EXHIBIT 10.11
AUTOMATION, MANUFACTURING & ROBOTIC
TECHNOLOGIES, LLC
MEMBER CONTROL AGREEMENT
THIS MEMBER CONTROL AGREEMENT (this "Agreement"), made and entered into
effective as of the 31st day of October, 2003, by and among Automation,
Manufacturing & Robotic Technologies, LLC, a Minnesota limited liability company
(the "Company"), and all of the members of the Company as of the date hereof,
such members being identified on attached Exhibit A (collectively, the
"Members").
W I T N E S S E T H:
WHEREAS, the Members constitute all of the current members of the Company;
WHEREAS, the Minnesota Limited Liability Company Act, codified as Chapter 322B
of the Minnesota Statutes (the "Act"), authorizes the adoption of a written
agreement among members concerning the business and affairs of a limited
liability company; and
WHEREAS, each of the parties to this Agreement desires to enter into such an
agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
promises and covenants hereinafter contained, the parties to this Agreement
agree as follows:
1. PURPOSE
The purpose of the Company shall be to engage in any lawful business permitted
by the Act.
2. TERM
The term of the Company shall commence with the filing of the Company's Articles
of Organization with the Minnesota Secretary of State and shall continue
thereafter until statutorily dissolved or otherwise terminated or dissolved as
provided in this Agreement.
3. CAPITAL
a. [INTENTIONALLY OMITTED].
b. CAPITAL ACCOUNTS. A separate capital account ("Capital
Account") shall be maintained for each Member in accordance with
Section 704(b) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the Treasury Regulations thereunder, including, without
limitation, Treasury Regulations Section 1.704-1(b)(2)(iv).
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c. CHANGES TO CAPITAL ACCOUNTS. The Capital Account for each
Member shall consist of the Member's initial capital contribution,
increased by any additional capital contributions made by the Member,
by the Member's share of Company profits and by the amount of any
Company liabilities which the Member is deemed to assume or which are
secured by any Company property distributed to the Member, and
decreased by the Member's share of Company losses, by any distributions
to the Member and by the amount of any liabilities of the Member which
the Company is deemed to assume or which are secured by property
contributed by the Member to the Company. A transferee shall succeed to
the Capital Account of the transferor to the extent that it relates to
the transferred membership interest.
d. NO INTEREST ON CAPITAL CONTRIBUTIONS. No interest shall be
paid on the initial capital contributions or on any subsequent capital
contributions.
e. ADDITIONAL CAPITAL CONTRIBUTIONS. The Board of Governors of
the Company shall not be able to require that the Members make
additional capital contributions into the Company (i.e., the Board of
Governors shall not have the authority to make any "capital calls" on
the Members).
f. LIMITED LIABILITY. No Member shall be personally liable for
any of the debts of the Company or be required to contribute any
capital to the Company other than the contribution required by this
Section, unless agreed to in writing or required by applicable law.
g. CREDITORS. A creditor who makes a nonrecourse loan to the
Company shall not have or acquire, at any time as a result of making
the loan, any direct or indirect interest in the profits, capital or
property of the Company other than as a creditor.
h. ADDITIONAL MEMBERS. Additional members may be admitted to the
Company as Members, and Membership Interest may be created and issued
to those persons, upon the majority vote of the Board of Governors of
the Company. Any admission of an additional member is effective only
after such new member has executed an agreement to be bound
unconditionally to this Member Control Agreement. Further, the Board of
Governors may accept capital contributions from current members in such
amounts, and in consideration for the issuance of such additional
membership interest units, as the Board of Governors in its discretion
may determine appropriate, subject to compliance with all requirements
under the Act which relate to the acceptance of capital contributions
and the issuance of additional Membership Interest in the Company.
x. XXXXXXXX PREEMPTIVE RIGHTS. Subject to termination as provided
below, Xxxxxxx Xxxxxxxx ("Xxxxxxxx") will have "preemptive rights," in
accordance with Minnesota Statutes Section 322B.33, with respect to any
issuance of additional membership interest units by the Company after
the issuance by the Company of membership interest units representing
an additional 10% ownership interest in the Company. Membership
interest units issued in a transaction or transactions exempt under
Minnesota Statutes Section 322B.33, subdivision 4, shall not count
towards the
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10% threshold. This provision shall only benefit Xxxxxxxx, may not be
assigned or otherwise transferred by Xxxxxxxx, shall not benefit any
other Member of the Company (including any successors to or assigns of
Xxxxxxxx'x Membership Interest) and shall terminate upon the earliest
to occur of (i) Xxxxxxxx'x death or "disability" (for purposes hereof,
"disability" shall mean that Xxxxxxxx shall become unable to perform
his employment duties as the result of his physical or mental
impairment for an aggregate of 180 days in any period of 365
consecutive days), (ii) such time as Xxxxxxxx no longer owns any
membership interest units in the Company, or (iii) such time as
Xxxxxxxx is no longer employed by the Company as a result of his
voluntary termination or a termination by the Company "for cause" (as
such term is defined in his employment agreement with the Company).
4. ALLOCATION OF PROFITS AND LOSSES
a. GENERAL. The profits and losses of the Company shall be
credited or charged, as the case may be, to each of the Members in
accordance with the membership interest percentages for each Member.
The actual percentage membership interest of a given Member in the
Company is determined by dividing the number of membership interest
units owned by the Member by the total number of membership interest
units owned by all Members of the Company, including such Member (such
membership interest percentages are referred to in this Agreement as
the "Membership Interests"). The number of membership interest units
owned by each Member and the Membership Interest of each Member as the
date of this Agreement is as set forth on attached Exhibit A.
b. QUALIFIED INCOME OFFSET. If any Member unexpectedly receives
any adjustments, allocations or distributions described in Treasury
Regulations Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5),
or 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain shall be
specifically allocated to such Member in an amount and manner
sufficient to eliminate a deficit in the Member's capital account
created by such adjustments, allocations or distributions as quickly as
possible. This Section 4(b) is intended to constitute a "qualified
income offset" within the meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(3).
c. MINIMUM GAIN CHARGEBACK. If there is a net decrease in
Partnership Minimum Gain (as defined in Treasury Regulations Section
1.704-2(b)(2)) during any Company fiscal year, each Member shall be
allocated items of Company income and gains in accordance with Treasury
Regulations Section 1.704-2(f)(1) for such year (and, if necessary,
subsequent years) in an amount equal to such Member's share of such net
decrease in Partnership Minimum Gain determined in accordance with
Treasury Regulations Section 1.704-2(g)(2). This Section 4(c) is
intended to comply with the minimum gain chargeback requirement in
Treasury Regulations Section 1.704-2(f)(1) and shall be interpreted
consistently therewith.
d. RECAPTURE INCOME. Any recapture income resulting from the sale
or other taxable disposition of any Company assets shall be allocated,
to the extent possible,
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among the Members in the same proportion that the deductions directly
or indirectly giving rise to such recapture income were allocated.
e. LIMITATION UPON MEMBER'S LOSS ALLOCATIONS. Company losses
shall not be allocated to a Member if such allocation of losses would
cause the Member to have a negative balance in the Member's Capital
Account in excess of the sum of (i) the amount, if any, the Member is
obligated to restore to the Company under this Agreement and (ii) the
amount the Member is deemed to be obligated to restore to the Company
pursuant to the penultimate sentences of Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5). Company losses which cannot be
allocated to a Member shall be allocated to the other Members;
provided, however, that if no Member may be allocated Company losses
due to the limitations of this Section 4(e), Company losses will be
allocated to all Members in accordance with their respective Membership
Interests.
f. CODE SECTION 704(c) ALLOCATIONS. In accordance with Code
Sections 704(b) and 704(c) and the Treasury Regulations promulgated
thereunder, Company income, gains, deductions, and losses with respect
to any property contributed to the capital of the Company shall 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 at that time (computed in
accordance with the Treasury Regulations). In the event Company
property is revalued in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv) at any time, subsequent allocations of Company
income, gains, deductions, and losses with respect to such property
shall take into consideration any variation between such property's
revaluation and its adjusted basis for federal income tax purposes in
the same manner as under Code Section 704(c) and the Treasury
Regulations thereunder. Any elections or other decisions relating to
such allocations shall be made by the Board of Governors in any manner
that reasonably reflects the purpose and intention of this Agreement.
