OPERATING AGREEMENT
OF
XXXXXXXXXX.XXX, LLC
THIS OPERATING AGREEMENT is made and entered into the 19th day of April
2000, by and among Covenant Transport, Inc., a Nevada corporation, X.X. Xxxx
Transport Services, Inc., an Arkansas corporation, M.S. Carriers, Inc., a
Tennessee corporation, Swift Transportation Co., Inc., a Nevada corporation,
U.S. Xpress Enterprises, Inc., a Nevada corporation and Xxxxxx Enterprises,
Inc., a Nebraska corporation, or the respective affiliates of the foregoing six
corporations (collectively the "Members") and Xxxxxxxxxx.xxx, LLC, a Nevada
limited liability company (the "Company"), to govern certain aspects of the
operations of the Company and to set forth the rights and obligations of the
Members, any Persons subsequently becoming Members, and their respective
successors and assigns.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and in consideration of becoming a Member of the Company, the undersigned
(including parties who subsequently become parties hereto after the effective
date of this Agreement) agree as follows:
ARTICLE I
DEFINITIONS AND GENERAL PROVISIONS
SECTION 1.1. DEFINITIONS. Unless the context or rules of grammar otherwise
require or unless otherwise expressly provided in this Agreement, the following
capitalized terms used in this Agreement (and the respective plural or singular
forms thereof) shall have the meanings specified in this Section as follows:
"ACT" means Chapter 86 of Title 7 of the Nevada Revised Statutes, as
amended from time- to-time.
"AFFILIATE" means any Person that is, directly or indirectly, through one
or more intermediaries, controlling, controlled by, or under common control with
a Member. The term "control," as used in the immediately preceding sentence,
means, with respect to a limited liability company or corporation, the right to
exercise, directly or indirectly, more than 50% of the voting rights of such
limited liability company or corporation and, with respect to any other Person,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies thereof.
"AGREEMENT" means this Operating Agreement, as amended from time-to-time.
"ARTICLES" mean the Articles of Organization of the Company filed with the
Nevada Secretary of State, as amended or restated from time-to-time.
"AVAILABLE CASH" of the Company means all cash funds of the Company on hand
from time-to-time (other than cash funds obtained as contributions to the
capital of the Company by the Members and cash funds obtained from loans to the
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Company) after (i) payment of all operating expenses of the Company as of such
time, (ii) provision for payment of all outstanding and unpaid current
obligations of the Company as of such time, and (iii) provision for a reasonable
working capital reserve if such a reserve is established by the Board of
Managers.
"BOARD OF MANAGERS" has the meaning set forth in Section 4.1 of this
Agreement.
"CAPITAL ACCOUNT" means the account established and maintained for each
Member in the manner prescribed by Article III and in the manner provided in
Treasury Regulation Section 1.704-l(b)(2)(iv), as amended from time-to-time.
"CAPITAL CONTRIBUTIONS" means the total value of any cash, property,
services rendered, or a promissory note or other binding obligation to
contribute cash or property or to perform services, that a person transfers to
the Company in the capacity as a Member, as shown on Exhibit B attached to and
made a part of this Agreement, as the same may be amended from time-to-time. Any
reference in this Agreement to the Capital Contributions of a Member shall
include all Capital Contributions previously made by any prior Member for the
interest of such Member, and shall be reduced by any distributions to such prior
Member in return of the Member's Capital Contributions as contemplated in this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended. All references
in this Agreement to Code Sections shall include any and all corresponding
provisions of succeeding law.
"COMPANY" means Xxxxxxxxxx.xxx, LLC
"FORMER MEMBER" means a Person who previously was, but is no longer, a
Member of the Company.
"INITIAL MEMBERS" means Covenant Transport, Inc., X.X. Xxxx Transport
Services, Inc., M.S. Carriers, Inc., Swift Transportation Co., Inc., U.S. Xpress
Enterprises, Inc., and Xxxxxx Enterprises, Inc., or any Affiliate of any of the
foregoing companies.
"INTEREST" means the entire ownership interest of a Member in the Company
at any particular time, including the right of such Member to any and all
benefits to which a Member may be entitled as provided in this Agreement and
under the Act, together with the obligations of such Member to comply with all
of the terms and provisions of this Agreement.
"LOSSES" or "LOSSES" means losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as determined in
accordance with Treasury Regulation Section 1.704-l(b)(2)(iv).
"MANAGER" means any Person or Persons designated as a Manager or Managers
of the Company pursuant to Article IV.
"MEMBER" means a Person that (i) owns an Interest in the Company, (ii) has
been admitted to membership in the Company in accordance with the Act, the
Articles and this Agreement, and (iii) has not ceased to be a Member in
accordance with the Act, the Articles and/or this Agreement.
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"MEMBERSHIP" means all of the Members.
"PERCENTAGE INTEREST" of a Member means the percentage of issued and
outstanding Units of the Company held by such Member as set forth opposite the
name of such Member under the column "Percentage Interest" on Exhibit B, as such
percentage may be adjusted from time-to-time pursuant to the terms of this
Agreement.
"PERSON" means and includes an individual, corporation, general partnership
(including a limited liability partnership), limited partnership, association,
limited liability company, business trust, or any other legal or commercial
entity.
"PROFITS" or "PROFITS" means income, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as determined in
accordance with Treasury Regulation Section 1.704-l(b)(2)(iv).
"TAX MATTERS MANAGER" means the "Tax Matters Partner" of the Company as
that term is defined in Code Section 6231.
"TREASURY REGULATIONS" means regulations of the United States Department of
the Treasury under the Code, as amended from time-to-time.
"UNITS" refers to an interest in the Company to be measured in such units
as may be established pursuant to Article III. Whenever reference is made to the
"Percentage Interest" of a Member, a Member's Units may be converted into the
same by dividing the Member's number of Units by the total of all Units
outstanding.
SECTION 1.2. REFERENCES TO ARTICLES, SECTIONS AND EXHIBITS. References in
this Agreement to numbered or lettered "Article" or "Section" or "subsection"
shall, unless the context clearly indicates otherwise, be construed as referring
to a particular Article, Section or subsection in this Agreement, and references
in this Agreement to "this Article" or "this Section" or "this subsection" shall
be construed as referring, as applicable, to the Article, Section or subsection
in which such reference is located. References in this Agreement to an "Exhibit"
are to a document so identified that is attached to, and a part of, this
Agreement.
SECTION 1.3. COORDINATION WITH THE ACT. The Act contains a number of
provisions that govern various aspects of the conduct of the business and
affairs of limited liability companies that can be "overruled", so to speak, by
the provisions of a written operating agreement adopted by the members of the
limited liability company or by the articles of organization of such company. In
construing this Agreement and the Articles and in coordinating the provisions
hereof and thereof with the Act, it is the intent of the Members that whenever
this Agreement or the Articles contain provisions addressing a certain subject
or matter, those provisions of this Agreement or the Articles will control over
the provisions of the Act with respect to that same subject or matter and shall
be construed as overruling any conflicting or different provisions of the Act
with respect thereto even though the provisions of this Agreement or the
Articles do not specifically state that they are intended to overrule such
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provisions of the Act. If this Agreement and the Articles are silent as to a
subject or matter covered by the Act, the provisions of the Act with respect
thereto shall control.
ARTICLE II
ORGANIZATION AND TERM
SECTION 2.1. ARTICLES OF ORGANIZATION. The Company was formed by filing the
Articles with the Nevada Secretary of State pursuant to the Act. The rights and
liabilities of the Members shall be as provided under the Act, the Articles and
this Agreement. The Members agree to each of the provisions of the Articles.
SECTION 2.2. NAME. The name of the Company is Xxxxxxxxxx.xxx, LLC.
SECTION 2.3. PRINCIPAL PLACE OF BUSINESS. The principal place of business
of the Company shall be located in or about Dallas, Texas, at such address as
may from time-to-time be established by the Board of Managers.
