Exhibit 10.2

EXECUTION VERSION

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY

OPERATING AGREEMENT

of

ALBANY SAFRAN COMPOSITES, LLC

Dated as of November 8, 2013

THE SECURITIES ISSUED PURSUANT TO THIS LIMITED LIABILITY COMPANYO PERATING
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS AND, AS
SUCH, THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED, OR
HYPOTHECATED UNLESS THE SECURITIES HAVE BEEN QUALIFIED AND REGISTERED UNDER
APPLICABLE STATE AND FEDERAL SECURITIES LAWS OR UNLESS SUCH QUALIFICATION AND
REGISTRATION IS NOT LEGALLY REQUIRED. TRANSFER OF THE SECURITIES REPRESENTED BY
THIS AGREEMENT MAY BE FURTHER SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS
SET FORTH HEREIN.

 

 

TABLE OF CONTENTS

    Page   ARTICLE I DEFINITIONS   Section 1.01. Certain Definitions 2 Section
1.02. Other Interpretive Provisions 15       ARTICLE II ORGANIZATIONAL MATTERS  
Section 2.01. Formation of the Company; Ratification 16 Section 2.02. Agreement;
Members 16 Section 2.03. Name of the Company 16 Section 2.04. Place of Business
17 Section 2.05. Registered Office and Registered Agent 17 Section 2.06.
Liability of Members 17 Section 2.07. Term of the Company 17 Section 2.08.
Purpose of the Company 17 Section 2.09. U.S. Tax Characterization of the Company
17       ARTICLE III CAPITAL CONTRIBUTIONS, MEMBERSHIP UNITS AND CAPITAL
ACCOUNTS   Section 3.01. Initial Capital Contributions and Membership Units 17
Section 3.02. Additional Capital Contributions 18 Section 3.03. Additional
Classes of Membership Units 18 Section 3.04. Additional Members 18 Section 3.05.
Voting Rights 19 Section 3.06. Capital Accounts 19 Section 3.07. Withdrawals;
Return of Capital 20 Section 3.08. No Deficit Restoration Obligation 20 Section
3.09. Working Capital 20       ARTICLE IV DISTRIBUTIONS AND ALLOCATIONS  
Section 4.01. Distributions 20 Section 4.02. Preferred Capital and Preferred
Return 21 Section 4.03. Restricted Distributions 21 Section 4.04. Withholding
and Payments on Behalf of a Member 21 Section 4.05. Offset 22 Section 4.06.
Allocation of Profits and Losses 22       ARTICLE V MANAGEMENT   Section 5.01.
Board of Managers 24 Section 5.02. Certain Matters Requiring Safran Manager
Approval 25 Section 5.03. Committees; Subsidiary Boards 27 Section 5.04.
Additional Management Provisions 27 Section 5.05. Meetings; Quorum; Notice;
Written Consent 27

 

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TABLE OF CONTENTS
(continued)

    Page     Section 5.06. Deadlock Events 28 Section 5.07. Quarterly Reports
and Review 28 Section 5.08. Review of Management Provisions 28 Section 5.09.
Business Plans 29 Section 5.10. Employee Transfers 30       ARTICLE VI OFFICERS
  Section 6.01. Designation; Term; Qualifications 30 Section 6.02. Officers 30
Section 6.03. Management Committee 31 Section 6.04. Removal and Resignation 31
Section 6.05. Vacancies 31       ARTICLE VII TRANSFER OF MEMBERSHIP UNITS  
Section 7.01. Limitations on Transfer 32 Section 7.02. Conditions to Transfer 33
Section 7.03. Permitted Transfers 33 Section 7.04. Rights and Obligations of
Transferees and Transferors 34 Section 7.05. Safran Option 35       ARTICLE VIII
COMPANY EXPENSES, BOOKS AND RECORDS, TAX MATTERS   Section 8.01. Fees and
Expenses 39 Section 8.02. Fiscal Year 39 Section 8.03. Inspection 39 Section
8.04. Financial Statements and Reports 40 Section 8.05. Tax Returns and Reports
40 Section 8.06. Tax Matters Partner 41       ARTICLE IX EXCULPATION AND
INDEMNIFICATION   Section 9.01. Exculpation 41 Section 9.02. Indemnification and
Expense Advancement 42 Section 9.03. Exclusivity 42 Section 9.04. Limitation on
Implied Duties 42       ARTICLE X DISSOLUTION, LIQUIDATION AND TERMINATION  
Section 10.01. Events Causing Dissolution 43 Section 10.02. Cancellation of
Certificate 44 Section 10.03. Liquidation 44 Section 10.04. Accounting on
Liquidation 44 Section 10.05. Return of Members’ Capital Contribution 44

 

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TABLE OF CONTENTS
(continued)

    Page     Section 10.06. Termination 44       ARTICLE XI REPRESENTATIONS,
WARRANTIES AND COVENANTS   Section 11.01. Representations and Warranties of the
Members 45 Section 11.02. Representations and Warranties of the Company 47
Section 11.03. Entitlement of the Company and the Members to Rely on    
Representations and Warranties 49 Section 11.04. Covenants of the Members 49
Section 11.05. Covenants of the Company 50       ARTICLE XII RESTRICTIVE
COVENANTS   Section 12.01. Exclusive Supplier to Safran 50 Section 12.02.
Non-Competition 51       ARTICLE XIII MISCELLANEOUS   Section 13.01. Notices 52
Section 13.02. Publicity and Confidentiality 52 Section 13.03. Amendments 53
Section 13.04. Governing Law; Jurisdiction 53 Section 13.05. Waiver of Jury
Trial 54 Section 13.06. Entire Agreement 54 Section 13.07. Other Instruments and
Acts 54 Section 13.08. Waivers 54 Section 13.09. Severability 54 Section 13.10.
Further Assurances 55 Section 13.11. No Partnership 55 Section 13.12.
Counterparts; Electronic Signatures 55 Section 13.13. Third Party Beneficiaries
55 Section 13.14. No Third Party Liability 55 Section 13.15. Binding Effect 55
Section 13.16. Specific Performance 55 Section 13.17. Time of the Essence 56
Section 13.18. Exculpation Among Members 56

 

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AMENDED AND RESTATED LIMITED LIABILITY COMPANY

OPERATING AGREEMENT

OF

ALBANY SAFRAN COMPOSITES, LLC

This AMENDED AND RESTATED LIMITED LIABILITY COMPANYO PERATING AGREEMENT (this
“Agreement”) of Albany Safran Composites, LLC, a Delaware limited liability
company (the “Company”), dated as of November 8, 2013, is entered into by and
among the Company and Albany Engineered Composites, Inc., a New Hampshire
corporation (“Albany”), Safran Aerospace Composites, Inc., a Delaware
corporation (“Safran”), and such other Members as may be listed on Schedule A
from time to time, as members of the Company (each, a “Member” and collectively,
the “Members”), and, solely with respect to its obligations under Section 3.09,
Section 12.02 and Article XIII, Albany International Corp., a Delaware
corporation (“Albany International”), and, solely with respect to its
obligations under Section 7.05(h), Section 7.05(i), Article XII and Article
XIII, Safran, S.A., a French société anonyme (“Safran S.A.”).

WITNESSETH:

WHEREAS, an authorized person executed and caused to be filed with the Secretary
of State of the State of Delaware the Certificate of Formation (as amended from
time to time, the “Certificate of Formation”) of the Company on May 22, 2013
(the “Formation Date”) in order to form a limited liability company pursuant to
the provisions of the Delaware Limited Liability Company Act, as amended from
time to time (the “Act”);

WHEREAS, Albany, as the initial member of the Company, entered into the Limited
Liability Company Operating Agreement of the Company, dated as of May 22, 2013
(the “Existing Agreement”);

WHEREAS, prior to the date of this Agreement (the “Agreement Date”), Albany
owned all of the Membership Units;

WHEREAS, the Members desire to cause the Company to engage in the Business;

WHEREAS, on or promptly following the Agreement Date, and from time to time
thereafter, Safran or one of its Affiliates, on the one hand, and the Company or
a Subsidiary of the Company, on the other hand, shall enter into such leases or
subleases, in such form as the parties thereto hereafter agree, as shall
reasonably be necessary for Safran and its Affiliates to make available to the
Company and its Subsidiaries such real property and facilities as shall
reasonably be necessary for the operation of the Business;

WHEREAS, pursuant to and in accordance with the Contribution Agreements, on or
prior to the Agreement Date, and effective as of 11:59pm local time on October
31, 2013 (the “Effective Time”), Safran S.A., on behalf of Safran, and Albany
have made certain contributions

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to the Company in exchange for Membership Units as set forth herein and in the
Contribution Agreements;

WHEREAS, pursuant to and in accordance with the Albany Contribution Agreement,
Albany has contributed 100% of the equity interests in Albany Engineered
Composites SAS, a société par actions simplifiée organized in France (“ASC
France”), to the Company, and ASC France has become a direct wholly owned
subsidiary of the Company;

WHEREAS, pursuant to and in accordance with the Albany Contribution Agreement,
Albany has assigned to the Company, and the Company has assumed and accepted,
all of Albany’s rights and obligations under the Long Term Supply Agreement;

WHEREAS, on or prior to the Agreement Date, and effective as of the Effective
Time, Albany and Safran have entered into the Intellectual Property Agreements
with the Company that provide for their respective rights and obligations
regarding the Albany Technology, the Safran Technology and the Company IP that
shall govern during and shall survive the term of this Agreement;

WHEREAS, on or prior to the Agreement Date, and effective as of the Effective
Time, Albany and the Company have entered into the Services Agreement, pursuant
to which Albany and its Affiliates, on the one hand, and the Company and its
Subsidiaries, on the other hand, shall provide certain services to each other;

WHEREAS, the Company desires to manufacture for and supply to Safran S.A. and
its Affiliates, and Safran S.A. and its Affiliates desire to procure from the
Company, Advanced Composite 3D Parts, in each case pursuant to and in accordance
with one or more present or future Industrial and Technical Agreements, Long
Term Supply Agreements, or other agreements or arrangements; and

WHEREAS, the Member who is party to the Existing Agreement desires to amend and
restate the Existing Agreement in its entirety in order to, among other things,
(i) admit Safran as a new Member; (ii) provide for the management of the
Company; and (iii) set forth the respective rights and obligations of Members of
the Company generally.

NOW, THEREFORE, in consideration of the mutual promises of the Parties, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is mutually agreed by and between the Parties as
follows:

ARTICLE I

DEFINITIONS

Section 1.01. Certain Definitions. As used in this Agreement, the following
terms have the following meanings:

“Act” has the meaning set forth in the recitals.

“Additional Capital Contribution” means any Capital Contribution made by any
Member on or after the Agreement Date, other than the Initial Capital
Contributions.

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“Advance Amount” has the meaning set forth in Section 4.04.

“Advanced Composite 3D Parts” means 3D woven preforms and resin-injected parts
made from 3D woven preforms.

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly Controls, is Controlled by, or is under common Control with, such
Person; provided, that (a) no Member or any of its Affiliates (excluding the
Company and its Subsidiaries) shall be deemed an Affiliate of the Company or any
of its Subsidiaries, and (b) neither the Company nor any of its Subsidiaries
shall be deemed an Affiliate of any Member or any of its Affiliates (excluding
the Company and its Subsidiaries).

“Affiliate Transferee” has the meaning set forth in Section 7.03(a).

“Agreed Space” means Advanced Composite 3D Parts for use in the Core Perimeter
and the Extended Perimeter, but excluding any military products of Safran S.A.
or any of its Affiliates that may not be sourced from the Company pursuant to
applicable Law; provided, that the Parties shall use commercially reasonable
efforts to obtain from the applicable Governmental Authority any consent,
approval, order, permit, license or authorization required by applicable Law to
allow such products to be sourced from the Company.

“Agreement” has the meaning set forth in the preamble.

“Agreement Date” has the meaning set forth in the recitals.

“Albany” has the meaning set forth in the preamble.

“Albany Contribution Agreement” means that certain Contribution Agreement, of
even date herewith, between the Company and Albany.

“Albany Facility” has the meaning set forth in the definition of Preferred
Return.

“Albany International” has the meaning set forth in the preamble.

“Albany International Board” has the meaning set forth in Section 7.05(a).

“Albany IPLA” means that certain Albany Intellectual Property License Agreement,
of even date herewith, by and among the Company and Albany.

“Albany Manager” has the meaning set forth in Section 5.01(b).

“Albany Officers” has the meaning set forth in Section 6.02(a).

“Albany Permitted Contract” has the meaning set forth in the Albany IPLA.

“Albany Software” has the meaning set forth in Section 7.05(d).

“Albany Technology” has the meaning set forth in the Albany IPLA.

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“Annual Business Plan” has the meaning set forth in Section 5.09(b).

“ASC France” has the meaning set forth in the recitals.

“Bankruptcy” has the meaning set forth in Section 10.01(c).

“Board” has the meaning set forth in Section 5.01(a).

“Business” means the design, development and manufacturing of Advanced Composite
3D Parts within the Agreed Space. For the avoidance of doubt, the Business does
not include (a) any application derived from composite technologies other than
3D-weaving for Advanced Composite 3D Parts or (b) any 3D-woven applications
outside of the Agreed Space.

“Business Day” means any day of the year on which national banking institutions
in New York, New York are open to the public for conducting business and are not
required or authorized to close.

“Calculation Date” means, in respect of any allocation or distribution
(including upon liquidation), the date on which such amounts are allocated or
distributed, as the case may be, by the Company.

“Capital Account” has the meaning set forth in Section 3.06(a).

“Capital Contribution” means, with respect to any Member, an amount of cash or
other consideration contributed by such Member to the Company.

“Cause” means, with respect to any employee or officer of the Company or any of
its Subsidiaries or any Manager, (a) undertaking a position in competition with
the Company, Albany or any of their respective Affiliates; (b) causing
substantial harm to the Company, Albany, Safran or any of their respective
Affiliates with intent to do so or as a result of gross negligence in the
performance of his or her duties; (c) wrongfully and substantially enriching
himself or herself at the expense of the Company, Safran, Albany or any of their
respective Affiliates; (d) the indictment of such employee, officer or Manager,
as applicable, or a plea of guilty or nolo contendere by such employee, officer
or Manager, as applicable, to any felony or other serious crime; or (e) failing
to perform the duties of such employee, officer or Manager, as applicable, in an
adequate and proper manner in accordance with the instructions communicated to
such individual by his or her direct supervisor, if any.

“Certificate of Formation” has the meaning set forth in the recitals.

“CFO” has the meaning set forth in Section 6.02(a). “Code” means the U.S.
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder. Any reference to a section of the Code shall include a reference to
any successor provision thereto.

“Common Capital” means, with respect to any Common Member, the amount designated
on Schedule B as Common Capital with respect to such Member.

“Common Member” means any Member that holds Common Membership Units, in such
Member’s capacity as a holder of such Membership Units.

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“Common Membership Units” has the meaning set forth in Section 3.01(a).

“Company” has the meaning set forth in the preamble.

“Company Technology” has the meaning set forth in the Intellectual Property
Agreements.

“Competing Assets” has the meaning set forth in Section 12.02.

“Competing Entity” has the meaning set forth in Section 12.02.

“Competitor” means a Person that manufactures gas turbine engines, rocket
engines or other products within the Agreed Space or significant systems or
sub-systems used in (a) gas turbine engines and rocket engines, (b) thrust
reversers and nacelle structures intended for use with gas turbine engines, (c)
aircraft landing and braking systems, and (d) other parts used by Safran S.A. or
any of its Affiliates to be agreed pursuant to the General Collaboration
Agreement.

“Contribution Agreements” means the Albany Contribution Agreement and the Safran
Contribution Agreement.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and
“Controlled” has a correlative meaning.

“Core Perimeter” means the specific 3D woven preform applications defined in any
and all Industrial and Technical Agreements executed by Safran S.A. or any of
its Affiliates and Albany International or any of its Affiliates pursuant to the
General Collaboration Agreement and elected by Albany International or Safran
S.A. pursuant to the exclusivity rules detailed in Article 4.1 of the General
Collaboration Agreement.

“Cumulative EBITDA” means the cumulated consolidated EBITDA of the Company and
its Subsidiaries realized over the last four (4) completed fiscal quarters
immediately preceding the Exercise Date.

“Deadlock Event” means (a) a failure to obtain the approval of the Board with
respect to any action listed in Section 5.02; (b) any dispute under the Albany
IPLA or the Safran IPLA; or (c) a dispute between Albany and Safran with respect
to any material business or management issue.

“Depreciation” means, for each Fiscal Year, an amount equal to the depreciation,
amortization, or other cost recovery deduction allowable with respect to a
depreciable or amortizable asset for such Fiscal Year for federal income tax
purposes, except that (a) with respect to any depreciable or amortizable asset
whose Gross Asset Value differs from its adjusted tax basis for federal income
tax purposes and which difference is being eliminated by use of the “remedial
allocation method” defined by Treasury Regulation Section 1.704-3(d),
Depreciation for such Fiscal Year shall be the amount of book basis recovered
for such Fiscal Year under the rules prescribed by Treasury Regulation Section
1.704-3(d)(2), and (b) with respect to any other depreciable or amortizable
asset whose Gross Asset Value differs from its adjusted basis for federal income
tax purposes at the beginning of such Fiscal Year, Depreciation shall be an

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amount that bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization, or other cost recovery deduction
for such Fiscal Year bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of a
depreciable or amortizable asset at the beginning of such Fiscal Year is zero
(0), Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the Board; provided,
further, that, notwithstanding anything to the contrary in this Agreement, with
respect to any Quarterly Performance Report, any Five Year Business Plan, any
Annual Business Plan, or any report to be provided by the Company pursuant to
Section 8.03 or Section 8.04 of this Agreement, Depreciation shall be determined
in accordance with GAAP.

“EBITDA” shall mean, for any period, (a) consolidated net income for such period
of the Company and its Subsidiaries without giving effect to (i) any
non-operating gain or loss, (ii) any gain or loss which results from currency
revaluation, (iii) any gains or losses from sales of assets other than inventory
sold in the ordinary course of business, (iv) any expenses related to
restructuring initiatives, and (v) any post-retirement employee benefit
expenses, plus (b) without duplication and in each case to the extent deducted
in determining consolidated net income for such period, the sum of the following
amounts for such period: (i) total interest expense of the Company and its
Subsidiaries determined on a consolidated basis for such period, (ii) provision
for Taxes based on income for the Company and its Subsidiaries determined on a
consolidated basis for such period, and (iii) all depreciation and amortization
expense related to tangible fixed assets and intangible assets of the Company
and its Subsidiaries determined on a consolidated basis for such period.

