GREAT PLAINS SOFTWARE U.K., LLC
LIMITED LIABILITY COMPANY AGREEMENT
FEBRUARY 20, 1996
TABLE OF CONTENTS
Article I.
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Name. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Principal Place of Business . . . . . . . . . . . . . . . 1
Section 1.3. Names and Addresses of Members. . . . . . . . . . . . . . 2
Section 1.4. Term of Existence . . . . . . . . . . . . . . . . . . . . 2
Section 1.5. Agent for Service of Process. . . . . . . . . . . . . . . 2
Section 1.6. Duties of Members . . . . . . . . . . . . . . . . . . . . 2
Section 1.7. Duties of Managers. . . . . . . . . . . . . . . . . . . . 2
Article II.
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Article III.
Purpose and Character of the Business. . . . . . . . . . . . . . . . . 4
Article IV.
Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.1. Place and Time of Meetings. . . . . . . . . . . . . . . . 4
Section 4.2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . 4
Section 4.3. Special Meetings. . . . . . . . . . . . . . . . . . . . . 4
Section 4.4. Quorum, Adjourned Meetings. . . . . . . . . . . . . . . . 4
Section 4.5. Organization. . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.6. Order of Business . . . . . . . . . . . . . . . . . . . . 5
Section 4.7. Voting. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.8. Inspectors of Election. . . . . . . . . . . . . . . . . . 5
Section 4.9. Certain Actions . . . . . . . . . . . . . . . . . . . . . 6
Section 4.10. Notices of Meetings. . . . . . . . . . . . . . . . . . . 6
Section 4.11. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.12. Waiver of Notice . . . . . . . . . . . . . . . . . . . . 7
Section 4.13. Consents . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.14. Member List. . . . . . . . . . . . . . . . . . . . . . . 7
Article V.
New Members; Units; Securities . . . . . . . . . . . . . . . . . . . . 7
Section 5.1. Admission of New Members. . . . . . . . . . . . . . . . . 7
Section 5.2. Issuance of Units . . . . . . . . . . . . . . . . . . . . 8
Article VI.
Management and Operation of Company Business . . . . . . . . . . . . . . . 8
Section 6.1. Authority of the Members. . . . . . . . . . . . . . . . . 8
Section 6.2. Board of Managers . . . . . . . . . . . . . . . . . . . . 8
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Section 6.3. Number, Qualification; Term of Office; Vote . . . . . . . 8
Section 6.4. Initial Board . . . . . . . . . . . . . . . . . . . . . . 9
Section 6.5. Place of Meetings . . . . . . . . . . . . . . . . . . . . 9
Section 6.6. Special Meetings. . . . . . . . . . . . . . . . . . . . . 9
Section 6.7. Meetings Held Upon Member Demand. . . . . . . . . . . . . 9
Section 6.8. Adjournments. . . . . . . . . . . . . . . . . . . . . . . 9
Section 6.9. Notice of Meetings. . . . . . . . . . . . . . . . . . . . 9
Section 6.10. Quorum . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.11. Absent Members . . . . . . . . . . . . . . . . . . . . . 10
Section 6.12. Conference Communications. . . . . . . . . . . . . . . . 10
Section 6.13. Removal. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.14. Acts of Managers . . . . . . . . . . . . . . . . . . . . 10
Section 6.15. Written Action . . . . . . . . . . . . . . . . . . . . . 10
Section 6.16. Proxies. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.17. Committees . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.18. No Fiduciary Duty. . . . . . . . . . . . . . . . . . . . 11
Section 6.19. Compensation . . . . . . . . . . . . . . . . . . . . . . 11
Article VII.
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.1. Number. . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.2. Election, Term of Office and Qualifications . . . . . . . 11
Section 7.3. Removal and Vacancies . . . . . . . . . . . . . . . . . . 11
Section 7.4. Chair . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.5. President . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.6. Secretary . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.7. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 7.8. Duties of Other Officers. . . . . . . . . . . . . . . . . 12
Section 7.9. Compensation. . . . . . . . . . . . . . . . . . . . . . . 13
Article VIII.
Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.1. Indemnification . . . . . . . . . . . . . . . . . . . . . 13
Section 8.2. Indemnification Procedures; Survival. . . . . . . . . . . 14
Article IX.
Certificates; Transfers. . . . . . . . . . . . . . . . . . . . . . . . 15
Section 9.1. Certificates for Units. . . . . . . . . . . . . . . . . . 15
Section 9.2. Loss of Certificates. . . . . . . . . . . . . . . . . . . 15
Section 9.3. Registration, Transfer and Exchange . . . . . . . . . . . 15
Section 9.4. Restriction on Transfers. . . . . . . . . . . . . . . . . 16
Section 9.5. Transfer by Legal Process . . . . . . . . . . . . . . . . 16
Section 9.6. Resignation . . . . . . . . . . . . . . . . . . . . . . . 16
Section 10.1. Books; Place; Access . . . . . . . . . . . . . . . . . . 16
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Section 10.2. Financial Information. . . . . . . . . . . . . . . . . . 16
Section 10.3. Tax Information. . . . . . . . . . . . . . . . . . . . . 17
Section 10.4. Tax Elections. . . . . . . . . . . . . . . . . . . . . . 17
Section 10.5. Tax Matters Partner. . . . . . . . . . . . . . . . . . . 17
Article XI.
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 11.1. Procedure Applicable to All Amendments . . . . . . . . . 19
Section 11.2. Voting Requirement . . . . . . . . . . . . . . . . . . . 19
Section 11.3. Approval by Members. . . . . . . . . . . . . . . . . . . 19
Article XII.
Approval of Reorganizations and Bankruptcy . . . . . . . . . . . . . . 20
Article XIII.
Dissolution and Liquidation. . . . . . . . . . . . . . . . . . . . . . 20
Section 13.1. Events Causing Dissolution . . . . . . . . . . . . . . . 20
Section 13.2. Continuation of Business . . . . . . . . . . . . . . . . 21
Section 13.3. Liquidation and Winding Up . . . . . . . . . . . . . . . 21
Section 13.4. Compliance with Timing Requirements of Regulations . . . 21
Article XIV.
Representations, Warranties of the Members . . . . . . . . . . . . . . 22
Section 14.1. Representations and Warranties of the Members. . . . . . 22
Article XV.
Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 15.1. Initial Capital Contributions. . . . . . . . . . . . . . 23
Section 15.2. No Right to Return of Contribution.. . . . . . . . . . . 23
Section 15.3. Additional Capital Contributions . . . . . . . . . . . . 23
Section 15.4. Loans to the Company; No Interest on Capital . . . . . . 23
Section 15.5. Creditor's Interest in the Company . . . . . . . . . . . 23
Section 15.6. Liability of Members . . . . . . . . . . . . . . . . . . 24
Section 15.7. Capital Accounts . . . . . . . . . . . . . . . . . . . . 24
Article XVI.
Allocation of Income, Gains and Losses;
Distributions to Members . . . . . . . . . . . . . . . . . . . . . . . 25
Section 16.1. Allocation of Income, Profits, Gains, Losses and Credits 25
Section 16.2. Other Allocation Rules . . . . . . . . . . . . . . . . . 25
Section 16.3. Limitation on Loss Allocation. . . . . . . . . . . . . . 25
Section 16.4. Special Allocations. . . . . . . . . . . . . . . . . . . 26
Section 16.5. Curative Allocations . . . . . . . . . . . . . . . . . . 27
Section 16.6. Tax Allocations: Section 704(c) of the Code . . . . . . 28
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Section 16.7. Distributions to Members . . . . . . . . . . . . . . . . 28
Article XVII.
Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 17.1. Additional Actions and Documents . . . . . . . . . . . . 28
Section 17.2. Arbitration. . . . . . . . . . . . . . . . . . . . . . . 28
Section 17.3. Notice . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 17.4. Severability . . . . . . . . . . . . . . . . . . . . . . 29
Section 17.5. Survival . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 17.6. Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 17.7. Exercise of Rights . . . . . . . . . . . . . . . . . . . 29
Section 17.8. Binding Effect . . . . . . . . . . . . . . . . . . . . . 29
Section 17.9. Limitation on Benefits of this Agreement. . . . . . . . 29
Section 17.10. Waiver of Partition. . . . . . . . 30
Section 17.11. Entire Agreement . . . . . . . . . 30
Section 17.12. Pronouns . . . . . . . . . . . . . 30
Section 17.13. Headings . . . . . . . . . . . . . 30
Section 17.14. Governing Law. . . . . . . . . . . 30
Section 17.15. Execution in Counterparts. . . . . 30
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LIMITED LIABILITY COMPANY AGREEMENT
OF
GREAT PLAINS SOFTWARE U.K., LLC
THIS LIMITED LIABILITY COMPANY AGREEMENT made and entered into as of
this 20th day of FEBRUARY 1996, by and between the persons named on Schedule A
attached hereto (hereinafter, such persons are referred to collectively as the
"Members" and individually as a "Member");
WITNESSETH THAT:
WHEREAS, the undersigned have caused the formation of Great Plains
Software U.K., LLC, a Delaware limited liability company (the "Company"), of
which the undersigned constitute all of the initial Members; and
WHEREAS, the undersigned have received and approved the business plan
of the Company;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged, the Members agree as
follows:
Article I.
GENERAL
The parties hereto do hereby agree that this Agreement shall
constitute the "limited liability company agreement" of the Company within the
meaning of Section 18-101(7) of the Delaware Limited Liability Company Act, as
amended (the "Act"), and hereby adopt, approve and ratify the execution and
filing in the office of the Secretary of State of the State of Delaware of the
certificate of formation of the Company by Xxxxxxxx X. Xxxxxxx, an individual
resident of the State of Minnesota, on February 20, 1996 (the "Certificate of
Formation") and acknowledge, approve and ratify his designation as an
"authorized person" of the Company in the Certificate of Formation as
contemplated by Section 18-201(a) of the Act. The parties agree that the
Agreement shall be effective as of the date of filing of the Certificate of
Formation in the office of the Secretary of State and that they shall comply
with the provisions and requirements of the Act and that the Act shall govern
the rights, duties and obligations of the Members, except as otherwise expressly
stated herein.
