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EXHIBIT 10.21
LIMITED LIABILITY COMPANY AGREEMENT
OF
AMERICAN GAMING NETWORK L.L.C.
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement"), dated as of
July 20, 1996, by and among American Gaming Network L.L.C., a limited liability
company formed pursuant to the laws of the State of Delaware (the "Company"),
and Xxxx Xxxxxx, an individual residing in Tulsa, Oklahoma.
In consideration of the covenants, conditions and agreements contained
herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
"Additional Member" shall mean a Person admitted as a Member pursuant to
Article IX of this Agreement.
"Affiliate" shall mean, with respect to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is under common
control with, the Person in question.
"Assets" shall mean all rights and ownership interests of the Company.
"Capital Account" shall mean the capital account maintained for each
Member pursuant to Article VII hereof.
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"Claim" shall mean any demand, claim, action or cause of action based on
any Loss.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Expenses" shall mean all amounts of expense, loss, amortization
or depreciation which are deductible from the Company's gross income for
federal income tax purposes and all amounts of expense described in Section
705(a)(2)(B) of the Code.
"Company Minimum Gain" shall have the meaning as set forth in Section
1.704-2(d) of the Treasury Regulations.
"Company Nonrecourse Liabilities" shall mean nonrecourse liabilities (or
portions thereof) of the Company for which no Member bears the economic risk of
loss.
"Contributed Capital" shall mean, with respect to each Member, any cash,
cash equivalents or the value of other property that a Member contributes to
the Company pursuant to Section 6.1 of this Agreement, in each case as the same
may from time to time be adjusted as provided in this Agreement.
"Delaware Law" shall mean the Delaware Limited Liability Company Act, as
amended from time to time, or any successor statute or statutes.
"Fair Market Value" shall mean (i) such value as is determined in good
faith by the Management Committee and delivered in writing to each Member, or
(ii) if such valuation by the Management Committee is objected to by a majority
of the Members and written notice of such (the "Objection Notice") is given
within twenty (20) business days after the receipt by such holders of the
Management Committee's valuation, which Objection Notice to be valid
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shall state the valuation proposed by the objecting party, such value as is
determined by mutual agreement among the Management Committee and the majority
of the Members, or (iii) if no such mutual agreement is reached in a twenty
(20) business day period following the receipt of the Objection Notice, such
value as is determined in good faith in a written report to the Company by an
appraisal or investment banking firm of recognized national standing selected
by the Management Committee from a list of three such firms submitted by a
majority of the Members that, in each case, are independent of the Company, any
Member and any of their respective Affiliates. The cost and expense of such
independent appraisal or investment banking firm shall be paid or shared by the
Company and/or the objecting party in an amount determined by the extent to
which the valuation of the Management Committee and the objecting party is
sustained (e.g., if the Management Committee proposes a valuation of $5 per
Membership Unit, the objecting party proposes $10 per Membership Unit and the
independent firm determines $6 to be the Fair Market Value, then the Company
shall pay 20% and the objecting party 80% of such cost and expense. The "Fair
Market Value," to be determined shall be the price at which a willing seller
under no compulsion to sell would sell in a private transaction to an
unaffiliated third party under no compulsion to buy.
"Fiscal Year" shall mean the fiscal year of the Company, which shall end
on each September 30.
"GAAP" shall mean the generally accepted accounting principles used in
the preparation of the financial records with respect to all periods presented
thereby, applied on a consistent basis for all such periods and in accordance
with past practice.
"Liquidation Value" shall mean an amount equal to the amount which the
Terminated Member would have received had the Company been dissolved under
Section 9.3 herein and its Assets disposed of at Fair Market Value and
following
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satisfaction of all the Terminated Member's obligations to the Company.
"Loss" shall mean any loss, damage, liability, cost, assessment and
expense including, without limitation, any interest, fine, court cost and
reasonable investigation cost, penalty and attorneys' and expert witnesses'
fees, disbursements and expenses, after taking into account any insurance
proceeds actually received by or paid on behalf of any party incurring a Loss.
"Majority Vote of the Members" shall mean the affirmative vote of the
holders of a majority of the Outstanding Membership Units held by the Members.
"Management Committee" shall mean the Management Committee established
pursuant to this Agreement and having the rights and powers set forth herein.
"Member" shall mean those Persons executing this Agreement as Members of
the Company on the signature pages hereto and each Additional Member.
"Member Nonrecourse Debt" shall have the meaning as set forth in Section
1.752-1(a)(2) of the Treasury Regulations.
"Member Nonrecourse Debt Minimum Gain" shall mean 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 Section 1.704-2(i)(3) of the Treasury
Regulations.
"Member Nonrecourse Deductions" shall have the meaning set forth in
Section 1.752-3(a) of the Treasury Regulations.
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"Membership Unit" shall mean units which reflect ownership rights in the
Company.
"Net Income" shall mean the excess of (i) the Company's gross income
(determined for federal income tax purposes but including income which is
exempt from federal income tax) over (ii) the sum of the Company's Expenses.
"Net Loss" shall mean the excess of the amount above described in clause
(ii) of Net Income over the amount above described in clause (i) of Net Income.
"Outstanding" shall mean the number of Membership Units issued by the
Company as shown on the Company's books and records, less any Membership Units
held by the Company.
"Person" shall mean an individual, a partnership, a joint venture, a
corporation, an association, a trust, an individual retirement account or any
other entity or organization, including a government or any department or
agency thereof.
"Remaining Members" shall mean (i) where used in Section 8.8 hereof, are
Members other than a Prospective Seller, and (ii) when used in Section 9.2
hereof, all Members of the Company who are not Terminated Members.
"Subsidiary" shall mean any corporation or similar business entity of
which more that fifty percent (50%) of the issued and outstanding securities
having ordinary voting power for the election of directors is owned or
controlled, directly or indirectly, by the Company.
"Taxable Income" shall mean the excess of (i) the Company's gross income
determined for federal income tax purposes over (ii) the sum of all amounts of
expense, loss, amortization or depreciation which are deductible from the
Company's gross income for federal income tax purposes.
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"Taxes" shall mean all taxes, levies or other like assessments, charges
or fees, including, without limitation, income, gross receipts, real or
personal property, withholding, asset, sales, use, license, payroll,
transaction, capital, business, corporation, employment, net worth and
franchise taxes, or other governmental taxes imposed by or payable to the
United States of America or any State, local or foreign governmental entity,
whether computed on a separate, consolidated, unitary, combined or any other
basis; and in each instance such term shall include any interest, penalties or
additions to tax attributable to any such Tax.
"Terminated Member" shall mean a Member as to which an event described
in Section 9.1(b) has occurred.
"Third Party" shall mean, with respect to any Member, any other Person,
other than the Company or any Affiliate of such Member.
"Treasury Regulation" shall mean 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).
ARTICLE II
THE COMPANY AND ITS BUSINESS
2.1 Formation. The Members do hereby associate themselves for the
purpose of organizing and conducting a limited liability company pursuant to
the provisions of Delaware Law and this Agreement.
2.2 Firm Name. The name of the Company shall be American Gaming
Network L.L.C. All properties of the Company shall be held, all contracts
shall be made, all instruments and documents shall be executed and all acts of
the Company shall be done, in the name of
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American Gaming Network L.L.C. The Management Committee shall cause to be
filed on behalf of the Company such limited liability company certificate or
assumed or fictitious name certificate or similar instruments as may from time
to time be required by applicable law.
2.3 Filings. Upon the request of the Management Committee, each
Member shall at the expense of the Company promptly execute and deliver all
such certificates and other instruments conforming hereto as shall be necessary
for the Company to accomplish all filing, recording, publishing and other acts
appropriate to comply with all requirements for the formation and operation of
a limited liability company under the laws of all jurisdictions where the
Company shall propose to conduct business. Prior to conducting business in a
jurisdiction where the Company proposes to conduct business the Company shall,
to the fullest extent possible to establish limited liability for each Member
under the laws of such jurisdiction and otherwise to comply with the laws of
such jurisdiction, cause the Company to comply with all requirements for the
registration, qualification or reformation of the Company to conduct business
as a limited liability company in such jurisdiction. Thereafter, the Company
shall continue to comply with all requirements necessary to maintain the
limited liability of each Member in each jurisdiction where the Company does
business.
