AMENDED AND RESTATED LIMITED LIABILITY AGREEMENT

EXHIBIT 3.2

EXECUTION COPY

 

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

ENSEMBLE ACQUISITION LLC

 

Dated as of November 22, 2005

 

TABLE OF CONTENTS

 

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of November 22, 2005 (the “ Agreement ”), concerning Ensemble Acquisition LLC (“ Acquisition ”), a Delaware limited liability company, is entered into by and among the Members (as defined herein).

RECITALS

WHEREAS, Acquisition is a party to an Agreement and Plan of Merger, dated as of October 11, 2005 (the “ Merger Agreement ”), among the Company, Team Health Holdings, L.L.C. (“ Holdings ”), Team Health, Inc., Team Finance LLC, Team Health MergerSub, Inc. and Ensemble Parent LLC (“ Parent ”), pursuant to which, among other transactions, Acquisition will merge with and into Holdings, (the “ Merger ”) with Holdings surviving the merger (the “ Surviving Company ”) and becoming a Subsidiary (as defined herein) of Parent;

WHEREAS, this Agreement shall survive the Merger as the limited liability company agreement of the surviving company of the Merger (Acquisition and, from and after the consummation of the Merger, the Surviving Company are herein referred to as the “ Company ”);

WHEREAS, Parent has subscribed for and currently holds one (1) Class A membership interest of the Company (the “ Class A Common Units ”), and will acquire an additional 5,580,663.55197 Class A Common Units in connection with the Merger, all of which will remain outstanding as Class A Common Units of the Surviving Company;

WHEREAS, in connection with the Merger, 471,088 outstanding common units of Holdings held by certain Management Members (as defined herein) will be converted into 471,088 Class A Common Units of the Surviving Company;

WHEREAS, in connection with or following the Merger, certain Management Members will also purchase from the Surviving Company an additional 51,475.60812 Class A Common Units;

WHEREAS, in connection with or following the Merger, certain Management Members will also be granted by the Surviving Company Class B membership interests of the Company (the “ Class B Common Units ”) and Class C membership interests of the Company (the “ Class C Common Units ”; collectively with the Class B Common Units, the “ Equity Incentive Units ”) (the Equity Incentive Units and the Class A Common Units are herein collectively referred to as the “ Units ”); and

WHEREAS, the current Members desire to continue the Company as a limited liability company under the Act and to amend and restate the Original LLC Agreement in its entirety;

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 and intending to be legally bound hereby, the parties to this Agreement hereby agree as follows:

ARTICLE I

ORGANIZATION

Section 1.1.  Certificate . The Certificate has been prepared, executed and filed by an authorized person within the meaning of the Act, in the Office of the Secretary of State of the State of Delaware. The rights and obligations of the Members shall be determined pursuant to the Act and this Agreement. To the extent that the rights or obligations of any Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control.

Section 1.2.  Name . In accordance with, and subject to the provisions of this Agreement, the name of the Company shall be “Ensemble Acquisition LLC”. Effective as of the Closing (as defined in the Merger Agreement) of the Merger (such date, the “ Effective Date ”), the name of the Company shall be the name of the surviving company of the Merger, “Team Health Holdings, L.L.C.”. The Company may conduct business under that name or any other name hereafter approved by the Board. Each Officer is considered an authorized person within the meaning of the Act who may execute, deliver, and file any amendment and/or restatement of the Certificate as necessary to change the name of the Company consistent with the provisions of this Section 1.2.

Section 1.3.  Term . The term of the Company commenced as of the date of the filing of the Certificate. The term of the Company shall continue until the Company is dissolved in accordance with the provisions of Article XI hereof. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate as provided in the Act.

Section 1.4.  Office and Agent . The principal place of business of the Company shall be such place or places as the Board may determine from time to time. The registered agent and office in the State of Delaware shall be c/o The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street, New Castle County, Wilmington, Delaware 19801 or as hereafter determined by the Board in accordance with the Act.

Section 1.5.  Qualification in Other Jurisdictions . The Officers shall cause the Company to be qualified or registered under foreign entity or assumed or fictitious name statutes or similar Laws in any jurisdiction in which the Company owns property or transacts business to the extent such qualification or registration is necessary or advisable in order to protect the limited liability of the Members or to permit the Company lawfully to own property or transact business. In connection with the foregoing, any Officer, acting alone, shall execute, deliver and file any certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in a jurisdiction in which the Company may wish to conduct business.

Section 1.6.  No State Law Partnership . The Members intend that the Company not be a partnership (including a limited partnership) or joint venture, and that no Member be a partner or joint venturer of any other Member by virtue of this Agreement and neither this Agreement nor any other document entered into by the Company or any Member relating to the subject matter hereof shall be construed to suggest otherwise.

 

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ARTICLE II

CAPITAL CONTRIBUTIONS

Section 2.1.  Authorization and Issuance of Units .

(a) The Units which the Company has authority to issue consist of 10,000,000 Class A Common Units, 400,000 Class B Common Units and 600,000 Class C Common Units. Unless otherwise determined by the Board, Units issued hereunder shall not be certificated.

(b) Each Member has made to the Company a Capital Contribution in the amount listed on Schedule A . In exchange for their respective Capital Contributions, the Members received the number and classes of Units set forth opposite such Member’s name on Schedule A . The Officers shall amend and revise Schedule A from time to time to properly reflect any changes to the information included therein, including to reflect the admission or withdrawal of Members. Any amendment or revision to Schedule A hereto or to the Company’s records to reflect information regarding Members shall not be deemed an amendment to this Agreement

Section 2.2.  Additional Capital Contributions . No Member shall be obligated to make any additional Capital Contribution. No Member shall be permitted to make any additional Capital Contribution without the approval of the Board.

Section 2.3.  Additional Members . By approval of the Board of Representatives of the Company (the “ Board ”) in accordance with Section 3.3 and subject to Section 6.2, the Company is authorized to issue additional Membership Interests, Units or other economic interests in the Company (“ Additional Interests ”) to any Person in such amounts and on such terms as the Board may determine. Each Person who subscribes for any of the Additional Interests shall, by approval of the Board, pursuant to Section 3.3, be admitted as a Member of the Company at the time such Person (i) executes this Agreement or a counterpart of this Agreement or (ii) is named as a Member in a written agreement with the Company to such effect or in the permanent records of the Company, effective as of the earlier of such times. For the avoidance of doubt, the individuals identified in the Merger Agreement as receiving Exchange Units in the Merger shall automatically be deemed as of the Closing to be Management Members under this Agreement for all purposes, holding such number of Class A Common Units as is set forth opposite such Member’s name on the attached Annex A beside the heading “Exchange Units”, regardless of whether a written agreement regarding membership in the Company is executed by such Management Member.