Section 1.1. NAME. The name of the Company shall be and the
business shall be conducted under the name of "Great Plains Software U.K., LLC"
Section 1.2. PRINCIPAL PLACE OF BUSINESS. The location of the
principal place of business of the Company shall be Knyvett House, The
Causeway, Staines, Xxxxxxxxx XX000XX or such other place in the United Kingdom
as the Board of Managers may from time to time determine (the "Principal
Office").
Section 1.3. NAMES AND ADDRESSES OF MEMBERS. The names and
addresses of the Members are as set forth in Schedule A.
Section 1.4. TERM OF EXISTENCE. The Company shall be formed as of
the time of the filing of the Certificate of Formation in the Office of the
Secretary of State of Delaware and its existence shall continue until the
fiftieth anniversary of the filing of the Certificate of Formation of the
Company, unless earlier terminated, dissolved or liquidated in accordance with
the provisions of this Agreement.
Section 1.5. AGENT FOR SERVICE OF PROCESS. The name and address of
the agent for service of process is, until changed by the Board of Managers, The
Corporate Trust Company, located at Corporation Trust Center, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000.
Section 1.6. DUTIES OF MEMBERS. The only duties of the Members to
the Company or to each other in respect of the Company shall be those
established in this Agreement, and there shall be no other express or implied
duties of the Members to the Company or to each other in respect of the Company.
Section 1.7. DUTIES OF MANAGERS. Each Manager shall owe duties of
care and loyalty to the Company and the Members. A Manager shall not be
personally liable to the Company or the Members for monetary damages for
breach of fiduciary duty as a Manager except (a) for any breach of the
Manager's duty of loyalty to the Company or the Members; (b) for acts or
omissions not in good faith or that involve intentional misconduct or a
knowing violation of law; or (c) for any transaction from which such Manager
derived an improper personal benefit.
Article II.
DEFINITIONS
Unless the context otherwise specifies or requires, the terms defined
in this Article II shall, for the purposes of this Agreement, have the meanings
herein specified. Certain other capitalized terms used herein are defined
elsewhere in the Agreement.
"ACT" is defined in the introduction to Article I.
"AGREEMENT" means this Limited Liability Company Agreement, as it may
be amended or supplemented from time to time.
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"BOARD OF MANAGERS" means the Board of Managers of the Company
established pursuant to Article VI.
"CAPITAL ACCOUNTS" means the capital accounts maintained by the
Company for each Member in respect of such Member's Units. The Capital Accounts
shall be maintained in accordance with the capital accounting rules of Section
704 of the Code.
"CAPITAL CONTRIBUTION" means the amount of money or the fair market
value of any property (as agreed by the Members as of the date of contribution)
contributed to the Company by any Member.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder. All references in this Agreement
to a section of the Code or the Treasury Regulations shall be considered to
include any subsequent amendment or replacement of that section.
"COMPANY" means Great Plains Software U.K., LLC, the Delaware limited
liability company formed pursuant to the filing of the Certificate of Formation
in Delaware and the terms of this Agreement.
"COMPANY ASSETS" means all assets and property, whether tangible or
intangible and whether real, personal or mixed, at any time owned by the
Company.
"FISCAL YEAR" means the 12-month accounting period of the Company
ending on May 31 of each year, or such other date as the Board of Managers may
determine from time to time.
"MANAGER" is defined in Section 6.3.
"MEMBERS" means the Persons executing this Agreement until they cease
to be Members and the Persons which are hereafter admitted to the Company as
Members in accordance with this Agreement.
"MEMBER SUPERMAJORITY" means 60% of the number of Units entitled to
vote.
"NAMED OFFICERS" is defined in Section 7.1.
"PERSON" means any natural person, corporation, limited liability
company, association, partnership (whether general or limited), joint venture,
proprietorship, governmental agency, trust, estate, association, custodian,
nominee or any other individual or entity, whether acting in an individual,
fiduciary, representative or other capacity.
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"PRINCIPAL OFFICE" is defined in Section 1.2.
"REORGANIZATION" means (x) any consolidation or merger of the Company
with or into any other Person, whether or not the Company is the surviving
entity, (y) any exchange or other transaction pursuant to which outstanding
Units are converted into other securities, property or money or (z) any sale,
transfer or other disposition of all or substantially all of the Company's
assets in a single transaction or a series of related transactions. A
dissolution or liquidation of the Company pursuant to Article XIII will not
constitute a "Reorganization" within the meaning of this Agreement.
"TRANSFER" is defined in Section 9.4.
"TREASURY REGULATIONS" or "TREAS. REG." refers to the regulations
promulgated by the United States Treasury Department under the Code.
"UNITS" means the interest of the Members in the Company, which Units
represent the ownership interest of the Members in the Company.
Article III.
PURPOSE AND CHARACTER OF THE BUSINESS
The purpose and character of the business of the Company shall be to
sell and distribute the products of Great Plains Software, Inc., a Minnesota
corporation, in the United Kingdom and to undertake and carry on any and all
other lawful business, purpose or activity permitted under the Act and approved
by the Board of Managers.
Article IV.
MEMBERS
Section 4.1. PLACE AND TIME OF MEETINGS. Meetings of the Members
shall be held at the Principal Office or such other location as decided by the
Members from time to time. In the absence of a designation of time, meetings
shall be held at 10:00 a.m. Any or all Members may participate in any meeting
of Members by any means of conference communication through which all Members
may simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, Members
participating pursuant to this provision shall be deemed present in person at
the meeting, and the place of the meeting shall be the place of origination of
the conference communication.
Section 4.2. ANNUAL MEETINGS. The annual meeting of the Members for
the appointment of Managers and for the transaction of any other business as
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may properly come before the meeting shall be held in April of each year on such
business day as the Board of Managers shall determine from time to time.
Section 4.3. SPECIAL MEETINGS. Special meetings of the Members for
any purpose or purposes shall be called by the Secretary at the written demand
of (x)a majority of all Managers, (y) the Chair or (z) Members owning not less
than 35% of the Units outstanding. Such demand shall state the purpose or
purposes of the proposed meeting. Within ten days after the Secretary shall
receive a proper demand to call a meeting, he or she shall cause a meeting to be
duly called on a business day determined by the Secretary within 70 days of the
date of receipt of such request. Business transacted at any special meeting
shall be limited to the purpose or purposes stated in the demand.
Section 4.4. QUORUM, ADJOURNED MEETINGS. Members owning a majority
of the Units outstanding shall constitute a quorum for the transaction of
business at any annual or special meeting of the Members. If a quorum is not
present at a meeting, the Members present and entitled to vote shall adjourn to
such day as they shall agree upon by a vote of the majority in voting interest
present and entitled to vote. Notice of any adjourned meeting need not be given
if the date, time and place thereof are announced at the meeting at which the
adjournment is taken. At adjourned meetings at which a quorum is present, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If a quorum is present, the Members may continue to
transact business until adjournment notwithstanding the withdrawal of enough
Members to leave less than a quorum.
Section 4.5. ORGANIZATION. At each meeting of the Members, the
Chair or, in his or her absence, the chair chosen by a majority in voting
interest of the Members present and entitled to vote shall act as chair; and the
Secretary or, in his or her absence, any person whom the chair of the meeting
shall appoint, shall act as secretary of the meeting.
Section 4.6. ORDER OF BUSINESS. The order of business at each
meeting of the Members shall be determined by the chair of the meeting, but such
order of business may be changed by the vote of a majority in voting interest of
the Members present and entitled to vote.
Section 4.7. VOTING. Subject to any different voting rights that
may be established for any Unit or class or series of Units, each Member
entitled to vote at a meeting of Members or entitled to express consent in
writing to action without a meeting shall have one vote for each Unit having
voting rights registered in his, her or its name on the books of the Company.
All questions at a meeting shall be decided by a majority vote of the number of
Units entitled to vote represented at the
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meeting at the time of the vote except where otherwise required by the Act or
this Agreement.
Persons holding Units in a fiduciary capacity shall be entitled to
vote the Units so held. If Units stand of record in the names of two or more
persons, whether fiduciaries, members of a partnership, joint tenants, tenants
in common, tenants by the entirety or otherwise, or if two or more persons shall
have the same fiduciary relationship respecting the same Units, unless the
Secretary shall have been given written notice to the contrary and shall have
been furnished with a copy of the instrument or order appointing them or
creating a relationship wherein it is so provided, their acts with respect to
voting shall have the following effect: (i) if only one shall vote, his, her or
its act shall bind all; (ii) if more than one shall vote, the act of the
majority voting shall bind all; and (iii) if more than one shall vote, but the
votes shall be evenly split on any particular matter, then, except as otherwise
required by law, each person may vote the Units in question proportionately.
Section 4.8. INSPECTORS OF ELECTION. At each meeting of the
Members, the chair of such meeting shall appoint two inspectors of election, who
shall be natural persons. Each inspector of election so appointed shall execute
the duties of an inspector of election at such meeting with strict impartiality
and according to the best of his or her ability. Such inspectors of election
shall take charge of the ballots at such meeting and after the balloting on any
question shall count the ballots cast and make a report in writing to the
secretary of the meeting of the results. An inspector of election need not be a
Member, and any officer or employee of the Company may be an inspector of
election on any question other than a vote for or against his or her election to
any position with the Company or on any other question in which he or she may be
directly interested.
Section 4.9. CERTAIN ACTIONS. In addition to the actions specified
in other provisions of this Agreement, the following actions shall require the
approval or authorization of a Member Supermajority:
(a) The approval of any Reorganization, any other merger or
consolidation to which the Company or a Subsidiary is a party or the
acquisition of another business by the Company;
(b) The authorization or issuance of any additional Units;
(c) The purchase by the Company of any Unit or an agreement to do so;
PROVIDED, HOWEVER, that the Member whose Units are subject to purchase
shall have no vote in such matter;
(d) The granting of any material lien, charge or encumbrance upon any
of the Company's assets;
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(e) The borrowing of money;
(f) The making of any distributions to the Members; and
(g) The appointment of the certified public accountants and any
attorneys for the Company.