“Effective Time” has the meaning set forth in the recitals.

“Enterprise Value” has the meaning set forth in Section 7.05(c).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder.

“Excess Cash Flow” means, for any period, an amount equal to:

(a) the sum, without duplication, of:

(i) the after-Tax net income (or loss) of the Company and its Subsidiaries on a
consolidated basis during such period;

(ii) non-cash charges due to depreciation and amortization of the assets of the
Company or its Subsidiaries during such period;

(iii) the amount of any decreases in the amount of current assets (excluding
cash, cash equivalents and Permitted Investments) of the Company and its
Subsidiaries during such period; and

(iv) the amount of any increases in the amount of current liabilities of the
Company and its Subsidiaries during such period;

minus

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(b) the sum, without duplication, of:

(i) the amount of capital expenditures made in cash or accrued by the Company or
its Subsidiaries during such period;

(ii) the aggregate amount of payments by the Company and its Subsidiaries during
such period in respect of (A) any principal amount of Indebtedness (including
Intercompany Loans) and (B) the Preferred Return(except to the extent financed
with the proceeds of other Indebtedness of the Company or its Subsidiaries
incurred during such period); and

(iii) the amount of any increases in the amount of current assets (excluding
cash, cash equivalents and Permitted Investments) of the Company and its
Subsidiaries during such period; and

(iv) the amount of any decreases in the amount of current liabilities of the
Company and its Subsidiaries during such period.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations promulgated thereunder.

“Exercise Date” has the meaning set forth in Section 7.05(b).

“Existing Agreement” has the meaning set forth in the recitals.

“Existing Supply Agreement” means the agreement listed on Annex I.

“Extended Perimeter” means any Advanced Composite 3D Parts that employ the use
of any know-how, software or hardware needed to design, develop, manufacture or
repair a 3D woven preform and that are intended for use (a) within gas turbine
engines and rocket engines, (b) on thrust reversers and nacelle structures
intended for use with gas turbine engines, (c) on aircraft landing and braking
systems, and (d) other Parts used by Safran S.A. or any of its Affiliates to be
agreed pursuant to the General Collaboration Agreement.

“Fiscal Year” has the meaning set forth in Section 8.02.

“Five Year Business Plan” has the meaning set forth in Section 5.09(a).

“Formation Date” has the meaning set forth in the recitals.

“Formula B Enterprise Value” means (a) 9.5 multiplied by (b) (i) Cumulative
EBITDA minus (ii) the amount (if a positive number) obtained by multiplying (A)
12.5% by (B) the aggregate number of shipsets sold during the four (4) completed
fiscal quarters immediately preceding the Exercise Date by (C) (1) the actual
weighted average shipset cost during the four (4) completed fiscal quarters
immediately preceding the Exercise Date minus (2) an amount equal to the lowest
unitary shipset cost that triggers a 12.5% margin pursuant to the Long Term
Supply Agreement at the Target Price (as defined in the Long Term Supply
Agreement) then in effect; provided, that if the amount obtained from the
calculation in clause (b)(ii) is not a positive number, then the amount to be
subtracted from clause (b)(i) shall be zero (0). For purposes of

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illustration only, assuming a Target Price of $100,000 the amount referred to in
clause (b)(ii)(C)(2) above would be $106,400.

“Formula Change Date” shall mean the earliest of (a) December 31, 2022, (b) the
date on which the Company has attained an annual production rate of 1,200 LEAP
shipsets, (c) the date on which the Company has produced a cumulative total of
4,800 LEAP shipsets, and (d) the date on which the Company has attained
Cumulative EBITDA of $38,600,000.

“GAAP” means generally accepted accounting principles in the United States, as
in effect from time to time.

“General Collaboration Agreement” means that certain General Collaboration
Agreement, dated June 8, 2006, between Safran S.A., Albany and Albany
International, as it may be amended, modified or supplemented from time to time
in accordance with its terms.

“General Manager” has the meaning set forth in Section 6.02(a).

“Governmental Authority” means any government or political subdivision, whether
federal, state, local or foreign, or any agency or instrumentality of any such
government or political subdivision, or any federal, state, local or foreign
court or arbitrator, or any quasi-governmental authority of any nature.

“Gross Asset Value” means, with respect to any Property, the Property’s adjusted
basis for federal income tax purposes, except as follows:

(a) the initial Gross Asset Value of any Property contributed by a Member shall
be the gross fair market value of such Property, as agreed to by the Members;

(b) the Gross Asset Value of every item of Property shall be adjusted to equal
its respective gross fair market value (taking Section 7701(g) of the Code into
account) immediately prior to either (i) the acquisition of additional
Membership Units by any new or existing Member in exchange for more than a de
minimis Capital Contribution, (ii) the distribution by the Company to a Member
of more than a de minimis amount of Property as consideration for Membership
Units, or (iii) the liquidation of the Company within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(g); provided, however, that the adjustments
pursuant to clauses (i) and (ii) above shall be made only if the Board
reasonably determines that such adjustments are necessary or appropriate to
reflect the relative economic interests of the Members in the Company;

(c) the Gross Asset Value of any item of Property to be distributed to any
Member shall be adjusted to equal the gross fair market value (taking Section
7701(g) of the Code into account) of such item immediately before the
distribution of such Property; and

(d) the Gross Asset Values of each item of Property shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Section 734(b) or Section 743(b) of the Code, but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulation

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Section 1.704-1(b)(2)(iv)(m) and subparagraph (f) of the definition of “Profits
and Losses”; provided, however, that Gross Asset Values shall not be adjusted
pursuant to this subparagraph (d) to the extent that an adjustment pursuant to
subparagraph (b) is required in connection with a transaction that would
otherwise result in an adjustment pursuant to this subparagraph (d).

If the Gross Asset Value of an item of Property has been determined or adjusted
pursuant to subparagraphs (a), (b) or (d), such Gross Asset Value shall
thereafter be adjusted by the Depreciation taken into account with respect to
such asset for purposes of computing Profits and Losses.

“Head of Engineering” has the meaning set forth in Section 6.02(a).

“HR Director” has the meaning set forth in Section 6.02(b).

“Indebtedness” means, with respect to any Person, the aggregate amount, without
duplication, of (a) all obligations of such Person for borrowed money of any
kind, including Intercompany Loans, overdraft, revolving line of credit, bank
debt, structured financing, finance leases, short or long term asset-backed
financing schemes (at carrying value) with the exception of operating leases,
plus any accrued interest, capitalized interest, or arrears relating to any of
such Indebtedness, (b) all obligations of such Person evidenced by ordinary or
convertible bonds, debentures, notes or similar instruments, (c) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any lien or
encumbrance created over property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed, (d) all guarantees by
such Person of Indebtedness of others, (e) dividends declared by such Person but
not paid, (f) any payables, including trade payables and accrued expenses,
overdue by more than 90 days less any unreserved for trade accounts receivable
overdue by more than 90 days, (g) all non-operating expenses provided for on the
balance sheet and that will materialize in cash outflows in the future, other
than trade payables and accrued expenses incurred in the ordinary course of
business, including any installment payment related to a litigation or other
settlement of claims, and any other unpaid portion of non-operating expenses
incurred by the Company and its Subsidiaries but excluded from EBITDA, and (h)
the unfunded portion of all post-retirement employee benefit obligations;
provided, that the term “Indebtedness” shall not include (i) deferred or prepaid
revenue, (ii) purchase price holdbacks in respect of a portion of the purchase
price of an asset to satisfy warranty or other unperformed obligations of the
seller, (iii) obligations secured by a Permitted Lien or (iv) for the avoidance
of doubt, any preferred equity interests issued by such Person (including, in
the case of the Company, the Preferred Membership Units). The amount of
Indebtedness of any Person for purposes of clause (c) above shall (unless such
Indebtedness has been assumed by such Person) be deemed to be equal to the
lesser of (A) the aggregate unpaid amount of such Indebtedness and (B) the fair
market value of the property encumbered thereby as determined by such Person in
good faith.

“Indemnified Person” has the meaning set forth in Section 9.01(a).

“Initial Capital Contribution” has the meaning set forth in Section 3.01(c).

“Intellectual Property Agreements” means the Albany IPLA and the Safran IPLA.

9

 

“Intercompany Loans” has the meaning set forth in Section 3.09.

“Investment Company Act” means the Investment Company Act of 1940, as amended
from time to time, and the rules and regulations promulgated thereunder.

“ITAR” means the International Traffic in Arms Regulations maintained by the
U.S. Department of State.

“Law” means any law, statute, code, ordinance, regulation or rule of any
Governmental Authority.

“Long Term Supply Agreement” means that certain Long Term Supply Agreement,
dated October 28, 2011, between Snecma, a French société anonyme, and Albany
(which agreement has been assigned by Albany to the Company as of the Effective
Time pursuant to the Albany Contribution Agreement), as it may be amended,
modified or supplemented from time to time in accordance with its terms.

“Management Committee” has the meaning set forth in Section 6.03.

“Manager” has the meaning set forth in Section 5.01(b).

“Material Indebtedness” means any indebtedness of the Company or its
Subsidiaries for borrowed money from third parties in aggregate principal amount
in excess of $1,000,000; provided, that Material Indebtedness shall not include
(a) any indebtedness of the Company or its Subsidiaries in respect of any
Intercompany Loan or (b) any indebtedness contemplated by the Five Year Business
Plan or by the Annual Business Plan for the then-current Fiscal Year; provided,
further, that a series of related transactions structured to avoid meeting the
definition of Material Indebtedness shall be deemed to be Material Indebtedness
if such series of transactions would otherwise meet the definition of Material
Indebtedness by considering such series of transactions in the aggregate as a
single transaction.

“Material Milestones” has the meaning set forth in Section 5.09(b).

“Material Transaction” means any acquisition, sale, transfer, assignment,
conveyance or other disposition (including in connection with the settlement of
any lawsuit or administrative proceeding against the Company or any Subsidiary
of the Company) of property or assets (including any corporation, partnership,
limited liability company, other business organization or division thereof) for
a purchase price or yielding gross proceeds in excess of $1,000,000, other than
(a) any sale of products in the ordinary course of business and (b) any
transaction pursuant to the Five Year Business Plan or the Annual Business Plan
for the then-current Fiscal Year; provided, further, that a series of related
transactions structured to avoid meeting the definition of Material Transaction
shall be deemed to be a Material Transaction if such series of transactions
would otherwise meet the definition of Material Transaction by considering such
series of transactions in the aggregate as a single transaction.

“Member” has the meaning set forth in the preamble.

“Membership Units” means membership interests in the Company, including Common
Membership Units and Preferred Membership Units. Each Membership Unit

10

 

represents a limited liability company interest with the rights, powers and
preferences provided in this Agreement and by the Act.

“Moody’s” means Moody’s Investors Service, Inc. and any successors thereto.

“Net Indebtedness” means, as of any date, the Indebtedness of the Company and
its Subsidiaries, minus cash (excluding Restricted Cash), cash equivalents and
Permitted Investments of the Company and its Subsidiaries.

“Non-U.S. Person” has the meaning set forth in Section 11.01(e)(i).

“Part” means any type of resin transfer molded part that employs the use of one
or more 3D woven preforms and has the same end use as a part used by Safran S.A.
or any of its Affiliates.

“Party” means each of Albany, Albany International, Safran and Safran S.A.
(collectively, the “Parties”).

“Percentage Interest” means, with respect to any Common Member, the number of
Common Membership Units owned by such Common Member and its Affiliates divided
by the total number of outstanding Common Membership Units multiplied by 100%.

“Permitted Investments” means:

(a) direct obligations of, or obligations the principal of and interest on which
are unconditionally guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed by the full faith and
credit of the United States of America), in each case maturing within one (1)
year from the date of acquisition thereof;

(b) investments in commercial paper maturing within 270 days from the date of
acquisition thereof and having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody’s;

(c) investments in certificates of deposit, bankers’ acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000; and

(d) shares of money market mutual or similar funds that invest exclusively in
assets satisfying the requirements of clauses (a) through (c) above.

“Permitted Liens” means (a) defects, easements, rights of way, restrictions,
irregularities, encumbrances (other than for borrowed money) on title and
statutory liens that do not materially impair the value or use by the Company or
any of its Subsidiaries of the real property rights affected, (b) liens,
deposits or pledges to secure statutory obligations relating to worker’s
compensation and/or unemployment insurance or other social security legislation,
(c) liens, deposits or pledges arising out of judgments or awards so long as
enforcement of any such

11

 

lien has been stayed and an appeal or proceeding for review is being prosecuted
in good faith, or in connection with which security has been provided, (d)
liens, deposits or pledges for taxes not yet due or that are being contested in
good faith by appropriate proceedings or are bonded or reserved, (e) carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, supplier’s,
construction, employees’, contractors’, operators’ or other similar liens or
charges securing the payment of expenses not yet due and payable that were
incurred by the Company or any of its Subsidiaries in the ordinary course of
business or which are the subject of a good faith contest or for which security
for such lien has otherwise been provided, (f) trade contracts or other
obligations of a like nature incurred in the ordinary course of business, (g)
obligations or duties to any Governmental Authority arising in the ordinary
course of business (including under licenses and permits held and under all
applicable laws, rules, regulations and orders of any Governmental Authority),
(h) liens, deposits or pledges to secure statutory obligations or performance of
bids, leases, tenders or contracts incurred in the ordinary course of business
(other than for the repayment of borrowed money) and (i) all other encumbrances
and exceptions that are incurred in the ordinary course of business, are not
incurred for borrowed money, not to exceed $1,000,000 in the aggregate.

“Permitted Transfer” means a Transfer of Membership Units in accordance with
Section 7.03(a) or Section 7.03(b).

“Person” means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, governmental entity or any other entity.

“Preferred Capital” means, with respect to any Preferred Member, the sum of (i)
the amount designated on Schedule B as Preferred Capital with respect to such
Preferred Member and (ii) any accrued and unpaid Preferred Return thereon.

“Preferred Member” means any Member that holds Preferred Membership Units, in
such Member’s capacity as a holder of such Membership Units.

“Preferred Membership Units” shall have the meaning set forth in Section
3.01(a). The Preferred Membership Units shall only have the economic rights
designated herein and shall have no voting or other governance rights in the
Company.

“Preferred Return” means, with respect to each Preferred Member, cumulative
payments for each Fiscal Year or portion thereof during which such Preferred
Member’s Preferred Membership Units are outstanding determined by multiplying
(A) the Preferred Capital of the Preferred Member for such Fiscal Year times (B)
a rate per annum equal to the average per annum rate paid by such Preferred
Member under its primary U.S. revolving credit facility (“Primary Facility”)
plus 1.00%, computed on the basis of the actual number of days elapsed during
the Fiscal Year or portion thereof over a three hundred sixty (360) day year. In
the event that Albany is a Preferred Member, its Primary Facility shall mean
that $330,000,000 Five-Year Revolving Credit Facility Agreement among Albany
International Corp., the other Borrowers named therein, the Lenders party
thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, JPMorgan Chase
Bank, N.A., Toronto Branch, as Canadian Agent and J.P.Morgan Europe Limited, as
London Agent, dated as of March 26, 2013, or any successor or replacement
facility,

12

 

in each case as the same may be amended from time to time (such facility, the
“Albany Facility”).

“Primary Facility” has the meaning set forth in the definition of Preferred
Return.

“Profits and Losses,” means, for each Fiscal Year, an amount equal to the
Company’s taxable income or loss for such Fiscal Year, determined for federal
income tax purposes, with the following adjustments (without duplication):

(a) any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses pursuant to this
definition of “Profits” and “Losses” shall be added to such taxable income or
loss;

(b) any expenditures of the Company described in Section 705(a)(2)(B) of the
Code or treated as Section 705(a)(2)(B) of the Code expenditures pursuant to
Treasury Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into
account in computing Profits or Losses pursuant to this definition of “Profits”
and “Losses” shall be subtracted from such taxable income or loss;

(c) in the event the Gross Asset Value of any item of Property is adjusted
pursuant to subparagraphs (b) or (c) of the definition of Gross Asset Value, the
amount of such adjustment shall be treated as an item of gain (if the adjustment
increases the Gross Asset Value of the item of Property) or an item of loss (if
the adjustment decreases the Gross Asset Value of the item of Property) from the
disposition of such item of Property and shall be taken into account for
purposes of computing Profits or Losses;

(d) gain or loss resulting from any disposition of Property with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the Property disposed of,
notwithstanding that the adjusted tax basis of such Property differs from its
Gross Asset Value;

(e) in lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Fiscal Year, computed in
accordance with the definition of “Depreciation”;

(f) to the extent an adjustment to the adjusted tax basis of any item of
Property pursuant to Section 734(b) of the Code is required, pursuant to
Treasury Regulation Section 1.704-(b)(2)(iv)(m)(4), to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Member’s Membership Units, the amount of such adjustment shall
be treated as an item of gain (if the adjustment increases the basis of the item
of Property) or loss (if the adjustment decreases such basis) from the
disposition of such item of Property and shall be taken into account for
purposes of computing Profits or Losses; and

(g) notwithstanding any other provision of this definition, any items that are
specially allocated pursuant to Section 4.06(b) shall not be taken into account
in computing Profits or Losses.

13

 

“Property” means all real and personal property (whether tangible or intangible)
owned by the Company, including (a) cash, (b) current assets (such as accounts
receivable) (c) contract rights, (d) investments (such as stocks, securities,
notes, bonds, debentures, derivative financial instruments, and other similar
financial assets), and (e) any improvements to real or personal property.

“Quarterly Performance Report” has the meaning set forth in Section 5.07.

“Quarterly Review” has the meaning set forth in Section 5.07.

“Restricted Cash” means cash of the Company and its Subsidiaries that the
Company and its Subsidiaries are restricted from using, such as amounts
deposited in escrow or for a specified purpose, for so long as such cash is
subject to release only at the order of a person other than the Company and its
Subsidiaries.

“S&P” means Standard & Poor’s or any successor thereto.

“Safran” has the meaning set forth in the preamble.

“Safran Authorized Agent” has the meaning set forth in Section 13.04(b).

“Safran Call Right” has the meaning set forth in Section 7.05(a).

“Safran Contribution Agreement” means that certain Contribution Agreement, of
even date herewith, between the Company, Safran and Safran S.A.

“Safran IPLA” means that certain Intellectual Property License Agreement, of
even date herewith, between the Company and Safran S.A.

“Safran Put Right” has the meaning set forth in Section 7.05(a).

“Safran Option” has the meaning set forth in Section 7.05(a).