Section 2.4.  No Withdrawal . No Person shall be entitled to withdraw any part of such Person’s Capital Contribution to receive any distribution from the Company, except as expressly provided herein.

Section 2.5.  Loans from Members . Loans by Members to the Company shall not be considered Capital Contributions. The amount of any such loans shall be a debt of the Company to such Member and shall be payable or collectible in accordance with the terms and conditions upon which such loans are made.

 

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Section 2.6.  No Cessation of Membership Upon Bankruptcy, etc . A Person shall not cease to be a Member of the Company upon the happening, with respect to such Person, of any of the events specified in §18-304 of the Act. Upon the occurrence of any event specified in §18-304 of the Act, the business of the Company shall be continued pursuant to the terms hereof without dissolution.

ARTICLE III

GENERAL GOVERNANCE AND MANAGEMENT

Section 3.1.  Purposes and Powers . The purpose of the Company is to engage in any lawful act or activity for which limited liability companies may be organized under the Act. The Company shall have the power and authority to take any and all actions necessary, appropriate, desirable, advisable, incidental or convenient to, or for the furtherance of, the purpose set forth in this Section 3.1, directly or indirectly through other Persons, alone or with others. Except as specifically provided otherwise in this Agreement, the management and control of the business and affairs of the Company shall to the maximum extent permitted under applicable Law be vested exclusively in the Board, which shall possess all rights and powers of managers as provided in the Act and otherwise by Law. Without limiting the generality of the foregoing, the Board, acting by majority consent, shall have sole discretion in determining whether to: (i) issue (A) Membership Interests in the Company, (B) obligations, evidences of indebtedness or other securities or interests convertible or exchangeable into equity interests in the Company and (C) warrants, options or other rights to purchase or otherwise acquire membership interests in the Company (the securities described in clauses (A) through (C), “ Equity Securities ”), the number of Equity Securities to be issued at any particular time, the value of the capital contribution or purchase price of any Equity Securities issued, and all other terms and conditions governing the issuance of Equity Securities; (ii) enter into, approve, and consummate any merger, consolidation, sale of all or any part of its assets, corporate conversion or other extraordinary transaction, and execute and deliver on behalf of the Company or its member any agreement, document and instrument in connection therewith (including amendments, if any, to this Agreement or adoptions of new constituent documents); (iii) amend this Agreement; and (iv) redeem or otherwise repurchase from time to time all or any portion of the Units held by one or more Members, in each case without the approval or consent of any Member of the Company. Except as otherwise expressly provided for herein, the Members hereby consent to the exercise by the Board of all such powers and rights conferred on them by the Act or otherwise by Law with respect to the management and control of the Company. No power delegated to the Board hereunder shall, merely because its exercise is authorized hereunder, be deemed to satisfy the duty of the Board to act in good faith. No Member and no Representative, in its capacity as such, shall have any power to act for, sign for, or do any act that would bind the Company.

Section 3.2.  Board of Representatives .

(a) Board . The Board shall consist of three, and, as of the Effective Time (as defined in the Merger Agreement) of the Merger, four representatives (the “Representatives”) elected by the affirmative vote of Members holding a majority of the outstanding Class A Common Units. The size and composition of the Board may be adjusted by the affirmative vote of Members holding a majority of the outstanding Class A Common Units. The Board shall initially consist

 

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of the following four Representatives heretofore appointed pursuant to the requisite approval of the holders of a majority of the outstanding Class A Common Units:

Neil Simpkins

Benjamin Jenkins

Michael Dal Bello

H. Lynn Massingale

provided that Dr. Massingale’s appointment as a Representative will only be effective from and as of the Effective Time of the Merger.

(b) Chairman and Lead Representative . A Chairman of the Board (the “ Chairman ”) and a Lead Representative (the “ Lead Representative ”) may, from time to time, be appointed by the Representatives from among themselves or any other member of the Board. The initial Chairman of the Board, from and after the Effective Time of the Merger, shall be H. Lynn Massingale. The Lead Representative of the initial Board shall be Neil Simpkins. The Chairman, if appointed, shall preside over meetings of the Board and shall otherwise have no greater authority than any other Representative. In the absence of the Chairman, the Lead Representative shall preside at all meetings of the Board. The Lead Representative, if appointed, shall have duties customarily performed by a “lead director” or “presiding director” and shall otherwise have no greater authority than any other Representative.

(c) Voting . Each Representative, including the Chairman and the Lead Representative, shall have a single vote. Except as otherwise required by Law, the affirmative vote of a majority of the Representatives in attendance at any meeting at which a quorum is present in accordance with Section 3.3(c) shall be required to authorize any action. Any vote, consent or other action of the Board may be undertaken by majority written consent (in lieu of meeting) of the Representatives, in each case who have been appointed and who are then in office.

(d) Proxies . Any Representative may vote at a meeting of the Board or any committee thereof either in person or by proxy executed in writing by such Representative. A telegram, telex, cablegram or similar transmission by the Representative, or a facsimile or similar reproduction of a writing executed by the Representative shall (if stated thereon) be treated as a proxy executed in writing for purposes of this Section 3.2(d). Proxies for use at any meeting of the Board or any committee thereof or in connection with the taking of any action by written consent shall be filed with the Board, before or at the time of the meeting or execution of the written consent, as the case may be. No proxy shall be valid after eleven months from the date of its execution unless otherwise provided in the proxy. A proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest.

(e) Removal; Replacement . Any Representative may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the Board. The acceptance by the Board of a resignation of any Representative shall not be necessary to make such resignation effective, unless otherwise specified in such resignation. Any Representative may be removed (with or without cause) from time to time and at any time by a vote of Members holding a majority of the

 

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outstanding Class A Common Units. Any vacancy on the Board in respect of a Representative may be filled by a vote of Members holding a majority of the outstanding Class A Common Units.

Section 3.3.  Meetings of the Board.

(a) Meetings . The Board shall meet at least quarterly, at such time and at such place as the Board may designate. Special meetings of the Board shall be held at the request of the Chairman or the Lead Representative upon at least five days (if the meeting is to be held in person) or three days (if the meeting is to be held telephonically) written notice to all of the Representatives, or upon such shorter notice as may be approved by all of the Representatives; provided that if the nature of the action to be taken is such that time is of the essence with respect to such action, such meeting may be held without such three days’ notice if at least one business day’s written notice has been given and (i) a good faith effort has been made to notify and consult with each of the Representatives entitled to vote on such action and (ii) a quorum exists for the taking of such action. Any Representative may waive the requirement of such notice as to itself, before, at or after the meeting. Any notice given pursuant to this Section 3.3(a) via electronic transmission (including e-mail if receipt of email is confirmed by recipient via email or otherwise) shall be deemed to have been given in writing.