Section 4.10. NOTICES OF MEETINGS. Every Member shall furnish the
Secretary with a post office address at which notices of meetings and requests
for consents to action without a meeting and all other communications may be
mailed to him, her or it. A written notice of each annual and special meeting
of Members shall be given not less than ten nor more than 60 days before the
date of such meeting to each Member by delivering such notice to him, her or it
personally or depositing the same in the United States mail, postage prepaid,
directed to him, her or it at the post office address shown upon the records of
the Company. Service of notice is complete upon mailing. Personal delivery to
any officer of a corporation or association or to any member of a partnership is
delivery to such corporation, association or partnership. Every notice of a
meeting of Members shall state the place, date and hour of the meeting and the
purpose or purposes for which the meeting is called.
Section 4.11. PROXIES. Each Member entitled to vote at a meeting of
Members or consent to action without a meeting may authorize another Person or
Persons to act for him, her or it by proxy by an instrument executed in writing
and filed with the Secretary. If any such instrument designates two or more
Persons to act as proxies, any proxy may exercise all of the powers conferred by
such written instrument unless the instrument shall otherwise provide. No proxy
shall be valid for more than one year from the date of its execution. Subject
to the above, any proxy may be revoked if an instrument revoking it or a proxy
bearing a later date is filed with the Secretary.
Section 4.12. WAIVER OF NOTICE. Notice of any annual or special
meeting may be waived either before, at or after such meeting in writing signed
by the Member entitled to the notice. Attendance by a Member at a meeting shall
constitute a waiver of notice of such meeting, unless the Member objects at the
beginning of the meeting to the transaction of business because the meeting is
not lawfully called or convened, or objects before a vote on an item of business
because the item may not lawfully be considered at that meeting and does not
participate in the consideration of the item at that meeting.
Section 4.13. CONSENTS. Any action that may be taken at a meeting of
the Members may be taken without a meeting and without a vote but only pursuant
to the consent procedures of this Section 4.13. A majority of all Managers, the
Chair or Members owning not less than 35% of the Units outstanding may demand in
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writing that the Secretary request consents of the Members for any proper
purpose or purposes. Such demand shall state the purpose or purposes of the
proposed consents. Within ten days after the Secretary shall receive a proper
demand to request consents, he or she shall cause a request for consent and
related consent form to be mailed to each Member by delivering such documents to
him, her or it personally or depositing the same in the United States mail,
postage prepaid, directed to him, her or it at the post office address shown
upon the records of the Company. Any action shall be approved if consents to
such action in writing, setting forth the actions so taken, shall be signed by
the Members owning outstanding Units having not less than the minimum number of
votes that would be required to authorize or take such action at a meeting at
which all Units entitled to vote thereon were present and voted and filed with
the Secretary. Notice of the taking of the action without a meeting shall be
given to all Members. The action shall become effective upon the mailing of
such notice, but no earlier than five days after the date of mailing of requests
for such consents by the Secretary.
Section 4.14. MEMBER LIST. The Secretary shall prepare, at least ten
days before each meeting of Members and in connection with any request for
consents, a complete list of the Members entitled to vote at such meeting or
express consent, arranged in alphabetical order and showing the address of each
Member and the number of Units registered in the name of each Member. Such list
shall be open to the examination of any Member for any purpose germane to the
meeting or such consents, during ordinary business hours, for a period of at
least ten days prior to the meeting or in the case of consents after the mailing
of requests therefor, at the Principal Office. The list shall also be produced
and kept at the time and place of the meeting during the whole time thereof and
may be inspected by any Member who is present.
Article V.
NEW MEMBERS; UNITS; SECURITIES
Section 5.1. ADMISSION OF NEW MEMBERS. The Members may from time to
time admit additional Members to the Company upon the issuance of new Units
pursuant to Section 5.4 or upon a transfer in compliance with Section 9.4. All
Members shall be required to have an interest in the Company represented by one
or more Units. Unless otherwise authorized by the Members in accordance with
this Article V, all Units shall be of one class and series, entitled to vote and
with equal rights and preferences in all matters, and the profits and losses,
and distributions of cash or other assets, of the Company shall be allocated
among the Members of the Company in proportion to the number of Units held by
the Members. The Members, by amendment to this Agreement approved by not less
than a Member Supermajority, may fix (i) the relative rights and preferences of
different classes and series of the Units and (ii) may authorize the issuance of
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securities convertible into, or exchangeable for, and options, warrants and
rights to purchase, Units.
Section 5.2. ISSUANCE OF UNITS. The Members may issue additional
Units from time to time to existing or new Members. Units may be issued for any
consideration, including, without limitation, cash or other property, tangible
or intangible, received or to be received by the Company or services rendered or
to be rendered to the Company. At the time of authorization of the issuance of
additional Units, the Members shall state, by resolution, their determination of
the fair value to the Company in monetary terms of any consideration other than
cash for which Units are to be issued.
Unless the Members otherwise determine by a vote of not less than a
Member Supermajority, Members holding Units shall have the preemptive right to
subscribe for additional Units, securities convertible into or exchangeable for
Units, and options, warrants and rights to purchase Units. Upon any proposed
issuance of such securities, the Board of Managers shall give notice of the
proposed issuance to holders of Units, and such holders shall have the right to
subscribe for such securities for the cash purchase price stated in such notice
on a PRO RATA basis, with the right to oversubscribe for any securities that
would otherwise be unsubscribed because of the failure of one or more Members to
subscribe for their PRO RATA amount. Any securities remaining unsubscribed
after 30 days from the date of such notice may be sold at a cash purchase price
not less than the cash purchase price stated in such notice.
Article VI.
MANAGEMENT AND OPERATION OF COMPANY BUSINESS
Section 6.1. AUTHORITY OF THE MEMBERS. Except as otherwise
expressly provided herein, no Member shall have any authority to act for, or to
assume any obligations or responsibility on behalf of, or bind any other Member
or the Company. Each of the Members represents, warrants and agrees that it
shall disclose in writing to all third parties with whom such Member is in
contact concerning the affairs or the business of the Company that such Member
does not have any authority to act for, or to assume any obligations or
responsibilities on behalf of, the Company unless expressly authorized by the
Board of Managers.
Section 6.2. BOARD OF MANAGERS. The business and affairs of the
Company shall be managed by or under the authority of the Board of Managers,
except as otherwise required by the Act or this Agreement.
Section 6.3. NUMBER, QUALIFICATION; TERM OF OFFICE; VOTE. The
number of members of the Board of Managers shall be up to four (4) (each a
"Manager"). The Managers shall be elected from time to time by the Members.
Each
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of the Managers shall hold office until such Manager's successor shall have been
elected, or until the earlier death, resignation, removal or disqualification of
such Manager. Each Manager shall have one vote in all matters to come before
the Board of Managers.
Section 6.4. INITIAL BOARD. The initial Board of Managers shall be
comprised of the following individuals:
Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxx
Section 6.5. PLACE OF MEETINGS. Meetings of the Board of Managers
shall be held at the principal executive office of the Company or at such other
place as may be agreed by the members of such Board from time to time.
Section 6.6. SPECIAL MEETINGS. A special meeting of the Board of
Managers may be called for any purpose or purposes at any time by the Chair or
by any Member who holds at least 35% of the outstanding Units and who shall
demand such special meeting by written notice given to the Chair specifying the
purposes of such meeting.
Section 6.7. MEETINGS HELD UPON MEMBER DEMAND. Within five (5)
business days after the Chair receives a valid demand for a meeting of the Board
of Managers from a Member, it shall be the duty of the Chair to cause a special
or regular meeting of Board of Managers, as the case may be, to be duly called
and held on notice no later than five (5) business days after receipt of such
demand. If the Chair fails to cause such a meeting to be called and held as
required by this Section 6.7, the Member or Members making the demand may call
the meeting by giving notice as provided in Section 6.9 at the expense of the
Company.
Section 6.8. ADJOURNMENTS. Any meeting of the Board of Managers may
be adjourned from time to time to another date, time and place. If any meeting
of the Board of Managers is so adjourned, no notice as to such adjourned meeting
need be given if the date, time and place at which the meeting will be
reconvened are announced at the time of adjournment.
Section 6.9. NOTICE OF MEETINGS. Unless otherwise required by law,
written notice of each meeting of the Board of Managers, stating the date, time
and place and, in the case of a special meeting, the purpose or purposes, shall
be given at least five (5) days and not more than ninety (90) days prior to the
meeting to every member of the Board of Managers. A member of the Board of
Managers may waive notice of the date, time, place and purpose or purposes of a
meeting of the Board of Managers. A waiver of notice is effective whether given
before, at or after the meeting, and whether given in writing, orally or by
attendance. Attendance by a
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member of the Board of Managers at a meeting is a waiver of notice of that
meeting, unless the member objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or convened,
or objects before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.
Section 6.10. QUORUM. Members of the Board of Managers representing
51% of all votes held by the members of the Board of Managers shall constitute a
quorum for the transaction of business at each meeting of the Board of Managers.
Section 6.11. ABSENT MEMBERS. A member of the Board of Managers may
give advance written consent or opposition to a proposal to be acted on at a
meeting of the Board of Managers. If such member is not present at the meeting,
such consent or opposition to a proposal does not constitute presence for
purposes of determining the existence of a quorum, but such consent or
opposition shall be counted as a vote in favor of or against the proposal and
shall be entered in the minutes or other record of action at the meeting, if the
proposal acted on at the meeting is substantially the same or has substantially
the same effect as the proposal to which the member has consented or objected.
