EXHIBIT 10.11
INTERNATIONAL ASSETS NEW YORK, LLC
LIMITED LIABILITY COMPANY AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS.......................................................1
ARTICLE 2 FORMATION OF COMPANY..............................................7
2.1 Formation.....................................................7
2.2 Name..........................................................7
2.3 Principal Place of Business...................................7
2.4 Registered Office and Registered Agent........................7
2.5 Term..........................................................7
2.6 Certificates of Membership Interests..........................7
ARTICLE 3 BUSINESS OF COMPANY...............................................8
3.1 Permitted Businesses.....................................8
ARTICLE 4 NAMES AND ADDRESSES OF MEMBERS....................................8
ARTICLE 5 RIGHTS AND DUTIES OF BOARD OF MANAGERS............................8
5.1 Management....................................................8
5.2 Number, Election, Tenure and Qualifications...................9
5.3 Manner of Acting..............................................9
5.4 Certain Powers of Managers....................................9
5.5 Managers Have No Exclusive Duty to Company...................10
5.6 Bank Accounts................................................10
5.7 Resignation..................................................10
5.8 Removal......................................................10
5.9 Vacancies....................................................10
ARTICLE 6 OFFICERS11
6.1 Officers of Company..........................................11
6.2 Election and Term of Office..................................11
6.3 Removal......................................................11
6.4 Vacancies....................................................11
6.5 President....................................................11
6.6 The Vice Presidents..........................................12
6.7 The Treasurer................................................12
6.8 The Secretary................................................12
6.9 Assistant Treasurers and Assistant Secretaries...............12
6.10Salaries.....................................................13
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ARTICLE 7 RIGHTS AND OBLIGATIONS OF MEMBERS................................13
7.1 Limitation of Liability......................................13
7.2 List of Members..............................................13
7.3 Company Books................................................13
7.4 Priority and Return of Capital...............................13
7.5 No Preemptive Rights.........................................13
ARTICLE 8 MEETINGS OF MEMBERS..............................................14
8.1 Meetings.....................................................14
8.2 Place of Meetings............................................14
8.3 Notice of Meetings...........................................14
8.4 Meeting of All Members.......................................14
8.5 Record Date..................................................14
8.6 Quorum.......................................................14
8.7 Manner of Acting.............................................15
8.8 Proxies......................................................15
8.9 Telephone Conference.........................................15
8.10Action by Members Without a Meeting..........................15
8.11Waiver of Notice.............................................15
ARTICLE 9 STANDARD OF CARE AND INDEMNIFICATION OF MANAGERS, OFFICERS
AND EMPLOYEES....................................................15
9.1 Standard of Care.............................................15
9.2 Indemnification of Managers, Officers and Employees..........15
ARTICLE 10 CONTRIBUTIONS TO THE COMPANY
AND CAPITAL ACCOUNTS...........................................16
10.1Initial Capital Contributions..............................16
10.2Additional Contributions...................................16
10.3Capital Accounts...........................................16
ARTICLE 11 ALLOCATIONS, INCOME TAX, DISTRIBUTIONS, ELECTIONS AND REPORTS..17
11.1Allocations of Net Profits and Net Losses..................17
11.2Additional Allocation Provisions...........................17
11.3Tax Allocations............................................19
11.4Distributions..............................................20
11.5Accounting Principles......................................21
11.6Interest on and Return of Capital Contributions............21
11.7Loans to Company...........................................21
11.8Records and Report.........................................21
11.9Returns and Other Elections................................21
00.00.Xxx Matters Partner..................................... 21
ARTICLE 12 [Intentionally Omitted]........................................22
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ARTICLE 13 ADDITIONAL MEMBERS.............................................22
13.1Admission of New Members...................................22
13.2Allocations to New Members.................................22
ARTICLE 14 DISSOLUTION AND TERMINATION....................................22
14.1Dissolution................................................22
14.2Winding Up, Liquidation and Distribution of Assets.........23
14.3Certificate of Cancellation................................25
14.4Effect of Filing of Certificate of Cancellation............25
14.5Return of Contribution Nonrecourse to Other Members........25
ARTICLE 15 MISCELLANEOUS PROVISIONS.......................................25
15.1Notices....................................................25
15.2Application of Delaware Law................................25
15.3Waiver of Action for Partition.............................26
15.4Amendments.................................................26
15.5Execution of Additional Instruments........................26
15.6Construction...............................................26
15.7Headings...................................................26
15.8Waivers....................................................26
15.9Rights and Remedies Cumulative.............................26
15.10Severability ............................................ 26
15.11 Heirs, Successors and Assigns .......................... 26
15.12No Third Party Beneficiaries............................. 26
15.13Conflict of Provisions .................................. 27
15.14Counterparts............................................. 27
15.15Investment Representations............................... 27
SCHEDULE A...................................................................29
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INTERNATIONAL ASSETS NEW YORK, LLC
LIMITED LIABILITY COMPANY AGREEMENT
THIS LIMITED LIABILITY COMPANY AGREEMENT (the "Agreement") is made and entered
into as of this 30th day of September, 1998, by and among International Assets
Holding Corp. ("IAHC") and Lakeside Investments, LLC ("Lakeside") (collectively,
the "Members").
WHEREAS, the Members intend to form the Company (as hereinafter defined) for the
purposes set forth herein; and
WHEREAS, the Members wish their relations and the Company to be governed by this
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
The following terms used in this Agreement shall have the following meanings
(unless otherwise expressly provided herein):
(a) "Adjusted Capital Account Deficit" shall mean with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the taxable year, after giving effect to the following adjustments:
(i) credit to such Capital Account that amount which such Member is obligated to
restore under Section 1.704-1(b)(2)(ii)(c) of the Treasury Regulations, as well
as any addition thereto pursuant to the next to last sentence of
Sections 1.704-2(g)(1) and (i)(5) of the Treasury Regulations, after taking into
account thereunder any changes during such year in Partnership Minimum Gain (as
determined in accordance with Section 1.704-2(d) of the Treasury Regulations)
and in Partner Minimum Gain (as determined under Section 1.704-2(i)(3) of the
Treasury Regulations); and
(ii) debit to such Capital Account the items described in
Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.
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This definition of Adjusted Capital Account Deficit is intended to comply with
the provisions of Treasury Regulation Sections 1.704-1(b)(2)(ii)(d) and 1.704-2,
and will be interpreted consistently with those provisions.
(b) "Board of Managers" means the Board of Managers described in Section 5.1.
(c) "Capital Account" as of any given date shall mean the Capital Account as
defined by Article 10.3.
(d) "Capital Contribution" shall mean any contribution to the capital of the
Company in cash or property by a Member whenever made. "Initial Capital
Contribution" shall mean the initial contribution to the capital of the Company
pursuant to this Agreement. "Additional Capital Contribution" shall mean any
Capital Contribution other than an Initial Capital Contribution.
(e) "Certificate" shall mean the Certificate of Formation of the Company as
filed by the organizer of the Company with the Delaware Secretary of State, as
the same may be amended from time to time.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended, or
corresponding provisions of subsequent superseding federal revenue laws.
(g) "Company" shall refer to International Assets New York, LLC.
(h) "Company Products" shall have the meaning given in the Joint Venture
Agreement.
(i) "Continued Products" has the meaning set forth in Section 14.2(g).
(j) "Delaware Act" shall mean the Delaware Limited Liability Company Act at
Title 6 of the Delaware Code, ss 18-101 through ss 18-1109, as the same may be
amended from time to time.