(b) Conduct of Meetings . Any meeting of the Board may be held in person, telephonically or through other communications equipment by means of which all participating members of the Board can simultaneously hear each other during the meeting.

(c) Quorum . A majority of the Representatives who have been appointed pursuant to the provisions of this Agreement and who are then in office shall be necessary to constitute a quorum of the Board for purposes of conducting business.

(d) Consent in Lieu of Meeting . Any vote, consent or other action of the Board may be undertaken by majority written consent (in lieu of meeting) of the Representatives, in each case who has been appointed and who is then in office.

Section 3.4.  Payments to Representatives; Reimbursements . All Representatives will be entitled to reimbursement of their reasonable out-of-pocket expenses incurred in connection with their attendance at Board meetings and such reasonable and customary fees as may be authorized by the Board.

Section 3.5.  Board Committees . The Board may organize an Audit Committee, a Compensation Committee and such other committees of the Board as it deems reasonably necessary to effectively govern the Company. Except as may be required by applicable Law or any exchange or over the counter market on which the securities of the Company are listed or quoted, Parent shall have majority representation on all committees of the Board.

Section 3.6.  Member Action . Except as otherwise provided herein or in the Act, only the holders of Class A Common Units will be entitled to vote on any matters requiring a vote, consent or other action of the Members. Any action shall be authorized if the affirmative vote of the holders of a majority of the Class A Common Units present at a meeting at which a quorum is present shall be obtained. Any action which may be taken by the Members under this

 

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Agreement shall be authorized if consents in writing setting forth the action so taken are signed by Members who hold a majority of the Class A Common Units then outstanding. All Members who do not participate in taking the action by written consent shall be given written notice thereof by the secretary of the Company after such action has been taken. The presence in person or by proxy of the holders of a majority of the outstanding Class A Common Units shall be necessary to constitute a quorum for action by the Members. Whenever the giving of any notice to Members is required by Law or this Agreement, a waiver thereof, in writing and delivered to the Company signed by the Person or Persons entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance of a Member at a meeting or execution of a written consent to any action shall constitute a waiver of notice of such meeting or action.

Section 3.7.  Officers .

(a) Designation and Appointment . The Board may, from time to time, employ and retain Persons as may be necessary or appropriate for the conduct of the Company’s business (subject to the supervision and control of the Board), including employees, agents and other Persons (any of whom may be a Member or Representative) who may be designated as Officers of the Company, with titles including but not limited to “chief executive officer,” “president,” “vice chairman,” vice president,” “treasurer,” “secretary,” “general counsel,” “director,” “chief financial officer” and “chief operating officer” as and to the extent authorized by the Board. Any number of offices may be held by the same Person. In the Board’s discretion, the Board may choose not to fill any office for any period as it may deem advisable. Officers need not be residents of the State of Delaware or Members. Any Officers so designated shall have such authority and perform such duties as the Board may, from time to time, delegate to them. The Board may assign titles to particular Officers. Each Officer shall hold office until his successor shall be duly designated and shall have qualified as an Officer or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. The salaries or other compensation, if any, of the Officers of the Company shall be fixed from time to time by the Board.

(b) Resignation and Removal . Any Officer may resign as such at any time. Such resignation shall be made in writing and shall take effect at the time specified therein, or if no time is specified, at the time of its receipt by the Board. The acceptance by the Board of a resignation of any Officer shall not be necessary to make such resignation effective, unless otherwise specified in such resignation. Subject to the terms of any written employment agreement to the contrary, any Officer may be removed as such, either with or without cause, at any time by the Board. Designation of any Person as an Officer by the Board shall not in and of itself vest in such Person any contractual or employment rights with respect to the Company.

(c) Duties of Officers Generally . The Officers, in the performance of their duties as such, shall: (i) owe to the Company and the Members duties of loyalty and due care of the type owed by the officers of a corporation to such corporation and its stockholders under the Laws of the State of Delaware; (ii) keep the Board reasonably apprised of material developments in the business of the Company; and (iii) present to the Board, at least annually, a review of the Company’s performance, an operating budget for the Company, and a capital budget for the Company.

 

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(d) Chief Executive Officer . Subject to the powers of the Board, the chief executive officer of the Company shall be in general and active charge of the entire business and affairs of the Company, and shall be its chief policy making Officer.

(e) Vice Chairman . The Vice Chairman, or if there be more than one, then each of them, shall, subject to the powers of the Board and the chief executive officer of the Company, participate in the supervision of the business and affairs of the Company, and shall have such other powers and perform such other duties as may be prescribed by the chief executive officer or by the Board. A Vice Chairman need not be a member of the Board.

(f) President . The president of the Company shall, subject to the powers of the Board and the chief executive officer of the Company, have general and active management of the business of the Company, and shall see that all orders and resolutions of the Board are effectuated. The president of the Company shall have such other powers and perform such other duties as may be prescribed by the chief executive officer of the Company or by the Board.

(g) Chief Financial Officer . The chief financial officer of the Company shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Company, including accounts of the Company’s assets, liabilities, receipts, disbursements, gains, losses, capital and Units. The chief financial officer of the Company shall have custody of the funds and securities of the Company, keep full and accurate accounts of receipts and disbursements in books belonging to the Company, and deposit all moneys and other valuable effects in the name and to the credit of the Company in such depositories as may be designated by such officer. The chief financial officer of the Company shall have such other powers and perform such other duties as may from time to time be prescribed by the chief executive officer of the Company or by the Board.

(h) Vice President(s) . The vice president(s) of the Company shall perform such duties and have such other powers as the chief executive officer of the Company or the Board may from time to time prescribe. A vice president may be designated as an Executive Vice President, a Senior Vice President, an Assistant Vice President, or a vice president with a functional title.

(i) Secretary . The secretary of the Company shall, if requested by the Board, attend meetings of the Board, record all the proceedings of the meetings and perform similar duties for the committees of the Board when required. The secretary of the Company shall keep all documents as may be required under the Act. The secretary shall perform such other duties and have such other authority as may be prescribed elsewhere in this Agreement or from time to time by the chief executive officer of the Company or the Board. The secretary of the Company shall have the general duties, powers and responsibilities of a secretary of a Corporation. If the Board chooses to appoint an assistant secretary or assistant secretaries, the assistant secretaries, in the order of seniority, shall in the Company secretary’s absence, disability or inability to act, perform the duties and exercise the powers of the secretary of the Company, and shall perform such other duties as the chief executive officer of the Company or the Board may from time to time prescribe.