Section 6.12. CONFERENCE COMMUNICATIONS. Any or all of the members
of the Board of Managers may participate in any meeting of the Board of
Managers, or of any duly constituted committee thereof, by any means of
communication through which such members may simultaneously hear each other
during such meeting. For the purposes of establishing a quorum and taking any
action at the meeting, members of the Board of Managers participating pursuant
to this Section 7.11 shall be deemed present in person at the meeting; and the
place of the meeting shall be the place of origination of the conference
telephone conversation or other comparable communication technique.
Section 6.13. REMOVAL. Any member of the Board of Managers may be
removed from office at any time, with or without cause, by the action of the
Member or Members who appointed such member; PROVIDED, HOWEVER, that such
removal shall be without prejudice to any contract rights of such member
pursuant to any employment or other agreement between such member and the
appointing Member(s) or the Company.
Section 6.14. ACTS OF MANAGERS. Except as otherwise provided herein,
the Board of Managers shall take action by the affirmative vote of those
Managers who have the power to vote 51% of all votes held by the Managers, and
any such act shall be deemed to be the action of the Board of Managers for all
purposes of this Agreement and the Act.
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Section 6.15. WRITTEN ACTION. Any action which might be taken at a
meeting of the Board of Managers, or any duly constituted committee thereof, may
be taken without a meeting if done in writing and signed by a number of the
members of the Board of Managers, or committee members, whose approval would be
sufficient to approve the action at a meeting at which all of the members of the
Board of Managers (or such committee) were present.
Section 6.16. PROXIES. A member of the Board of Managers may cast or
authorize the casting of a vote by filing a written appointment of a proxy with
the Chair at or before the meeting at which the appointment is to be effective.
The member may sign or authorize the written appointment by telegram, cablegram
or other means of electronic transmission setting forth or submitted with
information sufficient to determine that the member authorized such
transmission. Any copy, facsimile, telecommunication or other reproduction of
the original of either the writing or transmission may be used in lieu of the
original, PROVIDED that it is a complete and legible reproduction of the entire
original.
Section 6.17. COMMITTEES. (a) A resolution approved by the Board of
Managers may establish committees having the authority of the Board of Managers
in the management of the business of the Company to the extent provided in the
resolution. A committee shall consist of one or more Persons, who need not be
members of the Board of Managers. Committees are subject to the direction and
control of, and vacancies in the membership thereof shall be filled by, the
Board of Managers.
(b) A majority of the members of a committee present at a meeting is
a quorum for the transaction of business, unless a larger or smaller proportion
or number is provided in the resolution of the Board of Managers creating the
committee.
Section 6.18. NO FIDUCIARY DUTY. Persons serving on the Board of
Managers shall not constitute a fiduciary any Member(s) or the Company. No
Person serving on the Board of Managers shall incur any personal liability in
such capacity to the Members or the creditors of the Company.
Section 6.19. COMPENSATION. Members of the Board of Managers shall
not be compensated by the Company for serving in such capacity. The Company
shall bear the expenses, if any, incurred by each Member's respective
representatives in attending meetings of the Board of Managers.
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Article VII.
OFFICERS
Section 7.1. NUMBER. The officers of the Company, all of whom shall
be natural persons, shall consist of a Chair, a President, a Secretary and a
Treasurer ("Named Officers"), and any other officers and agents as the Board of
Managers by a majority vote of all Managers may designate from time to time.
Any person may hold two or more offices.
Section 7.2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. At each
annual meeting of the Board of Managers, all officers shall be elected. Such
officers shall hold office until the next annual meeting of the Managers or
until their successors are elected and qualified, or until such office is
eliminated by amendment of this Agreement, in the case of the Named Officers, or
a vote of the majority of all Managers, in the case of officers other than Named
Officers. An officer who is a Manager shall hold office until the election and
qualification of his or her successor even though he or she may cease to be a
Manager.
Section 7.3. REMOVAL AND VACANCIES. Any officer may be removed from
his or her office with or without cause upon a vote of a majority of the total
number of Managers. Such removal shall be without prejudice to the contract
rights of the person so removed. A vacancy among the officers by death,
resignation, removal or otherwise shall be filled for the unexpired term by the
Board of Managers, unless such office is eliminated.
Section 7.4. CHAIR. The Chair shall preside at all meetings of the
Members and Managers and shall have such other duties as may be prescribed, from
time to time, by the Board of Managers. The Chair shall be a Manager and shall
be elected by the Board of Managers.
Section 7.5. PRESIDENT.
(a) DAY-TO-DAY OPERATIONS. The Company shall be managed by a
President. The Board of Managers delegates to the President the authority to
oversee and supervise the Company's business. Except as otherwise provided in
this Agreement, the President shall be authorized to determine all questions
relating to the day-to-day conduct, operation and management of the business of
the Company. The President shall be responsible to the Board of Managers.
(b) GENERAL. The President shall be entitled to delegate such part
of his or her duties as he or she may deem reasonable or necessary in the
conduct of the business of the Company to one or more employees of the Company,
who shall each have such duties and authority as shall be determined from time
to time by the
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President or as may be set forth in any agreement between such employee and the
Company.
(c) ELECTION. The President shall be elected by the Board of
Managers and shall receive such compensation as may be determined from time to
time by the Board of Managers or as shall be set forth in any written agreement
approved by the Board of Managers.
Section 7.6. SECRETARY. The Secretary shall be secretary of and
shall attend all meetings of the Members and Board of Managers and shall record
all proceedings of such meetings in the minute book of the Company. He or she
shall give proper notice of meetings of Members and the Board of Managers. He
or she shall perform such other duties as may from time to time be prescribed by
the Board of Managers.
Section 7.7. TREASURER. The Treasurer shall keep or cause to be
kept accurate accounts of all moneys of the Company received or disbursed. He
or she shall deposit or cause to be deposited all moneys, drafts and checks in
the name of and to the credit of the Company in such banks and depositaries as
the Board of Managers shall from time to time designate. He or she shall have
power to endorse or cause to be endorsed for deposit or collection all notes,
checks and drafts received by the Company. He or she shall disburse or cause to
be disbursed the funds of the Company as ordered by the President, making proper
vouchers therefor. He or she shall render to the Board of Managers whenever
required an account of all his or her transactions as Treasurer and of the
financial condition of the Company and shall perform such other duties as may
from time to time be prescribed by the Board of Managers.
Section 7.8. DUTIES OF OTHER OFFICERS. The duties of such other
officers and agents as the Board of Managers may designate shall be set forth in
the resolution creating such office or agency or by subsequent resolution.
Section 7.9. COMPENSATION. The officers, agents and employees of
the Company shall receive such compensation for their services as may be
determined from time to time by the Board of Managers or as shall be set forth
in a written agreement.
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Article VIII.
INDEMNIFICATION
Section 8.1. INDEMNIFICATION.
(a) To the fullest extent permitted by law, each Manager and Named
Officer (individually, an "Indemnitee") shall be indemnified, held harmless and
defended by the Company from and against any and all losses, claims, damages,
liabilities, whether joint or several, expenses (including legal fees and
expenses), judgments, fines and other amounts paid in settlement, incurred or
suffered by such Indemnitee, as a party or otherwise, in connection with any
threatened, pending or completed claim, demand, action, suit or proceeding,
whether civil, criminal, administrative or investigative, and whether formal or
informal, arising out of or in connection with the business or the operation of
the Company and by reason of the Indemnitee's status as a Manager or Named
Officer regardless of whether the Indemnitee continues to be a Manager or Named
Officer of the Company at the time any such loss, claim, damage, liability or
other expense is paid or incurred if (i) the Indemnitee acted in good faith and
in a manner he or she reasonably believed to be in the best interests of the
Company and, with respect to any criminal proceeding, had no reasonable cause to
believe that his or her conduct was unlawful, (ii) the Indemnitee's conduct did
not constitute intentional misconduct or a material breach of the terms of this
Agreement and (iii) the Indemnitee's conduct did not involve a transaction from
which the Manager or Named Officer derived an improper personal benefit. The
termination of any action, suit or proceeding by judgment, order, settlement or
upon a plea of NOLO CONTENDERE, or its equivalent, shall not, of itself, create
a presumption that the Indemnitee acted in a manner contrary to the standards
specified in clauses (i), (ii) or (iii) of this Section 8.1(a).
(b) To the fullest extent permitted by law, expenses incurred by an
Indemnitee in defending any claim, demand, action, suit or proceeding subject to
this Section 7.1 shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Indemnitee to
repay such amount unless it is determined that such Indemnitee is entitled to be
indemnified therefor pursuant to this Section 8.1.
(c) The indemnification provided by this Section 8.1 shall be in
addition to any other rights to which any Indemnitee may be entitled under any
other agreement, pursuant to any vote of the Managers, as a matter of law or
otherwise, and shall inure to the benefit of the heirs, legal representatives,
successors, assigns and administrators of the Indemnities.
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(d) Any indemnification under this Section 8.1 shall be satisfied
solely out of the assets of the Company and no Indemnitee shall have any
recourse against any Member with respect to such indemnification.
(e) An Indemnitee shall not be denied indemnification in whole or in
part under this Section 8.1 merely because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies, if the
transaction was not otherwise prohibited by the terms of this Agreement and the
conduct of the Indemnitee satisfied the conditions set forth in Section 8.1(a).
(f) The Company may, but shall have no obligation to, purchase and
maintain insurance covering any potential liability of the Indemnitees for any
actions or omissions for which indemnification is permitted hereunder, including
such types of insurance (including extended coverage liability and casualty and
workers' compensation) as would be customary for any person engaged in a similar
business, and may name the Indemnitees as additional insured parties thereunder.
Section 8.2. INDEMNIFICATION PROCEDURES; SURVIVAL.
(a) Promptly after receipt by an Indemnitee of notice of the
commencement of any action that may result in a claim for indemnification
pursuant to Section 8.1, the Indemnitee shall notify the Company in writing
within 30 days thereafter; PROVIDED, HOWEVER, that any omission so to notify the
Company will not relieve it of any liability for indemnification hereunder as to
the particular item for which indemnification may then be sought (except to the
extent that the failure to give notice shall have been materially prejudicial to
the Company) nor from any other liability that it may have to any Indemnitee.
