Exhibit 10.1

Execution Version

 

 

AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

MANNING & NAPIER GROUP, LLC

(A Delaware Limited Liability Company)

Effective October 1, 2011

 

 

THE MEMBERSHIP INTERESTS (AS DEFINED HEREIN) GOVERNED BY THIS AMENDED AND
RESTATED LIMITED LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER APPLICABLE
SECURITIES LAWS. SUCH MEMBERSHIP INTERESTS MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
OTHERWISE DISPOSED OF AT ANY TIME WITHOUT EFFECTIVE REGISTRATION UNDER SUCH ACT
AND LAWS OR EXEMPTION THEREFROM, AND COMPLIANCE WITH THE OTHER SUBSTANTIAL
RESTRICTIONS ON TRANSFERABILITY SET FORTH HEREIN.

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TABLE OF CONTENTS

 

         Page  

Article I

 

DEFINITIONS AND CONSTRUCTION

     1   

1.01

  Certain Definitions      1   

1.02

  Construction      8   

Article II

 

GENERAL PROVISIONS

     9   

2.01

  Formation and Continuation      9   

2.02

  Name      9   

2.03

  Principal Place of Business      9   

2.04

  Registered Office; Registered Agent      9   

2.05

  Purposes and Powers      9   

2.06

  Foreign Qualifications      10   

2.07

  Term      10   

2.08

  Tax Treatment as Partnership      10   

Article III

 

MEMBERS; UNITS

     10   

3.01

  Members.      10   

3.02

  Units; Class and Series      11   

3.03

  Initial Unit Designations; Authorized Units.      11   

3.04

  Unit Certificates      12   

3.05

  Issued and Outstanding Units; Unit Ledger      13   

3.06

  Safe Harbor Election      13   

3.07

  Voting Rights      13   

3.08

  Splits, Distributions and Reclassifications      13   

Article IV

 

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

     13   

4.01

  Capital Contributions      13   

4.02

  Additional Capital Contributions      13   

4.03

  Return of Capital Contributions      13   

4.04

  No Liability; No Deficit Restoration      13   

4.05

  Capital Accounts      14   

Article V

 

ALLOCATIONS; DISTRIBUTIONS

     15   

5.01

  Allocation of Net Profits and Net Losses      15   

5.02

  No Return of Distributions      15   

5.03

  Deficit Capital Accounts      15   

5.04

  Regulatory Allocations      15   

5.05

  Curative Allocations      17   

5.06

  Income Tax Allocations      17   

 

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5.07

  Other Allocation Rules      17   

5.08

  Code Section 704(c) Allocations      18   

5.09

  Distributions      18   

5.10

  Tax Distributions      18   

5.11

  Restrictions on Distributions      19   

5.12

  Withholding      19   

5.13

  Indemnification and Reimbursement for Payments on Behalf of a Member      19
  

Article VI

 

COSTS AND EXPENSES

     20   

6.01

  Operating Costs      20   

Article VII

 

GOVERNANCE

     20   

7.01

  Management of the Business      20   

7.02

  Investment Company Act      22   

7.03

  Meetings of the Members      22   

7.04

  Provisions Applicable to All Meetings      23   

7.05

  Officers      24   

7.06

  Duties of the Managing Member and the Members      24   

7.07

  Liability of the Managing Member      24   

7.08

  No Right to Act      25   

7.09

  Investment Representations of Members      25   

Article VIII

 

ADDITIONAL COVENANTS

     25   

8.01

  Confidentiality      25   

8.02

  Company Property      26   

8.03

  Transactions Between Members and the Company      26   

8.04

  Noncompete; Nonsolicitation      26   

Article IX

 

RESTRICTIONS ON TRANSFERS

     28   

9.01

  General Restrictions      28   

9.02

  Permitted Transfers      28   

9.03

  Conditions to Transfers      28   

9.04

  Expenses of Transfer; Indemnification      29   

9.05

  Exchange Agreement      29   

9.06

  Redemption      29   

Article X

 

DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY

     30   

10.01

  Dissolution      30   

10.02

  Liquidation and Termination      30   

10.03

  Deficit Capital Accounts      32   

10.04

  Certificate of Cancellation      32   

Article XI

 

ACCOUNTING

     32   

 

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11.01

  Accounts of the Company      32   

11.02

  Annual Reports to Members      32   

11.03

  Tax Returns and Tax Elections      33   

11.04

  No Further Rights to Books and Records      33   

Article XII

 

EXCULPATION AND INDEMNIFICATION

     33   

12.01

  Exculpation      33   

12.02

  Indemnification      34   

12.03

  Expenses      34   

12.04

  Non-Exclusivity      34   

12.05

  Insurance      34   

Article XIII

 

MISCELLANEOUS

     35   

13.01

  Amendments      35   

13.02

  Severability      35   

13.03

  Notices      35   

13.04

  No Waiver      36   

13.05

  Governing Law; Venue      36   

13.06

  Binding Effect      36   

13.07

  Entire Agreement      36   

13.08

  Other Activities      36   

13.09

  Further Assurances      36   

13.10

  Counterparts      36   

13.11

  Waiver of Right to Partition      36   

 

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AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

OF

MANNING & NAPIER GROUP, LLC

This AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of MANNING &
NAPIER GROUP, LLC, a Delaware limited liability company (the “Company”),
effective as of October 1, 2011 (the “Effective Date”), is adopted, executed and
agreed to by and among the signatories hereto and shall be binding on all of the
Members (as defined below).

WHEREAS, the Company was formed on June 24, 2011, pursuant to and in accordance
with the Delaware Limited Liability Company Act (6 Del. C. § 18-101, et seq.)
(the “Act”) by the filing of its Certificate of Formation (the “Certificate”)
with the Secretary of State of the State of Delaware;

WHEREAS, the Company has been governed by a Limited Liability Company Agreement
dated as of June 24, 2011 (the “Original Agreement”);

WHEREAS, the signatories to this Agreement constitute the requisite Persons
needed to amend the Original Agreement, and such Persons desire to amend and
restate the Original Agreement in its entirety on the terms herein provided; and

WHEREAS, the Members desire to participate in the Company for the purposes
described herein.

NOW, THEREFORE, in consideration of the agreements and covenants set forth
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS AND CONSTRUCTION

1.01 Certain Definitions. For the purposes of this Agreement, the following
terms have the following meanings:

“2011 Equity Compensation Plan” shall mean an equity compensation plan of
Manning & Napier, to be effective at the time of the Initial Public Offering.

“Accounting Period” shall mean, as the context may require: (a) the period
commencing on the date of this Agreement and ending on December 31 of the same
year, (b) any subsequent twelve (12) month period beginning on January 1 and
ending on December 31 and (c) any portion of the period described in clauses
(a) or (b) for which the Company is required or elects to allocate items of Net
Profits and Net Loss, or any other items of Company income, gain, loss or
deduction pursuant to this Agreement.

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

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“Adjusted Capital Account” means the Capital Account maintained for each Member,
(a) increased by any amounts that such Member is obligated to restore (or is
treated as obligated to restore under Treasury Regulation Sections
1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and 1.704-2(i)(5)), and (b) decreased by any
amounts described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or
(6) with respect to such Member.

“Affiliate(s)” shall mean, with respect to any Person, any other Person that
directly, or through one (1) or more intermediaries, controls or is controlling,
controlled by, or under common control with, such Person. For the purposes of
this definition, the term “control” and its corollaries shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management policies of a Person, whether through the ownership
of voting securities, contract, as trustee or executor or otherwise.

“Agreement” shall mean this Amended and Restated Limited Liability Company
Agreement of Manning & Napier Group, LLC, as amended, supplemented or restated
from time to time, including the exhibits and schedules hereto.

“Business Day” shall mean any day on which commercial banks located in New York,
New York are not required or authorized by Law to remain closed.

“Capital Account(s)” has the meaning set forth in Section 4.05(a) hereof.

“Capital Contribution(s)” shall mean the contribution made by a Member to the
capital of the Company from time to time pursuant to Sections 4.01 or 4.02
hereof.

“Capital Transaction” means (a) any sale or other disposition (including as a
result of a damage or destruction or other loss) by the Company of all or
substantially all of the assets owned by the Company or (b) any financing or
refinancing by the Company of all or substantially all of the assets or any
indebtedness of the Company other than in the ordinary course of business of the
Company.

“Certificate” has the meaning set forth in the recitals hereto.

“Class A Common Stock” shall mean the Class A common stock, par value $0.01 per
share, of Manning & Napier, to be authorized immediately prior to the
consummation of the Initial Public Offering.

“Class A Units” has the meaning set forth in Section 3.03(a) hereof.

“Class B Units” has the meaning set forth in Section 3.03(b) hereof.

“Code” shall mean the Internal Revenue Code of 1986, as it may be amended from
time to time (or any succeeding Law), and the Treasury Regulations promulgated
pursuant thereto. References to sections of the Code shall include amended or
successor provisions thereto.

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

 

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“Confidential Information” shall mean any information which is currently held by
the Company or is hereafter acquired, developed or used by the Company or its
subsidiaries relating to business opportunities or other operational, economic,
financial, management or other aspects of the business, operations, properties
or prospects of the Company, whether oral or in written form.

“Curative Allocations” means the allocations pursuant to Section 5.05 of this
Agreement.

“Depreciation” means, for each taxable year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for federal income tax purposes in respect of such taxable
year, except that with respect to any other asset whose Gross Asset Value
differs from its adjusted basis for federal income tax purposes at the beginning
of such taxable year, Depreciation shall be an amount which bears the same ratio
to such beginning Gross Asset Value as the federal income tax depreciation,
amortization, or other cost recovery deduction for such taxable year bears to
such beginning adjusted tax basis; provided that if the adjusted basis for
federal income tax purposes of an asset at the beginning of such taxable year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset value using any reasonable method selected by the Managing Member.

“Dissolution Event” has the meaning set forth in Section 10.01(a) hereof.

“Economic Risk of Loss” has the meaning set forth in Treasury Regulation
Section 1.752-2(a).

“Effective Date” has the meaning set forth in the preamble hereto.

“Employee-Member” means a Member who is or was at any time employed by the
Company or its Affiliates.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.

“Exchange Agreement” shall mean the exchange agreement, by and among Manning &
Napier, M&N Group Holdings, Manning & Napier Capital Company, LLC and any other
holder of Units, to be entered into in connection with the Initial Public
Offering, pursuant to which the parties thereto are permitted, upon the terms
and subject to the conditions to be provided therein, to exchange Units for cash
or shares of Class A Common Stock, to be determined in Manning & Napier’s sole
discretion.

“Fiscal Year” shall mean the calendar year.

“GAAP” shall mean generally accepted accounting principles in the United States
as in effect at the time any applicable financial statements were prepared.

“Governmental or Regulatory Authority” shall mean any instrumentality,
subdivision, court, administrative agency, commission, official or other
authority of the United States or any other country or any state, province,
prefect, municipality, locality or other government or

 

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political subdivision thereof, or any quasi-governmental or private body
exercising any regulatory, taxing, importing or other governmental or
quasi-governmental authority.

“Grant Agreement” shall mean the agreement between the Company and an
Employee-Member pursuant to which an Employee-Member is issued Units.