2.4 Term. The Company shall be formed and commence upon the later of
(i) the filing for record of an initial certificate of formation with the
Secretary of State of the State of Delaware in accordance with Delaware Law and
(ii) the execution of this Agreement by the Members, and shall continue for a
period of forty (40) years or until sooner terminated as hereinafter provided
in this Agreement.
2.5 Purposes of the Company. Subject to the terms hereof, the purposes
of the Company shall be to (i) own and operate the Assets to the fullest extent
permitted under applicable law, (ii) conduct any lawful business permitted by
Delaware Law and the laws of any jurisdiction in which the Company may do
business, and (iiii) take all such other actions and to engage in such other
businesses as may
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be incidental to or in furtherance of any of the foregoing as the Management
Committee may determine to be necessary or desirable or to be in the best
interests of the Company.
2.6 Powers of the Company. The Company shall be empowered to do any
and all acts and things necessary, appropriate, proper, advisable, incidental
to or convenient for the furtherance and accomplishment of the purposes and
business of the Company described in Section 2.5 and for the protection and
benefit of the Company.
2.7 Compliance with Applicable Laws and Rules. No business or
activities shall be conducted by the Company that are or would be forbidden by,
or contrary to, any applicable law or to the rules or regulations lawfully
promulgated thereunder.
2.8 Principal Office, Registered Office and Registered Agent. The
principal office of the Company shall be at American Gaming Network L.L.C.,7335
Xxxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx, but other or additional places of
business within and without the State of Oklahoma may be selected from time to
time by the Management Committee upon notice to each Member. The registered
office of the Company in the State of Delaware shall be located at The
Corporation Trust Center, 1209 Orange Street, New Castle County, Xxxxxxxxxx,
Xxxxxxxx 00000 and the registered agent for service of process on the Company
in the State of Delaware at such registered office shall be The Corporation
Trust Company.
ARTICLE III
MANAGEMENT OF COMPANY BUSINESS;
MANAGEMENT COMMITTEE; MEETINGS; OFFICERS
3.1 Management and Control; Management Committee. Except as otherwise
specifically set forth in this Agreement, including without limitation Section
3.2 hereof, management, operation and policy decisions of the Company shall be
vested exclusively in the
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Management Committee, which shall have the power, on behalf and in the name of
the Company, to cause the Company to carry out any and all of the business and
purposes of the Company and to perform or cause to be performed all acts and
enter into and perform or cause to be performed all contracts and other
undertakings which the Management Committee may deem necessary or advisable or
incidental thereto.
3.2 Certain Required Consents. Notwithstanding any other provision of
this Agreement, the Management Committee may not, without a Majority Vote of
the Members, cause or authorize the Company to:
(a) Purchase all or substantially all of the assets or business of any
other Person.
(b) Sell all or substantially all of its assets to, or consolidate or
merge with, any other Person.
(c) Engage in any business activities or operations other than as set
forth in Section 2.5 hereof.
(d) Amend, modify or terminate this Agreement or any of the terms and
provisions hereof, waive compliance with or enforcement of any of such terms
and provisions, agree to or permit any such amendment, modification,
termination or waiver, or breach, violate or be in default under any of the
foregoing agreements.
(e) Authorize or issue (whether by split-up, recombination,
reclassification or otherwise) any interest in the Net Income or Net Loss of
the Company, or any security convertible into or representing the right to
purchase or acquire any such interest, other than the issuance of Membership
Units as provided in Section 4.1 hereof.
3.3 Number and Term of Office. (a) The authorized number of members
of the Management Committee shall be one (1) which shall be
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elected by a Majority Vote of the Members. The initial member of the
Management Committee shall be Xxxx Xxxxxx.
(b) Members of the Management Committee, including the initial member,
shall hold office until the member's successor shall have been duly elected and
shall qualify or until the member shall die or resign or shall have been
removed in the manner hereinafter provided in Section 3.4(b). Nominations of
persons to serve as members of the Management Committee must be submitted to
the Secretary of the Company in a writing signed by a Member not less than ten
(10) days prior to the meeting of Members at which the member of the Management
Committee shall be elected.
3.4 Resignations and Removals. (a) Members of the Management Committee
may resign at any time by giving written notice to the Management Committee or
to the Secretary of the Company. Any such resignation shall take effect at the
time specified therein, or, if the time be not specified, it shall take effect
immediately upon its receipt; and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
(b) Members of the Management Committee may be removed for any reason
by a Majority Vote of the Members.
3.5 Vacancies. Any vacancy in the Management Committee, whether
because of death, resignation, removal or any other cause, shall be filled by a
Majority Vote of the Members at a special meeting of the Members called for
such purpose. The member of the Management Committee so chosen to fill a
vacancy shall hold office until his successor shall have been elected and shall
qualify or until he shall resign or shall have been removed.
3.6 Place of Meeting, Etc. The Management Committee may hold any of
its meetings at such place or places within or without the State of Delaware as
the Management Committee may from time to time by resolution designate or as
shall be designated by the person or
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persons calling the meeting or in the notice or a waiver of notice of any such
meeting.
3.7 Annual Organizational Meeting. The Management Committee shall meet
as soon as practicable after each annual election of members of the Management
Committee and notice of such meeting shall not be required.
3.8 Regular Meetings. Regular meetings of the Management Committee may
be held at such times as the Management Committee shall from time to time by
resolution determine. If any day fixed for a regular meeting shall be a legal
holiday at the place where the meeting is to be held, then the meeting shall be
held at the same hour and place on the next succeeding business day not a legal
holiday. Except as provided by law, notice of regular meetings need not be
given.
3.9 Special Meetings. Special meetings of the Management Committee may
be called at any time by the member of the Management Committee, to be held at
the principal office of the Company, or at such other place or places, within
or without the State of Delaware, as the member of the Management Committee
shall designate.
3.10 Quorum and Manner of Acting. Except as otherwise provided in this
Agreement or by law, the presence of a majority of the then authorized and
required number of members of the Management Committee shall be required to
constitute a quorum for the transaction of business at any meeting of the
Management Committee. All matters shall be decided at any such meeting, a
quorum being present, by the affirmative votes of a majority of the members of
the Management Committee present. In the absence of a quorum, a majority of
members of the Management Committee present at any meeting may adjourn the same
from time to time until a quorum shall be present. Notice of any adjourned
meeting need not be given. The Management Committee shall act only as a
committee and no individual member thereof shall have the authority, as such,
to act for and on behalf of the Company.
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3.11 Action by Consent. Any action required or permitted to be taken
at any meeting of the Management Committee or of any committee thereof may be
taken without a meeting if a written consent thereto is signed by all members
of the Management Committee or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Management
Committee or committee.
3.12 Compensation. No stated salary need be paid members of the
Management Committee, as such, for their services, but, by resolution of the
Management Committee, reasonable expenses of attendance, if any, may be allowed
for attendance at each regular or special meeting of the Management Committee;
provided that, nothing herein contained shall be construed to preclude any
member of the Management Committee from serving the Company in any other
capacity and receiving compensation therefor.
3.13 Committees. The Management Committee may designate one or more
committees. Any such committee, to the extent provided in the resolution of
the Management Committee, and except as otherwise limited by law, shall have
and may exercise all the powers and authority of the Management Committee in
the management of the business and affairs of the Company. Any such committee
shall keep written minutes of its meetings and report the same to the
Management Committee at the next regular meeting of the Management Committee.
3.14 Officers of the Management Committee. The Management Committee
shall have a Chairman of the Management Committee and may, at the discretion of
the Management Committee, have a Vice Chairman. The Chairman of the Management
Committee and the Vice Chairman shall be appointed from time to time by the
Management Committee and shall have such powers and duties as shall be
designated by the Management Committee.
