Exhibit 10.1

 

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

 

of

 

ARIS MORTGAGE HOLDING COMPANY, LLC

 

dated as of [•], 2020

 











 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
Article I
    
	
 
    
	
GENERAL   DEFINITIONS
    
	
 
    	
 
    
	
1.1 Definitions
    	
3
    
	
1.2 Interpretation
    	
13
    
	
 
    	
 
    
	
Article II
    
	
 
    
	
ORGANIZATION
    
	
 
    	
 
    
	
2.1 Formation
    	
13
    
	
2.2 Name
    	
13
    
	
2.3 Purposes
    	
13
    
	
2.4 Duration
    	
13
    
	
2.5 Registered Office   and Registered Agent; Principal Office
    	
13
    
	
2.6 No State-Law   Partnership
    	
14
    
	
 
    	
 
    
	
Article III
    
	
 
    
	
MEMBERS
    
	
 
    
	
3.1 Members
    	
14
    
	
3.2 Units
    	
15
    
	
3.3 Recapitalization;   IPO Common Unit Contributions; IPO Unit Purchases
    	
15
    
	
3.4 Authorization and   Issuance of Additional Units
    	
16
    
	
3.5 Repurchase or   Redemption of shares of Class A Common Stock
    	
17
    
	
3.6 Certificates   Representing Units; Lost, Stolen or Destroyed Certificates; Registration and   Transfer of Units
    	
18
    
	
3.7 Negative Capital   Accounts
    	
18
    
	
3.8 No Withdrawal
    	
18
    
	
3.9 Loans From Members
    	
18
    
	
3.10 Corporate Stock   Option Plans and Equity Plans
    	
19
    
	
3.11 Dividend   Reinvestment Plan, Cash Option Purchase Plan, Stock Incentive Plan or Other   Plan
    	
21
    
	
3.12 Establishment of   Series A Mandatory Convertible Preferred Units
    	
21
    


 

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TABLE OF CONTENTS

(continued)

 

	
 
    	
Page
    
	
Article IV
    
	
 
    
	
Distributions
    
	
 
    	
 
    
	
4.1 Distributions
    	
27
    
	
 
    	
 
    
	
Article V
    
	
 
    
	
Capital   Accounts; Allocations; Tax Matters
    
	
 
    	
 
    
	
5.1 Capital Accounts
    	
29
    
	
5.2 Allocations
    	
30
    
	
5.3 Regulatory   Allocations
    	
30
    
	
5.4 Final Allocations
    	
31
    
	
5.5 Tax Allocations
    	
32
    
	
5.6 Indemnification and   Reimbursement for Payments on Behalf of a Member
    	
32
    
	
 
    	
 
    
	
Article VI
    
	
 
    
	
management
    
	
 
    	
 
    
	
6.1 Authority of   Manager; Officer Delegation
    	
34
    
	
6.2 Actions of the   Manager
    	
35
    
	
6.3 Resignation; No Removal
    	
35
    
	
6.4 Vacancies
    	
35
    
	
6.5 Transactions   Between the Company and the Manager
    	
35
    
	
6.6 Reimbursement for   Expenses
    	
35
    
	
6.7 Delegation of   Authority
    	
36
    
	
6.8 Limitation of   Liability of Manager
    	
36
    
	
6.9 Investment Company   Act
    	
37
    
	
 
    	
 
    
	
Article VII
    
	
 
    
	
RIGHTS, POWERS   AND OBLIGATIONS OF MEMBERS
    
	
 
    	
 
    
	
7.1 Limitation of   Liability and Duties of Members
    	
37
    
	
7.2 Lack of Authority
    	
38
    


 

ii











 

TABLE OF CONTENTS

(continued)

 

	
 
    	
Page
    
	
7.3 No Right of   Partition
    	
38
    
	
7.4 Indemnification
    	
39
    
	
7.5 Inspection Rights
    	
40
    
	
 
    	
 
    
	
Article VIII
    
	
 
    
	
Books, RECORDs,   accounting and reports, affirmative covenants
    
	
 
    	
 
    
	
8.1 Records and   Accounting
    	
40
    
	
8.2 Fiscal Year
    	
40
    
	
 
    	
 
    
	
Article IX
    
	
 
    
	
Tax Matters
    
	
 
    	
 
    
	
9.1 Preparation of Tax   Returns and Positions
    	
40
    
	
9.2 Tax Elections
    	
41
    
	
9.3 Tax Controversies
    	
41
    
	
 
    	
 
    
	
Article X
    
	
 
    
	
Restrictions on   Transfer of Units; Certain Transactions
    
	
 
    	
 
    
	
10.1 Transfers by   Members
    	
42
    
	
10.2 Permitted   Transfers
    	
43
    
	
10.3 Restricted Units   Legend
    	
43
    
	
10.4 Transfer
    	
44
    
	
10.5 Assignee’s Rights
    	
44
    
	
10.6 Assignor’s Rights   and Obligations
    	
44
    
	
10.7 Overriding   Provisions
    	
45
    
	
10.8 Spousal Consent
    	
46
    
	
10.9 Drag-Along Rights
    	
46
    
	
 
    	
 
    
	
Article XI
    
	
 
    
	
ADMISSION OF   MEMBERS
    
	
 
    	
 
    
	
11.1 Substituted   Members
    	
47
    


 

iii











 

TABLE OF CONTENTS

(continued)

 

	
 
    	
Page
    
	
11.2 Additional Members
    	
47
    
	
 
    	
 
    
	
Article XII
    
	
 
    
	
Withdrawal and   Resignation; Termination of Rights
    
	
 
    	
 
    
	
12.1 Withdrawal and   Resignation of Members
    	
48
    
	
 
    	
 
    
	
Article XIII
    
	
 
    
	
DISSOLUTION AND   Liquidation
    
	
 
    	
 
    
	
13.1 Dissolution
    	
48
    
	
13.2 Winding Up
    	
48
    
	
13.3 Deferment;   Distribution in Kind
    	
49
    
	
13.4 Cancellation of   Certificate
    	
50
    
	
13.5 Reasonable Time   for Winding Up
    	
50
    
	
13.6 Return of Capital
    	
50
    
	
 
    	
 
    
	
Article XIV
    
	
 
    
	
MISCELLANEOUS   PROVISIONS
    
	
 
    	
 
    
	
14.1 Power of Attorney
    	
50
    
	
14.2 Confidentiality
    	
51
    
	
14.3 Amendments
    	
52
    
	
14.4 Title to Company   Assets
    	
53
    
	
14.5 Addresses and   Notices
    	
53
    
	
14.6 Binding Effect;   Intended Beneficiaries
    	
54
    
	
14.7 Creditors
    	
54
    
	
14.8 Waiver
    	
54
    
	
14.9 Counterparts
    	
54
    
	
14.10 Applicable Law
    	
54
    
	
14.11 Severability
    	
54
    
	
14.12 Further Action
    	
55
    
	
14.13 Execution and   Delivery by Electronic Signature and Electronic Transmission
    	
55
    


 

iv











 

TABLE OF CONTENTS

(continued)

 

	
 
    	
Page
    
	
14.14 Right of Offset
    	
55
    
	
14.15 Entire Agreement
    	
55
    
	
14.16 Remedies
    	
55
    
	
14.17 Descriptive   Headings; Interpretation
    	
56
    
	
 
    	
 
    
	
Schedule I — Pre-IPO   Members
    	
 
    
	
 
    	
 
    
	
Schedule II — Schedule   of Members
    	
 
    
	
 
    	
 
    
	
Exhibit A —   Form of Joinder
    	
 
    
	
 
    	
 
    
	
Exhibit B-1 —   Form of Agreement and Consent of Spouse
    	
 
    
	
 
    	
 
    
	
Exhibit B-2 —   Form of Spouse’s Confirmation of Separate Property
    	
 
    


 

v











 

SECOND AMENDED AND RESTATED

LIMITED LIABILITY COMPANY AGREEMENT

 

of Aris Mortgage Holding Company, LLC

 

a Delaware Limited Liability Company

 

THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) is made and entered into as of [•], 2020 (the “Effective Date”), by and among Aris Mortgage Holding Company, LLC, a Delaware limited liability company (the “Company”) and any Person who is currently a member of the Company and any other Person who shall hereafter execute this Agreement as a Member of the Company (any such current members and any such other Person being herein referred to individually as a “Member” and collectively as the “Members”).

 

PRELIMINARY STATEMENTS

 

WHEREAS, the Company has heretofore filed a Certificate of Formation with the Secretary of State of the State of Delaware to organize the Company under and pursuant to the Delaware Limited Liability Company Act;

 

WHEREAS, A-A Mortgage Opportunities, L.P., a Delaware limited partnership (“A-A Mortgage”), entered into that certain Limited Liability Company Agreement of the Company, dated as of September 18, 2013 (the “Original Agreement”), as the sole member of the Company, which was amended and restated in its entirety by the Amended and Restated Limited Liability Company Agreement of the Company, dated as of March 6, 2014 (as amended from time to time, the “First A&R LLC Agreement”), which A-A Mortgage and the other parties listed on Schedule I hereto executed in their capacity as members (including pursuant to consents and joinders thereto) (such members other than A-A Mortgage listed on Schedule I, the “Pre-IPO Profits Units Holders”, and together with A-A Mortgage, the “Pre-IPO Members”); and

 

WHEREAS, prior to the date hereof, A-A Mortgage holds Original Common Units (as defined herein) and the Pre-IPO Profits Units Holders each hold Original Profits Units (as defined herein);

 

WHEREAS, the Pre-IPO Members desire to have AmeriHome, Inc., a Delaware corporation (“PubCo”), effect [(i)] an initial public offering (the “IPO”) of shares of its Class A common stock, par value $0.01 per share, (the “Class A Common Stock”) [and (ii) a concurrent public offering (the “Series A Preferred Stock Offering”) of its [•]% Series A Mandatory Convertible Preferred Stock, par value $[•] per share (the “Series A Preferred Stock”)];

 

WHEREAS, in connection with the IPO [and Series A Preferred Stock Offering], the Pre-IPO Members desire to convert all of the (i) Original Common Units into Common Units [and Series A Preferred Units] and (ii) Original Profits Units into Common Units (the “Recapitalization”);

 

WHEREAS, following the Recapitalization, the Pre-IPO Profits Units Holders shall contribute all of the Common Units received in connection with the recapitalization of the

 











 

Original Profits Units to PubCo in exchange for an equal number of shares of Class A Common Stock;

 

WHEREAS, following the Recapitalization, A-A Mortgage will distribute a number of Common Units held by it [and all of the Series A Preferred Units held by it at such time] to certain limited partners of A-A Mortgage (the “Selling Members”), and in turn, PubCo will use [(i)] the net proceeds from the IPO (other than the Over-Allotment Option Net Proceeds, as defined below) to purchase from the Selling Members such distributed Common Units [and (ii) the net proceeds from the Series A Preferred Stock Offering (other than the Preferred Over-Allotment Option Net Proceeds, as defined below) to purchase from the Selling Members such distributed Series A Preferred Units];

 

WHEREAS, PubCo may issue additional shares of Class A Common Stock in connection with the IPO as a result of the exercise by the underwriters of their over-allotment option (the “Over-Allotment Option”) and, if the Over-Allotment Option is exercised in whole or in part, A-A Mortgage shall distribute to the Selling Members an additional number of Common Units equal to the number of shares purchased by the underwriters from PubCo in connection with such exercise and any additional net proceeds (the “Over-Allotment Option Net Proceeds”) shall be used by the PubCo to purchase additional Common Units from the Selling Members; [and]

 

[WHEREAS, PubCo may issue additional shares of Series A Preferred Stock in connection with the Series A Preferred Stock Offering as a result of the exercise by the underwriters of their over-allotment option (the “Preferred Over-Allotment Option”) and, if the Preferred Over-Allotment Option is exercised in whole or in part at any time, the Company will distribute additional Series A Preferred Units equivalent to the number of shares of Series A Preferred Stock to be delivered by PubCo as part of the Preferred Over-Allotment Option at such time; and]

 

WHEREAS, in connection with the foregoing, the Pre-IPO Members desire to continue the Company without dissolution and amend and restate the First A&R LLC Agreement in its entirety as of the Effective Date to reflect, among other thing, (i) the Recapitalization [(including the creation and issuance of Series A Preferred Units)] and such other reorganizational transactions in connection with the IPO, (ii) the addition of PubCo as a Member and its designation as the sole Manager of the Company and (iii) the other rights and obligations of the Members, the Company, the Manager and PubCo, in each case, as provided and agreed upon in the terms of this Agreement as of the Effective Date, at which time the First A&R LLC Agreement shall be superseded entirely by this Agreement and shall be of no further force or effect.

 

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

 

2











 

ARTICLE I

 

GENERAL DEFINITIONS

 

1.1                               Definitions.  As used in this Agreement, the following terms shall each have the meanings set forth in this Article I, (unless the context otherwise requires).

 

“A-A Mortgage” has the meaning specified in the Preliminary Statements.

 

“Act” means the Delaware Limited Liability Company Act, as it may be amended from time to time, and any successor to such Act.

 

“Additional Member” has the meaning specified in Section 11.2.

 

“Adjusted Capital Account Deficit” means, with respect to the Capital Account of any Member as of the end of any Taxable Year, the amount by which the balance in such Capital Account is less than zero. For this purpose, such Member’s Capital Account balance shall be:

 

(a)                                 reduced for any items described in Treasury Regulation Section 1.704- 1(b)(2)(ii)(d)(4), (5), and (6); and

 

(b)                                 increased for any amount such Member is obligated to contribute or is treated as being obligated to contribute to the Company pursuant to Treasury Regulation Section 1.704-1(b)(2)(ii)(c) (relating to partner liabilities to a partnership) or 1.704-2(g)(1) and 1.704-2(i) (relating to minimum gain).

 

“Admission Date” has the meaning specified in Section 10.6.

 

“Affiliate” (and, with a correlative meaning, “Affiliated”) means, when used with reference to a specific Person (or when not referring to a specific Person shall mean an Affiliate of a Member), any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specific Person.  Athene Holding Ltd. and its subsidiaries shall be deemed Affiliates of the Company and A-A Mortgage Opportunities, L.P.

 

“Agreement” has the meaning specified in the Preamble.

 

“Approved Qualified Transaction” has the meaning specified in Section 10.9(a).

 

“Assignee” means a Person to whom a Unit has been transferred but who has not become a Member pursuant to Article XI.

 

“Assumed Tax Liability” means, with respect to any Member, an amount equal to the excess of (i) the product of (A) the Distribution Tax Rate multiplied by (B) the estimated or actual cumulative taxable income or gain of the Company, as determined for federal income tax purposes, allocated to such Member for full or partial Fiscal Years commencing on or after the closing date of the IPO, less prior losses of the Company allocated to such Member for full or partial Fiscal Years commencing on or after the closing date of the IPO, in each case, as determined by the Manager and to the extent such prior losses are available to reduce such income over (ii) the sum of the cumulative Tax Distributions made to such Member after the

 

3











 

closing date of the IPO pursuant to Sections 4.1(b)(i), 4.1(b)(ii) and 4.1(b)(iii); provided that, in the case of PubCo, such Assumed Tax Liability (x) shall be computed without regard to any increases to the tax basis of the Company’s property pursuant to Sections 734(b) or 743(b) of the Code and (y) to the extent permitted under the Credit Agreements, shall in no event be less than an amount that will enable the PubCo to meet both its tax obligations and its obligations pursuant to the Tax Receivable Agreement for the relevant Taxable Year; provided further that, in the case of each Member, and for the avoidance of doubt, such Assumed Tax Liability shall take into account any allocations under Section 704(c) of the Code (including “reverse” 704(c) allocations) to the Member.

 

“Base Rate” means, on any date, a variable rate per annum equal to the rate of interest most recently published by The Wall Street Journal as the “prime rate” at large U.S. money center banks.

 

“Book Value” means, with respect to any property of the Company, the Company’s adjusted basis for U.S. federal income tax purposes, adjusted from time to time to reflect the adjustments required or permitted by Treasury Regulation Section 1.704-1(b)(2)(iv)(d)-(g).

 

“Capital Account” means the Capital Account maintained for each Member pursuant to Section 5.1 of this Agreement.

 

“Capital Contribution” means, with respect to any Member, the amount of any cash, cash equivalents, promissory obligations or the Fair Market Value of other property that such Member (or such Member’s predecessor) contributes (or is deemed to contribute) to the Company pursuant to Article III hereof.

 

“Cash Exchange Payment” has the meaning specified in the Exchange Agreement.

 

“Certificate of Formation” means the Certificate of Formation of the Company described in Section 2.1.

 

“Class A Common Stock” has the meaning specified in the Preliminary Statements.

 

“Class B Common Stock” means the Class B common stock, par value $0.01 per share, of PubCo.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Common Unit” means a Unit designated as a “Common Unit” and having the rights and obligations specified with respect to the Common Units in this Agreement.

 

“Common Unitholder” means a Member who is the registered holder of Common Units.

 

“Company” has the meaning specified in the Preamble.

 

4











 

[“Company Reference Property” has the meaning specified in Section 3.12(g).]

 

[“Company Reorganization Event” has the meaning specified in Section 3.12(g).]

 

“Confidential Information” has the meaning set forth in Section 14.2(a).

 

“Credit Agreements” means any promissory note, mortgage, loan agreement, indenture or similar instrument or agreement to which the Company or any of its Subsidiaries is or becomes a borrower, as such instruments or agreements may be amended, restated, supplemented or otherwise modified from time to time and including any one or more refinancing or replacements thereof, in whole or in part, with any other debt facility or debt.

 

“Discount” has the meaning set forth in Section 6.6.

 

“Distributable Cash” means, as of any relevant date on which a determination is being made by the Manager regarding a potential distribution pursuant to Section 4.1(a), the amount of cash that could be distributed by the Company for such purposes in accordance with the Credit Agreements (and without otherwise violating any applicable provisions of any of the Credit Agreements).

 

“Distribution” means each distribution made by the Company to a Member with respect to such Member’s Units, whether in cash, property or securities of the Company and whether by liquidating distribution or otherwise; provided, however, that none of the following shall be a Distribution: (a) any recapitalization that does not result in the distribution of cash or property to Members or any exchange of securities of the Company, and any subdivision (by Unit split or otherwise) or any combination (by reverse Unit split or otherwise) of any outstanding Units or (b) any other payment made by the Company to a Member that is not properly treated as a “distribution” for purposes of Sections 731, 732, or 733 or other applicable provisions of the Code.

 

“Distribution Tax Rate” means a rate equal to the highest effective marginal combined federal, state and local income tax rate applicable to individual taxpayers residing in New York City, taking into account the character of the relevant tax items (e.g., ordinary or capital) and the deductibility of state and local income taxes for federal income tax purposes (but only to the extent such taxes are deductible under the Code), as reasonably determined by the Manager.

