-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OJO44cmLHKFAaCyZQGN1D0UKMrG01vCOe19+oxezRKfTPEiE/lJxbiJDjvZJAmgJ GSJu1QxG5/bbI1hcwPCvDg== 0000893220-03-000384.txt : 20030325 0000893220-03-000384.hdr.sgml : 20030325 20030325103901 ACCESSION NUMBER: 0000893220-03-000384 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20030325 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WILMINGTON TRUST CORP CENTRAL INDEX KEY: 0000872821 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 510328154 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-14659 FILM NUMBER: 03615033 BUSINESS ADDRESS: STREET 1: RODNEY SQUARE NORTH STREET 2: 1100 NORTH MARKET ST CITY: WILMINGTON STATE: DE ZIP: 19890-0001 BUSINESS PHONE: 3026518378 MAIL ADDRESS: STREET 1: 1100 NORTH MARKET STREET CITY: WILMINGTON STATE: DE ZIP: 19890-0001 10-Q/A 1 w84365e10vqza.txt FORM 10-Q/A - AMENDMENT NO. 1 DATED JUNE 30, 2002 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO. 1 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period ended June 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From to Commission File Number: 1-14659 WILMINGTON TRUST CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 51-0328154 - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (302) 651-1000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) Not Applicable - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Number of shares of issuer's common stock ($1.00 par value) outstanding at June 30, 2002 - 65,674,519 shares Wilmington Trust Corporation and Subsidiaries Form 10-Q/A Index
Page ---- Part I. Financial Information Item 1 - Financial Statements (unaudited) Consolidated Statements of Condition 1 Consolidated Statements of Income 3 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 16 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 29 Part II. Other Information Item 1 - Legal Proceedings 31 Item 2 - Changes in Securities and Use of Proceeds 31 Item 3 - Defaults Upon Senior Securities 31 Item 4 - Submission of Matters to a Vote of Security Holders 31 Item 5 - Other Information 32 Item 6 - Exhibits and Reports on Form 8-K 32
CERTAIN INFORMATION IN THE EXHIBITS FILED HEREWITH HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] Item 6 - Exhibits and Reports on Form 8-K
Exhibit Number Exhibit - ------- ------- 3.1 Amended and Restated Certificate of Incorporation of the Corporation (Commission File Number 1-14659)(1) 3.2 Amended and Restated Bylaws of the Corporation (Commission File Number 1-14659)(2) 10.44* Amended and Restated Limited Liability Company Agreement of Cramer Rosenthal McGlynn, LLC dated as of January 1, 2001(4) 10.45 Amendment to the Amended and Restated Limited Liability Company Agreement of Cramer Rosenthal McGlynn, LLC dated March 15, 2002 (Commission File Number 1-14659)(3) 10.46 Amendment to the Amended and Restated Limited Liability Company Agreement of Cramer Rosenthal McGlynn, LLC dated June 28, 2002 (Commission File Number 1-14659)(3) 10.47* Amended and Restated Limited Liability Company Agreement of Roxbury Capital Management, LLC dated as of July 31, 1998(4) 10.48* First Amendment to the Amended and Restated Limited Liability Company Agreement of Roxbury Capital Management, LLC(4) 10.49 Second Amendment to the Amended and Restated Limited Liability Company Agreement of Roxbury Capital Management, LLC dated as of March 10, 2001 (Commission File Number 1-14659)(3) 10.50* Third Amendment to the Amended and Restated Limited Liability Company Agreement of Roxbury Capital Management, LLC (4) 10.51* Merger Agreement among Balentine Holdings, Inc., Robert M. Balentine, B. Clayton Rolader, Jeffrey P. Adams, Robert E. Reiser, Jr., Gary B. Martin, Wesley A. French, Michael E. Wolf, The 1999 Balentine Family Trust, The Robert M. Balentine Insurance Trust, WTC Merger Subsidiary, Inc., WT Investments, Inc. and Wilmington Trust Corporation dated as of October 23, 2001(4) 10.52* Amended and Restated Limited Liability Company Agreement of Balentine Delaware Holding Company, LLC dated as of January 2, 2002(4) 10.53* Agreement for the Sale and Purchase of SPV Management Limited dated January 1, 2002 by and among Anthony Francis Raikes and Piers Minoprio and Wilmington Trust (UK) Limited and Wilmington Trust Corporation(4)
- -------------------- (1) Incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Wilmington Trust Corporation filed March 30, 1996. (2) Incorporated by reference to the corresponding exhibit to the Annual Report on Form 10-K of Wilmington Trust Corporation filed on March 30, 2000. (3) Incorporated by reference to the corresponding exhibit to the Quarterly Report on Form 10-Q of Wilmington Trust Corporation filed on August 14, 2002. (4) Filed herewith. The Corporation filed a report on Form 8-K on April 25, 2002 reporting certain developments under Item 5. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: March 20, 2003 /s/ Ted T. Cecala ------------------------------ Name: Ted T. Cecala Title: Chairman of the Board and Chief Executive Officer (Authorized Officer) /s/ David R. Gibson ------------------------------ Name: David R. Gibson Title: Executive Vice President and Chief Financial Officer (Principal Financial Officer) CERTIFICATIONS I, Ted T. Cecala, Chairman of the Board and Chief Executive Officer of Wilmington Trust Corporation, hereby certify that: 1. I have reviewed this quarterly report on Form 10-Q/A of Wilmington Trust Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. Date: March 20, 2003 /s/ Ted T. Cecala ------------------------------ Ted T. Cecala Chairman of the Board and Chief Executive Officer CERTIFICATIONS I, David R. Gibson, Executive Vice President and Chief Financial Officer of Wilmington Trust Corporation, hereby certify that: 1. I have reviewed this quarterly report on Form 10-Q/A of Wilmington Trust Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; and 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report. Date: March 20, 2003 /s/ David R. Gibson ------------------------------ David R. Gibson Executive Vice President and Chief Financial Officer CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES - OXLEY ACT OF 2002 The undersigned certify that, to their knowledge, the Form 10-Q/A of Wilmington Trust Corporation (the "Corporation") for the second quarter of 2002 fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 and that the information contained in that report fairly presents, in all material respects, the financial condition and results of operation of the Corporation. /s/ Ted T. Cecala ------------------------------ Ted T. Cecala Chairman of the Board and Chief Executive Officer /s/ David R. Gibson ------------------------------ David R. Gibson Executive Vice President and Chief Financial Officer EX-10.44 4 w84365exv10w44.txt AMENDED AND RESTATED LLC AGREEMENT DATED 1/1/2001 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF CRAMER ROSENTHAL McGLYNN, LLC EXHIBIT 10.44 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] - -------------------------------------------------------------------------------- AMENDED and RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF CRAMER ROSENTHAL McGLYNN, LLC - -------------------------------------------------------------------------------- TABLE OF CONTENTS Page ARTICLE I DEFINED TERMS .....................................................1 ARTICLE II GENERAL PROVISIONS ................................................9 Section 2.1. Formation, Name and Continuation......................9 Section 2.2. Term..................................................9 Section 2.3. Registered Agent and Office; Principal Place of Business.....................................9 Section 2.4. Fiscal Year...........................................9 ARTICLE III PURPOSE AND POWERS OF THE COMPANY.................................10 Section 3.1. Purpose...............................................10 Section 3.2. Powers of the Company.................................10 ARTICLE IV MEMBERS............................................................10 Section 4.1. Voting................................................10 Section 4.2. Meetings of Members...................................10 Section 4.3. Removal of Members....................................10 Section 4.4. Non-voting Members....................................10 ARTICLE V MANAGERS AND OFFICERS...............................................11 Section 5.1. Managers..............................................11 Section 5.2. Designated Managers...................................11 Section 5.3. Elections.............................................11 Section 5.4. Term..................................................11 Section 5.5. Resignation or Removal of a Manager...................11 Section 5.6. Vacancies.............................................12 Section 5.7. Meetings..............................................12 Section 5.8. Quorum................................................12 Section 5.9. Action by Consent.....................................12 Section 5.10. Telephonic Meetings...................................12 Section 5.11. Managers as Agents; Limitation on Power of Members............................................12 Section 5.12. Board Action..........................................13 Section 5.13. Duty of Managers......................................14 Section 5.14. Approval of Annual Budget.............................14 Section 5.15. Officers..............................................14 Section 5.16. Powers of the Board; Powers of Officers...............14 Section 5.17 Reimbursement.........................................15 ARTICLE VI CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; ALLOCATIONS AND DISTRIBUTION .................................................15 Section 6.1. Capital Contributions.................................15 Section 6.2. Capital Accounts......................................15 Section 6.3. Distributions of Accounts.............................16 i ARTICLE VII TRANSFER OF LLC INTERESTS, PUT AND CALL OPTIONS, MANDATORY PURCHASES AND ADMISSION OF ADDITIONAL MEMBERS ......................................................................18 Section 7.1. Assignability of Interests............................18 Section 7.2. Put Options...........................................18 Section 7.3. Purchase on Death, Disability, Retirement; Wilmington Call Options...............................20 Section 7.4. Company Call Options..................................23 Section 7.5. Substitute Members....................................23 Section 7.6. Recognition of Transfer by Company....................24 Section 7.7. Effective Date of Transfer............................24 Section 7.8. Indemnification.......................................24 Section 7.9. Issuance of Additional LLC Interests..................24 Section 7.10. Assignment of Wilmington's Rights and Obligations...........................................25 ARTICLE VIII BOOKS AND RECORDS ...............................................25 Section 8.1. Books, Records and Financial Statements...............25 Section 8.2. Accounting Method.....................................25 ARTICLE IX TAX................................................................26 Section 9.1. Tax Matters Member....................................26 Section 9.2. Right to Make Section 754 Election....................26 ARTICLE X LIABILITY, EXCULPATION AND INDEMNIFICATION..........................26 Section 10.1. Liability.............................................26 Section 10.2. Exculpation...........................................27 Section 10.3. Indemnification.......................................27 Section 10.4. Expenses..............................................27 ARTICLE XI NON-COMPETITION; CONFIDENTIALITY...................................28 Section 11.1. Non-Competition; Confidentiality......................28 ARTICLE XII CERTAIN COVENANTS ................................................31 Section 12.1. Compliance with Laws; Maintenance.....................31 Section 12.2. Other Business Arrangements...........................32 Section 12.3. Amendment to Other Agreements.........................32 ARTICLE XIII DISSOLUTION, LIQUIDATION AND TERMINATION.........................32 Section 13.1. No Dissolution........................................32 Section 13.2. Events Causing Dissolution............................32 Section 13.3. Notice of Dissolution.................................33 Section 13.4. Liquidation...........................................33 Section 13.5. Termination...........................................33 Section 13.6. Claims of the Members.................................33 ARTICLE XIV REPRESENTATIONS AND WARRANTIES....................................34 Section 14.1. Representations and Warranties of CRM, Inc............34 Section 14.2. Representations and Warranties of Principals..........34 Section 14.3. Representations and Warranties of WTI.................35 Section 14.4. Representations and Warranties of Wilmington..........35 ii Section 14.5. Representations and Warranties of All Members.........35 ARTICLE XV MISCELLANEOUS .....................................................36 Section 15.1. Amendments............................................36 Section 15.2. Employee Plans........................................36 Section 15.3. Power of Attorney and Other Authorizations............36 Section 15.4. Notices...............................................37 Section 15.5. Waivers...............................................38 Section 15.6. Binding Effect........................................38 Section 15.7. Severability..........................................38 Section 15.8. Counterparts..........................................38 Section 15.9. Governing Law; Arbitration............................38 Section 15.10. Captions..............................................39 Section 15.11. Gender................................................39 iii SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF CRAMER ROSENTHAL MCGLYNN, LLC This Second Amended and Restated Limited Liability Company Agreement (the "Agreement") of Cramer Rosenthal McGlynn, LLC (the "Company") is made as of January 1, 2001, by and among the Company, Cramer, Rosenthal, McGlynn, Inc., a New York corporation ("CRM, Inc."), WT Investments, Inc. ("WTI"), a Delaware corporation which is a wholly owned subsidiary of Wilmington Trust Company, a Delaware-chartered bank and trust company ("WTC"), the Principals and Wilmington Trust Corporation, a Delaware corporation ("Wilmington"). WHEREAS, the Company has heretofore been formed as a limited liability company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. Section 18-10 1, et seq., as amended from time to time (the "Delaware Act"), by the filing of a Certificate of Formation of the Company with the office of the Secretary of State of the State of Delaware on September 23, 1997 (the "Certificate"), as amended, and by the execution of the Limited Liability Company Agreement of Cramer Rosenthal McGlynn, LLC by Cramer, Rosenthal McGlynn, Inc. as of September 23, 1997 (the "Original LLC Agreement"), as amended and restated by the Amended and Restated Limited Liability Company Agreement of the Company dated as of January 2,1998, as amended by Amendment No. 1 to Amended and Restated Limited Liability Company Agreement of the Company, and as further amended and restated by the Amended and Restated Limited Liability Company Agreement of the Company dated as of September 15, 1999; and WHEREAS, the Members desire to continue the Company as a limited liability company under the Delaware Act. NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members, the Company and Wilmington, intending to be legally bound hereby, agree as follows: ARTICLE I DEFINED TERMS Unless the context otherwise requires the terms defined in this Article 1 shall, for the purposes of this Agreement, have the meanings herein specified. "AAA" means the American Arbitration Association. "Administration Agreement" means the Administration Agreement dated January 2, 1998 between CRM, Inc. and the Company, as amended from time to time. "Advisors" means CRM Advisors, LLC, a New York limited liability company. "Affiliate" means, with respect to any designated Person, (i) any other Person directly or indirectly owning, controlling or holding with the power to vote 10% or more of the outstanding voting securities of the designated Person; (ii) any Person directly or indirectly controlling, controlled by or under common control with the designated Person; (iii) any officer, director or partner of the designated Person; and (iv) if the designated Person is an officer, director or partner, any company for which such Person acts in such capacity. The term "control" means the possession, directly or indirectly, of the power, whether or not exercised, to direct or cause the direction or management or policies of any Person, whether through ownership of voting securities or otherwise. "Agreement" has the meaning set forth in the preamble hereof. "Available Cash" means, with respect to any Fiscal Year, the cash receipts of the Company during such Fiscal Year, together with interest or other earnings thereon, less the sum of (i) all cash expenditures made by the Company during such Fiscal Year, including, without limitation, operating expenses, principal and interest payments on any indebtedness of the Company and lease payments on capitalized leases; and (ii) such funds as shall have been set aside by the Board as reserves for contingencies, working capital, debt service, taxes, insurance or other costs and expenses in connection with the Company's business. "Board" has the meaning set forth in Section 5.1 hereof. "C Fees" means non-recurring corporate finance, consulting or investment banking fees earned by the Company. "Call Price", at any time, means the Put Price as of the immediately preceding Determination Date. "Cause" means: (i) a breach of any material provision of this Agreement, including any material misrepresentation made in this Agreement; (ii) any act of fraud, material misrepresentation, misappropriation, dishonesty, embezzlement or similar conduct involving in any way the business of the Company or any of its Subsidiaries, gross negligence, willful misconduct, insubordination, breach of trust or breach of fiduciary duty owed to the Company, its Clients, any Subsidiary or any Member, failure to cure or remedy the failure to perform stated duties within five days after written notice from the Board, conviction of a felony, abuse of illegal drugs, controlled substances or alcohol or conviction of a felony or any crime involving moral turpitude; or 2 (iii) any disqualification, censure, or revocation of any applicable registration or license that (a) would limit the performance of any duties by the Person holding the registration or license on behalf of the Company or (b) would limit the ability of the Company or any of its Subsidiaries to perform its business or contemplated business. "Certificate" has the meaning set forth in the preamble hereof. "Change of Control" with respect to WTI, Wilmington or WTC means (A) the acquisition by any entity, person, or group of beneficial ownership, as that term is defined in Rule 13d-3 under the Securities Exchange Act of 1934, directly or indirectly, of 25% or more of the outstanding capital stock of WTI, Wilmington or WTC entitled to vote for the election of directors ("Voting Shares"); or (B) the merger or consolidation of WTI, Wilmington or WTC with one or more other corporations as a result of which the holders of the outstanding Voting Shares of WTI, Wilmington or WTC immediately before the merger or consolidation hold less than 50% of the Voting Shares of the surviving or resulting corporation. Any transfer of the capital stock of WTI, Wilmington or WTC to an entity that prior to such transfer has been consolidated with WTI or Wilmington for federal income tax purposes, or to any newly-formed subsidiary of Wilmington or WTC which will be consolidated with WTI or Wilmington for federal income tax purposes, shall not be deemed to be a Change of Control for purposes of this Agreement. "Clients" has the meaning set forth in Section 11.1 (b) hereof. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted after the date of this Agreement. A reference to a specific section (Section) of the Code refers not only to such specific section but also to any corresponding provision of any federal tax statute enacted after the date of this Agreement, as such specific section or corresponding provision is in effect on the date of application of the provisions of this Agreement containing such reference. "Company" means Cramer Rosenthal McGlynn, LLC, the limited liability company formed by the Original LLC Agreement and Certificate and continued under and pursuant to the Delaware Act and this Agreement. "Company Call" has the meaning set forth in Section 7.4(a) hereof. "Company Call Notice" has the meaning set forth in Section 7.4(b) hereof. "Confidential Information" has the meaning set forth in Section 11.1(a) hereof. "CRM, Inc." has the meaning set forth in the preamble hereof. "CRM, Inc. Call" means a purchase which is required to be made or may be made by CRM, Inc. pursuant to Section 6.3 of the CRM, Inc. Shareholders Agreement. 3 "CRM, Inc. Designee" means the individual selected by CRM, Inc. and the Principals to serve on the Board in accordance with Section 5.2 hereof. "CRM, Inc. Shareholders Agreement" means the agreement in the form annexed hereto as Exhibit A between CRM, Inc. and its shareholders, as amended from time to time. "CRM Management" means CRM Management, Inc., a Delaware corporation. "Delaware Act" has the meaning set forth in the preamble hereof. "Derivative Share" means the portion of the outstanding LLC Interests of the Company represented by the indirect, pecuniary interest of a shareholder of CRM, Inc. in CRM, Inc.'s LLC Interest which portion shall be determined, at any time, in accordance with the following formula: Derivative CRM, Inc.'s The percentage of the Share = LLC Interest in outstanding shares of the Company x CRM, Inc. held by such individual For example, if (i) an individual owns 10% of the outstanding shares of CRM, Inc. and (ii) CRM, Inc. owns a 75.77 LLC Interest, then the individual's Derivative Share equals .7577 x .10 = 7.57%. "Designated Manager" means the Managers or their designees selected pursuant to Section 5.2(a) of this Agreement. "Determination Date" means, with respect to any year, December 31 of such year. "Disability" has the meaning set forth in a policy or policies of disability insurance, if any, obtained by the Company for the benefit of itself and/or its employees. If there is no definition of "disability" applicable under any such policy or policies of disability insurance, if any, obtained by the Company, then an employee shall be considered disabled if for a period of 180 days in any 12-month period such employee has been (a) adjudged incompetent by a court of competent jurisdiction; (b) physically or mentally incapable of performing the essential functions of his job, in the opinion of a licensed medical doctor acceptable to the Company; or ( c) certified as permanently disabled under the provisions of the Social Security Act, as amended from time to time. "Fair Market Value" means the amount for which any asset could be sold in an arm's length transaction by one who desires to sell, but is not under any urgent requirement to sell, to a buyer who desires to buy, but is under no urgent necessity to buy, when both have a reasonable knowledge of the facts. 4 "Family" means any member of a Person's immediate family, as defined in Rule 16a-1 of the Securities Exchange Act of 1934, and all aunts, uncles, nieces, nephews and first and second cousins of such Person. "Fiscal Year" has the meaning set forth in Section 2.4 hereof. "Four-Year Restricted Period" has the meaning set forth in Section 1.1(g) hereof. "Good Reason" means if and only if: (i) the Company takes any action which causes a material diminution in the position, authority, duties or responsibilities of an employee without the consent of such employee, excluding for this purpose any isolated, immaterial and inadvertent action not taken in bad faith and any action which is remedied by the Company promptly after receipt of a notice thereof given by such employee, which notice shall be given by the employee within 60 days of the adverse action; or (ii) the Company relocates the offices of the Company at which such employee is assigned to perform his or her principal duties as an employee of the Company, without the consent of such employee, beyond a radius of fifty (50) miles from New York City. "Hedge Funds" shall mean any pooled investment vehicle that is privately organized, administered by professional investment managers, and not widely available to the public. "High Water Mark" means, with respect to any Person as of any specified date, the largest combined LLC Interest and Derivative Share attributable to the Person and its Permitted Transferees, including the LLC Interests underlying all vested "in-the-money" options to purchase LLC Interests held by such Person and its Permitted Transferees, at anyone time during the period beginning on the date hereof and ending on the specified date. "Liquidating Trustee" has the meaning set forth in Section 13.3 hereof. "LLC Interest" means a limited liability company interest (including capital accounts and Membership Points of a Member) in the Company. "LLC Interest Purchase Agreement" means the Limited Liability Company Interest Purchase Agreement dated October 31, 1997 by and among the Company, CRM, Inc., CRM Management, Advisors, the Principals, Eugene A. Trainor III, Arthur J. Pergament and WTI. "LLC Value" means the fair market value of the Company, as of the applicable Determination Date, determined consistently with the methodology described in Exhibit B by a reputable investment banking firm or other independent third party selected by the Board with experience in valuing investment advisory firms. "Majority Vote" means the written approval of, or the affirmative vote by, a majority in interest of the Members determined with reference to the Membership Points set forth on Schedule 2 hereto. For purposes of determining a Majority Vote, Membership Points owned by Non-voting Members are not voted and are not counted in the calculation of total Membership Points outstanding. 5 "Manager" has the meaning set forth in Section 18-101(10) of the Delaware Act. "Member" means any Person named as a member of the Company on Schedule 2 hereto and includes any Person admitted as an additional Member pursuant to the provisions of this Agreement. "Membership Points" means, as of any date, with respect to a Member, the number of Membership Points set forth opposite such Member's name on Schedule 2 hereto, as adjusted from time to time pursuant to this Agreement, and as in effect on such date. "Non-voting Member" means a Member owning an LLC Interest but, pursuant to Section 4.4 hereof, not having the right to vote his or its Membership Points. "Note" has the meaning set forth in Section 7.3(d) hereof. "Officers" has the meaning set forth in Section 5.15 hereof. "One-Year Restricted Period" has the meaning set forth in Section 11.1 (f). "Option Agreement" has the meaning set forth in Section 7.9(b). "Original LLC Agreement" has the meaning set forth in the preamble hereof. "Permitted Transferee" shall mean, with respect to any natural person, the parents, siblings, spouse, children (by birth or adoption) or spouses of children of such person (in any such case who are the age of 21 or over), and any trust created by one or more of such aforementioned individuals of which a Principal is the voting trustee or otherwise possesses the power to vote the LLC Interest held by such trust. "Person" means any individual, partnership, corporation, association, business trust, joint venture, governmental entity, business entity or other entity of any kind or nature. "Principal" or "Principals" means the individuals identified from time to time on Schedule 2 hereto as Principals. "Profits" or "Losses" of the Company for any period means the taxable income or loss of the Company for such period as 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), increased by the amount of any tax-exempt income of the Company during such period and decreased by the amount of any Code section 705(a)(2)(B) expenditures (within the meaning of Treasury Regulation Section 1.704-1(b)(2)(iv)(1)) of the Company. "Purchase Closing Date" shall mean the date upon which LLC Interests are purchased and paid for by the Company or a Member pursuant to Article VII hereof. "Put" has the meaning set forth in Section 7.2(b) hereof. 6 "Put Notice" has the meaning set forth in Section 7.2(d) hereof. "Put Price" means an amount equal to the LLC Value multiplied by a fraction, the numerator of which is the number of Membership Points included in the LLC Interest to be purchased by Wilmington from CRM, Inc. or a Principal and his Permitted Transferees, as the case may be, and the denominator of which is the number of Membership Points outstanding on the Purchase Closing Date on a fully-diluted basis (i.e., including any "in the money" options as determined in accordance with Exhibit B). With respect to a Put under Section 7.2(b) and a purchase under Section 7.3(a) hereof, the Put Price shall be determined as of the Determination Date immediately preceding the Purchase Closing Date. For example, if a Principal were to die on August 1,1999, the Purchase Closing Date would occur on April 1, 2001, and the Determination Date as of which the Put Price is determined would be December 31, 2000. With respect to a purchase under Sections 7.3(b) and (c) hereof, the Put Price shall be determined as follows: a portion of the Put Price, which portion shall be determined by dividing the number of days the Principal has been employed by the Company during the Fiscal Year in which the event giving rise to the purchase obligation or Wilmington Call arises (or, with respect to delivery of a Put Notice in excess of one-half of a Principal's High Water Mark, the number of days during a Fiscal Year prior to the date of delivery of the Put Notice) and the denominator of which is 365, shall be determined as of the Determination Date immediately preceding the Purchase Closing Date, and the balance of the Put Price shall be determined as of the penultimate Determination Date preceding the Purchase Closing Date. For example, if (i) the LLC Value as of December 31,1998 is $(*) million; (ii) the LLC Value as of December 31, 1999 is $(*) million; (iii) a Principal and his Permitted Transferees own a 2% LLC Interest; and (iv) such Principal resigns his employment with the Company on August 1,1999, 212/365 of the Put Price would be based on the LLC Value determined as of December 31, 1999 and 153/365 of the Put Price would be based on the LLC Value determined as of December 31,1998. The Put Price would thus equal $(*) million x .02 x 212/365, or $(*), plus $(*) million x .02 x 153/365, or $(*) for a total Put Price of $(*). "Realization Event" shall mean (i) any sale of all or substantially all of the assets of the Company, (ii) any merger or consolidation of the Company with or into another entity, or, unless otherwise provided by the Board, of another entity with or into the Company or (iii) any dissolution or winding up of the Company. "Related Entities" shall mean, with respect to any Member or Members, any partnership, limited liability company or corporation in which such Member or Members or a Permitted Transferee of such Member or Members own all of the partnership, membership or other equity interests, or all of the capital stock, as the case may be, and with respect to WTI, shall mean any entity that is or will be consolidated with WTI or WTC for federal income tax purposes. (*) CONFIDENTIAL TREATMENT REQUESTED 7 "Retirement" means, with respect to a Principal other than Ronald H. McGlynn, when that Principal reaches age 55 and, with respect to Ronald H. McGlynn, when he reaches age 58; provided, however, Retirement shall not occur with respect to a Principal who continues to work for the Company after reaching the age set forth herein, unless the Board notifies him that it objects to his continued participation in the Company. Retirement with respect to a Principal who continues to participate in the Company after reaching such age shall occur upon the earlier of (i) notification from the Board that it objects to such Principal's continued participation or (ii) the voluntary cessation of the Principal's participation in the Company. "SEC Matters" means all losses, liabilities and expenses arising out of the facts that are the subject of the insider trading investigation with respect to Glenayre Technologies and the class action lawsuit with respect to Glenayre Technologies naming CRM, Inc., Gerald B. Cramer and Edward J. Rosenthal as defendants. "Subsidiary" means any corporation, partnership or other organization, whether incorporated or unincorporated, of which more than fifty percent (50%) of either the equity interests or the voting control is, directly or indirectly, through Subsidiaries or otherwise, beneficially owned by the Company, or of which the Company or any Subsidiary serves as the general partner. "Tax Liability Distribution" has the meaning set forth in Section 6.3(b) hereof. "Tax Matters Member" has the meaning set forth in Section 9.1(a) hereof. "Three-Year Restricted Period" has the meaning set forth in Section 11.1 (g) hereof. "Transfer" has the meaning set forth in Section 7.1(a) hereof. "Treasury Regulations" means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). "Wilmington" has the meaning set forth in the preamble hereof. "Wilmington Call" has the meaning set forth in Section 7.3(b) hereof. "Wilmington Call Notice" has the meaning set forth in Section 7.3(d) hereof. "WTC" has the meaning set forth in the preamble hereof. "WTI" has the meaning set forth in the preamble hereof. "WTI Designee" means the individual(s) selected and authorized by WTI to represent WTI and serve on the Board in accordance with Section 5.2 hereof. 8 ARTICLE II GENERAL PROVISIONS Section 2.1. Formation, Name and Continuation. This Agreement supersedes and replaces the Original LLC Agreement, as amended and restated, in its entirety and the Original LLC Agreement, as amended and restated, shall henceforth have no effect as of and from the date hereof. The name of the Company heretofore formed and continued hereby is Cramer Rosenthal McGlynn, LLC. The business of the Company may also be conducted under any other name or names designated by the Board from time to time. The parties hereto agree to continue the Company and enter into this Agreement, and do hereby continue the Company and enter into this Agreement, pursuant to the provisions of the Delaware Act and for the purposes hereinafter described and agree that the rights and liabilities of the Members shall be as provided in the Delaware Act for members except as provided herein. The name, mailing address, initial capital contribution and Membership Points of each Member shall be listed on Schedule 2. The Secretary of the Company shall update any Schedule from time to time as necessary to accurately reflect the information therein. Any amendment or revision to a Schedule made in accordance with this Agreement shall not be deemed an amendment to this Agreement. Any reference in this Agreement to a Schedule shall be deemed to be a reference to such Schedule as amended and in effect from time to time. Section 2.2. Term. The term of the Company commenced on the date the Certificate was filed in the office of the Secretary of State of the State of Delaware and shall continue in perpetuity, unless dissolved in accordance with the provisions of this Agreement. The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate. Section 2.3. Registered Agent and Office; Principal Place of Business. (a) The Company's registered agent and office in the State of Delaware shall be WT Investments, Inc., Rodney Square North, 1100 North Market St., WTC, New Castle County, Delaware 19890. At any time, the Board may designate another registered agent and/or registered office. (b) The principal place of business of the Company initially shall be at 707 Westchester Avenue, lst Floor, White Plains, New York 10604. (c) The Board may, at any time and from time to time: (i) change the location of the Company's principal place of business and establish such additional place or places of business of the Company as it or he may determine; (ii) change the location of the Company's books and records; (iii) change the Company's registered office in Delaware; and (iv) change the Company's resident agent for service of process in Delaware. Section 2.4. Fiscal Year. Except as otherwise determined by the Board, the Fiscal Year of the Company for accounting and tax purposes shall be the calendar year, except for the short years in the years of the Company's formation and termination and as otherwise required by the Code. 9 ARTICLE III PURPOSE AND POWERS OF THE COMPANY Section 3.1. Purpose. The Company is formed for the object and purpose of engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Act and engaging in any and all activities necessary or incidental to the foregoing except that the Company is not formed for the object and purpose of and shall not engage in any business that would be impermissible for WTI, Wilmington or WTC under federal or Delaware state banking law, as may be amended from time to time. Section 3.2. Powers of the Company. The Company shall have all power and authority granted under the Delaware Act to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose set forth in Section 3.1. ARTICLE IV MEMBERS Section 4.1. Voting. Members shall have the power to vote only as provided by Sections 5.3 and 5.5 of this Agreement or required by law. Unless otherwise provided in this Agreement or required by law, any vote of Members shall be determined by a Majority Vote. Section 4.2. Meetings of Members. The Board of Managers of the Company (the "Board") or the Chairman may call a meeting of Members. Meetings of Members shall be held at the principal place of business of the Company upon at least 10 days' written notice. Section 4.3. Removal of Members. The Board may remove any Member for cause. Section 4.4. Non-voting Members. Any Member that is removed for Cause pursuant to Section 4.3 hereof, resigns from employment with the Company other than for Good Reason or receives a WTI Call Notice with respect to the balance of his LLC Interest pursuant to Section 7.3 hereof shall become a Non-voting Member until his or its LLC Interest has been purchased in full in accordance with Article VII hereof. The estate or other successor of any Member that dies, dissolves or otherwise ceases to exist shall become a Non-voting Member until his or its LLC Interests have been purchased in full in accordance with Article VII hereof. The Board may, in its discretion, waive this provision. In accordance with Section 7.5 hereof, the Board may admit a substitute Member as a Non-Voting Member. 10 ARTICLE V MANAGERS AND OFFICERS Section 5.1. Managers. The management of the Company' s business shall be vested in a Board of Managers (the "Board"), which shall consist of five Managers, all of whom must be Members or employees, officers or directors of Members. Section 5.2. Designated Managers. (a) For so long as Gerald B. Cramer and his Permitted Transferees own a combined LLC Interest and Derivative Share that exceeds 10% of the outstanding LLC Interests, he or his designee shall be a Manager. For so long as Ronald H. McGlynn and his Permitted Transferees own a combined LLC Interest and Derivative Share that exceeds 10% of the outstanding LLC Interests, he or his designee shall be a Manager. If CRM, Inc. and the Principals and their Permitted Transferees together own LLC Interests that exceed 10% of the outstanding LLC Interests in the aggregate, and either Gerald B. Cramer or Ronald H. McGlynn ceases to be, or to be able to designate, a Manager as provided in the two immediately preceding sentences, then one of the Managers shall be a CRM, Inc. designee who shall be selected by the Principals by majority vote, which vote shall be based on their and their Permitted Transferees' direct LLC Interests and their Derivative Share of CRM, Inc.'s LLC Interest. For so long as WTI owns an LLC Interest that exceeds 10% of the outstanding LLC Interests, one of the Managers shall be a WTI Designee, except that, if, at any time, WTI owns an LLC Interest that exceeds 35% of the outstanding LLC Interests, two of the Managers shall be WTI Designees. Any Manager designated pursuant to this Section 5.2(a) is referred to as a "Designated Manager." (b) Except as provided otherwise herein, a Designated Manager shall have the same rights and privileges and be subject to the same limitations as any other Manager. Section 5.3. Elections. In April of each year a meeting of the Members shall be held to elect Managers to fill positions on the Board that are not occupied by a Designated Manager. Each Manager that is not a Designated Manager must be elected by a Majority Vote. In the event of the resignation, removal or death of a Manager or a Designated Manager, any Manager may call a special meeting of Members to fill such vacancy. Section 5.4. Term. The term of any Manager that is not a Designated Manager shall begin immediately after his election and shall last until the election of his successor or the effective date of his resignation or removal, whichever is earlier. Section 5.5. Resignation or Removal of a Manager. (a) Any Manager may resign by delivering to the Company a signed notice indicating his intent to resign and the effective date of his resignation. 11 (b) The Board or the Members, by Majority Vote, may remove any Manager (i) for Cause, (ii) if the Manager becomes subject to a Disability or (iii) if the Manager becomes a Non-voting Member. Any Person that has designated a Designated Manager may remove the Designated Manager at any time upon written notice to the Company. Section 5.6. Vacancies. Positions on the Board that are vacant due to the resignation, removal or death of a Manager that is not a Designated Manager shall remain vacant until the election of his replacement pursuant to Section 5.3. If a Designated Manager should resign or be removed from the Board, the Person or entity holding the power to designate that Manager pursuant to Section 5.2 hereof may designate another Person to serve as Designated Manager at any time after the resignation or removal by written notice to the Company. Section 5.7. Meetings. The Board shall hold regular quarterly meetings without call or notice at such places and at such times as the Board may from time to time determine, provided reasonable notice of the first regular meeting following any such determination is given to Managers absent at the meeting fixing regular meetings. When called by the Chairman or by Managers holding a majority of votes on the Board, the Board may hold special meetings at such places and times as are designated in the call of the meeting, upon at least seven days' notice given by the Chairman, the Secretary or an Assistant Secretary, or by the Managers calling the meeting. Section 5.8. Quorum. At any meeting of the Board, the presence of three Managers shall constitute a quorum. Any meeting may be adjourned from time to time by Managers holding a majority of votes present at the meeting, whether or not a quorum is present, and the meeting may be held as adjourned upon at least 10 days' notice to all the Managers, unless notice is waived. Section 5.9. Action By Consent. Any action of the Board may be taken without a meeting if all the Managers consent to the action in writing. The written consents shall be filed with the records of the meetings of the Board. Such actions by consent shall be treated for all purposes as actions taken at a meeting. Section 5.10. Telephonic Meetings. Managers may participate in a meeting of the Board by means of a conference telephone or similar communications equipment provided all Managers participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting. Section 5.11. Managers as Agents: Limitation on Power of Members. The Managers, to the extent of the powers set forth herein, are agents of the Company for the purpose of the Company' s business, and the actions of the Managers taken in accordance with such powers shall bind the Company. No Manager or Member in that Person's capacity as Manager or Member, acting individually, and no Managers representing less than the number of Managers and Designated Managers necessary for Board action under Section 5.12 hereof may bind the Company. 12 Section 5.12. Board Action. Unless otherwise specified in this Agreement, the Board shall act by majority vote with each Manager on the Board having one vote. Notwithstanding the foregoing, the approval of all Designated Managers shall be required for the following matters: (i) any changes in the line of business or a material change in the investment style of the Company from that heretofore conducted by CRM, Inc., CRM Management and Advisors; (ii) issuance of additional LLC Interests other than pursuant to exercise of a Put or Call Options under Section 7 hereof or exercise of options under Section 7.9 hereof; (iii) compensation arrangements, including bonus plans, between the Company and the Chairman, President, Executive Vice Presidents and Senior Vice Presidents; (iv) hiring and termination of any of the officers described in item (iii); (v) the Company's annual budget; (vi) any sale, assignment or other disposition by the Company of all or substantially all of its assets or of any interest in a Subsidiary of the Company; (vii) any consolidation or merger of the Company with or into any other Delaware limited liability company or other business entity (as defined in Section 18-209(a) of the Delaware Act), or any liquidation, dissolution or winding-up of the Company; (viii) (A) the creation or acquisition of any Subsidiary, (B) any consolidation or merger of any Subsidiary of the Company with or into any other Delaware limited liability company or other business entity (as defined in Section 18-209(a) of the Delaware Act) other than the Company, (C) any sale by any Subsidiary of the Company of all or substantially all of its assets other than to the Company, or (D) any liquidation, dissolution or winding-up of any Subsidiary of the Company other than into the Company; (ix) any issuance of any equity securities of any Subsidiary of the Company, or any securities convertible into equity securities of any Subsidiary of the Company; provided, however, that this Section 5.12(ix) shall not apply to the issuance of securities in special purpose partnerships or other investment vehicles established by the Company consistent with the past practices of CRM, Inc., CRM Management or the Company, provided that the Board is advised promptly of all such issuances of securities; (x) any acquisition by the Company or any Subsidiary of the Company of any stock or assets of another entity or of capital assets, in a single transaction or a series of related transactions in any 12-month period, for an aggregate purchase price in excess of $100,000; (xi) any incurrence by the Company and its Subsidiaries, on a combined basis, of funded debt (including undrawn amounts under any credit facility) in excess of $(*) million multiplied by a fraction, the numerator of which is the consolidated pre-tax income ( excluding any revenues received by the Company pursuant to the Administration Agreement, as amended from time to time) of the Company and its Subsidiaries, determined in accordance with generally accepted accounting principles applied consistently with prior periods, for the twelve month period ended on the last day of the month preceding the proposed incurrence of debt and the denominator of which is $(*) (xii) the rates of contribution by the Company to its "Vice President's Pool" from the contribution rates of CRM, Inc. to its Vice President's Pool as in effect on January 2,1998; (xiii) grants of options to purchase LLC Interests; (xiv) the resolution of third party claims involving amounts in excess of $250,000; (xv) the resolution of material disputes with any governmental, administrative or regulatory body, agency or similar entity; (xvi) removal of a Member, except a Designated Manager may not prevent the removal under Section 4.3 hereof of the Member for which it is the Designated Manager; (xvii) the selection of the third party which will make the determination of LLC Value; (xviii) any transaction contemplated by Section 12.2(a); (xix) any reduction below 10% in the percentage of operating income (as determined in accordance with Exhibit B hereto) allocated to a bonus pool for the Principals; and (xx) any amendment to, or termination of, the Administration Agreement. Notwithstanding anything contained in this Section 5.12 to the contrary, unless otherwise approved by all Designated Managers, 30% of all C Fees shall be paid as (*) CONFIDENTIAL TREATMENT REQUESTED 13 compensation to the employees who originated such C Fees (as determined by the Board by majority vote), 10% of all C Fees shall be paid to a bonus pool for employees of the Company designated by the Board (as determined by the Board by majority vote) and the balance of all C Fees shall be added to Available Cash. Section 5.13. Duty of Managers. A Manager shall be deemed to owe the same fiduciary duty to the Company as a director of a Delaware corporation is deemed to owe to the corporation under Delaware law. Section 5.14. Approval of Annual Budget. Subject to Section 5.12(v) hereof, the Board alone shall have the power to approve the annual budget of the Company. If the annual budget of the Company is not approved in its entirety by the Board under this Section, the Board shall approve the budget to the extent of those items on which there is agreement and shall continue to negotiate in good faith until all items of the budget are agreed upon. Section 5.15. Officers. The Board may appoint agents and employees of the Company who are designated as officers of the Company (the "Officers"). The Officers of the Company shall include a Chairman, a President and a Secretary and may include a Vice-Chairman, one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents and Assistant Secretaries and such other Officers with such titles as may be approved by the Board. Each Officer named on Schedule 5.15 shall serve in the capacities set forth opposite his name until his death, resignation or removal. The Board may remove any Officer at any time, for any reason, in its absolute discretion. The Officers shall be agents of the Company, authorized to execute and deliver documents and take other actions on behalf of the Company, subject to the direction of the Board, and to have such other duties as may be approved by the Board; provided, that the delegation of any such power and authority to the Officers shall not limit in any respect the power and authority of the Board to take such actions (or any other action) on behalf of the Company as provided in this Agreement. The Secretary shall record the actions of the Board, certify this Agreement and any related document or instrument, certify resolutions of the Board, incumbency and other matters of the Company, and have such other ministerial duties as may be specified by the Board from time to time. Section 5.16. Powers of the Board; Powers of Officers. (a) Subject to the provisions of this Agreement requiring the approval of the Members, the Board's powers on behalf and in respect of the Company shall be all powers and privileges permitted to be exercised by managers of the Company under the Delaware Act, including, without limitation, Section 18-402 of the Delaware Act; provided, that nothing herein shall supersede, limit or otherwise invalidate any action, authorization or resolution of the Members set forth in this Agreement. (b) Subject to Section 5.12 hereof and except to the extent that this Agreement requires the Board to vote on a matter, the Board may delegate any of its powers to the Officers of the Company or anyone or more of them. 14 (c) Subject to the limitation set forth in paragraph (b), the Board hereby delegates to the Officers of the Company the respective powers delegated to officers of a corporation under the Delaware General Corporation Law, subject to the powers of a board of directors of a corporation under such Delaware law; provided, that the Board reserves the right to rescind the delegation of any such powers at any time in the sole discretion of the Board. Section 5.17. Reimbursement. The Company shall reimburse each Manager for all reasonable and necessary out-of-pocket expenses incurred by such Manager on behalf of the Company according to such terms as shall be approved by the Board. The Board' s sole determination of which expenses may be reimbursed to a Manager and the amount of such expenses shall be conclusive. Such reimbursement shall be treated as an expense of the Company that shall be deducted in computing Profits and Losses and shall not be deemed to constitute a distributive share of Profits or a distribution or return of capital to the Manager. ARTICLE VI CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; ALLOCATIONS AND DISTRIBUTION Section 6.1. Capital Contributions. (a) CRM, Inc. has contributed to the capital of the Company all of its assets (other than the assets identified on Schedule 1 as excluded assets), subject to all of its liabilities (other than the liabilities identified on Schedule l as excluded liabilities), the agreed value of which is set forth opposite the name of CRM, Inc. on Schedule 2. WTI has contributed to the capital of the Company the assets set forth on Schedule 2, its interest in Advisors, and [ * ] in cash, the aggregate agreed value of which is set forth opposite the name of WTI on Schedule 2. (b) No Member shall be required to make any additional capital contribution to the Company. Section 6.2. Capital Accounts. (a) Each member shall have a capital account on the books of the Company. (b) A Member's capital account shall be credited with: (i) such Member's capital contributions; (ii) such Member's share of Profits as provided in Section 6.3(h); (iii) any gain allocated to such Member under Section 6.3(a); and * CONFIDENTIAL TREATMENT REQUESTED 15 (iv) such other amounts as may be required in order for the capital account to be considered to be determined and maintained in accordance with the rules of Treas. Reg. Section 1.704-1(b)(2)(iv) (or any successor section of similar import). (c) A Member's capital account shall be debited with: (i) such Member's share of Losses as provided in Section 6.3(h); (ii) distributions made to such Member; and (iii) such other amounts as may be required in order for the capital account to be considered to be determined and maintained in accordance with the rules of Treas. Reg. Section 1.704-1(b)(2)(iv) (or any successor section of similar import). (c) Capital accounts shall not bear interest. (d) Except as provided in Section 13.4(a)(ii) hereof, no Member has the right to demand a return of such Member's capital contributions (or the balance of such Member's capital account). Further, no Member has the right (i) to demand and receive any distribution from the Company in any form other than cash or (ii) to bring an action of partition against the Company or its property. Section 6.3. Distributions and Allocations. (a) Subject to Section 6.3(c), within 90 days after the end of each Fiscal Year, the Board shall cause to be distributed to the Members all Available Cash in accordance with (and in proportion to) their respective number of Membership Points for such Fiscal Year. In the event the Board, in its sole discretion, elects to make any distributions of Available Cash with respect to any Fiscal Year prior to the end of that Fiscal Year, such distributions shall be made to the Members pro rata, in accordance with reasonable estimates of the amount of distributions to be made to each Member for such Fiscal Year under this Section 6.3(a), and all such distributions shall be deemed advances against distributions of Available Cash to the Members pursuant to this Section 6.3(a). In the event (i) the Membership Points of any Member shall be adjusted, by Transfer or otherwise, during any Fiscal Year or (ii) any Member shall be admitted to the Company during any Fiscal Year, any distributions and any allocations to such Member pursuant to this Section 6.3 shall be made based on the average of the Member's LLC Interest for such Fiscal Year, determined on a monthly basis. For example, if in the months of January through July of a Fiscal Year (i.e., seven months) a Member owned nine Membership Points and in the months of August through December of such Fiscal Year (i.e., five months) a Member owned three Membership Points, the distributions and allocations to such Member pursuant to this Section 6.3(a) shall be based on an LLC Interest calculated as follows: (7 x 9) + (5 x 3) = 6.5 Membership 12 Points 16 (b) Notwithstanding the provisions of Section 6.3(a) hereof, the Board shall make distributions to the Members pro rata, in accordance with their Membership Points, at least quarterly, in amounts intended to enable the Members (or any Person whose tax liability is determined by reference to the income of a Member) to discharge their United States federal, state and local income tax liabilities arising from the allocations made pursuant to this Section 6.3, including, without limitation, estimated tax payments (a "Tax Liability Distribution"). The amount of any such Tax Liability Distribution shall be determined by the Board taking into account among other things (i) the maximum combined United States federal, and any applicable state and local tax rate, in each case applicable to individuals or corporations on ordinary income and net short-term capital gain or on net long-term capital gain, as applicable, and taking into account the deductibility of state and local income taxes for United States federal income tax purposes and the deductibility of local income taxes for state income tax purposes, and (ii) the amounts of such income and gain so allocated to such Member, and otherwise based on such reasonable assumptions as the Board determines in good faith to be appropriate. All distributions made to the Members pursuant to this Section 6.3(b) shall be deemed advances against distributions of Available Cash to the Members pursuant to Section 6.3(a). (c) Subject to the terms and conditions in Article XIII hereof, upon liquidation of the Company, any distributions shall be in proportion to the balances of the Members' capital accounts at the end of the Fiscal Year in which the liquidation occurs, or, if later, within ninety (90) days after the liquidation. (d) All amounts withheld pursuant to the Code or any provision of any state or local tax law with respect to any payment, distribution or allocation to the Company or the Members shall be treated as amounts distributed to the Members pursuant to this Section 6.3 for all purposes of this Agreement. The Board is authorized to withhold from distributions or with respect to allocations to the Members and to pay over to any federal, state or local government any amounts required to be so withheld pursuant to the Code or any provision of any other federal, state or local law and shall allocate such amounts to those Members with respect to which such amounts were withheld. (e) Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of its interest in the Company if such distribution would violate Section 18-607 of the Delaware Act or other applicable law. (f) Notwithstanding the foregoing, in the event that any Member unexpectedly receives any adjustments, allocations or distributions described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations such Member shall be specially allocated items of income and gain (consisting of a pro rata portion of each item of Company income, including gross income, and gain for such Fiscal Year) in an amount and manner sufficient to eliminate as quickly as possible the deficit capital account balance (if any) of such Member (determined after decreasing such balance for the items described in Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) of the Treasury Regulations and increasing such balance by any amount which a Member is deemed to be obligated to restore under Section 1.704-2(g)(1) or (i)(5) of the Treasury Regulations). This provision is intended to comply with the "qualified income offset" requirement of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted consistently therewith. 17 (g) Profits or Losses, as the case may be, for a Fiscal Year shall be allocated among the Members in accordance with their respective Membership Points based on the weighted average of each Member's LLC Interest for such Fiscal Year, determined on a monthly basis (See example in Section 6.3(a)). (h) Income, gain, loss and deduction with respect to any property contributed to the capital of the Company by a, Member shall, solely for income tax purposes, be allocated to the contributing Member in accordance with Section 704(c) of the Code and the Treasury Regulations. ARTICLE VII TRANSFER OF LLC INTERESTS, PUT AND CALL OPTIONS, MANDATORY PURCHASES AND ADMISSION OF ADDITIONAL MEMBERS Section 7.1. Assignability of Interests. (a) Except as otherwise provided in this Article VII, no LLC Interest of a Member may be sold, assigned, transferred, pledged, hypothecated, gifted, exchanged, optioned or encumbered (each, a "Transfer") and no Transfer in violation of this Agreement shall be binding upon the Company. (b) A Member may transfer all or any portion of its or his LLC Interest to any one or more Permitted Transferees or Related Entities who agree to be bound by the terms and conditions of this Agreement; provided, however, that notwithstanding anything contained in this Agreement to the contrary, the transferring Member shall retain the vote with respect to the LLC Interests so Transferred to Permitted Transferees or Related Entities unless the Transferee is consolidated with WTI or Wilmington for federal income tax purposes or unless the Transferee is a trust of which a Principal is the voting trustee or otherwise possesses the power to vote the LLC Interest so Transferred. (c) In addition to Transfers permitted under Section 7.1(b), the Members may exercise Puts in accordance with Section 7.2, make sales in accordance with Section 7.3 and pledge their LLC Interests to secure loans, the proceeds of which are used to finance the purchase of LLC Interests. Section 7.2 Put Options. (a) On or before February 28 of each year, the Company shall notify all Members of the LLC Value as of December 31 of the immediately preceding year. 18 (b) Subject to the terms, conditions and limitations of this Section 7.2, each Principal or his Permitted Transferee may exercise an option to sell to Wilmington all or any portion of their LLC Interest. In addition, subject to the terms, conditions and limitations of this Section 7.2, if a shareholder of CRM, Inc. notifies CRM, Inc. of his exercise of a put of all or any portion of his CRM, Inc. shares pursuant to Section 6.2 of the CRM, Inc. Shareholders Agreement, then CRM, Inc. shall put to Wilmington that portion of the outstanding LLC Interests represented by the Derivative Share attributable to the shares of CRM, Inc. with respect to which puts have been so exercised (each such Put to Wilmington by a Principal, his Permitted Transferees or CRM, Inc., a "Put"). Upon exercise of a Put under this Section 7.2(b), Wilmington shall thereupon become obligated to purchase the LLC Interest as to which the Put has been exercised. (c) Notwithstanding anything contained in Section 7.2(b) to the contrary, unless otherwise agreed to by Wilmington (i) a Principal and his Permitted Transferees may not exercise, or in their capacity as shareholders of CRM, Inc. cause CRM, Inc. to exercise, a Put during any Fiscal Year with respect to LLC Interests in excess of 50% of the High Water Mark of such Principal unless the sum of such Principal' s and his Permitted Transferees then current LLC Interest and their Derivative Share of CRM, Inc.'s LLC Interest is one percent (1%) or less; (ii) Puts may not be exercised in any Fiscal Year with respect to more than 20% of the LLC Interests of the Company then outstanding; (iii) a Principal and his Permitted Transferees may not exercise, or in their capacity as shareholders of CRM, Inc. cause CRM, Inc. to exercise, a Put until at least three years after such Principal ceases to be employed by the Company by reason of (A) termination for Cause or (B) resignation other than by Retirement or other than for Good Reason; (iv) a Put may not be exercised, and any Put which has been exercised shall be rescinded, with respect to any LLC Interest which, prior to the Purchase Closing Date of a proposed Put exercise, is to be purchased or has been Called under Section 7.3 hereof; (v) a Put may not be exercised with respect to the respective LLC Interests of Gerald B. Cramer or Ronald H. McGlynn and their Permitted Transferees, or their respective Derivative Shares, prior to March 15, 2000; and (vi) Puts may not be exercised with respect to an LLC Interest purchased pursuant to the exercise of options granted (A) prior to April 1, 2000 by the Company under Section 7.9 hereof until at least six months after the purchase of such LLC Interest, and (B) after March 31, 2000 by the Company under Section 7.9 hereof or by WTI until the earlier of (x) three years after the purchase of such LLC Interest and (y) five years after such options were granted by the Company or WTI, but in no event until at least six months after the Purchase of such LLC Interest; provided, however, if there is a Change of Control which accelerates the vesting of options pursuant to the terms thereof, a Put may be exercised with respect to an LLC Interest acquired pursuant to the exercise of such options beginning six months after the purchase of such LLC Interest; and further provided, however, the limitations set forth in this Section 7.2(c), other than the limitations set forth in item (vi) above, shall not apply with respect to the exercise of a Put by a Principal and his Permitted Transferees if such Principal's employment by the Company is terminated by the Company without Cause or such Principal's resignation of employment for Good Reason or to the exercise of a Put by CRM, Inc. following the termination of employment by the Company without Cause or resignation of employment for Good Reason of a Principal who or whose Permitted Transferees are shareholders of CRM, Inc., to the extent of such Principal's and Permitted Transferee's Derivative Share of CRM, Inc.'s LLC Interest, if such shareholder's CRM, Inc. shares are purchased pursuant to Section 6.2 of the CRM, Inc. Shareholders Agreement. If, in any Fiscal Year, Puts are exercised with respect to more than 20% of the outstanding LLC Interests of the Company (subject to the proviso set forth in the immediately preceding sentence) then each such Member shall be entitled to exercise Puts equal to the product of (x) 19 20%, (y) the LLC Interests of the Company then outstanding and (z) a fraction, the numerator of which is the LLC Interest for which a Put is sought to be exercised by the Member and the denominator of which is the total LLC Interests for which Puts are sought to be exercised by all Members. (d) A Member may exercise a Put by giving an irrevocable notice of exercise of the Put to Wilmington in substantially the form of Exhibit C hereto (the "Put Notice") on or before March 15 of any year stating that it or he is electing to exercise the Put and specifying the LLC Interest to be sold pursuant to the Put. On or before the first day of April after receipt of a Put Notice, and subject to the limitations set forth in Section 7.2(c), Wilmington shall purchase from the Principal and his Permitted Transferees and, if applicable, CRM, Inc., the LLC Interest set forth in the Put Notice. At the closing of the exercise of a Put, Wilmington shall deliver the Put Price to the Principal and his Permitted Transferees or CRM, Inc., as the case may be, by certified check or wire transfer of immediately available funds against delivery of such documents or instruments of transfer as may be reasonably requested by Wilmington. (e) On the last day of the month in which a Put is exercised by a Member, such Member shall cease to have any rights as a Member with respect to the LLC Interest so Put other than (i) the right to receive the Put Price on the Purchase Closing Date; and (ii) the right to receive distributions and allocations with respect to such LLC Interest through the last day of the month in which the Put is exercised in accordance with Section 6.3(g) and the last two sentences of Section 6.3(a). Section 7.3. Purchase on Death, Disability, Retirement; Wilmington Call Options. The following provisions with respect to the purchase and sale of an LLC Interest of a Principal and his Permitted Transferees, including their Derivative Share of CRM, Inc.'s LLC Interest, shall apply following the termination of such Principal's employment by the Company, a transfer required by operation of law or other involuntary transfer of an LLC Interest or a Derivative Share of CRM, Inc.'s LLC Interest or delivery of one or more Put Notices which together represent more than one-half (1/2) of the High Water Mark of a Principal; (a) In the event of the death, Disability or Retirement of a Principal (i) Wilmington shall be obligated to purchase from such Principal or such Principal's estate and such Principal's Permitted Transferees, and such Principal or such Principal's estate and such Principal's Permitted Transferees, as the case may be, shall be obligated to sell to Wilmington, all of such Principal's and his Permitted Transferees' LLC Interest at a purchase price equal to the Put Price thereof; and (ii) Wilmington shall be obligated to purchase from CRM, Inc. and CRM, Inc. shall be obligated to sell to Wilmington, the Derivative Share of CRM, Inc.'s LLC Interest attributable to such Principal and his Permitted Transferees, at a purchase price equal to the Put Price thereof. In the event of the death, Retirement or Disability of a Principal between January 1 and June 30 of any year, the Purchase Closing Date under this Section 7.3(a) shall be on April 1 (or if April 1 is not a business day, the next succeeding business day) of the year following the date of death, Disability or Retirement. At the closing of the purchase from the Principal, the estate of the deceased Principal, the Principal's Permitted Transferees, or CRM, Inc., in the event of such Principal's death, Disability or Retirement between January 1 and June 30 of any year, Wilmington shall deliver to the Principal, his Permitted Transferees, CRM, Inc. or the personal representative of the deceased Principal' s estate, as the case may be, the purchase price by certified check or wire transfer of immediately available funds. In the event of the death, Disability or Retirement of a Principal between July 1 and December 31 of any year, the Purchase Closing Date under this Section 20 7.3(a) shall be on April 1 (or if April 1 is not a business day, the next succeeding business day) of the second year following the date of death, Disability or Retirement. Notwithstanding the foregoing, on or before April 1 of the year following the date of death, Disability or Retirement of a Principal whose death, Disability or Retirement occurs between July 1 and December 31 of any year, Wilmington shall deliver to the Principal, the Principal's Permitted Transferees, the personal representative of the estate of the deceased Principal, or CRM, Inc., as the case may be, by certified check or wire transfer of immediately available funds, an amount equal to 75% of the Put Price determined as of the most recent Determination Date as an advance against the Put Price to be paid to the Principal, the Principal's Permitted Transferees, the personal representative of the deceased Principal's estate or CRM, Inc., as the case may be, at the Purchase Closing Date. At the closing of the purchase under this Section 7.3(a) with respect to a Principal whose death, Disability or Retirement occurs between July 1 and December 31 of any year, Wilmington shall deliver to the Principal, the Principal's Permitted Transferees, the personal representative of the deceased Principal's estate or CRM, Inc., as the case may be, by certified check or wire transfer of immediately available funds, the amount, if any, by which the purchase price for the LLC Interest purchased on such Purchase Closing Date exceeds the amount previously advanced to such Person pursuant to this Section 7.3(a). If Wilmington advises the Principal, the Principal's Permitted Transferees, the personal representative of the deceased Principal's estate or CRM, Inc., as the case may be, that the amount previously advanced to such Person exceeds the purchase price for the LLC Interest purchased on such Purchase Closing Date, then the Principal, the Principal's Permitted Transferees, the personal representative of the deceased Principal's estate or CRM, Inc., as the case may be, shall remit the shortfall promptly to Wilmington. Wilmington may purchase life insurance or Disability insurance on any Principal in order to fund the obligations of Wilmington under this Section 7.3(a) or for any other purpose. Each Principal shall cooperate with Wilmington, in obtaining such insurance, including taking any required physical examinations. (b) Within 90 days following (i) the termination of employment by the Company of a Principal, other than by reason of death, Disability or Retirement; (ii) a transfer required by operation of law or other involuntary transfer of a Principal's or his Permitted Transferee's LLC Interest or their Derivative Share of CRM, Inc.'s LLC Interest; or (iii) the first time there is a delivery of one or more Put Notices which together represent more than one-half (1/2) of the High Water Mark of a Principal, Wilmington may exercise the right to purchase from such Principal, such Principal's Permitted Transferees or from CRM, Inc., as the case may be, all or any portion of such Principal's and such Principal's Permitted Transferees' LLC Interest, including their Derivative Share of CRM, Inc.'s LLC Interest ( a "Wilmington Call"). Notwithstanding the foregoing, unless otherwise approved by the Board, Wilmington may not exercise a Wilmington Call pursuant to item (iii) of the immediately preceding sentence if, as a result of the purchase of the LLC Interest subject to the Wilmington Call, WTI would own 80% or more of the outstanding LLC Interests. In the event a Wilmington Call is exercised as a result of (i) a termination of a Principal's employment by the Company without Cause or by reason of voluntary resignation of his employment by the Company; (ii) a transfer required by operation of law or other involuntary transfer of a Principal's or such Principal's Permitted Transferees LLC Interest or their Derivative Share of CRM, Inc.'s LLC Interest; or (iii) delivery of one or more Put Notices which together represent more than one-half (1/2) of the High Water Mark of a Principal, the purchase price payable by Wilmington to a Principal and his Permitted Transferees for their LLC Interest, and to CRM, Inc. for the Derivative Share of the LLC Interest of CRM, Inc. attributable to such Principal and his Permitted Transferees, shall be the Put Price. In the event of the termination of a Principal's employment by the Company for Cause the purchase price payable by Wilmington to a Principal and his Permitted 21 Transferees for their LLC Interest and to CRM, Inc. for the Derivative Share of the LLC Interest of CRM, Inc. attributable to the terminated Principal and his Permitted Transferees shall be 60% of the Put Price. (c) If Wilmington does not exercise a Wilmington Call with respect to all of a Principal's and such Principal's Permitted Transferees' LLC Interest in accordance with Section 7.3(b) hereof, then the remaining Members shall have an additional 90 days to exercise such Wilmington Call with respect to that portion of the Principal's and such Principal's Permitted Transferees' LLC Interest as to which Wilmington does not exercise the Wilmington Call on a pro rata basis in accordance with their respective Membership Points or on such other basis as they shall agree upon. (d) A Wilmington Call may be exercised by delivering to the Member a written notice signed by Wilmington or the other Members if Section 7.3(c) is applicable in substantially the form of Exhibit D hereto (the "Wilmington Call Notice") stating that it or he is exercising the Wilmington Call and any LLC Interest with respect to which the Wilmington Call is being exercised. On the April 1 after receipt of a Wilmington Call Notice (or if April 1 is not a business day, the next succeeding business day, or if a Wilmington Call Notice is received before April 1 of any year, on April 1 of the subsequent year), the Member whose LLC Interest is subject to the Wilmington Call shall sell to Wilmington (or other Members pursuant to Section 7.3(c)), the LLC Interest set forth in the Wilmington Call Notice. Except as hereinafter provided, at the closing of the exercise by Wilmington or another Member of a Wilmington Call, Wilmington or the other Members, as the case may be, shall deliver the purchase price to the selling Principal, the selling Permitted Transferees of the Principal or CRM, Inc., as the case may be, by certified check or wire transfer of immediately available funds against delivery of such documents or instruments of transfer as may be reasonably requested by Wilmington or such other Member. Notwithstanding the foregoing, if a Wilmington Call is exercised with respect to the LLC Interest of a Principal or his Permitted Transferees or the Derivative Share of CRM, Inc.'s LLC Interest attributable to a Principal or his Permitted Transferees in connection with such Principal (i) who has voluntarily resigned his employment with the Company other than by Retirement and other than with Good Reason, then the portion of the purchase price payable to such Principal and his Permitted Transferees or payable to CRM, Inc. and attributable to their Derivative Share of CRM, Inc.'s LLC Interest shall be paid by delivery of a three year promissory note to the selling Member, which shall bear interest at the "applicable federal rate" as defined under Section 1274(d) of the Code (a "Note"), payable quarterly, and the principal of which shall be payable three years after the Purchase Closing Date; (ii) who has delivered one or more Put Notices which together represent more than one-half (1/2) of the High Water Mark of such Principal, then the purchase price payable to such Principal and his Permitted Transferees or payable to CRM, Inc. and attributable to their Derivative Share of CRM, Inc.'s LLC Interest shall (A) with respect to purchases of up to the first one-half (1/2) of a Principal's High Water Mark, be payable by certified check or wire transfer of immediately available funds and (B) with respect to purchases in excess of the first one-half (1/2) of a Principal's High Water Mark, be payable by delivery of a Note, the principal of which is payable in three consecutive equal annual installments with the first installment become due one year after the Purchase Closing Date, and interest on which is payable quarterly; or (iii) whose employment by the Company was terminated for Cause, then the portion of the purchase price payable to such Principal and his Permitted Transferees or payable to CRM, Inc. and attributable to their Derivative Share of CRM, Inc.'s LLC Interest shall be paid by the delivery of a Note, payable in three consecutive annual installments of principal, together with interest, with the first installment becoming due one year after the Purchase Closing Date in an amount equal to 20% of the principal amount of the Note, the second 22 installment becoming due two years after the Purchase Closing Date in an amount equal to 30% of the principal amount of the Note and the third installment becoming due three years after the Purchase Closing Date in an amount equal to 50% of the principal amount of the Note. All Notes issued under this Section 7.3 shall provide for set-off in the event of a breach by such individual of the provisions of Article V of the CRM, Inc. Shareholders Agreement or Article XI of this Agreement. Notwithstanding anything contained in this Section 7.3(d) to the contrary, all Notes shall become immediately due and payable if at any time the deposits of WTC are not rated long term by Standard & Poor's Corporation or Moody's Investors Service, Inc. or, if rated long term, are rated at or below "BBB" by Standard & Poor's Corporation or "Baa2" by Moody's Investors Service, Inc. (e) On the last day of the month in which the death, Disability or Retirement of a Principal occurs, or in which a Wilmington Call is exercised, the Principal who has died, become disabled or retired and his Permitted Transferees (and CRM, Inc. to the extent of their Derivative Share of CRM, Inc.'s LLC Interest), or the Member who has received a Wilmington Call Notice, shall cease to have any rights as a Member with respect to his or its entire LLC Interest, in the case of death, Disability or Retirement, or with respect to the LLC Interest as to which a Wilmington Call has been exercised, in the case of receipt of a Wilmington Call Notice, other than (i) the right to receive the Put Price on the Purchase Closing Date and (ii) the right to receive distributions and allocations with respect to such LLC Interest through the last day of the month in which the death, Disability or Retirement of a Principal occurs, or on which a Wilmington Call is exercised, in accordance with Section 6.3(g) and the last two sentences of Section 6.3(a). Section 7.4. Company Call Options. (a) Within 180 days following a Change of Control, the Company shall have the right to purchase from WTI, and WTI shall thereupon become obligated to sell to the Company, all, but not less than all, of WTI's LLC Interest (a "Company Call") at the Call Price If the Company does not exercise a Call with respect to all of WTI's LLC Interest within 180 days following a Change of Control, then the remaining Members shall have an additional 90 days to exercise the Company Call on a pro rata basis in accordance with their respective Membership Points or on such other basis as they shall agree upon. Upon the exercise of a Company Call by the remaining Members, WTI shall thereupon become obligated to sell to the remaining Members its entire LLC Interest. (b) A Company Call may be exercised by delivering to WTI a written notice signed by the Company or the remaining Members, as the case may be (the "Company Call Notice") stating that it or they are exercising the Company Call and specifying the LLC Interest with respect to which the Company Call is being exercised. Within 30 days after receipt of a Company Call Notice, WTI shall sell to the Company or the remaining Members, as the case may be, the LLC Interest set forth in the Company Call Notice. At the closing of the exercise of the Company Call, the purchasing party shall deliver the Call Price to WTI payable by certified check or wire transfer of immediately available funds. Upon the closing of the Company Call, WTI shall cease to be a Member and all of its rights and obligations under this Agreement, other than those set forth in Article XI, shall terminate. Section 7.5. Substitute Members. Any Transfer of LLC Interests other than pursuant to the exercise of a Put or call option pursuant to this Article VII shall, nevertheless, not entitle the 23 transferee, unless already a Member, to become a Member or to be entitled to exercise or receive any of the rights, powers or benefits of a Member other than the right to share in such profits and losses, to receive distributions and allocation of income, gain, loss, deduction or credit or similar item to which the transferor Member would otherwise be entitled, to the extent assigned, unless the transferor Member designates, in a written instrument delivered to the Board, its transferee to become a substitute Member and the Board, in its sole and absolute discretion, consents to the admission of such transferee as a Non-voting Member; and provided further, that such transferee shall not become a substitute Member without having first executed an instrument reasonably satisfactory to the Board accepting and agreeing to the terms and conditions of this Agreement, including a counterpart signature page to this Agreement, and without having paid to the Company a fee sufficient to cover all reasonable expenses of the Company in connection with such transferee's admission as a substitute Member. Section 7.6. Recognition of Transfer by Company. No Transfer of a Member's LLC Interest, or any part thereof, that is in violation of this Article VII shall be valid or effective, and neither the Company nor the Members shall recognize the same for the purpose of making distributions pursuant to Article VI hereof with respect to such transferred LLC Interest or part thereof. Neither the Company, any member of the Board, nor any Member shall incur any liability as a result of refusing to make any such distributions to the transferee of any such invalid Transfer. Section 7.7. Effective Date of Transfer. Any valid Transfer of a Member's LLC Interest, or part thereof, pursuant to the provisions of this Article VII shall be effective as of the close of business on the last day of the calendar month in which such Transfer occurs. Section 7 8. Indemnification. In the case of a Transfer or attempted Transfer of an LLC Interest that has not received the consents required by this Article VII, the parties engaging or attempting to engage in such Transfer shall be liable to indemnify and hold harmless the Company and the other Members from all costs, liabilities and damages that any of such indemnified Persons may incur (including, without limitation, incremental tax liability and lawyers' fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby. Section 7.9. Issuance of Additional LLC Interests. (a) Subject to Sections 5.12, 7.1 and 7.5 hereof, the Board may admit new Members to the Company, issue additional LLC Interests and grant options to purchase LLC Interests upon such terms and conditions as it may establish. As a condition to the admission of a new Member, such Member must become a party to this Agreement. (b) The Company granted options to purchase LLC Interests to the persons named on Schedule 7.9 hereto in the amounts and at the exercise price set forth opposite their respective names on such schedule. Upon the grant of additional options to purchase LLC Interests by the Company, an Officer shall make the appropriate revisions to Schedule 7.9 hereto to reflect the options granted. Such options shall be exercisable at a price per Membership Point equal to the fair market value of each such Membership Point on the date such options are granted based upon the valuation methodology set forth in Exhibit B hereto. As a condition to the grant of options under this Section 7.9(b), each option holder and the Company shall execute an Option Agreement substantially in the form of Exhibit E hereto (an "Option Agreement"). Upon the closing of the exercise of the options granted pursuant to this Section 24 7.9(b), the purchaser of Membership Points shall become a Principal with respect to the LLC Interest so purchased. (c) Upon the issuance of additional Membership Points to a Member, an Officer shall make the appropriate revisions to Schedule 2 hereto to reflect the additional Membership Points issued to the Member and identifying the Member as a Principal. Section 7.10. Assignment of Wilmington' s Rights and Obligations. Wilmington may assign all of its rights and delegate all of its obligations under Sections 7.2 and 7.3 hereof to WTC. ARTICLE VIII BOOKS AND RECORDS Section 8.1. Books, Records and Financial Statements. The Secretary shall prepare and maintain, or cause to be prepared and maintained, the books of account of the Company. Such books of account and all financial records of the Company shall be kept at the Company's office located at 707 Westchester Avenue, 4th Floor, White Plains, New York 10604. The Secretary shall also cause the following documents to be transmitted at the times hereinafter set forth: (a) to each Member, as soon as available and in any event within 100 days after the end of each Fiscal Year of the Company, a balance sheet, income statement, cash flow statement and statement of capital accounts of the Company as of the end of such Fiscal Year, all of which shall be audited by the Company's accountants; (b) to each Member, as soon as available and in any event within 30 days after the end of each quarter of each Fiscal Year of the Company, a balance sheet, income statement, cash flow statement and statement of capital accounts of the Company as of the end of such quarter; (c) to each Member, as soon as available from the Company's accountants, the annual federal and state income tax return of the Company and a K-l indicating its taxable income or loss for such Fiscal Year; (d) to each Member, ten days prior to the date on which any federal or state quarterly estimated tax payments are due, a schedule setting forth the Company's estimated taxable income allocable to each Member for such Fiscal Year; and (e) to WTI, within five business days after the end of each quarter, an estimate of the net income of the Company for the year to date period through the end of such quarter. Section 8.2. Accounting Method. The books and records of the Company shall be kept on an accrual basis for financial reporting and tax purpose. Except as provided in this Section 8.2, all records shall be maintained in accordance with generally accepted accounting principles in a consistent manner and shall reflect all Company transactions and be appropriate and adequate for the Company's business. 