(k) "Depreciation" means, for each Fiscal Year, an amount equal to the
depreciation, amortization, or other cost recovery deduction allowable with
respect to an asset for such Fiscal Year, except that if the Gross Asset Value
of an asset differs from its adjusted basis for federal income tax purposes at
any time during such Fiscal Year, Depreciation shall be an amount which bears
the same ratio to such Gross Asset Value as of such time as the federal income
tax depreciation, amortization, or other cost recovery deduction for such Fiscal
Year bears to such adjusted tax basis; provided, however, that if the adjusted
basis for federal income tax purposes of an asset is zero, Depreciation shall be
determined with reference to such Gross Asset Value using any reasonable method
selected by the Manager.
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(l) "Distributable Cash" shall mean all cash, revenues and funds received by the
Company from Company operations, less the sum of the following to the extent
paid or set aside by the Company: (i) all principal and interest payments on
indebtedness of the Company and all other sums paid to lenders; (ii) all cash
expenditures incurred in the normal operation of the Company's business; and
(iii) such reserves as the Managers deem reasonably necessary for the proper
operation of the Company's business.
(m) "Entity" shall mean any general partnership, limited partnership, limited
liability company, corporation, joint venture, trust, business trust,
cooperative, association, foreign trust or foreign business organization.
(n) "Fiscal Year" means the Company's fiscal year, which shall end on September
30.
(o) "Gross Asset Value" means, with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows:
(i) The initial Gross Asset Value of any asset contributed by a Member to the
Company shall be the gross fair market value of such asset, as determined by the
Members hereunder.
(ii) The Gross Asset Values of all Company assets shall be adjusted to equal
their respective gross fair market values, as of the following times:
(a) the acquisition of a Membership Interest in the Company by a new or existing
Member in exchange for more than a de minimis Capital Contribution, if such
adjustment is necessary or appropriate to reflect the relative economic
interests of the Members in the Company;
(b) the distribution by the Company to a Member of more than a de minimis amount
of Company money or property as consideration for a Membership Interest in the
Company, if necessary or appropriate to reflect the relative economic interests
of the Members in the Company;
(c) the liquidation of the Company within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(g); and
(d) at such other times as necessary or advisable in order to comply with
Treasury Regulation Sections 1.704-1(b) and 1.704-2.
(iii) The Gross Asset Value of any Company asset distributed to a Member shall
be the gross fair market value of such asset on the date of distribution as
determined by the Members.
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(iv) The Gross Asset Values of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent
that such adjustments are taken into account in determining Capital Accounts
pursuant to Treasury Regulation Section 1.704-1(b)(2)(iv)(m); provided, however,
that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d)
to the extent that the Members reasonably determine that an adjustment pursuant
to subparagraph (b) is necessary or appropriate in connection with a transaction
that would otherwise result in an adjustment pursuant to this subparagraph (d).
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
Section 1(p)(i), Section 1(p)(ii), or Section 1(p)(iv) hereof, such Gross Asset
Value shall thereafter be adjusted by the Depreciation taken into account with
respect to such asset for purposes of computing Net Profits and Net Losses.
(p) "Joint Venture Agreement" means that certain Joint Venture Agreement dated
September 30, 1998, between International Assets Holding Corp. and Lakeside
Investments, LLC.
(q) "Majority Interest" shall mean the affirmative vote of Members holding more
than fifty percent (50%) of the aggregate Percentage Interests in the Company.
(r) "Manager" shall mean one or more members of the Board of Managers of the
Company. References to the Managers in the singular or as him, her, it, itself
or other like references shall also, where the context so requires, be deemed to
include the plural or the masculine or feminine reference, as the case may be.
(s) "Member" shall mean, in connection with the formation of the Company, each
of the parties who executes a counterpart of this Agreement as a Member and,
after the formation of the Company, each of the parties who may be admitted as a
Member in accordance with Article 13 of this Agreement. References to a Member
as it, itself or other like references shall also, where the context so
requires, be deemed to include the masculine or feminine reference, as the case
may be.
(t) "Membership Interest" shall mean a Member's entire interest in the Company,
including the right to participate in the management of the business and affairs
of the Company, including the right to vote on, consent to or otherwise
participate in any decision or action of or by the Members granted pursuant to
this Agreement and the Delaware Act.
(u) "Net Profits" and "Net Losses" shall mean, for each Fiscal Year, an amount
equal to the Company's taxable income or loss for such fiscal year, determined
in accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss, and all fees and
reimbursements payable to any Member shall be regarded as deductions), with the
following adjustments:
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(i) Any income of the Company that is exempt from federal income tax and not
otherwise taken into account in computing Net Profit or Net Loss pursuant to
this definition of Net Profit or Net Loss shall be added to such taxable income
or loss;
(ii) Any expenditures of the Company described in Code Section 705(a)(2)(B) or
treated as Code Section 705(a)(2)(B) expenditures pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Net Profit or Net Loss pursuant to this definition of Net Profit or
Net Loss shall be subtracted from such taxable income or loss;
(iii) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraph (ii)(b) or subparagraph (ii)(c) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Profit or Net Loss;
(iv) Gain or loss resulting from any disposition of property with respect to
which gain or loss is recognized for federal income tax purposes shall be
computed by reference to the Gross Asset Value of the property disposed of,
notwithstanding that the adjusted tax basis of such property differs from its
Gross Asset Value;
(v) In lieu of the depreciation, amortization, and other cost recovery
deductions taken into account in computing such taxable income or loss, there
shall be taken into account Depreciation for such Fiscal Year, computed in
accordance with Section 1(i) hereof.
(vi) 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 Regulation Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as a result of a distribution other than in
liquidation of a Member's Membership Interest in the Company, the amount of such
adjustment shall be treated as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment decreases the basis of the asset)
from the disposition of the asset and shall be taken into account for purposes
of computing Net Profit or Net Loss; and
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(vii) Notwithstanding any other provision of this definition of Net Profit or
Net Loss, any items which are specially allocated pursuant to Section 11.2
hereof shall not be taken into account in computing Net Profit or Net Loss.
(v) "Nonrecourse Debt" has the meaning set forth in Treasury Regulation Section
1.704-2(b)(3).
(w) "Nonrecourse Deductions" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a fiscal
year of the Company shall be determined in accordance with the rules of Treasury
Regulation Section 1.704-2(c).
(x) "Partner Minimum Gain" means an amount, with respect to each Partner
Nonrecourse Debt, equal to the Company Minimum Gain that would result if such
Partner Nonrecourse Debt were treated as a Nonrecourse Debt, determined in
accordance with Treasury Regulation Section 1.704-2(i)(3).
(y) "Partner Nonrecourse Debt" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(4).
(z) "Partner Nonrecourse Deductions" has the meaning set forth in Treasury
Regulation Section 1.704-2(i)(2), and the amount of Partner Nonrecourse
Deductions with respect to a Partner Nonrecourse Debt for a Company year shall
be determined in accordance with the rules of Treasury Regulation Section
1.704-2(i)(2).
(aa) "Partnership Minimum Gain" has the meaning set forth in Treasury Regulation
Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as
any net increase or decrease in Partnership Minimum Gain, for a Company year
shall be determined in accordance with Treasury Regulation Section 1.704-2(d).
(bb) "Percentage Interest" shall mean the proportion that a Member's Initial
Capital Contribution and Additional Capital Contribution(s), if any, bears to
the aggregate Initial Capital Contributions and Additional Capital
Contribution(s), if any, of all Members and shall be as stated on Schedule A to
this Agreement. Schedule A shall be amended from time to time upon the
occurrence of an Additional Capital Contribution to reflect the aggregate
Capital Contributions and Percentage Interest of each Member.