 

“Drag-Along Amount” has the meaning set forth in Section 10.9(b).

 

“Drag-Along Notice” has the meaning set forth in Section 10.9(b).

 

“Drag-Along Right” has the meaning set forth in Section 10.9(a).

 

“Drag Price” has the meaning set forth in Section 10.9(a).

 

“Effective Date” has the meaning specified in the Preamble.

 

5











 

“Equity Plan” means any stock or equity purchase plan, restricted stock or equity plan or other similar equity compensation plan now or hereafter adopted by the Company or PubCo.

 

“Equity Securities” means (a) Units or other equity interests in the Company or any Subsidiary of the Company (including other classes or groups thereof having such relative rights, powers and duties as may from time to time be established by the Manager pursuant to the provisions of this Agreement, including rights, powers and/or duties senior to existing classes and groups of Units and other equity interests in the Company or any Subsidiary of the Company), (b) obligations, evidences of indebtedness or other securities or interests convertible or exchangeable into Units or other equity interests in the Company or any Subsidiary of the Company, and (c) warrants, options or other rights to purchase or otherwise acquire Units or other equity interests in the Company or any Subsidiary of the Company.

 

“Event of Withdrawal” means the bankruptcy or dissolution of a Member or the occurrence of any other event that terminates the continued membership of a Member in the Company. “Event of Withdrawal” shall not include an event that (a) terminates the existence of a Member for income tax purposes (including, without limitation, (i) a change in entity classification of a Member under Treasury Regulation Section 301.7701-3, (ii) a sale of assets by, or liquidation of, a Member pursuant to an election under Code Sections 336 or 338, or (iii) merger, severance, or allocation within a trust or among sub-trusts of a trust that is a Member) but that (b) does not terminate the existence of such Member under applicable state law (or, in the case of a trust that is a Member, does not terminate the trusteeship of the fiduciaries under such trust with respect to all the Units of such trust that is a Member).

 

“Exchange Agreement” means the Exchange Agreement dated on or about the date hereof, by and among the Company, PubCo and the other parties thereto.

 

“Exchanging Holder” has the meaning specified in the Exchange Agreement.

 

“Fair Market Value” of a specific asset of the Company will mean the amount which the Company would receive in an all-cash sale of such asset in an arms-length transaction with a willing unaffiliated third party, with neither party having any compulsion to buy or sell, consummated on the day immediately preceding the date on which the event occurred which necessitated the determination of the Fair Market Value (and after giving effect to any transfer taxes payable in connection with such sale), as such amount is determined by the Manager (or, if pursuant to Section 13.2, the Liquidators) in its good faith judgment using all factors, information and data it deems to be pertinent.

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“First A&R LLC Agreement” has the meaning specified in the Preliminary Statements.

 

“Fiscal Period” means any interim accounting period within a Taxable Year established by the Manager and which is permitted or required by Section 706 of the Code.

 

6











 

“Fiscal Year” means the Company’s annual accounting period established pursuant to Section 8.2.

 

“Governmental Entity” means any Federal, state, county, city, local or foreign governmental, administrative or regulatory authority, commission, committee, agency or body (including any court, tribunal or arbitral body and any self-regulating authority such as FINRA).

 

“Indemnified Person” has the meaning specified in Section 7.4(a).

 

[“Initial Series A Preferred Unit Issue Date” means [•], 2020, the first original issue date of the Series A Preferred Units.]

 

“IPO” has the meaning specified in the Preliminary Statements.

 

“IPO Common Unit Contributions” has the meaning specified in Section 3.3(b).

 

“IPO Unit Purchases” has the meaning specified in Section 3.3(c).

 

“IPO Unit Purchase Agreements” means those certain common unit purchase agreements, dated as of the Effective Date, by and between PubCo and the Selling Members.

 

“Investment Company Act” means the U.S. Investment Company Act of 1940, as amended from time to time.

 

“Joinder” means a joinder to this Agreement, in form and substance substantially similar to Exhibit A hereto.

 

[“Junior Units” means (i) the Common Units and (ii) each other class or series of Units established after the Initial Series A Preferred Issue Date, the terms of which do not expressly provide that such class or series ranks either (x) senior to the Series A Preferred Units as to distribution rights or rights upon the Company’s liquidation, winding-up or dissolution or (y) on parity with the Series A Preferred Units as to distribution rights or rights upon the Company’s liquidation, winding-up or dissolution.]

 

“Law” means all laws, statutes, ordinances, rules and regulations of any Governmental Entity.

 

“Liquidator” has the meaning specified in Section 13.2.

 

“LLC Employee” means an employee of, or other service provider (including, without limitation, any management member whether or not treated as an employee for the purposes of U.S. federal income tax) to, the Company or any of its Subsidiaries, in each case acting in such capacity.

 

“Losses” means items of loss or deduction of the Company determined according to Section 5.1(b).

 

7











 

“Manager” has the meaning specified in Section 6.1(a).

 

“Market Price” means, with respect to a share of Class A Common Stock as of a specified date, the last sale price per share of Class A Common Stock, regular way, or if no such sale took place on such day, the average of the closing bid and asked prices per share of Class A Common Stock, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the Stock Exchange or, if the Class A Common Stock is not listed or admitted to trading on the Stock Exchange, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Class A Common Stock is listed or admitted to trading or, if the Class A Common Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if the Class A Common Stock is not quoted by any such system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in shares of Class A Common Stock selected by the PubCo Board or, in the event that no trading price is available for the shares of Class A Common Stock, the fair market value of a share of Class A Common Stock, as determined in good faith by the PubCo Board.

 

“Member” means, as of any date of determination, (a) each of the members named on the Schedule of Members and (b) any Person admitted to the Company as a Substituted Member or Additional Member in accordance with Article XI, but in each case only so long as such Person is shown on the Company’s books and records as the owner of one or more Units, each in its capacity as a member of the Company.

 

“Minimum Gain” means “partnership minimum gain” determined pursuant to Treasury Regulation Section 1.704-2(d).

 

“Net Loss” means, with respect to a Fiscal Year, the excess if any, of Losses for such Fiscal Year over Profits for such Fiscal Year (excluding Profits and Losses specially allocated pursuant to Section 5.3 and Section 5.4).

 

“Net Profit” means, with respect to a Fiscal Year, the excess if any, of Profits for such Fiscal Year over Losses for such Fiscal Year (excluding Profits and Losses specially allocated pursuant to Section 5.3 and Section 5.4).

 

“Officer” has the meaning set forth in Section 6.1(b).

 

“Optionee” means a Person to whom a stock option is granted under any Stock Option Plan.

 

“Other Agreements” has the meaning specified in Section 10.4.

 

“Original Agreement” has the meaning specified in the Preliminary Statements.

 

8











 

“Original Common Units” means the Class A Units as defined in the First A&R LLC Agreement.

 

“Original Profits Units” means the Class P1 Units and Class T1 Units, each as defined in the First A&R LLC Agreement.

 

“Original Units” means the Original Common Units and the Original Profits Units, collectively.

 

“Over-Allotment Common Unit Purchase” has the meaning specified in Section 3.3(c).

 

“Over-Allotment Option” has the meaning specified in the Preliminary Statements.

 

“Over-Allotment Option Net Proceeds” has the meaning specified in the Preliminary Statements.

 

[“Parity Units” means any class or series of Units established after the Initial Series A Preferred Issue Date, the terms of which expressly provide that such class or series shall rank on parity with the Series A Preferred Units as to distribution rights or rights upon the Company’s liquidation, winding-up or dissolution.]

 

“Partnership Representative” has the meaning set forth in Section 9.1.

 

“Percentage Interest” means, as among an individual class of Units and with respect to a Member at a particular time, such Member’s percentage interest in the Company determined by dividing the number of such Member’s Units of such class by the total number of Units of all Members of such class at such time. The Percentage Interest of each Member shall be calculated to the fourth decimal place.

 

“Permitted Transfer” has the meaning specified in Section 10.2.

 

“Permitted Transferee” has the meaning specified in Section 10.2.

 

“Person” shall be construed in its broadest sense and means and includes a natural person, general partnership, limited partnership, corporation, limited liability company, limited liability partnership, joint venture, trust, business trust, governmental agency, cooperative, association, individual or other entity, and the heirs, executors, administrations, legal representatives, successors and assigns of such person, as the context may require.

 

“Pre-IPO Members” has the meaning set forth in the Preliminary Statements.

 

“Pre-IPO Profits Units Holders” has the meaning set forth in the Preliminary Statements.

 

“Pro rata,” “pro rata portion,” “according to their interests,” “ratably,” “proportionately,” “proportional,” “in proportion to,” “based on the number of Units held,”

 

9









 

“based upon the percentage of Units held,” “based upon the number of Units outstanding,” and other terms with similar meanings, when used in the context of a number of Units of the Company relative to other Units, means as amongst an individual class of Units, pro rata based upon the number of such Units within such class of Units.

 

“Profits” means items of income and gain of the Company determined according to Section 5.1(b).

 

[“Prospectus” means the final prospectus of PubCo, dated October [·], 2020.]

 

“PubCo” has the meaning specified in the Preliminary Statements.

 

“PubCo Board” means the board of directors of PubCo.

 

“Qualified Transaction” means any merger, consolidation or other business combination of PubCo, whether effectuated through one transaction or series of related transactions (including a tender offer followed by a merger in which holders of Class A Common Stock receive the same consideration per share paid in the tender offer), unless, following such transaction, all or substantially all of the holders of the voting power of all outstanding classes of Common Stock and any series of preferred stock issued by PubCo that are generally entitled to vote in the election of directors prior to such transaction or series of transactions, continue to hold a majority of the voting power of the surviving entity (or its parent) resulting from such transaction or series of transactions in substantially the same proportions as immediately prior to such transaction or series of transactions.

 

“Quarterly Tax Distribution” has the meaning set forth in Section 4.1(b)(i).

 

“Recapitalization” has the meaning specified in the Preliminary Statements.

 

“Registration Rights Agreement” means that certain registration rights agreement, dated as of the Effective Date, by and among PubCo and the other Persons party thereto (together with any joinder thereto from time to time by any successor or assign to any party to such agreement) (as it may be amended from time to time in accordance with its terms).

 

“Regulatory Allocations” has the meaning set forth in Section 5.3(f).

 

“Required Member” has the meaning set forth in Section 10.9(a).

 

“Revised Partnership Audit Provisions” means Section 1101 of Title XI (Revenue Provisions Related to Tax Compliance) of the Bipartisan Budget Act of 2015, H.R. 1314, Public Law Number 114-74.

 

“Schedule of Members” has the meaning specified in Section 3.1(b).

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Selling Members” has the meaning specified in the Preliminary Statements.

 

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[“Senior Units” means each class or series of Units established after the Initial Series A Preferred Issue Date, the terms of which expressly provide that such class or series shall rank senior to the Series A Preferred Units as to distribution rights or rights upon the Company’s liquidation, winding-up or dissolution.]

 

[“Series A Certificate of Designations” means the Certificate of Designations of PubCo providing for the Series A Preferred Stock.]

 

[“Series A Preferred Stock” has the meaning specified in the Preliminary Statements.]

 

[“Series A Preferred Stock Offering” has the meaning specified in the Preliminary Statements.]

 

[“Series A Preferred Units” has the meaning specified in Section 3.12(a).]

 

[“Series A Preferred Unit Conversion” has the meaning specified in Section 3.12(e).]

 

[“Series A Preferred Unit Distribution Period” means the period from, and including, a Series A Preferred Unit Payment Date to, but excluding, the next Series A Preferred Unit Payment Date, except that the initial Series A Preferred Unit Distribution Period shall commence on, and include, the Initial Series A Preferred Unit Issue Date and shall end on, and exclude, the February 1, 2021 Series A Preferred Unit Payment Date.]

 

[“Series A Preferred Unit Distribution Rate” has the meaning specified in Section 3.12(c).]

 

[“Series A Preferred Unit Liquidation Distribution Amount” has the meaning specified in Section 3.12(d)(i).]

 

[“Series A Preferred Unit Liquidation Preference” means, as to the Series A Preferred Units, $100.00 per Series A Preferred Unit.]

 

[“Series A Preferred Unit Payment Date” means February 1, May 1, August 1 and November 1 of each year to, and including, November 1, 2023 commencing on February 1, 2021.]

 

“Share Settlement” has the meaning specified in the Exchange Agreement.

 

“Stock Exchange” means the New York Stock Exchange.

 

“Stock Option Plan” means any stock option plan now or hereafter adopted by the Company or by PubCo, including the [[•] Plan].

 

“Stockholders Agreement” means that certain stockholders agreement, dated as of the Effective Date, by and among PubCo and the other Persons party thereto (as it may be amended from time to time in accordance with its terms).

 

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“Subsidiary” means, with respect to any Person, any other Person the majority of whose equity securities or voting securities are directly or indirectly owned or controlled by such Person.

 

“Substituted Member” means a Person that is admitted as a Member to the Company pursuant to Section 11.1.

 

“Tax Distributions” has the meaning set forth in Section 4.1(b)(i).

 

“Tax Receivable Agreement” means that certain tax receivable agreement, dated as the date of the Effective Date, by and among PubCo and each other party thereto, together with any joinder thereto from time to time by any successor or assign to any party to such agreement, as it may be amended from time to time in accordance with its terms.

 

“Taxable Year” means the Company’s accounting period for U.S. federal income tax purposes determined pursuant to Section 9.1(b).

 

“Trading Day” means a day on which the Stock Exchange or such other principal United States securities exchange on which the Class A Common Stock is listed or admitted to trading is open for the transaction of business (unless such trading shall have been suspended for the entire day).

 

“Transfer” (and, with a correlative meaning, “Transferred” and “Transferring”) means any sale, transfer, assignment, redemption, pledge, encumbrance or other disposition of (whether directly or indirectly, whether with or without consideration and whether voluntarily or involuntarily or by operation of Law) (a) any interest (legal or beneficial) in any Equity Securities or (b) any equity or other interest (legal or beneficial) in any Member if substantially all of the assets of such Member consist solely of Units.

 

“Treasury Regulations” means the regulations promulgated by the U.S. Treasury Department pursuant to the Code.

 

“Units” means the fractional interest of a Member in Profits, Losses and Distributions of the Company, and otherwise having the rights and obligations specified with respect to “Units” in this Agreement; provided, however, that any class or group of Units issued shall have the relative rights, powers and duties set forth in this Agreement applicable to such class or group of Units.

 

[“Unit Dilution Amount” means the increase in the number of diluted Common Units outstanding (determined in accordance with U.S. GAAP, and as measured from the Initial Issue Date) resulting from the grant, vesting or exercise of equity-based compensation to directors, employees and agents (whether of PubCo, the Company or its Subsidiaries) and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.]

 

“Unvested Corporate Shares” means shares of Class A Common Stock issuable pursuant to awards granted under the PubCo [[·] Plan] that are not Vested Corporate Shares.

 

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“Value” means (a) for any Stock Option Plan, the Market Price for the Trading Day immediately preceding the date of exercise of a stock option under such Stock Option Plan and (b) for any Equity Plan other than a Stock Option Plan, the Market Price for the Trading Day immediately preceding the Vesting Date.

 

“Vested Corporate Shares” means the shares of Class A Common Stock issued pursuant to awards granted under the PubCo [[•] Plan] that are vested pursuant to the terms thereof or any award or similar agreement relating thereto.

 

“Vesting Date” has the meaning set forth in Section 3.10(c)(ii).

 

1.2                               Interpretation.  Each definition in this Agreement includes the singular and the plural, and reference to the neuter gender includes the masculine and feminine where appropriate.  References to any statute or Treasury Regulations mean such statute or regulations as amended at the time and include any successor legislation or regulations.  The headings to the Articles and Sections are for convenience of reference and shall not affect the meaning or interpretation of this Agreement.  Except as otherwise stated, reference to Articles, Sections and Schedules mean the Articles, Sections and Schedules of this Agreement.  The Schedules are hereby incorporated by reference into and shall be deemed a part of this Agreement.

 

ARTICLE II

 

ORGANIZATION

 

2.1                               Formation.  The Company has been organized as a Delaware limited liability company under and pursuant to the Act by the filing of a Certificate of Formation with the Office of the Secretary of State of Delaware as required by the Act.  In the event of a conflict between the terms of this Agreement and the Certificate of Formation, the terms of the Certificate of Formation shall prevail.

 

2.2                               Name.  The name of the Company is Aris Mortgage Holding Company, LLC.  The Manager in its sole discretion may change the name of the Company at any time and from time to time.  To the extent permitted by the Act, the Company may conduct its business under one or more assumed names deemed advisable by the Manager.

 

2.3                               Purposes.  The purposes of the Company are to engage in any activity and/or business for which limited liability companies may be formed under the Act.  The Company shall possess and, subject to the limitations herein expressed, may exercise, all powers necessary, convenient or incidental to the conduct, promotion or attainment of its business, purposes or activities to the fullest extent provided by the Act.

 

2.4                               Duration.  The Company shall continue in existence until it is dissolved and its affairs wound up in accordance with the Act or this Agreement.

 

2.5                               Registered Office and Registered Agent; Principal Office.

 

(a)                                 The registered office of the Company required by the Act to be maintained in the State of Delaware shall be the initial registered office named in the Certificate of

 

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Formation or such other office (which need not be a place of business of the Company) as the Manager may designate from time to time in the manner provided by the Act.

 

(b)                                 The registered agent of the Company in the State of Delaware shall be the initial registered agent named in the Certificate of Formation or such other Person or Persons as the Manager may designate in the manner provided by the Act.

 

(c)                                  The principal office of the Company shall be at 1 Baxter Way, Thousand Oaks, California 91326, or at such place as the Manager may designate from time to time, which need not be in the State of Delaware, and the Company shall maintain records there for inspection as required by the Act.  The Company may have such other offices as the Manager may designate from time to time.

 

2.6                               No State-Law Partnership.  No provisions of this Agreement (including, without limitation, the provisions of Article VIII) shall be deemed or construed to constitute the Company a partnership (including, without limitation, a limited partnership) or joint venture, or any Member or Manager a partner or joint venturer of or with any other Member or Manager, for any purposes other than federal and state tax purposes.

 

ARTICLE III

 

MEMBERS

 

3.1                               Members.

 

(a)                                 On the Effective Date and concurrently with the IPO Common Unit Contributions and the IPO Unit Purchases, PubCo shall be automatically admitted to the Company as a Member.

