Exhibit 10.16
THE LIMITED LIABILITY COMPANY INTERESTS EVIDENCED BY THIS AGREEMENT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAWS OF
ANY STATE OR FOREIGN JURISDICTION AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT
COMPLIANCE WITH APPLICABLE FEDERAL, STATE OR FOREIGN SECURITIES LAWS. IN
ADDITION, TRANSFER OR OTHER DISPOSITION OF THE LIMITED LIABILITY COMPANY
INTERESTS IS RESTRICTED AS PROVIDED IN THIS AGREEMENT.
GCP, LLC
LIMITED LIABILITY COMPANY AGREEMENT
dated as of
June 27, 2000
among
▇▇▇▇▇▇▇▇▇ & Co., LLC
and the
Individual Members
ARTICLE 1
GENERAL PROVISIONS
SECTION 1.01. Definitions.......................................................1
SECTION 1.02. Formation of the Company..........................................1
SECTION 1.03. Name of the Company...............................................1
SECTION 1.04. Purposes of the Company and Powers................................2
SECTION 1.05. Office; Registered Agent..........................................2
SECTION 1.06. Title to Company Property.........................................2
SECTION 1.07. Filing of Certificates............................................3
SECTION 1.08. Admission of Members..............................................3
SECTION 1.09. Subsequent Admission of Individual Members........................3
ARTICLE 2
GOVERNANCE; MANAGEMENT AND OPERATIONS OF THE COMPANY
SECTION 2.01. Management of the Company.........................................4
SECTION 2.02. The Management Board..............................................4
SECTION 2.03. Procedures relating to the Management Board.......................4
SECTION 2.04. Meetings of the Management Board..................................5
SECTION 2.05. Quorum; Voting....................................................5
SECTION 2.06. Powers of the Management Board....................................5
SECTION 2.07. Operations Committee..............................................7
SECTION 2.08. Transactions with Affiliates......................................7
SECTION 2.09. Other Activities..................................................7
SECTION 2.10. Books and Records; Accounting Method; Fiscal Year.................8
SECTION 2.11. Partnership for Tax Purposes; Company Tax Returns.................8
SECTION 2.12. Confidentiality...................................................9
SECTION 2.13. Investment of Funds..............................................10
SECTION 2.14. Other Authority..................................................11
ARTICLE 3
CARRIED INTEREST POINTS; CERTAIN OTHER MATTERS
SECTION 3.01. General Provisions...............................................11
SECTION 3.02. Assignment of Carried Interest Points............................12
SECTION 3.03. Pro Rata Dilution................................................13
SECTION 3.04. No Right to Continued Employment.................................14
SECTION 3.05. Effect of Termination of Employment..............................14
SECTION 3.06. Other Provisions Relating to Special Members.....................16
ARTICLE 4
EXPENSES
SECTION 4.01. Definition of Expenses...........................................17
SECTION 4.02. Responsibility for Company Expenses among the Members............17
2
ARTICLE 5
CAPITAL CONTRIBUTIONS
SECTION 5.01. Capital Contributions............................................17
SECTION 5.02. Payment of Capital Contributions.................................17
ARTICLE 6
CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS
SECTION 6.01. Principles of Distributions Attributable to Invested Capital.....18
SECTION 6.02. Principles of Distributions Attributable to Carried Interest.....18
SECTION 6.03. Other Provisions Relating to Distributions.......................18
SECTION 6.04. Capital Accounts; Adjustments to Capital Accounts................19
SECTION 6.05. Tax Allocations..................................................20
SECTION 6.06. Foreign Currency Considerations..................................21
SECTION 6.07. Loans and Withdrawal of Amounts Allocated to Capital Accounts....21
SECTION 6.08. Repayment of Certain Distributions...............................21
ARTICLE 7
REPORTS TO INDIVIDUAL MEMBERS
SECTION 7.01. Reports..........................................................21
ARTICLE 8
LIABILITY; EXCULPATION AND INDEMNIFICATION
SECTION 8.01. Liability for Debts of the Company; Limited Liability............22
SECTION 8.02. Exculpation and Indemnification..................................22
ARTICLE 9
DURATION AND DISSOLUTION OF THE COMPANY
SECTION 9.01. Duration.........................................................24
SECTION 9.02. Dissolution......................................................24
SECTION 9.03. Liquidation of Company...........................................25
SECTION 9.04. Distribution upon Dissolution of the Company.....................25
SECTION 9.05. Resignation of Individual Members................................26
ARTICLE 10
TRANSFERABILITY OF A MEMBER'S INTEREST
SECTION 10.01. Restrictions on Transfer.........................................26
SECTION 10.02. Expenses of Transfer; Indemnification............................26
SECTION 10.03. Recognition of Transfer; Substituted Members.....................26
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Entire Agreement; Amendments; Waivers; Termination...............28
SECTION 11.02. Mergers and Consolidations.......................................28
3
SECTION 11.03. Investment Representation........................................29
SECTION 11.04. Successors; Counterparts.........................................29
SECTION 11.05. Governing Law; Severability......................................29
SECTION 11.06. Further Assurance................................................29
SECTION 11.07. Filings..........................................................29
SECTION 11.08. Power of Attorney................................................30
SECTION 11.09. No ▇▇▇▇ for Company Accounting...................................30
SECTION 11.10. Goodwill.........................................................30
SECTION 11.11. Notices..........................................................30
SECTION 11.12. Arbitration......................................................31
SECTION 11.13. No Partnership Intended for Non-tax Purposes.....................32
SECTION 11.14. Withholding......................................................32
SECTION 11.15. Headings.........................................................32
Appendix A Definitions.....................................................A-1
Schedule I Allocation of Carried Interest Points...........................S-1
Schedule II Assignment of Carried Interest Points...........................S-2
Schedule III Required Capital Contributions..................................S-3
LIMITED LIABILITY COMPANY AGREEMENT
OF
GCP, LLC
(a limited liability company formed under the laws of the State of Delaware)
LIMITED LIABILITY COMPANY AGREEMENT dated and effective as of June 27, 2000
of GCP, LLC among ▇▇▇▇▇▇▇▇▇ & Co., LLC, a Delaware limited liability company
("Greenhill"), the Individual Members party hereto and any Individual Members
who become parties hereto after the date hereof pursuant to Section 1.09, each
in the capacity as a Member.
WITNESSETH:
WHEREAS, Greenhill and the Individual Members wish to associate themselves
as members of the Company and to form the Company as a limited liability company
under the laws of the State of Delaware and on the terms set forth in this
Agreement;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE 1
GENERAL PROVISIONS
SECTION 1.01. Definitions. Capitalized terms used herein without definition
have the meanings assigned to them in Appendix A hereto.
SECTION 1.02. Formation of the Company. The Company was formed upon the
filing of the Company's certificate of formation (such certificate, as amended
or restated, the "Certificate of Limited Liability Company") in the office of
the Secretary of State of the State of Delaware on, 2000 under the Delaware
Limited Liability Company Act 6 Del. Sections 18-101, et seq. (as amended from
time to time, the "Delaware Act"). Effective upon the execution hereof, the
rights, duties and obligations of the Members shall be as provided in this
Agreement and, except as herein otherwise expressly provided, in the Delaware
Act.
SECTION 1.03. Name of the Company. The name of the Company is GCP, LLC. The
business of the Company shall be conducted under such name or such other names
(upon notice to all the Members) as the Management Board may from time to time
determine.
SECTION 1.04. Purposes of the Company and Powers. The Company is formed for
the object and purpose of, and the nature of the business to be conducted and
promoted by the Company is engaging in, any lawful act or activity for which
limited liability companies may be formed under the Delaware Act and engaging in
any and all activities necessary or incidental to the foregoing. Without
limiting the generality of the foregoing, the purpose of the Company is also to
act as the general partner of GCP, L.P. (the "Partnership"), which is the
general partner of each of ▇▇▇▇▇▇▇▇▇ Capital Partners, L.P., ▇▇▇▇▇▇▇▇▇ Capital
Partners (Cayman) L.P., ▇▇▇▇▇▇▇▇▇ Capital Partners (Executives), L.P., and
Greenhill Capital, L.P. (individually, a "Fund" and collectively the "Funds").
In furtherance of its purposes, (a) the Company shall have and may exercise all
of the powers now or hereafter conferred by Delaware law on limited liability
companies formed under the Delaware Act, including without limitation, all of
the powers that may be exercised on behalf of the Company by any of its Members,
and (b) the Company shall have the power to do any and all acts necessary,
appropriate, proper, advisable, incidental or convenient to or for the
protection and benefit of the Company.
SECTION 1.05. Office; Registered Agent. (a) The Company's registered agent
and office in the State of Delaware shall be The Corporation Trust Company,
Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(b) The business address of the Company shall be ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or (upon notice to all the Members) such other address as
may be designated by the Management Board.
SECTION 1.06. Title to Company Property.(a) All property of the Company,
whether real or personal, tangible or intangible, shall be owned by the Company
as an entity, and no Member, individually, shall have any direct ownership
interest in such property. Title to all such property shall be held in the name
of the Company and all securities shall be registered in the name of the
Company.
(b) The Company shall, subject to the terms of this Agreement, be the
exclusive beneficial holder of all securities and other property acquired in
connection with any investment made by the Company and of any property
transferred to the Company, and the Company shall make any such filings as may
be required or desirable in connection therewith.
(c) Any and all rights, including, without limitation, voting rights,
rights to consent to, object to or grant waivers with respect to partnership,
limited liability company and corporate action, rights to sell, transfer or
encumber any securities or other property held by the Company and any rights
arising out of or relating to any documents the Company is party to, including
the right to consent to or object to any proposed amendment or modification
thereof or waiver thereunder, shall be vested exclusively in the Company and
shall be exercised only by the Company and no Member either alone or
2
acting with one or more other Members shall have any such rights with respect to
such securities or property.
SECTION 1.07. Filing of Certificates. Each Senior Member and each Person
authorized by the Management Board is hereby designated as an authorized person,
within the meaning of the Delaware Act, to execute, deliver and file, or to
cause the execution, delivery and filing of, the Certificate of Formation of the
Company (and any amendments or restatements thereof) and all other certificates
required or permitted by the Delaware Act to be filed in the office of the
Secretary of State of the State of Delaware and any other certificates, notices,
statements or other instruments (and any amendments or restatements thereof)
necessary or advisable for the formation of the Company or the operation of the
Company in all jurisdictions where the Company may elect to do business.
SECTION 1.08. Admission of Members. Greenhill and each Individual Member
whose name appears on Schedule I shall be admitted to the Company on the date
hereof as a Member (and shall be shown as such on the books and records of the
Company) upon the execution and delivery by (or, pursuant to a
power-of-attorney, on behalf of) such Member and a Senior Member on behalf of
the Management Board of counterparts of this Agreement.