“Gross Asset Value” shall mean, with respect to any asset of the Company, such
asset’s adjusted basis for federal income tax purposes, except as follows:

(a) the initial Gross Asset Value of any asset contributed by a Member to the
Company shall be the gross fair market value of such asset, as determined by the
Managing Member in its sole discretion;

(b) the Gross Asset Values of all Company assets shall be adjusted to equal
their respective gross fair market values (taking Code Section 7701(g) into
account), as determined by the Managing Member as of the following times:
(A) the acquisition of a new or an additional interest in the Company by any new
or existing Member in exchange for more than a de minimis capital contribution
or as consideration for services performed or to be performed by such Member for
the Company; (B) the distribution by the Company to a Member of more than a de
minimis amount of Company property as consideration for an interest in the
Company; (C) the liquidation of the Company within the meaning of Treasury
Regulations Section 1.704-1(b)(2)(ii)(g); (D) the issuance, forfeiture or
redemption of more than a de minimis amount of Units after the date of this
Agreement; (E) the vesting of any Class B Unit; or (F) such other times as the
Managing Member may, in its sole discretion, determine; provided that an
adjustment described in clauses (A), (B) or (D) of this paragraph shall be made
only if the Managing Member, in its sole discretion, determines that such
adjustment is necessary to reflect the relative economic interests of the
Members in the Company;

(c) the Gross Asset Value of any item of Company assets distributed to a Member
shall be adjusted to equal the gross fair market value (taking Code
Section 7701(g) into account) of such asset on the date of distribution as
determined by the Managing Member; and

(d) the Gross Asset Values of Company assets shall be increased (or decreased)
to reflect any adjustments to the adjusted basis of such assets pursuant to Code
Section 734(b) or Code Section 743(b), but only to the extent that such
adjustments are taken into account in determining Capital Accounts pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(m) and clause (f) of the
definition of “Net Profits” and “Net Losses;” provided that Gross Asset Values
shall not be adjusted pursuant to this clause (d) to the extent that an
adjustment pursuant to clause (b) is required in connection with a transaction
that would otherwise result in an adjustment pursuant to this clause (d).

If the Gross Asset Value of an asset has been determined or adjusted pursuant to
clause (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 Net Profits and Net Losses.

“Indemnitee” has the meaning set forth in Section 12.02 hereof.

 

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“Initial Public Offering” shall mean the initial public offering of the Class A
Common Stock of Manning & Napier.

“Joinder Agreement” has the meaning set forth in Section 3.01(b) hereof.

“Law” shall mean any statute, law, ordinance, rule or regulation of any
Governmental or Regulatory Authority or any other Person.

“Legal Representative(s)” shall mean any and all executors, administrators,
committees, guardians, conservators or trustees, in bankruptcy or otherwise, of
a Member.

“Lien” shall mean a mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, easement, right of way, restriction on the use
of real property, title defect, title retention agreement, voting trust
agreement, option, right of first refusal, lien, charge, license to third
parties, lease to third parties, restriction on transfer or assignment, or other
restriction or limitation of any nature or irregularities in title.

“Losses” shall mean, collectively, losses, claims, damages, liabilities,
expenses (including legal fees and expenses), judgments, fines, settlements and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, whether civil, criminal, administrative or investigative.

“M&N Group Holdings” shall mean M&N Group Holdings, LLC, a Delaware limited
liability company.

“M&N Group Holdings Operating Agreement” shall mean that certain amended and
restated limited liability company agreement of M&N Group Holdings, LLC,
effective as of October 1, 2011, as amended, supplemented or restated from time
to time, including the exhibits and schedules thereto.

“Managing Member” shall mean Manning & Napier and any other successor of
Manning & Napier.

“Manning & Napier” shall mean Manning & Napier, Inc., a Delaware corporation.

“Member(s)” shall mean any Person, other than the Company, (a) executing this
Agreement as of the Effective Date or (b) who is hereafter admitted to the
Company as a Member as provided in Section 3.01(b), but such term does not
include any Person who has ceased to be a Member in the Company as provided in
Section 3.01(c).

“Member Nonrecourse Debt” has the meaning assigned to the term “partner
nonrecourse debt” in Treasury Regulation Section 1.704-2(b)(4).

“Member Nonrecourse Debt Minimum Gain” has the meaning assigned to the term
“partner nonrecourse debt minimum gain” set forth in Treasury Regulation
Section 1.704-2(i)(2).

 

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“Member Nonrecourse Deduction” has the meaning assigned to the term “partner
nonrecourse deduction” in Treasury Regulation Section 1.704-2(i)(1).

“Membership Interest” shall mean the interest of a Member, in its capacity as
such, in the Company, including the rights to distributions (liquidating or
otherwise), allocations, information, all other rights, benefits and privileges
enjoyed by that Member (under the Act, the Certificate of Formation, this
Agreement or otherwise) in its capacity as a Member and, with respect to the
Managing Member, otherwise to participate in the management of the Company, and
all obligations, duties and liabilities imposed on that Member (under the Act,
the Certificate of Formation, this Agreement or otherwise) in its capacity as a
Member.

“Minimum Gain” has the meaning assigned to that term in Treasury Regulation
Section 1.704-2(d).

“Net Proceeds” means, other than with respect to a Capital Transaction, all cash
receipts of the Company and the fair market value of any property received by
the Company, during any period, from whatever source derived, less the amount of
all of the Company’s expenses paid during such period, including, without
limitation, debt service payments and such reserves as the Managing Member, in
its sole discretion, may establish.

“Net Proceeds from a Capital Transaction” means, in connection with a Capital
Transaction, the gross cash proceeds and the fair market value of any property
received in connection therewith, less all expenses thereof, including, without
limitation, attorney fees, accountant fees and other professional fees, brokers
fees, all expenses of sale, closing costs, appraisal costs, fees, charges and
taxes, including any fees, charges and taxes which are allocable to such sale,
all expenses, the payment of which is to be paid out of such proceeds, and less
any reserves for such purposes as the Managing Member, in its sole discretion,
may establish.

“Net Profits” or “Net Losses” shall mean an amount equal to the Company’s
taxable income or loss for any taxable year, determined in accordance with Code
Section 703(a) (for this purpose, all items of income, gain, loss or deduction
required to be stated separately pursuant to Code Section 703(a)(1) shall be
included in taxable income or loss) with the following adjustments:

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

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

(c) In the event the Gross Asset Value of any Company asset is adjusted pursuant
to clauses (a) or (b) of the definition of Gross Asset Value, the amount of such

 

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adjustment shall be treated as an item of gain (if the adjustment increases the
Gross Asset Value of the asset) or an item of loss (if the adjustment decreases
the Gross Asset Value of the asset) from the disposition of such asset and shall
be taken into account for purposes of computing Net Profits or Net 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 of such taxable year, computed in
accordance with the definition of “Depreciation;”

(f) To the extent an adjustment to the adjusted tax basis of any Company asset
pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to
Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution other than a complete
liquidation of a Member’s interest in the Company, the amount of such adjustment
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases the basis of the asset) from the
disposition of the asset and shall be taken into account for purposes of
computing Net Profits or Net Losses; and

(g) Excluding any item specifically allocated under Article V.

“Noncompete Period” means, with respect to an Employee-Member, the period set
forth in such Employee-Member’s Grant Agreement.

“Officers” has the meaning set forth in Section 7.05 hereof.

“Original Agreement” has the meaning set forth in the recitals hereto.

“Permitted Transferee” has the meaning set forth in Section 9.02 hereof.

“Person(s)” shall mean any individual, partnership (whether general or limited),
joint venture, corporation, limited liability company, trust, an incorporated
organization and a Governmental or Regulatory Authority or other entity.

“Prime Rate” shall mean U.S. prime rate published in The Wall Street Journal on
the Business Day immediately prior to the date of determination.

“Prospect” means any Person (i) who is on the Company’s monthly marketing group
meeting list of prospects issued during the twelve months prior to Termination;
(ii) who is on the monthly, quarterly, or semiannual list of prospects submitted
to the Company’s products group manager (or Person fulfilling such function)
issued in the twelve months prior to Termination, (iii) who is on the Company’s
semiannual forecast list of prospects that each sales representative or client
consultant submits to the national sales manager (or Person fulfilling such
function)

 

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issued in the twelve months prior to Termination; or (iv) who has met with sales
or marketing personnel of the Company or its Affiliates more than two times in
the six months prior to Termination regarding the services provided by the
Company or its Affiliates.

“Regulatory Allocations“ means the allocations pursuant to Section 5.04 of this
Agreement.

“Revaluation Event” shall mean any event pursuant to which the property of the
Company is revalued in accordance with the definition of “Gross Asset Value”
herein.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

“Sharing Percentage” shall mean, with respect to any Member, a percentage,
expressed as a fraction the numerator of which is the number of Units held by
such Member and the denominator of which is the aggregate number of Units held
by all Members.

“Tax Allowance Amount” shall mean, with respect to any Member for any fiscal
quarter of the Company, an amount equal to the product of: (a) the highest
combined federal, state and local tax rate applicable to any Member (and in the
case of any Member that is a “pass-through” entity for income tax purposes,
including those applicable to the ultimate beneficial owners of any such Member
that are taxable entities or individuals) in respect of the taxable income and
taxable loss of the Company in respect of such fiscal quarter, taking into
account the deductibility of state and local taxes for federal income tax
purposes, and (b) an amount equal to the remainder of (i) such Member’s share of
the estimated net taxable income, other than from a Capital Transaction
resulting in the liquidation of the Company, allocable to such Member arising
from its ownership of an interest in the Company calculated through such fiscal
quarter and (ii) any net losses (for income tax purposes) of the Company for
prior Fiscal Years or net losses (for income tax purposes) prior fiscal quarters
of the then current Fiscal Year that are allocable to such Member that were not
previously utilized in the calculation of the Tax Allowance Amounts in a prior
Fiscal Year or any prior fiscal quarter of the then current Fiscal Year.

“Termination” means the date that an Employee-Member’s employment with the
Company or its Affiliates terminates for any reason, including, without
limitation, on account of death, disability or retirement.

“Transfer” shall mean, as a noun, any voluntary or involuntary, direct or
indirect transfer, sale, exchange, assignment, pledge, hypothecation, creation
of a security interest or other disposition and, as a verb, voluntarily or
involuntarily to transfer, sell, assign, pledge, hypothecate, grant a security
interest in or otherwise dispose of.

“Units” has the meaning set forth in Section 3.02 hereof.

1.02 Construction. For the purposes of this Agreement (a) any reference in this
Agreement to gender shall include all genders; (b) any words imparting the
singular number only shall include the plural and visa versa; (c) the terms
“herein,” “hereinafter,” “hereof,” “hereby”

 

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and “hereunder” and words of similar import refer to this Agreement as a whole
(including all of the exhibits and schedules hereto) and not merely to a
subdivision in which such words appear unless the context otherwise requires;
(d) the word “including” or any variation thereof means “including, without
limitation” and shall not be construed to limit any general statement that it
follows to the specific or similar items or matters immediately following it;
(e) any reference in this Agreement to “dollars” or ($) shall mean United States
dollars; (f) the word “or” shall not be exclusive; (g) all references to any
period of days shall be deemed to be to the relevant number of calendar days
unless otherwise specified; (h) all references to an “employee” of the Company
shall include any natural person that provides personal services to any member
of the Company, whether or not such natural person is treated as a “partner”
(rather than as an employee) for tax and tax withholding purposes; (i) any
reference in this Agreement to “writing” or comparable expressions includes a
reference to facsimile transmissions or comparable means of communication; and
(j) references to any statute or statutory provision shall include a reference
to that statute or statutory provision as amended, consolidated or replaced from
time to time (whether before or after the date of this Agreement) and include
subordinate legislation made under the relevant statute or statutory provision.