(b) An Indemnitee shall have the right to employ separate counsel in
any action as to which indemnification may be sought under any provision of this
Agreement and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnitee unless (i) the
Company has agreed in writing to pay such fees and expenses, (ii) the Company
has failed to assume the defense thereof and employ counsel within a reasonable
period of time after being given the notice required above or (iii) the
Indemnitee shall have been advised by its counsel that representation of such
Indemnitee and other parties by the same counsel would be inappropriate under
applicable standards of professional conduct (whether or not such representation
by the same counsel has been proposed) due to actual or potential differing
interests between them. It is understood, however, that the Company shall, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
only one separate firm of attorneys at any time for all such Indemnitees having
actual or potential differing interests with the
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Company, unless but only to the extent the Indemnitees have actual or potential
differing interests with each other.
(c) The Company shall not be liable for any settlement of any such
action effected without its written consent, but if settled with such written
consent, or if there is a final judgment against the Indemnitee in any such
action, the Company agrees to indemnify and hold harmless the Indemnitee to the
extent provided above from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.
(d) The indemnification obligations set forth in Section 8.1 and this
Section 8.2 shall survive the termination of this Agreement.
Article IX.
CERTIFICATES; TRANSFERS
Section 9.1. CERTIFICATES FOR UNITS. All Units of the Company shall
be certificated Units. Each Member shall be entitled to a certificate, to be in
such form as shall be prescribed by the Board of Managers, certifying the number
of Units of the Company owned by such Member. The certificates for such Units
shall be numbered in the order in which they shall be issued and shall be
signed, in the name of the Company, by such officers as the Board of Managers
may designate. Every certificate surrendered to the Company for exchange or
transfer shall be cancelled, and no new certificate or certificates shall be
issued in exchange for any existing certificate until such existing certificate
shall have been so cancelled, except in cases provided for in Section 9.2.
Section 9.2. LOSS OF CERTIFICATES. Any Member claiming a
certificate for Units to be lost, stolen or destroyed shall make an affidavit of
that fact in such form as the Board of Managers shall require and shall, if the
Board of Managers so requires, give the Company a bond of indemnity in form, in
an amount and with one or more sureties satisfactory to the Board of Managers,
to indemnify the Company against any claim which may be made against it on
account of the reissue of such certificate, whereupon a new certificate may be
issued in the same tenor and for the same number of Units as the one alleged to
have been lost, stolen or destroyed.
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Section 9.3. REGISTRATION, TRANSFER AND EXCHANGE.
(a) The Company shall keep at the Principal Office a register in
which shall be entered the names and addresses of the Members and all Transfers
of outstanding Units.
(b) Subject to this Article IX, each Unit, whether originally or in
substitution for, or upon transfer, exchange or other issuance of any Unit shall
be registered on the effective date of the Transfer, exchange or other issuance;
PROVIDED, HOWEVER, that no registration of any Transfer not made in compliance
with this Article IX shall be made in the register.
(c) Transfer of Units on the books of the Company may be authorized
only by the Member named in the certificate, the Member's legal representative
or the Member's duly authorized attorney-in-fact, and upon surrender of the
certificate or the certificates for such Units. The Company may treat as the
absolute owner of Units of the Company the person or persons in whose name Units
are registered on the books of the Company.
Section 9.4. RESTRICTION ON TRANSFERS. In addition to any
restrictions imposed by the federal securities laws and any applicable state
securities or "blue-sky" laws, no Member may sell, assign, pledge, transfer,
convey or otherwise dispose of (including through any merger, share exchange or
consolidation) (collectively, "Transfer") all or any part of any Unit, whether
for consideration or not, and no Transferee thereof shall have any rights in the
Company or be or have any rights as a Member with respect to all or any part of
any such Interest attempted to be Transferred, and any such attempted Transfer
of all or any part of an Interest shall be entirely null and void, unless (i)
the Members agree to continue the business of the Company pursuant to
Section 13.1(d) if all of the Units of such Member are to be Transferred and
(ii) Members holding at least 51% of the Units that are not being Transferred
consent to the Transfer and the admission of such Transferee as a Member if
such Transfer is to a Person, other than the Company, who is not then a Member.
The appropriate Company records and any certificates representing the Units
shall be noted to prevent any Transfers in violation of this Section 9.4.
Section 9.5. TRANSFER BY LEGAL PROCESS. Upon any involuntary
Transfer of all or any portion of the Units of a Member pursuant to a levy of
execution, foreclosure of pledge, garnishment, attachment, divorce decree,
bankruptcy or other legal process (or by operation of law resulting from the
death, disability, liquidation, dissolution or winding-up of a Member), such
Member shall cease to be a Member, but any successor in title to the transferred
Units shall have no right to become a Member except in compliance with Section
9.4. If such successor does not become a Member, such successor shall be merely
an assignee within the meaning of Section 18-702(b)(1) of the Act.
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Section 9.6. RESIGNATION. No Member shall be entitled to resign or
retire from the Company prior to the dissolution and winding up of the Company
pursuant to Article XIII hereof without the unanimous consent of the other
Members of the Company.
Article X.
BOOKS OF ACCOUNT; REPORTS AND FISCAL MATTERS
Section 10.1. BOOKS; PLACE; ACCESS. The Chair, or the Treasurer if
one is appointed, shall maintain books of account on behalf of the Company at
the Principal Office or such other place as may be designated by the Board of
Managers. All Members shall at all reasonable times have access to and the
right to inspect the same.
Section 10.2. FINANCIAL INFORMATION. The Chair, or the treasurer if
one is appointed, shall cause to be prepared and delivered to each of the
Members summary financial information with respect to each of the first three
quarters of each Fiscal Year. Such quarterly financial information shall be
provided to the Members not later than forty-five (45) days following the end of
each quarter of the Fiscal Year. The Chair, or the treasurer if one is
appointed, also shall cause to be prepared and delivered to each of the Members
an annual financial report that shall describe in reasonable detail the
financial and business activities of the Company and include the financial
statements of the Company for the previous Fiscal Year. Such annual financial
report shall be provided to the Members not later than ninety (90) days
following each Fiscal Year-end and shall not be audited unless the Board of
Managers otherwise decides.
Section 10.3. TAX INFORMATION. Within ninety (90) days after the
close of each Fiscal Year, all necessary tax information shall be transmitted to
all Members.
Section 10.4. TAX ELECTIONS. All elections required or permitted to
be made by the Company under the Code, shall be made by the "TMP" (as such term
is defined in Section 10.5) in consultation with the Company's accountants and
attorneys. In the event of a transfer of all or part of the Interest of any
Member, the Company may, in the sole discretion of the TMP, elect pursuant to
Section 754 of the Code to adjust the basis of the Company Assets.
Section 10.5. TAX MATTERS PARTNER. Great Plains Software, Inc.,
represented by Xxxxx Xxxxxxxxx, shall act as the tax matters partner (the
"TMP"), as such term is defined in Section 6231(a)(7) of the Code, and the TMP
is hereby authorized to and shall represent the Company in connection with all
examinations of the Company's affairs by tax authorities, including resulting
administrative and judicial proceedings. The Members and the TMP shall use all
reasonable efforts to
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comply with the responsibilities outlined in this Section 10.5 and in Sections
6222 through 6231 of the Code (including any Treasury Regulations thereunder and
any successor or amendatory provisions thereto for which a tax matters partner
is designated).
(a) TMP NOTICES. Each Member shall furnish the TMP with such
information (including information specified in Section 6230(e) of the Code) as
the TMP may reasonably request to permit the TMP to provide the Internal Revenue
Service with sufficient information to allow proper notice to the Members in
accordance with Section 6223 of the Code. The TMP shall keep each Member
informed of those administrative and judicial proceedings for the adjustment at
the Company level of Company items required by Section 6223(g) of the Code and
the Treasury Regulations thereunder, and such other matters as the TMP, in its
sole discretion, deems appropriate.
(b) INCONSISTENT TAX TREATMENT. Each Member shall notify the TMP in
the event its treatment of any Company item on its federal income tax return is
inconsistent with the treatment of that item on any return filed by or in any
records of the Company within thirty (30) days of the date such Member's return
is filed.
(c) REQUESTS FOR TAX ADJUSTMENTS. No Member shall file, pursuant to
Section 6227 of the Code, a request for an administrative adjustment of limited
liability company items for any Company taxable year without first notifying
each other Member. If each other Member agrees with the requested adjustment,
the TMP shall file the request for administrative adjustment on behalf of the
Company. If unanimous consent of the Members is not obtained within thirty (30)
days, or within the period required to file timely the request for
administrative adjustment, if shorter, any Member, including the TMP (on behalf
of the Company), may file a request for administrative adjustment on its own
behalf.
(d) TAX PROCEEDINGS. The TMP, in its sole discretion, shall
negotiate with the Internal Revenue Service on behalf of the Company during all
aspects of the tax proceeding, including without limitation the examination,
appeals and litigation process. Any Member who intends to file a petition under
Sections 6226, 6228, or other sections of the Code with respect to any Company
item, or other tax matters involving the Company, shall give reasonable notice
to each of the other Members of such intention and the nature of the
contemplated proceeding. In the case where the TMP is the Member intending to
file such petition, the TMP, in its sole discretion, shall choose the forum in
which such petition will be filed. If any Member intends to seek review of any
court decision rendered as a result of a proceeding instituted under the
preceding part of this paragraph (d) of Section 10.5, such Member shall notify
each of the other Members of such intended action. In accordance with its duty
to act in good faith, the TMP may choose to pursue or forego settlement,
litigation or any other proceedings.
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(e) TAX SETTLEMENTS. The TMP shall have the authority to bind
any Member to a settlement agreement without obtaining the written concurrence
of any such Member who would be bound by such agreement. Any Member (other than
the TMP) who enters into a settlement agreement with the Secretary of the
Treasury with respect to any partnership items, as defined by Section 6231(a)(3)
of the Code, shall notify the Members of such settlement agreement and its terms
within ninety (90) days from the date of settlement.