SECTION 1.09. Subsequent Admission of Individual Members. (a) At any time,
the Management Board may cause the Company to admit additional Persons as
Individual Members; provided that no Person may be admitted to the Company if,
as a result of such admission, the Company or the Partnership or any Fund would
not be exempt from the provisions of the Investment Company Act. A Person shall
become an Individual Member (and shall be shown as such on the books and records
of the Company) upon execution and delivery by (or, pursuant to a
power-of-attorney, on behalf of) such Person and a Senior Member on behalf of
the Management Board of counterparts of this Agreement. The admission of any
additional Individual Member to the Company pursuant to this Section 1.09 shall
not require the approval of any Individual Member existing immediately prior to
such admission.
(b) The Individual Members shall share in distributions or items of income
or gain of the Company attributable to any Partnership Investment made prior to
the date such Person becomes an Individual Member to the extent set forth in
Articles 3 and 6.
(c) No additional Individual Member shall be admitted to the Company if the
admission of such Individual Member would, in the judgment of the Management
Board (i) jeopardize the status of the Company as a partnership for United
States federal income tax purposes, (ii) cause a dissolution of the Company
under the Delaware Act, (iii) cause the Company's assets to be deemed "plan
assets" for purposes of ERISA, (iv) cause the Company to be an "investment
company" within the meaning of the Investment Company Act (except for purposes
of Section 12(d)(1) thereunder), (v) cause the Company to be in
3
violation of the Advisers Act, or (vi) violate, or cause the Company to violate,
any applicable law or regulation, including any applicable federal or state
securities laws.
(d) Notwithstanding anything herein to the contrary, each Member hereby
approves of any amendment of this Agreement and of the Certificate of Limited
Liability Company necessary to effect the admission of any Person as a Member
pursuant to Section 1.08 or this Section 1.09 or Article 10. Any amendment to
this Agreement permitted under this paragraph (d) may be executed by a Senior
Member on behalf of each other Member pursuant to the Power of Attorney given by
each other Member to the Senior Members pursuant to Section 11.08.
ARTICLE 2
GOVERNANCE; MANAGEMENT AND OPERATIONS OF THE COMPANY
SECTION 2.01. Management of the Company. The business and affairs of the
Company shall be managed by and under the direction of a board established
pursuant to, and with the powers and authority set forth in, this Article 2 (the
"Management Board"). Except as otherwise expressly provided herein, the
Management Board shall have complete and exclusive discretion in the management
and control of the affairs and business of the Company, and shall possess all
powers necessary, convenient or appropriate to carrying out the purposes and
business of the Company and to perform all acts and enter into and perform all
contracts and other undertakings that it may deem necessary or advisable or
incidental thereto, including doing all things and taking all actions necessary
to carry out the terms and provisions of this Agreement (and is hereby
authorized and directed, on behalf of the Company, to do all such things and to
take all such actions without any further act, vote, consent or approval of any
Member). Except as otherwise expressly provided herein, the Management Board may
delegate such general or specific authority to officers, Members, employees or
agents of the Company as the Management Board considers desirable from time to
time, and such officers, Members, employees or agents of the Company may,
subject to any restraints or limitations imposed by the Management Board,
exercise the authority granted to them.
SECTION 2.02. The Management Board. The Management Board shall be initially
comprised of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇ (each, so
long as such Person is a Managing Director of Greenhill, a "Senior Member") and,
thereafter, the Management Board may appoint one or more additional members.
SECTION 2.03. Procedures relating to the Management Board. (a) Any
Management Board member may resign at any time by giving written notice of his
resignation to the Management Board. A resignation shall take effect at the time
specified therein or, if the time when it shall become effective shall not be
specified
4
therein, immediately upon its receipt, and, unless otherwise specified therein,
the acceptance of a resignation shall not be necessary to make it effective.
(b) Each Senior Member shall serve on the Management Board for so long as
he is a Managing Director of Greenhill.
(c) Any Management Board member, other than a Senior Member, may be removed
at any time, with or without cause, by the affirmative vote of each of the
Senior Members. A Management Board member whose employment with the Company or
Greenhill is terminated for any reason shall be replaced by a Person designated
by the Management Board.
SECTION 2.04. Meetings of the Management Board. The Management Board shall
hold regular meetings at such time and place as shall be determined by the
Management Board. No advance notice of any meeting shall be required and all
meetings may be held by telephone, video conference or similar communications
equipment by means of which all persons participating in the meeting can hear
one another, and such participation shall constitute presence in person at such
meeting.
SECTION 2.05. Quorum; Voting. A quorum for any meeting of the Management
Board shall be constituted by at least 75% of the Management Board members;
provided that each of the Senior Members shall be required to constitute a
quorum. The affirmative vote of each of the Senior Members shall be required for
any act or decision of the Management Board; provided that, if the Management
Board consists of other Persons in addition to the Senior Members, then the
affirmative vote of at least 75% of the members of the Management Board shall
also be required for any act or decision thereof. Each member of the Management
Board may authorize another person or persons to vote and act for such member by
proxy, and such person or persons holding such proxy shall be counted towards
the determination of whether a quorum of the Management Board is present.
SECTION 2.06. Powers of the Management Board. Without limiting the
generality of the authority of the Management Board set forth in Section 2.01,
the Management Board hereby is authorized and empowered in the name and on
behalf of the Company and to the extent applicable and permitted under this
Agreement and the Partnership Agreement:
(a) to serve as the general partner of the Partnership and, with respect to
the Partnership, exercise such powers as are conferred on the general partner
under the Partnership Agreement, unless otherwise specifically provided herein;
(b) to acquire and hold the Company's general partner interest in the
Partnership, and to sell, transfer, exchange, or otherwise dispose of such
interest, and otherwise to exercise all rights, powers, privileges, options and
other incidents of
5
ownership or possession with respect to such interest or any other assets or
property held or owned by the Company or the Partnership;
(c) to employ attorneys and accountants of the Company, which attorneys and
accountants may also serve as counsel and auditors to the Partnership or any of
their respective Affiliates;
(d) to deposit the funds of the Company in the Company name in any bank or
trust company and to entrust to any such bank or trust company any of the
securities, monies, documents and papers belonging to or relating to the
Company, or to deposit in and entrust to any brokerage firm that is a member of
any national securities exchange any of said funds, securities, monies,
documents and papers;
(e) to set aside funds for reasonable reserves, reasonably anticipated
contingencies and reasonable working capital in the Company and the Partnership;
(f) to make such elections under the Code and other relevant tax laws as to
the treatment of items of Company income, gain, loss and deduction, and as to
all other relevant matters, as the Management Board deems necessary, appropriate
or advisable, including elections referred to in Section 754 of the Code, and a
determination of which items of cash outlay are to be capitalized or treated as
current expenses;
(g) to ▇▇▇, prosecute, settle or compromise all claims against third
parties, to compromise, settle or accept judgment in respect of claims against
the Company and to execute all documents and make all representations,
admissions and waivers in connection therewith;
(h) to enter into, make and perform all contracts, agreements, instruments
and other undertakings as the Management Board may determine to be necessary,
advisable or incidental to carrying out of the objects and purposes of the
Company;
(i) to cause the execution and delivery of such documents and performance
of such acts consistent with the terms of this Agreement as may be necessary to
comply with the requirements of law for the formation, qualification and
operation of a limited liability company under the laws of each jurisdiction in
which the Management Board determines it is necessary or advisable for the
Company to conduct business; and
(j) to do and perform everything that may be necessary, advisable, suitable
or proper for the conduct of the Company's business for the carrying out of the
purposes and objects hereinbefore enumerated, including the delegation to any
Person or Persons of such functions and authorities as the Management Board may
determine.
Any Person not a party to this Agreement dealing with the Company shall be
entitled to rely conclusively upon the power and authority of the Management
Board, as
6
evidenced by the signature of any Senior Member, to bind the Company in all
respects, and to authorize the execution of any and all agreements, instruments
and other writings on behalf of and in the name of the Company as and to the
extent set forth in this Agreement.
Notwithstanding any other provision of this Agreement, the Company, and any
Senior Member on behalf of the Company, may execute, deliver and perform the
Partnership Agreement, the Management Agreement among Greenhill Management Co.,
LLC and the Funds, and any amendments to such documents, all without any further
act, vote or approval of any Member or other Person. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ is hereby
authorized to enter into and perform on behalf of the Company the documents
described in the immediately preceding sentence, but such authorization shall
not be deemed a restriction on the power of a Senior Member to enter into other
documents on behalf of the Company (subject to any other restrictions expressly
set forth in this Agreement).
SECTION 2.07. Operations Committee. The Management Board will meet
regularly with the Advisory Committee of the Partnership to evaluate and discuss
potential investments and to review the performance of existing investments of
the Funds.
SECTION 2.08. Transactions with Affiliates. To the extent permitted by
applicable law, the Company is hereby authorized to purchase property,
securities, options or other assets from, sell property, securities, options or
other assets to, borrow funds from, or otherwise deal with, Greenhill (acting
other than in its capacity as a Member), any Affiliate of Greenhill, any Person
in which a Partnership or Fund Investment has been or is proposed to be made,
any Person having an interest in such Partnership or Fund Investment (or any
underlying assets) or any Affiliate of any such Persons; provided that (i) any
such dealing (A) shall be on terms no less favorable to the Company than would
be available from unaffiliated Persons and (B) shall not otherwise be in
violation of this Agreement. In connection with any services performed by any
Affiliate of Greenhill for the Company, such Affiliate shall be entitled to be
compensated by the Company for such services to the extent such compensation is
a Company Expense, and the amount of such compensation shall be determined by
the Management Board in its discretion; provided that such compensation at any
time shall not exceed the amount such Affiliate would customarily receive from
third parties as compensation at such time for the performance of similar
services. Each Individual Member acknowledges and agrees that the purchase or
sale of property or other assets, the performance of services, other dealings or
the receipt of compensation may give rise to conflicts of interest between the
Company and the Individual Members, on the one hand, and Greenhill or any
Affiliate of Greenhill, on the other hand.
SECTION 2.09. Other Activities. (a) The Senior Members shall be required to
devote such time to the affairs of the Company as may be necessary to manage and
operate the Company.
7
(b) Nothing contained in this Agreement shall be deemed to prohibit or
otherwise limit any Individual Member (or Affiliate thereof) from entering into
transactions with the Company, making investments in Persons or assets in which
Partnership or Fund Investments have been or are proposed to be made, in Persons
having an interest in such Partnership or Fund Investments (or any underlying
assets) or in any Affiliates of any such Persons or providing financing to any
such Person.