ARTICLE II

GENERAL PROVISIONS

2.01 Formation and Continuation. The Company was organized as a limited
liability company under the Act on June 24, 2011 by the execution and filing of
the Certificate with the Secretary of State of the State of Delaware. The
Managing Member and the other Members hereby agree to continue the Company under
and pursuant to the terms of the Act and agree further that the rights, duties
and obligations of the Members shall be as provided in the Act except as
otherwise provided in this Agreement.

2.02 Name. The name of the Company shall be “Manning & Napier Group, LLC,”
provided that the Managing Member shall have the right to change the name of the
Company, upon written notice to each of the Members.

2.03 Principal Place of Business. The principal office of the Company shall be
maintained at 290 Woodcliff Drive, Fairport, New York 14450, or at such other
location as the Managing Member may designate from time to time. The Company may
establish or abandon from time to time such additional offices and places of
business as the Managing Member may deem appropriate in the conduct of the
Company’s business.

2.04 Registered Office; Registered Agent. The registered office of the Company
required by the Act to be maintained in the State of Delaware shall be the
office of the initial registered agent named in the Certificate or such other
office (which need not be a place of business of the Company) as the Managing
Member may designate in the manner provided by Law. The registered agent of the
Company in the State of Delaware shall be the initial registered agent named in
the Certificate or such other Person or Persons as the Managing Member may
designate in the manner provided by Law.

2.05 Purposes and Powers. The purpose of the Company shall be to carry on any
lawful business or activity and to have and exercise all of the powers, rights
and privileges which

 

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a limited liability company organized pursuant to the Act may have and exercise.
The Company shall not conduct any business which is forbidden by or contrary to
Law.

2.06 Foreign Qualifications. Prior to the Company’s conducting business in any
jurisdiction other than Delaware, to the extent that the nature of the business
conducted requires the Company to qualify as a foreign limited liability company
under the Law of that jurisdiction, the Company shall satisfy all requirements
necessary to so qualify. At the request of the Company, each Member shall
execute, acknowledge, swear to and deliver all certificates and other
instruments conforming with this Agreement that are necessary or appropriate to
qualify, continue and terminate the Company as a foreign limited liability
company in all such jurisdictions in which the Company may conduct business.

2.07 Term. The existence of the Company commenced upon the filing of the
Certificate, and the Company shall have a perpetual existence unless and until
dissolved and terminated in accordance with the provisions of this Agreement and
the Act.

2.08 Tax Treatment as Partnership. The Members do not intend for the Company to
be a partnership (including a limited partnership) or joint venture, and no
Member or officer shall be a partner or joint venturer of any other Member or
officer by reason of this Agreement for any purpose other than federal and, if
applicable, state and local income tax purposes, and this Agreement shall not be
interpreted to provide otherwise. The Members intend that the Company will be
treated as a partnership for federal and, if applicable, state and local income
tax purposes, and each Member and the Company will file all tax returns and will
otherwise take all tax and financial reporting positions in a manner consistent
with such treatment. The Company will not make any election to be treated as a
corporation for federal and, if applicable, state and local income tax purposes,
except with the approval of the Managing Member.

ARTICLE III

MEMBERS; UNITS

3.01 Members.

(a) Existing Members. Each of the Persons listed on Schedule A hereto is hereby
admitted, or has previously been admitted, as a Member.

(b) Additional Members. In addition to the Persons listed on Schedule A, upon
the execution and delivery to the Company of a Joinder Agreement substantially
in the form of Exhibit A hereto (the “Joinder Agreement”), the following Persons
shall be deemed to be Members and shall be admitted as Members without any
further action by the Company, the Managing Member or any Member: (i) any Person
to whom Units are Transferred by a Member so long as such Transfer is made in
compliance with Article IX of this Agreement and (ii) any Person to whom the
Company issues Units after the Effective Date in compliance with this Agreement.

(c) Cessation of Members. Any Person admitted or deemed admitted as a Member
pursuant to Section 3.01(a) or Section 3.01(b) shall cease to have the rights of
a Member under this Agreement at such time that such Person is no longer a
record owner of any

 

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Units (except as provided under Section 12.02, which rights shall not cease),
but such Person shall remain bound by all of the provisions of this Agreement
except those, if any, that expressly terminate upon cessation of being a Member.

(d) Liability of Members. Except as otherwise provided by the Act or herein, 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 not be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a member of the
Company.

3.02 Units; Class and Series. Membership Interests in the Company shall be
represented by whole or fractional unit increments (each, a “Unit”). From time
to time, the Company may, subject to the terms of this Agreement, issue such
number of Units as the Managing Member reasonably determines to be in the best
interests of the Company. Units may be issued from time to time in one or more
classes or series, with such designations, preferences and rights as are set
forth in Section 3.03 or otherwise as shall be fixed from time to time by the
Managing Member by resolution thereof. All issuances of Units shall require the
prior approval of the Managing Member. In so fixing the designations, rights and
preferences of any class or series of Units, the Managing Member may designate
such Units as “Preferred Units,” “Class A Units,” “Class B Units,” or any other
designation and may specify the voting rights of such Units and such Units to be
senior, junior, or pari passu with any Units then outstanding or to be issued
thereafter. The Managing Member may increase the number of authorized Units in
any then existing class or series. Upon due authorization of such issuances, the
Managing Member is hereby authorized to take all actions that it deems
reasonably necessary or appropriate in connection with the authorization
(including the increase in number of authorized Units of any class or series),
designation, creation and issuance of Units and the fixing of the designations,
preferences and rights applicable thereto, and designations, preferences and
rights of any new class or series of Units relative to the designations,
preferences and rights governing any other series or classes of Units.

3.03 Initial Unit Designations; Authorized Units.

(a) A class of Units is hereby designated as “Class A Units.” The Company is
authorized to issue 100,000,000 Class A Units, or such greater number as the
Managing Member approves from time to time, and any Class A Unit issued in
accordance with this Agreement shall be deemed to have been duly authorized and
validly issued. The names and addresses of the Members holding record title to
the Class A Units that have been issued by the Company as of the Effective Date
are set forth in Schedule A hereto.

(b) A class of Units is hereby designated as “Class B Units.” The Company is
authorized to issue 10,000,000 Class B Units, or such greater number as the
Managing Member approves from time to time, and any Class B Unit issued in
accordance with the 2011 Equity Compensation Plan or otherwise at the discretion
of the Managing Member shall be deemed to have been duly authorized and validly
issued; provided, however, that such Class B Units shall be subject to such
other terms and conditions as may be set forth in the 2011 Equity Compensation
Plan, Grant Agreement or such other plan, agreement, or other arrangement. Class
B Units may be issued by the Company to Persons from time to time for no

 

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consideration or de minimis consideration as such interests are intended to
constitute “profits interests” within the meaning of Revenue Procedures 93-27
and 2001-43.

3.04 Unit Certificates. Ownership of Units may, but need not, be evidenced by
certificates similar to customary stock certificates. As of the date hereof,
Units are uncertificated, but the Managing Member may determine to certificate
all or any Units at any time by resolution thereof. In such event, the Managing
Member shall prescribe the forms of certificates to be issued by the Company
including the forms of legends to be affixed thereto. Any such certificate shall
be delivered by the Company to the applicable record owner of the Units
represented by such certificate. Certificates evidencing Units shall provide
that they are governed by Article 8 of the Uniform Commercial Code. Certificates
need not bear a seal of the Company but shall be signed by the Chief Executive
Officer, President, any Vice President or any other Person authorized by the
Managing Member to sign such certificates who shall certify the Units
represented by such certificate. In the event any Officer who shall have signed,
or whose facsimile signature or signatures shall have been placed upon, any such
certificate or certificates shall cease to be such Officer before such
certificate is issued by the Company, such certificate may nevertheless be
issued by the Company with the same effect as if such person were such Officer
at the date of issue. The Managing Member may determine the conditions upon
which a new certificate may be issued in place of a certificate which is alleged
to have been lost, stolen or destroyed and may, in its discretion, require the
owner of such certificate or its Legal Representative to give bond, with
sufficient surety, to indemnify the Company against any and all losses or claims
that may arise by reason of the issuance of a new certificate in the place of
the one so lost, stolen or destroyed. Each certificate shall bear a legend on
the reverse side thereof substantially in the following form in addition to any
other legend required by Law or by agreement with the Company:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE OFFERED OR SOLD, UNLESS IT HAS
BEEN REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE (AND, IN SUCH CASE, AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY MAY BE REQUESTED BY THE COMPANY TO THE EFFECT THAT
SUCH OFFER OR SALE IS NOT REQUIRED TO BE REGISTERED UNDER THE SECURITIES ACT).

THIS SECURITY MAY BE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER TERMS
AND CONDITIONS SET FORTH IN THE FIRST AMENDED AND RESTATED LIMITED LIABILITY
COMPANY AGREEMENT OF THE COMPANY, EFFECTIVE AS OF OCTOBER 1, 2011 (AS MAY BE
AMENDED OR RESTATED FROM TIME TO TIME), A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.

 

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3.05 Issued and Outstanding Units; Unit Ledger. The Company shall maintain a
ledger listing all of the record holders of Units and the number, class or
series of Units held thereby. The Company will update Schedule A as Units are
issued, forfeited or transferred from time to time. Any modification to Schedule
A for the foregoing reasons shall not require consent or approval from any of
the Members.

3.06 Safe Harbor Election. Without any further action by the Managing Member or
any other Member, the Company may make an election to value any Class B Units at
liquidation value (the “Safe Harbor Election”) as the same may be permitted
pursuant to or in accordance with Treasury Regulations Section 1.83-3(1) and IRS
Notice 2005-43. The Managing Member shall cause the Company to make any
allocations of items of income, gain, deduction, loss or credit (including
forfeiture allocations under Treasury Regulations Section 1.704-1(b)(4)(xii)(c)
and elections as to allocation periods) necessary or appropriate to effectuate
and maintain the Safe Harbor Election.

3.07 Voting Rights. Each Unit shall entitle the holder thereof to one vote for
each such Unit.

3.08 Splits, Distributions and Reclassifications. Following the consummation of
the Initial Public Offering, the Company shall not in any manner subdivide (by
any unit split, unit distribution, reclassification, recapitalization or
otherwise) or combine (by reverse unit split, reclassification, recapitalization
or otherwise) the outstanding Units unless an identical event is occurring or
has occurred with respect to the Class A Common Stock, in which event the Units
shall be subdivided or combined concurrently with subsequent to and in the same
manner as the Class A Common Stock.

ARTICLE IV

CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS

4.01 Capital Contributions. As of the Effective Date, each Member has made, or
is deemed to have made, Capital Contributions, in cash or other property, in the
amount specified in the books and records of the Company.

4.02 Additional Capital Contributions. No Member shall have any obligation to
make any additional Capital Contributions after the Effective Date. In addition,
no Member shall be permitted to make additional Capital Contributions of cash or
other property without the express permission of the Managing Member, which
permission may be withheld for any or no reason.

4.03 Return of Capital Contributions. Except as expressly provided in this
Agreement, (a) no Member shall receive any return or distribution of its Capital
Contributions, (b) no Member shall receive any interest or other return on or
with respect to either its Capital Contributions or its Capital Account and
(c) no Member shall be entitled to withdraw any part of its Capital
Contributions or its Capital Account.

4.04 No Liability; No Deficit Restoration. The Members shall not be bound by,
nor be personally liable for, the expenses, liabilities, indebtedness or
obligations of the Company (unless otherwise agreed to by such Member in
writing) or of any other Member. The Members

 

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intend and agree that no Member shall be obligated to pay any deficit in its
Capital Account to or for the account of the Company or any creditor of the
Company.

4.05 Capital Accounts.

(a) A separate capital account (a “Capital Account”) shall be maintained for
each Member on the books of the Company.