(cc) "Person" shall mean any individual or Entity, and their heirs, executors,
administrators, legal representatives, successors and assigns where the context
so permits.
(dd) "Regulatory Allocations" has the meaning set forth in Section
11.2(a)(viii).
(ee) "Reserves" shall mean funds set aside or amounts allocated to reserves
which shall be maintained in amounts deemed sufficient by the Board of Managers
for working capital and to pay taxes, insurance, debt service or other costs or
expenses incident to the ownership or operation of the Company's business.
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(ff) "Transferring Member" shall mean (i) any Member who sells, assigns,
pledges, hypothecates, transfers, exchanges or otherwise transfers for
consideration all or any portion of its Membership Interest or (ii) any Member
who gifts, bequeaths or otherwise transfers for no consideration (by operation
of law or otherwise, except with respect to bankruptcy) all or any part of its
Membership Interest.
(gg) "Treasury Regulations" shall include proposed, temporary and final
regulations promulgated under the Code.
(hh) "Withdrawal Event" shall mean the death, Resignation, Expulsion,
bankruptcy, or dissolution of, a Member or upon the occurrence of any other
event that terminates the continued membership of a Member in the Company other
than by transfer of all of the Member's Membership Interest to another person.
ARTICLE 2
FORMATION OF COMPANY
2.1 Formation. The Company has been organized as a Delaware limited liability
company by executing and delivering the Certificate to the Delaware Secretary of
State in accordance with and pursuant to the Delaware Act.
2.2 Name. The name of the Company is International Assets New York, LLC.
2.3 Principal Place of Business. The principal place of business of the Company
shall be in New York, New York. The Company may locate its places of business
and registered office at any other place or places as the Board of Managers may
deem advisable.
2.4 Registered Office and Registered Agent. The Company's initial registered
office shall be at the office of its registered agent at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx, Xxxxxx of New Castle and the name of its initial
registered agent shall be Corporation Service Company.
2.5 Term. The term of the Company shall commence on the date of the formation of
the Company in accordance with and pursuant to the Delaware Act, and shall
continue until December 31, 2010, unless the Company is earlier dissolved in
accordance with either the provisions of this Agreement or the Delaware Act.
2.6 Certificates of Membership Interests. The Board of Managers of the Company
may make such rules and regulations as they may deem appropriate concerning the
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issuance and registration of Membership Interests of the Company. The Board of
Managers may authorize the issuance of any Membership Interests without
certificates. Such authorization shall not affect Membership Interests already
represented by certificates until they are surrendered to the Company.
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ARTICLE 3
BUSINESS OF COMPANY
3.1 Permitted Businesses. The business of the Company shall be to engage in the
marketing and sale of certain securities related products developed by the
Members and new products to be developed by the Company and to carry on any
other lawful business or activity in connection with the foregoing.
ARTICLE 4
NAMES AND ADDRESSES OF MEMBERS
The names and addresses of the initial Members are as follows:
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NAME ADDRESS
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International Assets Holding Corp. 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxx Xxxxxx
Lakeside Investments, LLC 000 Xxxxxxx Xxx
Xxxxxxxx, Xxx Xxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
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ARTICLE 5
RIGHTS AND DUTIES OF BOARD OF MANAGERS
5.1 Management. The business and affairs of the Company shall be managed by its
Board of Managers. The Board of Managers shall have full and complete authority,
power and discretion to manage and control the business, affairs and properties
of the Company, to make all decisions regarding those matters and to perform any
and all other acts or activities customary or incident to the management of the
Company's business and objectives. No one Manager may take or effect any action
on behalf of the Company or otherwise bind the Company in the absence of a
formal delegation of authority by the Board of Managers to such Manager. Unless
authorized to do so
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by this Agreement or by the Board of Managers of the Company, no Member,
officer, attorney-in-fact, employee or other agent of the Company shall have any
power or authority to bind the Company.
5.2 Number, Election, Tenure and Qualifications. The number of Managers which
shall constitute the first Board of Managers shall be four (4), which Board of
Managers shall be established in accordance with Section 4.2 of the Joint
Venture Agreement. Managers need not be Members of the Company.
5.3 Manner of Acting. The Board of Managers shall meet at least once each
calendar quarter. The Board of Managers may designate any place, either within
or outside the State of Delaware, as the place of meeting of the Board of
Managers. If no designation is made, the place of meeting shall be the principal
place of business of the Company. A majority of the Board of Managers shall
constitute a quorum at meetings of the Board of Managers. If a quorum is
present, the unanimous vote of those in attendance shall constitute the act of
the Board of Managers, unless the vote of all Members is otherwise required by
this Agreement, the Delaware Act or the Certificate. Any Manager may participate
in a meeting by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting by means of such equipment shall
constitute presence in person at such meeting. Action may be taken without a
meeting if the action is evidenced by one or more written consents signed by
each Manager.
5.4 Certain Powers of Managers. Without limiting the generality of Section 5.1,
the Board of Managers shall have power and authority, after due action, on
behalf of the Company:
(a) to acquire property from any Person as the Board of Managers may determine,
whether or not such Person is directly or indirectly affiliated or connected
with any Manager or Member;
(b) to borrow money for the Company on such terms as the Board of Managers deem
appropriate, and in connection therewith, to hypothecate, encumber and grant
security interests in the assets of the Company to secure repayment of the
borrowed sums. No debt shall be contracted or liability incurred by or on behalf
of the Company except by the Board of Managers, or to the extent permitted under
the Delaware Act, by agents or employees of the Company expressly authorized to
contract such debt or incur such liability by the Board of Managers;
(c) to purchase liability and other insurance to protect the Company's property
and business;
(d) to hold and own Company real and personal properties in the name of the
Company;
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(e) to invest Company funds;
(f) to execute on behalf of the Company all instruments and documents,
including, without limitation, checks; drafts; notes and other negotiable
instruments; mortgages or deeds of trust; security agreements; financing
statements; documents providing for the acquisition, mortgage or disposition of
the Company's property; assignments, bills of sale; leases; and any other
instruments or documents necessary to the business of the Company;
(g) to employ accountants, legal counsel, agents or other experts to perform
services for the Company;
(h) to enter into any and all other agreements on behalf of the Company, in such
forms as the Board of Managers may approve;
(i) to appoint such agents, officers and delegees as may be necessary or
appropriate to the conduct of the business; and
(j) to do and perform all other acts as may be necessary or appropriate to the
conduct of the Company's business.
5.5 Managers Have No Exclusive Duty to Company. No Manager shall be required to
manage the Company as his or her sole and exclusive function and he or she may
have other business interests and engage in activities in addition to those
relating to the Company. Neither the Company, the Members, nor any other Manager
shall have any right, by virtue of this Agreement, to share or participate in
such other investments or activities of the Manager or in the income or proceeds
derived therefrom.
5.6 Bank Accounts. The Board of Managers may from time to time authorize the
opening of bank accounts in the name and on behalf of the Company, and the Board
of Managers shall determine who shall have the signatory power over such
accounts.
5.7 Resignation. Any Manager of the Company may resign at any time by giving
written notice to the Members of the Company and the other Managers of the
Company. The resignation of any Manager shall take effect upon receipt of notice
thereof or at such later date specified in such notice; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. The resignation of a Manager who is also a Member shall not
affect the Manager's rights as a Member and shall not constitute a withdrawal of
a Member.
5.8 Removal. Removal of any Manager shall be effected in accordance with Section
4.2 of the Joint Venture Agreement.