25 ARTICLE IX TAX Section 9.1. Tax Matters Member. (a) The President - Chief Executive Officer is hereby designated as the initial tax matters Member of the Company (the "Tax Matters Member") for purposes of Section 6231(a)(7) of the Code and shall have the power to manage and control, on behalf of the Company, any administrative proceeding at the Company level with the Internal Revenue Service relating to the determination of any item of Company income, gain, loss, deduction or credit for federal income tax purposes. (b) The Tax Matters Member shall, within 10 days of the receipt of any notice from the Internal Revenue Service in any administrative proceeding at the Company level relating to the determination of any Company item of income, gain, loss, deduction or credit, mail a copy of such notice to each Member. (c) The Board may at any time hereafter designate a new Tax Matters Member. Section 9.2. Right to Make Section 754 Election. The Board may make or revoke, on behalf of the Company, an election in accordance with Section 754 of the Code, so as to adjust the basis of Company property in the case of a distribution of property within the meaning of Section 734 of the Code, and in the case of a transfer of a Company interest within the meaning of Section 743 of the Code. Each Member shall, upon request of the Board, supply the information necessary to give effect to such an election. ARTICLE X LIABILITY, EXCULPATION AND INDEMNIFICATION Section 10.1. Liability. (a) Except as otherwise provided herein, in the LLC Interest Purchase Agreement, in any document referred to or incorporated therein or by the Delaware Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member. (b) Except as otherwise expressly provided herein, in the LLC Interest Purchase Agreement and any document referred to or incorporated therein or as required by law, a Member, in his capacity as such, shall have no liability in excess of (i) the amount of such Member's capital contributions, (ii) such Member's share of any assets and undistributed Profits of the Company, and (iii) the amount of any distributions wrongfully distributed to such Member. 26 Section 10.2. Exculpation. (a) No Officer or Manager shall be liable to the Company or any Member for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Officer or Manager in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Officer or Manager by this Agreement, except that an Officer or Manager shall be liable for any such loss, damage or claim incurred by reason of such Officer's or Manager's bad faith, gross negligence, reckless disregard of his duties hereunder, willful misconduct or breach of the provisions of this Agreement. (b) An Officer and Manager shall be fully protected in relying in good faith upon the records of the Company and upon such information, opinions, reports or statements presented to the Company by any person as to matters the Officer or Manager reasonably believes are within such person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Company, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses or net cash flow or any other facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid. Section 10.3. Indemnification. To the fullest extent permitted by applicable law, the Company shall indemnify each Officer and Manager for any loss, damage or claim incurred by any such Officer or Manager by reason of any act or omission performed or omitted by such Officer or Manager in good faith on behalf of the Company and in a manner reasonably believed to be within the scope of authority conferred on such Officer or Manager or by this Agreement, except that no Officer or Manager shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Officer or Manager or by reason of bad faith, gross negligence, reckless disregard of his duties hereunder or willful misconduct or breach of the provisions of this Agreement with respect to such acts or omissions; provided, however, that (i) any indemnity under this Section 10.3 shall be provided out of and to the extent of Company assets only, and no Member shall have any personal liability on account thereof; and (ii) nothing contained herein shall limit any indemnification or other rights of the Company or any Member under the LLC Interest Purchase Agreement or any of the documents referred to or incorporated therein. Section 10.4. Expenses. To the fullest extent permitted by applicable law, the Company shall advance to an Officer or Manager any expenses (including legal fees) incurred by such Officer or Manager in defending any claim, demand, action, suit or proceeding (such advance to be made prior to the final disposition of such claim, demand, action, suit or proceeding), including, without limitation, claims, demands, actions, suits or proceedings with respect to which such Officer or Manager is alleged to have not met the applicable standard of conduct or is alleged to have acted or failed to act in a manner which, if such allegations were true, would not entitle such Officer or Manager to indemnification under this Agreement, upon receipt by the Company of an undertaking by or on behalf of such Officer or Manager to repay such amount if it shall be determined that such Officer or Manager is not entitled to be indemnified as authorized in Section 10.3 hereof. 27 ARTICLE XI NON-COMPETITION; CONFIDENTIALITY Section 11.1. Non-competition; Confidentiality. (a) The Members acknowledge and agree that (i) the investment advisory and investment management business is an intensely competitive business, (ii) as a result of their association with the Company they have had access to, and are and will be in possession of, confidential client information, trade secrets relating to the business practices of the Company and other information pertaining to the goodwill) of the Company and its clients (including but not limited to confidential information specified in paragraphs (b) and (c) below), all of which are of vital importance to the success of the Company (the "Confidential Information"), and (iii) the use by any Member for its or his own account or the disclosure by any Member to any existing or potential competitors of the Company of the Confidential Information would place the Company at a serious competitive disadvantage and would cause irreparable harm to the business of the Company. (b) The Members acknowledge that (i) Confidential Information includes, without limitation, any lists of clients of the Company and any lists of investment management, custody and personal trust clients of WTI, Wilmington or WTC (including any former clients who were clients of the Company, CRM, Inc., CRM Management or Advisors at any time during the three-year period immediately prior to the date hereof and potential clients of the Company and any potential investment management, personal trust, or custody clients of WTI, Wilmington or WTC who are known by the Member to be potential clients and have been identified and contacted, by telephone or in person, by a representative of the Company, CRM, Inc., CRM Management, Advisors, WTI, Wilmington or WTC, and any Affiliates of such current, former and prospective clients (collectively, "Clients")); (ii) such Confidential Information is and shall remain the sole and exclusive property of the Company, WTI, Wilmington of WTC, as the case may be, and that the Members do not have and shall not have any right, title or interest therein by virtue of their status as Members, (iii) such Confidential Information must continue to be confidential, and (iv) Confidential Information is not readily accessible to competitors of the Company or of WTI, Wilmington or WTC, as the case may be. Nothing in this Article XI shall be construed to limit in any way the ownership rights of WTI, WTC or Wilmington to their lists of clients and prospective clients or their absolute right to use such lists in any manner they deem appropriate. (c) The Members further acknowledge that the personal investment advisory and investment management services currently offered by the Company represent proprietary financial products of the Company, embodying the unique trade know-how and operational methods of the Company. Accordingly, the Members acknowledge that Confidential Information of the Company also includes, without limitation, all trade know-how, secrets, operational methods, pricing and investment policies and other business affairs of the Company which are unique to the Company and are made known to or learned by the Members heretofore or hereafter. (d) By reason of paragraphs (a), (b) and (c) above, and in consideration of the issuance to each of the Members of an LLC Interest, each Member covenants and agrees that it shall not, at any time after the execution of this Agreement, directly or indirectly, reveal, divulge or make known to 28 any Person (other than the Company) or use for his or its own account, or for the account of any Person, any Confidential Information. (e) The Principals and CRM, Inc. acknowledge and agree that (i) the Company's present and future business relationships with its Clients are and will continue to be of a type which normally continue unless interfered with by others, and (ii) any statements or actions taken by the Principals or CRM, Inc. to induce any Client to enter into any business arrangement or place any funds or securities under management with any Person other than the Company would cause irreparable harm to the Company. The Principals and CRM, Inc. further acknowledge and agree that if they were to compete, directly or indirectly, with the Company's business, the Company would suffer irreparable harm. (f) By reason of the foregoing, and in consideration of the issuance of LLC Interests to CRM, Inc. and the Principals, each of the Principals and CRM, Inc. covenants and agrees that it or he will not, during the period commencing on the date hereof and ending one year after it or he ceases to be a Member of the Company (the "One-Year Restricted Period"), for whatever reason, whether for his or its account or for the account of any other Person, as a shareholder, employee, partner, member, board member, consultant, independent contractor, representative or otherwise, engage in any business similar to, related to or competitive with any business heretofore conducted by the Company, CRM, Inc., CRM Management or Advisors or conducted by the Company, CRM, Inc., CRM Management or Advisors at any time during the One- Year Restricted Period; provided, however, nothing herein shall prohibit a Principal or CRM, Inc. from being a shareholder or equity holder in any publicly traded entity whose business is similar to, related to or competitive with, the business heretofore conducted, or conducted at any time during the One-Year Restricted Period, by the Company, CRM, Inc., CRM Management or Advisors, so long as such Principal or CRM, Inc., as the case may be, does not hold more than a one percent (1%) equity interest in such publicly traded entity. The Principals acknowledge that the One-Year Restricted Period in this paragraph is appropriate given the unique nature of the services they will provide the Company and they further acknowledge that their fulfillment of the One-Year Restricted Period in this paragraph (f) will not cause any of them substantial economic hardship and will not render any of them unemployable within the investment management industry. The restrictions set forth in this Section 11.1(f) shall not apply to a Principal whose employment by the Company is terminated by the Company without Cause or who resigns his employment by the Company for Good Reason. (g) By reason of the foregoing, and in consideration of the issuance of LLC Interests to the Principals and CRM, Inc., each of the Principals and CRM, Inc. covenants and agrees that it or he will not, for whatever reason, whether for his or its account or for the account of any other Person, (i) make any statements or take any actions that may interfere with the Company's business relationships with any Client; (ii) contact either directly or indirectly any Client or otherwise induce or attempt to induce any Client to enter into any business relationship or to place any funds or securities under management with any Person other than the Company; (iii) accept any business from any Client or funds or securities for management from any Client other than on behalf of the Company; or (iv) hire or attempt to hire any Person who is, or was at any time prior to the date hereof or during the applicable periods referred to in this paragraph (g), employed by or associated with the Company, CRM, Inc., CRM Management or Advisors as an executive, officer, employee, manager, salesman, consultant, independent contractor, representative or other agent. In addition to the foregoing, each of the Principals and CRM, Inc. covenants and agrees that he or it will not (w) assist in hiring any such Person for or by any other 29 Person; (x) encourage any such Person to terminate his employment with the Company; (y) encourage any Client to terminate its advisory relationship with the Company; or (z) take any actions that may interfere with the Company's property rights in lists of Clients or otherwise diminish the value of such lists to the Company. The restrictions set forth in this Section 11.1(g) shall apply to each of the Principals and CRM, Inc. during the period commencing on the date hereof and ending three years after it or he ceases to be a Member of the Company (the "Three-Year Restricted Period"); provided, however, if a Principal and CRM, Inc. deliver one or more Put Notices which together represent one-half (1/2) or more of the High Water Mark of that Principal, then the restrictions set forth in this Section 11.1(g) shall apply to such Principal during the period ending four years after delivery of the Put Notice which results in such Principal and CRM, Inc. having exercised Puts with respect to one-half or more of the Principal's High Water Mark (the "Four-Year Restricted Period"). Nothing in this paragraph (g) shall be construed to permit the Principals or CRM, Inc. to use Confidential Information made available by WTI, WTC or Wilmington to the Company, including, without limitation, client lists, for any purpose whatsoever other than the pursuit of the Company's business objectives. (h) The restrictions set forth in Sections 11.1(f) and (g) shall not apply to (i) the management of a Member's own money; (ii) the management of the money of any member of such Member's Family; (iii) the management of the money of any trust of which such Member or any member of his Family is a grantor or beneficiary; or (iv) the management of the money of any of the accounts set forth on Schedule 11.1; provided, however, this exception to the Section 11.1(f) and (g) restrictions shall not apply to advisory accounts that are opened after the date hereof and on which advisory fees are payable (other than accounts which are opened after the date hereof and which are controlled by Persons described in items (i) through (iv) of this paragraph (h), provided that such Persons presently have accounts with the Company). The restrictions set forth in clause (ii) of Section 11.1(g) shall not apply to contacting any consultant to an institutional Client, or otherwise inducing or attempting to induce a consultant to an institutional Client, for the purpose of causing any such institutional Client to place funds under management in other than small, mid or large cap equity products or Hedge Funds with any Person other than the Company. The restrictions set forth in clause (iii) of Section 11.1(g) shall not apply to accepting business or funds or securities for management in other than small, mid or large cap equity products or Hedge Funds from any institutional Client if the acceptance of such business, funds or securities of such institutional Client results exclusively from the contact or solicitation of such institutional Client through a consultant to such Client. For purposes of this paragraph, the term "consultant" means any Person regularly engaged in the business of consulting for institutional clients of asset management firms in the selection of asset management firms or in asset allocation. (i) By reason of paragraph (e), and in consideration of the issuance of LLC Interests to the Principals and CRM, Inc., each of the Principals and CRM, Inc. covenants and agrees that it or he will not, at any time after the date hereof, for whatever reason, whether for his or its account or for the account of any other Person (other than the Company), use any investment results or performance information of the Company, CRM, Inc., CRM Management or Advisors, including, without limitation, the investment performance of any accounts or groups of accounts for which a Person was a portfolio manager, in connection with any business similar to, related to or in competition with the business conducted by the Company, CRM, Inc., CRM Management or Advisors, unless such Person refrains from taking any credit, explicitly or implicitly, for the achievement of such results or performance. 30 (j) The Members acknowledge and agree that it is fair and reasonable that they make the covenants and undertakings set forth above and have done so with the benefit of the advice of counsel. Furthermore, the Members agree that any breach or attempted breach by any of them of the provisions of Article XI of this Agreement will cause irreparable harm to the Company for which monetary damages will not be an adequate remedy. Accordingly, the Company shall be entitled to apply for and obtain injunctive relief (temporary, preliminary and permanent) in order to restrain the breach or threatened breach of, or otherwise to specifically enforce, any of the provisions of this Article XI, without the requirement to post a bond or provide other security. Nothing herein shall be construed as a limitation or waiver of any other rights or remedies that may be available to the Company for such breach or threatened breach. For emergency relief (including temporary and preliminary injunctive relief), an application may be made in any court of competent jurisdiction, in addition to the Company's right to seek injunctive, monetary and other relief from the arbitrators as provided in Section 15.9 of this Agreement. The Members further agree that the subject matter and duration of the restrictions covered herein are reasonable in light of the facts as they exist today. In the event that any restriction contained in this Article XI is deemed to be unreasonable in any respect by a court or a panel or arbitrators, it shall be reduced, not eliminated, in such manner as the court or panel of arbitrators determines is reasonable. (k) For purposes of this Article XI, (i) the Company shall include any of its Subsidiaries; and (ii) the restrictions set forth herein shall apply to Permitted Transferees and Related Entities who own LLC Interests. ARTICLE XII CERTAIN COVENANTS Section 12.1. Compliance with Laws; Maintenance. (a) The Company and its Subsidiaries shall (and the Board shall cause the Company to) comply in all material respects with all laws and regulations applicable to the Company and its Subsidiaries, including, without limitation, all laws and regulations applicable to the Company and its Subsidiaries as a registered investment adviser and an Affiliate of a bank or a thrift or bank holding company. (b) The Company and its Subsidiaries shall maintain in full force and effect its limited liability company or other existence, rights and franchises and all other rights, licenses and registrations owned or possessed by them and deemed by the Company to be necessary to the conduct of their businesses. 31 Section 12.2. Other Business Arrangements. (a) Consistent with the fiduciary duties of WTI and WTC and applicable law, for so long as WTI is a Member, without the consent of the Board, neither WTI nor any of its Affiliates will acquire, by means of stock or asset purchase, merger or otherwise, or enter into any joint venture or similar arrangement with, any investment manager, the majority of whose income is derived from U .S. small to mid-cap value investment advisory services. (b) Consistent with the fiduciary duties of WTI and WTC and applicable law, WTI will, and will cause its Affiliates to, keep the Board apprised of its or their strategy with respect to acquisitions of, or investment in, any other investment management firms. (c) As appropriate and consistent with the fiduciary duties of WTC and applicable law, WTC will use its reasonable best efforts to use the Company as a subadvisor for all accounts set forth on Schedule 12.2. (d) As appropriate and consistent with its fiduciary duty to clients and applicable law, the Company will (i) use its reasonable best efforts to direct trust and custody business to WTC or WTI; and (ii) seek to cross-sell WTC or WTI products to its current and prospective clients. (e) As appropriate and consistent with its fiduciary duty to clients and applicable law, WTI will introduce the Company's and its Subsidiaries' products, including, without limitation, private equity products, to its and its Affiliates' clients. Section 12.3. Amendment to Other Agreements. For so long as WTI owns 18.7% or more of the outstanding LLC Interests, without the prior written consent of WTI, CRM, Inc. shall not permit the amendment or modification of the CRM, Inc. Shareholders Agreement. ARTICLE XIII DISSOLUTION, LIQUIDATION AND TERMINATION Section 13.1. No Dissolution. The Company shall not be dissolved by the admission of additional Members in accordance with the terms of this Agreement. Section 13.2. Events Causing Dissolution. The Company shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events: (a) the determination of the Board (subject to Section 5.12 hereof) and the Majority Vote of all Members; (b) the occurrence of a Realization Event; or 32 (c) the entry of a decree of judicial dissolution under Section 18-802 of the Delaware Act. Section 13.3. Notice of Dissolution. Upon the dissolution of the Company, the person or persons appointed to carry out the winding up of the Company (the "Liquidating Trustee") shall promptly notify the Members of such dissolution. Section 13.4. Liquidation. Upon dissolution of the Company, (a) The proceeds of liquidation shall be distributed, as realized, in the following order and priority: (i) to creditors of the Company, including Members who are creditors, to the extent otherwise permitted by law, in satisfaction of the liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof), other than liabilities for distributions to Members; and (ii) the remaining proceeds of liquidation shall be distributed to the Members in accordance with their respective capital accounts after giving effect to all contributions, distributions and allocations for all periods (b) If the Liquidating Trustee shall determine that it is not feasible to liquidate all of the assets of the Company, then the Liquidating Trustee shall cause the Fair Market Value of the assets not so liquidated to be determined. Any unrealized appreciation or depreciation with respect to such assets shall be allocated among the Members in accordance with Article V as though the property were sold for its Fair Market Value and distribution of any such assets in kind to a Member shall be considered a distribution of an amount equal to the assets' Fair Market Value for purposes of Article VI and this Article XIII. (c) No Member shall have the right to demand or receive property other than cash upon dissolution and termination of the Company. Section 13.5. Termination. The Company shall terminate when all of the assets of the Company, after payment of or due provision for all debts, liabilities and obligations of the Company, shall have been distributed to the Members in the manner provided for ill this Article XIII, and the Certificate shall have been canceled in the manner required by the Delaware Act. Section 13.6. Claims of the Members. For purposes of this Article XIII, the Members shall look solely to the Company's assets for the return of their capital contributions, and if the assets of the Company remaining after payment of or due provision for all debts, liabilities and obligations of the Company are insufficient to return such capital contributions, the Members shall have no recourse against the Company or any other Member. 33 ARTICLE XIV REPRESENTATIONS AND WARRANTIES Section 14.1. Representations and Warranties of CRM, Inc. CRM, Inc. hereby represents and warrants to the Company and WTI as follows: (a) CRM, Inc. is an entity duly organized, validly existing and in good standing under the laws of New York and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) CRM, Inc. has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly approved and authorized by all necessary corporate action of CRM, Inc. This Agreement has been duly executed and delivered by CRM, Inc. and constitutes the legal, valid and binding obligation of CRM, Inc., enforceable against the CRM, Inc. in accordance with its terms. (c) No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any governmental or regulatory authority which has not been obtained is required in order to permit CRM, Inc. to enter into this Agreement. (d) CRM, Inc. has validly assigned to the Company good title to all of the assets which have been necessary to, or used in, the conduct of its business immediately prior to January 2, 1998, other than (i) the assets identified on Schedule 1 as excluded assets and (ii) to the extent consents to the assignments thereof have not been obtained, investment advisory agreements with CRM, Inc.'s Clients. Section 14.2. Representations and Warranties of Principals. Each of the Principals hereby severally, but not jointly, represents and warrants to WTI, CRM, Inc. and the Company with respect to himself as follows: (a) Such Principal has full legal capacity and authority to execute, deliver and perform his obligations under this Agreement. This Agreement has been duly executed and delivered by such Principal and constitutes the legal, valid and binding obligation of such Principal enforceable against him in accordance with its terms. (b) No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any government or regulatory authority which has not been obtained is required to permit such Principal to enter into this Agreement. 34 Section 14.3. Representations and Warranties of WTI. WTI hereby represents and warrants to CRM, Inc. and the Company as follows: (a) WTI is an entity duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) WTI has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly approved and authorized by all necessary corporate action of WTI. This Agreement has been duly executed and delivered by WTI and constitutes the legal, valid and binding obligation of WTI, enforceable against WTI in accordance with its terms. (c) No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any governmental or regulatory authority which has not been obtained is required in order to permit WTI to enter into this Agreement. (d) WTI has validly assigned to the Company good title to its entire interest in Advisors and to the assets set forth on Schedule 2. Section 14.4. Representations and Warranties of Wilmington. (a) Wilmington is an entity duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) Wilmington has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly approved and authorized by all necessary corporate action of Wilmington. This Agreement has been duly executed and delivery by Wilmington and constitutes the legal, valid and binding obligation of Wilmington, enforceable against Wilmington in accordance with its terms. (c) No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any governmental or regulatory authority which has not been obtained is required in order to permit Wilmington to enter into this Agreement. Section 14.5. Representations and Warranties of All Members. (a) Each Member represents and warrants to the Company and the other Members that the property and other assets which it contributed to the Company on January 2, 1998 were, on such date, free and clear of all liens, claims, encumbrances and rights of others, other than minor liens or other encumbrances of a character that do not substantially impair such assets or properties. 35 (b) Each Member hereby represents and warrants to the Company and each other Member, and acknowledges, that (a) he or it has such knowledge and experience in financial and business matters that he or it is capable of evaluating the merits and risks of an investment in the Company and making an informed investment decision with respect thereto, (b) he or it is able to bear the economic and financial risk of an investment in the Company for an indefinite period of time, (c) he or it is acquiring an interest in the Company for investment only and not with a view to, or for resale in connection with, any distribution to the public, (d) the LLC Interests have not been registered under the securities laws of any jurisdiction and cannot be disposed of unless they are subsequently registered and/or qualified under applicable securities laws and the provisions of this Agreement have been complied with, and (e) the execution, delivery and performance of this Agreement by him or it do not require him or it to obtain any consent or approval that has not been obtained and do not contravene or result in a default under any provision of any existing law or regulation applicable to him or it, or any agreement or instrument to which he or it is a party or by which he or it is bound. ARTICLE XV MISCELLANEOUS Section 15.1. Amendments. Any amendment to this Agreement shall be adopted and be effective as an amendment hereto if it is approved by Members holding at least 90% of all voting LLC Interests. Section 15.2. Employee Plans. Subject to Section 5.12, WTI acknowledges that the Company will continue to maintain in effect, until such time as the Board eliminates or modifies them, CRM, Inc.'s Vice President's pool, the bonus pool for junior employees and the bonus pool for senior executives which has historically equaled approximately 10% of pre-tax income. Section 15.3. Power of Attorney and Other Authorizations. Each Member does hereby constitute and appoint Ronald H. McGlynn as the true and lawful representative and attorney-in-fact of such Member, in the name, place and stead of such Member, to make, execute, sign and file any amendment to the Certificate, this Agreement, any amendments of this Agreement (to the extent authorized by the terms hereof) and such other instruments, documents and certificates which may from time to time be required by the laws of the United States of America, the State of Delaware or any other state or country in which the Company shall determine to do business or any political subdivision or agency thereof, to effectuate, implement and continue the valid and subsisting existence or qualification to do business of the Company or in connection with any tax returns, filings or related matters, in each case consistent with the provisions of this Agreement. Ronald H. McGlynn is hereby deemed to be an authorized person within the meaning of the Delaware Act. The Board may at any time replace Ronald H. McGlynn with another individual as attorney-in-fact if the Board determines such a replacement to be in the best interests of the Company. 36 Section 15.4. Notices. (a) All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be sent as provided below: (i) If to WTI, Wilmington or WTC, to: WT Investments, Inc. Rodney Square North 1100 North Market Street Wilmington, DE 19890 Attention: Gerard A. Chamberlain, Esq. Secretary, WTI with a copy to: Duane Morris & Hecksher 1667 K Street, NW Washington, DC 20006 Attention: Keith H. Ellis, Esq. (ii) If to CRM, Inc., to Cramer, Rosenthal, McGlynn, Inc. 707 Westchester Avenue, 1 st Floor White Plains, New York 10604 Attention: Ronald H. McGlynn President and Chief Executive Officer with a copy to: Richard & O'Neil, LLP 885 Third Avenue New York, NY 10022 Attention: Floyd I. Wittlin, Esq. (iii) If to a Principal, to: [NAME OF PRINCIPAL] c/o Cramer Rosenthal McGlynn, LLC 520 Madison Avenue New York, New York 10022 37 (b) All notices and other communications required or permitted under this Agreement which are addressed as provided in this Section 15, (i) shall be effective upon delivery if delivered personally against proper receipt and (ii) shall be effective upon receipt if sent (A) by certified or registered mail with postage prepaid or (B) by Federal Express or similar courier service with courier fees paid by the sender. The parties hereto may from time to time change their respective addresses for the purposes of notices to that party by a similar notice specifying a new address, but no such change shall be deemed to have been given unless it has been sent and received as provided in this Section 15.4. Section 15.5. Waivers. Any waiver of any terms or conditions or of the breach of any covenant, representation or warranty of this Agreement in anyone instance shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure or delay at any time or times to enforce or require performance of any provision hereof operate as a waiver of or affect in any manner such party's right at a later time to enforce or require performance of such provision or of any other provision hereof; provided, however, that no such waiver, unless, by its own terms, it explicitly provides to the contrary , shall be construed to effect a continuing waiver of the provision being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance. Section 15.6. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their heirs, legal representatives, successors and assigns. Section 15.7. Severability. The invalidity or unenforceability of any particular nonmaterial provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects by interpreting such invalid or unenforceable provision as nearly to the original meaning as possible so as to make it valid and enforceable or, if that is not possible or permitted by applicable law, by omitting such invalid or unenforceable provision. To the extent any material provision of this Agreement is determined by a court or regulatory body to be invalid or unenforceable, then the parties shall use their good faith efforts to address the implications of such invalidity or unenforceability so as to preserve the essential understanding of the parties with respect hereto. Section 15.8. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 15.9. Governing Law; Arbitration. This Agreement and the rights of the parties hereunder shall be interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. Except for emergency relief, should any dispute arise concerning this Agreement the parties shall submit the same to arbitration in the City of New York, County of New York, pursuant to the Rules of the AAA then obtaining before a panel of three (3) arbitrators to be selected by the AAA. The arbitrators shall have the power to grant injunctive relief with respect to any dispute which arises concerning their agreement. The 38 award of the arbitrators shall be final and conclusively binding upon the parties hereto, their heirs, legal representatives, and successors. For emergency relief, any court of competent jurisdiction may entertain an application by any party. Section 15.10. Captions. The captions in this Agreement are for convenience only and shall not affect the construction or interpretation of any term or provision hereof. Section 15 11. Gender. Whenever used herein, the singular number shall include the plural, the plural shall include the singular, unless the context otherwise requires, and the use of any gender shall include all genders. 39 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above stated. CRAMER ROSENTHAL McGLYNN, LLC By: /s/ Ronald H. McGlynn --------------------------------------- Ronald H. McGlynn President Chief Executive Officer CRAMER, ROSENTHAL, McGLYNN, LLC By: /s/ Ronald H. McGlynn --------------------------------------- Ronald H. McGlynn President Chief Executive Officer WT INVESTMENTS, INC. By: /s/ David R. Gibson --------------------------------------- Title: Senior Vice President and CFO WILMINGTON TRUST CORPORATION By: /s/ David R. Gibson --------------------------------------- Title: Senior Vice President & CFO /s/ Gerald B. Cramer ------------------------------------------- Gerald B. Cramer /s/ Edward J. Rosenthal ------------------------------------------- Edward J. Rosenthal /s/ Ronald H. McGlynn ------------------------------------------- Ronald H. McGlynn 40 /s/ Fred M. Filoon ------------------------------------------- Fred M. Filoon /s/ Jay B. Abramson ------------------------------------------- Jay B. Abramson 41 EX-10.47 5 w84365exv10w47.txt AMENDED AND RESTATED LLC AGREEMENT DATED 7/31/1998 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ROXBURY CAPITAL MANAGEMENT, LLC DATED AS OF JULY 31, 1998 EXHIBIT 10.47 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] ================================================================================ AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ROXBURY CAPITAL MANAGEMENT, LLC ================================================================================ TABLE OF CONTENTS
Page ---- 1 DEFINED TERMS......................................................... 1 2 GENERAL PROVISIONS.................................................... 14 2.1 Formation, Name and Continuation.................................. 14 2.2 Term.............................................................. 14 2.3 Registered Agent and Office; Principal Place of Business.......... 14 2.4 Fiscal Year....................................................... 15 3 PURPOSE AND POWERS OF THE LLC......................................... 15 3.1 Purpose........................................................... 15 3.2 Powers of the LLC................................................. 15 3.3 Authorized Persons................................................ 15 4 MEMBERS............................................................... 15 4.1 Voting............................................................ 15 4.2 Meetings of Members............................................... 15 4.3 Quorum............................................................ 15 4.4 Action by Consent................................................. 16 4.5 Telephonic Meetings............................................... 16 4.6 Non-voting Members................................................ 16 5 MANAGERS AND OFFICERS................................................. 16 5.1 Managers.......................................................... 16 5.2 Designation of Managers........................................... 16 5.3 Term.............................................................. 17 5.4 Resignation or Removal of a Manager............................... 17 5.5 Vacancies......................................................... 17 5.6 Meetings.......................................................... 17 5.7 Quorum............................................................ 17 5.8 Action by Consent................................................. 18 5.9 Telephonic Meetings............................................... 18 5.10 Managers as Agents; Limitation on Power of Members............... 18 5.11 Board Action..................................................... 18 5.12 Approval of Annual Budget........................................ 19 5.13 Officers......................................................... 19 5.14 Powers of the Board; Powers of Officers.......................... 19 5.15 Reimbursement.................................................... 20 5.16 Duties of Managers............................................... 20 5.17 Fiduciary Duties................................................. 20 6 CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; DISTRIBUTIONS; ALLOCATIONS... 21 6.1 Capital Contributions............................................. 21 6.2 Capital Accounts.................................................. 21 6.3 Distributions..................................................... 21 6.4 Allocation of Profits and Losses.................................. 23 6.5 Special Allocations............................................... 24
Page ---- 6.6 Tax Allocations: Code Section 704(c).............................. 25 6.7 Proration for Partial Years....................................... 25 7 TRANSFER OF LLC INTERESTS, PUT AND CALL OPTIONS, MANDATORY PURCHASES AND ADMISSION OF ADDITIONAL MEMBERS............................... 25 7.1 Assignability of Interests........................................ 25 7.2 Put Options....................................................... 26 7.3 Purchase on Occurrence of an Extraordinary Event or a Roxbury Extraordinary Event; Wilmington Call............................ 28 7.4 LLC Interests Subject to Option Rights............................ 30 7.5 Substitute Members................................................ 30 7.6 Recognition of Transfer by LLC.................................... 30 7.7 Effective Date of Transfer; Order of Puts, Calls and Purchases Under Section 7.3(b)............................................ 30 7.8 Indemnification................................................... 31 7.9 Issuance of Additional LLC Interests.............................. 31 7.10 Assignment of Wilmington's Rights and Obligations................ 31 8 BOOKS AND RECORDS..................................................... 31 8.1 Books, Records and Financial Statements........................... 31 8.2 Accounting Method................................................. 32 9 TAX................................................................... 32 9.1 Tax Matters Member................................................ 32 9.2 Section 754 Election.............................................. 33 10 LIABILITY, EXCULPATION AND INDEMNIFICATION............................ 33 10.1 Liability........................................................ 33 10.2 Exculpation...................................................... 33 10.3 Indemnification.................................................. 34 10.4 Expenses......................................................... 34 11 CERTAIN COVENANTS..................................................... 34 11.1 Compliance with Laws; Maintenance................................ 34 12 DISSOLUTION, LIQUIDATION AND TERMINATION.............................. 35 12.1 Events Causing Dissolution....................................... 35 12.2 Notice of Dissolution............................................ 35 12.3 Liquidation...................................................... 35 12.4 Termination...................................................... 36 12.5 Claims of the Members............................................ 36 13 REPRESENTATIONS AND WARRANTIES........................................ 36 13.1 Representation and Warranties of Roxbury......................... 36 13.2 Representations and Warranties of Principals..................... 37 13.3 Representations and Warranties of Wilmington and WTI............. 37 13.4 Representations and Warranties of Wilmington..................... 38 13.5 Representations and Warranties of All Members.................... 38 14 MISCELLANEOUS......................................................... 39 14.1 Amendments....................................................... 39 14.2 Notices.......................................................... 39 14.3 Waivers.......................................................... 39 14.4 Binding Effect................................................... 40 14.5 Severability..................................................... 40
ii
Page ---- 14.6 Counterparts..................................................... 40 14.7 Governing Law; Arbitration....................................... 40 14.8 Captions......................................................... 40 14.9 Gender........................................................... 40 14.10 Third Party Beneficiaries....................................... 41 14.11 Failure to Pursue Remedies...................................... 41 14.12 Cumulative Remedies............................................. 41 14.13 Integration..................................................... 41
iii AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ROXBURY CAPITAL MANAGEMENT, LLC This Amended and Restated Limited Liability Company Agreement of Roxbury Capital Management, LLC (the "LLC") is made as of July 31, 1998 ("Agreement"), by and among Roxbury Capital Management, a California corporation ("Roxbury"), WT Investments, Inc. ("WTI"), a Delaware corporation which is a wholly-owned subsidiary of Wilmington Trust Company, a Delaware-chartered bank and trust company ("WTC"), the Principals (as hereinafter defined) and Wilmington Trust Corporation, a Delaware corporation ("Wilmington"). WHEREAS, the LLC has heretofore been formed as a limited liability company pursuant to the Delaware Limited Liability Company Act, 6 Del. C. Section 18-101, et seq., as amended from time to time (the "Delaware Act"), by the filing of a Certificate of Formation of the LLC with the office of the Secretary of State of the State of Delaware on April 14, 1998, as amended by that certain Certificate of Amendment dated July 20, 1998 (as amended, the "Certificate"), and by the execution of the Limited Liability Company Agreement of the LLC by Roxbury and Anthony H. Browne as of April 14, 1998 (the "Original LLC Agreement"); WHEREAS, pursuant to the LLC Interest Purchase Agreement (as hereinafter defined), WTI purchased the Preferred Interests in the LLC from Roxbury; and WHEREAS, the Members desire to continue to operate the LLC as a limited liability company under the Delaware Act on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, Roxbury, the Principals, Wilmington and WTI, intending to be legally bound hereby, agree as follows: 1 DEFINED TERMS Unless the context otherwise requires, the terms defined in this Article 1 shall, for the purposes of this Agreement, have the meanings herein specified. 1.1 "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 or other period, after giving effect to the following adjustments: (i) Credit to such Capital Account for any amounts that such Member is deemed to be obligated to restore with respect to any deficit balance in its Capital Account pursuant to Sections 1.704-1(b)(2)(ii)(b)(3) and 1.704-1(b)(2)(ii)(c) of the Treasury Regulations; (ii) Credit to such Capital Account for any amounts that such Member is (or would be) deemed to be obligated to restore with respect to any deficit balance in its Capital Account pursuant to Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations; and (iii) Debit to such Capital Account the items described in 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) of the Treasury Regulations. The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Treasury Regulations and shall be interpreted consistently therewith. 1.2 "Adjusted Free Cash Flow" for a Fiscal Year means the Free Cash Flow for such Fiscal Year adjusted by: (i) adding the Excess Cash Flow Split, recalculated using [*] as the Hurdle Rate, for such Fiscal Year (see examples in Exhibit A); and (ii) subtracting 70% of any revenue not attributable to Advisory Fees for such Fiscal Year. 1.3 "Adjusted LLC Value" is the LLC Value that shall be used to determine the Call Price. If a Wilmington Call is exercised prior to the third anniversary of the later of the Commencement Date or the date of this Agreement, the Adjusted LLC Value shall equal the Adjusted Free Cash Flow for the Fiscal Year ending on the Determination Date immediately preceding the year in which the Wilmington Call Notice is delivered or the Free Cash Flow for Fiscal Year 1998 if the Wilmington Call Notice is delivered in 1998 or 1999. If a Wilmington Call is exercised after the third anniversary of the later of the Commencement Date or the date of this Agreement, but prior to the fourth anniversary of such event, the Adjusted LLC Value shall be computed in the same manner as the LLC Value using a multiple that is reduced by two. If a Wilmington Call is exercised after the fourth anniversary of the later of the Commencement Date or the date of this Agreement, but prior to the fifth anniversary of such event, the Adjusted LLC Value shall be computed in the same manner as the LLC Value using a multiple that is reduced by one. If a Wilmington Call is exercised after the fifth anniversary of the later of the Commencement Date or the date of this Agreement, the Adjusted LLC Value shall equal the LLC Value. 1.4 "Advance Payment" means, with respect to the purchase of LLC Interests under Section 7.3(b) hereof upon the occurrence of an Extraordinary Event or Roxbury Extraordinary Event that occurs after December 31, 1998, an amount equal to the product of (i) 0.75 and (ii) six times the Average Adjusted Free Cash Flow for the Fiscal Year immediately preceding the year in which such Extraordinary Event or Roxbury Extraordinary Event occurs or, in the case of an Extraordinary Event or Roxbury Extraordinary Event that occurs during 1999, six times the Free Cash Flow for Fiscal Year 1998. * CONFIDENTIAL TREATMENT REQUESTED 2 1.5 "Advisory Fees" means the fees for investment advisory, sub-advisory, investment management or administration services payable to the LLC pursuant to written agreements with Clients. 1.6 "Affiliate" of a designated Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the designated Person. As used in this definition, the term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power (a) to vote 10% or more of the outstanding voting securities of the designated Person or (b) otherwise direct the management policies of the designated Person by contract or otherwise. An "Affiliate" of a Person also includes any officer, director, member or partner of the designated Person and, if the designated Person is an officer, director, member or partner, any company for which such Person acts in such capacity. 1.7 "Assumed Fee Income" has the meaning set forth in Section 6.3(a)(ii). 1.8 "Average Adjusted Free Cash Flow" has the meaning set forth in the definition of LLC Value. 1.9 "Board" has the meaning set forth in Section 4.2 hereof. 1.10 "Business Day" means a day when WTC is open for business. 1.11 "Call Price" means an amount equal to the Adjusted LLC Value multiplied by a fraction, the numerator of which is the number of Common Membership Points included in the LLC Interests to be purchased by Wilmington or its designee from a Principal or Roxbury and the denominator of which is the sum of all of the Common Membership Points outstanding on the Purchase Closing Date plus all Common Membership Points relating to LLC Interests that have been issued or may be purchased from the LLC pursuant to an Incentive Plan or options issued thereunder that are outstanding, exercisable and unexercised in whole or in part on the Purchase Closing Date. 1.12 "Capital Account" means, with respect to any Member, the Capital Account established and maintained for such Member in accordance with the provisions of Section 1.704-1(b)(2)(iv) of the Treasury Regulations. 1.13 "Carrying Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) The initial Carrying Value of any asset contributed by a Member to the LLC shall be the gross fair market value of such asset, as determined by the contributing Member and the Board; (ii) The Carrying Value of all assets of the LLC shall be adjusted to equal their respective gross fair market values, as determined by the Board, as of the following times: (a) the acquisition of an additional interest in the LLC by any new or existing Member in exchange for a capital contribution; (b) the distribution by the LLC to a Member of property 3 as consideration for an interest in the LLC; and (c) the liquidation of the LLC within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations; provided, however, that adjustments pursuant to clauses (a) and (b) above shall be made only if the Board reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the LLC; (iii) The Carrying Value of any asset distributed by the LLC to any Member shall be the gross fair market value of such asset on the date of distribution; and (iv) The Carrying Value of assets of the LLC shall be increased or decreased to reflect any adjustments to the adjusted bases of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations; provided, however, that Carrying Values shall not be adjusted pursuant to this clause (iv) to the extent the Board determines that an adjustment pursuant to clause (ii) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (iv). If the Carrying Value of an asset has been determined or adjusted pursuant to clause (i), (ii) or (iv) hereof, such Carrying Value shall thereafter be adjusted by the Depreciation taken into account with respect to such assets for purposes of computing Profits and Losses. 1.14 "Cause" means: (i) a willful and intentional material breach of this Agreement by a Principal or an employee that is not remedied within twenty (20) Business Days after written notice thereof to the Principal or employee by the LLC; provided, however, that neither notice nor opportunity to cure need be given if there is a repeat of the same type of breach for which a prior notice has been given; (ii) an act of fraud, misappropriation, dishonesty, embezzlement or similar conduct by a Principal or an employee involving the business or assets of the LLC, a Client or a Wilmington Client; (iii) willful misconduct or gross negligence by a Principal or an employee in connection with the performance of his duties for the LLC; (iv) any conduct on the part of a Principal or an employee that constitutes a willful breach of any statutory or common law duty of loyalty owed to the LLC, a Client or a Wilmington Client; (v) a Principal's or an employee's conviction of a felony; or (vi) a disqualification or revocation of a registration or license held by a Principal or an employee that would preclude the performance of the material duties by him or her for the LLC. 1.15 "Certificate" has the meaning set forth in the recitals hereof. 4 1.16 "Change of Control" means (i) the acquisition by any Person or group of Persons of beneficial ownership, as that term is defined in Rule 13d-3 promulgated under the Exchange Act, directly or indirectly, of 25% or more of the outstanding capital stock of WTI, Wilmington or WTC entitled to vote for the election of directors ("Voting Shares"); (ii) the acquisition by any Person or group of Persons (other than WTI, WTC or Wilmington) of "beneficial ownership," as that term is defined in Rule 13d-3 promulgated under the Exchange Act, of 50% or more of the total outstanding Preferred Membership Points or 50% or more of the total outstanding Common Membership Points; (iii) the merger or consolidation of WTI, Wilmington or WTC with one or more other Persons as a result of which the holders of the outstanding Voting Shares of WTI, Wilmington or WTC, respectively, immediately before the merger or consolidation hold less than 50% of the Voting Shares of the surviving or resulting Person; (iv) the merger or consolidation of the LLC with one or more other Persons (other than WTI, WTC or Wilmington) as a result of which the holders of the outstanding Preferred Membership Points immediately before the merger or consolidation hold less than 50% of the total outstanding Preferred Membership Points (or equivalent) of the surviving or resulting Person, or the holders of the outstanding Common Membership Points immediately before the merger or consolidation hold less than 50% of the total outstanding Common Membership Points (or equivalent) of the surviving or resulting Person; (v) the sale of all or substantially all of WTI's, WTC's, Wilmington's or the LLC's assets; or (vi) a proxy contest for the election of directors of Wilmington that results in Persons constituting the Board of Directors of Wilmington immediately prior to the initiation of such proxy contest ceasing to constitute a majority of the Board of Directors of Wilmington upon the conclusion of such proxy contest; provided, however, that neither (x) any transfer of the capital stock or assets of WTI, Wilmington or WTC to, or merger or consolidation of WTI, Wilmington or WTC with or into, (A) an entity that prior to and after such transfer, merger or consolidation has been and will be consolidated with WTI, Wilmington or WTC for federal income tax purposes, or (B) any newly-formed, wholly owned subsidiary of WTI, Wilmington or WTC that will be consolidated with WTI, Wilmington or WTC for federal income tax purposes, nor (y) a transfer of Common Interests by one or more Principals to one or more Permitted Transferees or Related Entities, shall be deemed to be a Change of Control for purposes of this Agreement. 1.17 "Client" and "Clients" shall mean, at any particular time, any Person who is at such time an investment management customer or client of the LLC, any Person who, within the twelve (12) months immediately preceding such time, had been but at such time is not then an investment management customer or client of the LLC, and any Person to whom the LLC, through any of its managers, officers or employees, has within one (1) year prior to such time offered, by means of a personal meeting with representatives of such Person, to serve as investment manager but who is not at such time an investment management customer or client of the LLC. The term "Client," when used in this Agreement with respect to wrap accounts, shall mean the wrap sponsors, but not the underlying wrap account holders. 1.18 "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted after the date of this Agreement. A reference to a specific section of the Code refers not only to such specific section but also to any corresponding provision of any Federal tax statute enacted after the date of this Agreement, as such specific section or corresponding provision is in effect on the date of application of the provisions of this Agreement containing such reference. 5 1.19 "Commencement Date" means, with respect to any Person exercising a Put under Section 7.2 hereof or whose LLC Interests are the subject of a Wilmington Call, the date on which such Person first (i) becomes a Member; (ii) is granted an option to purchase a Common Interest pursuant to an Option Agreement or an Incentive Plan; or (iii) receives a Common Interest (whether or not vested) pursuant to an Incentive Plan. 1.20 "Common Interest" means an interest (including Common Membership Points, distribution and allocation rights, and any capital accounts) in the LLC held by a Common Member. A Common Interest represents a claim only on future profits of the LLC (i.e., profits earned by the LLC after issuance of the Common Interest). A holder of Common Interests has no interest in the capital of the LLC with respect to such Common Interests at the time such Common Interests are issued, and is not entitled to receive any assets upon liquidation of the LLC, except to the extent it has a positive balance in its Capital Account. 1.21 "Common Member" means the Founding Principals, Roxbury and any other Person subsequently admitted to the LLC as a Common Member. 1.22 "Common Membership Points" means those Membership Points relating to Common Interests owned by Common Members. 1.23 "Delaware Act" has the meaning set forth in the recitals hereof. 1.24 "Depreciation" means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such Fiscal Year or other period, except that, if the Carrying Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such Fiscal Year or other period, Depreciation shall be an amount that bears the same ratio to such beginning Carrying Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such Fiscal Year or other period bears to such beginning adjusted tax basis; provided, however, that, if the federal income tax depreciation, amortization or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Carrying Value using any reasonable method selected by the Board. 1.25 "Derivative Share" of a shareholder in Roxbury at any time means the portion of the LLC Interests then held by Roxbury and indirectly held by such shareholder, which portion shall be determined in accordance with the following formula: Derivative All of the Common The percentage of the Share = Membership Points then x outstanding shares of held by Roxbury Roxbury common stock held by such shareholder For example, if (i) a shareholder owns 10% of the outstanding shares of Roxbury common stock and (ii) Roxbury owns 75.44 Common Membership Points, then the shareholder's Derivative Share equals 75.44 x .10 = 7.544 Common Membership Points. 6 1.26 "Determination Date" means, with respect to any year, December 31 of such year. 1.27 "Disability" has the meaning set forth in a policy or policies of disability insurance, if any, obtained by the LLC for the benefit of itself and/or its employees. If there is no definition of "disability" applicable under any such policy or policies of disability insurance, if any, obtained by the LLC, or if the LLC maintains no such policy, then a Principal or an employee shall be considered disabled if, such Principal or employee has been (a) adjudged incompetent by a court of competent jurisdiction; (b) physically or mentally incapable of performing the essential functions of his or her job for a period of 180 days in any 12-month period, in the opinion of a licensed medical doctor mutually approved by the Principal or employee and the LLC, with the heads of internal medicine at the UCLA Medical Center and Cedars Sinai Medical Center being deemed to be preapproved by each Principal, employee and the LLC; or (c) certified as permanently disabled under the provisions of the Social Security Act, as amended from time to time. 1.28 "Excess Cash Flow Split" for a Fiscal Year means the amount described by Section 6.3(a)(ii) with respect to such Fiscal Year. See examples in Exhibit B. 1.29 "Exchange Act" means the Securities Exchange Act of 1934, as amended. 1.30 "Exercise Price," with respect to any LLC Interest that may be purchased pursuant to an Option Agreement, shall mean the exercise price for such LLC Interest as set forth in such Option Agreement. 1.31 "Extraordinary Events" has the meaning set forth in Section 7.3(a) hereof. 1.32 "Fair Market Value" means the amount for which any asset could be sold in an arm's length transaction by one who desires to sell, but is not under any urgent requirement to sell, to a buyer who desires to buy, but is under no urgent necessity to buy, when both have a reasonable knowledge of the facts. 1.33 "Fiscal Year" has the meaning set forth in Section 2.4 hereof. 1.34 "Founding Principals" means Anthony H. Browne, Harry B. Wilson and Kevin P. Riley. 1.35 "Free Cash Flow" means, with respect to any Fiscal Year, the Revenues of the LLC for such Fiscal Year, plus cash previously set aside as reserves that the Board determines is no longer needed for the LLC's business, less the sum of (i) all cash expenditures made by the LLC during such Fiscal Year, including, without limitation, operating expenses, bonuses paid to LLC employees or Principals with respect to such Fiscal Year or portion thereof, principal and interest payments on any indebtedness of the LLC and lease payments on capitalized leases; (ii) all distributions made to the Preferred Members with respect to such Fiscal Year pursuant to Section 6.3(a)(i) and all distributions made to the Common Members with respect to such Fiscal Year pursuant to Section 6.3(a)(ii); and (iii) such funds as shall have been set aside by the Board as reserves for contingencies, working capital, debt service, taxes, insurance or other costs and expenses in connection with the LLC's business. For all purposes of this Agreement except Section 7 6.3(a)(iii), for Fiscal Year 1998, this calculation shall include the revenues and expenditures of Roxbury for the calendar year ending December 31, 1998. 1.36 "Good Reason" means (i) a material breach by the LLC of its employment agreement with a Principal or an employee; (ii) action taken by the LLC which causes a material diminution in the position, authority, duties or responsibilities of a Principal or an employee without the consent of the Principal or employee, excluding for this purpose any isolated, immaterial or inadvertent action, and any action which is remedied by the LLC promptly after receipt of a notice thereof given by the Principal or employee, which notice shall be given by the Principal or employee within sixty (60) days of the adverse action; or (iii) a Change of Control. 1.37 "High Water Mark" means, with respect to any Person as of any specified date, the largest number of Membership Points relating to LLC Interests attributable to the Person, including that Person's Derivative Share and any LLC Interests underlying all outstanding and unexercised options to purchase LLC Interests held by such Person, at any one time during the period beginning on the date hereof and ending on the specified date. 1.38 "Historic Preferred Share" shall have the meaning set forth in Section 6.4(b) hereof. 1.39 "Hurdle Rate" shall have the meaning set forth in Section 6.3(a)(ii)(A) hereof, except as set forth in Section 1.2 hereof. 1.40 "Incentive Plan" has the meaning set forth in Section 7.9 hereof. 1.41 "Initial Put Price" shall have the meaning set forth in Section 1.68 hereof. 1.42 "Investment Advisory Agreement" means (i) the Investment Advisory Agreement between Roxbury Partners Special Fund - II and the LLC or (ii) the Investment Advisory Agreement between Ocean Avenue Investors, LLC and the LLC, in each case in substantially the same form as the respective existing agreement between such entity and Roxbury. 1.43 "Liquidating Trustee" has the meaning set forth in Section 12.2 hereof. 1.44 "LLC" means Roxbury Capital Management, LLC, the limited liability company formed by the Original LLC Agreement and Certificate and continued under and pursuant to the Delaware Act and this Agreement. 1.45 "LLC Interest" means a Common Interest or a Preferred Interest. 1.46 "LLC Interest Purchase Agreement" means the Limited Liability Company Preferred Interest Purchase Agreement dated as of April 24, 1998 by and among the LLC, Roxbury, the Founding Principals, WTI, Wilmington and WTC, as it may, from time to time, be amended. 1.47 "LLC Value" is the fair market value of the LLC, which shall be determined by multiplying the average of the Adjusted Free Cash Flow for the two Fiscal Years ending on the Determination Date immediately preceding the Purchase Closing Date ("Average Adjusted Free Cash Flow") by: (i) [*] , if the compound annual growth rate of Advisory Fees for the five Fiscal * CONFIDENTIAL TREATMENT REQUESTED 8 Years ending on the Determination Date immediately preceding the Purchase Closing Date is 0% or less; or (ii) [*], if the compound annual growth rate of Advisory Fees for the five Fiscal Years ending on the Determination Date immediately preceding the Purchase Closing Date is [*]% or more. If the compound annual growth rate of Advisory Fees for the five Fiscal Years ending on the Determination Date immediately preceding the Purchase Closing Date is between 0% and 10%, the multiple will be interpolated evenly between [*] and [*]. In determining LLC Value as of the December 31, 1999 Determination Date, Average Adjusted Free Cash Flow shall be an amount equal to the Adjusted Free Cash Flow for the Fiscal Year ending on December 31, 1999. For the purpose of computing the LLC Value, the LLC's Advisory Fees for the year ended December 31, 1998 shall include advisory fees collected by Roxbury for the calendar year ending December 31, 1998. If, at any time on or after December 31, 1999 at which the LLC Value is calculated the LLC has been in operation for less than five years, the multiple will be chosen by comparing the Advisory Fees for the period from January 1, 1999 through the applicable Determination Date with the LLC's Advisory Fees for the year ended December 31, 1998 (as determined in the preceding paragraph). LLC Value shall be determined only once each year; the determination will be made on or before February 28 of each year with respect to LLC Value as of December 31 of the immediately preceding year. See examples in Exhibit C. 1.48 "Majority Vote" means the written approval of, or the affirmative vote by, Voting Members holding a majority of the Membership Points held by all Voting Members, as set forth on Schedule 1 hereto. 1.49 "Manager" has the meaning set forth in Section 18-101(10) of the Delaware Act. A Manager shall be deemed to be an "employee" of the LLC for purposes of Sections 1.14, 1.27, 1.36 and 1.71 of this Agreement. 1.50 "Members" means the Preferred Members and the Common Members. 1.51 "Membership Points" means, as of any date, with respect to a Member, the number of Common or Preferred Membership Points relating to the Member's LLC Interest set forth opposite such Member's name on Schedule 1 hereto, and as in effect on such date. For all voting purposes, Membership Points owned by Non-voting Members may not be voted and are not counted in the calculation of total Membership Points outstanding. 1.52 "Non-voting Member" means a Member owning an LLC Interest but, pursuant to Section 4.6 hereof, not having the right to vote his or its Membership Points. 1.53 "Officers" has the meaning set forth in Section 5.13 hereof. 1.54 "Option Agreement" means any written agreement by which a Person is granted the right to purchase an LLC Interest from Roxbury. * CONFIDENTIAL TREATMENT REQUESTED 9 1.55 "Original LLC Agreement" has the meaning set forth in the recitals hereof. 1.56 "Permitted Transferee" shall mean WTI, Wilmington, WTC, an officer of the LLC and, with respect to any Principal, the parents, siblings, spouses, issue or spouses of issue of such Principal (in any such case who are the age of 21 or over) and any trust created by one or more of such aforementioned individuals of which such individual or individuals are the trustees. 1.57 "Person" means any individual, partnership (general or limited), corporation, limited liability company, limited liability partnership, association, trust, joint venture, unincorporated organization, government, governmental department or agency, instrumentality or political subdivision thereof, or other entity of any kind or nature. 1.58 "Preferred Interest" means an interest (including Preferred Membership Points, distribution and allocation rights, and any capital accounts) in the LLC held by a Preferred Member. 1.59 "Preferred Member" means WTI, in its capacity as such, any successor thereto, and any other Person subsequently admitted to the LLC as a Preferred Member. 1.60 "Preferred Membership Points" means those Membership Points relating to Preferred Interests owned by a Preferred Member. 1.61 "Preferred Member Revenue Share" for a Fiscal Year is the revenue share to which the Preferred Members are entitled under Section 6.3(a)(i) with respect to such Fiscal Year. 1.62 "Principal" or "Principals" means the individuals identified from time to time on Schedule 1 hereto as Principals. All natural persons who hold LLC Interests and Membership Points, including holders who have exercised options to purchase LLC Interests and Membership Points, shall be identified on Schedule 1 as Principals. 1.63 "Principal Entities" means (i) the Principal to whom the Extraordinary Event has occurred or whose employment with the LLC has terminated (other than because of an Extraordinary Event) and (ii) such Principal's estate and Related Holders. 1.64 "Profits" and "Losses" for each Fiscal Year or other period means an amount equal to the LLC's taxable income or loss for such 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), but computed with the following adjustments: (i) Any income of the LLC that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition of Profits and Losses shall be added to such taxable income or loss; (ii) Any expenditures of the LLC described in Code Section 705(a)(2)(b) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not otherwise taken into account in computing Profits and Losses pursuant to this definition, shall be subtracted from such taxable income or loss; 10 (iii) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Carrying Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Carrying Value; (iv) In lieu of the Depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period; and (v) Notwithstanding any other provisions of this definition, any items that are specially allocated pursuant to Section 6.5 hereof or which result from an adjustment to basis of one or more Members pursuant to Code Section 734(b) or 743(b) shall not be taken into account in computing Profits or Losses. 1.65 "Purchase Closing Date" shall mean the date upon which LLC Interests are purchased and paid for pursuant to Sections 7.2 or 7.3 hereof. 1.66 "Put" has the meaning set forth in Section 7.2(b) hereof. 1.67 "Put Notice" has the meaning set forth in Section 7.2(d) hereof. 1.68 "Put Price" means an amount equal to the LLC Value multiplied by a fraction (the "Interest Fraction"), the numerator of which is the number of Common Membership Points relating to the LLC Interest to be purchased by Wilmington or its designee from a Principal or Roxbury and the denominator of which is the sum of the number of Common Membership Points outstanding on the Purchase Closing Date plus all Common Membership Points relating to LLC Interests that have been issued by the LLC pursuant to an Incentive Plan or may be purchased from the LLC pursuant to Incentive Plan options that are outstanding, exercisable and unexercised in whole or in part on the Purchase Closing Date. With respect to a Put under Section 7.2(b), the Put Price shall be determined as of the Determination Date immediately preceding the Purchase Closing Date. With respect to a purchase under Section 7.3(b) hereof, the Put Price shall be determined as follows: (i) a portion of the Put Price, which portion shall be determined by multiplying a fraction, the numerator of which is the number of days the Principal has been employed by the LLC during the Fiscal Year in which the event giving rise to the purchase obligation arises and the denominator of which is 365 (the "Employment Fraction"), by the LLC Value as of the Determination Date immediately preceding the Purchase Closing Date, and (ii) the balance of the Put Price shall be determined by multiplying (A) one minus the Employment Fraction by (B) the LLC Value as of the penultimate Determination Date preceding the Purchase Closing Date. For example, if (w) the LLC Value as of December 31, 2000 is $[ * ]; (x) the LLC Value as of December 31, 2001 is $[ * ]; (y) a Principal owns a 2% LLC Interest; and (z) such Principal resigns his employment for Good Reason with the LLC on August 1, 2000, 212/365 of the Put Price would be based on the LLC Value determined as of December 31, 2001 and 153/365 of the Put Price would be based on the LLC Value determined as of December 31, 2000. The Put Price would thus equal $[ * ] x .02 x 212/365, or $[ * ], plus $[ * ] x .02, 153/365, or $[ * ], for a total Put Price of $[ * ]. * CONFIDENTIAL TREATMENT REQUESTED 11 Notwithstanding the above: (i) the Put Price with respect to any LLC Interest Roxbury owns that may be purchased pursuant to an Option Agreement shall be the lesser of: (A) the Put Price calculated under this Section 1.68, or (B) the Exercise Price for such LLC Interest; (ii) in the event of an Extraordinary Event or a Roxbury Extraordinary Event that occurs on or before December 31, 1998, the Put Price shall be equal to the sum of: (A) an amount equal to the product of (x) six times the Free Cash Flow for Fiscal Year 1998 and (y) the Interest Fraction (the "Initial Put Price") and (B) an amount (if greater than zero) equal to the product of (x) the excess (if any) of the multiple determined for purposes of determining LLC Value with respect to a Determination Date of December 31, 1999 over six and (y) the Free Cash Flow for Fiscal Year 1998 (the "Subsequent Put Price"); and (iii) in the event of an Extraordinary Event or a Roxbury Extraordinary Event that occurs between January 1, 1999 and June 30, 1999, the Put Price will be determined by multiplying the LLC Value as of December 31, 1999 by the Interest Fraction. 1.69 "Related Entities" shall mean, with respect to any Member or Members, any partnership, limited liability company, corporation or family trust in which such Member or Members or a Permitted Transferee of such Member or Members own all of the partnership, membership, other equity interests, all of the capital stock, or is the trustee or beneficiary as the case may be, and with respect to WTI, shall mean any entity that is or will be consolidated with WTI or WTC for federal income tax purposes. 1.70 "Related Holder" of a Principal shall mean all Persons (other than Wilmington, WTC or WTI) who acquired LLC Interests from such Principal, from a transferee from such Principal, or from a transferee of any such transferee or subsequent transferee. 1.71 "Retirement" means, with respect to a Principal or an employee, when that Principal or employee reaches age 62; provided, however, that Retirement shall not occur with respect to a Principal or an employee who continues to work for the LLC after reaching age 62 unless the Board notifies him or her that it objects to his or her continued participation in the LLC. Retirement with respect to a Principal or an employee who continues to participate in the LLC after reaching age 62 shall occur upon the earlier of (i) the voluntary cessation by the Principal or employee of his or her employment with the LLC, or (ii) with respect to Principals or employees other than the Founding Principals, notification from the Board that it objects to such Principal's or employee's continued participation. 1.72 "Revenues" means the gross receipts of the LLC from whatever source, including without limitation gross receipts from the sale of assets (including deemed sales of assets in connection with the liquidation of the LLC); provided, however, that Revenues shall not include gross receipts from the sale of all or substantially all of the LLC's assets or the deemed sale of the LLC's assets in connection with the liquidation of the LLC. 1.73 "Roxbury" shall have the meaning set forth in the recitals hereof. 12 1.74 "Roxbury Extraordinary Event" shall have the meaning set forth in Section 7.3(a) hereof. 1.75 "Roxbury Designees" means the individuals selected by the Principals to serve on the Board in accordance with Section 5.2 hereof. 1.76 "Roxbury Shareholders Agreement" shall have the meaning set forth in the LLC Interest Purchase Agreement. Each Founding Principal agrees that he will not amend the Roxbury Shareholders Agreement without the prior written consent of WTI and Wilmington. 1.77 "Special Profit Sharing Pool" means a pool of funds that Roxbury may annually establish to distribute to LLC employees and Principals up to 30% of the distribution Roxbury receives pursuant to Section 6.3(a) as a Common Member with respect to such Fiscal Year. 1.78 "Special Roxbury Put" shall have the meaning set forth in Section 7.2(c) hereof. 1.79 "Subsequent Put Price" shall have the meaning set forth in Section 1.68 hereof. 1.80 "Subsidiary" means any corporation, partnership or other organization, whether incorporated or unincorporated, of which more than fifty percent (50%) of either the equity interests or the voting control is, directly or indirectly, through Subsidiaries or otherwise, beneficially owned by the LLC, or of which the LLC or any Subsidiary serves as the general partner. 1.81 "Tax Matters Member" has the meaning set forth in Section 9.1(a) hereof. 1.82 "Transfer" has the meaning set forth in Section 7.1(a) hereof. 1.83 "Treasury Regulations" means the income tax regulations, including temporary regulations, promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). 1.84 "Voting Members" means all Members other than Non-voting Members. 1.85 "Wilmington" has the meaning set forth in the recitals hereof. 1.86 "Wilmington Call" has the meaning set forth in Section 7.3(c) hereof. 1.87 "Wilmington Call Notice" has the meaning set forth in Section 7.3(d) hereof. 1.88 "Wilmington Clients" means investment management, custody and personal trust clients of WTI, Wilmington or WTC (including any former clients who were clients of WTI, Wilmington or WTC at any time during the one-year period immediately prior to the date hereof) and any Person who has been offered, by means of a personal meeting with such Person or representatives of such Person, investment management, personal trust or custodial services by WTI, Wilmington or WTC, and any Affiliates of such current, former and prospective clients. 