(f) TMP EXPENDITURES, FEES AND INDEMNIFICATION. Subject to
Section 4.9(g), the TMP may engage such legal counsel, certified public
accountants, or others (including, without limitation, experts) on behalf of the
Company as it may determine to be necessary and appropriate. Any other Member
may engage other legal counsel, certified public accountants, or others on such
other Member's own behalf and at such other Member's sole cost and expense. Any
reasonable item of expense, including but not limited to fees and expenses for
legal counsel, certified public accountants, and others (including, without
limitation, experts) that the TMP incurs on behalf of the Company in connection
with any audit, assessment, litigation, or other proceeding regarding any
partnership item, shall constitute expenses of the Company. In the event that
the Company does not have adequate cash or other assets to pay such items of
expense, the TMP shall not be obligated to make capital contributions or loans
to fund such expenses, and the TMP shall be free to resign as the tax matters
partner of the Company pursuant to Section 10.5(g) hereof. The Company shall
indemnify the TMP pursuant to ArticleVIII hereof.
(g) RESIGNATION OF TMP. The TMP may resign as tax matters
partner at any time upon the filing of a signed statement with the Internal
Revenue Service in accordance with Temp. Treas. Reg. Section
301.6231(a)(7)-1T(i) (or any successor provision thereto). The successor tax
matters partner shall be determined pursuant to Temp. Treas. Reg. Sections
301.6231(a)(7)-1T (or any successor provision thereto).
(h) SURVIVAL OF TMP PROVISIONS. The provisions of this Section
10.5, including without limitation the obligation to pay fees and expenses and
the indemnification obligations described in Section 10.5(f) hereof, shall
survive the termination of the Company or the termination of any Member's
interest in the Company and shall remain binding on the Company for a period of
time necessary to resolve with the Internal Revenue Service, the Department of
the Treasury or any state taxing authority any and all matters regarding the
federal or state income taxation of the Company for the applicable tax year(s).
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Article XI.
AMENDMENT
Section 11.1. PROCEDURE APPLICABLE TO ALL AMENDMENTS. The Certificate
of Formation and this Agreement may be amended by the Board of Managers at any
duly called meeting. Any such amendment shall be binding on all of the Members.
Each amendment to this Agreement shall be appropriately designated in a document
included within the minute book of the Company indicating the change made, the
date of any necessary approval and an appropriate certification by the
Secretary. The Secretary shall provide notice of all such amendments to each
Member. There shall be no amendment or rescission of any portion of this
Agreement by implication. Any amendment may be prospective in nature.
Section 11.2. VOTING REQUIREMENT. Any amendment or repeal of any
portion of the Certificate of Formation or this Agreement shall require the vote
of not less than a majority of the Managers in addition to any approval of
Members required by Section 11.3. No amendment of Sections 8.1 or 8.2 shall be
effective as to any particular Indemnitee without the consent of the Indemnitee
affected thereby.
Section 11.3. APPROVAL BY MEMBERS. Any amendment or repeal of the
following provisions of the Certificate of Formation or this Agreement shall
require the vote of not less than a Member Supermajority:
(a) Certificate of Formation:
Article 1
Article 4
Article 5
Article 6
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(b) This Agreement:
Section 1.1--Name
Section 1.4--Duration
Section 1.5--Duties of Members
Section 1.6--Duties of Managers
Section 4.1--Place and Time of Meetings
Section 4.7--Voting
Section 4.9--Certain Actions
Section 5.4--Issuance of Units
Section 9.4--Restrictions on Transfer
Section 13.1--Events Causing Dissolution
Article XI--Amendment
Article XII--Approval of Reorganizations and
Bankruptcy
Article XII.
APPROVAL OF REORGANIZATIONS AND BANKRUPTCY
Without the vote of a Member Supermajority (i) the Company shall not
engage in any Reorganization or (ii) commence any proceedings or the filing of
any petition seeking relief under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other federal or state bankruptcy,
insolvency or similar law.
Article XIII.
DISSOLUTION AND LIQUIDATION
Section 13.1. EVENTS CAUSING DISSOLUTION. The Company shall be
dissolved only upon the occurrence of any of the following events:
(a) The expiration of the term set forth in the Certificate of
Formation;
(b) The sale, exchange or any other disposition of all or
substantially all of the Company Assets;
(c) The unanimous consent of the Members;
(d) The death, insanity, expulsion, bankruptcy, retirement,
resignation or dissolution of a Member or the occurrence of any other event
(including any Transfer, redemption or forfeiture of all of the Units of such
Member) which terminates the continued membership of a Member in the Company
unless the business of the Company is continued by the consent of such of the
remaining Members who hold the right to vote at least 51% of the Interests held
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by all of the remaining Members within ninety (90) days following the date the
occurrence of any such event; or
(e) The entry of a decree of judicial dissolution under Section
18-802 of the Act.
Section 13.2. CONTINUATION OF BUSINESS. If, upon dissolution of the
Company for any reason described in Section 13.1(d) hereof, the business of the
Company is continued without liquidation and without the winding up of the
affairs of the Company pursuant to the terms thereof, title to Company Assets
shall be vested in the company continuing the business and the allocation and
distribution rules set forth herein shall continue as set forth herein. Upon
such dissolution, no Member, nor any legal representative of any Member, shall
have the right to an account of its Interest or its Capital Account as against
the Company continuing the business, and no Member, nor any legal representative
of any Member, shall have the right to have the value of its Interest or Capital
Account as of the date of dissolution ascertained or have any right as a
creditor or otherwise with respect to the value of its Interest.
Section 13.3. LIQUIDATION AND WINDING UP. If dissolution of the
Company should be caused by reason of (i) any of the events set forth in
paragraphs (a), (b), (c), (e) or (f) of Section13.1 hereof or (ii) any of the
events set forth in paragraph (d) of Section 13.1 hereof and the business of the
Company is not continued pursuant to the terms of such paragraph (d), the
Company shall be liquidated and the Person designated at such time by the Board
of Managers (or other Person or Persons designated by a decree of court) shall
wind up the affairs of the Company. The Person or Persons winding up the
affairs of the Company shall promptly proceed to the liquidation of the Company
Assets and, in settling the accounts of the Company, the Company Assets shall
be distributed in the following order of priority:
(a) To creditors (excluding any Member and the Chair if they
are creditors), to the extent otherwise permitted by law, in satisfaction of
liabilities of the Company (whether by payment or the making of reasonable
provision for payment thereof), other than liabilities for which reasonable
provision for payment has been made and liabilities for distributions to Members
under Section 5.7 hereof;
(b) To the repayment of outstanding loans from a Member to the
Company;
(c) The balance, if any, to the Members in accordance with their
positive Capital Account balances, after giving effect to all allocations of
gain or loss in accordance with Article XVI hereof.
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Section 13.4. COMPLIANCE WITH TIMING REQUIREMENTS OF REGULATIONS. In
the event the Company is liquidated within the meaning of Treas. Reg. Section
1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article XI to
the Members who have positive Capital Account balances in compliance with Treas.
Reg. Section 1.704-1(b)(2)(ii)(b)(2).
Article XIV.
REPRESENTATIONS, WARRANTIES OF THE MEMBERS
Section 14.1. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS. Each of
the Members represents and warrants as of the date of this Agreement to each of
the other Members and the Company as follows:
(a) The Units being acquired by such Member are being purchased
for such Member's own account and not with a view to, or for sale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). Such Member
understands that such Units have not been registered under the Securities Act or
any state securities laws by reason of their contemplated issuance in
transactions exempt from the registration and prospectus delivery requirements
thereof and that the reliance of the Company and others upon such exemptions is
predicated in part by the representations and warranties of such Member
contained herein.
(b) Such Member has the requisite power and authority (whether
corporate or otherwise) and legal capacity to enter into, and to carry out its
obligations under, this Agreement.
(c) The execution and delivery by such Member of this Agreement
and the consummation by such Member of the transactions contemplated hereby have
been duly authorized prior to the date of this Agreement by all necessary action
on the part of such Member.
(d) This Agreement has been duly executed and delivered by such
Member and constitutes a valid and binding obligation enforceable against such
Member in accordance with its terms.
(e) Such Member is not subject to, or obligated under, any
provision of (i) any agreement, arrangement or understanding, (ii) any license,
franchise or permit or (iii) any law, regulation, order, judgment or decree that
would be breached or violated, or in respect of which a right of termination or
acceleration or any encumbrance on any of such Member's assets would be created,
by such Member's execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, EXCEPT for such agreements
as to which a Member has previously obtained the consent of the other party or
parties thereto.
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(f) No authorization, consent or approval of, waiver or
exemption by, or filing or registration with, any public body, court, third
party or authority is necessary on such Member's part, which has not previously
been obtained by such Member for the consummation of the transactions
contemplated by this Agreement.
(g) No person or entity has or will have, as a result of any act
or omission by such Member any right, interest or valid claim against the
Company or any other Member for any commission, fee or other compensation as a
finder or broker, or in any similar capacity, in connection with the
transactions contemplated by this Agreement.
Article XV.
CAPITAL
Section 15.1. INITIAL CAPITAL CONTRIBUTIONS. On the date of the
execution of this Agreement, the Members shall make the Capital Contributions
indicated opposite their respective names on Schedule A. In exchange for such
Capital Contributions, the Members shall receive the Units set forth opposite
their respective names on Schedule A.
Section 15.2. NO RIGHT TO RETURN OF CONTRIBUTION. No Member shall
have the right to the withdrawal or to the return of his, her or its Capital
Contribution, except upon the dissolution and liquidation of the Company
pursuant to Article XI.
Section 15.3. ADDITIONAL CAPITAL CONTRIBUTIONS. In the event that
the Members who hold the power to vote a majority of the Units at any time or
from time to time determine that contributions to the capital of the Company are
necessary to the conduct of the Company's activities, each of the Members shall
promptly make a cash contribution to the capital of the Company equal to his
share (determined in proportion to the number of Units held by each Member) of
such additional funds. As additional funds are needed for the conduct of the
Company's business, if one Member is unable to or otherwise does not contribute
his share of such funds to the Company, the funds advanced by the other Members
shall be regarded as a loan in accordance with Section15.4.