(b) Each Member’s Capital Account will be increased by: (i) the amount of money
contributed by such Member to the Company, (ii) the Gross Asset Value of any
property contributed by such Member to the Company, (iii) the amount of any
liabilities of the Company assumed by such Member or which are secured by any
property distributed to such Member and (iv) allocations to such Member of Net
Profits and other items of income or gain in accordance with the allocation
provisions of this Agreement.

(c) Each Member’s Capital Account will be decreased by: (i) the amount of money
distributed to such Member by the Company, (ii) the Gross Asset Value of any
property distributed to such Member by the Company, (iii) the amount of an
liabilities of such Member assumed by the Company or which are secured by any
property contributed by such Member to the Company and (iv) allocations to such
Member of Net Losses and other items of deduction and loss in accordance with
the allocation provisions of this Agreement.

(d) Each Member’s Capital Account will be appropriately adjusted to take into
account any adjustments to the Gross Asset Value of Company assets in accordance
with the definition of the term “Gross Asset Value”.

(e) In the event of a permitted sale or exchange of a Membership Interest, the
Capital Account of the transferor shall become the Capital Account of the
transferee to the extent it relates to the transferred Membership Interest in
accordance with Section 1.704-1(b)(2)(iv)(l) of the Treasury Regulations.

(f) In determining the amount of any liability for purposes of this
Section 4.05, there shall be taken into account Code Section 752(c) and any
other applicable provisions of the Code and the Treasury Regulations.

(g) The manner in which Capital Accounts are to be maintained pursuant to this
Section 4.05 is intended to comply with the requirements of Code Section 704(b)
and the Treasury Regulations promulgated thereunder. If the Managing Member
determines that the manner in which Capital Accounts are to be maintained
pursuant to the preceding provisions of this Section 4.05 should be modified in
order to comply with Code Section 704(b) and the Treasury Regulations, then
notwithstanding anything to the contrary contained in the preceding provisions
of this Section 4.05, the method in which Capital Accounts are maintained shall
be so modified; provided, however, that any change in the manner of maintaining
Capital Accounts shall not materially alter the economic agreement between or
among the Members as set forth in this Agreement.

 

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ARTICLE V

ALLOCATIONS; DISTRIBUTIONS

5.01 Allocation of Net Profits and Net Losses.

(a) Net Profits and Net Losses other than from a Capital Transaction, except as
otherwise provided herein, including Sections 5.01(b), 5.04 and 5.05, or unless
another allocation is required by Treasury Regulations promulgated under
Section 704(b) of the Code for the allocations to have “economic effect,” for
purposes of maintaining the Capital Accounts of the Members, for each Accounting
Period, shall be allocated to and among all Members, pro rata, based on their
respective Sharing Percentages.

(b) Subject to the provisions of Sections 5.04 and 5.05, if one or more
Revaluation Events are effectuated during a Fiscal Year, the Company shall
allocate amounts described in paragraph (c) of the definition of Net Profits and
Net Losses attributable to that Revaluation Event in a manner that will, as
nearly as possible, cause the Capital Account balance of each Member at the end
of such Accounting Period to be in the same proportion as its respective Sharing
Percentage.

(c) Subject to the provisions of Sections 5.04 and 5.05, Net Profits and Net
Losses with respect to a Capital Transaction shall be allocated to the
Members in a manner that will, as nearly as possible, cause the Capital Account
balance of each Member at the end of such Accounting Period to be in the same
proportion as their respective Sharing Percentages.

(d) Allocations provided in this Section 5.01 shall take into account changes to
the Sharing Percentages during the taxable year using the closing of books
method or any other reasonable convention adopted by the Managing Member or the
Board, as applicable, in its sole discretion; in addition, with respect to an
Accounting Period during which any Unit of the Company (that constitutes a
“profits interest” for tax purposes) is issued to any Member in connection with
performance of services, the Net Profits or Net Losses shall be allocated to
such Member only with respect to periods beginning after the receipt of such
Unit.

5.02 No Return of Distributions. No Member shall have any obligation to refund
to the Company any amount that shall have been distributed to such Member
pursuant to this Agreement unless required to do so by applicable law.

5.03 Deficit Capital Accounts. Except as otherwise provided herein or under the
Act, no Member shall be required at any time to contribute any amount to the
Company solely because of a deficit or negative balance in the Capital Account
of such Member, and any deficit or negative balance shall not be considered an
asset of the Company for any purpose.

5.04 Regulatory Allocations. The following allocations shall be made in the
following order:

(a) Nonrecourse Deductions shall be allocated to the Members in accordance with
their respective Sharing Percentages.

 

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(b) Member Nonrecourse Deductions attributable to Member Nonrecourse Debt shall
be allocated to the Members bearing the Economic Risk of Loss for such Member
Nonrecourse Debt as determined under Treasury Regulation Section 1.704-2(b)(4).
If more than one Member bears the Economic Risk of Loss for such Member
Nonrecourse Debt, the Member Nonrecourse Deductions attributable to such Member
Nonrecourse Debt shall be allocated among the Members according to the ratio in
which they bear the Economic Risk of Loss. This Section 5.04(b) is intended to
comply with the provisions of Treasury Regulation Section 1.704-2(i) and shall
be interpreted consistently therewith.

(c) Notwithstanding any other provision hereof to the contrary, if there is a
net decrease in Minimum Gain for a Fiscal Year (or if there was a net decrease
in Minimum Gain for a prior Fiscal Year and the Company did not have sufficient
amounts of income and gain during prior years to allocate among the Members
under this Section 5.04(c), items of income and gain shall be allocated to each
Member in an amount equal to such Member’s share of the net decrease in such
Minimum Gain (as determined pursuant to Treasury Regulation
Section 1.704-2(g)(2)). This Section 5.04(c) is intended to constitute a minimum
gain chargeback under Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.

(d) Notwithstanding any provision hereof to the contrary except Section 5.04(c)
(dealing with Minimum Gain), if there is a net decrease in Member Nonrecourse
Debt Minimum Gain for a Fiscal Year (or if there was a net decrease in Member
Nonrecourse Debt Minimum Gain for a prior Fiscal Year and the Company did not
have sufficient amounts of income and gain during prior years to allocate among
the Members under this Section 5.04(d), items of income and gain shall be
allocated to each Member in an amount equal to such Member’s share of the net
decrease in Member Nonrecourse Debt Minimum Gain (as determined pursuant to
Treasury Regulation Section 1.704-2(i)(4)). This Section 5.04(d) is intended to
constitute a partner nonrecourse debt minimum gain chargeback under Treasury
Regulation Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.

(e) Notwithstanding any provision hereof to the contrary except Sections 5.04(c)
and Section 5.04(d) (dealing with Minimum Gain and Member Nonrecourse Debt
Minimum Gain), a Member who unexpectedly receives an adjustment, allocation or
distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4),
(5) or (6) shall be allocated items of income and gain (consisting of a pro rata
portion of each item of income, including gross income, and gain for the Fiscal
Year) in an amount and manner sufficient to eliminate any deficit balance in
such Member’s Adjusted Capital Account as quickly as possible. This
Section 5.04(e) is intended to constitute a qualified income offset under
Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.

(f) In the event that any Member has a negative Adjusted Capital Account at the
end of any Fiscal Year, such Member shall be allocated items of Company income
and gain in the amount of such deficit as quickly as possible; provided that an
allocation pursuant to this Section 5.04(f) shall be made only if and to the
extent that such Member would have a negative Adjusted Capital Account after all
other allocations provided for in this Section 5.04 have been tentatively made
as if this Section 5.04(f) were not in this Agreement.

 

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(g) To the extent an adjustment to the adjusted tax basis of any Company
properties pursuant to Code Section 734(b) or Code Section 743(b) is required
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) or
1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts
as the result of a distribution to any Member in complete liquidation of such
Member’s Membership Interest, the amount of such adjustment to Capital Accounts
shall be treated as an item of gain (if the adjustment increases the basis of
the asset) or loss (if the adjustment decreases such basis) and such gain or
loss shall be allocated to the Members in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(2) if such Section applies, or to the Member to
whom such distribution was made if Treasury Regulation
Section 1.704-1(b)(2)(iv)(m)(4) applies.

5.05 Curative Allocations. The Regulatory Allocations are intended to comply
with certain requirements of Treasury Regulations Sections 1.704-1(b) and
1.704-2. The Regulatory Allocations may be inconsistent with the manner in which
the Members intend to divide Company distributions. Accordingly, the Managing
Member is authorized to divide other allocations of Profits, Losses and other
items among the Members, to the extent that they exist, so that the net amount
of the Regulatory Allocations and the Curative Allocations to each Member is
zero. The Managing Member shall have discretion to accomplish this result in any
reasonable manner that is consistent with Code Section 704 and the related
Treasury Regulations.

5.06 Income Tax Allocations. The income, gains, losses, deductions and credits
of the Company shall be allocated for federal, state and local income tax
purposes among the Members in the same manner and amounts as allocations are
made to the Members pursuant to Section 5.01 of this Agreement. If any
Membership Interest is transferred, or is increased or decreased by reason of
the admission of a new Member or otherwise, during any Accounting Period, each
item of income, gain, loss, deduction, or credit of the Company for such
Accounting Period allocable may be allocated based on any method consistent with
Section 706(d) of the Code, in the sole discretion of the Managing Member.

5.07 Other Allocation Rules.

(a) Except as otherwise provided herein, for purposes of determining the Net
Profits, Net Losses, or any other items allocable to any period, Net Profits,
Net Losses, and any such other items shall be determined on a daily, monthly, or
other basis, as determined by the Managing Member, using any permissible method
under Code Section 706 and the Regulations thereunder.

(b) All items of income, gain, loss, deduction and credit allocable to a Unit in
the Company that is transferred in accordance with this Agreement shall be
allocated between the transferor and the transferee based on the portion of the
calendar year during which each was recognized as the owner of such Unit,
without regard to the results of Company operations during any particular
portion of that calendar year and without regard to whether cash distributions
were made to the transferor or the transferee during that calendar year;
provided, however, that this allocation must be made in accordance with a method
permissible under Code Section 706 and the regulations thereunder.

 

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(c) The Members’ proportionate shares of the “excess nonrecourse liabilities” of
the Company, within the meaning of Treasury Regulation Section 1.752-3(a)(3),
shall be in the same proportions as the relative number of Units held thereby.

5.08 Code Section 704(c) Allocations.

(a) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, income, gain, loss, and deduction with respect to any property
contributed to the Company shall, solely for tax purposes, be allocated among
the Members so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its initial
Gross Asset Value computed in accordance with the definition of “Gross Asset
Value” using such method as the Managing Member shall select.

(b) In the event the Gross Asset Value of any asset is adjusted pursuant to
clause (b) of the definition of “Gross Asset Value,” subsequent allocations of
income, gain, loss and deduction with respect to such asset shall take account
of any variation between the adjusted basis of such asset for federal income tax
purposes and its Gross Asset Value in the same manner as under Code
Section 704(c) and the Treasury Regulations thereunder.

(c) Except otherwise provided herein, any elections or other decisions relating
to such allocations shall be made by the Managing Member in any manner that
reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this Section 5.08 are solely for purposes of federal, state, and
local taxes and shall not affect, or in any way be taken into account in
computing, any Member’s Capital Account or share of Net Profits, Net Losses or
other items or distributions pursuant to any provision of this Agreement.

5.09 Distributions. Subject to applicable Law and any limitations contained
elsewhere in this Agreement, distributions from the Company shall be made at
such times as the Managing Member shall determine from time to time as set forth
below:

(a) Distributions of Net Proceeds shall be made to the Members, pro rata, in
proportion with their respective Sharing Percentages.