 

(b)                                 The Company shall maintain a schedule setting forth: (i) the name and address of each Member; (ii) the aggregate number of outstanding Units and the number and class of Units held by each Member; (iii) the aggregate amount of cash Capital Contributions that has been made by the Members with respect to their Units; and (iv) the Fair Market Value of any property other than cash contributed by the Members with respect to their Units (including, if applicable, a description and the amount of any liability assumed by the Company or to which contributed property is subject) (such schedule, the “Schedule of Members”).  The Schedule of Members shall be the definitive record of ownership of each Unit of the Company and all relevant information with respect to each Member.  The Company shall be entitled to recognize the exclusive right of a Person registered on its records as the owner of Units for all purposes and shall not be bound to recognize any equitable or other claim to or interest in Units on the part of any other Person, whether or not it shall have express or other notice thereof, except as otherwise provided by the Act.

 

(c)                                  No Member shall be required or, except as approved by the Manager pursuant to Section 6.1 and in accordance with the other provisions of this Agreement, permitted to (i) loan any money or property to the Company, (ii) borrow any money or property from the Company or (iii) make any additional Capital Contributions.

 

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3.2                               Units.

 

(a)                                 Interests in the Company shall be represented by Units, or such other securities of the Company, in each case as the Manager may establish in its discretion in accordance with the terms and subject to the restrictions hereof. At the Effective Date, the Units will be comprised of Common Units [and Series A Preferred Units].

 

(b)                                 Subject to Section 3.4(a), the Manager may (i) issue additional Common Units [or Series A Preferred Units] at any time in its sole discretion and (ii) create one or more classes or series of Units or preferred Units solely to the extent such new class or series of Units or preferred Units are substantially economically equivalent to a class of common or other stock of PubCo or class or series of preferred stock of PubCo, respectively; provided, that as long as there are any Members (other than PubCo and its Subsidiaries) (A) no such new class or series of Units may deprive such Members of, or dilute or reduce, the allocations and distributions they would have received, and the other rights and benefits to which they would have been entitled, in respect of their Units if such new class or series of Units had not been created and (B) no such new class or series of Units may be issued, in each case, except to the extent (and solely to the extent) the Company actually receives cash in an aggregate amount, or other property with a Fair Market Value in an aggregate amount, equal to the aggregate distributions that would be made in respect of such new class or series of Units if the Company were liquidated immediately after the issuance of such new class or series of Units.

 

(c)                                  Subject to Sections 14.3(b) and Section 14.3(c), the Manager may amend this Agreement, without the consent of any Member or any other Person, in connection with the creation and issuance of such classes or series of Units, pursuant to Sections 3.2(b), 3.4(a) or 3.10.

 

3.3                               Recapitalization; IPO Common Unit Contributions; IPO Unit Purchases.

 

(a)                                 In order to effect the Recapitalization, the number of Original Units that were issued and outstanding and held by the Pre-IPO Members prior to the Effective Date as set forth opposite the respective Pre-IPO Member in Schedule I are hereby converted, as of the Effective Date and after giving effect to such conversion, the IPO Common Unit Contributions and the IPO Unit Purchases, into the number of Common Units [and Series A Preferred Units] set forth opposite the name of the respective Member on the Schedule of Members attached hereto as Schedule II (provided, for the avoidance of doubt, that the number of Common Units [and Series A Preferred Units] set forth on Schedule II is net of any Common Units transferred or contributed pursuant to the IPO Common Unit Contributions and the IPO Unit Purchases as described below), and such Common Units [and Series A Preferred Units] are hereby issued and outstanding as of the Effective Date.

 

(b)                                 Immediately following the Recapitalization, each Pre-IPO Profits Units Holder shall contribute all of the Common Units received by such Pre-IPO Profits Units Holder in connection with the recapitalization of the Original Profits Units to PubCo in exchange for one share of Class A Common Stock per Common Unit so contributed (such contributions, collectively, the “IPO Common Unit Contributions”).

 

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(c)                                  Following the Recapitalization and immediately following the consummation of the IPO, A-A Mortgage shall distribute [(i)] [·] Common Units [and [·] Series A Preferred Units] to the Selling Members and PubCo will purchase all of such distributed Common Units [and Series A Preferred Units] from each of the Selling Members pursuant to the IPO Unit Purchase Agreements (such purchases, collectively, the “IPO Unit Purchases”).  In addition, to the extent the underwriters in the IPO exercise the Over-Allotment Option in whole or in part, upon any exercise of the Over-Allotment Option, A-A Mortgage shall distribute a number of Common Units equal to the number of shares of Class A Common Stock issued by PubCo in connection with such exercise to the Selling Members and PubCo shall purchase all of such Common Units from the Selling Members pursuant to the IPO Unit Purchase Agreements (the “Over-Allotment Common Unit Purchase”).  [Further, to the extent the underwriters in the Series A Preferred Stock Offering exercise the Preferred Over-Allotment Option in whole or in part, upon any exercise of the Preferred Over-Allotment Option, the Company shall issue a number of additional Series A Preferred Units to A-A Mortgage that is equal to the number of shares of Series A Preferred Stock issued by PubCo in connection with such exercise, and following such issuance, A-A Mortgage shall distribute all of such Series A Preferred Units to the Selling Members and PubCo shall purchase all of such Series A Preferred Units from the Selling Members pursuant to the IPO Unit Purchase Agreements (the “Over-Allotment Preferred Unit Purchase”)  The Over-Allotment Common Unit Purchase and Over-Allotment Preferred Unit Purchase, if applicable, shall be reflected on the Schedule of Members.

 

3.4                               Authorization and Issuance of Additional Units.

 

(a)                                 The Company shall undertake all actions, including an issuance, reclassification, distribution, division or recapitalization, with respect to the Common Units, to maintain at all times a one-to-one ratio between the number of Common Units owned by PubCo and the number of outstanding shares of Class A Common Stock, disregarding, for purposes of maintaining the one-to-one ratio, (i) Unvested Corporate Shares, (ii) treasury stock or (iii) preferred stock or other debt or equity securities (including warrants, options or rights) issued by PubCo that are convertible into or exercisable or exchangeable for Class A Common Stock (except to the extent the net proceeds from such other securities, including any exercise or purchase price payable upon conversion, exercise or exchange thereof, has been contributed by PubCo to the equity capital of the Company).  In the event PubCo issues, transfers or delivers from treasury stock or repurchases Class A Common Stock in a transaction not contemplated in this Agreement, the Manager shall take all actions such that, after giving effect to all such issuances, transfers, deliveries or repurchases, the number of outstanding Common Units owned by PubCo will equal on a one-for-one basis the number of outstanding shares of Class A Common Stock.  In the event PubCo issues, transfers or delivers from treasury stock or repurchases or redeems PubCo’s preferred stock in a transaction not contemplated in this Agreement, the Manager shall have the authority to take all actions such that, after giving effect to all such issuances, transfers, deliveries, repurchases or redemptions, PubCo holds (in the case of any issuance, transfer or delivery) or ceases to hold (in the case of any purchase or redemption) equity interests in the Company which (in the good faith determination by the Manager) are in the aggregate substantially equivalent to the outstanding preferred stock of PubCo so issued, transferred, delivered, repurchased or redeemed. PubCo shall, concurrently with any action taken by the Company pursuant to the requirements of this Section 3.4, contribute the net proceeds (if any) received by PubCo in respect of the events which gave rise to

 

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the Company’s obligation to undertake any action pursuant to the requirements of this Section 3.4 to the equity capital of the Company.  The Company shall not undertake any subdivision (by any Common Unit split, Common Unit distribution, reclassification, recapitalization or similar event) or combination (by reverse Common Unit split, reclassification, recapitalization or similar event) of the Common Units that is not accompanied by an identical subdivision or combination of Class A Common Stock to maintain at all times a one-to-one ratio between the number of Common Units owned by PubCo and the number of outstanding shares of Class A Common Stock, unless such action is necessary to maintain at all times a one-to-one ratio between the number of Common Units owned by PubCo and the number of outstanding shares of Class A Common Stock as contemplated by the first sentence of this Section 3.4(a).

 

(b)                                 The Company shall only be permitted to issue additional Units or other Equity Securities in the Company to the Persons and on the terms and conditions provided for in Section 3.2, this Section 3.4, Section 3.10 and Section 3.11.  Subject to the foregoing, the Manager may cause the Company to issue additional Common Units authorized under this Agreement at such times and upon such terms as the Manager shall determine and the Manager shall amend this Agreement as necessary in connection with the issuance of additional Common Units and admission of additional Members under this Section 3.4 without the requirement of any consent or acknowledgement of any other Member.

 

(c)                                  At any time an Exchanging Holder exchanges Common Units for a Cash Exchange Payment from PubCo pursuant to the Exchange Agreement, the Company shall cancel such Common Units upon receipt by PubCo from such Exchanging Holder (provided, that, for the avoidance of doubt, this Section 3.4(c) shall not apply in the case of any exchanges effectuated pursuant to a Share Settlement under the Exchange Agreement).

 

3.5                               Repurchase or Redemption of shares of Class A Common Stock.  Except as otherwise determined by the Manager in connection with the use of cash or other assets held by PubCo, if at any time, any shares of Class A Common Stock are repurchased or redeemed (whether by exercise of a put or call, automatically or by means of another arrangement) by PubCo for cash, then the Manager shall cause the Company, immediately prior to such repurchase or redemption of Class A Common Stock, to redeem a corresponding number of Common Units held (directly or indirectly) by PubCo, at an aggregate redemption price equal to the aggregate purchase or redemption price of the shares of Class A Common Stock being repurchased or redeemed by PubCo (plus any expenses related thereto) and upon such other terms as are the same for the shares of Class A Common Stock being repurchased or redeemed by PubCo; provided, if PubCo uses funds received from distributions from the Company or the net proceeds from an issuance of Class A Common Stock to fund such repurchase or redemption, then the Company shall cancel a corresponding number of Common Units held (directly or indirectly) by PubCo for no consideration. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make any repurchase or redemption if such repurchase or redemption would violate any applicable Law.

 

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3.6                               Certificates Representing Units; Lost, Stolen or Destroyed Certificates; Registration and Transfer of Units.

 

(a)                                 Units shall not be certificated unless otherwise determined by the Manager. If the Manager determines that one or more Units shall be certificated, each such certificate shall be signed by or in the name of the Company, by the Chief Executive Officer, Chief Financial Officer, General Counsel, Secretary or any other officer designated by the Manager, representing the number of Units held by such holder. Such certificate shall be in such form (and shall contain such legends) as the Manager may determine. Any or all of such signatures on any certificate representing one or more Units may be a facsimile, engraved or printed, to the extent permitted by applicable Law. No Units shall be treated as a “security” within the meaning of Article 8 of the Uniform Commercial Code unless all Units then outstanding are certificated; notwithstanding anything to the contrary herein, including Section 14.3, the Manager is authorized to amend this Agreement in order for the Company to opt-in to the provisions of Article 8 of the Uniform Commercial Code without the consent or approval of any Member of any other Person.

 

(b)                                 If Units are certificated, the Manager may direct that a new certificate representing one or more Units be issued in place of any certificate theretofore issued by the Company alleged to have been lost, stolen or destroyed, upon delivery to the Manager of an affidavit of the owner or owners of such certificate, setting forth such allegation. The Manager may require the owner of such lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Company a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of any such new certificate.

 

(c)                                  To the extent Units are certificated, upon surrender to the Company or the transfer agent of the Company, if any, of a certificate for one or more Units, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, in compliance with the provisions hereof, the Company shall issue a new certificate representing one or more Units to the Person entitled thereto, cancel the old certificate and record the transaction upon its books. Subject to the provisions of this Agreement, the Manager may prescribe such additional rules and regulations as it may deem appropriate relating to the issue, Transfer and registration of Units.

 

3.7                               Negative Capital Accounts.  No Member shall be required to pay to any other Member or the Company any deficit or negative balance which may exist from time to time in such Member’s Capital Account (including upon and after dissolution of the Company).

 

3.8                               No Withdrawal.  No Person shall be entitled to withdraw any part of such Person’s Capital Contribution or Capital Account or to receive any Distribution from the Company, except as expressly provided in this Agreement.

 

3.9                               Loans From Members.  Loans by Members to the Company shall not be considered Capital Contributions. Subject to the provisions of Section 3.1(c), the amount of any such advances shall be a debt of the Company to such Member and shall be payable or collectible in accordance with the terms and conditions upon which such advances are made.

 

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3.10                        Corporate Stock Option Plans and Equity Plans.

 

(a)                                 Options Granted to Persons other than LLC Employees.  If at any time or from time to time, in connection with any Stock Option Plan, a stock option granted over shares of Class A Common Stock to a Person other than an LLC Employee is duly exercised:

 

(i)                                     PubCo shall, as soon as practicable after such exercise, make a Capital Contribution to the Company in an amount equal to the exercise price paid to PubCo by such exercising Person in connection with the exercise of such stock option.

 

(ii)                                  Notwithstanding the amount of the Capital Contribution actually made pursuant to Section 3.10(a)(i), PubCo shall be deemed to have contributed to the Company as a Capital Contribution, in lieu of the Capital Contribution actually made and in consideration of additional Common Units, an amount equal to the Value of a share of Class A Common Stock as of the date of such exercise multiplied by the number of shares of Class A Common Stock then being issued by PubCo in connection with the exercise of such stock option.

 

(iii)                               PubCo shall receive in exchange for such Capital Contributions (as deemed made under Section 3.10(a)(ii)), a number of Common Units equal to the number of shares of Class A Common Stock for which such option was exercised.

 

(b)                                 Options Granted to LLC Employees.  If at any time or from time to time, in connection with any Stock Option Plan, a stock option granted over shares of Class A Common Stock to an LLC Employee is duly exercised:

 

(i)                                     PubCo shall sell to the Optionee, and the Optionee shall purchase from PubCo, for a cash price per share equal to the Value of a share of Class A Common Stock at the time of the exercise, the number of shares of Class A Common Stock equal to the quotient of (x) the exercise price payable by the Optionee in connection with the exercise of such stock option divided by (y) the Value of a share of Class A Common Stock at the time of such exercise.

 

(ii)                                  PubCo shall sell to the Company (or if the Optionee is an employee of, or other service provider to, a Subsidiary, PubCo shall sell to such Subsidiary), and the Company (or such Subsidiary, as applicable) shall purchase from PubCo, a number of shares of Class A Common Stock equal to the difference between (x) the number of shares of Class A Common Stock as to which such stock option is being exercised minus (y) the number of shares of Class A Common Stock sold pursuant to Section 3.10(b)(i) hereof. The purchase price per share of Class A Common Stock for such sale of shares of Class A Common Stock to the Company (or such Subsidiary) shall be the Value of a share of Class A Common Stock as of the date of exercise of such stock option.

 

(iii)                               The Company shall transfer to the Optionee (or if the Optionee is an employee of, or other service provider to, a Subsidiary, the Subsidiary shall transfer to the Optionee) at no additional cost to such LLC Employee and as additional compensation (and not a distribution) to such LLC Employee, the number of shares of Class A Common Stock described in Section 3.10(b)(ii).

 

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(iv)                              PubCo shall, as soon as practicable after such exercise, make a Capital Contribution to the Company in an amount equal to all proceeds received (from whatever source, but excluding any payment in respect of payroll taxes or other withholdings) by PubCo in connection with the exercise of such stock option. PubCo shall receive for such Capital Contribution, a number of Common Units equal to the number of shares of Class A Common Stock for which such option was exercised.

 

(c)                                  Restricted Stock Granted to LLC Employees.  If at any time or from time to time, in connection with any Equity Plan (other than a Stock Option Plan), any shares of Class A Common Stock are issued to an LLC Employee (including any shares of Class A Common Stock that are subject to forfeiture in the event such LLC Employee terminates his or her employment with the Company or any Subsidiary) in consideration for services performed for the Company or any Subsidiary:

 

(i)                                     PubCo shall issue such number of shares of Class A Common Stock as are to be issued to such LLC Employee in accordance with the Equity Plan;

 

(ii)                                  On the date (such date, the “Vesting Date”) that the Value of such shares is includible in taxable income of such LLC Employee, the following events will be deemed to have occurred: (1) PubCo shall be deemed to have sold such shares of Class A Common Stock to the Company (or if such LLC Employee is an employee of, or other service provider to, a Subsidiary, to such Subsidiary) for a purchase price equal to the Value of such shares of Class A Common Stock, (2) the Company (or such Subsidiary) shall be deemed to have delivered such shares of Class A Common Stock to such LLC Employee, (3) PubCo shall be deemed to have contributed the purchase price for such shares of Class A Common Stock to the Company as a Capital Contribution, and (4) in the case where such LLC Employee is an employee of a Subsidiary, the Company shall be deemed to have contributed such amount to the capital of the Subsidiary; and

 

(iii)                               The Company shall issue to PubCo on the Vesting Date a number of Common Units equal to the number of shares of Class A Common Stock issued under Section 3.10(c)(i) in consideration for a Capital Contribution that PubCo is deemed to make to the Company pursuant to clause (3) of Section 3.10(c)(ii) above.

 

(d)                                 Future Stock Incentive Plans.  Nothing in this Agreement shall be construed or applied to preclude or restrain PubCo from adopting, modifying or terminating stock incentive plans for the benefit of employees, directors or other business associates of PubCo, the Company or any of their respective Affiliates. The Members acknowledge and agree that, in the event that any such plan is adopted, modified or terminated by PubCo, amendments to this Section 3.10 may become necessary or advisable and that any approval or consent to any such amendments requested by PubCo shall be deemed granted by the Manager and the Members, as applicable, without the requirement of any further consent or acknowledgement of any other Member.

 

(e)                                  Anti-dilution adjustments.  For all purposes of this Section 3.10, the number of shares of Class A Common Stock and the corresponding number of Common Units shall be determined after giving effect to all anti-dilution or similar adjustments that are

 

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applicable, as of the date of exercise or vesting, to the option, warrant, restricted stock or other equity interest that is being exercised or becomes vested under the applicable Stock Option Plan or other Equity Plan and applicable award or grant documentation.

 

3.11                        Dividend Reinvestment Plan, Cash Option Purchase Plan, Stock Incentive Plan or Other Plan.  Except as may otherwise be provided in this Article III, all amounts received or deemed received by PubCo in respect of any dividend reinvestment plan, cash option purchase plan, stock incentive or other stock or subscription plan or agreement, either (a) shall be utilized by PubCo to effect open market purchases of shares of Class A Common Stock, or (b) if PubCo elects instead to issue new shares of Class A Common Stock with respect to such amounts, shall be contributed by PubCo to the Company in exchange for additional Common Units. Upon such contribution, the Company will issue to PubCo a number of Common Units equal to the number of new shares of Class A Common Stock so issued.

