set forth in this Agreement, which breach
or failure to perform would result in the failure of any of the conditions set
forth in Section 5 and any such breach or failure to perform is not cured or is
incapable of being cured within 30 calendar days following the date upon which
the Purchaser receives written notice from the LLC of such breach or failure to
perform.
Section 8. INDEMNIFICATION.
(a) From and after the Closing Date, the LLC shall indemnify and hold
harmless the Purchaser and its respective Affiliates, partners, members,
managers, shareholders, directors, officers, employees and agents from and
against any loss, expense (including, without limitation, reasonable attorneys'
fees and expenses) damage or injury (collectively, "LOSSES") resulting from, or
arising out of, (a) any untrue representation or any breach of any
representation or warranty of the LLC contained in this Agreement, in each case
in any material respect, or (b) any breach or non-fulfillment, in each case in
any material respect, of any covenant or agreement of the LLC contained in this
Agreement.
(b) From and after the Closing Date, the Purchaser shall indemnify and hold
harmless the LLC and its respective Affiliates, partners, members, managers,
shareholders, directors, officers, employees and agents from and against any
Losses resulting from, arising out of, or in connection with (a) any untrue
representation or any breach of any representation or warranty of the Purchaser
contained in this Agreement, in each case in any material respect, or (b) any
breach or non-fulfillment, in each case in any material respect, of any covenant
or agreement of the Purchaser contained in this Agreement.
(c) Except with respect to third party claims, actions or suits covered by
Section 8(d), any Person entitled to make a claim for indemnification for a Loss
pursuant to Sections 8(a) or (b) as applicable (an "INDEMNIFIED PARTY"), shall
give written notice to each Person from whom indemnification is being claimed
(an "INDEMNIFYING PARTY") with reasonable promptness after the Indemnified
Party's discovery of the facts and circumstances giving rise to the
indemnification claim. The Indemnified Party shall supply the Indemnifying Party
such information and documents as it has in its possession regarding such claim,
together with all pertinent information in its possession regarding the amount
of the Loss it asserts it has sustained or incurred, and will permit the
Indemnifying Party to inspect such other records and books in the possession of
the Indemnified Party and relating to the claim and asserted Loss as the
Indemnifying Party shall reasonably request. The Indemnifying Party shall have a
period of 30 days after receipt by the Indemnifying Party of such notice and
such evidence to either (i) agree to the payment of the Loss to the Indemnified
Party or (ii) contest the payment of the Loss. If the Indemnifying Party does
not agree to or contest the payment of the Loss within such 30 day period, the
Indemnifying Party shall be deemed to have accepted all of the Loss. If the
Indemnifying Party agrees to the payment of the Loss or has been deemed to have
accepted all of the Loss, then the Indemnifying Party shall, within 15 business
days after such agreement or acceptance, pay to the Indemnified Party the amount
of the Loss that is payable pursuant to, and subject to the limitations set
forth in this Agreement. The failure to give the notice referred to herein with
reasonable promptness shall not relieve the Indemnifying Party of its
indemnification obligations hereunder except to the extent that the Indemnifying
Party is actually prejudiced as a result of the failure to give such notice.
(d) If any claim, action at law or suit in equity is instituted by a third
party against an Indemnified Party with respect to which an Indemnified Party
intends to claim indemnification for any Losses under Sections 8(a) or (b) as
applicable, such Indemnified Party shall give written notice to the Indemnifying
Party of such claim, action or suit with reasonable promptness. The failure to
give the notice required by this Section 8(d) with reasonable promptness shall
not relieve the Indemnifying Party of its indemnification obligations hereunder
except to the extent that the Indemnifying Party is actually prejudiced as a
result of the failure to give such notice.
(e) The Indemnifying Party shall have the right to conduct and control,
through counsel of its choosing, (which counsel must be reasonably satisfactory
to the Indemnified Party) so long as (i) the Indemnifying Party notifies the
Indemnified Party in writing within 15 business days after the Indemnified Party
has given notice of the third party claim that the Indemnifying Party will
indemnify the Indemnified Party from and against any adverse consequences the
Indemnified Party may suffer resulting from, arising out of or relating to such
third party claim and (ii) the Indemnifying Party conducts the defense of the
third party claim reasonably actively and diligently. The Indemnified Party may
participate in, but not control, the defense of such claim with counsel of its
choosing; PROVIDED, HOWEVER, that the fees and expenses of the Indemnified
Party's counsel shall be at the expense of the Indemnified Party unless (A) the
Indemnifying Party has agreed in writing to pay such fees and expenses, or (B)
the Indemnifying Party has failed to assume the defense and employ counsel as
provided herein or (C) a claim shall have been brought or asserted against the
Indemnifying Party as well as the Indemnified Party, and such Indemnified Party
shall have been advised in writing by counsel that there may be one or more
material factual or legal defenses available to it that are in conflict with
those available to the Indemnifying Party and that, in such counsel's opinion,
the use of separate counsel is advisable, in which case such counsel shall be at
the expense of the Indemnifying Party; PROVIDED, HOWEVER, that the Indemnifying
Party will not be required to pay the fees and expenses of more than one
separate principal counsel (and any appropriate local counsel) for all
Indemnified Parties. If, within the 15-business day period referred to above,
the Indemnifying Party does not assume the defense of such matter or fails to
defend the matter in the manner set forth above, the Indemnified Party may
defend against the matter in any manner that it reasonably may deem appropriate
and the Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against such claim (including reasonably
attorneys' fees and expenses).
(f) The Indemnified Party and the Indemnifying Party shall reasonably
cooperate with each other in regard to all matters relating to the third-party
claim, including corrective actions required by applicable law, assertion of
defenses, the determination, mitigation, negotiation and settlement of all
amounts, costs, actions, penalties, damages and the like related thereto, access
to each other's books and records, and, if necessary, providing the party
controlling the defense of the third party claim and its counsel with any powers
of attorney or other documents required to permit the party controlling the
defense of the third party claim and its counsel to act on behalf of the other
party. The Indemnifying Party agrees to reimburse the Indemnified Party for any
reasonable costs or expenses incurred in providing its cooperation pursuant to
this Section 8(f).
(g) Neither the Indemnified Party nor the Indemnifying Party shall settle
any such third party claim without the consent of the other party; PROVIDED,
however, that if such settlement involves the payment of money only and the
release of all claims and the Indemnified Party is completely indemnified
therefor and nonetheless refuses to consent to such settlement, the Indemnifying
Party shall cease to be obligated for such third party claim. Any compromise or
settlement of the claim under this Section 8(g) shall include as an
unconditional term thereof the giving by the claimant in question to the
Indemnifying Party and the Indemnified Party of a release of all liabilities in
respect of such claims.
Section 9. MISCELLANEOUS.
9A. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
9B. INTEGRATION. This Agreement and the LLC Agreement constitute the entire
agreement between the parties relating to the subject matter hereof. It
supersedes any prior agreement or understandings between them relating to the
subject matter hereof, and it may not be modified or amended in any manner other
than as set forth herein. Except as specifically set forth herein or therein,
neither party hereto makes any representation, warranty, covenant or undertaking
with respect to such matters.
9C. SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and permitted assigns of the parties hereto, whether
so expressed or not, unless the assignor and assignee have otherwise agreed.
This Agreement may not be assigned by any party without the prior written
consent of the other party. Notwithstanding the foregoing, either party may
assign this Agreement and any or all of its rights or obligations hereunder
without the consent of the other party, to one or more of its Affiliates;
provided that no assignment or attempted assignment shall relieve the assignor
of any of its obligations under this Agreement.
9D. SEVERABILITY. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
9E. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, anyone of which need not contain the signatures of more than
one party, but all such counterparts taken together shall constitute one and the
same Agreement.
9F. DESCRIPTIVE HEADINGS; INTERPRETATION; NO STRICT CONSTRUCTION. The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a substantive part of this Agreement. Whenever required by the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular forms of nouns, pronouns,
and verbs shall include the plural and vice versa. Reference to any agreement,
document, or instrument means such agreement, document, or instrument as amended
or otherwise modified from time to time in accordance with the terms thereof.
The use of the words "include" or "including" in this Agreement shall be by way
of example rather than by limitation. The use of the words "or," "either" or
"any" shall not be exclusive. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
9G. GOVERNING LAW. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the exhibits and
schedules hereto shall be governed by, and construed in accordance with, the
laws of the State of Delaware, without giving effect to any choice of law or
conflict of law rules or provisions (whether of the State of Delaware or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. The parties hereto hereby agree
that (a) any and all litigation arising out of this Agreement shall be conducted
only in courts of the State of Illinois located in Chicago, Illinois, or the
courts of the United States of America located in Chicago, Illinois, and (b)
such courts shall have the exclusive jurisdiction to hear and decide such
matters. Each of the parties hereto hereby submits to the jurisdiction of such
courts and waives any objection it may now or hereafter have to venue or that
such courts are inconvenient forums. IN ANY ACTION INVOLVING OR RELATING TO THIS
AGREEMENT, EACH OF THE PARTIES IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY.
9H. NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be made
as set forth in the LLC Agreement.
9I. DELIVERY BY FACSIMILE OR OTHER ELECTRONIC TRANSMISSION. This Agreement,
the agreements referred to herein, and each other agreement or instrument
entered into in connection herewith or therewith or contemplated hereby or
thereby, and any amendments hereto or thereto, to the extent signed and
delivered by means of a facsimile machine or other electronic transmission
(including e-mail of a pdf document), shall be treated in all manner and
respects as an original agreement or instrument and shall be considered to have
the same binding legal effect as if it were the original signed version thereof
delivered in person. At the request of any party hereto or to any such agreement
or instrument, each other party hereto or thereto shall reexecute original forms
thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine or other
electronic transmission (including e-mail of a pdf document) to deliver a
signature or the fact that any signature or agreement or instrument was
transmitted or communicated through the use of a facsimile machine or other
electronic transmission (including e-mail of a pdf document) as a defense to the
formation or enforceability of a contract and each such party forever waives any
such defense.