“Safran Manager” has the meaning set forth in Section 5.01(b).

“Safran Permitted Contract” has the meaning set forth in the Safran IPLA.

“Safran S.A.” has the meaning set forth in the preamble.

“Safran Technology” has the meaning set forth in the Safran IPLA.

“Safran USA” means Safran USA, Inc.

“Securities Act” means the U.S. Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.

“Senior Representative” has the meaning set forth in Section 5.06.

“Services Agreement” means that certain Services Agreement, of even date
herewith, by and between Albany and the Company.

14

 

“Subsidiary” of any Person means any Person (a) of which a majority of the
outstanding voting securities or other voting equity interests are owned,
directly or indirectly, by such first Person or (b) with respect to which such
Person or any of its Subsidiaries is a general partner or managing member.

“Tax” or “Taxes” means any and all taxes, charges, fees, levies, assessments,
duties or other amounts payable to any federal, state, local or foreign taxing
authority or agency, including: (a) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and gains taxes; (b) customs, duties, imposts, charges, levies or other
similar assessments of any kind; and (c) interest, penalties and additions to
tax imposed with respect thereto.

“Tax Matters Partner” has the meaning set forth in Section 8.06.

“Technology” means the Albany Technology and the Safran Technology. “Termination
Date” has the meaning set forth in Section 10.06(a).

“Transaction Documents” has the meaning set forth in Section 11.02(a).

“Transfer” means a direct or indirect transfer, sale, exchange, assignment,
pledge, hypothecation or other encumbrance or other disposition of any
Membership Units, whether directly or indirectly, whether voluntarily,
involuntarily or by operation of law.

“Transferred”, “Transferring”, “Transferee” and “Transferor” shall each have a
correlative meaning to the term “Transfer.”

“Treasury Regulations” means the regulations promulgated by the U.S. Department
of the Treasury under the Code, as amended from time to time (including any
successor regulations).

“Triggering Event” has the meaning set forth in Section 7.05(a).

Section 1.02. Other Interpretive Provisions. (a) The meanings of defined terms
are equally applicable to the singular and plural forms of the defined terms.

(b) The words “hereof”, “herein”, “hereunder” and similar words refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
subsection, Section, Exhibit, Schedule and Annex references are to this
Agreement unless otherwise specified.

(c) The term “including” is not limiting and means “including without
limitation.”

(d) The terms “or”, “either”, and “any” shall not be exclusive.

(e) Any reference in this Agreement to dollars or $ shall mean U.S. dollars.

15

 

(f) The captions and headings of this Agreement are for convenience of reference
only and shall not affect the interpretation of this Agreement.

(g) Any reference in this Agreement to Schedule A, Schedule B, Annex I, Annex
II, or Annex III shall be deemed to be a reference to Schedule A, Schedule B,
Annex I, Annex II, or Annex III, as applicable, of this Agreement as such
Schedule or Annex may be amended in accordance with this Agreement and is in
effect from time to time.

(h) Whenever the context requires, any pronouns used herein shall include the
corresponding masculine, feminine or neuter forms.

(i) Except (A) as otherwise expressly provided herein, (B) to the extent not
applicable or (C) as required for income Tax purposes, all terms of an
accounting or financial nature shall be construed in accordance with GAAP.

ARTICLE II

ORGANIZATIONAL MATTERS

Section 2.01. Formation of the Company; Ratification. The Members hereby:

(a) approve and ratify the filing of the Certificate of Formation with the
Secretary of State of the State of Delaware on the Formation Date and all
actions taken by or on behalf of the Company on or prior to the Agreement Date;
and (b) confirm and agree to their status as Members of the Company as set forth
herein.

Section 2.02. Agreement; Members.

(a) This Agreement is adopted by the Members and hereby amends and restates the
Existing Agreement in its entirety, in each case effective as of the Effective
Time.

(b) The Members agree to continue the Company as a limited liability company
under the Act, upon the terms and subject to the conditions set forth in this
Agreement, as amended from time to time. The Members hereby agree that during
the term of the Company, the rights, duties and obligations of the Members with
respect to the Company will be determined in accordance with the terms and
conditions of this Agreement and the Act.

(c) The name and mailing address of each Member is set forth on Schedule A. The
Board or any officer of the Company shall amend Schedule A and Schedule B from
time to time as necessary to ensure the accuracy of the information required to
be included therein in accordance with the terms hereof.

Section 2.03. Name of the Company. The name of the Company is “Albany Safran
Composites, LLC”. The business of the Company may be conducted under such name
or any other name permitted by the Act as the Board may determine from time to
time.

16

 

Section 2.04. Place of Business. The Company shall have its principal office at
85 Innovation Drive, Rochester, New Hampshire 03867 or such other place or
places as the Board may deem appropriate, and may establish such other offices
or places of business for the Company as the Board may deem appropriate.

Section 2.05. Registered Office and Registered Agent. The registered office of
the Company in the State of Delaware is Corporation Service Company, 2711
Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware 19808.
The registered agent for service of process of the Company at such address is
Corporation Service Company.

Section 2.06. Liability of Members. Except as otherwise provided in this
Agreement or the Act, the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and the Members shall have no
obligation whatsoever for any such debt, obligation or liability of the Company
solely by reason of being a Member. The failure of the Company to observe any
formalities or requirements relating to the exercise of its power or management
of its business or affairs under the Act or this Agreement shall not be grounds
for imposing personal liability on the Members for any debts, obligations or
liabilities of the Company.

Section 2.07. Term of the Company. The existence of the Company commenced on the
Formation Date and shall continue until dissolution thereof in accordance with
the provisions of this Agreement.

Section 2.08. Purpose of the Company. The purpose of the Company is to engage in
the Business and in any other lawful act or activity to which the Members may
agree in accordance with Section 5.02(k), either directly or indirectly through
one or more Subsidiaries or other entities in which it holds an equity interest.

Section 2.09. U.S. Tax Characterization of the Company. The Members intend that
the Company is, and will continue to be, classified as a partnership for U.S.
federal, state and local income tax purposes and neither the Company nor any
Member shall make any election to the contrary. The Company shall file an
election under Section 754 of the Code if requested by the Board.

ARTICLE III

CAPITAL CONTRIBUTIONS,
MEMBERSHIP UNITS AND CAPITAL ACCOUNTS

Section 3.01. Initial Capital Contributions and Membership Units.

(a) The Company shall have two (2) classes of Membership Units: (i) common
interests with the rights and conditions as set forth in this Agreement (the
“Common Membership Units”) and (ii) preferred interests with the rights and
conditions as set forth in this Agreement (the “Preferred Membership Units”).

17

 

(b) On or prior to the Agreement Date, and effective as of the Effective Time,
(i) Albany has (A) made a Capital Contribution of certain property to the
Company and the Company has assumed certain liabilities of Albany, in each case
pursuant to and in accordance with the Albany Contribution Agreement and (B)
licensed the Albany Technology to the Company pursuant to the Albany IPLA; and
(ii) Safran has (A) made a Capital Contribution, in cash, to the Company,
pursuant to and in accordance with the Safran Contribution Agreement and (B)
licensed the Safran Technology to the Company pursuant to the Safran IPLA.

(c) The value and form of each Member’s initial Capital Contribution, as well as
the amount of Preferred Capital and/or Common Capital it represents, is set
forth opposite such Member’s name on Schedule B (such Capital Contribution, with
respect to each Member (as applicable), being hereinafter referred to as the
“Initial Capital Contribution”) and, in consideration thereof, effective as of
the Effective Time, the Company hereby issues to each such Member the number of
Common Membership Units and/or Preferred Membership Units set forth opposite
such Member’s name on Schedule B and hereby admits each such Person as a Member
hereunder. Schedule B incorporates and supersedes any and all interests of
Albany pursuant to the Existing Agreement and any Capital Contributions which
may have been made pursuant to the Existing Agreement.

Section 3.02. Additional Capital Contributions.

(a) No Member shall be obligated to make any Additional Capital Contribution to
the Company; provided, that the foregoing sentence shall not limit (i) the
obligations of Albany to make any Intercompany Loan pursuant to Section 3.09,
(ii) the obligations of Albany as provided in the Albany Contribution Agreement,
and (iii) the obligations of Safran as provided in the Safran Contribution
Agreement.

(b) Any Member may make Additional Capital Contributions to the Company and the
Company shall issue in exchange therefor a number of Membership Units determined
by the Board; provided, that prior to any such Additional Capital Contribution,
issuance of Membership Units or any action by a Member that would change any
other Member’s Percentage Interest, the Company shall have received the written
consent of each such other Member (such consent to be delivered or withheld in
such other Member’s sole discretion).

(c) The Board or any officer of the Company shall amend Schedule B, from time to
time, to reflect any Additional Capital Contributions made in accordance with
this Section 3.02.

Section 3.03. Additional Classes of Membership Units. Subject to Section
5.02(c), the Company may issue one or more additional classes of Membership
Units. The Board shall determine the terms and conditions applicable to such new
Membership Units and, subject to Section 13.03, shall be permitted to amend this
Agreement to reflect the issuance of such new class or classes of Membership
Units and the terms and conditions applicable thereto.

Section 3.04. Additional Members. Subject to Section 3.02, Section 5.02(c) and
Article VII, the Board may admit one or more additional Members to the Company
on such terms and conditions as the Board may determine. An additional Member
admitted to the Company pursuant to this Section 3.04 shall (a) execute a
counterpart to this Agreement and

18

 

deliver such documents as may be necessary, in the reasonable opinion of the
Board, to make such Person a party hereto and (b) if so required by the Board,
make a Capital Contribution to the Company in an amount determined by the Board.
The Board or any officer of the Company shall amend Schedule A and Schedule B,
as applicable, to reflect the admission of any additional Members.

Section 3.05. Voting Rights. Subject to the terms of any other class of
Membership Units, the Company may issue pursuant to Section 3.03, each Member
shall be entitled to one (1) vote per Common Membership Unit held by such Member
in all matters submitted to the Members for a vote, except as required by the
Act or this Agreement (including Section 5.02).

Section 3.06. Capital Accounts. (a) The Company shall maintain a separate
capital account (each, a “Capital Account”) for each Member in accordance with
the following provisions:

(i) Each Member’s Capital Account shall be increased by the amount of any cash
and the Gross Asset Value of any other Property contributed to the Company by
such Member (net of liabilities secured by contributed Property that the Company
is considered to assume or take subject to under Section 752 of the Code), any
Company Profits allocated to such Member pursuant to Section 4.06(a)(i), any
Company income and gain allocated to such Member pursuant to Section 4.06(b),
and the amount of any Company liabilities assumed by such Member or secured by
any Company assets distributed to such Member.

(ii) Each Member’s Capital Account shall be decreased by the amount of cash and
the gross fair market value (as determined by the Board) of any other Company
Property distributed to such Member pursuant to any provision of this Agreement,
any Losses allocated to such Member pursuant to Section 4.06(a)(ii), (including
the Member’s share of expenditures described in Treasury Regulation Section
1.704-1(b)(2)(iv)(i)), any deductions and losses allocated to such Member
pursuant to Section 4.06(b) and the amount of any liabilities of such Member
assumed by the Company or secured by any Member assets contributed by such
Member.

(iii) In the event all or any portion of a Member’s Membership Units are
Transferred in accordance with the terms of this Agreement, the Transferee shall
succeed to the Capital Account of such Member to the extent such Capital Account
relates to the Transferred Membership Units.

(b) The foregoing provisions and the other provisions of this Agreement relating
to the maintenance of Capital Accounts are intended to comply with Treasury
Regulations issued under Section 704(b) of the Code and shall be interpreted and
applied in a manner consistent with such Treasury Regulations. The Board shall
be authorized to make appropriate amendments to the allocations of items
pursuant to this Section 3.06 if necessary in order to comply with Section 704
of the Code or applicable Treasury Regulations thereunder; provided, that no
such change shall have an adverse effect upon amounts distributable to any
Member pursuant to Section 4.01 or Section 10.03.

19

 

Section 3.07. Withdrawals; Return of Capital. Except as expressly provided in
this Agreement, including in Article IV and Article X, no Member shall have any
right to (a) withdraw as a Member from the Company, (b) withdraw from the
Company all or any part of such Member’s Capital Account or its Capital
Contributions, (c) a return of its Capital Contributions or Capital Account or
the payment of interest thereon from the Company or from another Member or (d)
receive any distribution from the Company.

Section 3.08. No Deficit Restoration Obligation. At no time during the term of
the Company or upon dissolution or liquidation thereof shall a Member with a
negative balance in its Capital Account have any obligation to the Company or
the other Members to restore such negative balance, except as may be required by
non-waivable provisions of applicable Law.

Section 3.09. Working Capital. So long as Albany International or any of its
Affiliates shall be a Member of the Company, Albany International shall be
responsible for providing, or causing Albany or its Affiliate Transferees or any
of their respective Affiliates to provide, the Company and its Subsidiaries with
operating cash in amounts reasonably required by the Company and its
Subsidiaries for the operation of the Business by the Company and its
Subsidiaries as determined by the Board. The Members acknowledge and agree that
Albany International shall provide, or cause one of its Affiliates to provide,
such operating cash by means of interest-bearing intercompany loans in exchange
for a demand note from the Company (such loans, the “Intercompany Loans”). Such
Intercompany Loans shall bear interest at a rate per annum not to exceed the
average per annum rate paid under the Albany Facility plus 1.00%, computed on
the basis of the actual number of days elapsed during the Fiscal Year or portion
thereof over a three hundred sixty (360) day year. All obligations under the
Intercompany Loans shall become immediately due and payable upon the exercise of
the Safran Call Right and as otherwise set forth in the note issued in respect
of the applicable Intercompany Loan; provided, that, in the event that the
Safran Call Right is exercised pursuant to Section 7.05(a)(ii) or Section
7.05(a)(vi), all obligations under the Intercompany Loans shall become due and
payable thirty (30) days after the exercise of the Safran Call Right. So long as
Albany International or any of its Affiliates shall be a Member of the Company,
Albany International shall ensure and guarantee that Albany or its Affiliate
Transferees shall have sufficient capitalization at all times during the Term
necessary to perform their respective duties and satisfy their respective
obligations under this Agreement.

ARTICLE IV

DISTRIBUTIONS AND ALLOCATIONS

Section 4.01. Distributions. (a) Notwithstanding anything to the contrary in
this Agreement, the Company shall not make any distributions until all
obligations under all outstanding Intercompany Loans have been satisfied in full
(including payment of all accrued interest thereon).

(b) The Board shall determine on an annual basis the Excess Cash Flow, if any,
available for distributions. Subject to Section 4.01(a), Section 4.02, and
Section 5.02(i), the rights of any Membership Units issued pursuant to Section
3.03, and the maintenance by the Company of appropriate reserves (as determined
by the Board), the Company may make cash

20

 

distributions to the Members, in such aggregate amount, if any, as the Board
shall determine; provided, that in no event shall the aggregate amount of
distributions made by the Company in any Fiscal Year exceed the Excess Cash Flow
as determined by the Board for the applicable Fiscal Year. Any such cash
distributions shall be made in the following order of priority: (i) first, to
the Preferred Members, pro rata in accordance with their respective ownership of
the Preferred Membership Units, until Preferred Capital for all Preferred
Membership Units has been repaid in full; (ii) thereafter, to the Common
Members, pro rata in accordance with their respective Percentage Interests.

Section 4.02. Preferred Capital and Preferred Return.

(a) The Preferred Capital shall become immediately due and payable upon the
exercise of the Safran Call Right, and in any event no later than ten (10) years
after the issuance of the Preferred Membership Units to which such Preferred
Capital relates (or such later date as agreed by the Company and the Preferred
Members); provided, that, in the event that the Safran Call Right is exercised
pursuant to Section 7.05(a)(ii) or Section 7.05(a)(vi), all Preferred Capital
shall become due and payable thirty (30) days after the exercise of the Safran
Call Right.

(b) Upon the indefeasible payment in full pursuant to this Article IV or Section
7.05(d) of all Preferred Capital with respect to any Preferred Membership Unit,
such Preferred Membership Unit shall immediately terminate and be cancelled and
the Preferred Member holding such Preferred Membership Unit shall have no
further rights or obligations hereunder in respect of such Preferred Membership
Unit, except for any rights of indemnification or other claims accruing prior to
such date or which by their terms survive such termination and cancellation.

Section 4.03. Restricted Distributions. Notwithstanding anything to the contrary
contained herein, the Company, and the Board on behalf of the Company, shall not
make a distribution to any Member on account of its Membership Units if such
distribution would violate the Act or other applicable Law.

Section 4.04. Withholding and Payments on Behalf of a Member. The Company is
hereby authorized to withhold from distributions, and to make payments on behalf
of a Member, in its capacity as such, of all amounts that the Company is
required by Law to withhold or pay on behalf of such Member (including for the
purposes of federal, state and local income tax withholding, state and local
personal property taxes and state and local unincorporated business taxes, or
any similar Taxes imposed by any non-U.S. Taxing authority with respect to
amounts distributable to a Member). All amounts withheld by the Company from
distributions or paid by the Company on behalf of a Member pursuant to this
Section 4.04 shall be deemed to have been distributed to the Member otherwise
entitled to receive the amount so withheld or on whose behalf the amount was
paid. In the event the Board reasonably determines that the Company is required
to withhold an amount from distributions to any Member, the Company shall notify
such Member of such withholding obligation and cooperate with such Member in
reducing the amount to be withheld or eliminating the requirement to withhold
such amounts, to the extent the Board or the Company can do so without
unreasonable efforts or expense (including any potential liability to a Taxing
authority for any such claimed withholding or interest and penalties related
thereto). Each Member hereby agrees, to the extent permitted by applicable state
and federal Law, to reimburse the Company for any liability with respect to

21

 

withholdings required on behalf of or with respect to such Member. If, pursuant
to this Section 4.04, the Company makes a payment on behalf of a Member or
otherwise withholds from distributions to a Member an amount in excess of the
amount available for distribution to such Member pursuant to Section 4.01 (the
amount of any such payment or such shortfall with respect to each Member being
hereinafter referred to as the “Advance Amount”), the Company may take any of
the following actions upon obtaining approval of the Board thereto (excluding,
for purposes thereof, the vote of any such Member subject to such
determination): (a) require that each such Member contribute an amount in cash
to the Company equal to such Member’s Advance Amount plus a commercially
reasonable rate of interest thereon (such payment not to constitute a Capital
Contribution hereunder) or (b) reduce the amount of any subsequent distributions
(or any proceeds such Member may receive under Section 10.03) which would
otherwise have been made to such Member by the Advance Amount plus a
commercially reasonable rate of interest thereon.