 

3.12                        Establishment of Series A Mandatory Convertible Preferred Units

 

(a)                                 Designation and Number of Units.  There is hereby established a series of Units designated as “Series A Mandatory Convertible Preferred Units” (the “Series A Preferred Units”), having the rights and obligations specified in this Agreement.  The number of Series A Preferred Units constituting such series shall be [·].

 

(b)                                 Ranking.   The Series A Preferred Units, with respect to distribution rights and rights upon liquidation, winding-up or dissolution, as applicable, of the Company, shall rank (i) senior to each class or series of Junior Units, (ii) on parity with each class or series of Parity Units and (iii) junior to each class or series of Senior Units and the Company’s existing and future indebtedness and other liabilities.

 

(c)                                  Distributions.

 

(i)                                     Rate. Subject to the rights of holders of any class or series of Units ranking senior to the Series A Preferred Units as to the payment of Distributions, PubCo, in its capacity as the holder of the then outstanding Series A Preferred Units, shall be entitled to receive, when, as and if authorized by the Manager, out of funds legally available for payment of Distributions, in the case of Distributions paid in cash, and Common Units legally permitted to be issued, in the case of Distributions paid in Common Units, cumulative Distributions at the rate per annum of [·]% of the Series A Preferred Unit Liquidation Preference (the “Series A Preferred Unit Distribution Rate”) (equivalent to $[·] per Series A Preferred Unit), payable in cash, by delivery of Common Units or through any combination of cash and Common Units pursuant to Section 3.12(c)(iii), determined by the Manager in its sole discretion (subject to Section 3.12(c)(iv)).

 

If declared, Distributions on the Series A Preferred Units will be payable quarterly on each Series A Preferred Unit Payment Date at such annual rate, and Distributions shall accumulate from the most recent date as to which Distributions shall have been paid or, if no Distributions have been paid, from the Initial Series A Preferred Unit Issue Date, whether or not in any Series A Preferred Unit Distribution Period or

 

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Series A Preferred Unit Distribution Periods there have been funds available to pay such Distributions.

 

If declared, Distributions shall be payable on the relevant Series A Preferred Unit Payment Date to PubCo on the immediately preceding Series A Preferred Unit Regular Record Date, whether or not such Series A Preferred Units are converted after a Series A Preferred Unit Regular Record Date. If a Series A Preferred Unit Payment Date is not a Business Day (as defined in the Series A Certificate of Designations), payment shall be made on the next succeeding Business Day, without any interest or other payment in lieu of interest accruing with respect to this delay.

 

The amount of Distributions payable on each Series A Preferred Unit for each full Series A Preferred Unit Distribution Period (subsequent to the initial Series A Preferred Unit Distribution Period) shall be computed by dividing the Series A Preferred Unit Distribution Rate by four. Distributions payable on Series A Preferred Units for the initial Series A Preferred Unit Distribution Period and any other partial Series A Preferred Unit Distribution Period shall be computed based upon the actual number of days elapsed during such period over a 360-day year (consisting of twelve 30-day months). Accumulated Distributions on shares of Series A Preferred Units shall not bear interest, nor shall additional Distributions be payable thereon, if they are paid subsequent to the applicable Series A Preferred Unit Payment Date.

 

No distribution shall be paid unless and until the Manager declares a dividend payable with respect to the Series A Preferred Units. No distribution shall be declared or paid upon, or any sum of cash or number of Common Units set apart for the payment of Distributions upon, any outstanding shares of Series A Preferred Unit with respect to any Series A Preferred Unit Distribution Period unless all Distributions for all preceding Series A Preferred Unit Distribution Periods have been declared and paid upon, or a sufficient sum of cash or number of Common Units have been set apart for the payment of such Distributions upon, all outstanding shares of Series A Preferred Units.

 

PubCo shall not be entitled to any Distributions on the Series A Preferred Units in excess of full cumulative Distributions.

 

Except as otherwise set forth herein, Distributions on any Series A Preferred Unit shall cease to accumulate on the date any such Series A Preferred Unit is subject to a Series A Preferred Unit Conversion.

 

(ii)                                  Priority of Distributions. So long as any Series A Preferred Units remains outstanding, no distribution shall be declared or paid on Common Unit or any other class or series of Junior Units, and no Common Unit or any other class or series of Junior Units or Parity Units shall be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Company or any of its Subsidiaries unless all accumulated and unpaid Distributions for all preceding Series A Preferred Unit Distribution Periods have been declared and paid in full in cash, Common Units or a combination thereof upon, or a sufficient sum of cash or number of Common Units has

 

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been set apart for the payment of such Distributions upon, all outstanding Series A Preferred Units. The foregoing limitation shall not apply to:

 

(a) any dividend or distribution payable in Common Units or any other class or series of Units that are neither Parity Units nor Senior Units;

 

(b) purchases, redemptions or other acquisitions of Common Units, other Junior Units or Parity Units in connection with the administration of any benefit or other incentive plan of the Company or PubCo, including any employment contract, in the ordinary course of business;

 

(c) purchases to offset the Unit Dilution Amount pursuant to a publicly announced repurchase plan, or acquisitions of Common Units surrendered, deemed surrendered or withheld in connection with the exercise of stock options or the vesting of restricted shares, restricted shares units, restricted share equivalents, performance share units, or instruments similar to any of the foregoing, whether of the Company or PubCo (provided that the number of units purchased to offset the Unit Dilution Amount shall in no event exceed the Unit Dilution Amount);

 

(d) purchases of Common Units or any other class or series of Units that is neither Parity Units nor Senior Units pursuant to a contractually binding requirement to buy Common Units or any such other class or series of the Units existing prior to the date of the Prospectus;

 

(e) any Distributions of rights or any class or series of Units that are neither Parity Units nor Senior Units in connection with a shareholders’ rights plan or any redemption or repurchase of rights pursuant to any shareholders’ rights plan (including any such plan of PubCo);

 

(f) the exchange or conversion of any class or series of Units that are neither Parity Units nor Senior Units for or into other class or series of Units that are neither Parity Units nor Senior Units or of Parity Units for or into other Parity Units (with the same or lesser aggregate liquidation preference) or any class or series of Units that are neither Parity Units nor Senior Units and, in each case, the payment of cash solely in lieu of fractional interests;

 

(g) the deemed purchase or acquisition of fractional interests in Common Units, any other class or series of Units that are neither Parity Units nor Senior Units or Parity Units pursuant to the conversion or exchange provisions of such shares or the security being converted or exchanged; and

 

(h) Tax Distributions made pursuant to Section 4.1(b).

 

When Distributions on Series A Preferred Units (1) have not been declared and paid in full on any Series A Preferred Unit Payment Date (or, in the case of Parity Units

 

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having dividend payment dates different from such Series A Preferred Unit Payment Dates, on a distribution payment date falling within a regular distribution period related to such Series A Preferred Unit Payment Date), or (2) have been declared but a sum of cash or number of Common Units sufficient for payment thereof has not been set aside for the benefit of PubCo on the applicable Series A Preferred Unit Regular Record Date, no Distributions may be declared or paid on any shares of Parity Units unless Distributions are declared on the Series A Preferred Units such that the respective amounts of such Distributions declared on the Series A Preferred Units and such Parity Units shall be allocated pro rata among PubCo, as holder of the Series A Preferred Units, and the holders of any Parity Units then outstanding. For purposes of calculating the pro rata allocation of partial distribution payments, the Company shall allocate those payments so that the respective amounts of those payments for the declared distribution bear the same ratio to each other as all accumulated and unpaid Distributions per unit on Series A Preferred Units and such Parity Units bear to each other (subject to their having been declared by the Manager, out of funds legally available to pay Distributions); provided that any unpaid Distributions on the Series A Preferred Units will continue to accumulate. For purposes of this calculation, with respect to non-cumulative Parity Units, the Company shall use the full amount of Distributions that would be payable for the most recent distribution period if Distributions were declared in full on such non-cumulative Parity Units.

 

Subject to the foregoing, and not otherwise, such Distributions as may be determined by the Manager may be declared and paid (payable in cash or other property or securities) on any securities, including Common Units and other Junior Units, from time to time out of funds legally available to pay Distributions, and PubCo, as holder of the Series A Preferred Units, shall not be entitled to participate in any such Distributions on account of the Series A Preferred Units.

 

(iii)                               Method of Payment.  Subject to the limitations set forth in Section 3.12(c)(iv), the Company may pay any declared distribution (or any portion of any declared distribution) on the Series A Preferred Units, whether or not for a current Series A Preferred Unit Distribution Period or any prior Series A Preferred Unit Distribution Period, as determined in the Manager’s sole discretion: (a) in cash, (b) by delivery of Common Units or (c) through any combination of cash and Common Units.

 

(iv)                              Limitation. Notwithstanding anything to the contrary herein, in no event will the Manager declare or pay any Distributions per Series A Preferred Unit in excess of the corresponding per share dividend paid on the Series A Preferred Stock, as determined by the Manager and in no event will the Manager declare or pay any Distributions per Series A Preferred Unit in Common Units in an amount of Common Units other than the corresponding amount, if any, of shares of Class A Common Stock paid by PubCo on such Series A Preferred Stock per share dividend.

 

(v)                                 Tax Distributions.

 

(a) With respect to each Fiscal Year or portion thereof ending after the closing date of the IPO, the Manager shall, to the extent permitted by

 

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applicable Law, make cash distributions to the holder of Series A Preferred Units in a manner consistent with the principles of Section 4.1(b) (“Preferred Tax Distributions”), with the following changes: (x) the “Distribution Tax Rate” used in determining the Preferred Tax Distributions shall be a rate equal to the highest effective marginal combined federal, state and local income tax rate applicable to corporate taxpayers resident in California, taking into account the character of the relevant tax items (e.g., ordinary or capital) and the deductibility of state and local income taxes for federal income tax purposes (but only to the extent such taxes are deductible under the Code), as reasonably determined by the Manager, (y) the Preferred Tax Distributions shall be calculated solely by reference to items of income, gain, deduction or loss attributable to the Series A Preferred Units and (z) the provisions of Section 4.1(b)(ii) shall not apply.

 

(b) The provisions of Section 4.1(b) shall apply mutatis mutandi to Preferred Tax Distributions and the holder of Series A Preferred Units, other than clause (ii) of Section 4.1(b), which shall not be applicable to Preferred Tax Distributions.

 

(c) In the event the Company does not have sufficient Distributable Cash to make distributions under both Section 4.1(b) and this Section 3.12(c)(v), the amount of cash able to be paid shall be paid on a pro rata basis to holders of the Series A Preferred Units and the Common Units, based on the relative amounts each is entitled to receive.

 

(d)                                 Liquidation, Dissolution or Winding-up.

 

(i)                                     In the event of any voluntary or involuntary liquidation, winding-up or dissolution of the Company, PubCo, as holder of the Series A Preferred Units shall be entitled to receive, per Series A Preferred Unit, the Liquidation Preference of $100.00 per Series A Preferred Unit, plus an amount (the “Series A Preferred Unit Liquidation Distribution Amount”) equal to accumulated and unpaid Distributions on such unit, whether or not declared, to, but excluding, the date fixed for liquidation, winding-up or dissolution to be paid out of the assets of the Company legally available for distribution to its Members, after satisfaction of indebtedness and other liabilities owed to the Company’s creditors and holders of any class or series of Units ranking senior to the Series A Preferred Units as to distribution rights upon the Company’s liquidation, winding-up or dissolution and before any payment or distribution is made to holders of shares of any class or series of Units ranking junior to the Series A Preferred Units as to distribution rights upon liquidation, winding-up or dissolution, including, without limitation, Common Units.

 

(ii)                                  If, upon the voluntary or involuntary liquidation, winding-up or dissolution of the Company, the amounts payable with respect to (a) the Series A Preferred Unit Liquidation Preference plus the Series A Preferred Unit Liquidation Distribution Amount of the Series A Preferred Units and (b) the liquidation preference of,

 

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and the amount of accumulated and unpaid Distributions, whether or not declared, to, but excluding, the date fixed for such liquidation, winding-up or dissolution, on all Parity Units, if applicable, are not paid in full, PubCo, as holder of the Series A Preferred Units and all holders of any such Parity Units shall share equally and ratably in any distribution of the Company’s assets in proportion to their respective liquidation preferences and amounts equal to the accumulated and unpaid Distributions (if any) to which they are entitled.

 

(iii)                               After the payment to PubCo, as holder of the Series A Preferred Units, of the full amount of the Series A Preferred Unit Liquidation Preference and the Series A Preferred Unit Liquidation Dividend Amount for each Series A Preferred Unit, PubCo, as holder of the Series A Preferred Units, as such shall have no right or claim to any of the remaining assets of the Company on account of the Series A Preferred Units.

 

(iv)                              Neither the sale, lease nor exchange of all or substantially all of Company’s assets or business (other than in connection with the liquidation, winding-up or dissolution of the Company), nor the Company’s merger or consolidation into or with any other Person, shall be deemed to be the voluntary or involuntary liquidation, winding-up or dissolution of the Company.

 

(v)                                 The Company shall not be required to set aside funds to protect the Series A Preferred Unit Liquidation Preference of the Series A Preferred Units.

 

(e)                                  Mandatory Conversion.

 

(i)                                     Notwithstanding anything herein to the contrary, in the event of a conversion of any share of Series A Preferred Stock into Class A Common Stock in accordance with terms of the Series A Certificate of Designations, then a corresponding Series A Preferred Unit shall be automatically converted into a number of Common Units equal to the number of shares of Class A Common Stock that are exchanged upon the conversion of such share of Series A Preferred Stock, without any notice or action on part of the Company, Manager, PubCo or any other Person (a “Series A Preferred Unit Conversion”).  In the event of a conversion of any share of Series A Preferred Stock, to the extent PubCo is required to pay cash in lieu of fractional shares of Class A Common Stock pursuant to the Series A Certificate of Designations in connection with such conversion, the Company shall distribute an equal amount of cash to PubCo.   No distribution by Series A Preferred Unit Conversion of cash or Common Units may be made unless permitted under the Delaware Act.

 

(f)                                   Restrictions on Ownership.  The Series A Preferred Units shall be owned and held solely by PubCo.

 

(g)                                  Reorganizations.  In the case of any event as a result of which the Common Units would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Company Reorganization Event”), then, at and after the effective time of such Company Reorganization Event, any obligation to deliver Common Units pursuant to any Series A Preferred Unit

 

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Conversion shall be changed into an obligation to deliver the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) (the “Company Reference Property”) that a holder of that number of Common Units would have been entitled to receive in such Partnership Reorganization Event.  The provisions of this Section 3.12(g) shall apply to successive Company Reorganization Events and to any Company Reference Property.

 

ARTICLE IV

 

DISTRIBUTIONS

 

4.1                               Distributions.

 

(a)                                 Distributable Cash; Other Distributions.  To the extent permitted by applicable Law and hereunder, Distributions to Members may be declared by the Manager out of Distributable Cash or other funds or property legally available therefor in such amounts and on such terms (including the payment dates of such Distributions) as the Manager shall determine using such record date as the Manager may designate; such Distributions shall be made to the Members as of the close of business on such record date on a pro rata basis in accordance with each Member’s Percentage Interest (other than, for the avoidance of doubt, any distributions made pursuant to Section 4.1(b)(v)) as of the close of business on such record date; provided, however, that the Manager shall have the obligation to make Distributions as set forth in Sections 4.1(b) and 13.2; and provided further that, notwithstanding any other provision herein to the contrary, no Distributions shall be made to any Member to the extent such Distribution would render the Company insolvent.  For purposes of the foregoing sentence, insolvency means the inability of the Company to meet its payment obligations when due.  Promptly following the designation of a record date and the declaration of a Distribution pursuant to this Section 4.1(a), the Manager shall give notice to each Member of the record date, the amount and the terms of the Distribution and the payment date thereof.  In furtherance of the foregoing, it is intended that the Manager shall, to the extent permitted by applicable Law and hereunder, have the right in its sole discretion to make Distributions to the Members pursuant to this Section 4.1(a) in such amounts as shall enable PubCo to pay dividends or to meet its obligations, including its obligations pursuant to the Tax Receivable Agreement (to the extent such obligations are not otherwise able to be satisfied as a result of Tax Distributions required to be made pursuant to Section 4.1(b)).

 

(b)                                 Tax Distributions.

 

(i)                                     With respect to each Fiscal Year or portion thereof ending after the closing date of the IPO, the Company shall, to the extent permitted by applicable Law, make cash distributions (“Tax Distributions”) to each Member in accordance with, and to the extent of, such Member’s Assumed Tax Liability.  Tax Distributions pursuant to this Section 4.1(b)(i) shall be estimated by the Company on a quarterly basis and, to the extent feasible, shall be distributed to the Members (together with a statement showing the calculation of such Tax Distribution and an estimate of the Company’s net taxable income allocable to each Member for such period) on a quarterly basis on April 15th, June 15th, September 15th and January 15th (of the succeeding year) (or such other dates

 

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for which individuals are required to make quarterly estimated tax payments for U.S. federal income tax purposes) (each, a “Quarterly Tax Distribution”); provided, that the foregoing shall not restrict the Company from making a Tax Distribution on any other date. Quarterly Tax Distributions shall take into account the estimated taxable income or loss of the Company for the Fiscal Year through the end of the relevant quarterly period. A final accounting for Tax Distributions shall be made for each Fiscal Year after the allocation of the Company’s actual net taxable income or loss has been determined and any shortfall in the amount of Tax Distributions a Member received for such Fiscal Year based on such final accounting shall promptly be distributed to such Member. For the avoidance of doubt, any excess Tax Distributions a Member receives with respect to any Fiscal Year shall reduce future Tax Distributions otherwise required to be made to such Member with respect to any subsequent Fiscal Year.

 

(ii)                                  To the extent a Member otherwise would be entitled to receive less than its Percentage Interest of the aggregate Tax Distributions to be paid pursuant to this Section 4.1(b) (other than any distributions made pursuant to Section 4.1(b)(v)) on any given date, the Tax Distributions to such Member shall be increased to ensure that all Distributions made pursuant to this Section 4.1(b) are made pro rata in accordance with the Members’ respective Percentage Interests. If, on the date of a Tax Distribution, there are insufficient funds on hand to distribute to the Members the full amount of the Tax Distributions to which such Members are otherwise entitled, Distributions pursuant to this Section 4.1(b) shall be made to the Members to the extent of available funds in accordance with their Percentage Interests and the Company shall make future Tax Distributions as soon as funds become available sufficient to pay the remaining portion of the Tax Distributions to which such Members are otherwise entitled.