* * * * * *
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
and year first above written.
STERLING SC INVESTOR, LLC
By: Sterling SC Manager, LLC
Its: Managing Member
By: /s/ M. Avi Xxxxxxx
------------------------------------
Name: M. Avi Xxxxxxx
------------------------------------
Title: Authorized Signatory
------------------------------------
CLINTON CO-INVESTMENT LLC
By: /s/ Xxxxxx X. Xxxx
------------------------------------
Name: Xxxxxx X. Xxxx
------------------------------------
Its: Managing Member
------------------------------------
SIGNATURE PAGE TO UNIT PURCHASE AGREEMENT
SCHEDULE 1
AMOUNT OF
NUMBER OF INITIAL
PURCHASER CLASS B UNITS CONTRIBUTION
------------------------------- ------------------------ --------------------
Clinton Co-Investment 5,000* $5,000,000*
LLC
* Subject to adjustment pursuant to Section 1B of this Agreement.
SCHEDULE 2
As of July 20, 2009, Clinton Group, Inc., a Delaware corporation ("CGI"),
Xxxxxxx Xxxxxxxx Master Fund, L.P. a Cayman Islands exempted company
("MAGNOLIA"), and Xxxxxx Xxxx (together with CGI and Magnolia, the "REPORTING
PERSONS", beneficially owned, in the aggregate, 4,253,945 shares of common stock
of Select.
As of the date of the Agreement the Reporting Persons beneficially own, in the
aggregate, 3,262,638 shares of common stock of Select.
SCHEDULE 3
------------------------------- ---------------------------- ---------------------------- ----------------------------
AMOUNT OF
NUMBER OF NUMBER OF INITIAL
MEMBER CLASS A UNITS CLASS B UNITS CONTRIBUTION
------------------------------- ---------------------------- ---------------------------- ----------------------------
Sterling Capital Partners 30,000 0 $30,000,000.00
III, L.P.
------------------------------- ---------------------------- ---------------------------- ----------------------------
Clinton Co-Investment LLC 0 5,000(2) $5,000,000.00(3)
------------------------------- ---------------------------- ---------------------------- ----------------------------
Other Class B Unit Purchasers 0 0(4) 0(4)
------------------------------- ---------------------------- ---------------------------- ----------------------------
Sterling SC Manager, LLC 0 0 $1,000.00
------------------------------- ---------------------------- ---------------------------- ----------------------------
Total 30,000 5,000 $35,001,000.00
------------------------------- ---------------------------- ---------------------------- ----------------------------
Pursuant to the LLC Agreement, the Members shall have certain preemptive rights,
as set forth more specifically in the LLC Agreement.
------------------
1 Subject to adjustment based upon issuances to other purchasers of Class B
Units on the Closing Date, consistent with Section 1B of this Agreement.
2 This number of Class B Units shall be reduced by the number of Class B Units
issued to other purchasers on the Closing Date, consistent with Section 1B
of this Agreement.
3 This amount shall be reduced by an amount equal to the capital contributions
made to the LLC by the other purchasers of Class B Units on the Closing
Date, consistent with Section 1B of this Agreement.
4 This amount shall be adjusted to reflect issuances of Class B Units to
purchasers other than the Purchaser on the Closing Date, consistent with
Section 1B of this Agreement.
Exhibit A
LIMITED LIABILITY COMPANY AGREEMENT
OF
STERLING SC INVESTOR, LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT is entered into as of this ___ day
of ________ 2009 (the "EFFECTIVE DATE") by and among Sterling SC Manager, LLC, a
Delaware limited liability company (the "MANAGING MEMBER"), and those other
Persons set forth as Members on SCHEDULE A attached hereto and made a part
hereof (referred to collectively, together with the Managing Member, as the
"MEMBERS" and individually, including the Managing Member, as a "MEMBER").
WHEREAS, Sterling SC Investor, LLC (the "COMPANY") was formed as a limited
liability company pursuant to the Act (as hereinafter defined) by Sterling
Capital Partners III, L.P. ("STERLING");
WHEREAS, immediately prior to the Effective Date, Sterling was the sole
member of the Company;
WHEREAS, on the Effective Date, Sterling admitted certain persons as
additional Members of the Company; and
WHEREAS, the Members desire to enter into this Agreement which sets forth,
among other things, the governance of the Company, the respective ownership
interests of the Members, and the relationship of the parties thereto.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements set forth herein, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
ARTICLE I
FORMATION OF LIMITED LIABILITY COMPANY
The Company was formed under the provisions of the Delaware Limited
Liability Company Act, as amended (the "ACT") by filing a Certificate of
Formation (the "CERTIFICATE") with the Delaware Secretary of State. Except as
herein otherwise expressly provided, the rights and liabilities of the Members
shall be as provided in the Act, as amended from time to time.
ARTICLE II
NAME
The business of the Company shall be conducted under the name Sterling SC
Investor, LLC, or such other name as the Managing Member shall hereafter
designate.
ARTICLE III
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"ADDITIONAL SELECT SHARES" shall have the meaning set forth in SECTION
14.4(a).
"AFFILIATE" of, or a Person "AFFILIATED" with, a specified Person means (i)
a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified, or (ii) any other Person that, directly or indirectly, is the
beneficial owner of a majority of any class of equity securities of the
specified Person or of which the specified Person is directly or indirectly the
owner of a majority of any class of equity securities.
"AGREEMENT" shall mean this Limited Liability Company Agreement, as the
same may be amended, modified or supplemented from time to time.
"BOOK VALUE" means, with respect to any Company property, the Company's
adjusted basis for federal income tax purposes, adjusted from time to time to
reflect the adjustments required or permitted by Treasury Regulation Section
1.704-1(b)(2)(iv)(d)-(g).
"CAPITAL ACCOUNT" means the account maintained by the Company for each
Member. If any Unit or interest in the Company is transferred pursuant to the
terms hereof, the transferee shall succeed to the Capital Account of the
transferor to the extent the Capital Account is attributable to the transferred
Unit or interest in the Company. It is intended that the Capital Accounts of all
Members shall be maintained in compliance with the provisions of Treasury
Regulation Section 1.704-1(b), and all provisions hereof relating to the
maintenance of Capital Accounts shall be interpreted and applied in a manner
consistent with that Treasury Regulation.
"CAPITAL CONTRIBUTION" shall mean the total amount of cash and the Fair
Market Value of any other assets contributed to the Company by a Member, net of
liabilities assumed or to which the assets are subject.
"CLASS A MEMBER" shall mean Sterling Capital Partners III, L.P. and any of
its transferees.
"CLASS A UNIT" shall mean an economic interest in the Company representing
a fractional part of the entire net profits, net losses and distributions of the
Company as set forth in this Agreement, and all of the other rights, powers and
duties set forth in this Agreement. Each Class A Unit shall entitle the holder
thereof to one vote on any matter submitted or required to be submitted to the
vote of the Members pursuant to this Agreement or the Act. The issue price of
each Class A Unit issued by the Company as of the Effective Date shall be
$1,000/Unit.
"CLASS B MEMBER" shall mean any Member other than the Class A Members and
the Managing Member.
"CLASS B UNIT" shall mean an economic interest in the Company representing
a fractional part of the entire net profits, net losses and distributions of the
Company as set forth in this Agreement, and all of the other rights, powers and
duties set forth in this Agreement. The Class B Units shall be non-voting. The
issue price of each Class B Unit issued by the Company as of the Effective Date
shall be $1,000/Unit.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning set forth in ARTICLE I.
"FAIR MARKET VALUE" means, as to securities of any issuer which are
publicly traded, the average of the Current Market Price (as hereinafter
defined) of such shares of securities on each of the trading days in the
Measurement Period (as hereinafter defined). "CURRENT MARKET PRICE" of publicly
traded securities of any issuer, for any day, shall mean the last reported sales
price or, in case no sale takes place on such day, the average reported closing
bid and ask prices, in either case as reported on the principal national
securities exchange on which such security is listed or admitted for trading or,
if such security is not listed or admitted to trading on any national securities
exchange, the average of the closing bid and ask price on each such day in the
over-the-counter market, or, if bid and ask prices for such security on such day
have not been reported, the average of the bid and ask prices for such day as
furnished by any New York Stock Exchange member firm regularly making a market
in such security selected for such purpose by the Managing Member on each
trading day during the Measurement Period. "MEASUREMENT PERIOD" shall mean the
period of 20 consecutive trading days ending on, and including, the date as of
which the Fair Market Value of a security is to be determined. The Fair Market
Value of any security which is not publicly traded or of any other property
shall mean the fair value thereof as determined in good faith by the Managing
Member in the exercise of its reasonable business judgment. The Managing Member
shall provide written notice to each of the Members of the determination of Fair
Market Value hereunder within two business days of such determination.
Notwithstanding the foregoing, if the holders a majority of the Class B Units
disagree with the Fair Market Value determined pursuant to the third sentence
above, then a majority of the Class B Members shall have 20 calendar days
following the date of the Managing Member's notice of its determination of Fair
Market Value to make a written request to the Managing Member to engage, on
behalf of the Company, an investment bank of national reputation to determine
such Fair Market Value and shall include in such request their determination of
such Fair Market Value. The investment bank engaged by the Managing Member on
behalf of the Company shall determine Fair Market Value based on the factors it
deems relevant. The fees, costs and expenses of such investment bank shall be
paid, either (x) by the Company if the investment bank's determination of Fair
Market Value is closer to the Fair Market Value determined by the majority of
the Class B Members or (y) by the Class B Members, on a pro rata basis, if the
investment bank's determination of Fair Market Value is closer to the Fair
Market Value determined by the Managing Member.
"INDEMNIFIED PARTIES" shall have the meaning set forth in SECTION 15.6.