5. DISTRIBUTIONS
Distributions shall be made to the Members in accordance with the following:
a. NON-LIQUIDATING DISTRIBUTIONS. All non-liquidating
distributions of cash and other property shall be made to the Members
of the Company, pro rata, in accordance with their respective
Membership Interests. All non-liquidating distributions shall be made
in such amounts and at such times as may be determined by the Company's
Board of Governors. The Board of Governors may establish reasonable
reserves as determined necessary to provide funds for improvements,
contingencies or working capital of the Company. No distribution shall
be made if the distribution would leave the Company unable to pay its
debts as they become due in the usual course of business. Subject to
the above limitations, the Company shall distribute pro rata to all
Members (taking into account prior year losses), in accordance with the
Members' respective Membership Interests, on an as-needed basis
(including quarterly distributions if required), funds necessary to
cover any income tax liability of the Members resulting from
allocations of Company income to the Members, and the Board of
Governors shall establish, from time
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to time as appropriate, the assumed taxable rate (which shall be the
same for all Members) to be used to calculate the amount of these
distributions.
b. LIQUIDATING DISTRIBUTIONS. Whether or not the distribution by
the Company shall constitute a "liquidating distribution" shall be
determined by the Board of Governors of the Company, in its sole and
absolute discretion. In the event that a distribution is a liquidating
distribution, the distribution shall be made and allocated among the
Members as follows:
i. POSITIVE CAPITAL ACCOUNTS. Distribution shall first
be made to all Members with positive Capital Account balances
(after such balances have been adjusted to reflect the
allocation of Company profit or loss arising from such event),
in proportion to and to the extent of such positive balances.
ii. REMAINING AMOUNTS. Distribution, if any, shall next
be made to all Members of the Company, pro rata, in proportion
to their respective Membership Interests in the Company.
c. RESTORATION OF DEFICIT CAPITAL ACCOUNTS. A Member with a
deficit balance in its Capital Account after all the allocations and
distributions pursuant to Sections 4 and 5 of this Agreement have been
made upon liquidation of the Company or its Membership Interest shall
not be obligated to contribute property or cash to the Company in order
to restore such deficit Capital Account balance.
d. AMOUNTS WITHHELD. All amounts withheld pursuant to the Code or
any provision of any other federal, state, local or foreign tax law
with respect to any payment, distribution or allocation to the Company
or the Members shall be treated as amounts distributed to the Members
pursuant to this Section 5 for all purposes under this Agreement. The
Chief Manager is authorized to withhold from distributions made to the
Members and to pay over to any federal, state, local or foreign
government any amounts required to be so withheld pursuant to the Code
or any provisions of any other federal, state, local or foreign law.
6. CONFLICTS OF INTEREST, SALARIES AND DRAWINGS
Any Member, or his affiliates, may deal with, perform services for, and sell
goods to the Company without limitation; provided, however, that any
compensation for such services or goods shall be limited to amounts and rates
determined by the Board of Governors. There shall be no set salaries or drawings
allowed and paid to the Members unless the same are duly authorized at a meeting
held for such purpose by the Board of Governors.
7. VOTING OF MEMBERSHIP INTERESTS
As to matters to be voted on by the Members, each Member shall have the right to
cast one vote for each membership interest unit owned by the Member. Except to
the extent otherwise
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specified in this Agreement, each Member shall be free to vote its membership
interest units in its discretion.
8. MANAGEMENT, DUTIES AND RESTRICTIONS
a. GENERAL MANAGEMENT. The general management and day-to-day
operations of the Company shall be the responsibility of those managers
appointed by the Board of Governors for such purpose. It is understood
that the Board of Governors may appoint Governors as managers. All
matters of general policy of the Company shall be decided by the Board
of Governors.
b. BOARD OF GOVERNORS. The Company's Board of Governors shall
consist of the number of persons as provided in the Bylaws. The Members
shall elect the Governors by the vote of the Members holding a majority
of the Membership Interests. Notwithstanding the foregoing, Xxxxxxxx
shall have the right to nominate and have elected one (1) governor.
Each Member agrees to vote its Membership Interest in favor of the
nominee so designated by Xxxxxxxx and each Member shall take no action
to prevent the individual so nominated from being elected to the Board
of Governors. Vacancies on a Board of Governors relating to the
governor nominated by Xxxxxxxx shall be filled as designated by
Xxxxxxxx. This right of Xxxxxxxx shall only benefit Xxxxxxxx, may not
be assigned or otherwise transferred by Xxxxxxxx, shall not benefit any
other Member of the Company (including any successors to or assigns of
Xxxxxxxx'x Membership Interest) and shall terminate upon the earliest
to occur of (i) Xxxxxxxx'x death or "disability" (for purposes hereof,
"disability" shall mean that Xxxxxxxx shall become unable to perform
his employment duties as the result of his physical or mental
impairment for an aggregate of 180 days in any period of 365
consecutive days), (ii) such time as Xxxxxxxx no longer owns 20% or
more of the membership interest units of the Company or (iii) such time
as Xxxxxxxx is no longer employed by the Company as a result of his
voluntary termination or a termination by the Company "for cause" (as
such term is defined in his employment agreement with the Company).
c. CHIEF MANAGER/PRESIDENT. An affirmative vote of the Board of
Governors shall be required to appoint a person as the Company's Chief
Manager or President. The Chief Manager shall manage the affairs of the
Company in a prudent and businesslike fashion and shall use his best
efforts to carry out the purposes and character of the business of the
Company. The Chief Manager shall have the responsibilities set forth in
the Company's Bylaws. If no Chief Manager is elected, then the
President of the Company shall perform the duties and discharge the
responsibilities of the Chief Manager.
d. RESTRICTED ACTIVITIES. Notwithstanding any of the provisions
of this Section, neither the Chief Manager, the President nor any
Member may take any of the following actions without the consent of all
of the Members:
i. Perform any act in contravention of this Agreement;
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ii. Possess Company property or assign any rights in
specific Company property for other than a Company purpose;
and
iii. Commingle Company funds with any Member's own funds.
e. FULL TIME NOT REQUIRED. In their capacity as Members of the
Company, the Members shall devote such of their time to the Company's
business as each deems necessary to accomplish the Member's
responsibilities and the Company's purpose, and shall not be obligated
to devote their full time to the Company's business. This limitation
does not limit obligations which a Member may otherwise have to the
Company in connection with, for example, that Member's employment by
the Company. Furthermore, any Member or an affiliate of any Member may
engage in or possess an interest in other business ventures of any
nature or description independently or with others and neither the
Company nor any Member shall have any rights in or to such independent
venture or the income or profits derived therefrom.
f. MEMBER SERVICES/COMPENSATION. It is expected and understood
that Xxxxxx X. Xxxxxxxx, Xxxxxxxx X. Xxxxx and Xxxxxxx X. Xxxx
(collectively, the "Xxxx Group"), each a Member of the Company, will be
providing consulting services to the Company on an ongoing basis. These
consulting services will include management, financial and oversight
responsibilities, and providing operational direction on a regular
basis. A consulting fee of $10,000 per month will be paid by the
Company to the Xxxx Group for these consulting services. This
arrangement will be reviewed by the Board of Governors on an annual
basis. Additionally, it is expected and understood that personnel of
another Member of the Company, Aero Systems Engineering, Inc. ("ASE"),
will be performing services for the Company on an as requested, as
needed basis. ASE will be compensated on a time and materials basis at
the same rates typically used by ASE to internally allocate its costs
for such services. For example, engineering time is currently
internally allocated at 210% of the engineer's hourly rate of
compensation. Services anticipated to be provided by ASE personnel
include, but are not limited to, engineering, accounting and payroll.