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5.9 Vacancies. Any vacancy occurring for any reason in the number of Managers of
the Company shall be filled in accordance with Section 4.2 of the Joint Venture
Agreement.
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ARTICLE 6
OFFICERS
6.1 Officers of Company. The officers of the Company shall consist of a
President, a Treasurer and a Secretary, and such Vice Presidents, Assistant Vice
Presidents, Assistant Treasurers, Assistant Secretaries or other officers or
agents as may be elected and appointed by the Board of Managers. Any two or more
offices may be held by the same person. The officers shall act in the name of
the Company and shall supervise its operation under the direction and management
of the Board of Managers, as further described below.
6.2 Election and Term of Office. The officers of the Company shall be elected
annually by the Board of Managers. Vacancies may be filled or new offices
created and filled at any meeting of the Board of Managers. Each officer shall
hold office until his or her successor shall have been duly elected and shall
have qualified or until his or her death or until he or she shall resign or
shall have been removed in the manner hereinafter provided. Election or
appointment of an officer or agent shall not of itself create contract rights.
6.3 Removal. Subject to the terms of the Joint Venture Agreement, any officer or
agent may be removed by the Board of Managers whenever in their judgment the
best interests of the Company would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
6.4 Vacancies. A vacancy in any office because of death, resignation, removal,
disqualification or otherwise may be filled by the Board of Managers for the
unexpired portion of the term.
6.5 President. The President of the Company shall be the chief operating officer
and in general and active charge of the entire business and all the affairs of
the Company and shall have the powers and perform the duties incident to that
position, including the power to bind the Company in accordance with this
Section 6.5. The President shall, when present, preside at all meetings of the
Board of Managers. He or she shall have such other powers and perform such
duties as are specified in this Agreement and as may from time to time be
assigned to him or her by the Board of Managers of the Company.
The President shall have general and active management of the business of the
Company and shall see that all orders and resolutions of the Board of Managers
of the Company are carried into effect. The President may execute bonds,
mortgages and other contracts (whenever requiring a seal, under the seal of the
Company), except where required or permitted by law to be otherwise signed and
executed and except where the signing and execution thereof shall be expressly
delegated by the Board of Managers of the Company to some other officer or agent
of the Company. The President shall have general powers of supervision and shall
be the final arbiter of all differences between
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officers of the Company, and such decision as to any matter affecting the
Company shall be final and binding as between the officers of the Company
subject only to the Board of Managers of the Company.
6.6 The Vice Presidents. In the absence of the President or in the event of his
or her inability or refusal to act, a Vice President (or in the event there be
more than one Vice President, the Vice Presidents in the order designated, or in
the absence of any designation, then in the order of their election) shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. Any Vice
President shall perform such other duties as from time to time may be assigned
to him by the President or the Board of Managers of the Company.
6.7 The Treasurer. The Treasurer shall be the chief financial officer of the
Company. The Treasurer shall not be required to give a bond for the faithful
discharge of his or her duties. He or she shall: (i) have charge and custody of
and be responsible for all funds and securities of the Company; (ii) be charged
with primary responsibility for dealing with national securities exchanges or
other exchanges in which the Company may hold a membership or on which the
Company may trade; (iii) receive and give receipts for moneys due and payable to
the Company from any source whatsoever, and deposit all such moneys in the name
of the Company in such banks, trust companies or other depositaries as shall be
selected by the Board of Managers of the Company; and (iv) in general perform
all the duties incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the Board of Managers
of the Company.
6.8 The Secretary. The Secretary shall: (a) keep the minutes of the Board of
Managers' meetings in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of this Agreement
or as required by law; (c) be custodian of Company records; (d) keep a register
of the post office address of each Member which shall be furnished to the
Secretary by such Member; (e) sign with the President or a Vice President (as
designated by the President), any certificates for Membership Interests, the
issue of which shall have been authorized by resolution of the Board of
Managers; (f) certify the resolutions of the Board of Managers, and other
documents to the Company as true and correct thereof; and (f) in general perform
all duties incident to the office of Secretary and such other duties as from
time to time may be assigned to him or her by the President, a Vice President
(as designated by the President) or the Board of Managers of the Company.
6.9 Assistant Treasurers and Assistant Secretaries. The Assistant Treasurers
shall respectively, if required by the Board of Managers of the Company, give
bonds for the faithful discharge of their duties in such sums and with such
sureties as the Board of Managers of the Company shall determine. The Assistant
Treasurers and Assistant Secretaries, in general, shall perform such duties as
shall be assigned to them by the Treasurer or the Secretary, respectively, or by
the President or the Board of Managers of the Company.
14
6.10 Salaries. Except as otherwise provided in the Joint Venture Agreement, the
salaries and other compensation of the officers and other employees of the
Company shall be fixed from time to time by the Board of Managers, and no
officer or employee shall be prevented from receiving such salary by reason of
the fact that he or she is also a Manager or Member of the Company.
ARTICLE 7
RIGHTS AND OBLIGATIONS OF MEMBERS
7.1 Limitation of Liability. A Member shall not be personally liable to
creditors of the Company for any debts, obligations, liabilities or losses of
the Company, whether arising in contract, tort or otherwise, beyond such
Member's Capital Contribution under Section 10.1 and any additional Capital
Contributions made by such Member under Section 10.2, except as otherwise
required by law.
7.2 List of Members. Upon the written request of any Member, the Board of
Managers shall provide a list showing the names, addresses and Membership
Interests of all Members.
7.3 Company Books. In accordance with Section 11.8 hereof, the Board of Managers
shall maintain and preserve, during the term of the Company, the accounts, books
and other relevant Company documents. Upon reasonable written request, each
Member and its duly authorized representative shall have the right, at a time
during ordinary business hours, as reasonably determined by the Board of
Managers, to inspect and copy such Company documents (at the requesting Member's
expense) which the Board of Managers, in its discretion, deems appropriate for
any purpose reasonably related to the requesting Member's Membership Interest.
7.4 Priority and Return of Capital. Except as may be expressly provided in
Article 11, no Member shall have priority over any other Member, either as to
the return of Capital Contributions or as to Net Profits, Net Losses or
distributions; provided that this Section shall not apply to the repayment by
the Company of loans (as distinguished from Capital Contributions) which a
Member has made to the Company.
7.5 No Preemptive Rights. No Member shall have any preemptive or preferential
right, including any such right with respect to (a) Additional Capital
Contributions; (b) issuance or sale of Membership Interests, whether unissued or
hereafter created; (c) issuance of any obligations, evidences of indebtedness or
other securities of the Company convertible into or exchangeable for, or
carrying or accompanied by any rights to receive, purchase or subscribe to, any
such unissued Membership Interest; (d) issuance of any right of, subscription to
or right to receive, or any warrant or option for the purchase of, any of the
foregoing securities; or (e) issuance or sale of any other securities that may
be issued or sold by the Company.
15
ARTICLE 8
MEETINGS OF MEMBERS
8.1 Meetings. Meetings of the Members, for any purpose or purposes, may be
called by any Member or Members owning a Majority Interest or by any Manager.
8.2 Place of Meetings. The Members may designate any place, either within or
outside the State of Delaware, as the place of meeting for any meeting of the
Members. If no designation is made, or if a special meeting be otherwise called,
the place of meeting shall be the principal place of business of the Company.
