MANAGEMENT MEMBERS AGREEMENT

MANAGEMENT MEMBERS AGREEMENT

CONCERNING

NALCO LLC

DATED AS OF JUNE 11, 2004.

 

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This MANAGEMENT MEMBERS AGREEMENT (the “Agreement”) dated as of June 11, 2004 by and among Nalco LLC (the “Company”), a Delaware limited liability company and the Persons who are or after the date hereof become signatories hereto (the “Management Members”).

RECITALS

WHEREAS, the Company is governed by that certain Second Amended and Restated Limited Liability Company Operating Agreement (the “LLC Agreement”) dated as of May 17, 2004.

WHEREAS, the Management Members will be providing services to the Company or its Affiliates.

WHEREAS, each Management Member will subscribe for and acquire from the Company, and the Company will issue and sell to each Management Member, the Company’s Class A Units (the “Class A Units”), Class B Units (the “Class B Units”), Class C Units (the “Class C Units”) and Class D Units (the “Class D Units”; collectively with the Class A Units, the Class B Units and the Class C Units, the “Units”), in each case in the amounts set forth on Schedule A to the LLC Agreement, as the same may be amended from time to time;

WHEREAS, it is a condition to the sale of the Units that the Management Members enter into this Agreement;

WHEREAS, the Management Members will enter into the Registration Rights Agreement; and

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

ARTICLE I

Management Members’ Representations, Warranties and Agreements

Section 1.01. Units Unregistered. Each Management Member acknowledges and represents that such Management Member has been advised by the Company that:

(a)

the offer and sale of the Units have not been registered under the 1933 Act;

 

(b)

the Units must be held and the Management Member must continue to bear the economic risk of the investment in the Units unless the offer and sale of such Units are subsequently registered under the 1933 Act and all applicable state securities laws or an exemption from such registration is available and the Units may never be so registered;

 

(c)

there is no established market for the Units and it is not anticipated that there will be any public market for the Units in the foreseeable future;

 

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(d)

a restrictive legend in the form set forth below shall be placed on the certificates representing the Units:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON ______________, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN TRANSFER AND OTHER RESTRICTIONS SET FORTH IN THE LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF MAY 17, 2004 AMONG NALCO LLC AND CERTAIN OF ITS MEMBERS, THE MANAGEMENT MEMBERS AGREEMENT, DATED AS OF JUNE 11, 2004 AMONG NALCO LLC AND CERTAIN MANAGEMENT MEMBERS NAMED THEREIN, THE REGISTRATION RIGHTS AGREEMENT AMONG NALCO LLC AND CERTAIN OF ITS MEMBERS AND, AMONG OTHER THINGS, MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH SUCH TRANSFER RESTRICTIONS. COPIES OF SUCH LIMITED LIABILITY COMPANY AGREEMENT, SUCH MANAGEMENT MEMBERS AGREEMENTS AND SUCH REGISTRATION RIGHTS AGREEMENT ARE ON FILE WITH THE SECRETARY OF THE LIMITED LIABILITY COMPANY AND ARE AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE APPLICABLE PROVISIONS OF THE AFORESAID AGREEMENTS.”;

(e)

a restrictive legend in the form set forth below shall be placed on the certificates representing the Units held by Georgia residents:

“THESE SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH 13 OF CODE SECTION 10-5-9 OF THE “GEORGIA SECURITIES ACT OF 1973,” AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.” and

 

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(f)

a notation shall be made in the appropriate records of the Company indicating that the Units are subject to restrictions on transfer and, if the Company should at some time in the future engage the services of a securities transfer agent, appropriate stop-transfer instructions may be issued to such transfer agent with respect to the Units.