"MAJORITY APPROVAL" shall mean the written approval of the Class A Members
holding, at the applicable time, more than 50% of the outstanding Class A Units,
voting together as a single class.
"MANAGING MEMBER" shall mean Sterling SC Manager, LLC, but in the event
that it is at any time no longer acting as the Managing Member, the term shall
mean the parties or party then acting in such capacity.
"MEMBERS" shall mean each Person signing this Agreement as a Member and any
Person who subsequently is admitted as a substitute Member under SECTION 16.2 or
as an additional Member under SECTION 20.1.
"PARTICIPATING PERCENTAGE" shall mean, as to each Member other than the
Managing Member, the percentage determined by dividing (x) the number of Units
held by such Member and (y) the total number of outstanding Units of the
Company.
"PERSON" shall mean any individual, group of individuals or entity,
including without limitation, any trust, custodian, individual retirement
account, corporation, partnership and limited liability company.
"PURCHASE AGREEMENT" shall mean the Securities Purchase Agreement, dated as
of May 22, 2009, between the Company and Select, as may be amended or modified
from time to time.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and
applicable rules and regulations thereunder, and any successor to such statute,
rules or regulations. Any reference herein to a specific section, rule or
regulation of the Securities Act shall be deemed to include any corresponding
provisions of future law.
"SELECT ISSUER" shall have the meaning set forth in SECTION 14.4
"SELECT SHARES" means (a) 50 million shares of common stock of Select
Comfort Corporation ("SELECT") issued to the Company pursuant to the Purchase
Agreement, (b) any Additional Select Shares purchased by the Company in
accordance with the terms of this Agreement after the Effective Date, and (c)
any capital stock or other securities acquired by the Company upon conversion of
the shares in Select described in CLAUSE (a) or (b) above or by way of dividends
or stock splits with respect to, or in connection with any merger,
consolidation, recapitalization or other reorganization affecting, the shares in
Select described in CLAUSE (a) or (b) above.
"THIRD PARTY CLAIM" shall have the meaning set forth in SECTION 15.6.
"TRANSFER" shall mean any sale, gift, bequest, distribution, disposition
(including a testamentary disposition), assignment, pledge or any other
voluntary or involuntary transfer, disposition or encumbrance of record or
beneficial ownership, including but not limited to any disposition by operation
of law, the exercise of a power of appointment and the exercise by a fiduciary
of distribution discretion.
"TREASURY REGULATIONS" means the income tax regulations, including any
temporary regulations, from time to time promulgated under the Code.
"UNIT" shall mean a Class A Unit, a Class B Units or any other class of
economic interest in the Company created in accordance with this Agreement.
Units are owned by Members as of the Effective Date as set forth on SCHEDULE A
hereto.
ARTICLE IV
NATURE OF BUSINESS
The purposes of the Company shall be to (i) acquire, own, hold, manage and
dispose of, the Select Shares; (ii) enter into and exercise rights and perform
its obligations under any agreements to which it may become a party as a result
of its ownership of the Select Shares; (iii) pursue claims and exercise all
rights, remedies and powers with respect to holders of the Select Shares, and
(iv) engage in any activities in connection with or incidental to the foregoing
as the Managing Member shall deem necessary, appropriate or advisable. The
Company shall have all powers necessary for the accomplishment of the foregoing
purposes, but shall not carry on any business other than in furtherance of its
purposes set forth in this ARTICLE IV.
ARTICLE V
NAMES OF MEMBERS
Subject to the following sentence, the names, addresses, Capital
Contributions and the number and class of Units of each Member are set forth on
SCHEDULE A, as such Schedule shall be amended from time to time in accordance
with the terms of 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 in accordance with the terms of this Agreement. The Members
acknowledge that the membership interest issued to the Managing Member hereunder
is in exchange for certain advisory services provided and to be provided to or
for the benefit of the Company in connection with the purchase, holding and
disposition by the Company of the Select Shares, and further acknowledge that,
except for the Managing Member's capital contribution of $1,000 to the Company,
the Managing Member is not required to make a capital contribution for its
membership interest.
ARTICLE VI
PRINCIPAL PLACE OF BUSINESS
The principal place of business of the Company shall be 0000 Xxxxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx 00000 or such other place or places
as the Managing Member may designate from time to time.
ARTICLE VII
CAPITAL AND CONTRIBUTIONS
7.1 The Capital Contribution and the number and class of Units issued to
each Member as of the Effective Date is set forth opposite such Member's name on
SCHEDULE A, as amended from time to time in accordance with the terms of this
Agreement. Each Member shall be liable only to make such Member's Capital
Contribution to the Company expressly provided in this SECTION 7.1, and no
Member shall be required to make any additional contributions to the Company.
7.2 Subject to the rights of the Members under SECTION 14.4, if, at any
time after the Effective Date, the Managing Member determines that the Company
needs additional capital to fund any litigation costs incurred by the Company,
the Managing Member shall be authorized to raise such additional capital from
the Class A Members (and/or any of their Affiliates) on such terms and
conditions as agreed to by the Managing Member and the Class A Members; provided
that in no event shall such additional capital raise by the Company dilute the
economic rights of the Class B Members.
ARTICLE VIII
TERM
The term of the Company commenced upon the filing of the Certificate in
accordance with the Act and shall continue in existence until termination and
dissolution thereof in accordance with the provisions of ARTICLE XVII.
ARTICLE IX
DISTRIBUTIONS
9.1 All cash, cash equivalents and other proceeds received by the Company
in connection with (i) any sale or other disposition of the Select Shares, or
(ii) any distributions or dividends on or arising from the ownership of the
Select Shares shall, in each case, be promptly distributed by the Managing
Member (subject to the Managing Member's right to retain reasonable reserves).
Subject to the next sentence, any and all other assets of the Company, including
cash, cash equivalents (but specifically excluding cash and cash equivalents
received as Capital Contributions) the Select Shares, or other proceeds
(including proceeds paid or awarded to the Company in connection with a claim by
the Company against Select for any breach of Select's representations or
warranties or any failure to perform its covenants, agreements or other
obligations under the Purchase Agreement) shall be distributed at such time or
times if, as and when determined by the Managing Member in its sole discretion.
Notwithstanding anything to the contrary in this Agreement, if the LLC is paid
any Termination Fee (as defined in the Purchase Agreement) and/or is reimbursed
for any Expenses (as defined in the Purchase Agreement), the LLC shall
distribute 100% of such proceeds to the Class A Members pro rata in accordance
with their relative Participating Percentages.
(a) All distributions for any period shall be made to the Members as
follows:
(i) The amount available for distribution shall be first allocated
among the Class A Members and the Class B Members, pro rata in accordance
with their respective Participating Percentages;
(ii) The amount allocated to the Class A Members pursuant to SECTION
9.1(a)(i) above shall be distributed to the Class A Members pro rata in
accordance with their relative Participating Percentages; and
(iii) The amount allocated to the Class B Members pursuant to SECTION
9.1(a)(i) above shall be distributed to the Class B Members and the
Managing Member in the following order of priority:
(A) First, to the Class B Members, in proportion to their
respective unreturned Capital Contributions, until each Class B Member
has received distributions equal, in the aggregate, to his, her or its
Capital Contribution;
(B) Second, to the Managing Member, until the cumulative amount
distributed to the Managing Member pursuant to this Section
9.1(a)(iii)(B) is equal to 20% of the sum of (x) the amount
distributed to the Class B Members pursuant to Section 9.1(a)(iii)(A),
and (y) the amount distributable to the Managing Member pursuant to
this Section 9.1(a)(iii)(B); and
(C) Thereafter, (x) 80% to the Class B Members pro rata in
accordance with their relative Participating Percentages and (y) 20%
to the Managing Member.
(b) If any non-cash assets of the Company (including, but not limited
to, all or any of the Select Shares or any other marketable securities) are
distributed to the Members, such distributions shall be made in accordance
with the formula set forth in this SECTION 9.1, treating each such
distribution for purposes of the formula as a sale of such assets at the
Fair Market Value thereof at the time of distribution; PROVIDED that with
respect to any distribution of Select Shares, Sterling and its Affiliates
shall assign to the Members any registration rights of such Persons with
respect to such Select Shares in accordance with, and to the extent
permitted by, the Registration Rights Agreement (as defined in the Purchase
Agreement).
9.2 To the extent that cash and/or marketable securities (including Select
Shares) are available (based on the reasonable discretion of the Managing
Member), the Managing Member may, in its discretion, cause the Company to make
distributions of cash and/or marketable securities to the Members to enable them
to pay federal and state income taxes with respect to their shares of Company
taxable income for a taxable year ("TAX DISTRIBUTIONS"). Tax Distributions to
all Members shall constitute distributions for purposes of SECTION 9.1. The
aggregate amount of the Tax Distributions shall be determined by the Managing
Member, but in any case shall not be less than the highest marginal individual
Federal and applicable state income tax rates for the applicable year for any
Member applicable to the character of taxable income allocated to the Members
(i.e., ordinary income or long-term capital gains). Tax Distributions, if any,
shall be made to the various Members pro rata in accordance with the amount of
taxable income allocated to each Member on its individual Form K-1 reduced by
the amount of the foreign taxes allocated to such Member during the taxable year
and any U.S. taxes withheld under any provision of the Code with respect to such
Member. If the Company pays Tax Distributions with respect to a taxable year of
the Company, the Company shall use reasonable efforts to make such payments
within 90 days after the end of such taxable year. The Managing Member will
furnish each Member with information as to its share of income and losses of the
Company, as well as certain other information, which will be sufficient to
prepare its Federal and state income tax returns. The Managing Member will use
reasonable efforts to provide such information not later than 90 days following
the close of the applicable fiscal year.