8.3 Notice of Meetings. Except as provided in Section 8.4, written notice
stating the place, day and hour of the meeting and the purpose or purposes for
which the meeting is called shall be delivered not less than five (5) nor more
than thirty (30) days before the date of the meeting, either personally or by
mail, by or at the direction of the Board of Managers or Member or Members
calling the meeting, to each Member entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered two (2) calendar days after being
deposited in the United States mail, addressed to the Member at its address as
it appears on the books of the Company, with postage thereon prepaid.
8.4 Meeting of All Members. If Members owning a Majority Interest consent to the
holding of a meeting at any time and place, such meeting shall be valid without
call or notice, and at such meeting lawful action may be taken.
8.5 Record Date. For the purpose of determining Members entitled to notice of or
to vote at any meeting of Members or any adjournment thereof, or Members
entitled to receive payment of any distribution, or in order to make a
determination of Members for any other purpose, the date on which notice of the
meeting is mailed or the date on which the resolution declaring such
distribution is adopted, as the case may be, shall be the record date for such
determination of Members. When a determination of Members entitled to vote at
any meeting of Members has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
8.6 Quorum. Members owning a Majority Interest, represented in person or by
proxy, shall constitute a quorum at any meeting of Members. In the absence of a
quorum at any such meeting, a majority of the Percentage Interests so
represented may adjourn the meeting from time to time for a period not to exceed
sixty (60) days without further notice. However, if the adjournment is for more
than sixty (60) days, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
Member of record entitled to vote at the meeting. At such adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally
16
noticed. The Members present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal during such
meeting of that number of Percentage Interests whose absence would cause less
than a quorum.
8.7 Manner of Acting. If a quorum is present, the affirmative vote of a majority
of the Percentage Interests so represented shall be the act of the Members,
unless the vote of a greater or lesser proportion or number is otherwise
required by the Delaware Act, by the Certificate or by this Agreement.
8.8 Proxies. At all meetings of Members, a Member may vote in person or by proxy
executed in writing by the Member or by a duly authorized attorney-in-fact. Such
proxy shall be filed with the Board of Managers of the Company before or at the
time of the meeting. No proxy shall be valid after eleven (11) months from the
date of its execution, unless otherwise provided in the proxy.
8.9 Telephone Conference. Any Member may participate in a meeting of the Members
by means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in the meeting by means of such equipment shall constitute
presence in person at such meeting.
8.10 Action by Members Without a Meeting. Action required or permitted to be
taken at a meeting of Members may be taken without a meeting if the action is
evidenced by one or more written consents describing the action taken, signed by
each Member entitled to vote and delivered to the Board of Managers of the
Company for inclusion in the minutes or for filing with the Company records.
Action taken under this Section is effective when all Members entitled to vote
have signed the consent, unless the consent specifies a different effective
date.
8.11 Waiver of Notice. When any notice is required to be given to any Member, a
waiver thereof in writing signed by the person entitled to such notice, whether
before, at or after the time stated therein, shall be equivalent to the giving
of such notice.
ARTICLE 9
STANDARD OF CARE AND INDEMNIFICATION
OF MANAGERS, OFFICERS AND EMPLOYEES
9.1 Standard of Care. No Manager or officer shall be liable to any Member or to
the Company by reason of the actions of such person in the conduct of the
business of the Company except for fraud, gross negligence or willful
misconduct.
9.2 Indemnification of Managers, Officers and Employees. The Company shall, to
the fullest extent to which is it empowered to do so by the Delaware Act or any
other applicable law, indemnify and make advances for expenses to any person who
was or is
17
a party, or is threatened to be made a party, to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a Manager, officer
or employee of the Company, against losses, damages, expenses (including
attorneys' fees), judgments, fines and amounts reasonably incurred by him or her
in connection with such action, suit or proceeding.
ARTICLE 10
CONTRIBUTIONS TO THE COMPANY AND CAPITAL ACCOUNTS
10.1 Initial Capital Contributions. Each Member shall contribute such amount set
forth in Schedule A as its Initial Capital Contribution.
10.2 Additional Contributions. Except as provided in Section 3.2 of the Joint
Venture Agreement, or as otherwise agreed by all the Members, no Member shall be
required to make Additional Capital Contributions. The failure of any Member to
make an Additional Capital Contribution required by Section 3.2 shall be deemed
to constitute an Event of Default.
10.3 Capital Accounts. (a) There shall be established and maintained for each
Member on the books of the Company a capital account (the "Capital Account") in
accordance with the following provisions: A separate Capital Account will be
maintained for each Member. Each Member's Capital Account will be increased by
(1) the amount of money contributed by such Member to the Company; (2) the Gross
Asset Value of property contributed by such Member to the Company (net of
liabilities secured by such contributed property that the Company is considered
to assume or take subject to under Code Section 752); (3) allocations to such
Member of Net Profits; (4) items in the nature of income or gain which are
specially allocated pursuant to Section 11.2 hereof; and (5) allocations to such
Member of income described in Code Section 705(a)(1)(B). Each Member's Capital
Account will be decreased by (1) the amount of money distributed to such Member
by the Company; (2) the Gross Asset Value of property distributed to such Member
by the Company (net of liabilities secured by such distributed property that
such Member is considered to assume or take subject to under Code Section 752);
(3) allocations to such Member of Net Losses; (4) allocations to such Member of
expenditures described in Code Section 705(a)(2)(B); and (5) items in the nature
of expenses or losses which are specially allocated pursuant to Section 11.2
hereof.
(b) In the event of a permitted sale or exchange of a Membership Interest in the
Company pursuant to Article 12 hereof, the Capital Account of the Transferring
Member shall become the Capital Account of the transferee to the extent it
relates to the transferred Membership Interest in accordance with
Section 1.704-1(b)(2)(iv) of the Treasury Regulations.
18
(c) The manner in which Capital Accounts are to be maintained pursuant to this
Section 10.3 is intended to comply with the requirements of Code Section 704(b)
and the Treasury Regulations promulgated thereunder and the provisions herein
regarding maintenance of Capital Accounts shall be interpreted and applied in a
manner consistent with such Regulations. If the Company determines that the
manner in which Capital Accounts are to be maintained pursuant to the preceding
provisions of this Section 10.3 should be modified in order to comply with Code
Section 704(b) and the Treasury Regulations, then notwithstanding anything to
the contrary contained in the preceding provisions of this Section 10.3, the
method in which Capital Accounts are maintained shall be so modified; provided,
however, that any change in the manner of maintaining Capital Accounts shall not
materially alter the economic agreement between or among the Members as set
forth in this Agreement.
ARTICLE 11
ALLOCATIONS, INCOME TAX, DISTRIBUTIONS, ELECTIONS
AND REPORTS
11.1 Allocations of Net Profits and Net Losses. The Net Profits and Net Losses
of the Company for each Fiscal Year shall be allocated among the Members in
proportion to their respective Percentage Interests in the Company. Subject to
the other provisions of this Article 11, allocations to a Member of Net Profits
or Net Loss shall be treated as an allocation of the same share of each item of
income, gain, loss, deduction or credit that is taken into account in computing
Net Profits or Net Loss.
11.2 Additional Allocation Provisions. Notwithstanding the foregoing provisions
of this Article 11:
(a) Regulatory Allocations.
(i) Minimum Gain Chargeback. Except as otherwise provided in Treasury
Regulation Section 1.704-2(f), notwithstanding the provisions of Section 11.1 of
this Agreement, or any other provision of this Article 11, if there is a net
decrease in Partnership Minimum Gain during any fiscal year, each Member shall
be specially allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in an amount equal to such Member's share of the
net decrease in Partnership Minimum Gain, as determined under Treasury
Regulation Section 1.704-2(g). The items to be allocated shall be determined in
accordance with Treasury Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2).
