Document:

Exhibit 10.30

 

CONTRIBUTION AGREEMENT

 

THIS CONTRIBUTION AGREEMENT (this “Agreement”) is
made and entered into as of June         ,
2007, by and among STR Holdings LLC (the “Issuer”) and                       
(the “Investor” and, collectively with the stockholders listed on Schedule
A, the “Investors”).

 

RECITALS

 

WHEREAS, immediately prior to the Effective Time, (i) each
Investor desires to contribute and assign the Rollover Securities owned by
Investor with a value equal to the value set forth opposite his or her name on Schedule
A (based on each Rollover Security being valued at the Per Share Merger
Consideration (as estimated in accordance with Section 2.14 of the
Agreement and Plan of Merger by and among the STR Holdings, Inc., STR
Acquisition, Inc. and Specialized Technology Resources, Inc. (the “Company”)
dated as of April 21, 2007, as it may be amended or restated from time to
time (the “Merger Agreement”)) minus the Per Share Escrow Amount) to the
Issuer in exchange for the number Class A Units of the Issuer in an
equivalent value (based on each unit of Issuer Class A Units being valued
at the price per share in cash paid by the Fund on the Closing Date for its Class A
Units) (the “Securities”), and (ii) the Issuer desires to accept
the Rollover Securities from the Investors and issue the Securities to the
Investors; capitalized terms used herein but not defined shall have the meaning
ascribed to them in the Merger Agreement;

 

WHEREAS, the Fund has executed and delivered to the
Issuer the Equity Commitment Letter pursuant to which the Fund has agreed to
purchase Securities from the Issuer; and

 

WHEREAS, as a condition to the Issuer’s acceptance of
the contribution and the issuance of the Securities to the Investors, each
Investor will enter into a Limited Liability Company Agreement with the Issuer
and the other members of the Issuer party thereto substantially in the form
attached hereto as Exhibit A (the “LLC Agreement”), which
will, among other things, impose certain restrictions on the transfer of the
Securities as more particularly described therein.

 

NOW, THEREFORE, in consideration of the foregoing and of
the covenants and agreements set forth below, the parties hereto agree as
follows:

 

ARTICLE
I

CONTRIBUTION OF ROLLOVER SECURITIES

 

1.1   Rollover
Stockholder.  As of immediately prior
to the Effective Time, on the terms and subject to the conditions herein, each
Investor shall contribute, transfer, and assign to the Issuer all of its right,
title, and interest in and to the Rollover Securities in exchange for the
Securities (the “Contribution”).

 

 

1.2   LLC Agreement.  No
later than two Business Days prior to the Closing Date, each Investor shall
execute and deliver to the Issuer the LLC Agreement.  The LLC Agreement shall become effective upon
the Closing.

 

1.3   Delivery
of Certificates.  As of
immediately prior to the Effective Time, in order to effectuate the
Contribution, the Investor agrees to deliver the certificates representing the
Rollover Securities, accompanied by irrevocable stock transfer powers giving
Susan Schnabel and Ryan Sprott power of attorney sufficient to transfer and
assign all right, title and interest of the Investor in the Rollover Securities
to the Issuer on the Effective Time subject to all of the conditions to Closing
in the Merger Agreement having been satisfied or waived.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF INVESTOR

 

2.1   Each Investor hereby severally represents and
warrants as to itself to the Issuer as of the date hereof and as of the Closing
Date as follows:

 

(a)           Investor has the power and authority
to enter into and perform this Agreement and this Agreement constitutes a valid
and legally binding obligation of the Investor;

 

(b)           Investor is the record and beneficial
owner of the Rollover Securities free and clear of any and all liens, claims
and encumbrances other than those which will be removed or eliminated prior to
the Closing Date;

 

(c)           Investor is in a financial position
to hold the Securities for an indefinite period of time and is able to bear the
economic risk and withstand a complete loss of Investor’s investment in the
Securities;

 

(d)           Investor believes Investor, either
alone or with the assistance of Investor’s own professional advisor, has such
knowledge and experience in financial and business matters that Investor is
capable of reading and interpreting financial statements and evaluating the
merits and risks of the prospective investment in the Securities and has the
net worth to undertake such risks;

 

(e)           Investor has obtained, to the extent
Investor deems necessary, Investor’s own personal professional advice with
respect to the tax consequences of receiving, and the risks inherent in, the
investment in the Securities, and the suitability of an investment in the
Securities in light of the Investor’s financial condition and investment needs;

 

(f)            Investor believes that the
investment in the Securities is suitable for the Investor based upon Investor’s
investment objectives and financial needs, and Investor has adequate means for
providing for the Investor’s current financial needs and personal contingencies
and has no need for liquidity of investment with respect to the Securities;

 

(g)           Investor has been given access to
full and complete information regarding the Issuer and the Company and has
utilized such access to Investor’s satisfaction for the 

 

2

 

purpose of obtaining information Investor believes to
be relevant in making its investment decision and, particularly, Investor has
either attended or been given reasonable opportunity to attend a meeting with
representatives of the Company for the purpose of asking questions of, and
receiving answers from, such representatives concerning the Company and to
obtain any additional information, to the extent reasonably available, Investor
believes to be relevant in making its investment decision;

 

(h)           Investor recognizes that an
investment in the Securities involves a high degree of risk, including, but not
limited to, the risk of economic losses from operations of the Company;

 

(i)            Investor realizes that (i) the
acquisition of the Securities is a long-term investment; (ii) the
purchaser of the Securities must bear the economic risk of investment for an
indefinite period of time because the Securities have not been registered under
the Securities Act of 1933, as amended (the “Securities Act”), or under
the securities laws of any state and, therefore, none of such securities can be
sold unless they are subsequently registered under said laws or exemptions from
such registrations are available, and there can be no assurance that any such
registration will be effected at any time in the future; (iii) Investor
may not be able to liquidate Investor’s investment in the event of an emergency
or pledge any of such securities as collateral for loans; and (iv) the
transferability of the Securities is restricted and (A) requires the
written consent the Company and (B) legends will be placed on the
certificate(s) representing the Securities referring to the applicable
restrictions on transferability;

 

(j)            Investor is a bona fide resident of,
is domiciled in and received the offer and made the decision to invest in the
Securities in the state set forth on the signature page below under “Address,”
and the Securities are being purchased by Investor in Investor’s name solely
for Investor’s own beneficial interest and not as nominee for, or on behalf of,
or for the beneficial interest of, or with the intention to transfer to, any
other person, trust or organization;

 

(k)           Investor has not retained any finder,
broker, agent, financial advisor, Purchaser Representative (as defined in Rule 501(h) of
Regulation D of the Securities Act) or other intermediary in connection with
the transactions contemplated by this Agreement and agrees to indemnify and
hold harmless the Company from any liability for any compensation to any such
intermediary retained by Investor and the fees and expenses of defending
against such liability or alleged liability; and

 

(l)            Investor has completed Schedule B
to this Agreement as to his status as an “Accredited Investor” (as
defined therein) and such information is true and complete.

 

3

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE ISSUER

 

The Issuer hereby represents and
warrants to the Investors as of the Closing Date as follows:

 

(a)   The Issuer
is a corporation duly organized, existing and in good standing, under the laws
of its state of formation.

 

(b)   The Issuer
has full corporate power and authority to enter into and perform this
Agreement.  The execution, delivery and
performance of this Agreement by the Issuer has been duly and validly approved
by the Issuer.  This Agreement has been
duly executed and delivered by the Issuer and constitutes a legal, valid and
binding agreement of the Issuer, enforceable against Issuer in accordance with
its terms.

 

(c)   When issued
and delivered in accordance with this Agreement, the Securities will be duly
authorized, validly issued, fully paid and nonassessable and will be free of
all preemptive rights and any other liens, claims, charges and other
encumbrances other than restrictions on transfer under the LLC Agreement and
applicable federal and state securities laws.

 

ARTICLE IV

COVENANTS AND AGREEMENTS

 

4.1   Further Assurances. 
From and after the date of this Agreement, the Investor shall execute
any and all further documents, financing statements, agreement and instruments,
and take all further action that may be required under applicable law or that
the Issuer may reasonably request in order to effectuate the transactions
contemplated by this Agreement including, without limitation, perfecting the
Issuer’s ownership of the Rollover Securities.

 

4.2   Transfer Restrictions.  The parties agree that the transfer of any
Securities shall be governed by the terms and provisions of the LLC Agreement.

 

ARTICLE V

MISCELLANEOUS

 

Each provision of Article X
(General Provisions) of the Merger Agreement is hereby incorporated by
reference and shall be deemed a provision of this Agreement for all purposes.

 

4

 

IN WITNESS WHEREOF, the undersigned has caused this
Agreement to be duly and validly executed as of the date first set forth above.

 

	
   

  	
  STR HOLDINGS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [INVESTOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:
  c/o Specialized Technology Resources, Inc.

  
	
   

  	
  10
  Water Street

  
	
   

  	
  Enfield,
  CT 06082-4899

  

 

SIGNATURE
PAGE TO THE CONTRIBUTION AGREEMENT

 

 

SCHEDULE A

 

INVESTORS

 

	
  Name

  	
   

  	
  Rollover Securities Value

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

The
number of Securities to be issued to each Investor will be equal to that
Investor’s Rollover Securities Value divided by the purchase price per security
to be paid by the Fund.

 

 

SCHEDULE B

 

ACCREDITED
INVESTOR STATUS

 

The Investor represents
and warrants that he is an “accredited investor” as defined in Rule 501(a) promulgated
under Regulation D of the Securities Act, because he meets at least one of the
following criteria (please initial each applicable item):

 

	
  ·

  	
  The Investor is a
  natural person whose individual net worth, or joint net worth with his or her
  spouse, exceeds $1,000,000 at the time of the subscriber’s purchase; or

  
	
   

  	
   

  
	
  ·

  	
  The Investor is a
  natural person who had an individual income in excess of $200,000 in each of
  the two most recent years (2003 and 2004) or joint income with the Investor’s
  spouse in excess of $300,000 in each of those years and who reasonably
  expects to reach the same income level in the current year (2005); or

  
	
   

  	
   

  
	
  ·

  	
  The Investor is a
  corporation, or similar business trust, partnership or an organization
  described in Section 501(c)(3) of the Internal Revenue Code, not
  formed for the specific purpose of acquiring the Issuer Common Stock, with
  total assets in excess of $5,000,000; or

  
	
   

  	
   

  
	
  ·

  	
  The Investor is either
  (i) a bank as defined in Section 3(a)(2) of the Securities
  Act, or any savings and loan association or other institution as defined in
  Section 3(a)(5)(A) of the Securities Act whether acting in its
  individual or fiduciary capacity, (ii) a broker or dealer registered
  pursuant to Section 15 of the Securities Exchange Act of 1934, as
  amended, (iii) an insurance company as defined in Section 2(13) of
  the Securities Act, (iv) an investment company registered under the
  Investment Company Act of 1940, as amended, or a business development company
  as defined in Section 2(a)(48) of such Act, (v) a Small Business
  Investment Company licensed by the U.S. Small Business Administration under
  Section 301(c) or (d) of the Small Business Investment Act of
  1958, (vi) a plan established or maintained by a state, its political
  subdivisions, or any agency or instrumentality of a state or its political
  subdivisions, for the benefit of its employees, if such plan has total assets
  in excess of $5,000,000 or (vii) an employee benefit plan within in the
  meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
  if the investment decision is made by a plan fiduciary, as defined in
  Section 3(21) of ERISA, which plan fiduciary is either a bank, savings
  and loan association, insurance company or registered investment adviser, or
  if the employee benefit plan has total assets in excess of $5,000,000 or, if
  a self-directed plan, with investment decisions made solely by persons who
  are accredited investors; or

  

 

 

	
  ·

  	
  The Investor is
  a private business development company as defined in Section 202(a)(22)
  of the Investment Advisers Act of 1940, as amended; or

  
	
   

  	
   

  
	
  ·

  	
  The Investor is a
  director or executive officer of the Company; or

  
	
   

  	
   

  
	
  ·

  	
  The Investor is a
  trust, with total assets in excess of $5,000,000, not formed for the specific
  purpose of acquiring the Securities, the purchase of which is directed by a
  sophisticated person as described in Rule 506(b)(2)(ii) of
  Regulation D promulgated under the Securities Act; or

  
	
   

  	
   

  
	
  ·

  	
  The Investor is any
  entity in which all of the equity owners are accredited investors. (Please
  submit a copy of this page countersigned by each such equity owner if
  relying on this item).

  

 

8

 

EXHIBIT A

 

LLC
AGREEMENT

 

 

THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY

 

AGREEMENT

 

OF

 

STR HOLDINGS LLC

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  

 

	
  ARTICLE I

  	
  DEFINITIONS

  	
  1

  

 

	
  ARTICLE II

  	
  ORGANIZATION

  	
  17

  
	
  Section 2.01.

  	
  Formation of Company

  	
  17

  
	
  Section 2.02.

  	
  Name

  	
  17

  
	
  Section 2.03.

  	
  Office; Agent for Service of Process

  	
  18

  
	
  Section 2.04.

  	
  Term

  	
  18

  
	
  Section 2.05.

  	
  Purpose and Scope

  	
  18

  
	
  Section 2.06.

  	
  Authorized Acts

  	
  18

  
	
  Section 2.07.

  	
  Fiscal Year

  	
  19

  
				

 

	
  ARTICLE III

  	
  CONTRIBUTIONS AND MEMBERS

  	
  19

  
	
  Section 3.01.

  	
  Initial Capital Contributions

  	
  19

  
	
  Section 3.02.

  	
  Additional Capital Contributions

  	
  19

  
	
  Section 3.03.

  	
  Interest Payments

  	
  20

  
	
  Section 3.04.

  	
  Ownership and Issuance of Units

  	
  20

  
	
  Section 3.05.

  	
  Vesting

  	
  21

  
	
  Section 3.06.

  	
  Termination

  	
  24

  
	
  Section 3.07.

  	
  Members with Employment or Consulting Agreements

  	
  24

  
	
  Section 3.08.

  	
  Profits Interests

  	
  24

  
	
  Section 3.09.

  	
  Voting Rights

  	
  26

  
	
  Section 3.10.

  	
  Withdrawals

  	
  26

  
	
  Section 3.11.

  	
  Liability of the Members Generally

  	
  26

  
	
  Section 3.12.

  	
  Capital Accounts

  	
  26

  
	
  Section 3.13.

  	
  No Deficit Restoration Obligation

  	
  26

  
				

 

	
  ARTICLE IV

  	
  MANAGEMENT

  	
  27

  
	
  Section 4.01.

  	
  Management and Control of the Company

  	
  27

  
	
  Section 4.02.

  	
  Actions by the Board of Managers

  	
  30

  
	
  Section 4.03.

  	
  Officers

  	
  30

  
	
  Section 4.04.

  	
  Expenses

  	
  30

  
	
  Section 4.05.

  	
  Exculpation

  	
  31

  
				

 

i

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 4.06.

  	
  Indemnification

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  DISTRIBUTIONS

  	
  32

  
	
  Section 5.01.

  	
  Distributions Generally

  	
  32

  
	
  Section 5.02.

  	
  Priority of Distributions

  	
  32

  
	
  Section 5.03.

  	
  Adjustment to Distributions on Account of Unvested Units

  	
  33

  
	
  Section 5.04.

  	
  Tax Distributions

  	
  33

  
	
  Section 5.05.

  	
  Distributions of Securities

  	
  34

  
	
  Section 5.06.

  	
  Withholding of Certain Amounts

  	
  34

  
	
  Section 5.07.

  	
  Restricted Distributions

  	
  34

  
	
  Section 5.08.

  	
  Withholding Tax Payments and Obligations

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  ALLOCATIONS

  	
  35

  
	
  Section 6.01.

  	
  General Application

  	
  35

  
	
  Section 6.02.

  	
  Loss Limitation

  	
  36

  
	
  Section 6.03.

  	
  Special Allocations

  	
  36

  
	
  Section 6.04.

  	
  Transfer of Interest

  	
  36

  
	
  Section 6.05.

  	
  Tax Allocations

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  ACCOUNTING AND TAX MATTERS

  	
  37

  
	
  Section 7.01.

  	
  Books and Records

  	
  37

  
	
  Section 7.02.

  	
  Reports to Members

  	
  37

  
	
  Section 7.03.

  	
  Tax Returns

  	
  38

  
	
  Section 7.04.

  	
  Tax Controversies

  	
  38

  
	
  Section 7.05.

  	
  Accounting Methods; Elections

  	
  39

  
	
  Section 7.06.

  	
  Partnership Status

  	
  39

  
	
  Section 7.07.

  	
  Confidentiality

  	
  39

  
	
  Section 7.08.

  	
  Restrictive Covenants

  	
  40

  
	
  Section 7.09.

  	
  Investment Opportunities and Conflicts of Interest

  	
  41

  
	
  Section 7.10.

  	
  Conflicting Agreements

  	
  42

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  TRANSFERS

  	
  42

  
	
  Section 8.01.

  	
  General Restrictions on Transfer

  	
  42

  
									

 

ii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 8.02.

  	
  [Reserved]

  	
  42

  
	
  Section 8.03.

  	
  Permitted Transferees

  	
  42

  
	
  Section 8.04.

  	
  Restrictions on Transfers by Other Members

  	
  43

  
	
  Section 8.05.

  	
  Restrictions on Transfers by DLJMB Members

  	
  43

  
	
  Section 8.06.

  	
  Tag-Along Rights

  	
  43

  
	
  Section 8.07.

  	
  Drag-Along Rights

  	
  46

  
	
  Section 8.08.

  	
  Additional Conditions to Tag-Along Sales and Drag-Along Sales

  	
  47

  
	
  Section 8.09.

  	
  Repurchase Rights

  	
  48

  
	
  Section 8.10.

  	
  Preemptive Rights

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  DISSOLUTION; LIQUIDATION

  	
  54

  
	
  Section 9.01.

  	
  Dissolution

  	
  54

  
	
  Section 9.02.

  	
  Final Accounting

  	
  54

  
	
  Section 9.03.

  	
  Liquidation

  	
  55

  
	
  Section 9.04.

  	
  Cancellation of Certificate

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  REPRESENTATIONS

  	
  55

  
	
  Section 10.01.

  	
  Investment Purpose

  	
  55

  
	
  Section 10.02.

  	
  Independent Inquiry

  	
  56

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  GENERAL PROVISIONS

  	
  57

  
	
  Section 11.01.

  	
  Members Representative

  	
  57

  
	
  Section 11.02.

  	
  Aggregation of Shares

  	
  57

  
	
  Section 11.03.

  	
  Binding Effect; Assignability; Benefit

  	
  57

  
	
  Section 11.04.

  	
  Notices

  	
  57

  
	
  Section 11.05.

  	
  Waiver; Amendment.

  	
  58

  
	
  Section 11.06.

  	
  Transfer of All Securities

  	
  59

  
	
  Section 11.07.

  	
  Fees and Expenses

  	
  59

  
	
  Section 11.08.

  	
  Governing Law

  	
  59

  
	
  Section 11.09.

  	
  Jurisdiction

  	
  59

  
	
  Section 11.10.

  	
  Waiver of Jury Trial

  	
  59

  
	
  Section 11.11.

  	
  Specific Enforcement; Cumulative Remedies

  	
  60

  
							

 

iii

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 11.12.

  	
  Entire Agreement

  	
  60

  
	
  Section 11.13.

  	
  Captions

  	
  60

  
	
  Section 11.14.

  	
  Pronouns

  	
  60

  
	
  Section 11.15.

  	
  Severability

  	
  60

  
	
  Section 11.16.

  	
  Counterparts; Effectiveness

  	
  60

  
	
  Section 11.17.

  	
  Initial Public Offering

  	
  60

  
					

 

iv

 

THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY

 

AGREEMENT

 

OF

 

STR HOLDINGS LLC

 

This
THIRD AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of STR Holdings
LLC (the “Company”) is made and entered into as of this 20th day of
March, 2008 (the “Effective Date”), by and among the Company and each of
the Persons listed on the signature pages hereof as Members.

 

W I T N E S S E T H :

 

WHEREAS,
the Company was formed as a limited liability company pursuant to the Delaware
Limited Liability Company Act (6 Del. C. § 18-101, et
seq., as amended and in effect from time to time) (the “Act”) by
filing a Certificate of Conversion (converting STR Holdings, Inc. to the
Company) and a Certificate of Formation with the Office of the Secretary of
State of the State of Delaware on June 13, 2007 and entering into a
Limited Liability Company Agreement (the “Initial Agreement”); and

 

WHEREAS,
on June 15, 2007, the parties hereto amended and restated the Initial
Agreement to amend and restate the terms of the Initial Agreement and to admit
additional members to the Company (the “Amended Agreement”); and

 

WHEREAS,
on July 31, 2007, the parties hereto amended and restated the Amended
Agreement to amend and restate the terms of the Amended Agreement and to create
an additional class of units of the Company (the “Second Amended Agreement”);
and

 

WHEREAS,
the parties hereto desire to effect the following: (a) the amendment and
restatement of the Second Amended Agreement; and (b) the continuation of
the Company on the terms set forth herein.

 

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

 

ARTICLE I

 

DEFINITIONS

 

Section 1.01.          “Act” has the
meaning set forth in the Recitals.

 

Section 1.02.          “Additional Capital
Contribution” means, with respect to each Member, any Capital Contributions
made by such Member in excess of the Initial Capital Contribution of such
Member.

 

Section 1.03.          “Additional Member”
means any additional member admitted to the Company pursuant to Section 3.02.

 

1

 

Section 1.04.          “Adjusted Capital
Account Deficit” means, with respect to any Member, the deficit balance, if
any, in such Member’s Capital Account as of the end of the relevant Fiscal
Year, after giving effect to the following adjustments:

 

(i)           credit to such Capital Account any amounts that such
Member is obligated to restore pursuant to any provision of this Agreement or
is deemed obligated to restore pursuant to the penultimate sentences of
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); and

 

(ii)          debit to such Capital Account the items described in
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6).

 

The
foregoing definition of Adjusted Capital Account Deficit is intended to comply
with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith.

 

Section 1.05.          “Adverse Person”
means any Person who, either directly or through an Affiliate, is a competitor
of, or is otherwise materially adverse to, the Company or any of its
Subsidiaries as reasonably determined by the Board of Managers in good faith;
provided, however, that a Person shall not be deemed an Adverse Person solely
as a result of owning directly or indirectly, five percent (5%) or less of the
outstanding capital stock of a publicly traded company that is a competitor of
the Company.

 

Section 1.06.          “Affiliate” of
any Person means any Person that directly, or indirectly through one or more
intermediaries, Controls, is Controlled by or is under common Control with such
Person, and the term “Affiliated” shall have a correlative meaning.

 

Section 1.07.          “Agreement” means
this Third Amended and Restated Limited Liability Company Agreement, including
all exhibits and schedules hereto, as it may be amended or restated from time
to time.

 

Section 1.08.          “Aggregate Ownership”
means, with respect to any Member or group of Members, the total number of the
relevant class of Units owned (without duplication) by such Member or group of
Members as of the date of such calculation, calculated on a fully-diluted
basis.

 

Section 1.09.          “Amended Agreement”
has the meaning set forth in the Recitals.

 

Section 1.10.          “Assumed Tax Rate”
means the highest marginal effective rate of Federal, state and local income
tax applicable to an individual resident in Connecticut taking account of any
difference in rates applicable to ordinary income, qualified dividends, capital
gains and any allowable deductions in respect of such state and local taxes in
computing such individual’s federal income taxes (taking into account any
phase-outs related thereto).

 

Section 1.11.          “Board of Managers”
has the meaning set forth in Section 4.01(a)(i).

 

Section 1.12.          “Book Item” has
the meaning set forth in Section 6.05(a).

 

2

 

Section 1.13.          “Business Day”
means any day, excluding Saturday, Sunday and any other day on which commercial
banks in New York, New York are authorized or required by law to close.

 

Section 1.14.          “Call Notice Date”
has the meaning set forth in Section 8.09(a).

 

Section 1.15.          “Call Period”
means, with respect to Units that are held by a Terminated Member on the
Termination Date, the period from the Termination Date with respect to such
Terminated Member to the date that is 180 days after such Termination Date.

 

Section 1.16.          “Capital Account”
has the meaning set forth in Section 3.12.

Section 1.17.          “Capital Contribution”
means, with respect to any Member, the amount of money or the Gross Asset Value
of any property (other than money) contributed to the Company by such Member at
such time with respect to the Units held by such Member.  “Capital Contributions” means, with
respect to any Member, the aggregate amount of money and the Gross Asset Values
of any property (other than money) contributed to the Company by such Member
(or its predecessors in interest) with respect to the Units held by such
Member.

 

Section 1.18.          “Cause” means,
with respect to any Management Member, “cause” as defined in such Management
Member’s employment agreement, or if not so defined:

 

(i)           the Management Member’s commission of fraud, embezzlement,
misappropriation of funds, material misrepresentation, breach of fiduciary duty
or other act of dishonesty against the Company or any of its Subsidiaries;

 

(ii)          the Management Member’s conviction of a felony or of a
misdemeanor if such misdemeanor involves moral turpitude or misrepresentation,
including a plea of guilty or nolo contendere;

 

(iii)         the Management Member’s material breach of any
provision of this Agreement, any employment agreement or non-competition
agreement, which breach is not cured within 30 days following written notice;

 

(iv)        the Management Member’s intentional wrongful act or
gross negligence that has a material detrimental effect on the Company or its
Subsidiaries;

 

(v)         the Management Member’s unlawful use (including being
under the influence) or possession of illegal drugs on the Company’s or any of
its Subsidiaries’ premises; or

 

(vi)        the Management Member’s failure or refusal to follow
the reasonable instructions of the Board of Managers or the board of directors
of any Subsidiary of the Company, which failure or refusal is not cured within
30 days following written notice.

 

Section 1.19.          “CEO Manager” has
the meaning set forth in Section 4.01(a)(i)(3).

 

3

 

Section 1.20.          “Certificate”
means the Certificate of Formation as filed with the Secretary of State of the
State of Delaware pursuant to the Act as set forth in the Recitals, as it may
be amended or restated from time to time.

 

Section 1.21.          “Change of Control”
means:

 

(i)           the sale (in one transaction or a series of
transactions) of all or substantially all of the assets of the Company or STR
to a third party other than any of the Existing Members or any of their
respective Affiliates;

 

(ii)          a sale or issuance (in one transaction or a series of
transactions) of any securities resulting in more than 50% of the voting power
of the Company or STR being held by a “person” or “group” (as such terms are
used in the Exchange Act) that does not include any of the Existing Members or
any of their respective Affiliates; or

 

(iii)         a merger or consolidation of the Company or STR with
or into another Person if following such merger or consolidation, more than 50%
of the voting power of the Company is held by a “person” or “group” (as such
terms are used in the Exchange Act) that does not include any of the Existing
Members or any of their respective Affiliates.

 

Section 1.22.          “Class A Member”
means each Person admitted to the Company as a Member and who holds Class A
Units, and any other Person admitted as an additional or substitute Member and
who holds Class A Units, so long as such Person holds Class A Units
together with any Permitted Transferees thereof.  If a Class A Member holds different
classes of Units, then such Class A Member shall be treated as a Class A
Member only with respect to its Class A Units.