SECTION 2.4. REGISTERED OFFICE AND REGISTERED AGENT. The Company's
registered office shall be at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxx
00000, and the name of its registered agent at such address is Corporate
Services of Nevada. The Company may designate another registered office or agent
at any time by following the procedures set forth in the Act.
SECTION 2.5. PURPOSE. The purpose of the Company is to engage in any and
all lawful business activities.
SECTION 2.6. EFFECTIVE DATE. This Agreement shall become effective upon
execution.
SECTION 2.7. TERM. The term of the Company shall continue in perpetuity and
until the Company is dissolved in accordance with the provisions of this
Agreement or the Act.
SECTION 2.8. OTHER INSTRUMENTS. Each Member hereby agrees, within ten (10)
days after receipt of a written request therefor, to execute and deliver such
other and further documents and instruments, statements of interest and
holdings, designations, powers of attorney and other instruments, and to take
such other action, as the Company deems necessary, useful, or appropriate to
comply with any laws, rules or regulations or as may be necessary to enable the
Company to fulfill its responsibilities under this Agreement.
Page 4 of 30 Xxxxxxxxxx.xxx Operating Agreement
ARTICLE III
MEMBERS AND CAPITAL STRUCTURE
SECTION 3.1. NAMES AND ADDRESSES OF MEMBERS. All Members and Former Members
of the Company, and their last known business, residence or mailing address,
shall be listed on Exhibit A. The Members shall be required to update Exhibit A
from time-to-time as necessary to accurately reflect the information therein.
SECTION 3.2. UNITS REPRESENTING INTERESTS. Interests in the Company shall
be represented by the Units held by each Member. Each Member's respective Units
in the Company shall be set forth on Exhibit B (which shall be updated by the
Members from time-to-time as required to accurately reflect the information
therein). The Members hereby agree that each Unit shall entitle the Member
possessing such Unit to, except as otherwise provided in Articles VIII and XII,
the allocation of an equal proportionate share per Unit of the Company's Profits
and Losses.
SECTION 3.3. CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS OF MEMBERS. The
agreed fair market value of the Capital Contributions to the Company and
Percentage Interests of each Member are set forth on Exhibit B (as same exists
at the Effective Date). Any subsequent Capital Contributions shall be in such
amounts and in such types of property as may be agreed upon by all of the
Members, and shall also be reflected on Exhibit B (as updated).
SECTION 3.4. ADDITIONAL CAPITAL CONTRIBUTIONS. Members shall be permitted
from time-to-time to make such additional or further Capital Contributions, for
such consideration and/or Units, as shall be determined by all the Members.
Except to the extent that a Member shall agree to do so or shall be
contractually obligated to do so, no Member shall be required to make any
additional Capital Contributions to the Company.
SECTION 3.5. CAPITAL ACCOUNTS.
(a) An individual Capital Account shall be established and maintained
on behalf of each Member in the manner provided by Treasury
Regulation Section 1.704-l(b)(2)(iv). To the extent consistent
with Treasury Regulation Section 1.704-l(b)(2)(iv), the Capital
Account of each Member shall consist of (i) the amount of cash
such Member has contributed to the Company, plus (ii) the agreed
fair market value of any property such Member has contributed to
the Company, net of any liabilities assumed by the Company or to
which such property is subject, plus (iii) the amount of Profits
(including tax-exempt income) allocated to such Member, less (iv)
the amount of Losses allocated to such Member, less (v) the
amount of all cash distributed to such Member, less (vi) the fair
market value of any property distributed to such Member, net of
any liability assumed by such Member or to which such property is
subject, less (vii) such Member's share of any other expenditures
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which are not deductible by the Company for federal income tax
purposes or which are not allowable as additions to the basis of
Company property, and (viii) subject to such other adjustments as
may be required under the Code. The Capital Account of a Member
shall be increased or decreased, as relevant or applicable, to
reflect adjustments to basis made pursuant to the Code or
Treasury Regulations.
(b) Except as may be specifically provided otherwise in this
Agreement, no Member shall have any liability or obligation to
the Company, or to any Member or any other Person, to restore a
negative or deficit balance in such Member's Capital Account.
SECTION 3.6. NO REDEMPTION RIGHTS. Except as may otherwise be specifically
provided in this Agreement or be determined by all the Members, no Member or
Former Member shall be entitled, at or after the time the Member ceases to be a
Member of the Company or at any other time, to demand or receive from the
Company a return of any of the Member's Capital Contributions or the purchase or
redemption of, or other payment for, the Member's Units or Interest.
SECTION 3.7. MEMBER LOANS OR SERVICES. Unless otherwise determined by all
the Members, loans or services by any Member to the Company shall not be
considered Capital Contributions.
SECTION 3.8. PRIOR OBLIGATIONS. In the event that any Member (or any of
such Member's shareholders, partners, members, owners, or Affiliates
(collectively, the "Liable Member")) has incurred any indebtedness or obligation
prior to the effective date of this Agreement that relates to or otherwise
affects the Company, neither the Company nor any Other Member shall have any
liability or responsibility for or with respect to such indebtedness or
obligation unless such indebtedness or obligation is assumed by the Company
pursuant to a written instrument signed by all the Members. All cost and
expenses incurred by any Member arising by way of organizing expenses for
activities undertaken on behalf of the Company shall be reimbursed to such
Member, subject to approval of the Board.
SECTION 3.9. CERTIFICATES FOR UNITS. The Units or Interest of a Member in
the Company may be represented by such Certificates of Membership, Unit
Certificates or similar instruments, if any, as may from time-to-time be
determined by the Board.
ARTICLE IV
BOARD OF MANAGERS
SECTION 4.1. MANAGEMENT BY BOARD OF MANAGERS. The business and affairs of
the Company shall be managed by, and shall be under the exclusive control and
direction of, a Board of Managers consisting of no fewer than seven (7) nor more
than nine (9) Managers (the "Board"). One (1) Manager shall be appointed by each
of the Initial Members of the Company; provided, however, that any Initial
Member shall lose such power of appointment upon the Transfer or attempted
Transfer (as defined in Section 11.1 below) of any portion of its Membership
Interest prior to any public offering of equity interests in the Company. One
Manager shall be the individual elected by the Board to serve as the Company's
Chief Executive Officer. The remaining Managers shall be elected by the majority
vote of the appointed Managers. Any Manager appointed by an Initial Member may
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only be removed, or replaced in the event of resignation, by that Initial
Member. Managers elected by the other Managers may be removed at any time for
any reason by the affirmative vote of a majority of the Board. The Board shall
elect from among the Managers, and may remove at any time for any reason, a
Chairman, who shall preside at all Board meetings and exercise such other duties
as are usually vested in the office of chairman of the board. In the absence of
the Chairman, the Tax Matters Manager shall preside at Board meetings as Acting
Chairman.
SECTION 4.2. AUTHORITY OF BOARD. The Board, in its sole and absolute
discretion, shall have full and complete power and authority to make all
decisions and to take all actions incident to the management and conduct of the
Company's business and affairs except that the Board may not, without the
unanimous consent of the Members, do any of the following:
(a) take any action in contravention of this Agreement or the Act;
(b) take any action resulting in personal liability of any Member in
any jurisdiction;
(c) take any action or make any decision reserved to the Members in
this Agreement or in the Articles;
(d) pledge or assign any of the Company's property as collateral for
the debt of any other person, corporation or entity or commit the
Company to act as an endorser, guarantor or surety for the
obligations of any other person, corporation or entity.
SECTION 4.3. VOTE REQUIRED. Unless otherwise specified herein, all actions
of the Board shall be taken by the affirmative vote of a majority of the
Managers then appointed or elected and acting, which must include a majority of
the Managers appointed by the Initial Members.
SECTION 4.4. EXECUTION OF INSTRUMENTS. All instruments, contracts,
agreements and documents of any type whatsoever to be executed on behalf of the
Company may be executed by such officer or officers of the Company as shall have
been so authorized by this Agreement or by the Board.