SECTION 2.10. Books and Records; Accounting Method; Fiscal Year. (a) The
Management Board shall keep or cause to be kept at the address of the Company
(or at such other place as shall be notified to the Members in writing) full and
accurate books and records of the Company. Each Member shall be shown as a
Member on such books and records. Subject to Section 2.10(b), such books and
records shall be available, upon 10 Business Days' notice to the Management
Board, for inspection at the offices of the Company at reasonable times during
business hours on any Business Day by each Member or his duly authorized agents
or representatives for a purpose reasonably related to such Individual Member's
interest as a Member.
(b) Each Individual Member agrees that (i) the books and records of the
Company contain confidential information relating to the Company and its affairs
and (ii) except for information otherwise required to be provided or made
available to Individual Members pursuant to this Agreement, the Management Board
may, to the maximum extent permitted by applicable law, keep confidential from
the Individual Members any information (excluding any financial statements of
the Company and underlying documentation supporting such financial statements)
the disclosure of which the Management Board reasonably believes is adverse to
the interests of the Company (including information relating to any Partnership
or Fund Investment or underlying assets or any Person that is, directly or
indirectly, the subject of any Partnership or Fund Investment) or which the
Company, Greenhill or the Management Board is required by law, agreement or
otherwise to keep confidential.
(c) Except as otherwise provided in this Agreement, the Company's books of
account shall be kept on the same basis followed by the Company for federal
income tax purposes.
SECTION 2.11. Partnership for Tax Purposes; Company Tax Returns. (a) The
Members agree that it is their intention that the Company shall be treated as a
partnership for purposes of United States federal, state and local income tax
laws, and further agree not to take any position or make any election, in a tax
return or otherwise, inconsistent therewith. In furtherance of the foregoing,
the Company will file an information return as a partnership for United States
federal income tax purposes. If a change in applicable law (including a revenue
ruling, revenue procedure or other administrative pronouncement) would cause the
Company not to be treated as a partnership for United States federal income tax
purposes, the Members shall endeavor in good faith to reach an agreement on
restructuring the Company so that it will be so treated (which may, subject to
the
8
following proviso, entail a merger of the Company into an entity treated as a
partnership for federal income tax purposes); provided that no Member shall be
required to agree to any restructuring that it reasonably determines would have
an adverse effect on the assets, properties, business or condition, or otherwise
would be adverse to the interests of or cause the incurrence of any material
expenditure by, such Member or any Affiliate of such Member.
(b) The Management Board shall cause to be prepared and timely filed all
tax returns required to be filed for the Company. The Management Board may, in
its discretion, make, or refrain from making, any federal, state or local income
or other tax elections for the Company that it deems necessary or advisable,
including an election pursuant to Code Section 754.
(c) The Senior Managing Member is hereby designated as the Company's "Tax
Matters Partner" under Code Section 6231(a)(7). The Tax Matters Partner is
specifically directed and authorized to take whatever steps the Management
Board, in its discretion, deems necessary or desirable to perfect such
designation, including filing any forms or documents with the Internal Revenue
Service and taking such other action as may from time to time be required under
Treasury regulations. Expenses incurred by the Tax Matters Partner, in its
capacity as such, will be Company Expenses. Any Member shall have the right to
participate in any administrative proceedings relating to the determination of
Company items at the Company level. Each Individual Member that elects to
participate in such proceedings shall be responsible for any expenses incurred
by such Individual Member in connection with such participation. Further, an
Individual Member shall notify the Tax Matters Partner in a timely manner of its
intention to: (i) file a notice of inconsistent treatment under Code Section
6222(b); (ii) file a request for administrative adjustment of Company items;
(iii) file a petition with respect to any Company item or other tax matters
involving the Company; or (iv) enter into a settlement agreement with the
Secretary of the Treasury with respect to any Company items. Upon any such
notification, the Tax Matters Partner may, if it agrees with the Individual
Member's position, elect (at its discretion) to make such filing or enter into
such agreement, as applicable and practicable, on behalf of the Company. The
expenses in connection with any resulting audits or adjustments of an Individual
Member's tax return shall be borne solely by the affected Individual Member.
(d) The Management Board may, in its discretion, take appropriate steps on
behalf of the Company that it deems necessary or advisable to comply with the
laws of non-U.S. jurisdictions.
SECTION 2.12. Confidentiality. (a) Each Individual Member agrees to keep
confidential, and not to make any use of (other than for purposes reasonably
related to his interest in the Company or for purposes of filing such Individual
Member's tax returns or for other routine matters required by law) nor to
disclose to any Person (other than to appropriate employees of ▇▇▇▇▇▇▇▇▇ or its
Affiliates associated with the business of the
9
Company), any Proprietary Information or any other information or matter
relating to the Company, the Partnership or the Funds and any of their
respective affairs or to any Partnership or Fund Investment (other than
disclosure to employees, agents, advisors, or representatives of the Company
responsible for matters relating to the Company (each such Person being
hereinafter referred to as an "Authorized Representative")); provided that such
Individual Member and such Authorized Representatives may make such disclosure
to the extent that the information being disclosed is publicly known at the time
of proposed disclosure by such Individual Member or Authorized Representative,
the information subsequently becomes publicly known through no act or omission
of such Individual Member or Authorized Representative, such disclosure, in the
written opinion of legal counsel of such Individual Member reasonably acceptable
to the Management Board, is required by law or regulation or by any regulatory
authority or self-regulatory organization having jurisdiction over such
Individual Member or such disclosure is approved in advance by the Management
Board. Notwithstanding the foregoing, the Management Board may disclose to the
Limited Partners such information relating to the Company, the Partnership or
the Funds as may be required by the Partnership Agreement. Prior to making any
disclosure required by law, regulation, regulatory authority or self-regulatory
organization, each Individual Member shall notify the Management Board of such
disclosure and deliver to the Management Board the opinion referred to above.
Prior to any disclosure to any Authorized Representative, each Individual Member
shall advise such Authorized Representative of the obligations set forth in this
Section 2.12(a) and obtain the agreement of such Person to be bound by the terms
of such obligation.
(b) The obligations of each Individual Member under this Section 2.12 shall
survive for a period of five years after the date such Individual Member ceases
to be a Member. If the Company is dissolved, the obligation of each Individual
Member under this Section 2.12 who is an Individual Member at the time of such
dissolution shall survive for a period of five years thereafter.
(c) Each party acknowledges and agrees that the covenants contained in this
Section 2.12 have been negotiated in good faith by the parties hereto, are
reasonable and are not more restrictive or broader than are necessary to protect
the interests of the Members and the Company, and would not achieve their
intended purpose if they were on different terms or for periods of time shorter
than the periods of time provided herein. Each party further acknowledges and
agrees that the business of the Company, the Partnership and the Funds is highly
competitive, that no party hereto would enter into this Agreement but for the
covenants contained in this Section 2.12 and that such covenants are essential
to protect the value of the business of the Company, the Partnership and the
Funds.
SECTION 2.13. Investment of Funds. Cash held by the Company, including all
amounts being held by the Company for future investment in Partnership
Investments, payment of expenses or distributions to Members may be invested in
such instruments as
10
the Management Board, or any Person which it has retained to manage such cash,
in its discretion deems appropriate.
SECTION 2.14. Other Authority. The Members agree to use their best efforts
to operate the Company in such a way that (i) the Company, the Partnership and
the Funds would be exempt from the provisions of the Investment Company Act,
(ii) none of the Company's assets would be deemed to be "plan assets" for
purposes of Section 4975 of the Code or ERISA, (iii) the Company would be in
compliance with the Advisers Act, and (iv) the Company would be in compliance
with any other material law, regulation, order or guideline applicable to the
Company. The Management Board is hereby authorized to take any action it has
determined in good faith to be necessary or desirable in order for (i) the
Company's assets not to be "plan assets" for purposes of ERISA, (ii) the
Company, the Partnership and the Funds to be exempt from the provisions of the
Investment Company Act, (iii) the Company not to be in violation of the Advisers
Act and (iv) the Company not to be in violation of any other material law,
regulation, order or guideline applicable to the Company, including, in each
case, (x) making any structural, operating or other changes in the Company by
amending this Agreement, (y) requiring the sale in whole or in part of an
Individual Member's limited liability company interest in the Company with
respect to or as a result of whom such violation arose, or otherwise causing the
withdrawal of such Individual Member from the Company, or (z) dissolving the
Company. Any action taken by the Management Board pursuant to Section 2.14 shall
not require the approval of any Individual Member.
ARTICLE 3
CARRIED INTEREST POINTS; CERTAIN OTHER MATTERS
SECTION 3.01. General Provisions. (a) The Management Board, upon the
recommendation of the Senior Managing Member, shall be solely responsible for
making all determinations as to the Carried Interest Points of the Private
Equity Limited Partners, and ▇▇▇▇▇▇▇▇▇ shall be solely responsible for making
all determinations as to the Carried Interest Points of the Advisory Limited
Partners, in each case in accordance with Article 3 of the Partnership
Agreement, at such times and in such amounts as it shall deem advisable. All
other determinations necessary or desirable under the Partnership Agreement with
respect to such Carried Interest Points, shall be determined by the Management
Board upon the recommendation of the Senior Managing Member.
(b) The Management Board will be responsible for making determinations as
to the Carried Interest Points of the Members; provided that if no consensus can
be reached among the members of the Management Board, then each Senior Member
will be entitled to the Carried Interest Points set forth on Schedule I hereto
for each year.
11
(c) The members of the Management Board, the Senior Managing Member and
▇▇▇▇▇▇▇▇▇ shall not be liable to the Company or the Members for anything
whatsoever in connection with this Agreement except for the gross negligence or
willful misconduct of the members of the Management Board, the Senior Managing
Member or ▇▇▇▇▇▇▇▇▇. In the performance of their respective functions with
respect to this Agreement, the members of the Management Board, the Senior
Managing Member and ▇▇▇▇▇▇▇▇▇ shall be entitled to rely upon information and
advice furnished by officers, accountants or legal counsel of ▇▇▇▇▇▇▇▇▇ or its
Affiliates, or by any other party the members of the Management Board, the
Senior Managing Member or ▇▇▇▇▇▇▇▇▇ deems necessary or appropriate as to matters
the members of the Management Board, the Senior Managing Member or ▇▇▇▇▇▇▇▇▇
reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Company, and the members of the Management Board, the Senior Managing Member and
▇▇▇▇▇▇▇▇▇ shall not be liable to the Company or the Members for any action taken
or not taken in good faith reliance upon any such advice. The members of the
Management Board, the Senior Managing Member and ▇▇▇▇▇▇▇▇▇ may delegate such of
their respective responsibilities hereunder as the members of the Management
Board, the Senior Managing Member or ▇▇▇▇▇▇▇▇▇ deems appropriate to one or more
officers or directors of ▇▇▇▇▇▇▇▇▇ or its Affiliates and in performing such
delegated responsibilities, such persons shall have the benefit of all the
protections afforded the members of the Management Board, the Senior Managing
Member and ▇▇▇▇▇▇▇▇▇ under this Agreement.