 

Section 1.23.          “Class A Units”
has the meaning set forth in Section 3.04(a)(i).

 

Section 1.24.          “Class B Member”
means each Person admitted to the Company as a Member and who holds Class B
Units, and any other Person admitted as an additional or substitute Member and
who holds Class B Units, so long as such Person holds Class B Units
together with any Permitted Transferees thereof.  If a Class B Member holds different
classes of Units, then such Class B Member shall be treated as a Class B
Member only with respect to its Class B Units.

 

Section 1.25.          “Class B Units”
has the meaning set forth in Section 3.04(a)(ii).

 

Section 1.26.          “Class C Member”
means each Person admitted to the Company as a Member and who holds Class C
Units, and any other Person admitted as an additional or substitute Member and
who holds Class C Units, so long as such Person holds Class C Units
together with any Permitted Transferees thereof.  If a Class C Member holds different
classes of Units, then such Class C Member shall be treated as a Class C
Member only with respect to its Class C Units.

 

Section 1.27.          “Class C Units”
has the meaning set forth in Section 3.04(a)(iii).

 

4

 

Section 1.28.          “Class D Member”
means each Person admitted to the Company as a Member and who holds Class D
Units, and any other Person admitted as an additional or substitute Member and
who holds Class D Units, so long as such Person holds Class D Units
together with any Permitted Transferees thereof.  If a Class D Member holds different
classes of Units, then such Class D Member shall be treated as a Class D
Member only with respect to its Class D Units.

 

Section 1.29.          “Class D Units”
has the meaning set forth in Section 3.04(a)(iv).

 

Section 1.30.          “Class E Member”
means each Person admitted to the Company as a Member and who holds Class E
Units, and any other Person admitted as an additional or substitute Member and
who holds Class E Units, so long as such Person holds Class E Units
together with any Permitted Transferees thereof.  If a Class E Member holds different
classes of Units, then such Class E Member shall be treated as a Class E
Member only with respect to its Class E Units.

 

Section 1.31.          “Class E Units”
has the meaning set forth in Section 3.04(a)(v).

 

Section 1.32.          “Class F Member”
means each Person admitted to the Company as a Member and who holds Class F
Units, and any other Person admitted as an additional or substitute Member and
who holds Class F Units, so long as such Person holds Class F Units
together with any Permitted Transferees thereof.  If a Class F Member holds different
classes of Units, then such Class F Member shall be treated as a Class F
Member only with respect to its Class F Units.

 

Section 1.33.          “Class F Units”
has the meaning set forth in Section 3.04(a)(vi).

 

Section 1.34.          “Code” means the
Internal Revenue Code of 1986, as amended from time to time.

 

Section 1.35.          “Company” has the
meaning specified in the introductory paragraph hereof.

 

Section 1.36.          “Company Business”
has the meaning set forth in Section 2.05(a).

 

Section 1.37.          “Company Expenses”
has the meaning set forth in Section 4.04(a).

 

Section 1.38.          “Company Minimum Gain”
has the same meaning as “partnership minimum gain” set forth in Regulations
Sections 1.704-2(b)(2) and 1.704-2(d).

 

Section 1.39.          “Company Register”
has the meaning set forth in Section 3.01.

 

Section 1.40.          “Compensatory
Interests” has the meaning set forth in Section 3.08(b)(i).

 

Section 1.41.          “Confidential
Information” has the meaning set forth in Section 7.07(b).

 

5

 

Section 1.42.          “Consolidated EBITDA”
means Consolidated EBITDA as defined in and calculated pursuant to the Credit
Facilities.

 

Section 1.43.          “Consolidated Net
Debt” means (x) any Indebtedness of the Company and its Subsidiaries
minus (y) the Company’s and its Subsidiaries’ cash on hand and in banks,
and any liquid investments readily convertible to cash, excluding any cash held
in escrow or otherwise restricted.

 

Section 1.44.          “Control,” “Controlled”
and “Controlling” mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting Securities, by contract or
otherwise.

 

Section 1.45.          “Credit Facilities”
means that certain Credit Agreement, dated as of the Effective Date, by and
between the Company, STR Acquisition, Inc., the Lenders (as defined
therein) and Credit Suisse, Cayman Islands Branch, as it may be amended or
restated from time to time.

 

Section 1.46.          “Disability”
means, with respect to any Management Member, “disability” as defined in such
Management Member’s employment agreement, or if not so defined shall mean any
physical or mental illness, injury or infirmity which prevents a Management
Member from performing the Management Member’s job functions for a period of (i) one
hundred twenty consecutive calendar days or (ii) an aggregate of one
hundred eighty calendar days out of any consecutive twelve month period.  Any determination of disability shall be made
by the Board of Managers in consultation with a qualified physician or
physicians selected by the Board of Managers and reasonably acceptable to the
Management Member.  The failure of the
Management Member to submit to a reasonable examination by such physician or
physicians shall act as an estoppel to any objection by the Management Member
to the determination of disability by the Board of Managers.

 

Section 1.47.          “Distribution
Threshold” means, with respect to all Incentive Units issued pursuant to Section 3.04(c),
an amount determined by the Board of Managers which will (but will not
necessarily be the minimum amount which will) cause such Units to constitute “profits
interests” within the meaning of Rev. Proc. 93-27 and 2001-43.

 

Section 1.48.          “DLJMB” means DLJ
Merchant Banking Partners IV, L.P.

 

Section 1.49.          “DLJMB Managers”
has the meaning set forth in Section 4.01(a)(i)(1).

 

Section 1.50.          “DLJMB Members”
means DLJMB, DLJMB Offshore Partners IV, L.P., DLJ Merchant Banking Partners IV
(Pacific), L.P. and MBP IV Plan Investors, L.P., DLJ Merchant Banking Partners
IV (Co-Investments), L.P., together with any Permitted Transferees thereof.

 

Section 1.51.          “Drag-Along Portion”
means, with respect to any Other Member in a Drag-Along Sale, the total number
of the relevant class of Units owned by such Other Member multiplied by a
fraction, the numerator of which is the aggregate number of the relevant class
of 

 

6

 

Units proposed to be sold by the Drag-Along Seller in the applicable
Drag-Along Sale and the denominator of which is the total number of the
relevant class of Units owned by the Drag-Along Seller at such time.

 

Section 1.52.          “Drag-Along Rights”
has the meaning set forth in Section 8.07(a).

 

Section 1.53.          “Drag-Along Sale”
has the meaning set forth in Section 8.07(a).

 

Section 1.54.          “Drag-Along Sale
Notice” has the meaning set forth in Section 8.07(b).

 

Section 1.55.          “Drag-Along Sale
Notice Period” has the meaning set forth in Section 8.07(b).

 

Section 1.56.          “Drag-Along Sale
Price” has the meaning set forth in Section 8.07(b).

 

Section 1.57.          “Drag-Along Seller”
has the meaning set forth in Section 8.07(a).

 

Section 1.58.          “Drag-Along
Transferee” has the meaning set forth in Section 8.07(a).

 

Section 1.59.          “Effective Date”
has the meaning specified in the introductory paragraph hereof.

 

Section 1.60.          “Electing Call Member”
has the meaning set forth in Section 8.09(a)(iii).

 

Section 1.61.          “Electing Put Member”
has the meaning set forth in Section 8.09(b)(iii).

 

Section 1.62.          “Entity” means
any general partnership, limited partnership, limited liability company,
corporation, joint venture, trust, business trust, cooperative, association or
other entity.

 

Section 1.63.          “Equity Securities”
has the meaning set forth in Section 3.02(a)(i).

 

Section 1.64.          “Equity Valuation”
means, with respect to a particular Fiscal Year, (A) the product of (i) ten
(10) and (ii) the Consolidated EBITDA for such Fiscal Year, less (B) Consolidated
Net Debt as of the end of such Fiscal Year.

 

Section 1.65.          “Excess Portion”
has the meaning set forth in Section 8.06(d).

 

Section 1.66.          “Excess Units”
has the meaning set forth in Section 8.10(c).

 

Section 1.67.          “Exchange Act”
means the Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder.

 

7

 

Section 1.68.          “Excluded Units”
means any Class A Units or other Equity Securities:

 

(i)           issued as a dividend or distribution on any of the
Units in accordance with this Agreement;

 

(ii)          granted or issued to employees, officers, directors,
managers of, or contractors, consultants or advisors to, the Company or any of
its Subsidiaries pursuant to incentive agreements, equity purchase or equity
option plans, equity bonuses or awards, warrants, contracts or other
arrangements that are approved by the Board of Managers, including, without
limitation, Incentive Units;

 

(iii)         issued or issuable in connection with any equipment
leases, real property leases, loans, credit lines, guarantees of indebtedness
or similar transactions, in each case, approved by the Board of Managers;

 

(iv)        issued pursuant to the acquisition of another Person by
the Company or any of its Subsidiaries by consolidation, merger, purchase of
all or substantially all of the assets, or other transaction in which the
Company or such Subsidiary acquires, in a single transaction or series of
related transactions, all or substantially all of the assets of such other
Person, fifty percent (50%) or more of the voting power of such other Person or
fifty percent (50%) or more of the equity ownership of such other Person;

 

(v)         issued pursuant to any public offering and sale pursuant
to an effective registration statement under the Securities Act;

 

(vi)        issued as an “equity kicker” to a lender in connection
with a third party debt financing (including the award of any such “equity
kicker” or the agreement to award or issue any such shares or “equity kicker”);
provided that Credit Suisse or its Affiliates may only be granted such
securities if such entities are part of a syndication or group of lenders; or

 

(vii)       issued to Persons other than Affiliates of the DLJMB
Members who the Board of Managers believes will provide strategic benefits to
the Company or any of its Subsidiaries.

 

Section 1.69.          “Existing Members”
means each of the Members other than the Management Members.

 

Section 1.70.          “Fiscal Year” has
the meaning set forth in Section 2.07.

 

Section 1.71.          “Fully Participating
Member” has the meaning set forth in Section 8.10(c).

 

Section 1.72.          “Fully Participating
Tagging Person” has the meaning set forth in Section 8.06(d).

 

8

 

Section 1.73.          “GAAP” means
generally accepted accounting principles as formulated and interpreted by the
Financial Accounting Standards Board in the United States of America.

 

Section 1.74.          “Good Reason”
means, with respect to any Management Member, “good reason” as defined in such
Management Member’s employment agreement, or if not so defined:

 

(i)           a reduction in such Management Member’s base salary
(other than a general reduction in base salary or annual incentive compensation
opportunities that affects all members of senior management equally);

 

(ii)          a material reduction in such Management Member’s
duties and responsibilities, a material and adverse change in such Management
Member’s title or the assignment to such Management Member of duties or
responsibilities materially inconsistent with his title; or

 

(iii)         any material breach by the Company of any material
written agreement with such Management Member.

 

provided,
that any event described in clauses (i), (ii) or (iii) above shall
constitute Good Reason only if the Company fails to cure such event within 30
days of receipt from Management Member of written notice of the event which
such Management Member believes constitutes Good Reason; provided, further,
that “Good Reason” shall cease to exist for an event on the 45th day following
the later of its occurrence or such person’s knowledge thereof, unless such
person has given the Company written notice thereof prior to such date.

 

Section 1.75.          “Gross Asset Value”
means, with respect to any asset, the asset’s adjusted basis for federal income
tax purposes, except as follows:

 

(i)           the Gross Asset Value of any asset contributed by a
Member to the Company is the gross fair market value of such asset as
determined at the time of contribution;

 

(ii)          the Gross Asset Value of all Company assets shall be
adjusted to equal their respective gross fair market values, as determined by
the Board of Managers, as of the following times:  (a) the
acquisition of any additional interest in the Company by any new or existing
Member in exchange for more than a de minimis Capital Contribution; (b) the
distribution by the Company to a Member of more than a de minimis amount of
property as consideration for an interest in the Company; (c) the grant of
an interest in the Company (other than a de minimis interest) as consideration
for the provision of services to or for the benefit of the Company by an
existing Member acting in a Member capacity, or by a new Member acting in a
Member capacity or in anticipation of becoming a Member; and (d) the
liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);
provided, however, that the adjustments pursuant to clauses (a), (b) and
(c) above shall be made only if the Board of Managers reasonably
determines that such adjustments are necessary or appropriate to reflect the
relative economic interests of the Members in the Company; and

 

9

 

(iii)         the Gross Asset Value of any Company asset distributed
to any Member shall be adjusted to equal the gross fair market value of such
asset on the date of distribution as determined by the Board of Managers.

 

Section 1.76.          “Incentive Members”
means the Class B Members, Class C Members, Class D Members, Class E
Members and/or Class F Members.

 

Section 1.77.          “Incentive Units”
means the Class B Units, Class C Units, Class D Units, Class E
Units and/or Class F Units.

 

Section 1.78.          “Indebtedness” means,
without duplication, the sum of:  (a) all
principal and accrued (but unpaid) interest owing by the Company and its
Subsidiaries for debt for borrowed money owed to any third party (specifically
excluding intercompany debt between the Company and any of its Subsidiaries and
any Subsidiary of the Company and another Subsidiary of the Company); plus
(b) all obligations of the Company and its Subsidiaries under leases that
have been recorded as capital leases under GAAP; plus (c) indebtedness
of any person other than the Company or any of its Subsidiaries that is
guaranteed by the Company or any of its Subsidiaries.

 

Section 1.79.          “Indemnified Party”
has the meaning set forth in Section 4.06(a).

 

Section 1.80.          “Initial Capital
Contributions” has the meaning set forth in Section 3.01.

 

Section 1.81.          “Initial Agreement”
has the meaning set forth in the Recitals.

 

Section 1.82.          “Initial Members”
means the Members, as of the Effective Date.

 

Section 1.83.          “Initial Public Offering”
means any underwritten initial public offering of Securities of the Company,
any corporate successor to the Company by way of conversion, STR or any of
their respective Subsidiaries pursuant to an effective registration statement
filed under the Securities Act.

 

Section 1.84.          “Issuance Notice” has
the meaning set forth in Section 8.10(a).

 

Section 1.85.          “Jilot Observer” has
the meaning set forth in Section 4.01(a).

 

Section 1.86.          “Joinder Agreement”
has the meaning set forth in Section 8.03.

 

Section 1.87.          “Liquidator” has the
meaning set forth in Section 9.03(b).

 

Section 1.88.          “Management Member”
means any Member who is an employee of the Company or any of its
Subsidiaries.  In no event shall any
DLJMB Member be deemed to be a Management Member.

 

Section 1.89.          “Manager” has the
meaning set forth in Section 4.01(a)(i).

 

Section 1.90.          “Manager Expenses”
has the meaning set forth in Section 4.04(b).

 

10

 

Section 1.91.          “Member Nonrecourse Debt”
has the same meaning as the term “partner nonrecourse debt” set forth in
Regulations Section 1.704-2(b)(4).

 

Section 1.92.          “Member Nonrecourse Debt
Minimum Gain” means an amount, with respect to each Member Nonrecourse
Debt, equal to the Company Minimum Gain that would result if the Member
Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with Regulations Section 1.704-2(i)(3).

 

Section 1.93.          “Members” means,
collectively, the Class A Members, the Class B Members, the Class C
Members, the Class D Members, Class E Members and the Class F
Members.

 

Section 1.94.          “Members Representative”
has the meaning set forth in Section 11.01.

 

Section 1.95.          “Merger Agreement”
means the Amended and Restated Agreement and Plan of Merger, dated as of June 15,
2007, among the Company (as successor to STR Holdings Inc.), STR Acquisition, Inc.
and Specialized Technology Resources, Inc., as it may be amended or
restated from time to time.

 

Section 1.96.          “Net Income” and “Net
Loss” means, for each Fiscal Year or other period, an amount equal to the
Company’s taxable income or loss for such Fiscal Year or period, determined in
accordance with Code Section 703(a) (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Code Section 703(a)(1) shall be included in taxable income or loss)
with the following adjustments (without duplication):

 

(i)           any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Net Income or Net
Loss pursuant to this paragraph, shall be added to such income or loss;

 

(ii)          any expenditures of the Company described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to
Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account
in computing Net Income or Net Loss pursuant to this paragraph, shall be
subtracted from such taxable income or loss;

 

(iii)         in the event the Gross Asset Value of any Company
asset is adjusted pursuant to subdivisions (ii) or (iii) of the
definition of “Gross Asset Value” herein, the amount of such adjustment shall
be taken into account as gain or loss from the disposition of such asset for
purposes of computing Net Income or Net Loss;

 

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

 

(v)         in lieu of depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or
loss, such amounts shall 

 

11

 

instead be determined in accordance with the
requirements of Regulations Section 1.704-1(b)(2)(iv)(g); and

 

(vi)        any items which are specially allocated pursuant to
the provisions of Section 6.03 shall not be taken into account in
computing Net Income or Net Loss.

 

Section 1.97.          “Non-competition Period”
has the meaning set forth in Section 7.08(a).

 

Section 1.98.          “Nonrecourse Liability”
has the meaning set forth in Regulations Section 1.704-2(b)(3).

 

Section 1.99.          “Nonrecourse Deductions”
has the meaning set forth in Regulations Sections 1.704-2(b)(1) and
1.704-2(c).

 

Section 1.100.        “Northwestern” means
The Northwestern Mutual Life Insurance Company.

 

Section 1.101.        “Northwestern Observer”
has the meaning set forth in Section 4.01(a).

 

Section 1.102.        “Observer” means each
of the Whitney Observer, the Jilot Observer and the Northwestern Observer.

 

Section 1.103.        “Officer” has the
meaning set forth in Section 4.03.

 

Section 1.104.        “Other Business” has
the meaning set forth in Section 7.09.

 

Section 1.105.        “Other Class A
Members” means all Class A Members other than the DLJMB Members.

 

Section 1.106.        “Other Members” means
all Members other than the DLJMB Members.

 

Section 1.107.        “Performance Target”
means the Equity Valuation target for each Fiscal Year as set forth on Schedule
III hereto with respect to Class D Units issued prior to the date
hereof and, with respect to subsequent Class D Units, shall be set forth
in an exhibit to the applicable Incentive Unit Grant at the time of issuance.

 

Section 1.108.        “Permitted Transferee”
means (i) in the case of any DLJMB Member, (A) any other DLJMB
Member, (B), any actual or prospective shareholder, member or general or
limited partner of any DLJMB Member (a “DLJMB Partner”), and any
corporation, partnership, limited liability company, or other entity that is an
Affiliate of any DLJMB Partner (collectively, “DLJMB Affiliates”), (C) any
managing director, general partner, director, limited partner, officer or
employee of any DLJMB Member or any DLJMB Affiliate, or any spouse, lineal
descendant, sibling, parent, heir, executor, administrator, testamentary
trustee, legatee or beneficiary of any of the foregoing persons described in
this clause (C) (collectively, “DLJMB Associates”) or (D) any
trust the beneficiaries of which, or any corporation, limited liability 

 

12

 

company or partnership the
stockholders, members or general or limited partners of which, include only
such DLJMB Members, DLJMB Affiliates, DLJMB Associates, their spouses or other
lineal descendants;

 

(ii)           in the case of any Other Class A Member, (A) any
entity that is an Affiliate of such Class A Member, (B) any actual or prospective shareholder, member or general or limited partner of
any such Class A Member, and any corporation, partnership, limited
liability company, or other entity that is an Affiliate of any such Class A
Member, (C) any
spouse, lineal descendant, sibling, parent, heir, executor, administrator,
testamentary trustee, legatee or beneficiary of such Class A Member, (C) a
trust that is for the exclusive benefit of such Class A Member or its
Permitted Transferees under clause (B) above or (D) in the case of
the Whitney Members, any other Whitney Member; and

 

(iii)          in the case of any Management Member, (A) any
spouse, lineal descendant, sibling, parent, heir, executor, administrator,
testamentary trustee, legatee or beneficiary of such Management Member, (B) a
trust that is for the exclusive benefit of such Management Member or its
Permitted Transferees under clause (A) above or (C) a limited
liability company or corporation, all of the outstanding capital stock or
membership interests of which is of record and beneficially owned by such
Management Member or any of those Persons in clause (A) above.

 

Section 1.109.        “Person” means any individual
or Entity and, where the context so permits, the legal representatives,
successors in interest and permitted assigns of such Person.

 

Section 1.110.        “Prime Rate” means
the highest prime rate of interest quoted from time to time by The Wall Street Journal as the “base rate” on corporate
loans at large money center commercial banks.

 

Section 1.111.        “Profits Interest”
has the meaning set forth in Section 3.08(a).

 

Section 1.112.        “Proposed Rules” has
the meaning set forth in Section 3.08(b)(i).

 

Section 1.113.        “Pro Rata Share”
means, for each Other Class A Member and any proposed issuance of any
class of Units with respect to which each such Other Class A Member shall
be entitled to exercise his or her rights under Section 8.10, the
fraction that results from dividing (A) such Other Class A Member’s
Aggregate Ownership of Class A Units proposed to be issued immediately
before giving effect to such issuance, by (B) the total number of such Class A
Units then outstanding and owned by all Members (immediately before giving
effect to such issuance), calculated on a fully diluted basis.

 

Section 1.114.        “Put Notice Date” has
the meaning set forth in Section 8.09(b).

 

Section 1.115.        “Put Units” has the
meaning set forth in Section 8.09(b).

 

Section 1.116.        “Registrable Securities”
means, at any time, any common stock of the Company, or any corporate successor
to the Company by way of conversion, STR or any of their respective
Subsidiaries which effects the Initial Public Offering held by any Member until
(i) a registration statement covering such shares has been declared
effective by the SEC and such shares have been disposed of pursuant to such
effective registration statement, (ii) such shares 

 

13

 

are sold under Rule 144
under the Securities Act or (iii) such shares are otherwise Transferred,
the Company has delivered a new certificate or other evidence of ownership for
such shares not bearing the legend required pursuant to this Agreement and such
shares may be resold without subsequent registration under the Securities Act.

 

Section 1.117.        “Regulations” means
the Income Tax Regulations promulgated under the Code, as amended.

 

Section 1.118.        “Repurchase Fair Market
Value” means, the amount that would be distributed in respect of a Class A
Unit, Class B Unit, Class C Unit, Class D Unit, Class E
Unit or Class F Unit, as applicable, as determined in good faith by the
Board of Managers as if the assets of the Company were sold for their fair
market value as a going concern and the proceeds distributed in accordance with
Article IX.  If the Board of
Managers determines that a regular, active public market does not exist for the
Units, the Board of Managers shall determine the Repurchase Fair Market Value
of the Units in its good faith judgment based on the total number of Class A
Units then outstanding, taking into account all outstanding Incentive Units and
without application of any minority interest discount or lack of marketability
discount.  The Board of Managers shall
make its determination of Repurchase Fair Market Value from time to time, but
not less than annually (the “Valuation”) and such determination shall
remain in effect until the Board of Managers makes the next Valuation (provided
that, at any relevant date of determination, the Valuation approximates the
Repurchase Fair Market Value at that date and, if it does not, the Board of
Managers shall make a new determination of Repurchase Fair Market Value which
shall apply retroactively at such date of determination).  Notwithstanding the foregoing, if an
investment banker or appraiser appointed by the Board of Managers makes a
determination of Repurchase Fair Market Value subsequent to a Valuation, such
subsequent determination shall supersede the Valuation then in effect and shall
establish the Repurchase Fair Market Value until the next Valuation; provided,
however, that, notwithstanding the foregoing, in connection with any
determination of  Repurchase Fair Market
Value required pursuant to Section 8.09(d), the selling Member, may
elect to have Repurchase Fair Market Value evaluated as of the date of
determination thereof as required pursuant hereto by an independent valuation
consultant or appraiser as may be selected mutually by the Board of Managers
and the Member rather than in reliance upon the most recent Valuation (“Third
Party Valuation”); provided, further, that, if the determination of
Repurchase Fair Market Value pursuant to the Third Party Valuation is (A) 110%
or greater than the Repurchase Fair Market Value determined by the Board of
Managers, the cost of such Third Party Valuation shall be borne by the Company,
(B) 90% or less than the Repurchase Fair Market Value determined by the
Board of Managers, the cost of such Third Party Valuation shall be borne by the
selling Member and (C) more than 90% less than and less than 110% more
than the Repurchase Fair Market Value determined by the Board of Managers, the
cost of such Third Party Valuation shall be borne equally by the selling Member
and the Company.

 

Section 1.119.        “RFMV Calculation Date”
means, with respect to the application of the provisions of Section 8.09
to a Terminated Member:

 

(i)            With respect to Termination
Units that are called by the Company pursuant to Section 8.09(a),
on the Call Notice Date;

 

14

 

(ii)           With respect to Termination
Units that are put to the Company by the Terminated Member pursuant to Section 8.09(b),
the Termination Date; and

 

(iii)          With respect to Rollover
Units that are acquired by the Company pursuant to Section 8.09(c), the
Termination Date.

 

Section 1.120.        “Reserves” means the
amount of proceeds that the Board of Managers determines in good faith and in
its reasonable discretion is necessary to be maintained by the Company for the
purpose of paying reasonably anticipated Company Expenses, liabilities and
obligations of the Company regardless of whether such Company Expenses,
liabilities and obligations are actual or contingent.

 

Section 1.121.        “Restricted Period”
has the meaning set forth in Section 8.04.

 

Section 1.122.        “Rollover Units”
shall mean the Class A Units issued to certain Management Members in
exchange for shares of STR pursuant to a Contribution Agreement between such
Management Member and the Company executed in connection with the closing of
the merger under the Merger Agreement.

 

Section 1.123.        “Safe Harbor Election”
has the meaning set forth in Section 3.08(b)(i).

 

Section 1.124.        “Second Amended Agreement”
has the meaning set forth in the Recitals.

 

Section 1.125.        “Section 83(b) Election”
has the meaning set forth in Section 3.08(a).

 

Section 1.126.        “Securities” means
securities of every kind and nature, including stock, notes, bonds, evidences
of indebtedness, options to acquire any of the foregoing, and other business
interests of every type, including interests in any Entity.

 

Section 1.127.        “Securities Act”
means the Securities Act of 1933, as amended from time to time.

 

Section 1.128.        “STR” has the meaning
set forth in Section 2.05(a).

 

Section 1.129.        “Subsidiary” means,
with respect to any Person, any corporation, limited liability company,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of such
Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity (other than a corporation), a
majority of company, partnership or other similar ownership interests thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more Subsidiaries of such Person or a combination thereof.  For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a limited liability
company, partnership, association or other business entity (other than a
corporation) if 

 

15

 

such Person or Persons shall
be allocated a majority of limited liability company, partnership, association
or other business entity gains or losses or shall be or control any managing
member, manager, general partner or similar controlling Person of such limited
liability company, partnership, association or other business entity.

 

Section 1.130.        “Syndication” means
the Transfer by the DLJMB Members of up to $15,000,000 of its Units to any
Person (who shall be admitted as an Additional Member) within six (6) months
of the date of this Agreement at the same price per Unit paid by the applicable
DLJMB Member together with interest thereon from the Closing Date.

 

Section 1.131.        “Tag-Along Date” has
the meaning set forth in Section 8.06(e).