3.15 Officers of the Company. The Management Committee may designate
one or more persons to act as the Chief Executive Officer, President, Chief
Financial Officer, Treasurer and Secretary of the Company. The Company may
also have a Chief Operating Officer, one or
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more Vice Presidents or Assistant Vice Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers and such other officers as may be
appointed in accordance with the provisions of Section 3.17 below. One person
may hold two or more offices, except that the Secretary may not also hold the
office of President or Chief Executive Officer.
3.16 Election. The officers of the Company, except such officers as
may be appointed in accordance with the provisions of Section 3.17 or Section
3.19 of this Article, shall be chosen annually by the Management Committee, and
each shall hold office until such officer shall resign or shall be removed or
otherwise disqualified to serve, or such officer's successor shall be elected
and qualified.
3.17 Subordinate Officers, etc. The Management Committee may appoint
such other officers as the business of the Company may require, each of whom
shall have such authority and perform such duties as the Management Committee
may from time to time specify, and shall hold office until such officer shall
resign or shall be removed or otherwise disqualified to serve, or such
officer's successor shall be elected and qualified.
3.18 Removal and Resignation. Any officer may be removed, either with
or without cause, by the Management Committee at any regular or special meeting
thereof or by any officer upon whom such power of removal may be conferred by
the Management Committee.
Any officer may resign at any time by giving written notice to the
Management Committee, the Chairman of the Management Committee, the President
or the Secretary of the Company. Any such resignation shall take effect at the
date of the receipt of such notice or at any later time specified therein; and
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
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3.19 Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled by the election of
the Management Committee at any meeting thereof.
3.20 Chairman of the Management Committee. The Chairman of the
Management Committee shall, subject to the control of the Management Committee,
serve a general oversight, planning and policy making function, shall preside
at all meetings of Members and at all meetings of the Management Committee, and
shall perform such other functions as determined from time to time by the
Management Committee.
3.21 Chief Executive Officer. The Chief Executive Officer of the
Company shall, subject to the control of the Management Committee, have general
supervision, direction and control of the business and affairs of the Company.
In the absence of the Chairman of the Management Committee, the Chief Executive
Officer shall preside at all meetings of Members. The Chief Executive Officer
shall have the general powers and duties of management usually vested in the
chief executive officer of a corporation, and shall have such other powers and
duties with respect to the administration of the business and affairs of the
Company as may from time to time be assigned by the Management Committee.
3.22 President. The President shall exercise and perform such powers
and duties with respect to the administration of the business and affairs of
the Company as may from time to time be assigned to such officer by the Chief
Executive Officer (unless the President is also the Chief Executive Officer) or
by the Management Committee. In the absence or disability of the Chief
Executive Officer, the President shall perform all of the duties of the Chief
Executive Officer and when so acting shall have all of the powers and be
subject to all the restrictions upon the Chief Executive Officer.
3.23 Vice Presidents. The Vice Presidents shall exercise and perform
such powers and duties with respect to the administration of
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the business and affairs of the Company as may from time to time be assigned to
each of them by the President or by the Chief Executive Officer or by the
Management Committee. In the absence or disability of the President, the Vice
Presidents, in order of their rank as fixed by the Management Committee, or if
not ranked, the Vice President designated by the Management Committee, shall
perform all of the duties of the President and when so acting shall have all of
the powers of and be subject to all the restrictions upon the President.
3.24 The Chief Financial Officer and Treasurer. The Chief Financial
Officer and Treasurer shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the Company, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and Membership Units.
The books of account shall at all reasonable times be open to inspection by any
Management Committee Representative.
The Chief Financial Officer and Treasurer shall deposit all moneys and
other valuables in the name and to the credit of the Company with such
depositories as may be designated by the Management Committee. Such officer
shall disburse the funds of the Company as may be ordered by the Management
Committee, shall render to the President, to the Chief Executive Officer, and
to the Management Committee, whenever they request it, an account of all of
transactions as Chief Financial Officer and Treasurer and of the financial
condition of the Company, and shall have such other powers and perform such
other duties as may be prescribed by the Management Committee or the Chief
Executive Officer or the President.
3.25 Secretary. The Secretary shall keep, or cause to be kept, a book
of minutes at the principal office of the Company, or such other place as the
Management Committee may order, of all meetings of the Management Committee and
Members, with the time and place of holding, whether regular or special, and if
special, how authorized and the notice thereof given, the names of those
present at meetings
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of the Management Committee, the number of Membership Units present or
represented at Members' meetings and the proceedings thereof.
The Secretary shall keep, or cause to be kept, at the principal office
of the Company or at the office of the Company's transfer agent, a Membership
Unit register, or a duplicate Membership Unit register, showing the names of
the Members and their addresses; the number and Classes of Membership Units
held by each; the number and date of certificates, if any, issued for the same;
and the number and date of cancellation of every certificate surrendered for
cancellation.
The Secretary shall give, or cause to be given, notice of all the
meetings of the Members and of the Management Committee required by this
Agreement or by law to be given, and shall keep the seal of the Company in safe
custody, and shall have such other powers and perform such other duties as may
be prescribed by the Management Committee, the Chief Executive Officer or the
President. If for any reason the Secretary shall fail to give notice of any
special meeting of the Management Committee or of the Members called by one or
more of the persons permitted to do so in this Agreement, then any such
permitted person may give notice of any such special meeting.
3.26 Compensation. The compensation of the officers of the Company
shall be fixed from time to time by the Management Committee. None of such
officers shall be prevented from receiving such compensation by reason of the
fact that such officer is also a Management Committee Representative. Nothing
contained herein shall preclude any officer from serving the Company, or any
Affiliate of the Company, in any other capacity and receiving proper
compensation therefor.
3.27 Execution of Contracts. Except as otherwise provided in this
Agreement, the Management Committee may authorize any officer or officers,
agent or agents, to enter into any contract or execute any instrument in the
name and on behalf of the Company, and such authority may be general or
confined to specific instances; and
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unless so authorized by the Management Committee or by this Agreement, no
officer, Member, agent or employee shall have any power or authority to bind
the Company by any contract or engagement or to pledge its credit or to render
it liable for any purpose or in any amount.
3.28 Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidence of indebtedness, issued in the name
of or payable to the Company, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Management Committee. Each such person shall give such bond,
if any, as the Management Committee may require.
3.29 Deposits. Subject to Section 3.2(e) hereof, all funds of the
Company not otherwise employed shall be deposited from time to time to the
credit of the Company in such banks, trust companies or other depositories as
the Management Committee may select, or as may be selected by any officer or
officers, assistant or assistants, agent or agents, or attorney or attorneys of
the Company to whom such power shall have been delegated by the Management
Committee. For the purpose of deposit and for the purpose of collection for
the account of the Company, the Chief Executive Officer, the President, any
Vice President or the Chief Financial Officer and Treasurer (or any other
officer or officers, assistant or assistants, agent or agents, or attorney or
attorneys of the Company who shall from time to time be determined by the
Management Committee) may endorse, assign and deliver checks, drafts and other
orders for the payment of money which are payable to the order of the Company.
3.30 General and Special Bank Accounts. The Management Committee may
from time to time authorize the opening and keeping of general and special bank
accounts with such banks, trust companies or other depositories as the
Management Committee may select or as may be selected by any officer or
officers, assistant or assistants, agent or agents, or attorney or attorneys of
the Company to whom such power shall have been delegated by the Management
Committee. The
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Management Committee may make such special rules and regulations with respect
to such bank accounts, not inconsistent with the provisions of this Agreement,
as it may deem expedient.
ARTICLE IV
AUTHORIZATION OF MEMBERSHIP UNITS;
RIGHTS AND DUTIES OF MEMBERS;
MEETINGS OF MEMBERS; VOTING
4.1 Authorization of Membership Units; Characteristic of Membership
Units. The Company is hereby authorized to issue one hundred (100) Membership
Units in exchange for the initial contribution as provided in Section 6.1 of
this Agreement. Each Membership Unit has (i) equal governance rights with
every other Membership Unit and in matters subject to a vote of the Members has
one vote and (ii) subject to Section 4.2, each Membership Unit has equal rights
with every other Membership Unit with respect to sharing of profits and losses
and with respect to distributions.