(j) Treasurer . The treasurer of the Company shall receive, keep, and disburse, or cause to be received, kept or disbursed, all moneys belonging to or coming to the Company. The

 

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treasurer of the Company shall prepare, or cause to be prepared, detailed reports and records of all expenses, losses, gains, assets, and liabilities of the Company as directed by the chief financial officer of the Company and shall perform such other duties in connection with the administration of the financial affairs of the Company as may from time to time be prescribed by the chief financial officer or the chief executive officer of the Company or by the Board.

Section 3.8.  Fiduciary Duties .

(a) General . Notwithstanding anything to the contrary in this Agreement or at Law or in equity, including but not limited to the Act, each Member agrees that any fiduciary duty imposed under Delaware Law (including the duty of loyalty and the duty of care) on Parent and the Representatives shall be defined, limited and eliminated as provided in this Section 3.8. For the avoidance of doubt, this Section 3.8 is not intended to create any duties on the part of any Member but shall also not be deemed to limit any duties which are otherwise imposed on such Member under Delaware Law or which are created pursuant to an express agreement with such Member.

(b) Certain Potential Conflicts . Each Member acknowledges that:

(i) Parent and its Affiliates may engage in material business transactions with the Company or its Subsidiaries; and

(ii) the directors, officers, and/or employees of Parent and its Affiliates may serve as directors, officers and/or employees of the Company or its Subsidiaries.

(c) Limitation of Liability . To the fullest extent permitted by Law, none of Parent or its Affiliates or any director, officer or employee of Parent or its Affiliates who may serve as an officer, director and/or employee of the Company or its Subsidiaries shall be liable to the Company or its Subsidiaries:

(i) by reason of any business decision or transaction undertaken by Parent or its Affiliates which may be adverse to the interests of the Company or its Subsidiaries;

(ii) by reason of any activity undertaken by Parent or its Affiliates or by any other Person in which Parent or its Affiliates may have an investment or other financial interest which is in competition with the Company or its Subsidiaries; or

(iii) by reason of any transaction of the Company or its Subsidiaries with Parent or its Affiliates, or any transaction of the Company or its Subsidiaries in which Parent or its Affiliates shall have a financial interest, unless the party seeking to assert such liability shall prove, by clear and convincing evidence, that such transaction was not fair to the Company or its Subsidiaries at the time it was authorized by the Board or a committee thereof.

Section 3.9.  Lack of Authority . No Member in its capacity as such has the authority or power to act for or on behalf of the Company in any manner, to do any act that would be (or could be construed as) binding on the Company or to make any expenditures on behalf of the Company, unless such specific authority has been expressly granted to such Member by the Board, and the Members hereby consent to the exercise by the Board and the Representatives of the powers conferred on them by Law and this Agreement.

 

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Section 3.10.  Withdrawal and Resignation of Members .

(a) No Member shall have the power or right to withdraw or otherwise resign as a Member from the Company prior to the dissolution of the Company pursuant to Article XI except as otherwise expressly permitted by this Agreement or any of the other agreements contemplated hereby. Upon a Transfer of all of a Member’s Units in a Transfer in accordance with the terms of this Agreement and any other agreement to which such Member is a party, such transferring Member shall cease to be a Member.

(b) Notwithstanding that a payment on account of a withdrawal may be made after the effective time of such withdrawal, any completely withdrawing Member will not be considered a Member for any purpose after the effective time of such complete withdrawal.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.1.  Units Unregistered . Each Member shall, upon admission as a Member, be deemed to hereby represent and warrant to, and agree with, the Company and the other Members that the following statements are true:

(a) Such Member is fully aware that the offering and sale of Units in the Company have not been and will not be registered under the Securities Act and are being made in reliance upon federal and state exemptions for transactions not involving a public offering and that the Member may not sell or otherwise transfer Units unless the Units are subsequently registered under the Securities Act and registered or qualified under applicable state securities laws, or unless an exemption is available that permits the sale or transfer without such registration and qualification.

(b) Such Member’s Units in the Company are being acquired for its own account solely for investment and not with a view to resale or distribution thereof.

(c) (i) Such Member’s financial condition is such that such Member can afford to bear the economic risk of holding its Units for an indefinite period of time; (ii) such Member can afford to suffer a complete loss of such Member’s investment in its Units; (iii) such Member understands and has taken cognizance of all risk factors related to the purchase of its Units; and (iv) such Member’s knowledge and experience in financial and business matters are such that such Member is capable of evaluating the merits and risks of purchasing its Units.

(d) Such Member has been given the opportunity to: (i) ask questions of, and receive answers from, the Company concerning the terms and conditions of the offering and sale of Units and other matters pertaining to an investment in the Company; and (ii) obtain any additional information which the Company can acquire without unreasonable effort or expense that is necessary to evaluate the merits and risks of an investment in the Company. In considering its investment in the Company, such Member has not relied upon any representations

 

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made by, or other information (whether oral or written) furnished by or on behalf of, the Company or any Representative, officer, employee, agent or Affiliate of such Persons, other than as set forth in this Agreement or any other Offering Document. Such Member has carefully considered and has, to the extent it believes such discussion necessary, discussed with legal, tax, accounting and financial advisers the suitability of an investment in the Company in light of its particular tax and financial situation, and has determined that an investment in the Company is a suitable investment for it.

(e) It is not a participant-directed defined contribution plan (such as a 401(k) plan).

(f) Such Member is not an ERISA Member (including an Individual Retirement Account) or, if it has disclosed to the Company in writing that it is an ERISA Member, then: (i) it has been informed of and understands the investment objectives and policies of, and the investment strategies that may be pursued by, the Company; (ii) it is aware of the provisions of Section 404 of ERISA relating to fiduciary duties, including the requirement for diversifying the investments of an employee benefit plan subject to ERISA; (iii) it has given appropriate consideration to the facts and circumstances relevant to the investment by such ERISA Member in the Company and has determined that such investment is reasonably designed, as part of such ERISA Member’s portfolio of investments, to further the purposes of the relevant plan(s); (iv) its investment in the Company is consistent with the requirements of Section 404 of ERISA; (v) it understands that current income will not be a primary objective of the Company; (vi) its investment in the Company is not a “prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Code; (vii) its investment in the Company is permissible under the documents governing the investment of its plan assets and under ERISA and the Code; and (viii) it is not relying and has not relied on the Company, any Representative, any Member or any of their Affiliates for any evaluation or other investment advice in respect of the advisability of an investment in the Company in light of the plan’s assets, cash needs, investment policies or strategy, overall portfolio composition or plan for diversification of assets.