(b) Distributions of Net Proceeds from a Capital Transaction shall be made
subject to Article X, to the Members, pro rata, in accordance with their
respective positive Capital Account balances.

Distributions may take the form of cash, securities or other property, as
determined by the Managing Member.

5.10 Tax Distributions. Notwithstanding any other provision of this Agreement to
the contrary and to the extent permitted by law, on or before the date in each
fiscal quarter that estimated income taxes are required to be paid, the Managing
Member shall determine the Tax Allowance Amount for each Member in respect of
such quarter. Upon such determination, and to the extent that the Company has
not made minimum distributions to each Member in an amount at least equal to
such Member’s respective Tax Allowance Amount for the then current fiscal
quarter, the Company shall distribute to each member an amount so that after
such

 

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distribution is made each Member shall have received minimum aggregate
distributions for such fiscal quarter equal to each such Member’s Tax Allowance
Amount. For the purposes of computing the Tax Allowance Amount, if any, the
effect of any benefit to a Member under Section 734 or 743 of the Code, if any,
will be ignored. A Tax Allowance Amount paid to a Member under this Section 5.10
shall be treated as an advance against distributions to the same Member under
this Agreement.

5.11 Restrictions on Distributions. Notwithstanding the provisions of Sections
5.09 and 5.10 hereof to the contrary, no distribution shall be made to the
Members if such distribution would (a) violate any contract or agreement to
which the Company is then a party or any Law then applicable to the Company,
(b) have the effect of rendering the Company insolvent or (c) result in the
Company having net capital lower than that required by applicable Law. Without
limiting the generality of the foregoing, the Company shall not make a
distribution to a Member to the extent that at the time of the distribution,
after giving effect to the distribution, the aggregate of the liabilities of the
Company and liabilities for which the recourse of creditors is limited to
specified property of the Company, exceed the fair value of the assets of the
Company (including, without limitation, the fair value of the Company’s
goodwill), except that the fair value of property that is subject to a liability
for which the recourse of creditors is limited shall be included in the assets
of the Company only to the extent that the fair value of that property exceeds
that liability.

5.12 Withholding. Each Member hereby authorizes the Company to withhold and to
pay to any appropriate Governmental or Regulatory Authority any taxes payable by
the Company as a result of such Member’s participation in the Company; if and to
the extent that the Company shall be required to withhold and pay any such
taxes, such Member shall be deemed for all purposes of this Agreement to have
received a payment from the Company in the amount of the sum withheld as of the
time such withholding is required to be paid to any appropriate Governmental or
Regulatory Authority, which payment shall be deemed to be a distribution to such
Member and an advance on any tax distributions to be made under this Agreement.

5.13 Indemnification and Reimbursement for Payments on Behalf of a Member. If
the Company is required by law to make any payment to a Governmental or
Regulatory Authority that is specifically attributable to a Member or a Member’s
status as such (including federal withholding taxes, state or local personal
property taxes and state or local unincorporated business taxes), then such
Member shall indemnify the Company in full for the entire amount paid (including
interest, penalties and related expenses). A Member’s obligation to indemnify
the Company under this Section 5.13 shall survive termination, dissolution,
liquidation and winding up of the Company, and for purposes of this
Section 5.13, the Company shall be treated as continuing in existence. The
Company may pursue and enforce all rights and remedies it may have against each
Member under this Section 5.13, including instituting a lawsuit to collect such
indemnification, with interest calculated at a rate equal to Prime Rate plus 2%
(but not in excess of the highest rate per annum permitted by law).

 

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ARTICLE VI

COSTS AND EXPENSES

6.01 Operating Costs. The Company shall (a) pay, or cause to be paid, all costs,
fees, operating expenses and other expenses of the Company (including the costs,
fees and expenses of attorneys, accountants or other professionals and the
compensation of all personnel providing services to the Company) incurred in
pursuing and conducting, or otherwise related to, the activities of the Company,
and (b) in the sole discretion of the Managing Member, reimburse the Managing
Member or any Company employee for any out-of-pocket costs, fees and expenses
incurred by them in connection therewith. To the extent that the Managing Member
reasonably determines in good faith that its expenses are related to the
business conducted by the Company and/or its subsidiaries (including any good
faith allocation of a portion of expenses that so relate to the business of the
Company and/or its subsidiaries that also relate to the businesses or activities
of the Managing Member), then the Managing Member may cause the Company to pay
or bear all such expenses of the Managing Member, including the cost of periodic
reports to its stockholders or as required by applicable law, litigation costs
and damages arising from litigation, accounting and legal costs and franchise
taxes (which are not based on, or measured by, income); provided that the
Company shall not pay or bear any income tax obligations of the Managing Member.
Payments under this Section 6.01 are intended to constitute reasonable
compensation for past or present services and are not “distributions” within the
meaning of Section 18-607 of the Act.

ARTICLE VII

GOVERNANCE

7.01 Management of the Business. The business, property and affairs of the
Company shall be managed under the sole and exclusive direction of the Managing
Member, which may from time to time delegate duties and authority in accordance
with this Agreement to one or more other Persons to act on behalf of the
Company. The Company, in the discretion of the Managing Member, may operate its
business, property and affairs through one or more of its subsidiaries.
Notwithstanding anything to the contrary herein, the Managing Member may not be
removed at any time by the other Members, unless the Managing Member has
committed willful misconduct or gross negligence in a manner that materially
impairs the Company’s financial condition or prospects. In addition to all
powers provided or permitted by the Act or any other applicable Law, the
Managing Member is hereby authorized on behalf of the Company to:

(a) expend Company funds in furtherance of the business and purpose of the
Company;

(b) admit Members and issue Units for consideration and on terms and conditions
in its discretion;

(c) incur obligations for and on behalf of the Company in connection with its
business;

 

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(d) open, maintain and close, in the name of the Company, brokerage and bank
accounts, and to draw checks or other orders for the payment of money;

(e) borrow or raise moneys for and on behalf of the Company upon such terms and
conditions as may be necessary or advisable and without limit as to amount or
manner and time of repayment;

(f) issue, accept, endorse and execute promissory notes, drafts, bills of
exchange, bonds, debentures and other negotiable or non-negotiable instruments
and evidences of indebtedness;

(g) hypothecate, mortgage or pledge the whole or any part of the property or
credit of the Company, whether at the time owned or thereafter acquired;

(h) repay in whole or in part, refinance, modify or extend any security interest
affecting property owned by the Company and, in connection therewith, to execute
for and on behalf of the Company any or all extensions, renewals, or
modifications of such security interests;

(i) lend funds and other property of the Company either with or without
security;

(j) waive any default under any agreement to which the Company is a party;

(k) apply for membership or participation in any exchanges, clearing agencies,
trade associations or other organizations and to take any actions and disclose
any information necessary or appropriate in connection with such applications;

(l) determine, subject to the provisions of this Agreement, the terms of any
offering of Units and the manner of complying with applicable Law and to take
any additional action as it shall deem necessary or desirable to effectuate the
offering of Units;

(m) prepare, execute, file and deliver any documents, instruments or agreements;

(n) employ such agents, brokers, traders, consultants, advisers, employees,
attorneys, accountants and other Persons as the Managing Member deems
appropriate and necessary to the conduct of the Company, at such rates and fees
as it deems necessary or appropriate, whether or not they are associates or
Affiliates of the Company or the Managing Member;

(o) obtain insurance for the proper protection of the Company and the Members;

(p) commence or defend any litigation or arbitration involving the Managing
Member in its capacity as Managing Member, and to retain legal counsel in
connection therewith and to pay out of the assets of the Company any and all
liabilities and expenses, including fees of

 

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legal counsel, incurred in connection therewith (except if the Managing Member
is or becomes liable therefor under Section 7.07 hereof);

(q) take any other action contemplated to be taken by the Managing Member
pursuant to this Agreement; and

(r) make such other decisions and enter into any other agreements or take such
other action as it believes to be necessary or desirable to carry out the
business and purpose of the Company.

7.02 Investment Company Act. The Managing Member shall use its reasonable best
efforts to assure that the Company shall not be subject to registration as an
investment company pursuant to the Investment Company Act of 1940, as amended.

7.03 Meetings of the Members.

(a) Place of Meetings. All meetings of the Members shall be held at the
principal office of the Company, or at such other place within or without the
State of Delaware as shall be specified or fixed in the notices (or waivers of
notice) thereof.

(b) Quorum; Required Vote for Member Action; Adjournment of Meetings. Except as
expressly provided otherwise by this Agreement, the holders of a majority of the
Units then outstanding shall constitute a quorum at any meeting of Members, and
the affirmative vote of the holders of a majority of the Units so present or
represented at such meeting, voting together as a single class, shall constitute
the act of the Members. The Members present at a duly organized meeting may
continue to transact business until adjournment, notwithstanding the withdrawal
of sufficient Members to destroy the quorum.

(c) Annual Meetings. An annual meeting of the Members for the transaction of
business as may properly be considered at the meeting may be held at such place,
within or without the State of Delaware, on such date, and at such time as the
Managing Member shall fix and set forth in the notice of the meeting.

(d) Record Date.

(i) The Managing Member shall give at least 10 days’ notice of any meeting of
the Members of the Company. For the purpose of determining Members entitled to
notice of or to vote at any meeting of Members, or any adjournment thereof, or
entitled to consent to any matter, or entitled to exercise any rights in
connection with any change, conversion or exchange of Units, or for the purpose
of any other lawful action, the Managing Member may fix a record date, which
record date shall not precede the date upon which the resolution fixing such
record date is adopted by the Managing Member, and which record date shall not
be more than 60 nor less than 10 days prior to the date of such meeting. If no
record date is fixed by the Managing Member, the record date for determining
Members entitled to notice of or to vote at a meeting of Members shall be the
close of business on the day next preceding the day on which notice of such
meeting is given, or, if notice is waived in accordance

 

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with this Agreement, the close of business on the day next preceding the day on
which the meeting of Members is held.

(ii) If action without a meeting is to be taken, the Managing Member may fix a
record date for determining Members entitled to consent in writing to such
action, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Managing Member, and which record date
shall not be more than 10 days subsequent to the date upon which the resolution
fixing the record date is adopted by the Managing Member. If no record date has
been fixed by the Managing Member, the record date for determining Members
entitled to consent to action in writing without a meeting shall be the first
date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Company by delivery to its registered
office, its principal place of business, or to an Officer of the Company having
custody of the book in which proceedings of meetings of Members are recorded.

(iii) A determination of Members of record entitled to notice of or to vote at a
meeting of Members shall apply to any adjournment of the meeting; provided,
however, that the Managing Member may fix a new record date for the adjourned
meeting.

7.04 Provisions Applicable to All Meetings. In connection with any meeting of
the Members, the following provisions shall apply:

(a) Waiver of Notice Through Attendance. Attendance of a Person at such meeting
(including attendance by telephone pursuant to Section 7.04(d)) shall constitute
a waiver of notice of such meeting, except where such Person attends the meeting
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.

(b) Proxies. A Member entitled to vote at such a meeting may vote at such
meeting by a written proxy executed by that Person and delivered to the
Secretary. A proxy shall be revocable unless it is stated to be irrevocable.

(c) Action by Written Consent. Any action required or permitted to be taken at
such a meeting may be taken without a meeting and without a vote if a consent or
consents in writing, setting forth the action or actions so taken, is signed by
such Members required to constitute a quorum and carry the vote at any duly
convened meeting thereof. Notwithstanding the foregoing, at least two Business
Days prior to any such action by written consent, the Company shall furnish
copies of all notices, form of consents in lieu of meetings of the Members and
other materials to any such Persons taking action by written consent.