Section 1.02. Additional Investment Representations. Each Management Member represents and warrants that:

(a)

the Management Member’s financial situation is such that such Management Member can afford to bear the economic risk of holding the Units for an indefinite period of time, has adequate means for providing for the Management Member’s current needs and personal contingencies, and can afford to suffer a complete loss of the Management Member’s investment in the Units;

 

(b)

the Management Member’s knowledge and experience in financial and business matters are such that the Management Member is capable of evaluating the merits and risks of the investment in the Units;

 

(c)

the Management Member understands that the Units are a speculative investment which involves a high degree of risk of loss of Management Member’s investment therein, there are substantial restrictions on the transferability of the Units and, on the date on which such Management Member acquires such Units and for an indefinite period following such date, there will be no public market for the Units and, accordingly, it may not be possible for the Management Member to liquidate the Management Member’s investment including in case of emergency, if at all;

 

(d)

the terms of this Agreement provide that if the Management Member ceases to provide services to the Company and its Affiliates, the Company and its Affiliates have the right to repurchase the Units at a price which may be less than the Fair Market Value thereof;

 

(e)

the Management Member understands and has taken cognizance of all the risk factors related to the purchase of the Units and, other than as set forth in this Agreement, no representations or warranties have been made to the Management Member or Management Member’s representatives concerning the Units, the Company, the Subsidiaries or their respective prospects or other matters;

 

(f)

the Management Member has been given the opportunity to examine all documents and to ask questions of, and to receive answers from, the Company and its representatives concerning the Company and its subsidiaries, the acquisition of Nalco Company and certain Subsidiaries of Nalco International S.A.S. by subsidiaries of the Company, the LLC Agreement, the Company’s organizational documents and the terms and conditions of the purchase of the Units and to obtain any additional information which the Management Member deems necessary; and

 

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(g)

all information which the Management Member has provided to the Company and the Company’s representatives concerning the Management Member and the Management Member’s financial position is complete and correct as of the date of this Agreement.

Section 1.03. Section 83(b) Election. The Company recommends that within 30 days after purchasing any Units (other than Class A Units), each Management Member should make an election with the Internal Revenue Service (“IRS”) under Section 83(b) of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder (an “83(b) Election”) in the form of Exhibit A attached hereto (any Units with respect to which such an election is properly made, “Electing Units”). Each Management Member shall submit any such election to the IRS within 30 calendar days after purchasing the Units and shall promptly send a copy to the Company. Management Members holding Electing Units shall use an accounting firm selected and paid for by the Company or a Subsidiary to file and handle all matters relating to their 2004, 2005 and 2006 personal income tax returns. Management Members holding Electing Units shall for all tax reporting purposes use the Units valuation prepared by the Company’s third party valuation firm in connection with the issuance of such Units. To the extent that a Management Member does not make an 83(b) Election with respect to any Units (other than Class A Units) and such Management Member is subject to ordinary income and withholding taxes upon the vesting of such Units (the “Vesting Units”) the Management Member will be required to pay, in cash, to the Company an amount equal to such withholding taxes, as determined by the Company in good faith. To the extent that the withholding taxes, with respect to the Vesting Units, are not paid to the Company within five days following a request from the Company to pay such withholding taxes, the Management Member will forfeit, without the payment of consideration, the Vesting Units.

Section 1.04. Contingent Loan. A Management Member shall, subject to the conditions set forth on Exhibit B, be entitled to a loan from the Company on the terms set forth on Exhibit B with respect to any Electing Units.

Section 1.05. Contingent Bonus. The Company shall cause one of its Subsidiaries to pay a bonus to Management Members in the circumstances set forth in Exhibit C.

ARTICLE II

Transfers; Acceleration

Section 2.01. Transfer. (a) Until the occurrence of a Qualified IPO, except as required by law, no Management Member may directly or indirectly, sell, contract to sell, give, assign, hypothecate, pledge, encumber, grant a security interest in, offer, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of any economic, voting or other rights in or to (collectively, “Transfer”) any Units except pursuant to (i) Article XI of the LLC Agreement, (ii) Sections 2.02 or 2.04 hereof or (iii) a Transfer to a Manager Permitted Transferee (each a “Permitted Transfer”).