Section 4.05. Offset. Whenever the Company is to distribute or pay any sum to
any Member pursuant to any provision of this Agreement, any amounts such Member
owes the Company or any of its Subsidiaries or Affiliates (whether pursuant to
this Agreement or otherwise), as determined by the Board, may be deducted from
such sum before distribution or payment, to the extent permitted by applicable
Law. All amounts deducted by the Company from amounts distributed or paid by the
Company to a Member pursuant to the foregoing sentence shall (a) be deemed to
have been distributed or paid to such Member and (b) reduce any amounts such
Member owes the Company or its Subsidiaries or Affiliates (as applicable) under
the applicable arrangement between such entity and such Member.

Section 4.06. Allocation of Profits and Losses.

(a) Generally. Except as otherwise set forth in this Agreement, and after giving
effect to the special allocations set forth in Section 4.06(b), Profits and
Losses shall be allocated among the Capital Accounts of the Members as follows:

(i) Profits shall be allocated (A) first, 100% to the Preferred Members, pro
rata in accordance with their respective ownership of the Preferred Membership
Units, until each Preferred Member has been allocated an amount equal to the
Preferred Return for all Preferred Membership Units held by such Preferred
Member; and (B) second, the balance, if any, 100% to the Common Members, pro
rata in accordance with their respective Percentage Interests.

(ii) Losses shall be allocated 100% to the Common Members, pro rata in
accordance with their respective Percentage Interests.

(b) Special Allocations.

(i) The provisions of Section 4.06(a) and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulations Section 1.704-1(b) and shall be interpreted and applied in
a manner consistent with such Regulations. The Board shall be authorized to make
appropriate amendments to the allocations of items pursuant to this Section 4.06
if necessary in order to comply with Section 704 of the Code or applicable
Treasury

22

 

Regulations thereunder; provided, that no such change shall have an adverse
effect upon amounts distributable to any Member pursuant to Section 4.01 or
Section 10.03.

(ii) Notwithstanding any provision of this Section 4.06, no item of deduction or
loss shall be allocated to a Member to the extent the allocation would cause a
negative balance in such Member’s Capital Account (after taking into account the
adjustments, allocations and distributions described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)) that exceeds the sum of (A) the
amount that such Member would be required to reimburse the Company pursuant to
this Agreement or under applicable Law plus (B) the amount that such Member is
deemed obligated to reimburse pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5). In the event some but not
all of the Members would have such excess Capital Account deficits as a
consequence of such allocation of loss or deduction, the limitation set forth in
this Section 4.06(b) shall be applied on a Member-by-Member basis so as to
allocate the maximum permissible deduction or loss to each Member under Section
1.704-1(b)(2)(ii)(d) of the Treasury Regulations. In the event any loss or
deduction is specially allocated to a Member pursuant to the preceding sentence,
an equal amount of income of the Company shall be specially allocated to such
Member prior to any allocation pursuant to Section 4.06(a).

(iii) In the event any Member unexpectedly receives any adjustments,
allocations, or distributions described in Treasury Regulations Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6), items of Company income and gain shall be
specially allocated to such Member in an amount and manner sufficient to
eliminate as quickly as possible any deficit balance in its Capital Accounts in
excess of that permitted under Section 4.06(b)(ii) created by such adjustments,
allocations or distributions. Any special allocations of items of income or gain
pursuant to this Section 4.06(b) shall be taken into account in computing
subsequent allocations pursuant to this Section 4.06 so that the net amount of
any items so allocated and all other items allocated to each Member pursuant to
this Section 4.06 shall, to the extent possible, be equal to the net amount that
would have been allocated to each such Member pursuant to the provisions of this
Section 4.06 if such unexpected adjustments, allocations or distributions had
not occurred.

(iv) In the event the Company incurs any nonrecourse liabilities, income and
gain shall be allocated in accordance with the “minimum gain chargeback”
provisions of Section 1.704-1(b)(4)(iv) and 1.704-2 of the Treasury Regulations.

(v) The Capital Accounts of the Members may be adjusted in accordance with
Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect the fair market
value (as determined by the Board) of Company property whenever permitted under
such provision, and shall be adjusted when the Company is liquidated pursuant to
Article X in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(e)
or in the case of a distribution of any property (other than cash).

(c) Tax Allocations. For federal, state and local income tax purposes, items of
income, gain, loss, deduction and credit shall be allocated to the Members in
accordance with

23

 

the allocations of the corresponding items for Capital Account purposes under
this Section 4.06, except that items with respect to which there is a difference
between tax and book basis will be allocated in accordance with Section 704(c)
of the Code, the Treasury Regulations thereunder, and Treasury Regulations
Section 1.704-1(b)(4)(i), using the “remedial allocation” set forth in Treasury
Regulations Section 1.704-3(d) (and if applicable similar provisions of state
and local Law), unless the Members otherwise agree.

(d) All decisions and other matters concerning the allocation of income,
deductions, gains and losses among the Members, and accounting procedures, not
specifically and expressly provided for by the terms of this Agreement, shall be
determined by the Board in its sole discretion. Such determination made by the
Board shall, absent manifest error, be final and conclusive as to all Members.

ARTICLE V

MANAGEMENT

Section 5.01. Board of Managers. (a) The business and affairs of the Company
shall be managed by the Members acting through their respective representatives
on the Board of Managers (the “Board”). Except as otherwise provided by this
Agreement, the Board shall have the full and exclusive right, power and
authority to oversee the Company, to manage its business and affairs and to do
all such lawful acts that are not, by the Act, the Certificate of Formation or
this Agreement directed or required to be exercised or done by the Members, and
in so doing the Board shall have the right and authority to take all actions
which the Board deems necessary, useful or appropriate for the management and
conduct of the business of the Company. No Member or Manager (acting
individually) shall have the authority to manage the business and affairs of the
Company or contract for or incur on behalf of the Company any debts, liabilities
or other obligations or bind the Company, except as expressly permitted by this
Agreement or required by the Act.

(b) The Board shall consist of four (4) individuals (each, a “Manager”), unless
a different number is unanimously approved by the Board, three (3) of whom shall
be designated from time to time by Albany (each Manager designated by Albany, an
“Albany Manager”) and one (1) of whom shall be designated from time to time by
Safran (the Manager designated by Safran, the “Safran Manager”). Albany hereby
designates Joseph G. Morone, Ralph Polumbo and Charles J. Silva as the initial
Albany Managers. Safran hereby designates Jean-Jacques Orsini as the initial
Safran Manager.

(c) Each Manager shall be entitled to one (1) vote in all matters submitted to
the Board for a vote. Except as otherwise specified in this Agreement, including
Section 5.02, decisions and actions of the Board shall require approval by a
simple majority of Manager votes present at a meeting at which a quorum is
present.

(d) Any Manager may resign as such at any time upon written notice to the
Company. Such resignation shall be made in writing and shall take effect at the
time specified therein or, if no time is specified therein, at the time of its
receipt by the Board. The acceptance of a resignation shall not be necessary to
make it effective, unless expressly so provided in the resignation.

24

 

(e) Each Manager shall hold office until his or her successor is designated, or
until his or her death, resignation or removal. Any Manager may be removed, with
or without cause, at any time by the Member who designated such Manager and in
no other circumstances; provided, however, that any Manager may be removed by
the Board of Managers for Cause. The applicable Member may designate a new
Manager to fill any vacancy created by any resignation, death or removal of any
Manager designated by such Member. In connection with each designation or
removal of a Manager, the Member making such designation or removal shall give
notice to the Company and the other Members. Any such removal or designation
shall be effective as of the date such notice is given to the Members or any
other later date specified in such notice.

(f) The Company or the applicable Subsidiary of the Company, as the case may be,
shall reimburse each Manager for all reasonable out-of-pocket expenses incurred
by such Manager in connection with his or her attendance at meetings of the
Board, any committees thereof, or the board of directors or similar governing
body of any of the Company’s Subsidiaries or any committees thereof, including
reasonable travel, lodging and meal expenses.

(g) The Company and its Subsidiaries shall obtain customary director and officer
indemnity insurance on commercially reasonable terms, which insurance shall
cover each Manager and the members of the board of directors or similar
governing body of each Subsidiary of the Company.

(h) Each Manager shall inform the Board promptly upon learning of any threatened
or pending lawsuit, administrative proceeding or review against the Company or
any Manager or officer (in their capacities as such) of the Company or to which
any of the assets of the Company is subject, or relating to the transactions
contemplated by this Agreement or the consummation thereof, in each case that
could reasonably be expected to have a material adverse effect upon the Company
and its Subsidiaries, taken as a whole; provided, that a Manager shall not be
required to so inform the Board where doing so would waive attorney-client
privilege or contravene any Law or any contract entered into prior to the
Agreement Date; provided, further, that such Manager and, if applicable, the
Member that shall have designated such Manager, shall use commercially
reasonable efforts, including by entering into a joint defense or common
interest agreement, to permit such Manager to so inform the Board without loss
of such privilege or contravention of such Law or contract.

Section 5.02. Certain Matters Requiring Safran Manager Approval. So long as
Safran or any of its Affiliates shall be a Member of the Company, the Company
shall not take or commit to take, and shall not cause or permit any of its
Subsidiaries to take or commit to take, directly or indirectly, any of the
following actions without the approval of the Safran Manager (such approval not
to be unreasonably withheld, conditioned or delayed in the case of the matters
described in Section 5.02(i)):

(a) enter into any Material Transaction;

(b) enter into any sale of all or substantially all of the assets of the Company
and its Subsidiaries (taken as a whole) or any merger, reorganization or
consolidation of the Company with or into any Person other than the Company or
any wholly owned Subsidiary of the Company (it being understood that this
Section 5.02(b) shall not require Albany, Albany

25

 

International or any of their respective Affiliates to obtain the approval of
the Safran Manager, Safran S.A. or Safran in connection with any event described
in Section 7.05(a)(i));

(c) (i) admit any new Member to the Company (except pursuant to Section 7.03),
(ii) issue any new class of Membership Units pursuant to Section 3.03, (iii)
request Additional Capital Contributions from the Members, or (iv) split,
subdivide, combine, or reclassify any Membership Units;

(d) enter into, amend or terminate any agreement between the Company or any
Subsidiary of the Company, on the one hand, and any Member or any Affiliate of
any Member, on the other hand, including the Services Agreement and the Albany
IPLA, other than agreements between the Company or any Subsidiary of the Company
and Albany or any of its Affiliates that are of a type that Albany or Albany
International enters into in the ordinary course of business with their
respective Affiliates (it being understood that any agreement or arrangement
that results in the sale, assignment or transfer of any material manufacturing
or product development assets of the Company to any Member or Affiliate of any
Member shall be deemed outside the ordinary course of business for purposes of
this Section 5.02(d));

(e) grant to any Person that is not the Company, a Subsidiary of the Company, a
Member or an Affiliate of a Member, by sale, assignment, transfer, license or
any other means, the right to use in the Agreed Space any Albany Technology that
is licensed or assigned to the Company (or required to be licensed or assigned
to the Company) or cause or permit a third party to utilize in the Agreed Space
Albany Technology that is licensed or has been assigned to the Company (or
required to be licensed or assigned to the Company), including any determination
by the Board or the Company to not enforce the Company’s rights in the Company
IP against infringement thereof by third parties within the Agreed Space of
which the Albany Managers have actual knowledge;

(f) sell Advanced Composite 3D Parts to any Person other than Safran and its
Affiliates;

(g) adopt a new Five Year Business Plan;

(h) enter into any future long term supply agreements for new Parts in the
Agreed Space;

(i) make any distribution or dividend of cash or other assets to the Members
either (i) with a value in excess of the projected Excess Cash Flow for the next
Fiscal Year or (ii) at a time when the aggregate amount of cash and cash
equivalents and Permitted Investments on the balance sheet of the Company and
its Subsidiaries is less than $20,000,000;

(j) amend, modify or otherwise alter the Certificate of Formation, the Services
Agreement, the Albany IPLA or this Agreement, including Section 2.08 (Purpose of
the Company), except as permitted by Section 2.02(c), Section 3.02(c), Section
3.04 and Section 7.01(c);

26

 

(k) modify the Business of the Company in a material respect or engage in any
business or activity other than the Business (or an activity that is incidental
or necessary thereto);

(l) knowingly take any action or knowingly omit to take any action that would
cause the Company to become an association taxable as a corporation for U.S.
income tax purposes;

(m) cause the Company or any of its Subsidiaries to (i) make an assignment for
the benefit of creditors, (ii) file a voluntary petition in bankruptcy, (iii) be
adjudged bankrupt or insolvent, or having entered against the Company or such
Subsidiary an order for relief, in any bankruptcy or insolvency proceeding, (iv)
file a petition or answer seeking for the Company or such Subsidiary any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any Law, (v) file an answer or other pleading admitting
or failing to contest the material allegations of a petition filed against the
Company or such Subsidiary in any proceeding of this nature, or (vi) seek,
consent to or acquiesce in the appointment of a trustee, receiver or liquidator
of the Company or such Subsidiary or of all or any substantial part of the
Company’s or such Subsidiary’s properties;

(n) (i) incur any Material Indebtedness or (ii) create any lien (other than a
Permitted Lien) upon assets of the Company or any of its Subsidiaries with an
aggregate value in excess of $1,000,000, in each case except pursuant to any
Intercompany Loan or as contemplated by the Five Year Business Plan or by the
Annual Business Plan for the then-current Fiscal Year; or

(o) delegate any authority of the Board to any Person or committee or amend the
terms of such delegation or form any committee of the Board or amend the terms
of formation of such committee (including authority, power, size and procedures
of such committee).

Section 5.03. Committees; Subsidiary Boards. Subject to Section 5.02(o), the
Board may designate one or more committees, each committee to consist (subject
to the immediately following sentence) of one or more Managers. Albany shall be
represented on each committee of the Board in proportion to the number of Albany
Managers relative to the total number of Managers pursuant to Section 5.01(b);
provided, that Albany may, in its sole discretion, designate fewer Albany
Managers to serve on any committee or not designate any Albany Managers to so
serve. Voting requirements of any committee designated by the Board shall be
included in the enabling Board resolution establishing such committee. The
provisions of this Section 5.03 shall apply to any committee or board, or
similar corporate governing body, of any Subsidiary of the Company.

Section 5.04. Additional Management Provisions. To the extent permitted by
antitrust, competition and any other applicable Law, each Member agrees and
acknowledges that the Managers may share confidential, non-public information
about the Company with the Members.

Section 5.05. Meetings; Quorum; Notice; Written Consent. (a) The quorum for a
meeting of the Board shall require the presence of a majority of the votes of
all the

27

 

Managers then in office. Meetings of the Board may be held at any time at any
location specified in the notice thereof in such place within or without the
State of Delaware, when called by any Albany Manager. Managers may participate
in a meeting of the Board by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other or by any other means permitted by Law.

(b) Reasonable and sufficient notice of each meeting shall be given to each
Manager. It shall be reasonable and sufficient notice to a Manager to send
notice by overnight delivery, electronic mail, facsimile or hand delivery at
least forty-eight (48) hours, before the meeting addressed to such Manager at
such Manager’s usual business address. Notice of a meeting need not be given to
any Manager if a written waiver of notice, executed by such Manager before or
after the meeting, is filed with the records of the meeting, or to any Manager
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to such Manager. Neither notice of a meeting nor a waiver of
a notice need specify the purposes of the meeting.

(c) Any action required or permitted to be taken at any meeting of the Board may
be taken without a meeting pursuant to a written consent signed by Managers
having not less than the minimum number of votes that would be necessary to
approve such action at a meeting of the Board at which all Managers then in
office were present and voted including, in the case of any action described in
Section 5.02, the Safran Manager. Such written consent shall be filed with the
records of the meetings of the Board and treated for all purposes as the act of
the Board.

Section 5.06. Deadlock Events. In the case of a Deadlock Event, the Management
Committee shall meet and use commercially reasonable efforts to resolve such
dispute to the mutual satisfaction of Albany and Safran. In the event the
Management Committee is unable to so amicably resolve such dispute within thirty
(30) days, such dispute shall be delegated to the Chief Operating Officer of
Albany and the Industrial Director (or equivalent officer) of Safran S.A.
(together, the “Senior Representatives”) who shall endeavor to resolve the
dispute to the mutual satisfaction of Albany and Safran, including by meeting
and using commercially reasonable efforts to resolve such dispute. In the event
the Senior Representatives are unable to resolve such dispute within thirty (30)
days of its delegation to the Senior Representatives, the chief executive
officer of Albany International and the chief executive officer of Safran S.A.
shall meet and use commercially reasonable efforts to resolve such dispute for a
period of no less than thirty (30) days.

Section 5.07. Quarterly Reports and Review. Each quarter of the Company’s Fiscal
Year, the Board shall cause the Management Committee to prepare a performance
report (the “Quarterly Performance Report”) and the Board shall review such
report and the operations of the Company and its Subsidiaries (such review, a
“Quarterly Review”), including by evaluating the progress of the Company and its
Subsidiaries towards the Material Milestones applicable to the then-current
Fiscal Year.

Section 5.08. Review of Management Provisions. In the event that Safran’s
Percentage Interest increases substantially relative to its Percentage Interest
as of the Agreement Date (such increase, a “Percentage Increase”), the Members
shall review and consider whether any amendments to this Article V are
appropriate.

28

 

Section 5.09. Business Plans.

(a) Not less than thirty (30) days prior to the beginning of each Fiscal Year,
the Albany Managers shall prepare and deliver to the Board for consideration and
approval in accordance with Section 5.02(g) a business plan for the Company and
its Subsidiaries with respect to the next five (5) years (the “Five Year
Business Plan”) which shall be based on the aggregate requirements as set forth
in the Long Term Supply Agreement as well as any future long-term supply
agreements for new Parts in the Agreed Space. If any proposed Five Year Business
Plan is not adopted by the Board in accordance with Section 5.02(g), the Five
Year Business Plan, if any, most recently adopted by the Board in accordance
with Section 5.02(g) shall remain in effect. If no Five Year Business Plan has
yet been so adopted by the Board, then the Five Year Business Plan shall, for
all purposes under this Agreement, be deemed to consist of the annual levels of
hiring and capital expenditures by the Company, and its Subsidiaries, for the
then most recent calendar year (or, solely with respect to the most recent
calendar year prior to the Agreement Date, the annual levels of hiring and
capital expenditures by Albany and its Subsidiaries), to support activities
under the Long Term Supply Agreement.