SECTION 4.5. AUTHORITY OF MEMBERS. Members (in their capacities as Members)
shall not have authority to act for or to bind the Company except such authority
as may from time-to-time be specifically granted or approved in writing by all
Members. No Member (in the capacity as a Member) shall have the authority to
sign agreements or other instruments on behalf of the Company or to otherwise
act as an authorized agent or other representative of the Company except as such
Member shall have been specifically authorized as provided in this Agreement.
SECTION 4.6. QUALIFICATIONS, NUMBER, APPOINTMENT AND VACANCIES. Any Person
appointed as provided herein, whether or not such Person is a Member, is
qualified to serve as a Manager of the Company. Managers shall be appointed, and
may from time-to-time be removed and/or replaced (with or without cause), and
vacancies in such position shall be filled, as provided in Section 4.1 above.
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SECTION 4.7. OFFICERS AND COMMITTEES. The Board may from time-to-time
establish such offices and Committees of the Company, and elect or appoint and
grant authority to act to such officers of the Company, as shall be deemed
advisable by the Board for the day-to-day management and conduct of the
Company's business and affairs. Officers may, but need not, be Members and/or
Managers of the Company. The initial offices and officers of the Company are
described and designated in Article VII. Officers may be removed (with or
without cause) and vacancies in offices may be filled at any time and from
time-to-time by the Board.
SECTION 4.8. REIMBURSEMENT OF EXPENSES. Each Manager shall be entitled to
reimbursement from the Company of all expenses reasonably incurred and paid by
such Manager on behalf of the Company. Any question as to whether a Manager is
entitled to reimbursement of expenses under this Section shall be determined by
the Board.
SECTION 4.9. LIABILITY. Managers shall not be personally liable for the
debts, obligations or liabilities of the Company, whether arising in contract,
tort or otherwise, or for the acts or omissions of any other Manager, agent or
employee of the Company. A Manager is not liable for any action taken as a
Manager, or for any failure to take any action, unless the Manager has breached
or failed to perform the Manager's duties to the Company and the breach or
failure to perform constitutes willful, fraud, or a knowing violation.
SECTION 4.10. PERFORMANCE OF DUTIES AND RELIANCE ON OTHERS. A Manager shall
perform the Manager's duties in good faith, in a manner the Manager reasonably
believes to be in the best interest of the Company, and with such care as an
ordinarily prudent person in a like position would use under similar
circumstances. In performing the Manager's duties, a Manager shall be entitled
to rely on information, opinions, reports, or statements of the following
persons or groups unless the Manager has knowledge concerning the matter in
question that would cause such reliance to be unwarranted:
(a) another Manager in the Company or one or more employees or other
agents in the Company whom the Manager reasonably believes to be
reliable and competent in the matters presented;
(b) any attorney, public accountant or other person as to matters
which the Manager reasonably believes to be within such person's
professional or expert competence; or
(c) a committee upon which the Manager does not serve, duly
designated in accordance with the provision of the articles of
this Agreement, as to matters within its designated authority,
which committee the Manager reasonably believes to merit
confidence.
SECTION 4.11. COMPENSATION. Managers shall be entitled to such reasonable
compensation, if any, as shall from time-to-time be determined by all the
Members. Compensation payable to Managers shall be treated as expenses of the
Company and shall not be deemed to constitute distributions to the recipient of
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any profit, loss or capital of the Company, even though the Manager to whom
payment is made is also a Member.
SECTION 4.12. APPOINTMENT OF TAX MATTERS MANAGER. Xxxxx Xxxxxxxx is hereby
designated as the Tax Matters Manager (the "TMM"). The TMM shall be responsible
for all matters involving Federal, state, local or other taxes of any type. The
TMM shall serve as such until a successor is duly elected by a majority of the
Board and qualified, or until the earlier withdrawal or retirement of the TMM or
removal by a majority of the Board.
SECTION 4.13. APPOINTMENT OF INITIAL MANAGER(S). The initial Managers of
the Company are: Xxx X. Xxxxxx (U.S. Xpress), Xxxxx Xxxxxxxx (X.X. Xxxx),
Jun-Xxxxx Xx (Chief Executive Officer), Xxxxx X. Xxxxx (Swift), Xxxxx X. Xxxxxx
(Covenant), Xxxxxxx X. Xxxxxxx (M.S. Carriers), and Xxxxxxxx X. Xxxxxx (Xxxxxx).
SECTION 4.14. MEETINGS OF THE BOARD. Regular meetings of the Board may be
held periodically on fixed, predetermined dates and times if the Board
determines that regular meetings should be held and fixes the dates and times
for such meetings in advance and each Manager is notified of such action. Other
meetings of the Board may be called at any time by the Chairman, Chief Executive
Officer, or a majority of the Managers.
SECTION 4.15. NOTICE OF MEETINGS. No notice of regular meetings shall be
required unless the date or time of any such meeting is changed from the date
and time fixed for such meeting, in which case each Manager shall be notified of
such change orally or in writing at least twenty-four hours before such meeting.
The Company shall give written or oral notice stating the date, time, and place
of any other meeting of the Board to each Manager of record entitled to vote at
the meeting at least twenty-four hours before the meeting.
SECTION 4.16. WAIVER OF NOTICE. A Manager may waive notice of any meeting,
before or after the date and time of the meeting as stated in the notice, by
delivering a signed waiver to the Company for inclusion in the minutes. A
Manager's attendance at any meeting in person or by proxy (a) waives objection
to lack of notice or defective notice of the meeting unless the Manager at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting, and (b) waives objection to consideration of a particular matter
at the meeting that is not within the purposes described in the meeting notice
unless the Manager objects to considering the matter when it is presented.
SECTION 4.17. VOTING BY PROXY. A Manager may appoint a proxy to vote or
otherwise act for the Manager pursuant to a written appointment form executed by
the Manager or the Manager's duly authorized attorney-in-fact. An appointment of
a proxy is effective when received by the Secretary or other officer or agent of
the Company authorized to tabulate votes. The general proxy of a fiduciary is
given the same effect as the general proxy of any other Manager. A proxy
appointment is valid for 11 months unless otherwise expressly stated in the
appointment form.
SECTION 4.18. ACTION BY CONSENT. Any action required or permitted to be
taken at a meeting of the Board may be taken without a meeting if the action is
taken in writing by all the Managers. The action must be evidenced by one or
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more written consents describing the action taken, signed by all the Managers
entitled to vote on the action, and delivered to the Company for inclusion in
the minutes.
SECTION 4.19. PRESENCE. Any or all Managers may participate in any regular
or other meeting of the Board by, or through the use of, any means of
communication by which all Managers participating may simultaneously hear each
other during the meeting. A Manager so participating is deemed to be present in
person at the meeting.
SECTION 4.20. CONDUCT OF MEETINGS. At any meeting of the Board, the
Secretary of the Company shall prepare minutes of the meeting, which shall be
placed in the minute books of the Company.
ARTICLE V
THE MEMBERSHIP
SECTION 5.1. THE MEMBERSHIP. The Members as a group shall be designated and
referred to as the Membership.
SECTION 5.2. MEETINGS OF THE MEMBERSHIP. Regular meetings of the Membership
may be held periodically on fixed, predetermined dates and times if a majority
of the Members determines that regular meetings should be held and fixes the
dates and times for such meetings in advance and each Member is notified of such
action. Other meetings of the Membership may be called at any time by a majority
of the Members.
SECTION 5.3. NOTICE OF MEETINGS. No notice of regular meetings shall be
required unless the date or time of any such meeting is changed from the date
and time fixed for such meeting, in which case each Member shall be notified of
such change orally or in writing at least twenty-four hours before such meeting.
The Company shall give written or oral notice stating the date, time, and place
of any other meeting of the Membership to each Member of record entitled to vote
at the meeting at least twenty-four hours before the meeting.
SECTION 5.4. WAIVER OF NOTICE. A Member may waive notice of any meeting,
before or after the date and time of the meeting as stated in the notice, by
delivering a signed waiver to the Company for inclusion in the minutes. A
Member's attendance at any meeting in person or by proxy (a) waives objection to
lack of notice or defective notice of the meeting unless the Member at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting, and (b) waives objection to consideration of a particular matter
at the meeting that is not within the purposes described in the meeting notice
unless the Member objects to considering the matter when it is presented.