This Section 11.2(a)(i) is intended to qualify as a "minimum gain chargeback"
within the meaning of Treasury Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(ii) Partner Minimum Gain Chargeback. Except as otherwise provided in Treasury
Regulation Section 1.704-2(i)(4), and notwithstanding the provisions
19
of Section 11.1 of this Agreement or any other provision of this Article 11
(except Section 11.2(a)(i)), if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any fiscal year, each Member
who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Treasury Regulation Section
1.704-2(i)(5), shall be specially allocated items of Company income and gain for
such year (and, if necessary, subsequent years) in an amount equal to such
Member's share of the net decrease in Partner Minimum Gain attributable to such
Partner Nonrecourse Debt, determined in accordance with Treasury Regulation
Section 1.704-2(i)(4). 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 Section 11.2(a)(ii) is intended to qualify as a "chargeback of partner
nonrecourse debt minimum gain" within the meaning of Treasury Regulation Section
1.704-2(i) and shall be interpreted consistently therewith.
(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions. Any Nonrecourse
Deductions for any Fiscal Year shall be specially allocated to the Members in
accordance with their Percentage Interests. Any Partner Nonrecourse Deductions
for any Fiscal Year shall be specially allocated to the Member(s) who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse Deductions are attributable, in accordance with Treasury
Regulation Section 1.704-2(i).
(iv) Qualified Income Offset. If any Member unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), that causes such Member to have a Adjusted
Capital Account Deficit, items of Company income and gain shall be allocated, in
accordance with Treasury Regulation Section 1.704-1(b)(2)(ii)(d), to the Member
in an amount and manner sufficient to eliminate, to the extent required by such
Treasury Regulation, the Adjusted Capital Account Deficit of the Member as
quickly as possible provided that an allocation pursuant to this Section
11.2(a)(iv) shall be made if and only to the extent that such Member would have
an Adjusted Capital Account Deficit after all other allocations provided in this
Article 11 have been tentatively made as if this Section 11.2(a)(iv) were not in
the Agreement. It is intended that this Section 11.2(a)(iv) qualify and be
construed as a "qualified income offset" within the meaning of treasury
Regulation 1.704-1(b)(2)(ii)(d), and shall be interpreted consistently
therewith.
(v) Gross Income Allocation. In the event any Member has a deficit balance in
its Capital Account at the end of any Fiscal Year which is in excess of the sum
of (1) the amount (if any) such Member is obligated to restore to the Company,
and (2) the amount such Member is deemed to be obligated to restore pursuant to
Treasury Regulation Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of
Treasury Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Membe
20-
shall be specially allocated items of Company income and gain in the amount of
such excess as quickly as possible, provided that an allocation pursuant to this
Section 11.2(a)(v) shall be made if and only to the extent that such Member
would have a Adjusted Capital Account Deficit in excess of such sum after all
other allocations provided in this Article 11 have been tentatively made as if
this Section 11.2(a)(v) and Section 11.2(a)(iv) were not in this Agreement.
(vi) Limitation on Allocation of Net Losses. The allocation of Net Losses to any
Member pursuant to Section 11.1 hereof shall not exceed the maximum amount of
Net Loss that can be so allocated to such Member without causing such Member to
have an Adjusted Capital Account Deficit at the end of any Fiscal Year. To the
extent an allocation of Net Loss would cause or increase an Adjusted Capital
Account Deficit as to any Member, the limitation set forth in this Section
11.2(a)(vi) shall be applied on a Member by Member basis in accordance with
their respective Percentage Interests so as to allocate the maximum permissible
Net Loss to each Member without causing any Member to have an Adjusted Capital
Account Deficit.
(vii) 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 Regulation Section
1.704-1(b)(2)(iv)(m)(2) or Treasury Regulation 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 liquidation of its 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 Percentage Interests in the
event that Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(2) applies, or to
the Members to whom such distribution was made in the event that Treasury
Regulation Section 1.704-1(b)(2)(iv)(m)(4) applies.
(viii) Curative Allocation. The allocations set forth in Sections 11.2(a)(i),
(ii), (iii), (iv), (v), (vi), and (vii) (the "Regulatory Allocations") are
intended to comply with certain regulatory requirements, including the
requirements of Treasury Regulation Sections 1.704-1(b) and 1.704-2.
Notwithstanding the provisions of Section 11.1, the Regulatory Allocations shall
be taken into account if necessary in allocating other items of income, gain,
loss and deduction among the Members so that, to the extent possible, the net
amount of such allocations of other items and the Regulatory Allocations to each
Member shall be equal to the net amount that would have been allocated to each
such Member if the Regulatory Allocations had not occurred.
11.3 Tax Allocations.
21
(a) In General. Except as otherwise provided in this Section 11.3, for income
tax purposes each item of income, gain, loss and deduction (collectively, "Tax
Items") shall be allocated among the Members in the same manner as its
correlative item of "book" income, gain, loss or deduction is allocated pursuant
to Sections 11.1 and 11.2.
(b) Allocations Respecting Section 704(c) Revaluations. Notwithstanding Section
11.3(a), Tax Items with respect to Company property that is contributed to the
Company by a Member shall be shared among the Members for income tax purposes
pursuant to Treasury Regulation promulgated under Section 704(c) of the Code, so
as to take into account the variation, if any, between the basis of the property
to the Company and its initial Gross Asset Value. With respect to Company
property, if any, that is initially contributed to the Company upon its
formation, such variation between basis and initial Gross Asset Value shall be
taken into account under the "traditional method" as described in Proposed
Treasury Regulation 1.704-3(b) and Treasury Regulation 1.704-1(c)(2). In the
event the Gross Asset Value of any Company asset is adjusted pursuant to
subparagraph (b) of the definition of Gross Asset Value, subsequent allocations
of tax items with respect to such asset shall take account of the variation, if
any, between the adjusted basis of such asset and its Gross Asset Value in the
same manner as under Code Section 704(c) and the applicable Treasury Regulation
under the same method.
11.4 Distributions. Interim distributions, liquidating distributions and
redemption distributions shall be made as follows:
(a) Subject to Section 18-607 of the Delaware Act the Board of Managers may
cause the Company to make interim distributions of Distributable Cash or other
property at such time and for such amounts as determined by the Board of
Managers. All interim distributions of Distributable Cash or other property
shall be made in proportion to the Members' Percentage Interests.
(b) Upon liquidation of the Company, liquidating distributions shall be made in
accordance with Section 14.2 below.
(c) Upon redemption of any Member's Membership Interest upon the occurrence of a
Withdrawal Event, redemption distributions will be made in accordance with
Section 14.1(d).
(d) The Company may offset damages for breach of this Agreement by a Member
whose Membership Interest is liquidated (either upon the redemption of a
Member's Membership Interest or the liquidation of the Company) against the
amount otherwise distributable to such Member pursuant to this Section or
Section 14.1(d).
(e) A Member has no right to demand and receive any distribution in a form other
than cash.
22
(f) All amounts withheld pursuant to the Code or any provision of any state or
local tax law with respect to any payment, distribution or allocation to the
Company or the Members may be treated as amounts distributed to the Members
pursuant to this Section 11.4 for all purposes under this Agreement. The Manager
is authorized to withhold from distributions, or with respect to allocations, to
the Members and pay over to any federal, state, or local government any amounts
required to be so withheld pursuant to the Code or any provisions of any other
federal, state or local law and may allocate such amounts to the Members with
respect to which such amount was withheld.