 

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(b) Following a Qualified IPO and the expiration of any underwriter or Company “lock-up” period (as provided for in Section 4(a) of the Registration Rights Agreement or otherwise) applicable to such Qualified IPO, each Management Member may only Transfer its Units pursuant to (i) a Permitted Transfer, (ii) a Transfer pursuant to Section 2.03, (iii) a Transfer in accordance with the Registration Rights Agreement or (iv) a Transfer conducted in accordance with the requirements of Rule 144 promulgated under the 1933 Act; provided, that no Management Member shall make a Transfer pursuant to this clause (iv) without the Company’s prior, written approval.

(c) No Transfer by any Management Member may be made pursuant to this Article II unless (i) the transferee has agreed in writing to be bound by the terms and conditions of this Agreement and the LLC Agreement (other than if the Transfer is conducted in accordance with the Registration Rights Agreement or the requirements of Rule 144 promulgated under the 1933 Act), (ii) the Transfer complies in all respects with the applicable provisions of this Agreement, (iii) the Transfer complies in all respects with applicable federal and state securities laws, including the 1933 Act and (iv) the Transfer is made in compliance with all applicable Company policies and restrictions (including any trading “window periods” or other policies regulating insider trading); provided, that the conditions to Transfer described in clause (i) above shall not apply to a Transfer pursuant Article XI of the LLC Agreement or Sections 2.02, 2.03 or 2.04 hereof.

(d) No Transfer by any Management Member may be made pursuant to this Article II (except pursuant to an effective registration statement under the 1933 Act) unless and until such Management Member has first delivered to the Company an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the 1933 Act and applicable state securities laws is required in connection with such Transfer.

(e) No Management Member may Transfer Accelerated Vesting C/D Units prior to the one-year anniversary of the date on which they became Accelerated Vesting C/D Units following a Sponsor Sell-Down.

 

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Section 2.02. Call Option. (a) If a Management Member’s Services to the Company or any Subsidiary terminate for any of the reasons set forth in clauses (i), (ii) or (iii) below (each such event a “Termination Event”), the Company shall have the right but not the obligation to purchase, from time to time after such termination of Services (x) in the case of any Unvested Unit, for a period of 120 days (subject to extension as provided below) immediately following the date of the Termination Event and (y) in the case of any Class A Unit or Vested Unit, for a period of 60 days (subject to extension as provided below) immediately following the later of (A) the date of the Termination Event and (B) the date that is six (6) months and one day after the date on which such Management Members’ Unit became a Vested Unit or after the date on which such Management Member acquired such Class A Unit (the later of (A) and (B), the “First Purchase Date”), and such Management Member shall be required to sell to the Company, any or all of such Units then held by such Management Member (it being understood that if Units of any class subject to repurchase hereunder may be repurchased at different prices, the Company, at its sole discretion, may elect to repurchase all or any portion of the Units of such class, including purchasing only such lower priced Units), at a price per Unit equal to the applicable purchase price determined pursuant to Section 2.02(c):

(i) if such Management Member’s Service with the Company and its Subsidiaries is terminated due to the Disability or death of the Management Member;

(ii) if such Management Member’s Service with the Company and its Subsidiaries is terminated by the Company and its Subsidiaries without Cause or by the Management Member for any reason;

(iii) if such Management Member’s Service with the Company and its Subsidiaries is terminated by the Company or any of its Subsidiaries for Cause.

Any Unvested Units purchased by the Company shall be canceled.