SECTION 5.5. VOTING BY PROXY. A Member may appoint a proxy to vote or
otherwise act for the Member pursuant to a written appointment form executed by
the Member or the Member's duly authorized attorney-in-fact. An appointment of a
proxy is effective when received by the Secretary or other officer or agent of
the Company authorized to tabulate votes. The general proxy of a fiduciary is
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given the same effect as the general proxy of any other Member. A proxy
appointment is valid for 11 months unless otherwise expressly stated in the
appointment form.
SECTION 5.6. ACTION BY CONSENT. Any action required or permitted to be
taken at a meeting of the Membership may be taken without a meeting if the
action is taken in writing by all the Members. The action must be evidenced by
one or more written consents describing the action taken, signed by all the
Members entitled to vote on the action, and delivered to the Company for
inclusion in the minutes.
SECTION 5.7. PRESENCE. Any or all Members may participate in any annual,
regular or special meeting of the Membership by, or through the use of, any
means of communication by which all Members participating may simultaneously
hear each other during the meeting. A Member so participating is deemed to be
present in person at the meeting.
SECTION 5.8. CONDUCT OF MEETINGS. At any meeting of the Membership, a
majority of the Members shall preside or appoint a person to preside at the
meeting and shall appoint a person to act as secretary of the meeting. The
secretary of the meeting shall prepare minutes of the meeting, which shall be
placed in the minute books of the Company.
SECTION 5.9. VOTING AND ATTENDING BY REPRESENTATIVES. Any Member that is a
corporation, partnership, limited liability company or other entity that is not
a natural person may attend and vote at meetings of the Membership by such
representatives as such Member may select from time-to-time in its sole
discretion. No written proxy or other appointment shall be required with respect
to any such representatives unless a majority of the Members determines
otherwise.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
SECTION 6.1. RIGHTS OF MEMBERS. None of the following actions may be taken
absent the unanimous consent of the Members:
(a) any action taken in contravention of this Agreement or the Act;
(b) any action taken by the Company resulting in personal liability
of any Member in any jurisdiction;
(c) the pledge or assignment of any of the Company's property as
collateral for the debt of any other person, corporation or
entity or act committing the Company to act as an endorser,
guarantor or surety for the obligations of any other person,
corporation or entity;
(d) any distribution of Individual Subscription Capital (as defined
in the Initial Subscription Agreement entered into by each of the
Initial Members) to the Members;
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(e) additional contributions of capital as described in Section 3.4
hereof;
(f) the Company's redemption of any Member's Interest as described in
Section 3.6 hereof;
(g) characterizing Member loans or services as Capital Contributions
as provided in Section 3.7 hereof;
(h) dissolution of the Company as provided in Section 12.1(b) hereof;
and
(i) any amendments to this Operating Agreement purporting to limit or
alter the rights of the Members as provided in Section 13.2
hereof.
SECTION 6.2. MANAGEMENT FEES AND OVERHEAD ALLOCATIONS. Members and/or
Affiliates may from time-to-time provide property and assets for use by the
Company, and in consideration thereof be entitled to reasonable rents or other
compensation or reimbursement as the Board determines is appropriate. In
addition, Members and/or Affiliates may from time-to-time provide management,
administrative or other services for the Company, as Managers or otherwise, and
in consideration thereof may be entitled to reasonable management fees, overhead
allocations and/or other compensation as from time-to-time determined by the
Board. In that regard, a Member to whom such sums are payable may participate as
a Manager of the Company in making a determination of the amount of any such
management fees, overhead allocations, rents, or other compensation or
reimbursement payable to the Member by the Company and such Member will owe no
fiduciary or other duties to any other Members or to the Company with respect to
determining the amounts thereof. All such payments made to any Member pursuant
to this Section shall be treated as expenses of the Company and shall not be
deemed to constitute distributions to the recipient of any profit, loss or
capital of the Company.
SECTION 6.3. REIMBURSEMENT OF EXPENSES. Each Member shall be entitled to
reimbursement from the Company of all expenses reasonably incurred and paid by
such Member on behalf of the Company. Any question as to whether a Member is
entitled to reimbursement of expenses under this Section shall be determined by
the Board.
SECTION 6.4. WAIVER OF PARTITION. Each Member, on behalf of such Member,
its successors and its assigns, hereby waives any rights to have any Company
property partitioned.
SECTION 6.5. LIABILITY. Members shall not be personally liable for the
debts, obligations or liabilities of the Company, whether arising in contract,
tort or otherwise, or for the acts or omissions of any other Member, agent or
employee of the Company. A Member is not liable for any action taken as a
Member, or any failure to take any action, unless the Member has breached or
failed to perform the Member's duties to the Company and the breach or failure
to perform constitutes willful misconduct, fraud, or a knowing violation of law.
Page 12 of 30 Xxxxxxxxxx.xxx Operating Agreement
SECTION 6.6. PERFORMANCE OF DUTIES AND RELIANCE ON OTHERS. A Member shall
perform the Member's duties as a Member in good faith, in a manner the Member
reasonably believes to be in the best interests of the Company, and with such
care as an ordinarily prudent person in a like position would use under similar
circumstances. In performing the Member's duties, a Member shall be entitled to
rely on information, opinions, reports, or statements of the following persons
or groups unless the Member has knowledge concerning the matter in question that
would cause such reliance to be unwarranted:
(a) a Manager of the Company or one or more employees or other agents
of the Company whom the Member reasonably believes to be reliable
and competent in the matters presented;
(b) any attorney, public accountant, or other person as to matters
which the Member reasonably believes to be within such person's
professional or expert competence; or
(c) a committee upon which the Member does not serve, duly designated
in accordance with a provision of the Articles or this Agreement,
as to matters within its designated authority, which committee
the Member reasonably believes to merit competence.
SECTION 6.7. COMPENSATION. The Company may, but shall not be obligated to
pay any Member or other Person a salary and/or bonus as compensation for
services rendered to the Company. Such salaries and/or bonuses shall be treated
as expenses of the Company and shall not be deemed to constitute distributions
to the recipient of any profit, loss or capital of the Company, even though such
recipient is a Member of the Company.
SECTION 6.8. NO RIGHT TO WITHDRAW. Members shall not have any right to
withdraw as Members. However, a Member may be permitted to withdraw as a Member
with the written consent of the Board.
ARTICLE VII
OFFICERS
SECTION 7.1. OFFICERS. Except as may from time-to-time be determined
otherwise by the Board, the officers of the Company shall be a President and a
Secretary. The Board may also choose and appoint one or more Vice Presidents,
one or more Assistant Secretaries or Assistant Treasurers and such other
officers and assistant officers as may be deemed necessary or appropriate by the
Board. Officers may, but need not, be Members and/or Managers of the Company.
SECTION 7.2. PRESIDENT/CHIEF EXECUTIVE OFFICER. Unless the Board otherwise
provides, the President of the Company shall be the Chief Executive Officer of
the Company with such general executive powers and duties of supervision and
management as are usually vested in the office of the Chief Executive Officer,
shall carry into effect all directions of the Board, shall sign all notes,
agreements or other instruments in writing made and entered into for or on
behalf of the Company, shall have general supervision over the business and
affairs of the Company, and, shall preside at all meetings of the Membership.
Page 13 of 30 Xxxxxxxxxx.xxx Operating Agreement
SECTION 7.3. VICE PRESIDENT. Each Vice President of the Company shall
report directly to the President, or such other person as the Board may direct
from time-to-time, and shall have such powers and duties as the Board or the
President may from time-to-time prescribe.
SECTION 7.4. SECRETARY. The Secretary of the Company shall keep an accurate
record of the proceedings of the meetings of the Membership and shall perform
such other duties as are usually incident to the office of the Secretary.