ASE will not be compensated for executive oversight services.
9. ACCOUNTING
The Company shall prepare or have prepared an annual financial report for the
Company as soon as practicable after the end of each fiscal year of the Company.
These financial statements shall be delivered to all of the Members and shall
include all necessary federal income tax information needed in the preparation
of the individual tax returns of each Member. Financial statements need not be
based upon a certified audit.
10. RESTRICTIONS ON TRANSFERABILITY
a. GENERAL. Except as otherwise expressly provided or permitted
by this Agreement, no Member shall assign, transfer, sell, exchange,
give by gift, hypothecate, mortgage, encumber or otherwise dispose of
all or any portion of the Membership Interest of the Member or suffer
the same to be encumbered, charged or taken
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involuntarily (collectively, a "Disposition"). Any Disposition by a
Member of any portion of the Membership Interest of the Member must
involve a transfer of both the financial rights and the governance
rights relating to the transferred Membership Interest, unless such
transfer is approved by the Board of Governors. Any Disposition which
is not made pursuant to and in accordance with the terms and conditions
of this Agreement shall be void and of no effect and shall vest no
right, title or interest in the transferee.
b. PERMITTED TRANSFERS. Notwithstanding anything in this
Agreement to the contrary, subject to the satisfaction of the
additional conditions specified in this Section 10(b), transfers of
part or all of a Membership Interest by a Member to or from their
respective "Permitted Transferees" (as such term is defined below) and
between or among their respective Permitted Transferees or between
Members are hereby specifically permitted, will not require the advance
written consent of the Members or the Board of Governors and will not
trigger or create any purchase options or other options or obligations
under this Agreement (collectively, "Permitted Transfers"). For
purposes of this provision, "Permitted Transferee" means, with respect
to any Member, any entity controlled by the Member, with "control"
constituting the ability to control at least eighty percent (80%) of
the voting power of such entity, directly or indirectly (including, but
not limited to, trusts where the beneficiaries of the trust consist of
his spouse, children, stepchildren, grandchildren or step-grandchildren
and where the trustee of such trust is the transferring Member). In
each such situation, the Disposition will only be permitted if, prior
to completion of such Disposition, the following shall be provided to
the Board of Governors:
i. A written agreement of the transferee, in form and
substance satisfactory to the Board of Governors, to be bound
by this Agreement, which shall include an agreement by the
transferee to execute any and all other documents that the
Board of Governors may deem necessary or appropriate to effect
and evidence such transfer and the agreements indicated above.
If the transferee does not provide such a written agreement,
the transferee shall retain the "financial rights" which
relate to the transferred Membership Interest, but shall be
deemed to have forfeited all "governance rights" which relate
to the transferred Membership Interest.
ii. An opinion of counsel, satisfactory in form and
substance to the Board of Governors, that the Permitted
Transfer will not terminate the Company or impair its ability
to be taxed as a partnership, and that the transfer
constitutes an exempt transaction and does not require
registration under applicable securities laws.
c. VOLUNTARY TRANSFERS. A Member may not voluntarily assign or
transfer all or any portion of the Membership Interest of the Member
except in accordance with the following:
i. NOTICE REQUIRED. A Member proposing to transfer all
or a portion of the Membership Interest of the Member (the
"Transferring Member") shall be
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required to provide written notice to all other Members and
the Board of Governors of the Company. The written notice (the
"Transfer Notice") shall specify the Membership Interest
proposed to be transferred (the "Transfer Interest"), the name
and address of the proposed transferee, the price and payment
terms, and any other terms and conditions of the transfer,
together with a representation, covenant and warranty that the
proposed transferee's offer to purchase the Transfer Interest
is genuine.
ii. GENERAL - MEMBER RIGHT OF FIRST REFUSAL. Except as
provided under Section 10(c)(iii) below, delivery of the
Transfer Notice to the Members shall create an option in favor
of all Members other than the Transferring Member (the
"Remaining Members") to acquire all, but not less than all, of
the Transfer Interest. Terms of this option shall be the same
as those specified in the Transfer Notice. Allocation exercise
of the option among the Remaining Members shall be as follows:
(1) ASE AS A REMAINING MEMBER. If ASE is one of
the Remaining Members, this option shall first be
exercisable by ASE. ASE shall have a period of thirty
(30) days, from receipt of the Transfer Notice,
within which to exercise this option. Exercise of the
option shall be made by ASE delivering written notice
thereof to the Board of Governors and the
Transferring Member. The other Remaining Members
shall then have a period of thirty (30) days
following expiration of the 30-day option period
provided to ASE within which to exercise their option
to acquire that portion, if any, of the Transfer
Interest not elected to be acquired by ASE. Exercise
of the option by the other Remaining Members may only
be made with respect to all of the Transfer Interest
which was not elected to be purchased by ASE.
Exercise of the option shall be made by written
notice delivered to the Board of Governors and the
Transferring Member. Unless otherwise agreed among
the other Remaining Members, each such Remaining
Member may purchase that percentage of the Transfer
Interest not purchased by ASE which bears the same
ratio as the Membership Interest of such Remaining
Member bears to the Membership Interest of all
Remaining Members (excluding ASE). In the event that
a Remaining Member does not purchase the full amount
of the Transfer Interest that such Remaining Member
is entitled to purchase, the other Remaining Members
(other than ASE) may purchase the excess on a
pro-rata basis, and the 30-day period specified above
shall be extended as necessary to accommodate this
process.
(2) ASE NOT AS A REMAINING MEMBER. If ASE is not
a Remaining Member, then all of the Remaining Members
shall have a period of thirty (30) days, from receipt
of the Transfer Notice, within which to exercise the
option. Exercise of the option shall be made by
written notice delivered to the Board of Governors
and the Transferring Member. Unless otherwise agreed
among the Remaining Members, each Remaining
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Member may purchase that percentage of the Transfer
Interest which bears the same ratio as the Membership
Interest of such Remaining Member bears to the
Membership Interests of all Remaining Members. In the
event that a Remaining Member does not purchase the
full amount of the Transfer Interest that such
Remaining Member is entitled to purchase, the other
Remaining Members may purchase the excess on a pro
rata basis, and the 30-day period specified above
shall be extended as necessary to accommodate this
process.
(3) FAILURE TO EXERCISE OPTION. Absent exercise
of the option by all or a portion of the Remaining
Members with respect to the entire Transfer Interest,
any partial acceptance shall be invalid and, upon
expiration of the option period provided to the
Remaining Members in Section 10(c)(ii)(1) or (2), as
the case may be, the Transferring Member may then
transfer the Transfer Interest as proposed, provided
(x) such transfer is completed within thirty (30)
days thereafter, (y) such transfer does not occur on
terms more favorable to the transferee than the terms
upon which the Transfer Interest was offered to the
Remaining Members, and (z) prior to completion of
such transfer, the following shall be provided to the
Board of Governors:
(a) A written agreement of the proposed
transferee, in form and substance
satisfactory to the Board of Governors, to
be bound by this Agreement and all other
agreements applicable to the Members, which
shall include an agreement by the proposed
transferee to execute any and all other
documents that the Board of Governors may
deem necessary or appropriate to effect and
evidence such transfer and to confirm that
the proposed transferee and the Transfer
Interest are subject to and bound by this
Agreement. If the proposed transferee does
not provide such a written agreement, the
proposed transferee shall retain the
"financial rights" which relate to the
Transfer Interest, but shall be deemed to
have forfeited all "governance rights" which
relate to the Transfer Interest.