 

Section 1.132.        “Tag-Along Notice”
has the meaning set forth in Section 8.06(a).

 

Section 1.133.        “Tag-Along Notice Period”
has the meaning set forth in Section 8.06(a).

 

Section 1.134.        “Tag-Along Portion”
means for any Tagging Person in a Tag-Along Sale, the total number of Class A
Units owned by the Tagging Person immediately prior to such Tag-Along Sale multiplied by the Tag-Along Pro Rata
Share.

 

Section 1.135.        “Tag-Along Pro Rata Share”
means a fraction, the numerator of which is the maximum number of Class A
Units proposed to be sold by the applicable Tag-Along Seller in such Tag-Along
Sale and the denominator of which is the total number of Class A Units
owned by such Tag-Along Seller at such time.

 

Section 1.136.        “Tag-Along Offer” has
the meaning set forth in Section 8.06(a).

 

Section 1.137.        “Tag-Along Response
Notice” has the meaning set forth in Section 8.06(a).

 

Section 1.138.        “Tag-Along Right” has
the meaning set forth in Section 8.06(a).

 

Section 1.139.        “Tag-Along Sale” has
the meaning set forth in Section 8.06(a).

 

Section 1.140.        “Tag-Along Seller”
has the meaning set forth in Section 8.06(a).

 

Section 1.141.        “Tagging Person” has
the meaning set forth in Section 8.06(a).

 

Section 1.142.        “Tax Distribution”
has the meaning set forth in Section 5.04(b).

 

Section 1.143.        “Tax Matters Member”
has the meaning set forth in Section 7.04.

 

Section 1.144.        “Terminated Member”
has the meaning set forth in Section 8.09(a).

 

Section 1.145.        “Termination Date” has
the meaning set forth in Section 3.06.

 

Section 1.146.        “Termination Event”
has the meaning set forth in Section 8.09(a).

 

16

 

Section 1.147.        “Termination Price”
has the meaning set forth in Section 8.09(d).

 

Section 1.148.        “Termination Units”
has the meaning set forth in Section 8.09(a).

 

Section 1.149.        “Third Party” means a
prospective purchaser (other than a Permitted Transferee of the prospective
selling Member) of Units in a bona fide arm’s-length transaction.

 

Section 1.150.        “Transfer” means, as
a noun, any voluntary or involuntary transfer, sale, pledge, assignment,
hypothecation or other disposition and, as a verb, to voluntarily or
involuntarily transfer, sell, pledge, assign, hypothecate or otherwise dispose
of, including by way of merger, consolidation or otherwise.

 

Section 1.151.        “Units” means,
collectively, the Class A Units, the Class B Units, the Class C
Units, the Class D Units, Class E Units and the Class F Units.

 

Section 1.152.        “Unreturned Capital
Contributions” means, with respect to each Class A Member, at any time
of determination, the aggregate amount of such Class A Member’s Capital
Contributions less the amount of distributions received by such Class A
Member (or its predecessors in interest) under Section 5.02(a) of
this Agreement.

 

Section 1.153.        “Unvested Fiscal Year”
has the meaning set forth in Section 3.05(c).

 

Section 1.154.        “Unvested Unit” has
the meaning set forth in Section 5.03.

 

Section 1.155.        “Unwinding Event” has
the meaning set forth in Section 8.03.

 

Section 1.156.        “Whitney Manager” has
the meaning set forth in Section 4.01(a).

 

Section 1.157.        “Whitney Members”
means Castleman 2007 GRAT, MRS Trust, Harrington Sound, LLC and Paul Vigano.

 

Section 1.158.        “Whitney Observer”
has the meaning set forth in Section 4.01(a).

 

Section 1.159.        “Yearly Amount” shall
mean a Class D Unit’s 1/5th vesting installment.

 

ARTICLE II

 

ORGANIZATION

 

Section 2.01.          Formation of Company.  The Company has previously been formed
pursuant to the Act.  The rights and
liabilities of the Members shall be as provided for in the Act if not otherwise
expressly provided for in this Agreement.

 

Section 2.02.          Name.  The name of the Company is “STR Holdings LLC”.  The business of the Company shall be
conducted under such name or under such other names as the 

 

17

 

Board of Managers may deem
appropriate.  No value shall be placed
upon the name or the goodwill attached thereto for the purpose of determining
the fair market value of any Member’s Capital Account or Units.

 

Section 2.03.          Office; Agent for Service of
Process.  The address of the Company’s
registered office in Delaware is c/o the Corporation Service Company, 2711
Centerville Road, Suite 400, City of Wilmington, County of New Castle,
Delaware 19808.  The name and address of
the registered agent in Delaware for service of process is the Corporation
Service Company, 2711 Centerville Road, Suite 400, City of Wilmington,
County of New Castle, Delaware 19808.  The
Board of Managers may change the registered office and the registered agent of
the Company from time to time.  The
Company shall maintain a principal place of business and office(s) at such
place or places as the Board of Managers may from time to time designate.

 

Section 2.04.          Term.  The Company commenced on the date of the
filing of the Certificate, and the term of the Company shall continue until the
dissolution of the Company in accordance with the provisions of Article IX
or as otherwise provided by law.

 

Section 2.05.          Purpose and Scope.

 

(a)           The purpose and business of
the Company is to, directly or indirectly, hold and exercise rights with
respect to the capital stock of Specialized Technology Resources, Inc. (“STR”)
and to engage in any and all activities that are incidental or ancillary
thereto (the “Company Business”).

 

(b)           The Company shall have the
power to do any and all acts reasonably necessary, appropriate, proper,
advisable, incidental or convenient to or for the furtherance of the Company
Business and for the protection and benefit of the Company, and shall have,
without limitation, any and all of the powers that may be exercised on behalf
of the Company by the Board of Managers pursuant to this Agreement, including
pursuant to Section 2.06.

 

Section 2.06.          Authorized Acts.  In furtherance of the Company Business, but
subject to all other provisions of this Agreement, the Board of Managers, on
behalf of the Company, is hereby authorized and empowered:

 

(a)           to do any and all things and
perform any and all acts necessary or incidental to the Company Business;

 

(b)           to enter into, and take any
action under, any contract, agreement or other instrument as the Board of
Managers shall determine to be necessary or desirable to further the objects
and purposes of the Company, including contracts or agreements with any Member
or prospective Member;

 

(c)           to open, maintain and close
bank accounts and draw checks or other orders for the payment of money and
open, maintain and close brokerage, money market fund and similar accounts;

 

18

 

(d)           to hire, for usual and customary
payments and expenses, consultants, brokers, attorneys, accountants and such
other agents for the Company as it may deem necessary or advisable, and
authorize any such agent to act for and on behalf of the Company;

 

(e)           to incur expenses and other
obligations on behalf of the Company in accordance with this Agreement, and, to
the extent that funds of the Company are available for such purpose, pay all
such expenses and obligations;

 

(f)            to bring and defend actions and proceedings
at law or in equity and before any governmental, administrative or other
regulatory agency, body or commission;

 

(g)           to establish Reserves in accordance
with this Agreement or the Act for contingencies and for any other purpose of
the Company;

 

(h)           to prepare and file all necessary
returns and statements, pay all taxes, assessments and other impositions
applicable to the assets of the Company, and withhold amounts with respect
thereto from funds otherwise distributable to any Member;

 

(i)            to determine the accounting methods
and conventions to be used in the preparation of any accounting or financial
records of the Company, which, in any case, must be consistent with GAAP; and

 

(j)            to act for and on behalf of the
Company in all matters incidental to the foregoing.

 

Section 2.07.          Fiscal Year.  The fiscal year (the “Fiscal Year”) of
the Company shall end on the last day of each calendar year unless, for federal
income tax purposes, another Fiscal Year is required.  The Company shall have the same Fiscal Year
for federal income tax purposes and for accounting purposes.

 

ARTICLE III

CONTRIBUTIONS AND MEMBERS

 

Section 3.01.          Initial Capital Contributions.  Each Class A Member has made initial
Capital Contributions (the “Initial Capital Contributions”) in the
amount set forth opposite its name on Schedule II and as reflected
in a register of the Company, maintained by the Company in accordance with Article VII
(the “Company Register”).

 

Section 3.02.          Additional Capital Contributions.

 

(a)           (i)  No Member shall be required
to make any Additional Capital Contributions to the Company.  In addition, no Member shall be permitted to
make any Additional Capital Contributions to the Company without the written
consent of the Board of Managers.  The
Board of Managers, subject to the preemptive rights provided for in Section 8.10,
shall have the authority to issue Class A Units or other equity securities
of the Company, including any security or instrument convertible into equity
securities of the Company (“Equity Securities”) in such amounts and at
such purchase price per Class A Unit or other 

 

19

 

Equity
Security as reasonably determined by the Board of Managers, taking into account
such financial data and projections and such other factors as the Board of
Managers may deem relevant.  For the
avoidance of doubt, Class A Units or other Equity Securities shall be
issued to the Members pursuant to this Section 3.02(a) on the
same date in which such Members make Capital Contributions to the Company.

 

(ii)           Upon the Board of Managers’ decision
to raise additional capital under Section 3.02(a)(i), the Board of
Managers may seek new members to provide such capital or the remainder thereof,
on substantially the same terms and conditions (including purchase price per Class A
Unit or other Equity Security) as offered to the Members under Section 3.02(a)(i),
and one or more Additional Members may be admitted into the Company at any time
with the written consent of the Board of Managers and payment of such capital
or portion thereof.

 

(b)           Each Additional Member shall execute
and deliver a written instrument satisfactory to the Board of Managers, whereby
such Additional Member shall become a party to this Agreement, as well as any
other documents required by the Board of Managers.  Upon execution and delivery of a counterpart
of this Agreement, contribution of capital to the Company and acceptance
thereof by the Board of Managers, such Person shall be admitted as a
Member.  Each such Additional Member
shall thereafter be entitled to all the rights and subject to all the
obligations of a Member as set forth herein.

 

(c)           Schedule II shall be
amended by the Board of Managers from time to time to reflect Additional
Capital Contributions, issuances, transfers or assignments of Units or other
Equity Securities permitted by this Agreement and admissions, resignations or
withdrawals of Members pursuant to the terms of this Agreement.

 

Section 3.03.          Interest Payments.  No interest shall be paid to any Member on
any Capital Contributions.  All Capital
Contributions shall be denominated and payable in U.S. dollars.

 

Section 3.04.          Ownership and Issuance of Units.

 

(a)           (i)  Subject to the terms and
conditions of this Agreement, the Company shall have the authority to issue an
unlimited number of Class A Units (the “Class A Units”) for
such consideration as the Board of Managers deems appropriate.  Each Class A Member owns that number of Class A
Units as appears next to its name on Schedule II hereto, as the
same may be amended or restated from time to time.

 

(ii)           Subject to the terms and conditions
of this Agreement, the Company shall have the authority to issue in
consideration for the provision of services to or for the benefit of the
Company up to the number of Class B Units (the “Class B Units”)
permitted under Schedule II.  Each
Class B Member owns that number of Class B Units as appears next to
its name on Schedule II, as the same may be amended or restated
from time to time.

 

(iii)          Subject to the terms and conditions of
this Agreement, the Company shall have the authority to issue in consideration
for the provision of services to or for the benefit of the Company up to the
number of Class C Units (the “Class C Units”) permitted 

 

20

 

under Schedule
II.  Each Class C Member owns
that number of Class C Units as appears next to its name on Schedule II,
as the same may be amended or restated from time to time.

 

(iv)          Subject to the terms and conditions of
this Agreement, the Company shall have the authority to issue in consideration
for the provision of services to or for the benefit of the Company up to the
number of Class D Units (the “Class D Units”) permitted under Schedule
II.  Each Class D Member owns that
number of Class D Units as appears next to its name on Schedule II,
as the same may be amended or restated from time to time.

 

(v)           Subject to the terms and conditions
of this Agreement, the Company shall have the authority to issue in
consideration for the provision of services to or for the benefit of the
Company up to the number of Class E Units (the “Class E Units”)
permitted under Schedule II.  Each
Class E Member owns that number of Class E Units as appears next to
its name on Schedule II, as the same may be amended or restated
from time to time.

 

(vi)          Subject to the terms and conditions of
this Agreement, the Company shall have the authority to issue in consideration
for the provision of services to or for the benefit of the Company up to the
number of Class F Units (the “Class F Units”) permitted under Schedule
II.  Each Class F Member owns
that number of Class F Units as appears next to its name on Schedule II,
as the same may be amended or restated from time to time.

 

(b)           The Board of Managers, subject to the
terms and conditions of this Agreement, shall have the authority to increase
the number of authorized Incentive Units, in such amounts as determined by the
Board of Managers.

 

(c)           The Company shall reserve all of the
Incentive Units for issuance to employees of, or service providers to, the
Company and its Subsidiaries, on the terms set forth in this Article III.  Incentive Units may be awarded from time to
time to employees of, or service providers to, the Company and its Subsidiaries
by the Board of Managers or any committee established by the Board of Managers;
provided that the Company will not issue any Incentive Units after the date
hereof to (i) Evergreen Capital Partners, LLC or its principals without
the prior consent of Whitney Members holding more than fifty percent (50%) of
the total Class A Units then held by the Whitney Members or (ii) the
DLJMB Members without the prior consent of a majority of the Other Class A
Members.  Incentive Units may not be
Transferred (other than as contemplated or required by Article VIII).  All Incentive Units will be issued subject to
the applicable Distribution Threshold, which, with respect to Class B
Units, Class C Units, Class D Units and Class F Units issued
prior to the date hereof, shall be $178,649,240, with respect to Class E
Units issued prior to the date hereof, shall be $484,214,750 and, with respect
to subsequent Incentive Units, shall be set forth in an exhibit to the
applicable Incentive Unit grant agreement at the time of issuance.

 

Section 3.05.      Vesting.

 

(a)           Class B Units shall be fully
vested at issuance.

 

(b)           Class C Units shall be unvested
at issuance and, unless provided otherwise herein, shall vest in equal 1/60th
installments as of the last day of each of the 60 successive calendar months
beginning after the date of issuance of such Class C Units; provided,
however, 

 

21

 

that all
outstanding but unvested Class C Units shall vest in full upon the
occurrence of a Change of Control (other than an Initial Public Offering).

 

(i)            Upon the occurrence of an Initial
Public Offering, each Class C Member shall be eligible to receive shares
of restricted stock of STR (or any corporate successor to the Company by way of
conversion or such other corporation owned by the Company which effects the
Initial Public Offering) that are equivalent in value to the unvested portion
of such Class C Member’s Class C Units, which shares shall continue
to vest in accordance with this Section 3.05(b), provided that such
shares shall vest in their entirety following the date upon which the DLJMB
Members have sold or otherwise Transferred to Third Parties fifty percent (50%)
or more of their original beneficial ownership of STR (or any corporate
successor to the Company by way of conversion or such other corporation owned
by the Company which effects the Initial Public Offering).

 

(ii)           Upon any Class C Member’s
termination for Good Reason or termination by the Company without Cause, the
unvested Class C Units shall vest in such additional installments as such Class C
Units would have vested had the Class C Member been employed for an
additional twelve (12) months.

 

(c)           Class D Units shall be unvested
at issuance and, unless provided otherwise in the applicable Incentive Unit
grant agreement for a Class D Member, shall vest in equal 1/5th
installments following the five successive Fiscal Years, beginning with the
Fiscal Year ending on December 31, 2007 (for the 2007 Fiscal Year) if the
Equity Valuation, measured as of the end of such Fiscal Year, is no less than
the Performance Target for such Fiscal Year; provided, however,
that all outstanding but unvested Class D Units for that year, all
subsequent years and one Unvested Fiscal Year (as defined below), if one exists,
shall vest in full upon the occurrence of a Change of Control (other than an
Initial Public Offering).  “Unvested
Fiscal Year” shall mean a year in which the Performance Target was not met
for any given Fiscal Year.

 

(i)            If the Performance Target for any of
the first four Fiscal Years referred to above is not attained, the Yearly
Amount for the previous Unvested Fiscal Year which is not then vested (or, if
the Yearly Amount for the previous Fiscal Year has vested, then the Yearly
Amount for any one prior Unvested Fiscal Year) shall become vested and
exercisable at the end of the first Fiscal Year thereafter in which the Equity
Valuation for such Fiscal Year is no less than the Performance Target for such
Fiscal Year.  For purposes of
illustration of the previous sentence: if the Performance Target is not
achieved for the 2007 and 2008 Fiscal Years but is achieved for the 2009 Fiscal
Year, in 2009, the Yearly Amounts for both 2009 and 2008 would become
vested.  Further, if the Performance
Target for 2010 was then achieved, the Yearly Amounts for both 2010 and 2007
would become vested.

 

(ii)           Upon the occurrence of an Initial
Public Offering, each Class D Member shall be eligible to receive shares
of restricted stock of STR (or any corporate successor to the Company by way of
conversion or such other corporation owned by the Company which effects the
Initial Public Offering) that are equivalent in value to the unvested portion
of such Class D Member’s Class D Units, which shares shall continue
to vest in accordance with this Section 3.05(c), provided that such
shares shall vest in their entirety following the date upon which the DLJMB
Members have sold or otherwise Transferred to Third Parties fifty percent 

 

22

 

(50%) or more
of their original beneficial ownership of STR (or any corporate successor to
the Company by way of conversion or such other corporation owned by the Company
which effects the Initial Public Offering).

 

(d)           Class E Units shall be unvested
at issuance and, unless provided otherwise herein, shall vest in equal 1/60th
installments as of the last day of each of the 60 successive calendar months
beginning after the date of issuance of such Class E Units; provided,
however, that all outstanding but unvested Class E Units shall vest
in full upon the occurrence of a Change of Control (other than an Initial
Public Offering).

 

(i)            Upon the occurrence of an Initial
Public Offering, each Class E Member’s Class E Units shall be
eligible to receive shares of restricted stock of STR (or any corporate
successor to the Company by way of conversion or such other corporation owned
by the Company which effects the Initial Public Offering) that are equivalent
in value to the unvested portion of such Class E Member’s Class E
Units, which shares shall continue to vest in accordance with this Section 3.05(d),
provided that such shares shall vest in their entirety following the date upon
which the DLJMB Members have sold or otherwise Transferred to Third Parties
fifty percent (50%) or more of their original beneficial ownership shares of
common stock of STR (or any corporate successor to the Company by way of
conversion or such other corporation owned by the Company which effects the
Initial Public Offering).

 

(ii)           Upon any Class E Member’s
termination for Good Reason or termination by the Company without Cause, the
unvested Class E Units shall vest in such additional installments as such Class E
Units would have vested had the Class E Member been employed for an
additional twelve (12) months.

 

(e)           Class F Units shall be fifty
percent (50%) vested at issuance and, unless provided otherwise herein,
thirty-three and one-third percent (331/3%)
per annum of such Class F Member’s unvested Class F Units shall vest
on each of the first, second and third anniversaries of the date of issuance; provided,
however, that all outstanding but unvested Class F Units shall vest
in full upon the occurrence of a Change of Control (other than an Initial
Public Offering).

 

(i)            Upon the occurrence of an Initial
Public Offering, each Class F Member shall be eligible to receive shares
of restricted stock of STR (or any corporate successor to the Company by way of
conversion or such other corporation owned by the Company which effects the
Initial Public Offering) that are equivalent in value to the unvested portion
of such Class F Member’s Class F Units, which shares shall continue
to vest in accordance with this Section 3.05(e), provided that such
shares shall vest in their entirety following the date upon which the DLJMB
Members have sold or otherwise Transferred to Third Parties fifty percent (50%)
or more of their original beneficial ownership of STR (or any corporate
successor to the Company by way of conversion or such other corporation owned
by the Company which effects the Initial Public Offering).

 

(ii)           The Board of Managers is hereby
authorized and empowered, without further vote or action of the Members, to
accelerate the vesting of any Class F Member’s Class F Units; provided,
however, that any such acceleration shall equally apply to all Class F
Members.

 

23

 

Section 3.06.          Termination.  Notwithstanding Section 3.05 and
unless otherwise agreed by the Company and a Member, all unvested Incentive Units
held by a Member shall be forfeited on the date such Member’s employment with
or provision of services to the Company and its Subsidiaries terminates (a “Termination
Date”) for any reason; provided, however, that if such Member is terminated
under circumstances constituting a termination for Cause, all Incentive Units
(vested and unvested) held by such Member shall be forfeited as of such
Termination Date.  Any Incentive Units
that are forfeited pursuant to the terms of this Agreement shall be cancelled
by the Company and shall no longer be outstanding unless and until they are
reissued by the Company.

 

Section 3.07.          Members with Employment or
Consulting Agreements.  The
application of the vesting provisions of Sections 3.05 and 3.06
to a Member who is a party to an employment, consulting, award or similar
agreement with the Company or any of its Subsidiaries that is entered into
after the Effective Date shall be subject to the terms of such employment,
consulting or similar agreement, and to the extent that any provision of Sections 3.05
and 3.06 conflicts with such employment, consulting, award or similar
agreement in respect of vesting, the provisions of such employment, consulting,
award or similar agreement shall supersede and control the provisions of Sections 3.05
and 3.06 as they apply to such vesting provisions.

 

Section 3.08.          Profits Interests.  (a)  The Company and each Member agree
to treat each Incentive Member’s Incentive Units (such interest, a “Profits
Interest”) as a separate “Profits Interest” within the meaning of Rev.
Proc. 93-27, 1993-2 C.B. 343, and it is the intention of the Company and the
Members that distributions to each Incentive Member (including any additional
Incentive Members, if any) pursuant to Section 5.02 be limited to
the extent necessary so that the Profits Interest of such Incentive Member
qualifies as a “Profits Interest” under Rev. Proc. 93-27, and this Agreement
shall be interpreted accordingly.  In the
event that distributions to a Member pursuant to Section 5.02 are
limited as a result of the first sentence of this Section 3.08, the
Board of Managers is authorized to adjust future distributions to the Members
in whatever manner it reasonably deems appropriate so that, after such
adjustments are made, each Member receives, to the maximum extent possible, an
amount of distributions equal to the amount of distributions such Member would
have received were such sentence not part of this Agreement.  Additionally, in accordance with Rev. Proc.
2001-43, 2001-2 CB 191, the Company shall treat a Member holding an Incentive
Unit as the owner of such Unit from the date it is granted, and shall file its
IRS Form 1065, and issue appropriate Schedule K-1s to such Member,
allocating to such Member its distributive share of all items of income, gain,
loss, deduction and credit associated with such Profits Interest as if it were
fully vested.  Each Incentive Member
agrees to take into account such distributive share in computing its federal
income tax liability for the entire period during which it holds the Profits
Interest.  The Company and each Member
agree not to claim a deduction (as wages, compensation or otherwise) for the
fair market value of such Profits Interest issued to an Incentive Member,
either at the time of grant of the Profits Interest or at the time the Profits
Interest becomes substantially vested. 
The undertakings contained in this Section 3.08 shall be
construed in accordance with Section 4 of Rev. Proc. 2001-43.  Each Incentive Member shall be required to
file an election pursuant to Section 83(b) of the Code (a “Section 83(b) Election”)
with respect to its Incentive Units no later than ten days after receipt of
such Incentive Units.  The provisions of
this Section 3.08 shall apply regardless of whether or not an Incentive
Member files a Section 83(b) Election with respect to its Incentive
Units.

 

24

 

(b)           (i)  The Board of Managers is
hereby authorized and directed to cause the Company to make an election to
value any Incentive Units issued by the Company as compensation for services to
the Company (collectively, “Compensatory Interests”) at liquidation
value (the “Safe Harbor Election”), as the same may be permitted
pursuant to or in accordance with the finally promulgated successor rules to
Proposed Regulations Section 1.83-3(l) and IRS Notice 2005-43
(collectively, the “Proposed Rules”). 
The Board of Managers shall cause the Company to make any allocations of
items of income, gain, deduction, loss or credit (including forfeiture
allocations and elections as to allocation periods) necessary or appropriate to
effectuate and maintain the Safe Harbor Election.

 

(ii)           Any such Safe Harbor Election shall
be binding on the Company and on all of its Members with respect to all
Transfers of Compensatory Interests thereafter made by the Company while a Safe
Harbor Election is in effect.  A Safe
Harbor Election once made may be revoked by the Board of Managers as permitted
by the Proposed Rules or any applicable rule.

 

(iii)          Each Member (including any person to
whom a Compensatory Interest is Transferred in connection with the performance
of services), by signing this Agreement or by accepting such Transfer, hereby
agrees to comply with all requirements of the Safe Harbor Election with respect
to all Compensatory Interests transferred while the Safe Harbor Election
remains effective.

 

(iv)          The Board of Managers shall file or
cause the Company to file all returns, reports and other documentation as may
be required to perfect and maintain the Safe Harbor Election with respect to
Transfers of Compensatory Interests covered by such Safe Harbor Election.

 

(v)           The Board of Managers is hereby
authorized and empowered, without further vote or action of the Members, to
amend this Agreement as necessary to comply with the Proposed Rules or any
rule, in order to provide for a Safe Harbor Election and the ability to
maintain or revoke the same, and shall have the authority to execute any such
amendment by and on behalf of each Member; provided that such amendment is not
materially adverse to such Member.  Any
undertakings by the Members necessary to enable or preserve a Safe Harbor
Election may be reflected in such amendments and to the extent so reflected shall
be binding on each Member, respectively.

 

(vi)          Each Member agrees to cooperate with
the Board of Managers to perfect and maintain any Safe Harbor Election, and to
timely execute and deliver any documentation with respect thereto reasonably
requested by the Board of Managers.

 

(vii)         Without limitation of any other
provision herein, no Transfer of any Profits Interest in the Company by a
Member, to the extent permitted by this Agreement, shall be effective unless
prior to such Transfer, the transferee, assignee or intended recipient of such Profits
Interest shall have agreed in writing to be bound by the provisions of this Section 3.08,
in form satisfactory to the Board of Managers.

 

25

 

Section 3.09.      Voting
Rights

 

(a)           Voting Rights.  Except as otherwise provided in the Act or as
otherwise provided herein, Members shall not be entitled to any vote or consent
right with respect to Incentive Units. 
All Class A Members shall be entitled to one vote for each Class A
Unit held.

 

(b)           Irrevocable Proxy.  Other than the specific Member approval
rights expressly set forth herein (including those in Section 11.05),
each Other Member hereby grants to the DLJMB Members, to the extent permitted
by law, an irrevocable proxy coupled with an interest to vote, including in any
action by written consent, such Other Member’s Class A Units, on all
matters submitted to the Members, for as long as the DLJMB Members in the
aggregate hold more Class A Units than any Other Member.

 

Section 3.10.          Withdrawals.  Except as explicitly provided elsewhere
herein, no Member shall have any right (i) to withdraw as a Member from
the Company, (ii) to withdraw from the Company all or any part of such
Member’s Capital Contributions, (iii) to receive property other than cash
in return for such Member’s Capital Contributions or (iv) to receive any
distribution from the Company, except in accordance with Article V
and Article IX.

 

Section 3.11.          Liability of the Members Generally.  Except as explicitly provided elsewhere
herein or in the Act, no Member shall be liable for any debts, liabilities,
contracts or obligations of the Company whatsoever.  Each of the Members acknowledges that its
Capital Contributions are subject to the claims of any and all creditors of the
Company to the extent provided by the Act and other applicable law.