SECTION 7.5. TREASURER. The Treasurer of the Company is responsible for (a)
keeping correct and complete books of account which show accurately at all times
the financial condition of the Company, (b) safeguarding all funds, notes,
securities, and other valuables which may from time-to-time come into the
possession of the Company, and (c) depositing all funds of the Company with such
depositories as the Board shall designate. The Treasurer shall furnish at
meetings of the Membership, or when otherwise requested, a statement of the
financial condition of the Company. The Treasurer has such other duties as the
Board may from time-to-time prescribe. The Treasurer shall be entitled to rely
and shall be deemed to be acting in good faith in relying upon the advice of
counsel or the public accountants of the Company.
ARTICLE VIII
ALLOCATIONS AND DISTRIBUTIONS
SECTION 8.1. ACCOUNTING DEFINITIONS. The following capitalized terms, which
are used predominantly in this Article, shall have the following meanings for
purposes of this Agreement:
"Adjusted Capital Account Deficit" means, with respect to any Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant fiscal year, after giving effect to the following adjustments:
Credit to such Capital Account any amounts which such Member is
obligated to restore pursuant to any provision of this Agreement or is
deemed to be obligated to restore pursuant to the penultimate sentences of
Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
Debit to such Capital Account the items described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and
1.704-1(b)(2)(ii)(d)(6) .
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation Section 1.704-l(b)(2)(ii)(d)
and shall be applied in a manner consistent with such intent.
Page 14 of 30 Xxxxxxxxxx.xxx Operating Agreement
"COMPANY MINIMUM GAIN" has the meaning set forth in Treasury Regulation
Sections 1.704-2(b)(2) and 1.704-2(d) with respect to "partnership minimum
gain," substituting the word "member" for "partner" and "company" for
"partnership" wherever they appear.
"MEMBER NONRECOURSE DEBT" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4) with respect to "partner nonrecourse debt," substituting
the word "member" for "partner" and "company" for "partnership" wherever they
appear.
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect to
each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Treasury Regulation Section 1.704-2(i)(3).
"MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth in Treasury
Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2) with respect to "partner
nonrecourse deductions," substituting the word "member" for "partner" and
"company" for "partnership" wherever they appear.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(1).
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury Regulation
Section 1.7042(b)(3).
SECTION 8.2. ALLOCATION OF PROFITS AND LOSSES. Except as may be expressly
provided otherwise in this Article, and subject to the provisions of Sections
704(b) and 704(c) of the Code, the Profits and Losses of the Company for each
fiscal year of the Company shall be allocated to the Members pro rata in
accordance with their respective Percentage Interests.
SECTION 8.3. SPECIAL ALLOCATIONS. The following special allocations shall
be made in the following order:
(a) Minimum Gain Chargeback. Except as otherwise provided in Treasury
Regulation Section 1.704-2(f), notwithstanding any other
provision of this Article, if there is a net decrease in Company
Minimum Gain during any fiscal year, each Member shall be
specially allocated items of Company income and gain for such
fiscal year (and, if necessary, subsequent fiscal years) in an
amount equal to such Member's share of the net decrease in
Company Minimum Gain, determined in accordance with Treasury
Regulation Section 1.704-2(g). Allocations pursuant to the
previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant thereto.
The items to be so allocated shall be determined in accordance
with Treasury Regulation Sections 1.704-2(f)(6) and
1.704-2(j)(2). This subsection is intended to comply with the
minimum gain chargeback requirement in Treasury Regulation
Section 1.704-2(f) and shall be interpreted consistently
therewith.
Page 15 of 30 Xxxxxxxxxx.xxx Operating Agreement
(b) Member Nonrecourse Debt Minimum Gain Chargeback. Except as
otherwise provided in Treasury Regulation Section 1.704-2(i)(4),
notwithstanding any other provision of this Article, if there is
a net decrease in Member Nonrecourse Debt Minimum Gain
attributable to a Member Nonrecourse Debt during any fiscal year,
each Member who has a share of the Member Nonrecourse Debt
Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Treasury Regulation Section
1.704-2(i)(5), shall be specifically allocated items of Company
income and gain for such fiscal year (and, if necessary,
subsequent fiscal years) in an amount equal to such Member's
share of the net decrease in Member Nonrecourse Debt Minimum Gain
attributable to such Member Nonrecourse Debt, determined in
accordance with Treasury Regulation Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to
each Member pursuant thereto. The items to be so allocated shall
be determined in accordance with Treasury Regulation Sections
1.704-2(i)(4) and 1.704-2(j)(2). This subsection is intended to
comply with the minimum gain chargeback requirement in Treasury
Regulation Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(c) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustments, allocations, or distributions described
in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6) that cause
such Member to have an Adjusted Capital Account Deficit as of the
end of any fiscal year or that increase such Member's Adjusted
Capital Account Deficit, items of Company gross income and gain
shall be specially allocated to each such Member in an amount and
manner sufficient to eliminate, to the extent and in the manner
required by the Treasury Regulations, the Adjusted Capital
Account Deficit of such Member as quickly as possible; provided,
however, that an allocation pursuant to this subsection shall be
made only if and to the extent that such Member would have an
Adjusted Capital Account Deficit after all other allocations
provided for in this Section have been tentatively made as if
this subsection were not in this Agreement. This subsection is
intended to constitute a "qualified income offset" within the
meaning of Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
(d) Avoidance of Adjusted Capital Account Deficit. To the extent
feasible no Losses shall be allocated to any Member who, after
giving effect to such allocation and other expected allocations
then anticipated, would have an Adjusted Capital Account Deficit
as of the end of any fiscal year of the Company. Any such Losses
that cannot be allocated to a Member by reason of this subsection
shall be allocated, to the extent possible, to other Members as
to which this subsection is not applicable in proportion to their
Interests. In the event that any Member is nevertheless allocated
Losses that cause such Member to have, or that increase, an
Adjusted Capital Account Deficit, items of Company gross income
and gain shall be specially allocated to each such Member in an
amount and manner sufficient to eliminate, to the extent and in
the manner required by the Treasury Regulations, the Adjusted
Capital Account Deficit of each such Member as quickly as
Page 16 of 30 Xxxxxxxxxx.xxx Operating Agreement
possible. The allocations pursuant to this subsection shall be
made only if and to the extent that such Member would have an
Adjusted Capital Account Deficit after all other allocations
provided for in this Article have been tentatively made as if
this subsection were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal
year shall be specifically allocated among the Members in
proportion to their Percentage Interests.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions
for any fiscal year shall be specially allocated to the Member
who bears the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are
attributable in accordance with Treasury Regulation Section
1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an adjustment to the
adjusted tax basis of any Company asset pursuant to Section
734(b) or Section 743(b) of the Code is required pursuant to
Treasury Regulation Section 1.704-l(b)(2)(iv)(m)(2) or
1.704-l(b)(2)(iv)(m)(4) to be taken into account in determining
Capital Accounts as the result of a distribution to a Member in
complete liquidation of the Member's Interest in the Company, the
amount of such adjustment to Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis), and such
gain or loss shall be specially allocated to the Members in
accordance with their Interests in the Company in the event
Treasury Regulation Section 1.704(b)(2)(iv)(m)(2) applies, or to
the Member to whom such distribution was made in the event
Treasury Regulation Section 1.704-l(b)(2)(iv)(m)(4) applies.
SECTION 8.4. CURATIVE ALLOCATIONS. The allocations set forth in Section 8.3
(the "Regulatory Allocations") are intended to comply with certain requirements
of the Treasury Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Company
Profits or Losses pursuant to this Section. Therefore, notwithstanding any other
provision of this Article (other than the Regulatory Allocations), the Members
shall make such offsetting special allocations of Company Profits or Losses so
that, after such offsetting allocations are made, each Member's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of the
Agreement and all Company items were allocated pursuant to Section 8.2.
SECTION 8.5. ALLOCATIONS WHEN INTERESTS VARY. Allocations of Profits and
Losses, or each item thereof, shall be made to or among Members whose Interests
vary during any taxable year of the Company, whether such varying
Page 17 of 30 Xxxxxxxxxx.xxx Operating Agreement
Interests are attributable to Transfers of Interests, the issuance of additional
Units or otherwise, shall be made in accordance with the applicable provisions
of the Code and the Treasury Regulations, using any permitted method or
convention selected by the Managers.