 

(iii)                               In the event of any audit by, or similar event with, a taxing authority that affects the calculation of any Member’s Assumed Tax Liability for any Taxable Year (other than an audit conducted pursuant to the Revised Partnership Audit Provisions for which no election is made pursuant to Section 6226 thereof and the Treasury Regulations promulgated thereunder), or in the event the Company files an amended tax return, each Member’s Assumed Tax Liability with respect to such year shall be recalculated by giving effect to such event (for the avoidance of doubt, taking into account interest or penalties). Any shortfall in the amount of Tax Distributions the Members and former Members received for the relevant Taxable Years based on such recalculated Assumed Tax Liability promptly shall be distributed to such Members and the successors of such former Members, except, for the avoidance of doubt, to the extent Distributions were made to such Members and former Members pursuant to Section 4.1(a) and this Section 4.1(b) in the relevant Taxable Years sufficient to cover such shortfall.

 

(iv)                              Notwithstanding the foregoing, Tax Distributions pursuant to this Section 4.1(b) for periods ending after the closing date of the IPO (other than, for the avoidance of doubt, any distributions made pursuant to Section 4.1(b)(v)), if any, shall be made to a Member only to the extent all previous Tax Distributions to such Member pursuant to Section 4.1(b) with respect to such Fiscal Year are less than the Tax

 

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Distributions such Member otherwise would have been entitled to receive with respect to such Fiscal Year pursuant to this Section 4.1(b).

 

(v)                                 Notwithstanding the foregoing and anything to the contrary in this Agreement, for the avoidance of doubt, the provisions of this Section 4.1 shall be effective for the portion of the Fiscal Year beginning on the day after the closing date of the IPO, and no further distributions shall be made after the date hereof pursuant to Section 5.9(a) of the First A&R LLC Agreement in respect of the portion of the Fiscal Year that ends on the closing date of the IPO.

 

(vi)                              [In the event the Company does not have sufficient Distributable Cash to make distributions under both Section 3.12(c)(v) and this Section 4.2(b), the amount of cash able to be paid shall be paid on a pro rata basis to holders of the Series A Preferred Units and Common Units, based on the relative amounts each class is entitled to receive.]

 

ARTICLE V

 

CAPITAL ACCOUNTS; ALLOCATIONS; TAX MATTERS

 

5.1                               Capital Accounts.

 

(a)                                 The Company shall maintain a separate Capital Account for each Member according to the rules of Treasury Regulation Section 1.704-1(b)(2)(iv). For this purpose, the Company may (in the discretion of the Manager), upon the occurrence of the events specified in Treasury Regulation Section 1.704-1(b)(2)(iv)(f), increase or decrease the Capital Accounts in accordance with the rules of such Treasury Regulation and Treasury Regulation Section 1.704-1(b)(2)(iv)(g) to reflect a revaluation of the Company’s property.

 

(b)                                 For purposes of computing the amount of any item of income, gain, loss or deduction with respect to the Company to be allocated pursuant to this Article V and to be reflected in the Capital Accounts of the Members, the determination, recognition and classification of any such item shall be the same as its determination, recognition and classification for U.S. federal income tax purposes (including any method of depreciation, cost recovery or amortization used for this purpose); provided, however, that:

 

(i)                                     The computation of all items of income, gain, loss and deduction shall include those items described in Sections 705(a)(l)(B) or 705(a)(2)(B) of the Code and Treasury Regulation Section 1.704-1(b)(2)(iv)(i), without regard to the fact that such items are not includible in gross income or are not deductible for U.S. federal income tax purposes.

 

(ii)                                  [Subject to Section 5.4(f),] if the Book Value of any property of the Company is adjusted pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(e) or (f), the amount of such adjustment shall be taken into account as gain or loss from the disposition of such property.

 

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(iii)                               Items of income, gain, loss or deduction attributable to the disposition of property of the Company having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the Book Value of such property.

 

(iv)                              Items of depreciation, amortization and other cost recovery deductions with respect to property of the Company having a Book Value that differs from its adjusted basis for tax purposes shall be computed by reference to the property’s Book Value in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv)(g).

 

(v)                                 To the extent an adjustment to the adjusted tax basis of any asset of the Company pursuant to Sections 732(d), 734(b) or 743(b) of the Code is required, pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the 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).

 

5.2                               Allocations.  Except as otherwise provided in Section 5.3, Section 5.4, [and Section 5.5] Net Profits and Net Losses for any Fiscal Year or Fiscal Period shall be allocated among the Capital Accounts of the Members holding Common Units pro rata in accordance with their respective Percentage Interests in respect of Common Units.

 

5.3                               Preferred Allocations

 

(a)                                 [Items of Company gross income shall be allocated to the Members holding Series A Preferred Units until the aggregate amount of gross income allocated to each Member holding Series A Preferred Units pursuant to this Section 5.3 for the current and all previous taxable periods is equal to the amount of distributions such Member is entitled to receive pursuant to Section 3.12(c) in respect of the Series A Preferred Unit Distribution Rate with respect to the current and all prior taxable periods; provided that gross income shall not be allocated pursuant to this Section 5.3 to the extent such allocation would cause the Capital Account of the Member in respect of the Series A Preferred Unit to exceed the Series A Preferred Unit Liquidation Distribution Amount in respect of such Member; and provided, further, that the allocations to a Member holding Series Preferred Units under this Section 5.3(a) shall be reduced to the extent Distributions in respect of Series A Preferred Units are properly treated as guaranteed payments under Section 707(c) of the Code or payments to a Member holding Series A Preferred Units other than in its capacity as a partner pursuant to Section 707(a) of the Code.

 

(b)                                 Net Losses of the Company shall be allocated to the Members in respect of their Series A Preferred Units only to the extent necessary to avoid an allocation to a Member holding Common Unit to have a deficit balance in its Capital Account attributable to its Common Units at the end of such taxable year or period (or increase any existing deficit balance in its Capital Account). Following any allocation of Net Loss pursuant to this Section 5.3(b), items of Partnership gross income shall be allocated to the Members holding Series A Preferred Units as quickly as possible to reverse such prior allocations of Net Losses.]

 

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5.4                               Regulatory Allocations.

 

(a)                                 Losses attributable to partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) shall be allocated in the manner required by Treasury Regulation Section 1.704-2(i). If there is a net decrease during a Taxable Year in partner nonrecourse debt minimum gain (as defined in Treasury Regulation Section 1.704-2(i)(3)), Profits for such Taxable Year (and, if necessary, for subsequent Taxable Years) shall be allocated to the Members in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(i)(4).

 

(b)                                 Nonrecourse deductions (as determined according to Treasury Regulation Section 1.704-2(b)(1)) for any Taxable Year shall be allocated pro rata among the Members in accordance with their Percentage Interests. Except as otherwise provided in Section 5.4(a), if there is a net decrease in the Minimum Gain during any Taxable Year, each Member shall be allocated Profits for such Taxable Year (and, if necessary, for subsequent Taxable Years) in the amounts and of such character as determined according to Treasury Regulation Section 1.704-2(f). This Section 5.4(b) is intended to be a minimum gain chargeback provision that complies with the requirements of Treasury Regulation Section 1.704-2(f), and shall be interpreted in a manner consistent therewith.

 

(c)                                  If any Member that unexpectedly receives an adjustment, allocation or Distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6) has an Adjusted Capital Account Deficit as of the end of any Taxable Year, computed after the application of Sections 5.4(a) and 5.4(b) but before the application of any other provision of this Article V, then Profits for such Taxable Year shall be allocated to such Member in proportion to, and to the extent of, such Adjusted Capital Account Deficit. This Section 5.4(c) is intended to be a qualified income offset provision as described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted in a manner consistent therewith.

 

(d)                                 If the allocation of Net Losses to a Member as provided in Section 5.2 would create or increase an Adjusted Capital Account Deficit, there shall be allocated to such Member only that amount of Losses as will not create or increase an Adjusted Capital Account Deficit. The Net Losses that would, absent the application of the preceding sentence, otherwise be allocated to such Member shall be allocated to [Members in respect of their Series A Preferred Units, and then to] the other Members in accordance with their relative Percentage Interests, subject to this Section 5.4(d).

 

(e)                                  Profits and Losses described in Section 5.1(b)(v) shall be allocated in a manner consistent with the manner that the adjustments to the Capital Accounts are required to be made pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(j), (k) and (m).

 

(f)                                   [Upon the Series A Preferred Unit Conversion, Capital Accounts of the Members shall be adjusted pursuant to the provisions of Section 1.704-1(b)(2)(iv)(s)(1)-(4) so that the Capital Accounts will be considered as determined and maintained in accordance with the provisions of Treas. Reg. 1.704-1(b)(2)(iv).]

 

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(g)                                  The allocations set forth in Section 5.4(a) through and including Section 5.4(f) (the “Regulatory Allocations”) are intended to comply with certain requirements of Treasury Regulation Sections 1.704-1(b) and 1.704-2. The Regulatory Allocations may not be consistent with the manner in which the Members intend to allocate Profit and Loss of the Company or make Distributions. Accordingly, notwithstanding the other provisions of this Article V, but subject to the Regulatory Allocations, income, gain, deduction and loss with respect to the Company shall be reallocated among the Members so as to eliminate the effect of the Regulatory Allocations and thereby cause the respective Capital Accounts of the Members to be in the amounts (or as close thereto as possible) they would have been if Profit and Loss (and such other items of income, gain, deduction and loss) had been allocated without reference to the Regulatory Allocations. In general, the Members anticipate that this will be accomplished by specially allocating other Profit and Loss (and such other items of income, gain, deduction and loss) among the Members so that the net amount of the Regulatory Allocations and such special allocations to each such Member is zero. In addition, if in any Fiscal Year or Fiscal Period there is a decrease in partnership minimum gain, or in partner nonrecourse debt minimum gain, and application of the minimum gain chargeback requirements set forth in Section 5.4(a) or Section 5.4(b) would cause a distortion in the economic arrangement among the Members, the Members may, if they do not expect that the Company will have sufficient other income to correct such distortion, request the Internal Revenue Service to waive either or both of such minimum gain chargeback requirements. If such request is granted, this Agreement shall be applied in such instance as if it did not contain such minimum gain chargeback requirement.

 

5.5                               Final Allocations.  Notwithstanding any contrary provision in this Agreement except Section 5.4, the Manager shall make appropriate adjustments to allocations of Profits and Losses to (or, if necessary, allocate items of gross income, gain, loss or deduction of the Company among) the Members upon the liquidation of the Company (within the meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(g)), the transfer of substantially all the Units (whether by sale or exchange or merger) or sale of all or substantially all the assets of the Company, such that, to the maximum extent possible, the Capital Accounts of the Members are proportionate to their Percentage Interests [and their rights under Section 3.12]. In each case, such adjustments or allocations shall occur, to the maximum extent possible, in the Fiscal Year of the event requiring such adjustments or allocations.

 

5.6                               Tax Allocations.

 

(a)                                 The income, gains, losses, deductions and credits of the Company will be allocated, for federal, state and local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses, deductions and credits among the Members for computing their Capital Accounts; provided that if any such allocation is not permitted by the Code or other applicable Law, the Company’s subsequent income, gains, losses, deductions and credits will be allocated among the Members so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.

 

(b)                                 Items of taxable income, gain, loss and deduction of the Company with respect to any property contributed to the capital of the Company after the date hereof shall be allocated among the Members in accordance with Section 704(c) of the Code so as to take account of any variation between the adjusted basis of such property to the Company for federal

 

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income tax purposes and its Book Value using the traditional method set forth in Treasury Regulation Section 1.704-3(b).

 

(c)                                  If the Book Value of any asset of the Company is adjusted pursuant to Section 5.1(b), including adjustments to the Book Value of any asset of the Company in connection with the execution of this Agreement, subsequent allocations of items of taxable 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 Book Value using the traditional method set forth in Treasury Regulation Section 1.704-3(b).

 

(d)                                 Allocations of tax credits, tax credit recapture, and any items related thereto shall be allocated to the Members as determined by the Manager taking into account the principles of Treasury Regulation Section 1.704-1(b)(4)(ii).

 

(e)                                  For purposes of determining a Member’s share of the Company’s “excess nonrecourse liabilities” within the meaning of Treasury Regulation Section 1.752-3(a)(3), each Member’s interest in income and gain shall be determined pursuant to any proper method, as reasonably determined by the Manager; provided, that each year the Manager shall use its reasonable best efforts (using in all instances any proper method, including without limitation the “additional method” described in Treasury Regulation Section 1.752-3(a)(3)) to allocate a sufficient amount of the excess nonrecourse liabilities to those Members who would have at the end of the applicable Taxable Year, but for such allocation, taxable income due to the deemed distribution of money to such Member pursuant to Section 752(b) of the Code that is in excess of such Member’s adjusted tax basis in its Units.

 

(f)                                   Allocations pursuant to this Section 5.6 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 Profits, Losses, Distributions or other items of the Company pursuant to any provision of this Agreement.

 

5.7                               Indemnification and Reimbursement for Payments on Behalf of a Member.  [If the Company is obligated to pay any amount to a Governmental Entity (or otherwise makes a payment to a Governmental Entity) that is specifically attributable to a Member or a Member’s status as such (including federal income taxes, additions to tax, interest and penalties as a result of obligations of the Company pursuant to the Revised Partnership Audit Provisions, federal withholding taxes, state personal property taxes and state unincorporated business taxes, but excluding payments such as payroll taxes, withholding taxes, benefits or professional association fees and the like required to be made or made voluntarily by the Company on behalf of any Member based upon such Member’s status as an employee of the Company), then such Member shall indemnify the Company in full for the entire amount paid (including interest, penalties and related expenses).] The Manager may offset Distributions to which a Member is otherwise entitled under this Agreement against such Member’s obligation to indemnify the Company under this Section 5.6. A Member’s obligation to make payments to the Company under this Section 5.6 shall survive the transfer or termination of any Member’s interest in any Units of the Company, the termination of this Agreement and the dissolution, liquidation, winding up and termination of the Company. In the event that the Company has been terminated prior to the date such payment is due, such Member shall make such payment to the Manager (or its designee),

 

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which shall distribute such funds in accordance with this Agreement. The Company may pursue and enforce all rights and remedies it may have against each Member under this Section 5.6, including instituting a lawsuit to collect such contribution with interest calculated at a rate per annum equal to the sum of the Base Rate plus 300 basis points (but not in excess of the highest rate per annum permitted by Law). Each Member hereby agrees to furnish to the Company such information and forms as required or reasonably requested in order to comply with any Laws and regulations governing withholding of tax or in order to claim any reduced rate of, or exemption from, withholding to which the Member is legally entitled. The Company may withhold any amount that it reasonably determines is required to be withheld from any amount otherwise payable to any Member hereunder, and any such withheld amount shall be deemed to have been paid to such Member for purposes of this Agreement.

 

ARTICLE VI

 

MANAGEMENT

 

6.1                               Authority of Manager; Officer Delegation.

 

(a)                                 Except for situations in which the approval of any Member(s) is specifically required by this Agreement, (i) all management powers over the business and affairs of the Company shall be exclusively vested in PubCo, as the sole managing member of the Company (PubCo, in such capacity, the “Manager”), (ii) the Manager shall conduct, direct and exercise full control over all activities of the Company and (iii) no other Member shall have any right, authority or power to vote, consent or approve any matter, whether under the Delaware Act, this Agreement or otherwise. The Manager shall be the “manager” of the Company for the purposes of the Delaware Act. Except as otherwise expressly provided for herein and subject to the other provisions of this Agreement, the Members hereby consent to the exercise by the Manager of all such powers and rights conferred on the Members by the Delaware Act with respect to the management and control of the Company. Any vacancies in the position of Manager shall be filled in accordance with Section 6.4.

 

(b)                                 Without limiting the authority of the Manager to act on behalf of the Company, the day-to-day business and operations of the Company shall be overseen and implemented by officers of the Company (each, an “Officer” and collectively, the “Officers”), subject to the limitations imposed by the Manager. An Officer may, but need not, be a Member. Each Officer shall be appointed by the Manager and shall hold office until his or her successor shall be duly designated and shall qualify or until his or her death or until he or she shall resign or shall have been removed in the manner hereinafter provided. Any one Person may hold more than one office. Subject to the other provisions of this Agreement (including in Section 6.7 below), the salaries or other compensation, if any, of the Officers of the Company shall be fixed from time to time by the Manager. The authority and responsibility of the Officers shall be limited to such duties as the Manager may, from time to time, delegate to them. Unless the Manager decides otherwise, if the title is one commonly used for officers of a business corporation formed under the General Corporation Law of the State of Delaware, the assignment of such title shall constitute the delegation to such person of the authorities and duties that are normally associated with that office. All Officers shall be, and shall be deemed to be, officers

 

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and employees of the Company. An Officer may also perform one or more roles as an officer of the Manager. Any Officer may be removed at any time, with or without cause, by the Manager.

 

(c)                                  Subject to the other provisions of this Agreement, the Manager shall have the power and authority to effectuate the sale, lease, transfer, exchange or other disposition of any, all or substantially all of the assets of the Company (including the exercise or grant of any conversion, option, privilege or subscription right or any other right available in connection with any assets at any time held by the Company) or the merger, consolidation, conversion, division, reorganization or other combination of the Company with or into another entity, for the avoidance of doubt, without the prior consent of any Member or any other Person being required.

 

6.2                               Actions of the Manager.  The Manager may act through any Officer or through any other Person or Persons to whom authority and duties have been delegated pursuant to Section 6.7.

 

6.3                               Resignation; No Removal.  The Manager may resign at any time by giving written notice to the Members. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Members, and the acceptance of the resignation shall not be necessary to make it effective. For the avoidance of doubt, the Members have no right under this Agreement to remove or replace the Manager.

 

6.4                               Vacancies.  Vacancies in the position of Manager occurring for any reason shall be filled by PubCo (or, if PubCo has ceased to exist without any successor or assign, then by the holders of a majority in interest of the voting capital stock of PubCo immediately prior to such cessation). For the avoidance of doubt, the Members (other than PubCo) have no right under this Agreement to fill any vacancy in the position of Manager.

 

6.5                               Transactions Between the Company and the Manager.  The Manager may cause the Company to contract and deal with the Manager, or any Affiliate of the Manager, provided, that such contracts and dealings (other than contracts and dealings between the Company and its Subsidiaries) are on terms comparable to and competitive with those available to the Company from others dealing at arm’s length or are approved by the Members and otherwise are permitted by the Credit Agreements; provided that the foregoing shall in no way limit the Manager’s rights under Sections 3.2, 3.4, 3.4(c) or 3.10. The Members hereby approve each of the contracts or agreements between or among the Manager, the Company and their respective Affiliates entered into on or prior to the date of this Agreement in accordance with the First A&R LLC Agreement or that the board of managers of the Company or the PubCo Board has approved in connection with the Recapitalization or the IPO as of the date of this Agreement.