1.89 "WTC" has the meaning set forth in the recitals hereof. 13 1.90 "WTI" has the meaning set forth in the recitals hereof. 1.91 "WTI Designee" means the individual(s) selected and authorized by WTI, its successor or assign to represent WTI and serve on the Board in accordance with Section 5.2 hereof. 2 GENERAL PROVISIONS 2.1 Formation, Name and Continuation. This Agreement supersedes and replaces the Original LLC Agreement in its entirety and the Original LLC Agreement shall henceforth have no effect as of and from the date hereof. The name of the LLC heretofore formed and continued hereby is Roxbury Capital Management, LLC. The business of the LLC may also be conducted under any other name or names designated by the Board from time to time. The parties hereto agree to continue the LLC and enter into this Agreement, and do hereby continue the LLC and enter into this Agreement, pursuant to the provisions of the Delaware Act and for the purposes hereinafter described. Upon the execution of this Agreement or a counterpart of this Agreement, WTI shall be admitted to the LLC as a Member. The name, mailing address, initial capital contribution and Membership Points of each Member shall be listed on Schedule 1. The Secretary of the LLC shall update any Schedule from time to time as necessary to accurately reflect the information required to be contained therein. Any amendment or revision to a Schedule made in accordance with this Agreement shall not be deemed an amendment to this Agreement. Any reference in this Agreement to a Schedule shall be deemed to be a reference to such Schedule as amended and in effect from time to time. 2.2 Term. The term of the LLC commenced on the date the Certificate was filed in the office of the Secretary of State of the State of Delaware and shall continue in perpetuity, unless dissolved in accordance with the provisions of this Agreement. The existence of the LLC as a separate legal entity shall continue until the cancellation of the Certificate. 2.3 Registered Agent and Office; Principal Place of Business. (a) The LLC's registered agent and office in the State of Delaware shall be WT Investments, Inc., Rodney Square North, 1100 North Market St., New Castle County, Delaware 19890. (b) The principal place of business of the LLC shall be at 100 Wilshire Boulevard, Suite 600 Santa Monica, California 90401, and the LLC shall qualify to do business in California and any other location where its business requires it to qualify to do business. (c) The Board may, at any time and from time to time: (i) change the location of the LLC's principal place of business and establish such additional place or places of business of the LLC as it may determine; (ii) change the location of the LLC's books and records; (iii) change the LLC's registered office in Delaware; and (iv) change the LLC's resident agent for service of process in Delaware. 14 2.4 Fiscal Year. Except as otherwise determined by the Board, the Fiscal Year of the LLC for accounting and tax purposes shall be the calendar year, except for the short years in the years of the LLC's formation and termination and as otherwise required by the Code. 3 PURPOSE AND POWERS OF THE LLC 3.1 Purpose. The LLC is formed for the object and purpose of engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Act and engaging in any and all activities necessary or incidental to the foregoing, except that the LLC is not formed for the object and purpose of and shall not engage in any business that would cause WTI, Wilmington or WTC to be in violation of any Federal or Delaware state banking law, as such laws may be amended from time to time. 3.2 Powers of the LLC. The LLC shall have all power and authority granted under the Delaware Act to take any and all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose set forth in Section 3.1. 3.3 Authorized Persons. Any Manager shall be an "authorized person" for purposes of the Delaware Act. 4 MEMBERS 4.1 Voting. Members shall have the power to vote only as provided in this Article 4 and by Section 12.1 of this Agreement. Unless otherwise provided in this Agreement or required by law, any vote of Members shall be determined by a Majority Vote. 4.2 Meetings of Members. The Board of Managers of the LLC (the "Board") or the Chairman may call a meeting of Voting Members. Meetings of Voting Members shall be held at the principal place of business of the LLC or such other location as may be selected by the Board upon at least 10 days' written notice to all of the Voting Members. Any notice required hereunder may be waived in writing by the Person to whom notice should have been sent, whether before or after the related meeting, and attendance at any meeting waives that attendee's right to any notice required hereunder unless the Person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. 4.3 Quorum. At any meeting of the Voting Members, the presence of (a) Preferred Members owning a majority of the Preferred Membership Points and (b) Common Members owning a majority of the Common Membership Points, other than Common Membership Points owned by Non-voting Members, shall constitute a quorum. Any meeting may be adjourned from time to time by Voting Members holding a majority of the votes present at the meeting, whether 15 or not a quorum is present, and the meeting may be held as adjourned upon at least 10 days' written notice to all the Voting Members, unless such notice is waived. 4.4 Action by Consent. Any action of the Voting Members may be taken without a meeting if the Voting Members required to consent to the action to be taken, if such action had been taken at a meeting of Voting Members, consent to such action in writing. The written consents shall be filed with the records of the meetings of the Members. Such actions by consent shall be treated for all purposes as actions taken at a meeting. 4.5 Telephonic Meetings. Voting Members may participate in a meeting of the Voting Members by means of a conference telephone or similar communications equipment provided all Voting Members participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting. 4.6 Non-voting Members. Any Member whose employment with the LLC is terminated for Cause, any Member who resigns from employment with the LLC other than for Good Reason and any Member, during the periods described in Sections 7.2(e) and 7.3(e), shall become a Non-voting Member until his or its LLC Interest has been purchased in full in accordance with Article 7 hereof. The estate or other successor of any Member that dies, dissolves or otherwise ceases to exist shall become a Non-voting Member until his or its LLC Interests have been purchased in full in accordance with Article 7 hereof. The Board may, in its sole and absolute discretion, waive the provisions of this Section 4.6 causing a Member to become a Non-voting Member. In accordance with Section 7.5 hereof, the Board may admit a substitute Member as a Voting or a Non-Voting Member. Non-voting Members do not have the right to receive notice of meetings of Voting Members or to participate in such meetings. 5 MANAGERS AND OFFICERS 5.1 Managers. The management of the LLC's business shall be vested in the Board, which shall consist of seven Managers, all of whom must be Voting Members, LLC employees, or officers or directors of Voting Members. Unless otherwise specified in this Agreement, the Board shall act by majority vote of those Managers present at a meeting at which a quorum is present, with each Manager on the Board having one vote. 5.2 Designation of Managers. (a) For so long as Principals and Roxbury together own 50% or more of the outstanding Membership Points, then five of the Managers shall be selected or replaced by the Principals by majority vote, which vote shall be based on their direct and Derivative Share ownership of Membership Points ("Roxbury Designees"). For so long as the Principals and Roxbury together own Membership Points that are less than 50% of the outstanding Membership Points, then three of the Managers shall be Roxbury Designees. 16 (b) For so long as WTI, WTC or Wilmington is a Preferred Member, two of the Managers shall be selected or replaced by WTI, WTC or Wilmington ("WTI Designee"). For so long as WTI, WTC or Wilmington is a Preferred Member and such entities collectively own more than 50% of the outstanding Membership Points, four of the Managers shall be WTI Designees. 5.3 Term. The term of any Manager shall begin immediately after his election and shall last until the election of his successor or the effective date of his resignation or removal, whichever is earlier. 5.4 Resignation or Removal of a Manager. (a) Any Manager may resign by delivering to the LLC a signed notice indicating his intent to resign and the effective date of his resignation. (b) The Board or the Voting Members, by Majority Vote, may remove any Manager (i) for Cause, or (ii) if the Manager becomes subject to a Disability. A Manager shall be automatically removed as such if he or she becomes a Non-voting Member. Any Person that has designated a Manager may remove the Manager, with or without Cause, using the same process that was used to appoint the Manager at any time upon prior written notice to the LLC. 5.5 Vacancies. If a Manager should resign or be removed from the Board, the Person(s) holding the power to designate that Manager pursuant to Section 5.2 hereof may at any time after the resignation or removal designate another Person to serve as a Manager by written notice to the LLC. 5.6 Meetings. The Board shall hold regular quarterly meetings without call or notice at the principal office of the LLC (or at such other place as shall be determined by the Board) and at such times as the Board may from time to time determine, provided reasonable notice of the first regular meeting following any such determination is given to Managers absent at the meeting fixing regular meetings. When called by the Chairman, or by any two Managers, the Board may hold special meetings at such places and times as are designated by the Board in the call of the meeting, upon at least two Business Days' notice given by the Chairman, the Secretary or an Assistant Secretary, or by the Managers calling the meeting. Any notice required hereunder may be waived in writing by the Person to whom notice should have been sent, whether before or after the related meeting, and attendance at any meeting waives that attendee's right to any notice required hereunder unless the Person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. 5.7 Quorum. At any meeting of the Board, the presence of four or more Managers (at least one of whom shall be a WTI Designee) shall constitute a quorum. Any meeting may be adjourned from time to time by Managers holding a majority of votes present at the meeting, whether or not a quorum is present, and the meeting may be held as adjourned upon at least two Business Days' notice to all the Managers, unless notice is waived. 17 5.8 Action by Consent. Any action of the Board may be taken without a meeting if all the Managers consent to the action in writing. The written consents shall be filed with the records of the meetings of the Board. Such actions by consent shall be treated for all purposes as actions taken at a meeting. 5.9 Telephonic Meetings. Managers may participate in a meeting of the Board by means of a conference telephone or similar communications equipment provided all Managers participating in the meeting can hear each other at the same time, and participation by such means shall constitute presence in person at a meeting. 5.10 Managers as Agents; Limitation on Power of Members. The Managers, to the extent of the powers set forth herein, are agents of the LLC for the purpose of the LLC's business, and the actions of the Managers taken in accordance with such powers shall bind the LLC. No Manager or Member in that Person's capacity as Manager or Member, acting individually, and no Managers representing less than the number of Managers necessary for Board action under Sections 5.1, 5.8, 5.9 or 5.11 hereof, may bind the LLC. 5.11 Board Action. Notwithstanding the other provisions of this Article 5, the approval of (a) at least one WTI Designee and (b) a majority of the Roxbury Designees shall be required for any of the following matters: (i) any determination to engage in a business other than investment management and advisory services or to change in a fundamental manner the investment methodology and strategy heretofore used by Roxbury; (ii) issuance of additional LLC Interests other than upon exercise of an option granted pursuant to an Incentive Plan; (iii) adoption of an Incentive Plan; (iv) compensation arrangements and year end payments pursuant to any such arrangements, including bonus plans, employment contracts, or severance agreements, between the LLC (or any Affiliate thereof) and any Senior Managing Director or Managing Director of the LLC; (v) hiring or termination of any Person described in Section 5.11(iv); (vi) the LLC's annual budget; (vii) any sale, assignment or other disposition by the LLC of all or substantially all of its assets or of any interest in a Subsidiary; (viii) any consolidation or merger of the LLC with or into any other Delaware limited liability company or other business entity (as defined in Section 18-209(a) of the Delaware Act), or any dissolution of the LLC; (ix) (A) the creation or acquisition of any Subsidiary, (B) any consolidation or merger of any Subsidiary with or into any other Delaware limited liability company or other business entity (as defined in Section 18-209(a) of the Delaware Act) other than the LLC, (C) any sale by any Subsidiary of all or substantially all of its assets other than to the LLC, or (D) any liquidation, dissolution or winding up of any Subsidiary other than into the LLC; (x) any issuance of any equity securities of any Subsidiary, or any securities convertible into equity securities of any Subsidiary; (xi) any acquisition by the LLC or any Subsidiary, other than for the accounts of Clients, of any stock or assets of another entity or of capital assets, in a single transaction or a series of related transactions in any 12-month period, for an aggregate purchase price in excess of $300,000; (xii) any incurrence by the LLC and its Subsidiaries, on a combined basis, of debt (including undrawn amounts under any credit facility) in excess of $250,000; (xiii) grants of options by the LLC to purchase Common Interests; (xiv) the resolution of third party claims involving an amount, including expenses, in excess of $250,000; (xv) the resolution of material disputes with any governmental, administrative or regulatory body, agency or similar entity; (xvi) any amendment to, or termination by the LLC of, an Investment Advisory Agreement, (xvii) 18 making a determination pursuant to Section 6.3(c); (xviii) any transfer of a Common Interest to a Person other than a Permitted Transferee or Related Entity; and (xix) whether a transferee of a Common Interest (whether or not a Permitted Transferee or Related Entity) shall have voting rights; provided, however, that the Board may (without the approvals required by this Section 5.11) grant options to purchase Common Interests that (A) do not contain terms more favorable to optionees than those set forth in Section 7.1(d) hereof with respect to Option Agreements, (B) do not represent more than 10% of the Common Membership Points outstanding on the date hereof and (C) are not granted prior to the fifth anniversary of the date hereof. 5.12 Approval of Annual Budget. Subject to Section 5.11(vi) hereof, the Board alone shall have the power to approve the annual budget of the LLC. If the annual budget of the LLC is not approved in its entirety by the Board under this Section, the Board shall approve the budget to the extent of those items on which there is agreement and shall continue to negotiate in good faith until all items of the budget are agreed upon. 5.13 Officers. The Board may appoint agents and employees of the LLC who are designated as officers of the LLC (the "Officers"). The Officers of the LLC shall include a Chairman (who must be a Manager), a President and a Secretary and may include a Vice-Chairman (who must be a Manager), Chief Operating Officer, Chief Investment Officer and Treasurer, one or more Senior Managing Directors, Managing Directors, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents and Assistant Secretaries and such other Officers with such titles as may be approved by the Board. Subject to Section 5.11, the Board may remove any Officer at any time, for any reason, in its sole and absolute discretion. The Officers shall be agents of the LLC, authorized to execute and deliver documents and take other actions on behalf of the LLC, subject to the direction of the Board, and to have such other duties as may be approved by the Board; provided, however, that the delegation of any such power or authority to the Officers shall not limit in any respect the power and authority of the Board to take such actions (or any other action) on behalf of the LLC as provided in this Agreement. The Secretary shall record the actions of the Board, certify this Agreement and any related document or instrument, certify resolutions of the Board, incumbency and other matters of the LLC, and have such other ministerial duties as may be specified by the Board from time to time. 5.14 Powers of the Board; Powers of Officers. (a) Subject to the provisions of this Agreement requiring the approval of the Members, the Board's powers on behalf and in respect of the LLC shall be all powers and privileges permitted to be exercised by managers of a limited liability company under the Delaware Act, including, without limitation, Section 18-402 of the Delaware Act. (b) Subject to Section 5.11 hereof and except to the extent that this Agreement requires the Board to vote on a matter, the Board may delegate any of its powers to the Officers of the LLC or any one or more of them. (c) Subject to the limitation set forth in Section 5.14(b), the Board hereby delegates to the Officers of the LLC the respective powers delegated to comparable officers of a corporation under the Delaware General Corporation Law, subject to the powers of a board of 19 directors of a corporation under such Delaware law; provided, however, that the Board reserves the right to rescind the delegation of any such powers at any time in the sole and absolute discretion of the Board. 5.15 Reimbursement. The LLC shall reimburse each Manager for all reasonable and necessary out-of-pocket expenses incurred by such Manager on behalf of the LLC according to such terms as shall be approved by the Board. The Board's sole determination of which expenses may be reimbursed to a Manager and the amount of such expenses shall be conclusive. Such reimbursement shall be treated as an expense of the LLC that shall be deducted in computing Profits and Losses and shall not be deemed to constitute a distributive share of Profits or a distribution or return of capital to the Manager. 5.16 Duties of Managers. To the extent that, at law or in equity, a Manager has duties (including fiduciary duties) and liabilities relating thereto to the LLC or to any Member, a Manager acting under this Agreement shall not be liable to the LLC or to any Member for his or her good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict the duties and liabilities of a Manager otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of such Manager. 5.17 Fiduciary Duties. (a) Unless otherwise expressly provided herein, (i) whenever a conflict of interest exists or arises between Managers, or (ii) whenever this Agreement or any other agreement contemplated herein or therein provides that a Manager shall act in a manner that is, or provides terms that are, fair and reasonable to the LLC or any Member, the Manager shall resolve such conflict of interest, take such action or provide such terms, considering in each case the relative interest of each party (including his or her own interest or the interests of his or her employer) to such conflict, agreement, transaction or situation and the benefits and burdens relating to such interests, any customary or accepted industry practices, and any applicable generally accepted accounting practices or principles. In the absence of bad faith by the Manager, the resolution, action or term so made, taken or provided by the Manager shall not constitute a breach of this Agreement or any other agreement contemplated herein or of any duty or obligation of the Manager at law or in equity or otherwise. (b) Whenever in this Agreement a Manager is permitted or required to make a decision (i) in his or her "discretion" or under a grant of similar authority or latitude, the Manager shall be entitled to consider such interests and factors as he or she desires, including his or her own interests or the interests of his or her employer, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the LLC or any other person, or (ii) in "good faith" or under another express standard, the Manager shall act under such express standard and shall not be subject to any other or different standard imposed by this Agreement or other applicable law. 20 6 CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; DISTRIBUTIONS; ALLOCATIONS 6.1 Capital Contributions. (a) Each Member has contributed to the capital of the LLC, or as a result of acquiring an LLC Interest has succeeded to, the amount set forth opposite his or its name under the column labeled "Capital Account" on Schedule 1. (b) No Member shall be required to make any additional capital contribution to the LLC. 6.2 Capital Accounts. (a) Each Member shall have a Capital Account on the books of the LLC, which shall not bear interest. (b) Except as provided in Section 12.3(a)(ii) hereof, no Member has the right to demand a return of such Member's capital contributions (or the balance of such Member's Capital Account). Further, no Member has the right (i) to demand and receive any distribution from the LLC in any form other than cash or (ii) to bring an action of partition against the LLC or its property. 6.3 Distributions. (a) Except as provided in Section 6.3(f), within 90 days after the end of each Fiscal Year, the Board shall cause to be distributed: (i) first, to the Preferred Members in proportion to their respective number of Preferred Membership Points, (A) [ * ]% of all Revenues of the LLC for that Fiscal Year ("Preferred Member Revenue Share") less (B) the Excess Cash Flow Split for such Fiscal Year. (ii) second, the "Excess Cash Flow Split" shall be paid to the Common Members in proportion to their respective number of Common Membership Points beginning with distributions with respect to Fiscal Year 1999. The Excess Cash Flow Split shall be calculated as follows: A) For the Fiscal Years 1999, 2000, 2001 and 2002, multiply annual Advisory Fee revenue in 1998 by [ * ] ("Hurdle Rate") taken to the "N"th power, where "N" is 1 with respect to Fiscal Year 1999, "N" is 2 with respect to Fiscal Year 2000, "N" is 3 with respect to Fiscal Year 2001 and "N" is 4 with respect to Fiscal Year 2002. Annual Advisory Fee revenue in 1998 shall be all 1998 advisory fee revenue earned by Roxbury plus all 1998 Advisory Fee revenue earned by the LLC. With respect to * CONFIDENTIAL TREATMENT REQUESTED 21 Fiscal Years 2003 and thereafter, the Excess Cash Flow Split shall be computed by multiplying the Advisory Fee revenue for the fifth prior Fiscal Year (for example, with respect to Fiscal Year 2003, use Advisory Fee revenue for Fiscal Year 1998) by [*] (which is [*] 5). An amount computed hereunder is "Assumed Fee Income" for such Fiscal Year. B) Subtract the Assumed Fee Income for such Fiscal Year from the actual Advisory Fee revenue for such Fiscal Year. C) If the calculation in B) produces a positive number, multiply that difference by .[ * ]. The product of this multiplication is the Excess Cash Flow Split. (See examples in Exhibit B.) (iii) third, Free Cash Flow shall be paid to the Common Members in proportion to their respective number of Common Membership Points for such Fiscal Year. (b) Notwithstanding the provisions of Section 6.3(a), the Board shall make estimated distributions described by Sections 6.3(a)(i), (ii) and (iii) to Members each quarter. To the extent the Board makes any distributions with respect to any Fiscal Year prior to the end of that Fiscal Year, the priority of distributions shall be in accordance with Section 6.3(a). All such distributions shall be deemed advances against the distributions required by Section 6.3(a). In the event that any such distributions are determined to be excessive, Members shall be required to repay, without interest, any excessive distribution within thirty (30) days of being notified in writing that the payment was excessive and must be repaid to the LLC. (c) If the Board determines that it is not possible to distribute all or part of the Preferred Member Revenue Share for any Fiscal Year because such a distribution would materially impair the LLC's ability to operate, the LLC shall execute a promissory note, without interest, which provides for payment within the subsequent 12 months of the unpaid portion of any amounts the Preferred Members should have received under Section 6.3(a)(i) and there shall be no distributions pursuant to Section 6.3(a) or (b) for that Fiscal Year or any subsequent Fiscal Year until such promissory note is satisfied. Notwithstanding anything herein to the contrary, the issuance of promissory note(s) to the Preferred Members under this Section 6.3(c) for any Fiscal Year shall not diminish or affect in any way the Preferred Members' right to a distribution of the Preferred Member Revenue Share under Section 6.3(a)(i) for any subsequent Fiscal Year. (d) All amounts withheld pursuant to the Code or any provision of any state or local tax law with respect to any payment, distribution or allocation to the LLC or the Members shall be treated as amounts distributed to the Members pursuant to this Section 6.3 for all purposes of this Agreement. The LLC is authorized to withhold from distributions or with respect to allocations to the Members and to pay over to any Federal, state or local government any amounts required to be so withheld pursuant to the Code or any provision of any other Federal, state or local law and shall allocate such amounts to those Members with respect to which such amounts were withheld. * CONFIDENTIAL TREATMENT REQUESTED 22 (e) Notwithstanding any provision to the contrary contained in this Agreement, the LLC shall not make a distribution to any Member on account of its LLC Interest if such distribution would (i) cause such Member to have an Adjusted Capital Account Deficit, or (ii) violate Section 18-607 of the Delaware Act or other applicable law. (f) In the event of a sale of all or substantially all of the assets of the LLC, or a deemed sale of assets in connection with the liquidation of the LLC, the proceeds thereof shall be distributed as provided in Section 12.3(a). 6.4 Allocation of Profits and Losses. (a) After giving effect to the special allocations provided in Section 6.5 hereof, and except as otherwise provided in Section 6.4(b) hereof, Profits for any Fiscal Year shall be allocated to the Members as follows: (i) First, to the Preferred Members in proportion to their respective number of Preferred Membership Points to the extent that the cumulative Losses that have been allocated to the Preferred Members under Section 6.4(c) hereof exceed the cumulative Profits that have been allocated thereto under this Section 6.4(a); (ii) Second, to the Preferred Members in proportion to their respective number of Preferred Membership Points in an amount equal to the Preferred Member Revenue Share distributed to the Preferred Members or deferred pursuant to Section 6.3(c) hereof with respect to such Fiscal Year; (iii) Third, to the Common Members in proportion to their respective number of Common Membership Points an amount equal to the amount distributed to such Common Members pursuant to Section 6.3(a)(ii) hereof; and (iv) Fourth, to the Common Members in proportion to their respective number of Common Membership Points for such Fiscal Year. (b) Notwithstanding the provisions of Section 6.4(a) hereof, Profits from the sale of all or substantially all of the assets of the LLC, and Profits from a deemed sale of assets in connection with the liquidation of the LLC, shall be allocated among the Members as follows: (i) First, such Profits shall be allocated to the Preferred Members in proportion to their respective number of Preferred Membership Points to the extent that the cumulative Losses that have been allocated to the Preferred Members under Section 6.4(c) hereof exceed the cumulative Profits that have been allocated thereto under Section 6.4(a); (ii) Second, an amount of such Profits equal to two-thirds (2/3) of the Purchase Price (as such term is defined in the LLC Interest Purchase Agreement) shall be allocated to the Common Members in proportion to their respective numbers of Common Membership Points; and 23 (iii) Thereafter, an amount of such Profits equal to the Historic Preferred Share of such Profits (after reduction for the amounts allocated to Members under Sections 6.4(b)(i) and (ii) above) shall be allocated to the Preferred Members in proportion to their respective numbers of Preferred Membership Points and the remainder of such Profits shall be allocated to the Common Members in proportion to their respective numbers of Common Membership Points. For purposes of this Section 6.4(b), the "Historic Preferred Share" shall be equal to a fraction, the numerator of which is the cumulative amount distributed or distributable to the Preferred Member pursuant to Section 6.3(a)(i) hereof for the five Fiscal Years (or, if fewer, the number of completed Fiscal Years) immediately preceding the year in which the sale or deemed sale of assets occurs and the denominator of which is the cumulative amount of all distributions made to Members in accordance with Section 6.3 hereof for the same period. (c) All Losses shall be allocated to the Preferred Members in proportion to their respective number of Preferred Membership Points. However, no allocation shall be made under this Section 6.4(c) to the extent it causes a Preferred Member to have an Adjusted Capital Account Deficit. 6.5 Special Allocations. (a) If and to the extent that any employee or Principal of the LLC or an Affiliate recognizes or is deemed to recognize any item of income or gain pursuant to Code Section 83 by virtue of any transaction or deemed transaction between any Member and such employee, then any resulting item of loss recognized by the LLC or deduction to which the LLC is entitled shall be specially allocated to such Member. (b) If and to the extent that any employee or Principal of the LLC receives a payment from Roxbury pursuant to the Special Profit Sharing Pool, then any resulting deduction to which the LLC is entitled shall be specially allocated to Roxbury. (c) The provisions of the Treasury Regulations promulgated under Code Section 704(b) relating to the qualified income offset, minimum gain chargeback, minimum gain chargeback with respect to nonrecourse debt, the allocation of nonrecourse deductions and the allocation of items of deduction, loss or expenditure relating to nonrecourse debt are hereby incorporated by this reference and shall be applied to the allocation of items of income, gain, loss or deduction of the LLC in the manner provided in such Treasury Regulations. However, the Members do not intend that the "deficit restoration obligation" described in Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations be incorporated by reference herein. (d) In the event that items of income, gain, loss or deduction are allocated to one or more Members pursuant to Section 6.5(c) above, subsequent items of income, gain, loss or deduction will first be allocated (subject to the provisions of Section 6.5(c)) to the Members in a manner designed to result in each Member having a Capital Account balance equal to what it would have been had the original allocation of Profits or Losses, or items thereof pursuant to Section 6.5(c) not occurred. 24 6.6 Tax Allocations: Code Section 704(c). (a) In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the capital of the LLC shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the LLC for federal income tax purposes and its initial Carrying Value at the time of its contribution to the LLC. (b) Allocations of income, gain, loss and deduction with respect to any asset revalued in accordance with Treasury Regulations under Code Section 704 shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Carrying Value in the same manner as under Code Section 704(c) and the Treasury Regulations thereunder and as required by Section 1.704-1(b)(2)(iv)(g) of the Treasury Regulations. (c) Any elections or other decisions relating to allocations described in paragraphs (a) or (b) of this Section 6.6 shall be made by the Members in any manner that reasonably reflects the purposes and intention of this Agreement. Allocations pursuant to this Section 6.6 are solely for purposes of federal, state and local taxes and shall not affect, nor in any way be taken into account in computing, any Member's Capital Account or share of Profits, Losses or other items or distributions pursuant to any provision of this Agreement. 6.7 Proration for Partial Years. In the event (a) the Membership Points of any Common Member shall be adjusted, by Transfer or otherwise, during any Fiscal Year or (b) any Common Member shall be admitted to the LLC during any Fiscal Year, any distributions and any allocations to such Member pursuant to this Article 6 shall be made based on the average of the Member's Membership Points for such Fiscal Year, determined on a monthly basis. For example, if in the months of January through July of a Fiscal Year (i.e., seven months) a Common Member owned nine Membership Points, and in the months of August through December of such Fiscal Year (i.e., five months) the Member owned three Membership Points, the distributions and allocations to such Member pursuant to this Article 6 would be based on an LLC Interest calculated as follows: (7 x 9) + (5 x 3) = 6.5 Membership ----------------- Points 12 7 TRANSFER OF LLC INTERESTS, PUT AND CALL OPTIONS, MANDATORY PURCHASES AND ADMISSION OF ADDITIONAL MEMBERS 7.1 Assignability of Interests. (a) Except as otherwise provided in this Article 7, no LLC Interest of a Member may be sold, assigned, transferred, pledged, hypothecated, gifted, exchanged, optioned, liened or encumbered (each, a "Transfer") and no Transfer in violation of this Agreement shall be binding upon the LLC. 25 (b) A Member may transfer all or any portion of its or his LLC Interest (i) to any one or more Permitted Transferees or Related Entities who agree to be bound by the terms and conditions of this Agreement, or (ii) upon obtaining the prior approval of the Board in accordance with Section 5.11 hereof, to any other Person who agrees to be bound by the terms and conditions of this Agreement; provided, however, that notwithstanding anything contained in this Agreement to the contrary, the transferring Member shall retain the right to vote with respect to LLC Interests Transferred unless (A) the transferee is WTI, WTC, Wilmington or an officer of the LLC, (B) the Transfer is pursuant to an Option Agreement, or (C) the transferee is approved by the Board as a Voting Member. (c) In addition to Transfers permitted under Section 7.1(b), certain Members, including Permitted Transferees of Principals, may exercise Puts in accordance with Section 7.2 and certain Members are required to make sales in accordance with Section 7.3, in accordance with the terms of such Sections. (d) Until December 31, 2003, Roxbury may grant options on LLC Interests it owns to employees of the LLC in Roxbury's sole and absolute discretion pursuant to a written Option Agreement if: (i) the aggregate exercise price to purchase the LLC Interests subject to the option is not less than the proportionate share of LLC Value represented by such LLC Interests determined on the date of the grant using a multiple of six in determining LLC Value; (ii) not more than one-third of the option shall vest before the end of the first year after grant, not more than two-thirds of the option shall vest before the end of the second year after grant, and not more than 100% of the option shall vest before the end of the third year after grant; (iii) the option does not become exercisable before the third anniversary of its date of grant (although an option may become exercisable prior to such third anniversary (A) in the event of death, Disability or Retirement of the option holder, (B) on termination of the employment of the option holder without Cause or (c) on resignation by the option holder for Good Reason); (iv) the option holder executes an employment contract in a form acceptable to the LLC at the time of, or prior to, the execution of the Option Agreement; (v) the option holder exercising the option must sign this Agreement as a condition of exercise; and (vi) the optionee makes representations and warranties to the LLC comparable to those contained in Section 13.5 on the date of grant of the option and on the date of each exercise thereof. 7.2 Put Options. (a) On or before February 28 of each year, the LLC shall notify all Members of the LLC Value as of December 31 of the immediately preceding year. (b) Subject to the terms, conditions and limitations of this Section 7.2, each Principal and Roxbury may exercise an option to sell to Wilmington all or any portion of his or its LLC Interest (each such Put to Wilmington being referred to as a "Put"). Upon exercise of a Put under this Section 7.2(b), Wilmington shall thereupon become obligated to purchase the LLC Interest as to which the Put has been exercised. (c) Notwithstanding anything contained in Section 7.2(b) to the contrary, unless otherwise agreed to by Wilmington: (i) neither a Principal nor Roxbury may exercise a Put prior to 26 the fifth anniversary of the later of the Commencement Date or the date hereof; (ii) Puts may not be exercised in any Fiscal Year with respect to LLC Interests representing more than 25% of the Common Membership Points of the LLC then outstanding; (iii) each Founding Principal may not exercise Puts in any Fiscal Year exceeding 50% of his High Water Mark and any other Principal may not exercise Puts in any Fiscal Year exceeding 20% of his High Water Mark; and (iv) a Put may not be exercised with respect to LLC Interests acquired on exercise of an Option Agreement unless such LLC Interests have been held for at least six months (other than after a Change of Control or in an amount with a Put Price equal to the dollar amount of the maximum federal, state and local tax rates applicable to the exercise of such Option Agreement). If, in any Fiscal Year, Puts are exercised with respect to more than 25% of the outstanding Common Membership Points, then each such Member shall be entitled to exercise Puts equal to the product of (x) 25%, (y) the Common Membership Points of the LLC then outstanding and (z) a fraction, the numerator of which is the Common Membership Points relating to the LLC Interests for which a Put is sought to be exercised by the Member (after giving effect to Section 7.2(c)(iii)) and the denominator of which is the total Common Membership Points relating to LLC Interests for which Puts are sought to be exercised by all Members (after giving effect to Section 7.2(c)(iii)). Notwithstanding the foregoing limitations of this Section 7.2(c), Roxbury may exercise a Put following an Extraordinary Event with respect to a Founding Principal or the exercise of a Wilmington Call with respect to the LLC Interests of a Founding Principal; provided, however, that the number of Common Membership Points that are the subject of such Put shall not exceed the Derivative Share of such Founding Principal (a "Special Roxbury Put"). A Special Roxbury Put shall not be included in determining whether the limitations set forth above in this Section 7.2(c) have been satisfied. (d) A Member may exercise a Put if, on or before March 15 of any year, Wilmington receives an irrevocable notice of exercise of the Put to Wilmington substantially in the form of Exhibit D hereto (the "Put Notice") stating that it or he is electing to exercise the Put and specifying the LLC Interest to be sold pursuant to the Put. On or before the first day of April after receipt of a Put Notice (or the next succeeding Business Day if such April 1 is not a Business Day), and subject to the limitations set forth in Section 7.2(c) hereof, Wilmington shall purchase from the Member the LLC Interest set forth in the Put Notice. At the closing of the exercise of a Put, Wilmington shall deliver the Put Price to the Member by certified check or wire transfer of immediately available funds against delivery of such documents or instruments of transfer as Wilmington may reasonably request. (e) On the last day of the month in which a Put is exercised by a Member, such Member shall cease to have any rights as a Member with respect to the LLC Interest so Put other than (i) the right to receive the Put Price on the Purchase Closing Date and (ii) the right to receive distributions and allocations with respect to such LLC Interest through the Purchase Closing Date. For example, this means that the LLC Interests to be purchased shall not have any voting rights during such period. (f) In the event of a Change of Control, a Member may send a Put Notice at any time during the fifteen months following the Change of Control, and the restrictions of Section 7.2(c)(i), (ii) and (iii) shall not apply to such Put, in which case the LLC Value shall be determined as of December 31 immediately prior to the date of the Put Notice and the Purchase Closing Date 27 shall be 60 days following delivery of the Put Notice (or the next succeeding Business Day if such date is not a Business Day). 7.3 Purchase on Occurrence of an Extraordinary Event or a Roxbury Extraordinary Event; Wilmington Call. (a) The provisions set forth in Section 7.3(b) shall apply to the purchase and sale of an LLC Interest of a Principal or a Related Holder of such Principal following the Principal's (i) death; (ii) Disability; (iii) Retirement; (iv) termination of employment by the LLC without Cause; (v) voluntary termination of employment with the LLC for Good Reason; (vi) a transfer of LLC Interests required by operation of law; or (vii) other involuntary transfers of an LLC Interest (all hereafter referred to as "Extraordinary Events"). Notwithstanding anything herein to the contrary, if an Extraordinary Event occurs that causes or permits a Person to become a Principal for the first time as a result of accelerated exercisability of vested options under an Option Agreement, the provisions of this Section 7.3(a) shall be effective immediately as if such Person were a Principal at the time the Extraordinary Event occurred. The provisions set forth in Section 7.3(b) shall also apply to the purchase and sale of all of the LLC Interests held by Roxbury once the last Founding Principal ceases to serve as an employee of the LLC for whatever reason, which event shall be deemed a "Roxbury Extraordinary Event." (b) In the event of an Extraordinary Event or a Roxbury Extraordinary Event, Wilmington shall be obligated to purchase from such Principal Entities or Roxbury, as the case may be, and such Principal Entities or Roxbury, as the case may be, shall be obligated to sell to Wilmington, all of such Principal Entities' or Roxbury's LLC Interests at a purchase price equal to the Put Price thereof. (i) If the Extraordinary Event or Roxbury Extraordinary Event occurs on or before December 31, 1998, the Purchase Closing Date shall be April 1, 1999 (or if such day is not a Business Day, the next succeeding Business Day). On such Purchase Closing Date, Wilmington shall deliver to the Principal Entities or Roxbury, as the case may be, the Initial Put Price by certified check or wire transfer of immediately available funds against delivery of such documents or instruments of transfer transferring the purchased LLC Interests to Wilmington as may be reasonably requested by Wilmington. In addition, in the event of an Extraordinary Event or Roxbury Extraordinary Event that occurs on or before December 31, 1998, on April 3, 2000 (or if such day is not a Business Day, the next succeeding Business Day), Wilmington shall deliver to such Principal Entities or Roxbury, as the case may be, the Subsequent Put Price, if any, by certified check or wire transfer of immediately available funds. (ii) If the Extraordinary Event or Roxbury Extraordinary Event occurs between January 1 and June 30 of any year after 1998, the Purchase Closing Date under this Section 7.3(b) shall be on April 1 (or if April 1 is not a Business Day, the next succeeding Business Day) of the year following the year of the date of the Extraordinary Event or Roxbury Extraordinary Event, at which time Wilmington shall deliver to such Principal Entities or Roxbury, as the case may be, the purchase price by certified check or wire transfer of immediately available funds. If the Extraordinary Event or Roxbury Extraordinary Event occurs between July 1 and December 31 of any year after 1998, the Purchase Closing Date under this Section 7.3(b) shall be on April 1 (or if 28 April 1 is not a Business Day, the next succeeding Business Day) of the second year following the year of the date of the Extraordinary Event or Roxbury Extraordinary Event, at which time Wilmington shall deliver to such Principal Entities or Roxbury, as the case may be, the purchase price by certified check or wire transfer of immediately available funds. With respect to any Extraordinary Event or Roxbury Extraordinary Event that occurs after December 31, 1998, on a date mutually agreed between Wilmington and the selling Principal Entities or Roxbury, as the case may be, but in any event not later than 60 days after the date on which such Extraordinary Event or Roxbury Extraordinary Event occurs, Wilmington shall deliver to the Principal Entities or Roxbury, as the case may be, the Advance Payment by certified check or wire transfer of immediately available funds against delivery of such documents or instruments of transfer as may be reasonably requested by Wilmington transferring 75% of the LLC Interests to be purchased pursuant to this Section 7.3(b) to Wilmington. In addition, on the Purchase Closing Date, such Principal Entities or Roxbury, as the case may be, shall deliver to Wilmington such documents or instruments of transfer as may be reasonably requested by Wilmington transferring the remaining 25% of the LLC Interests to be purchased pursuant to this Section 7.3(b) to Wilmington, and (i) if the Put Price exceeds the Advance Payment, Wilmington shall deliver to such Principal Entities or Roxbury, as the case may be, the excess of the Put Price over the Advance Payment by certified check or wire transfer of immediately available funds, and (ii) if the Advance Payment exceeds the Put Price, such Principal Entities or Roxbury, as the case may be, shall deliver to Wilmington the excess of the Advance Payment over the Put Price by certified check or wire transfer of immediately available funds. (c) Within 90 days following the termination of a Principal's employment with the LLC (other than because of an Extraordinary Event), Wilmington may exercise the right to purchase from such Principal Entities all or a portion of such Principal Entities' LLC Interests (a "Wilmington Call"). The purchase price for any LLC Interest subject to a Wilmington Call shall be the Call Price. (d) A Wilmington Call may be exercised by delivering to each appropriate Person a written notice signed by Wilmington in substantially the form of Exhibit E hereto (the "Wilmington Call Notice") stating that it is exercising the Wilmington Call and any LLC Interest with respect to which the Wilmington Call is being exercised. On April 1 of the year following the year in which the Wilmington Call Notice is delivered (or if such April 1 is not a Business Day, the next succeeding Business Day), each Person whose LLC Interest is subject to the Wilmington Call shall sell to Wilmington the LLC Interest (or portion thereof) set forth in the Wilmington Call Notice. At the closing of the exercise by Wilmington of a Wilmington Call, Wilmington shall deliver the purchase price by certified check or wire transfer of immediately available funds against delivery of such documents or instruments of transfer as may be reasonably requested by Wilmington. (e) On the last day of the month in which an Extraordinary Event or a Roxbury Extraordinary Event occurs or in which a Wilmington Call is exercised, each Person whose LLC Interests have been called or who has experienced the Roxbury Extraordinary Event or the Extraordinary Event, or his estate, as the case may be, shall cease to have any rights as a Member with respect to the LLC Interests being purchased, other than (i) the right to receive the Advance Payment, the Initial Put Price, the Subsequent Put Price or the Call Price, as the case may be, and (ii) the right to receive distributions and allocations with respect to such LLC Interests through the 29 date on which such LLC Interests are transferred to Wilmington. For example, this means that the LLC Interests to be purchased shall not have any voting rights during such period. 7.4 LLC Interests Subject to Option Rights. If any LLC Interests purchased by Wilmington pursuant to Sections 7.2 or 7.3 are subject to the rights of an individual who has been granted the option to purchase such LLC Interests pursuant to an Option Agreement, that option holder shall retain all rights granted by that Option Agreement. 7.5 Substitute Members. Any Transfer of LLC Interests (other than a transfer by WTI to a Permitted Transferee, a transfer pursuant to this Article 7 or a transfer as a result of the exercise of rights to acquire LLC Interests under an Option Agreement) shall, nevertheless, not entitle the transferee, unless already a Member, to become a Member or to be entitled to exercise or receive any of the rights, powers or benefits of a Member other than the right to share in such profits and losses, to receive distributions and allocations of income, gain, loss, deduction, credit or similar item to which the transferor Member would otherwise be entitled, to the extent assigned, unless the transferor Member designates, in a written instrument delivered to the Board, its transferee to become a substitute Member and the Board, in its sole and absolute discretion, consents to the admission of such transferee as a Non-voting Member; provided, however, that such transferee shall not become a substitute Member without having first executed an instrument reasonably satisfactory to the Board accepting and agreeing to the terms and conditions of this Agreement, including a counterpart signature page to this Agreement, and without having paid to the LLC a fee sufficient to cover all reasonable expenses of the LLC in connection with such transferee's admission as a substitute Member, and provided further that, upon the admission of such transferee as provided herein, such admission shall be reflected upon the books and records of the LLC, including Schedule 1 to this Agreement. 7.6 Recognition of Transfer by LLC. No Transfer of a Member's LLC Interest, or any part thereof, that is in violation of this Article 7 shall be valid or effective, and neither the LLC nor the Members shall recognize the same for the purpose of making distributions pursuant to Articles 6 or 12 hereof with respect to such transferred LLC Interest or part thereof. Neither the LLC, any member of the Board nor any Member shall incur any liability as a result of refusing to make any such distributions to the transferee of any such invalid Transfer. 7.7 Effective Date of Transfer; Order of Puts, Calls and Purchases Under Section 7.3(b). (a) Any valid Transfer of a Member's LLC Interest, or part thereof, pursuant to Sections 7.1, 7.2, 7.3 or 7.5 shall be effective as of the close of business on the last day of the calendar month in which such Transfer occurs. Upon the valid transfer of a Member's LLC Interest, such Person shall cease to be a Member, and the books and records of the LLC, including Schedule 1 to this Agreement, shall reflect such event. (b) With respect to Sections 7.2 and 7.3 hereof, the first to occur of (i) the delivery of a Put Notice under Section 7.2(d) or (f), (ii) the occurrence of the first Extraordinary Event or Roxbury Extraordinary Event under Section 7.3(a) or (iii) the delivery of a Wilmington Call Notice under Section 7.3(d), shall govern the rights and obligations of the parties with respect 30 to the Common Interests subject to the Put Notice or the Wilmington Call Notice, or the Common Interests to be purchased under Section 7.3(b), as the case may be. 7.8 Indemnification. In the case of a Transfer or attempted Transfer of an LLC Interest that has not received the consents required by this Article 7, the parties engaging or attempting to engage in such Transfer shall, to the fullest extent permitted by law, indemnify and hold harmless the LLC and the other Members from all costs, liabilities and damages that any of such indemnified Persons may incur (including, without limitation, incremental tax liability and lawyers' fees and expenses) as a result of such Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby. 7.9 Issuance of Additional LLC Interests. (a) Subject to Sections 5.11, 7.1 and 7.5 hereof, the Board may admit new Members to the LLC, issue additional LLC Interests and, pursuant to a written plan adopted and approved by the Board under Section 5.11 (an "Incentive Plan") issue Common Interests, or grant options to purchase Common Interests. As a condition to the admission of a new Member, such Member must become a party to this Agreement by signing a counterpart signature page to this Agreement. (b) Upon the issuance of additional LLC Interests to a Member, the LLC shall make the appropriate revisions to Schedule 1 hereto to reflect the additional LLC Interests issued to the Member and identifying the Member, other than Roxbury or any entity consolidated with Wilmington for Federal income tax purposes, as a Principal. (c) Upon the issuance of additional Common Interests pursuant to an Incentive Plan or otherwise, the percentage "[ * ]%" set forth in Section 6.3(a)(i)(A) hereof and used to calculate the Preferred Member Revenue Share shall be reduced in an amount and in a manner agreed to by Members holding a majority of the outstanding Preferred Membership Points and Members holding a majority of the outstanding Common Membership Points to reflect the parties' agreement that any such issuance of Common Interests will dilute the ownership of the LLC represented by the Preferred Interests as well as the Common Interests. See an example in Exhibit F. 7.10 Assignment of Wilmington's Rights and Obligations. Wilmington may assign any or all of its rights and/or delegate any or all of its obligations under Sections 7.2 and 7.3 hereof to WTC or WTI, provided, that in the case of any such assignment or delegation, Wilmington shall remain obligated therefor. 8 BOOKS AND RECORDS 8.1 Books, Records and Financial Statements. The Board shall designate an appropriate employee of the LLC to prepare and maintain, or cause to be prepared and * CONFIDENTIAL TREATMENT REQUESTED 31 maintained, the books of account of the LLC. Such books of account and all financial records of the LLC shall be kept at the LLC's office located at 100 Wilshire Boulevard, Suite 600 Santa Monica, California 90401. A Member shall have the right to examine the books and records of the LLC at a reasonable time and for purposes reasonably related to the Member's interest as a Member. Such Person shall also cause the following documents to be transmitted at the times hereinafter set forth: (a) to each Member, as soon as available and in any event within 100 days after the end of each Fiscal Year of the LLC, a balance sheet, income statement, cash flow statement and statement of capital accounts of the LLC as of the end of such Fiscal Year, all of which shall be audited by the LLC's accountants; (b) to each Member, as soon as available and in any event within 30 days after the end of each quarter of each Fiscal Year of the LLC (other than the fourth quarter), a balance sheet, income statement, cash flow statement and statement of capital accounts of the LLC as of the end of such quarter; (c) to each Member, as soon as available from the LLC's accountants, the annual Federal and state income tax return of the LLC and a Schedule K-1 indicating its taxable income or loss for such Fiscal Year; (d) to each Member, ten days prior to the date on which any Federal or state quarterly estimated tax payments are due, a schedule setting forth the LLC's estimated taxable income allocable to each Member for such Fiscal Year; and (e) to WTI, within 10 Business Days after the end of each quarter, an estimate of the net income of the LLC for the year-to-date period through the end of such quarter. 8.2 Accounting Method. All records shall be maintained in accordance with generally accepted accounting principles in a consistent manner and shall reflect all LLC transactions and be appropriate and adequate for the LLC's business. 9 TAX 9.1 Tax Matters Member. (a) Roxbury is hereby designated as the initial tax matters Member of the LLC (the "Tax Matters Member") for purposes of Code Section 6231(a)(7) and shall have the power to manage and control, on behalf of the LLC, any administrative proceeding at the LLC level with the Internal Revenue Service relating to the determination of any item of LLC income, gain, loss, deduction or credit for federal income tax purposes. (b) The Tax Matters Member shall, within 10 days of the receipt of any notice from the Internal Revenue Service in any administrative proceeding at the LLC level relating to the 32 determination of any LLC item of income, gain, loss, deduction or credit, mail a copy of such notice to each Member. (c) The Board may at any time hereafter designate a new Tax Matters Member. 9.2 Section 754 Election. The Board shall make, on behalf of the LLC, an election in accordance with Code Section 754, so as to adjust the basis of LLC property in the case of a distribution of property within the meaning of Code Section 734 and, in the case of a transfer of a LLC interest within the meaning of Code Section 743. Such election shall be made with respect to the taxable year of the LLC during which WTI acquired its Preferred Interest from Roxbury. Each Member shall, upon request of the Board, supply the information necessary to give effect to such an election. The Board may revoke such election on behalf of the LLC upon obtaining the required consent of the applicable IRS District Director and complying with all requirements of the Code and the Treasury Regulations; provided, however, that no such revocation may be made if it would have an adverse effect on WTI, WTC or Wilmington without the prior written consent thereof. 10 LIABILITY, EXCULPATION AND INDEMNIFICATION 10.1 Liability. (a) Except as otherwise expressly provided in this Article 10 or in Section 9.1 of the LLC Interest Purchase Agreement, the debts, obligations and liabilities of the LLC, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the LLC, and no Member shall be obligated personally for any such debt, obligation or liability of the LLC solely by reason of being a Member. (b) Except as otherwise expressly provided in this Article 10 or in Section 9.1 of the LLC Interest Purchase Agreement, a Member, in his capacity as such, shall have no liability in excess of (i) the amount of such Member's capital contributions; (ii) such Member's share of any assets and undistributed Profits of the LLC; and (iii) the amount of any distributions wrongfully distributed to such Member. 10.2 Exculpation. (a) No Officer or Manager shall be liable to the LLC or any Member for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Officer or Manager in good faith on behalf of the LLC and in a manner reasonably believed to be within the scope of authority conferred on such Officer or Manager, except that an Officer or Manager shall be liable for any such loss, damage or claim incurred by reason of such Officer's or Manager's bad faith, gross negligence, reckless disregard of his duties hereunder, willful misconduct or breach of the provisions of this Agreement. 33 (b) An Officer or Manager shall be fully protected in relying in good faith upon the records of the LLC and upon such information, opinions, reports or statements presented to the LLC by any person as to matters the Officer or Manager reasonably believes are within such person's professional or expert competence and who has been selected with reasonable care by or on behalf of the LLC (including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses or net cash flow or any other facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid). 10.3 Indemnification. To the fullest extent permitted by applicable law, the LLC shall indemnify each of its Officers and Managers for any loss, damage or claim incurred by any such Officer or Manager by reason of any act or omission performed or omitted by such Officer or Manager in good faith on behalf of the LLC and in a manner reasonably believed to be within the scope of authority conferred on such Officer or Manager by this Agreement, except that no Officer or Manager shall be entitled to be indemnified in respect of any loss, damage or claim incurred by such Officer or Manager by reason of bad faith, gross negligence, reckless disregard of his duties hereunder, willful misconduct or breach of the provisions of this Agreement with respect to such acts or omissions; provided, however, that (i) any indemnity under this Section 10.3 shall be provided out of and to the extent of LLC assets only, and no Member shall have any personal liability on account thereof; and (ii) nothing contained herein shall limit any indemnification or other rights of the LLC or any Member under the LLC Interest Purchase Agreement or any of the documents referred to or incorporated therein. 10.4 Expenses. To the fullest extent permitted by applicable law, the LLC shall advance to an Officer or Manager any expenses (including legal fees) incurred by such Officer or Manager in defending any claim, demand, action, suit or proceeding (such advance to be made prior to the final disposition of such claim, demand, action, suit or proceeding), including, without limitation, claims, demands, actions, suits or proceedings with respect to which such Officer or Manager is alleged to have not met the applicable standard of conduct or is alleged to have acted or failed to act in a manner which, if such allegations were true, would not entitle such Officer or Manager to indemnification under this Agreement, upon receipt by the LLC of an undertaking by or on behalf of such Officer or Manager to repay such amount if it shall be determined that such Officer or Manager is not entitled to be indemnified as authorized in Section 10.3 hereof. 11 CERTAIN COVENANTS 11.1 Compliance with Laws; Maintenance. (a) The LLC and its Subsidiaries shall (and the Board shall cause the LLC and its Subsidiaries to) comply in all material respects with all laws and regulations applicable to the LLC and its Subsidiaries, including, without limitation, all laws and regulations applicable to the LLC and its Subsidiaries as a registered investment adviser and an Affiliate of a bank or a thrift or bank holding company. 34 (b) The LLC and its Subsidiaries shall maintain in full force and effect their limited liability company or other existence, rights and franchises and all other rights, licenses and registrations owned or possessed by them and deemed by the LLC to be necessary to the conduct of their respective businesses. (c) Any options to purchase LLC Interests granted by Roxbury shall be granted in compliance with all statutes, rules and regulations governing the issuance of securities. 12 DISSOLUTION, LIQUIDATION AND TERMINATION 12.1 Events Causing Dissolution. The LLC shall be dissolved and its affairs shall be wound up only upon the occurrence of any of the following events: (a) the determination of the Board (subject to Section 5.11 hereof) and the Majority Vote of the Voting Members; or (b) the entry of a decree of judicial dissolution under Section 18-802 of the Delaware Act. With the exception of any event set forth in this Section 12.1, the Company shall not be dissolved by any other event or vote set forth in Section 18-801 of the Delaware Act. 12.2 Notice of Dissolution. Upon the dissolution of the LLC, the person or persons appointed to carry out the winding up of the LLC (the "Liquidating Trustee") shall promptly notify the Members of such dissolution. 12.3 Liquidation. (a) The proceeds of liquidation shall be distributed, as realized, in the following order and priority: (i) to creditors of the LLC, including Members who are creditors, to the extent otherwise permitted by law, in satisfaction of the liabilities of the LLC (whether by payment or the making of reasonable provision for payment thereof), other than liabilities for distributions to Members; and (ii) the remaining proceeds of liquidation shall be distributed among the Members in accordance with their positive Capital Account balances, after adjusting such Capital Accounts in accordance with Article 6 for the allocation of Profits or Losses resulting from the termination and liquidation of the LLC; provided, however, that such proceeds shall be distributed first to the Preferred Members until they have received an amount equal to the positive balance of their respective Capital Accounts (as so adjusted) and then, if there are proceeds remaining after the distribution to the Preferred Members, to the Common Members in proportion to their respective positive Capital Account balances. 35 (b) If the Liquidating Trustee shall determine that it is not feasible to liquidate all of the assets of the LLC, then the Liquidating Trustee shall cause the Fair Market Value of the assets not so liquidated to be determined. Any unrealized appreciation or depreciation with respect to such assets shall be allocated among the Members in accordance with Article 6 as though the property were sold for its Fair Market Value and distribution of any such assets in kind to a Member shall be considered a distribution of an amount equal to the assets' Fair Market Value for purposes of Article 6 and this Article 12. (c) No Member shall have the right to demand or receive property other than cash upon dissolution and termination of the LLC. 12.4 Termination. The LLC shall terminate when all of the assets of the LLC, after payment of or due provision for all debts, liabilities and obligations of the LLC, shall have been distributed to the Members in the manner provided in this Article 12, and the Certificate shall have been canceled in the manner required by the Delaware Act. 12.5 Claims of the Members. For purposes of this Article 12, the Members shall look solely to the LLC's assets for the return of their capital contributions and, if the assets of the LLC remaining after payment of or due provision for all debts, liabilities and obligations of the LLC are insufficient to return such capital contributions, the Members shall have no recourse against the LLC or any other Member. 13 REPRESENTATIONS AND WARRANTIES 13.1 Representation and Warranties of Roxbury. Roxbury hereby represents and warrants to the LLC, WTI and Wilmington as follows: (a) Roxbury is an entity duly organized, validly existing and in good standing under the laws of California and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) Roxbury has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly approved and authorized by all necessary corporate action of Roxbury. This Agreement has been duly executed and delivered by Roxbury and constitutes the legal, valid and binding obligation of Roxbury, enforceable against it in accordance with its terms. (c) No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any governmental or regulatory authority which has not been obtained is required in order to permit Roxbury to enter into this Agreement or perform its obligations hereunder. 36 (d) Roxbury has validly assigned to the LLC good title to all of the assets which have been necessary to, or used in, the conduct of its business immediately prior to the execution of this Agreement, other than (i) the assets identified on Schedule 2 as excluded assets and (ii) to the extent consents to the assignments thereof have not been obtained, investment advisory agreements with Roxbury's clients. Roxbury warrants that it will not provide investment advisory services to any client after the date hereof except (i) for the purpose of closing the relationship with the client and (ii) it may temporarily provide services to existing clients until such clients consent to the assignment of their investment advisory agreements to the LLC or terminate their relationship with Roxbury. (e) Roxbury will not issue any shares or any type of equitable interest in Roxbury subsequent to the date hereof. (f) The options granted pursuant to Option Agreements will be granted, and the exercises thereof will be made, in compliance with all applicable federal and state securities laws. 13.2 Representations and Warranties of Principals. Each of the Principals hereby severally, but not jointly, represents and warrants to WTI, and the LLC with respect to himself as follows: (a) Such Principal has full legal capacity and authority to execute, deliver and perform his obligations under this Agreement. This Agreement has been duly executed and delivered by such Principal and constitutes the legal, valid and binding obligation of such Principal enforceable against him in accordance with its terms. (b) No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any government or regulatory authority which has not been obtained is required to permit such Principal to enter into this Agreement or perform his obligations hereunder. (c) The Founding Principals shall also perform their obligations under the Roxbury Shareholders Agreement. 13.3 Representations and Warranties of Wilmington and WTI. Wilmington and WTI hereby represent and warrant to Roxbury, the Founding Principals and the LLC as follows: (a) WTI is an entity duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) WTI has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly approved and authorized by all necessary corporate action of WTI. This Agreement has been duly executed and delivered by WTI and constitutes the legal, valid and binding obligation of WTI, enforceable against WTI in accordance with its terms. 37 (c) No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any governmental or regulatory authority which has not been obtained is required in order to permit WTI to enter into this Agreement or perform its obligations hereunder. 13.4 Representations and Warranties of Wilmington. (a) Wilmington is an entity duly organized, validly existing and in good standing under the laws of Delaware and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. (b) Wilmington has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly approved and authorized by all necessary corporate action of Wilmington. This Agreement has been duly executed and delivered by Wilmington and constitutes the legal, valid and binding obligation of Wilmington, enforceable against it in accordance with its terms. (c) No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any governmental or regulatory authority which has not been obtained is required in order to permit Wilmington to enter into this Agreement or perform its obligations hereunder. 13.5 Representations and Warranties of All Members. (a) Each Member represents and warrants to the LLC and the other Members that the property and other assets which it has contributed to the LLC on the date hereof are free and clear of all liens, claims, encumbrances and rights of others. (b) Each Member hereby represents and warrants to the LLC and each other Member and acknowledges that (i) he or it has such knowledge and experience in financial and business matters that he or it is capable of evaluating the merits and risks of an investment in the LLC and making an informed investment decision with respect thereto; (ii) he or it is able to bear the economic and financial risk of an investment in the LLC for an indefinite period of time; (iii) he or it is acquiring an interest in the LLC for investment only and not with a view to, or for resale in connection with, any distribution to the public; (iv) the LLC Interests have not been registered under the securities laws of any jurisdiction and cannot be disposed of unless they are subsequently registered and/or qualified under applicable securities laws or exempt therefrom and the provisions of this Agreement have been complied with; (v) that, with respect to WTI, Roxbury, and each of the Founding Principals, he or it is an "accredited investor" within the meaning of Rule 501(a) of Regulation D; and (vi) the execution, delivery and performance of this Agreement by him or it do not require him or it to obtain any consent or approval that has not been obtained and do not contravene or result in a default under any provision of any existing law or regulation applicable to him or it, or any agreement or instrument to which he or it is a party or by which he or it is bound. 38 14 MISCELLANEOUS 14.1 Amendments. Subject to Section 5.11 hereof and the next succeeding sentence of this Section 14.1, any amendment to this Agreement shall be adopted and be effective as an amendment hereto if it is approved by both (a) Common Members holding at least 80% of the outstanding Common Membership Points and (b) Preferred Members holding a majority of the outstanding Preferred Membership Points. Notwithstanding the foregoing, the Board may amend this Agreement, without the vote or approval of the Members, to (i) reflect a change in the name of the LLC, (ii) cure any ambiguity or correct or supplement any provision hereof that may be inconsistent with any other provision hereof, or to correct any printing, stenographic or clerical errors or omissions and (iii) amend or restate the Certificate. 14.2 Notices. (a) All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be sent as provided below: (i) If to WTI, Wilmington or WTC, to: Rodney Square North 1100 North Market Street Wilmington, DE 19890 Attention: Matthew J. Lynch, Jr., Esq. (ii) If to Roxbury or a Principal, to: 100 Wilshire Boulevard, Suite 600 Santa Monica, California 90401 (b) All notices and other communications required or permitted under this Agreement which are addressed as provided in this Section 14.2, (i) shall be effective upon delivery if delivered personally against proper receipt and (ii) shall be effective upon delivery if sent (A) by certified or registered mail with postage prepaid or (B) by Federal Express or similar courier service with courier fees paid by the sender. The parties hereto may from time to time change their respective addresses for the purposes of notices to that party by a similar notice specifying a new address, but no such change shall be deemed to have been given unless it has been sent and received as provided in this Section 14.2. 14.3 Waivers. Any waiver of any term or condition or of the breach of any covenant, representation or warranty of this Agreement in any one instance shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of such term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty, nor shall any failure or delay at any time or times to enforce or require 39 performance of any provision hereof operate as a waiver of or affect in any manner such party's right at a later time to enforce or require performance of such provision or of any other provision hereof; provided, however, that no such waiver, unless, by its own terms, it explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provision being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance. 14.4 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their heirs, legal representatives, successors and assigns. 14.5 Severability. If any provision of this Agreement shall be held by any court of competent jurisdiction or an Arbitrator to be illegal, invalid, or unenforceable, such provision shall be construed and enforced as if it had been more narrowly drawn so as not to be illegal, invalid or unenforceable, and such illegality, invalidity or unenforceability shall have no effect upon and shall not impair the enforceability of any other provision of this Agreement. 14.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 14.7 Governing Law; Arbitration. This Agreement and the rights of the parties hereunder shall be interpreted in accordance with the laws of the State of Delaware, and all rights and remedies shall be governed by such laws without regard to principles of conflict of laws. All disputes arising out of or relating to this Agreement and the matters covered herein shall be decided by arbitration pursuant to the applicable J.A.M.S./Endispute Comprehensive Arbitration Rules and Procedures in effect at the time. Among the disputes that must be submitted to arbitration are those concerning the interpretation, enforcement or alleged breach of this Agreement, as well as those based on state and/or federal law. The arbitration shall be held in Los Angeles, California and the laws of the State of Delaware shall be applied without effect given to that State's choice of law rules. The decision of the Arbitrator shall be final and binding on all parties. The prevailing party shall be entitled to recover all provable damages, consequential or otherwise, in addition to all other remedies as may be available under this Agreement, at law or in equity. The parties agree that injunctive or other equitable relief preventing any breach or otherwise enforcing this Agreement may be ordered by the Arbitrator to the fullest extent permitted by applicable law. Notwithstanding the foregoing, for emergency equitable relief (including temporary and preliminary injunctive relief), any party may petition a state or federal court of competent jurisdiction. 14.8 Captions. The captions in this Agreement are for convenience only and shall not affect the construction or interpretation of any term or provision hereof. 14.9 Gender. Whenever used herein, the singular number shall include the plural, the plural shall include the singular, unless the context otherwise requires, and the use of any gender shall include all genders. 40 14.10 Third Party Beneficiaries. No Person who is not a party to this Agreement shall be entitled to any rights or benefits under this Agreement. 14.11 Failure to Pursue Remedies. The failure of any party to seek redress for violation of, or to insist upon strict performance of, any provision of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation. 14.12 Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. 14.13 Integration. This Agreement (as it may from time to time be amended) constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above stated. ROXBURY CAPITAL MANAGEMENT By: /s/ Anthony H. Browne ---------------------------------- Anthony H. Browne, Senior Managing Director WT INVESTMENTS, INC. By: /s/ David R. Gibson ---------------------------------- David R. Gibson, Senior Vice President WILMINGTON TRUST CORPORATION By: /s/ David R. Gibson ---------------------------------- David R. Gibson, Senior Vice President /s/ Anthony H. Browne ---------------------------------------- Anthony H. Browne /s/ Harry B. Wilson ---------------------------------------- Harry B. Wilson /s/ Kevin P. Riley ---------------------------------------- Kevin P. Riley 41 EX-10.48 6 w84365exv10w48.txt FIRST AMENDMENT TO AGREEMENT WITH ROXBURY CAPITAL CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] FIRST AMENDMENT TO THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ROXBURY CAPITAL MANAGEMENT, LLC EXHIBIT 10.48 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] FIRST AMENDMENT TO THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ROXBURY CAPITAL MANAGEMENT, LLC WHEREAS, an Amended and Restated Limited Liability Company Agreement (the "Agreement") was made as of July 31, 1998 by and among Roxbury Capital Management (Roxbury), WT Investments, Inc. (WTI), the Principals (as defined in the Agreement) and Wilmington Trust Corporation (Wilmington) to govern the operation of Roxbury Capital Management, LLC (the "LLC"); WHEREAS, the Members of the LLC desire to amend the Agreement pursuant to Section 14.1 of the Agreement; NOW, THEREFORE, in consideration of the agreements and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members of the LLC, intending to be legally bound, hereby agree to amend the Agreement as follows: 1. Each capitalized term used, but not defined, in this First Amendment shall have the meaning assigned to it in the Agreement. 2. Section 1.72 of the Agreement is amended as follows: 1.72 "Revenues" means the gross receipts of the LLC from whatever source, including without limitation gross receipts from the sale of assets; provided, however, that Revenues shall not include gross receipts from the sale of all or substantially all of the LLC's assets or the deemed sale of the LLC's assets in connection with the liquidation of the LLC AND SHALL NOT INCLUDE WILMINGTON FUND REVENUE. 3. Section 1 of the Agreement is amended by adding a new Section 1.92 as follows: 1.92 "WILMINGTON FUND REVENUE" MEANS, AFTER 1999, THE LESSER OF $[*], OR ANY ADVISORY FEES, MINUS ANY ADVISORY FEE WAIVERS, EARNED BY THE LLC PURSUANT TO AN INVESTMENT ADVISORY AGREEMENT WITH THE WILMINGTON LARGE CAP GROWTH PORTFOLIO FOR MANAGEMENT OF ASSETS HELD IN THAT MUTUAL FUND. IN 1999 WILMINGTON FUND REVENUE SHALL BE $[*]. 4. Section 6.3(a) of the Agreement is amended as follows: 6.3 Distributions. (a) Except as provided in Section 6.3(f), within 90 days after the end of each Fiscal Year, the Board shall cause to be distributed: * CONFIDENTIAL TREATMENT REQUESTED (i) first, to the Preferred Members in proportion to their respective number of Preferred Membership Points, (A) [ * ]% of all Revenues of the LLC for that Fiscal Year ("Preferred Member Revenue Share") PLUS (B) WILMINGTON FUND REVENUE less (C) the Excess Cash Flow Split for such Fiscal Year. (ii) second, the "Excess Cash Flow Split" shall be paid to the Common Members in proportion to their respective number of Common Membership Points beginning with distributions with respect to Fiscal Year 1999. A) For the Fiscal Years 1999, 2000, 2001 and 2002, multiply annual Advisory Fee revenue in 1998 by [ * ] ("Hurdle Rate") taken to the "N"th power, where "N" is 1 with respect to Fiscal Year 1999, "N" is 2 with respect to Fiscal Year 2000, "N" is 3 with respect to Fiscal Year 2001 and "N" is 4 with respect to Fiscal Year 2002. Annual Advisory Fee revenue in 1998 shall be all 1998 advisory fee revenue earned by Roxbury plus all 1998 Advisory Fee revenue earned by the LLC. With respect to Fiscal Years 2003 and thereafter, the Excess Cash Flow Split shall be computed by multiplying the Advisory Fee revenue (EXCLUDING ANY WILMINGTON FUND REVENUE) for the fifth prior Fiscal Year (for example, with respect to Fiscal Year 2003, use Advisory Fee revenue for Fiscal Year 1998) by [ * ] (which is [ * ]). An amount computed hereunder is "Assumed Fee Income" for such Fiscal Year. B) Subtract the Assumed Fee Income for such Fiscal Year from the actual Advisory Fee revenue for such Fiscal Year, EXCLUDING ANY WILMINGTON FUND REVENUE. C) If the calculation in B) produces a positive number, multiply that difference by [ * ]. The product of this multiplication is the Excess Cash Flow Split. (See examples in Exhibit B.) (iii) third, Fee Cash Flow shall be paid to the Common Members in proportion to their respective number of Common Membership Points for such Fiscal Year. 5. Section 7.1(d) of the Agreement is amended to read as follows: (b) Until December 31, 2003, Roxbury may grant options on LLC Interests it owns to employees of the LLC in Roxbury's sole and absolute discretion pursuant to a written Option Agreement if: (i) the aggregate exercise price to purchase the LLC Interests subject to the option is not less than the proportionate share of LLC Value represented by such LLC Interests determined on the date of the grant using a multiple of [ * ] in determining LLC Value; (ii) not more than one-third of the option shall vest before the end of the first year after grant, not more than two-thirds of the option shall vest before the end of the second year after grant, and not more than 100% of the option shall vest before the end of the third year after grant; (III) the option holder executes an employment contract in a form acceptable to the LLC at the time of, or prior to, the execution of the Option Agreement; (IV) the option holder exercising the option must * CONFIDENTIAL TREATMENT REQUESTED 2 sign this Agreement as a condition of exercise; and (V) the optionee makes representations and warranties to the LLC comparable to those contained in Section 13.5 on the date of grant of the option and on the date of each exercise thereof. 