SECTION 8.6. DISCRETIONARY DISTRIBUTIONS OF AVAILABLE CASH. Subject to the
provisions of Article XII and Section 6.1(a), the Board may from time-to-time
direct that some or all of the Available Cash, if any, be distributed to the
Members, pro rata in accordance with their respective Percentage Interests or in
such other manner as all the Managers shall from time-to-time unanimously
determine.
SECTION 8.7. DISTRIBUTIONS OF PROPERTY. To the extent that a Member is
entitled to a distribution of assets from the Company or to a return of the
Member's Capital Contributions, the Member shall have only the right to demand
and receive cash in satisfaction thereof.
SECTION 8.8. DISTRIBUTIONS TO MEMBERS OF RECORD. Distributions of Company
assets in respect of an Interest shall be made only to the Members who,
according to the books and records of the Company, are the holders of record of
the Interests in respect of which such distributions are made on the actual date
of distribution. Neither the Company nor any Member shall incur any liability
for making distributions in accordance with the provisions of the preceding
sentence, whether or not the Company or the Member has knowledge or notice of
any transfer or purported transfer of ownership of an Interest.
ARTICLE IX
RECORDS AND ACCOUNTING
SECTION 9.1. RECORDS AND ACCOUNTING. The fiscal year of the Company for
financial reporting and for Federal income tax purposes shall be the calendar
year. The books and records of the Company shall be kept, and the financial
position and the results of its operations recorded, in accordance with
generally accepted accounting principles. The books and records of the Company
shall reflect all Company transactions and shall be appropriate and adequate for
the Company's business. The Company shall keep the following records and
information, and any other records and information required by the Act, at its
principal office:
(a) A list with the full name and last known mailing address of each
Person who is or has been a Member or Manager of the Company from
the date of the Company's organization.
(b) A copy of the Articles and all amendments or restatements
thereof.
(c) Copies of the Company's Federal, state and local income tax
returns and financial statements for the three (3) most recent
years, or if the returns and statements were not prepared, copies
of the information and statements provided to or that should have
Page 18 of 30 Xxxxxxxxxx.xxx Operating Agreement
been provided to the Members to enable them to prepare their
Federal, state and local tax returns for the same period.
(d) Copies of this Agreement and all amendments hereto and copies of
any written operating agreements no longer in effect.
(e) A writing setting out the following:
(i) The amount of cash, if any, and a statement of the agreed
fair market value of any other property or services
contributed by each Member and the times at which or events
upon the happening of which any additional contributions
agreed to be made by each Member are to be made.
(ii) The events, if any, upon the happening of which the Company
is to be dissolved and its affairs wound up.
(iii) Any other writings required by this Agreement.
SECTION 9.2. ACCESS TO ACCOUNTING RECORDS. Each Member, and the Member's
duly authorized representative, shall have the right, at the Member's own
expense, to inspect and copy the records listed in Section 9.1 at the principal
office of the Company, upon reasonable request, during ordinary business hours.
SECTION 9.3 ACCOUNTING DECISIONS. All decisions as to accounting matters,
except as otherwise specifically set forth herein, shall be made by the Board.
The Board may rely upon the advice of the Company's public accountants as to
whether such decisions are in accordance with generally accepted accounting
principles.
SECTION 9.4 FEDERAL INCOME TAX ELECTIONS. The Company may make any and all
elections for Federal income tax purposes, including, but not limited to, the
following:
(a) to the extent permitted by applicable law and regulations, an
election to use an accelerated depreciation method with respect
to any depreciable asset of the Company; and
(b) in case of a transfer of all or part of the Interest of any
Member, an election to adjust the tax basis of the assets of the
Company pursuant to Code Sections 734, 743, and 754.
SECTION 9.5 COMPANY EXPENSES. All of the Company's expenses, including any
expenses incurred by the Managers and Members on behalf of the Company, shall be
paid by the Company. The expenses to be paid by the Company in connection with
the Company's business shall include, but not be limited to: (a) costs of
personnel employed by the Company and involved in the business of the Company;
(b) costs of borrowed money, taxes and assessments applicable to the Company;
(c) legal, audit, accounting, appraisal and engineering fees; (d) printing,
photocopying and other expenses and taxes incurred in connection with the
Page 19 of 30 Xxxxxxxxxx.xxx Operating Agreement
issuance, distribution, transfer, registration and recording of documents
evidencing ownership of Units or in connection with the business of the Company;
(e) fees and expenses in connection with the acquisition, sale, exchange, or
other disposition or financing of the assets of the Company; (f) the cost of
insurance in connection with the business of the Company; (g) expenses of
forming or converting, modifying or terminating the Company; (h) the cost of
preparing and disseminating to Members the reports contemplated by this
Agreement and the cost of preparing and filing reports and tax returns with
governmental agencies; and (i) the costs incurred in connection with any
litigation or regulatory proceedings in which the Company is involved. The
Managers and Members shall be entitled to reimbursement from the Company for all
expenses of the Company reasonably incurred and paid by them on behalf of the
Company whether prior to or after the date of the Company's organization.
ARTICLE X
ADDITIONAL MEMBERS AND UNITS
SECTION 10.1. ISSUANCE OF ADDITIONAL UNITS. The Company may from
time-to-time issue additional Units by sale or other issuance to existing
Members or other Persons for such consideration, and upon such terms and
conditions, as the Board shall from time-to-time unanimously determine. Any such
sales or other issuances of Units shall be made in accordance with the Articles
and this Agreement.
SECTION 10.2. CONDITIONS TO ISSUANCE. As a condition to such issuances, new
Members acquiring such Units shall execute this Agreement and all Members
acquiring such Units shall execute all other documents and instruments as the
Company may require.
ARTICLE XI
TRANSFER OF UNITS
SECTION 11.1. DEFINITION OF TRANSFER. For purposes of this Agreement the
term "Transfer" means, with respect to all or any portion of a Member's Interest
in the Company, any sale, gift, bequest, assignment, conveyance, transfer,
pledge, grant of a security interest, collateral assignment or other disposition
of all or any portion of such Interest, whether voluntary or involuntary,
including any of the foregoing that occur by operation of law. The transfer of
any Membership Interest by a Member to any of its Affiliates is specifically
permitted, and excluded from the definition of "Transfer" described in this
paragraph.
SECTION 11.2. SECURITIES LAW COMPLIANCE. In addition to any other
restrictions applicable to the Transfer of an Interest, and unless such
requirement shall be waived in writing by the Company, no Member shall Transfer
any Interest in the Company without registration under applicable federal and
state securities laws unless such Member furnishes to the Company an opinion of
counsel satisfactory to the Company to the effect that registration under such
laws is not required.
Page 20 of 30 Xxxxxxxxxx.xxx Operating Agreement
SECTION 11.3. REGULATORY COMPLIANCE. In addition to any other restrictions
applicable to the Transfer of an Interest, and unless such requirement shall be
waived in writing by the Company, no Member, either individually or in concert
with other Members, shall Transfer any Interest in the Company if such Transfer
will give rise to a requirement that the Company effect any regulatory or
antitrust filings (including filings under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, 15 U.S.C. ss. 18a), or obtain any regulatory or
antitrust approvals, including the expiration or early termination of mandatory
waiting periods without adverse government action (collectively, "Antitrust and
Regulatory Activities"). Each of the Members will support the Company's
Antitrust and Regulatory Activities.
SECTION 11.4. EFFECT OF TRANSFER OF INTEREST. A Transfer (or attempted
Transfer) of any Interest (a) that is prohibited by the terms of this Agreement
or that is prohibited by the terms of any other contract or agreement by which
the Member whose Interest is the subject of a Transfer (or attempted Transfer)
and the Company are bound; (b) that is made in violation of or without first
complying with any applicable restrictions (including, without limitation,
restrictions providing for a right of first refusal or option to purchase in
favor of another Person and/or restrictions requiring notice to another Person
or Persons prior to a Transfer) under the terms of this Agreement or under the
terms of any other contract or agreement by which the Member whose Interest is
the subject of a Transfer (or attempted Transfer) and the Company are bound; or
(c) that is made, prior to any public offering of equity interests in the
Company, to any party which is not an Affiliate of the transferring party (any
such Transfer or attempted Transfer described in clauses (a), (b) or (c) above
is a "Prohibited Transfer"), shall be absolutely void and of no effect and the
Company shall not give any recognition whatsoever thereto.