(b) If on the 61st day following (x) in the case of Class A Units, the date of the Termination Event and (y) in the case of Vested Units, the First Purchase Date, the Company has not purchased all of a terminated Management Member’s Units, and the Company has not opted to extend its 60 day election period pursuant to Section 2.02(d), the Company shall on or before the 61st day provide written notice to the Investor Groups of (i) its decision not to purchase some or all of such Units and (ii) the number of such Management Member’s Eligible Units (defined below) which the Company did not purchase, and the Investor Groups shall have the right to purchase and such Management Member shall be required to sell to the Investor Group(s), any or all of the Class A and Vested Units (the “Eligible Units”) then held by such Management Member at a price per Unit equal to the applicable purchase price determined pursuant to Section 2.02(c). The Investor Groups’ rights to purchase such Eligible Units and each Management Member’s corresponding obligation to sell such Eligible Units shall terminate on the 120th day following (x) in the case of Class A Units, the date of the Termination Event and (y) in the case of Vested Units, the First Purchase Date. Upon receipt of the written notice described above, each Investor Group desiring to purchase Units shall within 45 days of receipt of the Company’s notice provide written notice to the Company, specifying that such Investor Group is willing to purchase either (i) its pro rata share of the Eligible Units (based upon the number of Units held by such Investor Group relative to the total number of Units held by all of

 

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the Investor Groups), (ii) a number of Eligible Units less than such Investor Group’s pro rata share, or (iii) any and all Units available to be purchased; provided, that the Investor Groups shall, as much as reasonably practicable, consult with each other and coordinate the exercise of rights such that all Eligible Units are elected to be purchased. Upon receipt of the Investor Groups’ respective notices, the Company will notify the Management Member of the Investor Group(s)’ elections and the Management Member will be obligated to sell (x) to the Investor Groups making elections described in clauses (i) and (ii) of the preceding sentence, the number of Eligible Units elected to be purchased by such Investor Groups and (y) all remaining Eligible Units, if any, to the Investor Groups making the election described in clause (iii) of the preceding sentence to such Investor Group(s) on a pro rata basis (based upon the number of Units held by such Investor Group relative to the total number of Units held by all of the Investor Groups making such election), but in no event more that any such Investor Groups elected to purchase.

(c) In the event of a purchase by the Company pursuant to Section 2.02(a) and/or the Investor Group(s) pursuant to Section 2.02(b) (each a “Units Buyer”), the purchase price shall be:

(i) in the case of a Termination Event specified in Section 2.02(a)(i) or 2.02(a)(ii):

(x)

for Class A Units and Vested Units, a price per Unit equal to the most recently determined Fair Market Value; and

 

(y)

for Unvested Units, a price per Unit equal to the lesser of (1) the most recently determined Fair Market Value and (2) Cost.

(ii) in the case of a Termination Event specified in Section 2.02(a)(iii), for Class A Units, Vested Units and Unvested Units, a price per Unit equal to the lesser of (1) Fair Market Value and (2) Cost.

(d) The Units Buyer may pay the purchase price for such Units (i) by delivery of funds deposited into an account designated by the Management Member, a bank cashier’s check, a certified check or a company check of the Units Buyer for the purchase price; (ii) if the Units Buyer is the Company and is prohibited from paying cash by financing or liquidity constraints and is unable to pay the purchase price as provided in clause (iii), by delaying the exercise of the purchase right described under Section 2.02(a) until the earlier of (x) when the financing restrictions lapse and (y) when the Company is able to pay the purchase price as provided in clause (iii); or (iii) if the Units Buyer is the Company and has the right to purchase such Units during the period following a Qualified IPO (including in respect of a purchase that was delayed pursuant to clause (ii)), by delivery of a number of shares of Issuer Common Stock determined by dividing (A) the aggregate purchase price of the Units being sold by such Management Member by (B) the Public Share FMV as of the close of trading on the trading day immediately prior to the delivery thereof to the Management Member. Notwithstanding anything to the contrary in this Agreement, the Units Buyer may deduct and withhold from the amounts otherwise payable pursuant to this Agreement such amounts as necessary to comply with the Internal Revenue Code of 1986, as amended (the “Code”), or any other provision of applicable law, with respect to the making of such payment.