6. Schedule I of the Agreement is hereby amended and replaced with the Schedule I attached hereto. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above stated. ROXBURY CAPITAL MANAGEMENT By: /s/ Anthony H. Browne -------------------------------------- Anthony H. Browne, Senior Managing Director WT INVESTMENTS, INC. By: /s/ David R. Gibson -------------------------------------- David R. Gibson, Senior Vice President /s/ Anthony H. Browne ------------------------------------------- Anthony H. Browne /s/ Harry B. Wilson ------------------------------------------- Harry B. Wilson /s/ Kevin P. Riley ------------------------------------------- Kevin P. Riley 3 EX-10.50 7 w84365exv10w50.txt THIRD AMENDMENT TO AGREEMENT WITH ROXBURY CAPITAL CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] THIRD AMENDMENT TO THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ROXBURY CAPITAL MANAGEMENT, LLC EXHIBIT 10.50 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] THIRD AMENDMENT TO THE AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ROXBURY CAPITAL MANAGEMENT, LLC WHEREAS, an Amended and Restated Limited Liability Company Agreement (the "Agreement") was made as of July 31, 1998, by and among Roxbury Capital Management ("Roxbury"), WT Investments, Inc. ("WTI"), the Principals (as defined in the Agreement) and Wilmington Trust Corporation ("Wilmington") to govern the operation of Roxbury Capital Management, LLC (the "LLC"); WHEREAS, a First Amendment to the Agreement was made as of July 31, 1998, among Roxbury, WTI, the Principals and Wilmington; WHEREAS, a Second Amendment to the Agreement was made as of March 10, 2001, among Roxbury, WTI, the Principals, and Wilmington; and WHEREAS, the Members of the LLC now desire to amend further the Agreement pursuant to Section 14.1 of the Agreement. NOW, THEREFORE, in consideration of the agreements and obligations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Members of the LLC, intending to be legally bound, hereby agree to amend the Agreement as follows: 1. Each capitalized term used, but not defined, in this Third Amendment shall have the meaning assigned to it in the Agreement. 2. Each of the following terms used in Article I of the Agreement is hereby amended and restated in its entirety as set forth below: Section 1.5 "Advisory Fees" means the fees for investment advisory, sub-advisory, investment management, or administration services payable to the LLC pursuant to written agreements with Clients, with the following adjustments: (a) Advisory Fees shall exclude the Oregon Fees, and (b) Advisory Fees shall include [ * ] percent ([ * ]%) of the Oregon Surplus FCF, as defined in Section 15.1(m). Section 1.72 "Revenue" means the gross receipts of the LLC from whatever source, including without limitation gross receipts from the sales of assets; provided, however, that Revenues shall not include (A) gross receipts from the sales of all or substantially all of the LLC's assets or the deemed sales of the LLC's assets in connection with the liquidation of the LLC, (B) any Wilmington Fund Revenue, or (C) any Oregon Manager FCF, as defined in Section 15.1(j). * CONFIDENTIAL TREATMENT REQUESTED 1 3. The Agreement is hereby amended by adding the following as new Article 15 of the Agreement: 15 Class B Membership Interests 15.1 Defined Terms. Notwithstanding anything to the contrary in Article 1, the terms defined in this Section 15.1 shall, for the purposes of this Article 15, have the meanings herein specified. (a) "B Put Price" means an amount equal to [ * ] ([ * ]) multiplied by an amount equal to the Oregon Manager FCF multiplied by a fraction, the numerator of which is the number of Class B Membership Points to be sold by such Class B Member at such time, and the denominator of which is the total number of Class B Membership Points then outstanding. (b) "Break Even Point" means such date on which the Oregon Recoupment FCF equals the LLC Funded Startup Costs. (c) "Class B Member" means the Oregon Managing Members, and any other Person subsequently admitted to the LLC as a Class B Member. (d) "Class B Membership Interest" means an interest in the LLC held by a Class B Member. A Class B Membership Interest confers on its holders only the specific rights provided for in this Article 15. For purposes of applying the provisions of the Agreement, Class B Members shall not be treated as Members, Principals, or holders of Membership Points, except as specifically provided in this Article 15. Without limiting the generality of the foregoing, no Class B Member (i) shall have any voting rights of any kind under this Agreement, (ii) shall have any rights to any distributions or allocations under Article 6, or (iii) shall be counted for any purpose in respect of any provision relating to any change of control. (e) "Class B Membership Points" means those Membership Points representing Class B Membership Interests owned by Class B Members. (f) "LLC Funded Startup Costs" means an amount equal to the cumulative net costs and expenses of the LLC in connection with the establishment and operation of the Oregon division. (g) "Oregon Commission" means (i) [ * ] percent ([ * ]%) of the Oregon Fees if assets under management of the Oregon division (the "AUM") are equal to or less than $[ * ] billion at the close of the applicable Fiscal Year, or (ii) [ * ] percent ([ * ]%) of the Oregon Fees if AUM are greater than $[ * ] billion but equal to or less than $[ * ] billion at the close of the applicable Fiscal Year, or (iii) [ * ] percent ([ * ]%) of the Oregon Fees if AUM are greater than $[ * ] billion but less than or equal to $[ * ] billion at the close of the * CONFIDENTIAL TREATMENT REQUESTED 2 applicable Fiscal Year, or (iv) [ * ] percent ([ * ]%) of the Oregon Fees if AUM are greater than $[ * ] billion at the close of the applicable Fiscal Year. (h) "Oregon FCF" means, for any accounting period, the Oregon Gross Revenue less (A) all direct expenses of the operations of the LLC's Oregon division, including without limitation, all salaries, benefits, and related expenses of employees managed by the LLC's Oregon division, (B) interest calculated at the rate of ten percent (10%) per annum on the theretofore unrecouped LLC Funded Startup Costs, (C) all commissions paid with respect to accounts or assets managed by the Oregon division, which is an amount which is agreed to be the Oregon Commissions, and (D) the Oregon General Overhead Allocation. (i) "Oregon Fees" means the fees for investment advisory, sub-advisory, investment management, or administration services payable with respect to assets under management of the LLC's Oregon division. (j) "Oregon General Overhead Allocation" means the general overhead and other indirect expenses of the LLC allocable to the operation of the LLC's Oregon division, in an amount which is agreed to be $[ * ] plus an amount equal to [ * ] percent ([ * ]%) of the Oregon Gross Revenue for the applicable period; provided, however, that such amount shall in no event exceed $[ * ], unless the LLC's annual expense for wrap accounts exceeds $200 per wrap account, in which event the Oregon General Overhead Allocation shall be increased by an amount equal to the number of wrap accounts then under management of the LLC's Oregon division multiplied by the amount by which the LLC's annual expense per wrap account exceeds $200. 9 (k) "Oregon Gross Revenue" means, for any accounting period, the Oregon Fees and any other gross receipts from operations of the LLC's Oregon division (without deduction for any amounts payable to WTI, WTC, or Wilmington pursuant to Section 6.3(a)(i) of this Agreement). (l) "Oregon Manager FCF" means fifty percent (50%) of the Oregon Surplus FCF. (m) "Oregon Managing Members" means Steven N. Marshman, Robert Marvin, and Brian Smoluch. (n) "Oregon Recoupment FCF" means one hundred percent (100%) of the Oregon FCF up to an amount equal to the LLC Funded Startup Costs. (o) "Oregon Surplus FCF" means one hundred percent (100%) of the Oregon FCF which exceeds the Oregon Recoupment FCF. (p) "Outside Termination Date" shall have the meaning given in Section 7.3 of Exhibit A to the Employment Agreement of the applicable Oregon Member. * CONFIDENTIAL TREATMENT REQUESTED 3 (q) "Put Window" means the month of March of each Fiscal Year following the Break Even Point. 15.2 Distributions; Allocations; Proration. (a) Notwithstanding anything in this Agreement to the contrary, no portion of any Oregon Gross Revenue shall be included in the determination of the Preferred Member Revenue Share pursuant to Section 6.3(a)(i)(A) of this Agreement. (b) The LLC's outside accountants (the "LLC Accountants") shall determine the Oregon FCF for each calendar year, and the Company shall notify the Class B Members of any such determinations on or prior to February 28 following the applicable Fiscal Year. (c) In the event that all Class B Members disagree with the calculation of Oregon FCF determined by the LLC Accountants, the Class B Members may elect, by written notice delivered to the LLC within 15 days after receipt of the LLC's calculation of Oregon FCF, to engage independent accountants ("Class B Accountants") at the Class B Members' expense, to review the LLC's calculation. The LLC shall cooperate, and shall instruct the LLC Accountants to cooperate, with the Class B Accountants, and shall make available to the Class B Accountants the LLC's relevant work papers used in the calculation of Oregon FCF. The Class B Members shall deliver the Class B Accountant's calculation of Oregon FCF to the LLC within 60 days of the delivery of the LLC's calculation of Oregon FCF. If, within 30 days after the Class B Members' delivery of the Class B Accountant's calculation of Oregon FCF, the LLC and the Class B Members have not reached an agreement as to the Oregon FCF for such preceding Fiscal Year, the LLC and the Class B Members shall engage a third, unaffiliated independent accounting firm ("Independent Accountants") to calculate the Oregon FCF. The decision of the Independent Accountants shall be final and binding. The LLC and the Class B Members shall share the costs and expenses associated with the engagement of the Independent Accountants. If the Independent Accounts determine that the Oregon FCF is more than 105% of the determination of the LLC Accountants, then the LLC shall be responsible for the costs of the Independent Accountants, and shall reimburse the Class B Members for the reasonable costs of the Class B Accountants. (d) Within 10 business days after the end of each calendar quarter, the Board shall cause to be distributed to the Class B Members, pro rata in accordance with their respective holdings of outstanding Class B Membership Points, not less than forty percent (40%) of the estimated undistributed Oregon Manager FCF (if any) applicable to such quarter of each Fiscal Year. (e) Within 75 days after the end of each Fiscal Year, the Board shall cause to be distributed to the Class B Members, pro rata in accordance with their respective holdings of outstanding Class B Membership Points, the theretofore undistributed portion of Oregon Manager FCF (if any) applicable to such Fiscal Year. If the distributions to Class B Members during any Fiscal Year exceed the Oregon Member 4 FCF applicable to such Fiscal Year, then the Class B Members shall return any such excess to the LLC within 75 days after the end of such Fiscal Year. (f) The LLC shall not make any distributions to the Class B Members that violate Section 18-607 of the Delaware Act or other applicable law. (g) There shall be allocated to the Class B Members, pro rata with respect to their holdings of Class B Membership Points, profits equal to the Oregon Manager FCF. No other profits or losses shall be allocated to the Class B Members. All other profits and losses of the LLC, including the other fifty percent (50%) of the Oregon Surplus FCF, shall be allocated as otherwise provided in Sections 6.3 and 6.4 of this Agreement. (h) Section 6.7 of this Agreement shall apply to the Class B Members and their respective Class B Membership Points on the same terms as set forth in respect of the Common Members and their respective Common Membership Points. 15.3 Put Right. At any time and from time to time during each Put Window, each Class B Member shall have the right to sell to Wilmington, and Wilmington shall have the obligation to purchase, for the B Put Price (payable to such Class B Member within 15 days after the end of the applicable Put Window, such amount to accrue simple interest at the prime rate if unpaid at the end of such 15-day period until such amount is paid) a portion of the Class B Membership Points then held by such Class B Member; provided, however, that no Class B Member shall sell pursuant to this Section 15.3 more than fifty percent (50%) of the aggregate Class B Membership Points issued initially to such Class B Member. Notwithstanding the foregoing, if the total number of Class B Membership Points elected to be sold during any Put Window pursuant to this Section 15.3 by all Class B Members (the "Total Class B Election") exceeds twenty-five percent (25%) of the aggregate number of Class B Membership Points issued initially to all Class B Members (the "Yearly Limit"), then each Class B Member may sell pursuant to this Section 15.3 that number of his Class B Membership Points equal to the Yearly Limit multiplied by a fraction, the numerator of which is the number of Class B Membership Points elected to be sold by such Class B Member, and the denominator of which is the Total Class B Election during such Put Window. 15.4 Transfer. Class B Members shall be permitted to make Transfers of Class B Membership Interests as provided in Section 7.1(b) of the Agreement. 15.5 Reorganization. If at any time or from time to time there shall be a reorganization or other change in the business structure of the LLC, including without limitation a conversion to a subchapter "C" corporation (a "Structure Change") approved by the Board, then each Class B Member shall exchange such Class B Member's Class B Membership Interest for the applicable interest in the resulting entity (the "Exchange Interest") as determined by the Board; provided, however, that any such Exchange Interest shall have economic rights and characteristics substantially equivalent to the applicable Class B Membership Interest (including with respect to distributions of Oregon Manager FCF and sales of Class B Membership Interests). 5 15.6 Sale on Termination. (a) If (i) the LLC terminates the employment of any Class B Member (x) without Cause, (y) pursuant to either Sections 5.1(e) or 5.1(f) of such Class B Member's Employment Agreement, or (z) pursuant to the LLC's election not to renew the Term in accordance with Section 1 of such Class B Member's Employment Agreement, or (ii) such Class B Member terminates his employment with the LLC (x) for Good Reason, (y) such employment terminates by reason of such Class B Member's death or Disability, or, (z) pursuant to and in accordance with Section 7.3 of Exhibit A to such Class B Member's Employment Agreement if such employment is terminated by such Class B Member, with at least six months prior written notice, and with such termination to be effective not earlier than the Outside Termination Date, or (iii) the LLC sells all or substantially all of its assets or is deemed to have sold all of its assets in a liquidation, then such Class B Member (or his successors or legal representatives, as applicable) shall sell, and Wilmington shall purchase, all of such Class B Member's Class B Membership Points for a purchase (payable to such Class B Member within 15 days after any such event occurs, such amount to accrue simple interest at the prime rate if unpaid at the end of such 15-day period until such amount is paid) price equal to [ * ] multiplied by the Oregon Manager FCF for the twelve full calendar months immediately preceding the effective date of such termination, or the closing of such sale or deemed sale (as the case may be), multiplied by a fraction, the numerator of which is the total number of Class B Membership Points then owned by such Class B Member, and the denominator of which is the total number of Class B Membership Points then outstanding. (b) If (i) the LLC terminates the employment of any Class B Member for Cause, or if (ii) such employment is terminated by such Class B Member (x) without Good Reason, or (y) pursuant to such Class B Member's election not to renew the Term in accordance with Section 1 of such Class B Member's Employment Agreement prior to the Outside Termination Date, then such Class B Member shall sell, and Wilmington shall purchase, all of such Class B Member's Class B Membership Points for a purchase price (payable to such Class B Member within 15 days after any such event occurs, such amount to accrue simple interest at the prime rate if unpaid at the end of such 15-day period until such amount is paid) equal to [ * ] multiplied by the Oregon Manager FCF for the twelve full calendar months immediately preceding the effective date of such termination multiplied by a fraction, the numerator of which is the total number of Class B Membership Points then owned by such Class B Members, and the denominator of which is the total number of Class B Membership Points then outstanding. (c) As used in this Section 15.6, the terms "Cause", "Good Reason", "Term", and "Disability", shall all have the meanings set forth in the applicable Employment Agreement between any Class B Member and the LLC (the "Employment Agreement"). Any and all determinations concerning any such termination of employment of a Class B Member shall be made pursuant to such applicable Employment Agreement. * CONFIDENTIAL TREATMENT REQUESTED 6 15.7 Execution of Agreement; Representations and Warranties. (a) The execution of the Third Amendment to this Agreement by Class B Members shall constitute the execution of such Class B Member of this Agreement, and shall evidence such Class B Member's agreement to be bound by the applicable terms and conditions of this Agreement. (b) Each Class B Member represents and warrants as follows: (i) such Class B Member has such knowledge and experience in financial and business matters that he or it is capable of evaluating the merits and risks of an investment in the LLC and making an informed investment decision with respect thereto; (ii) such Class B Member is able to bear the economic and financial risk of an investment in the LLC for an indefinite period of time; (iii) such Class B Member is acquiring an interest in the LLC for investment only and not with a view to, or for resale in connection with, any distribution to the public; (iv) the Class B Membership Interests have not been registered under the securities laws of any jurisdiction and cannot be disposed of unless they are subsequently registered and/or qualified under applicable securities laws or exempt therefrom and the provisions of this Agreement have been complied with; (v) such Class B Member is an "accredited investor" within the meaning of Rule 501(a) of Regulation D; and (vi) the execution, delivery and performance of this Agreement by such Class B Member do not require such Class B Member to obtain any consent or approval that has not been obtained and do not contravene or result in a default under any provision of any existing law or regulation applicable to him or it, or any agreement or instrument to which such Class B Member is a party or by which such Class B Member is bound. 15.8 Amendments. Without limiting the applicability of Section 14.1 of the Agreement, any amendment to this Article 15 shall require the consent of at least fifty percent (50%) of the then outstanding Class B Membership Points. 4. Schedule I of the Agreement is hereby amended and replaced with the Schedule I attached hereto. 7 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of June __, 2002. ROXBURY CAPITAL MANAGEMENT By: /s/ Anthony H. Browne ---------------------------- Anthony H. Browne, Senior Managing Director WT INVESTMENTS, INC. By: /s/ David R. Gibson --------------------------- David R. Gibson, Senior Vice President /s/ Anthony H. Browne ------------------------------- Anthony H. Browne /s/ Brian Massey ------------------------------- Brian Massey /s/ Brian Beh ------------------------------- Brian Beh /s/ Kathryn Hayden ------------------------------- Kathryn Hayden /s/ David Kahn ------------------------------- David Kahn /s/ Phyllis Nelson ------------------------------- Phyllis Nelson /s/ Edward Shipe ------------------------------- Edward Shipe 8 WILMINGTON TRUST CORPORATION, a Delaware corporation By: --------------------------- Name: ------------------------- Title: ------------------------ /s/ Steven N. Marshman ------------------------------- Steven N. Marshman /s/ Robert Marvin ------------------------------- Robert Marvin /s/ Brian Smoluch ------------------------------- Brian Smoluch 9 Additional Signature Page to Second Amendment to Limited Liability Company Agreement of Roxbury Capital Management, LLC THE BROWNE FAMILY 1999 IRREVOCABLE TRUST By: /s/ Christopher Howard Browne ------------------------------- Christopher Howard Browne, Trustee 10 EX-10.51 8 w84365exv10w51.txt MERGER AGREEMENT AMONG BALLENTINE HOLDINGS, INC. CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] MERGER AGREEMENT AMONG BALENTINE HOLDINGS, INC., ROBERT M. BALENTINE, B. CLAYTON ROLADER, JEFFREY P. ADAMS, ROBERT E. REISER, JR., GARY B. MARTIN, WESLEY A. FRENCH, MICHAEL E. WOLF, THE 1999 BALENTINE FAMILY TRUST, THE ROBERT M. BALENTINE INSURANCE TRUST, WTC MERGER SUBSIDIARY, INC., WT INVESTMENTS, INC. AND WILMINGTON TRUST CORPORATION EXHIBIT 10.51 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] MERGER AGREEMENT AMONG BALENTINE HOLDINGS, INC., ROBERT M. BALENTINE, B. CLAYTON ROLADER, JEFFREY P. ADAMS, ROBERT E. REISER, JR., GARY B. MARTIN, WESLEY A. FRENCH, MICHAEL E. WOLF, THE 1999 BALENTINE FAMILY TRUST, THE ROBERT M. BALENTINE INSURANCE TRUST, WTC MERGER SUBSIDIARY, INC., WT INVESTMENTS, INC. AND WILMINGTON TRUST CORPORATION Dated as of October 23, 2001 TABLE OF CONTENTS
Page ---- BACKGROUND..................................................................................................... 1 ARTICLE 1 DEFINITIONS......................................................................................... 2 ARTICLE 2 THE MERGER.......................................................................................... 9 Section 2.1 The Merger......................................................................... 9 Section 2.2 Effective Time..................................................................... 9 Section 2.3 Closing............................................................................ 9 Section 2.4 Contribution....................................................................... 9 Section 2.5 Execution of LLC Agreement......................................................... 9 Section 2.6 Final Closing Balance Sheet........................................................ 9 ARTICLE 3 CONSIDERATION; EXCHANGE............................................................................. 10 Section 3.1 Merger Consideration............................................................... 10 Section 3.2 Rights as Stockholders; Stock Transfers............................................ 12 Section 3.3 Fractional Shares.................................................................. 12 Section 3.4 Exchange Procedure................................................................. 12 Section 3.5 Adjustments........................................................................ 13 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BALENTINE AND THE PRINCIPALS TO MERGER SUBSIDIARY, WTI AND WTC.... 13 PRINCIPALS TO MERGER SUBSIDIARY, WTI AND WTC................................................................... 13 Section 4.1 Organization....................................................................... 13 Section 4.2 Authority.......................................................................... 13 Section 4.3 Governmental Filings; Non-Contravention............................................ 14 Section 4.4 Capitalization..................................................................... 14 Section 4.5 Subsidiaries and Other Relationships............................................... 15 Section 4.6 Business........................................................................... 15 Section 4.7 Assets............................................................................. 15 Section 4.8 Managed Assets..................................................................... 16 Section 4.9 Receivables........................................................................ 16 Section 4.10 Contracts.......................................................................... 16 Section 4.11 Employment Arrangements............................................................ 17 Section 4.12 Financial Statements............................................................... 17 Section 4.13 Material Adverse Change............................................................ 17 Section 4.14 Ordinary Course of Business........................................................ 18
i Section 4.15 Litigation and Compliance with Laws................................................ 18 Section 4.16 Environmental Matters.............................................................. 19 Section 4.17 Broker Dealer...................................................................... 20 Section 4.18 Insurance Policies................................................................. 20 Section 4.19 Tax Matters........................................................................ 20 Section 4.20 Certain Transactions............................................................... 20 Section 4.21 Employee Benefit Plans............................................................. 21 Section 4.22 Brokerage.......................................................................... 22 Section 4.23 Investment Representations......................................................... 22 Section 4.24 Privacy............................................................................ 23 Section 4.25 Investment Limitation.............................................................. 23 Section 4.26 No Known Regulatory Delays......................................................... 23 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARY, WTI AND WTC TO BALENTINE AND THE PRINCIPALS.... 23 Section 5.1 Organization....................................................................... 24 Section 5.2 Authority.......................................................................... 24 Section 5.3 Governmental Filings; Non-Contravention............................................ 24 Section 5.4 Litigation and Compliance with Laws................................................ 25 Section 5.5 Investment Representations......................................................... 25 Section 5.6 Common Stock....................................................................... 26 Section 5.7 SEC Documents...................................................................... 26 Section 5.8 No Known Regulatory Delays......................................................... 27 Section 5.9 Brokerage.......................................................................... 27 ARTICLE 6 COVENANTS OF BALENTINE AND THE PRINCIPALS........................................................... 27 Section 6.1 Client Consent..................................................................... 27 Section 6.2 Conduct of Business................................................................ 27 Section 6.3 Preservation of Business and Assets................................................ 28 Section 6.4 Standstill......................................................................... 29 Section 6.5 Investment Limitation.............................................................. 29 ARTICLE 7 COVENANTS OF WTC.................................................................................... 29 Section 7.1 Securities Filings; NYSE Listing................................................... 29 Section 7.2 Indemnification.................................................................... 29 Section 7.3 WTC Business Benefits.............................................................. 30 ARTICLE 8 COVENANTS OF THE PARTIES............................................................................ 31 Section 8.1 Regulatory Authorizations.......................................................... 31 Section 8.2 Confidentiality.................................................................... 32 Section 8.3 Expenses Incident to this Agreement................................................ 32
-ii- Section 8.4 Access; Information................................................................ 32 Section 8.5 Press Releases..................................................................... 33 ARTICLE 9 CONDITIONS PRECEDENT TO MERGER SUBSIDIARY'S, WTI'S AND WTC'S OBLIGATIONS............................ 33 Section 9.1 No Litigation; No Opposition....................................................... 33 Section 9.2 Representations, Warranties and Covenants of Balentine and the Principals.......... 33 Section 9.3 Consents........................................................................... 34 Section 9.4 Shareholder Approval............................................................... 35 Section 9.5 Other Approvals.................................................................... 35 Section 9.6 Capitalization..................................................................... 35 Section 9.7 Deliveries......................................................................... 35 Section 9.8 Material Adverse Change............................................................ 36 Section 9.9 Liens.............................................................................. 36 Section 9.10 Stockholder Notes.................................................................. 36 Section 9.11 Shareholder Agreement.............................................................. 36 Section 9.12 Investment Adviser Registration.................................................... 37 Section 9.13 Stockholder Note of Nicholas J. Hoffman............................................ 37 Section 9.14 Non-Competition Agreements of Principals........................................... 37 ARTICLE 10 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BALENTINE ENTITIES AND THE PRINCIPALS............... 37 Section 10.1 No Litigation; No Opposition....................................................... 37 Section 10.2 Representations, Warranties and Covenants.......................................... 37 Section 10.3 Deliveries......................................................................... 38 Section 10.4 Consents........................................................................... 38 Section 10.5 Material Adverse Change............................................................ 39 ARTICLE 11 INDEMNIFICATION.................................................................................... 39 Section 11.1 Indemnification by the Principals.................................................. 39 Section 11.2 Indemnification by WTI and WTC..................................................... 39 Section 11.3 Limitation......................................................................... 39 Section 11.4 Defense of Claims.................................................................. 39 Section 11.5 Prompt Payment..................................................................... 41 Section 11.6 Sole Remedy........................................................................ 41 Section 11.7 Certain Reductions; Subrogation.................................................... 41 ARTICLE 12 TERMINATION........................................................................................ 41 Section 12.1 Termination........................................................................ 41 Section 12.2 Effect of Termination.............................................................. 42 ARTICLE 13 MISCELLANEOUS...................................................................................... 42
-iii- Section 13.1 Survival of Representations, Warranties and Covenants.............................. 42 Section 13.2 Waivers............................................................................ 42 Section 13.3 Modifications...................................................................... 43 Section 13.4 Further Assurances................................................................. 43 Section 13.5 Governing Law; Consent to Jurisdiction............................................. 43 Section 13.6 Notices............................................................................ 43 Section 13.7 Assignability...................................................................... 44 Section 13.8 Captions........................................................................... 45 Section 13.9 Number and Gender.................................................................. 45 Section 13.10 Severability....................................................................... 45 Section 13.11 Counterparts....................................................................... 45 Section 13.12 No Third-Party Beneficiaries....................................................... 45 Section 13.13 Remedies for Section 8.2........................................................... 45 Section 13.14 Integration........................................................................ 45 Section 13.15 Principals' Representative......................................................... 46
-iv- THIS MERGER AGREEMENT (the "Agreement") is dated as of October 23, 2001, among Balentine Holdings, Inc., a Georgia corporation ("Balentine"), Robert M. Balentine, B. Clayton Rolader, Jeffrey P. Adams, Robert E. Reiser, Jr., Gary B. Martin, Wesley A. French, Michael E. Wolf, The 1999 Balentine Family Trust, The Robert M. Balentine Insurance Trust (those individuals and trusts are sometimes collectively referred to herein as the "Principals"), WTC Merger Subsidiary, Inc., a Delaware corporation ("Merger Subsidiary"), WT Investments, Inc., a Delaware corporation ("WTI"), and Wilmington Trust Corporation, a Delaware corporation ("WTC"). BACKGROUND A. Balentine owns all of the issued and outstanding shares of capital stock of Balentine & Company, a Georgia corporation ("BC"), all of the limited liability company interests of Balentine General Partner, LLC, a Georgia limited liability company ("GP"), and 47.2% of the limited liability company interests in Balentine & Company of Tennessee, L.L.C. ("BCT") (Balentine, BC, GP and BCT are sometimes collectively referred to herein as the "Balentine Entities"). B. Balentine Delaware Holding Company, LLC, a Delaware limited liability company (the "LLC"), has heretofore been formed as a limited liability company under the Delaware Limited Liability Company Act, 6 Del. C.[sec][sec] 18-101 et seq., as amended from time to time, by filing a Certificate of Formation of the LLC with the Office of the Secretary of State of Delaware on October 18, 2001 (the "LLC Certificate"). C. Immediately before the events described in Recital D below, BC shall be converted into a Georgia limited liability company with an operating agreement in the form of Exhibit (c) hereto. D. Pursuant to a Contribution Agreement in the form of Exhibit (d)(1) Balentine will, immediately before the Merger, contribute all of its assets to the LLC (which will assume all of Balentine's liabilities) (the value of such assets net of such liabilities being $[*] plus five times the appraised value of the 20% profits interest) (the "Initial Capital Contribution"), in exchange for which the LLC will issue a 100% capital interest and 100% profits interest to Balentine, and execute an operating agreement of the LLC in the form of Exhibit (d)(2) hereto ("Original LLC Agreement"). Immediately after the foregoing contribution and before the Merger, Balentine will distribute to the Principals, as its shareholders, an aggregate 20% profits interest in the LLC and partially subordinated capital interest ("Principals' Interest") (collectively valued at the appraised value of the 20% profits interest), retaining the remaining capital interest and an 80% profits interest therein (the "Distribution"), and the Principals and the LLC will execute joinder agreements in the form of Exhibit (d)(3) hereto (the Original LLC Agreement as amended by such joinder agreements being collectively referred to as the "Second LLC Agreement"). E. Merger Subsidiary, a wholly owned subsidiary of WTC, has heretofore been formed as a corporation under the Delaware General Corporation Law, 8 Del. C.[sec][sec]101 et seq., by filing a Certificate of Incorporation of Merger Subsidiary with the Office of the Secretary of State of Delaware on October 17, 2001 (the "Certificate"). * CONFIDENTIAL TREATMENT REQUESTED F. WTI and WTC seek to add a quality "manager of managers" product that can be offered through their existing distribution and client networks. G. WTI and WTC believe they can further their goals by entering into this Agreement and the other agreements referred to herein. H. Subject to the terms and conditions hereof, the parties desire to effect the Merger (as defined below) of Merger Subsidiary with and into Balentine, with Balentine surviving the Merger. I. Immediately following the Merger, WTC will contribute all of the outstanding shares of capital stock of Balentine to WTI. J. The parties intend, and shall each use their respective reasonable best efforts to assure, that, for federal income tax purposes, the Merger will qualify as a reorganization as described in Section 368(a)(2)(E) of the Code (as hereinafter defined) and that each of WTC, Merger Subsidiary and Balentine will be a "party" to that reorganization within the meaning of Section 368(b) of the Code. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings set forth below. a. "Accelerated Run Rate" has the meaning assigned to such term in Section 3.1(c). b. "Accelerated Valuation" has the meaning assigned to such term in Section 3.1(c). c. "Advisers Act" means the Investment Advisers Act of 1940, as amended from time to time. d. "Affiliate" of a Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the first Person. As used in this definition, the term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to (1) vote 25% or more of the outstanding voting securities of a Person or (2) otherwise direct the management policies of a Person by contract or otherwise. e. "Average Closing Price" means the average closing sale prices of the Common Stock, as quoted on the New York Stock Exchange, for the 10 trading day period preceding (i) the Closing in the case of Section 3.1(a)(1), (ii) March 31 of the year specified in Section 3.1(a)(2), (3), -2- (4) or (5), as the case may be, or (iii) the closing of the Change of Control in the case of Section 3.1(c). f. "Bankruptcy Code" means the U.S. Bankruptcy Code, as amended from time to time, and any successor to that code. g. "Base Run Rate" mean[*]. h. "Base Valuation" means the Base Run Rate multiplied by [*] or [*]. i. "BCT Agreement" is the agreement between WTC and the non-Balentine members of BCT ("Non-Balentine Members") with respect to their right to put their limited liability company interests in BCT to WTC in the form of Exhibit 1(i) hereto. j. "Berkshire" has the meaning assigned to such term in Section 4.22. k. "Business Day" means a day Wilmington Trust Company is open for business. l. "Change of Control" means (1) the acquisition by any Person or group of Persons of beneficial ownership (as that term is defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of 25% or more of the outstanding capital stock of WTI or its parent, WTC, entitled to vote for the election of directors ("WTC Voting Shares"); (2) the acquisition by any Person or any group of Persons (other than WTC, WTI or any of their Affiliates) of 50% or more of the Membership Points in the LLC owned by WTC, WTI or any of their Affiliates immediately prior to such acquisition; (3) the merger or consolidation of WTI or WTC with one or more other Persons as a result of which the holders of the outstanding WTC Voting Shares of WTI or WTC, as the case may be, immediately before the merger or consolidation hold less than 50% of the WTC Voting Shares of the surviving or resulting Person; (4) the merger or consolidation of the LLC with one or more other Persons (other than WTI, WTC or one of more of their Affiliates) as a result of which the holders of the outstanding Membership Points immediately before the merger or consolidation hold less than 50% of the total outstanding Membership Points (or equivalent) of the surviving or resulting Person; (5) the transfer of all or substantially all of WTI's, WTC's or the LLC's assets, other than to an Affiliate of WTI or WTC; or (6) a proxy contest for the election of directors of WTC that results in Persons constituting the Board of Directors of WTC immediately before the initiation of that proxy contest ceasing to be a majority of the Board of Directors of WTC upon the conclusion of that proxy contest; provided that neither (x) any transfer of the capital stock or assets of WTI or WTC to, or the merger or consolidation of WTI or WTC with or into, (A) an entity that both prior to and also after that transfer, merger or consolidation had been and will be consolidated with WTI or WTC for federal income tax purposes or (B) any newly-formed, wholly owned subsidiary of WTI or WTC that will be consolidated with WTI or WTC for federal income tax purposes, nor (y) a transfer of LLC Interests by one or more Principals to one or more Permitted Transferees (as defined in the LLC Agreement) shall be deemed to be a Change of Control for purposes hereof. For the avoidance of doubt, the acquisition of 50% of the voting equity of any Affiliate of WTC (other than by WTC, WTI or any of their Affiliates) that has any direct or indirect ownership of the LLC shall be deemed to be an indirect acquisition of the Membership Points (or equivalent) of the LLC. * CONFIDENTIAL TREATMENT REQUESTED -3- m. "Closing" and "Closing Date" have the meanings assigned to such terms in Section 2.3. n. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted hereafter. A reference to a specific section of the Code refers to that section as well as any corresponding provision of any federal tax statute enacted hereafter, as that section is in effect on the date of application of the provisions hereof containing that reference. o. "Common Stock" means WTC's common stock, par value $1 per share. p. "Consent" has the meaning assigned to such term in Section 9.3(a). q. "Contract Value" has the meaning assigned to such term in Section 9.3(b). r. "Effective Time" means the time at which the Merger (as defined in Section 2.1) becomes effective in accordance with Section 2.2. s. "Employee Plan" or "Plan" has the meaning assigned to such term in Section 4.21(d). t. "Employment Agreements" means the employment agreements between the LLC and each Principal (other than The 1999 Balentine Family Trust and The Robert M. Balentine Insurance Trust) substantially in the form of Exhibit 1(t) attached hereto. u. "ERISA" has the meaning assigned to such term in Section 4.21(b). v. "Environmental Laws" has the meaning assigned to such term in Section 4.16(b). w. "Estimated Shares" has the meaning assigned to such term in Section 7.1(b). x. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. y. "Existing Debt" means the existing indebtedness of the Principals to Colonial Bank in the current principal amount of $[*] with the final scheduled installment due April 2008. Such debt was incurred to obtain funds, which were contributed to Balentine for its use to pay for leasehold improvements. z. "Existing Fund" means each of Balentine U.S. Small Cap Equity Fund, L.P., Balentine U.S. Small Cap Equity Fund Select, L.P., Balentine U.S. Mid Cap Equity Fund, L.P., Balentine U.S. Mid Cap Equity Fund Select, L.P., Balentine U.S. Large Cap Equity Fund, L.P., Balentine U.S. Large Cap Equity Fund Select, L.P., Balentine International Equity Fund, L.P., Balentine International Equity Fund Select, L.P., Balentine Hedge Fund, L.P., Balentine Hedge Fund Select, L.P. and Griffin Arbitrage, L.P.; and "Existing Funds" means all of such funds collectively. * CONFIDENTIAL TREATMENT REQUESTED -4- aa. "Final Closing Balance Sheet" has the meaning assigned to such term in Section 2.6. bb. "Financial Statements" has the meaning assigned to such term in Section 4.12(a). cc. "GAAP" means United States generally accepted accounting principles consistently applied with prior periods. dd. "Governmental Authority" means any United States or foreign government, any state or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including, without limitation, the SEC or any other government authority, agency, department, board, commission or instrumentality of the United States or any foreign government or any state or other political subdivision thereof or any state insurance or banking authority, the Board of Governors of the Federal Reserve System, a Federal Reserve Bank, the Federal Deposit Insurance Corporation, the NASD, the NYSE, and any other similar self-regulatory organization, and any court or tribunal of competent jurisdiction. ee. "Immediate Family" means, with respect to any natural person, that person's spouse, parents, grandparents, children, grandchildren and siblings. ff. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder. gg. "Indemnified Party" means a Person entitled to be indemnified under Article 11 hereof. hh. "Indemnifying Party" means a Person obligated to indemnify another Person under Article 11 hereof. ii. "Knowledge" means that which a Person actually knows or should know. "Knowledge of Balentine" shall be the Knowledge of the individual Principals only. jj. "Leased Real Property" has the meaning assigned to such term in Section 4.16. kk. "Licenses" means licenses, franchises, permits and regulatory approvals. ll. "Lien" means a charge, mortgage, pledge, security interest, restriction (other than a restriction on transfer arising under federal or state securities laws (or rules and regulations thereunder) or laws relating to the regulation of brokers, dealers, investment advisers, investment companies, banks, insurance companies and other regulated businesses), lien, or encumbrance of any nature whatsoever. mm. "LLC Agreement" means the Amended and Restated Limited Liability Company Agreement of the LLC in the form of Exhibit 1(mm) attached hereto, which agreement shall amend and restate the Original LLC Agreement and the Second LLC Agreement in their entirety. -5- nn. "LLC Interest" has the meaning assigned to such term in the LLC Agreement. oo. "LLC Value" means the value of the LLC as determined under the LLC Agreement. pp. "Losses" has the meaning assigned to such term in Section 11.1. qq. "Material Adverse Effect" with respect to a Person or Persons means a material adverse effect on the business, assets, or condition (financial or otherwise) of that Person or Persons determined on a consolidated basis with respect to all Subsidiaries of such Person, as the case may be. A Material Adverse Effect with respect to a Person shall include, without limitation, any of the following: (1) impairment of the Person's ability to conduct business in any material respect as it was conducted before the occurrence of the Material Adverse Effect; or (2) a decrease of 10% or more of the Person's annual net revenues or potential net revenues as a result of the occurrence of the Material Adverse Effect. Notwithstanding any of the foregoing provisions, a Material Adverse Effect shall not include the effect of any event, change or occurrence arising out of or attributable to (A) economic conditions in the United States or developed economies or national securities markets in general, (B) regulatory and legal conditions in the United States asset management industry generally, (C) changes in accounting principles applicable to the Person to the extent required by law or GAAP, or (D) with respect to Balentine as the Person, Balentine's obtaining 90% (or more than 90% but less than 100%) of the consents from clients as required by Section 9.3 hereof; provided, however, that a Material Adverse Effect shall include an event, change or occurrence described in clause (A), (B), (C) or (D) only if it adversely affects such Person or Persons to a materially greater extent than other Persons in similar financial and business circumstances. rr. "Member" has the meaning ascribed thereto in the LLC Agreement. ss. "Membership Points" has the meaning assigned to such term in the LLC Agreement. tt. "Merger" has the meaning assigned to such term in Section 2.1. uu. "NASD" means the National Association of Securities Dealers, Inc. and any successor thereto. vv. "New Business Opportunity" has the meaning assigned to such term in the LLC Agreement. ww. "Non-Voting Shares" has the meaning assigned to such term in Section 4.4(a). xx. "NYSE" means The New York Stock Exchange, Inc. and any successor thereto. yy. "Old Certificates" has the meaning assigned to such term in Section 3.4(a). zz. "Party" means Balentine, any Principal, Merger Subsidiary, WTI or WTC and "parties" means all Persons that qualify as a Party. aaa. "PBGC" has the meaning assigned to such term in Section 4.21(e). -6- bbb. "Person" means any individual, partnership, corporation, limited liability company, limited liability partnership, association, trust, joint venture, unincorporated organization and any government, governmental department or agency or political subdivision thereof. ccc. "Principals' Representative" and "Principals' Representative Agreement" have the meanings assigned to such terms in Section 13.15. ddd. "Registration Rights Agreement" means the agreement among WTC and each Principal in the form of Exhibit 1(ddd) hereto. eee. "Registration Statement" has the meaning assigned to such term in Section 7.1(b). fff. "Rights" has the meaning assigned to such term in Section 4.4(a). ggg. "Run Rate" means the LLC's consolidated annual net earnings before interest, taxes, depreciation and amortization, determined for each calendar year in accordance with GAAP and the accounting principles and practices historically used by Balentine in preparing the Financial Statements, provided that (1) in every event only costs directly attributable to the LLC's operations will be included in calculating the Run Rate, (2) expenses of a New Business Opportunity (as approved pursuant to the LLC Agreement) will not be included in calculating the Run Rate until 24 months after expenses are first incurred for that New Business Opportunity, (3) in preparing the LLC's consolidated annual net earnings before interest, taxes, depreciation and amortization for a calendar year, the LLC will be deemed to own its proportionate share of BCT's annual net earnings before interest, taxes, depreciation and amortization for that year based on the LLC's proportionate ownership of BCT during that year calculated as though any outstanding unexercised options or rights to purchase securities of BCT have not been exercised, (4) the LLC's revenues shall exclude any rent (but not expense reimbursements) received pursuant to the second sentence of Section 7.3(c) and (5) extraordinary, non-recurring items of revenue and expense will be excluded. The Run Rate will be calculated by reference to the LLC's financial statements prepared in accordance with GAAP and separately audited by an independent accounting firm selected by the Principals and acceptable to WTI, which acceptance will not be unreasonably withheld, and such other books and records as are sufficient to identify the items in clauses (1) through (5). Such direct costs referred to above do not include the costs of support services generally available from WTC but do include the cost of the benefits described in Section 7.3(b). The costs associated with opening and operating the trust and/or banking office described in Section 7.3(c) will not be included in computing the Run Rate. hhh. "SEC" means the U.S. Securities and Exchange Commission. iii. "SEC Documents" has the meaning assigned to such term in Section 5.7(a). jjj. "Securities Act" means the Securities Act of 1933, as amended from time to time. kkk. "Stockholder Notes" has the meaning assigned to such term in Section 9.10. lll. "Subsidiary" or "Subsidiaries" means any corporation, partnership or other organization, whether incorporated or unincorporated, of which more than twenty-five percent -7- (25%) of either the equity interests in, or the voting control of, that corporation or other organization is beneficially owned by a Person, directly or indirectly, through Subsidiaries or otherwise, or of which a Person serves as the general partner or managing member. mmm. "Surviving Entity" has the meaning assigned to such term in Section 2.1. nnn. "Taxes" has the meaning assigned to such term in Section 4.19. ooo. "Transaction Documents" means this Agreement, the LLC Agreement, the Employment Agreements, the Contribution Agreement, the Registration Rights Agreement, the Original LLC Agreement, the Second LLC Agreement, the Principals' Representative Agreement, the BCT Agreement, and all other agreements, documents, instruments and certificates entered into in connection herewith or therewith and any and all exhibits and schedules appertaining thereto. ppp. "Valuation" means, for determinations for events occurring in calendar years 2001 and 2002, the Base Valuation and, for determinations for events occurring in each calendar year thereafter, the LLC's Run Rate in the last full calendar year preceding the year in which the valuation is used multiplied by a factor determined by reference to the annual compound growth in the Run Rate to the end of the calendar year used to compute the Run Rate calculated from January 1, 2003 and thereafter in accordance with the following schedule:
Annual Compound Growth Multiple - ---------------------- -------- Below [*]% [*] times [*]% [*] times [*]% [*] times [*]% [*] times [*]% [*] times Over [*]% [*] times;
provided, however, that the product of (1) any amount excluded pursuant to clause (5) of Section 1(ggg) for a calendar year and (2) a fraction, the numerator of which is the number of Membership Points held by Balentine at the end of such year and the denominator of which is the total number of Membership Points outstanding at the end of such year, shall be subtracted from the Valuation for that year. Annual compound growth in the Run Rate between [*]% and [*]% shall be interpolated proportionately. The initial value used for the calculation of the compound growth rate that will determine the earn out payment multiple will be the Base Run Rate. The initial computation of the annual compound growth rate for 2002 shall be determined by dividing the Base Run Rate into the Run Rate for calendar year 2002, subtracting one from the result and converting that result into a percentage. For example, if the Base Run Rate were 2000 and the Run Rate for 2002 were 2400, the annual compound growth for 2002 would be 20% and the multiple for 2002 would be [*]. The annual compound growth rate for subsequent years would be determined on a compound basis beginning with calendar year 2003. Attached as Schedule l(ppp) are further examples of computations related to Valuation. * CONFIDENTIAL TREATMENT REQUESTED -8- qqq. "Voting Shares" has the meaning assigned to such term in Section 4.4(a). ARTICLE 2 THE MERGER Section 2.1 The Merger. At the Effective Time, Merger Subsidiary shall merge with and into Balentine in accordance with the terms hereof (the "Merger"), and the separate corporate existence of Merger Subsidiary shall cease. Balentine shall be the surviving entity in the Merger (sometimes referred to hereinafter as the "Surviving Entity") and continue to be governed by Georgia law, and the separate corporate existence of Balentine, with all of its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger. The articles of incorporation and the bylaws of Balentine immediately before the Merger shall be the articles of incorporation and the bylaws of the Surviving Entity Section 2.2 Effective Time. The Merger shall become effective upon the later to occur of the filing, in the offices of the respective Secretaries of State of Delaware and of Georgia, of a certificate or articles of merger in accordance with Delaware and Georgia law, or at such later date and time as may be set forth in those certificates. Section 2.3 Closing. The closing of the Merger (the "Closing") shall take place at the offices of Alston & Bird LLP, One Atlantic Center, 1201 West Peachtree Street, Atlanta, Georgia 30309-3424, at 10:30 a.m., local time, and be effective at the close of business on the closing date, which shall be five Business Days after the fulfillment or waiver of each condition set forth in Articles 9 and 10 hereof (other than the conditions that are fulfilled or waived as a part of the Closing); provided that, if the Closing would occur on or prior to December 31, 2001, the Closing may be delayed by Balentine to January 2, 2002 or such other date or place as Balentine may mutually agree upon, that date being herein referred to as the "Closing Date." The parties shall use their reasonable best efforts to cause the conditions to Closing set forth in Articles 9 and 10 hereof to be satisfied as soon as practicable, and shall cause to be executed at Closing the Transaction Documents by the respective parties to each of such documents. Section 2.4 Contribution. Immediately following the Merger, WTC shall contribute all of the outstanding capital stock of Balentine to WTI. Section 2.5 Execution of LLC Agreement. On the Closing Date and immediately following the contribution and distribution described in Recital C, the LLC Agreement shall be executed and a copy of the LLC Agreement shall be delivered to WTI, Balentine and the Principals. Section 2.6 Final Closing Balance Sheet. Promptly after the Closing, WTI and WTC (in consultation with, and with such assistance as WTI and WTC shall reasonably request of, the Balentine Entities and the Principals) shall prepare an audited consolidated balance sheet and related notes of the Balentine Entities as of the close of business on the Closing Date (the "Final Closing Balance Sheet"), prepared in accordance with GAAP on a basis consistent with the preparation of the Financial Statements under Section 4.12, except that (a) no item shall fail to be -9- included therein or excluded therefrom on the basis of materiality, individually or collectively and (b) at WTI's and WTC's option, the effect of any breaches of the representations and warranties of Balentine and the Principals made herein and discovered by WTI or WTC on or before the date of the Final Closing Balance Sheet shall be fully reserved therein. As soon as practicable following the Closing, the Final Closing Balance Sheet shall be delivered by WTI and WTC to the Principals, accompanied by the report of the auditors thereon. ARTICLE 3 CONSIDERATION; EXCHANGE Section 3.1 Merger Consideration. a. Subject to the terms and conditions hereof and as a part of the Merger, WTC shall issue Common Stock and cash to the Principals, in the manner contemplated by Section 3.1(e), equal to the following amounts in proportion to their respective ownership interests in common stock of Balentine immediately prior to Closing as set forth on Schedule 3.1(a) hereto: (1) At Closing, [*]% times the Base Valuation for 2000; (2) By March 31, 2004, [*]% times the Valuation for 2003; (3) By March 31, 2005, [*]% times the Valuation for 2004; (4) By March 31, 2006, (A) [*]% times the Valuation for 2005 (provided that, and to be paid only if, the Run Rate for 2005 is at least equal to the Base Run Rate), plus (B) [*]% of an amount determined by multiplying (a) the Run Rate multiple used for this payment minus ten and (b) the Base Run Rate; and (5) By March 31, 2007, [*]% of the Base Valuation. b. In addition: (1) At Closing and as a further part of the Merger, WTC shall pay to Colonial Bank on behalf of and for the benefit of the Principals 80% of the principal amount of the Existing Debt, in proportion to their respective ownership of common stock of Balentine immediately prior to Closing as set forth on Schedule 3.1(a) hereto; and (2) Notwithstanding Section 3.1(a) above, the total amount issued, in the manner contemplated by Section 3.1(e), to each of the Principals pursuant to Section 3.1(a)(2) through (5) shall be reduced (A) by the amounts and in the manner set forth in Schedule 3.1(b)(2) attached hereto, and (B) by any amounts that are due and unpaid from such Principal pursuant to the terms of a Stockholder Note. c. In the event of a Change of Control of WTC or the LLC, and provided that some or all of the Principals so elect (which election may be made prior to the effective date of the * CONFIDENTIAL TREATMENT REQUESTED -10- Change of Control), any amounts due and unissued, in the manner contemplated by Section 3.1(e), under Sections 3.1(a)(2), 3.1(a)(3), and 3.1(a)(4)(A) and (B) shall be calculated on the basis of the greater of (i) the Valuation (the "Accelerated Valuation") based on the Run Rate for the full calendar year preceding such Change of Control (the "Accelerated Run Rate") or (ii) the Base Valuation, and such amounts, along with any amount under Section 3.1(a)(5), shall be issued in Common Stock and cash, in the manner contemplated by Section 3.1(e), to the Principals within a period of the later of (A) 30 days following the receipt of such Principals' election or (B) the closing of the transactions giving rise to the Change of Control in the proportions set forth in Schedule 3.1(a) hereto. For example, if a Change of Control of WTC shall occur prior to the issue of Common Stock due under Section 3.1(a)(2), some or all Principals shall, if they so elect, receive in the aggregate an amount equal to the sum of: (1) [*]% times the Accelerated Valuation; (2) [*]% times the Accelerated Valuation; (3) [*]% times the Accelerated Valuation (the amount in this clause (3) to be paid only if the Accelerated Run Rate is at least equal to the Base Run Rate); (4) the amount due under Section 3.1(a)(4)(B), if the Accelerated Run Rate multiple exceeds [*]; and (5) the amount due under Section 3.1(a)(5). If some, but not all, of the Principals make the election contemplated by this Section 3.1(c) and Section 3.1(f) does not apply, then (1) the amounts payable to the Principals who have made such election shall be determined by multiplying (A) the sum of the amount determined in accordance with the preceding paragraph and Section 3.1(d) by (B) a percentage equal to the sum of their respective ownership percentages of Balentine immediately prior to Closing as set forth in Schedule 3.1(a) hereto, and shall be distributed among them in accordance with such respective ownership percentages, and (2) the amounts payable to the Principals who have not made such election shall remain payable at the times they would otherwise be payable and shall be determined by multiplying the amount they would otherwise have received under Section 3.1 by a percentage equal to the sum of their respective ownership percentages of Balentine immediately prior to Closing as set forth on Schedule 3.1(a) hereto, and shall be allocated among them in accordance with such respective ownership percentages. d. Notwithstanding Section 3.1(c) above, the amount to be issued in Common Stock and cash, in the manner contemplated by Section 3.1(e), pursuant to Section 3.1(c) to each of the Principals shall be reduced by (1) the present value of 80% of the interest payments on the Existing Debt in the manner described in Schedule 3.1(b)(2) to the extent such amounts have not already been deducted pursuant to Section 3.1(b)(2) of this Agreement, and (2) by any amounts that are due from such Principal pursuant to the terms of a Stockholder Note that are then unpaid. The present value of the remaining payments will be computed using the interest rate on the Existing Debt. e. 100% (or as close to such amount as is possible and still issue to each Person in whole shares of Common Stock) of each amount contemplated by Sections 3.1(a) and (c) (as adjusted by Section 3.1(d)) shall be made in Common Stock based on the Average Closing Price, and the balance shall be made in cash. The payment contemplated by Section 3.1(b)(1) shall be paid in cash. f. To the extent that any Principals and/or their Permitted Transferees have exercised their right to purchase LLC Interests pursuant to Section 7.5(b) of the LLC Agreement, * CONFIDENTIAL TREATMENT REQUESTED -11- (1) such Principals shall not be entitled to receive any future payments under this Section 3.1, and (2) the amounts otherwise payable to the other Principals under this Section 3.1 shall be determined as though they had elected to receive the accelerated payments pursuant to Section 3.1(c), reduced by the amount in Section 3.1(d), and shall be multiplied by a percentage equal to the sum of their respective ownership percentages of Balentine immediately prior to Closing as set forth in Schedule 3.1(a) hereto, and shall be allocated among them in accordance with such relative ownership percentages. If this Section 3.1(f) applies, then none of the Principals shall have any rights to receive Common Stock and cash under Section 3.1, if any, other than through this Section 3.1(f). g. Notwithstanding anything to the contrary in this Section 3.1, to the extent that some or all of the Principals and/or their Permitted Transferees have exercised their right to put some or all their LLC Interests to Balentine under Section 7.5(a) of the LLC Agreement, (1) the amounts otherwise payable to those Principals under this Section 3.1 shall be determined as though they had elected to receive the accelerated payments pursuant to Section 3.1(c), reduced by the amount in Section 3.1(d) and shall be multiplied by a percentage equal to the sum of their respective ownership percentages of Balentine immediately prior to Closing as set forth in Schedule 3.1(a) hereto, and shall be distributed among them in accordance with such relative ownership percentages, and (2) unless Section 3.1(f) applies, the amounts otherwise payable under this Section 3.1 to those Principals who have not exercised their right to put their LLC Interests to Balentine under Section 7.5(a) of the LLC Agreement shall remain payable at the times they would otherwise be payable and shall be equal to the amount they would have otherwise received under this Section 3.1 multiplied by the sum of their respective ownership percentages of Balentine immediately prior to Closing as set forth in Schedule 3.1(a) hereto, and shall be allocated among them in accordance with such relative ownership percentages. Section 3.2 Rights as Stockholders; Stock Transfers. At the Effective Time, holders of Balentine's stock shall cease to be, and shall have no rights as, stockholders of Balentine, other than the right to receive the consideration provided for in this Article 3, and WTC will own all of Balentine's outstanding shares of capital stock. After the Effective Time, there shall be no transfers on the stock transfer books of Balentine of shares of Balentine's capital stock. Section 3.3 Fractional Shares. Notwithstanding any other provision hereof, no fractional shares of Common Stock and no certificates or scrip therefor, or other evidence of ownership thereof, will be issued in the Merger. Instead, WTC shall pay each Principal who otherwise would be entitled to a fractional share an amount in cash, without interest, determined by multiplying that fraction by the Average Closing Price. Section 3.4 Exchange Procedure. a. At Closing, each Principal shall tender all certificates representing shares of Balentine stock he or it owns (the "Old Certificates") marked "cancelled" or provide such Principal's affidavit as to the status of the Old Certificates and such Principal's personal indemnity to WTC if any of those Old Certificates are lost, stolen or destroyed relative to any damages as a result of such lost, stolen or destroyed Old Certificates. -12- b. At Closing, WTC shall issue and deliver to the Principals certificates of Common Stock in the amounts required by Section 3.1(a)(1) and 3.1(e) in exchange for the Old Certificates and/or the affidavit and indemnity for missing Old Certificates. c. Subsequent to Closing and without further action by the Principals, WTC shall issue and deliver to the Principals the shares of Common Stock in the amounts and at the times indicated in Section 3.1 hereof. It is contemplated that the procedure will be completed before March 31 of each year in which an issue of Common Stock is required hereunder and, except as contemplated in Section 3.1(c), the issue and distribution of Common Stock will occur on March 31. d. No dividend or other distribution on Common Stock with a record date occurring after the date of this Agreement shall be paid to any Principal until he is entitled to receive new certificates in accordance with this Article 3, and no such shares shall be eligible to be voted at any meeting of holders of Common Stock until the Principal is entitled to receive those new certificates in accordance with this Article 3. Section 3.5 Adjustments. The shares of Common Stock to be issued to the Principals hereunder shall be adjusted appropriately to reflect any stock split, stock dividend, combination, merger, recapitalization, exchange of shares or similar transaction with a record date prior to the Effective Date or any other date an issue of Common Stock is due hereunder. ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BALENTINE AND THE PRINCIPALS TO MERGER SUBSIDIARY, WTI AND WTC Balentine and each Principal, jointly and severally, make each of the following representations, warranties and agreements to Merger Subsidiary, WTI and WTC: Section 4.1 Organization. Each Balentine Entity and the LLC is duly organized, validly existing and in good standing under Georgia law in the case of Balentine, BC and GP; Tennessee law in the case of BCT; and Delaware law in the case of the LLC; and each is duly qualified to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties requires that qualification. Balentine has had in effect a valid and effective election under Section 1362(a)(2) of the Code to be an S corporation for each taxable year since its incorporation. Neither Balentine nor the Principals have taken or will take any action prior to the Effective Time to terminate Balentine's S corporation election. For each taxable year that Balentine has had a nonresident shareholder (as defined in O.C.G.A. [sec] 48-7-100(6.2)), Balentine has filed with its Georgia corporate tax return an executed consent agreement required by O.C.G.A. [sec] 48-7-27(d)(2). Section 4.2 Authority. Each of Balentine and BC has all requisite corporate power and authority and each of GP, BCT and the LLC has all requisite power and authority to (a) own its assets and conduct its business as presently carried on and as contemplated by Balentine to be carried on after Closing and (b) execute, deliver and perform this Agreement and each other -13- Transaction Document to which any such Person is a party. This Agreement and each other Transaction Document to be executed, delivered and performed by any of the Balentine Entities, the LLC and the Principals in connection with the transactions contemplated hereby or thereby with respect to that Person has been duly and validly approved by all necessary action of that Person. This Agreement and each other Transaction Document to which any of the Balentine Entities, the LLC or any of the Principals is a party represents or, when executed, will represent, the valid and legally binding obligation of that Person, enforceable against it or him in accordance with its terms, except as may be limited by (x) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer or similar laws now or hereafter relating to creditors' rights generally or (y) general principles of equity, whether asserted in a proceeding in equity or at law. Section 4.3 Governmental Filings; Non-Contravention. Other than the filings and/or notices set forth in Schedule 4.3 (including those (i) under the HSR Act (if WTC notifies Balentine that a filing under such act is required), the Exchange Act and the Securities Act, (ii) required to be made with the NASD, and (iii) required to be made pursuant to state securities laws and regulations), no notices, reports, applications or other filings are required to be made by any of the Balentine Entities, the LLC or the Principals with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by any of them from, any Governmental Authority in connection with the execution and delivery of this Agreement and the other Transaction Documents, and the consummation by each such Person of the Merger and the other transactions contemplated hereby and thereby. Subject to the making or obtaining of all filings, notices, applications, consents, registrations, approvals, permits or authorizations with or of any relevant Government Authority with respect to the Merger, the Transaction Documents and the other transactions contemplated hereby and thereby as set forth on Schedule 4.3, the execution, delivery and performance of this Agreement and each other Transaction Document to be executed, delivered and performed by any of the Balentine Entities, the LLC or any of the Principals in connection with the transactions contemplated hereby and thereby does not and will not: (a) violate any provision of the articles of incorporation or bylaws of Balentine or BC or the limited liability company certificate or limited liability company agreement of GP or BCT; (b) violate, conflict with or result in a default under any material contract or material obligation to which any of the Balentine Entities or any Principal is a party or by which any of that Person's assets are bound; (c) violate or result in a violation of, or constitute a default, in any material respect, under any law, regulation or rule, or any order of or restriction imposed by any court or other Governmental Authority on, any of the Balentine Entities, the LLC and/or any Principal or any of that Person's properties; (d) require any of the Balentine Entities, the LLC and/or any Principal to obtain any approval, consent or waiver of, or make any filing with, any person or entity that has not been obtained or made, except as contemplated or excused by Sections 8.1, 9.3 and 9.4, which approvals, consents, waivers or filings, as applicable, will have been received prior to Closing or at any earlier time required hereunder or under applicable laws, rules and regulations; or (e) result in creation or imposition of any Lien on any of the assets of any of the Balentine Entities or the LLC. Section 4.4 Capitalization. a. The authorized capital stock of Balentine consists of 100,000 shares of voting common stock, no par value per share (the "Voting Shares"), and 1,000,000 shares of non-voting common stock, no par value per share (the "Non-Voting Shares"). As at the date hereof, 10,437 Voting Shares are outstanding, 93,932 Non-Voting Shares are outstanding and all such -14- outstanding shares were and are validly issued, fully paid and nonassessable. Schedule 4.4(a) lists by name, address and number of shares each holder of Voting Shares and Non-Voting Shares. Except as set forth in Schedule 4.4(a)(1) attached hereto, there are no (1) outstanding shares of capital stock or other securities of Balentine, (2) outstanding options, warrants, puts, calls, commitments, agreements, contracts or preemptive or other rights (such items being referred to hereafter as "Rights") to purchase, issue or otherwise acquire any capital stock or other securities of Balentine or (3) obligations or securities convertible into or exchangeable for capital stock or other securities of Balentine. None of such Voting Shares and/or Non-Voting Shares are subject to any Lien. b. After giving effect to the Merger, the LLC Agreement and the contribution contemplated in Section 2.4, the Members and their respective capital account balances and Membership Points in the LLC shall be as set forth in Schedule 4.4(b) hereto. Except as set forth in the Transaction Documents, there are no existing rights, agreements or commitments obligating or that might obligate the LLC or any of its members to issue, transfer, sell or redeem any securities. Section 4.5 Subsidiaries and Other Relationships. Except as set forth in Schedule 4.5, none of any of the Balentine Entities or the LLC: (a) owns, directly or indirectly, any capital stock of or other equity or proprietary interest in any Subsidiary or any other corporation, any such interest in any association, trust, partnership, limited liability company, joint venture or similar entity or in any other entity or enterprise; (b) is an Affiliate of any other entity that is not a Principal; or (c) is a party to any joint venture, profit-sharing or similar agreement regarding the profitability or financial results of any of the Balentine Entities, the LLC or any Principal or the division of revenues or profits of any Balentine Entity, the LLC or any Principal. Except as set forth in Schedule 4.5 or Schedule 4.7, none of any of the Balentine Entities or the LLC has any off-balance-sheet financial obligation, guaranty or promissory note to any Person in an amount in excess of $100,000. Except as set forth in Schedule 4.4(a) or Schedule 4.5, there are no (1) outstanding shares of capital stock or other securities of any of the Balentine Entities, (2) outstanding options, warrants, puts, calls, commitments, agreements, contracts or preemptive or other rights to purchase, issue or otherwise acquire any capital stock or other securities of any of the Balentine Entities or (3) obligations or securities convertible into or exchangeable for capital stock or other securities of any of the Balentine Entities. Section 4.6 Business. Since their inception, each of the Balentine Entities and the LLC has been engaged solely in the business of providing investment management, investment advisory services, and/or broker-dealer services. Each of the Balentine Entities, the LLC and the Existing Funds is in material compliance with all federal and state laws, including those requiring registration, licensing or qualification as an investment adviser or a broker-dealer, as applicable. Each of the Balentine Entities, the LLC and the Existing Funds has delivered to WTI true and complete copies of its organizational (and, in the case of the Existing Funds, offering) documents, as amended to date. Each of the Balentine Entities, the LLC and the Existing Funds has all Licenses necessary to own its properties and conduct its business as it is presently conducted. Section 4.7 Assets. None of the assets contributed by Balentine to the LLC is subject to any Lien in favor of any Person, except as listed in Schedule 4.7. None of the Balentine Entities is obligated to perform any obligation or pay any amount in connection with the Existing Debt, and -15- the holder of the Existing Debt does not have a Lien on any of the assets or properties of any Balentine Entity, except as listed in Schedule 4.7. None of the Balentine Entities or the LLC owns any real property; and no personal property owned by any of the Balentine Entities or the LLC is or, to the Knowledge of Balentine, will be subject to any Lien except for minor imperfections of title or insignificant Liens that do not, in the aggregate, materially detract from the value of the Balentine Entities and the lien associated with the Existing Debt. Schedule 4.7 hereto lists: a. All real property leased by any of the Balentine Entities or the LLC, together with the location of that property, monthly lease payments and lease termination dates; b. All personal property leases in which any of the Balentine Entities or the LLC is obligated to make annual lease payments to any Person in excess of $10,000; and c. All personal property owned by any of the Balentine Entities or the LLC, together with the book value thereof that is reflected on the books of the Balentine Entities or the LLC (with any personal property owned by a Principal indicated on Schedule 4.7). All leases for real or personal property are valid and effective in accordance with their terms, and there is no existing breach or event under any lease which, which with the giving of notice, the lapse of time or both would become a breach, on the part of the Balentine Entities or the LLC or, to the Knowledge of Balentine, on the part of any other party thereto. Section 4.8 Managed Assets. The aggregate assets under management by each of the Balentine Entities, the assets of entities for which any of the Balentine Entities serves as general partner or managing member and the aggregate amount of assets of entities from which any of the Balentine Entities earns any fees as of September 30, 2001 (or as of the most recent practicable date with respect to the aggregate amount of assets under management) are accurately set forth in Schedule 4.8 hereto. In addition, Schedule 4.8 lists, as of September 30, 2001 (or as of the most recent practicable date with respect to the aggregate amount of assets under management), all investment management, advisory or sub-advisory contracts, if any, setting forth the name of the client under contract, the aggregate amount of assets under management with respect to that contract and the fee schedule with respect to that contract. Section 4.9 Receivables. All accounts receivable set forth on the books and records of each of the Balentine Entities are (a) accurately reflected in the books and records of that Person, (b) valid receivables owned by that Person, free and clear of any Lien, and (c) to the Knowledge of Balentine, not subject to setoffs or counterclaims. Section 4.10 Contracts. All contracts to which any of the Balentine Entities or the LLC is a party or by which any of them is bound are enforceable against that Person and, to the Knowledge of Balentine, the other parties thereto in accordance with their respective terms. There is not under any such contract an existing material breach or event that, with the giving of notice or the lapse of time or both, would become a material breach or event, on the part of the Balentine Entities or the LLC, or, to the Knowledge of Balentine, on the part of any other party thereto. Schedule 4.10 lists all material contracts to which any of the Balentine Entities or the LLC is a party or by which any of them is bound together with a list of any material contract to which any of the Balentine Entities or -16- the LLC is a party or by which any of them is bound where the consent or approval of the other party(ies) to that contract is required for the consummation of the transactions contemplated hereby. Section 4.11 Employment Arrangements. Except as set forth in Schedule 4.11 hereto, none of the Balentine Entities or the LLC has any obligation, contingent or otherwise, under (a) any written or oral employment, collective bargaining or other labor agreement, (b) any written or oral agreement containing severance or termination pay arrangements, (c) any written or oral deferred compensation agreement, retainer or consulting arrangement, (d) any pension or retirement plan, bonus or profit-sharing plan or stock option or stock purchase plan (except any Employee Plan described in Section 4.21(a) hereto) or (e) any other written or oral employee contract or non-terminable employment arrangement (each, an "Employment Arrangement"). None of the Balentine Entities or the LLC is in default with respect to any term or condition of any Employment Arrangement. Section 4.12 Financial Statements. a. Balentine has delivered to WTI the audited consolidated and consolidating balance sheets, income statements and statements of cash flows of Balentine as of December 31, 2000 and the unaudited consolidated and consolidating balance sheets and income statements as of September 30, 2001 (collectively, the "Financial Statements"), as set forth in Schedule 4.12(a) hereto. b. The Financial Statements, subject to the qualifications and exceptions noted thereon or in the notes thereto, (i) are accurate and complete in accordance with the books of account and records of each such Person; (ii) have been prepared in accordance with GAAP throughout the indicated periods, except that the interim financial statements contain no notes or year-end adjustments; and (iii) fairly present in all material respects the financial condition, assets and liabilities, and results of operation of each such Person and its results of operations, respectively, as of the dates thereof or for the periods then ended. c. None of the Balentine Entities or the LLC has any debt, obligation or liability, absolute, fixed, contingent or otherwise, of any nature whatsoever, whether due or to become due, including any unasserted claim, whether incurred directly or by any predecessor thereto, and whether arising out of any