SECTION 11.5. MEMBERSHIP CONDITIONS. A Transferee who has been approved to
become a Member as provided in this Agreement must comply with or satisfy each
of the following conditions in order to be admitted as a Member:
(a) any conditions or requirements established or imposed by the
Managers in connection with the approval of the Transferee's
admission as a Member; and
(b) such Transferee must execute an instrument acceptable to the
Company whereby the Transferee accepts the terms of and becomes a
party to and bound by this Agreement.
SECTION 11.6. RIGHTS NOT ABROGATED. A Transfer of an Interest shall not, in
the absence of an effective waiver thereof or an agreement doing so, abrogate or
preclude the exercise or enforcement of any rights of any Person (other than the
transferor) with respect to the Interest transferred, and the Transferee shall
take such Interest subject thereto.
Page 21 of 30 Xxxxxxxxxx.xxx Operating Agreement
ARTICLE XII
DISSOLUTION AND WINDING UP
SECTION 12.1. DISSOLUTION. The Company shall be dissolved and its affairs
wound up on the first of the following to occur:
(a) the occurrence of any event specified in the Articles or this
Agreement as an event that will cause the dissolution of the
Company;
(b) the determination of all the Members to dissolve the Company; or
(c) entering of a decree of judicial dissolution.
The occurrence of an "event of dissociation" with respect to a Member (as the
term "event of dissociation" is defined in the Act) shall not result in the
dissolution of the Company, and the existence of and conduct of business by the
Company shall continue without interruption following any such occurrence.
SECTION 12.2. WINDING UP. Upon dissolution, the Board shall proceed to wind
up and liquidate the business and affairs of the Company, and the Company may
only carry on business that is appropriate to wind up and liquidate the business
and affairs of the Company, including the following: (a) collecting the
Company's assets; (b) disposing of properties that will not be distributed in
kind to Members; (c) discharging or making provision for discharging
liabilities; (4) distributing the remaining property among the Members; and (5)
doing every other act necessary to wind up and liquidate the business and
affairs of the Company. The Board shall follow the procedure for disposing of
known claims set forth in the Act.
SECTION 12.3. DISTRIBUTION OF ASSETS. Upon or in anticipation of the
winding up of the Company, the assets shall be distributed in the following
order:
(a) first, to creditors, including Members and Managers who are
creditors to the extent permitted by law, to satisfy the
liabilities of the Company whether by payment or by the
establishment of adequate reserves, excluding distributions to
Members pursuant to Article VIII;
(b) next, to Members and former Members to satisfy the Company's
liabilities for distributions pursuant to Article VIII;
(c) next, to Members of the Company in proportion to their respective
positive balances in their Capital Accounts to the extent each
such Member has a positive balance in his Capital Account as
provided in Treasury Regulation Section 1.704-1(b)(2)(ii)(b)(2);
and
(d) next, to Members of the Company in proportion to their respective
Percentage Interests.
Page 22 of 30 Xxxxxxxxxx.xxx Operating Agreement
ARTICLE XIII
AMENDMENTS
SECTION 13.1. PROPOSAL OF AMENDMENTS. Amendments to the Articles and this
Agreement may be proposed in writing by the Board. If any such proposed
amendment could adversely affect the classification of the Company as a
partnership for federal income tax purposes, the proposed amendment must be
accompanied by an opinion of counsel as to the legality and effect on the
Company and the Members. Copies of any amendments proposed to be made pursuant
to this Section shall be sent to each of the Members.
SECTION 13.2. APPROVAL BY BOARD. A proposed amendment of the Articles or
this Agreement shall be approved by the affirmative vote of the Board cast at
either a regular meeting or a special meeting of the Board duly called for the
purpose of voting on the amendment or by the written consent of all the
Managers, provided, however, that no amendment purporting to limit or change the
rights of the Members as described in Section 6.1 hereof will be binding upon
the Company or the Members absent the unanimous consent of the Members thereto.
Upon approval of any amendment as provided in this Section, all Managers,
whether or not they voted for or consented to such amendment, shall be deemed to
have consented to such amendment and shall be bound by the terms and provisions
thereof as if they had so consented.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. COMPLETE AGREEMENT. This Agreement and the Articles
constitute the complete and exclusive statement of agreement among the Members
with respect to their subject matter. This Agreement and the Articles replace
and supersede all prior agreements by and among the Members or any of them. This
Agreement and the Articles supersede all prior written and oral statements and
no representation, statement, or condition or warranty not contained in this
Agreement or the Articles will be binding on the Members or have any force or
effect whatsoever.
SECTION 14.2. GOVERNING LAW. This Agreement and the rights of the parties
under this Agreement will be governed by, interpreted, and enforced in
accordance with the laws of the State of Nevada.
SECTION 14.3. BINDING EFFECT. Subject to the provisions of this Agreement
relating to transferability, this Agreement will be binding upon and inure to
the benefit of the Members, and their respective Transferees, successors and
assigns.
SECTION 14.4. HEADINGS: INTERPRETATION. All headings herein are inserted
only for convenience and ease of reference and are not to be considered in the
construction or interpretation of any provision of this Agreement. The singular
shall include the plural, and the masculine gender shall include the feminine
and neuter, and vice versa, as the context requires.
Page 23 of 30 Xxxxxxxxxx.xxx Operating Agreement
SECTION 14.5. SEVERABILITY. If any provision of this Agreement is held to
be illegal, invalid, unreasonable, or unenforceable under the present or future
laws effective during the term of this Agreement, such provision will be fully
severable; this Agreement will be construed and enforced as if such illegal,
invalid, unreasonable, or unenforceable provision had never comprised a part of
this Agreement; and the remaining provisions of this Agreement will remain in
full force and effect and will not be affected by the illegal, invalid,
unreasonable, or unenforceable provision or by its severance from this
Agreement. Furthermore, in lieu of such illegal, invalid, unreasonable, or
unenforceable provision, there will be added automatically as a part of this
Agreement a provision as similar in terms to such illegal, invalid,
unreasonable, or unenforceable provision as may be possible and be legal, valid,
reasonable, and enforceable.
SECTION 14.6. MULTIPLE COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which will be deemed an original but all of which
will constitute one and the same instrument. However, in making proof with
respect to this Agreement it will be necessary to produce only one copy hereof
signed by the party to be charged.
SECTION 14.7. ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to execute
and deliver such additional documents and instruments and to perform such
additional acts as may be necessary or appropriate to effectuate, carry out and
perform all of the terms, provisions, and conditions of this Agreement and the
transactions contemplated by this Agreement.
SECTION 14.8. NO THIRD PARTY BENEFICIARY. This Agreement is made solely and
specifically among and for the benefit of the Members and their respective
successors and assigns subject to the express provisions of this Agreement
relating to successors and assigns; and no other person will have any rights,
interest, or claims under the Agreement or be entitled to any benefits under or
on account of this Agreement as a third party beneficiary or otherwise.
SECTION 14.9. NOTICES. Any notice to be given or to be served upon the
Company or any Member in connection with this Agreement must be in writing and
will be deemed to have been given and received when delivered to the address
specified by the party to receive the notice. Such notices will be given to a
Member at the address specified on Exhibit A. Any Member or the Company may, at
any time by giving five days' prior written notice to the other Members and the
Company, designate any other address in substitution of the foregoing address to
which such notice will be given.
SECTION 14.10. TITLE TO COMPANY PROPERTY. Legal title to all property of
the Company will be held and conveyed in the name of the Company.