9.3 The Company shall comply with all withholding requirements under
Federal, state, foreign and local law and shall remit amounts withheld to, and
file required forms with, the applicable jurisdictions. To the extent the
Company is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Member, the amount withheld shall
be treated as a distribution in the amount of the withholding to that Member. In
the event of any claimed over-withholding, the Members shall be limited to an
action against the applicable jurisdiction. If the amount withheld was not
withheld from actual distributions, the Company may, at its option, (i) require
the Member to reimburse the Company for such withholding, or (ii) reduce any
subsequent distributions by the amount of such withholding. Each Member agrees
to promptly furnish the Company with any representations and forms as shall be
reasonably requested by the Company to assist it in (i) determining the extent
of, and in fulfilling, its withholding obligations, and (ii) limiting the amount
of taxes imposed on the Company.
ARTICLE X
ALLOCATIONS OF PROFITS AND LOSSES
Except as otherwise required by Section 704 of the Code and the regulations
thereunder, profits and losses of the Company or any taxable year or other
allocation period shall be allocated among the Members in such manner that, as
of the end of such allocation period, the sum of (i) the Capital Account of each
Member, (ii) such Member's share of minimum gain (as determined according to
Treasury Regulation Section 1.704-2(g)), and (iii) such Member's "partner
nonrecourse debt minimum gain" (as defined in Treasury Regulation Section
1.704-2(i)(3)) shall be equal to the respective net amounts, positive or
negative, which would be distributed to them or for which they would be liable
to the Company under this Agreement, determined as if the Company were to (A)
liquidate the assets of the Company for an amount equal to their Book Value, and
(B) distribute the proceeds of liquidation pursuant to SECTION 9.1.
ARTICLE XI
BOOKS OF ACCOUNT AND RECORDS
Proper and complete records and books of account shall be kept by the
Managing Member or its designee in which shall be entered fully and accurately
all transactions and other matters relative to the Company's business as are
customarily entered into records and books of account maintained by Persons
engaged in businesses of a like character. The Company books and records shall
be kept using the cash or accrual method of accounting as the Managing Member
may determine. The books and records shall at all times be maintained at the
principal office of the Company, or at such other location in the discretion of
the Managing Member, and shall be open to the reasonable inspection and
examination by the Members or their duly authorized representatives during
reasonable business hours. The Managing Member shall retain independent
certified public accountants to prepare Company tax returns and financial
statements, and such financial statements may be prepared on an audited or
unaudited basis, as the Managing Member may determine.
ARTICLE XII
FISCAL YEAR
The fiscal year of the Company shall end on December 31.
ARTICLE XIII
COMPANY FUNDS
The Company's available cash-related investments shall be deposited in such
interest-bearing or non-interest-bearing bank account(s), money market funds,
short term United States Treasury Securities, commercial paper rated AAA by
Xxxxx'x Investors Service Inc., certificates of deposit or any other similar
instruments as shall be designated by the Managing Member. All withdrawals from
any such bank account(s) or investments shall be made by the duly authorized
officers or agents of the Managing Member or the Company. Company funds shall be
separately identifiable from those of any other person, including the Managing
Member and any Affiliate of the Managing Member.
ARTICLE XIV
RIGHTS AND DUTIES OF MEMBERS
14.1 The Members (except for the Managing Member) shall not participate in
the management or control of the Company's business, transact any business for
the Company or have the power to act for or bind the Company, said powers being
vested solely and exclusively in the Managing Member, Notwithstanding the
foregoing, nothing contained herein shall be construed to limit the right of any
Member to have a controlling interest in the Managing Member or any entity in
which the Company invests or to act as an advisor to or an officer of the
Company or the Managing Member.
14.2 No present or former Member or any of such Member's Affiliates,
employees, agents or representatives shall be liable to the Company or to any
other Member for any act or omission performed or omitted by such Person in its
capacity as a Member, except for acts or omissions constituting bad faith, gross
negligence or willful misconduct. The debts, obligations and liabilities of the
Company, whether arising in contract, in tort or otherwise, will be solely the
debts, obligations and liabilities of the Company, and no Member or Managing
Member will be obligated personally for any such debt, obligation or liability
solely by reason of being a Member or Managing Member beyond its Capital
Contribution. All fees and expenses related to or arising out of the acquisition
of the Select Shares pursuant to the Purchase Agreement shall be borne solely by
the Class A Members.
14.3 Except as provided in ARTICLE XVI, no Member shall be permitted to
withdraw or disassociate from the Company at any time. If a Member withdraws or
disassociates from the Company other than as provided in ARTICLE XVI, the
Company shall be entitled to recover all damages that it may incur as a result
thereof and shall be entitled to offset such damages against amounts otherwise
distributable to the withdrawn or disassociated Member pursuant to ARTICLE IX or
XVIII.
14.4 Preemptive Rights.
(a) If, at any time after the Effective Date, (i) Sterling or any of
their respective Affiliates (other than the Class B Members that are not
Affiliates of Sterling (1)) is permitted or offered the right to purchase from
Select or any of its subsidiaries (a "SELECT ISSUER") additional equity
securities of the Select Issuer (including any securities exchangeable for or
convertible into equity securities of the Select Issuer), whether pursuant to a
public rights offering, equity cure mechanism or for any other reason (the
"ADDITIONAL SELECT SHARES") and the Company, in the Managing Member's sole
discretion, or Sterling or such Affiliate, as applicable, determines to purchase
all or any portion of the Additional Select Shares, or (ii) the Company issues
or offers to issue any new equity securities, membership interests or other
securities in the Company of any class (including any securities exchangeable
for or convertible into equity securities of the Company) (the "ADDITIONAL
UNITS", and together with the Additional Select Shares, the "PREEMPTIVE
SECURITIES") to any Person, in each case each Member (other than the Managing
Member) (each, a "PREEMPTIVE RIGHT HOLDER") shall have preemptive rights
permitting such Preemptive Right Holder to purchase additional Units in the
Company (the "PREEMPTIVE RIGHT UNITS") in an amount that ensures that such
Preemptive Right Holder will be able to maintain its then-existing indirect pro
rata interest in Select (i.e., the pro rata interest in Select resulting from
such Preemptive Right Holder's ownership interest in the Company) or its
Participating Percentage in the Company, as applicable, on a fully diluted basis
(the "PRO RATA SHARE") and the economic rights of such Preemptive Rights Units
shall be substantially similar to the economic rights of the Class A Units and
the Class B Units (i.e., any Preemptive Rights Units purchased by a Class A
Member pursuant to this SECTION 14.4 shall not be subject to any "carried
interest" of the Managing Member and any Preemptive Rights Units purchased by a
Class B Member pursuant to this SECTION 14.4 shall be subject to a 20% "carried
interest" of the Managing Member).
(b) Prior to the purchase or issuance of the Preemptive Securities,
the Company shall provide each Preemptive Right Holder a notice setting forth in
reasonable detail the price and other terms upon which the Preemptive Securities
and the related Preemptive Right Units are proposed to be sold, the terms of
such Preemptive Right Units and the amount of Preemptive Right Units proposed to
be sold (the "PREEMPTIVE RIGHTS NOTICE"). Each Preemptive Right Holder shall
thereafter have the preemptive right, exercisable by written notice to the
Company no later than 10 days following receipt of the Preemptive Rights Notice
to purchase the number of additional Preemptive Right Units as equal to its Pro
Rata Share. Any notice by a Preemptive Right Holder exercising the right to
purchase its Pro Rata Share of Preemptive Right Units pursuant to this SECTION
--------------
(1) For the avoidance of doubt, all Class B Members will be unrelated third
parties to Sterling, its affiiliates, funds, portfolio companies and related
entitles.
14.4 shall constitute an irrevocable commitment to purchase from the Company the
Preemptive Right Units set forth in such notice. The closing of the purchase by
the Preemptive Rights Holders shall take place at the same time as the closing
of the issuance, grant or sale of the Preemptive Securities and the provisions
of SECTION 9.1 and ARTICLE X shall be appropriately adjusted solely to take into
account such purchase.
(c) Failure of a Preemptive Right Holder to exercise its preemptive
right within 10 days after the receipt of the Preemptive Rights Notice shall be
deemed to be a waiver by the Preemptive Right Holder of its rights hereunder but
only with respect to such offering. In the event of a failure by any Preemptive
Right Holder to purchase all or any portion of its Pro Rata Share, the Company
in connection with its purchase of the applicable Preemptive Securities shall be
entitled to (i) issue, grant or sell the remaining Preemptive Right Units to any
Person (including any Member, any Member's Affiliates or any third party) on the
terms set forth in the Preemptive Rights Notice, and (ii) purchase such
Additional Select Shares or, if and to the extent any such right to purchase the
Additional Select Shares is assignable or otherwise transferable, the Company
shall be permitted, in the Managing Member's sole discretion, to assign or
otherwise transfer such right to Sterling, any of its Affiliates and/or any
other Person. From the expiration of the 10 day period referred to in SECTION
14.4(b) and for a period of 90 days thereafter, the Company in connection with
its purchase of the applicable Preemptive Securities may offer, issue, grant and
sell to any Person, the remaining Preemptive Right Units having the terms set
forth in the Preemptive Rights Notice for a price and other terms no less
favorable to the Company, and including no less cash, than those set forth in
the Preemptive Rights Notice (without deduction for reasonable underwriting,
sales agency and similar fees payable in connection therewith); PROVIDED,
HOWEVER, that the Company may not issue, grant or sell Preemptive Right Units
(A) in the event it does not purchase any Preemptive Securities in the
applicable transaction, or (B) if the Company does purchase Preemptive
Securities in the applicable transaction, in an amount greater than the amount
set forth in the Preemptive Rights Notice minus the amount purchased or
committed to be purchased by the Preemptive Rights Holders upon exercise of
their preemptive rights.
(d) Sterling shall permit, and shall cause any of its Affiliates to
permit, the Company to purchase such number of Select Shares as necessary to
permit the Company to comply with this SECTION 14.4 in the event that the
Company does not initially participate in any transaction relating to the
purchase of Additional Select Shares and Sterling or any of its Affiliates
purchase Additional Select Shares in accordance with such transaction.