(b) An opinion of counsel, satisfactory
in form and substance to the Board of
Governors, that the transfer will not
terminate the Company or impair its ability
to be taxed as a partnership and that the
transfer constitutes an exempt transaction
and does not require registration under
applicable securities laws.
iii. ASE TRANSFER OF GREATER THAN TWENTY-FIVE PERCENT -
TAG-ALONG/DRAG-ALONG OPTIONS. If the proposed voluntary
transfer involves the transfer by ASE of greater than
twenty-five percent (25%) of the total membership interest
units owned by all Members of the Company, Section
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10(c)(ii) shall not apply and delivery of the Transfer Notice
by ASE to the Members shall create the following options:
(1) TAG-ALONG OPTION. At the option of each
Member other than ASE (collectively, the "Remaining
Members"), ASE agrees to condition its sale to the
proposed transferee upon acquisition by the proposed
transferee of a "proportionate share" of the
Membership Interest of the Remaining Member, at the
same per unit price and under the same terms and
conditions involved in the sale of the Transfer
Interest by ASE. For purposes of this provision, a
"proportionate share" shall be the percentage equal
to the ratio of (i) the number of membership interest
units to be sold by ASE to the proposed transferee,
divided by (ii) the total number or membership
interest units owned by ASE prior to such sale. As to
each Remaining Member, this option must be exercised,
if at all, by the Remaining Member providing ASE with
written notice thereof within fifteen (15) days from
receipt of the notice from the Board of Governors.
(2) DRAG-ALONG OPTION. In connection with any
sale which triggers a tag-along option pursuant to
Section 10(c)(iii)(1), ASE shall have the option to
require that one or more Remaining Members sell a
"proportionate share" of the Membership Interests of
the Remaining Members to the proposed transferee, at
the same per unit price and under the same terms and
conditions involved in the sale of the Transfer
Interest by ASE; provided that if the sale also
involves the sale of affiliates of the Company, the
allocation of the aggregate purchase price among the
Company and its affiliates shall be commercially
reasonable to reflect the relative values of the
Company and its affiliates. For purpose of this
provision, a "proportionate share" shall be the
percentage equal to the ratio of (i) the number of
membership interest units to be sold by ASE to the
proposed transferee, divided by (ii) the total number
of membership interest units owned by ASE prior to
such sale. If exercised, written notice must be
provided to the affected Remaining Members within
fifteen (15) days from receipt of the notice from the
Board of Governors.
d. INVOLUNTARY TRANSFERS.
i. GENERAL. In the event of any involuntary sale or any
other involuntary Disposition whatsoever of part or all of the
Membership Interest of any Member other than as permitted by
this Agreement (hereinafter referred to as the "Involuntary
Transfer"), the Member whose Membership Interest is subject to
such Involuntary Transfer shall be required to send written
notice to the Board of Governors and all Members describing in
reasonable detail such Involuntary Transfer, including the
identity of the involuntary transferee (the "Involuntary
Transferee") and the circumstances of the Involuntary Transfer
(for example, foreclosure of pledge, divorce decree or
bankruptcy filing).
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ii. PURCHASE OPTION. Upon the occurrence of an
Involuntary Transfer, the remaining Members (the "Remaining
Members") shall have the option, exercisable by written notice
to the Member undergoing the Involuntary Transfer (hereinafter
referred to as the "Involuntary Transferor") or to his or its
successor or legal representative, as appropriate, to purchase
all or any portion of the Membership Interest of the
Involuntary Transferor which is subject to the Involuntary
Transfer (the "Transfer Interest"). The purchase price to be
paid to the Involuntary Transferor shall be as set forth in
Section 11 herein, and the payment terms shall be as set forth
in Section 12 herein; provided however, that for purposes of
establishing the purchase price to be paid for the Transfer
Interest, the following shall apply:
(1) Immediately upon occurrence of the
Involuntary Transfer, the parties shall commence the
Section 11 process for determining the purchase price
for the Transfer Interest;
(2) The "selling party" under Section 11 shall
be the Involuntary Transferee, and the "purchasing
party" under Section 11 shall be the Remaining
Members; and
(3) Decisions to be made by the purchasing party
shall be as decided by those Remaining Members
representing a majority of the Membership Interests
held by all Remaining Members.
iii. EXERCISE AND ALLOCATION OF OPTION AMONG MEMBERS.
(1) ASE AS A REMAINING MEMBER. If ASE is one of
the Remaining Members, this option shall first be
exercisable by ASE. ASE shall have until fifteen (15)
days after determination of the purchase price within
which to exercise all or any portion of this option,
it being expressly understood that less than all of
the Transfer Interest may be purchased. Exercise of
the option shall be made by ASE delivering written
notice thereof to the Board of Governors and the
Involuntary Transferor. The other Remaining Members
shall then have a period of thirty (30) days
following expiration of the option period provided to
ASE within which to exercise their option to acquire
all or any portion of the Transfer Interest not
elected to be acquired by ASE. Exercise of the option
shall be made by written notice delivered to the
Board of Governors and the Transferring Member.
Unless otherwise agreed among the other Remaining
Members, each such Remaining Member may purchase that
percentage of the Transfer Interest not purchased by
ASE which bears the same ratio as the Membership
Interest of such Remaining Member bears to the
Membership Interest of all Remaining Members
(excluding ASE). In the event that a Remaining Member
does not purchase the full amount of the Transfer
Interest that such Remaining Member is entitled to
purchase, the other Remaining Members (other than
ASE) may purchase the excess on a pro-
- 12 -
rata basis, and the 30-day period specified above
shall be extended as necessary to accommodate this
process.
(2) ASE NOT AS A REMAINING MEMBER. If ASE is not
a Remaining Member, then all of the Remaining Members
shall have until fifteen (15) days after
determination of the purchase price within which to
exercise all or any portion of this option, it being
expressly understood that less than all of the
Transfer Interest may be purchased. Exercise of the
option shall be made by written notice delivered to
the Board of Governors and the Involuntary
Transferor. Unless otherwise agreed among the
Remaining Members, each Remaining Member may purchase
that percentage of the Transfer Interest which bears
the same ratio as the Membership Interest of such
Remaining Member bears to the Membership Interests of
all Remaining Members. In the event that a Remaining
Member does not purchase the full amount of the
Transfer Interest that such Remaining Member is
entitled to purchase, the other Remaining Members may
purchase the excess on a pro rata basis, and the
15-day period specified above shall be extended as
necessary to accommodate this process.
iv. FAILURE TO EXERCISE OPTION. Upon expiration of the
option period provided to the Remaining Members under Section
10(d)(iii) above, an Involuntary Transfer of that portion of
the Transfer Interest not elected to be purchased by the
Remaining Members will occur, and such interest shall be
transferred in accordance with the provisions set forth in the
Act. The Involuntary Transferee shall be obligated to provide
the following to the Board of Governors:
(1) A written agreement of the Involuntary
Transferee, in form and substance satisfactory to the
Board of Governors, to be bound by this Agreement and
all other agreements applicable to the Members, which
shall include an agreement by the Involuntary
Transferee to execute any and all other documents
that the Board of Governors may deem necessary or
appropriate in order to effect and evidence such
transfer and to confirm that the Involuntary
Transferee and the Transfer Interest are subject to
and bound by this Agreement. If the Involuntary
Transferee does not provide such a written agreement,
the Involuntary Transferee shall retain the
"financial rights" which relate to the Transfer
Interest, but shall be deemed to have forfeited all
"governance rights" which relate to the Transfer
Interest.
(2) An opinion of counsel, satisfactory in form
and substance to the Board of Governors, that the
Involuntary Transfer will not terminate the Company
or impair its ability to be taxed as a partnership
and that the Involuntary Transfer constitutes and
exempt transaction that does not require registration
under applicable securities laws.
- 13 -
e. DEATH. Upon the death of a Member (the "Deceased Member"), the
successors, heirs, devisees, legal representatives, guardians or
assigns, as the case may be, of the Deceased Member (the "Succeeding
Members") shall succeed to the Membership Interest of the Deceased
Member and each shall be considered a Member of the Company. Except as
provided in this Section 10(e), the Members agree that the Succeeding
Members shall assume all "financial rights" and all "governance rights"
formerly associated with the Deceased Member's Membership Interest.