(g) Such Member, if it is not an individual, is duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of organization or formation and the execution, delivery and performance by it of this Agreement is within its powers, has been duly authorized by all necessary corporate or other action on its behalf, requires no action by or in respect of, or filing with, any governmental body, agency or official, and does not and will not contravene, or constitute a default under, any provision of applicable law or regulation or of its certificate of incorporation or other comparable organizational documents or any agreement, judgment, injunction, order, decree or other instrument to which such Member is a party or by which such Member or any of its properties is bound. This Agreement constitutes a valid and binding agreement of such Member, enforceable against such Member in accordance with its terms.

(h) If such Member is an individual, the execution, delivery and performance by such Member of this Agreement is within such Member’s legal right, power and capacity, requires no action by or in respect of, or filing with, any governmental body, agency, or official, and does not and will not contravene, or constitute a default under, any provision of applicable law or regulation or of any agreement, judgment, injunction, order, decree or other instrument to which such Member is a party or by which such Member or any of his or her properties is bound. This Agreement constitutes a valid and binding agreement of such Member, enforceable against such Member in accordance with its terms.

 

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(i) The Company has advised such Member that the Units may be subject to restrictions on Transfer as set forth in this Agreement and that a restrictive legend in the form set forth in Section 5.4 shall be placed on the Unit Certificates.

(j) The foregoing representations, warranties and agreements shall survive the date of the Member’s admission to the Company.

(k) If any Units are to be disposed of in accordance with Rule 144 under the Securities Act or otherwise, such Member will promptly notify the Company of such intended disposition and will deliver to the Company at or prior to the time of such disposition such documentation as the Company may reasonably request in connection with such sale and, in the case of a disposition pursuant to Rule 144, will deliver to the Company an executed copy of any notice on Form 144 required to be filed with the SEC, if any.

Section 4.2.  Additional Representations of the Management Members . Each Management Member shall, upon admission as a Member, be deemed to hereby represent and warrant to, and agree with, the Company and the other Members that the following statements are true:

(a) Such Management Member has been advised by the Company that 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.

(b) Such Management Member acknowledges that 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 may have the right to repurchase some of such Member’s Units, to the extent they are not forfeited, at a price which may be less than the Fair Market Value thereof.

(c) Such Management Member has been furnished with and has carefully read copies of the Offering Documents. Such Management Member is as of the date of admission as a Member an employee of the Company or one of its subsidiaries and in such capacity has acquired an understanding of the Company and its business.

(d) If such Management Member is resident in a community property state, such Management Member’s spouse, if any, has duly executed or will duly execute the Consent of Spouse attached hereto as Exhibit A , and such Consent of Spouse was delivered as of the date of this Agreement, or, if later, the date such party became a party. Such Consent of Spouse was duly authorized, executed and delivered by such spouse and effectively binds such spouse to the terms set forth therein.

Section 4.3.  Company’s Right to Waive . Notwithstanding anything contained herein to the contrary, the Company in its sole discretion may waive the obligation of a Member to make any particular representation contained in this Article IV or may require that a Member make a separate representation in lieu of any particular representation.

 

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ARTICLE V

TRANSFERS

Section 5.1.  Transferee Agrees to Be Bound .

(a) No Transfer of Units by a Management Member shall be effective unless the Transferee: (A) agrees to be bound by the terms and conditions of, and agrees to make the representations, warranties and agreements set forth in, this Agreement as a Management Member, and agrees to be bound by any related agreements to which the Transferor of such Transferee previously agreed to be bound; and (B) executes a counterpart to this Agreement and such other documents or instruments as the Board may determine are necessary or appropriate to effect such Transferee’s admission as a Management Member (including such opinions, instruments and other documents evidencing compliance with applicable exemptions from the registration and reporting requirements of the Securities Act, the Exchange Act, applicable state securities Laws and the Investment Company Act of 1940, as amended); provided that this Section 5.1(a) shall not apply (i) from and after the six-month anniversary of a Qualified IPO, to Transfers of Units made in compliance with the requirements of Rule 144 of the Securities Act, (ii) to Transfers of Registrable Securities pursuant to Article VIII, or (iii) to Transfers of Units pursuant to Section 6.1. For the avoidance of doubt, no such Transfer shall be permitted without the prior written consent of the Board if it would require the Company to register the Units under the Securities Act, the Exchange Act, applicable state securities Laws or the Investment Company Act of 1940, as amended.

(b) No holder of Units shall grant any proxy or become party to any voting trust or other agreement that is inconsistent with, conflicts with or violates any provision of this Agreement.

(c) Equity Incentive Units shall be subject to such additional restrictions on Transfer as are set forth in the applicable Award Agreement.

Section 5.2.  Void Transfers . Any Transfer or attempted Transfer of any Units in violation of any provision of this Agreement shall be null and void, and the Company shall not record such Transfer on its books or, to the fullest extent permitted by Law, treat any purported Transferee of such Transferee as the owner thereof for any purpose.

Section 5.3.  Successors and Substitute Members . Upon the bankruptcy, termination, liquidation or dissolution of a Member which is a partnership, trust, corporation, limited liability company or other entity or the bankruptcy, death or incapacity of a Member who is an individual, the estate or successor in interest of such Member shall thereupon succeed only to the rights of such Member to receive distributions hereunder (but not the other rights hereunder) and may become a substitute Member only upon the approval of the Board.

 

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Section 5.4.  Certificates; Legend .

(a) In the event the Units are certificated, each Unit shall be evidenced by a certificate (a “ Unit Certificate ”) in substantially the form of Exhibit B attached hereto. Each Unit Certificate shall be stamped or otherwise imprinted with a legend in substantially the following form, or such similar legend as may be specified in any other agreement with the Company:

“THE LIMITED LIABILITY COMPANY UNITS REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ SECURITIES ACT ”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE LIMITED LIABILITY COMPANY UNITS ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE LIMITED LIABILITY COMPANY UNITS MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

THE LIMITED LIABILITY COMPANY UNITS REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN TRANSFER AND OTHER RESTRICTIONS SET FORTH IN THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, DATED AS OF NOVEMBER 22, 2005 AND OTHER AGREEMENTS AMONG THE ISSUER OF THESE LIMITED LIABILITY COMPANY UNITS AND CERTAIN OF ITS MEMBERS, AS THEY MAY BE AMENDED FROM TIME TO TIME, AND, AMONG OTHER THINGS, MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH SUCH TRANSFER RESTRICTIONS. COPIES OF SUCH AGREEMENTS ARE ON FILE WITH THE SECRETARY OF THE ISSUER 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 PROVISIONS OF THE AFORESAID AGREEMENTS.”