(b) Not less than thirty (30) days prior to the beginning of each Fiscal Year,
the Albany Managers shall prepare and deliver to the Board for consideration and
approval a business plan for such Fiscal Year (each such business plan, an
“Annual Business Plan”). Each Annual Business Plan shall include (i) certain
material milestones related to minimum hiring and capital expenditure by the
Company and its Subsidiaries for the applicable Fiscal Year (such milestones,
“Material Milestones”) and (ii) a forecast of revenues, costs (including costs
to be incurred under the Services Agreement) and expenses (including capital
expenditures) of the Company and its Subsidiaries for the applicable Fiscal
Year. Annex III sets forth the initial material milestones related to minimum
hiring and capital expenditures by the Company and its Subsidiaries for the five
(5) Fiscal Years following the Agreement Date, it being understood that such
milestones for each Fiscal Year set forth on Annex III shall be considered the
Material Milestones for the applicable Fiscal Year until the adoption of an
Annual Business Plan for the applicable Fiscal Year.

(c) For the purpose of determining whether a Material Milestone relating to
capital expenditures by the Company and its Subsidiaries has been met, any
capital expenditure will be deemed to have been made in the Fiscal Year in which
the amounts in respect thereof were paid by the Company or any of its
Subsidiaries. A Material Milestone in respect of hiring by the Company and its
Subsidiaries for any Fiscal Year shall be met if, from and after the Agreement
Date and prior to the end of such Fiscal Year, employment offers from the
Company or any of its Subsidiaries shall have been accepted by an aggregate
number of full-time equivalent employees (net of any such employees that, after
the Agreement Date and prior to the end of such Fiscal Year, were hired, and
thereafter ceased to be employed, by the Company or any of its Subsidiaries)
that is equal to or in excess of the aggregate number of full-time equivalent
employees as are specified as a Material Milestone for such Fiscal Year and each
prior Fiscal Year following the Agreement Date.

(d) To the extent reasonably required in order to meet the Material Milestones,
the Company shall request funding from Albany International in the form of
Intercompany Loans as contemplated in Section 3.09.

29

 

Section 5.10. Employee Transfers. Notwithstanding anything in this Agreement to
the contrary, to the extent reasonably required in order to satisfy the
reasonable employment needs of any of Albany, its Affiliates, the Company or any
Subsidiary of the Company, Albany shall have the right to transfer, or cause the
transfer of, any employee of Albany or any of its Affiliates to the Company or
any Subsidiary of the Company, and to cause the Company or any Subsidiary of the
Company to transfer any employee of the Company or any Subsidiary of the Company
to Albany or any of its Affiliates; provided, that (a) during any six (6) month
period, the aggregate number of managerial and technical employees transferred
from the Company or any Subsidiary of the Company to Albany or any of its
Affiliates pursuant to this Section 5.10, shall not exceed 20% of the total
number of managerial and technical employees of the Company and its Subsidiaries
without Safran’s prior written consent and (b) at all times the Company’s and
its Subsidiaries’ requirements for the services provided by such transferred
managerial and technical employees are met or exceeded.

ARTICLE VI

OFFICERS

Section 6.01. Designation; Term; Qualifications. Except as otherwise provided in
Section 6.02, the Board may, from time to time, appoint one or more individuals
to be officers of the Company. Any officer so appointed shall have such
authority and perform such duties as the Board may, from time to time, delegate
to him or her. Unless the Board decides otherwise, if the title is one commonly
used for officers of a business corporation formed under the General Corporation
Law of the State of Delaware, the assignment of such title shall constitute the
delegation to such officer of the authority and duties that are normally
associated with that office, subject to any restrictions on such authority
imposed by the Board and this Agreement (including Article V). Any number of
offices may be held by the same Person. Without regard to the general delegation
to the officers as set forth above, each officer who holds the title of
“President”, “Senior Vice President” or “Vice President”, acting alone, shall
have the authority to make, enter into and perform all contracts, agreements,
reports and undertakings of the Company that have been authorized by the Board.
Subject to Article V, the execution and delivery of such contracts, agreements
or other documents, or the taking of any actions in connection therewith, shall
be conclusive evidence of the Company’s approval thereof, and no further
approval by the Company shall be required. Each officer shall hold office for
the term for which such officer is appointed and until his or her successor
shall be duly appointed and shall qualify, or until his or her death,
resignation or removal as provided in this Agreement.

Section 6.02. Officers. As of the Agreement Date, the Company shall have such
officers as required by and determined in accordance with this Section 6.02.

(a) The Albany Managers shall have the right to appoint a general manager (the
“General Manager”), a head of engineering (the “Head of Engineering”) and a
chief financial officer (the “CFO” and, together with the General Manager and
the Head of Engineering, the “Albany Officers”). None of the Albany Officers
shall be Managers. Each of the Albany Officers is an agent of the Company, and
the actions of any of the Albany Officers taken in accordance with such powers
shall bind the Company. Each of the Albany Officers may be removed, with or
without Cause, by unanimous vote of the Albany Managers, such removal to be
effective upon such vote, unless otherwise set forth in the vote of the Albany
Managers. In

30

 

the event of the resignation, removal or death of any Albany Officer, the Albany
Managers shall appoint a new General Manager, Head of Engineering or CFO, as
applicable.

(b) Safran shall have the right to appoint a director of human resources (the
“HR Director”). The HR Director shall be consulted by the Company on matters
relating to development and training, employee relations, employee safety,
welfare, wellness and health, employee services and counseling and the relation
of such matters to the common human resources handbook between Safran and the
Company. The HR Director shall perform such duties at the reasonable direction
of the General Manager consistent with the responsibilities described in this
Section 6.02(b). The HR Director shall not be a Manager and, unless expressly
authorized by the Board or by this Agreement, shall not have the authority to
make, enter into or perform any contracts, agreements or undertakings of the
Company. The Company shall (x) provide the HR Director with a copy of its
standard form of employment, consulting or other agreements for hiring employees
or independent contractors, (y) notify the HR Director of any material changes
to the standard form of such agreements, and (z) in each case, consider in good
faith any comments to such agreements provided by the HR Director. For avoidance
of doubt, Albany Managers and Albany Officers shall be responsible for making
and implementing all hiring and compensation decisions relating to the Company
and its Subsidiaries. Within thirty (30) days following the beginning of each
Fiscal Year and within thirty (30) days following the beginning of the third
(3rd) quarter of each Fiscal Year, the Company shall provide the HR Director a
list of all employees of the Company, which list shall set forth for each such
employee (i) such employee’s number of years of composites experience, (ii) such
employee’s core competencies and (iii) the percentage of hours worked by such
employee during the preceding twelve (12) months on Company Services (as such
term is defined in the Services Agreement) relative to the total number of hours
worked by such employee during the preceding twelve (12) months. The HR Director
may be removed (x) with or without Cause, by the Safran Manager or (y) with
Cause, by the Board (with or without the approval of the Safran Manager). In the
event of the resignation, removal or death of the HR Director, the Safran
Manager shall appoint a new HR Director.

Section 6.03. Management Committee. The General Manager, the Head of
Engineering, the HR Director and the CFO shall constitute the initial members of
a management committee (the “Management Committee”) which shall be responsible
for the day-to-day operational management of the Company, except as otherwise
provided in this Agreement.

Section 6.04. Removal and Resignation. Except as set forth in Section 6.02, the
Board may remove any officer of the Company as such, with or without Cause, at
any time. Any officer of the Company may resign as such at any time upon written
notice to the Company. Such resignation shall be made in writing and shall take
effect at the time specified therein or, if no time is specified therein, at the
time of its receipt by the Company. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the resignation.

Section 6.05. Vacancies. Except as set forth in Section 6.02, any vacancy
occurring in any office of the Company may be filled by Board approval in
accordance with Section 6.01.

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ARTICLE VII

TRANSFER OF MEMBERSHIP UNITS

Section 7.01. Limitations on Transfer. (a) A Member may Transfer its Membership
Units only in accordance with, and subject to the applicable provisions of, this
Article VII.

(b) Any purported Transfer of Membership Units other than in accordance with
this Agreement shall be null and void, and the Company shall refuse to recognize
any such Transfer for any purpose and shall not reflect in its records any
change in record ownership of Membership Units pursuant to any such Transfer.
Except for Permitted Transfers or Transfers in accordance with Section 7.05,
each other Member must consent in writing to any purported Transfer, which
Transfer (if any) shall be subject to such other Members’ preemption right on
terms to be agreed between the Parties subject to agreement by the Parties on
mutually acceptable terms.

(c) The Board or any officer of the Company shall amend Schedule A and Schedule
B to reflect the admission of any additional Members and any Transfer, in each
case, in accordance with this Article VII.

(d) The Membership Units have not been registered under the Securities Act and,
therefore, in addition to the other restrictions on Transfer contained in this
Agreement, cannot be sold unless subsequently registered under the Securities
Act or an exemption from such registration is then available. To the extent such
Membership Units have been certificated, each certificate evidencing Membership
Units and each certificate issued in exchange for or upon the Transfer of any
Membership Units shall be stamped or otherwise imprinted with a legend in
substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON
_______ AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”). THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER SPECIFIED IN THE AMENDED AND RESTATED LIMITED LIABILITY
COMPANY OPERATING AGREEMENT, DATED AS OF _______, 2013, AS AMENDED AND MODIFIED
FROM TIME TO TIME. THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH
SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE
HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

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The Company shall imprint such legend on certificates (if any) evidencing
Membership Units. Notwithstanding the foregoing, to the extent the Membership
Units are not certificated, this Agreement will contain a legend in
substantially the form stated above.

Section 7.02. Conditions to Transfer. Notwithstanding any other provision of
this Agreement, no Transfer of Membership Units shall be permitted at any time
unless the Board is reasonably satisfied in good faith that such Transfer would
not cause the Company to be classified as a “publicly traded partnership” as
defined under Section 7704 of the Code or cause the Company to lose its status
as a partnership for U.S. federal income tax purposes. Any Transfer of any
Membership Units permitted under this Article VII shall be subject to the
satisfaction of the following conditions:

(a) unless otherwise provided in this Agreement, a duly executed and
acknowledged written instrument of Transfer has been delivered to the Company,
which instrument shall specify the Membership Units being Transferred and shall
set forth the intention of the Transferor that the Transferee succeed to the
transferor’s Membership Units as a substituted Member in the Transferor’s place;

(b) the Transferor and the Transferee have executed, acknowledged and delivered
such other documents as may be necessary, in the reasonable opinion of the
Board, to effect such substitution, including the execution of a counterpart to
this Agreement by the transferee;

(c) the Transferee pays or reimburses the Company for any legal, filing and
publication costs that the Company incurs in connection with the admission of
the transferee as a Member; and

(d) the Transferee makes the representations and warranties set forth in Section
11.01 to the Company and the other Members as of the date of the Transfer.

Upon satisfaction of such conditions, the transferee shall automatically be
admitted as a Member of the Company.

Section 7.03. Permitted Transfers. Subject to Section 7.04:

(a) subject to Section 3.09, a Member may Transfer all (but not less than all)
of its Membership Units to one of its Affiliates; provided, that such Affiliate
is wholly-owned, directly or indirectly, by Albany or Albany International (each
such Transferee, an “Affiliate Transferee”); provided, that, if the Affiliate
Transferee should at any time thereafter cease to be an Affiliate of such
Member, such Membership Units shall be Transferred back to the original
Transferor (or to an Affiliate of the original Transferor) prior to the time
that such Affiliate Transferee ceases to be an Affiliate, so that at all times
the Membership Units shall be held either by Albany, Safran or one of their
respective Affiliates (except as otherwise permitted by this Article VII);

(b) subject to Section 7.05(a)(i), Albany may Transfer all (but not less than
all) of its Membership Units in connection with a sale of all or substantially
all of the assets of

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Albany International or Albany, all of the equity of Albany, or any merger or
consolidation of Albany International or Albany with or into any Person; and

(c) Safran may Transfer all (but not less than all) of its Membership Units in
connection with a sale of all or substantially all of its assets or any merger
or consolidation of Safran S.A. with or into any Person.

Section 7.04. Rights and Obligations of Transferees and Transferors.

(a) Any Transferee of Membership Units (including any Affiliate of any Member)
shall be required, at the time of and as a condition to such Transfer, to become
a party to this Agreement by executing a counterpart to this Agreement and
delivering such documents as may be necessary, in the reasonable opinion of the
Board, to make such Person a party hereto, whereupon such Transferee will be
treated as a Member for all purposes of this Agreement. A Transferee of
Membership Units that complies with the provisions of this Section 7.04 shall be
admitted by the Company as a Member hereunder so long as such Transfer was
effected in compliance with the terms of this Agreement, including this Article
VII.

(b) Notwithstanding anything to the contrary in this Agreement:

(i) in the event of any Permitted Transfer, the Transferee shall acquire all of
the rights and become responsible for all of the covenants and agreements of the
applicable Transferor hereunder, including those set forth in Article XII;

(ii) in the event that Albany Transfers any of its Membership Interests, Albany
shall continue to be bound by its covenants and agreements set forth in Article
XII; provided, that the foregoing sentence shall not apply to any Transfer by
Albany (A) resulting from the exercise of the Safran Call Right or (B) pursuant
to Section 7.03(b) (it being understood that, in the case of any Transfer by
Albany pursuant to Section 7.03(b), the applicable Transferee shall assume and
become responsible for all covenants and agreements of Albany set forth in
Article XII); and

(iii) in the event that Safran Transfers any of its Membership Interests, Safran
S.A. shall continue to be bound by its covenants and agreements set forth in
Article XII; provided, that the foregoing sentence shall not apply to any
Transfer by Safran (A) resulting from the exercise of the Safran Put Right or
(B) pursuant to Section 7.03(b) (it being understood that, in the case of any
Transfer by Safran pursuant to Section 7.03(b), the applicable Transferee shall
assume and become responsible for all covenants and agreements of Safran set
forth in Article XII).

(c) Safran may propose to increase its Percentage Interest through the purchase
of Albany’s Membership Units or, subject to Section 3.02(b), by making
Additional Capital Contributions, in each case at a price jointly agreed by the
Members; provided, that Albany shall have the right to refuse any such offer in
its sole discretion. In the event that Safran increases its Percentage Interest
for any reason, the governance of the Company in accordance with this Agreement
shall be reviewed and agreed as provided in Section 5.08.

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Section 7.05. Safran Option. (a) Upon the occurrence of any of the following
events (each such event, a “Triggering Event”), Safran shall have the right to
elect, at its option, within sixty (60) days after receipt of written notice of
such Triggering Event, to (i) purchase all of the Common Membership Units then
owned by Albany and its Affiliates at a purchase price determined in accordance
with Section 7.05(b) (such right, the “Safran Call Right”) or (ii) sell all of
the Common Membership Units then owned by Safran and its Affiliates to Albany
(or, at Albany’s election, an Affiliate of Albany) for a purchase price
determined in accordance with Section 7.05(g) (such right, the “Safran Put
Right” and, together with the Safran Call Right, the “Safran Option”):

(i) a change of control transaction whereby (A) any Competitor of Safran becomes
the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of Albany or Albany International
representing 50% or more of the voting power of Albany’s or Albany
International’s then-outstanding securities, (B) Albany or Albany International
is party to a merger or consolidation, or series of related merger or
consolidation transactions, with any Competitor of Safran which results in the
holders of voting securities of Albany or Albany International outstanding
immediately prior thereto failing to continue to (1) hold securities
representing (either by remaining outstanding or by being converted into
securities of the surviving or another entity) at least fifty (50%) percent of
the voting power of the securities of Albany, Albany International or such
surviving entity outstanding immediately after such merger or consolidation or
(2) directly or indirectly have the power to elect the majority of the entire
board of directors or other similar governing body of Albany, Albany
International or such surviving entity immediately after such merger or
consolidation, (C) the sale or disposition of all or substantially all of
Albany’s or Albany International’s assets to (or consummation of any
transaction, or series of related transactions, having the same effect, with)
any Competitor of Safran, or (D) any transaction or series of related
transactions with any Competitor of Safran that has the same effect as any one
or more of the foregoing (it being understood that the execution by Albany,
Albany International or any of their respective Affiliates of a definitive
agreement with a Competitor of Safran to effectuate any of the foregoing shall
be considered a Triggering Event);

(ii) a “material breach” by the Company of the Long Term Supply Agreement as
such term is defined therein and failure to cure such breach within twelve (12)
months following receipt by the Company of written notice from Safran describing
the material breach in reasonable detail (it being understood that such twelve
(12) month period shall run concurrently with the applicable cure period set
forth in Article 19.1.1 of the Long Term Supply Agreement);

(iii) the Company shall have commenced any case, proceeding or other action (A)
under any existing or future Law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all of its assets;

35

 

(iv) a failure to meet a Material Milestone, which failure remains uncured for
ninety (90) days following the receipt by the Company of written notice from
Safran describing the applicable failure in reasonable detail, such notice to be
delivered following the Safran Manager’s review of the Quarterly Performance
Report or other applicable report delivered pursuant to Section 8.04; provided,
that Safran shall be prohibited from exercising the Safran Option in the event
that the HR Director shall have been the primary cause of, or the primary factor
that resulted in, the occurrence of a Triggering Event pursuant to this Section
7.05(a)(iv) (unless such primary cause or factor shall have resulted from action
taken by the HR Director at the reasonable direction of the General Manager
consistent with Section 6.02(b), in which case Safran shall not be so prohibited
from exercising the Safran Option);

(v) a Deadlock Event (A) occurs as a result of a proposal by the Albany Managers
of an Annual Business Plan, to which Safran does not agree, that includes
minimum annual hiring or capital expenditure targets that are 25% or less than
the amounts in the Five Year Business Plan or the initial Material Milestones
and (B) is not amicably resolved following completion of the procedures set
forth in Section 5.06;

(vi) a series of material breaches of this Agreement, the Services Agreement,
the Safran IPLA, and/or the Albany IPLA, by Albany that causes Safran or its
Affiliates to breach, or creates a material risk that Safran or its Affiliates
will breach, their material obligations to their respective customers, including
delivery obligations or conformity obligations, which series of material
breaches by Albany remains uncured for four (4) months following the receipt by
the Company of written notice from Safran describing the applicable failures in
reasonable detail; or

(vii) a resolution by the board of directors of Albany International (the
“Albany International Board”) or a written public communication by Albany
International’s CEO or the Albany International Board that Albany International
is no longer committed to the growth of Albany, with notice to be provided to
Safran within five (5) days of such decision by the Board or formal
communication.