SECTION 3.02. Assignment of Carried Interest Points. (a) On or prior to
January 1 of each fiscal year, or as soon as practicable thereafter (the "Annual
Allocation Date"), the Management Board shall assign each Member a number (which
may include fractional numbers) of carried interest points (the "Carried
Interest Points") for all Fund Investments made by all Funds during the fiscal
year commencing on such January 1 (the "Carried Interest Annual Pool"). The
aggregate number of Carried Interest Points for any Fund Investment shall be
equal to the Carried Interest Points of the Company under the Partnership
Agreement (the "GP Points"), and the amount of the Carried Interest with respect
to each Fund Investment for such fiscal year allocated to a Member shall be
calculated by multiplying the Carried Interest by a fraction, the numerator of
which shall be the number of points so awarded and the denominator of which
shall be the GP Points Each Carry Participating Partner's share of the Carried
Interest for any Fund Investment is referred to herein as his "Carried Interest
Share". With respect to each Fund Investment made during the 2000 fiscal year
and with respect to Members who have been admitted as such on the date of this
Agreement, the Carried Interest Points shall be set forth in Schedule I to this
Agreement with respect to such Member (the "Allocation Schedule"), which shall
be maintained by the Management Board and the Company and updated to reflect any
changes in the allocation of Carried Interest Points. The Management Board shall
advise each Member of such Partner's Carried Interest Points in effect at any
time. With respect to each Fund Investment made during any fiscal year, the
Carried Interest Points (as determined in accordance with this Section 3.02(a)
or adjusted in accordance with this Article 3) of each Member having an interest
in such Fund
12
Investment shall be set forth in the Allocation Schedule. Except as otherwise
provided in this Article 3, such Carried Interest Points shall not be changed
after they are determined in accordance with this Section 3.02(a).
(b) The Management Board may award Carried Interest Points to newly
admitted Members and may award additional Carried Interest Points to existing
Members at any time during the course of a fiscal year. In making such award the
Management Board may, in its discretion, determine whether the Carried Interest
Points assigned to such Person shall be calculated as if such Person was
admitted as a Member on the date such award was determined or any other date or
in any other manner that the Management Board in its discretion shall determine
is appropriate in light of the circumstances giving rise to such determination.
Such awards shall be made either from Reserved Carried Interest Points, from
Reallocated Carried Interest Points, from Forfeited Carried Interest Points or
through a reallocation of Carried Interest Points as provided in Section 3.03.
(c) Notwithstanding anything in this Agreement to the contrary, the
Management Board may, in its discretion, elect to reserve a portion of the
Carried Interest Points for allocation at any time during the period ending on
January 31 of the fiscal year next succeeding the fiscal year for which an
allocation of Carried Interest Points has been made to any Member or may be
allocated additional Carried Interest Points under the Partnership Agreement
(the "Reserved Carried Interest Points"). During any fiscal year, all Reserved
Carried Interest Points with respect to the Fund Investments made during such
fiscal year shall be initially allocated to ▇▇▇▇▇▇▇▇▇. To the extent such
Reserved Carried Interest Points are awarded to Members, the Allocation Schedule
shall be revised accordingly to reflect such award. If the Reserved Carried
Interest Points have not been so allocated by January 31 of the next succeeding
fiscal year, they shall be allocated pro rata among the Members based on each
Member's Carried Interest Share in the relevant Fund Investments.
(d) If any Carried Interest Points awarded to any Member are later
surrendered or forfeited by such Member or otherwise reduced in accordance with
this Article 3, such surrendered, forfeited or reduced Carried Interest Points
shall, unless otherwise determined by the Management Board in its discretion, be
reallocated to the other Members and to the Partners in the Partnership on a pro
rata basis in accordance with their Carried Interest Share in the relevant Fund
Investments.
SECTION 3.03. Pro Rata Dilution. Initially, the Carried Interest Points for
the Carried Interest Annual Pool for 2000 will be allocated as set forth in
Schedule I. If an additional Member admitted to the Company following the award
of Carried Interest Points in any fiscal year or any other Member receives a
Carried Interest Point award which the Management Board determines is not to
come from Reserved Carried Interest Points, from Reallocated Carried Interest
Points or from Forfeited Carried Interest Points, the number of Carried Interest
Points of the Partners will be reduced on a pro rata basis
13
by the number of Carried Interest Points so awarded unless otherwise determined
by the Management Board.
SECTION 3.04. No Right to Continued Employment. Neither this Agreement nor
any action taken or omitted to be taken hereunder shall be deemed to create or
confer on any Member any right (i)(A) to be retained in the employ of ▇▇▇▇▇▇▇▇▇
or the Company or any Affiliate thereof or (ii) to interfere with or to limit in
any way the right of ▇▇▇▇▇▇▇▇▇ or the Company or any Affiliate thereof to
terminate the employment of such Member at any time or to transfer his or her
employment within ▇▇▇▇▇▇▇▇▇ or the Company or any Affiliate thereof to other
activities from time to time.
SECTION 3.05. Effect of Termination of Employment. (a) An Individual Member
whose employment with the Company and ▇▇▇▇▇▇▇▇▇ terminates for any reason shall
automatically (without any action being required on the part of the Company or
any Member) and immediately become a "Special Member". Upon becoming a Special
Member, (i) such Individual Member shall no longer receive any new awards of
Carried Interest Points with respect to any Fund Investments and (ii) such
Individual Member's Carried Interest Points theretofore awarded may be reduced,
eliminated or forfeited in accordance with this Section 3.05. Upon the complete
liquidation of all Fund Investments in which a Special Member is a participant,
such Special Member (i) shall cease to be a Member of the Company and (ii) shall
not be entitled to any further distributions of Carried Interest under this
Agreement.
(b) With respect to any Individual Member who becomes a Special Member and
any Fund Investment in which such Individual Member has an interest prior to
becoming a Special Member, such Individual Member shall continue to hold his or
her Carried Interest Points theretofore awarded with respect to such Fund
Investment and shall be entitled to such Individual Member's Carried Interest
Share of such Fund Investment without reduction if such Individual Member
becomes a Special Member as a result of (i) termination of employment due to
permanent disability (as determined by the Management Board and ▇▇▇▇▇▇▇▇▇), (ii)
subject to Section 3.06(a), termination of employment due to death, or (iii) any
other exception determined by the Management Board.
(c) With respect to any Individual Member who becomes a Special Member as a
result of the termination of employment for any reason other than those
specified in Section 3.05(b) or 3.05(d), and any Fund Investment in which such
Individual Member has an interest prior to becoming a Special Member, such
Individual Member's Carried Interest Share of such Fund Investment shall be
vested and become non-forfeitable in accordance with this Section 3.05(c). All
Persons who become Special Members as a result of termination of employment for
any reason other than those specified in Section 3.05(b) or 3.05(d) (a
"Forfeiture Event") will be vested with respect to 33 1/3% of their Carried
Interest Share attributable to a Fund Investment made in any given fiscal year
on January 1 of the year following the year such Fund Investment was made; will
be vested
14
with respect to 66 2/3% of their Carried Interest Share attributable to such
Fund Investment on January 1 of the second year following the year such Fund
Investment was made; and will be fully vested with respect to their Carried
Interest Share attributable to such Fund Investment on January 1 of the third
year following the year such Fund Investment was made; provided that an
Individual Member will be vested with respect to 100% of his Carried Interest
Share attributable to a Fund Investment which is realized prior to the date on
which he becomes a Special Member; and provided further that, on and after
January 1, 2003, an Individual Member who has held the position of Principal or
any higher executive office of the Management Board or ▇▇▇▇▇▇▇▇▇ continuously
from June 1, 2000 through January 1, 2003 will be fully vested with respect to
100% of his Carried Interest Share attributable to all Fund Investments made
prior to the date on which he becomes a Special Member. Individual Members shall
be "Partially Reduced Members" with respect to the unvested portion of their
Carried Interest Share forfeited in accordance with this Section 3.05(c). The
unvested portion of the Carried Interest Share of each Special Member shall be
forfeited on the date of termination of employment and shall be reallocated as
provided in Section 3.02(d). The number of Carried Interest Points so forfeited,
derived by application of the foregoing percentages to such Carry Participating
Partner's Carried Interest Points in a Carried Interest Annual Pool, is
hereinafter referred to as the "Forfeited Carried Interest Points", and the
vested number of Carried Interest Points at such time, derived by application of
the foregoing percentages to such Carry Participating Partner's Carried Interest
Points in such Carried Interest Annual Pool, is hereinafter referred to as the
"Vested Carried Interest Points".
(d) With respect to any Individual Member who becomes a Special Member and
any Fund Investment in which such Individual Member has an interest prior to
becoming a Special Member, if such Individual Member becomes a Special Member as
a result of an Elimination Event (a "Fully Reduced Partner"), such Individual
Member's Carried Interest Points with respect to such Fund Investment and any
Proceeds with respect to such Fund Investment that otherwise has been or could
be allocated to such Individual Member at any time after such Individual Member
becomes a Special Member shall be forfeited and shall be reallocated to other
Members as provided in Section 3.02(d).
For purposes of this Agreement, the term "Elimination Event" means, with
respect to any Individual Member at any time, (i) the termination of such
Individual Member's employment with the Company or ▇▇▇▇▇▇▇▇▇ for Cause (or the
termination of such Individual Member's employment with the Company or ▇▇▇▇▇▇▇▇▇
for any reason and, following such termination, the Company or ▇▇▇▇▇▇▇▇▇
determines that circumstances existed during such Individual Member's employment
with the Company or ▇▇▇▇▇▇▇▇▇ which would have entitled the Company or ▇▇▇▇▇▇▇▇▇
to terminate such Individual Member's employment with the Company or ▇▇▇▇▇▇▇▇▇
for Cause), (ii) the termination of such Individual Member's employment due to
resignation with less than 30 days' notice, (iii) the termination of such
Individual Member's employment with the Company or ▇▇▇▇▇▇▇▇▇ for any reason and,
within 180 days of such termination (or during the 180 days preceding such
termination), such Individual Member attempts or attempted to hire a
15
person who is or was an employee of the Company or ▇▇▇▇▇▇▇▇▇, (iv) the
termination of such Individual Member's employment with the Company or ▇▇▇▇▇▇▇▇▇
for any reason and, within 180 days of such termination, the Individual Member
solicits business of a customer or client of the Company or ▇▇▇▇▇▇▇▇▇, or (v)
the termination of such Individual Member due to disclosure by such Individual
Member (or in the event of termination of employment by reason of death, by such
Special Member's estate or any designated beneficiary or heir or personal
representative that became a Special Member) of any Proprietary Information,
without the consent of the Company or ▇▇▇▇▇▇▇▇▇ or otherwise in contravention of
Section 2.12, to any unauthorized Person or the use of Proprietary Information
by such Individual Member (or in the event of termination of employment by
reason of death, by such Special Member's estate or any designated beneficiary
or heir or personal representative that became a Special Member) other than in
connection with the Company's or ▇▇▇▇▇▇▇▇▇'▇ business where such disclosure or
use may be adverse to the financial interests of the Company or ▇▇▇▇▇▇▇▇▇ or
their respective Affiliates (as determined by the Management Board in its
discretion).