act, omission, transaction, circumstance, sale of goods or services, state of facts or other condition, except: (1) those reflected or reserved against on the Financial Statements in the amounts shown therein; (2) those not required under GAAP to be reflected or reserved against in the Financial Statements that are expressly quantified and set forth in the Transaction Documents; (3) those incurred in the ordinary course of business since the date of the Financial Statements, and (4) those disclosed on Schedule 4.12(c). Section 4.13 Material Adverse Change. Since September 30, 2001, no event or condition, individually or in the aggregate, has had a Material Adverse Effect on the Balentine Entities and the LLC, taken as a whole, and, to the Knowledge of Balentine, there is no impending event or condition that would have a Material Adverse Effect on the Balentine Entities and the LLC, taken as a whole. -17- Section 4.14 Ordinary Course of Business. Since the date of the Financial Statements, each of the Balentine Entities has operated its business in the normal, usual and customary manner in the ordinary and regular course of business, consistent in all material respects with prior practice. Section 4.15 Litigation and Compliance with Laws. a. There are no order, writs, injunctions, decrees or unsatisfied judgments, and no actions, suits, claims or proceedings or investigations pending or, to the Knowledge of Balentine, threatened against any of the Balentine Entities, the LLC or any Principal for any of their past or current business activities. b. (1) Each of the Balentine Entities, the LLC and the Principals are currently and, during the past five years (or, with respect to any of the Balentine Entities and the LLC, such shorter time, if any, that it has been in existence), have been, operating in compliance in all material respects with all laws, rules, regulations and orders applicable to that Person's business, including all federal and state securities laws, and (A) None of the Balentine Entities, the LLC or any Principal nor, to the Knowledge of Balentine, any Person "associated" (as that term is defined under the Advisers Act) with any of the Balentine Entities, the LLC or any Principal has, within five years prior to the date hereof, been convicted of any crime or is or has been subject to any disqualification in each case that would be the basis for denial, suspension or revocation of registration of an investment adviser under Section 203(e) or 206(4) of the Advisers Act or Rule 206(4)-4(b) thereunder or for disqualification as an investment adviser for any investment company pursuant to Section 9 of the Investment Company Act of 1940, as amended; and (B) None of any of the Balentine Entities, the LLC or any Principal, nor to the Knowledge of Balentine, any Affiliate of the Balentine Entities, the LLC or any Principal, is subject to a "statutory disqualification" as defined in Section 3(a)(39) of the Exchange Act or is subject to a disqualification that would be a basis for censure, limitations on the activities, functions or operations of, or suspension or revocation of the registration of BC as a broker-dealer, municipal securities dealer, government securities broker or government securities dealer under Section 15, Section 15B or Section 15C of the Exchange Act, and, to the Knowledge of Balentine, there is no reasonable basis for, or proceeding or investigation, whether formal or informal or whether preliminary or otherwise, that is reasonably likely to result in, any such censure, limitations, suspension or revocation (2) Without limiting the generality of the foregoing: (A) The Form ADV and/or Form BD of each Balentine Entity when filed with the SEC and on each date any amendment to such form was filed (and, with respect to Part II of Form ADV, on each date when distributed by such Balentine Entity) complied in all material respects with the rules and regulations of the SEC and did not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading; and -18- (B) The offering documents for the Existing Funds when distributed or used did not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading and no oral or written representation, warranty or statement made by any of the Balentine Entities, the LLC or any Principal in connection with the offer or sale of an interest in an Existing Fund contradicts such offering documents. c. None of the Balentine Entities, the LLC or any Principal is in default with respect to any judgment, order, writ, injunction, decree, demand or assessment issued by any court or any federal, state, municipal or other governmental agency, board, commission, bureau, instrumentality or department, domestic or foreign, relating to any aspect of the business, affairs, properties or assets of that Person, provided that the foregoing representation and warranty does not apply to misdemeanors or traffic violations and with respect to each Principal is made only by that Principal. d. None of any of the Balentine Entities, the LLC or any Principal is charged or, to the Knowledge of Balentine, threatened with or under investigation with respect to any violation of any federal, state, municipal or other law or any administrative rule or regulation, domestic or foreign, applicable to the business, affairs, properties or assets of that Person; provided, however, that the foregoing representation and warranty does not apply to misdemeanors or traffic violations and, with respect to each Principal, is made only by that Principal. e. Each participant in Griffin Arbitrage, L.P., Balentine Hedge Fund, L.P. and Balentine Hedge Fund Select, L.P. is a "qualified client" within the meaning of Rule 205-3 under the Advisers Act, and no participant in any other Existing Fund pays a performance fee within the meaning of such Rule 205-3. Section 4.16 Environmental Matters. a. Each of the Balentine Entities and the LLC has operated its business in the properties identified in Schedule 4.7 ("Leased Real Property") in material compliance with all applicable federal, state and local laws relating to public health and safety, employee health and safety and protection of the environment (collectively, "Environmental Laws"). b. None of Balentine Entities or the LLC is subject to any liability, penalty or expense (including legal fees) by virtue of: (1) Any violation of any Environmental Law; (2) Any activity conducted on or with respect to any property owned or leased by that Person; (3) Any environmental condition existing on or with respect to any property owned or leased by that Person, in each case whether or not that Person permitted or participated in that act or omission; -19- (4) Any off-site transportation, storage, treatment or disposal of any hazardous substance or waste; and (5) The presence of polychlorinated biphenyls, asbestos-containing material, urea formaldehyde insulation or storage tanks at any Leased Real Property. c. To the Knowledge of Balentine, none of the Leased Real Property is listed or proposed for listing on the National Priorities List Pursuant to the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, or any state or local list of sites requiring investigation or cleanup. d. Each of the Balentine Entities and the LLC has furnished WTI copies of all environmental reports, studies or audits in its possession conducted on its behalf relating to the Leased Real Property. Section 4.17 Broker Dealer. Except for BC, none of any of the Balentine Entities, the LLC and the Principals is a "broker" or "dealer" that is registered or required to be registered with the SEC pursuant to the Exchange Act, with the NASD pursuant to the NASD's Membership and Registration Rules, or with any state pursuant to any applicable state securities law. Section 4.18 Insurance Policies. Each of the Balentine Entities and the LLC has in full force and effect insurance which management has reasonably determined to be prudent with respect to its business, properties and assets (including, without limitation, errors and omissions liability insurance) as listed in Schedule 4.18 hereto. None of the Balentine Entities or the LLC is in material default under any such policy, and each will use commercially reasonable efforts to continue those policies in full force and effect. As of Closing, the LLC shall become an insured under the policies listed in Schedule 4.18. Section 4.19 Tax Matters. Each of the Balentine Entities and the LLC has (a) paid or caused to be paid all federal, state, county, local, foreign and other taxes (including, without limitation, income, excise, property, withholding, sales, use and franchise taxes, unemployment insurance, social security, gross receipt taxes, occupation taxes and other similar obligations) and all deficiencies or additions to tax, interest, fines and penalties (collectively, "Taxes") required to be paid by it (other than current taxes the liability for which is adequately provided for in the Financial Statements) and (b) in accordance with applicable law, filed all federal, state, county, local and foreign tax returns required to be filed by it. All such returns correctly and accurately set forth the amount of any Taxes relating to the applicable period. No taxing authority is now asserting or, to the Knowledge of Balentine, threatening to assert against any of them any deficiency or claim for additional taxes. Section 4.20 Certain Transactions. Except as set forth in Schedule 4.20 or other than as contemplated by this Agreement, the Transaction Documents or any schedule or exhibit hereto, no officer, director, stockholder, partner or member of any of the Balentine Entities, the LLC and/or any Principal is presently a party to any material transaction with any of the Balentine Entities, the LLC and/or any Principal (including, without limitation, any material contract, agreement or other -20- material arrangement providing for the furnishing of services to or by or otherwise requiring payments to or from any such Person, any member of the Immediate Family of any such Person or any corporation, partnership, trust, limited liability company or other entity in which any such Person or any member of the Immediate Family of any such Person has an interest or is an officer, director, stockholder, trustee, member or partner). Section 4.21 Employee Benefit Plans. a. Each Employee Plan (as that term is defined in Section 4.21(d) below) that any of the Balentine Entities or the LLC maintains and that is intended to be qualified under Section 401(a) of the Code is, in its current form, covered by a favorable determination from the Internal Revenue Service with respect to its tax-qualified status. To the Knowledge of Balentine, no event or omission has occurred which could cause any such Employee Plan not to be so qualified or for any trust thereunder not to be tax-exempt under Section 501(a) of the Code. b. None of the Balentine Entities or the LLC now has, or within the past ten years had, an obligation to contribute to a Multiemployer Plan (as defined in Section 4001(a)(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any other Plan subject to Title IV of ERISA. None of the Balentine Entities or the LLC has, within the past ten years, ever promised or provided health care or other non-pension benefits to its former employees (other than "Continuation Coverage" under the Consolidated Omnibus Reconciliation Act of 1985 required to be provided by Part 6 of Subtitle B of Title I of ERISA), nor are any such benefits provided for in any Employee Plan. c. With respect to each Employee Plan, there has been no transaction prohibited by Section 406 of ERISA or Section 4975 of the Code that could result in any material tax, penalty or liability of any of the Balentine Entities. All of the Employee Plans have complied in all material respects with the requirements prescribed by any and all applicable statutes, orders or governmental rules or regulations now or heretofore in effect with respect thereto. There are no material actions, suits or claims pending or threatened with respect to any Plan. d. For the purposes of this Section 4.21, the term "Employee Plan" or "Plan" includes any "employee benefit plan" as defined in Section 3(3) of ERISA and any bonus, stock option or other compensation or benefit plan or arrangement, whether or not subject to ERISA, but does not include any such Plan or arrangement that is, or is similar to, a payroll practice as defined in 29 C.F.R. [sec] 2510.3-1(b). Schedule 4.21(d) hereto is a list of each Employee Plan that any of the Balentine Entities or the LLC now maintains, contributes to or provides benefits under or has, within the past ten years, established, maintained, contributed to or provided benefits under. e. There is no matter pending with respect to any Plan before the Internal Revenue Service, the Pension Benefit Guaranty Corporation (the "PBGC"), the Department of Labor or any other Governmental Authority. f. Each of the Balentine Entities and the LLC has made full and timely payment of all amounts that are required under the terms of each Plan and any related trust or collective bargaining agreement or that are otherwise required by law to be paid as a contribution to -21- each such Plan with respect to all periods through the Closing. No accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Code) exists nor has any funding waiver from the IRS been received or requested with respect to any Plan and no excise tax or other taxes are due or owing because of any failure to comply with the minimum funding standards of the Code and ERISA with respect to any of such Plans. g. Neither Balentine, nor any entity required to be aggregated with Balentine under Sections 414(b), (c), (m) or (o) of the Code, sponsors, contributes to, has an obligation to contribute to or maintains a defined benefit plan within the meaning of Section 3(35) of ERISA, nor has Balentine or any such entity sponsored, contributed to, had an obligation to contribute to or maintained any such plan during the six-year period ending on the Closing Date. Section 4.22 Brokerage. None of any of the Balentine Entities, the LLC or any Principal has incurred any obligation for a brokerage commission or finders' fee in connection with the transactions contemplated hereby other than to Berkshire Capital Corporation ("Berkshire"). The Balentine Entities shall indemnify Merger Subsidiary, WTI and WTC for any liability to Berkshire. Section 4.23 Investment Representations. a. Each Principal will acquire his or its LLC Interest and will acquire the share of Common Stock issuable to him or it under the terms of this Agreement for his or its own account for investment and not with a view to or for sale in connection with any distribution thereof or with any present intention of selling or distributing all or any part thereof. Each Principal acknowledges that the LLC Interests and those shares of Common Stock have not been registered under the Securities Act or the securities laws of any state or other jurisdiction, and cannot be disposed of unless registered under the Securities Act and any applicable state laws or an exemption from that registration is available. b. Each of the Principals is sufficiently knowledgeable and experienced in making investments of this type as to be able to evaluate the risks and merits of its or his investment in LLC Interests and in those shares of Common Stock and is able to bear the economic risk of its or his investment in the LLC and in those shares of Common Stock. Each of the Principals acknowledges that the LLC Interests are illiquid, that no market for LLC Interests exists and that none is contemplated to be created. c. Each Principal is an "accredited investor" within the meaning of Rule 501(a) under the Securities Act. d. Each Principal acknowledges that he or it has received (1) WTC's 2000 annual report prepared in accordance with Rule 14a-3 under the Exchange Act; (2) WTC's Form 10-K for the year ended December 31, 2000; (3) WTC's Form 10-Qs for the three months ended March 31, 2001 and June 30, 2001; (4) WTC's definitive proxy statement for its 2001 annual meeting of shareholders; (5) all other reports and statements filed by WTC with the SEC under Sections 13(a), 14(a), 14(c) or 15(d) of the Exchange Act since December 31, 2000; (6) the description of the Common Stock contained in pages 27 through 29 of the proxy statement of Wilmington Trust Company dated May 2, 1991; and (7) the description of WTC's preferred stock -22- purchase rights contained in WTC's Registration Statement on Form 8-A filed on January 28, 1995. Each Principal acknowledges that he or it has been provided with an opportunity to review each exhibit to each of the documents described in this Section 4.23(d) a reasonable time prior to the date of this Agreement. e. Each Principal acknowledges that WTC has not provided such Principal with information regarding the Balentine Entities because such Principal, as a result his or its position with Balentine, has access to all information, financial or other, regarding the Balentine Entities necessary for such Principal to determine whether to execute this Agreement and otherwise participate in the transactions contemplated hereby. f. Each Principal acknowledges that he or it has been provided with an opportunity to ask questions of and receive answers concerning the terms and conditions of the offering of Common Stock in connection with the Merger and to obtain any additional information that WTC possesses or can acquire without unreasonable effort or expense that is necessary to verify the information furnished pursuant to Section 4.23(d). g. Each Principal acknowledges that his residence or its principal business address is set forth under his or its name on the signature pages to this Agreement. h. The representations and warranties made in this Section 4.23 are made only by each Principal as to such Principal and no other Person is making the representations and warranties in this Section 4.23 with respect to such Principal. Section 4.24 Privacy. Each of the Balentine Entities and the LLC complies in all material respects with all applicable U.S. federal and state privacy laws in effect prior to the date of this Agreement, including, without limitation, Title V of the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act and any and all applicable regulations implementing either Act. Section 4.25 Investment Limitation. The Existing Funds do not, in the aggregate, own or otherwise control more than 5% of any class of voting securities of any Person. Section 4.26 No Known Regulatory Delays. To the Knowledge of Balentine, there is no reason to believe that the Balentine Entities and the Principals will be unable to obtain all consents and permits from all Governmental Authorities and other Persons necessary to complete the transactions contemplated by this Agreement promptly and without undue delay, expense or restriction. ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MERGER SUBSIDIARY, WTI AND WTC TO BALENTINE AND THE PRINCIPALS Each of WTC, WTI and Merger Subsidiary represents and warrants to Balentine and each of the Principals that: -23- Section 5.1 Organization. Each of Merger Subsidiary, WTI and WTC is a corporation duly organized, validly existing and in good standing under Delaware law. Section 5.2 Authority. Each of Merger Subsidiary, WTI and WTC has all requisite power and authority to (a) own its assets and conduct its business and (b) execute, deliver and perform this Agreement and the other Transaction Documents to be executed, delivered and performed by it in connection with this Agreement and the transactions contemplated hereby and thereby. This Agreement and each other Transaction Document to be executed, delivered and performed by Merger Subsidiary, WTI and WTC in connection with the transactions contemplated hereby have been duly and validly approved by all necessary action of that Person. This Agreement and each other Transaction Document to which it is a party represents, or when executed will represent, its valid and legally binding obligation, enforceable against it in accordance with its terms, except as may be limited by (x) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, fraudulent transfer or similar laws now or hereafter in effect affecting creditors; rights generally or (y) general principles of equity, whether asserted in a proceeding in equity or at law. Section 5.3 Governmental Filings; Non-Contravention. Other than the filings and/or notices set forth in Schedule 5.3 (including those (i) under the HSR Act (if WTC determines that a filing under such act is required), the Exchange Act and the Securities Act, and with the NYSE and (ii) required to be made with the Federal Reserve Bank of Philadelphia), no notices, reports, applications or other filings are required to be made by WTI, WTC or the Merger Subsidiary with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by any of them from, any Governmental Authority in connection with the execution and delivery of this Agreement and the other Transaction Documents, and the consummation by each such Person of the Merger and the other transactions contemplated hereby and thereby. Subject to the making or obtaining of all filings, notices, applications, consents, registrations, approvals, permits or authorizations with or of any relevant Government Authority with respect to the Merger, the Transaction Documents and the other transactions contemplated hereby and thereby as set forth in Schedule 5.3, the execution, delivery and performance of this Agreement and each other Transaction Document to be executed, delivered and performed by Merger Subsidiary, WTI and WTC in connection with the transactions contemplated hereby does not and will not: (a) violate any provision of the charter or bylaws of Merger Subsidiary, WTI or WTC; (b) violate, conflict with or result in a default under any contract or obligation to which Merger Subsidiary, WTI or WTC is a party or by which it or its assets are bound; (c) violate or result in a violation of, or constitute a default under, any law, regulation or rule, or any order of or restriction imposed by any court or other Governmental Agency on Merger Subsidiary, WTI or WTC or its properties; and (d) except with respect to a post-Effective Time notice to be filed by WTC with the Federal Reserve Bank of Philadelphia and as contemplated by Section 8.1 hereof, require Merger Subsidiary, WTI or WTC to obtain any approval, consent or waiver of, or make any filing with, any Governmental Authority that has not been obtained or made, except for approvals, consents, waivers or filings, as applicable, that are set forth in Schedule 5.3 and that will have been received prior to Closing or at any earlier time required hereunder or under applicable laws, rules and regulations. -24- Section 5.4 Litigation and Compliance with Laws. a. Except as set forth on Schedule 5.4, there are no orders, writs, injunctions, decrees or unsatisfied judgments, and no actions, claims, suits, proceedings or investigations pending or, to Merger Subsidiary's, WTI's or WTC's Knowledge, threatened against Merger Subsidiary, WTI or WTC that, if adversely determined, might call into question the validity or hinder or delay the enforceability or performance of this Agreement or the other Transaction Documents or have a Material Adverse Effect on Merger Subsidiary, WTI or WTC or their assets or properties, taken as a whole. Except as set forth on Schedule 5.4, each of Merger Subsidiary, WTI or WTC is and, during the past five years has been, operating in material compliance with all laws and governmental rules and regulations, domestic or foreign (including, without limitation, all federal and state securities laws), applicable to the business, affairs, properties and assets of Merger Subsidiary, WTI and WTC. Except as set forth in Schedule 5.4, none of Merger Subsidiary, WTI or WTC is in default with respect to any judgment, order, writ, injunction, decree, demand or assessment issued by any court or any federal, state, municipal other governmental agency, board, commission, bureau, instrumentality or department, domestic or foreign, relating to any aspect of its business, affairs, properties or assets. Except as set forth in Schedule 5.4, none of Merger Subsidiary, WTI or WTC has been charged or, to that Person's Knowledge, threatened with or is under investigation with respect to any violation of any federal, state, municipal or other law or any administrative rule or regulation, domestic or foreign, affecting Merger Subsidiary, WTI or WTC or the transactions contemplated hereby. b. To Merger Subsidiary's, WTI's or WTC's Knowledge, none of Merger Subsidiary, WTI or WTC nor any Person "associated" (as that term is defined under the Advisers Act) with any of Merger Subsidiary, WTI or WTC has, within five years prior to the date hereof, been convicted of any crime or is or has been subject to any disqualification in each case that would be the basis for denial, suspension or revocation of registration of an investment adviser under Section 203(e) or 206(4) of the Advisers Act or Rule 206(4)-4(b) thereunder or for disqualification as an investment adviser for any investment company pursuant to Section 9 of the Investment Company Act of 1940, as amended. c. To Merger Subsidiary's, WTI's or WTC's Knowledge, none of any of Merger Subsidiary, WTI or WTC nor any Affiliate of Merger Subsidiary, WTI or WTC is subject to a "statutory disqualification" as defined in Section 3(a)(39) of the Exchange Act or is subject to a disqualification that would be a basis for censure, limitations on the activities, functions or operations of, or suspension or revocation of the registration of any Affiliate of Merger Subsidiary, WTI or WTC as a broker-dealer, municipal securities dealer, government securities broker or government securities dealer under Section 15, Section 15B or Section 15C of the Exchange Act, and, to Merger Subsidiary's, WTI's or WTC's Knowledge, there is no reasonable basis for, or proceeding or investigation, whether formal or informal or whether preliminary or otherwise, that is reasonably likely to result in, any such censure, limitations, suspension or revocation. Section 5.5 Investment Representations. a. Merger Subsidiary will acquire its LLC Interest and the Balentine stock in the Merger under the terms of this Agreement for its own account for investment and not with a -25- view to or for sale in connection with any distribution thereof or with any present intention of selling or distributing all or any part thereof. Merger Subsidiary acknowledges that the LLC Interests and the Balentine stock have not been registered under the Securities Act or the securities laws of any state or other jurisdiction, and cannot be disposed of unless registered under the Securities Act and any applicable state laws or an exemption from that registration is available. b. Merger Subsidiary is sufficiently knowledgeable and experienced in making investments of this type as to be able to evaluate the risks and merits of its investment in LLC Interests and Balentine stock and is able to bear the economic risk of its investment in the LLC and Balentine. Merger Subsidiary acknowledges that the Balentine stock and the LLC Interests are illiquid, that no market for the Balentine stock or the LLC Interests exists and that none is contemplated to be created. Section 5.6 Common Stock. a. As of the date hereof, the authorized capital stock of WTC consists solely of 150,000,000 shares of Common Stock, of which 32,660,627 shares were issued and outstanding as of September 30, 2001 and 1,000,000 shares of preferred stock, of which no shares were outstanding as of the date hereof. As of the date hereof, WTC has outstanding Rights with respect to 2,082,915 aggregate shares of Common Stock. b. Each of the shares of Common Stock delivered by WTC as part of the Merger consideration shall be duly authorized, validly issued, fully paid and nonassessable, will be issued free and clear of any Liens or preemptive rights, and will be listed, subject to official notice of issuance, on the NYSE. Section 5.7 SEC Documents. a. WTC's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and all other reports, registration statements, definitive proxy statements or information statements filed or to be filed by it or any of its Subsidiaries since January 1, 1998 under the Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the form filed or to be filed with the SEC (collectively, WTC's "SEC Documents"), as of the date filed, (A) complied or will comply in all material respects as to form with the applicable requirements under the Securities Act or the Exchange Act, as the case may be, and (B) did not and will not, as the case may be, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading; and each of the balance sheets contained in or incorporated by reference into any such SEC Document (including the related notes and schedules thereto) fairly presents, or will fairly present, as the case may be, the financial position of WTC and its Subsidiaries as of its date, and each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements in such SEC Documents (including any related notes and schedules thereto) fairly presents, or will fairly present, as the case may be, the results of operations, changes in shareholders' equity and changes in cash flows, as the case may be, of WTC and its Subsidiaries for the periods to which they relate, in each case in accordance with GAAP during the periods involved, except in each -26- case as may be noted therein and subject to normal, recurring year-end audit adjustments in the case of unaudited statements. b. Since September 30, 2001, WTC has not suffered any change that has had a Material Adverse Effect on WTC, and to the Knowledge of WTC there is no impending event or condition that would have a Material Adverse Effect on WTC. Section 5.8 No Known Regulatory Delays. WTC has no Knowledge or reason to believe that it will be unable to obtain all consents and permits from all Governmental Authorities and other Persons necessary to complete the transactions contemplated by this Agreement promptly and without undue delay, expense or restriction. Section 5.9 Brokerage. None of Merger Subsidiary, WTI or WTC has incurred any obligation for a brokerage commission or finders' fee in connection with the transactions contemplated hereby. ARTICLE 6 COVENANTS OF BALENTINE AND THE PRINCIPALS Balentine and each Principal covenants as follows: Section 6.1 Client Consent. a. As soon as practicable after the date hereof, each of the Balentine Entities shall notify each of its clients (including the participants in each Existing Fund) of the transactions contemplated hereby and by the other Transaction Documents. That notice shall be in the form of Exhibit 6.1(a) hereto. b. As soon as practicable after the notice in Section 6.1(a), each of the Balentine Entities shall send to each client who has not returned the notice in substantially the form of Exhibit 6.1(a) hereto, countersigned indicating approval of the transactions contemplated hereby, a second notice and consent in substantially the form of Exhibit 6.1(a) hereto and acceptable to WTI, which acceptance will not be unreasonably withheld, delayed or conditioned. Section 6.2 Conduct of Business. Until Closing, except as specifically contemplated by this Agreement, without WTI's prior written consent: a. The business of each of the Balentine Entities shall be conducted only in the ordinary course, in a manner consistent in all material respects with past practices and in compliance in all material respects with all applicable laws, rules and regulations; b. None of any of the Balentine Entities or any Principal shall in any capacity make or assist in making any change in the charter documents or bylaws of Balentine or BC or organizational documents of GP or BCT; -27- c. None of any of the Balentine Entities or any Principal shall acquire any asset or make any capital expenditure, or sell, lease or dispose of any asset other than (1) in the ordinary course of business and (2) in an amount not to exceed $100,000; d. None of any of the Balentine Entities or any Principal shall permit any Person to mortgage, pledge or subject to or permit to exist any Lien on any property or asset of any of the Balentine Entities except for minor imperfections of title or insignificant liens that do not, in the aggregate, materially detract from the value of the Balentine Entities (and none of any of the Balentine Entities shall, nor shall any Principal permit any such Person to, mortgage, pledge or subject to or permit to exist any Lien on, any properties, assets or contracts that are to be acquired by the LLC pursuant to the Transaction Documents); e. Except as provided in Schedule 6.2(e), none of the Balentine Entities shall issue any (i) shares of its capital stock or other securities, (ii) options, warrants, puts, calls, commitments, agreements, contracts or preemptive or other rights to purchase, issue or otherwise acquire any capital stock or other securities of such entity, or (iii) obligations or securities convertible into or exchangeable for capital stock or other securities of such entity; f. None of the Balentine Entities shall declare or pay any dividend or distribution on its capital stock or other securities, whether in the form of cash, capital stock or other securities, except that Balentine will distribute to the Principals amounts consistent with past practices, including distributing all excess cash held on or before Closing, which distribution amount should be approximately equal to all net income, depreciation and amortization of Balentine, and principal payments on the Stockholder Notes received by Balentine or BC, on or before Closing. In addition, Balentine will take into income all remaining prepaid amounts that were prepaid as of the end of 2000 and are being taken into income each quarter in 2001 and will distribute such amount to the Principals; and g. The LLC shall not conduct any business or take any actions, other than as specifically contemplated in Recital C to this Agreement. Section 6.3 Preservation of Business and Assets. a. Until Closing, except as contemplated hereby, each of the Balentine Entities and the Principals shall use his or its reasonable best efforts to: (1) preserve the current business of the Balentine Entities; (2) maintain the present clients of the Balentine Entities, in each case on terms substantially equivalent to the terms of the existing agreements between those clients and those Persons in effect on the date hereof; (3) preserve the goodwill of the Balentine Entities; and (4) preserve the Licenses required in connection with the businesses of any of the Balentine Entities and the Principals. b. Except for the transactions contemplated by the Transaction Documents prior to Closing, none of the Balentine Entities shall materially change the fundamental nature or characteristics of its business from the business conducted as of the date hereof without WTI's prior written consent. -28- Section 6.4 Standstill. Except as provided in Schedule 6.2(e), the relative interest of the Principals in the Balentine Entities as of the date hereof may not be altered without the prior written consent of WTI, which consent will not be unreasonably withheld, delayed or conditioned. Section 6.5 Investment Limitation. Each of the Balentine Entities and each Principal covenants, from the date hereof until Closing, that the Existing Funds and all other private investment funds, if any, for which any Balentine Entity or any Principal serves as a general partner or managing member shall not at any time own or otherwise control in the aggregate more than 5% of any class of voting securities of any Person. ARTICLE 7 COVENANTS OF WTC Section 7.1 Securities Filings; NYSE Listing. a. WTC shall make all necessary filings with respect to the issuance of Common Stock in the Merger under the United States federal securities laws. b. As soon as possible after the Closing (and in any event not later than twenty (20) days thereafter), WTC shall prepare and file with the SEC a Registration Statement on Form S-3 covering the resale by the Principals of the shares of Common Stock received by them at Closing pursuant to the Merger (the "Registration Statement"). WTC shall use its reasonable best efforts to cause such Registration Statement to cover the resale by the Principals of a reasonable estimate of the number of shares of Common Stock issuable to the Principals after the Closing pursuant to Section 3.1 hereof ("Estimated Shares"). If WTC is unable to register the resale of such Estimated Shares in the original Registration Statement, WTC shall file with the SEC subsequent registration statement(s) on Form S-3 covering the resale of the shares of Common Stock issued following the Closing under Section 3.1 promptly following each issuance of such shares. WTC shall use its reasonable best efforts to cause the Registration Statement(s) to become effective under the Securities Act and take any action required to be taken under the applicable United States state "blue sky" or securities laws in connection with the issuance of the shares of Common Stock as a result of the Merger. Balentine and the Principals shall cooperate in the preparation and filing of the Registration Statement(s) and shall furnish all information concerning Balentine and the Principals as WTC may reasonably request in connection with such action. WTC shall bear all expenses associated with the preparation and filing of such Registration Statement(s); however, each Principal shall be responsible for his or its commissions and other selling expenses in connection with the sale of any Common Stock and for the cost of any counsel employed by him or it. c. WTC shall use its reasonable best efforts to list, prior to the Effective Time, on the NYSE, subject to official notice of issuance, the shares of Common Stock to be issued to the Principals pursuant to the Merger, and WTC shall give all notices and make all filings with the NYSE required in connection with the transactions contemplated hereby. Section 7.2 Indemnification. -29- a. From and after the Effective Time, WTC shall add the directors, officers, managers, and members of the LLC to the WTC's directors' and officers' insurance or similar liability insurance coverage that serves to reimburse such Persons (determined as of the Effective Time) with respect to claims against such Persons arising in connection with their actions as a director, officer, manager, or member of the LLC, which insurance shall be in an amount commercially reasonable and which may be the directors' and officers' insurance currently maintained by WTC; provided, however, that such Persons so covered shall cooperate in making applications to, and providing customary representations and warranties to, WTC's insurance carrier for the purpose of obtaining such insurance or coverage. b. If WTC or any of its successors or assigns shall consolidate with or merge into any other entity and shall not be the continuing or surviving entity in such consolidation or merger or shall transfer all or substantially all of its assets to any entity, then and in each case, proper provision shall be made so that the successors and assigns of WTC shall assume the obligations set forth in this Section 7.2. Section 7.3 WTC Business Benefits. a. WTC will provide to the LLC and its Subsidiaries New Business Opportunities as provided in the LLC Agreement and will provide its share of the capital required to fund such New Business Opportunities also as provided in the LLC Agreement. b. The LLC shall have the right to elect, on or prior to six months after the Closing Date, to have the officers and employees of the LLC and its Subsidiaries participate in some or all WTC's then-existing employee benefit plans (other than the Wilmington Trust profit sharing plan or bonus or incentive plans) at the LLC's cost; provided, however, that (i) once the election to participate or not participate in a particular plan is made it cannot be changed without WTC's written consent, which shall not be unreasonably withheld, (ii) such officers and employees are otherwise eligible to participate in such plans in accordance with their terms, (iii) nothing herein shall entitle such an officer or employee to participate in a plan where participation is not based solely on eligibility criteria set forth in the plan and (iv) WTC acknowledges that there will be no cost to the LLC for WTC stock options granted to officers and employees of the LLC or its Subsidiaries. With respect to the WTC employee benefit plans, for all purposes, except for the computation of the benefits under defined benefit plans, WTC agrees that years of service with any Balentine Entities shall be deemed to be years of service with WTC. The LLC shall have a reasonable opportunity to participate in any new employee benefit plans made available to employees generally. c. WTC will use its reasonable best efforts to cause Wilmington Trust FSB to open a trust and/or banking office in Atlanta and to place the office in the same space as is presently used by Balentine if commercially feasible. If such office is in the space presently used by Balentine, Wilmington Trust FSB will be responsible for its pro rata share of rent and related expenses based on the percent of square footage occupied by Wilmington Trust FSB. WTC will cause the Chief Executive Officer of the LLC to be appointed an officer of Wilmington Trust FSB and cause the other Wilmington Trust FSB staff in such office to report to such officer. The -30- Wilmington Trust FSB officers and employees and the LLC officers and employees will use reasonable best efforts to coordinate marketing and client development programs and services. d. WTC will make available on a nationwide basis in the United States the LLC's Subsidiaries' expertise in their manager of managers program, including in connection therewith asset allocation modeling, asset rebalancing strategies and manager evaluation and selection. WTC may access this expertise through client investment in the LLC's Subsidiaries' investment funds, proprietary WTC investment funds managed by those Subsidiaries, client customized investment funds managed by those Subsidiaries and/or non-discretionary advisory services of those Subsidiaries. Accordingly, WTC will work cooperatively with those Subsidiaries to use their know how and the services of their officers and employees to provide advice and assistance relating to the manager of managers program and will pay to the appropriate Subsidiary a fee for such services and know how as may be agreed by WTC and the LLC from time to time. The Principals agree to cause those Subsidiaries to use their reasonable best efforts to meet the reasonable needs of WTC in connection with the use of the expertise and a condition of WTC's continued use of the Subsidiaries will depend on those Subsidiaries' meeting commercially reasonable service levels and performance standards. It is intended that the service levels and performance standards will be discussed by WTC and the LLC from time to time and will be adjusted from time to time on a mutual basis. e. WTC will provide to the LLC's Subsidiaries client related services that are available for the use of WTC's other asset management affiliates, including external asset management, custom-built insurance products, and marketing materials on a reasonable and fair basis and cost. WTC will also make available the full array of support services on the same basis as are made available to its other affiliated asset managers, including internal asset management, human resources, marketing, financial reporting, tax and estate planning, compliance and information technology, as the LLC may request from time to time. ARTICLE 8 COVENANTS OF THE PARTIES Section 8.1 Regulatory Authorizations. (a) Except as provided in Section 7.1, Merger Subsidiary, WTI and WTC shall at their sole expense timely and promptly make all filings required to be made by any of them with any Governmental Authority with respect to the consummation of the transactions contemplated hereby (including, but not limited to, the listing of the Common Stock on the NYSE, the filings under the HSR Act (if WTC determines such filings are required) and/or the filings with the Federal Reserve Bank of Philadelphia). Merger Subsidiary, WTI and WTC shall furnish to any of the Balentine Entities such information and assistance any of them may reasonably request in connection with the preparation by any of them of necessary filings or submissions to any Governmental Authority. Merger Subsidiary, WTI and WTC shall promptly supply Balentine with copies of all non-confidential correspondence, filings or communications (or memoranda summarizing the substance thereof) between Merger Subsidiary, WTI, WTC or -31- their counsel and any Governmental Authority with respect to this Agreement and the transactions contemplated hereby. (b) Except as provided in Section 7.1, each of Balentine and the Principals shall at his or its sole expense timely and promptly make all filings required to be made by it, him, the Balentine Entities or the LLC with any Governmental Authority with respect to the consummation of the transactions contemplated hereby (including, but not limited to, the filings under the HSR Act (if WTC determines such filings are required), the filings with the SEC of amendments to the Form ADV or Form BD of any Balentine Entity; any required requests for approval of the transactions from the NASD, the NYSE, and/or other self-regulatory organization; and/or the filings in any state of any amendments relating to the investment adviser or broker-dealer registration of any Balentine Entity in such state). Each of Balentine and the Principals shall furnish to each of Merger Subsidiary, WTI and WTC such information and assistance as that Person may reasonably request in connection with its preparation of necessary filings or submissions to any Governmental Authority. Balentine shall promptly supply WTI with copies of all non-confidential correspondence, filings or communications (or memoranda summarizing the substance thereof) between any of the Principals, the Balentine Entities or the LLC, his or its counsel and any Governmental Authority with respect to this Agreement and the transactions contemplated hereby. Section 8.2 Confidentiality. Each party (each a "Receiving Party") shall, on behalf of himself or itself and his or its representatives and agents, keep confidential any and all information and data of a proprietary or confidential nature with respect to any other party (a "Disclosing Party") in the Receiving Party's possession or that he or it receives as a result of any investigation made in connection with this Agreement, other than information that is or becomes generally available to the public other than as a result of disclosure by the Receiving Party in violation of this Agreement. Notwithstanding the preceding sentence, each party shall be free to disclose any such information or data (a) to the extent required by applicable law, order, rule or regulation and (b) during the course of or in connection with any litigation, arbitration or other proceeding based upon or in connection with the subject matter of this Agreement; provided that, prior to disclosing any such information in connection with any such litigation, arbitration or proceeding, the Receiving Party shall, to the extent permitted by law, give prior notice to the Disclosing Party and use reasonable efforts to obtain confidential treatment therefor. Section 8.3 Expenses Incident to this Agreement. Except as otherwise expressly provided herein, each party shall pay his or its own expenses incident to the negotiation and consummation of the transactions contemplated by this Agreement and the other Transaction Documents and the preparation and carrying out of this Agreement and the transactions contemplated hereby or thereby. Section 8.4 Access; Information. The Balentine Entities and the Principals hereby agree that, upon reasonable notice and subject to applicable laws relating to the exchange of information, the Balentine Entities shall afford WTC and its officers, employees and representatives, such access during normal business hours throughout the period prior to Closing to the books, records, properties, personnel and to such other information of the Balentine Entities as WTC may reasonably request. WTC shall make available from time to time and on reasonable notice its -32- personnel to respond to appropriate questions relating to the transactions contemplated by this Agreement from participants in Existing Funds and other clients of the Balentine Entities. Section 8.5 Press Releases. The Parties shall coordinate and approve, to the extent permitted by law, any public announcement, press release or response to media inquiries regarding this Agreement and the transactions contemplated hereby. ARTICLE 9 CONDITIONS PRECEDENT TO MERGER SUBSIDIARY'S, WTI'S AND WTC'S OBLIGATIONS The obligations of Merger Subsidiary to merge with and into Balentine and of Merger Subsidiary, WTI and WTC to consummate the transactions contemplated hereby are subject to the satisfaction on or, where appropriate, before the Closing Date of the following conditions, except to the extent Merger Subsidiary, WTI or WTC waives any such condition in writing on or before the Closing Date: Section 9.1 No Litigation; No Opposition. No judgment, injunction, order or decree enjoining or prohibiting any of Merger Subsidiary, WTI, WTC, the LLC, any of the Balentine Entities or any Principal or other party to any Transaction Document from consummating the transactions contemplated by this Agreement or by any other Transaction Document or from engaging in any advisory or broker-dealer activity shall have been entered except such actions as, individually or in the aggregate, would not be reasonably likely to result in a Material Adverse Effect on the Balentine Entities and the LLC, taken as a whole. No suit, action, claim, proceeding or investigation shall be pending or threatened at any time prior to or on the Closing Date before or by any court or Governmental Authority seeking to materially restrain or prohibit, or seeking material damages or other significant relief in connection with, the execution and delivery of this Agreement or any other Transaction Document or the consummation of the transactions contemplated hereby. Section 9.2 Representations, Warranties and Covenants of Balentine and the Principals. The representations and warranties of each of Balentine and the Principals contained in this Agreement, any schedule or exhibit hereto and in each other Transaction Document shall be true and correct in all material respects at and as of Closing as though newly made at that time; provided that no breaches of representations and warranties shall be deemed to excuse WTC's obligations to consummate the transactions contemplated hereby unless, individually or in the aggregate, such breaches could reasonably be likely to result in a Material Adverse Effect on the Balentine Entities and the LLC, taken as a whole (ignoring, for this purpose, any materiality qualifications to such representations and warranties). Each and all of the agreements and conditions to be performed or satisfied by each of the Balentine Entities, the LLC and/or the Principals hereunder and under the other Transaction Documents at or prior to Closing shall have been duly performed or satisfied in all material respects. Each of the Balentine Entities and the Principals shall have furnished Merger Subsidiary, WTI and WTC with a certificate or certificates dated as of the Closing Date with respect to each of the foregoing. -33- Section 9.3 Consents. Each Balentine Entity shall have obtained the Consent to the transactions contemplated by the Transaction Documents in the manner set forth in Section 6.1 from each participant in each Existing Fund and from its other clients whose advisory agreements provide for the payment (based on the Contract Value of each such agreement) of fees constituting at least ninety percent (90%) of Balentine's investment advisory revenues for its fiscal quarter ending December 31, 2001; provided, however, that, with respect to the Balentine consulting clients listed on Schedule 9.3(a), advisory fees for the third quarter of 2001 shall be used. Compliance with this condition shall be measured five Business Days prior to the Closing Date. a. "Consent" shall mean (1) with respect to a client whose contract by its terms terminates upon the consummation of the transactions contemplated by the Transaction Documents, that the LLC or the appropriate Balentine Entity shall have entered into a new contract on substantially equivalent terms, which contract is effective after giving effect to the Closing, and (2) with respect to a client, including each Existing Fund, whose contract or partnership agreement requires written consent from a party or parties thereto or partners therein for it to survive the transactions contemplated by the Transaction Documents, that Balentine or the appropriate Balentine Entity shall have obtained all such written consents as may be required. b. "Contract Value" shall mean, with respect to an advisory contract or limited partnership agreement of an Existing Fund, the advisory fees for the fourth quarter of 2001 based on the fee schedule and assets under management set forth in the relevant agreement as of September 30, 2001 (adjusted for any additions and/or withdrawals since September 30, 2001 in the manner provided below); provided, however, that, with respect to the Balentine consulting clients listed on Schedule 9.3(a), advisory fees for the third quarter of 2001 shall be used. Without limiting the generality of the foregoing, for purposes of the definition of "Contract Value," each limited partnership agreement of an Existing Fund and each wrap-fee program shall be considered an advisory contract, and the addition and withdrawal of participants in each such program shall be treated as an addition or withdrawal of funds. Contract Value for a new client added after September 30, 2001 or a client that adds additional assets to its assets under management shall be added by computing the Contract Value for the fourth quarter of 2001 with respect to the value of the client's assets under management on the date the management of those assets commences (using the fee rate for such client when it first becomes a client) for the entire quarter. A client that withdraws all of its assets under management after September 30, 2001 (or gives notice that it intends to do so) shall be treated as though Consent was not obtained. Contract Value for a client that withdraws more than $1 million in the aggregate from assets under management after September 30, 2001 (or gives notice that it intends to do so) shall be reduced by a percentage calculated by dividing (1) the amount of the assets withdrawn (or notified to be withdrawn) valued as of the date of such withdrawal or notice, by (2) the amount of assets under management immediately prior to the first withdrawal or notice by such client after September 30, 2001. Advisory fees associated with new clients, with existing clients adding additional assets under management and with clients who have withdrawn either all of their assets from management or more than $1 million of such assets shall be included in the numerator but not the denominator for purposes of computing such 90%. -34- At Closing, Balentine shall deliver to Merger Subsidiary, WTI and WTC a certificate certifying to compliance with this Section 9.3. Section 9.4 Shareholder Approval. Balentine's Board of Directors shall have approved the transactions contemplated by the Transaction Documents, Balentine's shareholders shall have approved the transactions contemplated by the Transaction Documents, and, at Closing, Balentine shall deliver to Merger Subsidiary, WTI and WTC a certificate certifying that such Board and shareholder approval has been obtained. Section 9.5 Other Approvals. All actions and approvals by or in respect of, or filings with, any Governmental Authority required to permit the consummation of the transactions contemplated hereby so that the LLC and the Balentine Entities shall be able to continue to carry on after the Closing Date the business conducted by the Balentine Entities immediately prior to Closing shall have been taken, made or obtained. All other material permits, approvals, consents or other actions commercially necessary to consummate the transactions hereunder shall have been received or taken, except where the failure to obtain such permit, approval, consent or other action would not have a Material Adverse Effect on the Balentine Entities and the LLC, taken as a whole. Section 9.6 Capitalization. The Members of the LLC, and the capital account balances and Membership Points of each Member in the LLC, shall be as set forth on Schedule 4.4(b) hereto. Section 9.7 Deliveries. Each of the Balentine Entities, the LLC and the Principals shall have executed, where applicable, and delivered to Merger Subsidiary, WTI and WTC (or shall have caused to be executed and delivered to Merger Subsidiary, WTI and WTC by the appropriate person) the following: a. A certificate of the Secretary of each of the Balentine Entities and the LLC that it has completed all required actions contemplated by the Transaction Documents; b. The LLC Agreement; c. The Registration Rights Agreement; d. Certified copies of resolutions of the respective board of directors or board of managers (and, if necessary, the members or shareholders) authorizing the execution of each Transaction Document to which any of the Balentine Entities or the LLC is a party; e. Evidence that BC has converted into a Georgia limited liability company, and copies of the Original LLC Agreement, the Second LLC Agreement, the Georgia limited liability company operating agreement of BC referred to in Recital C, the articles of incorporation and bylaws of Balentine and BC and the certificate of formation or organization of GP, BCT and the LLC, each of which in the case of the evidence of conversion and the articles of incorporation and other formation documents filed with the Secretary of State is certified as of a recent date by the Secretary of State of the relevant state of organization; f. A certificate of the Secretary of each of the Balentine Entities certifying that the resolutions, articles of incorporation, certificates and bylaws in paragraphs (d) and (e) above are -35- in full force and effect and have not been amended or modified, and that the officers of each of the Balentine Entities are those persons named in the certificate; g. A certificate issued by the appropriate Secretary of State certifying that each of the Balentine Entities is validly existing in that state as of the most recent practicable date; h. The Employment Agreements; i. True and correct copies of each of the other Transaction Documents; j. An opinion from counsel to each of Balentine, BC, GP and the LLC in the form of Exhibit 9.7(j); provided, however, that any specific exceptions taken in such opinion that are not included in the form of such opinion attached hereto as Exhibit 9.7(j) shall not excuse WTC's obligations to consummate the transactions contemplated hereby unless, individually or in the aggregate, such exceptions would also constitute a breach of a representation or warranty by Balentine or a Principal that could reasonably be likely to result in a Material Adverse Effect on the Balentine Entities and the LLC, taken as a whole (ignoring, for this purpose, any materiality qualification to such representations and warranties). k. A copy of the Form D to be filed with the SEC with respect to the issuance of the LLC Interests and of any similar filing or notification of filing that will be filed with any applicable state securities department; and l. A copy of an appraisal of the fair market value of the Principals' Interest performed by Valuation Econometrics, LLC, or another appraisal firm reasonably acceptable to WTC, as of a date within 10 days prior to the Closing Date. Section 9.8 Material Adverse Change. No event or condition, individually or in the aggregate, shall have had a Material Adverse Effect on the Balentine Entities and the LLC, taken as a whole. Section 9.9 Liens. Any and all Liens on the Voting Shares and the Non-Voting Shares shall be released in full, and any and all Liens on the assets of Balentine and its Subsidiaries shall be released in full and to WTI's reasonable satisfaction. Section 9.10 Stockholder Notes. The stockholder notes listed on Schedule 9.10 attached hereto ("Stockholder Notes") shall, to the extent owned by Balentine, have been transferred to the LLC at or immediately prior to Closing and shall, to the extent owned by BC, remain with BC, and all of such Stockholder Notes shall continue to be paid in accordance with their terms; provided, however, that Nicholas Hoffman's Stockholder Note shall be repaid or otherwise satisfied in full prior to Closing. Section 9.11 Shareholder Agreement. The Amended and Restated Shareholder Agreement dated April 4, 1995 between BC and its shareholders, as supplemented by Joinder Agreements dated January 1, 1996, December 31, 1998, January 1, 1999, December 31, 1999 and January 1, 2001, shall have been terminated to WTI's reasonable satisfaction. -36- Section 9.12 Investment Adviser Registration. GP shall have either registered effectively as an investment adviser under the Advisers Act or merged into BC, with BC being the surviving entity in such merger. Section 9.13 Stockholder Note of Nicholas J. Hoffman. The Stockholder Note of Nicholas J. Hoffman shall have been paid or satisfied in full at or prior to Closing, and Gary B. Martin and Wesley A. French shall have issued promissory notes to Balentine in the aggregate principal amount, and on substantially similar terms, as the promissory note issued by Balentine to Nicholas J. Hoffman under Section 3 of the Hoffman/Balentine Exit Agreement dated October 20, 2001 among BC, Balentine and Nicholas J. Hoffman. Section 9.14 Non-Competition Agreements of Principals. Each non-competition agreement (a) between BC and Robert M. Balentine dated February 6, 2000, (b) between BC and B. Clayton Rolader dated February 15, 2000, (c) between BC and Jeffrey P. Adams dated February 6, 2000, (d) between BC and Robert E. Reiser, Jr. dated February 14, 2000, and (e) between BC and Michael E. Wolf dated January 1, 2001, shall have been terminated. ARTICLE 10 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BALENTINE ENTITIES AND THE PRINCIPALS The obligations of Balentine and the Principals to consummate the transactions contemplated hereby are subject to the satisfaction at or prior to the Closing Date of the following conditions, except to the extent that any of the Balentine Entities or the Principals, as the case may be, has waived any such condition in writing on or prior to the Closing Date: Section 10.1 No Litigation; No Opposition. No judgment, injunction, order or decree enjoining or prohibiting any of Merger Subsidiary, WTI, WTC, the LLC, any of the Balentine Entities or any Principal from consummating the transactions contemplated hereby or thereby shall have been entered. No suit, action, claim, proceeding or investigation shall be pending or threatened on the Closing Date before or by any court or Governmental Authority seeking to restrain or prohibit the execution and delivery of this Agreement or any other Transaction Document or the consummation of the transactions contemplated hereby or thereby. Section 10.2 Representations, Warranties and Covenants. Each representation and warranty of Merger Subsidiary, WTI and WTC contained in this Agreement and in any schedule or exhibit hereto and in each other Transaction Document shall be true and correct in all material respects at and as of Closing as though newly made at that time; provided that no breaches of representations and warranties shall be deemed to excuse the Balentine Entities' or the Principals' obligations to consummate the transactions contemplated hereby unless, individually or in the aggregate, such breaches could reasonably be likely to result in a Material Adverse Effect on Merger Subsidiary, WTI and WTC, taken as a whole (ignoring, for this purpose, any materiality or material adverse effect qualifications to such representations and warranties). Each and all of the agreements and conditions to be performed or satisfied by Merger Subsidiary, WTI or WTC -37- hereunder and under the other Transaction Documents at or prior to Closing shall have been duly performed or satisfied in all material respects. Merger Subsidiary, WTI and WTC shall have furnished each Principal with a certificate dated as of the Closing Date to that effect. Section 10.3 Deliveries. Merger Subsidiary, WTI or WTC, as appropriate, shall have executed and delivered to Balentine or the Principals: a. Certified copies of resolutions of each of Merger Subsidiary's, WTI's and WTC's board of directors authorizing the execution of this Agreement and each other Transaction Document to which Merger Subsidiary, WTI or WTC is a party and, in the case of WTC, the issuance of the shares of Common Stock in the Merger; b. A copy of the charter and current bylaws of Merger Subsidiary, WTI and WTC, which, in the case of the charters and certificates, are certified as of a recent date by the Secretary of State of Delaware; c. A certificate of the Secretary of each of Merger Subsidiary, WTI and WTC certifying that the resolutions, charters and bylaws in paragraphs (a) and (b) above are in full force and effect and have not been amended or modified, and that the officers of Merger Subsidiary, WTI and WTC are those persons named in the certificate; d. A certificate issued by the Secretary of State of Delaware certifying that Merger Subsidiary, WTI and WTC are validly existing in Delaware as of the most recent practicable date; e. True and correct copies of each other Transaction Document to which Merger Subsidiary, WTI or WTC is a party; f. An opinion from counsel to Merger Subsidiary, WTI and WTC in the form of Exhibit 10.3(f); g. A copy of the Form D to be filed with the SEC with respect to the issuance of the shares of Common Stock and of any similar filing or notification of filing that will be filed with any applicable state securities department; h. WTI shall execute the BCT Agreement in favor of the Non-Balentine Members; provided, however, that it shall not be a condition precedent to Closing that the Non-Balentine Members shall have executed such agreement; and i. A copy of an appraisal of the fair market value of the Principals' Interest performed by Valuation Econometrics, LLC, or another appraisal firm reasonably acceptable to WTC, as of a date within 10 days prior to the Closing Date. In addition, WTC shall have delivered the merger consideration to be paid at Closing. Section 10.4 Consents. Balentine shall have obtained all Consents contemplated by Section 9.3. -38- Section 10.5 Material Adverse Change. No event or condition, individually or in the aggregate, shall have had a Material Adverse Effect on Merger Subsidiary, WTI and WTC, taken as a whole. ARTICLE 11 INDEMNIFICATION Section 11.1 Indemnification by the Principals. Subject to the provisions of this Article 11, each of the Principals shall defend, indemnify, save and hold harmless Merger Subsidiary, WTI and WTC, their respective Affiliates and the shareholders, directors, officers, employees and agents of each of the foregoing, from and against any and all actions, suits, claims, proceedings, demands, assessments, judgments, costs, losses, liabilities, damages, deficiencies and expenses (including, without limitation, interest, penalties, reasonable attorneys' and accountants' fees and all reasonable amounts paid in the investigation, defense or settlement of any of the foregoing) (collectively, "Losses") incurred in connection with, arising out of, or resulting from (a) any misrepresentation or breach of any representation or warranty by any of Balentine or the Principals herein, (b) any breach of any covenant or agreement to be performed pursuant to this agreement by any of Balentine, the LLC or the Principals herein, (c) the Existing Debt and (d) any failure of GP to be registered as an investment adviser under the Georgia Securities Act of 1973, as amended; provided that each Principal shall be obligated to pay only such Principal's pro rata share of any such Losses other than Losses relating to Sections 4.15(c), 4.15(d) or 4.23. The pro rata share shall be such Principal's percentage of the outstanding stock of Balentine immediately prior to the Merger, determined by dividing such Principal's number of shares of Balentine stock immediately prior to the Merger by the number of all such Balentine stock then outstanding. With respect to Sections 4.15(c), 4.15(d) and 4.23, each Principal shall be obligated to pay only such Losses relating to the breach of such representations by such Principal. Section 11.2 Indemnification by WTI and WTC. Subject to the provisions of this Article 11, Merger Subsidiary, WTI and WTC shall each defend, indemnify, save and hold harmless the Principals from and against any and all Losses incurred in connection with, arising out of, or resulting from any misrepresentation or breach of any warranty, covenant or agreement by Merger Subsidiary, WTI or WTC herein or in any Transaction Documents. Section 11.3 Limitation. No amount shall be recoverable under this Article 11 by Merger Subsidiary, WTI or WTC, on the one hand, or the Principals, on the other hand, until the total amount of Losses suffered to date exceeds $10,000. Further, the indemnification provided by Section 11.1(a) shall terminate one year following the Closing and shall be limited to an amount not exceeding the amount of the payment made under Section 3.1(a)(1). The indemnification provided by each of the Principals relating to breaches of the representations contained in Sections 4.15(c) and (d) and 4.23 shall be limited to an amount not exceeding the amount of the payment made under Section 3.1(a)(1) to such Principal. Section 11.4 Defense of Claims. If any action, suit, claim, tax audit, proceeding, demand, assessment or enforcement action is filed or initiated against an Indemnified Party with -39- respect to a matter subject to an indemnification claim by such Indemnified Party, the Indemnified Party shall give written notice thereof to the Indemnifying Party or Parties as promptly as practicable, and in any event within 20 days after service of the citation or summons, but the failure of an Indemnified Party to give timely notice shall not affect the rights of that party to indemnification hereunder to the extent such failure does not prejudice the Indemnifying Party. After such notice and a reasonable period of time to allow for analysis of the claim, if the Indemnifying Party acknowledges in writing to the Indemnified Party that the Indemnifying Party is obligated under the terms of its indemnity hereunder for all liabilities of the Indemnified Party in connection with that action, suit, claim, tax audit, proceeding, demand, assessment or enforcement action, the Indemnifying Party shall be entitled, if it so elects and with counsel reasonably satisfactory to the Indemnified Party, to take control of the defense and investigation of that action, suit, claim, tax audit, proceeding, demand, assessment or enforcement action and to employ and engage attorneys to handle and defend the same, at the Indemnifying Party's cost, risk and expense, except that, if the Indemnifying Party elects not to assume such defense or counsel for the Indemnified Party determines in good faith and advises the Indemnifying Party in writing that there are issues that raise conflicts of interest between the Indemnifying Party and the Indemnified Party, the Indemnified Party may retain counsel satisfactory to him or it, and the Indemnifying Party shall pay all reasonable fees and expenses of such counsel for the Indemnified Party promptly as statements therefore are received; provided, however, that (i) the Indemnifying Party shall be obligated pursuant to this Section 11.4 to pay for only one firm of counsel (unless the use of one counsel for such Indemnified Party would present such counsel with a conflict of interest) for all Indemnified Parties in any jurisdiction, and (ii) the Indemnified Party will cooperate in the defense of any such matter. If the Indemnifying Party assumes the control of such defense, the Indemnified Party shall cooperate in all reasonable respects, at the Indemnifying Party's request and cost, risk and expense, with the Indemnifying Party and its attorneys in the investigation, trial and defense of that action, suit, claim, tax audit, proceeding, demand, assessment or enforcement action and any appeal arising therefrom; provided that the Indemnified Party may, at its own cost, participate in the investigation, trial and defense of that action, suit, claim, tax audit, proceeding, demand, assessment or enforcement action and any appeal arising therefrom. The Indemnifying Party shall keep the Indemnified Party apprised of the status of the action, suit, claim, tax audit, proceeding, demand, assessment or enforcement action, furnish the Indemnified Party with all documents and information the Indemnified Party reasonably requests in connection therewith, and consult with the Indemnified Party prior to acting on major matters involved in that action, suit, claim, tax audit, proceeding, demand, assessment or enforcement action, including settlement discussions. Unless the Indemnified Party receives a complete release from all matters involved in the dispute, no settlement of any action for which indemnification may be payable hereunder shall be made without the prior written consent of the Indemnified Party, which consent shall not be unreasonably withheld, delayed or conditioned. The Indemnified Party shall be entitled to defend, settle or proceed in such other manner as it deems fit, in its sole discretion, in connection with any action, suit, claim, proceeding, demand, assessment or enforcement action with respect to which the Indemnifying Party has not acknowledged its obligations in writing in accordance with the foregoing; and no reasonable action taken by the Indemnified Party in connection therewith shall affect or limit the obligations of the Indemnifying Party pursuant to this Section 11.4. -40- If the Indemnifying Party assumes the control of such defense as provided above but subsequently, in the course of defending the matter, comes to believe that the matter is not properly an obligation of such Indemnifying Party, the Indemnifying Party may with reasonable promptness advise the Indemnified Party of such new information. In such case, (a) if the Indemnified Party then agrees with the Indemnifying Party, the Indemnifying Party and the Indemnified Party shall make mutually satisfactory arrangements for the Indemnified Party to assume the defense of such matter and to repay the Indemnifying Party for any amounts reasonably expended by it pursuant to this Article 11 with respect to such matter, and (b) if the Indemnified Party does not then agree with the Indemnifying Party, the Indemnifying Party shall have the right to commence legal proceedings to determine whether the matter is subject to indemnification by the Indemnifying Party; provided that, in the case of clause (b), the Indemnifying Party shall continue to be obligated to defend the Indemnified Party with respect to such matter and to otherwise make the payments required by this Article 11 until such dispute is finally adjudicated by a court of competent jurisdiction and all rights to appeal with respect thereto have expired. Section 11.5 Prompt Payment. Any indemnity payable pursuant to this Article 11 shall be paid within the later of ten days of the Indemnified Party's request therefor or five days prior to the date on which the liability upon which the indemnity is based is required to be paid by the Indemnified Party; provided, however, that, if it is finally determined by a court of competent jurisdiction, and all rights to appeal have expired, that the Indemnifying Party is not liable under this Article 11 with respect to a Loss, nothing in this Section 11.5 shall give the Indemnified Party any independent right to sue for a breach of this Agreement. Section 11.6 Sole Remedy. After the Closing, each party's sole and exclusive remedy for any breach of this Agreement by any other party shall be the provisions in Article 11; provided, however, that nothing set forth in this Article 11 shall be deemed to prohibit or limit any party's right at any time on or after the Closing Date, to seek injunctive or equitable relief for the failure of any other party to perform any covenant or agreement contained herein or to seek any other relief based upon fraud or intentional misrepresentation. Section 11.7 Certain Reductions; Subrogation. All indemnification payments payable hereunder shall be reduced by the amount of insurance proceeds received by the Indemnified Party as a result of the Losses for which the Indemnified Party is seeking indemnification. In the event that the Indemnifying Party shall be obligated to indemnify the Indemnified Party pursuant to this Article 11, the Indemnifying Party shall, upon payment of such indemnity in full, be subrogated to all rights of the Indemnified Party with respect to the Losses to which such indemnification relates; provided, however, that the Indemnifying Party shall only be subrogated to the extent of any amount paid by it pursuant to this Article 11 in connection with such Loss. ARTICLE 12 TERMINATION Section 12.1 Termination. This Agreement may be terminated (a) by the mutual consent of WTI and Balentine; (b) by WTI or Balentine at any time after March 31, 2002 if for any reason -41- the transactions contemplated by this Agreement have not been consummated by that date and the failure to consummate the transactions is not caused by a breach of this Agreement by the Merger Subsidiary, WTI or WTC, if WTI seeks to terminate this Agreement pursuant to this Section 12.1(b), or Balentine and the Principals, if Balentine seeks to terminate this Agreement pursuant to this Section 12.1(b); (c) by WTI if there has been a misrepresentation or breach on the part of any of Balentine, the LLC or the Principals in the representations, warranties or covenants of any of Balentine, the LLC or the Principals set forth herein that, if curable, has not been cured within 10 days after notice thereof by WTI and which breach, if not cured, would cause a failure of the conditions set forth in Article 9; (d) by Balentine if there has been a misrepresentation or breach on the part of Merger Subsidiary, WTI or WTC in the representations, warranties or covenants of Merger Subsidiary, WTI or WTC set forth herein that, if curable, has not been cured within 10 days after notice thereof by Balentine and which breach, if not cured, would cause a failure of the conditions set forth in Article 10; (e) by WTI or Balentine if any court of competent jurisdiction or other competent governmental or regulatory authority (1) has issued an order making illegal or otherwise materially restricting, preventing or prohibiting any of the transactions contemplated hereby and that order has become final and nonappealable or (2) whose approval is necessary to the consummation of the transactions contemplated hereby and whose approval has not been obtained after all appeals have been taken; (f) by WTI if an event or condition or events or conditions occur that, either individually or the aggregate, have a Material Adverse Effect on the LLC and the Balentine Entities, taken as a whole; and (g) by Balentine if an event or condition or events or conditions occur, which, either individually or in the aggregate, have a Material Adverse Effect on Merger Subsidiary, WTI and WTC, taken as a whole. Section 12.2 Effect of Termination. If this Agreement is validly terminated pursuant to Section 12.1, it will become null and void immediately and there will be no liability or obligation on the part of any party hereto (or any of their respective representatives or Affiliates), except that (a) the provisions of Sections 8.2 and 8.3 and Article 11 will continue to apply following that termination and (b) nothing contained herein shall relieve any party hereto from liability for breach of its representations, warranties, covenants or agreements contained in this Agreement. ARTICLE 13 MISCELLANEOUS Section 13.1 Survival of Representations, Warranties and Covenants. The representations and warranties contained herein and in any certificate or other writing delivered pursuant hereto shall survive the Closing Date and the consummation of the transactions contemplated hereby. All covenants herein not fully performed shall survive the Closing Date and continue thereafter until fully performed. Section 13.2 Waivers. Any waiver of any term or condition or of the breach of any covenant, representation or warranty in this Agreement in any one instance shall not operate as or be deemed to be a further or continuing waiver of any other breach of that term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty. No failure or delay at any time to enforce or require performance of any provision hereof -42- shall operate as a waiver of or affect in any manner that party's right at a later time to enforce or require performance of that provision or any other provision hereof. No such waiver, unless by its own terms it explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provision being waived, and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom that waiver is claimed in all other instances or for all other purposes to require full compliance. Section 13.3 Modifications. Except as otherwise expressly provided in this Agreement, neither this Agreement (including the exhibits and schedules hereto) nor any term hereof or thereof may be changed, amended, modified, waived, discharged or terminated except to the extent the same is evidenced by the written consent of the party against whom enforcement of that change or modification is sought. Section 13.4 Further Assurances. Each party agrees to execute all further instruments and documents and to take all additional actions as any other party may reasonably require in order to effectuate the terms and purposes of this Agreement and the transactions contemplated hereby. Section 13.5 Governing Law; Consent to Jurisdiction. This Agreement shall be construed under and governed by Georgia law, without giving effect to the choice or conflicts of law provisions thereof. Each of WTC, WTI and Balentine hereby agrees to submit to the jurisdiction of the courts of the State of Georgia and the courts of the United States of America located in the Northern District in the State of Georgia in any action or proceeding arising out of or relating to this Agreement. Each of the Principals and Balentine hereby agrees to submit to the jurisdiction of the courts of the State of Delaware and to the courts of the United States of America located in Delaware in any action or proceeding arising out of or relating to this Agreement. Section 13.6 Notices. a. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and sent as provided in Section 13.6(b) hereof: (1) If to Merger Subsidiary, WTI or WTC to: WT Investments, Inc. Rodney Square North 1100 North Market Street Wilmington, DE 19890 Attention: David R. Gibson, Senior Vice President with a copy to: WT Investments, Inc. Rodney Square North 1100 North Market Street Wilmington, DE 19890 -43- Attention: Gerard A. Chamberlain, Esq. Vice President (2) If to Balentine, to: Balentine Holdings, Inc. 3455 Peachtree Road Suite 2000 Atlanta, GA 30326 Attention: Robert M. Balentine with a copy to: Alston & Bird LLP One Atlantic Center 1201 West Peachtree Street Atlanta, GA 30309 Attention: B. Harvey Hill, Jr. (3) If to the Principals, to c/o Balentine Holdings, Inc. 3455 Peachtree Road Suite 2000 Atlanta, GA 30326 with a copy to: Alston & Bird LLP One Atlantic Center 1201 West Peachtree Street Atlanta, GA 30309 Attention: B. Harvey Hill, Jr. b. All Notices and other communications required or permitted hereunder that are addressed as provided in this Section 13.6, (1) if delivered personally against proper receipt shall be effective upon delivery and (2) if sent (A) by certified or registered mail with postage prepaid or (B) by Federal Express or similar courier service with courier fees paid by the sender, shall be effective upon receipt. A party may change its address for the purpose of notices to that party from time to time by a similar notice specifying a new address, but no such change shall be deemed to have been given unless it is sent and received in accordance with this Section 13.6. Section 13.7 Assignability. Neither this Agreement nor any rights or obligations hereunder shall be assignable by any party to any other Person without the prior written consent of the other parties, except that each of WTI and/or WTC may, with notice to the other parties, assign -44- any or all of its interests in this Agreement and its rights and obligations hereunder to WTC or any Person directly or indirectly wholly owned by WTC, provided in every instance WTC shall remain fully liable for all of the obligations of WTC, WTI or Merger Subsidiary hereunder and under the Transactions Documents following any such assignment and shall in no way be released from this Agreement and the other Transaction Documents. This Agreement shall be binding upon, enforceable by and inure to the benefit of the parties hereto and their respective successors and permitted assigns. Section 13.8 Captions. The captions in this Agreement are for convenience only and shall not affect the construction or interpretation of any term or provision hereof. Section 13.9 Number and Gender. Whenever used herein, the singular number shall include the plural, the plural shall include the singular unless the context otherwise requires and the use of any gender shall include all genders. Section 13.10 Severability. The invalidity or unenforceability of any nonmaterial provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects by interpreting that invalid or unenforceable provision as nearly to the original meaning as possible so as to make it valid and enforceable or, if that is not possible or permitted by applicable law, by omitting that invalid or unenforceable provision. Section 13.11 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Section 13.12 No Third-Party Beneficiaries. Except as otherwise provided in Article 11, no Person who is not a party to this Agreement shall be entitled to any rights or benefits hereunder. Section 13.13 Remedies for Section 8.2. Each Receiving Party acknowledges that any breach or attempted breach by such party of the provisions of Section 8.2 will cause irreparable harm to the Disclosing Party, for which monetary damages will not be an adequate remedy. Accordingly, each Disclosing Party shall be entitled to apply for and obtain injunctive relief (temporary, preliminary and permanent) to restrain the breach or threatened breach by a Receiving Party of, or otherwise to specifically enforce, any provision of Section 8.2, without the requirement to post a bond or provide other security. Nothing herein shall be construed as a limitation or waiver of any other right or remedy that may be available to the Disclosing Party for that breach or threatened breach. For emergency relief (including temporary and preliminary injunctive relief), an application may be made in any court of competent jurisdiction. Each Receiving Party further agrees that the subject matter and duration of the restrictions covered in Section 8.2 are reasonable in light of the facts as they exist today. Section 13.14 Integration. This Agreement (as it may be amended from time to time) and the exhibits and schedule hereto constitute the entire agreement among the parties hereto with respect to the subject matter hereof, and supersede all prior agreements and understandings, oral or written, express or implied, with respect thereto. -45- Section 13.15 Principals' Representative. Each Principal has appointed Robert M. Balentine as his or its representative, agent, and attorney-in-fact ("Principals' Representative") pursuant to an agreement in the form of Exhibit 13.15 ("Principals' Representative Agreement") and has provided to the Principals' Representative the full legal authority, capacity, and power to act on behalf of such Principal with respect to any matters arising under this Agreement or in connection therewith. Merger Subsidiary, WTI and WTC shall be entitled to rely, and shall in no way be liable for relying, on the full legal authority, capacity, and power of Robert M. Balentine to act on behalf of each Principal with respect to any matters arising under this Agreement or in connection therewith without further inquiry, and each Principal shall hold each of Merger Subsidiary, WTI and WTC harmless from any liability or loss arising out of the reliance by any of them on that power-of-attorney. If the Principals, by Majority Vote, provide WTI, WTC and their Permitted Transferees and Affiliates with 30 days' notice that Robert has been terminated as Principals' Representative, WTI, WTC and their Permitted Transferees and Affiliates shall cease to rely on Robert as Principals' Representative and shall rely on any successor Principals' Representative who such Principals so designate as the new "Principals' Representative." The term "Majority Vote" has the meaning assigned to such term in the LLC Agreement. -46- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. BALENTINE HOLDINGS, INC. By: /s/ Robert M. Balentine, Jr. ----------------------------------------- Name: Robert M. Balentine, Jr. Title: Chief Executive Officer Address: 3455 Peachtree Road Suite 2000 Atlanta, Georgia 30326 Robert M. Balentine,Jr. (SEAL) --------------------------------------- ROBERT M. BALENTINE Address: 3015 Andrews Drive Atlanta, GA 30305 /s/ B. Clayton Rolader (SEAL) --------------------------------------- B. CLAYTON ROLADER Address: 5050 Riverview Road Atlanta, GA 30327 /s/ Jeffrey P. Adams (SEAL) --------------------------------------- JEFFREY P. ADAMS Address: 901 Hawick Drive Atlanta, GA 30327 /s/ Robert E. Reiser, Jr. (SEAL) --------------------------------------- ROBERT E. REISER, JR. Address: 304 The Prado Atlanta, GA 30309 /s/ Gary B. Martin (SEAL) --------------------------------------- GARY B. MARTIN Address: 116 Peachtree Battle Avenue Atlanta, GA 30305 /s/ Wesley A. French (SEAL) --------------------------------------- WESLEY A. FRENCH Address: 3283 Wood Valley Road Atlanta, GA 30327 /s/ Michael E. Wolf (SEAL) --------------------------------------- -47- MICHAEL E. WOLF Address: 2028 Kinderton Manor Drive Duluth, GA 30097 THE 1999 BALENTINE FAMILY TRUST /s/ Jeffrey P. Adams --------------------------------------- Name: Jeffrey P. Adams Title: Trustee Address: 3455 Peachtree Road Suite 2000 Atlanta, GA 30326 THE ROBERT M. BALENTINE INSURANCE TRUST By: /s/ Lillian A. Balentine Law --------------------------------------- Name: Lillian A. Balentine Law Title: Trustee Address: c/o Lillian A. Balentine Law 47 28th Street, NW Atlanta, GA 30309 WTC MERGER SUBSIDIARY, INC. By: /s/ David R. Gibson --------------------------------------- Name: David R. Gibson, Title: Senior Vice President Address: Rodney Square North 1100 North Market Street Wilmington, DE 19890 WT INVESTMENTS, INC. By: /s/ David R. Gibson --------------------------------------- Name: David R. Gibson, Title: Senior Vice President Address: Rodney Square North 1100 North Market Street Wilmington, DE 19890 WILMINGTON TRUST CORPORATION By: /s/ David R. Gibson --------------------------------------- Name: David R. Gibson, Title: Senior Vice President Address: Rodney Square North -48- 1100 North Market Street Wilmington, DE 19890 -49- EX-10.52 9 w84365exv10w52.txt AMENDED AND RESTATED LLC AGREEMENT DATED 1/2/2002 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF BALENTINE DELAWARE HOLDING COMPANY, LLC EXHIBIT 10.52 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] - ------------------------------------------------------------------------------- AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF BALENTINE DELAWARE HOLDING COMPANY, LLC - ------------------------------------------------------------------------------- TABLE OF CONTENTS Page ARTICLE 1 DEFINED TERMS.................................................................................... 2 ARTICLE 2 GENERAL PROVISIONS............................................................................... 14 Section 2.1. Formation, Name and Continuation.................................................... 14 Section 2.2. Term................................................................................ 14 Section 2.3. Registered Agent and Office; Principal Place of Business............................ 14 Section 2.4. Fiscal Year......................................................................... 15 ARTICLE 3 PURPOSE AND POWERS OF THE LLC.................................................................... 15 Section 3.1. Purpose............................................................................. 15 Section 3.2. Powers of the LLC................................................................... 15 ARTICLE 4 MEMBERS.......................................................................................... 15 Section 4.1. Voting.............................................................................. 15 Section 4.2. Meetings of Members................................................................. 15 Section 4.3. Quorum.............................................................................. 16 Section 4.4. Action by Consent................................................................... 16 Section 4.5. Telephonic Meetings................................................................. 16 Section 4.6. Non-Voting Members.................................................................. 16 ARTICLE 5 MANAGERS AND OFFICERS............................................................................ 16 Section 5.1. Managers............................................................................ 16 Section 5.2. Designated Managers................................................................. 17 Section 5.3. Resignation or Removal of a Manager................................................. 17 Section 5.4. Vacancies........................................................................... 17 Section 5.5. Meetings............................................................................ 17 Section 5.6. Quorum.............................................................................. 18 Section 5.7. Action By Consent................................................................... 18 Section 5.8. Telephonic Meetings................................................................. 18 Section 5.9. Managers as Agents; Limitation on Power of Members.................................. 18 Section 5.10. Duty of Managers.................................................................... 18 Section 5.11. Approval of Annual Budget........................................................... 18 Section 5.12. Officers ........................................................................... 18 Section 5.13. Powers of the Board; Powers of Officers............................................. 19 Section 5.14. Reimbursement....................................................................... 21 ARTICLE 6 CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS, DISTRIBUTIONS AND ALLOCATIONS........................... 21 Section 6.1. Capital Contributions............................................................... 21 Section 6.2. Capital Accounts.................................................................... 22 Section 6.3. Distributions of Cash............................................................... 22