 

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(e) Notwithstanding anything to the contrary elsewhere herein, the Company shall not be obligated to purchase any Units at any time pursuant to this Section 2.02, regardless of whether it has delivered a notice of its election to purchase any such Units, (i) to the extent that (A) the purchase of such Units (together with any other purchases of Units pursuant to Sections 2.02 or 2.03 hereof, or pursuant to similar provisions in any other agreements with other investors of which the Company has at such time been given or has given notice) or (B) in the event of an election to purchase such Units with shares of Issuer Common Stock, the issuance of such shares by the IPO Entity, the purchase of such shares by the Company or the distribution of such shares to the Management Member would result (x) in a violation of any law, statute, rule, regulation, policy, order, writ, injunction, decree or judgment promulgated or entered by any governmental authority applicable to the Company or any of its Subsidiaries or any of its or their assets (including any unavailability of a registration statement or exemption from registration necessary to allow delivery of shares of Issuer Common Stock to the Management Member), (y) after giving effect thereto (including any dividends or other distributions or loans from a Subsidiary of the Company to the Company in connection therewith), in a Financing Default or (z) in the Company being required to disgorge any profit to the IPO Entity pursuant to Section 16(b) of the 1934 Act, (ii) if immediately prior to such purchase of Units, issuance of Issuer Common Stock or purchase of shares of Issuer Common Stock, as the case may be, there exists a Financing Default which prohibits such issuance or purchase (including any dividends or other distributions or loans from a Subsidiary of the Company to the Company in connection therewith), or (iii) if the Company does not have funds available to effect such purchase of Units or Issuer Common Stock. The Company shall within 30 days of learning of any such fact so notify the Management Member that it is not obligated to purchase such Units and has deferred its right to make such purchase until such violation, potential liability under the 1933 Act or 1934 Act, Financing Default or unavailability of funds would not result therefrom or has ceased. The Company agrees to use commercially reasonable efforts to cure any such Financing Default that is curable. To the extent that, pursuant to this Section 2.02(e), the Company is not obligated to pay for a Management Member’s Units in accordance with one of the payment methods described in the first sentence of Section 2.02(d), the Company shall, except as otherwise permitted by this Section 2.02(e), be required to pay for such Units pursuant to an alternate method of payment described in the first sentence of Section 2.02(d).

(f) Notwithstanding anything to the contrary contained in this Section 2.02, any Units which the Company has elected to purchase from a Management Member, but which in accordance with Section 2.02(e) are not purchased at the applicable time provided in this Section 2.02, shall be purchased by the Company on the tenth Business Day after such date or dates that it is no longer permitted to defer purchasing such Units under Section 2.02(e), and the Company shall give such Management Member five Business Days prior notice of any such purchase.

Section 2.03. Put Right. (a) Subject to the Call Right described in Section 2.02, following a Qualified IPO and for so long as no Termination Event pursuant to Section 2.02(a)(iii) shall have occurred with respect to a Management Member, such Management Member shall have the right, but not the obligation, to sell (the “Put Right”) beginning on the later of (i) in the case of Class A Units and Equity Units that were Vested Units on the date of consummation of the Qualified IPO, the later of (x) the first date immediately following the expiration of any Company or underwriter “lock-up” period applicable to such Qualified IPO and

 

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(y) the date that is at least six (6) months and one day after, (A) in the case of Class A Units, the Sale Date, and (B) in the case of any Equity Units that were Vested Units on the date of consummation of the Qualified IPO, the date on which such Equity Units became Vested Units and (ii) in the case of Equity Units that were Unvested Units on the date of consummation of the Qualified IPO, the date that is six (6) months and one day after the date on which such Management Member’s Units became Vested Units (the later of (i) and (ii) shall be referred to as the “First Put Date”), and the Company shall be required to purchase from such Management Member, a number of such Management Member’s Class A Units and Vested Units as determined by such Management Member, at a price per Unit equal to the Fair Market Value as of the date the Management Member exercises such Put Right. For the avoidance of doubt, subject to the Call Right described in Section 2.02, a Management Member shall remain entitled to the Put Right following a Termination Event pursuant to Sections 2.02(a)(i) or (ii) with respect to such Management Member.