(b) The Company shall maintain all records for the exchange and registration of Units, including all forms of transfer for Units, and shall:

(i) keep at its principal place of business a register (the “ Register ”) in such form as it may determine, in which, subject to such reasonable regulations as it may prescribe, it shall provide for the registration of Unit Certificates and of Transfers thereof;

 

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(ii) ensure that all requests for Transfers of Units in compliance with this Agreement are appropriately recorded and accompanied by a written instrument of Transfer; and

(iii) ensure that the original issue date of each Unit is appropriately recorded.

(c) Notwithstanding anything contained herein to the contrary, the Company shall not be required to ascertain whether any transfer or exchange of Units complies with the registration provisions or exemptions from the Securities Act, the Exchange Act, applicable state securities Laws or the Investment Company Act of 1940, as amended.

(d) Prior to due presentment of a Unit for registration or Transfer, the Company, or any agent, manager or Officer of the Company, may treat the Person in whose name such Unit is registered as the owner of the Unit for the purpose of receiving distributions pursuant to this Agreement and for all other purposes whatsoever, and the Company shall not be affected by notice to the contrary.

(e) In the event Units are certificated, if (i) any mutilated Unit Certificate is surrendered to the Company, or (ii) the Company receives evidence to its satisfaction of the destruction, loss or theft of any Unit Certificate, together with indemnity or security sufficient to hold it harmless, the Company shall execute, and upon its written request the Company shall authenticate and deliver, in exchange for any such mutilated Unit Certificate or in lieu of any such destroyed, lost or stolen Unit Certificate, a new Unit Certificate of like tenor and principal amount, bearing a number not contemporaneously outstanding. Upon the issuance of any new Unit Certificate under this Section 5.4(e), the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses in connection therewith. The provisions of this Section 5.4(e) are exclusive and shall preclude (to the extent permissible under applicable Law) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Unit Certificates.

Section 5.5.  Right of First Refusal .

(a) Until the six-month anniversary of a Qualified IPO (the “ ROFR Period ”), the Company and the holders of Units shall have a right of first refusal with respect to any proposed Transfer of Units by any Management Members (each a “ Transferring Member ”), and any Transferring Member must first comply with the provisions of this Section 5.5.

(b) At any time a Transferring Member proposes to make a bona fide Transfer of Units during the ROFR Period (other than Transfers of Registrable Securities pursuant to Article VIII), and such Transferring Member has received a bona fide arm’s length commitment (the “ Offer ”) pursuant to a definitive purchase agreement executed by the prospective purchaser (subject to only customary conditions and not including any financing condition) to purchase all or any portion of its Units (the “ Offered Units ”) for an all cash purchase price (subject to no post-Transfer adjustments) from an identified Person (the “ Offeror ”) with readily available financing which the Transferring Member wishes to accept, such Transferring Member shall deliver all written agreements relating to such Offer to the Company and all other holders of Units (the “ Offerees ”) and shall notify the Company and the Offerees in writing of its wish to accept the Offer (the “ Offering Notice ”).

 

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(c) Offering Notice . The Offering Notice shall contain an irrevocable offer to sell the Offered Units to the Company, and, if the Company does not elect to accept such Offer by the end of the Company Option Period referred to below, to the Offerees ( pro rata in accordance with the number of Units held by each) at a cash price equal to the price contained in, and otherwise on the same terms and conditions of, the Offer and shall be accompanied by a copy of all written agreements relating to such Offer (and identifying the Offeror), including a copy of the definitive fully-executed purchase agreement and satisfactory evidence of the ready availability of financing.

(d) Company and Offeree Options; Exercise .

(i) For a period of 60 days after the date upon which the Company shall have received the Offering Notice (the “ Company Option Period ”), the Company shall have the right to elect to purchase all (but not less than all) of the Offered Units at the same cash price and on the same terms and conditions as the Offer. If the Company does not elect to purchase all of the Offered Units by the end of the Company Option Period, then, for a period of 60 days after the earlier of (x) date upon which the Company elects not to purchase all the Offered Units pursuant to the preceding sentence and (y) the expiration of the Company Option Period (the “ Offeree Option Period ”), each Offeree shall have the right to elect to purchase its pro rata portion (and each Offeree may offer to purchase more than such pro rata portion in the event that other Offerees do not elect to purchase their pro rata portion) of the Offered Units at the same cash price and on the same terms and conditions as the Offer, provided that such elections shall not be effective unless such Offerees, in the aggregate, have elected to purchase all (but not less than all) of the Offered Units. In the event that Offerees, in the aggregate, offer to purchase more than the number of Offered Units, the Offered Units shall be allocated amongst the electing Offerees based on the number of Units then held by each such Offeree.

(ii) The right of the Company to purchase the Offered Units under Section 5.5(d)(i) shall be exercisable by delivering written notice of the exercise thereof, prior to the expiration of the Company Option Period, to the Transferring Member. The failure of the Company to deliver such a notice to the Transferring Member within the Company Option Period shall be deemed to be a waiver of the Company’s rights under Section 5.5(d)(i). The right of the Offerees to purchase the Offered Units under Section 5.5(d)(i) shall be exercisable by the Offerees by delivering written notices of the exercise thereof with respect to all of the Offered Units, prior to the expiration of the Offeree Option Period, to the Transferring Member. The failure of the Offerees to deliver the requisite notices to the Transferring Member within the Offeree Option Period shall be deemed to be a waiver of the Offerees’ rights under Section 5.5(d)(i).

 

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(e) Closing . The closing of the purchase of Offered Units subscribed for by the Company or the Offerees under Section 5.5(d) shall be held at the executive office of the Company at 11:00 a.m., local time, no later than (x) 60 days after either the Company’s or the Offerees’ election (as applicable) to purchase all the Offered Units pursuant to Section 5.5(d) is delivered to the Transferring Member, or at such other time and place as the parties to the transaction may agree; provided that if such sale is subject to any prior regulatory approval, then such 60-day period shall be extended until the expiration of ten days after all such approvals shall have been received, but in no event shall such period be extended for more than an additional 60 days without the consent of the Transferring Member. At such closing, the Transferring Member shall take all steps necessary to record the Transfer of, or deliver certificates representing, the Offered Units, duly endorsed for transfer and accompanied by all requisite transfer taxes, if any, and such Offered Units shall be free and clear of any liens, and the Transferring Member shall so represent and warrant, and shall further represent and warrant that it is the sole beneficial and record owner of such Offered Units with the full right, power and authority to convey the Offered Units to the Company or the Offerees (as applicable). The Company or each of the electing Offerees (as applicable) shall deliver at the closing payment in full in immediately available funds for the Offered Units purchased by it. At such closing, all of the parties to the transaction shall execute such additional documents as are otherwise reasonably necessary or appropriate.