 

6.6                               Reimbursement for Expenses.  The Manager shall not be compensated for its services as Manager of the Company except as expressly provided in this Agreement. [The Members acknowledge and agree that, upon consummation of the IPO, the Manager’s Class A Common Stock will be publicly traded and, therefore, the Manager will have access to the public capital markets and that such status and the services performed by the Manager will inure to the benefit of the Company and all Members; therefore, the Manager shall be reimbursed by the Company for any reasonable out-of-pocket expenses incurred on behalf of the Company, including without limitation all fees, expenses and costs of being a public company (including

 

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without limitation public reporting obligations, proxy statements, stockholder meetings, Stock Exchange fees, transfer agent fees, legal fees, SEC and FINRA filing fees and offering expenses) and maintaining its corporate existence. To the extent practicable, expenses incurred by the Manager on behalf of or for the benefit of the Company shall be billed directly to and paid by the Company and, if and to the extent any reimbursements to the Manager or any of its Affiliates by the Company pursuant to this Section 6.6 constitute gross income to such Person (as opposed to the repayment of advances made by such Person on behalf of the Company), such amounts shall be treated as “guaranteed payments” within the meaning of Section 707(c) of the Code and shall not be treated as distributions for purposes of computing the Members’ Capital Accounts. Notwithstanding the foregoing, the Company shall not bear any income tax obligations of the Manager or any payments made pursuant to the Tax Receivable Agreement.]

 

6.7                               Delegation of Authority.  The Manager (a) may, from time to time, delegate to one or more Persons such authority and duties as the Manager may deem advisable, and (b) may assign titles (including, without limitation, chief executive officer, president, chief financial officer, chief operating officer, general counsel, senior vice president, vice president, secretary, assistant secretary, treasurer or assistant treasurer) and delegate certain authority and duties to such Persons which may be amended, restated or otherwise modified from time to time. Any number of titles may be held by the same individual. The salaries or other compensation, if any, of such agents of the Company shall be fixed from time to time by the Manager, subject to the other provisions in this Agreement.

 

6.8                               Limitation of Liability of Manager.

 

(a)                                 Except as otherwise provided herein or in an agreement entered into by such Person and the Company, neither the Manager nor any of the Manager’s Affiliates or Manager’s officers, employees or other agents shall be liable to the Company, to any Member that is not the Manager or to any other Person bound by this Agreement for any act or omission performed or omitted by the Manager in its capacity as the sole managing member of the Company pursuant to authority granted to the Manager by this Agreement (including the Manager or its designee in its capacity as the Partnership Representative); provided, however, that, except as otherwise provided herein, such limitation of liability shall not apply to the extent the act or omission was attributable to the Manager’s gross negligence, willful misconduct, fraud or knowing violation of Law or for any present or future material breaches of any representations, warranties or covenants by the Manager or its Affiliates contained herein or in the Other Agreements with the Company. The Manager may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents, and shall not be responsible for any misconduct or negligence on the part of any such agent (so long as such agent was selected in good faith and with reasonable care). The Manager shall be entitled to rely upon the advice of legal counsel, independent public accountants and other experts, including financial advisors, and any act of or failure to act by the Manager in good faith reliance on such advice shall in no event subject the Manager to liability to the Company or any Member that is not the Manager.

 

(b)                                 To the fullest extent permitted by applicable Law, whenever this Agreement or any other agreement contemplated herein provides that the Manager shall act in a manner which is, or provide terms which are, “fair and reasonable” to the Company or any

 

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Member that is not the Manager, the Manager shall determine such appropriate action or provide such terms considering, in each case, the relative interests of each party to such agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable United States generally accepted accounting practices or principles, notwithstanding any other provision of this Agreement or in any agreement contemplated herein or applicable provisions of Law or equity or otherwise.

 

(c)                                  To the fullest extent permitted by applicable Law and notwithstanding any other provision of this Agreement or in any agreement contemplated herein or applicable provisions of Law or equity or otherwise, whenever in this Agreement or any other agreement contemplated herein, the Manager is permitted or required to take any action or to make a decision in its “sole discretion” or “discretion,” with “complete discretion” or under a grant of similar authority or latitude, the Manager shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Company, other Members or any other Person.

 

(d)                                 To the fullest extent permitted by applicable Law and notwithstanding any other provision of this Agreement or in any agreement contemplated herein or applicable provisions of law or equity or otherwise, whenever in this Agreement the Manager is permitted or required to take any action or to make a decision in its “good faith” or under another express standard, the Manager shall act under such express standard and shall not be subject to any other or different standards imposed by this Agreement or any other agreement contemplated herein, notwithstanding any provision of this Agreement or duty otherwise, existing at Law or in equity, and, notwithstanding anything contained herein to the contrary, so long as the Manager acts in good faith or in accordance with such other express standard, the resolution, action or terms so made, taken or provided by the Manager shall not constitute a breach of this Agreement or impose liability upon the Manager or any of the Manager’s Affiliates and shall be deemed approved by all Members.

 

6.9                               Investment Company Act.  The Manager shall use its best efforts to ensure that the Company shall not be subject to registration as an investment company pursuant to the Investment Company Act.

 

ARTICLE VII

 

RIGHTS, POWERS AND OBLIGATIONS OF MEMBERS

 

7.1                               Limitation of Liability and Duties of Members.

 

(a)                                 Except as provided in this Agreement or in the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company and no Member or Manager shall be obligated personally for any such debts, obligations, contracts or liabilities of the Company solely by reason of being a Member or the Manager (except to the extent and under the circumstances set forth in any non-waivable provision of the Act). Notwithstanding anything contained herein to the contrary, to the fullest extent permitted by applicable Law, the failure of the Company to

 

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observe any formalities or requirements relating to the exercise of its powers or management of its business and affairs under this Agreement or the Act shall not be grounds for imposing personal liability on the Members for liabilities of the Company.

 

(b)                                 In accordance with the Act and the laws of the State of Delaware, a Member may, under certain circumstances, be required to return amounts previously distributed to such Member. It is the intent of the Members that no Distribution to any Member pursuant to Article IV or Article XIII shall be deemed a return of money or other property paid or distributed in violation of the Act. The payment of any such money or Distribution of any such property to a Member shall be deemed to be a compromise within the meaning of Section 18-502(b) of the Act, and, to the fullest extent permitted by Law, any Member receiving any such money or property shall not be required to return any such money or property to the Company or any other Person, unless such distribution was made by the Company to its Members in clerical error. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Member is obligated to make any such payment, such obligation shall be the obligation of such Member and not of any other Member.

 

(c)                                  To the fullest extent permitted by applicable Law, including Section 18-1101(c) of the Act, and notwithstanding any other provision of this Agreement (but subject, and without limitation, to Section 6.8 with respect to the Manager) or in any agreement contemplated herein or applicable provisions of Law or equity or otherwise, the parties hereto hereby agree that to the extent that any Member (other than the Manager in its capacity as such) (or any Member’s Affiliate or any manager, managing member, general partner, director, officer, employee, agent, fiduciary or trustee of any Member or of any Affiliate of a Member) has duties (including fiduciary duties) to the Company, to the Manager, to another Member, to any Person who acquires an interest in a Unit or to any other Person bound by this Agreement, all such duties (including fiduciary duties) are hereby eliminated, to the fullest extent permitted by law, and replaced with the duties or standards expressly set forth herein, if any; provided, however, that the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing. The elimination of duties (including fiduciary duties) to the Company, the Manager, each of the Members, each other Person who acquires an interest in a Unit and each other Person bound by this Agreement and replacement thereof with the duties or standards expressly set forth herein, if any, are approved by the Company, the Manager, each of the Members, each other Person who acquires an interest in a Unit and each other Person bound by this Agreement.

 

7.2                               Lack of Authority.  No Member, other than the Manager or a duly appointed Officer, in each case in its capacity 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 or to make any expenditure on behalf of the Company. The Members hereby consent to the exercise by the Manager of the powers conferred on them by Law and this Agreement.

 

7.3                               No Right of Partition.  No Member, other than the Manager, shall have the right to seek or obtain partition by court decree or operation of Law of any property of the Company, or the right to own or use particular or individual assets of the Company.

 

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7.4                               Indemnification.

 

(a)                                 Subject to Section 5.6, the Company hereby agrees to indemnify and hold harmless any Person (each an “Indemnified Person”) to the fullest extent permitted under applicable Law, as the same now exists or may hereafter be amended, substituted or replaced (but, to the fullest extent permitted by law, in the case of any such amendment, substitution or replacement only to the extent that such amendment, substitution or replacement permits the Company to provide broader indemnification rights than the Company is providing immediately prior to such amendment), against all expenses, liabilities and losses (including attorneys’ fees, judgments, fines, excise taxes or penalties) reasonably incurred or suffered by such Person (or one or more of such Person’s Affiliates) by reason of the fact that such Person is or was a Member or an Affiliate thereof (other than as a result of an ownership interest in PubCo) or is or was serving as the Manager or a director, officer, employee or other agent of the Manager, or a director, manager, Officer, employee or other agent of the Company or is or was serving at the request of the Company as a manager, officer, director, principal, member, employee or agent of another corporation, partnership, joint venture, limited liability company, trust or other enterprise or is or was serving as the Partnership Representative; provided, however, that no Indemnified Person shall be indemnified for any expenses, liabilities and losses suffered that are attributable to such Indemnified Person’s or its Affiliates’ willful misconduct or knowing violation of Law or for any present or future breaches of any representations, warranties or covenants by such Indemnified Person or its Affiliates contained herein or in Other Agreements with the Company. Reasonable expenses, including out-of-pocket attorneys’ fees, incurred by any such Indemnified Person in defending a proceeding shall be paid by the Company in advance of the final disposition of such proceeding, including any appeal therefrom, upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that such Indemnified Person is not entitled to be indemnified by the Company.

 

(b)                                 The right to indemnification and the advancement of expenses conferred in this Section 7.4 shall not be exclusive of any other right which any Person may have or hereafter acquire under any statute, agreement, bylaw, action by the Manager or otherwise.

 

(c)                                  The Company shall maintain directors’ and officers’ liability insurance, or substantially equivalent insurance, at its expense, to protect any Indemnified Person against any expense, liability or loss described in Section 7.4(a) whether or not the Company would have the power to indemnify such Indemnified Person against such expense, liability or loss under the provisions of this Section 7.4. The Company shall use its commercially reasonable efforts to purchase and maintain property, casualty and liability insurance in types and at levels customary for companies of similar size engaged in similar lines of business, as determined in good faith by the Manager, and the Company shall use its commercially reasonable efforts to purchase directors’ and officers’ liability insurance (including employment practices coverage) with a carrier and in an amount determined necessary or desirable as determined in good faith by the Manager.

 

(d)                                 The indemnification and advancement of expenses provided for in this Section 7.4 shall be provided out of and to the extent of Company assets only. No Member (unless such Member otherwise agrees in writing or is found in a non-appealable decision by a court of competent jurisdiction to have personal liability on account thereof) shall have personal liability on account thereof or shall be required to make additional Capital Contributions to help satisfy such indemnity of the Company. The Company (i) shall be the primary indemnitor of first

 

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resort for such Indemnified Person pursuant to this Section 7.4 and (ii) shall be fully responsible for the advancement of all expenses and the payment of all damages or liabilities with respect to such Indemnified Person which are addressed by this Section 7.4.

 

(e)           If this Section 7.4 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify and hold harmless each Indemnified Person pursuant to this Section 7.4 to the fullest extent permitted by any applicable portion of this Section 7.4 that shall not have been invalidated and to the fullest extent permitted by applicable Law.

 

7.5          Inspection Rights.  The Company shall permit each Member and each of its designated representatives at such Member’s sole cost and expense to examine the books and records of the Company or any of its Subsidiaries at the principal office of the Company or such other location as the Manager shall reasonably approve during normal business hours and upon reasonable notice for any purpose reasonably related to such Member’s Units.

 

ARTICLE VIII

 

BOOKS, RECORDS, ACCOUNTING AND REPORTS, AFFIRMATIVE COVENANTS

 

8.1          Records and Accounting.  The Company shall keep, or cause to be kept, appropriate books and records with respect to the Company’s business, including all books and records necessary to provide any information, lists and copies of documents required pursuant to applicable Laws. All matters concerning (a) the determination of the relative amount of allocations and Distributions among the Members pursuant to Article IV and Article V and (b) accounting procedures and determinations, and other determinations not specifically and expressly provided for by the terms of this Agreement, shall be determined by the Manager, whose determination shall be final and conclusive as to all of the Members absent manifest clerical error.

 

8.2          Fiscal Year.  The Fiscal Year of the Company shall end on December 31 of each year or such other date as may be established by the Manager.

 

ARTICLE IX

 

TAX MATTERS

 

9.1          Preparation of Tax Returns and Positions.

 

(a)           The Members intend that the Company shall be treated as a partnership for U.S. federal, state and local income tax purposes, and not as a publicly traded partnership within the meaning of Section 7704 of the Code, and agree to take (or refrain from taking) such actions as may be necessary to receive and maintain such treatment and refrain from taking any actions inconsistent thereof.

 

(b)           The Manager shall arrange for the preparation and timely filing of all tax returns required to be filed by the Company. The Company shall use reasonable best efforts to (i) furnish, within ninety (90) days of the close of each Taxable Year, to each Member a completed

 

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IRS Schedule K-1 (and any comparable state income tax form) and such other information as is reasonably requested by such Member relating to the Company that is necessary for such Member to comply with its tax reporting obligations (provided, however, that if the Company is unable to deliver a completed IRS Schedule K-1 by March 30 following the close of the Taxable Year, the Company shall use its reasonable best efforts to provide a requesting Member with a good faith estimate of such information) and (ii) furnish, as soon as reasonably possible after the close of each of the Company’s first three quarters of each Taxable Year, such information concerning the Company as is reasonably required to enable the Member to calculate and pay estimated taxes. Subject to the terms and conditions of this Agreement and except as otherwise provided in this Agreement, in its capacity as Partnership Representative, PubCo (or its designee) shall have the authority to prepare (or cause to be prepared) the tax returns of the Company using such permissible methods and elections as it determines in its reasonable discretion, including without limitation the use of any permissible method under Section 706 of the Code for purposes of determining the varying Units of its Members. Each Member agrees that such Member shall not, except as otherwise required by applicable Law, treat, on such Member’s separate income tax returns, any item of income, gain, loss, deduction or credit relating to such Member’s interest in the Company in a manner inconsistent with the treatment of such item by the Company as reflected in the IRS Schedule K-1 or other information statement furnished by the Company to such Member pursuant to this Section 9.1(b).

 

9.2          Tax Elections.  The Taxable Year shall be the Fiscal Year set forth in Section 8.2, unless otherwise required by Section 706 of the Code. The Manager shall cause the Company and each of its Subsidiaries that is treated as a partnership for U.S. federal income tax purposes to have in effect an election pursuant to Section 754 of the Code (or any similar provisions of applicable state, local or foreign tax Law) effective for the Taxable Year that includes the date hereof and all future Taxable Years. The Manager shall take commercially reasonable efforts to cause each Person in which the Company owns a direct or indirect equity interest (other than a Subsidiary) that is so treated as a partnership to have in effect any such election for each Taxable Year. Each Member will upon request supply any information reasonably necessary to give proper effect to any such elections.

 

9.3          Tax Controversies.  The Manager shall cause the Company to take all necessary actions required by Law to designate PubCo (or its designee) as the “tax matters partner” of the Company within the meaning of Section 6231 of the Code (as in effect prior to repeal of such section pursuant to the Revised Partnership Audit Provisions) with respect any Taxable Year beginning on or before December 31, 2017. The Manager shall further cause the Company to take all necessary actions required by Law to designate PubCo (or its designee) as the “partnership representative” of the Company as provided in Section 6223(a) of the Code with respect to any Taxable Year of the Company beginning after December 31, 2017 (the “tax matters partner” and the “partnership representative,” collectively, the “Partnership Representative”). The Company and the Members shall cooperate fully with each other and shall use reasonable best efforts to cause PubCo (or its designee) to become the Partnership Representative with respect to any taxable period of the Company with respect to which the statute of limitations has not yet expired (and causing any tax matters partner, partnership representative or designated individual designated prior to the Effective Date to resign, be revoked or replaced, as applicable), including (as applicable) by filing certifications pursuant to Treasury Regulation Section 301.6231(a)(7)-1(d) and completing IRS Form 8979 or any other

 

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form or certificate required pursuant to Treasury Regulation Section 301.6223-1(e)(1). The Partnership Representative may exercise any authority granted to it under the Code. Each Member agrees to cooperate with the Partnership Representative and to use commercially reasonable efforts to do or refrain from doing any or all things requested by the Partnership Representative (including paying any and all resulting taxes, additions to tax, penalties and interest in a timely fashion) in connection with any examination of the Company’s affairs by any federal, state, or local tax authorities, including resulting administrative and judicial proceedings. The Partnership Representative may retain, at the Company’s expense, such outside counsel, accountants and other professional consultants as it may reasonably deem necessary in the course of fulfilling its obligations as the Partnership Representative. The Partnership Representative is authorized and required to represent the Company (at the Company’s expense) in connection with all examinations of the Company’s affairs by tax authorities, including any resulting administrative and judicial proceedings, and to expend Company funds for professional services reasonably incurred in connection therewith. [Without limiting the generality of the foregoing, with respect to any audit or other proceeding, the Partnership Representative shall be entitled to cause the Company (and any of its Subsidiaries) to make any available elections pursuant to Section 6226 of the Code (and similar provisions of state, local and other Law), and the Members shall cooperate to the extent reasonably requested by the Company in connection therewith.] The Company shall reimburse the Partnership Representative for all reasonable out-of-pocket expenses incurred by the Partnership Representative, including reasonable fees of any outside counsel, accountants and other professional consultants, in carrying out its duties as the Partnership Representative. The provisions of this Section 9.1 shall survive the transfer or termination of any Member’s interest in any Units of the Company, the termination of this Agreement and the termination of the Company, and shall remain binding on each Member for the period of time necessary to resolve all tax matters relating to the Company, and shall be subject to the provisions of the Tax Receivable Agreement, as applicable.