Section 15.4. LOANS TO THE COMPANY; NO INTEREST ON CAPITAL. The
Members may, but are not obligated to, make loans to the Company from time to
time, as authorized by the Board of Managers. Any such loans shall not be
treated as Capital Contributions to the Company for any purpose hereunder nor
entitle such Member to any increase in its share of the profits and losses and
cash distributions of the Company, but the Company shall be obligated to such
Member for the amount of any such loans pursuant to the terms thereof, as the
same are determined by the Board of Managers and such Member. Interest with
respect to the outstanding
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amount of any loans made by a Member to the Company shall accrue and be payable
at such times and at such rate as shall be determined by the Board of Managers
and such Member. All scheduled principal and interest payments with respect to
any loans from a Member to the Company pursuant to this Section 15.9 shall be
repaid prior to any distributions to any Members pursuant to Section 16.7. No
interest shall be paid on any Capital Contribution to the Company or on any
balance in any Capital Account.
Section 15.5. CREDITOR'S INTEREST IN THE COMPANY. No creditor who
makes a loan to the Company shall 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 such interest as may be accorded to a
secured creditor. Notwithstanding the foregoing, this provision shall not
prohibit in any manner whatsoever a secured creditor from participating in the
profits of operation or gross or net sales of the Company or in the gain on sale
or refinancing of the Company, all as may be provided in its loan or security
agreements.
Section 15.6. LIABILITY OF MEMBERS. Except as otherwise provided in
the Act, no Member, as such, shall have any personal liability whatsoever to the
Company, any of the other Members or any of the creditors of the Company for the
debts, liabilities, contracts or other obligations of the Company or any of the
Company's losses beyond, with respect to a Member, such Member's Capital
Contribution and, solely to the extent and for the period required by applicable
law, the amount of such Member's Capital Contribution which is returned to it.
Each Unit, on issuance, shall be fully paid and, except as set forth in
Section 15.2, not subject to assessment for additional Capital Contributions.
No Member shall be required to lend any funds to the Company as a condition
to admission or continued membership of such Member in the Company. It is
the intent of the Members that (i) no distribution to any Member (other than
a distribution upon the dissolution and liquidation of the Company) shall be
deemed a withdrawal of capital, even if such distribution represents, for
Federal income tax purposes or otherwise (in full or in part), a distribution
of depreciation or any other non-cash item accounted for as a loss or
deduction from or offset to the Company's income, and (ii) no Member shall be
obligated to pay any such amount to or for the account of the Company or any
creditor of the Company. However, if any court of competent jurisdiction
holds that, notwithstanding the provisions of this Agreement, any
distribution made by the Company to a Member constitutes a withdrawal of
capital, any obligation under applicable law to return the same or any
portion thereof to or for the account of the Company or its creditors shall
be the obligation of such Member.
Section 15.7. CAPITAL ACCOUNTS. A separate Capital Account shall be
maintained for each Member. It is intended that the Capital Accounts of the
Members will be maintained in accordance with the capital accounting rules of
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Treas. Reg. Section 1.704-1(b)(2)(iv) and the provisions of this Agreement
relating to the maintenance of Capital Accounts shall be interpreted and applied
in a manner consistent therewith. In the event the Board of Managers shall
determine that it is prudent to modify the manner in which the Capital Accounts,
or any debits or credits thereto, are computed in order to comply with such
Treasury Regulation, the Board of Managers may make such modification, provided
that any such modifications shall not materially alter the economic agreement of
the Members. In general, the Capital Account of a Member shall be initially
credited with the value of its Capital Contribution to the Company in respect of
its Units. The Capital Account of a Member shall further be credited by the
value of any additional Capital Contributions to the Company made by such Member
from time to time in respect of its Interest, shall be debited by the amount of
any cash distributions made by the Company to such Member on account of any such
Interest and shall be credited with the amount of income and gains and debited
with the amount of losses of the Company allocated to such Member in accordance
with the terms of Article V hereof. In all instances, the capital accounting
rules in Treas. Reg. Section 1.704-1(b)(2)(iv) will determine the proper debits
or credits to the Capital Accounts of the Members. The Board of Managers may,
at its option, increase or decrease the Capital Accounts of the Members to
reflect a revaluation of Company Assets on the Company's books at the times
when, pursuant to Treas. Reg. Section 1.704-1(b)(2)(iv), such adjustments may
occur. The adjustments will, if made, be made in accordance with such Treasury
Regulation, including allocating taxable items, as computed for book purposes,
to the Capital Accounts as prescribed in such Treasury Regulation. In the case
of the transfer of all or a part of the Interest of a Member, the Capital
Account of the transferor Member attributable to the transferred Interest will
carry over to the transferee Member. In the case of termination of the Company
pursuant to Section 708 of the Code, the rules of Treas. Reg. Section
1.704-1(b)(2)(iv) shall govern adjustments to the Capital Accounts. If there
are any adjustments to Company Assets as a result of Sections 732, 734 or 743 of
the Code, the Capital Accounts of the Members shall be adjusted as provided in
Treas. Reg. Section 1.704-1(b)(2)(iv)(m).
Article XVI.
ALLOCATION OF INCOME, GAINS AND LOSSES;
DISTRIBUTIONS TO MEMBERS
The Members agree that the income, profits, gains, losses and tax
credits of the Company shall be allocated, and cash distributions of the Company
shall be made, as follows:
Section 16.1. ALLOCATION OF INCOME, PROFITS, GAINS, LOSSES AND
CREDITS. After giving effect to the special allocations set forth in Section
16.4 hereof, and subject to Section 16.3 hereof, all income, profits, gains,
losses and tax credits of the
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Company shall be allocated to each of the Members holding Units in proportion to
their respective Units in the Company.
Section 16.2. OTHER ALLOCATION RULES. In the event of any changes in
Units during a Fiscal Year, all income, profits, gains, losses and tax credits
from operations of the Company during such Fiscal Year, using such methods of
accounting for depreciation and other items as the Board of Managers determines
to use for federal income tax purposes, shall be allocated to each Member
holding an Interest based on its varying interest in the Company during such
operating year in accordance with Section 706 of the Code. The Board of
Managers shall determine in accordance with Section 706 of the Code whether to
prorate items of income and deduction according to the portion of the Fiscal
Year for which a Member held an Interest or whether to close the books on an
interim basis and divide such operating year into two or more segments.
Section 16.3. LIMITATION ON LOSS ALLOCATION. Notwithstanding
anything in Section 16.1 hereof, no allocation of loss may be made to a Member
if such loss would cause a Member to have a negative balance in its Capital
Account, after such Capital Account is credited by any amounts which the Member
is obligated to restore or is deemed to be obligated to restore pursuant to the
penultimate sentences of Treas. Reg. Section 1.704-2(g)(1) and Treas. Reg.
Section 1.704-2(i)(5) and debited by the items described in Treas. Reg. Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6). The foregoing limitation is intended to
comply with the provisions of Treas. Reg. Section 1.704-1(b)(2)(ii)(d) and
shall be interpreted consistently therewith. In addition, the Members with
deficit Capital Account balances resulting in whole or in part from allocations
of loss or deduction attributable to nonrecourse indebtedness shall be allocated
income or gain in an amount no less than the "minimum gain" and at a time no
later than the time at which the "minimum gain" is reduced below the sum of such
deficit Capital Account balances or as soon thereafter as possible.
Section 16.4. SPECIAL ALLOCATIONS. The following special allocations
shall be made in the following order:
(a) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section
1.704-2(f) of the Treasury Regulations, notwithstanding any other provision of
this Article V, if there is a net decrease in Company minimum gain during any
Fiscal Year, each Capital Account shall be specially allocated items of Company
income and gain for such Fiscal Year (and, if necessary, subsequent years) in an
amount equal to the associated Member's share of the net decrease in Company
minimum gain (within the meaning of Treasury Regulations Sections 1.704-2(b)(2)
and 1.704-2(d)) determined in accordance with Treasury Regulations Section
1.704-2(g). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to the Capital
Account of each
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Member pursuant thereto. The items to be so allocated shall be determined in
accordance with Treasury Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2).
This Section 16.4(a) is intended to comply with the minimum gain chargeback
requirement in Treasury Regulations Section 1.704-2(f) and shall be interpreted
consistently therewith.
(b) MEMBER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Treasury Regulations Section 1.704-2(i)(4), notwithstanding any other provision
of this Article XVI, if there is a net decrease in Member nonrecourse debt
minimum gain, as defined in Treasury Regulations Section 1.704-2(i)(2) and
determined pursuant to Treasury Regulations Section 1.704-2(i)(3), attributable
to a Member nonrecourse debt, as defined in Treasury Regulations Section
1.704-2(b)(4), during any Fiscal Year, the Capital Account of each Member who
has a share of the Member nonrecourse debt minimum gain attributable to such
Member nonrecourse debt, determined in accordance with Treasury Regulations
Section 1.704-2(i)(5), shall be specially allocated items of Company income and
gain for such Fiscal Year (and if necessary, subsequent Fiscal Years) in an
amount equal to such Member's share of the net decrease in Member nonrecourse
debt minimum gain attributable to such Member nonrecourse debt, determined in
accordance with Treasury Regulations Section 1.704-2(i)(4). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to the Capital Account of each Member pursuant
thereto. The items to be so allocated shall be determined in accordance with
Treasury Regulations 1.704-2(i)(4) and 1.704-2(j)(2). This Section 16.4(b) is
intended to comply with the minimum gain chargeback requirement in Treasury
Regulations Section 1.704-2(i)(4) and shall be interpreted consistently
therewith.