SECTION 14.11. RELIANCE ON AUTHORITY OF PERSON SIGNING AGREEMENT. In the
event that a Member is not a natural person, neither the Company nor any Member
will (a) be required to determine the authority of the individual signing this
Agreement to make any commitment or undertaking on behalf of such Person or to
determine any fact or circumstance bearing upon the existence of the authority
of such individual, or (b) be required to see to the application or distribution
of proceeds paid or credited to individuals signing this Agreement on behalf of
such entity.
Page 24 of 30 Xxxxxxxxxx.xxx Operating Agreement
SECTION 14.12. INDEMNIFICATION. To the fullest extent allowable by Nevada
law (including pursuant to the expanded rights and financial arrangements that
may be granted to persons under articles of organization, operating agreement,
vote of members or disinterested managers, if any, or otherwise under such law),
the Company shall indemnify Indemnifiable Persons (as defined below), in the
manner and under the circumstances described in this Section 14.12.
(a) The Company shall indemnify any person who was or is a party, or
is threatened to be made a party, to any threatened, pending or
completed investigation, claim, action, suit or proceeding,
whether civil, criminal, administrative, or investigative,
including any action by or in the right of the Company, by reason
of the fact that he is or was a Manager, Member, officer,
employee, or agent of the Company, or is or was serving at the
request of the Company as a Manager, Member, director, officer,
employee, or agent of another limited liability company,
partnership, joint venture, trust, or other enterprise (any such
person, an "Indemnifiable Person"), against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
Indemnifiable Claim, unless a final adjudication by a court of
competent jurisdiction establishes that his acts or omissions
involved intentional misconduct, fraud, or a knowing violation of
law and were material to the cause of action. The termination of
any Indemnifiable Claim by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person's acts
or omissions involved intentional misconduct, fraud, or a knowing
violation of law.
(b) To the extent that an Indemnifiable Person has been successful on
the merits or otherwise in defense of any Indemnifiable Claim, or
in defense of any claim, issue or matter therein, he shall be
indemnified by the Company against expenses, including attorneys'
fees, actually and reasonably incurred by him in connection with
such defense.
(c) Expenses incurred in defending an Indemnifiable Claim shall be
paid by the Company in advance of the final disposition of such
Indemnifiable Claim upon receipt of an undertaking by or on
behalf of the Indemnifiable Person to repay such amount if final
adjudication by a court of competent jurisdiction establishes
that his acts or omissions involved intentional misconduct,
fraud, or a knowing violation of law and were material to the
cause of action.
(d) The indemnification provided by this Section 14.12 does not
exclude any other rights to which a person seeking
indemnification may be entitled under any law, articles of
organization, insurance, agreement, vote of Members or
disinterested Managers or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office. The indemnification provided by this Section
14.12 shall continue as to a person who has ceased to be a
Member, Manager, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person. No amendment to repeal this Section 14.12 shall apply to
Page 25 of 30 Xxxxxxxxxx.xxx Operating Agreement
or have any effect on the rights of any Indemnifiable Person
under this Section 14.12, which rights came into existence by
virtue of acts or omissions of such person occurring prior to
such amendment or repeal.
(e) The Company may purchase and maintain insurance on behalf of any
person who is or was a Member, Manager, officer, employee or
agent of the Company, or is or was serving at the request of the
Company as a Member, Manager, director, officer, employee or
agent of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise (a
"Business Entity") against any liability asserted against him and
incurred by him in any such capacity, or arising out of his
status as such, whether or not the Company would have the power
to indemnify him against such liability under the provisions of
this Section 14.12.
(f) For the purposes of this Section 14.12, references to "the
Company" include, in addition to the Company itself, any
corporation resulting from converting the Company into corporate
form, any surviving Business Entity in any merger or similar
business combination, any constituent Business Entity (including
any constituent of a constituent) absorbed in consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its members, managers,
directors, officers, employees and agents so that any person who
is or was a member, manager, director, officer, employee or agent
of such constituent Business Entity, or is or was serving at the
request of such constituent Business Entity as a director,
officer, employee or agent of another Business Entity, shall
stand in the same position under the provisions of this Section
14.12 with respect to the resulting or surviving Business Entity
as he or she would have with respect to such constituent Business
Entity if its separate existence had continued.
(g) For purposes of this Section 14.12, references to "other
enterprise" shall include employee benefit plans; references to
"fine" shall include any excise tax assessed on a person with
respect to an employee benefit plan; references to "serving at
the request of the Company" shall include any service as a
member, manager, trustee, director, officer, employee or agent of
the Business Entity that imposes duties on, or involves services
by, such member, manager, director, officer, employee, or agent
with respect to an employee benefit plan, its participants, or
beneficiaries; and masculine references shall include the
feminine.
SECTION 14.13. LOCATION OF RECORDS. The Company shall not be required to
keep the records and documents specified in Section 86.241 of the Nevada law
applicable to limited liability companies at its office in Nevada.
Page 26 of 30 Xxxxxxxxxx.xxx Operating Agreement
[The following page is the Signature Page]
Page 27 of 30 Xxxxxxxxxx.xxx Operating Agreement
SIGNATURE PAGE OF OPERATING AGREEMENT
OF XXXXXXXXXX.XXX. LLC
DATE INITIAL MEMBERS
- ---- ---------------
April 19, 2000 COVENANT TRANSPORT, INC.
By: Xxxxx X. Xxxxxx
Chairman, President & CEO
April 19, 2000 X.X. XXXX TRANSPORT SERVICES, INC.
By: Xxxxx Xxxxxxxx
Chairman
April 19, 2000 M.S. CARRIERS, INC.
By: Xxxxxxx X. Xxxxxxx
Chairman, President & CEO
April 19, 2000 SWIFT TRANSPORTATION CO., INC.
By: Xxxxx X. Xxxxx
Chairman, President & CEO
April 19, 2000 U.S. XPRESS ENTERPRISES, INC.
By: Xxx X. Xxxxxx
Co-Chairman
April 19, 2000 XXXXXX ENTERPRISES, INC.
By: Xxxxxxxx X. Xxxxxx
Chairman & CEO
XXXXXXXXXX.XXX, LLC
By: Xxxxx Xxxxxxxx
Tax Matters Manager
Page 28 of 30 Xxxxxxxxxx.xxx Operating Agreement
EXHIBIT A
TO
OPERATING AGREEMENT
OF
XXXXXXXXXX.XXX, LLC
CURRENT MEMBERS
XXXXXXXX TRANSPORT, INC. SWIFT TRANSPORTATION CO., INC.
000 XXXXXXXXXX XXXXXXX 0000 XXXXX 00XX XXXXXX
XXXXXXXXXXX, XX 00000 XXXXXXX, XX 00000
X.X. XXXX TRANSPORT SERVICES, INC U.S. XPRESS ENTERPRISES, INC.
615 X.X. XXXX CORPORATE DRIVE 0000 XXXXXXX XXXX
XXXXXX, XX 00000 XXXXXXXXXXX, XX 00000
M.S. CARRIERS, INC. XXXXXX ENTERPRISES, INC.
3171 DIRECTORS ROW 00000 XXXXXXXX XXXX
XXXXXXX, XX 00000 XXXXX, XX 00000
Page 29 of 30 Xxxxxxxxxx.xxx Operating Agreement
EXHIBIT B
TO
OPERATING AGREEMENT
OF
XXXXXXXXXX.XXX, LLC
Capital Contribution
--------------------------------- Percent
Member Type Agreed Value Units Interest
------ ---- ------------ ----- --------
Covenant Transport, Inc. Cash & Assets To be determined 130 13%
X.X. Xxxx Transport Services, Inc. Cash & Assets To be determined 280 28%
M.S. Carriers, Inc. Cash & Assets To be determined 140 14%
Swift Transportation Co., Inc. Cash & Assets To be determined 160 16%
U.S. Xpress Enterprises, Inc. Cash & Assets To be determined 130 13%
Xxxxxx Enterprises, Inc. Cash & Assets To be determined 160 16%
----- ---
TOTAL 1,000 100%
Page 30 of 30 Xxxxxxxxxx.xxx Operating Agreement