4.2 Participation of Membership Units in Net Income and Net Loss. Each
Membership Unit shall participate in the Net Income and Net Loss of the Company
in the proportion that such Unit bears to the total number of Membership Units
outstanding.
4.3 Annual Meetings. Annual meetings of the Members of the Company for
the purpose of electing the members of the Management Committee and for the
transaction of such other proper business as may come before such meetings may
be held at such time, date and place as the Management Committee shall
determine by resolution.
4.4 Special Meetings. Special meetings of the Members of the Company
for any purpose or purposes may be called at any time by the Management
Committee, or by a committee of the Management Committee which has been duly
designated by the Management Committee and whose powers and authority, as
provided in a resolution of the Management
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Committee or in this Agreement, include the power to call such meetings, but
such special meetings may not be called by any other Person or Persons.
4.5 Place of Meetings. All meetings of the Members shall be held at
such places, within or without the State of Delaware, as may from time to time
be designated by the person or persons calling the respective meeting and
specified in the respective notices or waivers of notice thereof.
4.6 Notice of Meetings. Except as otherwise required by law, notice of
each meeting of the Members, whether annual or special, shall be given not less
than fifteen (15) nor more than sixty (60) days before the date of the meeting
to each Member of record entitled to vote at such meeting by delivering a
written notice thereof to such Member personally, or by depositing such notice
in the United States mail, in a postage prepaid envelope, directed to such
Member at the post office address furnished by such Member to the Secretary of
the Company for such purpose or, if such Member shall not have furnished to the
Secretary the address for such purpose, then at such Member's post office
address last known to the Secretary. Except as otherwise expressly required by
law, no publication of any notice of a meeting of the Members shall be
required. Every notice of a meeting of the Members shall state the place, date
and hour of the meeting, and, in the case of a special meeting, shall also
state the purpose or purposes for which the meeting is called. Notice of any
meeting of Members shall not be required to be given to any Member who shall
have waived such notice and such notice shall be deemed waived by any Member
who shall attend such meeting in person or by proxy, except as a Member who
shall attend such meeting 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. Except as otherwise expressly
required by law, notice of any adjourned meeting of the Members need not be
given if the time and place thereof are announced at the meeting at which the
adjournment is taken.
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4.7 Quorum. The holders of record of a majority of Membership Units of
the Company, present in person or by proxy, shall constitute a quorum for the
transaction of business at any meeting of the Members of the Company or any
adjournment thereof. In the absence of a quorum at any meeting or any
adjournment thereof, a majority of Unit Membership holders actually present in
person or by proxy or, in the absence therefrom of all the Members, any officer
entitled to preside at, or to act as secretary of, such meeting, may adjourn
such meeting from time to time. At any such adjourned meeting at which a
quorum is present any business may be transacted which might have been
transacted at the meeting as originally called.
4.8 Voting. (a) Each Member shall, at each meeting of the Members, be
entitled to one vote per Membership Unit as held by such Member in person or by
proxy on the matter in question and which shall have been held by such Member
and registered in such Member's name on the books of the Company:
(i) on the date fixed pursuant to Section 4.9 of this Agreement
as the record date for the determination of Members entitled to notice
of and to vote at such meeting, or
(ii) if no such record date shall have been so fixed, then (1)
at the close of business on the day next preceding the day on which
notice of the meeting shall be given or (2) if notice of the meeting
shall be waived, at the close of business on the day next preceding the
day on which the meeting shall be held.
(b) Membership Units owned, directly or indirectly, by the Company,
shall neither be entitled to vote nor be counted for quorum purposes. Persons
holding Membership Units of the Company in a fiduciary capacity shall be
entitled to vote such stock. Persons whose Membership Units are pledged shall
be entitled to vote such Membership Units.
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(c) Any such voting rights may be exercised by the Member entitled
thereto in person or by proxy appointed by an instrument in writing, subscribed
by such Member or by such Member's attorney thereunto authorized and delivered
to the secretary of the meeting. The attendance at any meeting of a Member who
may theretofore have given a proxy shall not have the effect of revoking the
same.
(d) At any meeting of the Members all matters, except as otherwise
provided in this Agreement or by law, shall be decided by the vote of holders
of a majority of Membership Units present in person or by proxy and entitled to
vote thereat and thereon, a quorum being present.
(e) Any action required or permitted to be taken at any regular or
special meeting of the Members of the Company may be taken without a meeting,
without prior notice and without a vote, if a written consent thereto is signed
by Members holding Units representing not less than the minimum interest in the
Net Income and Net Loss of the Company that would be necessary to authorize or
take such action at a meeting at which all Units entitled to vote thereon were
present and voted, and such written consent is filed with the minutes of
proceedings of the Members.
4.9 Fixing Date for Determination of Members of Record. In order that
the Company may determine the Members entitled to notice of or to vote at any
meeting of Members or any adjournment thereof, or entitled to receive payment
of any dividend or other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any other change, conversion or exchange
of Membership Units or for the purpose of any other lawful action the
Management Committee may fix, in advance, a record date, which shall not be
more than sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action. If in any
case involving the determination of Members for any purpose other than notice
of or voting at a meeting of Members the Management Committee shall not fix
such a record date, the record date for determining Members for such purpose
shall be the close of business
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on the day on which the Management Committee shall adopt the resolution
relating thereto. A determination of Members entitled to notice of or to vote
at a meeting of Members shall apply to any adjournment of such meeting;
provided, that the Management Committee may fix a new record date for the
adjourned meeting.
ARTICLE V
BOOKS AND RECORDS
5.1 Books of Account. At all times during the continuance of the
Company, the Company shall keep or cause to be kept, true and complete books of
account utilizing the GAAP method of accounting, on the basis of the Company's
Fiscal Year.
5.2 Availability of Books of Account. All of the books of account
referred to in Section 5.1 hereof, together with an executed copy of this
Agreement and the Certificate of Formation of the Company, and any amendments
thereto, shall at all times be maintained at the principal office of the
Company, and shall be open to the inspection and examination of each Member or
its representative at such Member's expense during reasonable business hours.
5.3 Annual Reports and Other Statements. (a) The Company shall cause
to be prepared, and shall deliver to each Member as soon as practical, but in
any event on or before the 90th day following the end of the Company's Fiscal
Year, an unaudited, end of the year, balance sheet and preliminary statement of
income and loss of the Company, certified by the Chief Financial Officer.
(b) The Company shall cause to be prepared, and shall deliver to each
Member as soon as practical, but in any event on or before the 90th day
following the end of the Company's Fiscal Year, a statement of such Member's
Capital Account as of the end of such Fiscal Year, a statement indicating such
Member's share of the Company's Net Income or Net Loss for such Fiscal Year,
and other
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items relevant for Federal income tax purposes, all of which shall be
certified by the Chief Financial Officer.
5.4 Tax Matters Partner. (a) Xxxx Xxxxxx is hereby designated as the
Tax Matters Partner of the Company within the meaning of Section 6231 of the
Code. Each Member, by the execution of this Agreement, consents to such
designation.
(b) To the extent and in the manner provided by applicable law and
regulations, the Tax Matters Partner shall furnish the name, address, profits
interest and taxpayer identification number of each Member, including any
successor or Additional Member, to the Internal Revenue Service, and shall keep
each Member informed of the administrative and judicial proceedings for the
adjustment at the Company level of any item required to be taken into account
by a Member for income tax purposes (such an administrative proceeding referred
to hereinafter as a "tax audit" and such a judicial proceeding referred to
hereinafter as "judicial review"). If the Tax Matters Partner, on behalf of
the Company, receives a notice with respect to a tax audit from the Internal
Revenue Service, the Tax Matters Partner shall promptly forward a copy of such
notice to the Members or former Members who hold or held interests in the
profits or losses of the Company for any taxable year to which the notice
relates.