(d) Meetings by Telephone. Members may participate in and hold any meeting by
means of conference telephone, video conference or similar communications
equipment by means of which all Persons participating in the meeting can hear
each other, and the votes of any Members participating by conference telephone,
video conference or similar communications equipment shall be given full effect.

 

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7.05 Officers. The Managing Member may appoint certain agents of the Company to
be referred to as “officers” of the Company (“Officers”) and designate such
titles (such as Chief Executive Officer, President, Vice-President, Secretary
and Treasurer) as are customary for corporations under Delaware Law, and such
Officers shall have the power, authority and duties described by resolution of
the Managing Member or as is customary for each such position. In addition to or
in lieu of Officers, the Managing Member may authorize any Person to take any
action or perform any duties on behalf of the Company (including any action or
duty reserved to any particular Officer) and any such person may be referred to
as an “authorized person.” An employee or other agent of the Company shall not
be an authorized person unless specifically appointed as such by the Managing
Member. Duly elected and designated Officers shall have primary responsibility
for the day-to-day operations of the Company, subject to oversight by the
Managing Member.

7.06 Duties of the Managing Member and the Members.

(a) To the fullest extent permitted by the Act and during the continuance of the
Company, the Managing Member shall devote such time and effort to the business
of the Company as may be necessary to promote adequately the interests of the
Company. Any action of the Managing Member or failure to act, taken or omitted
in good faith reliance on the foregoing provisions shall not, as between the
Company and the other Members, on the one hand, and the Managing Member, on the
other hand, constitute a breach of any duty (including any fiduciary or other
similar duty, to the extent such exists under the Act or any other applicable
Law, rule or regulation) on the part of the Managing Member.

(b) Each Member hereby:

(i) agrees that (A) the terms of this Section 7.06, to the extent that they
modify or limit a duty or other obligation, if any, that the Managing Member may
have to the Company or any another Member under the Act or other applicable Law,
rule or regulation, are reasonable in form, scope and content; and (B) the terms
of this Section 7.06 shall control to the fullest extent possible if it is in
conflict with a duty, if any, that the Managing Member may have to the Company
or another Member, under the Act or any other applicable law, rule or
regulation; and

(ii) waives to the fullest extent permitted by the Act, any duty or other
obligation, if any, that a Member may have to the Company or another Member,
pursuant to the Act or any other applicable Law, rule or regulation, to the
extent necessary to give effect to the terms of this Section 7.06.

(c) The Members acknowledge, affirm and agree that (i) the Members would not be
willing to make any investment in the Company in the absence of this
Section 7.06 and (ii) they have reviewed and understand the provisions of
§§18-1101(b) and (c) of the Act.

7.07 Liability of the Managing Member. Notwithstanding anything to the contrary
contained herein, the Managing Member shall not be liable, responsible or
accountable in damage or otherwise to the Company or to any Member, successor,
assignee or transferee except

 

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by reason of acts or omissions due to fraud or intentional misconduct or that
constitute a violation of the implied contractual duty of good faith and fair
dealing.

7.08 No Right to Act. No Member, as such, has the authority or power to act for
or on behalf of the Company, to do any act that would be binding on the Company,
to manage the business or affairs of the Company, to direct that any action be
taken by the Company or any of its Officers, officers, employees, or agents, or
to make any expenditures on behalf of the Company, unless such specific
authority has been expressly granted to and not revoked from such Person by the
Managing Member.

7.09 Investment Representations of Members. Each Member hereby represents,
warrants and acknowledges to the Company that:

(a) Such Member has all requisite power to execute, deliver and perform this
Agreement, and the performance of its obligations hereunder will not result in a
breach or a violation of, or a default under, any material agreement or
instrument by which such Member or any of such Member’s properties is bound or
any statute, rule, regulation, order or other Law to which it is subject, nor
require the obtaining of any consent, approval, permit or license from or filing
with, any governmental authority or other Person by such Person in connection
with the execution, delivery and performance by such Member of this Agreement.

(b) This Agreement constitutes (assuming its due authorization and execution by
the other Members) such Member’s legal, valid and binding obligation.

(c) Such Member is acquiring its Membership Interest for investment solely for
such Member’s own account and not for distribution, transfer or sale to others
in connection with any distribution or public offering.

(d) Such Member (i) has received all information that such Member deems
necessary to make an informed investment decision with respect to an investment
in the Company and (ii) has had the unrestricted opportunity to make such
investigation as such Member desires pertaining to the Company and an investment
therein and to verify any information furnished to such Member.

(e) Such Member understands that such Member must bear the economic risk of an
investment in the Company for an indefinite period of time because (i) the
Membership Interests have not been registered under the Securities Act and
applicable state securities Laws and (ii) the Membership Interests may not be
sold, transferred, pledged or otherwise disposed of except in accordance with
this Agreement and then only if they are subsequently registered in accordance
with the provisions of the Securities Act and applicable state securities Laws
or registration under the Securities Act or any applicable state securities Laws
is not required.

ARTICLE VIII

ADDITIONAL COVENANTS

8.01 Confidentiality. Each Member shall keep confidential and shall not
disclose, divulge or use, other than for Company business, any Confidential
Information except for

 

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disclosures (a) compelled by Law or required or requested by subpoena or request
from a court, regulator or a stock exchange (but the Member shall (provided such
notification is legally permitted) notify the Company or the Member affected by
such disclosure, as applicable, promptly of any request for that information
before disclosing it if practicable), (b) to Legal Representatives of the Member
(provided that each Legal Representative is informed of the confidential nature
of such information, and that the disclosing Member remains liable for any
breach of this provision by its Legal Representatives, (c) to any Person to
which such Member Transfers or offers to Transfer any of its Units in compliance
with this Agreement so long as the transferring party first obtains a
confidentiality agreement from the proposed transferee, in form reasonably
acceptable to the Company, (d) of information in connection with litigation
against the Company or any Member to which the disclosing Member is a party (but
the Member shall notify the Company or the Member affected by such disclosure,
as applicable, as promptly as practicable prior to making such disclosure, if
practicable, and shall disclose only that portion of such information required
to be disclosed) or (e) permitted by the Company or Member affected by such
disclosure, as applicable. The Members agree that breach of the provisions of
this Section 8.01 may cause irreparable injury to the Company or the other
Members for which monetary damages (or other remedy at law) are inadequate in
view of the complexities and uncertainties in measuring the actual damages that
would be sustained by reason of the failure of a Member to comply with such
provisions. Accordingly, the Members agree that the provisions of this
Section 8.01 may be enforced by specific performance.

8.02 Company Property. All confidential and proprietary information of the
Company shall be the exclusive property and proprietary rights of the Company,
and to the extent any Member has participated in the development thereof, such
Member shall assign all such rights to the Company and such Member’s work effort
shall be considered “works for hire” for the Company.

8.03 Transactions Between Members and the Company. Except as otherwise provided
by applicable Law, a Member may, but shall not be obligated to, lend money to
the Company, act as a surety or guarantor for the Company, or transact other
business with the Company, and has the same rights and obligations when
transacting business with the Company as a Person who is not a Member; provided
such transactions shall be entered into on terms and conditions customary in
arm’s length transactions between unrelated parties.

8.04 Noncompete; Nonsolicitation.

(a) In consideration of the Units granted to the Employee-Members from time to
time by the Company, except as otherwise provided in a Grant Agreement, each
Employee-Member granted Units agrees that during the entire term of the
Noncompete Period applicable to such Employee Member, such Employee-Member shall
not, directly or indirectly, engage in or become interested in, as owner,
shareholder, partner, lender, investor, director, officer, employee, consultant,
agent, representative or otherwise, any Person engaged in any business
competitive with that of the Company or its Affiliates. Notwithstanding the
foregoing, an Employee-Member shall not be deemed to have breached this
Section 8.04(a) by reason of purchasing stock in a corporation whose shares are
listed on the New York Stock Exchange or quoted on NASDAQ, provided that the
Employee-Member’s beneficial ownership (as defined in Rule 13d-

 

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3 under the Exchange Act) of any class of equity securities in any such
corporation is less than 5% of the aggregate number of outstanding shares of
such class.

(b) In consideration of the Units granted to the Employee-Members from time to
time by the Company, except as otherwise provided in a Grant Agreement, each
Employee-Member agrees that such Employee-Member shall not, directly or
indirectly, (i) for a period of (A) three years after Termination, (B) four
years after Termination, if the Termination occurs after the Employee-Member has
been an employee of the Company for five years after such employee became an
Employee-Member, or (C) five years after Termination, if the Termination occurs
after the Employee-Member has been an employee of the Company for ten years
after such employee became an Employee-Member, solicit, on behalf of himself or
any Person, any Person that is as of the Termination, or has been within one
year prior to the Termination, a client of the Company or its Affiliates to
become an investment advisory, brokerage, or similar client of the
Employee-Member or any other Person; (ii) for a period of five years after
Termination, solicit any Person who is as of the Termination, or has been within
one year prior to the Termination, an employee of the Company or its Affiliates
to become an employee of or consultant to the Employee-Member or any other
Person; or (iii) for a period of (A) two years after Termination, (B) three
years after Termination, if the Termination occurs after the Employee-Member has
been an employee of the Company for five years after such employee became an
Employee-Member, or (C) four years after Termination if the Termination occurs
after the Employee-Member has been an employee of the Company for ten years
after such employee became an Employee-Member, solicit any Person who is a
Prospect of the Company or its Affiliates to become an investment advisory,
brokerage, or similar client of the Employee-Member or any other Person.

(c) Each Employee-Member acknowledges and agrees that the covenants set forth in
this Section 8.04 are reasonable and necessary for the protection of the
Company. Each Employee-Member further agrees that irreparable injury will result
to the Company in the event of any breach of the terms of Section 8.04, and that
in the event of any actual or threatened breach of any of the provisions
contained in Section 8.04, the Company will have no adequate remedy at Law. Each
Employee-Member accordingly agrees that in the event of any actual or threatened
breach by such Employee-Member of any of the provisions contained in
Section 8.04, the Company shall be entitled to seek such injunctive and other
equitable relief as may be deemed necessary or appropriate by a court of
competent jurisdiction, without the necessity of showing actual monetary damages
and without posting any bond or other security.

(d) Each Employee-Member acknowledges and agrees that the provisions of this
Section 8.04 shall survive and be enforceable by the Company after such
Employee-Member ceases to be an employee of the Company and/or after the
Employee-Member ceases to be a Member.

 

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ARTICLE IX

RESTRICTIONS ON TRANSFERS

9.01 General Restrictions.

(a) No Member may Transfer all or any portion of its Units without the prior
written consent of the Managing Member, which may be withheld in its sole
discretion, and any attempted Transfer that is not in accordance with this
Article IX shall be, and is hereby declared, null and void ab initio.

(b) No Member or transferee thereof shall, without the prior written consent of
the Managing Member, which may be withheld in its sole discretion, create, or
suffer the creation of, a Lien on such Member’s Units.

(c) No Member shall Transfer all or any of its Units (i) if such Transfer would
subject the Company to the reporting requirements of the Exchange Act or (ii) if
such Transfer would cause the Company to lose its status as a partnership for
federal income tax purposes or cause the Company to be classified as a “publicly
traded partnership” within the meaning of Code Section 7704, and any attempted
Transfer that is not in accordance with this Section 9.01(c) shall be, and is
hereby declared, null and void ab initio.