SECTION 3.06. Other Provisions Relating to Special Members. (a) In the
event of the death of an Individual Member, such Individual Member shall cease
to be a Member of the Company and the Company shall furnish to such Individual
Member's estate or designated beneficiary such information relating to the
Company's affairs and Fund Investments as such estate's executor or such
designated beneficiary shall reasonably request in order to enable such estate
or designated beneficiary to prepare and file tax returns and conduct audits or
other proceedings relating to such tax returns; provided that such estate and
its executor and any designated beneficiary shall have executed an instrument
reasonably satisfactory to the Management Board agreeing to be bound by the
confidentiality obligations set forth in Section 2.12 with respect to all
information so furnished. Notwithstanding anything in this Agreement to the
contrary, the estate or designated beneficiary shall automatically be admitted
to the Company as a Special Member and shall receive allocations and
distributions to the extent and in the manner provided for in this Agreement
with respect to such deceased Individual Member.
(b) If, at any time during the term of the Company, the Management Board
determines in good faith that any further participation by a Special Member in
the Company's affairs would be detrimental to any Portfolio Company, the
Company, the other Individual Members, ▇▇▇▇▇▇▇▇▇, any Fund, any Investor or any
of their respective Affiliates, then, to the extent determined appropriate by
the Management Board in its discretion and to the maximum extent permitted by
applicable law, such Special Member shall cease to have the right to obtain
information regarding the Company and its affairs or regarding any Company or
any Fund Investment (other than any financial statements of the Company and
underlying documentation supporting such financial statements).
(c) A Special Member shall not be entitled to vote, except for purposes of
clause (x) of Section 11.01(b)(ii), except as required by applicable law and
except where a Special Member's interests in Fund Investments existing at the
time any vote or
16
approval of the Members or the Individual Members is required pursuant to
Article 2 or 11.01 or any other provision of this Agreement shall be materially
adversely affected by such vote or approval in a way that is different from the
effect of such vote or approval on any other Members. To the extent such Special
Member is not entitled to vote, such Special Member's economic interest, if any,
shall be disregarded in connection with any such vote or approval and such
Special Member's Carried Interest Points shall be excluded from both the
numerator and the denominator of the fraction representing the specified
percentage of Carried Interest Points required for the consent or approval of
Members under this Agreement.
ARTICLE 4
EXPENSES
SECTION 4.01. Definition of Expenses. "Company Expenses" means any expenses
incurred by the Company including without limitation (a) Indemnification
Obligations: (b) all costs and expenses of organizing the Company; and (c) all
routine administrative expenses of the Company, including salaries and employee
benefit expenses of employees, consultants and independent contractors of the
Company, fees and expenses associated with the maintenance of books and records
of the Company, the employment or retention by the Company with respect to
routine matters of accountants, attorneys and other professionals, and the
preparation and dispatch to the Members of checks, financial reports and notices
required by this Agreement.
SECTION 4.02. Responsibility for Company Expenses among the Members. Any
Company Expense or Indemnification Obligation shall be borne by all Members, pro
rata in proportion to their respective Capital Account balances at such time.
ARTICLE 5
CAPITAL CONTRIBUTIONS
SECTION 5.01. Capital Contributions. The Individual Members listed in
Schedule III (the "Contributing Members") shall be obligated to make Capital
Contributions to the Company in the amounts set forth opposite their names on
Schedule III. Except as required by the Delaware Act, the Members shall have no
obligation to make any other contributions to the capital of the Company,
whether to fund Partnership or Fund Investments, to fund Company Expenses or for
any other reason.
SECTION 5.02. Payment of Capital Contributions. All Capital Contributions
shall be paid to the Company in immediately available funds in United States
dollars by 11:00 A.M. (New York City time) on the date and to the account
17
specified by the Management Board. Capital Contributions may include amounts
that the Management Board determines in its discretion are necessary or
desirable to establish reserves in respect of Company Expenses or the Company's
obligation to make its capital contribution to the Partnership.
ARTICLE 6
CAPITAL ACCOUNTS; ALLOCATIONS; DISTRIBUTIONS
SECTION 6.01. Principles of Distributions Attributable to Invested Capital.
Except as otherwise provided in this Agreement, all Proceeds received by the
Company, including Proceeds in respect of the Company's capital contributions as
general partner of the Partnership, shall be distributed as follows: Proceeds
that are cash or readily-marketable securities received from the Partnership
shall be distributed or paid promptly after the receipt thereof, and in the case
of other types of Proceeds at such time as the Management Board shall determine
in its discretion. With respect to any Proceeds referred to in this paragraph,
the Management Board shall, at the time of distribution, determine each
Contributing Member's Investment Percentage of such Proceeds and make
distributions of such amounts to the Contributing Members.
SECTION 6.02. Principles of Distributions Attributable to Carried Interest.
Except as otherwise provided in this Agreement, Proceeds from any Fund
Investment representing Carried Interest from any Fund Investment shall be
distributed promptly after the Company receives such proceeds for the
Partnership. The Management Board shall, at the time of distribution, determine
each member's Carried Interest Share of such Proceeds and make distributions of
such amounts to the Members.
SECTION 6.03. Other Provisions Relating to Distributions. (a) All cash
distributions shall be made in immediately available funds in U.S. Dollars,
except to the extent that distributions in U.S. dollars would be illegal under
applicable law, in which case, to such extent, distributions shall be made in
the currency in which cash is received by the Company.
(b) In connection with any distribution of cash, securities or other
property received by the Company, the Management Board may, in its discretion,
set off against, or withhold from, the amount distributable to any Member the
following amounts:
(i) such Member's share of any Company Expense or any other amount due
from such Member to the Company; and
(ii) any amounts required to pay, or to reimburse (on a net after-tax
basis) any Indemnified Person for the payment of, any taxes and related
expenses that the Management Board in good faith determines to be properly
attributable to
18
such Member (including, without limitation, withholding taxes and interest,
penalties and expenses incurred in respect thereof).
Any amounts so set off or withheld pursuant to this Section 6.03 shall be
treated for all purposes of this Agreement as if actually distributed to such
Member and shall be applied by the Management Board to discharge the obligation
in respect of which such amounts were withheld.
(c) The Management Board shall have the right, in its discretion, to
withhold amounts otherwise distributable by the Company to a Member in order to
make such provision as the Management Board, in its discretion, deems necessary
or advisable for the payment of such Member's share of any future Company
Expense if the nature and amount of such Company Expense is known or reasonably
anticipated at the time of distribution.
(d) Notwithstanding anything in this Agreement to the contrary, the Company
shall not make any distributions pursuant to this Agreement except to the extent
permitted by the Delaware Act.
SECTION 6.04. Capital Accounts; Adjustments to Capital Accounts. (a) There
shall be established for each Member, on the books and records of the Company, a
capital account (a "Capital Account"). Each Member's Capital Account shall
initially be zero and shall be adjusted as set forth in this Section 6.04.
(b) The Capital Account of each Member shall be adjusted as follows:
(i) Cash Contributions. The amount of cash contributed to the Company
by such Member shall be credited to the Capital Account of such Member.
(ii) Distributions. The amount of cash (or the value of other property
distributed in kind as determined in accordance with the Fund Agreements),
distributed by the Company to any Member shall be debited against the
Capital Account of such Member.
(iii) Income, Profit or Gain. The amount of any allocation of income,
profit or gain made by the Company to any Member shall be credited to the
Capital Account of such Member.
(iv) Expense, Deduction or Loss. The amount of any allocation of
expense, deduction or loss made by the Company to any Member shall be
debited against the Capital Account of such Member.
19
(c) The Company's items of income, gain, loss, deduction and expense shall
be allocated to the Capital Accounts as follows:
(i) Allocation of Company Expenses. The amount of any Company Expense
shall be allocated among the Members in accordance with Section 4.02.
(ii) Allocation of Interest Income and Expense. The amount of any
interest earned on any Member's Capital Contribution shall be allocated to
the Capital Account of such Member.
(iii) Allocation of a Carry Participating Partner's Carry Income,
Gains and Losses. All income and gains representing the Carried Interest
shall be allocated among the Members in a manner consistent with the
corresponding distributions made or to be made pursuant to Section 6.02.
All losses with respect to a Carried Interest Annual Pool shall be
allocated among the Members in a manner consistent with each Member's
Carried Interest Share.
(iv) Residual Allocations. The Company's remaining net income or net
loss (after giving effect to clauses (i) through (iii) of this Section
6.04(c) for any fiscal period and each item of income, gain, loss,
deduction or expense shall be allocated among the Members in a manner
consistent with the corresponding distributions made or to be made pursuant
to Sections 6.01 and 9.04.
SECTION 6.05. Tax Allocations. (a) For federal, state and local income tax
purposes, each item of income, gain, loss, deduction and credit of the Company
shall be allocated among the Members as nearly as possible in the same manner as
the corresponding item of income, expense, gain or loss is allocated pursuant to
the other provisions of this Article 6. It is intended that the Capital Accounts
will be maintained at all times in accordance with Section 704 of the Code and
applicable Treasury regulations thereunder, and that the provisions hereof
relating to the Capital Accounts be interpreted in a manner consistent
therewith. The Management Board shall be authorized by this Section 6.05 to make
appropriate amendments to the allocations of items pursuant to Article 6 if
necessary in order to comply with Section 704 of the Code or applicable Treasury
regulations thereunder; provided that no such change shall have an adverse
effect upon the amount distributable to any Member hereunder.
(b) Notwithstanding anything else contained in this Article 6, if any
Member has a deficit Capital Account for any fiscal period as a result of any
adjustment, allocation or distribution of the type described in Treasury
Regulations Section 1.704-1(b)(2)(ii)(d)(4)-(6), then the Company's income and
gain will be specially allocated to such Member in accordance with Treasury
Regulations Section 1.704-1(b)(2)(ii)(d).
20
SECTION 6.06. Foreign Currency Considerations. At the time any cash is
received in a currency other than U.S. Dollars for payment (as distributions or
otherwise) to Members:
(i) if such cash is to be paid (as a distribution or otherwise) in
U.S. Dollars, the Management Board shall effect the conversion of such cash
into U.S. Dollars, at the exchange rate determined by the Management Board,
as soon as practicable after such cash is received; and
(ii) if, pursuant to Section 6.03(a), such cash is to be paid in the
currency in which it is received, the Management Board shall determine the
U.S. Dollar equivalent of such cash, based upon the applicable exchange
rate in effect on the date such cash is received, for purposes of this
Article 6.