(f) Sale to the Offeror . If neither the Company nor the Offerees elect to purchase all of the Offered Units under Section 5.5(d), or if either the Company or the requisite Offerees do so elect but the regulatory approvals necessary to consummate such purchase are not obtained within the time periods referred to in Section 5.5(e), then in either such case the Transferring Member may sell all (but not less than all) of the Offered Units to the Offeror on terms and conditions no less favorable to the Transferring Member than those set forth in the definitive purchase agreement; provided , however , that such sale is bona fide; and provided , further , that such sale shall not be consummated unless and until (A) such Offeror shall represent in writing to the Company that it is aware of the rights and obligations of the Company and the other holders of Units contained in this Agreement and (B) prior to the purchase by such Offeror of such Offered Units, such Offeror shall become a party to this Agreement and shall agree to be bound by the terms and conditions hereof to the same extent as the Transferring Member. If such sale is not consummated within 60 days after the expiration of the Offeree Option Period (or, in the event that an election has been made by the Company or the Offerees but the necessary regulatory approvals are not obtained, the expiration of the time periods referred to in Section 5.5(e)) for any reason, then the restrictions provided for herein shall again become effective, and no Transfer of such Offered Units may be made thereafter by the Transferring Member without again complying with this Section 5.5; provided that if such sale is subject to any prior regulatory approval, then such 60-day period shall be extended until the expiration of ten days after all such approvals shall have been received, but in no event shall such period be extended for more than an additional 60 days without the consent of the Company.

 

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ARTICLE VI

CERTAIN PROVISIONS APPLICABLE TO MANAGEMENT MEMBERS

Section 6.1.  Company Call Option .

(a) If a Management Member’s Services to the Company and its Subsidiaries terminate for any reason (a “ Termination Event ”), to the extent that any Equity Incentive Units are not forfeited pursuant to the terms hereof or of the relevant award agreement(s) (which may include provisions of an employment agreement to which the Company is a party) between such Management Member and the Company granting such Equity Incentive Units (such agreement, the “ Award Agreement ”), the Company shall have the right but not the obligation to purchase, from time to time after such Termination Event, for a period of 120 days following the date of termination of such Management Member’s Services (the “ Call Option Period ”), the Equity Incentive Units held by such Management Member. To exercise such purchase right with respect to a Management Member, the Company shall deliver to such Management Member prior to the expiration of the Call Option Period a written notice specifying the number and class of Units with respect to which the Company has elected to exercise such purchase right, whereupon such Management Member shall be required to sell to the Company, the Equity Incentive Units specified in such notice, at a price per Equity Incentive Unit equal to the applicable purchase price determined pursuant to Section 6.1(c).

(b) If, upon expiration of the Call Option Period, the Company has not purchased all of a terminated Management Member’s Equity Incentive Units which are Vested Units and are not forfeited pursuant to the terms hereof or of the applicable Award Agreement, the Company shall, on or before the expiration of the Call Option Period, provide written notice to Parent of (i) its decision not to purchase some or all of such Equity Incentive Units and (ii) the number and class of such Equity Incentive Units which the Company did not purchase, and Parent shall have the right to purchase all or a portion of such remaining Equity Incentive Units which are Vested Units at a price per Equity Incentive Unit equal to the applicable purchase price determined pursuant to Section 6.1(c). Parent’s rights to purchase such Equity Incentive Units and such Management Member’s corresponding obligation to sell such Equity Incentive Units shall terminate on the 30th day following the expiration of the Call Option Period. If Parent elects to exercise such purchase right, it shall provide written notice to the Company prior to the 30th day following the expiration of the Call Option Period specifying that the number and class of such Equity Incentive Units it wishes to purchase. Upon receipt of Parent’s notice, the Company will notify such Management Members of Parent’s election and such Management Member will be obligated to sell to Parent the number of such Equity Incentive Units covered by Parent’s notice.

(c) Upon a termination of a Management Member’s Services to the Company and its Subsidiaries for any reason other than a termination by the Company for Cause, any Equity Incentive Units held by such Management Member which are Unvested Units shall be forfeited without any payment therefor (other than reimbursement of any taxes theretofore paid by such Management Member as a result of, and which are directly attributable to, the grant of such Equity Incentive Units to such Management Member to the extent provided and in accordance with the terms of the relevant Award Agreement). Upon a termination of a Management Member’s Services by the Company for Cause, any Equity Incentive Units held by such Management Member which are Vested Units or Unvested Units shall be forfeited without any

 

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payment therefor. Upon a termination of a Management Member’s Services to the Company for any reason other than a termination by the Company for Cause, to the extent that any Equity Incentive Units which are Vested Units are not forfeited pursuant to the terms of the applicable Award Agreement, the purchase price for the Equity Incentive Units which are Vested Units will be the Fair Market Value determined, in the case of a purchase by the Company pursuant to Section 6.1(a), as of the date on which the Company exercised its call right pursuant to Section 6.1(a) or, in the case of a purchase by Parent pursuant to Section 6.1(b), as of the 30th day following the expiration of the applicable Call Option Period (such date, the “ Call Price Determination Date ”).

(d) The closing of the purchase of the Equity Incentive Units pursuant to Section 6.1(a) or 6.1(b) shall occur at such time and place as the parties to such purchase shall agree, and in any event within 45 days of the Call Price Determination Date; provided that if such purchase is subject to any prior regulatory approval, then such 45-day period shall be extended until the expiration of ten days after all such approvals shall have been received; provided , further , that if all such approvals are not obtained within 120 days of the expiration of such 45-day period, then the provisions of this Section 6.1 shall terminate and be of no further force and effect with respect to such Equity Incentive Units. At such closing, the Management Member shall take all steps necessary to record the Transfer of Units, or shall deliver Unit Certificates, representing such Equity Incentive Units, duly endorsed for transfer and accompanied by all requisite transfer taxes, if any, and such Equity Incentive Units shall be free and clear of any liens, and the Management Member selling such Equity Incentive Units shall so represent and warrant, and shall further warrant that it is the sole beneficial and record owner of such Equity Incentive Units with the full right, power and authority to convey such Equity Incentive Units to the purchaser. At such closing, all of the parties to the transaction shall execute such additional documents as are otherwise necessary or appropriate. The Equity Incentive Units may be purchased:

(i) by delivery of funds deposited into an account designated by the Management Member selling such Equity Incentive Units, a bank cashier’s check, a certified check or a company check of the purchaser for the purchase price; or

(ii) if the purchaser is the Company and is prohibited from paying cash by any financing arrangements of the Company, by a Subordinated Note of the Company with a principal amount equal to the applicable purchase price. A “Subordinated Note” of the Company means a subordinated promissory note of the Company payable in one installment on the second anniversary of the closing of the purchase and bearing interest at a rate per annum equal to 10%, compounded quarterly, and containing subordination language acceptable to the Company’s senior and subordinated lenders, and if any such lenders prohibit payment on such note at its scheduled maturity, the Subordinated Note will then bear interest at a rate per annum equal to 12%, compounded quarterly, and the Company will pay principal and interest on such note at the earliest time such payments are so permitted.