(c) The Tax Matters Partner is hereby authorized, but not required:
(1) subject to pre-approval by the Management Committee, to
enter into any settlement with the Internal Revenue Service with respect
to any tax audit or judicial review;
(2) in the event that a notice of a final administrative
adjustment (a "final adjustment") is mailed to the Tax Matters Partner,
to seek judicial review of such final adjustment;
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(3) to intervene in any action brought by any other Member for
judicial review of a final adjustment;
(4) to file a request for an administrative adjustment with the
Internal Revenue Service at any time and, if any part of such request is
not allowed by the Internal Revenue Service, to file a petition for
judicial review with respect to such request;
(5) to enter into an agreement with the Internal Revenue Service
to extend the period for assessing any tax which is attributable to any
item required to be taken into account by a Member for tax purposes, or
an item affected by such item; and
(6) to take any other action on behalf of the Members in
connection with any administrative or judicial tax proceeding to the
extent permitted or required by applicable law or regulations.
(d) The Tax Matters Partner shall have no obligation to provide funds
for the purpose of contesting any tax audit or final adjustment, intervening in
any action, or seeking an administrative adjustment or judicial review. The
taking of any action and the incurring of any expense by the Tax Matters
Partner in connection with any such proceeding, except to the extent required
by law, is a matter in the sole discretion of the Tax Matters Partner and the
provisions on limitation of liability of the members of the Management
Committee set forth in Article XI hereof shall be fully applicable to the Tax
Matters Partner in its capacity as such; provided, that in any event the Tax
Matters Partner shall always act in the best interests of the Members.
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ARTICLE VI
CAPITAL CONTRIBUTIONS
6.1 Capital Contributions. On or before the Closing Date the Member
listed on Exhibit A shall contribute ten dollars ($10.00) cash, in immediately
available U.S. funds, for each Membership Unit set forth opposite such Member's
name on Exhibit A hereto.
6.2 Advances, Etc. Except as otherwise provided in this Agreement, no
Member shall be entitled to withdraw any part of his Capital Account or to
receive any distribution from the Company and no Member shall be obligated or
entitled to make any additional Capital Contributions to the Company. Loans by
a Member to the Company shall not (i) be considered as a contribution to the
capital of the Company; (ii) increase the Capital Account of the lending
Member; (iii) entitle the lending Member to an increase in its share of the
income of the Company; or (iv) subject the lending Member to any greater
portion of any losses which the Company may sustain. The amount of any such
loan shall be a debt due from the Company to such Member.
6.3 Additional Capital Contributions. Any Member may, with the prior
Majority Vote of the Members, make additional capital contributions to the
Company upon terms and conditions approved by such Majority Vote of the
Members.
6.4 Return of Capital Contribution. Except as otherwise expressly
provided in this Agreement, no Member shall have the right to demand of the
Company the return of all or any part of any contribution to the capital of the
Company until the Company has been dissolved and terminated and then only to
the extent provided in Article IX hereof, and no Member shall have the right to
demand or receive property other than cash in return for its contribution.
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ARTICLE VII
CAPITAL ACCOUNTS; ALLOCATIONS
7.1 Capital Accounts. A Capital Account shall be maintained for each
Member. Such Account shall be credited with (i) such Member's Contributed
Capital and (ii) any Net Income (or items thereof), and income and gain
described in Treasury Regulation Section 1.704-1(b)(2)(iv)(g) (exclusive of
income described in Treasury Regulation Section 1.704-1(b)(4)(i)) and (iii) the
fair market value of property hereafter contributed to the Company by such
Member (net of liabilities secured by such contributed property that the
Company is considered to assume or take subject to under Section 752 of the
Code). Such Account shall be reduced by (i) any cash distribution to such
Member pursuant to Article X hereof and the fair market value of any other
property distributed thereto pursuant to either such Article (net of any
liability secured thereby which such Member is considered to assume or take
subject to under Section 752 of the Code), and (ii) any Net Loss (or item
thereof), and loss or deduction described in Treasury Regulation Section
1.704-1(b)(2)(iv)(g) (exclusive of amounts described in Treasury Regulation
Section 1.704-1(b)(4)(i) or (iii)). Such Capital Account shall be otherwise
credited, reduced and maintained in accordance with Treasury Regulation Section
1.704-1(b). Except as otherwise provided in this Agreement, whenever it is
necessary to determine the Capital Account of any Member for purposes of this
Agreement, the Capital Account of such Member shall be determined after giving
effect to all prior distributions and to all allocations under this Article VII
in respect of transactions effected prior to or on the date as of which such
determination is to be made.
7.2 Allocations. (a) After giving effect to the special allocations
set forth in Section 7.2(b) and 7.2(c), the Net Income and Net Loss of the
Company shall be allocated to the Members in accordance Section 4.2.
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(b) The following special allocations shall be made in the following
order:
(i) Company Minimum Gain Chargeback. Except as otherwise
provided in Treasury Regulation Section 1.704-2(f), notwithstanding any
other provision of this Section 7.2, 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 Regulations 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. This Section 7.2(c)(i) is intended to comply
with the minimum gain chargeback requirement of the Treasury Regulations
Section 1.704-1(f) and shall be interpreted consistently therewith.
(ii) Member Minimum Gain Chargeback. Except as otherwise
provided in Section 1.704-1(i)(4) of the Treasury Regulations,
notwithstanding any other provision of this Section 7.2, 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
Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of
the Treasury Regulations, 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 share of the net decrease in
Member Nonrecourse Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with Treasury Regulations
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 Partner pursuant thereto. This Section 7.2(c)(ii) is
intended to comply with the minimum gain chargeback requirement
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in Section 1.704-2(i)(4) of the Treasury Regulations and shall be
interpreted consistently therewith.
(iii) Partner 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 Regulations Section 1.704-
2(i)(1).
(iv) Code Section 754 Adjustment. To the extent an adjustment
to the adjusted tax basis of any Company asset pursuant to Code Section
734(b) or Code Section 743(b) is required, pursuant to Treasury
Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Treasury Regulations
Section 1.704-1(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 his interest in the Company, the amount of such
adjustment to the Capital Accounts shall be treated as an item of gain
(if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Members in accordance with their interests in
the Company in the event Treasury Regulations Section 1.704-
1(b)(2)(iv)(m)(2) applies, or to the Members to whom such distribution
was made in the event Treasury Regulations Section 1.704-
1(b)(2)(iv)(m)(4) applies.
(v) Code Section 704(c). In accordance with Code Section 704(c)
and the Treasury Regulations thereunder, income, gain, loss and
deduction with respect to any property contributed by a Member to the
Company shall, solely for tax purposes, be allocated among the Members
so as to take account of any variation between the adjusted basis of
such property to the Company for federal income tax purposes and its
fair market value as of the date of contribution.
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(c) The allocations set forth in Sections 7.2(b) hereof (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
income, gain, loss, or deduction pursuant to this Section 7.2(d). Therefore,
notwithstanding any other provision of this Section 7.2 (other than the
Regulatory Allocations), the Company shall make such offsetting special
allocations of Company income, gain, loss, or deduction in whatever manner
appropriate so that, after such offsetting allocations are made, each Member
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 7.2(a) hereof. In exercising this discretion under this Section
7.2(c), the Company shall take into account future Regulatory Allocations that,
although not yet made, are likely to offset other Regulatory Allocations
previously made.
7.3 Varying Interests. All allocations pursuant to Section 7.2 hereof
shall take due account of increases and decreases in the number of Membership
Units owned by each Member during the Fiscal Year.
7.4. Transferred Interests. In the event all or a portion of an
interest in the Company is transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital Account of the
transferor to the extent it relates to the transferred interest.
7.5 Distributions in Kind. The amount by which the fair market value
of any property to be distributed in kind to the Members pursuant to Article X
hereof exceeds or is less than the adjusted basis of such property for federal
income tax purposes shall, to the extent not otherwise recognized to the
Company, be taken into account in computing gain or loss of the Company for
purposes of crediting or
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charging the Capital Accounts of, and distributing proceeds to, the Members
under Articles VII or X hereof.