(b) Upon exercise of the Safran Call Right, Safran shall pay to Albany an amount
equal to (i) the aggregate Percentage Interest of Albany and all Affiliates of
Albany that own any Common Membership Units as of the date of exercise of the
Safran Call Right (the “Exercise Date”) multiplied by (ii) (A) the Enterprise
Value as of the Exercise Date minus (B) the sum (without duplication) of (1) Net
Indebtedness (including all amounts owing under all outstanding Intercompany
Loans) and (2) the portion of Preferred Capital for all Preferred Membership
Units owned by Albany or any of its Affiliates that has not been repaid in full,
in each case as of the Exercise Date.

(c) For purposes of this Section 7.05, “Enterprise Value” shall be defined as
follows:

(i) if the Exercise Date occurs on or before the Formula Change Date, then the
Enterprise Value as of the Exercise Date shall be as set forth in Annex II for
the applicable quarter; or

36

 

(ii) if the Exercise Date occurs after the Formula Change Date, then the
Enterprise Value as of the Exercise Date shall be equal to the Formula B
Enterprise Value.

(d) In the event that the Safran Call Right is exercised, (i) the Company shall
immediately (A) satisfy all of its obligations under all outstanding
Intercompany Loans, and (B) pay to each Preferred Member the portion of
Preferred Capital for all Preferred Membership Units owned by such Preferred
Member that has not been repaid in full as of the Exercise Date (or, if the
Company is unable to timely satisfy such obligations, Safran shall satisfy such
obligations on behalf of the Company), (ii) Albany and Safran shall negotiate an
implementation plan to avoid a disruption in the production and sale of Safran
products to customers and (iii) Albany and Albany International, subject to (iv)
below and Albany’s rights and obligations under the Albany IPLA, shall have no
further rights or obligations under this Agreement and Albany shall cease to be
a member of the Company effective as of the Exercise Date; provided, that the
exercise of the Safran Call Right shall not relieve Albany or Albany
International from liability for any breach of this Agreement on or prior to the
Exercise Date, and (iv) Albany shall provide the Company with (A) a copy of the
software source code not already transferred or licensed to the Company (so that
the Company will thereafter be able to make improvements or modifications
thereto) necessary to applications in the Agreed Space (the “Albany Software”)
and (B) all reasonable support necessary to enable the Company to use the Albany
Technology (including Albany Software) for two (2) years following the Exercise
Date; provided, that such support will be provided by Albany without charge for
the six (6) months immediately following the Exercise Date; provided, further,
that if the Company reasonably determines that additional services are required
after such six (6) month period, Albany shall provide such services at cost for
an additional period not to exceed eighteen (18) months.

(e) If a Triggering Event shall have occurred, upon Albany’s receipt of notice
from Safran of such Triggering Event and until the third (3rd) anniversary of
receipt of such notice, Albany and its Affiliates shall not, without the prior
written consent of Safran, directly or indirectly contact or solicit, in each
case for the purpose of offering employment to or hiring, any person who is
actively employed by the Company or any of its Subsidiaries as of the date of
such Triggering Event; provided, that the restrictions in this Section 7.05(e)
shall not apply with respect to (i) any solicitations of employment (including
newspaper or Internet help wanted advertisements or search firm engagements) not
directed or focused on such employees of the Company or any of its Subsidiaries,
(ii) any such person who initiates discussions regarding employment with Albany
or any of its Affiliates without any direct or indirect solicitation or
encouragement by Albany or any of its Affiliates that is prohibited by this
Section 7.05(e), or (iii) any such person who has ceased to be employed by the
Company or any of its Subsidiaries prior to the commencement of any employment
discussions with Albany or any of its Affiliates; provided, further, that
although the obligations contained in this Section 7.05(e) shall commence upon
Albany’s receipt of notice from Safran of such Triggering Event, such
obligations shall terminate upon the failure of Safran to either (x) exercise
the Safran Call Right with respect to such Triggering Event within the time
limit set forth in Section 7.05(a) or (y) satisfy its obligations under this
Agreement in connection with such exercise of the Safran Call Right.

(f) If a Triggering Event shall have occurred, upon Albany’s receipt of notice
from Safran of such Triggering Event and until the second (2nd) anniversary of
receipt of such notice, Albany and its Affiliates shall not, without the prior
written consent of Safran, hire any

37

 

employee of the Company or any of its Subsidiaries; provided, that the
restrictions in this Section 7.05(f) shall not apply with respect to any Person
whose employment with the Company or any of its Subsidiaries shall have been
terminated by the Company or the applicable Subsidiary of the Company; provided,
further, that although the obligations contained in this Section 7.05(f) shall
commence upon Albany’s receipt of notice from Safran of such Triggering Event,
such obligations shall terminate upon the failure of Safran to either (x)
exercise the Safran Call Right with respect to such Triggering Event within the
time limit set forth in Section 7.05(a) or (y) satisfy its obligations under
this Agreement in connection with such exercise of the Safran Call Right.

(g) Upon exercise of the Safran Put Right, (i) Safran shall, and shall cause its
Affiliates to, transfer to Albany (or, at Albany’s election, an Affiliate of
Albany) all Membership Units owned by Safran and its Affiliates, (ii) Albany
shall transfer or cause to be transferred to Safran in exchange therefor an
amount equal to the product of (A) the aggregate Percentage Interest of Safran
and all Affiliates of Safran that own any Membership Units and (B) the aggregate
Common Capital of the Company, and (iii) Safran, subject to its rights and
obligations under the Intellectual Property Agreements, shall have no further
rights or obligations under this Agreement and shall cease to be a Member of the
Company effective as of the Exercise Date; provided, that the exercise of the
Safran Put Right shall not relieve Safran from liability for any breach of this
Agreement on or prior to the Exercise Date.

(h) If a Triggering Event shall have occurred, upon Albany’s receipt of notice
from Safran of such Triggering Event and until the third (3rd) anniversary of
receipt of such notice, Safran S.A. shall not, and shall cause its Affiliates
not to, without the prior written consent of Albany, directly or indirectly
contact or solicit, in each case for the purpose of offering employment to or
hiring, any person who is actively employed by the Company or any of its
Subsidiaries as of the date of such Triggering Event; provided, that the
restrictions in this Section 7.05(h) shall not apply with respect to (i) any
solicitations of employment (including newspaper or Internet help wanted
advertisements or search firm engagements) not directed or focused on such
employee of the Company or any of its Subsidiaries, (ii) any such person who
initiates discussions regarding employment with Safran S.A. or any of its
Affiliates without any direct or indirect solicitation or encouragement by
Safran S.A. or any of its Affiliates that is prohibited by this Section 7.05(h),
or (iii) any such person who has ceased to be employed by the Company or any of
its Subsidiaries prior to the commencement of any employment discussions with
Safran S.A. or any of its Affiliates; provided, further, that although the
obligations contained in this Section 7.05(h) shall commence upon Albany’s
receipt of notice from Safran of such Triggering Event, such obligations shall
terminate upon the failure of either (x) Safran to exercise the Safran Put Right
with respect to such Triggering Event within the time limit set forth in Section
7.05(a) or (y) Albany to satisfy its obligations under this Agreement in
connection with such exercise of the Safran Put Right.

(i) If a Triggering Event shall have occurred, upon Albany’s receipt of notice
from Safran of a Triggering Event and until the second (2nd) anniversary of
receipt of such notice, Safran S.A. and its Affiliates shall not, without the
prior written consent of Albany, hire any employee of the Company or any of its
Subsidiaries; provided, that the restrictions in this Section 7.05(i) shall not
apply with respect to any Person whose employment with the Company or any of its
Subsidiaries shall have been terminated by the Company or the applicable
Subsidiary of the Company; provided, further, that although the obligations
contained in this Section 7.05(i) shall

38

 

commence upon Albany’s receipt of notice from Safran of such Triggering Event,
such obligations shall terminate upon the failure of either (x) Safran to
exercise the Safran Put Right with respect to such Triggering Event within the
time limit set forth in Section 7.05(a) or (y) Albany to satisfy its obligations
under this Agreement in connection with such exercise of the Safran Put Right.

ARTICLE VIII

COMPANY EXPENSES, BOOKS AND RECORDS, TAX MATTERS

Section 8.01. Fees and Expenses. Notwithstanding anything herein to the
contrary, the Company shall pay all current expenses, including administrative
expenses and fees, before any distributions may be made to the Members.
Appropriate reserves may be determined and withheld from distributions to the
Members for contingent liabilities, if any, as of the date any such contingent
liability becomes known to the Board; provided, however, that any such reserves
shall be withheld from the Members pro rata based on their respective Membership
Units.

Section 8.02. Fiscal Year. Unless otherwise determined by the Board, the “Fiscal
Year” of the Company shall be the taxable year of the Company, which shall be
the fiscal year of Albany unless otherwise required by Law.

Section 8.03. Inspection. Appropriate books and records in accordance with and
as required by the Act or any other applicable Law shall be kept by the Company.
Such books and records shall show a true and accurate record of all costs and
expenses incurred, all charges made, all credits made and received and all
income derived in connection with the operation of the Business, including any
fees or other compensation paid to Albany or its Affiliates under the Services
Agreement, in accordance with GAAP. In addition, such books and records shall at
all times be kept at the Company’s place of business. Each Member and its
representatives shall, to the extent reasonably requested of the Company, have
reasonable access to (i) discuss the Company’s operations and the Business with
employees or agents of the Company (provided that reasonable notice shall have
been given) and (ii) inspect, audit or make copies of all books, records,
financial results, data, procedures and other information related to the
operations of the Company and the Business at such Member’s own expense;
provided, that Safran shall be permitted to conduct no more than one (1) full
financial audit supported by certified financial accountants per Fiscal Year
pursuant to this Section 8.03 and shall be required to provide the Company with
at least ninety (90) days’ notice prior to the commencement of any such audit;
provided, further, that each Member shall maintain the confidentiality of such
information in accordance with the provisions of this Agreement, including
Section 13.02; provided, further, that any action taken pursuant to this Section
8.03 shall be conducted in such a manner as not to unreasonably interfere with
normal operation of the Business by the Company and its Subsidiaries. To the
extent required by any Governmental Authority (including the Federal Aviation
Administration), the Company shall permit inspections by such Governmental
Authority.

39

 

Section 8.04. Financial Statements and Reports.

(a) The Company shall prepare and furnish, or cause to be prepared and
furnished, to each Member:

(i) as soon as available and in any event within ninety (90) days after the end
of each Fiscal Year, annual consolidated and consolidating financial statements
of the Company, which statements shall include the balance sheet, profit and
loss statements and cash flow statements, shall show the comparable figures for
the prior Fiscal Year and any other information required by applicable Laws,
and, to the extent included in such financial statements, accompanying notes and
a management discussion and analysis;

(ii) as soon as available and in any event within ninety (90) days after the end
of each Fiscal Year, a summary itemization, by type and/or classification of the
total fees and compensation, including any general and administrative
reimbursements and operating fees, paid by the Company, or indirectly on the
Company’s behalf, to Albany and its Affiliates, including such amounts paid or
accrued under the Services Agreement;

(iii) as soon as available and in any event within forty-five (45) days after
the end of each fiscal quarter, quarterly consolidated financial statements of
the Company, which statements shall include quarterly and year-to-date
consolidated balance sheets, and profit and loss statements and cash flow
statements for such fiscal quarter and the comparable period for the prior
Fiscal Year and any other information required by applicable Laws; and

(iv) as soon as practicable and in any event within twenty (20) days after the
end of each calendar month, monthly operating reports setting forth the results
of operations for such month and the year to-date, in such format as the Board
may direct, including cumulative deviations from current capital and operating
budgets included in the Annual Business Plan, to the extent applicable.

(b) The Company shall provide to each Member: (i) notice of events that, in the
Board’s determination, would reasonably be expected to have a material impact on
the business operations of the Company including the commencement of criminal or
material civil actions; and (ii) such other information as may reasonably be
requested by any Member or as is otherwise required by Law.

Section 8.05. Tax Returns and Reports.

(a) The Company shall prepare and timely file, or cause to be prepared and
timely filed, all Tax returns and reports required to be filed by the Company
and its Subsidiaries under all applicable Tax laws and regulations, and shall
provide a copy of any such filing to a Member upon reasonable request. Each
Member shall provide the Company with such information, if any, as may be needed
by the Company for purposes of preparing such returns and reports.

40

 

(b) The Company shall use its reasonable efforts to provide to each Member any
information reasonably requested by such Member to prepare its Tax or
information returns, including an IRS Schedule K-1 properly completed and filled
out in respect of the Company as soon as practicable following the end of each
calendar year (but in no event later than four (4) months following the end of
such calendar year), or to the extent it is unable to do so, as soon as
reasonably practicable thereafter. Each Member agrees that such Member shall
not, except as otherwise required by applicable Law, treat, on such Member’s
separate income Tax returns, any item of income, gain, loss, deduction or credit
relating to such Member’s interest in the Company in a manner inconsistent with
the treatment of such item by the Company as reflected in the Schedule K-1 or
other information statement furnished by the Company to such Member pursuant to
this Section 8.05(b).

Section 8.06. Tax Matters Partner.

(a) At the Company’s expense, Albany shall be the “Tax Matters Partner” within
the meaning of Section 6231(a)(7) of the Code.

(b) Except as this Agreement otherwise provides, the Tax Matters Partner shall
make all applicable elections (including whether or not to file for extensions),
determinations, and other decisions under the Code, including the deductibility
of a particular item of expense and the positions to be taken on the Company’s
Tax return and the determination of the allocations to be made pursuant to the
terms of this Agreement and the guaranteed payments, if any, to be made pursuant
to this Agreement, and shall approve the settlement or compromise of all audit
matters raised by the Internal Revenue Service or any other Tax authority
affecting the Members generally. The Board shall cause the accountants of the
Company (at the Company’s expense) to prepare the Company’s federal, state and
local income and other Tax returns and deliver such returns to the Members (in
accordance with Section 8.05) for their review and approval. The Members shall
each take reporting positions on their respective federal, state and local
income Tax returns consistent with the positions determined for the Company.

ARTICLE IX

EXCULPATION AND INDEMNIFICATION

Section 9.01. Exculpation. (a) Subject to applicable Law, no Member (or any of
its Affiliates), Manager or officer of the Company, or any direct or indirect
partner, manager, member, shareholder, employee, director, officer or agent of
such Person (each, an “Indemnified Person”) shall be liable, in damages or
otherwise in connection with this Agreement, to the Company, the Members or any
of their Affiliates or successors or assigns for any act or omission performed
or omitted by any of them in good faith that relates to the Company or any of
its Subsidiaries (including any act or omission performed or omitted by any of
them in reliance upon and in accordance with the opinion or advice of experts,
including legal counsel as to matters of Law, accountants as to matters of
accounting, or investment bankers or appraisers as to matters of valuation),
other than (i) in connection with any breach of this Agreement by a Member or
(ii) by reason of acts or omissions related to the Company which are

41

 

found by a court of competent jurisdiction upon entry of a final and
non-appealable judgment to be the result of such Indemnified Person’s fraud,
gross negligence or willful misconduct.

(b) To the fullest extent permitted by Law, and notwithstanding any other
provision of this Agreement or in any agreement contemplated herein or
applicable provisions of law or equity or otherwise, no Member nor any Manager,
acting in such Person’s capacity as such, shall (i) have any fiduciary or other
duties to the Company or any Member other than the duty to comply with the
applicable terms and provisions of this Agreement, or (ii) be obligated to do or
perform any act or thing in connection with the Company and its Subsidiaries not
expressly set forth in this Agreement. Without limiting the foregoing, the
provisions of this Agreement, to the extent that they restrict the duties and
liabilities of any Member, Indemnified Person or any Manager otherwise existing
at law or in equity, are agreed by the Parties to replace such other duties and
liabilities of such Persons, to the maximum extent permitted by applicable Law.

Section 9.02. Indemnification and Expense Advancement. (a) To the fullest extent
permitted by Law, the Company shall indemnify, defend and hold harmless each
Indemnified Person from and against any and all losses, liabilities, damages,
claims, judgments, awards, settlements, demands, offsets, costs or expenses
(including interest, penalties, court costs, arbitration costs and fees, witness
fees and reasonable fees and expenses of outside attorneys, investigators,
expert witnesses, accountants and other professionals) resulting from a claim,
demand, lawsuit, action or proceeding (i) by reason of any act or omission
performed or omitted by such Indemnified Person on behalf of the Company and in
a manner reasonably believed to be within the scope of the authority conferred
on such Indemnified Person by this Agreement or (ii) with respect to any
Indemnified Person that is a Member or any of its Affiliates, based upon,
arising out of, related to or resulting from such Indemnified Person’s status as
an equityholder of the Company; provided, that such acts or omissions of such
Indemnified Person related to such indemnification are not (x) found by a court
of competent jurisdiction upon entry of a final and non-appealable judgment to
constitute fraud, gross negligence or willful misconduct or (y) in breach of
this Agreement.

(b) Expenses reasonably incurred by an Indemnified Person in defense or
settlement of any claim that are subject to a right of indemnification hereunder
(which, for the avoidance of doubt, shall not include expenses incurred in
defense or settlement of any claim in connection with a breach of this Agreement
by any Member) shall be advanced by the Company prior to the final disposition
thereof upon receipt of an undertaking (in form and substance reasonably
satisfactory to the Board) by or on behalf of such Indemnified Person to repay
such amount to the extent that it shall be determined upon final adjudication
after all possible appeals have been exhausted that such Indemnified Person is
not entitled to be indemnified hereunder.

Section 9.03. Exclusivity. The remedies provided for in this Article IX are not
exclusive and shall not limit any rights or remedies that may otherwise be
available to any Indemnified Person.

Section 9.04. Limitation on Implied Duties. The Members hereby agree,
notwithstanding anything to the contrary in this Agreement, any other agreement
or at law or in equity, that, to the fullest extent permitted by Law, when any
Member, Albany Manager, Safran Manager, member of the Management Committee or
other committee takes any action under this Agreement to give or withhold its
consent, such Member, Albany Manager, Safran Manager or

42

 

member of the Management Committee or other committee shall have no duty
(fiduciary or otherwise) to consider the interests of the Company or any of its
respective Subsidiaries or the other Members and may act exclusively in its (or
in the case of (a) an Albany Manager or Albany appointee to the Management
Committee or other committee, Albany’s or (b) a Safran Manager or Safran
appointee to the Management Committee or other committee, Safran’s) own interest
and without regard to the interest of any other Person.

ARTICLE X

DISSOLUTION, LIQUIDATION AND TERMINATION

Section 10.01. Events Causing Dissolution. (a) The Company shall be dissolved
and its affairs shall be wound up upon the first of the following to occur:

(i) a determination by the Board in accordance with the terms of this Agreement
to dissolve the Company; or

(ii) any dissolution required by operation of Law.