(d) The Members agree that a breach of the provisions of this Article IX may
cause irreparable injury to the Company and the Members for which monetary
damages (or other remedy at Law) are inadequate in view of (i) the complexities
and uncertainties in measuring the actual damages that would be sustained by
reason of the failure of a Person to comply with such provisions and (ii) the
uniqueness of the Company’s business and the relationship among the Members.
Accordingly, the Members agree that the provisions of this Article IX may be
enforced by specific performance.

9.02 Permitted Transfers. Notwithstanding anything to the contrary contained
herein, and subject to compliance with the provisions of Section 9.03:

(a) M&N Group Holdings may, at any time, Transfer all or a portion of its Units
to one or more of its members, and such members may Transfer all or portion of
such Units to certain Persons, in each case in accordance with the terms and
conditions set forth in the M&N Group Holdings Operating Agreement (any such
Transferee, a “Permitted Transferee”), and each such Transfer shall thereupon be
deemed effective in all respects;

(b) M&N Group Holdings may, upon the consummation of the Initial Public
Offering, Transfer all or a portion of its Units to Manning & Napier; and

(c) a Member may, at any time, Transfer all or a portion of its Units pursuant
to the terms and conditions set forth in the Exchange Agreement.

9.03 Conditions to Transfers. If the Managing Member has consented to a
Transfer, or a Transfer is to a Permitted Transferee pursuant to
Section 9.02(a), such Transfer may be made only if (a) the provisions of
Section 9.01 do not otherwise prohibit the Transfer, (b) a duly executed and
acknowledged counterpart of the instrument effecting such Transfer, in form and

 

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substance satisfactory to the Managing Member, shall have been delivered to the
Managing Member, and the transferring Member shall have indicated such intention
of substitution in the instrument effecting such Transfer, (c) the assignee
shall have expressly agreed to be bound by the provisions of this Agreement and
to assume all of the obligations imposed upon Members hereunder, (d) the
transferring Member and the assignee shall have executed or delivered such other
instruments as the Managing Member may deem necessary or desirable to effectuate
such admission, including, but not limited to, an opinion of counsel that the
Transfer complies with the registration provisions of the Securities Act or an
exemption therefrom, and (e) the transferring Member or assignee shall have paid
all reasonable expenses and legal fees relating to the Transfer and the
assignee’s admission as a Member, including, but not limited to, the cost of any
required counsel’s opinion.

9.04 Expenses of Transfer; Indemnification. All reasonable costs and expenses
incurred by the Managing Member and the Company in connection with any Transfer
of a Member’s Units, including any filing and recording costs and the reasonable
fees and disbursements of counsel for the Company, shall be paid by the
transferring Member. In addition, the transferring Member hereby indemnifies the
Managing Member and the Company against any losses, claims, damages or
liabilities to which the Managing Member, the Company or any of their respective
Affiliates may become subject arising out of or based upon any false
representation or warranty made by, or breach or failure to comply with any
covenant or agreement of, such transferring Member or such transferee in
connection with such Transfer.

9.05 Exchange Agreement. Notwithstanding anything contained herein to the
contrary, in connection with any Transfer or any portion of a Member’s Units
pursuant to the Exchange Agreement, the Managing Member shall cause the Company
to take any action as may be required under the Exchange Agreement or requested
by any party thereto to effect such Transfer promptly.

9.06 Redemption. The Managing Member shall have the sole discretion to approve
any request for redemption of any Unit. Notwithstanding the foregoing, no
redemption shall be permitted unless:

(a) the conditions to a Transfer in Section 9.03 are satisfied with respect to
the redemption as if the redemption were a Transfer;

(b) the Requesting Member provides the Managing Member a written request for
redemption at least 60 calendar days in advance of the requested redemption
date;

(c) the redemption price is established not earlier than 60 calendar days after
the Managing Member’s receipt of such written request; and

(d) the redemption, if granted, together with “transfers” (within the meaning of
Section 7704 of the Code) previously effectuated during the Fiscal Year of the
Company (other than transfers described in Treasury Regulation
Section 1.7704-1(e)) does not exceed 10% of the total interests in the Company’s
capital or profits.

 

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The Managing Member may elect to waive one or more of (a)-(d) if a written
opinion is received by the Company’s tax counsel, in a form reasonably
satisfactory to the Managing Member, that the proposed redemption will not
adversely cause the Company to constitute a “publicly traded partnership” within
the meaning of Section 7704 of the Code.

ARTICLE X

DISSOLUTION, LIQUIDATION AND TERMINATION OF THE COMPANY

10.01 Dissolution.

(a) The Company shall dissolve and its affairs shall be wound up on the first to
occur of the following events (each, a “Dissolution Event”), and no other event
shall cause the Company’s dissolution:

(i) the determination by the Managing Member that the Company should dissolve;
provided, however, that the Managing Member has received the prior written
consent of the holders of at least 66-2/3% of the issued and outstanding Class A
Units at such time; or

(ii) the entry of a decree of judicial dissolution of the Company under
Section 18-802 of the Act.

(b) Upon the dissolution of the Company, no further business shall be done in
the Company name except the completion of any incomplete transactions and the
taking of such action as shall be necessary for the winding up of the affairs of
the Company and the distribution of its assets.

(c) To the maximum extent permitted by the Act, the death, retirement,
resignation, expulsion, bankruptcy or dissolution of a Member shall not
constitute a Dissolution Event and, notwithstanding the occurrence of any such
event or circumstance, the business of the Company shall be continued without
dissolution.

10.02 Liquidation and Termination.

(a) On the occurrence of a Dissolution Event, the Managing Member or a Person
selected by the Managing Member to act as liquidating trustee shall proceed
diligently to wind up the affairs of the Company and make final distributions as
provided herein and in the Act. The Managing Member or liquidating trustee, as
applicable, is authorized, subject to the Act, to sell, exchange or otherwise
dispose of the assets of the Company, or to distribute Company assets in kind,
as the Managing Member or liquidating trustee shall determine to be in the best
interests of the Members. The reasonable out-of-pocket expenses incurred by the
Managing Member or liquidating trustee, as applicable, in connection with
winding up the Company (including legal and accounting fees and expenses) shall
be borne by the Company. Except as otherwise required by Law and except in
connection with any gross negligence or willful misconduct of the Managing
Member or liquidating trustee, as applicable, the Managing Member or liquidating
trustee shall not be liable to any Member or the Company for any loss
attributable to any act or omission of the Managing Member or liquidating
trustee taken in good

 

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faith in connection with the winding up of the Company and the distribution of
Company assets. The Managing Member or liquidating trustee, as applicable, may
consult with counsel and accountants with respect to winding up the Company and
distributing its assets and shall be justified in acting or omitting to act in
accordance with the advice or opinion of such counsel or accountants, provided
that the Managing Member or liquidating trustee, as applicable, shall have used
reasonable care in selecting such counsel or accountants.

(b) The Managing Member or the liquidating trustee, as applicable, shall take
the following actions and make the following distributions out of the property
of the Company in the following manner and order:

(i) Accounting. As promptly as possible after dissolution and again after final
winding up, the Managing Member or the liquidating trustee, as applicable, shall
cause a proper accounting to be made by an independent outside accounting firm
of the Company’s assets, liabilities, and operations through the last calendar
day of the month in which the dissolution occurs or the final winding up is
completed, as applicable.

(ii) Satisfaction of Obligations. The Managing Member or the liquidating
trustee, as applicable, shall pay, satisfy or discharge from Company funds all
of the debts, liabilities and obligations of the Company (including all expenses
incurred in winding up); provided, however, that the Managing Member or the
liquidating trustee, as applicable, may establish one or more cash escrow funds
(in such amounts and for such terms as the Managing Member or the liquidating
trustee may reasonably determine) for the payment of contingent liabilities.

(iii) Distribution of Assets. All remaining assets of the Company shall be
distributed to the Members as follows:

(A) the Managing Member or the liquidating trustee, as applicable, may sell any
or all Company property, including to the Members, and any resulting gain or
loss from each sale shall be computed and allocated to the Capital Accounts of
Members in accordance with the allocation provisions in this Agreement;

(B) with respect to all Company property that has not been sold, the Gross Asset
Value of that property shall be determined and the Capital Accounts of Members
shall be adjusted to reflect the manner in which the unrealized income, gain,
loss, and deduction inherent in property that has not been reflected in the
Capital Accounts previously would be allocated among Members if there were a
taxable disposition of that property for the Gross Asset Value of that property
on the date of distribution; and

(C) the property of the Company shall be distributed to the Members, pro rata,
in accordance with their respective positive Capital Account balances.

(c) All distributions in kind to the Members shall be made subject to the
liability of each distributee for costs, expenses, and liabilities theretofore
incurred or for which the Company has committed prior to the date of
termination, and those costs, expenses, and

 

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liabilities shall be allocated to the distributee pursuant to this
Section 10.02; provided, however, that no Member shall be liable for any such
Company cost, expense or liability in excess of the Gross Asset Value of the
property so distributed in kind to such Member. The distribution of cash and/or
property to a Member in accordance with the provisions of this Section 10.02
constitutes a complete return to the Member of its Capital Contributions and all
the Company’s property and constitutes a compromise to which all Members have
consented within the meaning of Section 18-502(b) of the Act; provided, however,
that no Member shall be deemed under this Section 10.02(c) to have agreed to be
liable for any such Company cost, expense or liability in excess of the Gross
Asset Value of the property so distributed in kind to such Member. To the extent
that a Member returns funds to the Company, it has no claim against any other
Member for those funds.

10.03 Deficit Capital Accounts. No Member will be required to pay to the
Company, any other Member or any third party, any deficit balance which may
exist, from time to time, in the Member’s Capital Account.

10.04 Certificate of Cancellation. On completion of the distribution of Company
assets as provided herein, the Managing Member (or any Person or Persons as the
Act may require or permit) shall file a Certificate of Cancellation with the
Secretary of State of Delaware, cancel any other filings made pursuant to
Section 2.06, and take such other actions as may be necessary to terminate the
existence of the Company. Upon the effectiveness of the Certificate of
Cancellation, the existence of the Company shall cease, except as may be
otherwise provided by the Act or other applicable Law.

ARTICLE XI

ACCOUNTING

11.01 Accounts of the Company. The books and records of account of the Company
shall be maintained in accordance with GAAP consistently applied and shall be
reconciled to comply with the methods followed by the Company for United States
federal income tax purposes, consistently applied. The books and records shall
be maintained at the Company’s principal office or at a location designated by
the Managing Member.

11.02 Annual Reports to Members. Within one hundred twenty (120) days after the
end of each Fiscal Year, the Managing Member shall cause to be prepared and
mailed to each Member one (1) or more reports setting forth, as of the end of
such Fiscal Year, (a) a statement of Net Profits and Net Losses and the amount
of such Member’s Capital Account and, as soon as thereafter practicable, the
amount of such Member’s share of the Company’s taxable income or loss for such
Fiscal Year, in sufficient detail to enable such Member to prepare its federal,
state and other tax returns and (b) a balance sheet and statements of operations
and cash flows for the Company and its subsidiaries as of and for the Fiscal
Year. The financial statements described in this Section 11.02 shall be prepared
in accordance with GAAP applied on a consistent basis (except as may be noted
therein).

 

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11.03 Tax Returns and Tax Elections.

(a) The Company’s accountants shall prepare all federal, state and local tax
returns of the Company for each year for which such returns are required to be
filed. The Managing Member, in its sole discretion, shall determine the
accounting methods and conventions under the tax laws of the United States, the
several states and other relevant jurisdictions as to the treatment of income,
gain, loss, deduction and credit of the Company or any other method or procedure
related to the preparation of such tax returns. The Managing Member, in its sole
discretion, may cause the Company to make or refrain from making any and all
elections permitted by such tax laws, provided that the Company shall make an
election under Section 754 of the Code promptly following the date hereof, which
election shall not be revoked without the consent of M&N Group Holdings.