 

Section 3.12.          Capital Accounts.  There shall be established and maintained for
each Member a separate capital account (“Capital Account”).  There shall be added to the Capital Account
of each Member (i) such Member’s Capital Contributions, (ii) such
Member’s distributive share of Net Income and any item in the nature of income
or gain that is specially allocated to the Member pursuant to Section 6.03,
and (iii) the amount of any Company liabilities assumed by such Member or
which are secured by any property distributed to such Member.  There shall be subtracted from the Capital
Account of each Member (i) the amount of any money, and the Gross Asset
Value of any other property, distributed to such Member, (ii) such Member’s
distributive share of Net Loss and any item in the nature of loss or expense
that is specially allocated to such Member pursuant to Section 6.03,
and (iii) the amount of any liabilities of such Member assumed by the
Company or which are secured by any property contributed by such Member of the
Company.  The foregoing provision and
other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Regulations Section 1.704-1(b) and
shall be interpreted and applied in a manner consistent with such
Regulations.  In determining the amount
of any liability for purposes of this Section 3.12, there shall be
taken into account Code Section 752(c) and any other applicable
provisions of the Code and Regulations.

 

Section 3.13.          No Deficit Restoration Obligation.  Except as explicitly provided elsewhere
herein, at no time during the term of the Company or upon dissolution and
liquidation thereof shall a Member with a negative balance in its Capital
Account have any obligation to the Company or the other Members to restore such
negative balance, except as may be required by law or in respect of any
negative balance resulting from a withdrawal of capital or dissolution in
contravention of this Agreement.

 

26

 

ARTICLE IV

 

MANAGEMENT

 

Section 4.01.          Management and Control of the
Company.

 

(a)           (i)  The Members have
established the Company as a “board of managers-managed” limited liability
company and have agreed to designate a board of managers (the “Board of
Managers”) of seven (7) Persons to manage the Company and its business
and affairs.  Each of the Managers
appointed to the Board of Managers is referred to herein as a “Manager.”  The Class A Members shall have the exclusive
right to designate the members of the Board of Managers, and the Board of
Managers shall be comprised, as follows:

 

(1)           up to five (5) Managers shall be
designated by DLJMB (the “DLJMB Managers”)

 

(2)           one (1) Manager shall be
designated by the Whitney Members, who shall initially be Michael Stone (the “Whitney
Manager”); and

 

(3)           the then current Chief Executive
Officer of the Company (the “CEO Manager”).

 

(ii)           If at any time any Manager other than
the CEO Manager ceases to serve on the Board of Managers (whether due to
resignation, removal or otherwise), the Class A Member responsible for the
designation of such Manager pursuant to Section 4.01(a)(i) above
shall designate a replacement for such Manager by written notice to the Board
of Managers and to each of the other Class A Members.  In the event the Whitney Members designate a
Manager, other than Michael Stone, pursuant to Section 4.01(a)(i)(2) above,
DLJMB’s consent must be obtained, which consent may not be unreasonably
withheld.  Any Class A Member
entitled to designate a specific Manager may remove such Manager, at any time
and from time to time, with or without cause (subject to applicable law), in
such Class A Member’s sole discretion, and such Class A Member shall
give written notice of such removal to each of the other Class A Members
and to the Board of Managers.  If at any
time the CEO Manager dies, becomes disabled, resigns or is otherwise removed
from the office of Chief Executive Officer of the Company, such CEO Manager
shall be concurrently removed as a Manager and the next duly appointed or
elected Chief Executive Officer of the Company shall be designated the CEO
Manager.  In the event that the Whitney
Members cease to own at least fifty percent (50%) but not less than twenty-five
(25%) of the Whitney Members’ Class A Units owned on the date hereof, the
Whitney Manager shall resign within 180 days thereafter, subsequent to which
the Whitney Members shall no longer have the right to designate a Manager and
in the event that the Whitney Members cease to own at least twenty-five (25%)
of the Whitney Members Class A Units owned on the date hereof, the Whitney
Manager shall immediately resign; provided that so long as the Whitney Members
own any Units, the Whitney Members shall be entitled to designate an observer
(the “Whitney Observer”), without voting rights, to the Board of
Managers.  If (x) Dennis Jilot is no
longer the CEO Manager, (y) he continues to own any Units and (z) in
the reasonable discretion of the Board of Managers, his presence is not
detrimental to meetings of the Board of Managers, he shall be entitled to be an
observer (the “Jilot Observer”), without voting rights, to the Board of 

 

27

 

Managers.  Northwestern shall have the right to
designate an observer (the “Northwestern Observer”), without voting
rights, to the Board of Managers so long as it owns at least fifty percent
(50%) of its Class A Units owned on the date hereof.

 

(1)           Each Observer shall be entitled to
notice of any written actions in lieu of meetings of the Board of Managers, to
the financial reports set forth in Section 7.02 and to information
provided to Managers in connection with topics to be discussed at any meeting
of the Board of Managers.  The Company
reserves the right to withhold any information and to exclude any Observer from
any meeting or portion thereof if access to such information or attendance at
such meeting or portion of such meeting would (A) in the reasonable
judgment of the Company’s outside counsel, adversely affect the attorney-client
privilege between the Company and its counsel or cause the Board of Managers to
breach its fiduciary duties or (B) in the good faith determination of a
majority of the members of the Board of Managers, result in a conflict of
interest with the Company.  Each Observer
agrees, and each of Northwestern and the Whitney Members agree to cause its
respective designated Observer to agree, to be bound by the confidentiality
provisions set forth in Section 7.07 hereof.  Each Observer agrees, and each of Northwestern
and the Whitney Members agree to cause its respective designated Observer to
agree, that, except with the prior written permission of the Company, he will
maintain confidential information of the Company to which such Observer has
been or shall become privy by reason of its observation rights consistent with
such Observer’s duties if he were a Manager of the Company.

 

(iii)          The rights of any Person to designate
Managers pursuant to this Section 4.01 are personal rights and
shall not be exercised by or on behalf of, or assignable to, any transferee
other than a Permitted Transferee unless otherwise approved in writing by DLJMB
or its respective Permitted Transferees.

 

(iv)          Subject to the terms and conditions of
this Agreement, the Board of Managers shall have the exclusive right to manage
and control the Company.  Except as
otherwise specifically provided herein, the Board of Managers shall have the
right to perform all actions necessary, convenient or incidental to the
accomplishment of the purposes and authorized acts of the Company, as specified
in Sections 2.05 and 2.06, and each Manager shall possess
and may enjoy and exercise all of the rights and powers of a “manager” as
provided in and under the Act, and each Manager shall be a “manager” for
purposes of the Act; provided, however, that no individual
Manager shall have the authority to act for or bind the Company without the
requisite consent of the Board of Managers.

 

(v)           Any action, consent, approval, election,
decision or determination to be made by the Board of Managers under or in
connection with this Agreement (including any act by the Board of Managers
within its “discretion” under this Agreement and the execution and delivery of
any documents or agreements on behalf of the Company), shall be in the sole and
absolute discretion of the majority of the Board of Managers.

 

(vi)          Meetings of the Board of Managers are
expected to be held on approximately a quarterly basis, when called by any
Manager, upon not less than two Business Days advance written notice to the
other Managers.  Attendance at any
meeting of the Board of Managers shall constitute waiver of notice of such
meeting.  Additionally, a waiver of such 

 

28

 

notice in
writing signed by a Manager entitled to such notice, whether before or after
the time stated therein, shall be deemed equivalent to the giving of such
notice.  The quorum for a meeting of the
Board of Managers shall be a simple majority of the Managers.  Members of the Board of Managers may
participate in any meeting of the Board of Managers by conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other.  All
actions taken by the Board of Managers shall be by a vote of a simple majority
of the Managers.  The Board of Managers
shall conduct its business in such manner and by such procedures as a majority
of the Managers deems appropriate.

 

(vii)         The Board of Managers may also take
action without any meeting of the Managers by written consent of a majority of
the Managers.

 

(viii)        Each Manager shall be entitled to
receive the financial reports set forth in Section 7.02, the
Company’s annual budget and all board materials.

 

(b)           The consent of the Other Members
holding more than fifty percent (50%) of the then outstanding Class A
Units held by all Other Members shall be required prior to the Company or any
of its Subsidiaries entering into a transaction with any of the DLJMB Members
or any of their respective Affiliates that is on terms which in the aggregate
are less favorable to the Company or such Subsidiary than would be obtainable
in a comparable arm’s-length transaction with a person that is not an Affiliate
of the Company, except for (i) customary employment arrangements,
agreements with independent directors and benefit programs on reasonable terms,
including reasonable fees and compensation to, and indemnity provided on behalf
of, the officers, managers, directors and employees of the Company or any of
its Subsidiaries, (ii) as contemplated by (A) that certain Advisory
Services Agreement, dated as of December 7, 2006, by and between the
Company and DLJMB, (B) that certain Advisory Services and Monitoring
Agreement, dated as of the Effective Date, by and between STR and DLJMB, (C) that
certain Advisory Services and Monitoring Agreement, dated as of the Effective
Date, by and between STR and Evergreen Capital Partners, LLC and (D) that
certain Advisory Services and Monitoring Agreement, dated as of the Effective
Date, by and between STR, DLJMB, Westwind STR Advisors, LLC and Dennis L.
Jilot, (iii) as contemplated by the Credit Facilities, (iv) the
payment of the Company Expenses and Manager Expenses contemplated by Section 4.04
and (v) the issuance of any Equity Securities in compliance with Section 3.02.  Notwithstanding the foregoing, the Company
may not engage the investment banking unit of Credit Suisse as financial
advisor on a merger and acquisition transaction if such engagement is opposed
by MRS Trust and either of AXA Equitable Life Insurance Company or The
Northwestern Mutual Life Insurance Company. 
For the avoidance of doubt, distributions made pursuant to Article V
or Article IX or Transfers or purchases of Units made pursuant to Article VIII
and, in each case, the transactions related thereto shall neither be considered
affiliate transactions nor be subject to the provisions of this Section 4.01(b).

 

(c)           No Member, in its capacity as such,
shall participate in or have any control over the Company Business.  Each such Member hereby consents to the
exercise by the Board of Managers of the powers conferred upon the Board of
Managers by this Agreement.  The Members,
in their capacities as such, shall not participate in the control, management,
direction or operation of the activities or affairs of the Company and shall
not have any authority or right, in their capacities as Members of the Company,
to act for or bind the Company.

 

29

 

Section 4.02.          Actions by the Board of Managers.  Except as may be expressly limited by the
provisions of this Agreement, including Section 4.01(a)(iii) and
Section 4.01(a)(v), any Manager is specifically authorized to
execute, sign, seal and deliver in the name and on behalf of the Company any
and all agreements, certificates, instruments or other documents requisite to
carrying out the intentions and purposes of this Agreement and of the Company.

 

Section 4.03.          Officers.  The Board of Managers may, from time to time
as it deems advisable, appoint officers of the Company (each, an “Officer”)
and assign in writing titles to any such Person.  Unless the Board of Managers decides
otherwise, if the title is one commonly used for officers of a corporation
formed under the Delaware General Corporation Law, the assignment of such title
shall constitute the delegation to such Person of the authorities and duties
that are normally associated with that office. 
Any delegation pursuant to this Section 4.03 may be revoked
at any time by the Board of Managers. In addition, the Board of Managers is
authorized to employ, engage and dismiss, on behalf of the Company, any Person,
including an Affiliate of any Member, to perform services for, or furnish goods
to, the Company.

 

Section 4.04.          Expenses.

 

(a)           The Company shall pay for any and all
expenses, costs and liabilities incurred in the conduct of the business of the
Company and its Subsidiaries in accordance with the provisions hereof
(collectively, “Company Expenses”), including by way of example and not
limitation:

 

(i)            all expenses incurred by the Company
and the DLJMB Members in connection with the negotiation and consummation of
the Merger Agreement and the other transactions contemplated thereby;

 

(ii)           all expenses incurred by the Company,
and its respective Affiliates in connection with any acquisitions and
financings approved, whether prior to or following the Effective Date, by the
Board of Managers;

 

(iii)          all routine administrative and
overhead expenses of the Company, including fees of auditors, attorneys and
other professionals, expenses incurred by the Tax Matters Member and expenses
associated with the maintenance of books and records of the Company and
communications with Members;

 

(iv)          all expenses incurred in connection
with any litigation involving the Company and the amount of any judgment or
settlement paid in connection therewith;

 

(v)           all expenses for indemnity or
contribution payable by the Company to any Person, whether payable under this
Agreement or otherwise and whether payable in connection with any litigation
involving the Company or any of its Subsidiaries, or otherwise;

 

(vi)          all expenses incurred in connection
with any indebtedness of the Company; and

 

30

 

(vii)         all expenses incurred in connection
with the dissolution and liquidation of the Company.

 

(b)           The Company shall reimburse each
Manager for any reasonable and documented costs and expenses incurred by such
Manager in connection with attending any meetings of the Board of Managers or
any committees thereof (collectively, the “Manager Expenses”).

 

Section 4.05.      Exculpation.

 

(a)           Subject to applicable law, no
Indemnified Party shall be liable, in damages or otherwise, to the Company, the
Members or any of their Affiliates for any act or omission performed or omitted
by any of them in good faith (including any act or omission performed or
omitted by any of them in reliance upon and in accordance with the opinion or
advice of experts, including, legal counsel as to matters of law, accountants
as to matters of accounting, or investment bankers or appraisers as to matters
of valuation), except (i) for any act taken by such Indemnified Party
purporting to bind the Company that has not been authorized pursuant to this
Agreement or by the Board of Managers, as appropriate, or (ii) in the case
of any officer or employee of the Company or any of its Affiliates, any act or
omission with respect to which such officer or employee was grossly negligent
or engaged in willful misconduct.

 

(b)           To the extent that, at law or in
equity, any Indemnified Party has duties (including fiduciary duties) and
liabilities relating thereto to the Company or to any Member, such Indemnified
Party acting under this Agreement or approval of the Board of Managers shall
not be liable to the Company or to any Member for its good faith reliance on
the provisions of this Agreement or approval of the Board of Managers, as
appropriate.  The provisions of this
Agreement, to the extent that they restrict the duties and liabilities of an
Indemnified Party otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of such Indemnified
Party, to the maximum extent permitted by applicable law.

 

Section 4.06.      Indemnification.

 

(a)           To the fullest extent permitted by
applicable law, the Company shall and does hereby agree to indemnify and hold
harmless and pay all judgments and claims against the Board of Managers, each
current or former Manager, each current or former Class A Member
(including DLJ Merchant Banking Partners IV, L.P., in its role as Tax Matters
Member), any Affiliate thereof, their respective officers, directors, trustees,
employees, shareholders, partners, managers and members and each officer of the
Company and each officer and director of its Subsidiaries (each, an “Indemnified
Party”, each of which shall be a third-party beneficiary of this Agreement
solely for purposes of Section 4.05 and this Section 4.06),
from and against any loss or damage incurred by an Indemnified Party or by the
Company for any act or omission taken or suffered by such Indemnified Party in
good faith (including any act or omission taken or suffered by any of them in
reliance upon and in accordance with the opinion or advice of experts,
including, legal counsel as to matters of law, accountants as to matters of
accounting, or investment bankers or appraisers as to matters of valuation) by
reason of the fact that such Indemnified Party is or was a member, Manager,
director or officer of the Company or any of its 

 

31

 

Subsidiaries
or is or was serving as a director, officer or agent of another corporation,
partnership, joint venture, trust or other enterprise at the request of the
Company, including costs and reasonable attorneys’ fees and any amount expended
in the settlement of any claims of loss or damage, except with respect to (i) any
act taken by such Indemnified Party purporting to bind the Company that has not
been authorized pursuant to this Agreement or by the Board of Managers, as
appropriate, or (ii) in the case of any officer, director, manager or
employee of the Company or any of its Affiliates, any act or omission with
respect to which such officer, director, manager or employee was grossly
negligent or engaged in willful misconduct.

 

(b)           The satisfaction of any
indemnification obligation pursuant to Section 4.06(a) shall
be from and limited to Company assets (including insurance and any agreements
pursuant to which the Company, its officers or employees are entitled to
indemnification) and no Member, in such capacity, shall be subject to personal
liability therefor.

 

(c)           Expenses reasonably incurred by an
Indemnified Party in defense or settlement of any claim that may be subject to
a right of indemnification hereunder shall be advanced by the Company prior to
the final disposition thereof upon receipt of an undertaking by or on behalf of
such Indemnified Party to repay such amount to the extent that it shall be
determined upon final adjudication after all possible appeals have been
exhausted that such Indemnified Party is not entitled to be indemnified
hereunder.

 

(d)           The Company may purchase and maintain
insurance on behalf of one or more Indemnified Parties and other Persons
against any liability which may be asserted against, or expense which may be
incurred by, any such Person in connection with the Company’s activities.

 

ARTICLE V

 

DISTRIBUTIONS

 

Section 5.01.          Distributions Generally.  The Members shall be entitled to receive
distributions, including distributions in connection with the liquidation,
dissolution or winding up of the affairs of the Company, when and as determined
by the Board of Managers, out of funds of the Company legally available
therefor, net of any Reserves, payable on such payment dates to Members on such
record date as shall be determined by the Board of Managers.  All determinations made pursuant to this Article V
shall be made by the Board of Managers in its sole discretion.  To the extent that the Board of Managers
determines that any distributions shall be made to the Members, such
distributions shall be made in accordance with the provisions of this Article V.

 

Section 5.02.          Priority of Distributions.  Subject to Section 5.03 and Section 5.04,
distributions to the Members shall be made as follows:

 

(a)           first, 100% to the Class A
Members pro rata in proportion to their
Unreturned Capital Contributions, until each Class A Member has received,
pursuant to this Section 5.02(a), an aggregate amount equal to such
Class A Member’s Capital Contributions; and

 

32

 

(b)           thereafter, to the Class A
Members, Class B Members, Class C Members, Class D Members, Class E
Members and Class F Members pro rata in
proportion to the number of Class A Units, Class B Units, Class C
Units, Class D Units, Class E Units and Class F Units held by
such Members.

 

With
respect to those Units that were issued as Incentive Units pursuant to Section 3.04(c),
the holder of such Incentive Unit shall only be entitled to share in
distributions under this Section 5.02 after such time as the aggregate
amount of distributions pursuant to this Section 5.02 from and after the
date of issuance of such Incentive Unit is equal to the Distribution Threshold.

 

Section 5.03.          Adjustment to Distributions on
Account of Unvested Units. 
Notwithstanding the distribution priority and entitlements set forth in Section 5.02,
no distribution shall be made to an Incentive Member on account of an Incentive
Unit held by such Incentive Member that has not vested pursuant to Section 3.05
(such Unit an “Unvested Unit”). 
Any amount that would otherwise be distributed to an Incentive Member
pursuant to Section 5.02 but for the application of the preceding
sentence shall instead be retained in a segregated Company account to be
distributed in accordance with this Article V by the Company and paid to
such Incentive Member if, as and when the Unvested Unit to which such retained
amount relates vests pursuant to Section 3.05.  Items of income, gain, loss and deduction
attributable to amounts retained by the Company pursuant to this Section 5.03
shall be allocated among the Incentive Members holding Unvested Units in a
manner, determined in the Board of Managers’ discretion, that equitably
reflects each such Incentive Member’s share of the amounts to which such items
relate.  If any Unvested Units are
forfeited, amounts retained by the Company pursuant to this Section 5.03
on account of such Unvested Units shall be distributed in accordance with Section 5.02.

 

Section 5.04.      Tax
Distributions.

 

(a)           Subject to any restrictions in the
Credit Facilities, the Board of Managers shall cause the Company to distribute
to the Members, on a timely basis taking into consideration the due dates for
estimated tax payments, an amount designed to assist the Members in satisfying
their respective tax liabilities arising from allocations of income, gain,
loss, deduction and credit attributable to such Members’ interests in the
Company in any taxable quarter (or other applicable period) for which such an
allocation is required (each, a “Tax Distribution”).

 

(b)           Any Tax Distributions made to the
Members shall be made in an aggregate amount (without duplication) equal to the
sum of the Tax Distributions calculated pursuant to this Section 5.04
for each Member.  For each Member, such
Member’s Tax Distribution shall be equal to (i) the product of (A) the
Assumed Tax Rate then in effect and applicable to such Member and (B) for
the applicable fiscal quarter (or other applicable period), the cumulative
excess of items of income over items of expense allocable to such Member, or
the cumulative excess of items of gain over items of loss allocable to such
Member, as appropriate, in each case taking into account losses from prior
periods, and (ii) any previously undistributed amounts determined pursuant
to the formula set forth in clause (i).

 

33

 

(c)           Any distributions made pursuant to
this Section 5.04 shall be treated for purposes of this Agreement
as having been distributed pursuant to Section 5.02 (and, if
applicable, Section 9.03(c)(ii)) and shall reduce,
dollar-for-dollar, the amount otherwise distributable to such Member pursuant
to Section 5.02 (and, if applicable, Section 9.03(c)(ii)).  If, at the end of any Fiscal Year, the
aggregate amount of Tax Distributions made to a Member is in excess of the
amount that would result from the application of the formula set forth in Section 5.04(a) to
the entire Fiscal Year, then the amount of such excess shall be treated as an
advance against, and shall reduce the amount of, any future distributions made
with respect to such Member pursuant to this Section 5.04.

 

Section 5.05.          Distributions of Securities.  The Board of Managers is authorized, in its
sole discretion, to make distributions to the Members in the form of Securities
or other property received or otherwise held by the Company; provided, however,
that, in the event of any such non-cash distribution, such Securities or other
property shall be valued at the fair market value and shall be distributed to
the Members in the same proportion that cash received upon the sale of such
Securities or other property at such fair market value would have been
distributed pursuant to Section 5.02.  In the event that the Company distributes
shares of capital stock of STR to the Members and either simultaneously with or
shortly thereafter liquidates the Company, the Members shall enter into a shareholders
agreement that contains, to the extent applicable, substantially similar terms
and provisions as this Agreement such that the rights of the Members hereunder
are not materially adversely altered, including without limitation the rights
of the Members (a) under Article VIII and (b) to exercise
their registration rights in accordance with Annex A.

 

Section 5.06.      Withholding
of Certain Amounts.

 

(a)           Subject to Section 5.08(c) but
notwithstanding any other provision contained herein to the contrary, the Board
of Managers may withhold from any distribution to any Member contemplated by
this Agreement any amounts due and payable by such Member to the Company or to
any other Person in connection with the Company Business to the extent not
otherwise paid.  Any amount withheld
pursuant to this Section 5.06(a) shall be applied or paid by
the Company to discharge the obligation in respect of which such amount was
withheld.

 

(b)           Notwithstanding anything to the
contrary contained herein, all amounts withheld by the Board of Managers
pursuant to Section 5.06(a) with respect to a Member shall be
treated as if such amounts were distributed to such Member under this
Agreement.

 

Section 5.07.          Restricted Distributions.  Notwithstanding anything to the contrary contained
herein, the Company, and the Board of Managers on behalf of the Company, shall
not make a distribution to any Member on account of its Units if such
distribution would violate the Act or other applicable law.

 

Section 5.08.          Withholding Tax Payments and
Obligations.  In the event that
withholding taxes are paid or required to be paid in respect of amounts
distributed by the Company, such payments or obligations shall be treated as
follows:

 

34

 

(a)           Payments by the Company.  The Company is authorized to withhold from
any payment made to, or any distributive share of, a Member, any taxes required
by law to be withheld, and in such event, such taxes shall be treated as if an
amount equal to such withheld taxes had been paid to the Member rather than
paid over to the taxing authority.

 

(b)           Overwithholding.  Neither the Company nor the Board of Managers
shall be liable for any excess taxes withheld in respect of any Member’s
interest in the Company, and, in the event of overwithholding, a Member’s sole
recourse shall be to apply for a refund from the appropriate governmental
authority.

 

(c)           Certain Withheld Taxes Treated as
Demand Loans.  Any taxes withheld
pursuant to Section 5.08(a) shall be treated as if distributed
to the relevant Member to the extent an amount equal to such withheld taxes
would then be distributable to such Member and, to the extent in excess of such
distributable amounts, as a demand loan payable by the Member to the Company
with interest at the lesser of (i) the Prime Rate in effect from time to
time plus 2%, compounded quarterly, and (ii) the highest rate per
annum permitted by law.  The Board of
Managers may, in its discretion, either demand payment of the principal and
accrued interest on such demand loan at any time, and enforce payment thereof
by legal process, or may withhold from one or more distributions to a Member
amounts sufficient to satisfy such Member’s obligations under any such demand
loan.

 

(d)           Indemnity.  In the event that the Company, or the Board
of Managers or any Affiliate thereof, becomes liable as a result of a failure
to withhold and remit taxes in respect of any Member, then, in addition to, and
without limiting, any indemnities for which such Member may be liable under Section 4.05,
such Member shall indemnify and hold harmless the Company, or the Board of
Managers, as the case may be, in respect of all taxes, including interest and
penalties, and any expenses incurred in any examination, determination,
resolution and payment of such liability. 
The provisions contained in this Section 5.08(d) shall
survive the termination of the Company and the withdrawal of any Member.

 

ARTICLE VI

 

ALLOCATIONS

 

Section 6.01.          General Application.  Except as explicitly provided elsewhere
herein, the items of income, gain, loss or deduction of the Company comprising
Net Income or Net Loss for a Fiscal Year shall be allocated among the Members
in a manner such that the Capital Account of each Member, immediately after
making such allocation, is, as nearly as possible, equal (proportionately) to (i) the
distributions that would be made to such Member pursuant to Section 5.02
if the Company were dissolved, its affairs wound up and its assets sold for
cash equal to their Gross Asset Values, all Company liabilities were satisfied
(limited in the case of each Nonrecourse Liability to the Gross Asset Value of
the assets securing such liability) and the net assets of the Company were
distributed in accordance with Section 9.03(c) to the Members immediately
after making such allocations, minus (ii) such Member’s share of Company
Minimum Gain and Member Nonrecourse Debt Minimum Gain, computed immediately
prior to the hypothetical sale of the assets.

 

35

 

Section 6.02.          Loss Limitation.  Notwithstanding anything to the contrary in Section 6.01,
the amount of items of Company expense and loss allocated pursuant to Section 6.01
to any Member shall not exceed the maximum amount of such items that can be so allocated
without causing such Member to have an Adjusted Capital Account Deficit at the
end of any Fiscal Year, unless each Member would have an Adjusted Capital
Account Deficit.  All such items in
excess of the limitation set forth in this Section 6.02 shall be
allocated first to Members who would not have an Adjusted Capital Account
Deficit pro rata in proportion to their Capital
Account balances, adjusted as provided in clauses (i) and (ii) of the
definition of Adjusted Capital Account Deficit, until no Member would be
entitled to any further allocation, and thereafter, to all Members pro rata in proportion to the number of Units held by such
Members.