7.6 Composition of Net Income or Loss. Net Income or Net Loss shall
be determined for each Fiscal Year (or for any portion thereof as may be
required by Section 7.3 hereof). For federal income tax purposes each item of
income, gain, loss or deduction which enters into the calculation of Net Income
or Net Loss shall be allocated in the same proportions as such Net Income or
Net Loss is allocated pursuant to Section 7.2 hereof.
7.7 Authority of Management Committee to Vary Allocations. It is the
intent of the Members that each Member's allocable share of income, gain, loss,
deduction, or credit (or item thereof) (hereinafter, "Tax Items") shall be
determined and allocated in accordance with this Article VII to the fullest
extent permitted by Section 704(b) of the Code. The Management Committee is
authorized and directed to allocate Tax Items arising in any Fiscal Year
differently than otherwise provided for in this Article VII to the extent that
allocating Tax Items in the manner provided for in Article VII, in the opinion
of tax counsel or the accountants to the Company, would cause the
determinations and allocations of each Member's distributive share of Tax Items
not to be permitted by Section 704(b) of the Code and Treasury Regulations
promulgated thereunder.
7.8. Partnership Treatment for Income Tax Purposes. The Members are
aware of the income tax consequences of the allocations made by this Article
VII and hereby agree to be bound by the provisions of this Article VII in
reporting their share of the Company's Net Income and Net Loss for income tax
purposes.
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ARTICLE VIII
TRANSFERS OF MEMBERSHIP UNITS
8.1 Assignment of Membership Units by Members. (a) Except as
otherwise expressly provided in this Section 8.1, no Member shall transfer
(whether by gift, court order, operation of law, or otherwise) all or any part
of a Membership Unit to any person unless such transfer is made in accordance
with the terms and provisions of Section 8.1(b) hereof. Any transferee
pursuant to this Section 8.1 shall take and hold the transferred interest
subject to this Agreement and to all other obligations and restrictions upon
the transferor Member, shall observe and comply with this Agreement and with
such obligations and restrictions and shall, unless such transferee is a Member
or is admitted as an Additional Member pursuant to Section 8.3 hereof, as a
condition of transfer, execute and deliver to the Company an agreement, in form
and substance satisfactory to the Management Committee in its sole discretion,
pursuant to which such transferee agrees to be bound by all of the terms and
provisions of this Agreement. Any attempted transfer in violation of this
Section 8.1(a) shall be null and void.
(b) A Member may transfer Membership Units only as follows (and any
Person to whom a Membership Unit is permitted to be transferred in accordance
with this Section 8.1(b) is herein called a "Permitted Transferee"):
(1) Upon death by will or by the laws of intestate distribution.
(2) To a Person other than a Third Party with consent after a
majority vote of the Management Committee, which consent may be granted
or withheld in the sole and absolute discretion of the Management
Committee.
(3) To a Third Party in compliance with the provisions of
Section 8.8 hereof and with written consent after a majority
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vote of the Management Committee, which consent may be granted or
withheld in the sole and absolute discretion of the Management
Committee. The failure to exercise the rights of first refusal set
forth in Section 8.8 hereof shall not be deemed to be the giving of such
consent.
8.2 When Transfers Binding on Company. No transfer of all or any part
of a Membership Unit by Member permitted to be made under this Agreement shall
be binding upon the Company unless and until a duplicate original of the
instrument of transfer, duly executed and acknowledged by the transferor, has
been delivered to the Company.
8.3 Additional Members. Permitted Transferees of a Member shall be
admitted to the Company as an Additional Member and shall participate in Net
Income and Net Loss of the Company on the same basis as the transferor Member.
8.4 Costs to Additional Members. As a condition further to those
described in Section 8.1 hereof to the admission of any Additional Member, such
Additional Member shall, if required by the Management Committee in its sole
discretion, pay all reasonable expenses actually incurred in connection with
such admission as a Member.
8.5 Election to Adjust Tax Basis. The Management Committee may, but
shall not be required to, cause the Company to make an election, or to revoke
any such election previously made, under Section 754 of the Code to adjust the
basis of Company property under Sections 734 and 743 of the Code. Any Member
requesting that such election be made in the context of a transaction to which
Section 743 of the Code would apply shall reimburse the Company for any
additional accounting costs resulting from such election.
8.6 Distributions and Allocations in Respect to Transferred Interests.
If any Membership Units are sold, assigned, or transferred during any
accounting period in compliance with the provisions of this Section 9, Net
Income, Net Loss, each item
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thereof, and all other items attributable to the transferred interest for such
period shall be divided and allocated between the transferor and the transferee
by taking into account their varying interests during the period in accordance
with Code Section 706(d), using any conventions permitted by law and selected
by the Management Committee. All distributions on or before the date of such
transfer shall be made to the transferor, and all distributions thereafter
shall be made to the transferee.
8.7 Legends. The Company shall be entitled to affix to each
certificate evidencing outstanding Membership Units that is issued to any
Member a legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO REGISTRATION OF
TRANSFER OF SUCH SECURITIES WILL BE MADE ON THE BOOKS OF THE COMPANY
UNLESS SUCH TRANSFER IS MADE IN CONNECTION WITH AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH ACT DOES NOT APPLY.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE THE RIGHTS, PRIVILEGES
AND PREFERENCES AND ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS
SET FORTH IN A LIMITED LIABILITY COMPANY AGREEMENT DATED AS OF JANUARY
15, 1996, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES
OF THE COMPANY. NO REGISTRATION OF TRANSFER OF SUCH SECURITIES WILL BE
MADE ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL SUCH RESTRICTIONS
SHALL HAVE BEEN COMPLIED WITH."
8.8 Right of First Refusal. (a) If any Member receives from or
otherwise negotiates with a Third Party a bona fide offer to purchase for cash
(for purposes of this Section 8.8, an "Offer") any
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of the Membership Units owned or held by such Member, and such Member intends
to pursue a sale of such Membership Units to such Third Party, such Member (for
purposes of this Section 8.8, the "Prospective Seller") shall provide the
Company and each of the other Members (for purposes of this Section 8.8, the
"Remaining Members") written notice of such Offer (for purposes of this Section
8.8, an "Offer Notice"). The Offer Notice shall identify the Third Party
making the Offer, the number of Membership Units with respect to which the
Prospective Seller has such an Offer (for purposes of this Section 8.8, the
"Offered Membership Units"), the cash price per Membership Unit at which a sale
is proposed to be made (for purposes of this Section 8.8, the "Offer Price"),
and all the other material terms and conditions of the Offer. The number of
Membership Units which may become Offered Membership Units shall be limited to
two Membership Units per Member, per year unless increased by the Management
Committee in its sole discretion.
(b) The receipt of an Offer Notice by each Remaining Member and the
Company from a Prospective Seller shall constitute an offer by the Prospective
Seller to sell to each Remaining Member and the Company the Offered Membership
Units at the Offer Price in cash. Such offer shall be irrevocable for 20
business days after receipt of the Offer Notice by each Remaining Member and
for two additional five (5) business day periods thereafter as hereinafter
provided. During such 20 business day period, each Remaining Member and the
Company shall, subject to the priorities set forth in the next succeeding
paragraph, have the right to accept such offer as to all or a portion of the
Offered Membership Units by giving a written notice of acceptance (for purposes
of this Section 8.8, the "Notice of Acceptance") to the Prospective Seller
prior to the expiration of such 20 business day period. If after expiration of
such 20 business day period the Prospective Seller shall not have received
Notices of Acceptance for all the Offered Membership Units, the Prospective
Seller shall thereupon notify each Accepting Party (as hereinafter defined) by
telecopy or personal delivery of such fact and shall provide each Accepting
Party an opportunity, during a period of five (5) business days from the date
such notice is so given, to submit an
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additional Notice of Acceptance of any such Offered Membership Units. For
purposes of this Section 8.8, any Remaining Member submitting a Notice of
Acceptance pursuant to this Section 8.8 is herein called an "Accepting Party."
Each Remaining Member and the Company shall be entitled to accept the
offer from the Prospective Seller in the following order of priority:
(i) first, the Company shall be entitled to accept such offer for any or
all of the Offered Membership Units.