 

ARTICLE X

 

RESTRICTIONS ON TRANSFER OF UNITS; CERTAIN TRANSACTIONS

 

10.1        Transfers by Members.  No holder of Units shall Transfer any interest in any Units, except Transfers (a) pursuant to and in accordance with Sections 10.2 and 10.9 or (b) approved in advance and in writing by the Manager, in the case of Transfers by any Member other than the Manager, or (c) in the case of Transfers by the Manager, to any Person who succeeds to the Manager in accordance with Section 6.4. Notwithstanding the foregoing, “Transfer” shall not include (i) an event that terminates the existence of a Member for income tax purposes (including, without limitation, a change in entity classification of a Member under Treasury Regulation Section 301.7701-3, a sale of assets by, or liquidation of, a Member pursuant to an election under Sections 336 or 338 of the Code, or merger, severance, or allocation within a trust or among sub-trusts of a trust that is a Member), but that does not terminate the existence of such Member under applicable state Law (or, in the case of a trust that is a Member, does not terminate the trusteeship of the fiduciaries under such trust with respect to all the Units of such trust that is a Member) or (ii) any indirect Transfer of Units held by the Manager by virtue of any Transfer of Equity Securities in PubCo.

 

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10.2        Permitted Transfers.  The restrictions contained in Section 10.1 shall not apply to any Transfer (each, a “Permitted Transfer” and each transferee, a “Permitted Transferee”) in connection with:  (a)(i) an “Exchange” pursuant to the terms of the Exchange Agreement (as defined therein) or (ii) a Transfer by a Member to PubCo or any of its Subsidiaries; (b) a Transfer by any Member to such Member’s spouse, any lineal ascendants or descendants or trusts or other entities in which such Member or Member’s spouse, lineal ascendants or descendants are the sole beneficial owners; (c) a Transfer to a partner, shareholder, member or Affiliate of such Member (which may include special purpose investment vehicles wholly owned by one or more Affiliated investment funds but shall not include portfolio companies) or (d) a Transfer of Units to a reinsurance counterparty of any Member (or Affiliate of such Member) that is an Affiliate of Athene Holding Ltd. to hold in a funds withheld account or modified coinsurance account established by such reinsurance counterparty for the purpose of maintaining assets supporting business ceded or retroceded to such Member (or Affiliate of such Member), or a Transfer of Units from any Member that is a reinsurance counterparty of any Member (or Affiliate of such Member) that is an Affiliate of Athene Holding Ltd. to such Member (or Affiliate of such Member); provided, however, that (A) the restrictions contained in this Agreement will continue to apply to Units after any Permitted Transfer of such Units, and (B) in the case of the foregoing clauses (b), (c) and (d), the Permitted Transferees of the Units so Transferred shall agree in writing to be bound by the provisions of this Agreement and, the transferor will deliver a written notice to the Company and the Members, which notice will disclose in reasonable detail the identity of the proposed transferee.  In the case of a Permitted Transfer of any Common Units, the transferring Member shall be required to transfer an equal number of shares of Class B Common Stock corresponding to the proportion of such Member’s Common Units that were transferred in the transaction to such Permitted Transferee.  All Permitted Transfers are subject to the additional limitations set forth in Section 10.7(b).

 

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

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED ON [•], 2020, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER SPECIFIED IN THE SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ARIS MORTGAGE HOLDING COMPANY, LLC, AS IT MAY BE AMENDED, RESTATED, AMENDED AND RESTATED, OR OTHERWISE MODIFIED FROM TIME TO TIME, AND ARIS MORTGAGE HOLDING COMPANY, LLC RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO ANY TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY ARIS

 

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MORTGAGE HOLDING COMPANY, LLC TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

 

The Company shall imprint such legend on certificates (if any) evidencing Units. The legend set forth above shall be removed from the certificates (if any) evidencing any Units which cease to be Units in accordance with the definition thereof.

 

10.4        Transfer.  Prior to Transferring any Units, the Transferring holder of Units shall cause the prospective Permitted Transferee to be bound by this Agreement and any other agreements executed by the holders of Units and relating to such Units in the aggregate to which the transferor was a party (collectively, the “Other Agreements”) by executing and delivering to the Company counterparts of this Agreement and any applicable Other Agreements.

 

10.5        Assignee’s Rights.

 

(a)           The Transfer of a Unit in accordance with this Agreement shall be effective as of the date of such Transfer (assuming compliance with all of the conditions to such Transfer set forth herein), and such Transfer shall be shown on the books and records of the Company. Profits, Losses and other items of the Company shall be allocated between the transferor and the transferee according to Section 706 of the Code, using any permissible method as determined in the reasonable discretion of the Manager. Distributions made before the effective date of such Transfer shall be paid to the transferor, and Distributions made on or after such date shall be paid to the Assignee.

 

(b)           Unless and until an Assignee becomes a Member pursuant to Article XI, the Assignee shall not be entitled to any of the rights granted to a Member hereunder or under applicable Law, other than the rights granted specifically to Assignees pursuant to this Agreement; provided, however, that, without relieving the Transferring Member from any such limitations or obligations as more fully described in Section 10.6, such Assignee shall be bound by any limitations and obligations of a Member contained herein by which a Member would be bound on account of the Assignee’s Units (including the obligation to make Capital Contributions on account of such Units).

 

10.6        Assignor’s Rights and Obligations.  Any Member who shall Transfer any Unit in a manner in accordance with this Agreement shall cease to be a Member with respect to such Units and shall no longer have any rights or privileges, or, except as set forth in this Section 10.6, duties, liabilities or obligations, of a Member with respect to such Units or other interest (it being understood, however, that the applicable provisions of Sections 6.8 and 7.4 shall continue to inure to such Person’s benefit), except that unless and until the Assignee (if not already a Member) is admitted as a Substituted Member in accordance with the provisions of Article XI (the “Admission Date”), (i) such Transferring Member shall retain all of the duties, liabilities and obligations of a Member with respect to such Units, and (ii) the Manager may, in its sole discretion, reinstate all or any portion of the rights and privileges of such Member with respect to such Units for any period of time prior to the Admission Date. Nothing contained herein shall relieve any Member who Transfers any Units in the Company from any liability of such Member to the Company with respect to such Units that may exist as of the Admission Date or that is otherwise specified in the Delaware Act or for any liability to the Company or any other Person

 

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for any materially false statement made by such Member (in its capacity as such) or for any present or future breaches of any representations, warranties or covenants by such Member (in its capacity as such) contained herein or in the Other Agreements with the Company.

 

10.7        Overriding Provisions.

 

(a)           Any Transfer or attempted Transfer of any Units in violation of this Agreement or the Exchange Agreement (including any prohibited indirect Transfers) shall be, to the fullest extent permitted by applicable law, null and void ab initio, and the provisions of Sections 10.5 and 10.6 shall not apply to any such Transfers. For the avoidance of doubt, any Person to whom a Transfer is made or attempted in violation of this Agreement or the Exchange Agreement shall not become a Member and shall not have any other rights in or with respect to any rights of a Member of the Company with respect to the applicable Units. The approval of any Transfer in any one or more instances shall not limit or waive the requirement for such approval in any other or future instance. The Manager shall promptly amend the Schedule of Members to reflect any Permitted Transfer pursuant to this Article X.

 

(b)           Notwithstanding anything contained herein to the contrary (including, for the avoidance of doubt, the provisions of Section 10.1), in no event shall any Member Transfer any Units to the extent such Transfer would:

 

(i)            result in the violation of the Securities Act, or any other applicable federal, state or foreign Laws;

 

(ii)           result in the violation of the Exchange Agreement;

 

(iii)          cause an assignment under the Investment Company Act;

 

(iv)          in the reasonable determination of the Manager, be a violation of or a default (or an event that, with notice or the lapse of time or both, would constitute a default) under, or result in an acceleration of any obligation under any Credit Agreement to which the Company or the Manager is a party; provided that the payee or creditor to whom the Company or the Manager owes such obligation is not an Affiliate of the Company or the Manager;

 

(v)           be a Transfer to a Person who is not legally competent or who has not achieved his or her majority of age under applicable Law (excluding trusts for the benefit of minors); or

 

(vi)          cause the Company to be treated as a “publicly traded partnership” or to be taxed as a corporation pursuant to Section 7704 of the Code or any successor provision thereto under the Code.

 

(c)           Notwithstanding anything contained herein to the contrary, in no event shall any Member that is not a “United States person” within the meaning of Section 7701(a)(30) of the Code Transfer any Units, unless such Member and the transferee have delivered to the Company, in respect of the relevant Transfer, written evidence that all required withholding under Section 1446(f) of the Code will have been done and duly remitted to the applicable taxing

 

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authority or duly executed certifications (prepared in accordance with the applicable Treasury Regulations or other authorities) of an exemption from such withholding.

 

10.8        Spousal Consent.  In connection with the execution and delivery of this Agreement, any Member who is a natural person will deliver to the Company an executed consent from such Member’s spouse (if any) in the form of Exhibit B-1 attached hereto or a Member’s spouse confirmation of separate property in the form of Exhibit B-2 attached hereto. If, at any time subsequent to the date of this Agreement such Member becomes legally married (whether in the first instance or to a different spouse), such Member shall cause his or her spouse to execute and deliver to the Company a consent in the form of Exhibit B-1 or Exhibit B-2 attached hereto. Such Member’s non-delivery to the Company of an executed consent in the form of Exhibit B-1 or Exhibit B-2 at any time shall constitute such Member’s continuing representation and warranty that such Member is not legally married as of such date.

 

10.9        Drag-Along Rights.

 

(a)           In the event that the PubCo Board and the holders of a majority of the voting power of all outstanding capital stock of PubCo approve a Qualified Transaction (the “Approved Qualified Transaction”), each Member (each, a “Required Member”) agrees to Transfer all of such Required Member’s Units in connection with such Approved Qualified Transaction (the “Drag-Along Right”) for an amount of consideration per Unit equal (before taking into account any rights such Required Member may have under the Tax Receivable Agreement) to the amount of consideration to be received per share of Class A Common Stock by the holders thereof (the “Drag Price”), and otherwise with respect to such Units on the same terms and conditions as apply to the shares of Class A Common Stock in such Approved Qualified Transaction, with such modifications as are appropriate, as determined in good faith by the Manager, to reflect the fact that Units rather than shares of Class A Common Stock will be Transferred in the first instance by such Member.  Such Transfer shall be structured in the sole discretion of the Manager and, without limitation to any other structure, the Manager will use its reasonable best efforts expeditiously and in good faith to take all such actions and do all such things as are necessary or desirable to enable and permit the Members to participate in such Approved Qualified Transaction to the same extent or on an economically equivalent basis as the holders of shares of Class A Common Stock without discrimination; provided that, without limiting the generality of this sentence, the Manager will use its reasonable best efforts expeditiously and in good faith to ensure that such Members may participate in each such Approved Qualified Transaction without being required to have their Common Units and shares of Class B Common Stock redeemed (or, if so required, to ensure that any such redemption shall be effective only upon, and shall be conditional upon, the closing of such Approved Qualified Transaction, or, as applicable, to the extent necessary to exchange the number of Common Units being repurchased).

 

(b)           PubCo shall send written notice (the “Drag-Along Notice”) to the Company and the Required Members at least thirty (30) days prior to the closing of the Approved Qualified Transaction notifying them that such Required Members will be required to sell all (but not less than all) of their Units in such sale (the “Drag-Along Amount”), and setting forth (i) a copy of the written proposal or agreement pursuant to which the Approved Qualified Transaction will be effected, (ii) the Drag Price, (iii) the terms and conditions of transfer and

 

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payment and (iv) the date and location of and procedures for selling the Units.  In the event that the information set forth in the Drag-Along Notice changes from that set forth in the initial Drag-Along Notice, a subsequent Drag-Along Notice shall be delivered by PubCo no less than seven (7) days prior to the closing of the Approved Qualified Transaction.  Notwithstanding the foregoing, to the extent that any of the foregoing information to be included in the Drag-Along Notice is publicly available, PubCo shall not be required to include such information in the Drag-Along Notice or deliver a subsequent Drag-Along Notice. Each Required Member shall thereafter be obligated to sell their Units on the terms set forth in the Drag-Along Notice.

 

(c)           Upon receipt of a Drag-Along Notice, each Required Member receiving such notice shall be obligated to sell all of its Units in the Approved Qualified Transaction as contemplated by the Drag-Along Notice for the Drag Price, on the terms and conditions described in this Section 10.9, including by executing any document containing customary representations, warranties and agreements with respect to itself and its ownership of the Units or shares of Class A Common Stock, as applicable, as requested by the Manager in connection with the Approved Qualified Transaction, which representations, warranties, indemnities and agreements shall be substantially the same as those contained in any letter of transmittal to be executed by the holders of Class A Common Stock with such modifications as are appropriate, as determined in good faith by the Manager, to reflect the fact that Units rather than shares of Class A Common Stock will be transferred by such Required Member. The Company and each Member shall cooperate in good faith in connection with the consummation of the Approved Qualified Transaction.

 

ARTICLE XI

 

ADMISSION OF MEMBERS

 

11.1        Substituted Members.  Subject to the provisions of Article X hereof, in connection with the Permitted Transfer of a Unit hereunder, the Permitted Transferee shall become a Substituted Member on the effective date of such Transfer, which effective date shall not be earlier than the date of compliance with the conditions to such Transfer, and such admission shall be shown on the books and records of the Company, including the Schedule of Members.

 

11.2        Additional Members.  Subject to the provisions of Article X hereof, any Person that is not a Member as of the Effective Date may be admitted to the Company as an additional Member (any such Person, an “Additional Member”) only upon furnishing to the Manager (a) duly executed Joinder and counterparts to any applicable Other Agreements and (b) such other documents or instruments as may be reasonably necessary or appropriate to effect such Person’s admission as a Member (including entering into such documents as may reasonably be requested by the Manager). Such admission shall become effective on the date on which the Manager determines in its sole discretion that such conditions have been satisfied and when any such admission is shown on the books and records of the Company, including the Schedule of Members.

 

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ARTICLE XII

 

WITHDRAWAL AND RESIGNATION; TERMINATION OF RIGHTS

 

12.1        Withdrawal and Resignation of Members.  Except in the event of Transfers pursuant to Section 10.6 and the Manager’s right to resign pursuant to Section 6.3, no Member shall have the power or right to withdraw or otherwise resign as a Member from the Company prior to the dissolution and winding up of the Company pursuant to Article XIII. Any Member, however, that attempts to withdraw or otherwise resign as a Member from the Company without the prior written consent of the Manager upon or following the dissolution and winding up of the Company pursuant to Article XIII, but prior to such Member receiving the full amount of Distributions from the Company to which such Member is entitled pursuant to Article XIII, shall be liable to the Company for all damages (including all lost profits and special, indirect and consequential damages) directly or indirectly caused by the withdrawal or resignation of such Member. Upon a Transfer of all of a Member’s Units in a Transfer permitted by this Agreement, subject to the provisions of Section 10.6, such Member shall cease to be a Member.

 

ARTICLE XIII

 

DISSOLUTION AND LIQUIDATION

 

13.1        Dissolution.  The Company shall not be dissolved by the admission of Additional Members or Substituted Members or the attempted withdrawal, removal, dissolution, bankruptcy or resignation of a Member. The Company shall dissolve, and its affairs shall be wound up, upon:

 

(a)           the decision of the Manager together with the written approval of the Common Unitholders holding a majority of the Common Units to dissolve the Company (excluding for purposes of such calculation PubCo and all Common Units held directly or indirectly by it);

 

(b)           a dissolution of the Company under Section 18-801(4) of the Delaware Act, unless the Company is continued without dissolution pursuant thereto; or

 

(c)           the entry of a decree of judicial dissolution of the Company under Section 18-802 of the Delaware Act;

 

Except as otherwise set forth in this Article XIII, the Company is intended to have perpetual existence. An Event of Withdrawal shall not in and of itself cause a dissolution of the Company and the Company shall continue in existence subject to the terms and conditions of this Agreement.

 

13.2        Winding Up.  Subject to Section 13.5, on dissolution of the Company, the Manager shall act as liquidating trustee or may appoint one or more Persons as liquidating trustee (each such Person, a “Liquidator”). The Liquidators shall proceed diligently to wind up the affairs of the Company and make final distributions as provided herein and in the Delaware Act. The costs of liquidation shall be borne as an expense of the Company. Until final distribution, the Liquidators shall, to the fullest extent permitted by applicable Law, continue to operate the properties of the Company with all of the power and authority of the Manager. The steps to be accomplished by the Liquidators are as follows:

 

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(a)           as promptly as possible after dissolution and again after final liquidation, the Liquidators shall cause a proper accounting to be made by a recognized firm of certified public accountants of the Company’s assets, liabilities and operations through the last day of the calendar month in which the dissolution occurs or the final liquidation is completed, as applicable;

 

(b)           the Liquidators shall pay, satisfy or discharge from the Company’s funds, or otherwise make adequate provision for payment and discharge thereof (including, without limitation, the establishment of a cash fund for contingent, conditional and unmatured liabilities in such amount and for such term as the liquidators may reasonably determine) the following: first, all of the debts, liabilities and obligations of the Company owed to creditors other than the Members in satisfaction of the liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof), including all expenses incurred in connection with the liquidations; and second, all of the debts, liabilities and obligations of the Company owed to the Members (other than any payments or distributions owed to such Members in their capacity as Members pursuant to this Agreement); and

 

(c)           following any payments pursuant to the foregoing Section 13.2(b), all remaining assets of the Company shall be distributed to the Members in accordance with Section 4.1(a) by the end of the Taxable Year during which the liquidation of the Company occurs (or, if later, by ninety (90) days after the date of the liquidation).

 

The distribution of cash and/or property to the Members in accordance with the provisions of this Section 13.2 and Section 13.3 below shall constitute a complete return to the Members of their Capital Contributions, a complete distribution to the Members of their interest in the Company and all of the Company’s property and shall constitute a compromise to which all Members have consented within the meaning of the Delaware Act. To the extent that a Member returns funds to the Company, it has no claim against any other Member for those funds.

 

13.3        Deferment; Distribution in Kind.  Notwithstanding the provisions of Section 14.2, but subject to the order of priorities set forth therein, if upon dissolution of the Company the Liquidators determine that an immediate sale of part or all of the Company’s assets would be impractical or would cause undue loss (or would otherwise not be beneficial) to the Members, the Liquidators may, in their sole discretion and the fullest extent permitted by applicable Law, defer for a reasonable time the liquidation of any assets except those necessary to satisfy the Company’s liabilities (other than loans to the Company by any Member(s)) and reserves. Subject to the order of priorities set forth in Section 13.2, the Liquidators may, in their sole discretion, distribute to the Members, in lieu of cash, either (a) all or any portion of such remaining assets in-kind of the Company in accordance with the provisions of Section 13.2(c), (b) as tenants in common and in accordance with the provisions of Section 13.2(c), undivided interests in all or any portion of such assets of the Company or (c) a combination of the foregoing. Any such Distributions in-kind shall be subject to (y) such conditions relating to the disposition and management of such assets as the Liquidators deem reasonable and equitable and (z) the terms and conditions of any agreements governing such assets (or the operation thereof or the holders thereof) at such time. Any assets of the Company distributed in kind will first be written up or down to their Fair Market Value, thus creating Profit or Loss (if any), which shall be allocated in

 

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accordance with Article V. The Liquidators shall determine the Fair Market Value of any property distributed.