 

Section 6.03.          Special Allocations.  Notwithstanding anything to the contrary
contained in this Article VI, special allocations shall be made in
respect of any minimum gain chargeback as required by Section 1.704-2 of
the Regulations, and any qualified income offset as required by Section 1.704-1(b)(2)(ii)(d)(3) of
the Regulations.  In addition, in the
event that any Member has a deficit Capital Account at the end of any Fiscal
Year which is in excess of the sum of (i) the amount, if any, that such
Member is obligated to restore pursuant to this Agreement, and (ii) the
amount such Member is deemed obligated to restore pursuant to the penultimate
sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations, each such Member shall be specially allocated items of Company
income and gain in the amount of such excess as quickly as possible; provided,
however, that such an allocation shall be made only if and to the extent
that a Member would have a deficit Capital Account in excess of such sum after
all other allocations provided for in this Article VI have been
tentatively made as if this sentence were not in this Agreement.  Nonrecourse Deductions shall be allocated to
the Members pro rata in proportion to the number of
Units held by such Members.  Member
Nonrecourse Deductions shall be allocated to the Member who bears the economic
risk of loss with respect to the liability to which such Member Nonrecourse
Deductions are attributable in accordance with Section 1.704-2(j) of
the Regulations.  In accordance with Section 1.752-1(a)(3) of
the Regulations, each Member’s share of Nonrecourse Liabilities, if any, of the
Company shall be allocated pro rata in
proportion to the number of Units held by such Member.

 

Section 6.04.          Transfer of Interest.  In the event of a transfer of all or part of
an interest (in accordance with the provisions of this Agreement) or the
admission of an Additional Member (in accordance with the provisions of this
Agreement) the Company’s taxable year shall close with respect to the
transferring Member, and such Member’s distributive share of all items of
profits, losses and any other items of income, gain, loss or deduction shall be
determined using the interim closing of the books method under Code Section 706
and Regulations Section 1.706-1(c)(2)(i). 
Except as otherwise provided in this Section 6.04, in all
other cases in which it is necessary to determine the profits, losses, or any
other items allocable to any period, profits, losses, and any such other items
shall be determined on a daily, monthly, or other basis, as determined by the
Board of Managers using any permissible method under Code Section 706 and
the Regulations thereunder.

 

36

 

Section 6.05.          Tax Allocations.

 

(a)           Sections 704(b) and 704(c) Allocations.  Each item of income, gain, loss, deduction or
credit for federal income tax purposes that corresponds to an item of income,
gain, loss or expense that is either taken into account in computing Net Income
or Net Loss or is specially allocated pursuant to Section 6.03 (a “Book
Item”) shall be allocated among the Members in the same proportion as the
corresponding Book Item; provided, however, that in the case of
any Company asset the Gross Asset Value of which differs from its adjusted tax
basis for federal income tax purposes, income, gain, loss and deduction with
respect to such asset shall be allocated solely for federal income tax purposes
in accordance with the principles of Sections 704(b) and (c) of the
Code (using any permissible method determined by the Board of Managers) so as
to take account of the difference between the Gross Asset Value and the
adjusted tax basis of such asset.

 

(b)           Credits.  All tax credits shall be allocated among the
Members as determined by the Board of Managers in its sole and absolute
discretion, consistent with applicable law.

 

(c)           Capital Accounts.  The tax allocations made pursuant to this Section 6.05
shall be solely for tax purposes and shall not affect any Member’s Capital
Account or share of non-tax allocations or distributions under this Agreement.

 

ARTICLE VII

 

ACCOUNTING AND TAX MATTERS

 

Section 7.01.          Books and Records.  At all times during the existence of the
Company, the Company shall maintain, at its principal place of business,
separate books of account for the Company, including the Company Register.  Subject to reasonable confidentiality
restrictions established by the Board of Managers (including as set forth in Section 18-305(c) of
the Act), each Member and its respective agents and representatives shall be
afforded access to the Company’s books and records applicable to such Member
for any proper purpose (as determined by the Board of Managers in its
reasonable discretion), at any reasonable time during regular business hours
upon reasonable written notice to the Board of Managers.

 

Section 7.02.          Reports to Members.

 

(a)           Annual Reports.  The Company shall prepare and deliver to each
Manager and each Class A Member, as soon as available and in any event
within 120 days following the end of each Fiscal Year, an audited consolidated
balance sheet of the Company and its Subsidiaries as of the end of such fiscal
year, and audited consolidated statements of income, retained earnings and cash
flows of the Company and its Subsidiaries for such year, prepared in accordance
with GAAP and setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and accompanied by the
opinion of independent public accountants of recognized national standing
selected by the Company.

 

(b)           Quarterly Reports.  The Company shall prepare and deliver to each
Manager and each Class A Member that owns at least two percent (2%) of the
outstanding Class A Units, as soon as available and in any event within 45
days following the end of each 

 

37

 

Company fiscal
quarter (other than the last quarter of any Fiscal Year), commencing with the
first full quarter ending after the date hereof, a consolidated balance sheet
of the Company and its Subsidiaries as of the end of each such quarterly
period, and consolidated statements of income, retained earnings and cash flows
of the Company and its Subsidiaries for such period and for the current fiscal
year to date, prepared in accordance with GAAP (subject to normal year-end
audit adjustments and the absence of notes thereto) and setting forth in
comparative form the figures for the corresponding periods of the previous
fiscal year, all in reasonable detail and certified by the principal financial
or accounting officer of the Company.

 

(c)           Monthly Reports.  The Company shall prepare and deliver to each
Manager and each Class A Member that owns at least two percent (2%) of the
outstanding Class A Units, as soon as available and in any event within 30
days following the end of each month (other than the last month of any Company
fiscal quarter), commencing with the first full month ending after the date
hereof, a consolidated balance sheet of the Company and its Subsidiaries as of
the end of such month and consolidated statements of operations, income, cash
flows, retained earnings and Members’ equity of the Company and its
Subsidiaries, for each month and for the current fiscal year of the Company to
date, prepared in accordance with GAAP (subject to normal year-end audit
adjustments and the absence of notes thereto).

 

(d)           All Units held by the Whitney Members
shall be aggregated together for purposes of determining the two percent (2%) ownership
level set forth in Sections 7.02(b) and (c) above, and,
if such ownership level is met, each Whitney Member shall be entitled to
receive quarterly and monthly reports in accordance with this Section 7.02;
provided, however, that if any Whitney Member becomes Affiliated
with an Adverse Person, such relevant Whitney Member shall no longer be
eligible to receive such reports but its Units shall nonetheless be aggregated
with the other Whitney Members for purposes of determining the remaining
Whitney Members’ eligibility.

 

(e)           Audit. The Company shall
engage a reputable firm of independent certified public accountants to provide
annual audit reports of the Company’s consolidated financial statements,
prepared in accordance with GAAP.

 

Section 7.03.          Tax Returns.  The Board of Managers, at the expense of the
Company, shall endeavor to cause the preparation and timely filing (including
extensions) of all tax returns required to be filed by the Company pursuant to
the Code as well as all other required tax returns in each jurisdiction in
which the Company or its Subsidiaries, as applicable, owns property or does
business.  As soon as reasonably possible
after the end of each Fiscal Year, the Board of Managers will cause to be
delivered to each Person who was a Member at any time during such Fiscal Year,
information with respect to the Company as may be necessary for the preparation
of such Person’s federal, state and local income tax returns for such Fiscal
Year.

 

Section 7.04.          Tax Controversies.  DLJ Merchant Banking Partners IV, L.P. is
hereby designated the “Tax Matters Member” and shall serve as the tax
matters partner (as defined in Code Section 6231) and 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
resulting administrative and judicial proceedings.  Each Member agrees that any action taken by
the Tax Matters Member in connection with audits of the Company shall 

 

38

 

be binding
upon such Members and each such Member further agrees that such Member shall
not treat any Company item inconsistently on such Member’s income tax return
with the treatment of the item on the Company’s return and that such Member
shall not independently act with respect to tax audits or tax litigation
affecting the Company.  The Tax Matters
Member may resign at any time.  If DLJ
Merchant Banking Partners IV, L.P. ceases to be the Tax Matters Member for any
reason, the Class A Members whose Class A Units represent more than
50% of the aggregate number of all Class A Units shall appoint a new Tax
Matters Member.

 

Section 7.05.          Accounting Methods; Elections.  The Board of Managers shall determine the
accounting methods and conventions to be used in the preparation of the Company’s
tax returns and shall make any and all elections under the tax laws of the
United States and any other relevant jurisdictions as to the treatment of items
of income, gain, loss, deduction and credit of the Company, or any other method
or procedure related to the preparation of the Company’s tax returns.

 

Section 7.06.          Partnership Status.  The Members intend, and the Company shall
take no position inconsistent with, treating the Company as a partnership for
federal, state and local income and franchise tax purposes.  In furtherance of the foregoing, the Company
shall neither elect, pursuant to Regulations Section 301.7701-3(c), to be
treated as an entity other than a partnership nor elect, pursuant to Code Section 761(a),
to be excluded from the provisions of subchapter K of the Code.  To ensure that Units are not traded on an
established securities market within the meaning of Regulations Section 1.7704-1(b) or
readily tradable on a secondary market or the substantial equivalent thereof
within the meaning of Regulations Section 1.7704-1(c), (a) the
Company shall not participate in the establishment of any such market or the
inclusion of its Units thereon, and (b) the Company shall not recognize any
Transfer made on any market by (i) redeeming the transferor Member (in the
case of a redemption or repurchase by the Company) or (ii) admitting the
transferee as a Member or otherwise recognizing any rights of the transferee,
such as a right of the transferee to receive Company distributions (directly or
indirectly) or to acquire an interest in the capital or profits of the Company.

 

Section 7.07.          Confidentiality.  (a)  Each Other Member agrees that
Confidential Information (as defined below) furnished and to be furnished to
him or her was and shall be made available in connection with such Other Member’s
investment in the Company.  Such Other
Member acknowledges that the Confidential Information which such Other Member
has obtained or will obtain is the property of the Company and its
Subsidiaries.  Each Other Member agrees
that he or she will not disclose any Confidential Information to any other
Person (other than its directors, employees, counsel, auditors, agents,
partners, advisers and representatives so long as such Persons are made aware
of the confidential nature of the Confidential Information and agree or are
otherwise obligated to keep it confidential), except that Confidential
Information may be disclosed: (i) to the extent required by applicable
law, rule or regulation (including complying with any oral or written
questions, interrogatories, requests for information or documents, subpoena,
civil investigative demand or similar process to which a such Other Member is
subject); provided that such Other Member gives the Company prompt notice of
such requests, to the extent practicable, so that the Company may at its own
cost and expense seek an appropriate protective order or similar relief (and
the Other Member shall cooperate with such efforts by the Company, and shall in
any event make only the minimum disclosure required by such law, rule or
regulation), (ii) if the prior written consent of the Board shall have
been 

 

39

 

obtained, (iii) by
Additional Members, on a confidential basis, to current and prospective limited
partners or members or lenders in connection with a loan or prospective loan to
such Additional Member and to their respective legal counsel, auditors, agents
and representatives, (iv) to any Other Member, (v) upon prior written
notice to the Board of Managers, to any institutional investor which is not an
Adverse Person to which it Transfers or offers to Transfer its Units or any
part thereof (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 7.07
and has delivered to the Company a confidentiality agreement reasonably
acceptable to the Company) or (vi) to any federal or state regulatory
authority having jurisdiction over such Other Member, the National Association
of Insurance Commissioners or the National Association of Insurance
Commissioners Securities Valuation Office or any similar organization, or any
nationally recognized rating agency that requires access to information about
such Other Member’s investment portfolio, in each case, in the ordinary
course.  The obligations with respect to
Confidential Information in this Section 7.07 shall terminate three
(3) years after a Person ceases to be a Member;  provided, however, that the obligation to
maintain the confidentiality of “trade secrets” shall not terminate.

 

(b)           “Confidential Information”
shall mean any information relating to the business or affairs of the Company
or any of its Subsidiaries, including, but not limited to, information relating
to financial statements, customer identities, potential customers, potential
acquisitions, employees, sales representatives, suppliers, servicing methods,
equipment programs, strategies and information, analyses, profit margins or
other proprietary information used by the Company or any of its Affiliates;
provided, however, that Confidential Information does not include any
information which is in the public domain or becomes known in the industry
through no wrongful act on the part of such Other Member; provided further that
Confidential Information shall not include information that (i) is or
becomes generally known to the public other than as a result of a disclosure by
such Other Member in violation of this Agreement or, (ii) is or was
available to such Other Member on a non-confidential basis prior to its
disclosure to such Other Member.

 

(c)           Except as otherwise agreed by the
Company, in the event of a conflict between this Section 7.07 and
the terms of a Management Member’s employment or consulting agreement, the
terms of such employment or consulting agreement shall be controlling.

 

Section 7.08.          Restrictive Covenants.

 

(a)           During the term of employment or
consultancy and for a period of one (1) year after the termination thereof
(which the Company may elect to extend in accordance with the Management Member’s
consulting or employment agreement, if applicable) (the “Non-Competition
Period”), each Management Member shall not, without the prior written consent
of the Company, and whether as employee, principal, agent, shareholder,
partner, consultant, advisor, limited liability company manager or member,
director, or otherwise, directly or indirectly, compete with the Company or any
subsidiary of the Company in the business of manufacturing solar panel
encapsulant or providing consumer product quality assurance services to third
parties, (the “Restricted Business”). 
The making or guarantying of a loan, lease or any other financial
arrangement to, with, or for any person or entity that engages in a Restricted
Business shall be deemed a breach of this covenant.  However, such Management Member may purchase
or own up to 1% of the outstanding stock of a publicly traded corporation that
competes

 

40

 

with the
Company or any Subsidiary, but such Management Member may not be employed by or
otherwise participate in the activities of such corporation.

 

(b)           During the Non-Competition Period,
such Management Member will not, and will not permit any of his or her
affiliates to, directly or indirectly, (i) recruit or otherwise solicit or
induce any employee, customer, subscriber or supplier of the Company or any of
its Subsidiaries to terminate its employment or arrangement with the Company or
any of its Subsidiaries, otherwise change its relationship with the Company or
any of its Subsidiaries or establish any relationship with such Management
Member or any of his or her affiliates to compete in the Restricted Business or
(ii) without the Company’s prior written consent, hire (A) any
employee of the Company or any of its Subsidiaries or (B) any person whose
employment with the Company or such Subsidiary is terminated by such person
without Good Reason during the six-month period ending on the date of such
hire; provided, that with respect to former employees of the Company or any of
its Subsidiaries, the Company’s consent shall not be unreasonably withheld.

 

(c)           The parties hereto agree that, if any
court of competent jurisdiction in a final nonappealable judgment determines
that a specified time period, a specified geographical area, a specified
business limitation or any other relevant feature of this Section 7.08
is unreasonable, arbitrary or against public policy, then a lesser time period,
geographical area, business limitation or other relevant feature which is
determined to be reasonable, not arbitrary and not against public policy may be
enforced against the applicable party.

 

(d)           In the event of a conflict between
this Section 7.08 and the terms of a Management Member’s employment
or consulting agreement the terms of such employment or consulting agreement
shall be controlling.

 

Section 7.09.          Investment Opportunities and
Conflicts of Interest.  The parties
hereto expressly acknowledge and agree that (i) the DLJMB Members and
their respective Affiliates are permitted to have, and may presently or in the
future have, investments or other business relationships, ventures, agreements
or arrangements with entities engaged in the Restricted Business other than
through the Company and its Subsidiaries (an “Other Business”), (ii) the
DLJMB Members and their respective Affiliates have or may develop a strategic
relationship with businesses that are or may be competitive with the Company
and its Subsidiaries, (iii) none of the DLJMB Members or their respective
Affiliates will be prohibited by virtue of their investment in the Company or
any of its Subsidiaries from pursuing and engaging in any such activities, (iv) none
of the DLJMB Members or their respective Affiliates will be obligated to inform
the Company or any Other Member of any such opportunity, relationship or
investment, (v) the Other Members will not acquire, be provided with an
option or opportunity to acquire or be entitled to any interest or
participation in any Other Business as a result of the participation therein of
any of the DLJMB Members or their respective Affiliates.  The Members expressly authorize and consent
to the involvement of the DLJMB Members and/or their respective Affiliates in
any Other Business; provided that any transactions between the Company and its
Subsidiaries and an Other Business will be on terms no less favorable to the
Company and its Subsidiaries than would be obtainable in a comparable arm’s-length
transaction, and expressly waive, to the fullest extent permitted by applicable
law, any rights to assert any claim that such involvement breaches any duty
owed to any other Member or to assert

 

41

 

that such
involvement constitutes a conflict of interest by such Persons with respect to
any Member and (vi) nothing contained herein shall limit, prohibit or
restrict any designee of any DLJMB Members or any representative of any of its
Affiliates from serving on the board of directors or other governing body or
committee of any Other Business.

 

Section 7.10.          Conflicting Agreements.  Each Member represents and agrees that it
shall not (a) grant any proxy or enter into or agree to be bound by any
voting trust or agreement with respect to the Units, except as expressly
contemplated by this Agreement, (b) enter into any agreement or
arrangement of any kind with any Person with respect to its Units inconsistent
with the provisions of this Agreement or for the purpose or with the effect of
denying or reducing the rights of any other Member under this Agreement,
including agreements or arrangements with respect to the Transfer or voting of
its Units or (c) act, for any reason, as a member of a group or in concert
with any other Person in connection with the Transfer or voting of its Units in
any manner that is inconsistent with the provisions of this Agreement.

 

ARTICLE VIII

 

TRANSFERS

 

Section 8.01.          General Restrictions on Transfer.  (a)  Each Member understands and agrees
that the Units held by it on the date hereof have not been and will not be
registered under the Securities Act and are restricted securities under the
Securities Act and the rules and regulations promulgated thereunder.  Each Member agrees that it shall not Transfer
any Units (or solicit any offers in respect of any Transfer of any Units),
except in compliance with the Securities Act, any other applicable securities
or “blue sky” laws and any restrictions on Transfer contained in this
Agreement.  No Member shall Transfer any
Units to any Person if such Transfer would result in adverse regulatory
consequences to the Company, including, without limitation, obligations of the
Company to file periodic reports with the SEC under the Exchange Act.

 

(b)           Notwithstanding anything in this
Agreement to the contrary, other than pursuant to a Drag Along Sale pursuant to
Section 8.07, no Member shall Transfer any Units to an Adverse
Person without the prior written consent of the Company.

 

(c)           Any attempt to Transfer any Units not
in compliance with this Agreement shall be null and void, and the Company shall
not, and shall cause any transfer agent not to, give any effect in the Company’s
records to such attempted Transfer.

 

Section 8.02.          [Reserved]

 

Section 8.03.          Permitted Transferees.

 

(a)           Subject to Section 8.01,
any Member may at any time Transfer any or all of its Units to a Permitted
Transferee without the consent of any Person and without compliance with Sections
8.04, 8.06 and 8.07, as the case may be, so long as (i) such
Permitted Transferee shall have agreed in writing to be bound by the terms of
this Agreement by executing a joinder agreement in the form of Exhibit A
attached hereto (“Joinder Agreement”); (ii) the Transfer is in
compliance with the Securities Act, any other applicable securities or “blue
sky” laws and any 

 

42

 

other
restrictions on Transfer contained in this Agreement; and (iii) the
Transfer does not trigger any registration obligation under Section 12(g) of
the Securities Act.  Such Member must
give written prior notice to the Company of any proposed Transfer to a
Permitted Transferee, including the identity of such proposed Permitted
Transferee and such other information reasonably requested by the Company to
ensure compliance with the terms of this Agreement and the Company shall be
entitled to condition any such Transfer on receipt of an opinion of counsel
reasonably acceptable to the Company that such Transfer is exempt from the
registration requirements of the Securities Act.

 

(b)           If, while a Permitted Transferee
holds any Units, a Permitted Transferee ceases to qualify as a Permitted
Transferee in relation to the initial transferor Member from whom or which such
Permitted Transferee or any previous Permitted Transferee of such initial
transferor Member received such shares or becomes an Adverse Person (an “Unwinding
Event”), then the relevant initial transferor Member:

 

(i)            shall
forthwith notify the other Members and the Company of the pending occurrence of
such Unwinding Event; and

 

(ii)           shall
take all actions necessary, prior to such Unwinding Event, to effect a Transfer
of all the Units held by the relevant Permitted Transferee either back to such
Member or, pursuant to this Section 8.03, to another Person which
qualifies as a Permitted Transferee of such initial transferring Member.

 

Notwithstanding the foregoing, the provisions of this Section 8.03(b) will
not be applicable if, prior to any Transfer, the initial transferor Member receives
from the Permitted Transferee its agreement not to undertake any actions that
would be reasonably likely to result in an Unwinding Event.

 

Section 8.04.          Restrictions on Transfers by Other
Members.  Until the date when the
DLJMB Members cease to own fifteen percent (15%) or more of the then
outstanding Class A Units (the “Restricted Period”), no Other
Member may Transfer any of their Units, except (A) to a Permitted
Transferee in accordance with Section 8.03, or (B) in a
Transfer of Units in a Tag-Along Sale, Drag-Along Sale or Repurchase pursuant
to Sections  8.06, 8.07 or 8.09.

 

Section 8.05.          Restrictions on Transfers by DLJMB
Members.  Any DLJMB Member may at any
time Transfer any Units (i) to a Permitted Transferee in compliance with Section 8.03,
(ii) in connection with the exercise of its Drag-Along Rights pursuant to Section 8.07,
(iii) in the Syndication or (iv) to any other Person so long as (A) the
transferee agrees to be bound by this Agreement and (B) the transferor
complies with Section 8.06 hereof to the extent applicable to such
Transfer.

 

Section 8.06.          Tag-Along Rights.  (a)  Subject to Sections 8.06(g) and
8.08, if any DLJMB Members (collectively, the “Tag-Along Seller”)
propose to Transfer any Class A Units to any Third Party or Third Parties
in a single transaction or in a series of related transactions (a “Tag-Along
Sale”):

 

(i)            the
Tag-Along Seller shall provide each Other Class A Member written notice of
the terms and conditions of such proposed Transfer (“Tag-Along 

 

43

 

Notice”)
and offer each Other Class A Member the opportunity to participate in such
Transfer in accordance with this Section 8.06, and

 

(ii)           each
Other Class A Member may elect, at its option, to participate in the
proposed Transfer in accordance with this Section 8.06 (each such
electing Other Class A Member, a “Tagging Person”).

 

The
Tag-Along Notice shall identify the number of Class A Units proposed to be
sold by the Tag-Along Seller and all other Units subject to the offer (“Tag-Along
Offer”), the consideration for which the Transfer is proposed to be made,
and all other material terms and conditions of the Tag-Along Offer, including
the form of the proposed agreement, if any, and a firm offer by the proposed
Third Party transferee to purchase Class A Units from the Class A
Members in accordance with this Section 8.06.  If the economic terms of the Tag-Along Offer
are changed in a manner that is beneficial to the Tag-Along Seller as compared
to those set forth in the Tag-Along Notice, the Tag-Along Seller shall deliver
a new Tag-Along Notice to each Other Class A Member setting forth the
revised terms of the Tag-Along Offer, and the time periods in this Section 8.06
shall be calculated based upon the Other Class A Members’ receipt of such
revised Tag-Along Notice.

 

From
the date of its receipt of the Tag-Along Notice, each Tagging Person shall have
the right (a “Tag-Along Right”), exercisable by notice (“Tag-Along
Response Notice”) given to the Tag-Along Seller within ten (10) Business
Days after its receipt of the Tag-Along Notice (the “Tag-Along Notice Period”),
to request and require that the Tag-Along Seller include in the proposed
Transfer up to the number of Class A Units constituting its Tag-Along
Portion of Class A Units and the Tag-Along Seller shall include the number
of Class A Units proposed to be Transferred by such Tag-Along Seller as
set forth in the Tag-Along Notice.  Each
Tag-Along Response Notice shall include wire transfer instructions for payment
of the purchase price for the Class A Units to be sold in such Tag-Along
Sale.  Each Tagging Person that exercises
its Tag-Along Rights hereunder shall deliver to the Tag-Along Seller, with its
Tag-Along Response Notice, the certificate or certificates representing the
Units of such Tagging Person to be included in the Tag-Along Sale, together
with a limited power-of-attorney authorizing the Tag-Along Seller to Transfer
such Units on the terms set forth in the Tag-Along Notice.  Delivery of the Tag-Along Response Notice
with such certificate or certificates and limited power-of-attorney shall
constitute an irrevocable acceptance of the Tag-Along Offer by such Tagging
Persons.

 

If, at
the end of a 120-day period after the Tag-Along Date (which 120-day period
shall be extended if any of the transactions contemplated by the Tag-Along
Offer are subject to regulatory approval until the expiration of five (5) Business
Days after all such approvals have been received, but in no event later than
180 days following the Tag-Along Date by the Tag-Along Seller), the Tag-Along
Seller has not completed the Transfer of all such Class A Units on
substantially the same terms and conditions set forth in the Tag-Along Notice,
the Tag-Along Seller shall (i) promptly return to each Tagging Person the
limited power-of-attorney (and all copies thereof and any other documents in
the possession of the Tag-Along Seller executed by the Tagging Persons in
connection with the proposed Tag-Along Sale, and (ii) not conduct any
Transfer of Class A Units without again complying with this Section 8.06(a).

 

44

 

(b)           Concurrently with the consummation of
the Tag-Along Sale, the Tag-Along Seller shall (i) notify the Tagging
Persons thereof, (ii) remit or cause to be remitted to the Tagging Persons
the total consideration to be paid at the closing of the Tag-Along Sale for the
Units of the Tagging Persons Transferred pursuant thereto, with the cash
portion of the purchase price paid by wire transfer of immediately available
funds in accordance with the wire transfer instructions in the applicable
Tag-Along Response Notices and (iii) promptly after the consummation of
such Tag-Along Sale, furnish such other evidence of the completion and the date
of completion of such Transfer and the terms thereof as may be reasonably
requested by the Tagging Persons.

 

(c)           If at the termination of the
Tag-Along Notice Period any Other Member shall not have elected to participate
in the Tag-Along Sale, such Other Member shall be deemed to have waived its
rights under Section 8.06(a) with respect to, and only with
respect to, the Transfer of its Class A Units pursuant to such Tag-Along
Sale.

 

(d)           If (i) any Other Member declines
to exercise its Tag-Along Rights or (ii) any Tagging Person elects to
exercise its Tag-Along Rights with respect to less than such Tagging Person’s
Tag-Along Portion (the aggregate amount of Units subject to all such
unexercised Tag-Along Portions, the “Excess Portion”), the Tag-Along
Seller shall notify the Tagging Persons who desire to sell their Tag-Along
Portion (but not less than such amount) (a “Fully Participating Tagging
Person”) and the Tag-Along Seller and any Fully Participating Tagging
Person shall be entitled to Transfer, pursuant to the Tag-Along Offer, in
addition to any Units already being Transferred, a number of Units held by it
equal to the product of (i) the Excess Portion and (ii) a fraction,
the numerator of which is the total number of the relevant class of Class A
Units owned by the Tag-Along Seller or Fully Participating Tagging Person, as
the case may be, and the denominator of which is equal to the sum of the total
number Class A Units owned by the Tag-Along Seller and all Fully
Participating Tagging Persons.