(b) Dissolution of the Company shall be effective as of the day on which the
event occurs giving rise to the dissolution, but the Company shall not terminate
until there has been a winding up of the Company’s business and affairs, and all
of the Company’s assets have been distributed as provided in Section 10.03 and
in the Act.

(c) Notwithstanding any other provision of this Agreement, no Member shall cease
to be a Member of the Company upon the happening of (i) such Member (A) making
an assignment for the benefit of creditors, (B) filing a voluntary petition in
bankruptcy, (C) being adjudged bankrupt or insolvent, or having entered against
such Member an order for relief, in any bankruptcy or insolvency proceeding, (D)
filing a petition or answer seeking for the Member any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law, (E) filing an answer or other pleading admitting or
failing to contest the material allegations of a petition filed against the
Member in any proceeding of this nature, (F) seeking, consenting to or
acquiescing in the appointment of a trustee, receiver or liquidator of such
Member or of all or any substantial part of such Member’s properties, (ii) the
commencement of any proceeding against such Member seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any Law or (iii) the appointment without such Member’s consent or
acquiescence of a trustee, receiver or liquidator of such Member or of all or
any substantial part of such Member’s properties (any such occurrence in the
foregoing clauses (i), (ii) or (iii), such Member’s “Bankruptcy”), and despite
the occurrence of any such event, the business of the Company shall continue
without dissolution.

(d) Notwithstanding any other provision of this Agreement, each Member waives
any right it might have under the Act or otherwise to (i) agree in writing to
dissolve the Company upon such Member’s Bankruptcy, or upon the occurrence of an
event that causes such Member to cease to be a Member of the Company, and (ii)
apply for judicial dissolution of the Company.

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Section 10.02. Cancellation of Certificate. Upon the dissolution and completion
of the winding up of the Company and the termination of this Agreement, the
Certificate of Formation shall be canceled in accordance with the provisions of
Section 18-203 of the Act and the Members shall be promptly notified of such
dissolution.

Section 10.03. Liquidation. Upon dissolution of the Company, as expeditiously as
is reasonable, the liabilities of the Company shall be paid and distributions
shall be made in the following manner and order:

(a) to creditors, including (i) third party creditors, (ii) Members who are
creditors (including, in the case of any Intercompany Loan, Albany and any
Affiliates of Albany that own Membership Interests) and (iii) Members who have
not yet received the distributions determined by the Board to be payable to such
Members pursuant to Section 4.01 to the extent otherwise permitted by Law, in
satisfaction of liabilities of the Company (whether by payment or by
establishment or reserves); and

(b) to the Preferred Members, pro rata in accordance with their respective
ownership of the Preferred Membership Units, until Preferred Capital for all
Preferred Membership Units has been repaid in full; and

(c) to the Common Members, pro rata in accordance with their respective
Percentage Interests.

Section 10.04. Accounting on Liquidation. Upon liquidation, a proper accounting
shall be made by the Company’s accountants of the Company’s assets, liabilities
and results of operations through the last day of the month in which the Company
is terminated.

Section 10.05. Return of Members’ Capital Contribution. A Member shall look
solely to the Company’s assets for the return of such Member’s Capital
Contribution. If the assets remaining after payment or discharge of all debts
and liabilities of the Company are insufficient to return such Member’s Capital
Contribution, the Member shall have no recourse against any other Member, except
to the extent of any required Capital Contribution of any other Member which has
not been paid when due.

Section 10.06. Termination. (a) At such time (the “Termination Date”) as all of
the Company’s assets have been distributed as provided for in Section 10.03, the
Company and this Agreement shall terminate.

(b) Upon the termination of this Agreement, but subject to the Intellectual
Property Agreements, no Party shall have any liability or obligation to any
other Party; provided, that (i) the termination of this Agreement shall not
relieve a Party from liability for any breach of this Agreement on or prior to
the Termination Date, and (ii) Article IX, Article X and Sections 13.04 through
13.06, Section 13.08, and Sections 13.10 through 13.15 shall survive termination
of this Agreement in accordance with their terms.

44

 

ARTICLE XI

REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 11.01. Representations and Warranties of the Members. Each Member hereby
represents and warrants to each other Member and to the Company that on the
Agreement Date:

(a) Such Member (i) has the necessary power and authority to enter into this
Agreement and to carry out its obligations hereunder and (ii) is duly organized
and validly existing under the Laws of its jurisdiction of organization, and the
execution of this Agreement, and the consummation of the transactions
contemplated herein, have been authorized by all necessary corporate or other
action, and no other act or proceeding, corporate or otherwise, on its part is
necessary to authorize the execution of this Agreement or the consummation of
any of the transactions contemplated hereby. This Agreement has been duly
executed by such Member and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws relating to or affecting creditors’ rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and any implied covenant of good faith and fair dealing.

(b) The execution and delivery by such Member of this Agreement and the
performance of its obligations hereunder do not and will not conflict with, or
result in the breach of any provision of the constitutive documents of such
Member. The execution and delivery by such Member of this Agreement and the
performance of its obligations hereunder do not and will not (i) result in any
violation, breach, conflict, default or event of default (or an event which with
notice, lapse of time, or both, would constitute a default or event of default),
or give rise to any right of acceleration or termination or any additional
payment obligation, under the terms of any material contract, agreement or
permit to which such Member is a party or by which such Member’s assets or
operations are bound or affected or (ii) violate, in any material respect, any
Law applicable to such Member, the Company or any of its Subsidiaries.

(c) To the knowledge of such Member, other than any consents that have already
been obtained, no consent, waiver, approval, authorization, exemption,
registration, license or declaration is required to be made or obtained by such
Member in connection with (i) the execution, delivery or performance of this
Agreement or (ii) the consummation of any of the transactions currently
contemplated herein, excluding, for the avoidance of doubt, any transactions
contemplated herein solely as a result of one or more amendments to this
Agreement following the Agreement Date.

(d) (i) Such Member’s interest in the Company is intended to be and is being
acquired solely for such Member’s own account for the purpose of investment and
not with a view to any sale or other disposition of all or any part thereof,
(ii) such Member’s knowledge and experience in financial and business matters
are such that the Member is capable of evaluating the risks of making a Capital
Contribution, and (iii) such Member’s determination to purchase the Membership
Units and make Capital Contributions has been, and in each case will be, made by
such Member independent of and without reliance upon any other Member or Person
other than such Member’s legal counsel and financial, accounting, regulatory and
Tax advisors, if any,

45

 

and independent of any statements or opinions as to the advisability of such
purchase or Capital Contribution or as to the properties, business, prospects or
condition (financial or otherwise) of any Person in which the Company may invest
which may have been made or given by any such other Person.

(e) (i) The Member understands that the offering and sale of the Membership
Units are intended to be exempt from registration under the Securities Act and
applicable U.S. state securities Laws (A) in the case of “U.S. persons” (as
defined in Rule 902(k) of Regulation S of the Securities Act), in reliance on
the private placement exemption from registration provided in Section 4(2) of
the Securities Act and Regulation D promulgated thereunder and exemptions under
applicable U.S. state securities Laws (including Rule 506 of Regulation D of the
Securities Act), and (B) in the case of persons that are not U.S. persons (each,
a “Non-U.S. Person”), in reliance on Regulation S promulgated under the
Securities Act and exemptions under the applicable Laws of the non-U.S.
jurisdiction in which the Membership Units are being offered and sold. The
Member is aware that the Membership Units cannot be sold or otherwise disposed
of unless they are registered under the Securities Act and applicable U.S. state
securities Laws or unless an exemption from such registration is available, and
that the Company has no present intention of so registering such interests under
the Securities Act, and that accordingly such Member is able and is prepared to
bear the economic risk of making a Capital Contribution and to suffer a complete
loss of investment. The Member further agrees that it shall not engage in any
Transfer of the Membership Units it acquires in any manner that would require
the registration of the Membership Units under the Securities Act or under the
Laws of any non-U.S. jurisdictions.

(ii) Either the Member or each beneficial owner of such Member is (A) an
“accredited investor” within the meaning of Regulation D of the Securities Act;
or (B) if the Member is not an accredited investor, the Member is a Non-U.S.
Person.

(iii) If the Member is a Non-U.S. Person, the Member has not been solicited to
purchase and has not and shall not acquire its Membership Units, directly or
indirectly, while present in the United States.

(iv) If the Member is a Non-U.S. Person, the Member shall notify the Board
promptly after it ceases to be a Non-U.S. Person.

(f) The Member (i) directly or indirectly, is acquiring the Membership Units in
compliance with all applicable Laws and other legal requirements including the
legal requirements of jurisdictions in which the Member is resident and in which
such acquisition is being consummated, (ii) has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of its investment in the Membership Units; and (iii) has consulted with
legal counsel and financial, accounting, regulatory and Tax advisors, as
necessary, to ensure it is eligible to, directly or indirectly, acquire all or
any part of the Membership Units.

(g) The Member has no need for liquidity in this investment, has the ability to
bear the economic risk of this investment, and at the present time and in the
foreseeable future can afford a complete loss of this investment.

46

 

(h) The Member agrees to deliver to the Company such information as to certain
matters under the Securities Act, the Exchange Act, the Investment Company Act
and any Tax Laws as the Company may reasonably request in order to ensure
compliance with such acts and Laws and the availability of any exemptions
thereunder.

(i) The Member has been given the opportunity to ask questions of, and receive
answers from, the Company concerning the terms and conditions of, and other
matters pertaining to, this investment, and has had access to such financial and
other information concerning the Company as it has considered necessary to make
a decision to invest in the Company and has availed itself of this opportunity
to the full extent desired.

(j) The Member acknowledges that neither the Company nor any Affiliate thereof
has rendered any investment advice or securities valuation advice to the Member,
and that the Member is neither subscribing for nor acquiring any interest in the
Company in reliance upon, or with the expectation of, any such advice.

(k) No representations or warranties have been made to the Member with respect
to the investment in the Membership Units or the Company other than the
representations set forth herein, and the Member has not relied upon any
representation or warranty not provided herein in making its investment in the
Company.

(l) None of the funds that the Member is using or will use to fund its Capital
Contributions are assets of an employee benefit plan, as defined in Section 3(3)
of ERISA, subject to Title I of ERISA, or a plan described in Section 4975(e)(1)
of the Code, or an entity whose underlying assets include plan assets subject to
Title I of ERISA by reason of a plan’s investment in the entity (any such plan
under ERISA or the Code or any such entity.

(m) The Member understands that the Company intends to be classified and taxed
as a partnership for U.S. federal tax purposes and not as a publicly-traded
partnership, and accordingly such Member agrees that it will not Transfer any
interest in the Company if it would cause the Company to become a “publicly
traded partnership” as such term is defined in Section 7704(b) of the Code and
the Treasury Regulations thereunder.

Section 11.02. Representations and Warranties of the Company. Each of Albany and
the Company hereby represents and warrants to Safran that on the Agreement Date:

(a) The Company is a limited liability company duly organized, validly existing
and in good standing under the Laws of the State of Delaware and has all
requisite power and authority under its certificate of formation, this Agreement
and the Act to own, lease and otherwise hold and operate its properties and
other assets, to carry on its business as presently conducted, to enter into and
perform its obligations under this Agreement, the Albany Contribution Agreement,
the Safran Contribution Agreement, the Albany IPLA, the Safran IPLA, the
Services Agreement and any other agreements entered into in connection with the
execution of therewith and the agreements contemplated hereby (collectively, the
“Transaction Documents”) to which it is a party and to carry out the
transactions contemplated hereby and thereby. The Company is duly qualified or
licensed as a foreign limited liability company to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing

47

 

necessary, except where the failure to be so qualified or licensed and in good
standing would not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the Company and its Subsidiaries taken
as a whole.

(b) The Company has all necessary power and authority under its Certificate of
Formation, this Agreement and the Act to execute this Agreement and the other
Transaction Documents and to consummate the transactions contemplated by this
Agreement and the other Transaction Documents. The execution and delivery of
this Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
and the other Transaction Documents have been duly and validly authorized by all
necessary action and no other proceedings on the part of the Company are
necessary to authorize this Agreement or the other Transaction Documents or to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents. This Agreement and each of the other Transaction
Documents have been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Members and the other
parties thereto, constitutes, or will constitute, legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar Laws affecting creditors’
rights generally and subject, as to enforceability, to the effect of general
principles of equity.

(c) The execution and delivery of this Agreement by the Company do not, the
execution and delivery of the other Transaction Documents by the Company will
not, and the performance of this Agreement and the other Transaction Documents
by the Company will not, (i) conflict with or violate the Certificate of
Formation, this Agreement, or any equivalent organizational documents of any of
its Subsidiaries, (ii) conflict with or violate any foreign or domestic
(federal, state or local) Law, statute, ordinance, franchise, permit,
concession, license, writ, rule, regulation, order, injunction, judgment or
decree applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected, or (iii) conflict with, result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, require consent, approval or notice under, give to others any
right of termination, amendment, acceleration or cancellation of, require any
payment under, or result in the creation or imposition of a lien, mortgage,
charge, pledge, security interest, deed of trust, ground lease, lease, sublease,
assessment, tenancy, claim, covenant, condition, restriction, easement, judgment
or other encumbrance on any property or asset of the Company or any of its
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
(written or otherwise) to which the Company or any of its Subsidiaries is a
party or any of its or any Subsidiary’s assets are bound.

(d) To the knowledge of the Company, the execution and delivery of this
Agreement and the other Transaction Documents by the Company does not, and the
performance of this Agreement and the other Transaction Documents by the Company
will not, require any consent, approval, order, permit, or authorization from,
or registration, notification or filing with, any domestic or foreign
governmental, regulatory or administrative authority, agency or commission, any
court, tribunal or arbitral body, or any quasi-governmental or private body
exercising any regulatory, Taxing, importing or other Governmental Authority, or
any other third party.

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(e) The capitalization of the Company is as set forth in this Agreement. Except
as set forth in the Transaction Documents, (i) there are no outstanding
subscriptions, options, “phantom” equity or other equity equivalent instruments,
warrants, agreements, arrangements or commitments of any kind for or relating to
the issuance, or sale of, or outstanding securities convertible into or
exchangeable or exercisable for, any Membership Units or other membership
interests or other equity interests of the Company, (ii) all of the outstanding
membership interests of the Company will have been duly and validly authorized
and issued and will have been offered, issued, sold and delivered in compliance
with applicable federal and state securities Laws and not subject to any
preemptive rights, (iii) the Company has not granted any preemptive rights,
rights of first refusal, put or call rights or obligations, tag-along rights,
drag-along rights, anti-dilution rights or other similar rights with respect to
the issuance, sale, redemption or transfer of the Company’s membership interests
or other equity securities of the Company, or (iv) there are no rights to have
the Company’s membership interests registered for sale to the public in
connection with the Laws of any jurisdiction.

(f) The Company is a newly formed entity, formed in connection with the
transactions contemplated by the Transaction Documents. Other than the
Transaction Documents and the agreements entered into pursuant to or in
connection with the transactions contemplated by the Transaction Documents, the
Company (i) is not a party to any agreement, contract or undertaking, and (ii)
does not have any obligations or liabilities of any kind.

Section 11.03. Entitlement of the Company and the Members to Rely on
Representations and Warranties. The representations and warranties contained in
Section 11.01 may be relied upon by the Company, and by the other Members, in
connection with the entering into of this Agreement. Without limiting the
foregoing, each Member agrees that it will make the representations and
warranties set forth in Section 11.01 upon (i) making any Additional Capital
Contribution to the Company; (ii) any Transfer of Membership Units by such
Member and (iii) upon written request by the Company in the event of any
transaction or any other matter in connection with which the Company has a
reasonable basis to request such representations and warranties be made by such
Member.

Section 11.04. Covenants of the Members.

(a) New potential applications within the Agreed Space will be explored by
Albany and Safran in accordance with the General Collaboration Agreement. When
Albany and Safran agree that a new application is ready to proceed to
development and manufacturing, Albany and Safran shall negotiate in good faith a
commercial agreement with respect to such new application and such other
agreements as may be necessary to effect the transfer of the application to the
Company at the time such commercial agreement becomes effective; provided that
the price policies of any such agreements shall be consistent with Section
11.05(b) below.

(b) With respect to any new potential applications within the Agreed Space, the
split of responsibilities from an industrial perspective will be as follows:

(i) The Company shall be responsible for (A) process development and
improvement, (B) quality assurance on manufacturing processes, (C) preform
engineering starting from a Technology Readiness Level 5 (including converting
the applicable preform’s pattern into loom instructions), (D) preform
manufacturing

49

 

(including production of development samples), excluding any activities pursuant
to the Existing Supply Agreement, (E) unless otherwise decided by the Parties on
a case-by-case basis, preform injection (provided, that, for the avoidance of
doubt, preform injection will not be provided by the Company for the activities
performed pursuant to the Existing Supply Agreement), and (F) any related
process industrialization and cost improvement initiatives undertaken in respect
of such new potential application.

(ii) Safran shall be responsible for final quality monitoring in the manner and
to the extent provided in the Long Term Supply Agreement in respect of current
applications; and

(iii) Each Member shall provide all necessary preliminary design specifications
and manufacturing processes, as appropriate (including geometry and weaving
patterns).

Section 11.05. Covenants of the Company.

(a) The Company shall (i) inform each Member of the amount, if any, of Taxes
paid by the Company during each calendar year to non-U.S. jurisdictions that are
attributable to income that is allocable to such Member and (ii) provide such
information to such Member within ninety (90) days of the end of the relevant
calendar year.

(b) Pricing policies with respect to any products developed by the Company
following the Agreement Date shall be based on the pricing mechanism set forth
in the Long Term Supply Agreement, subject to negotiation of a definitive
agreement between the Company and Safran with respect to such products and with
cost parameters to be based on prevailing economic conditions.

(c) The Company shall use commercially reasonable efforts to (i) comply at all
times with each applicable Law, including all applicable federal, state,
foreign, and local Laws relating to, Tax, zoning and land use, environmental,
occupational health and safety, product quality, product labeling, import and
export laws (including ITAR) and safety and employment and labor matters, (ii)
maintain and possess from each appropriate Governmental Authority all right,
title and interest in and to all permits, licenses, authorizations, approvals,
quality certifications, franchises or rights issued by any Governmental
Authority necessary to conduct the Business, and (iii) maintain in full force
and effect all insurance for the protection of the assets of the Company
required to be maintained by the Company pursuant to any Long Term Supply
Agreement, except, in the case of clauses (i) and (ii), to the extent that the
failure to do so would not reasonably be expected to have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.