ii Section 6.4. Allocations of Profits and Losses for Tax Purposes.................................. 23 Section 6.5. Special Allocations................................................................. 24 Section 6.6. Allocations under Code Section 704(c)............................................... 24 Section 6.7. Transfer of LLC Interests........................................................... 24 ARTICLE 7 TRANSFER OF LLC INTERESTS, PUT AND CALL OPTIONS, CHANGE OF CONTROL AND ADMISSION OF ADDITIONAL MEMBERS......................................................................................... 25 Section 7.1. Assignability of Interests.......................................................... 25 Section 7.2. Put Options......................................................................... 25 Section 7.3. Call Options........................................................................ 27 Section 7.4. Right of First Refusal.............................................................. 31 Section 7.5. Change of Control................................................................... 33 Section 7.6. Substitute Members.................................................................. 33 Section 7.7. Recognition of Transfer by LLC...................................................... 34 Section 7.8. Order of Puts and Calls and Right of First Refusal.................................. 34 Section 7.9. Indemnification..................................................................... 34 Section 7.10. Issuance of Additional LLC Interests................................................ 34 Section 7.11. Assignment of Balentine's Rights and Obligations.................................... 35 Section 7.12. Guarantee of Performance............................................................ 35 ARTICLE 8 BOOKS AND RECORDS................................................................................ 35 Section 8.1. Books, Records and Financial Statements............................................. 35 Section 8.2. Accounting Method................................................................... 35 Section 8.3. LLC's Independent Accounting Firm................................................... 36 ARTICLE 9 TAX MATTERS...................................................................................... 36 Section 9.1. Tax Matters Member.................................................................. 36 Section 9.2. Right to Make Tax Elections; Tax Classification..................................... 36 ARTICLE 10 LIABILITY, EXCULPATION AND INDEMNIFICATION...................................................... 37 Section 10.1. Liability........................................................................... 37 Section 10.2. Exculpation......................................................................... 37 Section 10.3. Indemnification..................................................................... 38 Section 10.4. Expenses ........................................................................... 38 ARTICLE 11 NON-COMPETITION; CONFIDENTIALITY................................................................ 38 Section 11.1. Confidential Information............................................................ 38 Section 11.2. Non-Competition..................................................................... 40 Section 11.3. Non-Solicitation.................................................................... 41 Section 11.4. Use of Performance Information...................................................... 42 Section 11.5. Specific Performance................................................................ 42 ARTICLE 12 CERTAIN COVENANTS............................................................................... 43 Section 12.1. Compliance with Laws; Maintenance................................................... 43 Section 12.2. Business Agreements................................................................. 43
iii ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION........................................................ 45 Section 13.1. No Dissolution...................................................................... 45 Section 13.2. Events Causing Dissolution.......................................................... 45 Section 13.3. Notice of Dissolution............................................................... 46 Section 13.4. Liquidation......................................................................... 46 Section 13.5. Termination......................................................................... 46 Section 13.6. Claims of the Members............................................................... 46 ARTICLE 14 REPRESENTATIONS AND WARRANTIES.................................................................. 47 Section 14.1. Representations and Warranties of Natural Person Principals......................... 47 Section 14.2. Representations and Warranties of Balentine, WTI and WTC............................ 47 Section 14.3. Representations and Warranties of the Family Trust and the Insurance Trust.......... 48 Section 14.4. Representations and Warranties of All Members....................................... 48 ARTICLE 15 MISCELLANEOUS................................................................................... 48 Section 15.1. Amendments.......................................................................... 49 Section 15.2. Power of Attorney and Other Authorizations.......................................... 49 Section 15.3. Notices............................................................................. 49 Section 15.4. Waivers............................................................................. 51 Section 15.5. Binding Effect...................................................................... 51 Section 15.6. Severability........................................................................ 51 Section 15.7. Counterparts........................................................................ 52 Section 15.8. Governing Law....................................................................... 52 Section 15.9. Captions............................................................................ 52 Section 15.10. Gender.............................................................................. 52 Section 15.11. Third Party Beneficiaries........................................................... 52 Section 15.12. Remedies Cumulative................................................................. 52 Section 15.13. Integration......................................................................... 52
iv AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF BALENTINE DELAWARE HOLDING COMPANY, LLC This Amended and Restated Limited Liability Company Agreement (the "Agreement") of Balentine Delaware Holding Company, LLC (the "LLC") is made as of January 2, 2002, among Balentine Holdings, Inc., a Georgia corporation ("Balentine"), WT Investments, Inc., a Delaware corporation ("WTI"), Wilmington Trust Corporation, a Delaware corporation ("WTC"), Robert M. Balentine ("Robert"), B. Clayton Rolader ("Rolader"), Jeffrey P. Adams ("Adams"), Robert E. Reiser, Jr. ("Reiser"), Gary B. Martin ("Martin"), Wesley A. French ("French"), Michael E. Wolf ("Wolf"), The 1999 Balentine Family Trust (the "Family Trust") and The Robert M. Balentine Insurance Trust (the "Insurance Trust") (Robert, Rolader, Adams, Reiser, Martin, French, Wolf, the Family Trust, the Insurance Trust and other employees of the LLC subsequently admitted to the LLC as members in accordance herewith hereinafter are sometimes collectively referred to as the "Principals"). This Agreement amends and restates in its entirety the LLC's Operating Agreement dated as of October 23, 2001 (the "Original LLC Agreement"), executed by Balentine and, pursuant to certain Joinder Agreements dated as of January 2, 2002, by the Principals (collectively, the "Second LLC Agreement"). BACKGROUND A. Immediately prior to the Merger (as hereinafter defined), the Principals owned all of the outstanding shares of capital stock in Balentine. B. Immediately prior to the Merger, Balentine owned all of the issued and outstanding shares of capital stock of Balentine & Company, a Georgia corporation ("BC"), all of the limited liability company interests of Balentine General Partner, LLC, a Georgia limited liability company ("GP"), and 47.2% of the limited liability company interests in Balentine & Company of Tennessee, L.L.C. ("BCT"). C. The LLC has heretofore been formed as a limited liability company under the Delaware Limited Liability Company Act, 6 Del. C.[sec][sec] 18-101 et seq., as amended from time to time (the "Delaware Act"), by filing a Certificate of Formation of the LLC with the Office of the Secretary of State of Delaware on October 18, 2001 (the "Certificate"). D. Immediately before the events described in Recital E below, BC was converted into a Georgia limited liability company. E. Pursuant to a Contribution Agreement dated January 2, 2002, Balentine, immediately before the Merger, contributed all of its assets to the LLC (which assumed all of Balentine's liabilities) (the value of such assets net of such liabilities being $[*] (the "Initial Capital Contribution"), in exchange for which the LLC issued a 100% capital interest and 100% profits interest to Balentine, and executed the Original LLC Agreement. Immediately after the foregoing contribution and before the Merger, Balentine distributed to the Principals, as its shareholders, an aggregate 20% profits interest and a partially subordinated capital interest in the LLC (collectively valued at $[*]), retaining the remaining capital interest and an 80% profits interest therein (the "Distribution"), and the LLC and the Principals executed the Joinder * CONFIDENTIAL TREATMENT REQUESTED Agreements, constituting, together with the Original LLC Agreement, the Second LLC Agreement. F. WTC Merger Subsidiary, Inc., a wholly owned subsidiary of WTC ("Merger Subsidiary"), has heretofore been formed as a corporation under the Delaware General Corporation Law, 8 Del. C.[sec][sec] 101 et seq., by filing a Certificate of Incorporation of Merger Subsidiary with the Office of the Secretary of State of Delaware on October 17, 2001. G. Subject to the terms and conditions of the Merger Agreement dated October 23, 2001, WTC and the Principals effected the merger of Merger Subsidiary with and into Balentine (the "Merger"), with Balentine surviving the Merger. H. Immediately following the Merger, WTC contributed all of the outstanding shares of capital stock of Balentine to WTI. I. WTC is entering into this Agreement solely for the purpose of guaranteeing the performance of Balentine hereunder pursuant to Section 7.12 and committing to the undertakings in Section 12.2. J. The parties desire to amend and restate the Original LLC Agreement in its entirety and to operate the LLC as a limited liability company under the Delaware Act on the terms and conditions herein. NOW, THEREFORE, in consideration of the foregoing, the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: ARTICLE 1 DEFINED TERMS Unless the context otherwise requires, the terms defined in this Article 1 shall, for the purposes hereof, have the following meanings: a. "Accounting Period" means each Fiscal Year and each other period (1) beginning on the first Business Day following a Business Day on which a Member (i) is admitted to the LLC, (ii) completely withdraws from the LLC, (iii) makes a capital contribution to the LLC, (iv) withdraws a portion of its Capital Account balance, or (v) increases or decreases his or her Membership Points and (2) ending on the earliest thereafter to occur of December 31 or a Business Day on which any of the events in clauses (i)-(v) above occurs. b. "Affiliate" means, with respect to any Person: (1) any other Person directly or indirectly owning, controlling or holding with the power to vote 25% or more of the outstanding voting securities of that Person; (2) any Person directly or indirectly controlling, -2- controlled by or under common control with that Person; (3) any officer, director or partner of that Person; and (4) if the Person is an officer, director or partner, any company for which that Person acts in that capacity. The term "control" means the possession, directly or indirectly, of the power, whether or not exercised, to direct or cause the direction or management or policies of any Person, whether through ownership of voting securities or otherwise. c. "Balentine Entities" means the LLC, BC, GP, and BCT and any Subsidiary (present or future), and the term "Balentine Entity" shall mean any one of the foregoing Balentine Entities. d. "Base Run Rate" means $[*]. e. "Base Valuation" means the Base Run Rate multiplied by [*], or [*]. f. "BCT" means Balentine & Company of Tennessee, L.L.C., a Tennessee limited liability company. g. "BCT Agreement" means the agreement dated January 2, 2002 between WTC and the non-Balentine members of BCT with respect to their right to put their limited liability company interests in BCT to WTC. h. "Board" means the LLC's Board of Managers selected in accordance with, and with the power and authority set forth in, Article 5. i. "Business Day" means a day WTC is open for business. j. "Call" has the meaning assigned to such term in Section 7.3(a). k. "Call Notice" has the meaning assigned to such term in Section 7.3(a). l. "Capital Account" means, with respect to any Member, the Capital Account established and maintained for that Member on the LLC's books in accordance with Section 1.704-1(b)(2)(iv) of the Treasury Regulations. m. "Capital Deduction Amount" means, with respect to the aggregate LLC Interests and associated Membership Points issued on the date hereof to the Principals, $4,418,000; and with respect to LLC Interests and associated Membership Points issued subsequently, an amount determined by the Board. n. "Carrying Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (1) The initial Carrying Value of an asset a Member contributes to the LLC shall be the Fair Market Value of that asset, as determined by the contributing Member and the Board; * CONFIDENTIAL TREATMENT REQUESTED -3- (2) The Carrying Value of all of the LLC's assets shall be adjusted to equal their respective Fair Market Values, as determined by the Board, as of the following times: (a) the acquisition of an additional LLC Interest by any new or existing Member in exchange for a capital contribution; (b) the distribution by the LLC to a Member of property as consideration for an LLC Interest; and (c) the liquidation of the LLC within the meaning of Section 1.704-(b)(2)(ii)(g) of the Treasury Regulations; provided that adjustments pursuant to clauses (a) and (b) above shall be made only if the Board reasonably determines that those adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the LLC; (3) The Carrying Value of any asset the LLC distributes to any Member shall be the Fair Market Value of that asset on the date of distribution; and (4) The Carrying Value of the LLC's assets shall be increased or decreased to reflect any adjustments to the adjusted bases of those assets pursuant to Code Section 734(b) or Code Section 743(b), but only (a) if an election under Code Section 754 is in effect and (b) to the extent those adjustments are taken into account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations; provided that Carrying Values shall not be adjusted pursuant to this clause (4) to the extent the Board determines that an adjustment pursuant to clause (2) hereof is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this clause (4). If the Carrying Value of an asset has been determined or adjusted pursuant to clause (1), (2) or (4) hereof, that Carrying Value shall thereafter be adjusted by the Depreciation taken into account with respect to those assets for purposes of computing Profits and Losses. o. "Cause," with respect to a Person, means: (1) A breach (other than one that is inadvertent) of any provision of Article 11 hereof, provided that such Person has received notice of such breach by the Board and, if curable, has been given the opportunity to cure such breach and has not cured it within five days of receiving notice; (2) The willful and continued failure of a Person to perform substantially such Person's duties with the LLC (other than any such failure resulting from incapacity due to physical or mental illness), for a period of five days after a written demand for substantial performance is delivered to such Person by the Board which specifically identifies the manner in which the Board believes that such Person has not substantially performed such Person's duties; (3) The engaging by a Person in illegal conduct, dishonest conduct, conduct that is a breach of such Person's fiduciary duty, or gross misconduct, in each instance where the conduct or misconduct is materially injurious to the LLC or one of its Subsidiaries; or -4- (4) Any disqualification, suspension or revocation of any applicable registration or license of a Person as a result of a final, non-appealable proceeding by the U.S. Securities and Exchange Commission, any state securities commission, or any self-regulatory authority or court with jurisdiction over the LLC that would materially limit (a) the performance of any duties by such Person or (b) the ability of the LLC or any of its Affiliates to perform its business or contemplated business. Within ten business days after a Person's termination for Cause, there shall be delivered to such Person a copy of a resolution duly adopted by the affirmative vote of a majority of all of the members of the Board at a meeting of the Board called and held for such purpose, finding that, in the good faith opinion of the Board, such Person is guilty of the conduct described in subparagraph (1), (2) or (3) above, and specifying the particulars thereof in detail. p. "Change of Control" means (1) the acquisition by any Person or group of Persons of beneficial ownership (as that term is defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of 25% or more of the outstanding capital stock of WTI or its parent, WTC, entitled to vote for the election of directors ("WTC Voting Shares"); (2) the acquisition by any Person or any group of Persons (other than WTC, WTI or any of their Affiliates) of 50% or more of the Membership Points in the LLC owned by WTC, WTI or any of their Affiliates immediately prior to such acquisition; (3) the merger or consolidation of WTI or WTC with one or more other Persons as a result of which the holders of the outstanding WTC Voting Shares of WTI or WTC, as the case may be, immediately before the merger or consolidation hold less than 50% of the WTC Voting Shares of the surviving or resulting Person; (4) the merger or consolidation of the LLC with one or more other Persons (other than WTI, WTC or one of more of their Affiliates) as a result of which the holders of the outstanding Membership Points immediately before the merger or consolidation hold less than 50% of the total outstanding Membership Points (or equivalent) of the surviving or resulting Person; (5) the transfer of all or substantially all of WTI's, WTC's or the LLC's assets, other than to an Affiliate of WTI or WTC; or (6) a proxy contest for the election of directors of WTC that results in Persons constituting the Board of Directors of WTC immediately before the initiation of that proxy contest ceasing to be a majority of the Board of Directors of WTC upon the conclusion of that proxy contest; provided that neither (x) any transfer of the capital stock or assets of WTI or WTC to, or the merger or consolidation of WTI or WTC with or into, (A) an entity that both prior to and also after that transfer, merger or consolidation had been and will be consolidated with WTI or WTC for federal income tax purposes or (B) any newly formed, wholly owned subsidiary of WTI or WTC that will be consolidated with WTI or WTC for federal income tax purposes, nor (y) a transfer of LLC Interests by one or more Principals to one or more Permitted Transferees shall be deemed to be a Change of Control for purposes hereof. For the avoidance of doubt, the acquisition of 50% of the voting equity of any Affiliate of WTC (other than by WTC, WTI or any of their Affiliates) that has any direct or indirect ownership of the LLC shall be deemed to be an indirect acquisition of the Membership Points (or equivalent) of the LLC. q. "Client" means, at any time, any Person who is at that time a customer or client of the LLC or a Subsidiary (either directly or by participating as a partner, member, -5- shareholder or other equity holder of an Existing Fund or an investment vehicle to which the LLC or a Subsidiary provides investment advice or investment management or administrative services). r. "Closing" has the meaning assigned to it in the Merger Agreement. s. "Code" means the Internal Revenue Code of 1986, as amended from time to time, or any corresponding federal tax statute enacted hereafter. A reference to a specific section of the Code refers to that section as well as any corresponding provision of any federal tax statute enacted hereafter, as that section is in effect on the date of application of the provisions hereof containing that reference. t. "Compensation Plan" means, with respect to each Principal, the compensation plan set forth on Schedule 1 to the Employment Agreement of such Principal dated as of the date hereof. u. "Confidential Information" has the meaning assigned to such term in Section 11.1(b). v. "Depreciation" means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for that Fiscal Year or other period, except that, if the Carrying Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of that Fiscal Year or other period, Depreciation shall be an amount that bears the same ratio to that beginning Carrying Value as the federal income tax depreciation, amortization or other cost recovery deduction for that Fiscal Year or other period bears to that beginning adjusted tax basis; provided that, if the federal income tax depreciation, amortization or other cost recovery deduction for that year is zero, Depreciation shall be determined with reference to that beginning Carrying Value using any reasonable method the Board selects. w. "Disability" has the meaning set forth in a policy or policies of disability insurance, if any, the LLC obtains for the benefit of itself and/or its employees. If there is no definition of "disability" applicable under any such policy or policies, then a Person shall be considered "Disabled" upon the first to occur of: (1) such Person's being adjudged incompetent by a court of competent jurisdiction; (2) such Person's being determined to be physically or mentally incapable of performing the essential functions of his job for a period of 180 days in any 12-month period, in the opinion of a licensed medical doctor acceptable to the LLC; or (3) such Person's being certified as permanently disabled under the provisions of the Social Security Act, as amended from time to time. x. "Election Period" has the meaning assigned to such term in Section 7.4(a). y. "Employment Agreement" means an employment agreement between the LLC and a Principal (other than the Family Trust or the Insurance Trust) as in effect from time to time. -6- z. "Exchange Act" means the Securities Exchange Act of 1934, as amended. aa. "Existing Debt" means the existing indebtedness of certain of the Principals to Colonial Bank for leasehold improvements for Balentine in the current principal amount of $[*] with the final scheduled installment due April 2008. bb. "Existing Fund" means any one of Balentine U.S. Small Cap Equity Fund, L.P., Balentine U.S. Small Cap Equity Fund Select, L.P., Balentine U.S. Mid Cap Equity Fund, L.P., Balentine U.S. Mid Cap Equity Fund Select, L.P., Balentine U.S. Large Cap Equity Fund, L.P., Balentine U.S. Large Cap Equity Fund Select, L.P., Balentine International Equity Fund, L.P., Balentine International Equity Fund Select, L.P., Balentine Hedge Fund, L.P., Balentine Hedge Fund Select, L.P. and/or Griffin Arbitrage, L.P., and "Existing Funds" means all of such funds collectively. cc. "Fair Market Value" means the amount for which an asset could be sold in an arms'-length transaction by one who desires to sell, but is not under any urgent requirement to sell, to a buyer who desires to buy, but is under no urgent necessity to buy, when both have a reasonable knowledge of the facts. dd. "Family" means any member of a Person's immediate family, as defined in Rule 16a-1 of the Exchange Act, and all aunts, uncles, nieces, nephews and first and second cousins of that Person. ee. "Final Election Period" has the meaning assigned to such term in Section 7.4(a). ff. "First Refusal Notice" has the meaning assigned to such term in Section 7.2(d). gg. "Fiscal Year" has the meaning assigned to such term in Section 2.4. hh. "Free Cash Flow" means, for any Accounting Period, (1) the Profits (determined without deduction of any Depreciation) for such period, excluding Profits resulting from or in connection with any Realization Event, plus (2) all principal repayments that the LLC or its Subsidiaries received during such period on the aggregate debt (including any Stockholder Notes) owed thereto as of the date hereof by certain Principals, unless otherwise consented to in writing by the Principals holding a majority of the Principals' Membership Points, less (3) all distributions during such period pursuant to Section 6.3(b). In no event shall Free Cash Flow for any Accounting Period be less than the LLC's consolidated revenues for such period (excluding cash generated by or in connection with any Realization Event) plus cash previously set aside as reserves for contingencies, working capital, debt service, taxes, insurance and/or other costs and expenses in connection with the LLC's business that the Board reasonably determines in good faith is no longer needed for the LLC's business, less the sum of (A) all cash expenditures the LLC made during such period (including operating expenses, principal and interest payments on * CONFIDENTIAL TREATMENT REQUESTED -7- any indebtedness of the LLC and lease payments on capitalized leases) and (B) funds the Board has reasonably determined in good faith to set aside during such period as such reserves. ii. "GAAP" means U.S. generally accepted accounting principles consistently applied with prior periods. jj. "Good Reason" means, with respect to any Principal employed by the LLC: (1) a reduction by the LLC in such Principal's salary as the foregoing is in effect on the date hereof or as the same may be increased from time to time; (2) a material adverse change in, or the failure by the LLC to continue in effect, any compensation plan (other than salary) in which such Principal participates unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; (3) the LLC's requiring such Principal, without his consent, to be based at any office or location other than in the Atlanta, Georgia Metropolitan Statistical Area, or, if such Principal was employed by BC immediately prior to the date hereof, to travel primarily for purposes unrelated to developing or maintaining new or existing business relationships for the LLC and/or its Subsidiaries to a substantially greater extent than required immediately prior to the date hereof; (4) without the written consent of a Person, the assignment to such Person of duties inconsistent in any material respect with such Person's position, authority, duties or responsibilities as in effect on the effective date of such Person's employment by the LLC, or any other action by the LLC, which assignment, in each instance, results in a material diminution in such position, authority, duties or responsibilities; or (5) the material breach by the LLC of any provision of such Principal's Employment Agreement. Good Reason shall not include a Principal's death or Disability. Such Person's continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder. The LLC shall have an opportunity to cure any claimed event of Good Reason within 30 days of notice from the Principal. kk. "Liquidating Trustee" has the meaning assigned to such term in Section 13.3. ll. "LLC Interest" means a beneficial interest in the LLC, consisting of an interest in Profits (i.e., an interest representing a claim to a portion of (a) Profits earned by the LLC after issuance of such LLC Interest, (b) Free Cash Flow thereafter, and (c) under certain circumstances, distributions on the LLC's liquidation, all based on the interestholder's -8- Membership Points) and in the LLC's capital (reflected by the interestholder's Capital Account balance). mm. "LLC Value" means the Valuation for the last completed Fiscal Year prior to the event giving rise to the calculation of LLC Value. nn. "Majority Vote" means (i) with respect to the Members, the written approval of, or the affirmative vote by, a majority in interest of the Members determined with reference to their Membership Points set forth on Schedule 1 hereto, and (ii) with respect to the Principals, the written approval of, or the affirmative vote by, a majority in interest of the Principals determined with reference to their Membership Points there set forth. For purposes of determining a Majority Vote, Membership Points owned by Non-Voting Members are not voted and are not counted in the calculation of the total Membership Points outstanding or the Membership Points held by the Principals for purposes of such vote. oo. "Manager" means a member of the Board. pp. "Members" means the Principals, their Permitted Transferees, Balentine, its Permitted Transferees, and any additional Persons admitted as Members pursuant to Section 7.6. qq. "Membership Points" means, as of any date, with respect to a Member, the number of Membership Points set forth opposite that Member's name on Schedule 1 hereto, as adjusted from time to time pursuant hereto and as in effect on that date. rr. "Merger Agreement" means the Merger Agreement dated October ____, 2001 among Balentine, the Principals, Merger Subsidiary, WTI and WTC, as it may from time to time be amended. ss. "Metropolitan Statistical Area" of a city means such city's metropolitan statistical area as defined by the United States Office of Management and Budget. tt. "New Business Opportunity" means any opportunity to provide wealth management services that are provided by the LLC or its Subsidiaries as of the date hereof, including, but not limited to, (1) opening a new office of the LLC, (2) hiring or "lifting out" from another business one or more professional employees involving an initial signing bonus or comparable payment of $250,000 or more, or (3) acquiring a business that at the time of acquisition is engaged in investment management or investment advisory activities that the LLC performs at that time; provided, however, that the Principals may, by Majority Vote, determine that an opportunity is not a New Business Opportunity. uu. "Non-Voting Member" means a Member owning an LLC Interest but, pursuant to Section 4.6, not having the right to vote his or its Membership Points. vv. "Note" has the meaning assigned to such term in Section 7.3(c). -9- ww. "Offer" has the meaning assigned to such term in Section 7.4(a). xx. "Offered Membership Points" has the meaning assigned to such term in Section 7.4(a). yy. "Offer Notice" has the meaning assigned to such term in Section 7.4(a). zz. "Officer" has the meaning assigned to such term in Section 5.12. aaa. "Other Principals" has the meaning assigned to such term in Section 7.2(b). bbb. "Permitted Transferee" means WTI and any other Person consolidated with WTI for federal income tax purposes and, with respect to any natural person, the parents, siblings, spouse, children (by birth or adoption) or spouses of children of that person (in any such case who are age 21 or over) and any trust, partnership, limited partnership, limited liability partnership or limited liability company created by or for one or more of the aforementioned individuals (including those who are under age 21) of which a Principal is the voting trustee, general partner, managing member or otherwise possesses the power to vote the LLC Interest held by that entity. ccc. "Person" means any individual, partnership, limited liability company, corporation, association, trust, joint venture or governmental, business or other entity. ddd. "Principals' Representative" has the meaning assigned to such term in Section 15.2(b). eee. "Principals' Representative Agreement" has the meaning assigned to such term in Section 15.2(b). fff. "Profits" and "Losses," for each Fiscal Year or Accounting Period, mean an amount equal to the LLC's taxable income or loss, respectively, for that 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), but computed with the following adjustments: (1) Any income of the LLC exempt from federal income tax and not otherwise taken into account in computing Profits or Losses shall be added to that taxable income or loss; (2) Any expenditures of the LLC described in Code Section 705(a)(2)(B) or treated as such expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not otherwise taken into account in computing Profits and Losses, shall be subtracted from that taxable income or loss; -10- (3) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Carrying Value of that property, notwithstanding that its adjusted tax basis differs from its Carrying Value; (4) In lieu of depreciation, amortization and other cost recovery deductions otherwise taken into account in computing taxable income or loss, there shall be taken into account Depreciation; and (5) Notwithstanding any other provisions of this definition, any items that are specially allocated pursuant to Section 6.5 or that result from an adjustment to basis of one or more Members pursuant to Code Section 734(b) or 743(b) shall not be taken into account in computing Profits or Losses. ggg. "Purchase Closing Date" means the date upon which LLC Interests are purchased and paid for pursuant to Article 7 hereof. hhh. "Purchase Price" means, in the case of a purchase of an LLC Interest from a Principal or his or its Permitted Transferees, an amount equal to (a) the LLC Value less the Base Valuation, multiplied by (b) a fraction, the numerator of which is the number of Membership Points associated with the LLC Interest to be purchased and the denominator of which is the number of all Membership Points outstanding on the related Purchase Closing Date. The Purchase Price shall be calculated by using the LLC Value as of the end of the Fiscal Year immediately prior to the exercise of the Put or the event giving rise to the Call. iii. "Purchaser" has the meaning assigned to such term in Section 7.4(c). jjj. "Put" has the meaning assigned to such term in Section 7.2(b). kkk. "Put Notice" has the meaning assigned to such term in Section 7.2(d). lll. "Realization Event" means (1) any sale of all or substantially all of the LLC's assets, (2) any merger or consolidation of the LLC with or into another entity or, unless otherwise approved by the Board, of another entity with or into the LLC or (3) any dissolution or winding up of the LLC. A "Realization Event" shall not include a merger of GP into or with BC or the transfer of GP's assets to BC. mmm. "Remaining Principals" has the meaning assigned to such term in Section 7.4(a). nnn. "Restricted Area" has the meaning assigned to such term in Section 11.2. ooo. "Restricted Period" has the meaning assigned to such term in Section 11.2. -11- ppp. "Retirement" with respect to a natural person Principal means when that Principal reaches age 65; provided that Retirement shall not occur with respect to a Principal who continues to work for the LLC after reaching age 65 unless the Board notifies him that it objects to his continued participation in the LLC. Retirement with respect to a Principal who continues to participate in the LLC after reaching that age shall occur upon the earlier of (1) notification from the Board that it objects to that Principal's continued participation or (2) the voluntary cessation of the Principal's employment by the LLC. qqq. "Run Rate" means the LLC's consolidated annual net earnings before interest, taxes, depreciation and amortization, determined for each Fiscal Year in accordance with GAAP and the accounting principles and practices historically used by Balentine in preparing Balentine's financial statements, provided that (1) in every event only costs directly attributable to the LLC's operations will be included in calculating the Run Rate, (2) expenses of a New Business Opportunity will not be included in calculating the Run Rate until 24 months after expenses are first incurred for that New Business Opportunity, (3) in preparing the LLC's consolidated annual net earnings before interest, taxes, depreciation and amortization for a Fiscal Year, the LLC will be deemed to own its proportionate share of BCT's annual net earnings before interest, taxes, depreciation and amortization for that year based on the LLC's proportionate ownership of BCT during that year calculated as though any outstanding unexercised options or rights to purchase securities of BCT have not been exercised, (4) the LLC's revenues shall exclude any rent (but not expense reimbursements) received pursuant to the second sentence of Section 12.2(b)(4), and (5) extraordinary, non-recurring items of revenue and expense will be excluded. The Run Rate will be calculated by reference to the LLC's financial statements prepared in accordance with GAAP and separately audited by an independent accounting firm selected by the Principals and acceptable to WTI, which acceptance will not be unreasonably withheld, and such other books and records as are sufficient to identify the items in clauses (1) through (5). Such direct costs referred to above do not include the costs of support services generally available from WTC but do include the cost of the benefits described in Section 12.2(b)(7). The costs associated with opening and operating the trust and/or banking office described in Section 12.2(b)(4) will not be included in computing the Run Rate. rrr. "Stockholder Notes" has the meaning assigned to such term in the Merger Agreement. sss. "Subsidiary" means any Person of which (1) more than 25% of either the equity interests or the voting control is, directly or indirectly, through Subsidiaries or otherwise, beneficially owned by such Person or (2) the LLC or any such Person either serves as the general partner or managing member. ttt. "Tax Matters Member" has the meaning assigned to such term in Section 9.1(a). uuu. "Term," with respect to a Principal, has the meaning assigned to such term under such Principal's Employment Agreement. -12- vvv. "Transfer" has the meaning assigned to such term in Section 7.1(a). www. "Treasury Regulations" means the income tax regulations, including temporary regulations, promulgated under the Code, as those regulations may be amended from time to time (including corresponding provisions of succeeding regulations). xxx. "Trust" has the meaning assigned to such term in Section 14.3. yyy. "Valuation" means, for determinations for events occurring in Fiscal Years 2001 and 2002, the Base Valuation and, for determinations for events occurring in each Fiscal Year thereafter, the LLC's Run Rate in the last full Fiscal Year preceding the year in which the valuation is used multiplied by a factor determined by reference to the annual compound growth in the Run Rate to the end of the Fiscal Year used to compute the Run Rate calculated from January 1, 2003 and thereafter in accordance with the following schedule:
Annual Compound Growth Multiple Below [*]% [*]times [*]% [*]times [*]% [*]times [*]% [*]times [*]% [*]times Over [*]% [*]times
Annual compound growth in the Run Rate between [*]% and [*]% shall be interpolated proportionately. The initial value used for the calculation of the compound growth rate that will determine the earn out payment multiple will be the Base Run Rate. The initial computation of the annual compound growth rate for 2002 shall be determined by dividing the Base Run Rate into the Run Rate for Fiscal Year 2002, subtracting one from the result and converting that result into a percentage. For example, if the Base Run Rate were 2000 and the Run Rate for 2002 were 2400, the annual compound growth for 2002 would be 20% and the multiple for 2002 would be [*]. The annual compound growth rate for subsequent years would be determined on a compound basis beginning with Fiscal Year 2003. Attached as Schedule 3 are further examples of computations related to Valuation. zzz. "Voting Members" means all Members, other than Non-Voting Members. aaaa. "WTC" means Wilmington Trust Corporation, a Delaware corporation, and its successors. bbbb. "WTC Change of Control Purchase Price" means an amount equal to the sum of (1) the LLC Value multiplied by a fraction, the numerator of which is the number of Membership Points held by Balentine, WTI, WTC and their Permitted Transferees and the denominator of which is the number of Membership Points outstanding on the Purchase Closing Date, plus (2) * CONFIDENTIAL TREATMENT REQUESTED -13- the Capital Deduction Amount multiplied by a fraction, the numerator of which is the number of Membership Points held by the Principals and their Permitted Transferees on the Purchase Closing Date and the denominator of which is the number of Membership Points held by the Principals and their Permitted Transferees on the date hereof, less (3) what the Principals who exercise their right under Section 7.5(b) would have received under Sections 3.1(c) and (d) of the Merger Agreement had only such Persons elected to receive an accelerated payment under such sections. The WTC Change of Control Purchase Price shall be calculated by using the LLC Value as of the end of the year immediately prior to the exercise of the rights described in Section 7.5(b). cccc. "WTI" means WT Investments, Inc., a Delaware corporation, and its successors. dddd. "WTI Clients" means investment management, custody and personal trust clients of WTI or any of its Affiliates. For this purpose, the LLC and its Subsidiaries are not considered to be Affiliates of WTI. ARTICLE 2 GENERAL PROVISIONS Section 2.1. Formation, Name and Continuation. The name of the LLC is "Balentine Delaware Holding Company, LLC." The LLC's business will be conducted with reference to its affiliation with WTC as the Board designates from time to time and may be conducted under any other name or names the Board designates from time to time. The parties hereto enter into this Agreement pursuant to the provisions of the Delaware Act and for the purposes described herein. The rights and liabilities of the Members shall be as provided in the Delaware Act for members, except as provided herein. The name, mailing address, initial capital contribution and Membership Points of each Member shall be listed on Schedule 1 hereto. The LLC's Secretary shall update any schedule from time to time necessary to reflect accurately the information therein. Any amendment or revision to a schedule made in accordance with this Agreement shall not be deemed an amendment hereto. Any reference in this Agreement to a "schedule" shall be deemed to be a reference to a schedule hereto as amended and in effect from time to time, unless expressly noted otherwise. Section 2.2. Term. The term of the LLC commenced on the date the Certificate was filed in the office of the Secretary of State of Delaware and shall continue in perpetuity, unless dissolved in accordance with the provisions hereof. The existence of the LLC as a separate legal entity shall continue until the Certificate's cancellation. Section 2.3. Registered Agent and Office; Principal Place of Business. a. The LLC's registered agent and office in Delaware shall be WTI, Rodney Square North, 1100 North Market Street, New Castle County, Delaware 19890. The Board may at any time designate another registered agent and/or registered office. -14- b. The LLC's principal place of business initially shall be at 3455 Peachtree Road, Suite 2000, Atlanta, Georgia 30326. c. The Board may, at any time and from time to time: (1) subject to Section 5.13(d), change the location of the LLC's principal place of business and establish an additional place or places of business of the LLC as it may determine; (2) change the location of the LLC's books and records; (3) change the LLC's registered office in Delaware; and (4) change the LLC's resident agent for service of process in Delaware. Section 2.4. Fiscal Year. Except as the Board determines otherwise, the LLC's fiscal year for accounting purposes and taxable year ("Fiscal Year") shall be the calendar year, except for the short year in the years of the LLC's formation and termination and as otherwise required by the Code. ARTICLE 3 PURPOSE AND POWERS OF THE LLC Section 3.1. Purpose. The LLC is formed for the purpose of engaging in any lawful act or activity for which limited liability companies may be formed under the Delaware Act and engaging in any and all activities necessary or incidental to the foregoing; provided that the LLC is not formed for the purpose of and shall not engage in any business that would be impermissible for WTI or any of its Affiliates under federal or state banking law, as those laws may be amended from time to time. Section 3.2. Powers of the LLC. The LLC shall have all power and authority granted under the Delaware Act to take all actions necessary, appropriate, proper, advisable, incidental or convenient to or for the furtherance of the purpose set forth in Section 3.1. ARTICLE 4 MEMBERS Section 4.1. Voting. Members shall have the power to vote only as provided by this Article 4 and as required by law. Unless otherwise provided in this Agreement or by law, any vote of Members shall be determined by a Majority Vote. Section 4.2. Meetings of Members. The Board or its Chairman may call a meeting of Voting Members. Meetings of Voting Members shall be held at the LLC's principal place of business upon at least 10 days' written notice to all Voting Members. The notice shall state the purpose or purposes of the meeting with reasonable particularity and shall contain a description of the items to be acted upon. -15- Section 4.3. Quorum. At any meeting of Voting Members, the presence of Members owning LLC Interests representing a majority of the Membership Points, other than LLC Interests representing Membership Points owned by Non-Voting Members, shall constitute a quorum. Any meeting may be adjourned from time to time by Voting Members holding a majority of the votes present at the meeting, whether or not a quorum is present, and the meeting may be held as adjourned upon at least 10 days' written notice to all Voting Members. Section 4.4. Action by Consent. Any action of Voting Members may be taken without a meeting if the Voting Members required to consent to the action to be taken, if the action had been taken at a meeting of Voting Members, consent to the action in writing and the Board and all Members are given at least five days' prior written notice of the proposed action. The written consents shall be filed with the records of the Members' meetings. Those actions by consent shall be treated for all purposes as actions taken at a meeting. Section 4.5. Telephonic Meetings. Voting Members may participate in a meeting of Voting Members by means of a conference telephone or similar communications equipment if all Voting Members participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence in person at a meeting. Section 4.6. Non-Voting Members. Any Member shall become a Non-Voting Member until his LLC Interest has been purchased in full in accordance with Article 7 if such Member (a) is terminated from employment with the LLC for Cause, (b) voluntarily resigns from employment with the LLC without Good Reason, (c) is a Member during the periods described in Sections 7.2(e) and 7.3(d), or (d) is so determined by the Board to be a Non-Voting Member by reason of Cause. The estate or other successor of any Member that dies, dissolves or otherwise ceases to exist shall become a Non-Voting Member until his or its LLC Interest has been purchased in full in accordance with Article 7. The Board may, in its discretion, waive this provision. In accordance with Section 7.6, the Board may admit a substitute Member as a Non-Voting Member. Non-Voting Members do not have the right to receive notice of meetings of Voting Members or to participate in those meetings. ARTICLE 5 MANAGERS AND OFFICERS Section 5.1. Managers. The management of the LLC's business shall be vested in the Board, which shall consist of five Managers, all of whom must be Voting Members or employees, officers or directors of Voting Members (or of WTC or one of its Affiliates in the case of Balentine). Unless otherwise specified herein, the Board shall act by majority vote of those Managers present at a meeting at which a quorum is present, with each Manager on the Board present having one vote. -16- Section 5.2. Designated Managers. a. Until March 31, 2006, the Principals shall be entitled to designate or redesignate three of the five Managers (or at least 60% of the Managers if the number of Managers is adjusted) by Majority Vote of the Principals. After March 31, 2006 and provided that they own LLC Interests with an aggregate of at least 3% of the then outstanding Membership Points, the Principals shall be entitled to designate or redesignate one of the five Managers by Majority Vote of the Principals (or at least 20% of the Managers if the number of Managers is adjusted) by written notice to the Board of their designee. b. Until March 31, 2006, Balentine, WTC and their Affiliates shall be entitled to appoint two of the five Managers (or no more than 40% of the Managers if the number of Managers is adjusted) by written notice to the Board of their designees. After March 31, 2006, Balentine, WTC and their Affiliates shall be entitled to appoint four of the five Managers (or at least 80% of the Managers if the number of Managers is adjusted) by written notice to the Board of their designees. c. The initial Managers of the LLC shall be Robert, Rolader and Adams, who shall be deemed designated by the Principals pursuant to Section 5.2(a), and Ted T. Cecala and Rodney P. Wood, who shall be deemed designated by Balentine, WTC and their Affiliates pursuant to Section 5.2(b). A Manager shall hold office until the Manager resigns, Retires, dies or is removed. Section 5.3. Resignation or Removal of a Manager. a. Any Manager may resign by delivering to the LLC a signed notice indicating his intent to resign and the effective date of his resignation. b. The Board by Majority Vote may remove any Manager (1) for Cause or (2) if the Manager becomes subject to a Disability. A Manager shall be automatically removed if he becomes a Non-Voting Member. Those Persons who are entitled to designate a Manager and who hold the number of Membership Points necessary to designate a Manager may remove and replace such Manager previously designated by them at any time upon written notice to the LLC. Section 5.4. Vacancies. If a Manager resigns or is removed from the Board, the Persons who previously designated that Manager may designate another Person to serve as Manager at any time after the resignation or removal by written notice to the LLC. Section 5.5. Meetings. The Board shall hold regular quarterly meetings without call or notice, at such places and times as the Board determines from time to time, provided reasonable notice of the first regular meeting following any such determination is given to Managers absent at the meeting fixing regular meetings. When called by the Chairman or by Managers holding a majority of votes on the Board, the Board may hold special meetings at such places and times as are designated in the call of the meeting, upon at least ten days' notice given by the Chairman, the Secretary or an Assistant Secretary, or by the Managers calling the meeting. Any notice -17- required hereunder may be waived in writing by the Person to whom notice should have been sent, whether before or after the meeting, and attendance at any meeting waives the attendee's right to any notice required hereunder unless the Person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened. Section 5.6. Quorum. At any meeting of the Board, the presence of three Managers shall constitute a quorum, provided that prior to March 31, 2006 at least two of such Managers must have been designated by the Principals. Any meeting may be adjourned from time to time by Managers holding a majority of votes present at the meeting, whether or not a quorum is present, and the meeting may be held as adjourned upon at least 10 days' notice to all Managers. Section 5.7. Action By Consent. Any action of the Board may be taken without a meeting if all Managers consent to the action in writing. The written consents shall be filed with the records of the Board meetings. Those actions by consent shall be treated for all purposes as actions taken at a meeting. Section 5.8. Telephonic Meetings. Managers may participate in Board meetings by conference telephone or similar communications equipment, as long as all Managers participating in the meeting can hear each other at the same time. Participation by such means shall constitute presence at the meeting in person. Section 5.9. Managers as Agents; Limitation on Power of Members. To the extent of their powers set forth herein, the Managers are agents of the LLC for purposes of the LLC's business, and the actions of the Managers taken in accordance with those powers shall bind the LLC. No Member, in that Person's capacity as Member, acting individually or with all Members, and no Managers representing less than the number of Managers necessary for Board action under Sections 5.1, 5.7 or 5.13(d) may bind the LLC. The Managers representing the number of Managers necessary for Board action under Article 5 may bind the LLC. Section 5.10. Duty of Managers. A Manager is required to act in good faith in a manner he reasonably believes to be in the best interest of the LLC and shall be deemed to owe the same fiduciary duty to the LLC as a director of a Delaware corporation is deemed to owe the corporation under Delaware law. Section 5.11. Approval of Annual Budget. The Board alone shall have the power to approve the LLC's annual budget. If the LLC's annual budget is not approved in its entirety by the Board under this Section 5.11, the Board shall approve the budget to the extent of those items on which there is agreement, and shall continue to negotiate in good faith until all items of the budget are agreed upon. Section 5.12. Officers. The Board may appoint agents and employees of the LLC who are designated as officers of the LLC (each, an "Officer"). The Officers shall at all times include a Chairman, a President, a Chief Executive Officer and a Secretary and may from time to time -18- include a Vice Chairman, one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents and Assistant Secretaries and such other Officers as the Board may approve. The initial Officers shall be as set forth on Schedule 2. The Board may remove any Officer at any time, for any reason, in its sole and absolute discretion. The Officers shall be agents of the LLC, authorized to execute and deliver documents and take other actions on the LLC's behalf, subject to the direction of the Board, and to have such other duties as the Board may approve, provided that the delegation of any such power and authority to the Officers shall not limit in any respect the power and authority of the Board to take such actions or any other action on the LLC's behalf as provided herein. The Secretary shall record the actions of the Board, certify this Agreement and any related document or instrument, certify Board resolutions, incumbency and other matters of the LLC, and have such other ministerial duties as the Board may specify from time to time. Section 5.13. Powers of the Board; Powers of Officers. a. Subject to the provisions hereof and of the Delaware Act requiring the approval of Members, the Board's powers on behalf and in respect of the LLC shall be all powers and privileges permitted to be exercised by managers of the LLC under the Delaware Act (including Section 18-402 of the Delaware Act), including the authority, power and discretion to manage and control the business operations, affairs and properties of the LLC, to make all decisions regarding those matters and to perform any and all other acts or activities customary or incident to the management of the LLC's business operations, including, without limitation, the right and power to hire and terminate employees, and determine salaries, bonuses and other employee benefits for the employees of the LLC. b. Except to the extent that this Agreement requires the Board to vote on a matter, the Board may delegate any of its powers to the Officers or any one or more of them. c. Subject to the limitation set forth in Section 5.13(b), the Board hereby delegates to the respective Officers the respective powers delegated to officers of a corporation under Delaware's General Corporation Law, subject to the powers of a board of directors of a corporation under Delaware law. Any documents signed by such Officers with the foregoing delegation shall be binding on the LLC as if signed by the number of Managers required to approve such action. The Board reserves the right to rescind the delegation of any such powers at any time in its sole discretion. d. Notwithstanding the foregoing, without the approval of all of the Managers, the Board has no authority to: (1) amend this Agreement or, except as otherwise specifically provided herein, the Certificate; (2) issue new LLC Interests; (3) admit new Members; -19- (4) amend the investment management and advisory agreements of the LLC existing as of the effective date of this Agreement in a manner materially adverse to the LLC; (5) in a single transaction or series of related transactions, consolidate or merge the LLC or any Subsidiary of the LLC with or into another Person (whether or not the LLC or such Subsidiary is the surviving Person), sell, assign, transfer, lease, convey or otherwise dispose of all or any substantial part of the property or assets of the LLC or any Subsidiary of the LLC (other than pursuant to the BCT Agreement), or liquidate, dissolve or wind up, or undertake any similar transaction or authorize, announce, make proposals or seek offers for, or enter into any binding or nonbinding arrangements, understandings or agreements with respect to any transaction or transactions with a similar effect to the foregoing, except in all cases with, into, or to any Person that is an Affiliate of the LLC, WTC, or WTI; (6) file a voluntary petition or otherwise initiate proceedings (i) to have the LLC adjudicated insolvent, or (ii) seeking an order for relief of the LLC as a debtor under the United States Bankruptcy Code (11 U.S.C. [sec][sec] 101 et seq.); file any petition seeking any composition, reorganization, readjustment, liquidation, dissolution or similar relief under the present or any future federal bankruptcy laws or any other present or future applicable federal, state or other statute or law relating to bankruptcy, insolvency, or other relief for debtors with respect to the LLC; or seek, consent or fail to contest the appointment of any trustee, receiver, conservator, assignee, sequestrator, custodian, liquidator (or other similar official) of the LLC or of all or any substantial part of the property or assets of the LLC, or make any general assignment for the benefit of creditors of the LLC, or admit in writing the inability of the LLC to pay its debts generally as they become due, or declare or effect a moratorium on the LLC's debt or take any action in furtherance of any proscribed action; (7) enter into a type of business that is fundamentally different than presently conducted by the LLC; (8) initiate and/or settle any third party or governmental claims, disputes or litigation involving the LLC in excess of $250,000; (9) incur new indebtedness for money borrowed in excess of $250,000 in any Fiscal Year; (10) issue additional securities of a Subsidiary of the LLC (other than any securities that may be issued pursuant to any agreements existing with BCT as of the date hereof); (11) make capital expenditures in excess of $250,000 in any Fiscal Year; -20- (12) make any election, or take or omit to take any action, that would prevent the LLC from being taxed as a partnership for federal or state income tax purposes; (13) change the name or the location of the principal place of business of the LLC, except within the Atlanta, Georgia Metropolitan Statistical Area; (14) undertake any New Business Opportunity; (15) revise, modify or amend any compensation plan in any material respect; and (16) enter into any business transactions with WTC or any of its Affiliates for the provision of investment advisory services that would be in conflict with the LLC's business. Section 5.14. Reimbursement. The LLC shall reimburse each Manager and Officer for all reasonable and necessary out-of-pocket expenses that Manager or Officer incurs on an LLC's behalf according to terms the Board approves, except that the LLC will not be required to reimburse any out-of-pocket travel expenses of a Manager or Officer who has been designated by WTI. The Board's sole determination of which expenses may be reimbursed to a Manager or an Officer and the amount of those expenses shall be conclusive. Any such reimbursement shall be treated as an expense of the LLC that shall be deducted in computing Profits and Losses and, if made to a Manager or Officer that also is a Member, shall not be deemed a distributive share of Profits or a distribution or return of capital to such Manager or Officer. ARTICLE 6 CAPITAL CONTRIBUTIONS, CAPITAL ACCOUNTS, DISTRIBUTIONS AND ALLOCATIONS Section 6.1. Capital Contributions. a. Balentine, in exchange for the capital contribution set forth opposite its name on Schedule 1 hereto (representing the Initial Capital Contribution less the part thereof assigned to the Principals in connection with the Distribution), has received an LLC Interest with the number of Membership Points set forth there. Each Principal, in exchange for the part of the Initial Capital Contribution assigned to him or it in connection with the Distribution and set forth opposite his or its name on Schedule 1 under the heading "Capital Contribution," has received an LLC Interest with the number of Membership Points set forth there. b. No Member shall be required to make any additional capital contribution to the LLC, except with respect to any New Business Opportunity approved by all of the Managers. -21- Section 6.2. Capital Accounts. a. Each Member shall have a Capital Account, which shall not bear interest. b. No Member has the right to demand a return of that Member's capital contributions (or the balance of that Member's Capital Account). In addition, no Member has the right to (1) demand and receive any distribution from the LLC in any form other than cash or (2) bring an action of partition against the LLC or its property. Section 6.3. Distributions of Cash. a. Subject to Section 12.2(b)(2), within 15 days after the availability of the year-end audit for each Fiscal Year, the Board shall cause the LLC to distribute Free Cash Flow to the Members in proportion to the average of their respective Membership Points held as of the close of each Accounting Period in that Fiscal Year. b. Subject to Section 12.2(b)(2) but notwithstanding Section 6.3(a), the Board shall cause the LLC to make interim distributions of Free Cash Flow to the Members within 30 days after the end of each of the four quarters in each Fiscal Year, in proportion to the average of their respective Membership Points held as of the close of each Accounting Period in such quarter; all such distributions in any Fiscal Year shall be deemed advances against the distribution required by Section 6.3(a) for such year. If any such distribution is determined to be excessive by the Board, the Members shall repay, without interest, the excessive portion of the distribution within 30 days after being notified by the Board in writing of such determination. c. The LLC is authorized to withhold from distributions, or with respect to allocations, to the Members and to pay over to any federal, state or local government any amount required to be so withheld pursuant to the Code or any provision of any state or local tax law. All amounts so withheld, and all amounts withheld pursuant to the Code or any provision of any state or local tax law with respect to any payment, distribution or allocation to the LLC, shall be treated for all purposes hereof as amounts distributed pursuant to this Section 6.3 to the affected Member, or all the Members, as the case may be. d. Notwithstanding any provision to the contrary herein, the LLC shall not make a distribution to any Member on account of its LLC Interest if that distribution would (1) cause that Member to have a deficit balance in its Capital Account or (2) violate Section 18-607 of the Delaware Act or other applicable law. e. The proceeds of a sale of all or substantially all of the LLC's assets shall be distributed pursuant to Section 13.4(a) as if they were proceeds of the LLC's liquidation. f. If any LLC Interest is transferred during any Accounting Period, Free Cash Flow for such period that is distributable to the holder thereof shall be distributed in accordance with Section 6.7 (by substituting "Accounting Period" for "Fiscal Year"). -22- Section 6.4. Allocations of Profits and Losses for Tax Purposes. a. After giving effect to the special allocations provided in Section 6.5, and except as otherwise provided in Section 6.4(c), Profits for any Fiscal Year or Accounting Period shall be allocated to the Members as follows: (1) First, to each Member in an amount equal to the excess, if any, of (i) the cumulative Losses allocated to such Member pursuant to Section 6.4(b) for all prior Fiscal Years and prior Accounting Periods in the current Fiscal Year over (ii) the cumulative Profits allocated to such Member pursuant to this Section 6.4(a) for all such prior Fiscal Years and Accounting Periods; provided that, if the Profits of the current Fiscal Year or Accounting Period are less than the sum of such excess for all Members, such Profits shall be allocated to each Member in proportion to its share of such sum; and (2) Second, to the Members in proportion to their respective Membership Points as of the end of that Fiscal Year or Accounting Period, as the case may be. b. After giving effect to the special allocations provided in Section 6.5, and except as otherwise provided in Section 6.4(c), Losses for any Fiscal Year or Accounting Period shall be allocated to the Members as follows: (1) First, to each Member in an amount equal to the excess, if any, of (i) the cumulative Profits allocated to such Member pursuant to Section 6.4(a) for all prior Fiscal Years and prior Accounting Periods in the current Fiscal Year over (ii) the cumulative Losses allocated to such Member pursuant to this Section 6.4(b) for all such prior Fiscal Years and Accounting Periods; provided that, if the Losses of the current Fiscal Year or Accounting Period are less than the sum of such excess for all Members, such Losses shall be allocated to each Member in proportion to its share of such sum, and provided further that no current Fiscal Year Losses shall be allocated to any Member to the extent such allocation would cause such Member to have a deficit in its Capital Account; (2) Second, to the Members in proportion to their respective Membership Points as of the end of that Fiscal Year or Accounting Period, as the case may be, up to the amount of their positive Capital Account balances as of that time; and (3) Third, to the Members in proportion to their respective Capital Account balances as of the end of that Fiscal Year or Accounting Period, as the case may be. c. Notwithstanding Section 6.4(a), Profits and Losses from the sale of all or substantially all of the LLC's assets, and Profits and Losses from a deemed sale of assets in connection with the liquidation of the LLC (as described in Section 13.4(b)), shall be allocated among the Members in proportion to distributions pursuant to Sections 13.4(a)(2) through (4). -23- Section 6.5. Special Allocations. a. If and to the extent any employee or Principal of the LLC or an Affiliate recognizes or is deemed to recognize any item of income or gain pursuant to Code Section 83 by virtue of any transaction or deemed transaction between any Member and that employee, then any resulting item of loss the LLC recognizes or deduction to which the LLC is entitled shall be specially allocated to that Member. b. The provisions of the Treasury Regulations under Code Section 704(b) relating to the qualified income offset, minimum gain chargeback, minimum gain chargeback with respect to nonrecourse debt, allocation of nonrecourse deductions and allocation of items of deduction, loss or expenditure relating to nonrecourse debt hereby are incorporated herein by this reference and shall be applied to the allocation of items of income, gain, loss or deduction of the LLC. However, the Members do not intend to incorporate, by reference or otherwise, the "deficit restoration obligation" described in Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations. c. If items of income, gain, loss or deduction are allocated to one or more Members pursuant to Section 6.5(b), subsequent items of income, gain, loss or deduction shall first be allocated to the Members in a manner designed to result in each Member's receiving an allocation of Profits and Losses through the time of such subsequent allocation equal to what such Member would have received in the absence of Section 6.5(b). Section 6.6. Allocations under Code Section 704(c). a. In accordance with Code Section 704(c) and the Treasury Regulations thereunder, income, gain, loss and deduction with respect to any property contributed to the LLC's capital shall, solely for tax purposes, be allocated among the Members to take account of any variation between the LLC's adjusted basis in that property for federal income tax purposes and its initial Carrying Value at the time of its contribution to the LLC. b. Allocations of income, gain, loss and deduction with respect to any asset revalued in accordance with Section 1.704-1(b)(2)(iv)(f) of the Treasury Regulations shall take account of any variation between the LLC's adjusted basis in that asset for federal income tax purposes and its Carrying Value in the same manner as under Code Section 704(c) and the Treasury Regulations thereunder and as required by Section 1.704-1(b)(2)(iv)(g) of the Treasury Regulations. c. Any elections or other decisions relating to allocations described in Sections 6.6(b) or (c) shall be made by the Members in any manner that reasonably reflects the purposes and intent hereof. Allocations pursuant to Sections 6.4, 6.5 and 6.6 are solely for purposes of federal, state and local income taxes and shall not affect, nor in any way be taken into account in computing, any Member's Capital Account balance, Free Cash Flow or other items or distributions pursuant to any provision hereof. Section 6.7. Transfer of LLC Interests. If an LLC Interest is transferred during any Fiscal Year (including to the LLC or another Member), the Profits or Losses attributable to such -24- LLC Interest for such Fiscal Year shall be allocated, and the Free Cash Flow for such year distributable to the holder thereof shall be distributed, between the transferor and the transferee ("parties") in any manner permitted by law as to which they agree; provided, however, that, if the LLC does not receive, on or before January 31 of the year following the Fiscal Year in which the transfer occurs, written notice from the transferor and the transferee stating the manner in which the parties have agreed to allocate such Profits or Losses and distributions of Free Cash Flow, then all such Profits or Losses and distributions of Free Cash Flow shall be allocated between or made to the parties based on the percentage of the year each of them was, according to the LLC's books and records, the holder of the transferred LLC Interest. ARTICLE 7 TRANSFER OF LLC INTERESTS, PUT AND CALL OPTIONS, CHANGE OF CONTROL AND ADMISSION OF ADDITIONAL MEMBERS Section 7.1. Assignability of Interests. a. Except as otherwise provided in this Article 7, no LLC Interest may be sold, assigned, transferred, pledged, hypothecated, given, exchanged, optioned or encumbered (each, a "Transfer"), and no Transfer in violation of this Agreement shall be binding upon the LLC. b. A Member may transfer all or any portion of its or his LLC Interest to any one or more Permitted Transferees who agree to be bound by the terms and conditions hereof; provided that, notwithstanding anything to the contrary contained herein, the transferring Member shall retain the vote with respect to the LLC Interest so Transferred to Permitted Transferees; provided, however, if the Transferee is WTI or is consolidated with WTI for federal income tax purposes, the Transferee shall become a Voting Member. Section 7.2. Put Options. a. Except as provided in the next paragraph of this Section 7.2(a), on or before February 28 of each year beginning in 2003, the Board shall notify each Member of the LLC Value as of December 31 of the immediately preceding year. The Board shall also furnish a certified copy of a balance sheet, income statement, and cash flow statement of the LLC for each Fiscal Year, and statement of such Member's Capital Account balance as of the end of that Fiscal Year, all of which shall be audited by, and shall receive the unqualified opinion of, the LLC's independent accounting firm, as if the LLC were independent and not affiliated with WTC, to each Member promptly after they are available. If the LLC's financial statements are unavailable until after February 28 of a year beginning in 2003, the Board shall notify, on or before February 28 of that year, each Member of the estimated LLC Value as of December 31 of the immediately preceding year and shall notify each Member of the actual LLC Value as promptly as possible after such financial statements -25- become available. If the Purchase Closing Date with respect to any LLC Interests put pursuant to this Section 7.2 has not occurred, and the LLC Value differs from the estimated LLC Value by 5% or more, each Principal and/or his or its Permitted Transferees who or that has exercised his or its Put rights shall have the right to rescind his and/or its decision to exercise of his or its Put rights. If such Purchase Closing Date has occurred, each of the Principals and/or his or its Permitted Transferees exercising the