(e) Notwithstanding anything to the contrary in this Agreement, the
provisions of this SECTION 14.4 shall not apply to (i) any acquisition of equity
securities other than from a Select Issuer, (ii) any issuance by a Select Issuer
of equity securities to a Person other than the Company, (A) as consideration in
a merger or consolidation (the primary purpose or material result of which is
not to raise or obtain equity capital or cash), (B) in connection with any
strategic partnership or joint venture (the primary purpose or material result
of which is not to raise or obtain equity capital or cash) (C) as consideration
for the acquisition of a business, product, license or other assets by, or the
provision of services to, a Select Issuer (the primary purpose or material
result of which is not to raise or obtain equity capital or cash), (D) in any
transaction similar to any of the transactions referred to in (A), (B) and (C)
of this CLAUSE (ii), (iii) any grant of stock options, or other issuance of
equity securities to any employee, officer or director of, or consultant to, a
Select Issuer, in consideration for, or otherwise in connection with, such
Person's employment or directorship with, or provision of services to, a Select
Issuer, or (iv) any rights of any Person to acquire equity securities of a
Select Issuer that result directly from ownership of any equity securities as to
which, pursuant to CLAUSE (i), (ii) or (iii) of this sentence, the provisions of
this SECTION 14.4 do not apply.
14.5 Each Class B Member hereby acknowledges and agrees that, so long as
such Class B Member remains a Member and Sterling and its Affiliates are the
"beneficial owners" (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, as amended (including any successor thereto, the "EXCHANGE
ACT")), directly or indirectly, of at least 20% of the total ordinary voting
power of the capital stock of Select, such Class B Member shall not, and shall
cause each other Person that is a reporting person on any Schedule 13D or
Schedule 13G (or amendment thereto) filed with the U.S. Securities and Exchange
Commission (including any successor thereto, the "SEC") by such Class B Member
(such Class B Member, together with each such other Person, being collectively
referred to herein as such "CLASS B MEMBER'S GROUP") and each Affiliate of any
member of such Class B Member's Group not to, directly or indirectly, without
the prior written consent of the Managing Member (which consent the Managing
Member may withhold, condition or delay in its sole discretion):
(a) engage in any transaction constituting a "short sale" (as defined
in Rule 200 of Regulation SHO under the Exchange Act of any securities of Select
or establish an open "put equivalent position" (within the meaning of Rule
16a-1(h) under the Exchange Act) with respect to any securities of Select;
(b) initiate, propose, induce or attempt to induce any other person to
initiate any shareholder proposal, nominate any person to be elected as a member
of the Board of Directors of Select (the "BOARD") or make any attempt to call a
special meeting of shareholders of Select, (ii) submit any proposal for
consideration at, or bring any other business before, any meeting of
shareholders of Select, or request that Select include any proposals or nominees
for election as members of the Board in any Select proxy statement, (iii)
engage, or in any way participate, directly or indirectly, in any "solicitation"
(as such term is defined in Rule 14a-1(l) promulgated by the SEC under the
Exchange Act) of proxies, consents or authorizations (whether or not relating to
the election or removal of directors), seek to advise, encourage or influence
any Person with respect to the voting of any Select securities, or (iv)
otherwise communicate with Select's shareholders or others pursuant to Rule
14a-1(l)(2)(iv) under the Exchange Act; provided, however, that nothing herein
shall limit the ability of any member of such Class B Member's Group from voting
its own voting securities on any matter submitted to a vote of the shareholders
of Select;
(c) make any public announcement, statement or disclosure with respect
to, or publicly offer to effect, seek or propose (with or without conditions),
any merger, acquisition, consolidation, other business combination,
restructuring, recapitalization, tender offer, exchange offer or other
extraordinary transaction with or involving Select or any of its subsidiaries or
any of its or their securities or assets, publicly announce its opposition to
any Board-approved proposals, or otherwise make any public announcement,
statement or disclosure regarding or relating to (i) Select or any of its
subsidiaries, the Company, the Managing Member or any Affiliate of any of the
foregoing, (ii) any actions taken or proposed to be taken by Select or any of
its subsidiaries, the Company, the Managing Member or any Affiliate of any of
the foregoing, or (iii) the Board or management of Select or any member thereof;
PROVIDED, HOWEVER, that nothing contained herein shall limit the ability of any
member of such Class B Member's Group to file an amendment or amendments to its
Schedule 13D or Schedule 13G regarding securities of the Company as required by
law, rule or regulation or to make other securities or tax filings as required
by law or any rules or regulations so long as no member of such Class B Member's
Group nor any Affiliate of any such member enters into any contract,
arrangement, understanding or relationship (legal or otherwise) with respect to
the Company's voting securities, or otherwise takes any action, in violation of
any provision of this SECTION 14.5;
(d) (i) form, join or in any way participate in a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, other than a "group" that includes
all or some lesser number of Persons publicly identified as members of such
Class B Member's Group as of the Effective Date or Sterling and the other Class
B Members, (ii) enter into any negotiation, agreement, arrangement,
understanding or relationship (legal or otherwise) with any Persons in
connection with any of the foregoing or with respect to the voting of any
securities of Select, (iii) or otherwise deposit any securities of Select in any
voting trust or subject any securities of Select to any arrangement or agreement
with respect to the voting of any securities of Select; or
(e) publicly seek or request permission from the Managing Member or
the Class A Members to do any of the foregoing or to amend or waive any
provision of this SECTION 14.5, or make any public announcement with respect to
any of the foregoing, except as permitted pursuant to SECTIONS 14.5(b), (c) or
(d).
14.6 Each Class B Member hereby acknowledges and agrees that, so long as
such Class B Member remains a Member, such Class B Member shall, and shall cause
each other member of such Class B Member's Group and each Affiliate of any
member of such Class B Member's Group to, promptly provide the Company or the
Managing Member with any information (i) that may be reasonably requested by
either of them for purposes of filings with the SEC on Schedule 13D (including
any amendments to any such filings) or any other securities filings required by
applicable law, or (ii) that may be required or requested to be disclosed by the
SEC or any other regulatory or self-regulatory authority, subject (in the case
of this CLAUSE (ii)) to the right of the Class B Member's Group to seek a
protective order or other appropriate remedy. If, in the absence of a protective
order or other remedy, the Company and the Managing Member are advised by legal
counsel that they are required to disclose such information, the Company and the
Managing Member may disclose the information provided by the Class B Member's
Group provided that the Company and the Managing Member provide a copy of any
portion of such disclosure to the Class B Member's Group in advance of the
filing thereof and considers in good faith any comments of the Class B Member's
Group or its legal counsel thereon prior to the filing of such disclosure. which
such counsel advises is required to be disclosed,
ARTICLE XV
POWERS, RIGHTS AND DUTIES OF THE MANAGING MEMBER
15.1 The Managing Member shall have exclusive authority to manage the
operations and affairs of the Company and to make all decisions regarding the
business of the Company. Without limiting the generality of the foregoing, the
Managing Member shall have the sole and exclusive right to manage the Company
and its business and shall have any and all the rights and powers to act on
behalf of the Company including, but not limited to, the right and the power to:
(i) control, vote, sell or otherwise dispose of all or any of the
Select Shares;
(ii) determine whether or not the Company will purchase any
Additional Select Shares;
(iii) appoint directors of Select;
(iv) establish such business strategies, accounting procedures and
other practices and to make such business and investment decisions
consistent with the provisions of ARTICLE IV as the Managing Member, in its
sole discretion, deems advisable for the operation of the Company;
(v) advise the Company with respect to the appropriate amount of
reserves to be maintained thereby for anticipated future expenses, costs
and taxes of the business of the Company;
(vi) from time to time borrow money on behalf of the Company;
(vii) enter into any agreement for sale of any of the assets of the
Company; and
(viii) enter into any agreement or commitment binding upon the Company
with respect to any of the foregoing.
In addition, it is understood and agreed that the Managing Member shall
have all of the rights and powers of a Managing Member as provided in the Act
and as otherwise provided by law, and any action taken by the Managing Member
shall constitute the act of and serve to bind the Company. In dealing with the
Managing Member acting on behalf of the Company, no Person shall be required to
inquire into the authority of the Managing Member to bind the Company. Persons
dealing with the Company are entitled to rely conclusively on the power and
authority of the Managing Member as set forth in this Agreement. The Company
shall promptly reimburse the Managing Member for its out-of-pocket expenses
incurred in connection with the performance of its duties hereunder.
15.2 The Managing Member is hereby granted the right, power and authority
to do on behalf of the Company all things that, in its sole judgment, are
necessary, proper or desirable to carry out the aforementioned duties and
responsibilities, including, but not limited to, the right, power and authority
to: (i) make all reasonable expenditures and incur all necessary obligations;
(ii) employ and dismiss from employment any and all agents, independent
contractors, brokers, attorneys and accountants; (iii) do any and all of the
foregoing at such price, rental or amount, for cash, securities or other
property and upon such terms as the Managing Member deems proper; and (iv)
execute, acknowledge and deliver any and all instruments necessary or desirable
to effectuate any and all of the foregoing. The Managing Member shall also be
empowered to admit an assignee of a Member's Units to be a substituted Member,
pursuant to and subject to the terms of ARTICLE XVI.
15.3 The Managing Member shall devote such time to the Company's business
as it, in its sole discretion, shall deem necessary to manage and supervise the
Company's business and affairs in an efficient manner, but nothing in this
Agreement shall preclude the employment, at the expense of the Company, of any
lawyers, accountants, consultants or other service providers to provide other
services in respect of the Company's affairs subject to the control of the
Managing Member. The Managing Member may elect officers of the Company to
exercise certain of the Managing Member's management responsibilities. Such
officers will have authority to open and maintain bank accounts on behalf of the
Company, make expenditures and incur obligations on behalf of the Company that
do not (individually or in a series of related transactions) exceed such amount
as may be determined from time to time by the Managing Member and perform such
other duties as may be delegated by the Managing Member.