(b) Each Management Member who desires to sell any of his or her Class A Units or Vested Units following the applicable First Put Date shall send written notice to the Company of his or her intention to sell such Units pursuant to this Section 2.03. Subject to the exercise of any Call Right pursuant to Section 2.02, the closing of the purchase shall take place at the principal office of the Company on a date specified by the Company no later than 30 days after the giving of such notice.

(c) At the closing of a purchase pursuant to a Put Right, the Company will pay to the Management Member the purchase price for such Units (determined in accordance with Section 2.03(a)) by delivery of a number of shares of Issuer Common Stock determined by dividing (A) the aggregate purchase price of the Units being sold by such Management Member by (B) the Public Share FMV as of the close of trading on the trading day immediately prior to the delivery thereof to the Management Member.

(d) Notwithstanding anything to the contrary elsewhere herein, the Company shall not be obligated to purchase any Units at any time pursuant to this Section 2.03 (i) to the extent that (A) the purchase of such Units (together with any other purchases of Units pursuant to Sections 2.02 or 2.03 hereof, or pursuant to similar provisions in any other agreements with other investors of which the Company has at such time been given or has given notice) or (B) the issuance of shares by the IPO Entity or the purchase of such shares by the Company would result (x) in a violation of any law, statute, rule, regulation, policy, order, writ, injunction, decree or judgment promulgated or entered by any governmental authority applicable to the Company or any of its Subsidiaries or any of its or their assets (including any unavailability of a registration statement or exemption from registration necessary to allow delivery of shares of Issuer Common Stock to the Management Member(s)), (y) after giving effect thereto, in a Financing Default or (z) in the Company being required to disgorge any profit to the IPO Entity pursuant to Section 16(b) of the 1934 Act or (ii) if immediately prior to such purchase of Units, issuance of Issuer Common Stock or purchase of shares of Issuer Common Stock, as the case may be, there exists a Financing Default which prohibits any such issuance or purchase. The Company agrees to use commercially reasonable efforts to cure any such Financing Default that is curable. To the extent that the Company is not obligated to pay for any Units as described in the first sentence of Section 2.03(c) pursuant to the terms of this Section 2.03(d), the Company shall promptly notify any Management Member that has delivered a notice of exercise of a Put Right that it is not

 

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obligated to purchase such Units and has deferred its right to make such purchase until such violation, potential liability under the 1933 Act or 1934 Act or Financing Default would not result therefrom or has ceased.

(e) Notwithstanding anything to the contrary contained in this Section 2.03, any Units which a Management Member has elected to sell to the Company, but which in accordance with Section 2.03(d) are not purchased at the applicable time provided in this Section 2.03, shall be purchased by the Company on the tenth Business Day after such date or dates that it is no longer permitted to defer purchasing such Units under Section 2.03(d), and the Company shall give such Management Member five Business Days prior notice of any such purchase.