Notwithstanding anything in this Agreement to the contrary, the
Succeeding Members shall be bound by this Agreement as if original
signatories hereto and shall execute a written agreement, in form and
substance satisfactory to the Board of Governors, to be bound by this
Agreement. If a given Succeeding Member does not provide such a written
agreement, that Succeeding Member shall retain the "financial rights"
which relate to the Deceased Member's Membership Interest but shall be
deemed to have forfeited all "governance rights" formerly associated
with the Deceased Member's Membership Interest. This Section 10(e) is
intended to only apply to individual Members and shall not apply to
entity Members. The dissolution of a Member, other than in connection
with a Permitted Transfer, shall be considered an Involuntary Transfer
and shall trigger purchase options as provided in Section 10(d) above.
f. TERMINATION OF XXXXXXXX EMPLOYMENT PRIOR TO 2007.
Notwithstanding anything contained in this Agreement to the contrary,
upon the termination of Xxxxxxxx'x employment with the Company on or
prior to December 31, 2006 as a result of (i) his voluntary
termination, (ii) his termination of employment by the Company "for
cause" (as such term is defined in his employment agreement with the
Company) or (iii) as a result of his death or "disability" (for
purposes hereof, "disability" shall mean that Xxxxxxxx shall become
unable to perform his employment duties as the result of his physical
or mental impairment for an aggregate of 180 days in any period of 365
consecutive days), ASE will have the right to acquire all, some or none
of the Membership Interest of Xxxxxxxx on the terms indicated below:
i. OFFER CREATED. Upon termination of Xxxxxxxx'x
employment with the Company as indicated above, the Membership
Interest owned by Xxxxxxxx (the "Xxxxxxxx Interest") shall be
offered for sale to ASE. The offer shall be made at a purchase
price determined as follows:
(1) Xxxxxxxx, the Xxxx Group and ASE previously
entered into that certain Membership Interest
Purchase Agreement, dated October 31, 2003, pursuant
to which ASE and the Xxxx Group acquired from
Xxxxxxxx 60% of the issued and outstanding membership
interest units of the Company (the "Purchase
Agreement").
(2) Immediately following termination of
Xxxxxxxx'x employment as indicated above, the Company
shall calculate and determine the aggregate purchase
price paid to and received by Xxxxxxxx from ASE and
the Xxxx Group (collectively, the "Buyers") under the
Purchase Agreement through the date of the
termination of Xxxxxxxx'x employment with the Company
(it
- 14 -
being understood that this amount may be less than
the aggregate "purchase price" to be paid to Xxxxxxxx
by the Buyers under the Purchase Agreement). This
amount is hereinafter referred to as the "Aggregate
To-Date Payments."
(3) The purchase price to be paid under this
Section shall be equal to the Aggregate To-Date
Payments multiplied by a fraction, the numerator of
which is the total number of membership interest
units to be acquired pursuant to this Section 10(f)
and the denominator of which is 600 (which represents
the total number of membership interest units
acquired by the Buyers from Xxxxxxxx under the
Purchase Agreement).
(4) If Xxxxxxxx'x employment is terminated subsequent
to any change in the number of outstanding membership
interest units of the Company occurring by reason of
any membership interest unit dividend, split, reverse
split or similar recapitalization of the Company,
there shall be an appropriate adjustment to the 600
denominator used to calculate the purchase price so
that the purchase price calculation will be the same
as if it occurred prior to such membership interest
unit dividend, split, reverse split or other similar
recapitalization.
The Company shall calculate the purchase price to be paid for
100% of the Xxxxxxxx Interest and send written notice thereof
to Xxxxxxxx and ASE. Terms of payment for any purchase of part
or all of the Xxxxxxxx Interest under this Section 10(f) shall
require that the entire purchase price be paid in cash at
closing.
ii. ACCEPTANCE OF THE OFFER. The offer shall create an
option in favor of ASE. ASE shall have until thirty (30) days
after its receipt of the written notice from the Company of
the purchase price to be paid for 100% of the Xxxxxxxx
Interest within which to exercise all or any portion of this
option, it being expressly understood that less than all of
the Xxxxxxxx Interest may be purchased. If less than all of
the Xxxxxxxx Interest is purchased, the aggregate purchase
price indicated in the written notice from the Company shall
be proportionately reduced as provided under Section 10(f)(i)
above. Exercise of the option shall be made by written notice
delivered to Xxxxxxxx.
iii. FAILURE TO EXERCISE OPTION. Upon expiration of the
option period provided to ASE under Section 10(f)(ii) above,
any portion of the Xxxxxxxx Interest which has not been
elected to be purchased by the Company shall be retained by
Xxxxxxxx, and the rights and interest of Xxxxxxxx as they
relate to the retained portion of the Xxxxxxxx Interest and
the Company shall continue to be governed by and subject to
all provisions of this Agreement.
g. PUT OPTION. Beginning November 1, 2008, through October 31,
2013 (the "Put Period"), Xxxxxxxx shall have the one-time right to
require that ASE purchase all of the Xxxxxxxx Interest on the following
terms:
- 15 -
i. PUT NOTICE. To exercise this put option, Xxxxxxxx
must deliver written notice thereof to ASE specifically
stating his exercise of his put option rights under this
Section 10(g) (the "Put Notice").
ii. PURCHASE PRICE. The purchase price shall be equal to
the "appraised value" of the Xxxxxxxx Interest, determined in
accordance with the following:
(1) Within thirty (30) days following ASE's
receipt of the Put Notice, ASE and Xxxxxxxx shall
each designate a professional appraiser experienced
in appraising the value of businesses. The two
appraisers shall for a period of thirty (30) days
thereafter attempt to agree upon the appraised value
of the Xxxxxxxx Interest. If the two appraisers are
able to agree, the agreed upon appraised value shall
be the purchase price. If the two appraisers are not
able to agree, they shall jointly select a third
professional appraiser. Within thirty (30) days
thereafter, all three appraisers shall submit their
appraised value of the Xxxxxxxx Interest. The
purchase price shall be equal to the average of the
two closest appraisals.
(2) If either party fails to identify an
appraiser within the 30-day period specified above,
the appraiser identified by the other party shall
determine the appraised value of the Xxxxxxxx
Interest and the value determined by such appraiser
shall be the purchase price.
(3) The appraisers shall be instructed not to
apply any minority interest discount, but to apply
discounts for lack of marketability if and as
appropriate when valuing the Company.
(4) The cost of the appraisal(s) shall be paid
one-half by ASE and one-half by Xxxxxxxx.
iii. ASE ELECTION AND TERMS OF PAYMENT. Upon determination
of the purchase price, ASE shall have a period of thirty (30)
days thereafter to elect whether or not to purchase the
Xxxxxxxx Interest at the appraised purchase price. ASE's
election shall be made by written notice delivered to Xxxxxxxx
within the 30-day period. If ASE fails to so elect within such
30-day period, ASE will be deemed to have elected to purchase
the Xxxxxxxx Interest. If ASE elects to purchase the Xxxxxxxx
Interest, the purchase price shall be paid 25% down and the
balance pursuant to ASE's execution and delivery of a
promissory note in the form attached hereto as Exhibit B;
except that the note shall be a three-year promissory note and
interest will accrue under the promissory note at the
"applicable federal rate" in effect at the time of closing on
the purchase, determined in accordance with Internal Revenue
Code Section 1274(d).
iv. CONSEQUENCE OF ASE ELECTION TO NOT PURCHASE. If ASE
elects to not purchase the Xxxxxxxx Interest as provided
above, ASE commits to then, in good
- 16 -
faith, market and attempt to sell the entire Company. The
rights of Xxxxxxxx under this Section are personal to him, may
not be assigned or otherwise transferred by him, shall not
benefit any other Member of the Company (including any
successors to or assigns of Xxxxxxxx'x Membership Interest)
and shall terminate upon the earliest to occur of (i)
Xxxxxxxx'x death, (ii) such time as Xxxxxxxx no longer owns
any membership interest units in the Company or (iii) such
time as Xxxxxxxx is no longer employed by the Company as a
result of his voluntary termination or termination by the
Company "for cause" (as such term is defined in his employment
agreement with the Company).