(ii) second, to the extent the Company shall not have accepted such
offer for all the Offered Membership Units, each Remaining Member shall be
entitled to accept such offer for not more than a portion of the Offered
Membership Units determined on a pro rata basis based on the ratio of the
interest in the Net Income and Net Loss represented by the Membership Units
then owned by such Remaining Member to the total interest in the Net Income and
Net Loss represented by all Membership Units then outstanding (other than the
Offered Membership Units); and
(iii) third, to the extent that any Offered Membership Units remain
after application of clause (i) and (ii) above, each Accepting Party shall then
be entitled to purchase such remaining Offered Membership Units on a pro rata
basis based upon the ratio that the interest in the Net Income and Net Loss
represented by the Membership Units owned by each Accepting Party exercising
its rights pursuant to this clause (iii) bears to the interest in the Net
Income and Net Loss represented by the Membership Units owned by all Accepting
Parties exercising their rights pursuant to this clause (iii).
If the Company or any Remaining Member so accepts the Prospective Seller's
offer, each Accepting Party will purchase for cash from the Prospective Seller,
and the Prospective Seller will sell to each Accepting Party, such number of
Offered Membership Units as to which each Accepting Party shall have accepted
the Prospective Seller's
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offer. The price per Membership Unit to be paid by each Accepting Party shall
be the Offer Price specified in the Offer Notice. The Notice of Acceptance
shall specify (i) such Accepting Party's acceptance of the Prospective Seller's
offer and (ii) the number of Offered Membership Units to be purchased by such
Accepting Party.
(c) The consummation of any purchase by any Accepting Party shall take
place on such date, not later than 10 days after the expiration of the 20
business day period referred to in Section 8.8(b) above (or, if applicable, the
expiration of the additional five (5) business day period referred to in
Section 8.8(b) above), as such Accepting Party and the Prospective Seller shall
select. Upon the consummation of such purchase and sale, the Prospective
Seller shall (i) deliver to the Accepting Party certificates evidencing the
Offered Membership Units so purchased, duly endorsed in blank or accompanied by
written instruments of transfer in form satisfactory to such Accepting Party
and duly executed by the Prospective Seller, and (ii) assign all its rights
under this Agreement with respect to the Offered Membership Units so purchased
pursuant to an instrument of assignment reasonably satisfactory to such
Accepting Party.
(d) In the event that (i) each Remaining Member and the Company shall
have received an Offer Notice from a Prospective Seller but the Prospective
Seller shall not have received Notices of Acceptance as to all the Offered
Membership Units, or (ii) an Accepting Party shall have failed to consummate,
other than as a result of the fault of the Prospective Seller, the purchase of
the Offered Membership Units to be purchased by such Accepting Party (and
another Accepting Party or Parties does not purchase such Membership Units),
the Prospective Seller shall have the right to reject any or all Notices of
Acceptance theretofore received and nothing in this Section 8.8 shall limit the
right of the Prospective Seller to make a sale of the Offered Membership Units
so long as all the Offered Membership Units that are sold or otherwise disposed
of by the Prospective Seller (which number of Offered Membership Units shall be
not less than the number of Offered Membership Units specified in Offer Notice)
are sold for cash (A) within 60 days after the date of receipt of the
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Offer Notice by each Remaining Member, (B) at a price not less than the Offer
Price included in the Offer Notice, (C) to the Third Party making the Offer,
and (D) the Number of Offered Membership Units does not exceed two per Member,
per year, unless increased by the Management Committee.
(e) In the event that the Prospective Seller shall not have sold the
Offered Membership Units before the expiration of the 60-day period in
accordance with paragraph (d) above, then the provisions of this Section 8.8
shall be reinstated as to the Offered Membership Units as if an Offer Notice
had not been delivered and such Prospective Seller shall not give another Offer
Notice for a period of 120 days from the earlier of the date the transactions
contemplated herein were terminated or such 60-day period.
8.9 Certificates for Membership Units. Every owner of a Membership
Unit shall be entitled to have a certificate or certificates, to be in such
form as the Management Committee shall prescribe, certifying the number of
Membership Units owned by such Member. The certificates representing
Membership Units shall be numbered in the order in which they shall be issued
and shall be signed in the name of the Company by the President, or a Vice
President, and by the Secretary or an Assistant Secretary or by the Treasurer
or an Assistant Treasurer. Any or all of the signatures on the certificates
may be a facsimile. In case any officer, transfer agent or registrar who has
signed, or whose facsimile signature has been placed upon, any such certificate
shall thereafter have ceased to be such officer, transfer agent or registrar
before such certificate is issued, such certificate may nevertheless be issued
by the Company with the same effect as though the person who signed such
certificate, or whose facsimile signature shall have been placed thereupon,
were such officer, transfer agent or registrar at the date of issue. A record
shall be kept of the respective names of the Persons owning the Membership
Units represented by such certificates, the number of Membership Units
represented by such certificates, respectively, and the respective dates
thereof, and in case of cancellation, the respective dates of cancellation.
Every
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certificate surrendered to the Company for exchange or transfer shall be
canceled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
canceled, except in cases of lost or mutilated certificates as provided for in
Section 8.10 below. The person in whose name Membership Units stand on the
books of the Company shall be deemed the owner thereof for all purposes as
regards the Company. Certificates shall be issued for fractional Membership
Units.
8.10 Lost, Stolen, Destroyed, and Mutilated Certificates. In any case
of loss, theft, destruction, or mutilation of any certificate of Membership
Units, another may be issued in its place upon proof of such loss, theft,
destruction, or mutilation and upon the giving of a bond of indemnity to the
Company in such form and in such sum as the Management Committee may direct;
provided, however, that a new certificate may be issued without requiring any
bond when, in the judgment of the Management Committee, it is proper to do so.
ARTICLE IX
DISSOLUTION AND TERMINATION OF COMPANY;
LIQUIDATION AND DISTRIBUTION OF ASSETS
9.1 Dissolution and Termination. The Company shall be dissolved upon
the earliest of:
(a) the fortieth anniversary of the date hereof;
(b) 90 days after the death, retirement, resignation, expulsion,
bankruptcy or dissolution of any Member, or the entry of a decree of
judicial dissolution under Section 18-802 of the Delaware Law, unless
the action described in Section 9.2 hereof shall have been taken;
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(c) the date as of which all or substantially all of the assets
of the Company shall have been distributed or converted to cash or its
equivalent; or
(d) at any time, upon the majority vote in favor of such
dissolution by the Management Committee.
Upon dissolution, the Company shall wind up its affairs and shall be liquidated
and a certificate of cancellation of the Company, as required by law, shall be
filed.
9.2 Continuation of Company. The business of the Company shall be
continued after an event described in Section 9.1(b) hereof if within 90 days
after any such event (i) all of the Members (including any Person that becomes
an Additional Member in respect of the interest of a Terminated Member) elect
in writing that the business of the Company should be continued, or (ii) a
majority of the Remaining Members shall elect in writing that the business of
the Company should be continued. In the event all of the Members elect to
continue the business of the Company pursuant to clause (i) above, such
continuation shall include the interest of the Terminated Member and the
Company shall not be obligated to pay to the Terminated Member the Liquidation
Value of the Terminated Member's interest in the Company. In the event the
Remaining Members elect to continue the business of the Company pursuant to
clause (ii) above, such continuation shall not include the interest of the
Terminated Member and the Company shall pay to the Terminated Member, in full
and complete settlement of the Terminated Member's interest in the Company, an
amount equal to the Liquidation Value of the Terminated Member's interest in
the Company. Such amount shall be paid in cash or in the form of a promissory
note, or in any combination thereof, as determined by the management committee
in its sole discretion. Any promissory note so issued shall bear interest at
the Prime Interest Rate.