15.4 Liability.
(a) Neither the Managing Member nor any partner, shareholder, member,
Managing Member, officer, director, employee or agent of the Managing Member or
any officer of the Company shall be liable, responsible or accountable in
damages or otherwise to the Company or a third party or any Member for any
action taken or failure to act on behalf of the Company within the scope of the
authority conferred on the Managing Member or any officer of the Company by this
Agreement or by law; PROVIDED that such action or failure to act does not
constitute fraud, willful misconduct, bad faith or gross negligence.
(b) To the maximum extent permitted by applicable law, each Member
hereby waives any claim or cause of action against the Managing Member, its
members or any of their Affiliates, employees, agents and representatives for
any breach of any fiduciary duty to the Company or the Members by such Person,
including as may result from a conflict of interest between the Company and such
Person. Subject to the express terms of this Agreement, the Managing Member
shall not be obligated to recommend or take any action as a "manager" that
prefers the interests of the Company or the other Members over the interests of
Managing Member or its Affiliates, employees, agents or representatives and the
Company and the Members hereby waive the fiduciary duty, if any, of the Managing
Member to the Company and the Members.
15.5 The Company shall indemnify and hold harmless the Company's officers
and Members, the Managing Member and their respective partners, shareholders,
members, Managing Members, officers, directors, employees and agents
(collectively, the "INDEMNIFIED PARTIES") from and against any loss, expense,
damage or injury suffered or sustained by them by reason of any acts, omissions
or alleged acts or omissions arising out of their activities on behalf of the
Company or in furtherance of the interests of the Company, including but not
limited to any judgment, award, settlement, reasonable attorneys' fees and other
costs or expenses incurred in connection with the investigation and defense of
any actual or threatened action, proceeding or claim (including any payments
made by the Managing Member to any of its members, officers or Managing Members,
pursuant to an indemnification provision no broader than this SECTION 15.5), if
the acts, omissions or alleged acts or omissions upon which such actual or
threatened action, proceeding or claim is based were for a purpose reasonably
believed to be in the best interest of the Company; PROVIDED that such acts or
omissions do not constitute fraud, willful misconduct, bad faith or gross
negligence. If any claim for indemnification is based on a claim by a third
party (a "THIRD PARTY CLAIM"), the Indemnified Party in question shall give
prompt written notice thereof to the Company and shall permit the Company to
defend and/or settle such Third Party Claim, so long as it does so diligently
and in good faith; PROVIDED that any settlement does not require any payment
from any Class B Member or require any admission of wrongdoing on the part of
the Class B Member or its Affiliates. Any such indemnification shall only be
from the assets or insurance of the Company. Any such indemnification shall only
be from the assets or insurance of the Company. Any such indemnification shall
be paid by the Company in advance of the final disposition of any such action,
proceeding or claim upon receipt of an undertaking by or on behalf of the
Indemnified Party seeking advancement to repay the amount advanced should it
ultimately be determined that the Indemnified Party was not entitled to be
indemnified hereunder or under the Act.
15.6 The Members shall have no interest in the properties or assets of the
Managing Member or any of its Affiliates, or any equity therein, or in any
proceeds of any sales thereof (which sales shall not be restricted in any
respect), by virtue of acquiring or owning Units in the Company or otherwise.
The Members hereby acknowledge and agree that (i) the Managing Member and/or one
or more of its Affiliates, partners, shareholders, members, officers and
directors may be entitled to receive an annual management or similar fee from
Select or any of its Affiliates and may be entitled to expense reimbursement
from Select or any of its Affiliates, and (ii) no Member shall have any interest
or a right to share in such payments or reimbursements.
15.7 The Managing Member is hereby designated the "tax matters person" of
the Company. The Managing Member may make any tax elections for the Company
allowed under the Code, or the tax laws of any state or other jurisdiction
having taxing jurisdiction over the Company. The Managing Member shall make a
Code Section 754 election if requested by a transferring Member to do so, so
long as the Member or Members benefiting from such election agree to pay for the
Company's reasonable expenses in making such election and in making any
accounting adjustments resulting from such election. Each of the Members will
upon request supply the information necessary to properly give effect to such
election.
15.8 The Managing Member, its partners, shareholders, members, officers,
directors, and/or its Affiliates may have other business interests and may
engage in other activities in addition to those related to the Company. Neither
the Company nor any Member shall have any right by virtue of this Agreement or
of their relationship to one another hereunder in or to such other business
interests or activities even if competitive with the Company or to the income or
proceeds derived therefrom, and the pursuit of such business interests and
activities shall not be deemed wrongful or improper. The Managing Member and any
Affiliate of the Managing Member shall not be obligated to offer to the Company
or pursue on behalf of the Company any business opportunities except in such
Person's sole and complete discretion. The Managing Member and the Company shall
conduct all transactions between or among the Company and the Managing Member
and its Affiliates, current or former officers or directors, or any of their
respective family members in compliance with all applicable laws and on terms
that are no less favorable to the Company than they would obtain in a comparable
arm's-length transaction with a Person that is not an Affiliate, a Member, an
Affiliate of a Member, a current or former officer or director, or a family
member, it being understood that all transactions approved by a vote of a
majority of the Class B Units not participating in any such transactions shall
be deemed to be in compliance with this SECTION 15.8. The rights and powers of
the Managing Member and its Affiliates pursuant to this Agreement shall be
subject to the provisions of this SECTION 15.8.
15.9 The Managing Member may not be removed by action of the Members. The
Managing Member may resign as Managing Member by giving written notice of such
resignation to the Members not less than 90 days prior to the effective date of
such resignation. In connection with such resignation, the Managing Member shall
have the power to admit, without the consent of the Members, a replacement
Managing Member if the replacement Managing Member(s) is an Affiliate of the
Managing Member; PROVIDED that the prior written consent of each of the Class B
Members shall be required to admit a replacement Managing Member that is not an
Affiliate of the Managing Member. Except as set forth in this SECTION 15.9,
replacement Managing Members may only be admitted to the Company pursuant to
SECTION 17.1(a).
15.10 The Managing Member shall be reimbursed by the Company for
reasonable, Company-related, business expenses.
15.11 The Managing Member shall preside at all meetings of the Members.
15.12 The Managing Member shall decide any questions arising with respect
to the Company or to this Agreement that are not specifically provided for in
this Agreement.
ARTICLE XVI
TRANSFER OF MEMBERSHIP UNITS
16.1 Subject to SECTION 16.3, no Member shall Transfer, directly or
indirectly, his, her or its Units, or any portion thereof, (i) except with the
prior written consent of the Managing Member, which consent may be withheld in
its sole discretion and (ii) in the case of Sterling and its Affiliates, without
compliance with SECTION 16.6 of this Agreement; provided that each Member shall
be permitted to pledge his, her or its Units, or any portion thereof as
collateral to an institutional lender in connection with any financing by such
Member or any of its Affiliates without the prior written consent of the
Managing Member (it being understood that any foreclosure on any Units pledged
as collateral pursuant to this SECTION 16.1 shall be subject to the prior
written consent of the Managing Member as described above; PROVIDED that such
Member shall use its reasonable best efforts to provide substitute collateral to
the institutional lender in the event of foreclosure on any pledged assets) and,
in the case of Sterling and its Affiliates, without compliance with SECTION
16.6. In case of any permitted Transfer, the instrument of Transfer shall be in
form and substance reasonably satisfactory to the Managing Member. Any Transfer
of Units made in conflict with or derogation of this Agreement shall be null and
void AB INITIO.
16.2 No assignee or transferee shall automatically become a substitute
Member or have any of the rights of the assignor or transferor Member, except
that an assignee or a transferee shall be entitled to share in such profits and
losses, to receive such distributions and to receive such allocation of income,
gain, loss, deduction, or credit or similar item to which the assignor or
transferor was entitled, to the extent Transferred. The assignee or transferee
of the Member's Units, or any portion thereof, may be admitted to the Company as
a Member in the place and stead of, or together with, as the case may be, the
Member who has assigned or transferred all or part of his, her or its Units upon
satisfaction of all of the following conditions:
(a) A duly executed and acknowledged written instrument of assignment
must be filed with the Company setting forth the intention of the assignor or
transferor that the assignee or transferee become a Member;
(b) The assignor or transferee and the assignee or transferee must
execute and deliver such other instruments as the Managing Member may deem
necessary or desirable to effect such admission, including the written
acceptance and adoption by the assignee or transferee of the provisions of this
Agreement; and
(c) The written consent of the Managing Member shall be obtained, the
granting or denial of which shall be within the sole discretion of the Managing
Member.
If all of the foregoing conditions have been fulfilled and the assignee has been
admitted to the Company as a Member, the Managing Member shall amend this
Agreement and any Schedules hereto to reflect the assignee's admission to the
Company as a Member.
16.3 Notwithstanding the provisions of SECTION 16.1, but subject to
compliance with SECTION 16.2, each Member is hereby permitted to Transfer all or
any part of its Units to any Permitted Transferees of such transferring Member
without the consent of the Managing Member. As used herein, the term "PERMITTED
TRANSFEREE" shall mean with respect to a Member, (i) an Affiliate of such
Member, or (ii) the Company.