11.5 Accounting Principles. The Company's financial statements shall be prepared
and its profit and loss statement shall be determined in accordance with
generally accepted accounting principles applied on a consistent basis using the
accrual method of accounting.
11.6 Interest on and Return of Capital Contributions. No Member shall be
entitled to interest on its Capital Contribution or to a return of its Capital
Contribution.
11.7 Loans to Company. Nothing in this Agreement shall prevent any Member from
making secured or unsecured loans to the Company by agreement with the Company.
11.8 Records and Report. At the expense of the Company, the Board of Managers
shall maintain records and accounts of the operations and expenditures of the
Company. At a minimum, the Company shall keep at its principal place of business
the following records:
(a) A current list of the full name and last known business or mailing address
of each Member and Manager;
(b) A copy of the Certificate and all amendments thereto, together with executed
copies of any powers of attorney pursuant to which any amendment has been
executed;
(c) Copies of the Company's financial statements and federal, state and local
income tax returns and reports, if any, for the three most recent years; and
(d) Copies of the Company's currently effective written Agreement, as amended.
11.9 Returns and Other Elections. The Treasurer shall cause the preparation and
timely filing of all tax returns required to be filed by the Company pursuant to
the Code and all other tax returns deemed necessary and required in each
jurisdiction in which the Company does business. Copies of such returns or
pertinent information therefrom shall be furnished to the Members within a
reasonable time after the end of the Company's Fiscal Year. All elections
permitted to be made by the Company under federal or state laws shall be made by
the treasurer in his or her sole discretion. In recognition of the fact that the
Company expects to be treated as a partnership for U.S. federal income tax
23
purposes, the Members agree to treat their Membership Interest as partnership
interests for U.S. federal and state income tax reporting purposes.
11.10 Tax Matters Partner. IAHC is designated the "Tax Matters Partner" (as
defined in Code Section 6231), and is authorized and required to represent the
Company (at the Company's expense) in connection with all examinations of the
Company's affairs by tax authorities, including, without limitation,
administrative and judicial proceedings, and to expend Company funds for
professional services and costs associated therewith. The Members agree to
cooperate with each other and to do or refrain from doing any and all things
reasonably required to conduct such proceedings.
ARTICLE 12
[Intentionally Omitted]
ARTICLE 13
ADDITIONAL MEMBERS
13.1 Admission of New Members. From the date of the formation of the Company,
any Person or Entity acceptable to the Members by their unanimous vote thereof
may become a Member in the Company by the issuance by the Company of a
Membership Interest for such consideration as the Members by their unanimous
votes shall determine, or by being a permitted transferee of an existing
Membership Interest in accordance with Article 12, subject to the terms and
conditions of this Agreement.
13.2 Allocations to New Members. No new Members shall be entitled to any
retroactive allocation of any item of income, gain, loss, deduction or credit of
the Company. The Board of Managers may, at its option, at the time a Member is
admitted, close the Company books (as though the Company's tax year has ended)
or make pro rata allocations of items of income, gain, loss, deduction or credit
to a new Member for that portion of the Company's tax year in which a new Member
was admitted in accordance with the provisions of Code Section 706(d) and the
Treasury Regulations promulgated thereunder.
ARTICLE 14
DISSOLUTION AND TERMINATION
14.1 Dissolution.
(a) The Company shall be dissolved upon the occurrence of any of the following
events:
24
(i) When the period fixed for the duration of the Company pursuant to
Section 2.5 hereof shall expire;
(ii) by the unanimous written agreement of all Members;
(iii) upon a Withdrawal Event, unless the business of the Company is continued
by the affirmative vote of all of the remaining Members within ninety (90) days
following the Withdrawal Event and there is at least one Member; or
(iv) the entry of a decree of judicial dissolution under Section 18-802 of the
Delaware Act.
(b) If a Member who is an individual dies or a court of competent jurisdiction
adjudges him to be incompetent to manage his or her person or his or her
property, the Member's executor, administrator, guardian, conservator or other
legal representative may exercise all of the Member's rights for the purpose of
settling his or her estate or administering his or her property.
(c) Unless the business of the Company is continued by the remaining Members in
accordance with Section 14.1(a)(iii) above, dissolution of the Company shall be
effective on the day on which a Withdrawal Event occurs, but the Company shall
not terminate until the certificate of cancellation shall be filed with the
Secretary of State of the State of Delaware and the assets of the Company are
distributed as provided in Section 14.2 below. Notwithstanding the dissolution
of the Company, prior to the termination of the Company, the business of the
Company and the affairs of the Members shall continue to be governed by this
Agreement.
(d) If there is a Withdrawal Event and all of the remaining Members consent to
continue the business of the Company in accordance with Section 14.1(a)(iii),
the Company shall, subject to Section 11.4(d), pay to the withdrawing Member any
positive balance in the withdrawing Member's Capital Account within ninety (90)
days from the date of the Withdrawal Event. The remaining Members shall have the
right in their sole discretion at any time within sixty (60) days of the
Withdrawal Event to determine all Net Profits and Net Losses of the Company as
of the date of such determination and to make appropriate credits and debits to
the Members' Capital Accounts. The Capital Account of the withdrawing Member as
of the date of determination shall be conclusively deemed to be the fair value
of all of its Membership Interest and the payment provided for in this
Section 14.1(d) shall be the full and only consideration for the redemption of
the withdrawing Member's Membership Interest.
14.2 Winding Up, Liquidation and Distribution of Assets.
(a Subject to the provisions of the Joint Venture Agreement, the Members who
have not wrongfully dissolved the Company may wind up the Company's affairs, but
the Court of Chancery, upon cause shown, may wind up the Company's affairs upon
25
application of any Member or his legal representative, and in connection
therewith, may appoint a liquidating trustee.
(b Upon dissolution, an accounting shall be made of the Company's assets,
liabilities and operations, from the date of the last previous accounting until
the date of dissolution. The Board of Managers shall immediately proceed to wind
up the affairs of the Company.
(c If the Company is dissolved and its affairs are to be wound up, the Board of
Managers shall:
(i0 Except as provided in Section 14.2(g) and subparagraph (ii), sell or
otherwise liquidate all of the Company's assets as promptly as practicable;
(ii0 Allocate any Net Profit or Net Loss resulting from such sales to the
Member's Capital Accounts in accordance with Article 11 hereof;
(iii0 Discharge all liabilities of the Company, including liabilities to Members
who are creditors of the Company to the extent permitted by law, excluding
liabilities for distributions to Members under Sections 11.4(a) and 11.4(c); and
(iv0 Distribute the remaining assets to Members in accordance with the positive
balance (if any) of each Member's Capital Account (as determined after taking
into account all Capital Account adjustments for the Company's taxable year
during which the liquidation occurs). Any such distributions to the Members in
respect of their Capital Accounts shall be made within the time specified in
Section 1.704-1(b)(2)(ii)(b)(2) of the Treasury Regulations.
(d Notwithstanding anything to the contrary in this Agreement, if any Member has
a deficit balance in its Capital Account (after giving effect to all
contributions, distributions, allocations and other Capital Account adjustments
for all taxable years, including the year during which such liquidation occurs),
such Member shall have no obligation to make any Capital Contribution, and the
deficit balance shall not be considered a debt owed by such Member to the
Company or to any other Person for any purpose whatsoever.
(e Upon completion of the winding up, liquidation and distribution of the assets
of the Company, the Company shall be deemed terminated.
(f The Board of Managers shall comply with all requirements of applicable law
pertaining to the winding up of the affairs of the Company and the final
distribution of its assets.