SECTION 6.07. Loans and Withdrawal of Amounts Allocated to Capital
Accounts. Except as permitted by the Management Board, no Individual Member
shall be permitted to borrow, or to make an early withdrawal of, any portion of
the amounts allocated to his or her Capital Account.
SECTION 6.08. Repayment of Certain Distributions. In the event that any
amount distributed to an Individual Member hereunder is later determined by the
Management Board to be in excess of the amount such Individual Member was
entitled to under this Agreement, such Individual Member shall return such
amount to the Company.
ARTICLE 7
REPORTS TO INDIVIDUAL MEMBERS
SECTION 7.01. Reports. (a) The Management Board shall provide to each
Individual Member reports and financial information on the Company's affairs and
on such Individual Member's Capital Account in such form and at such times as
the Management Board shall determine in its discretion.
(b) After the end of each fiscal year, the Management Board shall cause the
independent certified public accountants of the Company to prepare and transmit,
within 30 days after the tax returns for all Partnerships have been completed,
or as soon thereafter as is practicable, a federal income tax form K-1 for each
Member, a copy of the Company's return filed for federal income tax purposes and
a report setting forth in sufficient detail such transactions effected by the
Company during such fiscal year as shall enable each Member to prepare its
United States federal and state income tax returns, if any. The Management Board
shall provide such materials to (i) each Member and (ii) each former Member (or
its successors, assigns, heirs or personal representatives)
21
who may require such information in preparing its United States federal and
state income tax returns.
ARTICLE 8
LIABILITY; EXCULPATION AND INDEMNIFICATION
SECTION 8.01. Liability for Debts of the Company; Limited Liability. (a)
Except as otherwise provided in the Delaware Act, the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise,
shall be solely the debts, obligations and liabilities of the Company, and no
Member shall be obligated personally for any such debt, obligation or liability
of the Company solely by reason of being a Member.
(b) Except as otherwise expressly required by law, a Member, in its
capacity as such, shall have no liability to the Company or any other Member in
excess of such Member's obligations to make payments required to be made by such
Member under this Agreement.
(c) An Individual Member may also be a limited partner of the Partnership,
an employee, agent or officer of the Company or an employee, agent, officer,
director or stockholder of ▇▇▇▇▇▇▇▇▇ or any of its Affiliates. The existence of
these relationships and acting in such capacities shall not affect the liability
of the Individual Member so acting.
SECTION 8.02. Exculpation and Indemnification. (a) No Indemnified Person
shall be liable to the Company or to the Members for any losses, claims, damages
or liabilities arising from, related to, or in connection with this Agreement,
the Company's business or affairs, the Partnership Agreement, any Fund Agreement
or the Partnership's or the Funds' business or affairs (including any act or
omission by any Indemnified Person and any activity of the type or character
disclosed or contemplated in Section 2.08 or 2.09 hereof or in the Partnership
Agreement or any Fund Agreement (such disclosure being incorporated herein by
reference) and no such activity will in and of itself constitute a breach of any
duty owed by any Indemnified Person to any Member or the Company), except for
any losses, claims, damages or liabilities resulting from such Indemnified
Person's gross negligence or willful misconduct.
(b) The Company shall, to the fullest extent permitted by applicable law,
indemnify and hold harmless each Indemnified Person against any losses, claims,
damages or liabilities, arising out of, related to or in connection with this
Agreement, the Company's business or affairs, the Partnership Agreement, the
Fund Agreements or the Partnership's or Funds' business or affairs, except for
(i) any such losses, claims, damages or liabilities resulting from such
Indemnified Person's gross negligence or willful misconduct, and (ii) any losses
allocated to any Member's Capital Account. The
22
Company will periodically reimburse each Indemnified Person for all expenses
(including fees and expenses of counsel) as such expenses are incurred in
connection with investigating, preparing, pursuing or defending any Proceeding
related to, arising out of or in connection with this Agreement, the Company's
business or affairs, the Partnership Agreement, the Fund Agreements or the
Partnership's or Funds' business or affairs; provided that such Indemnified
Person shall promptly repay to the Company the amount of any such reimbursed
expenses paid to it if it shall be judicially determined by judgment or order
not subject to further appeal or discretionary review that such Indemnified
Person is not entitled to be indemnified by the Company in connection with such
matter as provided in the exceptions contained in the immediately preceding
sentence. If for any reason (other than the exceptions contained in the first
sentence of this Section 8.02(b)) the foregoing indemnification is unavailable
to any Indemnified Person, or insufficient to hold it harmless, then the Company
shall contribute to the amount paid or payable by such Indemnified Person as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and such Indemnified Person, on the other hand, or, if such allocation is
not permitted by applicable law, to reflect not only the relative benefits
referred to above but also any other relevant equitable considerations. Any
indemnity, contribution or reimbursement obligation of the Company under this
Section 8.02(b) is referred to as an "Indemnification Obligation."
(c) Each Member covenants for itself and its successors, assigns, heirs and
personal representatives that such Person will, at any time prior to or after
dissolution of the Company, whether before or after such Person's withdrawal
from the Company, pay to the Company on demand any amount which the Company
properly pays in respect of taxes (including withholding taxes) imposed upon
income of, or distributions in respect of Partnership Investments made to, such
Member.
(d) In the event that any Individual Member initiates any Proceeding
against the Company, the Senior Managing Member, a Senior Member, ▇▇▇▇▇▇▇▇▇ or
any Affiliate of ▇▇▇▇▇▇▇▇▇ and a judgment or order not subject to further appeal
or discretionary review is rendered in respect of such Proceeding for the
Company, the Senior Managing Member, any Senior Member, ▇▇▇▇▇▇▇▇▇ or any
Affiliate of ▇▇▇▇▇▇▇▇▇, as the case may be, such Individual Member shall be
solely liable for all costs and expenses of the Company, the Senior Managing
Member, such Senior Member, ▇▇▇▇▇▇▇▇▇ or such Affiliate of ▇▇▇▇▇▇▇▇▇, as the
case may be, attributable thereto and shall pay such amounts in cash to the
Persons incurring such costs and expenses within 90 days after the entry of such
judgment or order.
(e) Notwithstanding anything else contained in this Agreement, the
exculpation provisions under 8.02(a) and the reimbursement, indemnity and
contribution obligations of the Company under Section 8.02(b) shall:
23
(i) be in addition to any liability which the Company may otherwise
have; and
(ii) be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company and each
Indemnified Person.
(f) To the extent that, at law or in equity, any Member has duties
(including fiduciary duties) and liabilities relating thereto to the Company or
to any other Member, the Member acting in connection with the Company's affairs
shall not be liable to the Company or to any other Member for its good faith
reliance on the provisions of this Agreement. To the fullest extent permitted by
applicable law, the provisions of this Agreement, to the extent that they
restrict the duties and liabilities or rights and powers of the Members
otherwise existing at law or in equity, are agreed by the Members to replace
such other duties, liabilities, rights and powers of the Members.
(g) The foregoing provisions of this Section 8.02 shall survive for a
period of four years from the date of dissolution of the Company; provided that
if at the end of such period, there are any Proceedings then pending or any
other liability (whether contingent or otherwise) or claim then outstanding, any
Individual Member shall so notify the Management Board, ▇▇▇▇▇▇▇▇▇ or a Senior
Member at such time (which notice shall include a brief description of each such
Proceeding (and of the liabilities asserted in such Proceeding) and of such
liabilities and claims) and the foregoing provisions of this Section 8.02 shall
survive with respect to each such Proceeding, liability and claim set forth in
such notice (or any related Proceeding, liability or claim based upon the same
or a similar claim) until such date that such Proceeding, liability or claim is
ultimately resolved.
ARTICLE 9
DURATION AND DISSOLUTION OF THE COMPANY
SECTION 9.01. Duration. The term of the Company shall continue for so long
as the Partnership or any of the Funds continue in existence, unless the Company
is sooner dissolved pursuant to Section 9.02; provided that in order to permit
an orderly winding up of the affairs of the Company, subject to Section 9.02,
the Management Board may, in its discretion, extend the term of the Company for
up to three successive one-year terms following the expiration of such initial
term.
SECTION 9.02. Dissolution. Subject to the Delaware Act, the Company shall
be dissolved and its affairs shall be wound up upon the earliest of:
(a) the expiration of the term of the Company provided in Section 9.01;
24
(b) in the discretion of the Management Board, upon the dissolution and
distribution of assets of the Partnership and of all the Funds;
(c) a decision made by the Management Board, after consultation with
counsel, to dissolve the Company because it has determined in good faith that
(i) changes in any applicable law or regulation would have a material adverse
effect on the continuation of the Company or (ii) such action is necessary or
desirable as provided in Section 2.14;
(d) the written consent of all Members;
(e) the entry of a decree of judicial dissolution under Section 18-802 of
the Delaware Act; and
SECTION 9.03. Liquidation of Company. Upon dissolution, the Company's
business shall be liquidated in an orderly manner. Except as provided in the
immediately succeeding sentence, the Management Board shall be the liquidator to
wind up the affairs of the Company pursuant to this Agreement. If the Management
Board is not available to serve as liquidator or if the Company shall be
dissolved upon dissolution of the Partnership or any of the Funds in accordance
with the terms of the applicable Partnership Agreement or Fund Agreement, the
Individual Members may by approval of the Majority Individual Members appoint
one or more liquidators to act as the liquidator in carrying out such
liquidation. In performing its duties, the liquidator is authorized to sell,
distribute, exchange or otherwise dispose of the assets of the Company in any
reasonable manner that the liquidator shall determine to be in the best interest
of the Members.
SECTION 9.04. Distribution upon Dissolution of the Company. (a) Upon
dissolution of the Company, the liquidator winding up the affairs of the Company
shall determine in its discretion which assets of the Company shall be sold and
which assets of the Company shall be retained for distribution in kind to the
Members. Subject to the Delaware Act, after all liabilities (contingent or
otherwise) of the Company have been satisfied or duly provided for (as
determined by the liquidator in its discretion), the remaining assets of the
Company shall be distributed to the Members in proportion to their respective
positive Capital Accounts up to the amounts thereof, and thereafter in the
manner in which additional amounts would have been distributed pursuant to
Article 6.
(b) In the discretion of the liquidator, and subject to the Delaware Act,
all or a portion of the assets of the Company may be:
(i) distributed to a trust established for the benefit of the Members
for purposes of liquidating Company assets, collecting amounts owed to the
Company, and satisfying any liabilities or obligations of the Company
arising out of, or in connection with, this Agreement or the Company's
affairs; or
25
(ii) withheld, with respect to any Member, to provide a reserve
reasonably required for Company Expenses; provided that such withheld
amounts shall be distributed to the Members as soon as the liquidator
determines, in its discretion, that it is no longer necessary to retain
such amounts.