h. CALL OPTION. At any time from the date of this Agreement
through October 31, 2013 (the "Call Period"), ASE shall have the right
to acquire all, but not less than all, of the Membership Interest held
by any Member of the Company. ASE may exercise this call option with
respect to one, some or all of the other Members, and may exercise this
call option at multiple times with respect to different Members
throughout the Call Period. However, ASE may only exercise this call
option with respect to a given Member as to the entire Membership
Interest of that Member. ASE shall exercise this call option by
delivering written notice thereof to the Member whose Membership
Interest is to be acquired. The purchase price to be paid for a given
Member's Membership Interest shall be equal to $10 million multiplied
by a fraction, the numerator of which is the number of membership
interest units then owned by the Member and the denominator of which is
400; provided if ASE exercises this option subsequent to any change in
the number of outstanding membership interest units of the Company
occurring by reason of any membership interest unit dividend, split,
reverse split or similar recapitalization of the Company, there shall
be an appropriate adjustment to the denominator used to calculate the
purchase price so that the purchase price calculation will be the same
as if it occurred prior to such membership interest unit dividend,
split, reverse split or other similar recapitalization. Payment terms
shall require that the entire purchase price be paid in cash at
closing.
i. CLOSING PROCEDURES. The closing of any purchase or sale of a
Membership Interest pursuant to this Agreement shall take place within
thirty (30) days following the last to expire applicable option period.
The closing shall take at the principal business office of the Company.
At the closing, the selling party shall deliver to the purchasing
party, in exchange for payment of the purchase price, a full and
complete assignment of the Membership Interest to be purchased and
sold, together with any other documents as may be reasonably required
to transfer full and complete title to the Membership Interest to the
purchasing party, in form satisfactory to the purchasing party. The
selling party shall warrant that the selling party has good title to,
the right to possession of and the right to sell the Membership
Interest and that the Membership Interest is transferred to the
purchasing party free and clear of all pledges, liens, encumbrances,
charges, proxies, restrictions, options, transfers and other adverse
claims, except those as have been imposed by this Agreement. Each
selling party shall further warrant that the selling party will
indemnify and hold harmless the purchasing party for all costs,
expenses and fees incurred in defending the title to and/or the right
to possession of such Membership Interest.
- 17 -
j. SALE OF ENTIRE MEMBERSHIP INTEREST. Any Member who makes a
disposition of all of the Membership Interest of the Member in
accordance with the terms of this Agreement, or otherwise, shall no
longer be a party to this Agreement and shall have no further rights or
interests under this Agreement; provided that a Member who makes a
disposition other than in compliance with the terms of this Agreement
shall remain liable to the Company and the other Members for any
damages resulting from such transfer.
11. PURCHASE PRICE
Where any provision of this Agreement provides that the purchase price shall be
determined by this Section 11, the purchase price shall be equal to the fair
market value of the Membership Interest to be sold, determined in accordance
with the following:
a. MUTUAL AGREEMENT. The selling party and the purchasing party
shall, for a period of fifteen (15) days after the occurrence of the
event which triggered the purchase option (except in the case of death,
where such 15-day period shall commence upon the later to occur of (i)
the appointment of the personal representative of the Deceased Member
or (ii) sixty (60) days after the death of the Deceased Member),
attempt to mutually agree upon the fair market value of the Membership
Interest to be sold. If the selling party and the purchasing party are
not able to agree within this fifteen (15) day period, fair market
value shall be determined by appraisal.
b. APPRAISAL. For a period of seven (7) days following expiration
of the 15-day period specified in Section 11(a) above, the selling
party and the purchasing party shall attempt to mutually agree upon an
appraiser. If the parties agree upon the identity of the appraiser, the
appraiser shall determine the fair market value of the Membership
Interest to be sold, and the value determined by such appraiser shall
be the purchase price. If the parties are not able to reach agreement
within such 7-day period, each shall within seven (7) days thereafter
identify an appraiser. If one party fails to identify an appraiser
within such 7-day period, the appraiser identified by the other party
shall determine the fair market value of the Membership Interest to be
sold, and the value determined by such appraiser shall be the purchase
price. If both parties identify an appraiser within such 7-day period,
the two appraisers shall select a third appraiser and the third
appraiser shall determine the fair market value of the Membership
Interest to be sold. The value determined by such third appraiser shall
be the purchase price. The costs and expense of the appraiser(s) shall
be paid one-half by the selling party and one-half by the purchasing
party.
c. DETERMINATION OF FAIR MARKET VALUE. The fair market value of a
Membership Interest shall be determined without application of minority
interest discounts. Thus, the fair market value of the Membership
Interest of a Member in the Company shall be determined by appraising
the fair market value of the Company as a whole, and multiplying the
result by a fraction, the numerator of which is the number of
membership interest units represented by the Membership Interest to be
sold, and the denominator of
- 18 -
which is the total number of membership interest units owned by all
Members of the Company.
12. PAYMENT TERMS
Unless otherwise agreed to by the parties, where any provision of this Agreement
provides that the payment terms shall be as specified this Section 12, the
purchase price shall be payable to the Transferring Member or his successor or
legal representative as follows:
a. the greater of (i) twenty percent (20%) of the purchase price,
or (ii) where the Membership Interest of a Deceased Member is being
purchased and the purchasing party is the beneficiary of a life
insurance policy on the Deceased Member, the amount of such life
insurance proceeds received by the purchasing party (not to exceed the
purchase price), shall be payable in cash or certified funds at the
closing, and
b. the remainder shall be payable by delivery of a five-year
promissory note, the terms of which shall be as set forth in attached
Exhibit B. Where a purchasing party gives such a note, the purchasing
party shall pledge the Membership Interest then purchased to secure
repayment of the note in accordance with and subject to a pledge
agreement containing terms and conditions substantially as provided on
attached Exhibit C.
13. DISSOLUTION
a. DISSOLUTION EVENTS. Except as otherwise specifically provided
herein, the Company shall not be dissolved or required to be wound up
upon the occurrence of any event set forth in Section 322B.80, Subd.
1(5) of the Act and such events shall not trigger an event of
dissolution of the Company. In addition to as otherwise required by
this Agreement, the Company shall be dissolved and its business wound
up upon the earliest to occur of the following events:
i. Members representing a majority of the voting power
of all Membership Interests shall agree in writing that the
Company shall be dissolved or shall vote, at a duly called and
held meeting of the Members of the Company, in favor of the
dissolution of the Company;
ii. All assets of the Company shall have been distributed
to its members as authorized by the Board of Governors of the
Company;
iii. The sale of all or substantially all of the Company's
assets, except that a deferred payment sale of such assets
shall not dissolve the Company and the Company shall continue
in existence until the last day of the calendar year in which
it shall have received the full amount of principal and
interest which it is entitled to receive with respect to such
deferred payment sale, whereupon the Company shall be
dissolved; and
- 19 -
iv. The occurrence of any event which, under the laws of
the State of Minnesota and in spite of the terms of this
Agreement, shall cause the dissolution of the Company.
b. SALE OF ASSETS. Upon any dissolution requiring the winding up
of the business of the Company, the Board of Governors will appoint a
person to handle the liquidation of the assets of the Company (the
"Liquidator"). The Board of Governors may replace the Liquidator at any
time. The method, manner and timing of the liquidation of the assets of
the Company will be left to the discretion of the Board of Governors
and the Liquidator.
c. CONTRACTUAL OBLIGATIONS. The dissolution of the Company shall
neither release nor relieve any of the Members of their contractual
obligations.
14. DISSOLUTION PROCEDURES
In the event of dissolution of the Company pursuant to Section 13 of this
Agreement or otherwise, the Company name, goodwill or similar intangible assets,
together with all other assets of the Company business, shall be sold and
distributed in the following order:
a. First, to the payment of the debts, liabilities and
obligations of the Company (including any loans or advances that may
have been made by the Members to the Company) and to the costs and
expenses of the liquidation;
b. Next, to the establishment of such reserves, if any, deemed
reasonably necessary for any contingent or unforeseen debts,
liabilities, or obligations of the Company; and
c. Next, the balance shall be distributed to the Members as
provided in Section 5 above.