(b) Each Member agrees that, in respect of any year in which it has or had any
interest in the Company, it shall not (i) treat, on its individual income tax
returns, any item of income, gain, loss, deduction or credit relating to its
interest in the Company in a manner inconsistent with the treatment of such item
by the Company as reflected on the Form K-1 or other information statement
furnished by the Company to such Member for use in preparing its income tax
returns or (ii) file any claim for refund relating to any such item based upon,
or that would result in, such inconsistent treatment unless such Member has been
advised by counsel that treating such item in a manner consistent with the
treatment of such item by the Company would subject such Member to penalties
under the Code.

(c) The Managing Member, or a Person designated by the Managing Member who is a
Member, shall be the Company’s “Tax Matters Partner” (as that term is defined in
Section 6231(a)(7) of the Code) in the event of an income tax audit of any
Company return. To the extent the Company is treated as an entity for purposes
of the audit, including administrative settlement and judicial review, the Tax
Matters Partner shall be authorized to act for and represent the Company, and to
enter into a settlement agreement within the meaning of Section 6224(c)(1) of
the Code (or comparable provisions under state or local Law) to which each
Member agrees to be bound. All expenses incurred in connection with any such
audit shall be expenses of the Company. The Tax Matters Partner shall be
authorized to carry out on behalf of the Company and at the Company’s expense
all acts appropriate to such designation with respect to federal, state and
local taxing authorities.

11.04 No Further Rights to Books and Records. Except for the information
required to be provided to the Members under this Agreement, no Member shall
have the right to demand from the Company, and the Company shall have no
obligation to provide to any Member, any books or records of the Company.

ARTICLE XII

EXCULPATION AND INDEMNIFICATION

12.01 Exculpation. To the fullest extent permitted by applicable Law, and except
as otherwise expressly provided herein, no Indemnitee shall be liable to the
Company or any other Indemnitee for any Losses which at any time may be imposed
on, incurred by, or asserted against, the Company or any other Indemnitee as a
result of or arising out of the activities of the

 

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Indemnitee in its capacity as an Officer of the Company or otherwise on behalf
of the Company to the extent within the scope of the authority reasonably
believed to be conferred on such Indemnitee, except to the extent such Losses
arise out of (a) the Indemnitee’s failure to act in good faith and in a manner
such Indemnitee believed to be in, or not opposed to, the best interests of the
Company, and, with respect to any criminal proceeding, the Indemnitee’s not
having any reasonable cause to believe such conduct was unlawful, or (b) the
Indemnitee’s gross negligence or willful misconduct.

12.02 Indemnification. To the fullest extent permitted by applicable Law, each
of (a) the Members, the Managing Member and their respective Affiliates, (b) the
stockholders, members, managers, directors, officers, partners, employees and
agents of the Members and the Managing Member and their respective Affiliates,
and (c) the Officers of the Company (each, an “Indemnitee”) shall be indemnified
and held harmless by the Company from and against any and all Losses which at
any time may be imposed on, incurred by, or asserted against, the Indemnitee as
a result of or arising out of this Agreement, the Company, its assets, business
or affairs or the activities of the Indemnitee in its capacity as an officer of
the Company or otherwise on behalf of the Company to the extent within the scope
of the authority reasonably believed to be conferred on such Indemnitee;
provided, however, that the Indemnitee shall not be entitled to indemnification
for any Losses to the extent such Losses arise out of (a) the Indemnitee’s
failure to act in good faith and in a manner such Indemnitee believed to be in,
or not opposed to, the best interests of the Company, and, with respect to any
criminal proceeding, the Indemnitee’s not having any reasonable cause to believe
such conduct was unlawful, or (b) the Indemnitee’s gross negligence or willful
misconduct. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere, or its
equivalent, shall not, of itself, create a presumption that the Indemnitee acted
in a manner specified in clause (a) or (b) above. Any indemnification pursuant
to this Article XII shall be made only out of the assets of the Company and no
Member shall have any personal liability on account thereof.

12.03 Expenses. Expenses (including reasonable legal fees and expenses) incurred
by an Indemnitee in defending any claim, demand, action, suit or proceeding
described in Section 12.02 shall, from time to time, be advanced by the Company
prior to the final disposition of such claim, demand, action, suit or
proceeding, upon receipt by the Company of an undertaking by or on behalf of the
Indemnitee to repay such amount if it shall be determined that the Indemnitee is
not entitled to be indemnified as provided in this Article XII.

12.04 Non-Exclusivity. The indemnification and advancement of expenses set forth
in this Article XII shall not be exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
statute, the Act, this Agreement, any other agreement, a policy of insurance or
otherwise. The indemnification and advancement of expenses set forth in this
Article XII shall continue as to an Indemnitee who has ceased to be a named
Indemnitee and shall inure to the benefit of the heirs, executors,
administrators, successors and permitted assigns of such a Person.

12.05 Insurance. The Company may purchase and maintain insurance on behalf of
the Indemnitees against any liability asserted against them and incurred by them
in such capacity, or arising out of their status as Indemnitees, whether or not
the Company would have the power to indemnify them against such liability under
this Article XII.

 

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ARTICLE XIII

MISCELLANEOUS

13.01 Amendments.

(a) The terms and provisions of this Agreement (including, for the avoidance of
doubt, any exhibit or schedule hereto) may be modified or amended at any time
and from time to time with the written consent of the Managing Member and M&N
Group Holdings; provided that the Managing Member may, without the consent of
any of the other Members, amend this Agreement:

(i) to satisfy any requirements, conditions, guidelines or opinions contained in
any opinion, directive, order, ruling or regulation of the Securities and
Exchange Commission, the Internal Revenue Service or any other U.S. federal or
state or non-U.S. governmental agency, or in any U.S. federal or state or
non-U.S. statute, compliance with which the Managing Member deems to be in the
best interest of the Company;

(ii) (A) to ensure that the Company will not be treated as (x) an association
taxable as a corporation for U.S. federal income tax purposes or (y) a “publicly
traded partnership” for purposes of Section 7704 of the Code or (B) to comply
with the then existing requirements of the Code, final or temporary Treasury
Regulations and the rulings of the Internal Revenue Service affecting the
treatment of the Company as a partnership for federal income tax purposes; or

(iii) to change the name of the Company.

(b) Notwithstanding the provisions of Section 13.01(a), no modification or
amendment to this Agreement shall be made that, based on the subject matter of
the items affected by any such modification or amendment, would affect any
Member in a manner that is disproportionate to the manner in which other Members
holding the same series of class of Units is affected, without the consent of
the disproportionately affected Members holding a majority of the class or
series of Units that would be disproportionately affected by such amendment or
modification.

13.02 Severability. If any term, provision, agreement, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, agreements, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not effected in any manner materially adverse to any
party. Upon such a determination, the parties hereof shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.

13.03 Notices. All notices to the Company shall be addressed to its principal
office. All notices addressed to a Member or its Legal Representative or to the
Members as a group shall be addressed to such Member or Legal Representative or
Members at the address of such Member

 

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or Legal Representative for the Members set forth on Schedule A hereto. Any
Member or the Legal Representative of any Member may designate a new address by
notice to such effect given to the Company. All notices and other communications
to be given to a Member or its Legal Representative shall be sufficiently given
for all purposes hereunder (a) when received, if in writing and delivered by
hand, (b) two (2) Business Days following deposit with a nationally recognized
courier or overnight delivery service, (c) three (3) days after being mailed by
certified or registered mail, return receipt requested, with appropriate postage
prepaid, or (d) when sent, if sent in the form of an e-mail message or facsimile
if receipt thereof is confirmed by telephone.

13.04 No Waiver. No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any other subsequent breach or condition, whether of
like or different nature.

13.05 Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. The Members covenant and
agree that the state courts located in Delaware, or in a case involving
diversity of citizenship or a federal question, the federal courts located in
Delaware shall have exclusive jurisdiction of any action or proceeding under
this Agreement or related to the matters contemplated by this Agreement or any
agreement entered into in connection therewith.

13.06 Binding Effect. Except as otherwise provided in this Agreement, every
covenant, term and provision of this Agreement shall be binding upon and inure
to the benefit of the Members and their respective heirs, personal
representatives, successors, permitted transferees and permitted assigns.

13.07 Entire Agreement. This Agreement and any other agreements expressly
mentioned herein constitute the entire agreement of the Members, and their
respective Affiliates relating to the matters covered hereby and supersede all
prior contracts or agreements with respect to the Company, whether oral or
written.

13.08 Other Activities. Neither the Company nor any Member (or any Affiliate of
any Member) shall have any right by virtue of this Agreement either to
participate in or to share in any other now existing or future ventures,
activities or opportunities of any of the other Members or their Affiliates, or
in the income or proceeds derived from such ventures, activities or
opportunities.

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

13.10 Counterparts. This Agreement may be executed in any number of
counterparts, including facsimile counterparts, with the same effect as if all
signing parties had signed the same document. All counterparts shall be
construed together and constitute the same instrument.

13.11 Waiver of Right to Partition. Each of the Members irrevocably waives
during the term of the Company any right that such Member may have to maintain
any action for partition

 

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with respect to the property and assets of the Company, and hereby agrees not to
file a bill for a membership accounting or otherwise proceed adversely in any
manner whatsoever against the other Members or the Company, except for bad
faith, gross negligence, fraud, intentional misconduct or violation of this
Agreement.

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.

 

MANAGING MEMBER: MANNING & NAPIER, INC. By:   /s/ Richard B. Yates   Name:
Richard B. Yates   Title: Corporate Secretary MEMBERS: M&N GROUP HOLDINGS, LLC
By:   /s/ William Manning   Name: William Manning   Title: Managing Member
MANNING & NAPIER CAPITAL COMPANY, LLC By:   /s/ Richard B. Yates   Name: Richard
B. Yates   Title: Authorized Signatory

 

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EXHIBIT A

JOINDER AGREEMENT

This Joinder Agreement (“Joinder Agreement”) is executed by the undersigned
Member pursuant to the terms of that certain Amended and Restated Limited
Liability Company Agreement dated as of October 1, 2011, as amended as of the
date hereof (the “Agreement”), of Manning & Napier Group, LLC (the “Company”).
Capitalized terms used but not defined herein shall have the respective meanings
ascribed to such terms in the Agreement. By the execution of this Joinder
Agreement, the Member agrees as follows:

1. Units. The Member is acquiring Units in the Company consisting of
[            Class A Units] [            Class B Units].

2. Capital Contribution. [In consideration of the Units, the Member shall make
on the date hereof a Capital Contribution of $            in cash to the
Company.] [In consideration of the Units, the Member shall make on the date
hereof a Capital Contribution to the Company consisting of             .] [The
Member is not required to make a Capital Contribution to the Company in
consideration of the Units.]

3. Agreement. The Member agrees that it shall be bound by and subject to the
terms of the Agreement thereunder and shall be deemed to have made the
representations in Section 7.09 of the Agreement as of the date hereof, and
hereby adopts the Agreement with the same force and effect as if the Member was
originally a party thereto.

4. Notice. Any notice required or permitted by the Agreement shall be given to
the Member at the address listed beside the Member’s signature below.

EXECUTED AND DATED this             day of             ,             .

 

Member: By:       Name:   Title: Address:    

 

Fax:    

 

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Acknowledged and Agreed to

as of the date first written above:

MANNING & NAPIER GROUP, LLC

 

By:       Name:   Title:

 

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