(c) QUALIFIED INCOME OFFSET. If a Member unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6), and such unexpected adjustment,
allocation or distribution puts such Member's Capital Account into a deficit
balance or increases such deficit balance determined after such account is
credited by any amounts which the Member is obligated to restore or is deemed to
be obligated to restore pursuant to the penultimate sentence of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5) and debited by the items
described in Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6)
and for all other allocations tentatively made pursuant to this Article V as if
this Section 16.4(c) were not in this Agreement, the Capital Account of such
Member shall be allocated items of Company income and gain in an amount and
manner sufficient to eliminate such deficit or increase as quickly as possible.
It is intended that this Section 16.4(c) shall meet the requirement that this
Agreement contain a "qualified income offset" as defined in Treasury Regulations
Section 1.704-1(b)(2)(ii)(d) and this Section shall be interpreted and applied
consistently therewith.
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(d) NONRECOURSE DEDUCTIONS. Nonrecourse deductions, within the
meaning of Treasury Regulations Section 1.704-2(b)(1), for any Fiscal Year or
other period shall be specially allocated among the Capital Accounts of the
Members in proportion to their respective Units.
(e) MEMBER NONRECOURSE DEDUCTIONS. Any Member nonrecourse
deductions, within the meaning of Treasury Regulations Sections 1.704-2(i)(1)
and 1.704-2(i)(2), for any Fiscal Year or other period shall be specially
allocated to the Capital Account of the Member who bears the economic risk of
loss with respect to the Member nonrecourse debt to which such Member
nonrecourse deductions are attributable in accordance with Treasury Regulations
Section 1.704-2(i).
(f) SECTION 754 ADJUSTMENT. To the extent an adjustment to the
adjusted tax basis of any Company Asset pursuant to Code Sections 732, 734(b) or
743(b) is required, pursuant to Treasury Regulations Sections
1.704-1(b)(2)(iv)(m)(2) or (4), to be taken into account in determining Capital
Accounts, 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 Company Asset)
or loss (if the adjustment decreases such basis) and such gain or loss shall be
specially allocated to the Members in a manner consistent with the manner in
which their Capital Accounts are required to be adjusted pursuant to such
Sections of the Treasury Regulations.
Section 16.5. CURATIVE ALLOCATIONS. The allocations set forth in
Sections 16.4(a), (b), (c), (d), (e) and (f) hereof (the "Regulatory
Allocations") are intended to comply with certain requirements of the Treasury
Regulations. It is the intent of the Members that, to the extent possible, all
Regulatory Allocations shall be offset either with other Regulatory Allocations
or with special allocations of other items of Company income, gain, loss, or
deduction pursuant to this Section 16.5. Therefore, notwithstanding any other
provision of this Article V (other than the Regulatory Allocations), the Board
of Managers shall make such offsetting special allocations of Company income,
gain loss, or deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Member's Capital Account
balance is, to the extent possible, equal to the Capital Account balance such
Member would have had if the Regulatory Allocations were not part of the
Agreement and all Company items were allocated pursuant to Sections 16.1 and
16.2 hereof. In exercising its discretion under this Section 16.5, the Board of
Managers shall take into account future Regulatory Allocations under Sections
16.4(a) and (b) hereof that, although not yet made, are likely to offset other
Regulatory Allocations previously made under Sections 16.4(e) and (f) hereof.
Section 16.6. TAX ALLOCATIONS: SECTION 704(c) OF THE CODE. In
accordance with Section 704(c) of the Code, income, gain, loss and deduction
with respect to any property contributed to the Company shall, solely for tax
purposes, be allocated among the Capital Accounts of the Members so as to take
account of any
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variation between the adjusted basis of such property to the Company for income
tax purposes and its book value, in the same manner as such variations are
treated under Section 704(c) of the Code. Any elections or other decisions
related to such allocations shall be made by the Board of Managers in any manner
that reasonably reflects the purpose and intention of this Agreement.
Allocations pursuant to this Section 16.6 are solely for purposes of federal,
state and local taxes and shall not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of income, gain, loss or
deduction pursuant to any provision of this Agreement.
Section 16.7. DISTRIBUTIONS TO MEMBERS. Subject to any restrictions
imposed by the Act (including but not limited to Section 18-607(a) thereof), any
distributions by the Company shall be made to the Members as of a record date
determined by the Board of Managers (which date shall not be less than ten (10)
nor more than forty-five (45) days before the date of the distribution) in
accordance with their respective Units, but no less frequently than once per
year.
Article XVII.
MISCELLANEOUS PROVISIONS
Section 17.1. ADDITIONAL ACTIONS AND DOCUMENTS. Each of the Members
hereby agrees to take or cause to be taken such further actions, to execute,
acknowledge, deliver and file, or cause to be executed, acknowledged, delivered
and filed such further documents and instruments, and to use all reasonable
efforts to obtain such consents, as may be necessary or as may be reasonably
requested in order to fully effectuate the purposes, terms and conditions of
this Agreement.
Section 17.2. ARBITRATION. All disputes hereunder shall be submitted
to arbitration in Minneapolis, Minnesota in accordance with the rules of the
American Arbitration Association then in existence. The decision of such
arbitration panel shall be final and binding on the parties thereto and may be
enforced in any court of competent jurisdiction.
Section 17.3. NOTICE. Any notice, demand, consent, authorization or
other communication which any Member is required or may desire to give to or
make upon the other Members pursuant to this Agreement shall be in writing and
shall be effective, valid and duly given if mailed by regular mail, postage
prepaid, personally delivered or sent by facsimile, receipt acknowledged; if to
the Company, to the principal office of the Company set forth in Section 1.2
hereof or to such other address as the Company shall notify the Members in
writing; and if to the Members, to their respective addresses set forth in
ScheduleA hereof or in the register maintained by the Company, or to such other
address as any such Member may hereafter designate by notice in writing to the
Chair and Company. Each notice, demand, request or communication which shall be
delivered, mailed or transmitted
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in the manner described above shall be deemed sufficiently given, served, sent
or received for all purposes at such time as it is delivered to the addressee or
at such time as delivery is refused by the addressee upon presentation.
Section 17.4. SEVERABILITY. The invalidity of any one or more
provisions hereof or of any other agreement or instrument given pursuant to or
in connection with this Agreement shall not affect the remaining portions of
this Agreement or any such other agreement or instrument or any part thereof;
and in the event that one or more of the provisions contained herein or therein
should be invalid, or should operate to render this Agreement or any such other
agreement or instrument invalid, this Agreement and such other agreements and
instruments shall be construed as if such invalid provisions had not been
inserted.
Section 17.5. SURVIVAL. It is the express intention and agreement of
the Members that all covenants, agreements, statements, representations,
warranties and indemnities made in this Agreement shall survive the execution
and delivery of this Agreement.
Section 17.6. WAIVERS. Neither the waiver by a Member of a breach of
or a default under any of the provisions of this Agreement, nor the failure of a
Member, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right, remedy or privilege hereunder shall
thereafter be construed as a waiver of any such provisions, rights, remedies or
privileges hereunder.
Section 17.7. EXERCISE OF RIGHTS. No failure or delay on the part of
a Member or the Company in exercising any right, power or privilege hereunder
and no course of dealing between the Members or between a Member and the Company
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein expressly provided are cumulative and not exclusive of any other
rights or remedies which a Member or the Company would otherwise have at law or
in equity or otherwise.
Section 17.8. BINDING EFFECT. Subject to any provisions hereof
restricting assignment, this Agreement shall be binding upon and shall inure to
the benefit of the Members and their respective successors and permitted
assigns.
Section 17.9. LIMITATION ON BENEFITS OF THIS AGREEMENT. It is the
explicit intention of the Members that no person or entity other than the
Members and the Company is or shall be entitled to bring any action to enforce
any provision of this Agreement against any Member or the Company, and that the
covenants, undertakings and agreements set forth in this Agreement shall be
solely for the
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benefit of, and shall be enforceable only by, the Members (or their respective
heirs, legal representatives, successors and assigns as permitted hereunder) and
the Company; PROVIDED, HOWEVER, that the Indemnitees shall, as intended
third-party beneficiaries thereof, be entitled to the enforcement of Sections
8.1 and 8.2 hereof, but only as insofar as the obligations sought to be enforced
thereunder are those of the Company.
Section 17.10. WAIVER OF PARTITION. The Members agree that the
Company Assets are not and will not be suitable for partition. The Members
hereby waive any right of partition or any right to take any action that
otherwise might be available to them for the purpose of severing their
relationship with the Company or interest in assets held by the Company from the
interest of the other Members.
Section 17.11. ENTIRE AGREEMENT. This Agreement contains the entire
agreement among the Members with respect to the matters contained herein, and
supersedes all prior oral or written agreements, commitments or understandings
with respect to the matters provided for herein.
Section 17.12. PRONOUNS. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular or plural,
as the identity of the person or entity may require.
Section 17.13. HEADINGS. Article and Section headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
Section 17.14. GOVERNING LAW. This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating thereto,
shall be governed by and construed in accordance with the laws of the State of
Delaware (but not including the choice of law rules thereof).
Section 17.15. EXECUTION IN COUNTERPARTS. To facilitate execution,
this Agreement may be executed in as many counterparts as may be required; and
it shall not be necessary that the signatures of, or on behalf of, each party,
or that the signatures of all Persons required to bind any party, appear on each
counterpart; but it shall be sufficient that the signature of, or on behalf of,
each party, or that the signatures of the Persons required to bind any party,
appear on one or more of the counterparts. All counterparts shall collectively
constitute a single agreement. It shall not be necessary in making proof of
this Agreement to produce or account for more than a number of counterparts
containing the respective signatures of, or on behalf of, all of the parties
hereto.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
GREAT PLAINS SOFTWARE, INC.
By /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Its V.P. Human Resources & Legal Affairs
------------------------------------
/s/ Xxxxxxx Xxxxxx
------------------------------------------
Xxxxxxx Xxxxxx
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SCHEDULE A
Name and Address of Capital Agreed Fair
Member Contribution Market Value Units
------ ------------ ------------ -------
Great Plains Software, Inc. Cash $50,000 99
Xxxxxxx Xxxxxx Cash $ 500 1
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