The assets of any trust established in connection with clause (i) above
shall be distributed to the Members from time to time, in the discretion of the
liquidator, in the same proportions as the amount distributed to such trust by
the Company would otherwise have been distributed to the Members pursuant to
this Agreement.
(c) Each Member shall look solely to the assets of the Company for the
return of such Member's aggregate invested capital in Partnership Investments,
and no Member shall have priority over any other Member as to the return of such
invested capital.
SECTION 9.05. Resignation of Individual Members. Except as otherwise
provided in Article 10 or with the approval of the Management Board, an
Individual Member may not resign or withdraw from the Company prior to its
dissolution and winding up.
ARTICLE 10
TRANSFERABILITY OF A MEMBER'S INTEREST
SECTION 10.01. Restrictions on Transfer. A Member may not, directly or
indirectly, sell, exchange, transfer, assign, pledge, hypothecate or otherwise
dispose of all or any portion of its limited liability company interest
(including any entitlement to any distributions hereunder) in the Company (any
such direct or indirect sale, exchange, transfer, assignment, pledge,
hypothecation or other disposition being herein collectively called "Transfers")
to any Person, except with the consent of the Management Board.
SECTION 10.02. Expenses of Transfer; Indemnification. All expenses,
including attorneys' fees and expenses, incurred by the Company in connection
with any Transfer shall be borne by the transferring Member or such Member's
transferee (any such transferee, when admitted and shown as an Individual Member
on the books and records of the Company, being hereinafter called a "Substituted
Individual Member"). In addition, the transferring Member or such transferee
shall indemnify the Company and the Management Board in a manner satisfactory to
the Management Board against any losses, claims, damages or liabilities to which
the Company or the Management Board may become subject arising out of, related
to or in connection with any false representation or warranty made by, or breach
or failure to comply with any covenant or agreement of, such transferring Member
or such transferee.
SECTION 10.03. Recognition of Transfer; Substituted Members. (a) If the
Management Board approves the admission of any Person to the Company as a
26
Substituted Individual Member, such Person, as a condition to its admission as a
Member, shall execute and acknowledge such instruments (including a counterpart
of this Agreement), in form and substance satisfactory to the Management Board,
as the Management Board reasonably deems necessary or desirable to effectuate
such admission and to confirm the agreement of such Person to be bound by all
the terms and provisions of this Agreement with respect to the limited liability
company interest in the Company acquired by such Person.
(b) The Company shall not recognize for any purpose any purported Transfer
of all or any part of a Member's limited liability company interest in the
Company and no assignee, transferee or other recipient of all or any part of
such interest shall become a Substituted Individual Member hereunder unless:
(i) the provisions of this Article 10 shall have been complied with;
(ii) the Management Board shall have been furnished with the documents
effecting such Transfer, in form reasonably satisfactory to the Management
Board, executed and acknowledged by both the assignor or transferor and
assignee, transferee or other recipient;
(iii) such assignee, transferee or other recipient shall have
represented that such Transfer was made in accordance with all applicable
laws and regulations;
(iv) all necessary governmental consents shall have been obtained in
respect of such Transfer;
(v) the books and records of the Company shall have been changed
(which change shall be made as promptly as practicable) to reflect the
admission of such Substituted Individual Member; and
(vi) all necessary instruments reflecting such admission shall have
been filed in each jurisdiction in which such filing is necessary in order
to qualify the Company to conduct business or to preserve the limited
liability of the Individual Members.
Upon the satisfaction of the conditions set forth in this Section 10.03,
any such assignee or other recipient shall become a Substituted Individual
Member.
Any Person who succeeds to any Member's limited liability company interest
in the Company and who becomes a Substituted Individual Member shall, for
purposes of the calculations under Section 6.04, be bound by such calculations
previously made with respect to the transferring Member pursuant to this
Agreement, and shall be otherwise
27
treated with respect to such calculations as if such Person were the Member from
the inception of the Company.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. Entire Agreement; Amendments; Waivers; Termination. (a) This
Agreement constitutes the entire agreement among the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof.
(b) Any provision of this Agreement (including Article 10) may be amended
or waived by a written agreement executed by the Management Board and without
the approval of any Individual Member; provided that,
(i) the provisions of Article 8, Section 9.01 and this Section
11.01(b) may not be amended or waived without the approval of the
Management Board and each Individual Member;
(ii) no amendment or waiver of the provisions of this Agreement may
increase the liability of an Individual Member beyond the liability of such
Individual Member expressly set forth in this Agreement or otherwise modify
or affect the limited liability of such Individual Member without the
consent of the Management Board and the Individual Member affected thereby;
and
(iii) no provision of this Agreement that relates to or affects
▇▇▇▇▇▇▇▇▇ may be amended or waived without the approval of ▇▇▇▇▇▇▇▇▇.
(c) The Management Board shall give the affected Individual Members written
notice of any amendment of this Agreement effected pursuant to Section 11.01(b)
within 30 days after the same becomes effective.
SECTION 11.02. Mergers and Consolidations. The Company may merge or
consolidate with or into one or more Delaware limited liability companies or
other business entities (as defined in the Delaware Act) pursuant to, and in
accordance with, Section 18-209 of the Delaware Act upon the approval of the
Management Board and the Majority Individual Members; provided that in
connection with any such merger or consolidation, no amendment of any provision
of this Agreement may be effected without the approval required for an amendment
of such provision in accordance with Section 11.01. Notwithstanding anything
else contained in this Agreement, any agreement of merger or consolidation
approved in accordance with the preceding sentence may (x) effect any amendment
to this Agreement or (y) effect the adoption of a new limited
28
liability company agreement for the Company if it is the surviving or resulting
entity in such merger or consolidation.
SECTION 11.03. Investment Representation. Each Member, by executing this
Agreement, represents and warrants that his limited liability company interest
in the Company has been acquired by him for his own account for investment and
not with a view to resale or distribution thereof and that he is fully aware
that in agreeing to admit him as a Member, the Management Board, ▇▇▇▇▇▇▇▇▇ and
the Company are relying upon the truth and accuracy of this representation and
warranty.
SECTION 11.04. Successors; Counterparts. This Agreement (i) shall be
binding as to the executors, administrators, estates, heirs and legal successors
of the Members and (ii) may be executed in several counterparts with the same
effect as if the parties executing the several counterparts had all executed one
counterpart.
SECTION 11.05. Governing Law; Severability. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Delaware
as applied between residents of that state entering into contracts wholly to be
performed in that state. In particular, it shall be construed to the maximum
extent possible to comply with all of the terms and conditions of the Delaware
Act. If it shall be determined by court order not subject to appeal or
discretionary review that any provision or wording of this Agreement shall be
invalid or unenforceable under the Delaware Act or other applicable law, such
invalidity or unenforceability shall not invalidate the entire Agreement, in
which case this Agreement shall be construed so as to limit any term or
provision so as to make it enforceable or valid within the requirements of
applicable law, and, in the event such term or provision cannot be so limited,
this Agreement shall be construed to omit such invalid or unenforceable
provisions.
SECTION 11.06. Further Assurance. Each Individual Member, upon the request
of the Management Board, agrees to perform all further acts and to execute,
acknowledge and deliver any documents that may reasonably be necessary to carry
out the provisions of this Agreement.
SECTION 11.07. Filings. The Management Board shall promptly prepare,
following the execution and delivery of this Agreement, any documents required
to be filed and recorded, or, which are in the Management Board's discretion,
appropriate for filing and recording, under the Delaware Act, and any Senior
Member, as an authorized person, shall promptly cause each such document to be
filed and recorded in accordance with the Delaware Act and, to the extent
required by local law, to be filed and recorded or notice thereof to be
published in the appropriate place in each State in which the Company may
hereafter establish a place of business. Any Senior Member shall also promptly
cause to be filed, recorded and published such statements of fictitious business
name and other notices, certificates, statements or other instruments required
by any
29
provision of any applicable law of the United States or any State or other
jurisdiction which governs the conduct of its business from time to time.
SECTION 11.08. Power of Attorney. (a) Each Individual Member does hereby
constitute and appoint each Senior Member, with full power of substitution, as
his true and lawful representative and attorney-in-fact, in his name, place and
▇▇▇▇▇ to make, execute, sign, deliver and file (i) the Certificate of Limited
Liability Company and any amendment thereof required because of an amendment to
this Agreement or in order to effectuate any change in the membership of the
Company, (ii) any amendments to this Agreement in accordance with Section 11.01,
(iii) all such other instruments, documents and certificates which may from time
to time be required by the laws of the United States of America, the State of
Delaware or any other State, or any political subdivision or agency thereof, or
any foreign country, to effectuate, implement and continue the valid and
subsisting existence of the Company or to dissolve the Company and (iv) any
document, certificate, instrument or agreement necessary or desirable to
effectuate the transfer of all or any part of a Member's limited liability
company interest in the Company in accordance with the provisions of Articles 3
or 10.
Such representatives and attorneys-in-fact shall not have any right, power
or authority to amend or modify this Agreement except in accordance with the
terms of this Agreement when acting in such capacities.
(b) The power of attorney granted pursuant to this Section 11.08 is coupled
with an interest and shall survive and not be affected by the subsequent death,
incapacity, disability, dissolution, termination or bankruptcy of the Individual
Member granting such power of attorney or the transfer of all or any portion of
such Individual Member's limited liability company interest in the Company, and
extend to such Individual Member's successors, assigns and legal
representatives.
SECTION 11.09. No ▇▇▇▇ for Company Accounting. Subject to mandatory
provisions of law applicable to an Individual Member and to circumstances
involving a breach of this Agreement, each of the Members covenants that it will
not (except with the consent of the Management Board) file a ▇▇▇▇ for a Company
accounting.
SECTION 11.10. Goodwill. No value shall be placed on the name or goodwill
of the Company.
SECTION 11.11. Notices. All notices, requests and other communications to
any party hereunder shall be in writing (including telex, facsimile or similar
writing) and shall be given to such party at its address or telex or facsimile
number set forth in a schedule filed with the records of the Company or such
other address or telex or facsimile number as such party may hereafter specify
for the purpose by notice in like manner to the Management Board. Each such
notice, request or other communication shall be effective (a) if given by telex
or facsimile, when such telex or facsimile is transmitted to the telex
30
or facsimile number specified pursuant to this Section 11.11 and the appropriate
answerback or confirmation is received, (b) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (c) if given by any other means, when delivered at the
address specified pursuant to this Section 11.11.