ARTICLE XII

RESTRICTIVE COVENANTS

Section 12.01. Exclusive Supplier to Safran. The Company shall be the exclusive
manufacturer and supplier of Advanced Composite 3D Parts to Safran S.A. and its
Affiliates in the Agreed Space and Safran S.A. agrees not to, and to cause its
Affiliates not to,

50

 

procure Advanced Composite 3D Parts in the Agreed Space from any Person
(including Safran S.A. and its Affiliates) other than the Company except to the
extent that:

(a) applicable Law prohibits Safran S.A. from engaging in such activities with
the Company;

(b) a Governmental Authority in France requires that Safran S.A. purchase
Advanced Composite 3D Parts from a Person other than the Company in connection
with a sale by Safran of products or services to the French Armed Forces or to
Société Air France, S.A.; provided, that Safran S.A. shall have used
commercially reasonable efforts to permit such preforms to be sourced from the
Company; or

(c) an Existing Supply Agreement by which Safran S.A. continues to be bound
requires Safran S.A. to procure Advanced Composite 3D Parts from a Person other
than the Company; provided, that Safran S.A. shall not renew or otherwise extend
the term of the Existing Supply Agreement and shall use its commercially
reasonable efforts to promptly terminate the Existing Supply Agreement.

For the avoidance of doubt, (x) this Section 12.01 shall not apply to the
design, manufacture or supply to Safran S.A. by any Person other than the
Company of parts for non-3D woven preforms and composites for any applications
and (y) Safran will remain free to source parts from another supplier for non
3D-woven preforms and composites for any applications.

Section 12.02. Non-Competition. Except as otherwise provided in the Transaction
Documents, each of Albany International and Safran S.A. hereby acknowledges and
recognizes the highly competitive nature of the businesses of the Company and
its Affiliates and accordingly agrees that it will not, and will cause its
Affiliates not to, directly or indirectly, engage in the Business. The Company
shall not directly or indirectly engage in the Business other than with Safran
S.A. or its Affiliates without the approval of the Safran Manager in accordance
with Section 5.02(f), as applicable. Notwithstanding the foregoing or anything
to the contrary in this Agreement, (a) Albany International and its Affiliates
may engage in any of the activities contemplated by the Albany Permitted
Contracts to the extent required pursuant to the applicable Albany Permitted
Contract, (b) Safran S.A. and its Affiliates may engage in any of the activities
contemplated by the Safran Permitted Contracts to the extent required pursuant
to the applicable Safran Permitted Contract, (c) without limiting Section 12.01,
the prohibitions in this Section 12.02 shall not apply to any acquisition by
Safran S.A. or any of its Affiliates of all or a portion of the equity interests
in any Person engaged in the Business (any such Person, a “Competing Entity”) if
the revenues of such Competing Entity attributable to the Business represent no
more than thirty percent (30%) of the aggregate consolidated revenues of such
Competing Entity for such Competing Entity’s most recently completed fiscal
year; provided, in the case of this clause (c), that Safran S.A. shall promptly
(i) notify Albany in writing of the entry into any definitive agreement in
respect of any acquisition of a Competing Entity and (ii) if so requested by
Albany within sixty (60) days following Albany’s receipt of such written notice,
participate in good faith negotiations with Albany to facilitate the acquisition
by Albany, the Company, or any of their respective Affiliates of all or a
portion of the assets of the Competing Entity relating to the Business (such
assets, the “Competing Assets”) on terms to be agreed between Albany and Safran
S.A.; provided, further, that if Albany determines not to acquire, and not to
cause any of its Affiliates or the Company or any of the Company’s Affiliates to
acquire,

51

 

the Competing Assets, Safran S.A. shall use its best efforts, as soon as
reasonably practicable following (and in any event within twenty-four (24)
months of) Safran S.A.’s receipt of written notice from Albany of Albany’s
determination not to so acquire or cause the acquisition of the Competing
Assets, to (x) sell or otherwise dispose of the Competing Assets or (y) cease
and discontinue the design, development and manufacturing of Advanced Composite
3D Parts within the Agreed Space by the Competing Entity. Notwithstanding
anything to the contrary in this Agreement, Albany International and its
Affiliates will remain free to develop and supply (A) non 3D-woven preforms and
parts derived from non 3D-woven composites for aerospace applications in any
thrust class for other aerospace companies and (B) 3D-woven preforms and parts
to customers for any applications outside the Agreed Space.

ARTICLE XIII

MISCELLANEOUS

Section 13.01. Notices. In the event a notice or other document is required to
be sent hereunder to the Company, the Board or to any Party, such notice or
other document shall be in writing and shall be considered given and received,
in all respects when personally delivered, or when sent by express or courier
service or United States registered or certified mail, return receipt requested
and postage and other fees prepaid, or by electronic mail, on the day such
notice or document is personally delivered or delivered by electronic mail or on
the third Business Day following the day on which such notice or other document
is deposited in the mail or delivered to any such commercial delivery service as
aforesaid. Any notice and document shall be addressed: (i) if to the Board or
the Company, to 85 Innovation Drive, Rochester, New Hampshire 03867; (ii) if to
such Party entitled to receive such notice or other document at the addresses
shown on Schedule A hereto or at such other address as any such Party shall
request in a written notice sent to the Company. The Company or any Party or
their respective legal representatives may effect a change of address for
purposes of this Agreement by giving written notice of such change to the
Company, and the Company shall, upon the request of any Party, notify such Party
of such change in the manner provided herein. Until such notice of change of
address is properly given, the addresses set forth herein shall be effective for
all purposes.

Section 13.02. Publicity and Confidentiality. Subject to Article XII, each
Member agrees that it shall (and shall cause its Affiliates to) keep
confidential, and shall not disclose to any third Person or use for its own
benefit, without prior approval of the Board, any non-public information with
respect to the Company or its Subsidiaries (including any Person in which the
Company holds, or contemplates acquiring, an investment) that is in such
Member’s or any of its Affiliate’s possession on the Agreement Date or disclosed
after the date of this Agreement to such Member or any of its Affiliates by or
on behalf of the Company or its Subsidiaries; provided, that each Member or any
such Affiliate may disclose any such information (i) as has become generally
available to the public, was or has come into such Member’s or such Affiliate’s
possession on a non-confidential basis, without a breach of any confidentiality
obligations by the Person disclosing such information, or has been independently
developed by such Member or any such Affiliate, without use of the non-public
information, (ii) to its Affiliates, directors, managers, officers,
representatives, agents and employees and professional advisers who need to know
such information and agree to keep it confidential on terms consistent with this
Section 13.02, (iii) to potential transferees of their Membership Units, in each
case who have agreed to keep such information confidential on terms consistent
with this

52

 

Section 13.02, (iv) to the extent necessary in order to comply with any Law
applicable to such Member or its Affiliates, or to a regulatory agency with
applicable jurisdiction, or (v) as may be required in response to any summons or
subpoena or in connection with any litigation or arbitration, it being agreed
that, unless such information has been generally available to the public, if
such information is being requested pursuant to a summons or subpoena or a
discovery request in connection with a litigation, then (x) such Member shall
give the Company notice of such request and shall cooperate with the Company at
the Company’s request so that the Company may, in its discretion, seek a
protective order or other appropriate remedy, if available, and (y) in the event
that such protective order is not obtained (or sought by the Company after
notice), such Member (a) shall furnish only that portion of the information
which, in accordance with the advice of counsel, is legally required to be
furnished and (b) will exercise its reasonable efforts to obtain assurances that
confidential treatment will be accorded such information. No news releases,
public announcements, advertisements or other publicity shall be released by any
Party or its Affiliates concerning the Company, the Business or any activities
related thereto without the prior written approval of the other Parties (such
approval not to be unreasonably conditioned, delayed or withheld), except to the
extent necessary in order to comply with any Law applicable to such Party or its
Affiliates, or to a regulatory agency with applicable jurisdiction.

Section 13.03. Amendments. Except as provided in Section 2.02(c), Section
3.02(c), Section 3.04, Section 3.06 and Section 7.01(c), the terms and
provisions of this Agreement may be modified or amended at any time and from
time to time only by unanimous approval of the Board in accordance with Section
5.02(j). All Members shall receive notice of any amendment to this Agreement.

Section 13.04. Governing Law; Jurisdiction.

(a) This Agreement and any dispute arising out of, relating to or in connection
with this agreement, shall be construed (both as to validity and performance),
interpreted and enforced in accordance with the Laws of the State of Delaware,
without regard to any conflicts of law provisions thereof that would result in
the application of the Laws of any other jurisdiction. This Agreement shall be
construed in accordance with Section 18-1101 of the Act. Any action against any
Party relating to the foregoing shall be brought exclusively in the Chancery
Court of the State of Delaware located in Wilmington, Delaware (or, if the
Chancery Court of the State of Delaware declines to accept jurisdiction over a
particular matter, any state court located in Wilmington, Delaware or the United
States District Court for the District of Delaware) and appellate courts
thereof. The Parties hereby irrevocably waive, to the fullest extent permitted
by applicable Law, any objection that they may now or hereafter have to the
laying of venue of any such action brought in such court or any defense of
inconvenient forum for the maintenance of such action.

(b) Except as otherwise set forth in this Section 13.04(b), each Party agrees
that service of summons and complaint or any other process that might be served
in any action may be made on such Party by sending or delivering a copy of the
process to such Party by registered mail, return receipt requested, at the
address provided for the giving of notices to such Party in Section 13.01.
Safran S.A. hereby appoints Safran (the “Safran Authorized Agent”) as its
authorized agent, upon whom service of summons and complaint or any other
process that might be served in any action may be made by sending or delivering
a copy of the process to the

53

 

Safran Authorized Agent by registered mail, return receipt requested, at the
following address (or at such other address as Safran S.A. shall request in a
written notice sent to the Company): CT Corporation System, 9 Capitol Street,
Concord, New Hampshire 03301. Safran S.A. hereby agrees to take any and all
action, including the filing of any and all documents that may be necessary to
establish and continue such appointment in full force and effect as aforesaid.
Safran S.A. hereby agrees that service of process upon the Safran Authorized
Agent shall be, in every respect, effective service of process upon Safran S.A..
Nothing in this Section 13.04 shall affect the right of any Party to serve legal
process in any other manner permitted by Law.

Section 13.05. Waiver of Jury Trial. THE PARTIES ACKNOWLEDGE AND AGREE THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE THE PARTIES HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO
THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) EACH SUCH PARTY HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 13.05.

Section 13.06. Entire Agreement. This Agreement, together with the other
Transaction Documents, embodies the entire agreement and understanding of the
Parties and supersedes all prior agreements and understandings between the
Parties with respect to the subject matter hereof.

Section 13.07. Other Instruments and Acts. The Parties agree to execute any
other instruments and perform any other acts that are or may be necessary to
effectuate and carry on the Company, as determined in good faith by the Board.

Section 13.08. Waivers. No waiver of any breach of any of the terms of this
Agreement shall be effective unless such waiver is made expressly in writing and
executed and delivered by the Party against whom such waiver is claimed. No
waiver of any breach shall be deemed to be a further or continuing waiver of
such breach or a waiver of any other or subsequent breach. Except as otherwise
expressly provided herein, no failure on the part of any Party to exercise, and
no delay in exercising, any right, power or remedy hereunder, or otherwise
available in respect hereof at law or in equity, shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such Party preclude any other or further exercise thereof, or the exercise of
any other right, power or remedy.

Section 13.09. Severability. If any provision of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

54

 

Section 13.10. Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Party shall execute and deliver any
additional documents and instruments and perform any additional acts that the
Company determines to be necessary or appropriate to effectuate and perform the
provisions of this Agreement and those transactions.

Section 13.11. No Partnership. The Members intend that the Company not be a
partnership (including a limited partnership), joint venture, association or
other co-operative entity and nothing in this Agreement nor any other document
entered into by the Company or any Member relating to the subject matter hereof
and no actions taken by the Parties under this Agreement or any such other
document shall constitute a partnership (including a limited partnership), joint
venture, association or other co-operative entity between any of the Parties or
constitute any Party the agent of any other Party for any purpose, other than
for U.S. federal, state and local tax purposes.

Section 13.12. Counterparts; Electronic Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
Facsimile, .pdf and other electronic signatures to this Agreement shall have the
same effect as original signatures.

Section 13.13. Third Party Beneficiaries. Except as provided in Article IX and
the Intellectual Property Agreements, this Agreement does not create any rights,
claims or benefits inuring to any Person that is not a party hereto, and it does
not create or establish any third party beneficiary hereto.

Section 13.14. No Third Party Liability. This Agreement may only be enforced
against the Parties. All claims or causes of action (whether in contract or
tort) that may be based upon, arise out of or relate to this Agreement, or the
negotiation, execution or performance of this Agreement (including any
representation or warranty made in or in connection with this Agreement or as an
inducement to enter into this Agreement), may be made only against the Parties;
and no past, present or future director, manager, officer, employee,
incorporator, member, partner, stockholder, Affiliate, agent, attorney or
representative of any Party (including any Person negotiating or executing this
Agreement on behalf of a Party), unless party to this Agreement, shall have any
liability or obligation with respect to this Agreement or with respect to any
claim or cause of action (whether in contract or tort) that may arise out of or
relate to this Agreement, or the negotiation, execution or performance of this
Agreement (including a representation or warranty made in or in connection with
this Agreement or as an inducement to enter into this Agreement).

Section 13.15. Binding Effect. Except as otherwise provided in this Agreement to
the contrary, this Agreement shall be binding upon and inure to the benefit of
the Parties, their distributees, heirs, legal representatives, executors,
administrators, successors and permitted assigns.

Section 13.16. Specific Performance. It is hereby agreed and acknowledged that
it will be impossible to measure in money the damages that would be suffered if
the Parties fail to comply with any of the obligations herein imposed on them
and that, in the event of any such failure, an aggrieved Person will be
irreparably damaged and will not have an adequate

55

 

remedy at law. Any such Party shall, therefore, be entitled (in addition to any
other remedy to which such Party may be entitled at law or in equity) to
injunctive relief, including specific performance, to enforce such obligations,
without the posting of any bond and if any action should be brought in equity to
enforce any of the provisions of this Agreement, none of the Parties shall raise
the defense that there is an adequate remedy at law.

Section 13.17. Time of the Essence. The Parties agree that time shall be of the
essence in the performance of this Agreement.

Section 13.18. Exculpation Among Members. Each Member acknowledges that it is
not relying upon any other Person in making its investment or decision to invest
in the Company (other than the Company pursuant to any written agreement). Each
Member agrees that no Member nor their respective Affiliates, controlling
persons, officers, directors, managers, partners, agents or employees of any
Member shall be liable to any other Member for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with their
purchase or acquisition of any Membership Units, except with respect to breaches
of any Transaction Documents.

[SIGNATURE PAGES TO FOLLOW]

56

 

IN WITNESS HEREOF, the Parties have duly executed this Agreement as of the date
first above written.

  THE COMPANY       ALBANY SAFRAN COMPOSITES, LLC       By:  /s/ Joseph G.
Morone     Name:  Joseph G. Morone     Title: President        

 [Signature Page to A&R LLC Agreement]

 

 

 

  MEMBERS       ALBANY ENGINEERED COMPOSITES, INC.       By:  /s/ Brian S.
Coffenberry     Name:  Brian S. Coffenberry     Title: President        

 [Signature Page to A&R LLC Agreement]

 

 

 

          SAFRAN AEROSPACE COMPOSITES, INC.       By:  /s/ Orsini Jean-Jacques  
  Name:  Orsini Jean-Jacques     Title: President        

 [Signature Page to A&R LLC Agreement]

 

 

  And solely with respect to its obligations under Section 3.09, Section 12.02
and Article XIII,       ALBANY INTERNATIONAL CORP.       By:  /s/ Joseph G.
Morone     Name:  Joseph G. Morone     Title: President and Chief Executive
Officer        

 [Signature Page to A&R LLC Agreement]

 

 

  And solely with respect to its obligations under Section 7.05(h), Section
7.05(i) and Article XII and Article XIII       SAFRAN S.A.       By:  /s/ M.
Ventre     Name:  M. Ventre     Title: Safran COO        

 [Signature Page to A&R LLC Agreement]

 

 

SCHEDULE A

NAMES AND ADDRESSES OF PARTIES

Party Address Albany Engineered Composites, Inc. 85 Innovation Drive, Rochester,
NH 03867 Safran Aerospace Composites, Inc. 85 Innovation Drive, Rochester, NH
03867 Albany International Corp. 216 Airport Drive, Rochester, NH 03867 Safran
S.A. 2, boulevard du Général Martial Valin, 75724 Paris Cedex 15, France

 

A-1

 

SCHEDULE B

CAPITAL CONTRIBUTIONS AND MEMBERSHIP UNITS

Member Value of
Capital
Contribution Preferred
Capital Common
Capital Form of
Capital
Contribution Preferred
Membership
Units % Preferred Common
Membership
Units % Common Albany $280,000,000 $28,000,000 $252,000,000 Property 1 100% 900
90% Safran $28,000,000 0 $28,000,000 Cash 0 0% 100 10%

 

B-1

 

ANNEX I

Existing Supply Agreement

1.Long Term Supply Agreement, dated as of June 1, 2008, between Messier-Dowty
LTD, Albany Engineered Composites, Inc. and Albany International Corp.

Annex I - 1

 

ANNEX II

Enterprise Values of the Company

Quarter Enterprise Value
($ millions) 4Q 2012 280.0 1Q 2013 281.5 2Q 2013 283.1 3Q 2013 284.6 4Q 2013
286.1 1Q 2014 286.3 2Q 2014 286.4 3Q 2014 286.6 4Q 2014 286.7 1Q 2015 288.5 2Q
2015 290.3 3Q 2015 292.0 4Q 2015 293.8 1Q 2016 297.0 2Q 2016 300.2 3Q 2016 303.4
4Q 2016 306.6 1Q 2017 311.8 2Q 2017 317.0 3Q 2017 322.1 4Q 2017 327.3 1Q 2018
334.0 2Q 2018 340.7 3Q 2018 347.4 4Q 2018 354.0 1Q 2019 357.3 2Q 2019 360.5 3Q
2019 363.7 4Q2019 367.0 2020 and onwards 367.0

 

Annex II - 1

 

ANNEX III

Initial Material Milestones

Capital Expenditure Targets

2014 $8,300,000 2015 $4,900,000 2016 $2,700,000 2017 $2,000,000 2018 $9,200,000

 

Minimum Hiring Targets (FTE)

2014 20 2015 28 2016 67 2017 71 2018 160

 

Annex III - 1