 

(e)           The Tag-Along Seller shall Transfer,
on behalf of itself and any Tagging Person, the Class A Units subject to
the Tag-Along Offer and elected to be Transferred on the terms and conditions
set forth in the Tag-Along Notice within 120 days (or such longer period as
extended under Section 8.06(a)) of the date on which all Tag-Along
Rights shall have been waived, exercised or expired (the “Tag-Along Date”).

 

(f)            Notwithstanding anything contained
in this Section 8.06, there shall be no liability on the part of
the Tag-Along Seller to the Tagging Persons (other than the obligation to
return limited powers- of-attorney received by the Tag-Along Seller) if the
Transfer of Class A Units pursuant to Section 8.06 is not
consummated for whatever reason.  The
decision to effect a Transfer of Class A Units pursuant to this Section 8.06
by the Tag-Along Seller is in the sole and absolute discretion of the Tag-Along
Seller.

 

(g)           If the consummation of the Tag-Along
Sale would result in a Change of Control, Incentive Members shall be entitled
to participate in such Tag-Along Sale to the extent that their Incentive Units
have vested and all references to “Class A Units” in this Section 8.06
shall mean “Units” and all references to “Class A Members” or “Other Class A
Members” shall mean “Members.”

 

45

 

(h)           The provisions of this Section 8.06
shall not apply to any Transfer of Units: (i) to any Permitted Transferees
of the Tag-Along Seller, (ii) in a Drag-Along Sale for which the
Drag-Along Seller shall have elected to exercise its rights under Section 8.07,
or (iii) in connection with the Syndication.

 

Section 8.07.          Drag-Along Rights.  (a)  Subject to Section 8.08,
if one or more of the DLJMB Members (collectively, the “Drag-Along Seller”)
propose to Transfer Units to any Third Party or Parties (the “Drag-Along
Transferee”) in a single transaction or in a series of related transactions
and the Units to be Transferred by the Drag-Along Seller represent not less
than 50% of Units then owned by the DLJMB Members in the aggregate (any such
Transfer, a “Drag-Along Sale”), the Drag-Along Seller may at its option
require each Other Member to Transfer, and each other Member hereby agrees to
Transfer, the Drag-Along Portion of the Units (“Drag-Along Rights”) then
held by such Other Member.  All Other
Members shall cooperate in, and shall take all actions that the Drag-Along
Seller deems reasonably necessary or desirable to consummate the Drag-Along
Sale, including, without limitation, (i) voting their respective Units (or
executing and delivering any written consents in lieu thereof) in favor of the
Drag-Along Sale, including voting to approve a Drag-Along Sale if such
Drag-Along Sale is structured as a merger or a sale of all or substantially all
of the assets of the Company, and against any action or proposal that may
prevent, hinder or impede the consummation of the Drag-Along Sale, (ii) to
the extent permitted by applicable law, not exercising any dissenters’ or
appraisal rights to which they may be entitled in connection with the
Drag-Along Sale, and (iii) subject to Section 8.07(b),
entering into agreements with the Drag-Along Transferee on terms substantially
identical to those (if any) entered into between the Drag-Along Transferee and
the Drag-Along Seller.  Each Other Member
hereby grants to the Drag-Along Seller, an irrevocable proxy coupled with an
interest to vote, including in any action by written consent, such Other Member’s
Units in accordance with such Other Member’s agreements in this Section 8.07
and a power of attorney to execute and deliver in the name and on behalf of
such Other Member all such agreements, instruments and other documentation
(including any written consents of Members) as is required to Transfer the
Units held by such Other Member to the Drag-Along Transferee.  The Drag-Along Seller shall provide notice to
each Other Member that sets forth the circumstances in which such proxy or
power of attorney was used immediately following the exercise of the Drag-Along
Seller’s rights as set forth above.

 

(b)           The Drag-Along Seller shall provide
notice of such Drag-Along Sale to the Other Members (a “Drag-Along Sale
Notice”) not later than ten (10) Business Days prior to the proposed
Drag-Along Sale.  The Drag-Along Sale
Notice shall identify the Drag-Along Transferee, the number of Units subject to
the Drag-Along Sale, the consideration for which a Transfer is proposed to be
made (the “Drag-Along Sale Price”) and all other material terms and
conditions of the Drag-Along Sale.  The
number of Units to be sold by each Other Member shall be the Drag-Along Portion
of the Units that such Other Member owns. 
Each Other Member shall be required to participate in the Drag-Along
Sale on the terms and conditions set forth in the Drag-Along Sale Notice and to
tender the Drag-Along Portion of its Units as set forth below.  The price payable in such Transfer shall be
the Drag-Along Sale Price.  Not later
than five (5) Business Days after the date of the Drag-Along Sale Notice
(the “Drag-Along Sale Notice Period”), each of the Other Members shall
deliver to a representative of the Drag-Along Seller designated in the
Drag-Along Sale Notice the certificate (if then certificated) and other
applicable instruments representing the Units 
of such Other Member to be included in the 

 

46

 

Drag-Along
Sale, together with a limited power-of-attorney authorizing the Drag-Along
Seller or such representative to Transfer such Units on the terms set forth in
the Drag-Along Notice and wire transfer instructions for payment of the cash
portion of the consideration to be received in such Drag-Along Sale, or, if
such delivery is not permitted by applicable law, an unconditional agreement to
deliver such Units pursuant to this Section 8.07 (b) at the
closing for such Drag-Along Sale against delivery to such Other Member of the
consideration therefor.  If an Other
Member should fail to deliver such certificates (if then certificated) or
instruments to the Drag-Along Seller and the Drag-Along Sale is consummated,
the Company shall cause the books and records of the Company to show that such
Units are bound by the provisions of this Section 8.07 (b) and
that such Units shall be Transferred to the Drag-Along Transferee immediately
upon surrender for Transfer by the holder thereof.

 

(c)           The Drag-Along Seller shall have a
period of 120 days from the date of receipt of the Drag-Along Sale Notice to
consummate the Drag-Along Sale on the terms and conditions set forth in such
Drag-Along Sale Notice, provided that, if such Drag-Along Sale is subject to
regulatory approval, such 120-day period shall be extended until the expiration
of five (5) Business Days after all such approvals have been received, but
in no event later than 180 days following the date of receipt of the Drag-Along
Sale Notice.  If the Drag-Along Sale
shall not have been consummated during such period, the Drag-Along Seller shall
promptly return to each of the Other Members the limited power-of-attorney (and
all copies thereof) and all certificates and other applicable instruments
representing Units that such Other Members delivered for Transfer pursuant
hereto, together with any other documents in the possession of the Drag-Along
Seller executed by the Other Members in connection with such proposed Transfer,
and all the restrictions on Transfer contained in this Agreement or otherwise
applicable at such time with respect to such Units owned by the Other Members
shall again be in effect.

 

(d)           Concurrently with the consummation of
the Drag-Along Sale, the Drag-Along Seller shall give notice thereof to the
Other Members, shall remit or cause to be remitted to each of the Other Members
the total consideration to be paid at the closing of the Drag-Along Sale (the
cash portion of which is to be paid by wire transfer of immediately available
funds in accordance with such Other Member’s wire transfer instructions) for
the Units Transferred pursuant hereto and shall furnish such other evidence of
the completion and time of completion of such Transfer and the terms thereof as
may be reasonably requested by such Other Members.

 

(e)           Notwithstanding anything contained in
this Section 8.07, there shall be no liability on the part of the
Drag-Along Seller to the Other Members (other than the obligation to return the
limited power-of-attorney and the certificates (if then certificated) and other
applicable instruments representing Units received by the Drag-Along Seller) if
the Transfer of Units pursuant to this Section 8.07 is not
consummated for whatever reason, regardless of whether the Drag-Along Seller
has delivered a Drag-Along Sale Notice. 
The decision to effect a Transfer of Units pursuant to this Section 8.07
by the Drag-Along Seller is in the sole and absolute discretion of the
Drag-Along Seller.

 

Section 8.08.          Additional Conditions to Tag-Along
Sales and Drag-Along Sales. 
Notwithstanding anything contained in Sections 8.06 or 8.07, in
connection with a Tag-Along Sale under Section 8.06 or a Drag-Along
Sale under Section 8.07:

 

47

 

(a)           the DLJMB Members shall ensure (i) that
upon the consummation of such Tag-Along Sale, all of the Members participating
therein will receive the same form and amount of consideration per Unit, or, if
any Members are given an option as to the form and amount of consideration to
be received, all Members participating therein will be given the same option
and (ii) if the Tag-Along Sale is a transaction that results in a Change
of Control such that the Incentive Members participate in such Tag-Along Sale
as set forth in Section 8.06(g), the DLJMB Members shall ensure
that upon the consummation of such Tag-Along Sale, all of the Incentive Members
participating therein will receive the amount that would be distributed to them
in respect of their Units included in the Tag-Along Sale as if the assets of
the Company were sold for their fair market value (based upon the sale price
per Unit) and the proceeds were distributed as consideration payable in
accordance with Article IX;

 

(b)           the DLJMB Members shall ensure that
upon the consummation of such Drag-Along Sale, all of the Members participating
therein will receive the amount that would be distributed to them in respect of
their Units included in the Drag-Along Sale as if the assets of the Company
were sold for their fair market value (based upon the Drag-Along Sale Price)
and the proceeds were distributed as consideration payable in accordance with Article IX;
and

 

(c)           each Other Member shall (i) make
such customary representations and warranties, including as to due organization
and good standing, corporate power and authority, due approval, no conflicts
and ownership and transfer of Units, and covenants and enter into such
definitive agreements as are customary for transactions of the nature of the
proposed Transfer, provided, that no Other Member shall be required to make any
representation or warranty or agree to any covenant that is more extensive or
burdensome than those made by the Tag-Along Seller or Drag-Along Seller or
enter into any agreements not also executed by the Tag-Along Seller or the
Drag-Along Seller,  (ii) benefit
from and be subject to all of the same provisions of the definitive agreements
as the Tag-Along Seller or Drag-Along Seller, as the case may be, and (iii) be
required to bear their proportionate share of any escrows, holdbacks or
adjustments in respect of the purchase price or indemnification obligations; provided that no Other Member shall be obligated (A) to
provide indemnification with respect to any other Member or the representations,
warranties, covenants or agreements of any other Member, (B) to incur
liability to any Person in connection with such Tag-Along Sale or Drag-Along
Sale, as the case may be, including without limitation under any indemnity, in
excess of the lesser of (1) its pro rata share of such liability and (2) the
proceeds realized by such Other Member in such sale, or (C) to agree not
to compete with or solicit employees of any Person; provided
that any Management Member who is offered continued employment with the Company
or any of its Subsidiaries after such Tag-Along Sale or Drag-Along Sale on
reasonably similar or better terms may be required to agree with all the
provisions in Sections 7.07 and 7.08 hereof.

 

Section 8.09.          Repurchase
Rights.

 

(a)           Call Right.

 

(i)            Except
as otherwise agreed to by the Company, upon any Management Member ceasing to be
employed by the Company or its Subsidiaries (a “Terminated Member”) for
any reason (a “Termination Event”), subject to the provisions of Sections
8.09(a)(ii), (iii) and (iv), 8.09(a)(iii), 8.09(b) and
8.09(c) 

 

48

 

hereof, the
Company shall have the option to purchase, and if such option is exercised,
such Terminated Member shall sell, and shall cause any Permitted Transferees of
such Terminated Member to sell, to the Company all or any portion of the
Units  owned by such Management Member
and such Permitted Transferees designated by the Company (the “Termination
Units”) on the date of the occurrence of such Termination Event at a price
per Termination Unit equal to the Termination Price (as determined pursuant to Section 8.09(d) below)
of the Termination Units.

 

(ii)           With
respect to each Termination Unit (other than Rollover Units in the event that
the Terminated Member terminates for Good Reason or the Company terminates the
Terminated Member without Cause, in which case Section 8.09(c) shall
apply), the Company shall notify a Terminated Member in writing, within the
Call Period with respect to such Termination Units, whether the Company will
exercise its right to purchase such Termination Units (the date on which a
Terminated Member is so notified, the “Call Notice Date”).

 

(iii)          The
Company shall have the option to assign its right to purchase all or any
portion of the Termination Units under this Section 8.09 to the Class A
Members on a pro rata basis in proportion to the number of Units held by such Class A
Member and any such Class A Member may exercise the Company’s rights under
this Section 8.09 in the same manner in which the Company could
exercise such rights.  In the event that
the Company determines that it will assign its right to purchase Termination
Units under this Section 8.09, it shall give the Class A
Members written notice of the number of Termination Units, the Termination
Price and the terms and conditions of the proposed sale.  Each Class A Member shall have ten (10) days
from the date of receipt of any such notice to agree to purchase up to its pro
rata share of such Termination Units, for the Termination Price and upon the
terms and conditions specified in the notice, by giving written notice to the
Company stating therein the quantity of Termination Units to be purchased up to
such Class A Member’s pro rata share. 
If any Class A Member fails to agree to purchase its full pro rata
share within such ten (10) day period, the Company will give the Class A
Members who did so agree (the “Electing Call Members”) notice of the
number of Termination Units not subscribed for. 
The Electing Call Members shall have five (5) days from the date of
such second notice to agree to purchase their pro rata share (or such greater
amount as the Electing Call Members agree upon) of all or any part of the
Termination Units not purchased by such other Class A Members.

 

(iv)          The
closing of the purchase by the Company of Termination Units pursuant to Section 8.09(a) shall
take place at the principal office of the Company on the date chosen by the
Company, which date shall, except as may be reasonably necessary to determine
the Termination Price, in no event be more than 45 days after the Call Notice
Date; provided, that in the event the Terminated Member has not held the
Termination Units for a period of 180 days after the date of grant, the closing
shall occur immediately following the expiration of such 180 day period (for
purposes hereof each Permitted Transferee shall be considered to

 

49

 

have held the
Termination Units to the same extent as the original transferee).  At such closing, (i) the Company shall
pay the Terminated Member and/or such Terminated Member’s Permitted
Transferees, as applicable, against delivery of duly endorsed certificates
described below representing such Termination Units, the aggregate Termination
Price by wire transfer of immediately available federal funds and (ii) the
Terminated Member and/or such Terminated Member’s Permitted Transferees, as
applicable, shall deliver to the Company a certificate or certificates
representing the Termination Units to be purchased by the Company duly
endorsed, or with unit powers duly endorsed, for transfer with signature
guaranteed, free and clear of any lien or encumbrance, with any necessary stock
transfer tax stamps affixed. The delivery of a certificate or certificates for
the Termination Units by any Person selling such Termination Units pursuant to
this Section 8.09 shall be deemed a representation and warranty by
such Person that: (1) such Person has full right, title and interest in
and to such Termination Units; (2) such Person has all necessary power and
authority and has taken all necessary action to sell such Termination Units as
contemplated; (3) such Termination Units are free and clear of any and all
liens or encumbrances, and (4) there is no adverse claim with respect to
such Termination Units.

 

(b)           Put Right.

 

(i)            Upon
any Management Member’s termination for Good Reason, termination by the Company
without Cause, or upon the death or Disability of the Management Member, such
Management Member (or his or her legal representative) shall have the option to
sell and if such option is exercised the Company shall purchase, all or any
portion of such Terminated Member’s Termination Units designated by such
Management Member (in each case other than Rollover Units, which shall be
subject to Section 8.09(c)) owned on the Termination Date
(collectively, the “Put Units”) for a purchase price equal to the
Termination Price of the Put Units.

 

(ii)           The
Terminated Member (or such Terminated Member’s Permitted Transferees) shall
notify the Company in writing, within 90 days of the Termination Date, whether
such Terminated Member (or such Permitted Transferee) will exercise its option
pursuant to Section 8.09(b)(i) (the date on which the Company
is so notified, the “Put Notice Date”).

 

(iii)          The
Company may offer to the Class A Members the opportunity to participate in
the purchase of all or any portion of the Put Units under this Section 8.09(b) on
a pro rata basis in proportion to the number of Units held by such Class A
Member and any such Class A Member electing to participate may act under
this Section 8.09(b) in the same manner in which the Company could
act.  In the event that the Company
determines that it will offer the opportunity to purchase Termination Units
under this Section 8.09, it shall give the Class A Members
written notice of the number of Put Units, the Termination Price and the terms
and conditions of the proposed sale. 
Each Class A Member shall have ten (10) days from the date of
receipt of any such notice to agree to purchase up to its

 

50

 

pro rata share of
such Put Units, for the Termination Price and upon the terms and conditions
specified in the notice, by giving written notice to the Company stating therein
the quantity of Put Units to be purchased up to such Class A Member’s pro
rata share.  If any Class A Member
fails to agree to purchase its full pro rata share within such ten (10) day
period, the Company will give the Class A Members who did so agree (the “Electing
Put Members”) notice of the number of Put Units not subscribed for.  The Electing Put Members shall have five (5) days
from the date of such second notice to agree to purchase their pro rata share
(or such greater amount as the Electing Put Members agree upon) of all or any
part of the Put Units not purchased by such other Class A Members.

 

(iv)          Any
notice delivered pursuant to Section 8.09(b)(ii) shall set
forth the closing date chosen by such Management Member, which date shall in no
event be less than 90 days nor more than 120 days after the Put Notice Date;
provided that in the event the Terminated Member has not held the Termination
Units for a period of 180 days after the date of grant, the closing shall occur
immediately following the expiration of such 180 day period (for purposes
hereof each Permitted Transferee shall be considered to have held the
Termination Units to the same extent as the original transferee).  The closing of the purchase by the Company of
Put Units pursuant to Section 8.09(b) shall take place at the
principal office of the Company on or before the closing date set forth in such
notice.  At such closing, (i) the
Company shall pay the Terminated Member and/or such Terminated Member’s
Permitted Transferees, as applicable, against delivery of duly endorsed
certificates described below representing such Termination Units, the aggregate
Termination Price by wire transfer of immediately available federal funds and (ii) the
Terminated Member and/or such Terminated Member’s Permitted Transferees, as
applicable, shall deliver to the Company a certificate or certificates
representing the Put Units to be purchased by the Company duly endorsed, or
with unit powers duly endorsed, for transfer with signature guaranteed, free
and clear of any lien or encumbrance, with any necessary stock transfer tax
stamps affixed. The delivery of a certificate or certificates for the Put Units
by any Person selling such Termination Units pursuant to this Section 8.09(b) shall
be deemed a representation and warranty by such Person that: (i) such
Person has full right, title and interest in and to such Put Units; (ii) such
Person has all necessary power and authority and has taken all necessary action
to sell such Put Units as contemplated; (iii) such Put Units are free and
clear of any and all liens or encumbrances, and (iv) there is no adverse
claim with respect to such Put Units.

 

(c)           Rollover Units.

 

(i)            Except
as otherwise agreed by the Company, upon any Management Member’s termination
for Good Reason or termination by the Company without Cause, the Company and
the Terminated Member shall each seriously and in good faith consider a
proposal, which may be made by either party, for the Company to acquire the
Rollover Units from the Terminated

 

51

 

Member for the
Termination Price but neither party shall be obligated to make or accept any
offer.

 

(ii)           Any
closing of the purchase by the Company of Rollover Units pursuant to this Section 8.09(c) shall
take place at the principal office of the Company on the date chosen by the
Company, which date shall, except as may be reasonably necessary to determine
the Termination Price, in no event be more than 45 days after receipt of the
acceptance; provided, that in the event the Terminated Member has not held the
Termination Units for a period of 180 days after the date of grant, the closing
shall occur immediately following the expiration of such 180 day period (for
purposes hereof each Permitted Transferee shall be considered to have held the
Termination Units to the same extent as the original transferee).  At such closing, (i) the Company shall
pay the Terminated Member and/or such Terminated Member’s Permitted
Transferees, as applicable, against delivery of duly executed option assignment
documentation or duly endorsed certificates described below representing such
Termination Units, the aggregate Termination Price by wire transfer of
immediately available federal funds and (ii) the Terminated Member and/or
such Terminated Member’s Permitted Transferees, as applicable, shall deliver to
the Company an assignment(s) of option grant or certificate(s) representing
the Termination Units to be purchased by the Company duly endorsed, or with
unit powers duly endorsed, for transfer with signature guaranteed, free and
clear of any lien or encumbrance, with any necessary stock transfer tax stamps
affixed, as applicable. The delivery of an assignment(s) or certificate(s) for
the Termination Units by any Person selling such Termination Units pursuant to
this Section 8.09 shall be deemed a representation and warranty by
such Person that: (1) such Person has full right, title and interest in
and to such Termination Units; (2) such Person has all necessary power and
authority and has taken all necessary action to sell such Termination Units as
contemplated; (3) such Termination Units are free and clear of any and all
liens or encumbrances, and (4) there is no adverse claim with respect to
such Termination Units.

 

(d)           Termination Price.  For purposes of this Section 8.09,
if the employment or other service arrangement of a Management Member is
terminated (i) by the Company or a Subsidiary thereof for Cause, the “Termination
Price” shall be an amount per Termination Unit equal to the original
purchase price paid to the Company for such Termination Unit, and (ii) if
the employment or other service arrangement of a Management Member is
terminated for any reason other than for Cause, the “Termination Price”
shall be (x) in the case of a Call, an amount per Termination Unit equal
to the greater of Repurchase Fair Market Value on the RFMV Calculation Date and
original purchase price paid to the Company and (y) in the case of a Put,
an amount per Put Unit equal to the Repurchase Fair Market Value on the RFMV
Calculation Date.

 

(e)           Payment.  The Company shall pay the Termination Price
in cash; provided, however,
that in the event of the exercise of a Put Right under Section 8.09(b),
the Termination Price may be paid by the execution and delivery by the Company
of a promissory note, secured by the underlying repurchased Termination Units,
bearing interest at the prime rate, per annum, as published in The  Wall Street Journal,
eastern edition, with principal and accrued

 

52

 

interest and
payable in sixteen (16) equal quarterly installments on the first day of each
calendar quarter, commencing with the first calendar quarter beginning after
the closing date (or at such other time as is required in order to address the
issue set forth in clauses (i) or (ii) below) if (i) restrictive
covenants or other provisions contained in the documents evidencing the Company’s
indebtedness for borrowed money do not permit the Company to make such payments
in cash (or to the extent partial cash payment is permitted, the balance to be
represented by such a note); or (ii) the cash payment of the Termination
Price would materially and adversely affect the Company’s financial condition
as reasonably determined by the Board of Managers.  The Company will provide payment of the
Termination Price in cash to the extent that the Board of Managers
reasonably  determines that such cash
payment may be made subject to clauses (i) or (ii) above.

 

Section 8.10.          Preemptive Rights.  (a)  The Company shall give each Other Class A
Member written notice (an “Issuance Notice”) of any proposed issuance by
the Company of any Units (other than Excluded Units) at least ten (10) Business
Days prior to the proposed issuance date. 
The Issuance Notice shall specify the number and class of such Units and
the price at which such Units are to be issued and the other material terms and
conditions of the issuance.  Subject to Section 8.10(e) below,
each Other Class A Member shall be entitled to purchase such Other Class A
Member’s Pro Rata Share of the Units proposed to be issued at the price and on
the other terms and conditions specified in the Issuance Notice.

 

(b)           Each Other Class A Member may
exercise his or her rights under this Section 8.10 by delivering
notice of his or her election to purchase such Units to the Company and to each
other within ten (10) Business Days of receipt of the Issuance
Notice.  A delivery of such notice (which
notice shall specify the number (or amount) of Units to be purchased by such
Other Class A Member submitting such notice) by such Other Class A
Member shall constitute a binding agreement of such Other Class A Member
to purchase, at the price and on the terms and conditions specified in the
Issuance Notice, the number (or amount) of Units specified in such Other Class A
Member’s notice.  If, at the termination
of such ten (10) Business Day period, any Other Class A Member shall
not have exercised his or her rights to purchase any of such Other Class A
Member’s Pro Rata Share of such Units, such Other Member shall be deemed to
have waived all of its rights under this Section 8.10 with respect
to, and only with respect to, the purchase of such Units.

 

(c)           If any Other Class A Member
declines to exercise his or her preemptive rights under this Section 8.10
or elects to exercise such rights with respect to less than such Other Class A
Member’s Pro Rata Share of such Units (the aggregate amount of Units subject to
all such unexercised preemptive rights, the “Excess Units”), any participating
Other Class A Member electing to exercise its rights with respect to its
full Pro Rata Share (a “Fully Participating Member”) shall be entitled
to purchase an additional number of Units equal to the product of (i) the
number of Excess Units and (ii) a fraction, the numerator of which is the
Aggregate Ownership of the Class A Units owned by the Fully Participating
Member, and the denominator of which is equal to the sum of the Aggregate
Ownership of that class of Units of all Fully Participating Members.

 

(d)           The Company shall have ninety (90)
days from the date of the Issuance Notice to consummate the proposed issuance
of any or all of such Units that each Other Class A

 

53

 

Member has
elected not to purchase at the price and upon terms and conditions that are not
materially less favorable to the Company than those specified in the Issuance
Notice, provided that, if such issuance is
subject to regulatory approval, such 90-day period shall be extended until the
expiration of five (5) Business Days after all such approvals have been
received, but in no event later than 120 days from the date of the Issuance
Notice.  At the consummation of such
issuance, the Company will register the Units to be purchased by each Other Class A
Member exercising preemptive rights pursuant to this Section 8.10  in the name of such Other Class A
Member, against payment by such Other Class A Member of the purchase price
for such Units.  If the Company proposes
to issue any class of Units after such 90-day period or on other terms
materially less favorable to the issuer, it shall again comply with the
procedures set forth in this Section 8.10.

 

(e)           The Company shall not be under any
obligation to consummate any proposed issuance of Units, nor shall there be any
liability on the part of the Company to any Other Class A Member if the
Company has not consummated any proposed issuance of Units pursuant to this Section 8.10
for whatever reason, regardless of whether it shall have delivered an Issuance
Notice in respect of such proposed issuance.

 

(f)            The Company may offer and sell Units
to the prospective investor subject to the preemptive rights under this Section 8.10
without first offering such Units to each Other Class A Member or
complying with the procedures of this Section 8.10, so long as the
Board of Managers has determined in good faith that the procedures in this Section 8.10
cannot be complied with prior to the offer and sale of Units and each Other Class A
Member receives prompt written notice of such sales and thereafter is given the
opportunity to purchase its Pro Rata Share of such Units within forty-five (45)
days after the close of such sale and in any event no later than ten (10) Business
Days from receipt of the notice referred to herein on substantially the same
terms and conditions and for the identical price as such sale to the
prospective investor.

 

ARTICLE
IX

 DISSOLUTION; LIQUIDATION

 

Section 9.01.          Dissolution.  The Company shall be dissolved and its
affairs wound up on the first to occur of any of the following events:

 

(a)           the decision, following the
occurrence of a Change of Control or consummation of an Initial Public
Offering, of a majority of the Board of Managers to dissolve the Company;

 

(b)           the unanimous decision, at any time,
of the Board of Managers, to dissolve the Company; or

 

(c)           any other event sufficient under the
Act (other than action of the Board of Managers or the Members) to cause the
dissolution of the Company.