(g) The Members hereby agree that in the event of a winding up of the Company,
the Members shall agree upon which, if any, Company Products (as such term is
defined in Section 7.2 of the Joint Venture Agreement) shall continue subsequent
26
to the Company's termination. Such Company Products so continued shall be
designated the "Continued Products". The Members shall negotiate in good faith
to determine the terms upon which the Continued Products will be marketed and
sold subsequent to the Company's termination. In the event the Members agree to
jointly market and sell the Continued Products, the Members shall divide the net
earnings derived from such Continued Products equally (net of all costs incurred
by each of the Members in marketing and selling such Continued Products). In the
event the Members agree to individually market and sell the Continued Products,
each Member shall be responsible for the costs incurred in marketing and selling
such Continued Products. All Company Products which are not designated as
Continued Products upon the winding up of the Company, or are thereafter
discontinued upon the request of either Member, shall be terminated and
distributed to the Members in accordance with this Section 14.2.
14.3 Certificate of Cancellation. When all debts, liabilities and obligations of
the Company have been paid and discharged or adequate provisions have been made
therefor and all of the remaining property and assets of the Company have been
distributed, a certificate of cancellation shall be executed by one or more
authorized persons, which certificate shall set forth the information required
by the Delaware Act. A certificate of cancellation shall be filed with the
Delaware Secretary of State to accomplish the cancellation of the Certificate of
the Company upon the dissolution and completion of the winding up of the
Company.
14.4 Effect of Filing of Certificate of Cancellation. Upon the filing of the
certificate of cancellation with the Delaware Secretary of State, the existence
of the Company shall cease, except for the purpose of suits, other proceedings
and appropriate action as provided in the Delaware Act. The Board of Managers
shall have authority to distribute any Company property discovered after
dissolution, convey real estate and take such other action as may be necessary
on behalf of and in the name of the Company.
14.5 Return of Contribution Nonrecourse to Other Members. Except as provided by
law or as expressly provided in this Agreement, upon dissolution, each Member
shall look solely to the assets of the Company for the return of its Capital
Contribution. If the property remaining after the payment or discharge of the
debts and liabilities of the Company is insufficient to return the cash
contribution of one or more Members, such Member or Members shall have no
recourse against any other Member, except as otherwise provided by law.
ARTICLE 15
MISCELLANEOUS PROVISIONS
15.1 Notices. Any notice, demand or communication required or permitted to be
given by any provision of this Agreement shall be in writing and shall be deemed
to have been given when actually received. Any such notice, demand or
communication may be given by mail, express package service, telex or telefax
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and shall be addressed to each Member at the addresses shown in Article 4,
and/or to the Company at its principal office or to such other address as a
party may from time to time designate by notice to the other parties.
15.2 Application of Delaware Law. This Agreement and its interpretation shall be
subject to and is governed exclusively by its terms and by the laws of the State
of Delaware, and specifically the Delaware Act and the Certificate. In the event
of a direct conflict between the provisions of this Agreement and the provisions
of the Delaware Act or the Certificate, such provisions of the Delaware Act or
the Certificate, as the case may be, will be controlling.
15.3 Waiver of Action for Partition. Each Member irrevocably waives during the
term of the Company any right that it may have to maintain any action for
partition with respect to the property of the Company.
15.4 Amendments. This Agreement may be amended at any time in a writing executed
by all the Members.
15.5 Execution of Additional Instruments. Each Member hereby agrees to execute
such other and further statements of interest and holdings, designations, powers
of attorney and other instruments necessary to comply with any laws, rules or
regulations.
15.6 Construction. Whenever the singular number is used in this Agreement and
when required by the context, the same shall include the plural and vice versa,
and the masculine gender shall include the feminine and neuter genders and vice
versa.
15.7 Headings. The headings in this Agreement are inserted for convenience only
and are in no way intended to describe, interpret, define, or limit the scope,
extent or intent of this Agreement or any provision hereof.
15.8 Waivers. The failure of any party to seek redress for violation of or to
insist upon the strict performance of any covenant or condition of this
Agreement shall not prevent a subsequent act, which would have originally
constituted a violation, from having the effect of an original violation.
15.9 Rights and Remedies Cumulative. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude or waive the right to use any or all other remedy. Said
rights and remedies are given in addition to any other rights the parties may
have by law, statute, ordinance or otherwise.
15.10 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid, illegal or unenforceable
to any extent, the remainder of this Agreement and the application thereof shall
not be affected and shall be enforceable to the fullest extent permitted by law.
28
15.11 Heirs, Successors and Assigns. Each and all of the covenants, terms,
provisions and agreements herein contained shall be binding upon and inure to
the benefit of the parties hereto and, to the extent permitted by this
Agreement, their respective heirs, legal representatives, successors and
assigns.
15.12 No Third Party Beneficiaries. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any Person other than the Members.
15.13 Conflict of Provisions. In the event of a conflict between provisions of
this Agreement provisions of the Joint Venture Agreement, the Joint Venture
Agreement shall prevail.
15.14 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument.
15.15 Investment Representations. The undersigned Members, if any, understand
(1) that the Membership Interests issued pursuant to this Agreement have not
been registered under the Securities Act of 1933 or any state securities laws
(the "Securities Acts") because the Company is issuing these Membership
Interests in reliance upon the exemptions from the registrations requirements of
the Securities Acts providing for issuance of securities not involving a public
offering, (2) that the Company has relied upon the fact that the Membership
Interests are to be held by each Member for investment, and (3) that exemption
from registrations under the Securities Acts would not be available if the
Membership Interests were acquired by a Member with a view to distribution.
Accordingly, each Member hereby confirms to the Company that such Member is
acquiring a Membership Interest for such own Member's account, for investment
and not with a view to the resale or distribution thereof without complying with
an exemption for registration under the Securities Acts. Each Member agrees
not-to-transfer, sell or offer for sale any of portion of the Membership
Interest unless there is an effective registration or other qualification
relating thereto under the Securities Acts or unless the holder of the
Membership Interest delivers to the Company an opinion of counsel, satisfactory
to the Company, that such registration or other qualification under such
Securities Acts is not required in connection with such transfer, offer or sale.
Each Member understands that the Company is under no obligation to register the
Membership Interests or to assist such Member in complying with any exemption
from registration under the Securities Acts if such Member should at a later
date wish to dispose of the Membership Interest. Furthermore, each Member
realizes that the Membership Interests are unlikely to qualify for disposition
under Rule 144 of the Securities and Exchange Commission unless such Member is
not an "affiliate" of the Company and the Membership Interest has been
beneficially owned and fully paid for by such Member for at least three years.
Prior to acquiring a Membership Interest, each Member has made an investigation
of the Company and its business and the Company has made available to each such
29
Member all information with respect thereto which such Member needed to make an
informed decision to acquire a Membership Interest. Each Member considers
himself to be a person possessing experience and sophistication as an investor
which are adequate for the evaluation of the merits and risks of such Member's
investment in a Membership Interest.
IN WITNESS WHEREOF, the parties hereto have caused their signatures, or the
signatures of their duly authorized representatives, to be set forth below on
the day and year first above written.
MEMBERS:
International Assets Holding Corp.
By: /s/ Diego X. Xxxxxx
Its: Chairman & CEO
Lakeside Investments, LLC
By: /s/ Xxxxxxx Xxxxxxx
Its: President
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SCHEDULE A
Amount of Initial Percentage
Member Capital Contribution Interest
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International Assets Holding Corp. $100,000 50%
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Lakeside Investments, LLC $100,000 50%
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