16.4 If the Managing Member elects to consummate a sale of all or
substantially all of the Units and other membership interest in the Company to
an independent third party (including through a merger or consolidation of the
Company with another person or entity) (such transaction, a "SALE OF THE
COMPANY"), the Managing Member shall notify the other Members in writing of such
Sale of the Company. Upon the request by the Managing Member, each Member will
consent to and raise no objections to the proposed transaction, and will take
all other actions reasonably necessary or desirable to cause the consummation of
such Sale of the Company on the terms proposed by the Managing Member. The
obligations of the Members pursuant to this SECTION 16.4 with respect to a Sale
of the Company are subject to the following conditions: (i) the consideration
payable upon consummation of a Sale of the Company to all of the Members shall
be allocated among the Members as set forth in SECTION 9.1, and (ii) upon the
consummation of a Sale of the Company, all of the Members shall receive the same
form of consideration per Unit or other equity interest. Each Member agrees to
be bound by agreements with respect to indemnification obligations, amounts paid
into escrow, amounts subject to holdbacks or amounts subject to post-closing
purchase price adjustments, and agreements to appoint representatives; PROVIDED,
that any such indemnification, escrow, holdback and adjustment obligations
undertaken by any Member (x) shall be no less favorable to such Member as is
applicable to Sterling and its Affiliates, (y) shall be proportional to the
share of the purchase price paid in connection with a Sale of the Company that
is allocable to such Member, and (z) shall not exceed the total amount of
consideration received by such Member in connection with a Sale of the Company.
Notwithstanding the foregoing, in no event shall this SECTION 16.4 require any
Member to vote or cause to be voted any shares of voting stock of Select owned
by it or its Affiliates for any transaction to be undertaken by Select or its
subsidiaries in its capacity as a shareholder thereof or refrain from any other
action not prohibited by SECTION 14.5.
16.5 If, at any time after the Effective Date, Select consummates a
transaction with Sterling and/or any of its Affiliates as a result of which the
shares of stock of Select are no longer traded on any established stock exchange
(a "GOING PRIVATE TRANSACTION"), the Company or Sterling (as determined by the
Managing Member in its sole discretion) shall, immediately prior to or
concurrently with the consummation of such Going Private Transaction, purchase
all, but not less than all, of the Units held by the Class B Members at a
purchase price in cash per Unit determined as if an amount equal to the
aggregate price for the Select Shares (as determined in such Going Private
Transaction) is distributed to the Members, including the Class B Members and
the Managing Member, in the order of priority set forth in SECTION 9.1(a).
16.6 Tag-Along Rights.
(a) Neither Sterling nor any of its Affiliates who is admitted as a
Member after the Effective Date (a "TRANSFEROR") may Transfer any Units,
directly or indirectly, to one or more third parties unless each other Member is
offered a right to sell Units (the "TAG ALONG RIGHT"), in such Transfer with
such Transferor in accordance with this SECTION 16.6.
(i) At least five business days prior to any such Transfer, the
Transferor will deliver a sale notice to the other Members specifying the
identity of the prospective transferee(s) and disclosing in reasonable
detail the number of Units, the price and the other terms and conditions of
the proposed Transfer. The Members who elect to participate in the proposed
Transfer (the "TAG ALONG MEMBER") shall deliver written notice of their
election to participate to the Transferor prior to the expiration of such
five business day period. In the event that a Class B Member elects to
become a Tag-Along Member, the Managing Member shall be entitled to
participate in such sale (and receive a pro rata portion of the
consideration as described in SECTION 16.6(c) below).
(ii) Each Tag Along Member will be entitled to sell in such proposed
Transfer, on the same terms as the Transferor (except that the purchase
price per each Unit shall be determined as if the total consideration
payable by the third party buyer were distributed pursuant to SECTION
9.1(a), but assuming that the Units to be sold in the contemplated Transfer
are the only Units outstanding as of the time of such Transfer, and any
consideration payable per Class B Unit shall be allocated among and paid to
the Class B Member and the Managing Member as provided in SECTION
9.1(a)(iii)) a number of Units equal to the product of (x) the quotient
determined by dividing the number of Units then held by such Tag Along
Member by the aggregate number of Units then outstanding multiplied by (y)
the number of Units to be sold in the proposed Transfer. The number of
Units proposed to be Transferred by the Transferor in the current Transfer
shall be reduced to the extent necessary to provide for the sale of Units
by each Tag Along Member exercising its rights hereunder.
(b) In the event that any entity that is an Affiliate of, and under
common control with, the LLC (a "SELECT STOCK TRANSFEROR"), proposes to directly
or indirectly Transfer a number of shares of common stock or other equity
securities (including any securities exchangeable for or convertible into equity
securities) of Select or its subsidiaries representing the lesser of (i) three
percent (3%) or more of the total number of shares of Select common stock then
outstanding or (ii) twenty-five percent (25%) or more of the total number of
shares of Select common stock or other equity securities (including any
securities exchangeable for or convertible into equity securities) held or owned
by the LLC as of the Closing Date (as defined in the Purchase Agreement), in
each case in a single transaction or series of related transactions, to a Person
or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) of
Persons, then each Member (the "DIRECTING MEMBER") shall be entitled to cause
the LLC to sell in such proposed Transfer a number of Select Shares equal to the
product of (x) the quotient of (A) the product of the total number of Select
Shares then held by the LLC multiplied by the Directing Member's Participating
Percentage at such time, divided by (B) the aggregate number of shares of Select
common stock directly and indirectly held by the LLC, the Select Stock
Transferor and the LLC's Affiliates, multiplied by (y) the total number of
shares of Select common stock being sold in the proposed Transfer. The LLC shall
use the net proceeds received from any such sale of Select Shares pursuant to
this SECTION 16.6(b) to redeem a pro rata portion of the Units then held by the
Directing Member such that, following such redemption, the Participating
Percentage of the Directing Member shall be equal to the quotient of (1) (x) the
product of the total number of Select Shares held by the LLC immediately prior
to the sale of Select Shares pursuant to this SECTION 16.6(b) multiplied by the
Directing Member's Participating Percentage at such time, minus (y) the number
of Select Shares sold by the LLC at the direction of the Directing Member,
divided by (2) the total number of Select Shares held by the LLC immediately
after the sale of Select Shares pursuant to this Section 16.6(b); provided that,
if the redeemed Units are Class B Units, the redemption price for such Units
shall be allocated among and paid to the Class B Member and the Managing Member
as provided in SECTION 9.1(a)(iii), assuming for such purpose that the redeemed
Units are the only Units outstanding as of the time of such redemption.
16.7 Any repurchase, redemption or buyback of any Units or other class or
series of membership interests or other securities by the Company shall be on a
pro rata basis among all Members (except for the Managing Member) in accordance
with their respective Participating Percentages at a price equal to the Fair
Market Value of the Units or other membership interests or securities (except
that the purchase price per each Unit shall be determined as if the total
consideration payable by the third party buyer were distributed pursuant to
SECTION 9.1(a), but assuming that the Units to be repurchased or redeemed are
the only Units outstanding as of the time of such repurchase or redemption, and
any consideration payable per Class B Unit shall be allocated among and paid to
the Class B Member and the Managing Member as provided in SECTION 9.1(a)(iii).
ARTICLE XVII
DISSOLUTION OF THE COMPANY
17.1 The happening of any of the following events shall work an immediate
(except as otherwise provided below) dissolution of the Company:
(a) the resignation (unless a replacement is appointed by the Managing
Member in accordance with SECTION 15.9), dissolution or bankruptcy of the
Managing Member, unless a substitute Managing Member is selected by the Majority
Approval within the period authorized by law (or, if none, within 90 days
thereafter) (unless the substitute Managing Member is not an Affiliate of the
Managing Member, in which case the selection of the substitute Managing Member
shall require approval of each of the Class B Members), and the new Managing
Member elects to continue the business of the Company;
(b) the written election of the Managing Member to dissolve, which
election shall be effective immediately or on the date specified in such
election; or
(c) entry of decree of judicial dissolution under the Act.
17.2 For purposes of this Agreement, the "bankruptcy" of the Managing
Member shall be deemed to have occurred upon the happening of any of the
following: (i) the filing of an application by the Managing Member for, or a
consent to, the appointment of a trustee of its assets; (ii) the filing by the
Managing Member of a voluntary petition in bankruptcy or the filing of a
pleading in any court of record admitting in writing its inability to pay its
debts as they come due; (iii) the making by the Managing Member of a general
assignment for the benefit of creditors; (iv) the filing by the Managing Member
of an answer admitting the material allegations of, or its consenting to, or
defaulting in answering a bankruptcy petition filed against it in any bankruptcy
proceeding; or (v) the entry of an order, judgment or decree by any court of
competent jurisdiction adjudicating the Managing Member as bankrupt or
appointing a trustee of its assets, and such order, judgment or decree continues
unstayed and in effect for any period of sixty (60) days.
ARTICLE XVIII
ADDITIONAL PROVISIONS CONCERNING
DISSOLUTION OF THE COMPANY
18.1 In the event of the dissolution of the Company for any reason, the
Managing Member or, in the event of the resignation, dissolution or bankruptcy
of the Managing Member, a liquidator or a liquidating committee selected by the
Majority Approval shall wind up the affairs of the Company. In accordance with
the provisions of ARTICLES IX and X, the Members shall continue to share
profits, losses and cash distributions during the period of liquidation in the
same proportions as before dissolution. The Managing Member (or such liquidator
or liquidating committee) shall have full right and unlimited discretion to
determine the time, manner and terms of any sale or sales of Company property
pursuant to such liquidation.
18.2 Following the payment of all debts and liabilities of the Company and
all expenses of liquidation, and subject to the right of the Managing Member (or
such liquidator or liquidating committee) to set up such cash reserves as it may
deem reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company, the proceeds of the liquidation and any other funds
of the Company shall be distributed in accordance with ARTICLE IX. If and when
the Managing Member (or such liquidator or liquidating committee) determines
that any such reserves are no longer required, they shall be distributed in
accordance with ARTICLE IX.
18.3 Each Member shall look solely to the assets of the Company for all
distributions and for the return of its Capital Contribution and shall have no
recourse therefor against any other Member. The Members shall not have any right
to demand or receive property other than cash upon dissolution and termination
of the Company or to demand the return of their Capital Contributions to the
Company prior to dissolution and termination of the Company.
18.4 Upon the dissolution and the commencement of winding up of the
Company, the Managing Member (or such liquidator or liquidating committee) shall
have the authority to execute and record a certificate of cancellation of the
Company as well as any and all other documents required to effectuate the
dissolution and termination of the Company.