 

Section 9.02.          Final Accounting.  Upon the dissolution of the Company, a proper
accounting shall be made from the date of the last previous accounting to the
date of dissolution.

 

54

 

Section 9.03.          Liquidation.

 

(a)           Dissolution of the Company shall be
effective as of the date on which the event occurs giving rise to the
dissolution and all Members shall be given prompt notice thereof in accordance
with Article XI, but the Company shall not terminate until the
assets of the Company have been distributed as provided for in Section 9.03(c).  Notwithstanding the dissolution of the
Company, prior to the termination of the Company, the business, assets and
affairs of the Company shall continue to be governed by this Agreement.

 

(b)           Upon the dissolution of the Company,
the Board of Managers or, if there is no Board of Managers, a person selected
by the affirmative vote of Class A Members holding Class A Units that
represent more than 50% of the issued and outstanding Class A Units, shall
act as the liquidator (the “Liquidator”) of the Company to wind up the
Company.  The Liquidator shall have full
power and authority to sell, assign and encumber any or all of the Company’s
assets and to wind up and liquidate the affairs of the Company in an orderly and
business-like manner.

 

(c)           The Liquidator shall distribute all
proceeds from liquidation in the following order of priority:

 

(i)            first, to creditors of the
Company (including creditors who are Members) in satisfaction of the
liabilities of the Company (whether by payment or the making of reasonable
provision for payment thereof); and

 

(ii)           second, to the Members in the
same manner in which non-liquidating distributions are made pursuant to Section 5.02.

 

(d)           The Liquidator shall determine
whether any assets of the Company shall be liquidated through sale or shall be
distributed in kind.  A distribution in
kind of an asset to a Member shall be considered, for the purposes of this Article IX,
a distribution in an amount equal to the fair market value of the assets so
distributed as determined in good faith by the Liquidator in its reasonable
discretion.

 

Section 9.04.          Cancellation of Certificate.  Upon the completion of the distribution of
Company assets as provided in Section 9.03, the Company shall be terminated
and the Person acting as Liquidator shall cause the cancellation of the
Certificate and shall take such other actions as may be necessary or
appropriate to terminate the Company.

 

ARTICLE X

 REPRESENTATIONS

 

Section 10.01.        Investment Purpose.  Each Member hereby represents and warrants to
the Company, the Board of Managers and each other Member that such Member (i) is
an “accredited investor” as such term is defined in Rule 501(a) of
Regulation D promulgated under the Securities Act, (ii) has acquired its
Units for itself for investment purposes only, and not with a view to any
resale or distribution of such Units, (iii) HAS BEEN ADVISED AND
UNDERSTANDS THAT SUCH UNITS HAVE NOT BEEN AND SHALL NOT BE

 

55

 

REGISTERED
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS AND,
THEREFORE, CANNOT BE RESOLD UNLESS SUCH UNITS ARE REGISTERED UNDER THE
SECURITIES ACT AND ALL APPLICABLE STATE SECURITIES LAWS, OR UNLESS EXEMPTIONS
FROM REGISTRATION ARE AVAILABLE, and (iv) has, either alone or with its “purchaser
representatives” as that term is defined in Rule 501(h) under the
Securities Act, such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of its investment in the
Company.  Each Member further
acknowledges that the Company has made available to such Member, at a
reasonable time prior to its acquisition of its Units, the opportunity to ask
questions and receive answers concerning the terms and conditions of such
acquisition and to obtain any additional information which the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to verify the accuracy of the information furnished by the Company in
connection with such acquisition.  Each
Member further represents and warrants to the Company and each other Member
that, as of the signing of this Agreement:

 

(a)           if other than an individual, it is
duly organized, validly existing and in good standing under the laws of the
jurisdiction where it purports to be organized;

 

(b)           it has full power and authority to
enter into and perform this Agreement;

 

(c)           all actions necessary to authorize
the signing and delivery of this Agreement, and the performance of obligations
under it, have been duly taken;

 

(d)           this Agreement has been duly signed
and delivered by a duly authorized officer or other representative of such
Member (if such Member is not an individual) and constitutes the legal, valid
and binding obligation of such Member enforceable in accordance with its terms
(except as such enforceability may be affected by applicable bankruptcy,
insolvency or other similar laws affecting creditors’ rights generally, and
except that the availability of equitable remedies is subject to judicial
discretion);

 

(e)           no consent or approval of any other
Person is required in connection with the signing, delivery and performance of
this Agreement by such Member; and

 

(f)            the signing, delivery and
performance of this Agreement do not violate the organizational documents of
such Member (if such Member is not an individual) or any material agreement to
which such Member is a party or by which it is bound unless such violation
would not have a material adverse effect on the ability of the Member to
fulfill and perform its obligations under this Agreement.

 

Section 10.02.        Independent Inquiry.  Each Member acknowledges, agrees, represents
and warrants that it has completed its own independent inquiry and has relied
fully upon the advice of its own legal counsel, accountant, financial and other
advisors in determining the legal, tax, financial and other consequences of
this Agreement and the transactions contemplated hereby and the suitability of
this Agreement and the transactions contemplated hereby for such Member and its
particular circumstances and has not relied upon any representations or advice
by any other Member or the Board of Managers. 
Without limiting the generality of the foregoing, each Member
acknowledges, agrees, represents and warrants that

 

56

 

(i) it
has completed its own independent inquiry as to the investment risks associated
with its respective Units, (ii) any projections or assumptions as to
potential returns that have previously been submitted to such Member by the
Company or any other person Affiliated with the Company are not guarantees of
actual returns and (iii) no representations, warranties or guarantees have
been made to such Member as to the returns or performance of the Company by any
of the Board of Managers, the Company or any other person Affiliated with the
Company.

 

ARTICLE XI

 

GENERAL PROVISIONS

 

Section 11.01.        Members Representative.  For purposes of this Agreement, the DLJ
Members hereby consent to the appointment of DLJMB, as representative of the
DLJ Members (the “Members Representative”), and as attorney-in-fact for
and on behalf of the DLJ Members, and, subject to the express limitations set
forth below, the taking by the Members Representative of any and all actions
and the making of any decisions required or permitted to be taken by the DLJ
Members under this Agreement.  The
Members Representative will have unlimited authority and power to act on behalf
of the DLJ Members with respect to this Agreement and the disposition,
settlement or other handling of all claims, rights or obligations arising under
this Agreement so long as all DLJ Members are treated in the same manner.  The DLJ Members will be bound by all actions
taken by the Members Representative in connection with this Agreement.  In performing its functions hereunder, the
Members Representative will not be liable to the DLJ Members in the absence of
gross negligence or willful misconduct.

 

Section 11.02.        Aggregation of Shares.  All Units held by a Member and its Affiliates
shall be aggregated together for purposes of determining the availability of
any rights under this Agreement; provided, however, for purposes of this Section 11.02,
none of the DLJ Members shall be deemed an Affiliate of any Other Member.

 

Section 11.03.        Binding Effect; Assignability;
Benefit.  (a)  This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective heirs, successors, legal representatives and permitted assigns.  Any Member that ceases to own beneficially
any Units shall cease to be bound by the terms hereof (other than (i) the
provisions of Annex A applicable to such Member with respect to any
offering of Registrable Securities completed before the date such Member ceased
to own any Units, (ii) Sections 7.07, 7.08, 7.09 and 7.10
and (iii) Article XI).

 

(b)           Nothing in this Agreement, expressed
or implied, is intended to confer on any Person other than the parties hereto,
and their respective heirs, successors, legal representatives and permitted
assigns, any rights, remedies, obligations or liabilities under or by reason of
this Agreement.

 

Section 11.04.        Notices.  All notices, requests and other
communications to any party shall be in writing and shall be delivered in
person, mailed by certified or registered mail, return receipt requested, or
sent by facsimile transmission,

 

If to the Company, to:

 

57

 

STR Holdings LLC

c/o DLJ Merchant Banking Partners

Eleven Madison Avenue, 16th Floor

New York, NY  10010

Attention:  Susan C. Schnabel

Facsimile:  (310) 712-2734

 

If to the DLJ Members,
to:

 

c/o DLJ Merchant Banking, Inc.

Eleven Madison Avenue

New York, NY 10010

Attention:  Susan C. Schnabel

Facsimile:  (310) 712-2734

 

In each case with a copy
to:

 

Weil, Gotshal &
Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention:  Douglas P. Warner, Esq.

Facsimile:  (212) 310-8007

 

If to an Other Member, to the address set forth below
the name of such Other Member on Schedule A hereto;

 

or, in each case, at such
other address or fax number as such party may hereafter specify for the purpose
of notices hereunder by written notice to the other parties hereto.  Notice shall be sent by United States Mail,
first class postage prepaid, return receipt requested, by Federal Express or
other nationally recognized overnight parcel delivery service for next day
delivery; or by hand delivery with a receipt confirmation requested.  Notice given in accordance with this
paragraph shall be presumed to have been delivered and received three (3) days
after mailing if sent by United States Mail, first class, one day after mailing
if sent for next day deliver by Federal Express or equivalent; and on the day
of delivery if hand delivered.  Notice
may also be given by fax or electronic mail, but such notice will not be
effective unless the notice provider obtains a confirmation of receipt of the
fax or electronic mail signed by the notice recipient.

 

Any Person that hereafter
becomes a Member shall provide its address and fax number to the Company, which
shall promptly provide such information to each other Member.

 

Section 11.05.        Waiver; Amendment.  (a)  No provision of this Agreement may
be waived except by an instrument in writing executed by the party against whom
the waiver is to be effective.  No
provision of this Agreement may be amended or otherwise modified except by an
instrument in writing executed by (1) the Company; (2) Class A
Members  holding at least 51% of the
outstanding Class A Units; and (3)  if any such amendment will
disproportionately and materially adversely affect the Other Class A
Members differently than the DLJMB Members, the consent of such Other Class A
Members, as the case may be, holding at least 51% of the outstanding Class A
Units held by the Other Class A Members, as applicable, at the time

 

58

 

of such
proposed amendment or modification will be required; provided, however,
that this Section 11.05 may not be amended without the written
consent of Other Class A Members holding at least 51% of the outstanding Class A
Units held by the Other Class A Members and Section 11.02 may
not be amended in any manner that materially and adversely affects a Member
without the prior written consent of such Member so adversely affected.

 

Section 11.06.        Transfer of All Securities.  Upon the permitted Transfer by any Member,
executor or other entity of all Units owned or held by him, her or it and, upon
payment of any consideration to which such Member is entitled, such Member
shall have no further rights or privileges under this Agreement or otherwise be
entitled to the benefits hereof. 
However, such Transfer shall not relieve a Member, his or her executor
or his, her or its successors or assigns from liability hereunder in the event
of a breach by any such Member of his, her or its duties hereunder prior to
such Transfer.

 

Section 11.07.        Fees and Expenses.  Except as provided herein or otherwise agreed
in writing, each party shall pay its own costs and expenses incurred in
connection with the preparation and execution of this Agreement, or any
amendment or waiver hereof, and the transactions contemplated hereby and all matters
related hereto.

 

Section 11.08.        Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without regard
to the conflicts of laws rules of such state.

 

Section 11.09.        Jurisdiction.  The parties hereby agree that any suit,
action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby, whether in contract, tort or otherwise, shall be brought
in the United States District Court for the District of Delaware or in the
Court of Chancery of the State of Delaware (or, if such court lacks subject
matter jurisdiction, in the Superior Court of the State of Delaware), so long
as one of such courts shall have subject matter jurisdiction over such suit,
action or proceeding, and that any case of action arising out of this Agreement
shall be deemed to have arisen from a transaction of business in the State of
Delaware, and each of the parties hereby irrevocably consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient form. 
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.  Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 7.04 shall be deemed effective service of process on
such party.

 

Section 11.10.        Waiver of Jury Trial.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT
OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

59

 

Section 11.11.        Specific Enforcement; Cumulative
Remedies.  The parties hereto
acknowledge that money damages may not be an adequate remedy for violations of
this Agreement and that any party, in addition to any other rights and remedies
which the parties may have hereunder or at law or in equity, may, in his or its
sole discretion, apply to a court of competent jurisdiction for specific
performance or injunction or such other relief as such court may deem just and
proper in order to enforce this Agreement or prevent any violation hereof and,
to the extent permitted by applicable law, each party waives any objection to
the imposition of such relief.  All
rights, powers and remedies provided under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof by
any party shall not preclude the simultaneous or later exercise of any other
such rights, powers or remedies by such party.

 

Section 11.12.        Entire Agreement.  This Agreement and any exhibits and other
documents referred to herein constitute the entire agreement and understanding
among the parties hereto in respect of the subject matter hereof and thereof
and supersede all prior and contemporaneous agreements and understandings, both
oral and written, among the parties hereto, or between any of them, with
respect to the subject matter hereof and thereof.

 

Section 11.13.        Captions.  The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.

 

Section 11.14.        Pronouns.  Any masculine personal pronoun shall be
considered to mean the corresponding feminine or neuter personal pronoun, and
vice versa, as the context requires.

 

Section 11.15.        Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.  Upon such a determination,
the parties shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner so that the transactions contemplated hereby be consummated
as originally contemplated to the fullest extent possible.

 

Section 11.16.        Counterparts; Effectiveness.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become automatically
effective upon the execution of this Agreement by the Company and Class A
Members holding at least 51% of the outstanding Class A Units.

 

Section 11.17.        Initial Public Offering.  Notwithstanding anything to the contrary
contained herein, in connection with any Initial Public Offering, and upon the
request of the Board of Managers, each of the Members hereby agrees that it
will, at the expense of the Company, take such action and execute such
documents as may reasonably be necessary to effect such Initial Public
Offering.  Either in connection with an
Initial Public Offering or prior to the expiration of the later of (i) 180
days following the consummation of the Initial Public Offering or (ii) the
expiration of any underwriter lock-up period, the Board of Managers will 

 

60

 

liquidate the
Company and distribute to the Members shares of common stock of STR or such
other corporation owned by the Company which effects the Initial Public Offering;
provided that (a) fifty percent (50%) of the shares of common stock held
by each Member shall become eligible for sale by such Member on the date that
is 180 days following the expiration of any underwriter lock-up period
applicable to such Member and the remaining fifty percent (50%) of such Member’s
shares shall become eligible for sale by such Member on the date that is 271
days following the expiration of such underwriter lock-up period and (b) the
Members have entered into an agreement acceptable to the Company not to sell
such shares of common stock except as set forth in clause (a) above or
pursuant to the exercise of registration rights (as set forth in Annex A).  The number of shares of common stock of STR
or such other corporation to be received by each Member shall be determined in
accordance with Section 9.03 hereof.  In connection with any such distribution or
in the event that the Company is converted into a corporation that effects the
Initial Public Offering, the Members shall be entitled to the registration
rights set forth on Annex A hereto.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY
LEFT BLANK.]

 

61

 

 

 

[Signature Block]Exhibit 4.16
 
RESTATED ARTICLES OF INCORPORATION
 
OF
 
BLACK HILLS CORPORATION
 
Pursuant to the provisions of SDCL 49-33-1, Black Hills Corporation, a South Dakota corporation organized under the provisions of SDCL 49-33, does hereby restate its Articles of Incorporation as of May 24, 1994 and by so doing includes in this restatement the Restated Articles of Incorporation previously adopted by the Board of Directors on July 30, 1986 and all of the subsequent amendments thereto which were adopted by stockholders as set forth in Articles of Amendment dated (i) May 21, 1987 and filed May 26, 1987, (ii) May 16, 1989 and filed June 1, 1989, (iii) May 28, 1992 and filed June 2, 1992 (as corrected by Articles of Correction dated September 10, 1993 and filed September 14, 1993), and (iv) May 24, 1994 and filed May 25, 1994.
 
FIRST:  The name of this Corporation (“Corporation” or “Company”) shall be
 
Black Hills Corporation
 
and the place where its principal corporate offices are located shall be in Rapid City, Pennington County, State of South Dakota.
 
The Corporation is formed for the purpose of generating, transmitting and distributing electricity within the State of South Dakota and elsewhere, the same to be sold to and used by the public for heat, light or power, pursuant to the provisions of Chapter 49-33 of the South Dakota Codified Laws, and shall have all the powers and privileges therein provided and set forth, together with such additional powers, rights and privileges as may otherwise be provided by the laws of the State of South Dakota. Without in any way limiting the generality of the foregoing, the purposes for which the Corporation is formed shall specifically include the following:
 
1.     To generate, produce, purchase, transmit, distribute, use and sell electricity for heat, light or power.
 
2.     To construct, purchase, lease, maintain and operate electric generating stations or substations and all appurtenances thereto for electric transmission and distribution lines whether on poles or underground, for the transmission and distribution of electricity for heat, light or power, and, for such purposes, to acquire by lease, purchase, or in any other lawful manner all real property and rights-of-way necessary for the generation, transmission and distribution of electricity and generally for its proper corporate purposes to purchase or otherwise acquire, hold, pledge, mortgage, sell, exchange or otherwise deal in or dispose of, property, both real and personal, of every kind and 

 

 

description.
 
3.     To acquire, purchase, lease, operate and maintain dams, reservoirs, ditches, flumes, pipes and conduits for the accumulation, storage, flow and transmission of water for the purpose of generating electricity.
 
4.     To acquire, hold, possess and convey franchises and grants from state or municipal authorities for supplying cities, villages and towns, or any of them, and the inhabitants thereof with electric current and electric power to be used for heat, light or power.
 
5.     To contract with cities, towns, municipalities and any political subdivision or agency of the State of South Dakota or of any other State or of the United States of America and with persons, firms and corporations for the supply of electricity for heat, light or power.
 
6.     To buy and sell electrical appliances, supplies, fixtures and equipment, including radios, radio parts, radio equipment, cooling devices, washing machines, vacuum sweepers, stoves and all other similar articles, to engage in the electrical contracting business, to carry on and develop any business undertaking, transaction or operation commonly carried on by electrical retail and wholesale merchants, supply men and contractors, and to do any and all things that may be necessary or incidental to carry on, manage and operate said mercantile electrical business. 
 
7.     To borrow from time to time such sums of money at such rates of interest and upon such terms as the Board of Directors shall agree and authorize, to execute trust deeds or mortgages or both, as occasion may require on any or all of its property for any amounts borrowed or owing by the Corporation and generally to borrow money and contract debts for its corporate purposes; to issue bonds, promissory notes, debentures and other obligations and evidences of indebtedness without limit as to amount, whether secured by mortgage, pledge, or otherwise or unsecured, for money borrowed or in payment of property purchased or acquired, or for any other lawful purpose.
 
8.     To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or otherwise dispose of shares of the capital stock of, or any bonds, securities or evidences of indebtedness created by, any other corporation of the State of South Dakota, or any other state, and, while the owner of such stock, to exercise all the rights, powers and privileges of ownership, including the right to vote thereon.
 
9.     To aid in any manner any corporation or association, any shares of stock of which, or any bonds, debentures, notes, securities, evidences of indebtedness, contracts, or obligations of which, are held by or for the Corporation, in which, or in the welfare of which, the Corporation shall have any interest, and to do any acts designed to protect, preserve, improve or enhance the value of any property at any time held or controlled by the

 

 

Corporation, or in which it may be at any time interested; and to organize, promote or facilitate the organization of subsidiary companies.
 
10.   To purchase, hold, sell and transfer shares of its own capital stock in the manner and to the extent provided by the laws of the State of South Dakota.
 
11.   To engage in and carry on the business of a water company and for said purposes to develop, supply, sell, buy, purify, transport and deliver water for commercial, industrial, domestic, governmental or any other public or private uses; to buy, sell and deal in appliances, fixtures and products for the utilization of water; and to acquire, construct, maintain and operate all types of plants, works, structures, wells, ditches, canals, flumes, pipelines, dams, reservoirs, machinery, fixtures and equipment necessary for the conduct of said business.
 
12.   To engage in and carry on the business of a gas company and for said purpose to manufacture, produce, sell, buy, supply, transport, distribute and deal in natural, manufactured or by- product gases, their products and compounds, and liquified petroleum gas and products for commercial, industrial, domestic, governmental or any other public or private uses; to buy, sell and deal in appliances and fixtures for the utilization of such gas and petroleum products for power, heat, light or other purposes; and to acquire, construct, maintain and operate all types of plants, works, structures, transmission and distribution lines, machinery, fixtures and equipment necessary for the conduct of said business.
 
13.   To engage in and carry on the business of operating a gas or petroleum transmission pipeline for the purpose of transporting, supplying and selling gas, petroleum and petroleum products for its own use or for the public, or for private persons and firms and governmental agencies.
 
14.   To engage in and carry on the business of a telegraph or telephone company and for said purpose to acquire, construct, maintain and operate telephone and telegraph lines providing for all manner and kind of telegraph and telephone service for commercial, industrial, domestic, governmental or other public or private uses, and including the providing of such service through its electric light and power facilities and services, or by lease or other arrangement for use of such electric light and power facilities and services; to buy, sell and deal in appliances, fixtures and products for the utilization of such telegraph and telephone services; and to acquire, construct, maintain and operate all type of plants, works, structures, lines, machinery, fixtures and equipment necessary for the conduct of said business.
 
15.   To engage in and carry on any other business for profit as permitted by law.
 
16.   To do all and everything necessary and proper for the accomplishment of the objects enumerated in these Restated

 

 

Articles of Incorporation or any amendment thereof, or necessary or incidental to the protection and benefit of the Corporation, and to have, enjoy and exercise all the rights, powers and privileges which are now or may hereafter be conferred upon corporations organized under the same statutes as the Corporation.
 
The foregoing clauses shall be construed both as objects and powers, and it is hereby expressly provided that the above enumeration of specific powers shall not be held to limit or restrict in any manner the powers of the Corporation, but is in furtherance of and in addition to the general powers conferred by the laws of the State of South Dakota. 
 
SECOND: The amount of the total authorized capital stock of the Corporation shall be 50,670,000 shares divided into three classes consisting of (1) 270,000 shares of Cumulative Preferred Stock having a par value of $100 per share (hereinafter called the “$100 Preferred Stock”), (2) 400,000 shares of Cumulative Preferred Stock having a no par value (hereinafter called the “No Par Preferred Stock”), and (3) 50,000,000 shares of Common Stock having a par value of $1 per share.
 
Where the term “Preferred Stock” is used in this Article Second without being immediately preceded by either “$100” or “No Par,” the term shall include both $100 Preferred Stock and No Par Preferred Stock.
 
All classes and series of the Preferred Stock shall be designated as specified in resolutions of the Board of Directors provided for in said subdivision (K).
 
All classes and series of the Preferred Stock shall rank pari passu with each other as to dividends and distribution of assets on liquidation. 
 
The further description of the different classes and series of stock of the Corporation and a statement of the designations and powers (including voting powers), preferences and relative participating, optional or other rights and the qualifications, limitations and restrictions thereof are as follows:
 
(A)          Before any dividends on the Common Stock shall be paid or declared or set apart for payment, the holders of the Preferred Stock at the time outstanding shall be entitled to receive, but only when and as declared, out of funds legally available for the declaration of dividends, cumulative cash dividends payable quarterly on March 1, June 1, September 1, and December 1 in each year at such rates and principal as shall be specified by the Board of Directors pursuant to subdivision (K) of this Article Second. Such dividends shall be cumulative from the first day of the quarterly dividend period in which such shares of Preferred Stock are issued, unless otherwise specified by the Board of Directors pursuant to said subdivision (K). If dividends at said specified rates on all

 

 

outstanding shares of the Preferred Stock from the date from which dividends on such shares became cumulative shall not have been paid, or declared and set apart for payment, for all past quarterly dividend periods, and the full dividends thereon for the current quarterly dividend period shall not have been paid, or declared and set apart for payment, the deficiency shall be fully paid or dividends equal thereto declared and set apart for payment, but without interest on cumulative dividends, before any dividends shall be declared or any distribution made on the Common Stock. After full dividends on the Preferred Stock shall have been paid, or declared and set apart for payment, then, and not otherwise, dividends may be declared and paid upon the Common Stock, out of any funds legally available for the declaration of dividends but only when and as determined by the Board of Directors. The provisions of this subdivision (A) with respect to dividends upon the Common Stock are subject to the requirements with respect to sinking funds or retirement funds for the Preferred Stock pursuant to subdivision (D) and (K) of this Article Second. 
 
(B)           The Corporation at its option may redeem at any time or from time to time the whole or any part of the Preferred Stock outstanding by paying to the holders of such shares to be redeemed such sums as shall be determined by the Board of Directors pursuant to subdivision (K) of this Article Second, together, in each case, with a sum in respect of each such share computed at the annual dividend rate from the date from which dividends on such share became cumulative to the date fixed for such redemption, less the aggregate of the dividends theretofore or on such redemption date paid thereon. Notice of every such redemption shall be given at least thirty days and not more than sixty days prior to the date fixed for such redemption by mailing to the holders of record of the Preferred Stock to be redeemed, at their respective addresses as the same shall appear on the books of the Corporation; but neither failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any shares of the Preferred Stock so to be redeemed. In the event that at any time less than all of the Preferred Stock of a particular series outstanding is to be redeemed, the shares to be redeemed may be selected by lot or in such other manner as the Board of Directors may determine. If such notice of redemption shall have been duly given, and if on or before the redemption date specified in such notice all funds necessary for such redemption shall have been set aside so as to be available therefor, then, notwithstanding that any certificate for the shares of the Preferred Stock so called for redemption shall not have been surrendered for redemption, the shares represented thereby shall no longer be deemed outstanding in the

 

 

hands of the persons who are the holders thereof immediately preceding such redemption, the right of such holders to receive dividends thereon shall cease to accrue from and after the date of redemption so fixed, and all rights of such holders with respect to such shares of Preferred Stock so called for redemption shall forthwith on such redemption date cease and terminate, except only the right of such holders to receive the amount payable upon redemption thereof, but without interest; provided, however, that the Corporation may, after giving such notice of any such redemption, or giving irrevocable instructions therefor, and prior to the redemption date specified in such notice, deposit in trust, for the account of the holders of the Preferred Stock to be redeemed, with a bank or trust company in good standing, organized under the laws of the United States of America or of the State of New York, doing business in the Borough of Manhattan, the City of New York, having a capital, surplus and undivided profits aggregating at least $5,000,000, all funds necessary for such redemption, and thereupon all shares of the Preferred Stock with respect to which such deposit shall have been made shall no longer be deemed to be outstanding in the hands of such holders, and all rights of such holders with respect to such shares of Preferred Stock shall forthwith upon such deposit in trust cease and terminate, except only the right of such holders to receive the amount payable upon the redemption thereof, but without interest, and except, in the case of any series of Preferred Stock convertible into shares of the Common Stock of the Corporation, the right, within limits specified by the Board of Directors to convert shares of such series into shares of Common Stock not later than the close of business on the third full business day prior to the date fixed for such redemption. All or any shares of the Preferred Stock redeemed at any time may, in the discretion of the Board of Directors and to the extent permitted by law, be reissued or otherwise disposed of as shares of the same class at any time or from time to time subject to the provisions of this Article Second. 
 