15. REMEDIES
In view of the purposes of this Agreement, the Members acknowledge that money
damages in the event of a default in the performance of any provision hereof may
be inadequate, and accordingly, any Member shall have the right, in addition to
any other remedies available, to apply for and receive from any court of
competent jurisdiction, equitable relief by way of restraining order, injunction
or otherwise, prohibitory or mandatory, to prevent a breach of the terms of this
Agreement or by way of specific performance to enforce performance of the terms
of this Agreement, or to rescission thereof, plus reimbursement for costs,
including reasonable attorneys' fees, incurred in the securing of such relief.
However, such right of equitable relief shall not be construed to be in lieu of
the right to seek the remedy at law.
16. NOTICES
All notices, offers, and communications from any party to another party shall be
in writing, and shall be considered to have been duly given or served if sent by
first class, certified or registered mail, return receipt requested, postage
prepaid, to the party at his or its address as set forth
- 20 -
below, or to such other address as such party may hereafter designate by written
notice to the other parties:
a. If to the Company, or to the Board of Governors, to the
attention of such party at 000 Xxxx Xxxxxxxx Xxxxxx, Xx. Xxxx,
Xxxxxxxxx 00000-0000.
b. If to any Member, to the attention of such Member at the
address specified on the attached signature page for such Member.
Notice shall be deemed to be received, whether actually received or not, two (2)
business days after it has been deposited in the United States mail, unless
actually received prior thereto.
17. MISCELLANEOUS
a. ACKNOWLEDGMENT. Each covenant and agreement on the part of one
party is understood and agreed to constitute an essential part of the
consideration for each covenant and agreement on the part of the other
party.
b. WAIVER. The waiver by any party of the breach of any provision
of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach of such or any other provision.
c. SEVERABILITY. If any part of this Agreement or any part of any
provision hereof shall be adjudicated to be void or invalid, then the
remaining provisions hereof not specifically so adjudicated to be
invalid shall be enforced to the fullest extent permitted.
d. GOVERNING LAW. This Agreement shall be subject to and governed
by the laws of the State of Minnesota.
e. HEADINGS. The headings of the Sections of this Agreement are
for convenience of reference only and do not form a part hereof and in
no way interpret or construe such Sections.
f. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the heirs, personal representatives, successors and
permitted assigns of the respective parties.
g. ENTIRE AGREEMENT/AMENDMENT. This Agreement contains the entire
agreement of the parties. It may not be changed orally but only by an
agreement in writing signed by the party against whom enforcement of
any waiver, change, modification, extension or discharge is sought.
Notwithstanding the foregoing, the Board of Governors of the Company
may authorize and effect amendments to this Agreement and such
amendments shall be valid and binding on all parties if such amendments
are entered into for purposes of documenting and effecting the
admission of a new member to the Company, the withdrawal or other
removal of a member from the Company or a change in the relative
membership interests of the members of the Company.
- 21 -
h. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same instrument.
i. ACQUISITIONS OF MEMBERSHIP INTEREST BY THE COMPANY. The
parties hereto understand and agree that any purchase of a Membership
Interest by the Company shall be subject to the Company's ability to
comply with the provisions of Minnesota Statutes, Section 322B.54, as
amended, with respect to such purchase.
j. PREPARATION OF AGREEMENT. Winthrop & Weinstine, P.A. has
drafted this Agreement at the request of the Company. By signing this
Agreement, the Members acknowledge that they have been advised that
Winthrop & Weinstine, P.A. is not representing them individually and
that their interests under this Agreement may now or hereafter be
adverse to or in conflict with the interests of the Company and/or with
each other. The Members further acknowledge that Winthrop & Weinstine,
P.A. has encouraged them to seek separate counsel because of potential
conflicts of interest which exist, or which may arise in the future,
and that the Members have in fact received or have had the opportunity
to receive separate counsel.
[THE REMAINDER OF THIS PAGE HAS INTENTIONALLY BEEN LEFT BLANK.
SIGNATURES APPEAR ON THE FOLLOWING PAGE(s).]
- 22 -
[SIGNATURE PAGE TO THAT CERTAIN MEMBER CONTROL AGREEMENT OF AUTOMATION,
MANUFACTURING & ROBOTIC TECHNOLOGIES, LLC, DATED OCTOBER 31, 2003.]
IN WITNESS WHEREOF, the undersigned have executed this signature page effective
as of the day and year indicated on the first page of the Automation,
Manufacturing & Robotic Technologies, LLC Member Control Agreement.
MEMBERS: COMPANY:
Automation, Manufacturing & Robotic Technologies, LLC
By: /s/ Xxxxxxx Xxxx By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------- -----------------------------
Xxxxxxx X. Xxxx, President Xxxxxxx Xxxxxxxx, President
000 Xxxx Xxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000-0000
/s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxx
Winthrop & Weinstine, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
--------------------------------------
Xxxxxxxx X. Xxxxx
Divine, Xxxxxxxx & Xxxxx, Ltd.
3000 Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
/s/ Xxxxxxx X. Xxxx
--------------------------------------
Xxxxxxx X. Xxxx
Winthrop & Weinstine, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
/s/ Xxxxxxx Xxxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxx Xxxxxxx, XX 00000
- 23 -
EXHIBIT A
MEMBERSHIP INTEREST MEMBERSHIP INTEREST
NAME OF MEMBER UNITS OWNED PERCENTAGE
-------------- ----------- ----------
Aero Systems Engineering, Inc. 510 51%
Xxxxxxx Xxxxxxxx 400 40%
Xxxxxx X. Xxxxxxxx 30 3%
Xxxxxxxx X. Xxxxx 30 3%
XXXXXXX X. XXXX 30 3%
TOTAL 1,000 100%
- 24 -
EXHIBIT B
PROMISSORY NOTE
$__________ _____________, Minnesota
__________________, 20___
1. FOR VALUE RECEIVED, ________________________________ (the "Borrower"), hereby
promises to pay to the order of ____________________________________________
(the "Holder"), at such location as the Holder may direct, the principal sum of
____________________________ and ___/100 Dollars ($__________) together with
interest on the unpaid principal balance accruing as of the date hereof at a
rate equal to the announced prime lending rate of U.S. Bank National Association
as the same may change from time to time and be adjusted in the manner and at
the times hereinafter provided for.
2. The rate of interest due hereunder shall initially be determined as of the
date hereof and shall be adjusted on the first anniversary of the date of this
Note and every 12 months thereafter (each such date hereinafter being referred
to as an "Adjustment Date"). All such adjustments to said rate of interest shall
be made and become effective on the next corresponding Adjustment Date and said
rate of interest as adjusted shall remain in effect until the next Adjustment
Date. Interest hereunder shall be computed on the basis of a year of 365 days
and charged for actual days principal is unpaid.
3. This Note shall be due and payable in twenty (20) as nearly equal as possible
consecutive quarterly installments of principal and accrued interest commencing
on the ______ day of __________, 20__, and continuing on the same day of each
third calendar month thereafter until and including ______________, 20__.
4. All payments made by the Borrower shall, at the option of the Holder, be
applied first to costs of collection, if any, second to accrued interest and the
remainder thereof to principal.
5. The Borrower promises to pay all costs of collection, including but not
limited to, attorneys' fees, paid or incurred by the Holder on account of such
collection, whether or not suit is filed with respect thereto and whether or not
such costs are paid or incurred, or to be paid or incurred, prior to or after
the entry of judgment.
6. This Note may be prepaid at any time, either in whole or in part, without
premium or penalty.