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9.3 Distribution upon Liquidation. Upon any dissolution of the
Company, each of the following shall be accomplished within the period
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(b):
(i) the Company shall prepare a statement setting forth the
assets and liabilities of the Company as of the date of termination, and
such statement shall be furnished to all of the Members;
(ii) the assets of the Company shall be liquidated as promptly
as possible, but in an orderly and businesslike manner so as not to
involve undue sacrifice;
(iii) Company funds shall be applied to the payment and
discharge of the claims of creditors (including Members who are
creditors) in the order of priority provided by law or to the
establishment or increase of reserves therefor;
(iv) the Company Net Income and Net Loss for the final Fiscal
Year shall be allocated, and the Members' Capital Accounts shall be
credited or charged in accordance with the terms of this Agreement; and
(v) the balance of any remaining cash and other assets shall be
distributed to the Members in accordance with their respective Capital
Accounts.
ARTICLE X
INDEMNIFICATION
10.1 Actions, Etc. Other Than by or in the Right of the Company. The
Company shall indemnify any Person (herein, together with any Affiliates of
such Person, an "Indemnified Person") who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil,
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criminal, administrative or investigative (other than an action by or in the
right of the Company) by reason of the fact that the Indemnified Person is or
was a Member, a Management Committee Representative, an officer, an employee or
an agent of the Company, or is or was serving at the request of the Company as
a director, officer, employee or agent of another Person or other enterprise or
as a member of any committee or similar body, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by the Indemnified Person in connection with such action,
suit or proceeding if the Indemnified Person acted in good faith and in a
manner the Indemnified Person reasonably believed to be in or not opposed to,
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the Indemnified Person did not act in good
faith and in a manner which the Indemnified Person reasonably believed to be
in, or not opposed to, the best interests of the Company, and, with respect to
any criminal action or proceeding, that the Indemnified Person had reasonable
cause to believe that such conduct was unlawful.
10.2 Actions, Etc., by or in the Right of the Company. The Company
shall indemnify any Indemnified Person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of the Company to procure a judgment in its favor by reason of the
fact that the Indemnified Person is or was a Member, a Management Committee
Representative, an officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer, employee or agent
of another Person or other enterprise, or as a member of any committee or
similar body, against expenses (including attorneys' fees) actually and
reasonably incurred by the Indemnified Person in connection with the defense or
settlement of such action or suit if the Indemnified Person acted in good faith
and in a manner he reasonably believed to be in, or not opposed to, the best
interests
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of the Company, except that no indemnification shall be made in respect of any
claim, issue or matter as to which the Indemnified Person shall have been
adjudged to be liable for negligence or misconduct in the performance of the
Indemnified Person's duty to the Company unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, the Indemnified Person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
10.3 Determination of Right of Indemnification. Any indemnification
under Section 10.1 or 10.2 (unless ordered by a court) shall be made by the
Company only as authorized in the specific case upon a determination that
indemnification of the Indemnified Person is proper in the circumstances
because the Indemnified Person has met the applicable standard of conduct set
forth in Section 10.1 and 10.2. Such determination shall be made (i) by the
Management Committee by a majority vote of a quorum consisting of members who
were not parties to such action, suit or proceeding, or (ii) if such a quorum
is not obtainable, or, even if obtainable, a quorum of disinterested members of
the Management Committee so directs, by independent legal counsel in a written
opinion, or (iii) by a Majority Vote of the Members.
10.4 Indemnification Against Expenses of Successful Party.
Notwithstanding the provisions of Section 10.1 or 10.2, to the extent that an
Indemnified Person has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in Section 10.1 or 10.2, or in
defense of any claim, issue or matter therein, the Indemnified Person shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by the Indemnified Person in connection therewith.
10.5 Advance of Expenses. Expenses incurred in defending a civil or
criminal action, suit or proceeding referred to in Section 10.1 or 10.2 shall
be paid by the Company in advance of the final
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disposition of such action, suit or proceeding as authorized by the Management
Committee in the specific case upon receipt of an undertaking by or on behalf
of the Indemnified Person to repay such amount unless it shall ultimately be
determined that the Indemnified Person is entitled to be indemnified by the
Company as authorized in this Article.
10.6 Other Rights and Remedies. The indemnification provided by
Section 10.1 and 10.2 shall not be deemed exclusive and is declared expressly
to be nonexclusive of any other rights to which one seeking indemnification may
be entitled under any agreement, vote of Members or of disinterested members of
the Management Committee or otherwise, both as to action in an Indemnified
Person's official capacity and as to action in another capacity while holding
such office, and shall continue as to an Indemnified Person who has ceased to
be a Member, Management Committee Representative, officer, employee or agent of
the Company and shall inure to the benefit of the heirs, executors and
administrators of such an Indemnified Person.
ARTICLE XI
MISCELLANEOUS
11.1 Further Assurances. Each party to this Agreement agrees to
execute, acknowledge, deliver, file and record such further certificates,
amendments, instruments and documents, and to do all such other acts and
things, as may be required by law, or as may be necessary or advisable to carry
out the intents and purposes of this Agreement.
11.2 Amendments. This Agreement may be amended by a Majority Vote of
the Members; provided, that no such amendment shall be made without the consent
of all Members if the effect of any such amendment would be to (i) increase any
Member's personal liability; (ii) change any Members' right and interest in the
Net Income, Net
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Loss or distributions from the Company; (iii) change any Member's rights upon
liquidation of the Company; or (iv) cause the Company to be treated for tax
purposes as an association taxable as a corporation.
11.3 Notices. Unless otherwise specified in this Agreement, all
notices, demands, elections, requests or other communications that any party to
this Agreement may desire or be required to give hereunder shall be in writing
(which shall include telecopier, telegram or cable) and shall be deemed to have
been duly given or made upon the transmittal thereof by telecopier, answerback
received, or the delivery thereof to the telegraph office, or on receipt
following the deposit thereof in the mails or when delivered by hand, in each
case to the person to whom notice is being given, addressed as follows:
(a) to the Company, at the principal place of business of the
Company or at such other address as may be designated by the Company
upon written notice to the Members;
(b) to each Member at the address set forth beneath the
signature of such Member on the signature pages to this Agreement, or at
such other address as may be designated by written notice to the Company
as provided in this Section; and
(c) to any person who hereafter becomes an Additional Member, at
such address as may be designated by it by written notice to the
Company.
11.4 Headings and Captions. All headings and captions contained in
this Agreement are for convenience only and shall not be deemed a part of this
Agreement.
11.5 Variations of Pronouns. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine or neuter, singular or
plural, as the identity of the person or entity may require.
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11.6 Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
11.7 Governing Law. This Agreement is made pursuant to the provisions
of the Delaware Law and shall be construed accordingly.
11.8 Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors, executors, administrators,
legal representatives, heirs and assigns and shall inure to the benefit of the
parties hereto and, except as otherwise provided herein, their respective
successors, executors, administrators, legal representatives, heirs and
assigns.
11.9 Waiver of Right of Partition. Each of the Members does hereby
agree to and does hereby irrevocably waive (a) any right it may have, whether
by statute or by rule of law, to cause any asset of the Company to be
partitioned or to file a complaint or to institute any proceeding at law, or in
equity, to cause any asset to be partitioned, or to complete a sale of all or
any part of the assets of the Company, and (b) any right to take any action
which otherwise may be available to such Member for the purpose of severing its
relation with the Company or its interest in the assets of the Company from the
interest of the other Members other than any rights such Member may have
pursuant to the terms of this Agreement, throughout the term of the Company and
during the period of its liquidation following any dissolution.
11.10 Entire Agreement. This Agreement and the other documents
contemplated herein constitutes the entire agreement of the Members with
respect to the transactions contemplated hereby and supersedes all prior oral
or written agreements and understandings.
11.11 Future Members. While the Company will initially consist of a
sole Member, Xxxx Xxxxxx, this Agreement has been written in contemplation that
there will be multiple Members of the Company shortly after the formation of
the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the ____ day of July, 1996.
American Gaming Network L.L.C.
By:
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ADDRESS:
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Xxxx Xxxxxx
ADDRESS:
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Exhibit A
American Gaming Network L.L.C.
Limited Liability Company Agreement
Member Number of Membership Units
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Xxxx Xxxxxx one (1)
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