SECTION 11.12. Arbitration. In the event that any dispute arises between an
Individual Member, on the one hand, and Greenhill, the Company, the Management
Board or any Senior Member, on the other hand, relating to or in connection with
this Agreement, the Company and its business or affairs, the Partnership
Agreement, the Fund Agreements or the Partnership's business or affairs, such
Members shall attempt to resolve such dispute by discussion and negotiation
within thirty days after the date one such party (the "Initiating Party")
initially raises such dispute. Any and all disputed issues that are not resolved
in writing by the parties during such thirty (30) day period shall be finally
settled by binding arbitration to be held in Wilmington, Delaware or New York
City, New York in accordance with the Commercial Arbitration Rules of the
American Arbitration Association, as from time to time amended and in effect.
The parties to this Agreement hereby waive (and agree to cause their respective
Affiliates to waive) any right to refer such dispute or controversy to any other
forum or tribunal. The arbitration panel shall be composed of three arbitrators,
appointed pursuant to the following procedure. The Initiating Party shall notify
the other party (the "Responding Party") of the substance of its claim and the
name and address of the arbitrator chosen by the Initiating Party. Within thirty
days of receipt of such notification, the Responding Party shall notify the
Initiating Party of its answer to the claim made, any counterclaim which it
wishes to assert in the arbitration, and the name and address of the arbitrator
chosen by the Responding Party. If this is not done by the Responding Party
within thirty (30) days, appointment of the second arbitrator shall be made by
the American Arbitration Association upon request of the Initiating Party. The
arbitrators shall choose a third arbitrator, who shall serve as president of the
panel thus composed. If the arbitrators fail to agree upon the choice of a third
arbitrator within thirty (30) days from the appointment of the second
arbitrator, the third arbitrator will be appointed by the American Arbitration
Association upon the request of the arbitrators or either of the parties. In all
cases the arbitrators must be persons who are knowledgeable about and have
recognized ability and experience in dealing with the subject matter of the
dispute. The arbitrators will decide the dispute by majority decision and in
accordance with Delaware law. The decision shall be rendered in writing and
shall bear the signatures of at least two arbitrators. It also shall identify
the members of the arbitration panel, and the time and place of the award
granted. Finally, it will determine the expenses of the arbitration and the
party who shall be charged therewith or the allocation of the expenses between
the parties in the discretion of the panel. The arbitration decision shall be
rendered as soon as possible, but in any event not later than six months after
the constitution of the arbitration panel. The arbitration decision shall be
final and binding upon both parties. Judgment upon any award rendered by the
arbitration panel may be entered in any court having jurisdiction thereof or
having jurisdiction over the party
31
against whom enforcement is sought or having jurisdiction over any of such
party's assets. To the maximum extent permitted by law, the parties to this
Agreement hereby waive (and agree to cause their respective Affiliates to waive)
any right of appeal from any judgment rendered upon an award, particularly
including (but not limited to) appeals with respect to any question of law.
SECTION 11.13. No Partnership Intended for Non-tax Purposes. The Company
has been formed as a limited liability company under the Delaware Act and the
Members expressly disclaim any intention to form a partnership under either the
Uniform Partnership Act, the Revised Uniform Limited Partnership Act or any
other partnership law. Except as provided in Section 2.11, the Members do not
intend to be partners one to another or partners as to any third party. To the
extent any Member, by word or action, represents to another Person that any
other Member is a partner or that the Company is a partnership, the Member
making such wrongful representation shall be liable to another Member who incurs
personal liability by reason of such wrongful representation.
SECTION 11.14. Withholding. The Management Board shall have the right to
deduct and withhold from any distributions or other assets any federal, state or
local taxes that it determines in good faith to be required by law to be
withheld with respect to income allocable to any Member.
SECTION 11.15. Headings. Section and other headings contained in this
Agreement are for reference only and are not intended to describe, interpret,
define or limit the scope or intent of this Agreement or any provision hereof.
32
IN WITNESS WHEREOF, the undersigned have hereto set their hands as of the
day and year first above written.
By: ▇▇▇▇▇▇▇▇▇ & Co., LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Member
33
Individual Member Signature Page for GCP, LLC
Individual Member:
/s/ ▇▇▇▇▇ ▇. ▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
Individual Member
Commencement Date:
Address for Notices:
▇▇▇▇▇▇▇▇▇ & Co., LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Accepted:
By: GCP, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Member
Individual Member Signature Page for GCP, LLC
Individual Member:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Individual Member
Commencement Date:
Address for Notices: ▇▇▇▇▇▇▇▇▇ & Co., LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Accepted:
By: GCP, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Member
Individual Member Signature Page for GCP, LLC
Individual Member:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Individual Member
Commencement Date:
Address for Notices:
▇▇▇▇▇▇▇▇▇ Capital Partners
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Accepted:
By: GCP, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Member
APPENDIX A
DEFINITIONS
"Advisers Act" means the Investment Advisers Act of 1940, as amended from
time to time.
"Advisory Limited Partner" means each of the limited partners of the
Partnership who is predominantly engaged in the advisory business of Greenhill.
"Affiliate" of any Person means any other Person that, directly or
indirectly through one or more intermediaries, controls, is controlled by or is
under common control with such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means this Limited Liability Company Agreement, as amended from
time to time.
"Authorized Representative" has the meaning set forth in Section 2.12(a).
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"Capital Account" has the meaning set forth in Section 6.04.
"Capital Contribution" means with respect to each of the Members whose
names appear on Schedule I, the amount set forth opposite the name of such
Member on Schedule I.
"Carried Interest" means that portion of the Carried Interest (as defined
in the Fund Agreements) that may be distributed to the Partnership, as general
partner of the Funds that in turn is distributed to the Company by the
Partnership.
"Contributing Member" means each Member that makes Capital Contributions as
provided in Section 5.01.
"Carried Interest Points" means points, reflecting a share of the Carried
Interest, that are assigned to the limited partners of the Partnership pursuant
to Article 6 of the Partnership Agreement.
"Certificate of Limited Liability Company" has the meaning set forth in
Section 1.02.
A-1
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Company" means GCP, LLC, a Delaware limited liability company, as such
limited liability company may from time to time be constituted.
"Company Expenses" has the meaning set forth in Section 4.01.
"Contributing Members" has the meaning set forth in Section 5.01.
"Delaware Act" has the meaning set forth in Section 1.02.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Fund Agreement" means an agreement of limited partnership of a Fund, as
amended from time to time.
"Funds" has the meaning set forth in Section 1.04.
"Fund Investment" means, with respect to a Fund, any Investment (as defined
in the partnership agreement applicable to such Fund) made by such Fund pursuant
to such partnership agreement.
"Greenhill" means ▇▇▇▇▇▇▇▇▇ & Co., LLC.
"Indemnification Obligation" has the meaning set forth in Section 8.01(b).
"Indemnified Person" means each Individual Member, (including the Senior
Managing Member and the Senior Members) both in such Person's capacity as a
Member and in such Person's capacity as a director, officer, stockholder,
employee, agent or representative of the Company or of Greenhill or any of their
respective Affiliates.
"Individual Member" means, at any time, any Member other than Greenhill who
is at such time a Member of the Company and who is shown as such on the books
and records of the Company.
"Initiating Party" has the meaning set forth in Section 11.12.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time.
"Investment Percentage" means, with respect to any Contributing Member, the
percentage derived by dividing (i) such Contributing Member's aggregate Capital
Contributions by (ii) the aggregate Capital Contributions of all Contributing
Members.
A-2
"Investor" means each or any investor in any Partnership or Partnership
Investment.
"Limited Partner" means each of the limited partners of the Partnership.
"Majority Individual Members" means, at any time and with respect to a
matter, Individual Members entitled to vote on such matter having balances in
their Capital Accounts at such time equal to more than 50% of the aggregate
amount of all Capital Account Balances of all Individual Members entitled to
vote on such matter (and present for purposes of a quorum, if applicable) at
such time.
"Management Board" has the meaning set forth in Section 2.01.
"Members" means Greenhill and the Individual Members, and "Member" means
any Individual Member or Greenhill, in their capacity as members of the Company.
Notwithstanding anything to the contrary contained herein, the Company shall
have only one class or group of Members for all purposes of the Delaware Act and
this Agreement.
"Net Income" has the meaning set forth in the applicable Partnership
Agreement.
"Net Loss" has the meaning set forth in the applicable Partnership
Agreement.
"Partnership" has the meaning set forth in Section 1.04.
"Partnership Agreement" means the agreement of limited partnership of the
Partnership as amended and in effect from time to time.
"Person" means any individual, partnership, corporation, limited liability
company, trust, estate or designated beneficiary or other entity.
"Private Equity Limited Partner" means those limited partners listed on
Schedule I to the Partnership Agreement with Points designated as Private Equity
Points or who are subsequently designated as a Private Equity Limited Partner by
the Management Board.
"Proceeding" means any action, claim, suit, investigation or proceeding by
or before any court, arbitrator, governmental body or other agency.
"Proceeds" means, with respect to any Partnership Investment, all cash and
non-cash proceeds received by the Partnership from any sale of, or distribution
from, such Partnership Investment, including any dividends, interest or other
distributions received by the Partnership in respect of such Partnership
Investment (net of any sales commissions, fees or other Investment Expense
incurred, directly or indirectly, by the Partnership in connection with such
receipt).
A-3
"Proprietary Information" means any information that may have intrinsic
value to the Company, the Partnership or Greenhill, or its Affiliates, clients
or other parties with which the Company, the Partnership or Greenhill, or its
Affiliates has a relationship, or that may provide the Company, the Partnership
or Greenhill, or its Affiliates with a competitive advantage, including, without
limitation, any trade secrets; formulas; flow charts; computer programs, access
codes or other systems information; algorithms; business, product or marketing
plans; sales and other forecasts; financial information; client lists; and
information relating to compensation and benefits; provided that such
Proprietary Information does not include any information which is available to
the general public or is generally available within the relevant business or
industry other than as a result of the Individual Member's action. Proprietary
Information may be in any medium or form, including without limitation, physical
documents, computer files or discs, videotapes, audiotapes, and oral
communications.
"Required Members" means, with respect to a fiscal year, both (i) Members
having a majority of the Carried Interest Points awarded for such year and (ii)
each of the Senior Members.
"Responding Party" has the meaning set forth in Section 11.12.
"Senior Managing Member" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ as a member of the
Company.
"Senior Members" has the meaning set forth in Section 2.02.
"Substituted Individual Member" has the meaning set forth in Section 10.02.
"Tax Matters Partner" has the meaning set forth in Section 2.11(c).
"Transfers" has the meaning set forth in Section 10.01.
A-4
SCHEDULE II
Assignment of Carried Interest Points
Date of Assignment:
-----------------
Member:
Calendar Year Covered: January 1, to December 31,
---- ----
Investment* Carried Interest Points
----------
*To be specified either on an annual basis for all investments made during
the year or on an investment-by-investment basis.
S-2