The Company shall notify the Management Members in writing of the method by which it has elected to purchase the Equity Incentive Units at least 10 days prior to the closing of such purchase.

 

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(e) Notwithstanding anything to the contrary elsewhere herein, the Company shall not be obligated to purchase any Equity Incentive Units at any time pursuant to this Section 6.1, regardless of whether it has delivered a notice of its election to purchase any such Equity Incentive Units:

(i) to the extent that the purchase of such Equity Incentive Units (together with any other purchases of Equity Incentive Units pursuant to this Section 6.1, 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) would result (x) in a violation of any Law or (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;

(ii) if immediately prior to such purchase of Equity Incentive Units, 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 Equity Incentive Units.

The Company shall within 15 days of learning of any such fact so notify the Management Members in writing that it is not obligated to purchase such Equity Incentive Units, whereupon Sections 6.1(b) and 6.1(c) shall apply to such Equity Incentive Units as if the Company had never delivered a notice electing to purchase such Equity Incentive Units (except that each reference to “the 30th day following the expiration of the Call Option Period” in Section 6.1(b) shall be deemed a reference to “the 30th day following the delivery by the Company of the notice referred to in Section 6.1(e)” and the definition of “Call Price Determination Date” shall be deemed modified in a corresponding manner).

(f) Fair Market Value for the Equity Incentive Units to be purchased under this Section 6.1 will be determined by the Board or the compensation committee of the Board in good faith based upon the value of the Company as a whole taking into account all factors that the Board or the compensation committee reasonably deems relevant (including the order and priority of distributions set forth in Section 9.2 and the lack of liquidity of the Units due to the Company’s status as a privately held company). If the relevant Management Member disagrees with the Board’s determination of Fair Market Value, he or she may require the Company to retain an Independent Appraiser to determine the Fair Market Value (it being understood that the Independent Appraiser shall be instructed in its determination of Fair Market Value to apply any discount applicable pursuant to the preceding sentence). The determination of Fair Market Value by the Independent Appraiser shall be final and binding upon the Company and such Management Member. The Company will bear the cost of such appraisal unless the Fair Market Value as determined by the Independent Appraiser is less than 110% of the Board’s determination of Fair Market Value pursuant to the first sentence of this paragraph, in which case the Management Member and the Company will each bear one half of the cost of the appraisal. Notwithstanding the foregoing, following a Qualified IPO, Fair Market Value for any Equity Incentive Units that were distributed in such Qualified IPO for purposes of this Section 6.1 shall in all cases be based on the Public Security FMV.

 

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Section 6.2.  Pre-Emptive Rights .

(a) If, at any time prior to an initial Public Offering, the Company issues any equity securities (collectively, the “ Offered Securities ”) for cash, the Management Members owning Class A Common Units (the “ Pre-Emptive Rights Holders ”) shall have a preemptive right to purchase or subscribe for the number or amount of such Offered Securities in the offering as they may elect to purchase or subscribe for, up to such Management Member’s Ownership Percentage (determined as of the time of the approval of such issuance) of the total number or amount of Offered Securities proposed to be issued. The Company shall provide each Pre-Emptive Rights Holder with notice of a proposed issuance subject to this preemptive right at least 10 days prior to such issuance specifying the number of or amount of such Offered Securities and proposed terms of such issuance. If a Pre-Emptive Rights Holder exercises its right, it shall be required to pay the same consideration for each Offered Security as the Company shall receive for each Offered Security purchased by a Person other than a Pre-Emptive Rights Holder and as the Company shall have specified in its notice of the proposed issuance. The preemptive right given by the Company pursuant to this Section 6.2(a) shall terminate as to each Pre-Emptive Rights Holder if such Pre-Emptive Rights Holder shall not have notified the Company in writing of its election to exercise such right within 10 days after receipt of the notice of the proposed issuance; provided that such right shall become available once again if the price or any other material term of the proposed issuance shall change, in which case the parties shall again follow the procedures set forth in this Section 6.2(a).

(b) The preemptive rights under Section 6.2(a) shall not apply to the following: (i) securities issued to officers, employees or directors of, or consultants or advisors to, the Company or its Subsidiaries pursuant to profit sharing, management option or other management incentive plans, including any issuance of the Equity Incentive Units; (ii) securities issued to non-Affiliates of the Company pursuant to any merger, consolidation, acquisition of assets or businesses or similar transaction, or in exchange for non-cash consideration; (iii) securities issued pursuant to a Unit split or Unit dividend; (iv) securities issued pursuant to the exercise of any option, warrant or convertible security; (v) securities issued pursuant to a Public Offering; (vi) securities issued in connection with third-party debt financing; or (vii) securities issued to the Company or any of its Subsidiaries.

ARTICLE VII

CONVERSION

Section 7.1.  Conversion to Corporation . Without limiting the generality of the Board’s authority with respect to the management and control of the Company as set forth in Section 3.1, in connection with any contemplated Public Offering, the Board, acting by majority consent and without the approval or consent of any Member of the Company, shall have the sole discretion to cause the conversion of the Company into a Delaware corporation by filing with the Secretary of State of the State of Delaware a certificate of conversion pursuant to the Act and the Delaware General Corporation Law (such resulting new entity, the “ Corporation “, and such transaction, a “ Corporate Conversion “). It is intended that any such conversion shall be done in

 

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a manner that maintains the “recapitalization accounting” treatment applicable to the Merger and the Company; provided that the Board may, in its sole discretion, elect to effect such a conversion in a manner which does not maintain the “recapitalization accounting”. Any Corporate Conversion may include causing an exchange of each Unit for common stock or other Securities of a newly formed corporation on such terms as the Board in its good faith judgment may determine in such a manner as it deems reasonable and using all factors, information and data deemed to be pertinent. Each Member hereby consents to the exercise by the Board of the authority to cause a Corporate Conversion, to the conversion of Units of any class into such Securities as the Board determines and to become party to such shareholders’, registration rights or similar agreements and documents as the Board determines is appropriate to preserve generally the substance of the agreements of the Members provided in this Agreement. Each Member hereby agrees that as of the effective date of such conversion, any Units outstanding thereafter which s