7. As used herein, the term "Event of Default" shall mean and include any one or
more of the following events:
a. The Borrower shall fail to pay, when due, any amounts required
to be paid by the Borrower under this Note;
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b. The Borrower shall file a petition in bankruptcy or for an
arrangement pursuant to any present or future state or federal
bankruptcy act or under a similar federal or state law, or shall be
adjudicated a bankrupt or insolvent, or shall make a general assignment
for the benefit of creditors, or shall be unable to pay its debts
generally as they become due; or if an order for relief under any
present or future federal bankruptcy act or similar state or federal
law shall be entered against the Borrower; or if a petition or answer
requesting or proposing the entry of such order for relief or the
adjudication of the Borrower as a debtor or a bankrupt under a present
or future state or federal bankruptcy act or a similar federal or state
law shall be filed in any court and such petition and answer shall not
be discharged or denied within thirty (30) days after the filing
thereof; or if a receiver, trustee or liquidator of all or
substantially all of the assets of the Borrower shall be appointed in
any proceeding brought against the Borrower and shall not be discharged
within thirty (30) days of such appointment; or if the Borrower shall
consent to or acquiesce in such appointment; or if any property of the
Borrower shall be levied upon or attached in any proceeding;
c. Final judgment(s) for the payment of money shall be rendered
against the Borrower and shall remain undischarged for a period of
thirty (30) days during which execution shall not be effectively
stayed; or
d. The Borrower shall be or become insolvent (whether in the
equity or bankruptcy sense) or, if an individual, shall die.
8. Upon the occurrence of an Event of Default, the Holder shall give
written notice to the Borrower of such default, specifying the terms thereof,
and the Borrower shall be accorded ten (10) days from the date of the receipt of
such notice within which to cure such default. Such written notice shall be
delivered in writing to Borrower or sent by certified or registered mail to the
following address:
______________________________
______________________________
______________________________
9. Upon the occurrence of any Event of Default which is not cured by the
Borrower, and at any time and from time to time thereafter, the Holder shall
have the right to set off any and all amounts due hereunder by the Borrower to
the Holder against any indebtedness or obligation of the Holder to the Borrower.
Upon the occurrence of an Event of Default and at any time thereafter, the
unpaid principal balance hereof plus accrued interest hereon plus all other
amounts due hereunder shall, at the option of the Holder, be immediately due and
payable without notice or demand.
10. Demand, presentment, protest and notice of nonpayment and dishonor of
this Note are hereby waived.
11. This Note shall be governed by and construed in accordance with the
laws of the State of Minnesota.
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12. This Note is secured by that certain Pledge Agreement of even date
herewith between the Borrower and the Holder.
BORROWER
By:_________________________________________
Its:_____________________________________
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EXHIBIT C
PLEDGE AGREEMENT
THIS AGREEMENT, made and entered into this ____ day of ____________, 20__, by
and between __________________________ (the "Pledgor") and ____________________
___________ (the "Pledgee").
WHEREAS, on the date hereof, Pledgee has made certain financial accommodations
to Pledgor under and pursuant to that certain Member Control Agreement (the
"Member Control Agreement") dated the 31st day of October, 2003, by and among
Pledgor, Pledgee and Automation, Manufacturing & Robotic Technologies, LLC, a
Minnesota limited liability company (the "Company"); and
WHEREAS, under and pursuant to the Member Control Agreement, Pledgor is
obligated to pledge certain membership interests in the Company to the Pledgee
as security for the full and complete performance of Pledgor's obligations under
and pursuant to that certain Promissory Note of even date herewith (the "Note")
in the original principal amount of _______________________ and ___/100 Dollars
($___________) (the "Obligations").
NOW, THEREFORE, in consideration of the foregoing premises, and further in
consideration of the extensions of credit by Pledgee to Pledgor on the date
hereof, Pledgor and Pledgee hereby agree as follows:
1. PLEDGE. In consideration of Pledgee extending the above-referenced
financial accommodations to Pledgor, receipt of which is hereby acknowledged,
Pledgor hereby grants a security interest to the Pledgee in the membership
interests described on Exhibit A attached hereto evidencing the number of
Membership Interests in the Company specified in said Exhibit A (said membership
interests are hereinafter collectively referred to as the "Pledged Membership
Interests"). Pledgor shall execute and deliver to Pledgee any and all documents
and instruments as Pledgee may determine to be necessary in order to perfect and
maintain the security interest granted hereunder in and to the Pledged
Membership Interests.
2. DISTRIBUTIONS. During the term of this pledge, and provided no Event of
Default (as defined below) has occurred and is then continuing, Pledgor shall be
entitled to receive all distributions and other amounts payable on or with
respect to the Pledged Membership Interests.
3. VOTING RIGHTS. During the term of this pledge, and provided no Event of
Default has occurred and is then continuing, Pledgor shall have the right to
vote the Pledged Membership Interests.
4. REPRESENTATIONS. Pledgor warrants and represents that there are no
restrictions upon the transfer or pledge of any of the Pledged Membership
Interests, other than as set forth in the Member Control Agreement, and that
Pledgor has the right to transfer and pledge such Membership Interests free and
clear of any security interests or other liens or encumbrances whatsoever and
without obtaining the consent of any third party or, if such consent is
required, it has been obtained on or prior to the date hereof.
5. ADJUSTMENTS. In the event that during the term of this pledge any
reclassification, readjustment, or other change is declared or made in the
capital structure of the entity which has
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issued any of the Pledged Membership Interests, all new, substituted, and
additional Membership Interests, or other securities, issued by reason of any
such change shall be delivered to and held by Pledgee under the terms of this
Pledge Agreement in the same manner as the Membership Interests originally
pledged hereunder.
6. WARRANTS AND RIGHTS. In the event that during the term of this Pledge
Agreement warrants or any other rights or options shall be issued in connection
with the Pledged Membership Interests, such warrants, rights, and options shall
be immediately assigned and delivered by Pledgee to Pledgor, and if exercised by
Pledgor all new Membership Interests or other securities so acquired by Pledgor
shall be immediately assigned and delivered to Pledgee, in each case, to be held
under the terms of this Pledge Agreement in the same manner as the Membership
Interests originally pledged hereunder.
7. RELEASE OF PLEDGED MEMBERSHIP INTERESTS. Upon the complete performance
of the Obligations, Pledgee shall release all of its rights in and to the
Pledged Membership Interests hereunder.
8. DEFAULT. Upon the occurrence of an Event of Default, as that term is
defined in the Note, which is not cured in the manner provided in Section 7 of
the Note, and at any time thereafter, Pledgee shall have the rights and remedies
provided in the Uniform Commercial Code in force in the State of Minnesota and,
in this connection, Pledgee may, upon ten (10) days' written notice to Pledgor
which notice shall be deemed commercially reasonable for purposes of the Uniform
Commercial Code as adopted by the State of Minnesota, and without liability for
any diminution in price which may have occurred, sell all the Pledged Membership
Interests in such manner and for such price as the Pledgee may determine.
Pledgee shall be free to purchase all or any part of the Pledged Membership
Interests. Out of the proceeds of any sale, Pledgee may retain an amount equal
to the principal and accrued interest then due on the Note plus the amount of
the expenses of sale and costs of collection incurred by Pledgee with respect to
the Obligations, and shall pay any balance of such proceeds to Pledgor. In the
event that the proceeds of any sale are insufficient to cover the principal and
interest of the Note plus expenses of the sale and costs of collection, Pledgor
shall remain liable to Pledgee for any deficiency.
9. WAIVER. No delay or failure by the Pledgee in the exercise of any right
or remedy shall constitute waiver thereof, and no single or partial exercise by
the Pledgee of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy.
10. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been given when
personally delivered or deposited in the United States mail, mailed first class,
registered or certified, postage prepaid, addressed to the last known address of
such party.
11. GOVERNING LAW. This Pledge Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota.
12. TAXES. Pledgor shall be responsible for the payment of all state and
federal taxes payable as a result of any sale of all or any number of the
Pledged Membership Interests pursuant to Section 8 hereof.
29
IN WITNESS WHEREOF, the Pledgor and the Pledgee have executed and delivered this
Pledge Agreement as of the date and year first above-mentioned.
PLEDGOR:
____________________________________________
PLEDGEE:
____________________________________________
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