ARTICLE XIX
NOTICES
All notices and demands required or permitted under this Agreement shall be
in writing and be deemed properly given and effective (i) three days after
mailing if sent by certified U.S. mail, postage prepaid, return receipt
requested, (ii) one day after delivery to a reputable overnight air courier,
(iii) upon receipt (or, if refused, upon the date of such refusal) if delivered
personally, or (iv) the next business day after being sent by facsimile or
email, to the Members at their addresses, facsimile numbers or email addresses
as shown from time to time on the records of the Company. Any Member may specify
a different address by notifying the Managing Member in writing of such
different address.
ARTICLE XX
AMENDMENT OF THE AGREEMENT
AND MEETINGS
20.1 Except as otherwise required by law or as set forth herein, all
provisions of this Agreement may be amended or waived upon the affirmative vote
of the Managing Member and the Majority Approval; PROVIDED that the consent of
the Members is not required for the amendment or waiver of this Agreement or
SCHEDULE A hereto by the Managing Member in connection with (a) the admission of
additional or substituted Members and any corresponding modifications of the
Members' Units, (b) repurchases by the Company of Units from Members, and (c)
additional contributions or investments in the Company pursuant to this
Agreement; PROVIDED, HOWEVER that no amendment to ARTICLE IV, ARTICLE IX (only
with respect to distributions relating to or arising from the initial Select
Shares acquired pursuant to the Purchase Agreement) or this ARTICLE XX shall be
adopted without the prior written consent of the Members; PROVIDED, FURTHER,
HOWEVER, that no amendment shall be adopted pursuant to this SECTION 20.1 if
such amendment would have a material adverse or disproportionate effect on the
rights (economic or otherwise) or obligations of or to a Member without the
prior written consent of such affected Member; PROVIDED, FURTHER that if any
Preemptive Right Holder fails to purchase all or any portion of its Pro Rata
Share pursuant to a preemptive rights transaction under SECTION 14.4, then any
amendment to this Agreement made solely to give effect to the terms and the
issuance of Units in connection with such preemptive rights transaction (which
transaction shall be consistent with the terms of the Preemptive Rights Notice),
such Preemptive Right Holder shall have no right to consent to such amendment
pursuant to this SECTION 20.1, regardless of whether such amendment would have a
material adverse or disproportionate effect on the rights or obligations of such
Preemptive Right Holder.
20.2 In the event this Agreement shall be amended pursuant to this ARTICLE
XX, the Managing Member shall amend the Certificate of Formation to reflect such
change if it deems such amendment of the Certificate to be necessary or
appropriate.
20.3 Subject to SECTION 20.1, in addition to any amendments otherwise
authorized herein, this Agreement may be amended from time to time by the
Managing Member without the consent of any of the Members (a) to add to the
representations, duties or obligations of the Managing Member or surrender any
right or power granted to the Managing Member herein, for the benefit of the
Members; (b) to cure any ambiguity, to correct or supplement any provision
herein that may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Agreement that will not be inconsistent with the provisions of this Agreement;
and (c) to delete or add any provision of this Agreement required to be so
deleted or added by a state "Blue Sky" commissioner or similar such official,
which addition or deletion is deemed by such official to be for the benefit or
protection of the Members.
20.4 Notwithstanding any other provisions of this Agreement, the Managing
Member shall have the right to modify the provisions of ARTICLE X or any other
provision of this Agreement without the consent of the Members, if, in the
opinion of counsel to the Managing Member, such modification is necessary to (a)
cause the allocations contained in ARTICLE X to have substantial economic effect
in accordance with the most recently proposed or final regulations relating to
Section 704 of the Code or any other statutory provision or regulation relating
to such allocations, or (b) cause the provisions of this Agreement to comply
with any applicable Federal legislation, regulation or rule enacted or
promulgated, or which becomes effective, after the date of this Agreement.
20.5 Any vote of the Members on any matters upon which the Members are
entitled to vote hereunder may be accomplished at a meeting of the Members
called for such purpose by the Managing Member upon not less than two days'
prior notice, or, in lieu of a meeting, by Majority Approval.
ARTICLE XXI
POWER OF ATTORNEY
Each Member hereby irrevocably constitutes and appoints the Managing
Member, with full power of substitution, as its true and lawful representative
and attorney-in-fact, granting unto such attorney-in-fact full power of
substitution and with full power and authority in the Member's name, place and
stead to make, execute, acknowledge, deliver, swear to, file and record in all
necessary or appropriate places: (a) this Agreement; (b) all other documents,
certificates or instruments that the Managing Member deems appropriate to
qualify, continue or terminate the Company as a limited liability company in the
jurisdictions in which the Company may conduct business; (c) all instruments
that the Managing Member deems appropriate to reflect a change or modification
of the Company in accordance with the terms of this Agreement; (d) all other
certificates, documents and instruments with any jurisdiction that the Managing
Member deems appropriate to carry out the business of the Company; (e)
Certificates of Assumed Name; (f) any agreement or instrument relating to the
defense, settlement, compromise or satisfaction of any Claim (as defined below)
and to do all other lawfully permitted acts in furtherance thereof with the same
legal force and effect as if executed by such Member; and (g) all conveyances
and other instruments that the Managing Member deems appropriate to effect the
dissolution and liquidation of the Company in accordance with the terms of this
Agreement.
This Power of Attorney is coupled with an interest, is irrevocable, and
shall survive the death, dissolution, incompetency or incapacity of the Member
or an assignment by the Member of the Member's Units except that where the
assignee hereof has been admitted to the Company as a substituted Member, this
Power of Attorney shall survive such assignment for the sole purpose of enabling
the Managing Member to execute, acknowledge and file any certificate, instrument
or document necessary or appropriate to effect such substitution.
ARTICLE XXII
MISCELLANEOUS
22.1 This Agreement constitutes the entire agreement between the parties
relating to the subject matter hereof. It supersedes any prior agreement or
understandings between them relating to the subject matter hereof, and it may
not be modified or amended in any manner other than as set forth herein.
22.2 This Agreement and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware, without regard to principles of conflicts of law. The undersigned
hereby agrees that (a) any and all litigation arising out of this Agreement
shall be conducted only in courts of the State of Illinois located in Chicago,
Illinois, or the courts of the United States of America located in Chicago,
Illinois, and (b) such courts shall have the exclusive jurisdiction to hear and
decide such matters. The undersigned hereby submits to the jurisdiction of such
courts and waives any objection it may now or hereafter have to venue or that
such courts are inconvenient forums. IN ANY ACTION INVOLVING OR RELATING TO THIS
AGREEMENT, EACH OF THE PARTIES IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY.
22.3 Except as herein otherwise specifically provided, this Agreement shall
be binding upon and inure to the benefit of the parties and their legal
representatives, heirs, administrators, executors, successors and assigns.
22.4 Captions contained in this Agreement are inserted only as a matter of
convenience and in no way define, limit or extend the scope or intent of this
Agreement or any provision thereof.
22.5 If any provision of this Agreement, or the application of such
provision to any person or circumstance, shall be held invalid, the remainder of
this Agreement, or the application of such provision to persons or circumstances
other than those to which it is held invalid, shall not be affected hereby.
22.6 This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument. All of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had
signed a single signature page. Any Member may evidence his, her or its assent
to, and shall be bound by, this Agreement by execution of a subscription
agreement for Units without execution of a counterpart hereof.
22.7 The Managing Member is not obligated to deliver or mail to any Member
a copy of the Company's Certificate or of any amendment thereto or restatement
thereof.
22.8 The waiver by a Member of any breach of any provision of this
Agreement shall not constitute or operate as a waiver of any other breach of
such provision or of any other provision hereof, nor shall any failure to
enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof.
22.9 The parties hereto agree to execute and deliver all documents, provide
all information and take or refrain from taking such actions as may be
reasonably necessary to achieve the purposes of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOLLOWS]
LIMITED LIABILITY COMPANY AGREEMENT
OF STERLING SC INVESTOR, LLC
IN WITNESS WHEREOF, the undersigned has executed this Limited Liability
Company Agreement of Sterling SC Investor, LLC effective as of the Effective
Date.
THE COMPANY:
Sterling SC Investor, LLC
By: Sterling SC Manager, LLC
Its: Managing Member
By:
---------------------------------
Name:
---------------------------------
Its:
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MANAGING MEMBER:
Sterling SC Manager, LLC
By:
---------------------------------
Name:
---------------------------------
Its:
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LIMITED LIABILITY COMPANY AGREEMENT
OF STERLING SC INVESTOR, LLC
SIGNATURE PAGE FOR ENTITIES
Form of Organization (check one):
---------- Partnership
---------- Corporation
---------- Limited Liability Company
---------- Trust
---------- Bank
Full Name of Member:
---------------------------------------------------------
Tax ID:
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Address:
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Phone:
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Fax:
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Email:
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The undersigned warrants that he/she/it has full power and authority to execute
this Limited Liability Company Agreement on behalf of the above entity, and an
investment in the Company is not prohibited by the governing documents of the
entity or by any law applicable to such entity.
Entity Name:
--------------------------------
--------------------------------
By:
--------------------------------
(Signature)
--------------------------------
(Signer's
Printed Name)
Its:
--------------------------------
--------------------------------
Date:
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SCHEDULE A
MEMBER ADDRESS CLASS A CLASS B TOTAL CAPITAL PARTICIPATING
NAME UNITS UNITS UNITS CONTRIBUTION PERCENTAGE
Sterling Capital 30,000 0 30,000 $30,000,000 85.714%
Partners III, X.X.
Xxxxxxx Co-Investment 0 5,000* 5,000* $5,000,000*
LLC
____________________ 0
Sterling SC 0 0 0 $1,000.00 0
Manager, LLC
Total: $35,001,000.00 100%
* Subject to adjustment based upon issuances to other purchases of Class B Units
on the Closing Date consistent with the terms of this Agreement and the Unit
Purchase Agreement.