 

13.4        Cancellation of Certificate.  On completion of the winding up of the Company as provided herein, the Manager (or such other Person or Persons as the Delaware Act may require or permit) shall file a certificate of cancellation of the Certificate of Formation with the Secretary of State of Delaware, cancel any other filings made pursuant to this Agreement that should be canceled and take such other actions as may be necessary to terminate the existence of the Company. The Company shall continue in existence for all purposes of this Agreement until it is terminated pursuant to this Section 13.4.

 

13.5        Reasonable Time for Winding Up.  A reasonable time shall be allowed for the orderly winding up of the business and affairs of the Company and the liquidation of its assets pursuant to Sections 13.2 and 13.3 in order to minimize any losses otherwise attendant upon such winding up.

 

13.6        Return of Capital.  The Liquidators shall not be personally liable for the return of Capital Contributions or any portion thereof to the Members (it being understood that any such return shall be made solely from assets of the Company).

 

ARTICLE XIV

 

MISCELLANEOUS PROVISIONS

 

14.1        Power of Attorney.

 

(a)           Each Member hereby constitutes and appoints the Manager (or the Liquidator, if applicable) with full power of substitution, as his or her true and lawful agent and attorney-in-fact, with full power and authority in his, her or its name, place and stead, to:

 

(i)            execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (A) this Agreement, all certificates and other instruments and all amendments thereof which the Manager deems appropriate or necessary to form, qualify, or continue the qualification of, the Company as a limited liability company in the State of Delaware and in all other jurisdictions in which the Company may conduct business or own property; (B) all instruments which the Manager deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (C) all conveyances and other instruments or documents which the Manager deems appropriate or necessary to reflect the dissolution, winding up and termination of the Company pursuant to the terms of this Agreement, including a certificate of cancellation; and (D) all instruments relating to the admission, substitution or resignation of any Member pursuant to Article XI or Article XII; and

 

(ii)           sign, execute, swear to and acknowledge all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the reasonable judgment of the Manager, to evidence, confirm or ratify any vote, consent, approval, agreement or other action which is made or given by the Members hereunder or

 

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is consistent with the terms of this Agreement, in the reasonable judgment of the Manager, to effectuate the terms of this Agreement.

 

(b)           The foregoing power of attorney is irrevocable and coupled with an interest, and shall survive the death, disability, incapacity, dissolution, bankruptcy, insolvency or termination of any Member and the transfer of all or any portion of his, her or its Units and shall extend to such Member’s heirs, successors, assigns and personal representatives.

 

14.2        Confidentiality.

 

(a)           Each of the Members (other than PubCo) agrees to hold the Company’s Confidential Information in confidence and may not disclose or use such information except as otherwise authorized separately in writing by the Manager. “Confidential Information” as used herein includes all non-public information concerning the Company or its Subsidiaries including, but not limited to, ideas, financial product structuring, business strategies, innovations and materials, all aspects of the Company’s business plan, proposed operation and products, corporate structure, financial and organizational information, analyses, proposed partners, software code and system and product designs, employees and their identities, equity ownership, the methods and means by which the Company plans to conduct its business, all trade secrets, trademarks, tradenames and all intellectual property associated with the Company’s business. With respect to each Member, Confidential Information does not include information or material that: (a) is rightfully in the possession of such Member at the time of disclosure by the Company; (b) before or after it has been disclosed to such Member by the Company, becomes part of public knowledge, not as a result of any action or inaction of such Member in violation of this Agreement; (c) is approved for release by written authorization of the Chief Executive Officer, Chief Financial Officer or General Counsel of the Company or of PubCo, or any other officer designated by the Manager; (d) is disclosed to such Member or their representatives by a third party not, to the knowledge of such Member, in violation of any obligation of confidentiality owed to the Company with respect to such information; or (e) is or becomes independently developed by such Member or their respective representatives without use of or reference to the Confidential Information.

 

(b)           Solely to the extent it is reasonably necessary or appropriate to fulfill its obligations or to exercise its rights under this Agreement, each of the Members may disclose Confidential Information to its Subsidiaries, Affiliates, partners, directors, officers, employees, counsel, advisers, consultants, outside contractors and other agents, on the condition that such Persons keep the Confidential Information confidential to the same extent as such Member is required to keep the Confidential Information confidential; provided, that such Member shall remain liable with respect to any breach of this Section 14.2 by any such Subsidiaries, Affiliates, partners, directors, officers, employees, counsel, advisers, consultants, outside contractors and other agents (as if such Persons were party to this Agreement for purposes of this Section 14.2).

 

(c)           Notwithstanding Section 14.2(a) or Section 14.2(b), each of the Members may disclose Confidential Information (i) to the extent that such Member is required by Law (by oral questions, interrogatories, request for information or documents, subpoena, civil investigative demand or similar process) to disclose any of the Confidential Information, (ii) for purposes of reporting to its stockholders and direct and indirect equity holders (each of whom are

 

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bound by customary confidentiality obligations) the performance of the Company and its Subsidiaries and for purposes of including applicable information in its financial statements to the extent required by applicable Law or applicable accounting standards; or (iii) to any bona fide prospective purchaser of the equity or assets of a Member, or the Common Units held by such Member (provided, in each case, that such Member determines in good faith that such prospective purchaser would be a Permitted Transferee), or a prospective merger partner of such Member (provided, that (i) such Persons will be informed by such Member of the confidential nature of such information and shall agree in writing to keep such information confidential in accordance with the contents of this Agreement and (ii) each Member will be liable for any breaches of this Section 14.2 by any such Persons (as if such Persons were party to this Agreement for purposes of this Section 14.2)). Notwithstanding any of the foregoing, nothing in this Section 14.2 will restrict in any manner the ability of PubCo to comply with its disclosure obligations under Law, and the extent to which any Confidential Information is necessary or desirable to disclose.

 

14.3        Amendments.  Except as otherwise contemplated by this Agreement, this Agreement may be amended or modified upon the written consent of the Manager, together with the written consent of the holders of a majority of the Common Units then outstanding (excluding all Common Units held directly or indirectly by PubCo). Notwithstanding the foregoing, no amendment or modification:

 

(a)           to this Section 14.3 may be made without the prior written consent of the Manager and each of the Members;

 

(b)           to any of the terms and conditions of this Agreement which terms and conditions expressly require the approval or action of certain Persons may be made without obtaining the consent of the requisite number or specified percentage of such Persons who are entitled to approve or take action on such matter; and

 

(c)           to any of the terms and conditions of this Agreement which would (A) reduce the amounts distributable to a Member pursuant to Article IV and Article XIII in a manner that is not pro rata with respect to all Members, (B) increase the liabilities of such Member hereunder, (C) otherwise materially and adversely affect a holder of Units (with respect to such Units) in a manner materially disproportionate to any other holder of Units of the same class or series (with respect to such Units) (other than amendments, modifications and waivers necessary to implement the provisions of Article XI) or (D) materially and adversely affect the rights of any Member under Section 3.4, Section 3.4(c), Section 7.1, Section 7.4, or Article X, shall be effective against such affected Member or holder of Units, as the case may be, without the prior written consent of such Member or holder of Units, as the case may be.

 

Notwithstanding any of the foregoing, the Manager may make any amendment (i) of an administrative nature that is necessary in order to implement the substantive provisions hereof, without the consent of any other Member; provided, that any such amendment does not adversely change the rights of the Members hereunder in any respect, or (ii) to reflect any changes to the Class A Common Stock or Class B Common Stock or the issuance of any other capital stock of PubCo.

 

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14.4        Title to Company Assets.  Company assets shall be owned by the Company as an entity, and no Member, individually or collectively, shall have any ownership interest in such assets of the Company or any portion thereof. The Company shall hold title to all of its property in the name of the Company and not in the name of any Member. All assets of the Company shall be recorded as the property of the Company on its books and records, irrespective of the name in which legal title to such assets is held. The Company’s credit and assets shall be used solely for the benefit of the Company, and no asset of the Company shall be transferred or encumbered for, or in payment of, any individual obligation of any Member.

 

14.5        Addresses and Notices.  All notices and other communications to be given to any party hereunder shall be sufficiently given for all purposes hereunder if in writing and delivered by hand, courier or overnight delivery service, or when received in the form of an electronic transmission (receipt confirmation requested), and shall be directed to the address set forth below, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the Company or the sending party or, with respect to any Member, at such address as indicated by the Company’s records.

 

To the Company:

 

Aris Mortgage Holding Company, LLC

c/o AmeriHome, Inc.

1 Baxter Way

Thousand Oaks, California 91362

Attn: [·]

Email: [·]

 

with a copy (which copy shall not constitute notice) to:

 

Sidley Austin LLP

787 Seventh Avenue

New York, New York 10019

Attn: Perry J. Schwachman, Samir A. Gandhi, Robert A. Ryan

E-mail: pshwachman@sidley.com; sgandhi@sidley.com; rryan@sidley.com

 

To PubCo:

 

AmeriHome, Inc.

1 Baxter Way

Thousand Oaks, California 91362

Attn: [·]

Email: [·]

 

with a copy (which copy shall not constitute notice) to:

 

Sidley Austin LLP

787 Seventh Avenue

New York, New York 10019

Attn: Perry J. Schwachman, Samir A. Gandhi, Robert A. Ryan

E-mail: pshwachman@sidley.com; sgandhi@sidley.com; rryan@sidley.com

 

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14.6        Binding Effect; Intended Beneficiaries.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

14.7        Creditors.  None of the provisions of this Agreement shall be for the benefit of or enforceable by any creditors of the Company or any of its Affiliates, and no creditor who makes a loan to the Company or any of its Affiliates may have or acquire (except pursuant to the terms of a separate agreement executed by the Company in favor of such creditor) at any time as a result of making the loan any direct or indirect interest in Profits, Losses, Distributions, capital or property of the Company other than as a secured creditor; provided, that, for the avoidance of doubt, this Section 14.7 shall not apply to any Member or the Manager who is also a creditor of the Company with respect to such Member or Manager’s rights under this Agreement or interests in the Company arising from their status as a Member or Manager.

 

14.8        Waiver.  No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute a waiver of any such breach or any other covenant, duty, agreement or condition.

 

14.9        Counterparts.  This Agreement may be executed in separate counterparts, each of which will be an original and all of which together shall constitute one and the same agreement binding on all the parties hereto.

 

14.10      Applicable Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Any suit, dispute, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement shall be heard in the state or federal courts of the State of Delaware, and the parties hereby consent to the exclusive jurisdiction of such court (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid therein. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD, WHETHER WITHIN OR WITHOUT THE JURISDICTION OF ANY SUCH COURT (INCLUDING BY PREPAID CERTIFIED MAIL WITH A VALIDATED PROOF OF MAILING RECEIPT) AND SHALL HAVE THE SAME LEGAL FORCE AND EFFECT AS IF SERVED UPON SUCH PARTY PERSONALLY WITHIN THE STATE OF DELAWARE. WITHOUT LIMITING THE FOREGOING, TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES AGREE THAT SERVICE OF PROCESS UPON SUCH PARTY AT THE ADDRESS REFERRED TO IN SECTION 14.5 (INCLUDING BY PREPAID CERTIFIED MAIL WITH A VALIDATED PROOF OF MAILING RECEIPT), TOGETHER WITH WRITTEN NOTICE OF SUCH SERVICE TO SUCH PARTY, SHALL BE DEEMED EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY.

 

14.11      Severability.  Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision

 

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of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or the effectiveness or validity of any provision in any other jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

14.12      Further Action.  The parties shall execute and deliver all documents, provide all information and take or refrain from taking such actions as may be necessary or appropriate to achieve the purposes of this Agreement.

 

14.13      Execution and Delivery by Electronic Signature and Electronic Transmission.  This Agreement and any signed agreement or instrument entered into in connection with this Agreement or contemplated hereby or entered into by the Company in accordance herewith, and any amendments hereto or thereto, to the extent signed and delivered by means of an electronic signature and/or electronic transmission, including by a facsimile machine or via email, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of electronic signature or electronic transmission to execute and/or deliver a document or the fact that any signature or agreement or instrument was transmitted or communicated through such electronic transmission as a defense to the formation of a contract and each such party forever waives any such defense.

 

14.14      Right of Offset.  Whenever the Company or PubCo is to pay any sum (other than pursuant to Article IV) to any Member, any amounts that such Member owes to the Company or PubCo which are not the subject of a good faith dispute may be deducted from that sum before payment. For the avoidance of doubt, the distribution of Units to PubCo shall not be subject to this Section 14.14.

 

14.15      Entire Agreement.  This Agreement, those documents expressly referred to herein (including the Stockholders Agreement, the Registration Rights Agreement, the Exchange Agreement and the Tax Receivable Agreement), any indemnity agreements entered into in connection with the First A&R LLC Agreement with any member of the board of directors at that time and other documents of even date herewith embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. For the avoidance of doubt, the First A&R LLC Agreement is superseded by this Agreement as of the Effective Date and shall be of no further force and effect thereafter.

 

14.16      Remedies.  Each Member shall have all rights and remedies set forth in this Agreement and all rights and remedies which such Person has been granted at any time under any other agreement or contract and all of the rights which such Person has under any Law. Any Person having any rights under any provision of this Agreement or any other agreements contemplated hereby shall be entitled to enforce such rights specifically (without posting a bond

 

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or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by Law.

 

14.17      Descriptive Headings; Interpretation.  The descriptive headings of this Agreement are inserted for convenience only and do not constitute a substantive part of this Agreement. Whenever required by the context, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa. The use of the word “including” in this Agreement shall be by way of example rather than by limitation. Reference to any agreement, document or instrument means such agreement, document or instrument as amended or otherwise modified from time to time in accordance with the terms thereof, and if applicable hereof. Without limiting the generality of the immediately preceding sentence, no amendment or other modification to any agreement, document or instrument that requires the consent of any Person pursuant to the terms of this Agreement or any other agreement will be given effect hereunder unless such Person has consented in writing to such amendment or modification. Wherever required by the context, references to a Fiscal Year shall refer to a portion thereof. The use of the words “or,” “either” and “any” shall not be exclusive. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the dates set below their names, to be effective on the date first above written.

 

	
 
    	
ARIS MORTGAGE HOLDING COMPANY, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
James Furash
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MEMBERS
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
A-A MORTGAGE OPPORTUNITIES, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
A-A Mortgage Opportunities Corp.,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
James Furash
    
	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
AMERIHOME, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
James Furash
    
	
 
    	
Title:
    	
Chief Executive Officer
    
						


 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY

AGREEMENT

OF ARIS MORTGAGE HOLDING COMPANY, LLC

 











 

Schedule I

 

Schedule of Pre-IPO Members

 

Sched. I-1











 

Schedule II

 

Schedule of Members

 

Sched. II-1











 

Exhibit A

 

FORM OF JOINDER AGREEMENT

 

This JOINDER AGREEMENT, dated as of                               , 20      (this “Joinder”), is delivered pursuant to that certain Second Amended and Restated Limited Liability Company Agreement, dated as of [·], 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “LLC Agreement”) of Aris Mortgage Holding Company, LLC, a Delaware limited liability company (the “Company”), by and among the Company, AmeriHome, Inc., a Delaware corporation and the managing member of the Company (“PubCo”), and each of the Members from time to time party thereto. Capitalized terms used but not otherwise defined herein have the respective meanings set forth in the LLC Agreement.

 

1.              Joinder to the LLC Agreement.  Upon the execution of this Joinder by the undersigned and delivery hereof to PubCo, the undersigned hereby is admitted as and hereafter will be a Member under the LLC Agreement and a party thereto, with all the rights, privileges and responsibilities of a Member thereunder. The undersigned hereby agrees that it shall comply with and be fully bound by the terms of the LLC Agreement as if it had been a signatory thereto as of the date thereof.

 

2.              Incorporation by Reference.  All terms and conditions of the LLC Agreement are hereby incorporated by reference in this Joinder as if set forth herein in full.

 

3.              Address.  All notices under the LLC Agreement to the undersigned shall be direct to:

 

[Name]

[Address]

[City, State, Zip Code]

Attn:

Facsimile:

E-mail:

 

IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Joinder as of the day and year first above written.

 

	
 
    	
[NAME OF NEW MEMBER]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    


 

Exh. A-1











 

Exhibit B-1

 

FORM OF AGREEMENT AND CONSENT OF SPOUSE

 

The undersigned spouse of                                                  (the “Member”), a party to that certain Second Amended and Restated Limited Liability Company Agreement, dated as of [·], 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Agreement”) of Aris Mortgage Holding Company, LLC, a Delaware limited liability company (the “Company”), by and among the Company, AmeriHome, Inc., a Delaware corporation and the managing member of the Company, and each of the Members from time to time party thereto (capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Agreement), acknowledges on his or her own behalf that:

 

I have read the Agreement and understand its contents. I acknowledge and understand that under the Agreement, any interest I may have, community property or otherwise, in the Units owned by the Member is subject to the terms of the Agreement which include certain restrictions on Transfer.

 

I hereby consent to and approve the Agreement. I agree that said Units and any interest I may have, community property or otherwise, in such Units are subject to the provisions of the Agreement and that I will take no action at any time to hinder operation of the Agreement on said Units or any interest I may have, community property or otherwise, in said Units.

 

I hereby acknowledge that the meaning and legal consequences of the Agreement have been explained fully to me and are understood by me, and that I am signing this Agreement and consent without any duress and of free will.

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[NAME OF SPOUSE]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    


 

Exh. B-1-1











 

Exhibit B-2

 

FORM OF SPOUSE’S CONFIRMATION OF SEPARATE PROPERTY

 

I, the undersigned, the spouse of                                                             (the “Member”), who is a party to that certain Second Amended and Restated Limited Liability Company Agreement, dated as of [·], 2020 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Agreement”) of Aris Mortgage Holding Company, LLC, a Delaware limited liability company (the “Company”), by and among the Company, AmeriHome, Inc., a Delaware corporation and the managing member of the Company, and each of the Members from time to time party thereto (capitalized terms used but not otherwise defined herein have the respective meanings set forth in the Agreement), acknowledge and confirm on that the Units owned by said Member are the sole and separate property of said Member, and I hereby disclaim any interest in same.

 

I hereby acknowledge that the meaning and legal consequences of this Member’s spouse’s confirmation of separate property have been fully explained to me and are understood by me, and that I am signing this Member’s spouse’s confirmation of separate property without any duress and of free will.

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
[NAME OF SPOUSE]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    


 

Exh. B-2-1