Section 2.04. Tag-Along Right. (a) If, at any time prior to a Qualified IPO, one or more Sponsor Members propose to Transfer, in a single transaction or a series of related transactions, a number of Class A Units representing at least 30% of the Sponsor Members’ aggregate Initial Equity Stakes (as defined in the LLC Agreement) to any Person (other than a Transfer to a Permitted Transferee (as defined in the LLC Agreement) of any such Sponsor Member and other than a Transfer in accordance with the Registration Rights Agreement and other than to another Sponsor Member) (a “Tag-Along Purchaser”), then, unless such transferring Sponsor Member(s) are entitled to give and do give a Drag-Along Sale Notice (as defined in the LLC Agreement) and no other Sponsor Member(s) has elected to purchase its pro rata share of such Class A Units pursuant to Section 2.04(a) of the Sponsor Agreement, the Company shall first provide written notice to each of the Management Members, which notice (the “Tag-Along Notice”) shall state: (i) the maximum number of Class A Units proposed to be Transferred (the “Tag-Along Securities”); (ii) the purchase price per Unit (the “Tag-Along Price”) for the Tag-Along Securities and (iii) any other material terms and conditions of such sale, including the proposed transfer date (which date will be within 60 business days after the termination of the Election Period (defined below), subject to extension for any required regulatory approvals). Each of the Management Members that has been provided with the Tag-Along Notice (each, a “Tag-Along Manager”) shall have the right to sell to such Tag-Along Purchaser, upon the terms set forth in the Tag-Along Notice, up to the aggregate number of Class A Units which are held by such Tag-Along Manager multiplied by a fraction, the numerator of which is the aggregate number of Class A Units proposed to be sold by the transferring Sponsor Member as reflected in the Tag-Along Notice and the denominator of which is the total number of Class A Units which are held by the transferring Sponsor Member. If the number of Class A Units elected to be sold by the Tag-Along Managers and any other individuals identified from time to time on Exhibit A to the LLC Agreement, the transferring Sponsor Member and any other Sponsor Members electing to participate in such sale is greater than the number of Tag-Along Securities specified in the Tag-Along Notice, the number of Class A Units being sold by each such seller shall be reduced such that the applicable seller shall be entitled to (and obligated to) sell only their pro rata share of Class A Units (based on the aggregate number of Class A Units held by such seller to the total number of Class A Units held by all of such electing sellers). The transferring Sponsor Member(s), the Sponsor Members electing to participate in such sale and the Tag-Along Manager(s) exercising their rights pursuant to this Section 2.04 shall effect the sale of the Tag-Along Securities, and such Tag-Along Manager(s) shall sell the number of Tag-Along Securities required to be sold by such Tag-Along Manager(s) pursuant to

 

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this Section 2.04(a) within 60 business days after the expiration of the Election Period, subject to extension for any required regulatory approvals.

(b) The tag-along rights provided by this Section 2.04 must be exercised by any Tag-Along Manager wishing to sell its Class A Units within 10 business days following the date of delivery of the Tag-Along Notice (the “Election Period”), by delivery of a written notice to the Company indicating such Tag-Along Manager’s wish to irrevocably exercise its rights and specifying the number of Class A Units (up to the maximum number of Class A Units owned by such Tag-Along Manager requested to be purchased by such Tag-Along Purchaser) it wishes to sell; provided that any Tag-Along Manager may waive its rights under this Section 2.04 prior to the expiration of such 10-business day period by giving written notice to the Company, which will be distributed by the Company to the transferring Sponsor Member(s). The failure of a Tag-Along Manager to respond within such 10-business day period shall be deemed to be a waiver of such Tag-Along Manager’s rights under this Section 2.04.

(c) In connection with any sale pursuant to this Section 2.04, each Tag-Along Manager shall make to the Tag-Along Purchaser the same representations, warranties, covenants, indemnities and agreements as the transferring Sponsor Member(s) makes in connection with the proposed transfer (except that in the case of representations, warranties, covenants, indemnities and agreements pertaining specifically to the transferring Sponsor Member(s), a Tag-Along Manager shall make the comparable representations, warranties, covenants, indemnities and agreements); provided that all representations, warranties and indemnities shall be made by the transferring Sponsor Member(s) and such Tag-Along Manager severally and not jointly and that the liability of the transferring Sponsor Member(s) and such Tag-Along Manager thereunder shall be borne by each of them on a pro rata basis. The Tag-Along Managers shall receive the same type and amount of consideration (and rights) per Class A Unit as is paid or delivered to the transferring Sponsor Member(s) in the sale pursuant to Section 2.04(a).

(d) No Transfer of any Unit pursuant to this Section 2.04 shall be effective unless and until the applicable transferee agrees to be bound by all of the terms and conditions of the LLC Agreement.

Section 2.05. Fair Market Value. Either the Board or the compensation committee of the Board shall undertake in good faith to determine the Fair Market Value of the Units no less frequently than annually and on a quarterly basis if necessary in connection w