(C)           In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, then before any distribution shall be made to the holders of the Common Stock, the holders of the shares of the Preferred Stock at the time outstanding shall be entitled to receive in cash, (i) upon any involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the par value for the $100 Preferred Stock and the amount of the consideration as fixed in the resolutions creating the respective series of the No Par Preferred Stock for the No Par Preferred Stock, together with a sum in respect of each share of Preferred Stock, computed at the annual dividend rate from the date from which dividends on such share became

 

 

cumulative to the date fixed for the payment of such distributive amounts, less the aggregate of the dividends theretofore or on such date paid thereon, or (ii) upon any voluntary liquidation, dissolution or winding up of the affairs of the Corporation, the sums to which such holders of shares of the Preferred Stock would be entitled if such shares were redeemed (other than pursuant to subdivision (D) of this Article Second or pursuant to the provisions of any sinking or analogous fund of any series of Preferred Stock) on the date fixed for the distribution. After such payment to the holders of the Preferred Stock, the remaining assets and funds of the Corporation shall be divided and distributed among the holders of the Common Stock then outstanding according to their respective shares.
 
(D)          After the Corporation shall have paid or shall have declared and set apart for payment full dividends on the Preferred Stock, and on any other stock ranking on a parity with or prior to the Preferred Stock as to dividends and assets, for all past quarterly dividend periods and for the current quarterly dividend period, it shall set aside out of funds legally available therefor as a retirement fund in the amounts and at the times as will be determined by the Board of Directors in each certificate of designation authorizing a series of Preferred Stock. The obligation of the Corporation to set aside such retirement funds shall be cumulative, so that unless the payments for all past periods shall have been made, no dividend shall be paid or declared and no other distribution shall be made on the Common Stock and no Common Stock shall be purchased or otherwise acquired for value by the Corporation.
 
(E)           The holders of shares of Preferred Stock shall not be entitled to notice of any meeting of stockholders and shall have no right to vote at any meeting of stockholders for the election of members of the Board of Directors or for any other purpose or otherwise to participate in any actions taken by the Corporation, or the stockholders thereof, except as otherwise required by statutes of the State of South Dakota or specifically provided for at subdivisions (F) and (G) of this Article Second.
 
(F)           Whenever and as often as dividends payable on the Preferred Stock shall be accrued and unpaid in an amount equivalent to or exceeding four (but less than eight) quarterly dividends, the holders of the Preferred Stock voting separately as one class for such purpose, shall be entitled at the next succeeding Annual Meeting of Stockholders to elect such number of directors as will constitute one-third of the then board members; and the holders of the Common Stock, voting separately as one class for such purpose, shall be entitled to elect the remaining directors of the

 

 

Corporation.
 
Whenever and as often as dividends payable on the Preferred Stock shall be accrued and unpaid in an amount equivalent to or exceeding eight quarterly dividends, the holders of the Preferred Stock, voting separately as one class for such purpose, shall be entitled (in lieu of the voting rights conferred by the provisions of the first paragraph of this subdivision (F) of this Article Second) at the next succeeding Annual Meeting of Stockholders to elect the smallest number of directors necessary to constitute a majority of the Board of Directors, and the holders of the Common Stock, voting separately as one class for such purpose, shall be entitled to elect the remaining directors of the Corporation.
 
If and when all dividends accrued and unpaid on the Preferred Stock shall have been paid, the holders of the Preferred Stock shall at the next succeeding Annual Meeting of the Stockholders be divested of their rights in respect of the election of directors provided in this subdivision (F), and the voting rights of holders of the Preferred Stock and Common Stock shall revert to the status existing prior to the first dividend payment date on which dividends were not paid in full, but subject always to the provisions for revesting rights in the holders of the Preferred Stock in the event specified in this subdivision (F) and to the extent herein set forth.
 
At all meetings of stockholders at which holders of the Preferred Stock are entitled to elect directors in the exercise of rights provided in this subdivision (F), the holders of record of 25 percent of the aggregate number of shares of the Preferred Stock, then outstanding, shall constitute a quorum for the election of such directors. At all such meetings each holder of Preferred Stock shall be entitled to one vote for each share of Preferred Stock held by the holder thereof.
 
In case any vacancy shall occur among the directors elected by the holders of the Preferred Stock pursuant to this subdivision (G), the successor to any such director shall be elected by the vote of the majority of the remaining members of the Board of Directors, whether elected by the holders of the Preferred Stock or by the holders of Common Stock, such successor to hold office until the end of the term of the Class in which the vacancy occurred.
 
(G)           So long as any shares of the Preferred Stock are outstanding, the Corporation shall not, without the affirmative consent (given in writing without a meeting or by vote at a meeting duly called for the purpose) of the holders of at least two-thirds of the aggregate number of shares of each affected series of the

 

 

Preferred Stock then outstanding, alter or amend the preferences, voting powers or other special rights or the qualifications, limitations or restrictions thereof, of such series of Preferred Stock so as adversely to affect the shares of such series; but such action may be taken with such affirmative consent, together with such additional vote or consent of stockholders as from time to time may be required by law. 
 
So long as any shares of the Preferred Stock are outstanding, the Corporation shall not, without the affirmative consent (given in writing without a meeting or by vote at a meeting duly called for the purpose) of the holders of at least two-thirds of the aggregate number of shares of the Preferred Stock then outstanding voting as one class:
 
(1)        create or increase the authorized amount of any other class of stock which shall rank prior to the Preferred Stock in respect of dividends or assets;
 
(2)        reclassify shares of stock of any class ranking junior to the Preferred Stock in respect of dividends or assets, wholly or partially into shares of stock of any class ranking on a parity with or prior to the Preferred Stock in respect of dividends or assets;
 
(3)        sell all or substantially all of its property and assets to, or merge or consolidate into or with, any other company; or
 
(4)        make any distribution out of capital or capital surplus (other than dividends payable in stock ranking junior to the Preferred Stock in respect of dividends and assets) to holders of stock of the Corporation ranking junior to the Preferred Stock in respect of dividends or assets.
 
(H)          If any class of stock is hereafter created which ranks on a parity with the Preferred Stock in respect of dividends and assets and which by its terms is to have voting rights equal to the voting rights of the Preferred Stock specified in subdivisions (F) and (G) of this Article Second then the Preferred Stock and each such additional class of stock shall vote together as one class in all instances in which it is provided in said subdivisions that the Preferred Stock shall vote as one class.
 
(I)            Neither the holders of the Common Stock nor the holders of the Preferred Stock shall have any preemptive rights to subscribe to any issue of stock or other securities of any class of the Corporation.
 
(J)            Each holder of Common Stock shall at every meeting of the stockholders be entitled to one vote for each share of Common Stock held by him, subject to the

 

 

provisions of subdivisions (F) and (G) of this Article Second.
 
(K)          Shares of each series of Preferred Stock shall have such distinctive serial designations as shall be set forth in the resolution or resolutions from time to time adopted by the Board of Directors providing for the issue of shares of such series; and in any such resolution or resolutions with respect to each particular series of Preferred Stock the Board of Directors is hereby expressly authorized to fix from time to time before issuance and to the extent which may be permitted by law,
 
(1)        the consideration for the No Par Preferred Stock,
 
(2)        the annual dividend rate for the particular series,
 
(3)        the redemption prices per share for the particular series, and 
 
(4)        any other characteristics of, and any restrictive or other provisions (including sinking fund or other retirement fund provisions and the right to convert shares of said series into shares of Common Stock) relating to, the shares of the particular series, not inconsistent with the provisions of this Article Second applicable to all series.
 
THIRD:           The Corporation shall have perpetual existence.
 
FOURTH:       Except as otherwise expressly provided by the laws of the State of South Dakota, the following additional provisions are inserted for the regulation of the business and for the conduct of the affairs of this Corporation and its directors and stockholders:
 
1.      The Board of Directors shall have power from time to time to fix and determine and to vary the amount to be reserved as working capital of the Corporation and, before the payment of any dividends or making any distribution of profits, it may set aside out of the net profits or surplus of the Corporation such sum or sums as it may from time to time in its absolute discretion think proper, whether as a reserve fund to meet contingencies or for the equalizing of dividends or for repairing or maintaining any property of the Corporation or for such corporate purposes as the board shall think conducive to the interests of the Corporation, subject only to such limitations as the Bylaws of the Corporation may from time to time impose.
 
2.      No contract or other transaction between this Corporation and any other corporation shall be void or voidable because of the fact that directors of this Corporation are directors of such other corporation, if such contract or transaction shall be approved or ratified by the affirmative vote of a majority of the directors present at a meeting of the Board 

 

 

of Directors, who are not so interested. Any director individually, or any firm of which any director is a partner, may be a party to or may be interested in any contract or transaction of this Corporation provided that such contract or transaction shall be approved or ratified by the affirmative vote of at least a majority of the directors present at a meeting of the Board of Directors, who are not so interested, nor shall any director be liable to account to this Corporation for any profit realized by him from or through any such transaction or contract of this Corporation, ratified or approved as aforesaid, by reason of his interest in such transaction or contract. Directors so interested may be counted when present at meetings of the Board of Directors for the purpose of determining the existence of a quorum.
 
3.      The Board of Directors shall have the power to fix the times for the declaration and payment of dividends, except as herein otherwise provided; to borrow money and contract debts when necessary for the transaction of the business of the Corporation, or for the exercise of its corporate rights, privileges or franchises; and to issue bonds, promissory notes, debentures and other obligations and evidences of indebtedness without limitation, whether secured by mortgage, pledge or otherwise or unsecured, for money borrowed or in payment of property purchased or acquired or any other lawful purpose.
 
4.      Subject to direction by resolution of a majority of the stockholders, the Board of Directors shall have power from time to time to determine whether and to what extent and at what times and places and under what conditions and regulations the accounts, books and stock ledger of the Corporation or any of them, shall be open to the inspection of stockholders; and no stockholder shall have any right to inspect any account, book, stock ledger or document of the Corporation except as conferred by statute or authorized by the Board of Directors or by a resolution of the stockholders. 
 
5.      The Board of Directors shall have the power to appoint an Executive Committee from among its number, which Committee, to the extent and in the manner provided in the Bylaws of the Corporation, shall have and may exercise all of the powers of the Board of Directors, so far as may be permitted by law, in the management of the business and affairs of the Corporation whenever the Board of Directors is not in session. 
 
6.      The Board of Directors, in addition to the powers and authority expressly conferred upon it hereinbefore and by statute and by the Bylaws, is hereby empowered to exercise all such powers as may be exercised by the Corporation; subject, nevertheless, to the provisions of the laws of the State of South Dakota and of these Restated Articles of Incorporation. 
 
7.      To the fullest extent permitted by South Dakota law governing this Corporation as the same exists or may hereafter be amended, a director of this Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, 

 

 

except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for any violation of Sections 47-5-15 to 47-5-19, inclusive, of the South Dakota Codified Laws, or (iv) for any transaction from which the director derived an improper personal benefit.
 
8.      The provisions of South Dakota Codified Laws Sections 47-33-8 through 47-33-16, inclusive, do not apply to control share acquisitions (as defined by South Dakota Compiled Laws Section 47-33-3(l)) of shares of the Company.
 
FIFTH: The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors, the number of which shall be nine (9); provided, (i) the Board of Directors may determine the number of directors to be more than nine through amendments to its Bylaws if permitted by the state law governing this corporation, and (ii) the number of directors shall be increased under the conditions set forth in the following paragraph. The Board of Directors shall be and is divided into three classes, Class I, Class II and Class III, which shall be as nearly equal in number as possible. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, each initial director in Class I shall hold office until the annual meeting of stockholders in 1987, each initial director in Class II shall hold office until the annual meeting of stockholders in 1988, and each initial director in Class III shall hold office until the annual meeting of stockholders in 1989.
 
In the event that dividends payable on the Preferred Stock shall be accrued and unpaid in an amount equivalent to or exceeding four (but less than eight) quarterly dividends, the number of directors constituting the Board of Directors shall be increased by a number sufficient so that, without removal of any director from office prior to the expiration of his or her term, the holders of the Preferred Stock, voting separately as one class for such purpose, can elect a sufficient number of directors to constitute one-third of all directors, in compliance with subdivision (G) of the Article Second. At each subsequent annual meeting of stockholders, the holders of the Preferred Stock shall elect the smallest number of directors necessary to ensure that one-third of all directors shall have been elected by the holders of the Preferred Stock, until such time as all dividends accrued and unpaid on the Preferred Stock shall have been paid, after which such voting rights of the holders of the Preferred Stock shall be terminated. In the event that dividends payable on the Preferred Stock shall be accrued and unpaid in an amount equivalent to or exceeding eight quarterly dividends, the number of directors constituting the Board of Directors shall be increased by a number sufficient so that, without removal of any director from office prior to the expiration of his or her term, the holders of the Preferred Stock, voting separately as one class for such purpose, can elect a sufficient number of directors to constitute a majority of all directors, in

 

 

compliance with subdivision (H) of the Article Second. At each subsequent annual meeting of stockholders, the holders of the Preferred Stock shall elect the smallest number of directors necessary to ensure that a majority of all directors shall have been elected by the holders of the Preferred Stock, until such time as all dividends accrued and unpaid on the Preferred Stock shall have been paid, after which such voting rights of the holders of the Preferred Stock shall be terminated. 
 
The Board of Directors is expressly authorized to determine the rights, powers, duties, rules and procedures that affect the power of the Board of Directors to manage and direct the business and affairs of the Corporation, including the power to designate and empower committees of the Board of Directors, to elect, appoint and empower the officers and other agents of the Corporation, and to determine the time and place of, and the notice requirements for, Board meetings, as well as quorum and voting requirements for, and the manner of taking, Board action.
 
In the event of any change in the authorized number of directors, the Board of Directors shall apportion any newly created directorships to, or reduce the number of directorships in, such class or classes as shall, so far as possible, equalize the number of directors in each class. The Board of Directors shall allocate consistently with the rule that the three classes shall be as nearly equal in number of directors as possible, any newly-created directorship to the class the term of office of which is due to expire at the latest date following such allocation. 
 
Any vacancies in the Board of Directors for any reason, including any newly created directorships resulting from any increase in the number of directors, may be filled by the Board of Directors, acting by a majority of the directors then in office, although less than a quorum; and any directors so chosen shall hold office until the next election of the class for which such directors shall have been chosen. 
 
Notwithstanding any of the foregoing, each director shall serve for a term continuing until the annual meeting of stockholders at which the term of the class to which he was elected expires and until his successor is elected and qualified or until his or her earlier death, resignation or removal; except, a director may be removed from office prior to the expiration of his or her term only for cause and by a vote of the majority of the total number of members of the Board of Directors without including the director who is the subject of the removal determination and without such director being entitled to vote thereon. 
 
Notwithstanding anything contained in these Restated Articles of Incorporation to the contrary, the affirmative vote or concurrence of the holders of at least eighty percent (80%) of the Common Stock entitled to vote thereon and sixty-six and two- thirds percent (66-2/3%) of the Preferred Stock entitled to vote thereon shall be required to alter, amend, or repeal this Article Fifth.

 

 

SIXTH:           1.     In addition to any other approvals and voting requirements mandated by law and other provisions of these Restated Articles of Incorporation, the affirmative vote of the holders of not less than eighty percent (80%) of the outstanding shares of “Voting Stock” (as hereinafter defined) of the Company shall be required for the approval or authorization of any “Business Transaction” (as hereinafter defined) with any “Related Person” (as hereinafter defined) or any Business Transaction in which a Related Person has an interest (except proportionately as a stockholder of the Company); provided, the eighty percent (80%) voting requirement shall not be applicable if either:
 
(i)                                    the “Continuing Directors” (as hereinafter defined) of the Company by at least a majority vote thereof (a) have expressly approved in advance the acquisition of the outstanding shares of Voting Stock that caused such Related Person to become a Related Person, or (b) have expressly approved such Business Transaction; or
 
(ii)                                all of the following conditions (a), (b) and (c) shall have been met:
 
(a)    the cash or fair market value (as determined by at least a majority of the Continuing Directors) of the property, securities or other consideration to be received per share by holders of Voting Stock of the Company (other than the Related Person) in the Business Transaction is not less than the “Highest Purchase Price” or the “Highest Equivalent Price” (as those terms are hereinafter defined) paid by the Related Person involved in the Business Transaction in acquiring any of its holdings of the Company’s Voting Stock;
 
(b)    the ratio of:
 
(w)       the aggregate amount of the cash and the fair market value or other consideration to be received per share by holders of Common Stock in such Business Transaction, to 
 
(x)        the market price of the Common Stock immediately prior to the announcement of such Business Transaction, is at least as great 
 
as the ratio of:
 
(y)        the highest per share price (including brokerage commissions, transfer taxes and soliciting dealers’ fees) which the Related Person involved in such Business Transaction has theretofore paid for any shares of Common Stock acquired by it, to
 
(z)        the market price of the Common Stock immediately prior to the initial acquisition by such Related Person of any Common Stock; and 
 
(c)    the consideration to be received by holders of each class of capital stock in such Business Transaction shall be 

 

 

the same form and of the same kind as the consideration paid by the Related Person in acquiring the shares of that class of capital stock already owned by it. 
 
2.          For purposes of this Article Sixth:
 
(i)         The term “Business Transaction” shall include, without limitation, (a) any merger, consolidation or plan of exchange of the Company, or any entity controlled by or under common control with the Company, with or into any Related Person, or any entity controlled by or under common control with such Related Person, (b) any merger, consolidation or plan of exchange of a Related Person, or any entity controlled by or under common control with such Related Person, with or into the Company or any entity controlled by or under common control with the Company, (c) any sale, lease, exchange, transfer or other disposition (in one transaction or a series of transactions), including without limitation a mortgage or any other security device, of all or any “Substantial Part” (as hereinafter defined) of the property and assets of the Company, or any entity controlled by or under common control with the Company, to a Related Person, or any entity controlled by or under common control with such Related Person, (d) any purchase, lease, exchange, transfer or other acquisitions (in one transaction or a series of transactions), including, without limitation a mortgage or any other security device, of all or any Substantial Part of the property and assets of a Related Person or any entity controlled by or under common control with such Related Person, by the Company or any entity controlled by or under common control with the Company, (e) any recapitalization of the Company that would have the effect of increasing the voting power of a Related Person, (f) the issuance, sale, exchange or other disposition of any securities of the Company, or of any entity controlled by or under common control with the Company, by the Company or by any entity controlled by or under common control with the Company, (g) any liquidation, spin-off, split-off, split-up or dissolution of the Company, and (h) any agreement, contract or other arrangement providing for any of the transactions described in this definition of Business Transaction.
 
(ii)        The term “Related Person” shall mean and include (a) any individual, corporation, association, trust, partnership or other person or entity (a “Person”) which, together with its “Affiliates” (as hereinafter defined) and “Associates” (as hereinafter defined), “Beneficially Owns” (as defined in Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 as in effect at March 27, 1986) in the aggregate ten percent (10%) or more of the outstanding Voting Stock of the Company, and (b) any Affiliate or Associate (other than the Company or a subsidiary of the Company of which the Company owns, directly or indirectly, more than eighty percent (80%) of the voting stock) of any such Person. Two or more Persons acting in concert for the purpose of acquiring, holding or disposing of Voting Stock of the Company shall be deemed a “Person.”
 
(iii)       Without limitation, any share of Voting Stock of

 

 

the Company that any Related Person has the right to acquire at any time (notwithstanding that Rule 13d-3 deems such shares to be beneficially owned only if such right may be exercised within 60 days) pursuant to any agreement, contract, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise, shall be deemed to be Beneficially Owned by such Related Person and to be outstanding for purposes of clause (ii) above.
 
(iv)       For the purposes of subparagraph (ii) of paragraph 1 of this Article Sixth, the term “other consideration to be received” shall include, without limitation, Common Stock or other capital stock of the Company retained by its existing stockholders, other than any Related Person or other Person who is a party to such Business Transaction, in the event of a Business Transaction in which the Company is the survivor.
 
(v)        The term “Voting Stock” shall mean all of the outstanding shares of capital stock of the Company entitled to vote generally in the election of directors, considered as one class, and each reference to a proportion of shares of Voting Stock shall refer to such proportion of the votes entitled to be cast by such shares. 
 
(vi)       The term “Continuing Director” shall mean any member of the Board of Directors of the Company (the “Board”) who is unaffiliated with, and not a nominee of, the Related Person involved in a Business Transaction and was a member of the Board prior to the time that the Related Person became a Related Person and any successor of a Continuing Director who is unaffiliated with, not a nominee of, the Related Person and is designated to succeed a Continuing Director by a majority of Continuing Directors then on the Board.
 
(vii)      A Related Person shall be deemed to have acquired a share of the Voting Stock of the Company at the time when such Related Person became the Beneficial Owner thereof. With respect to the shares owned by Affiliates, Associates or other Persons whose ownership is attributed to a Related Person under the foregoing definition of Related Person, if the price paid by such Related Person for such shares is not determinable by a majority of the Continuing Directors, the price so paid shall be deemed to be the higher of (a) the price paid upon the acquisition thereof by the Affiliate, Associate or other Person or (b) the market price of the shares in question at the time when such Related Person became the Beneficial Owner thereof.
 
(viii)     The terms “Highest Purchase Price” and “Highest Equivalent Price” as used in this Article Sixth shall mean the following: If there is only one class of capital stock of the Company issued and outstanding, the Highest Purchase Price shall mean the highest price that can be determined to have been paid at any time by the Related Person involved in the Business Transaction for any share or shares of that class of capital stock. If there is more than one class of capital stock of the Company issued and outstanding, the Highest Equivalent Price shall mean, with respect to each class and series of capital

 

 

stock of the Company, the amount determined by a majority of the Continuing Directors, on whatever basis they believe is appropriate, to be the highest per share price equivalent to the highest price that can be determined to have been paid at any time by the Related Person for any share or shares of any class or series of capital stock of the Company. The Highest Purchase Price and the Highest Equivalent Price shall include any brokerage commissions, transfer taxes and soliciting dealers’ fees paid by a Related Person with respect to the shares of capital stock of the Company acquired by such Related Person. In the case of any Business Transaction with a Related Person, the Continuing Directors shall determine the Highest Purchase Price or the Highest Equivalent Price for each class and series of the capital stock of the Company. The Highest Purchase Price and Highest Equivalent Price shall be appropriately adjusted to reflect the occurrence of any reclassification, recapitalization, stock split, reverse stock split or other readjustment in the number of outstanding shares of capital stock of the Company, or the declaration of a stock dividend thereon, between the last date upon which the Related Party paid the Highest Purchase Price or Highest Equivalent Price and the effective date of the merger or consolidation or the date of distribution to stockholders of the Company of the proceeds from the sale of all or substantially all of the assets of the Company.
 
(ix)       The term “Substantial Part” shall mean ten percent (10%) or more of the fair market value of the total assets of the Person in question, as reflected on the most recent balance sheet of such Person existing at the time the stockholders of the Company would be required to approve or authorize the Business Transaction involving the assets constituting any such Substantial Part.
 
(x)        The term “Affiliate,” used to indicate a relationship with a specified Person, shall mean a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified.
 
(xi)       The term “Associate,” used to indicate a relationship with a specified Person, shall mean (a) any entity of which such specified Person is an officer or partner or is, directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of equity securities, (b) any trust or other estate in which such specified Person has a substantial beneficial interest or as to which such specified Person serves as trustee or in a similar fiduciary capacity, (c) any relative or spouse of such specified Person, or any relative of such spouse, who has the same home as such specified Person or who is a director or officer of the Company or any of its subsidiaries, and (d) any Person who is a director or officer of such specified Person or any of its parents or subsidiaries (other than the Company or an entity controlled by or under common control with the Company).
 
(xii)      The term “subsidiary,” when used to indicate a relationship with a specified Person, shall mean an Affiliate controlled by such Person directly, or indirectly through one or

 

 

more intermediaries.
 
3.          For the purposes of this Article Sixth, a majority of the Continuing Directors shall have the power to make a good faith determination, on the basis of information known to them, of: (i) the number of shares of Voting Stock that any Person Beneficially Owns, (ii) whether a Person is an Affiliate or Associate of another, (iii) whether a Person has an agreement, contract, arrangement or understanding with another or some other right as to the matters referred to in subparagraph 2(i)(h) or 2(iii) hereof, (iv) whether the assets subject to any Business Transaction constitute a Substantial Part, (v) whether any Business Transaction is one in which a Related Person has an interest (except proportionately as a stockholder of the Company), (vi) the date of the initial acquisition of Common Stock by a Related Person, (vii) whether the consideration to be received is in the same form as to the matter referred to in subparagraph 1(ii)(c), and (viii) such other matters with respect to which a determination is required under this Article Sixth.
 
4.          The provisions set forth in this Article Sixth may not be amended, altered, changed or repealed in any respect unless such action is approved by the affirmative vote of the holders of not less than eighty percent (80%) of the outstanding shares of Voting Stock of the Company.
 
IN WITNESS WHEREOF, Black Hills Corporation, as authorized and directed by resolution adopted by its Board of Directors at a regular meeting held May 24, 1994 pursuant to authority at SDCL 49-33-1, executes these Restated Articles of Incorporation as of May 31, 1994, through its duly authorized officers.
 

	
   

  	
  BLACK
  HILLS CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By
  

  	
  /s/DALE
  E. CLEMENT

  
	
   

  	
   

  	
  Dale
  E. Clement

  
	
   

  	
   

  	
  Its
  Senior Vice President - Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  ATTEST:

  	
   

  
	
   

  	
   

  
	
  By
  

  	
  /s/
  ROXANN R. BASHAM

  	
   

  
	
   

  	
  Roxann
  R. Basham

  	
   

  
	
   

  	
  Its
  Secretary

  	
   

  
	
   

  	
   

  
	
   (CORPORATE SEAL)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  STATE
  OF SOUTH DAKOTA

  	
   

  
	
   

  	
   

  
	
  COUNTY
  OF PENNINGTON

  	
   

  

 

Dale E. Clement and Roxann R. Basham hereby each first duly sworn on his or her oath deposes and says as follows: Dale E.  Clement is the Senior Vice President - Finance and Roxann R. Basham is the Secretary of Black Hills Corporation; each has read

 

 

the within and foregoing Restated Articles of Incorporation and knows the contents thereof to be true; the above Restated Articles of Incorporation constitute a true and correct restatement of the Corporation’s Restated Articles of Incorporation as previously adopted by the Board of Directors on July 30, 1986 and as amended by as set forth in Articles of Amendment dated (i) May 21, 1987 and filed May 26, 1987, (ii) May 16, 1989 and filed June 1, 1989, (iii) May 28, 1992 and filed June 2, 1992 (as corrected by Articles of Correction dated September 10, 1993 and filed September 14, 1993), and (iv) May 24, 1994 and filed May 25, 1994; and these Restated Articles of Incorporation were adopted by unanimous vote of the members of the Board of Directors at a meeting regularly called and held May 24, 1994.
 
 

	
   

  	
  /s/
  DALE E. CLEMENT

  
	
   

  	
  Dale
  E. Clement

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  ROXANN R. BASHAM

  
	
   

  	
  Roxann
  R. Basham

  
	
   

  	
   

  
	
   

  	
   

  
	
  Subscribed and sworn before me this 31st day of May, 1994.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  BARBARA RASK

  
	
   

  	
  Notary
  Public

  
	
   

  	
   

  
	
   

  	
   

  
	
  (SEAL)

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