Put rights with respect to his or its LLC Interest and the purchaser(s) of such LLC Interest, as the case may be, shall remit to the other(s) the amount(s) necessary to reflect appropriately the difference between the LLC Value and the estimated LLC Value. b. Subject to the terms, conditions and limitations of this Section 7.2, each Principal (on behalf of himself and/or his or its Permitted Transferees) may exercise an option to sell all or any portion of his or its LLC Interest and associated Membership Points (each such exercise is referred to herein as a "Put") at the Purchase Price therefor. Upon exercise of a Put under this Section 7.2(b) by a Principal, the other Principals (the "Other Principals") shall first have the right (in proportion to their Membership Points or in such other proportions as the Principals' Representative may determine) to purchase from that Principal or that Principal's Permitted Transferees, as the case may be, all of that Principal's and his or its Permitted Transferees' LLC Interests (or such portion as the Other Principals agree to purchase). If the Other Principals do not elect to purchase all of that Principal's and his or its Permitted Transferees' LLC Interests, Balentine shall thereupon become obligated to purchase any remaining LLC Interests with respect to which the Put has been exercised. c. Notwithstanding anything contained in Section 7.2(b) to the contrary, unless otherwise agreed to by Balentine: (1) a Principal (on behalf of himself or itself and/or his or its Permitted Transferees) may not exercise a Put prior to January 1, 2006; and (2) Puts may not be exercised in any year with respect to LLC Interests and associated Membership Points representing more than 25% of the Membership Points of the LLC owned by a Principal and/or his Permitted Transferees on December 31, 2005; provided, however, if a Put is not exercised in full by a Principal or his Permitted Transferees for any year beginning in 2006, that unexercised portion may be exercised at the time that a Put is exercised for any subsequent year. For purposes of illustration if, during 2006, a Principal and his Permitted Transferees exercised a Put for LLC Interests associated with only 10% of the Membership Points held by them on December 31, 2005, such Principal and his Permitted Transferees would then be permitted during 2007 to exercise a Put in respect of LLC Interests associated with 40% of the Membership Points held by them on December 31, 2005. In no event, however, shall any Principal be entitled to Put LLC Interests associated with more than 25% of the Membership Points owned by such Principal and/or his Permitted Transferees on December 31, 2005 in 2006, 50% in 2007, 75% in 2008 and 100% in 2009. The restrictions on the Put rights described in this Section 7.2(c) apply solely to LLC Interests and associated Membership Points held by the Principals or their Permitted Transferees as of the Closing (as defined in the Merger Agreement); however, any subsequent holder of such LLC Interests shall be entitled to exercise the Put right herein as if such holder were the Principal or Permitted Transferee holding such LLC Interests as of the Closing. -26- d. A Principal (on behalf of himself and/or his or its Permitted Transferees) may exercise a Put if, on or before March 31 of any year (beginning on January 1, 2006), Balentine and each Other Principal receives an irrevocable notice of exercise of the Put substantially in the form of Exhibit A hereto (a "Put Notice") stating that he or it is electing to exercise the Put and specifying the LLC Interests and associated Membership Points to be sold pursuant to the Put. On or before 60 days after receipt of a Put Notice, the Other Principals may exercise their right of first refusal to purchase all of that Principal's and his or its Permitted Transferees' LLC Interests and associated Membership Points (or such portion as the Other Principals agree to purchase) by providing written notice to the Principal and/or the Principal's Permitted Transferees, as the case may be, and Balentine in the form of Exhibit B (the "First Refusal Notice"), and, if that right is exercised, that Principal or that Principal's Permitted Transferees, as the case may be, shall be obligated to sell to the Other Principals, all of that Principal's and his or its Permitted Transferees' LLC Interests and associated Membership Points (or such portion as the Other Principals agree to purchase). If the Other Principals do not elect to purchase all of that Principal's and his or its Permitted Transferees' LLC Interests and associated Membership Points (or if Balentine has not received any notice from the Other Principals of their intention to purchase any portion of that Principal's or his or its Permitted Transferees' LLC Interests and associated Membership Points within the 60-day period described in this Section 7.2(d)), Balentine shall purchase any and all remaining LLC Interests and associated Membership Points with respect to which the Put has been exercised. The Purchase Closing Date for a purchase pursuant to this Section 7.2(d) shall be within 30 days following the earlier of the expiration of the time period contained in the preceding paragraph or the delivery of the First Refusal Notice by the Other Principals of their exercise in part or in whole of their rights of first refusal. On the Purchase Closing Date, each of Balentine and the Other Principals shall pay the Purchase Price, in proportion to the amount of LLC Interests and associated Membership Points being purchased by that Person, to the Member by certified check or wire transfer of immediately available funds against delivery of the LLC Interests and associated Membership Points, free and clear of all liens, security interests and other encumbrances, and any other documents or instruments of transfer as they may reasonably request. e. On the last day of the month in which a Put is exercised by a Principal (on behalf of himself and/or his or its Permitted Transferees), that Member shall cease to have any rights as a Member with respect to the LLC Interests so Put other than (1) the right to receive the Purchase Price on the Purchase Closing Date and (2) the right to receive distributions and allocations with respect to those LLC Interests through the Purchase Closing Date. Without limiting the generality of the foregoing, the LLC Interests to be purchased on the Purchase Closing Date shall not have any voting rights during that period. Section 7.3. Call Options. The following provisions with respect to the purchase and sale of an LLC Interest of a Principal and his or its Permitted Transferees shall apply following the Principal's death, Disability, Retirement, termination of a Principal's employment with the LLC, a transfer required by operation of law or other involuntary transfer of an LLC Interest. -27- a. In the event of the death, Disability or Retirement of a Principal, the Other Principals shall have the right (in proportion to their Membership Points or in such other proportions as the Principals' Representative may determine), exercisable by providing written notice, within 60 days of that event, to the Principal, the Principal's estate and/or the Principal's Permitted Transferees, as the case may be, and Balentine in the form of Exhibit C (a "Call Notice"), to purchase (a "Call") from that Principal or that Principal's estate and that Principal's Permitted Transferees, as the case may be, and, if that right is exercised, that Principal or that Principal's estate and that Principal's Permitted Transferees, as the case may be, shall be obligated to sell to the Other Principals, all of that Principal's and his or its Permitted Transferees' LLC Interests and associated Membership Points (or such portion as the Other Principals agree to purchase). If the Other Principals do not elect to purchase all of that Principal's and his or its Permitted Transferees' LLC Interests and associated Membership Points, Balentine shall have the right, exercisable by providing a Call Notice to the Principal, that Principal's estate and that Principal's Permitted Transferees, as the case may be, within the 60-day period following receipt of notice from the Other Principals declining to purchase all or a portion of that Principal's and his or its Permitted Transferees' LLC Interests and associated Membership Points (or, if Balentine has not received any notice from the Other Principals regarding their intent to purchase any portion of that Principal's and his or its Permitted Transferee's LLC Interests and associated Membership Points, within the 60-day period following the first 60-day period), to purchase some or all of the remaining LLC Interests and associated Membership Points of that Principal and his or its Permitted Transferees. If that right is exercised, that Principal and that Principal's estate and Permitted Transferees, as the case may be, shall be obligated to sell to Balentine all of that Principal's and his or its Permitted Transferee's remaining LLC Interests and associated Membership Points (or such portion as Balentine agrees to purchase). Notwithstanding anything to the contrary herein, the Other Principals and Balentine shall not be obligated to purchase any or all of that Principal's and his or its Permitted Transferees' LLC Interests and associated Membership Points, and any rights granted by this Section 7.3(a) may be exercised in whole or in part. The aggregate purchase price for all of that Principal's and his Permitted Transferees' LLC Interests and associated Membership Points purchased pursuant to this Section 7.3(a) shall be the Purchase Price thereof. Each of Balentine and the Other Principals shall pay the Purchase Price in proportion to the amount of LLC Interests and associated Membership Points being purchased by that Person. The Purchase Closing Date for a purchase pursuant to this Section 7.3(a) shall be within ten days following the earlier of the expiration of the time periods contained in the preceding paragraph or the delivery of the Call Notice by Balentine. At the closing of the purchase from the Principal, the estate of the deceased Principal and/or the Principal's Permitted Transferees, Balentine and/or the Other Principals shall deliver to the Principal, his or its Permitted Transferees or the personal representative of the deceased Principal's estate, as the case may be, the Purchase Price by certified check or wire transfer of immediately available funds against delivery of the LLC Interests and associated Membership Points, free and clear of all liens, security interests and other encumbrances, and any other documents or instruments of transfer as they may reasonably request. Balentine and the Other Principals may purchase life insurance or -28- disability insurance on any Principal. Each Principal shall cooperate with Balentine and the Other Principals in obtaining that insurance, including taking any required physical examinations. b. Within 60 days following (1) the date the Principal's employment with the LLC is terminated other than by reason of death, Disability or Retirement; (2) the date the Principal becomes a Non-Voting Member pursuant to Section 4.6(d); or (3) a transfer required by operation of law or other involuntary transfer of a Principal's or his or its Permitted Transferee's LLC Interests and associated Membership Points, the Other Principals (in proportion to their Membership Points or in such other proportions as the Principals' Representative may determine) may exercise a Call with respect to all or any portion of that Principal's and that Principal's Permitted Transferees' LLC Interests and associated Membership Points. If some or all of a Principal's or his or its Permitted Transferees' LLC Interests and associated Membership Points are transferred by operation of law or by means of any other involuntary transfer, that Person shall cause its transferees to comply with all of the requirements of this Section 7.3 as though they were parties hereto. A Call may be exercised by the Other Principals providing a Call Notice to the Principal and/or the Principal's Permitted Transferees and Balentine within 60 days after that event, of their intent to purchase all or any portion of the Principal's and that Principal's Permitted Transferees' LLC Interests and associated Membership Points. If the Other Principals do not exercise a Call with respect to all of a Principal's and that Principal's Permitted Transferees' LLC Interests and associated Membership Points in accordance with the preceding sentence (or if Balentine has not received any notice from the Other Principals of their intent to purchase any portion of that Principal's and his or its Permitted Transferees' LLC Interests and associated Membership Points within the 60-day period described in this Section 7.3(b)), Balentine shall have an additional 60 days to exercise a Call with respect to that portion of the Principal's and that Principal's Permitted Transferees' LLC Interests and associated Membership Points for which the Other Principals do not exercise a Call by providing a Call Notice to the Principal and his or its Permitted Transferees. Notwithstanding anything to the contrary contained herein, the Other Principals and Balentine shall not be obligated to exercise any Call, and any right granted in this Section 7.3(b) may be exercised in whole or in part. If a Call is exercised as a result of (1) a Principal's employment with the LLC being terminated without Cause or by reason of voluntary resignation of his employment with the LLC; or (2) a transfer required by operation of law or other involuntary transfer of a Principal's or that Principal's Permitted Transferees' LLC Interests and associated Membership Points, the purchase price payable by the Other Principals and/or Balentine to that Principal and his or its Permitted Transferees for their LLC Interests and associated Membership Points shall be the Purchase Price. If a Principal's employment with the LLC is terminated by the LLC for Cause or if the Principal becomes a Non-Voting Member pursuant to Section 4.6(d), then, notwithstanding anything else to the contrary herein, the Purchase Price payable by the Other Principals and/or Balentine to that Principal and his or its Permitted Transferees for their LLC Interests shall be 60% of the Purchase Price that would otherwise apply. -29- The Purchase Closing Date under this Section 7.3(b) shall be within ten days following the earlier of the expiration of the time periods contained in the first paragraph of this Section 7.3(b) or the delivery of the Call Notice by Balentine. At the closing of the purchase from the Principal, and/or the Principal's Permitted Transferees, Balentine and/or the Other Principals shall deliver to the Principal, or his or its Permitted Transferees, as the case may be, the Purchase Price by certified check or wire transfer of immediately available funds against delivery of the LLC Interests and associated Membership Points, free and clear of all liens, security interests and other encumbrances, and any other documents or instruments of transfer as they may reasonably request. c. Notwithstanding the foregoing, if a Call is exercised with respect to the LLC Interests and associated Membership Points of a Principal or his or its Permitted Transferees who has voluntarily resigned his employment with the LLC other than by death, Disability or Retirement or for Good Reason or whose employment by the LLC is terminated for Cause or if the Principal becomes a Non-Voting Member pursuant to Section 4.6(d), in each case at any time prior to March 31, 2006, then the portion of the Purchase Price payable to that Principal and his or its Permitted Transferees shall be paid by delivery of a three-year promissory note of the purchaser(s) of such LLC Interests and associated Membership Points to the selling Principal and his or its Permitted Transferees, which shall bear interest at the "applicable federal rate" determined under Section 1274(d) of the Code for three-year instruments (a "Note"), payable quarterly, and the principal of which shall be payable three years after the Purchase Closing Date. If such employment is terminated after March 31, 2006, the Purchase Price must be paid in cash as provided above. d. On the last day of the month in which a Call is exercised, the Principal who has died, become Disabled or Retired and his or its Permitted Transferees, or the Principal and his or its Permitted Transferees who have received a Call Notice, shall cease to have any rights as a Member with respect to the LLC Interest for which Calls have been exercised, other than (1) the right to receive the Purchase Price on the Purchase Closing Date and (2) the right to receive distributions and allocations with respect to that LLC Interest through the Purchase Closing Date. e. In the event of the death, Disability or Retirement of Robert, the Family Trust shall be treated for purposes of this Section 7.3 as having died, become Disabled or Retired on the date Robert died, became Disabled or Retired. If Robert's employment with the LLC is terminated other than by reason of death, Disability or Retirement, or if his Membership in the LLC is terminated for Cause, then the Family Trust shall be treated for purposes of this Section 7.3 as having terminated employment with the LLC or terminated its membership in the LLC in such circumstance and on such date, except that, with respect to only those LLC Interests owned by the Family Trust as of the date hereof, each of the Family Trust shall, notwithstanding any provision to the contrary in Section 7.3(b), receive 100% of the Purchase Price for those LLC Interests and such amount shall be paid in cash. f. If the Insurance Trust has not exercised all of its Put rights pursuant to Section 7.2 by March 31, 2009, the Other Principals (in proportion to their Membership Points or in such -30- other proportions as the Principals' Representative may determine) may exercise a Call with respect to all or any portion of the Insurance Trust's LLC Interests and associated Membership Points. A Call may be exercised by the Other Principals by providing a Call Notice to the Insurance Trust and Balentine within 60 days after March 31, 2009 of their intent to purchase all or any portion of the Insurance Trust's LLC Interests and associated Membership Points. If the Other Principals do not exercise a Call with respect to all of the Insurance Trust's LLC Interests and associated Membership Points in accordance with the preceding sentence (or if Balentine has not received any notice from the Other Principals of their intent to purchase any portion of the Insurance Trust's LLC Interests and associated Membership Points within the 60-day period described in this Section 7.3(f)), Balentine shall have an additional 60 days to exercise a Call with respect to that portion of the Insurance Trust's LLC Interests and associated Membership Points for which the Other Principals do not exercise a Call by providing a Call Notice to the Insurance Trust. Notwithstanding anything to the contrary contained herein, the Other Principals and Balentine shall not be obligated to exercise any Call, and any right granted in this Section 7.3(f) may be exercised in whole or in part. The Purchase Closing Date under this Section 7.3(f) shall be within ten days following the earlier of the expiration of the time periods contained in the first paragraph of this Section 7.3(f) or the delivery of the Call Notice by Balentine. At the closing of the purchase from the Principal, and/or the Principal's Permitted Transferees, Balentine and/or the Other Principals shall deliver to the Principal, or his or its Permitted Transferees, as the case may be, the Purchase Price by certified check or wire transfer of immediately available funds against delivery of the LLC Interests and associated Membership Points, free and clear of all liens, security interests and other encumbrances, and any other documents or instruments of transfer as they may reasonably request. Section 7.4. Right of First Refusal. a. If Balentine desires to sell any or all of Balentine's LLC Interests to a third party (other than a Permitted Transferee) and Balentine receives an offer from a third party that would permit Balentine to do so, Balentine shall give notice ("Offer Notice") to the LLC and the Principals within 15 days of receipt of such offer ("Offer"), which Offer Notice shall set forth the name and address of the third party, the amount of the Membership Points associated with the LLC Interests to be sold, the proposed purchase price and the other terms and conditions of the Offer. The Principals shall have the option, exercisable by notice to Balentine, within 60 days of the date of the Offer Notice ("Election Period"), to purchase, pro rata in proportion to their Membership Points, all (but not less than all) of the Balentine LLC Interests and associated Membership Points subject to the Offer ("Offered Membership Points") at the same price and on substantially the same terms specified in the Offer except as provided in Section 7.4(c); provided, however, (i) that, if one or more of the Principals does not elect to purchase his or its full proportionate amount of the Offered Membership Points, then the balance may be purchased by each of the other Principals ("Remaining Principals") in an amount equal to the balance multiplied by a fraction, the numerator of which is the number of Membership Points then held by a Remaining Principal and the denominator of which is the number of Membership Points -31- then held by all of the Remaining Principals, or in such other proportions as they may agree, and (ii) that the Remaining Principals must exercise their option to purchase all of the Offered Membership Points pro rata, or in such other proportions as such Remaining Principals may agree, within ten days ("Final Election Period") after expiration of the Election Period. b. If neither the Principals nor the Remaining Principals elect to purchase all of the Offered Membership Points, Balentine may, notwithstanding the other provisions of this Article 7, within 60 days after expiration of the last applicable Election Period, transfer all (but not less than all) of the Offered Membership Points to the third party upon the same terms and conditions of the Offer (but, if the Offered Membership Points are not transferred within that 60-day period, they shall again be subject to this Agreement and a new right of first refusal); provided, however, that no such transfer may be made to such third party unless the third party executes and delivers to the LLC a written agreement, in form and substance satisfactory to the Board, agreeing to be bound by the provisions of this Agreement, in which event the third party shall become a Voting Member with the number of Membership Points associated with the Offered Membership Points. c. The closing of any purchase under this Section 7.4 shall be held at a place and date specified by the purchaser(s) of the Offered Membership Points ("Purchaser(s)"), but not more than 60 days after expiration of the last applicable Election Period. At such closing, the Offered Membership Points shall be delivered by Balentine to the Purchaser(s) thereof, free and clear of all liens, security interests and other encumbrances, and the Purchaser(s) shall pay the purchase price for the Offered Membership Points, and Balentine shall have right to receive distributions and allocations with respect to those Offered Membership Points through the Purchase Closing Date. If some or all of the Principals are the Purchaser(s), the purchase price shall be payable in cash by the Purchaser(s) even if some of the consideration provided in the Offer was in a form other than cash, in which case such Purchaser(s) and Balentine shall in good faith ascribe a value to such non-cash consideration. If such Purchaser(s) and Balentine cannot agree on the value of the non-cash consideration, they shall retain an independent appraiser, mutually acceptable to such Purchaser(s) and Balentine, and the average of the high and low values ascribed to the non-cash consideration by the appraiser shall be such value. The fees of such appraiser shall be split equally between such Purchaser(s) (pro rata in proportion to number of Membership Points held by each such Purchaser) and Balentine. d. If all of Balentine's LLC Interests and associated Membership Points are purchased by a third party, then such third party shall succeed to all of Balentine's rights and obligations under this Agreement, including the obligations of Balentine under Section 7.5. If Balentine transfers part of its LLC Interests and associated Membership Points to such third party pursuant to this Section 7.4, the Principals, Balentine and such third party shall make appropriate adjustments to the terms of this Agreement to entitle such third party to exercise Balentine's rights under Sections 7.2 and 7.3 proportionately with Balentine, and to otherwise grant such third party rights similar to Balentine's other rights under this Agreement. -32- Section 7.5. Change of Control. a. In the event of a Change of Control of WTC or the LLC, each of the Principals or their Permitted Transferees shall have the right, which must be exercised within six months after such Change of Control, to put to Balentine all or a portion of the LLC Interests and associated Membership Points held by such Principal and/or Permitted Transferee. Upon exercise of a put under this Section 7.5, Balentine shall thereupon become obligated to purchase the LLC Interests and associated Membership Points with respect to which the put has been exercised. The Purchase Closing Date under this Section 7.5(a) shall be within 60 days following the delivery of the notice by a Principal and his or its Permitted Transferees, and such Persons shall have the right to receive distributions and allocations on the LLC Interests to be purchased through the Purchase Closing Date. At the Purchase Closing Date, Balentine shall deliver to the Principal, or his or its Permitted Transferees, as the case may be, the Purchase Price by certified check or wire transfer of immediately available funds against delivery of the LLC Interests and associated Membership Points, free and clear of all liens, security interests and other encumbrances, and any other documents or instruments of transfer as Balentine may reasonably request. b. In the event of a Change of Control of WTC prior to March 31, 2006, if the Principals do not elect to receive the accelerated payments pursuant to Section 3.1(c) of the Merger Agreement and less than all of the Principals and their Permitted Transferees exercise the put right provided for in Section 7.5(a), the Principals who or that have not exercised their put pursuant to Section 7.5(a) shall have the right to purchase all, but not less than all, outstanding LLC Interests then held by Balentine, WTI, WTC and their Permitted Transferees from such Persons, including those put under Section 7.5(a). This right to purchase may be exercised by some or all of such Principals by providing written notice to WTC or its successor within eight months after the Change of Control of their intent to purchase all, but not less than all, outstanding LLC Interests from Balentine, WTI, WTC and their Permitted Transferees. The Purchase Closing Date under this Section 7.5(b) shall be within 30 days following the delivery of the notice by such Principals. At the Purchase Closing Date, such Principals shall deliver to Balentine, WTI, WTC or their Permitted Transferees, as the case may be, the WTC Change of Control Purchase Price by certified check or wire transfer of immediately available funds against delivery of the LLC Interests, free and clear of all liens, security interests and other encumbrances, and any other documents or instruments of transfer as they may reasonably request. Balentine shall have the right to receive distributions and allocations with respect to those LLC Interests through the Purchase Closing Date. Section 7.6. Substitute Members. Any Transfer of LLC Interests other than pursuant to this Article 7 shall nevertheless not entitle the transferee, unless already a Member, to become a Member or be entitled to exercise or receive any right, power or benefit of a Member other than the right to share in profits and losses, receive distributions and allocations of income, gain, loss, deduction or credit or similar item to which the transferor Member would otherwise be entitled, to the extent assigned, unless the transferor Member designates, in a written instrument delivered to the Board, its transferee to become a substitute Member and the Board, in its sole and absolute discretion, consents to the admission of that transferee as a Non-Voting Member. That transferee -33- shall not become a substitute Member without having first executed an instrument satisfactory to the Board accepting and agreeing to the terms and conditions of this Agreement, including a counterpart signature page to this Agreement, and without having paid to the LLC a fee sufficient to cover all reasonable expenses of the LLC in connection with that transferee's admission as a substitute Member. Section 7.7. Recognition of Transfer by LLC. No Transfer of a Member's LLC Interest or any part thereof in violation of this Article 7 shall be valid or effective, and neither the LLC nor the Members shall recognize the same for the purpose of making distributions pursuant to this Article 7 with respect to that transferred LLC Interest or part thereof. Neither the LLC, any member of the Board nor any Member shall incur any liability as a result of refusing to make any distributions to the transferee of any such invalid Transfer. Upon the valid transfer of a Member's LLC Interest, that Person shall cease to be a Member, and the LLC's books and records, including Schedule 1, shall be revised to reflect that event. Section 7.8. Order of Puts and Calls and Right of First Refusal. With respect to Sections 7.2, 7.3 and 7.4, the first to occur of (1) the delivery of a Put Notice under Section 7.2(d); (2) the delivery of the first Call Notice under Section 7.3(a) or (b); or (3) the delivery of an Offer Notice under Section 7.4, shall govern the rights and obligations of the parties with respect to the LLC Interests subject to the Put Notice, the Call Notice, the Purchase Notice or the Offer Notice. Notwithstanding the foregoing, the delivery of a put notice under Section 7.5(a) or a call notice under Section 7.5(b) shall govern the rights and obligations of the parties with respect to the LLC Interests. Section 7.9. Indemnification. In the case of a Transfer or attempted Transfer of an LLC Interest that has not received the consents required by this Article 7, the parties engaging or attempting to engage in that Transfer shall be liable to indemnify and hold the LLC and the other Members harmless from all costs, liabilities and damages any such indemnified Person may incur (including, without limitation, incremental tax liability and attorneys' fees and expenses) as a result of that Transfer or attempted Transfer and efforts to enforce the indemnity granted hereby. Section 7.10. Issuance of Additional LLC Interests. a. Subject to Sections 5.13(d), 7.1, 7.2, 7.3 and 7.4, the Board may admit new Members to the LLC, issue additional LLC Interests and grant options to purchase LLC Interests upon terms and conditions it may establish from time to time, which terms may include any Capital Deduction Amount relating to the LLC Interests and, the rights, if any, that a holder of such LLC Interests will have relating to the matters discussed in this Article 7. As a condition to the admission of a new Member, that Member must become a party to this Agreement. b. Upon the issuance of additional LLC Interests with associated Membership Points to a Member, an Officer shall make the appropriate revisions to Schedule 1. -34- Section 7.11. Assignment of Balentine's Rights and Obligations. Balentine may assign any or all of its rights and delegate any or all of its obligations under this Article 7 to one or more of its Affiliates. Section 7.12. Guarantee of Performance. WTC hereby guarantees due and punctual payment and performance when due of all obligations of Balentine (and any assignee or delegate under Section 7.11) under this Agreement (as such may be amended or modified subsequent to the date hereof). This guaranty shall be an absolute obligation of WTC for its own account and a guaranty of payment, and not of collection. ARTICLE 8 BOOKS AND RECORDS Section 8.1. Books, Records and Financial Statements. The LLC's Secretary shall prepare and maintain, or cause to be prepared and maintained, the LLC's books of account. Those books of account and all financial records of the LLC shall be kept at its office located at 3455 Peachtree Road, Suite 2000, Atlanta, Georgia 30326. The Secretary shall also cause the following documents to be transmitted at the times hereinafter set forth: a. To each Member, as soon as available, a balance sheet, income statement and cash flow statement of the LLC, and a statement of such Member's Capital Account balance, as of the end of the preceding Fiscal Year, all of which shall be audited by the LLC's independent accounting firm; b. To each Member, as soon as available and in any event within 30 days after the end of each of the first three quarters of each of the LLC's Fiscal Year, a balance sheet, income statement and cash flow statement of the LLC, and a statement of such Member's Capital Account balance, as of the end of that quarter; c. To each Member, as soon as available from the LLC's accountants, a copy of the annual federal and state income tax return of the LLC and a Schedule K-1 indicating such Member's taxable income or loss for that Fiscal Year; d. To each Member, at least ten days prior to each date on which any federal or state estimated income tax payment is due, a schedule setting forth the LLC's estimated taxable income allocable to such Member for the current Fiscal Year; and e. To Balentine, within five business days after the end of each quarter, an estimate of the net income of the LLC for the year-to-date period through the end of that quarter. Section 8.2. Accounting Method. The LLC's books and records shall be kept on an accrual basis for financial reporting and tax purposes. All records shall be maintained in accordance with -35- GAAP and shall reflect all LLC transactions and be appropriate and adequate for the LLC's business. Section 8.3. LLC's Independent Accounting Firm. The LLC's independent accounting firm shall be selected by the Principals and shall be acceptable to WTI, which acceptance will not be unreasonably withheld, conditioned or delayed. ARTICLE 9 TAX MATTERS Section 9.1. Tax Matters Member. a. The LLC's initial "tax matters partner" designated under Code Section 6231(a)(7) and Section 301.6231(a)(7)-1 of the Treasury Regulations (the "Tax Matters Member") shall be the LLC's Chief Executive Officer, who shall be a Member at all times he or she is serving as the Tax Matters Member. Each Member, by executing this Agreement, consents to such designation of the Tax Matters Member and agrees to execute, certify, acknowledge, deliver, swear to, file and record at the appropriate public offices all documents necessary or appropriate to evidence such consent. b. The Tax Matters Member shall have the power to manage and control, on the LLC's behalf, any administrative proceeding at the LLC level with the Internal Revenue Service relating to the determination of any item of LLC income, gain, loss, deduction or credit for federal income tax purposes. In furtherance of the foregoing, the Tax Matters Member shall have all the powers and responsibilities of such position provided in the Code and (1) shall promptly furnish the Internal Revenue Service with information sufficient to cause each Member to be treated as a "notice partner" as defined in Code Section 6231(a)(8), (2) shall, within ten days of the receipt of any notice from the Internal Revenue Service in any administrative proceeding at the LLC level relating to the determination of any LLC item of income, gain, loss or deduction, mail a copy of that notice to each Member and (3) shall not file any action or suit, extend any statute of limitations or settle any action or suit relating to the LLC's tax matters without first notifying each Member. Reasonable expenses incurred by the Tax Matters Member, in his capacity as such, will be treated as LLC expenses hereunder and will be deducted in computing the Run Rate. c. The Board may at any time hereafter designate from among the Members a new Tax Matters Member. Section 9.2. Right to Make Tax Elections; Tax Classification. a. Subject to Section 5.13(d), the Board may, in its discretion, make or revoke, on the LLC's behalf, elections for federal income tax purposes permitted under the Code, including -36- an election in accordance with Code Section 754. Upon request of the Board, each Member shall supply the information necessary to give effect to such an election. b. Each Member intends that the LLC be classified for federal tax purposes as a partnership that is not a "publicly traded partnership" treated as a corporation under Code Section 7704(a), and each Member shall at all times use commercially reasonable efforts to maintain the LLC's classification as such. The LLC shall not elect to be classified as other than a partnership for federal tax purposes. ARTICLE 10 LIABILITY, EXCULPATION AND INDEMNIFICATION Section 10.1. Liability. a. Except as otherwise provided herein, any document referred to or incorporated herein or by the Delaware Act, the debts, obligations and liabilities of the LLC, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the LLC, and no Member shall be obligated personally for any debt, obligation or liability of the LLC solely because he or she is a Member. b. Except as otherwise expressly provided herein, any document referred to or incorporated herein or by the Delaware Act, a Member, in his capacity as such, shall have no liability in excess of (1) the amount of that Member's capital contributions, (2) that Member's share of any assets and undistributed Profits of the LLC and (3) the amount of any distributions wrongfully distributed to that Member. Section 10.2. Exculpation. a. No Officer or Manager shall be liable to the LLC or any Member for any loss, damage or claim incurred by reason of any act or omission performed or omitted by that Officer or Manager in good faith on the LLC's behalf and in a manner reasonably believed to be in the best interest of the LLC and within the scope of authority conferred on that Officer or Manager hereby, except that an Officer or Manager shall be liable for any such loss, damage or claim incurred by reason of that Officer's or Manager's bad faith, gross negligence, reckless disregard of his duties hereunder, willful misconduct or breach of the provisions hereof or in connection with any transaction for which such Officer or Manager or any Affiliate thereof received an improper personal benefit. b. An Officer or Manager shall be protected fully in relying in good faith upon the LLC's records and upon information, opinions, reports or statements presented to the LLC by any person as to matters the Officer or Manager reasonably believes are within that person's professional or expert competence and who has been selected with reasonable care by or on behalf of the LLC, including information, opinions, reports or statements as to the value and -37- amount of the assets, liabilities, profits, losses or net cash flow or any other facts pertinent to the existence and amount of assets from which distributions to Members might properly be paid. Section 10.3. Indemnification. To the fullest extent permitted by applicable law, the LLC shall indemnify each Officer and Manager for any loss, damage or claim incurred by that Officer or Manager by reason of any act or omission that Officer or Manager performed or omitted in good faith on behalf of the LLC and in a manner reasonably believed to be in the best interest of the LLC and within the scope of authority conferred on that Officer or Manager or hereby, except that no Officer or Manager shall be entitled to be indemnified in respect of any loss, damage or claim incurred by that Officer or Manager by reason of bad faith, gross negligence, reckless disregard of his duties hereunder, willful misconduct or breach of the provisions hereof with respect to those acts or omissions or in connection with any transaction for which such Officer or Manager or any Affiliate thereof received an improper personal benefit. Notwithstanding the foregoing: (a) any indemnity under this Section 10.3 shall be provided out of and to the extent of LLC assets only, and no Member shall have any personal liability on account thereof; and (b) nothing contained herein shall limit any indemnification or other rights of the LLC or any Member under the Merger Agreement or any document referred to or incorporated therein. Section 10.4. Expenses. To the fullest extent permitted by applicable law, the LLC shall advance to an Officer or Manager any expenses, including legal fees, that Officer or Manager incurs in defending any claim, demand, action, suit or proceeding (that advance to be made prior to the final disposition of that claim, demand, action, suit or proceeding), including, without limitation, claims, demands, actions, suits or proceedings with respect to which that Officer or Manager is alleged to have not met the applicable standard of conduct or is alleged to have acted or failed to act in a manner which, if those allegations were true, would not entitle that Officer or Manager to indemnification hereunder, upon receipt by the LLC of an undertaking by or on behalf of that Officer or Manager to repay that amount if it is determined that that Officer or Manager is not entitled to be indemnified as authorized in Section 10.3. ARTICLE 11 NON-COMPETITION; CONFIDENTIALITY Section 11.1. Confidential Information. a. Each Member acknowledges and agrees that (1) the investment advisory and investment management business is an intensely competitive business, (2) as a result of his or its association with the Balentine Entities, he or it has had access to, and is and will be in possession of, Confidential Information, all is which is of vital importance to the success of the Balentine Entities, WTI and WTI's Affiliates, and (3) the use by such Member for his or its own account or the disclosure by Member to any existing or potential competitor of a Balentine Entity, WTI or WTI's Affiliates of Confidential Information would place the Balentine Entities, WTI, or WTI's -38- Affiliates at a serious competitive disadvantage and cause irreparable harm to the business of the Balentine Entities, WTI or WTI's Affiliates. b. Each Member acknowledges and agrees that "Confidential Information" includes, without limitation: (1) trade secrets relating to the business practices of the Balentine Entities, WTI or WTI's Affiliates and other information pertaining to the goodwill of the Balentine Entities, WTI or WTI's Affiliates and Clients and WTI Clients; (2) "non-public personal information," as that phrase is defined in Section 509 of Title V of the Gramm-Leach-Bliley Act and federal Regulation P promulgated thereunder by the Federal Reserve Board, of natural person Clients or WTI Clients, except that, for purposes of this Agreement, such term shall extend to all such clients, present and former. "Non-public personal information" means (i) personally identifiable client financial information, including, but not limited to, information provided to, or obtained by, the Balentine Entities or WTI or its Affiliates confidentially or on a non-public basis, and (ii) any list, description, or other grouping of clients (and publicly available information pertaining to them) that is derived using any personally identifiable financial information that is not publicly available; (3) proprietary financial products of the Balentine Entities, WTI or WTI's Affiliates, embodying the unique trade know-how and operational methods of the Balentine Entities, WTI or WTI's Affiliates, and, without limitation, all trade know-how, secrets, operational methods, pricing, investment policies, procedures, personnel, concepts, format, style, techniques, proprietary software, business strategies, client investment strategies and other financial information, and other business affairs of the Balentine Entities, WTI or WTI's Affiliates that are unique to the Balentine Entities, WTI or WTI's Affiliates and are made known to or learned by such Member heretofore or hereafter; and (4) lists of WTI Clients. c. Each Member acknowledges and agrees that (1) Confidential Information is and shall remain the sole and exclusive property of the appropriate Balentine Entity or WTI or its Affiliates, as the case may be, and such Member does not have and shall not have any right, title or interest therein by virtue of his or her status as an executive of the LLC or a Member, and (2) Confidential Information is not readily accessible to competitors of the Balentine Entities or WTI or its Affiliates, as the case may be. d. By reason of Sections 11.1(a), (b) and (c) above, each Member covenants that he or it shall not directly or indirectly, reveal, divulge or make known to any Person other than the Balentine Entities, WTI, or WTI's Affiliates or use for his own account, or for the account of any Person other than the Balentine Entities, WTI, or WTI's Affiliates, (1) until such Member ceases to be a Member and for a period of five years thereafter, any Confidential Information relating to WTI or its Affiliates or WTI Clients; (2) until such Member ceases to be a Member and -39- thereafter, any Confidential Information not permitted to be revealed, divulged, or made known under the LLC's, WTI's, its Affiliates' or the Balentine Entities' policies to comply with all applicable U.S. federal and state privacy laws in effect, including, without limitation, Title V of the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act, and any and all applicable regulations implementing either Act or successor Act; and (3) until such Member ceases to be a Member and for a period of five years thereafter, any Confidential Information not included in clauses (1) and (2) of this subsection. e. Each Principal (1) shall comply, until such Member ceases to be a Member, with all reasonable procedures each Balentine Entity, WTI or one of its Affiliates may adopt from time to time to preserve the confidentiality of the Confidential Information; (2) acknowledges that the absence of any legend indicating the confidentiality of any materials will not give rise to an inference that the contents thereof or information derived therefrom are not confidential; and (3) shall immediately following the termination of such Principal's employment with or membership in the LLC return to each Balentine Entity, WTI or such WTI Affiliate, as the case may be, all materials that Balentine Entity or WTI or any of WTI's Affiliates provides such Principal during the Term, all works created by such Principal or others in the course of his, her, or their employment duties during the Term and all copies thereof. Notwithstanding the foregoing, the limitations imposed on such Principal pursuant to this Section 11.1 shall not apply to such Principal's (y) compliance with legal process or subpoena, or (z) statements in response to inquiry from a court or regulatory body; provided that, to the extent permitted by law, such Principal gives the appropriate Balentine Entities, WTI or its Affiliates reasonable prior written notice of that process, subpoena or request and uses reasonable efforts to obtain confidential treatment of the Confidential Information. Section 11.2. Non-Competition. With respect to a natural person Principal, until the termination of a Principal's employment with the LLC and each of its Subsidiaries (the "Restricted Period"), such Principal shall not, for whatever reason, whether for his or her account or for the account of any other Person, without the prior written consent of the LLC, as a shareholder, employee, partner, member, board member, consultant, independent contractor, representative or otherwise, engage in any business competitive with any business conducted by the Balentine Entities or the Existing Funds at any time during the Restricted Period, in the Metropolitan Statistical Areas of Atlanta, Georgia, or Nashville, Tennessee (the "Restricted Area"); provided, however, that Robert's Restricted Period shall extend until one year after the termination of his employment with the LLC and each of its Subsidiaries. Notwithstanding the foregoing, nothing herein shall prohibit such Principal from being engaged in a competitive business during the Restricted Period if such Principal is not providing to such competing business services comparable to services provided to the LLC or from being a shareholder or equity holder in any publicly-traded entity whose business is competitive with, the business heretofore conducted, or conducted at any time during the Restricted Period and in the Restricted Area, by the Balentine Entities or the Existing Funds, as long as such Principal does not hold more than a three percent equity interest in that publicly-traded entity, provided that an investment in WTC shall not come within this limitation. Each Principal acknowledges that the Restricted Period and the Restricted Area in this paragraph are appropriate given the unique nature of the services he or she has provided and -40- will provide the Balentine Entities, and further acknowledges that his or her fulfillment of the Restricted Period and Restricted Area in this Section 11.2 will not cause him or her substantial economic hardship and will not render him or her unemployable within the investment management industry. The restrictions set forth in this Section 11.2 shall not apply if Robert's employment with the LLC and each of its Subsidiaries is terminated by the LLC and such Subsidiaries without Cause or by Robert for Good Reason. Section 11.3. Non-Solicitation. Until one year after the date of termination of each Principal's employment with the LLC and each of its Subsidiaries, such Principal shall not, directly or indirectly, for whatever reason, whether for his own account or the account of any Person, without the prior written consent of the LLC: a. solicit, either directly or indirectly, or otherwise induce or attempt to induce any WTI Client whose residence or principal office is located in Georgia, Tennessee, North Carolina, South Carolina, Alabama, Florida, Delaware, Maryland, Pennsylvania, New York, Nevada or California, or any Client whose residence or principal business office is located in Georgia, Tennessee, North Carolina, South Carolina, Alabama or Florida to place any funds or securities under management with any Person other than WTC, its Affiliates, the Balentine Entities or the Existing Funds and will otherwise treat the list of Clients as if it were Confidential Information; provided, however, that the prohibition of this covenant shall apply only to such clients with whom the Principal had Material Contact on the LLC's or one of its Subsidiaries' behalf during the twelve (12) months immediately preceding the termination of his employment. For purposes of this Agreement, a Principal has "Material Contact" with such client if (1) he had business dealings with such client on the LLC's or one of its Subsidiaries' behalf, (2) he was responsible for supervising or coordinating the dealings between the LLC (or one of its Subsidiaries) and such client, or (3) he obtained Confidential Information about such client as a result of his association with the LLC or one of its Subsidiaries; or b. solicit or hire any Person who is, or was during the 12 months prior to the time of such Principal's termination of employment, employed by or associated with a Balentine Entity, WTI or a WTI Affiliate as an executive, officer, employee, manager, salesman, consultant, independent contractor, representative or other agent or induce such Person to terminate his or her employment relationship with any Balentine Entity or to enter into employment with any other Person. The restrictions set forth in this Section 11.3 shall not apply if a Principal's employment with the LLC and each of its Subsidiaries is terminated by the LLC and such Subsidiaries without Cause or by such Member for Good Reason. Nothing in Section 11.3(a) or (b) shall permit a Principal to use Confidential Information made available by WTI or any of its Affiliates to the Balentine Entities (including, without limitation, WTI Client lists) for any purpose other than the pursuit of the Balentine Entities' business objectives or those of WTI or its Affiliates. -41- Section 11.4. Use of Performance Information. Each Principal covenants that he or it will not, at any time after the date hereof, for whatever reason, whether for his or its account or for the account of any other Person (other than a Balentine Entity), publish any investment results or performance information of a Balentine Entity or an Existing Fund (including, without limitation, the investment performance of any accounts or groups of accounts for which such Principal was a portfolio manager), in connection with any business similar to, related to or in competition with the business conducted by a Balentine Entity, unless such Principal refrains from taking any credit, explicitly or implicitly, for the achievement of those results or performance. Section 11.5. Specific Performance. a. The Members acknowledge that it is fair and reasonable that they make the covenants and undertakings set forth above, and have done so with the benefit of the advice of counsel. In addition, the Members acknowledge that any breach or attempted breach by any of them of the provisions of this Article 11 will cause irreparable harm to WTI, its Affiliates and each Balentine Entity, for which monetary damages will not be an adequate remedy. Accordingly, WTI, its Affiliates and each Balentine Entity shall be entitled to apply for and obtain injunctive relief (temporary, preliminary and permanent) to restrain the breach or threatened breach of, or otherwise to specifically enforce, any provision of this Article 11, without the requirement to post a bond or provide other security. Nothing herein shall be construed as a limitation or waiver of any other right or remedy that may be available to the WTI, its Affiliates or a Balentine Entity for that breach or threatened breach. For emergency relief (including temporary and preliminary injunctive relief), an application may be made in any court of competent jurisdiction. The Members further agree that the subject matter and duration of the restrictions covered herein are reasonable in light of the facts as they exist today. If any restriction contained in this Article 11 is deemed unreasonable by a court, it shall, to the extent permitted by applicable law, be reduced to the maximum restriction that is enforceable under such law. b. The restrictions set forth in Section 11.1 shall apply to Permitted Transferees who own LLC Interests. c. If Principals exercise their purchase rights under Section 7.5(b), then WTC and its Affiliates shall only be entitled to enforce their rights under Article 11 with respect to Confidential Information relating to WTC, one of its Affiliates (other than the LLC and its Subsidiaries) and WTI Clients, and with respect to non-solicitation of WTI Clients and employees of WTI or one of its Affiliates (other than the LLC and its Subsidiaries). -42- ARTICLE 12 CERTAIN COVENANTS Section 12.1. Compliance with Laws; Maintenance. a. The LLC and the Subsidiaries shall and the Board shall cause the LLC to comply in all material respects with all laws and regulations applicable to the LLC and the Subsidiaries (including, without limitation, all federal and state laws and regulations relating to investment advisers and all laws and regulations applicable to the LLC and the Subsidiaries as an Affiliate of a bank, a thrift or a bank or thrift holding company. b. The LLC and the Subsidiaries shall maintain in full force and effect its limited liability company or other existence, rights and franchises and all other rights, licenses and registrations owned or possessed by them. Section 12.2. Business Agreements. a. Each Principal covenants that, from and after the date hereof, the Existing Funds and all other private investment funds, if any, for which the LLC or any Subsidiary serves as a general partner or managing member shall not at any time own or otherwise control in the aggregate more than 5% of any class of voting securities of any Person; provided that WTC agrees to use commercially reasonable efforts to assist the LLC or any Subsidiary in reallocating any shares in order to reduce or maintain its ownership or control under such percentage. b. (1) Subject to Section 5.13(d), to WTC's fiduciary and other professional duties and to the requirements of law, WTC will refer to the LLC and its Subsidiaries all New Business Opportunities that are derived from or referred to WTC and its Affiliates (other than Cramer Rosenthal McGlynn, LLC and Roxbury Capital Management, LLC) from within the States of Alabama, Georgia, Mississippi, North Carolina, South Carolina and Tennessee. As provided in Section 5.13(d)(14), the Board shall unanimously agree on which New Business Opportunities the LLC should pursue and on a budget and business plan for the implementation of any such New Business Opportunity. If all of the Managers designated by the Principals vote to approve the New Business Opportunity pursuant to Section 5.13(d)(14) but some or all of the Managers designated by Balentine, WTC or their Affiliates do not, WTC and its Affiliates (other than Cramer Rosenthal McGlynn, LLC and Roxbury Capital Management, LLC) will be prohibited from pursuing the New Business Opportunity without again referring it to the LLC and its Subsidiaries. If some or all of the Managers designated by the Principals do not vote to approve the New Business Opportunity pursuant to Section 5.13(d)(14), WTC and its Affiliates (other than Cramer Rosenthal McGlynn, LLC and Roxbury Capital Management, LLC) will be permitted to pursue the New Business Opportunity without again referring it to the LLC and its Subsidiaries. -43- (2) Each Member agrees that, from time to time as the LLC incurs expenses relating to a New Business Opportunity, such Member shall, within 15 days of a written notice by the LLC (which notice will contain reasonable detail of the net expenses of such New Business Opportunity), make an additional capital contribution to the LLC in immediately available funds in an amount, in the proportion that such Member's Membership Points bear to the total outstanding Membership Points, of the net expenses set forth in such notice. For these purposes, "net expenses" shall be all expenses less all revenue derived by such New Business Opportunity. To the extent the LLC has Free Cash Flow on the due date for any such additional capital contributions, the amount of the net expenses set forth in such notice shall be paid out of such Free Cash Flow instead of by the Members' making such contributions, and they shall be promptly notified thereof. (3) WTC will also, at all times consistent with its fiduciary and other professional duties and subject to the requirements of law in appropriate circumstances, work cooperatively with the LLC to make available the LLC's services to a prospective client of WTC or one of its Affiliates whose residence or principal business office is located in the States of Alabama, Georgia, Mississippi, North Carolina, South Carolina or Tennessee and whose needs include services the LLC provides, unless such prospective client makes an unsolicited request not to be referred to the LLC. (4) WTC will use its reasonable best efforts to cause Wilmington Trust FSB to open a trust and/or banking office in Atlanta and to place the office in the same space as is presently used by the LLC if commercially feasible. If such office is in the space presently used by the LLC, Wilmington Trust FSB will be responsible for its pro rata share of rent and related expenses based on the percent of square footage occupied by Wilmington Trust FSB. WTC will cause the Chief Executive Officer of the LLC to be appointed an officer of Wilmington Trust FSB and cause the other Wilmington Trust FSB staff in such office to report to such officer. The Wilmington Trust FSB officers and employees and the LLC's officers and employees will use reasonable best efforts to coordinate marketing and client development programs and services. (5) WTC will make available on a nationwide basis in the United States the LLC's Subsidiaries' expertise in their manager of managers program, including in connection therewith asset allocation modeling, asset rebalancing strategies and manager evaluation and selection. WTC may access this expertise through client investment in the LLC's Subsidiaries' investment funds, proprietary WTC investment funds managed by those Subsidiaries, client customized investment funds managed by those Subsidiaries and/or non-discretionary advisory services of those Subsidiaries. Accordingly, WTC will work cooperatively with those Subsidiaries to use their know how and the services of their officers and employees to provide advice and assistance relating to the manager of managers program and will pay to the appropriate Subsidiary a fee for such services and know how as may be agreed by WTC and the LLC from time to time. The Principals agree to cause those Subsidiaries to use their reasonable best efforts to meet the reasonable needs of WTC in connection with the use of the expertise and a condition of WTC's continued use of the Subsidiaries will depend on those Subsidiaries' meeting commercially reasonable service levels and performance standards. It is intended that -44- the service levels and performance standards will be discussed by WTC and the LLC from time to time and will be adjusted from time to time on a mutual basis. (6) WTC will provide to the LLC's Subsidiaries client related services that are available for the use of WTC's other asset management affiliates, including external asset management, custom-built insurance products, and marketing materials on a reasonable and fair basis and cost. WTC will also make available the full array of support services on the same basis as are made available to its other affiliated asset managers, including internal asset management, human resources, marketing, financial reporting, tax and estate planning, compliance and information technology, as the LLC may request from time to time. (7) The LLC shall have the right to elect, on or prior to six months after the Closing Date, to have the officers and employees of the LLC and its Subsidiaries participate in some or all WTC's then-existing employee benefit plans (other than the Wilmington Trust profit sharing plan or bonus or incentive plans) at the LLC's cost; provided, however, that (i) once the election to participate or not participate in a particular plan is made it cannot be changed without WTC's written consent, which shall not be unreasonably withheld, (ii) such officers and employees are otherwise eligible to participate in such plans in accordance with their terms, (iii) nothing herein shall entitle such an officer or employee to participate in a plan where participation is not based solely on eligibility criteria set forth in the plan and (iv) WTC acknowledges that there will be no cost to the LLC for WTC stock options granted to officers and employees of the LLC or its Subsidiaries. With respect to the WTC employee benefit plans, for all purposes, except for the computation of the benefits under defined benefit plans, WTC agrees that years of service with any Balentine Entities shall be deemed to be years of service with WTC. The LLC shall have a reasonable opportunity to participate in any new employee benefit plans made available to WTC's employees generally. ARTICLE 13 DISSOLUTION, LIQUIDATION AND TERMINATION Section 13.1. No Dissolution. The LLC shall not be dissolved by the admission of additional Members in accordance with the terms hereof. Section 13.2. Events Causing Dissolution. The LLC shall be dissolved and its affairs shall be wound up upon the occurrence of any of the following events: a. The determination of the Board and the vote of Members holding 90% or more of the Membership Points; b. The occurrence of a Realization Event; or c. The entry of a decree of judicial dissolution under Section 18-802 of the Delaware Act. -45- Section 13.3. Notice of Dissolution. Upon the LLC's dissolution, the person or persons appointed to carry out the winding up of the LLC (the "Liquidating Trustee") shall promptly notify the Members of that dissolution. Section 13.4. Liquidation. Upon dissolution of the LLC: a. The proceeds of liquidation shall be distributed, as realized, in the following order and priority: (1) First, to the LLC's creditors, including Members who are creditors and the Liquidating Trustee, to the extent otherwise permitted by law, in satisfaction of the LLC's liabilities (whether by payment or making reasonable provision for payment thereof), other than liabilities for distributions to Members; (2) Next, to Balentine up to the Base Valuation, which amount shall be subtracted from its Capital Account balance; (3) Next, to all Members, up to the amount of their Capital Account balances, in proportion thereto; and (4) The remainder, to all Members in proportion to their respective Membership Points. b. If the Liquidating Trustee determines that it is not feasible to liquidate all of the LLC's assets, then the Liquidating Trustee (1) shall cause the Fair Market Value of the assets not so liquidated to be determined and (2) shall distribute such assets in kind to the Members pursuant to Section 13.4(a). For purposes of such section, a distribution of any such asset in kind to a Member shall be considered a distribution of an amount equal to such asset's Fair Market Value as of the date of distribution thereof. Each such asset shall be treated as if it was sold for such Fair Market Value, and the resulting Profits or Losses shall be allocated among the Members in accordance with Article 6. Section 13.5. Termination. The LLC shall terminate when all of its assets, after payment of or provision for all of its debts, liabilities and obligations, have been distributed to the Members as provided for in this Article 13, and the Certificate has been canceled in the manner required by the Delaware Act. Section 13.6. Claims of the Members. For purposes of this Article 13, the Members shall look solely to the LLC's assets for the return of their capital contributions. If the assets of the LLC remaining after payment of or provision for all of the LLC's debts, liabilities and obligations are insufficient to return those capital contributions, the Members shall have no recourse against the LLC or any other Member. -46- ARTICLE 14 REPRESENTATIONS AND WARRANTIES Section 14.1. Representations and Warranties of Natural Person Principals. Each Principal who is a natural person hereby represents and warrants to Balentine, the other Principals and the LLC with respect to himself: a. He has full legal capacity and authority to execute, deliver and perform his obligations hereunder. This Agreement has been duly executed and delivered by him and constitutes his legal, valid and binding obligation, enforceable against him in accordance with its terms, except as may be limited by (x) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and fraudulent transfer or similar laws now or hereafter relating to creditors' rights generally or (y) general principles of equity, whether asserted in a proceeding in equity or at law. b. No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any government or regulatory authority that has not been obtained is required to permit him to enter into this Agreement. Section 14.2. Representations and Warranties of Balentine, WTI and WTC. Each of Balentine, WTI and WTC hereby represents and warrants to the Principals and the LLC on behalf of itself: a. It is an entity duly organized, validly existing and in good standing under Georgia law in the case of Balentine and Delaware law in the case of WTI and WTC, and has all requisite corporate power and authority to own, lease and operate its properties and carry on its business as now being conducted. b. It has all requisite corporate power and authority to execute, deliver and perform its obligations hereunder. The execution, delivery and performance hereof and the consummation of the transactions contemplated hereby have been duly approved and authorized by all necessary corporate action of Balentine, WTI or WTC, as the case may be. This Agreement has been duly executed and delivered by Balentine, WTI or WTC, as the case may be, and constitutes the legal, valid and binding obligation of Balentine, WTI or WTC, as the case may be, enforceable against it in accordance with its terms, except as may be limited by (x) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and fraudulent transfer or similar laws now or hereafter relating to creditors' rights generally or (y) general principles of equity, whether asserted in a proceeding in equity or at law. c. No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any governmental or regulatory authority that has not been obtained is required in order to permit Balentine, WTI or WTC, as the case may be, to enter into this Agreement. -47- Section 14.3. Representations and Warranties of the Family Trust and the Insurance Trust. Each of the Family Trust and the Insurance Trust (each, a "Trust") hereby represents and warrants to the other Principals, Balentine and the LLC on behalf of itself: a. It is an entity duly organized and validly existing under Georgia law, and has all requisite power and authority to enter into this Agreement under the terms of its trust instrument and other organizational documents. b. This Agreement has been duly executed and delivered by such Trust and constitutes the legal, valid and binding obligation of such Trust, enforceable against it in accordance with its terms, except as may be limited by (x) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and fraudulent transfer or similar laws now or hereafter relating to creditors' rights generally or (y) general principles of equity, whether asserted in a proceeding in equity or at law. c. No approval, authorization, consent, license, clearance or order of, declaration or notification to, or filing, registration or compliance with, any governmental or regulatory authority that has not been obtained is required in order to permit such Trust to enter into this Agreement. Section 14.4. Representations and Warranties of All Members. Each Member hereby represents and warrants to the LLC and each other Member and acknowledges that (1) he or it has such knowledge and experience in financial and business matters that he or it is capable of evaluating the merits and risks of an investment in the LLC and making an informed investment decision with respect thereto, (2) he or it is able to bear the economic and financial risk of an investment in the LLC for an indefinite period of time, (3) he or it is acquiring an interest in the LLC for investment only and not with a view to, or for resale in connection with, any distribution to the public, (4) the LLC Interests have not been registered under the securities laws of any jurisdiction and cannot be disposed of unless they are subsequently registered and/or qualified under applicable securities laws and the provisions of this Agreement have been complied with and (5) the execution, delivery and performance of this Agreement by him or it do not require him or it to obtain any consent or approval that has not been obtained, and do not contravene or result in a default under any existing law or regulation applicable to him or it, or any agreement or instrument to which he or it is a party or by which he or it is bound. ARTICLE 15 MISCELLANEOUS Section 15.1. Amendments. Except as provided otherwise herein, any amendment to this Agreement shall be adopted and be effective as an amendment hereto if it is approved by all Members in writing. -48- Section 15.2. Power of Attorney and Other Authorizations. (a) Each Member hereby constitutes and appoints the LLC's Chief Executive Officer as the true and lawful representative and attorney-in-fact of that Member, in his or its name, place and stead, to make, execute, sign and file any amendment to the Certificate and other instruments, documents and certificates that may from time to time be required by the laws of the United States of America, the State of Delaware, any other state or country or any political subdivision or agency thereof, in which the LLC does business to effectuate, implement and continue the valid and subsisting existence or qualification to do business of the LLC or in connection with any tax returns, filings or related matters, in each case consistent with the provisions hereof. Each Member acknowledges that such appointment is coupled with an interest. The Board may at any time replace the LLC's Chief Executive Officer with another individual as attorney-in-fact if the Board determines that a replacement would be in the LLC's best interests. (b) Each Principal has appointed Robert as his or its representative, agent, and attorney-in-fact ("Principals' Representative") pursuant to an agreement in the form of Exhibit 13.15 to the Merger Agreement ("Principals' Representative Agreement") and has provided to the Principals' Representative the full legal authority, capacity, and power to act on behalf of such Principal with respect to any matters arising under this Agreement or in connection therewith. Balentine, WTI, WTC and their Permitted Transferees and Affiliates shall be entitled to rely, and shall in no way be liable for relying, on the full legal authority, capacity, and power of Robert to act on behalf of each Principal with respect to any matters arising under this Agreement or in connection therewith without further inquiry, and each Principal shall hold each of Balentine, WTI, WTC and their Permitted Transferees and Affiliates harmless from any liability or loss arising out of the reliance by any of them on that power-of-attorney. If the Principals, by Majority Vote, provide WTI, WTC and their Permitted Transferees and Affiliates with 30 days' notice that Robert has been terminated as Principals' Representative, WTI, WTC and their Permitted Transferees and Affiliates shall cease to rely on Robert as Principals' Representative and shall rely on any successor Principals' Representative who such Principals so designate as the new "Principals' Representative." Section 15.3. Notices. a. All notices, requests, demands and other communications required or permitted hereunder shall be in writing and shall be sent as provided below: -49- (1) If to Balentine, to: Balentine Holdings, Inc. c/o WT Investments, Inc. Rodney Square North 1100 North Market Street Wilmington, DE 19890 Attention: David R. Gibson Senior Vice President with a copy to: WT Investments, Inc. Rodney Square North 1100 North Market Street Wilmington, DE 19890 Attention: Gerard A. Chamberlain, Esquire Secretary (2) If to the LLC, to: Balentine Delaware Holding Company, LLC 3455 Peachtree Road Suite 2000 Atlanta, GA 30326 Attention: Robert M. Balentine with a copy to: Alston & Bird 1201 West Peachtree Street Atlanta, GA 30309 Attention: B. Harvey Hill, Jr., Esquire (3) If to a Principal, to that Principal's attention at: Balentine Delaware Holding Company, LLC 3455 Peachtree Road Suite 2000 Atlanta, GA 30326 -50- with a copy to: Alston & Bird 1201 West Peachtree Street Atlanta, GA 30309 Attention: B. Harvey Hill, Jr., Esquire b. All notices and other communications required or permitted hereunder addressed as provided in this Section 15.3: (1) shall be effective upon delivery if delivered personally against proper receipt and (2) shall be effective upon receipt if sent by (A) certified or registered mail with postage prepaid or (B) Federal Express or similar courier service with courier fees paid by the sender. The parties hereto may change their respective addresses for the purposes of notices to that party from time to time by a similar notice specifying a new address. No such change shall be deemed to have been given unless it has been sent and received in accordance with this Section 15.3. Section 15.4. Waivers. Any waiver of any term or condition or of the breach of any covenant, representation or warranty hereof in any one instance shall not operate as or be deemed to be or construed as a further or continuing waiver of any other breach of that term, condition, covenant, representation or warranty or any other term, condition, covenant, representation or warranty. No failure or delay at any time or times to enforce or require performance of any provision hereof shall operate as a waiver of or affect in any manner a party's right at a later time to enforce or require performance of that provision or of any other provision hereof; provided that no such waiver, unless by its terms it explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provision being waived. No such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom that waiver is claimed in all other instances or for all other purposes to require full compliance. Section 15.5. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and, to the extent permitted by this Agreement, their heirs, legal representatives, successors and assigns. Section 15.6. Severability. The invalidity or unenforceability of any particular nonmaterial provision hereof shall not affect the other provisions hereof, and this Agreement shall be construed in all respects by interpreting that invalid or unenforceable provision as nearly to the original meaning as possible so as to make it valid and enforceable or, if that is not possible or permitted by applicable law, by omitting that invalid or unenforceable provision. To the extent any material provision hereof is determined by a court or regulatory body to be invalid or unenforceable, the parties shall use their good faith efforts to address the implications of that invalidity or unenforceability to preserve the essential understanding of the parties with respect hereto. -51- Section 15.7. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 15.8. Governing Law. This Agreement shall be construed under and governed by Delaware law, without giving effect to the choice or conflicts of law provisions thereof. Each of WTC, WTI and Balentine hereby agrees to submit to the jurisdiction of the courts of the State of Georgia and the courts of the United States of America located in the Northern District in the State of Georgia in any action or proceeding arising out of or relating to this Agreement. Each of the Principals and the LLC hereby agrees to submit to the jurisdiction of the courts of the State of Delaware and to the courts of the United States of America located in Delaware in any action or proceeding arising out of or relating to this Agreement. Section 15.9. Captions. The captions in this Agreement are for convenience only and shall not affect the construction or interpretation of any term or provision hereof. Section 15.10. Gender. Whenever used herein, the singular number shall include the plural, the plural shall include the singular, unless the context otherwise requires, and the use of any gender shall include all genders. Section 15.11. Third Party Beneficiaries. No person who is not a party to this Agreement shall be entitled to any rights or benefits hereunder; provided, however, that WTI's Affiliates, each Balentine Entity and each Subsidiary is a third-party beneficiary of Sections 11.1, 11.3 and 11.5. Section 15.12. Remedies Cumulative. The rights and remedies provided herein are cumulative, and the use of any one right or remedy by any party shall not preclude or waive its right to use any and all other remedies. Section 15.13. Integration. This Agreement (as it may be amended from time to time) and the exhibits and schedules hereto constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, express or implied, with respect thereto. -52- THIS PAGE LEFT INTENTIONALLY BLANK -53- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. /s/ Robert M. Balentine (SEAL) ------------------------------------------ ROBERT M. BALENTINE /s/ B. Clayton Rolader (SEAL) ------------------------------------------ B. CLAYTON ROLADER /s/ Jeffrey P. Adams (SEAL) ------------------------------------------ JEFFREY P. ADAMS /s/ Robert E. Reiser, Jr. (SEAL) ------------------------------------------ ROBERT E. REISER, JR. /s/ Gary B. Martin (SEAL) ------------------------------------------ GARY B. MARTIN /s/ Wesley A. French (SEAL) ------------------------------------------ WESLEY A. FRENCH /s/ Michael E. Wolf (SEAL) ------------------------------------------ MICHAEL E. WOLF -54- THE 1999 BALENTINE FAMILY TRUST By: /s/ Jeffrey P. Adams, Trustee ----------------------------------------------- (Authorized Signer) By: /s/ Elizabeth G. Balentine, Trustee ----------------------------------------------- (Authorized Signer) THE ROBERT M. BALENTINE INSURANCE TRUST By: /s/ Lillian A. Balentine Law, Trustee ----------------------------------------------- (Authorized Signer) BALENTINE HOLDINGS, INC. By: /s/ Jeffrey P. Adams ------------------------------------------------ Title: Executive Vice President WT INVESTMENTS, INC. By: /s/ David R. Gibson ---------------------------------------------- Title: Senior Vice President -55- WILMINGTON TRUST CORPORATION By: /s/ David R. Gibson ------------------------------------------------ Title: Senior Vice President -56- EX-10.53 10 w84365exv10w53.txt AGREEMENT FOR SALE AND PURCHASE OF SPV MANAGEMENT CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] AGREEMENT FOR THE SALE AND PURCHASE OF SPV MANAGEMENT LIMITED DATED JANUARY 1, 2002 BY AND AMONG ANTHONY FRANCIS RAIKES AND PIERS MINOPRIO AND WILMINGTON TRUST (UK) LIMITED AND WILMINGTON TRUST CORPORATION EXHIBIT 10.53 CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT FILED WITH THE SEC AND IS MARKED BY AN ASTERISK [*] ANTHONY FRANCIS RAIKES AND PIERS MINOPRIO AND WILMINGTON TRUST (UK) LIMITED AND WILMINGTON TRUST CORPORATION ------------------------------------------------------------------- AGREEMENT FOR THE SALE AND PURCHASE OF SPV MANAGEMENT LIMITED -------------------------------------------------------------------- CONTENTS
Clause Page 1. Conditionality/Interpretation................................................................ 3 2. Sale And Purchase............................................................................ 8 3. Conditions................................................................................... 9 4. Completion................................................................................... 11 5. Issue Of Interim And Final Loan Notes........................................................ 13 6. Escrow Account............................................................................... 13 7. Warranties And Pre-Completion Conduct........................................................ 16 8. The Buyers Remedies.......................................................................... 17 9. Limitations On The Seller's Liability........................................................ 18 10. Use Of Intellectual Property Rights.......................................................... 24 11. Further Undertakings By The Sellers.......................................................... 24 12. Confidential Information..................................................................... 26 13. Guarantor's Obligations...................................................................... 26 14. Announcements................................................................................ 28 15. Costs........................................................................................ 28 16. General...................................................................................... 28 17. Set-Off...................................................................................... 29 18. Entire Agreement............................................................................. 29 19. Assignment................................................................................... 30 20. Notices...................................................................................... 30 21. Governing Law And Jurisdiction............................................................... 32 22. Counterparts................................................................................. 33 Schedule 1 THE SELLERS.................................................................... Schedule 2 INFORMATION ABOUT THE COMPANY AND THE SUBSIDIARY UNDERTAKINGS.................. Schedule 3 REVENUE PERFORMANCE PREMIUM.................................................... Schedule 4 COMPLETION REQUIREMENTS........................................................ Schedule 5 PART 1 - WARRANTIES............................................................ Schedule 5 Part 2 - WARRANTIES............................................................ SCHEDULE 7 REAL PROPERTY..................................................................
SCHEDULE 8 REGISTERED INTELLECTUAL PROPERTY RIGHTS APPENDIX ONE The Accounts APPENDIX TWO (INCORPORATED FOR INFORMATION PURPOSES ONLY) Agreement for the Sale and Purchase of SPV Management Limited between Martin McDermott and James Patrick Johnston Fairrie and Wilmington Trust (UK) Limited and Wilmington Trust Corporation. AGREED FORM DOCUMENTS 1. Tax Deed 2. Employment Agreements 3. Raikes Services Agreement 4. Irrevocable power of attorney in relation to the Shares -2- THIS AGREEMENT is made on 25 January 2002 BETWEEN: (1) ANTHONY FRANCIS RAIKES ("AFR") AND PIERS MINOPRIO ("PM") (each, a "SELLER" and together, the "SELLERS"); and (2) WILMINGTON TRUST (UK) LIMITED, a company incorporated in England and Wales (registered no. 04330127) whose registered office is at 200 Aldersgate Street, London EC1A 4JJ, England (the "BUYER"); and (3) WILMINGTON TRUST CORPORATION, a corporation incorporated in the State of Delaware whose principal place of business is at Rodney Square North, 1100 North Market Street, Wilmington, Delaware (the "GUARANTOR"). THE PARTIES AGREE as follows: 1. CONDITIONALITY/INTERPRETATION 1.1 Clauses 1, 3, 7, 8, 9, 10, 11.1.6, 12-16, and 18-22 of this Agreement shall be immediately effective and enforceable. 1.2 The remaining clauses of this Agreement are conditional upon satisfaction of (or where permitted waiver of) the conditions set out in clause 3 on or before the times specified therein. 1.3 In this Agreement: "ACCOUNTS" means the accounts set out in the Appendix; "ACT" means the Companies Act 1985; "BUSINESS DAY" means a day other than a Saturday or Sunday or public holiday in England and Wales or the United States of America; "BUYER'S GROUP UNDERTAKING" means the Buyer or an undertaking which is, on the date of this Agreement, a subsidiary undertaking or parent undertaking of the Buyer or a subsidiary undertaking of a parent undertaking of the Buyer; "BUYER'S SOLICITORS" means Clifford Chance Limited Liability Partnership of 200 Aldersgate Street, London EC1A 4JJ; "COMPANY", other than when used in part 1 of schedule 5, means SPV Management Limited, a company incorporated in England and Wales (registered number 02548079), whose registered office is at 78 Cannon Street, London EC4P 5LN; "COMPLETION" means completion of the sale and purchase of the Shares in accordance with this Agreement; "COMPLETION DATE" means the date which is five Business Days after the date (not being later than the ninetieth day after today's date) on which the last of the Conditions to be satisfied or waived is satisfied or waived, other than the Conditions in clauses 3.1.2 and 3.1.9; -3- "CONDITION" means a condition set out in clause 3.1 and "Conditions" means all those conditions; "CONFIDENTIAL INFORMATION" means all information which is used in or otherwise relates to a Group Company's business, customers or financial or other affairs including, without limitation, information relating to: (a) the marketing of goods or services including, without limitation, customer names and lists and other details of customers, sales targets, sales statistics, market share statistics, prices, market research reports and surveys, and advertising or other promotional materials; or (b) future projects, business development or planning, commercial relationships and negotiations; but does not include information which is already publicly known or becomes publicly known (other than as a result of, a breach of this Agreement by either of the Sellers); "DISCLOSURE LETTER" means the letter from the Sellers to the Buyer in relation to the Warranties including for the avoidance of doubt all annexes thereto having the same date as this Agreement the receipt of which has been acknowledged by the Buyer; "EMPLOYMENT AGREEMENTS" means the employment agreements between the Company and each of James Fairrie and Martin McDermott in the Agreed Form; "ENCUMBRANCE" means a mortgage, charge, pledge, lien, option, restriction, right of first refusal, right of pre-emption, third-party right or interest, other encumbrance or security interest of any kind, or another type of preferential arrangement (including, without limitation, a title transfer or Escrow arrangement) having similar effect; "ENRON SPVS" means Northern Gas Processing Limited, Omegron Limited and Teesside Investments Limited; "ESCROW ACCOUNT" means the account referred to in clause 6; "ESCROW AMOUNT" means the monies from time to time held in the Escrow Account; "ESCROW AGENTS" means Clifford Chance Limited Liability Partnership of 200 Aldersgate Street, London EC1A 4JJ and Eversheds of 85 Queen Victoria Street, London EC4V 4JL; "ESCROW LETTER" means the letter in relation to the Escrow Account from the Escrow Agents to the Buyer and the Sellers in a form to be agreed between the parties within thirty days of today's date on terms consistent with this Agreement; "ESCROW LOAN NOTES" means loan notes in such form as AFR may reasonably request which shall have a face value of [pound][*] and carry interest at 1% a year and which shall be non qualifying corporate bonds. Such notes shall be subject to rights of set off for valid claims made under this Agreement and provide for redemption as follows: [pound][*] plus interest of [pound][*] on the first anniversary of Completion; * CONFIDENTIAL TREATMENT REQUESTED -4- [pound][*] plus interest of [pound][*] on the second anniversary of Completion; [pound][*] plus interest of [pound][*] on the third anniversary of Completion. "EVENT" has the meaning given to it in the Tax Deed; "FINAL LOAN NOTES" means the loan notes in such form as the Sellers may reasonably request which shall carry interest at LIBOR and can be redeemable on or anytime after six months from their date of issue and which shall be non-qualifying corporate bonds with an aggregate face value of up to [pound][*] to be issued by the Buyer to the Sellers within 5 Business Days of finalisation of the SPV Revenue Certificate (as defined in Schedule 3) in respect of the Financial Year ending 31st December 2004 in the proportions set out in Schedule 1; "GROUP" means the Company and each Subsidiary Undertaking; "GROUP COMPANY" means the Company or a Subsidiary Undertaking; "INTELLECTUAL PROPERTY" means: (a) patents, trade marks, service marks, registered designs, applications and rights to apply for any of those rights, trade, business and company names, internet domain names and e-mail addresses, unregistered trade marks and service marks, copyrights, database rights, rights in software, know-how, rights in designs and inventions; (b) rights under licences, consents, orders, statutes or otherwise in relation to a right in paragraph (a); (c) rights of the same or similar effect or nature as or to those in paragraphs (a) and (b) which now or in the future may subsist; and (d) the right to sue for past infringements of any of the foregoing rights; "INTELLECTUAL PROPERTY RIGHTS" means all Intellectual Property owned, used or required to be used by a Group Company; "INTERIM LOAN NOTES" means the loan notes in such form as the Sellers may reasonably request which shall carry interest at LIBOR and can be redeemable on or anytime after six months from their date of issue and which shall be non-qualifying corporate bonds with an aggregate face value of up to [pound][*] to be issued by the Buyer to the Sellers within 5 Business Days of finalisation of the SPV Revenue Certificate (as defined in Schedule 3) in respect of the Financial Year ending 31st December 2003 in the proportions set out in Schedule 1; "LAST ACCOUNTING DATE" means 31 December 2000; "LOAN NOTES" means the Escrow Loan Notes, the Interim Loan Notes and the Final Loan Notes; "MATERIAL ADVERSE EFFECT" means a material adverse effect on the condition (financial, legal or business) or future prospects of the Group and, without limitation to the * CONFIDENTIAL TREATMENT REQUESTED -5- generality of the foregoing, shall include an impairment of the Group's capacity to conduct business in any material respect as it was conducted before the occurrence of the Material Adverse Effect; "MATERIAL SPV CLIENT" means First Active Financial plc, First Active plc and Anthea srl; "PERMIT" means: (a) a permit, licence, consent, approval, certificate, qualification, specification, registration or other authorisation; or (b) a filing of a notification, report or assessment, in each case necessary for the effective operation of a Group Company's business, its ownership, possession, occupation or use of an asset or the execution or performance of this Agreement; "PREFERENCE SHARES" means 25,000 fully paid preference shares of [pound]1 each of the Company having the rights set out in the articles of association of the Company; "PROPERTY" means the property or properties details of which are set out in schedule 6 and includes an individual property and a part of an individual property; "RAIKES OPTIONS" means the share options over 3,750 ordinary shares of [pound]1 each in the capital of the Company granted on 25 January 2002 to Martin McDermott and James Fairrie; "RAIKES SERVICES AGREEMENT" means the agreement in the Agreed Form between the Buyer and AFR as modified or extended in writing from time to time; "RELEVANT CLAIM" means a Warranty Claim, or a claim by the Buyer under clause 7.7.2 or under the Tax Deed; "RELEVANT PROPORTIONS" means 87% in respect of AFR and 13% in respect of PM; "RELIEF" has the meaning given to it in the Tax Deed; "RESTRICTED PERIOD" means the period commencing on the Completion Date and ending on the fourth (4th) anniversary of the Completion Date; "SECOND DISCLOSURE LETTER" means the letter or letters (if any) given by the Sellers to the Buyer prior to Completion in relation to the Warranties repeated immediately prior to Completion; "SHARES" means the ordinary shares of [pound]1, comprising the whole of the allotted and issued share capital of the Company other than those subject to the Raikes Options; "SPV CORE BUSINESS" means the provision of directors, secretaries, and registered offices for special purpose companies in the European securitisation market; -6- "SPV REVENUE" means the consolidated revenue of the Group calculated in accordance with Schedule 3; "STATUTORY ACCOUNTS" means the accounts referred to in clause 3.1.7; "STATUTORY ACCOUNTS DATE" means 31 March 2002; "SUBSIDIARY UNDERTAKING" means a subsidiary undertaking of the Company listed in part B of schedule 2 (and in relation to Schedule 3 any new subsidiary undertaking of the Company acquired or formed after today's date for the purposes of carrying on the SPV Core Business) and "Subsidiary Undertakings" means all those subsidiary undertakings; "TAX" has the meaning given in the Tax Deed; "TAX AUTHORITY" has the meaning given in the Tax Deed; "TAX DEED" means the tax deed in the Agreed Form between the Sellers and the Buyer; "TAXES ACT" means the Income and Corporation Taxes Act 1988; "TCGA" means the Taxation of Chargeable Gains Act 1992; "US GAAP" means the applicable accounting standards, principles and practices generally accepted in the United States of America; "VATA" means, in the United Kingdom, the Value Added Tax Act 1994 and, in a jurisdiction outside the United Kingdom, any equivalent legislation; "WARRANTY" means a statement contained in schedule 5 and "WARRANTIES" means all those statements; and "WARRANTY CLAIM" means a claim by the Buyer under or pursuant to the provisions of clause 7.1. 1.4 In this Agreement, a reference to: 1.4.1 a "SUBSIDIARY UNDERTAKING" or "PARENT UNDERTAKING" is to be construed in accordance with section 258 of the Act and to a "SUBSIDIARY" or "HOLDING COMPANY" is to be construed in accordance with section 736 of the Act; 1.4.2 liability under, pursuant to or arising out of (or any analogous expression) any agreement, contract, deed or other instrument includes a reference to contingent liability under, pursuant to or arising out of (or any analogous expression) that agreement, contract, deed or other instrument; 1.4.3 a document in the "AGREED FORM" is a reference to a document in a form approved and either signed by the each relevant party or initialled by or on behalf of each party; 1.4.4 a statutory provision includes a reference to the statutory provision as modified or re-enacted or both from time to time before the date of this Agreement and -7- any subordinate legislation made under the statutory provision (as so modified or re-enacted) before the date of this Agreement; 1.4.5 a "PERSON" includes a reference to any individual, firm, company, corporation or other body corporate, government, state or agency of a state or any joint venture, association or partnership, works council or employee representative body (whether or not having separate legal personality); 1.4.6 a person includes a reference to that person's legal personal representatives, successors and permitted assigns; 1.4.7 a "PARTY" includes a reference to that party's successors and permitted assigns; 1.4.8 a clause, paragraph or schedule, unless the context otherwise requires, is a reference to a clause or paragraph of, or schedule to, this Agreement; 1.4.9 any English legal term for any action, remedy, method of judicial proceeding, legal document, legal status, court, official or any legal concept or thing shall in respect of any jurisdiction other than England be deemed to include what most nearly approximates in that jurisdiction to the English legal term and to any English statute shall be construed so as to include equivalent or analogous laws of any other jurisdiction; and 1.4.10 times of the day is to London time. 1.5 All obligations of the Sellers contained in this Agreement are undertaken by them in a several capacity and accordingly any breach by AFR alone shall be actionable only against him and any breach by PM alone shall be actionable only against him. Any liability for any Relevant Claim in respect of which both Sellers are liable shall be dealt with in accordance with clause 9. 1.6 The headings in this Agreement do not affect its interpretation. 1.7 A reference in Schedule 5 to a Seller's knowledge, information or belief is deemed to include knowledge, information and belief which such Seller would have if such Seller had made all reasonable enquiries. 2. SALE AND PURCHASE 2.1 Subject to clause 3.1 below, the Sellers agree to sell with full title guarantee and the Buyer agrees to buy the Shares set out opposite the name of each Seller in column (2) of Schedule 1 and each right attaching to the Shares at or after the date of this Agreement, free of any Encumbrance. 2.2 The initial purchase price of the Shares shall be [pound][*] and shall be satisfied in the proportions identified in Schedule 1, in accordance with clause 4. 2.3 In addition to the initial purchase price, the Sellers shall be entitled to additional consideration in the circumstances described in Schedule 3. * CONFIDENTIAL TREATMENT REQUESTED -8- 2.4 In the event that the SPV Revenue for the financial year which ends on 31 December 2001 ("Actual 2001 Revenue"), as determined under Schedule 3 is less than [pound][*], the initial purchase price shall be reduced to such amount as is equal to [pound][*] multiplied by (Actual 2001 Revenue/[pound][*]) on the basis that 2.4.1 any such price reduction shall be shared between the Sellers in the following proportions: (i) AFR: 75/85ths; and (ii) PM: 10/85ths. 2.4.2 the reduction referable to each Seller shall be set off against the cash payments otherwise due to him at Completion. 2.5 If either of the Sellers is or becomes liable to make any payment to the Buyer under this Agreement the payment in question shall be deemed to be a reduction in the purchase price due to that Seller. 2.6 The Sellers waive all rights of pre-emption and other restrictions on transfer over the Shares and the shares of the Company subject to the Raikes Options conferred on them under the Articles or in any other manner whatsoever and shall procure that all such rights conferred on any other person are waived no later than Completion so as to permit the sale and purchase of the Shares. 2.7 If either of the Raikes Options lapses, AFR shall additionally sell, with full title guarantee and the Buyer shall additionally buy free from any Encumbrance the shares previously subject to that Raikes Option at the same price as the Buyer would otherwise have paid to the optionholder pursuant to the agreement between Martin McDermott and James Fairrie and the Buyer and the Guarantor of today's date. 3. CONDITIONS 3.1 Completion is conditional on the following conditions being satisfied or waived by the Buyer (or as appropriate the Sellers), on or before the ninetieth day following today's date, but in the case of condition 3.1.2 on or before 6pm on the fourth Business Day after the date on which all of the other Conditions (other than condition 3.1.9) have been satisfied (or where permitted waived) and in the case of condition 3.1.9 on or before 10am on the Completion Date: 3.1.1 the Employment Agreements shall have been entered into; 3.1.2 a matter, fact or circumstance has not occurred on or after today's date save as contemplated in the Disclosure Letter which has or is likely to have a Material Adverse Effect or that the Buyer has not given written notice to the Sellers that it is aware that such a matter, fact or circumstance has occurred; 3.1.3 the Buyer shall have obtained clearances from the US Banking Authorities for the purchase of the Company's shares on terms reasonably satisfactory to it; * CONFIDENTIAL TREATMENT REQUESTED -9- 3.1.4 the Buyer shall have obtained the favourable opinion of its auditors that the persons and entities in respect of which a Group Company provides corporate services will not be consolidated in the annual audited consolidated accounts of the Buyer for the purposes of US GAAP; 3.1.5 the Sellers shall have procured that the Company has redeemed in full all of the Company's Preference Shares; 3.1.6 the parties shall have notified and obtained if required the approval of the Jersey Financial Services Commission or any similar regulatory body in Jersey in relation to the proposed change in ownership and directors of Bedell SPV Management (Jersey) Ltd and SPV Jersey Limited, as contemplated by this Agreement; 3.1.7 the consolidated audited accounts of the Company for the financial period ending on 31 March 2002 comprising the reporting periods (for Tax purposes) ended 31 December 2001 and ending 31 March 2002 shall have been signed and delivered to the Buyer and shall not have shown a material adverse change in the state of affairs of the Group as compared with the management accounts for the year ended 31 December 2001, save to the extent that they reflect the matters disclosed in the Disclosure Letter, and shall show consolidated revenues of at least [pound][*]; 3.1.8 the Sellers shall have obtained tax clearances from the Inland Revenue for the sale of the Company on terms reasonably acceptable to them; 3.1.9 the Buyer being reasonably satisfied with the Second Disclosure Letter, if any, or no Second Disclosure Letter being delivered by 10.00 am on the Completion Date; 3.1.10 the parties shall have obtained consent from Bedell Cristin Trust Company Limited within 30 days of today's date firstly for the Buyer to proceed with its acquisition of the Company as contemplated by this Agreement and secondly that it is not required to consult with Bedell Cristin Trust Company Limited in connection with the expansion of any operations of the Company in a jurisdiction other than in Jersey or Guernsey as contemplated by an agreement between Bedell Cristin Trust Company Limited and the Company and AFR dated 11 January 2000 or the Buyer shall have waived this condition within 40 days of today's date; 3.1.11 the parties shall have notified and if required obtained the approval of the appropriate regulatory bodies in Ireland, Italy and the Cayman Islands in relation to the proposed change in ownership and directors of SPV Management (Dublin) Limited, SPV Management (Italia) SRL, and SPV Cayman Limited respectively, as contemplated by this Agreement, provided that this condition shall be deemed satisfied in 30 days after today's date in respect of each of the above companies unless and to the extent that either of the parties has written to the others identifying any specific notifications and/or approvals required under this clause; and * CONFIDENTIAL TREATMENT REQUESTED -10- 3.1.12 either: (i) the directors of the Enron SPVs who are directors or employees of a Group Company resigning as directors and being replaced as directors by persons who are not directors or employees of a Group Company and all shares held or owned by a Group Company being transferred to a person who is not a Group Company; or (ii) the Buyer being satisfied in its absolute discretion that neither Group Companies nor the Buyer may suffer adversely in any way whatsoever arising from the Enron SPV transactions other than as a result of the loss of the Enron SPV appointments. 3.2 The Buyer shall make all reasonable efforts to achieve satisfaction of each Condition set out in clauses, 3.1.3, 3.1.4, 3.1.6, 3.1.9, 3.1.10 and 3.1.11 as soon as possible. 3.3 The Sellers shall make all reasonable efforts to achieve satisfaction of each Condition set out in clauses 3.1.1, 3.1.5, 3.1.6, 3.1.7, 3.1.8, 3.1.10, 3.1.11 and 3.1.12 within ninety days of today's date. 3.4 If, at any time, the Sellers or the Buyer becomes aware of a fact or circumstance that might prevent a Condition being satisfied, it shall immediately inform the other party. 3.5 At any time on or before the ninetieth day after today's date the Buyer may waive a Condition (other than a Condition in clauses 3.1.2, 3.1.5, 3.1.7, 3.1.8 or 3.1.10) by written notice to the Sellers on any terms it decides and the Sellers may waive the condition in clause 3.1.8) by written notice to the Buyer on any terms they decide. 3.6 If: 3.6.1 a Condition (other than the Conditions in clauses 3.1.2 and 3.1.9) has not been waived pursuant to clause 3.5 or has not been satisfied on or before the ninetieth day after today's date; or 3.6.2 the Condition in clause 3.1.2 is not satisfied as at 6pm on the fourth Business Day after the date on which all of the other Conditions (other than the condition in clause 3.1.9) have been satisfied and has not been waived by the Buyer pursuant to clause 3.5; or 3.6.3 the Condition in clause 3.1.9 is not satisfied as at 10am on the Completion Date this Agreement shall automatically terminate with immediate effect. 3.7 Save for clauses 1, 8.2, 9, 13-16, and 18-21 each party's further rights and obligations cease immediately on termination, but termination does not affect a party's accrued rights and obligations at the date of termination. 4. COMPLETION 4.1 Completion shall take place at 10.00 am at the office of the Buyer's Solicitors on the Completion Date or at such other place and time as the parties may agree. -11- 4.2 At Completion: 4.2.1 AFR will comply with his obligations under the Raikes Options if they are exercised and the Buyer shall comply with its obligations under the agreement of today's date between the Buyer, the Guarantor, Martin McDermott and James Fairrie, but if either of the Raikes Options is not exercised and thereby lapses AFR and the Buyer shall instead complete the sale of the relevant shares in accordance with clause 2.7; 4.2.2 the Sellers and the Buyer shall do all those things respectively required of them in Schedule 4 and the Buyer shall issue the Escrow Loan Notes to AFR; 4.2.3 the Sellers and the Buyer shall sign the Escrow Letter and deliver the Escrow Letter to the Escrow Agents as soon as practicable after Completion; 4.2.4 the Buyer shall, subject to clause 4.3, pay [pound][*] by telegraphic transfer into Eversheds' client account with HSBC Bank PLC, 31 Holborn, London EC1N 2HR [*]; 4.2.5 the Buyer shall pay [pound][*] by telegraphic transfer into Eversheds' client account as above in satisfaction of the Sellers' obligation to make loan funds available under the loan agreements of today's date, between Martin McDermott, the Sellers and the Company and James Patrick Johnson Fairrie, the Sellers and the Company; 4.2.6 the Buyer shall pay [pound][*] by telegraphic transfer into the Escrow Account, of which [pound][*] shall continue to belong to the Buyer but be held as security for the Buyer's obligations under the Escrow Loan Notes and of which [pound][*] shall belong to PM but be held as security for his obligations under this Agreement, in accordance with clause 6; and 4.2.7 the Buyer shall execute a charge in such form as the Seller reasonably requests in respect of the [pound][*] mentioned above that is held as security for the Escrow Loan Notes. 4.3 If the Company has an overdraft as at the close of business on the day prior to the Completion Date, after giving effect to uncashed cheques issued by the Company as at the close of business on the day prior to the Completion Date, AFR shall lend the Company an amount equal to such overdraft. In such event the amount payable to Eversheds on AFR's behalf under clause 4.2.4 shall be reduced and the Buyer shall instead pay the loan amount to the Company on behalf of AFR. Such loan shall be interest free and the Buyer shall procure that it is repaid by the Company out of the Company's future receipts on the basis that one third of such receipts shall be applied in arrears on the calendar quarterly dates to repay the loan until it is extinguished. 4.4 The Buyer is not obliged to complete this Agreement unless: 4.4.1 the Sellers comply with all their obligations under clause 4 and Schedule 4; and 4.4.2 the purchase of all the Shares is completed simultaneously. * CONFIDENTIAL TREATMENT REQUESTED -12- 4.5 Neither Seller shall be obliged to complete this Agreement unless the Buyer complies with all its obligations under clause 4 and Schedule 4. 4.6 If Completion does not take place on the Completion Date because one of the parties fails to comply with any of its or his obligations under clause 4 and Schedule 4 (whether such failure amounts to a repudiatory breach or not), the other parties may by notice to the party in default: 4.6.1 proceed to Completion to the extent reasonably practicable (but if a party exercises its or his rights pursuant to this clause, completion of the purchase of some of the Shares does not affect that party's rights in connection with the others); 4.6.2 postpone Completion to a date not later than 31 May 2002; or 4.6.3 terminate this Agreement. 4.7 If a party postpones Completion to another date in accordance with clause 4.6.2, the provisions of this Agreement apply as if that other date is the Completion Date. 4.8 Save for clauses 1, 8.2, 9, and 13-16, and 18-21 if a party terminates this Agreement pursuant to clause 4.6.3, each party's further rights and obligations under it shall cease immediately on termination, but termination does not affect a party's accrued rights and obligations at the date of termination. 4.9 The Buyer will procure that the Company discharges its own obligations post Completion with Royal Bank of Scotland plc. 5. ISSUE OF INTERIM AND FINAL LOAN NOTES 5.1 If appropriate under Schedule 3, the Buyer shall issue the Interim and/or the Final Loan Notes to the Sellers in accordance with that schedule. 5.2 If the Buyer has acquired any of the shares subject to the Raikes Option direct from AFR the amount of Interim or Final Loan Notes (as the case may be) shall be increased accordingly. 6. ESCROW ACCOUNT 6.1 The parties agree that money in the Escrow Account shall only be used in accordance with the provisions set out in this clause and in the Escrow Letter. Each party shall ensure that all rights to the Escrow Account remain free from any Encumbrance, set-off or counterclaim except as referred to in this clause. 6.2 The Escrow Account will be a joint on-demand interest bearing deposit account with HSBC Bank Plc in the name of the Escrow Agents who will hold the Escrow Amount as stakeholders upon trust for the Buyer and the Sellers on the following terms: 6.3 Subject as provided in clauses 6.6 and 6.7, the Escrow Agents will make payments out of the Escrow Amount to AFR in the amounts (inclusive of interest) and on the dates provided in the Escrow Loan Notes -13- 6.4 Subject as provided in clauses 6.6 and 6.7, the Escrow Agents will make payments out of the Escrow Amount to PM as follows: 6.4.1 [pound][*] on the first anniversary of Completion; 6.4.2 [pound][*] on the second anniversary of Completion; and 6.4.3 [pound][*] on the third anniversary of Completion. 6.5 If, the Buyer believes that at any time on or before the third anniversary of Completion, (i) either of the Sellers is in breach of any of the undertakings given by each of the Sellers to the Buyer under clause 11; (ii) a liability is due and owing by a Seller under a Warranty; (iii) AFR has breached a covenant in the Raikes Services Agreement or (iv) liability is due and owing by a Seller under the Tax Deed (in each case a "Claim"); 6.5.1 the Buyer shall as soon as is reasonably practicable send notice to the relevant Seller and the Escrow Agents specifying the Seller which is in breach and setting out in reasonable detail the nature of the Claim and the amount thereof; 6.5.2 within twenty Business Days starting on the day of receipt of the notice given under clause 6.5.1 the relevant Seller shall notify the Buyer and the Escrow Agents whether or not it accepts the Claim and if not, setting forth in reasonable detail the basis of its objection to the Claim (an "OBJECTION") and whether or not he requires the Buyer to obtain an opinion from a Queen's Counsel selected by the Buyer, of a minimum of 10 years' call, indicating that he regards the amount claimed under clause 6.5.1 to be a reasonable amount in the circumstances 6.5.3 if the relevant Seller fails to deliver to the Buyer and the Escrow Agents its Objection to the Claim in accordance with clause 6.5.2, such Seller shall be deemed to have accepted that the Claim may be paid out of the Escrow Account and the Escrow Agents shall be authorised to make and continue payment of the amount thereof in accordance with clause 6.6 hereof without further action by the Sellers; 6.5.4 if the Seller delivers an Objection to the Claim, upon resolution of the Claim the amount of such Claim shall be paid in accordance with clause 6.6 hereof. 6.6 Upon receipt of notice of a Claim, the Escrow Agents shall hold back the amount of the Claim from any amount that it would otherwise have paid to the relevant Seller(such amount, a "Held-over Amount"). 6.6.1 In the event the Seller shall accept (or be deemed to have accepted) the Claim, the Buyer shall be entitled to obtain from the Escrow Agents forthwith payment in the amount of the Claim Provided Always that the maximum amount that may be paid to the Buyer out of the Escrow Account in respect of any claim against either one of the Sellers shall not exceed the amounts potentially still due to that Seller out of the Escrow Account. * CONFIDENTIAL TREATMENT REQUESTED -14- 6.6.2 In the event that a Seller shall have delivered a notice of its Objection to an Escrow Claim to the Escrow Agents, the relevant Seller or the Buyer, as the case may be, shall be entitled to obtain from the Escrow Agents payment in the amount of the Claim upon delivery of (i) written direction executed by both parties authorising the payment and specifying the amount thereof, or (ii) a written decision of an appropriate court in England (together with a written certification by counsel to such party that no appeal has or may be taken from such decision), in each case specifying the amount agreed or determined to be payable, in which case the Escrow Agents shall forthwith pay to the party indicated by such writing the amount so agreed or awarded in respect of the Escrow Claim (and to the Seller as and when due any remaining portion of the Held-over Amount not directed to be paid to the Buyer) Provided Always that the maximum amount that may be paid to the Buyer out of the Escrow Account in respect of any claim against either one of the Sellers shall not exceed the amounts potentially still due to that Seller in respect of the Escrow Account. 6.6.3 If an Objection notice given by a Seller indicates that he requires the Buyer to obtain an opinion from a Queen's Counsel, the Buyer shall have thirty Business Days from the date of service of such notice, to provide that Seller and the Escrow Agents with a copy of a signed Opinion from a Queen's Counsel selected by the Buyer, of a minimum of 10 years' call, giving reasonable details of the Claim and indicating that he regards the amount claimed under clause 6.5.1 or such other amount as the Queen's Counsel considers reasonable to be a reasonable amount in the circumstances 6.6.4 If the Buyer does not provide the relevant Seller and the Escrow Agents with such a copy opinion within such thirty Business Days, or if the opinion shows a lower amount to be reasonable than was claimed, the Claim shall be deemed to have been withdrawn either in full or, if the opinion did show a lower amount, in respect of the excess and the Escrow Agents shall pay the amount for which the Claim is deemed to have been withdrawn to the relevant Seller if it would otherwise have been due for payment. 6.6.5 If the Buyer does provide the relevant Seller and the Escrow Agents with such a copy opinion within such thirty Business Days, the amount in question shall be retained in the Escrow account until delivery of a written direction or decision under clause 6.6.2 and the relevant Seller shall reimburse the Buyer for the reasonable fees of the Queen's Counsel for the delivery of the above opinion. If both Sellers requested delivery of such an opinion they shall reimburse such fees in the Relevant Proportions. 6.7 If the maximum amount which may be paid by the Escrow Agents in respect of a Claim is insufficient to satisfy such Claim, the Buyer shall be entitled at any time prior to the date on which a Loan Note becomes due for issue to the relevant Seller under Schedule 3 to exercise a right of hold back in respect of the shortfall. If the Buyer exercises such right, it shall issue a Loan Note for the amount in dispute and if applicable, a Loan Note for the balance. The Loan Note for the amount in dispute shall be in the Agreed Form but shall not be transferable and shall provide for payment to be suspended pending a written -15- agreement between such Seller and the Buyer or a written decision of an appropriate court in England from which no appeal has or may be taken and shall provide for a right of set off in respect of any such amount as is ultimately agreed or determined by such a court to be due to the Buyer from the relevant Seller. 6.8 Subject to clause 6.9, any interest accruing on the Escrow Amount shall be paid to the Buyer as it arises, save that any interest accruing on a Held-over Amount after the date on which it would otherwise have been paid to a Seller shall be retained in the Escrow Account. Such interest shall be paid to the Seller once the claim has been determined or agreed, unless (but then only to the extent that) the Held-over Amount is insufficient to cover any amount determined or agreed to be payable to the Buyer in respect of the relevant claim (including any amount determined or agreed to be due in respect of interest or costs), in which case it shall be paid to the Buyer. 6.9 All payments of interest to the Buyer and/or a Seller shall be paid after deduction of any tax on such interest for which the Escrow Agents may be accountable and the Escrow Agents shall be entitled to withdraw from the Escrow Account an amount equal to such tax, subject to their providing appropriate certificates. 6.10 The Sellers and the Buyer shall each pay one half of the Escrow Agents' costs in respect of any work done pursuant to this clause. 7. WARRANTIES AND PRE-COMPLETION CONDUCT 7.1 AFR warrants to the Buyer that each Warranty is true, accurate and not misleading at the date of the Agreement. PM warrants to the Buyer that each Warranty is true, accurate and not misleading as at 9 October 2001 by reference to the facts and circumstances as at that date. For this purpose only, as to PM where there is an express or implied reference in a Warranty by PM or the Sellers, to the date of this Agreement or to a date after 9 October 2001, such references as to PM only are to be construed as a reference to 9 October 2001. Immediately before Completion, AFR is deemed to warrant to the Buyer, and PM in respect of Warranties 1.2.1, 3.1.1 and 3.1.3, that each Warranty is true, accurate and not misleading by reference to the facts and circumstances as at Completion. For this purpose only, where there is an express or implied reference in a Warranty to the "date of this Agreement", that reference is to be construed as a reference to Completion. 7.2 The Sellers acknowledge that the Buyer: 7.2.1 is entering into this Agreement in reliance on each Warranty which has also been given as a representation and with the intention of inducing the Buyer to enter into this Agreement; and 7.2.2 may rely on the Warranties in warranting to any subsequent buyer of all or any of the Shares or of all or any part of the undertaking of a Group Company. 7.3 The Warranties are qualified by the facts and circumstances fairly and specifically disclosed in the Disclosure Letter or in the Second Disclosure Letter in relation to the Warranties repeated prior to Completion under clause 7.1. No other knowledge relating to a Group Company (actual, constructive or imputed) prevents or limits a claim made by -16- the Buyer for breach of clause 7.1. The Sellers shall not invoke the Buyer's knowledge (actual, constructive or imputed) of a fact or circumstance which might make a Warranty untrue, inaccurate or misleading as a defence to a claim for breach of clause 7.1. 7.4 Reference to any facts and circumstances being disclosed shall be deemed to be a reference to them being fully and specifically disclosed in the Disclosure Letter or the Second Disclosure Letter in such a manner that: 7.4.1 in the context of the disclosures contained in the Disclosure Letter: (a) the significance of the information disclosed and its relevance to a particular Warranty ought reasonably to be appreciated by the Buyer, taking into account the paragraphs or subject matters in relation to which the information was disclosed; (b) there is not omitted from the information disclosed any information which would have the effect of rendering the information so disclosed misleading in relation to the relevant Warranty; and 7.4.2 in the context of any document treated as disclosed by the Disclosure Letter, the matter disclosed is reasonably apparent from the terms of the document; and nothing disclosed by the Sellers to the Buyer other than in the Disclosure Letter and in accordance with the provisions of this clause shall constitute disclosure for the purposes of this Agreement. 7.5 The Sellers undertake not to make any claim against a Group Company or a director, officer or employee of a Group Company which they may have in respect of a misrepresentation, inaccuracy or omission in or from information or advice provided by a Group Company or a director, officer or employee of a Group Company for the purpose of assisting the Sellers to make a representation, give a Warranty or prepare the Disclosure Letter. 7.6 Each Warranty is to be construed independently and (except where this Agreement provides otherwise) is not limited by a provision of this Agreement or another Warranty. 7.7 Between the execution of this Agreement and Completion the Sellers shall: 7.7.1 ensure that each Group Company complies with schedule 6; and 7.7.2 notify the Buyer immediately if they become aware of a fact or circumstance which constitutes or which would or might constitute a breach (whether repudiatory in nature or not) of clause 7.1 or 7.7.1 or which would or might cause a Warranty to be untrue, inaccurate or misleading if given in respect of the facts or circumstances as at Completion. 8. THE BUYERS REMEDIES 8.1 If, at any time before Completion, the Sellers are in material breach of any provision of this Agreement, the Buyer may by notice in writing to the Sellers elect to proceed to Completion or terminate this Agreement. -17- 8.2 If the Buyer terminates this Agreement pursuant to clause 8.1: 8.2.1 the Sellers shall indemnify the Buyer, and keep the Buyer indemnified, on demand against all its costs relating to the negotiation, preparation, execution or termination of this Agreement and the satisfaction of any Condition and of any legal proceedings against the Sellers in respect of any failure by them to comply with this Agreement; and 8.2.2 save for clauses 1, 8.2.1, 9, 13-16, and 18-21 each party's further rights and obligations shall cease immediately on termination, but termination does not affect a party's accrued rights and obligations at the date of termination. 9. LIMITATIONS ON THE SELLER'S LIABILITY 9.1 Neither of the Sellers shall be liable in respect of a Relevant Claim: 9.1.1 unless the aggregate amount that would otherwise be recoverable from the Sellers (but for this sub clause) in respect of that Relevant Claim exceeds [pound][*]; and 9.1.2 unless and until the aggregate amount that would otherwise be recoverable from the Sellers (but for this sub clause) in respect of that Relevant Claim, when aggregated with any other amount or amounts recoverable in respect of other Relevant Claims, exceeds [pound][*] and in the event that the aggregated amounts exceed [pound][*] the Sellers shall be liable in respect of the total aggregated amounts (subject to the other limitations in this clause 9) and not the excess only. 9.2 AFR's total liability in respect of all Relevant Claims and PM's total liability in respect of all Relevant Claims is limited to the sum of such amounts as shall have been paid to them or to their order under this Agreement except in cases of fraud by one of them in relation to the negotiation of this Agreement when no limit is to attach to that Seller. 9.3 PM shall not be liable for any Relevant Claim (other than one regarding title to the Shares sold by him and/or his capacity to sell them) to the extent that it relates to matters arising after 9 October 2001 and (subject to the other provisions of this clause 9) AFR shall accordingly be wholly liable for the relevant part of any such valid Relevant Claim. 9.4 Subject to clause 9.3, AFR shall be liable for only 87% of any valid Relevant Claim (unless it relates to his title to the Shares sold by him under this Agreement and/or his capacity to sell them (in which case he shall be liable for 100% of such claim)) and PM shall be liable for only 13% of any valid Relevant Claim (unless it relates to his title to the Shares sold by him under this Agreement and/or his capacity to sell them (in which case he shall be liable for 100% of such claim)) Provided That if the aggregate value of all valid Relevant Claims (including AFR's share, if applicable) for which PM would otherwise be liable (other than any regarding title to the Shares sold by him and/or his capacity to sell them) is less than [pound][*], PM shall have no liability for any such Claims and AFR's liability for such Relevant Claim(s) shall be increased accordingly. * CONFIDENTIAL TREATMENT REQUESTED -18- 9.5 The Sellers shall not be liable for a Relevant Claim in respect of: 9.5.1 a claim under the Tax Deed or under the Warranties contained in paragraph 6 of Schedule 5 unless the Buyer has notified the Sellers of the claim stating in reasonable detail the nature of the Claim and, if practicable, the amount claimed not later than 31 January 2008; and 9.5.2 any other Warranty unless the Buyer has notified the Sellers of the Warranty Claim stating in reasonable detail the nature of the Warranty Claim and, if practicable, the amount claimed on or before 30 June 2004. 9.6 A Seller shall not be liable for a Relevant Claim unless proceedings in respect of the Relevant Claim are issued and served on him within 6 months following the day of notification to him of the Relevant Claim. 9.7 Clauses 9.1, 9.2, 9.5 and 9.6 do not apply in respect of a valid Relevant Claim involving or relating to breach of clause 7.1 in respect of a Warranty contained in paragraph 3.1 of Schedule 5. 9.8 The Sellers shall not be liable in respect of any Relevant Claim: 9.8.1 to the extent that it arises or is increased as a result of the passing of, or a change in, any law, rule, regulation, interpretation of the law or administrative practice of a government, government department, agency or regulatory body or an increase in rates of taxation after the Last Accounting Date, or any provision or reserve in the Accounts or management accounts for the year ended 31 December 2001 being insufficient by reason of any increase in rates of taxation after the Last Accounting Date; 9.8.2 if it would not have arisen but for any act, omission, transaction or arrangement carried out at the written request of or with the written consent of the Buyer before Completion; 9.8.3 if it would not have arisen but for any voluntary act, omission, transaction or arrangement carried out after Completion by the Buyer or any Group Company and which the Buyer ought reasonably have anticipated would give rise to the loss in question; 9.8.4 to the extent that such Relevant Claim arises, or has otherwise arisen and is increased, as a result of any reorganisation or change made in the ownership of the Group after Completion or any change in any accounting or taxation policies or practice or accounting reference date of any Group Company or the Buyer made after Completion; 9.8.5 to the extent that it relates to any loss for which the Buyer or any Group Company has a right of recovery whether by contribution or indemnity by insurance or would have been entitled to recover if valid and adequate insurance: (a) had been maintained at the relevant time; and -19- (b) was of a type in force in relation to any Group Company at the date of this Agreement or normally effected by prudent companies carrying on a business similar to that of any Group Company; 9.8.6 to the extent that it relates to: (a) any matter in respect of which a provision or reserve is made in the Statutory Accounts; or (b) any liability for Taxation arising as a result of an Event occurring in the ordinary course of business of any Group Company after the Statutory Accounts Date, and without limitation, the exercise of any share options granted prior to Completion by James Patrick Johnston Fairrie or Martin McDermott SHALL be regarded for the purposes of 9.8.6 (b) as an Event occurring in a Group Company's ordinary course of business but each of the following SHALL NOT be regarded for the purposes of that sub-clause as an Event occurring in a Group Company's ordinary course of business: (i) an Event giving rise to a liability under section 126 or Schedule 23 of the Finance Act 1995 (UK representatives of non-residents etc.); (ii) an Event giving rise to a liability under Part XVII of the Taxes Act (tax avoidance); (iii) a distribution within the meaning given by Part VI or section 418 of the Taxes Act; (iv) an acquisition or deemed acquisition of assets, goods, services or business facilities of any kind (including a loan of money or a letting, hiring or licensing of tangible or intangible property) to the extent that the consideration as treated for Tax purposes is less than the actual consideration or, a disposal or supply or deemed disposal or supply of assets, goods, services or business facilities of any kind (including a loan of money or a letting, hiring or licensing of tangible or intangible property) to the extent that the consideration as treated for Tax purposes is more than the actual consideration; (v) an Event which results in a Group Company being liable for Tax for which it is not primarily liable; (vi) a Group Company's failure to deduct or account for Tax or pay Tax when due; (vii) a disposal of capital assets giving rise to a balancing charge for capital allowances purposes; (viii) an Event giving rise to a liability within section 419 of the Taxes Act; -20- (ix) a release of all or part of any debt to the extent that a deduction would not be available for Tax purposes in respect of such release; (x) the making of, or providing for, any redundancy or similar payments not authorised by the Buyer; and (xi) an Event which results in a chargeable gain being attributed to a Group Company under section 13 or 87 TCGA. 9.8.7 to the extent that the amount of the Relevant Claim is taken into account in calculating the SPV Revenue for any of the 4 years ending on 31st December 2004 and to the extent that it thereby reduces the amount payable under Schedule 3. 9.8.8 to the extent that such liability for Tax or other liability is discharged on or before the Statutory Accounts Date and the discharge of such liability is recognised in the Statutory Accounts; 9.8.9 to the extent that such liability for Tax or other liability is in respect of the actual (as opposed to the deemed) earning, receipt or accrual for any Tax purposes of any income, profit or gain which is not recognised in the Statutory Accounts; 9.8.10 to the extent that such liability for Tax or other liability would not have arisen or would have been reduced or eliminated but for the failure or omission on the part of any Group Company or the Buyer on or after Completion to make any claim, election, surrender or disclaimer or to give any notice or consent or to do any other thing, the making, giving or doing of which was taken into account in the preparation of the Statutory Accounts and the details of which have been notified to the Buyer on or before the date on which the relevant action is required to be taken; 9.8.11 to the extent that such liability to Tax or other liability would not have arisen but for the withdrawal or amendment by the Buyer or any Group Company after Completion of any election, claim, surrender, disclaimer, notice or consent made by the Group Company prior to Completion in relation to any Relief; 9.8.12 to the extent that such liability for Tax or other liability would not have arisen but for any failure or delay by the Buyer or any Group Company in paying over to any Tax Authority any payment previously made by the Sellers under the Tax Deed or for breach of the Warranties contained in paragraph 6 of Schedule 5 of this Agreement; 9.8.13 to the extent that at the Statutory Accounts Date there was available to any Group Company any Relief which was not included or taken into account in the provision or reserve for Tax in the Statutory Accounts or to the extent that any losses attributable to periods ending on or before the Statutory Accounts Date become available to any Group Company and such repayment, credit, set-off or such losses can, in the opinion of the Buyer's auditors, be used by any Group Company or the Buyer to avoid any liability to Tax which but for this sub- -21- paragraph would have given rise to a claim under the Tax Deed or under the Warranties contained in paragraph 6 of Schedule 5 of this Agreement by the Buyer, to the intent and effect that such Relief, or losses should as far as possible be utilised in:- 9.8.13.1 discharge of any liability for Tax which could otherwise form the subject matter of a claim against the Sellers under this Deed or under the Warranties contained in paragraph 6 of Schedule 5 of this Agreement; and 9.8.13.2 reduction of any other liability for Tax of any Group Company or the Buyer (whether by way of carry forward and set-off against future profits or otherwise) and in such case the amount for which the Sellers would otherwise be liable under this Deed or under the Warranties contained in paragraph 6 of Schedule 5 of the Agreement shall be reduced by an amount which is equal to the amount of the said reduction and if the said reduction occurs after a liability under the Tax Deed or under the Warranties contained in paragraph 6 of Schedule 5 of this Agreement has been discharged, the relevant Group Company or the Buyer shall be liable to repay to the Sellers the amount of such reduction (up to the amount of the liability previously discharged); 9.8.14 to the extent that such liability arises solely by virtue of any Group Company's average rate of corporation tax increasing as a result of becoming a member of the Buyer's group; 9.8.15 to the extent that such liability arises as a result of the grant of share options or other benefits to or the exercise of share options by James Patrick Johnston Fairrie or Martin McDermott; 9.8.16 to the extent that such liability is stamp duty arising on documents other than those documents in the enforcement of which the Company is interested. 9.9 If the Buyer or any Group Company is able to recover from some other person any sum in respect of any matter or event which could give rise to a Relevant Claim, the Buyer will (or will procure that any relevant Group Company will) take all reasonable steps to recover that sum before making such Relevant Claim, and any sum recovered will reduce the amount of such Relevant Claim after deduction of all reasonable costs and expenses of recovery. 9.10 If a Seller pays the Buyer a sum to settle or discharge a Relevant Claim and the Buyer or any Group Company subsequently recovers whether by payment, discount, credit, relief or otherwise from any third party (including any Tax Authority) a sum which is referable to the Relevant Claim the Buyer will repay the Seller immediately the Relevant Proportion of the amount recovered from the third party less the Relevant Proportion of any reasonable costs and expenses incurred in recovering the same and less any Tax -22- payable on such amount, or if less such amount as is equivalent to the sum paid by the Seller in settlement or discharge of that Relevant Claim. 9.11 The Buyer shall not be entitled to recover damages or otherwise obtain payment, reimbursement or restitution more than once under this Agreement (including the Tax Deed) in respect of the same loss or liability. 9.12 If any potential Relevant Claim arises as a result of a contingent or unquantifiable liability of any Group Company, the Sellers shall be obliged to pay any sum in respect of the potential Relevant Claim at such time (if at all) as the liability or a portion thereof either ceases to be contingent or becomes quantifiable (and then only to the extent that it does so). 9.13 If the Buyer or a Group Company becomes aware that matters have arisen which will or are likely to give rise to a Relevant Claim, the Buyer will (and will procure that any Relevant Group Company will): 9.13.1 immediately notify the Sellers in writing of the potential Relevant Claim; 9.13.2 not make any admission of liability, agreement or compromise with any person, body or authority in relation to the potential Relevant Claim without prior written consent of the Sellers (not to be unreasonably withheld or delayed); 9.13.3 disclose promptly in writing to the Sellers all information and documents relating to the potential Relevant Claim or the matters which will or are likely to give rise to the potential Relevant Claim; 9.13.4 if requested by the Sellers give each Seller and his professional advisers reasonable access (at the relevant Seller's cost) to: (a) the personnel of the Buyer and/or any relevant Group Company in order to interview the personnel; (b) any relevant premises, chattels, accounts, documents and records within the power, possession or control of the Buyer and/or any relevant Group Company in order to, at the Sellers' own expense, examine and photograph the premises and chattels and to examine, photograph and take copies of the accounts, documents and records; 9.13.5 take such action as either Seller may reasonably request to avoid, resist, contest, defend, compromise or remedy the potential Relevant Claim or the matters which will or are likely to give rise to such Relevant Claim and in each case on the basis that the Sellers shall indemnify the Buyer in the Relevant Proportions for all reasonable costs incurred as a result of a request by the Sellers; 9.13.6 in connection with any actions or proceedings relating to the matter or Relevant Claim, and subject to the Buyer being indemnified for all reasonable costs incurred, use advisers nominated by the Sellers and, if the Sellers (or the relevant Seller if only one of them is potentially liable) request, consult with the -23- Sellers or relevant Seller regarding the exclusive conduct of such actions or proceedings. 9.14 Nothing in this clause 9 shall in any way restrict or limit the Buyer's or any relevant Group Company's common law duty to mitigate its loss. 9.15 The Buyer confirms to the Sellers that it is not aware at the date of this Agreement, after discussion with its accountants and solicitors, of any matter or thing which in its reasonable opinion will or may give rise to any Relevant Claim. 9.16 Save as provided herein, the sole remedy of the Buyer for any breach of any of the Warranties or any other breach of this Agreement by the Sellers shall be an action for damages and the Buyer shall not be entitled to terminate or rescind this Agreement. 9.17 Nothing in clause 9 shall have the effect of limiting or restricting any liability of a Seller in respect of a Relevant Claim arising as a result of any fraud committed by that Seller in connection with the negotiation, preparation, execution and performance of this Agreement. 10. USE OF INTELLECTUAL PROPERTY RIGHTS Each of the Sellers shall not, either alone or jointly with, through or as manager, adviser, consultant or agent for a person, directly or indirectly use or authorise, encourage or assist any person to use in connection with a business which competes, directly or indirectly, with a business of a Group Company as operated at the date of this Agreement, any of the Intellectual Property Rights (in particular, a name consisting of or including word "SPV") or use in that connection anything which is intended, or is likely to be confused with, any of the Intellectual Property Rights. 11. FURTHER UNDERTAKINGS BY THE SELLERS 11.1 Each of the Sellers undertakes to the Buyer, for itself and as agent and trustee for each Group Company, that subject to clause 11.2, he will not do any of the following things: 11.1.1 for a period of 4 years starting on the date of Completion, either alone or jointly with, through, or as adviser to or manager for, any person, carry on or be engaged, concerned or interested in a business which competes with a Group Company in respect of the SPV Core Business Provided that a Seller may be involved in a business if not more than 5% of the revenue of that business arises from activities that are competitive with the SPV Core Business as at the time of such involvement; 11.1.2 for a period of 4 years starting on the date of Completion, do or say anything which is harmful to a Group Company's goodwill (as subsisting at the date of this Agreement) or which may lead a person who has dealt with a Group Company at any time during the twelve months prior to the date of this Agreement to cease to deal with a Group Company in respect of the SPV Core Business on substantially equivalent terms to those previously offered or at all; 11.1.3 for a period of 4 years starting on the date of Completion, on his own account or in conjunction with or on behalf of any other person in respect of the products -24- or services of a business of a Group Company, either seek to obtain orders from, or do business with, or encourage another person to obtain orders from or do business with, a person who has been a customer of that business at any time during the twelve months prior to the date of this Agreement, in respect of the SPV Core Business provided that a Seller may be involved in a business if not more than 5% of the revenue of that business arises from activities that are competitive with the SPV Core Business as at the time of such involvement; 11.1.4 for a period of 4 years starting on the date of this Agreement, engage, employ, solicit or contact with a view to his engagement or employment by another person, a person who was a director, officer, employee or manager of a Group Company at the date of this Agreement, where the person in question either has Confidential Information or would be in a position to exploit a Group Company's trade connections; or 11.1.5 for a period of 4 years starting on the date of Completion, seek to contract with or engage (in such a way as to affect adversely a Group Company in respect of the SPV Core Business) a person who has been contracted with or engaged to supply services to that Group Company at any time during the twelve months prior to the date of this Agreement. 11.1.6 pending Completion each of the Sellers shall not, directly or indirectly: (i) enter into or be involved in any discussion or negotiation with any person except the Buyer in connection with the sale of any Group Company or the business or any part of the business of or (except in the usual course of business) any of the assets of the business of any Group Company; (ii) enter into an agreement or arrangement with any person except the Buyer or any person designated by the Buyer in connection with the sale of any Group Company or the business or any part of the business of or (except in the usual course of business) any of the material assets of any Group Company; or (iii) make available to any person except their own advisors, the Buyer, its directors, officers, duly authorised representatives, advisers or agents any information relating to the sale of any Group Company or the business or any part of the business of or (except in the usual course of business) any of the assets of any Group Company (except in the usual course of business). 11.2 Nothing in this clause 11 shall prevent either Seller from: 11.2.1 holding or acquiring any business or the shares or other securities of any company if: (i) not more than 5 per cent of the business or that company's business is competitive with the SPV Core Business; and -25- (ii) the principal reason for doing so is not the ownership of an interest in that part of the business in question; 11.2.2 holding or acquiring shares in any public company if the shares in question represent less than 5% of the issued shares of the relevant company. 11.3 Each undertaking in clause 11.1 constitutes an entirely independent undertaking and if one or more of the undertakings is held to be against the public interest or unlawful or in any way an unreasonable restraint of trade the remaining undertaking shall continue to bind each of the Sellers. 11.4 On receiving the Buyer's reasonable request each of the Sellers shall (at the Buyer's cost): 11.4.1 do and execute, or arrange to be done and executed, each act, document and thing reasonably requested by the Buyer from the relevant Seller to implement this Agreement; and 11.4.2 give to the Buyer all documents in their possession (if any) that belong to a Group Company and copies of any other documents that the Buyer might reasonably request. 12. CONFIDENTIAL INFORMATION 12.1 Each of the Sellers undertakes to the Buyer, for itself and as agent and trustee for each Group Company, that before and after Completion each of the Sellers shall not use or disclose to any person Confidential Information he has or acquires and shall make every reasonable effort to prevent the use or disclosure of Confidential Information by any third party not authorised by the Company to have it. 12.2 Clause 12.1 does not apply to disclosure of Confidential Information: 12.2.1 to a director, officer or employee of the Buyer or of a Group Company whose function requires him to have the Confidential Information; 12.2.2 required to be disclosed provided that the disclosure shall be made after consultation with the Buyer and after taking into account the Buyer's reasonable requirements as to its timing, content and manner of making or despatch; or 12.2.3 to an adviser for the purpose of advising the relevant Seller in connection with his affairs provided that such disclosure is essential for these purposes and is on the basis that clause 12.1 applies to the disclosure by the adviser. 13. GUARANTOR'S OBLIGATIONS 13.1 In consideration of the Sellers entering into this Agreement, the Guarantor irrevocably and unconditionally: 13.1.1 guarantees to the Sellers the due and punctual payment, observance and performance by the Buyer of all of the Buyer's liabilities and obligations, whether present or future, express or implied, actual or contingent, under or -26- arising out of this Agreement, including any liability or obligation to pay any sums due and payable under the Loan Notes; and 13.1.2 agrees as a primary obligation to indemnify each of the Sellers from time to time on demand against each loss, liability and cost which he may incur as a result of any of the obligations of the Buyer under the Agreement being or becoming void, voidable, unenforceable or ineffective for any reason whatsoever whether or not known to either Seller, the amount of such loss being the amount which the relevant Seller would otherwise have been entitled to recover from the Buyer. 13.2 The Sellers will not be obliged before exercising any of the rights, powers or remedies conferred upon them in respect of the Guarantor under this clause or by law: 13.2.1 to make any demand of the Buyer; 13.2.2 to enforce or seek to enforce any claim, right or remedy against the Buyer or any other person; or 13.2.3 to make or file any claim or proof in connection with the insolvency of the Buyer or any other person; or 13.2.4 to take any action or obtain judgement in any court against the Buyer or any other person. 13.3 Neither the liability of the Guarantor under this clause nor the rights, powers and remedies conferred on the Sellers under this clause or by law will in any way be released, prejudiced, diminished or affected by any of the following: 13.3.1 any time or other indulgence being granted to the Buyer in respect of its obligations under the Agreement; 13.3.2 any amendment to, or any variation, waiver or release of, any obligation of the Buyer under this Agreement; 13.3.3 any failure to take, or fully to take, any security contemplated by this Agreement or otherwise agreed to be taken in respect of the Buyer's obligations under the Agreement; 13.3.4 any failure to realise or fully to realise the value of, or any release, discharge, exchange or substitution, of any such security taken in respect of the Buyer's obligations under the Agreement; 13.3.5 the insolvency, incapacity, disability, or any change in the constitution, name, control or style of, the Buyer, the Guarantor or any other person; 13.3.6 any invalidity, illegality, unenforceability, irregularity or frustration in any respect of any of the liabilities or obligations referred to in clause 13.1.1; and 13.3.7 any act, omission event or circumstances which, but for this provision, might operate to prejudice, affect or otherwise affect the liability of the Guarantor -27- under this clause or any of the rights, powers or remedies conferred upon the Sellers under this clause or by law. 14. ANNOUNCEMENTS 14.1 Subject to clause 14.2, none of the parties shall, before or after Completion, and, before Completion, the Sellers shall procure that the Company shall not, make or send a public announcement, communication or circular concerning the transactions referred to in this Agreement unless it has first obtained the other parties' written consent which may not be unreasonably withheld or delayed. 14.2 Clause 14.1 does not apply to a public announcement, communication or circular required by law, or by a governmental authority or other authority with relevant powers to which a party is subject or submit, whether or not the requirement has the force of law, provided that the public announcement, communication or circular shall be made after consultation with the other parties and after taking into account the reasonable requirements of the other parties as to its timing, content and manner of making or despatch. 15. COSTS Except where this Agreement or the relevant document provides otherwise, each party shall pay its own costs relating to the negotiation, preparation, execution and performance by it of this Agreement and of each document referred to in it. 16. GENERAL 16.1 A variation of this Agreement is valid only if it is in writing and signed by or on behalf of each party. 16.2 The failure to exercise or delay in exercising a right or remedy provided by this Agreement, or by law, does not impair or constitute a waiver of the right or remedy or an impairment of, or a waiver of, other rights or remedies. No single or partial exercise of a right or remedy provided by this Agreement or by law prevents further exercise of the right or remedy or the exercise of another right or remedy. 16.3 The parties' rights and remedies contained in this Agreement are cumulative and not exclusive of rights or remedies provided by law. 16.4 Except to the extent that they have been performed and except where this Agreement provides otherwise, the obligations contained in this Agreement remain in force after Completion. 16.5 If a party fails to pay a sum due from it under this Agreement on the due date of payment in accordance with the provisions of this Agreement, that party shall pay interest on the overdue sum from the due date of payment until the date on which its obligation to pay the sum is discharged at the rate of 2 per cent. per annum over the base lending rate of Barclays Bank plc (whether before or after judgement). Interest accrues and is payable from day to day, but without compounding. -28- 16.6 Except as provided in clause 18.6, a person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement, but this does not affect any right or remedy of a third party which exists or is available apart from that Act. 17. SET-OFF 17.1 The Buyer shall not be entitled to set off any liability of either Seller to the Buyer in respect of a Relevant Claim against any liability of the Buyer to that Seller under this Agreement, except as provided in clause 6, or in the Loan Notes, under the Tax Deed and subject to clause 9. 17.2 If the Buyer does exercise a right of set off in accordance with clause 17.1, the withholding by the Buyer shall not discharge the Sellers from their obligations under this Agreement (save to the extent of the set off), whether under clause 7, or otherwise, or under the Tax Deed. If, however, it is subsequently agreed between the relevant parties or determined that the Buyer was not entitled to withhold anything, or that it withheld more than it was entitled to withhold, the Buyer shall pay to the Seller the amount improperly withheld, together with interest under clause 16.5, save that the Buyer shall be entitled to a credit against such obligation for any interest paid to the relevant Seller under clause 6. 18. ENTIRE AGREEMENT 18.1 This Agreement and each document referred to in it constitutes the entire agreement and supersedes any previous agreements between the parties relating to the subject matter of this Agreement. 18.2 The Buyer acknowledges and represents that it has not relied on or been induced to enter into this Agreement and the documents referred to in it by a representation, warranty or undertaking (whether contractual or otherwise) given by the Sellers other than the Warranties or otherwise as set out in this Agreement or each document referred to in it. 18.3 The Sellers are not liable to the Buyer (in equity, contract or tort (including negligence), under the Misrepresentation Act 1967 or in any other way) for a representation, warranty or undertaking that is not set out in this Agreement or any document referred to in this Agreement. 18.4 The Sellers acknowledge and represent that they have not relied on or been induced to enter into this Agreement and the documents referred to in it by a representation, warranty or undertaking (whether contractual or otherwise) given by the Buyer other than as set out in this Agreement or any document referred to in this Agreement. 18.5 The Buyer is not liable to the Sellers (in equity, contract or tort (including negligence), under the Misrepresentation Act 1967 or in any other way) for a representation, warranty or undertaking relating to the subject matter of this Agreement that is not set out in this Agreement or any document referred to in this Agreement. 18.6 The Sellers agree that no Buyer's Group Undertaking or adviser or provider of finance to the Buyer or other Buyer's Group Undertaking shall have any liability to the Sellers (in -29- equity, contract or tort (including negligence), under the Misrepresentation Act 1967 or in any other way) for a representation, warranty or undertaking relating to the subject matter of this Agreement that is not set out in this Agreement or any document referred to in this Agreement. 18.7 The Buyer and the Sellers agree that neither party shall bring any action against any of the others or against any Buyer's Group Undertaking in relation to (a) any previous agreement(s) between them relating to the subject matter of this Agreement or (b) any representation, warranty or undertaking relating to the subject matter of this Agreement other than the Warranties or otherwise as set out in this Agreement or each document referred to in it, save that this clause shall not affect any rights that either of the Sellers may have against each other under any other agreement between them in relation to the Group. In particular, but without limitation, the only remedy available to the Buyer for breach of the Warranties shall be the right to terminate under clause 8 prior to Completion and/or to seek damages for breach of contract under the terms of this Agreement. 18.8 Nothing in this clause 18 shall have the effect of limiting or restricting any liability arising as a result of any fraud committed by any of the parties in connection with the negotiation, preparation, execution and performance of this Agreement and of each document referred to in it. 19. ASSIGNMENT 19.1 The Sellers agree that the benefit of every provision in this Agreement is given to the Buyer for itself and its successors in title and assigns. Accordingly, the Buyer (and its successors and assigns) may, without the consent of the Sellers, assign the benefit of all or any of the Sellers' obligations under this Agreement and/or any other benefit arising under or out of this Agreement. Provided Always that the Buyer shall not be entitled to assign the benefit of any of the provisions of this Agreement or to transfer ownership of the Shares without the written consent of the Sellers (except to a member of the Buyer's consolidated group and provided the Guarantor remains obligated) unless it has first paid to the Sellers all sums potentially due to them under the Loan Notes, measured at their outstanding face value (or potential face value if they have not yet been issued) inclusive of interest up to the date of payment, or out of the Escrow Account free from any set off that has not been agreed by the relevant Seller. 19.2 Subject to the limited transferability rights set out in the Escrow Loan Notes, each of the Sellers shall be entitled either in whole or in part to assign, or otherwise transfer, declare a trust of the benefit of, or in any other way alienate any of his rights under this Agreement (including his rights under the Loan Notes or to receive those Loan Notes that have not yet been issued). 20. NOTICES 20.1 A notice or other communication under or in connection with this Agreement (a "Notice") shall be: -30- 20.1.1 in writing; 20.1.2 in the English language; and 20.1.3 delivered personally or sent by first class post pre-paid recorded delivery (and air mail if overseas) or by fax to the party due to receive the Notice to the address set out in clause 20.3 or to another address, person, or fax number specified by that party by not less than seven days' written notice to the other party received before the Notice was despatched. 20.2 Unless there is evidence that it was received earlier, a Notice is deemed given if: 20.2.1 delivered personally, when left at the address referred to in clause 20.1.3; 20.2.2 sent by mail, except air mail, two Business Days after posting it; 20.2.3 sent by air mail, six Business Days after posting it; and 20.2.4 sent by fax, when confirmation of its transmission has been recorded by the sender's fax machine. 20.3 The address referred to in clause 20.1.3 is:
NAME OF PARTY ADDRESS FACSIMILE NO. MARKED FOR THE ATTENTION OF AFR Tower Mill 0189 285 2587 Mark Cross Crowborough East Sussex TN6 3PL COPY TO SPV Management Limited 020 7220 7819 Martin 78 Cannon Street McDermott/James London Fairrie EC4P 5LN COPY TO Eversheds 020 7919 4919 Bruce Gripton Senator House 85 Queen Victoria Street London EC4V 4JL PM The Old Coach House 01580 819 154 Shoyswell Manor Sheepstreet Lane Etchingham East Sussex TN19 7AZ
-31- COPY TO Richards Butler 020 7247 5091 Philip Allford Beaufort House 15 St Botolph Street London EC3A 7EE THE BUYER Wilmington Trust +13026364158 Howard Cohen, Rodney Square North AND/OR THE 1100 N. Market Street Senior Vice President GUARANTOR Wilmington Delaware 19890 USA COPIES TO Wilmington Trust +13024274771 David C Roulston, Esq. Rodney Square North 1100 N.Market Street Wilmington Delaware 19890 USA Clifford Chance LLP +442076005555 Martin Richards 200 Aldersgate Street London EC1A 4JJ United Kingdom (Ref: MER/W1539/00081).
21. GOVERNING LAW AND JURISDICTION 21.1 This Agreement is governed by English law. 21.2 The courts of England have exclusive jurisdiction to settle any dispute arising from or connected with this Agreement (a "DISPUTE"). 21.3 The parties agree that they shall not commence proceedings in any court other than the courts of England. 21.4 The parties agree that the documents which start any Proceedings and any other documents required to be served in relation to those Proceedings may be served on the Seller in accordance with clause 21. These documents may, however, be served in any other manner allowed by law. 21.5 The Guarantor irrevocably agrees that any notice or document may be sufficiently and effectively served on it in connection with proceedings in England by service on the Buyer, if no replacement agent has been appointed and notified to the Sellers under clause 21.7, or on the replacement agent if one has been so appointed and notified to the Sellers. -32- 21.6 Any notice or document served pursuant to this clause shall be marked for the attention of: 21.6.1 The Company Secretary at the registered office of the Buyer or such other address within England as may be notified to the Sellers by the Guarantor; or 21.6.2 such other person as is appointed as agent for service pursuant to clause 21.7 below. 21.7 If the agent referred to in clause 21.5 (or any replacement agent appointed pursuant to this clause) at any time ceases for any reason to act as such, the Guarantor shall appoint a replacement agent to accept service having an address for service in England and shall notify the Sellers of the name and address of the replacement agent. Failing such appointment and notification, the Sellers shall be entitled by notice to the Guarantor to appoint such a replacement; provided that in cases where service is effected upon a replacement agent appointed by the Sellers in accordance with this sub-clause a copy of the relevant notice or document shall at the same time be forwarded to the last known business address of the Guarantor. 22. COUNTERPARTS This Agreement may be executed in any number of counterparts, each of which when executed and delivered is an original and all of which together evidence the same agreement. -33- EXECUTED by the parties: Signed by ANTHONY FRANCIS ) A. F. RAIKES RAIKES ) Signed by PIERS MINOPRIO ) P. MINOPRIO Signed by NORMA CLOSS ) N. CLOSS a duly authorised ) representative of ) WILMINGTON TRUST ) (UK) LIMITED ) Signed by HOWARD COHEN ) H. COHEN a duly authorised ) representative of ) WILMINGTON TRUST ) CORPORATION ) -92- -----END PRIVACY-ENHANCED MESSAGE-----