Exhibit 10.7
OPERATING AGREEMENT
OF
RBE, LLC
(A Delaware Limited Liability Company)
OPERATING AGREEMENT
OF
RBE, LLC
(A Delaware Limited Liability Company)
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS.......................................................1
1.01 Definitions.......................................................1
1.02 Construction......................................................6
ARTICLE II - ORGANIZATION.....................................................6
2.01 Formation.........................................................6
2.02 Name..............................................................6
2.03 Registered Office; Principal Place of Business; Other Offices.....6
2.04 Purposes..........................................................6
2.05 Foreign Qualification.............................................6
2.06 Term..............................................................6
2.07 No State-Law Partnership..........................................7
ARTICLE III - MEMBERSHIP, DISPOSITIONS OF MEMBERSHIP INTERESTS................7
3.01 Initial Members...................................................7
3.02 Restrictions on the Disposition of an Interest....................7
3.03 Grant of Option...................................................7
3.04 Exercise of Option................................................7
3.05 Bona Fide Offer...................................................8
3.06 Transferee Bound by Agreement.....................................8
3.07 Retained Membership Interests.....................................8
3.08 Additional Members................................................9
3.09 Indemnity.........................................................9
3.10 Liability.........................................................9
3.11 Lack of Authority.................................................9
ARTICLE IV - CAPITAL CONTRIBUTIONS............................................9
4.01 Capital Contributions.............................................9
4.02 Return of Contributions..........................................10
4.03 Advances by Members..............................................10
4.04 Capital Account..................................................10
ARTICLE V - ALLOCATIONS OF PROFITS AND LOSSES................................11
5.01 Profits..........................................................11
5.02 Losses...........................................................11
5.03 Special Allocations..............................................11
5.04 Curative Allocations.............................................13
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5.05 Tax Allocations..................................................13
5.06 Miscellaneous....................................................13
5.07 Establishment of Reserves........................................14
ARTICLE VI - DISTRIBUTIONS...................................................14
6.01 Distributions....................................................14
6.02 Definitions......................................................14
6.03 Tax Distributions................................................15
ARTICLE VII - MANAGERS.......................................................15
7.01 Number and Term of Office of Managers; Initial Managers..........15
7.02 Management by Managers...........................................15
7.03 Delegation.......................................................15
7.04 Vacancies; Removal; Resignation..................................16
7.05 Meetings.........................................................16
7.06 Action by Written or Telephone Conference........................17
7.07 Compensation of Managers.........................................17
7.08 Conflicts of Interest............................................17
7.09 Limitation of Liability..........................................17
ARTICLE VIII - MEMBERS.......................................................18
8.01 Voting...........................................................18
8.02 Meetings.........................................................18
8.03 Proxies..........................................................18
8.04 Conduct of Meetings..............................................19
8.05 Action by Written Consent or Telephone Conference................19
8.06 Liability of Members.............................................19
ARTICLE IX - INDEMNIFICATION.................................................19
9.01 Right to Indemnification.........................................19
9.02 Advance Payment..................................................20
9.03 Indemnification of Employees and Agents..........................20
9.04 Appearance as a Witness..........................................20
9.05 Nonexclusivity of Rights.........................................20
9.06 Insurance........................................................20
9.07 Savings Clause...................................................20
ARTICLE X - TAXES............................................................21
10.01 Tax Returns...................................................21
10.02 Tax Elections.................................................21
10.03 Tax Matters Partner...........................................21
ARTICLE XI - BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS......................22
11.01 Maintenance of Books..........................................22
11.02 Reports.......................................................22
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11.03 Accounts......................................................22
ARTICLE XII - DISSOLUTION, LIQUIDATION, AND TERMINATION......................22
12.01 Dissolution...................................................22
12.02 Liquidation and Termination...................................22
12.03 Deficit Capital Accounts......................................23
12.04 Certificate of Cancellation...................................24
ARTICLE XIII- MEMBERSHIP INTERESTS...........................................24
13.01 Membership Interests..........................................24
13.02 Reissuance....................................................24
ARTICLE XIV - GENERAL PROVISIONS.............................................24
14.01 Offset........................................................24
14.02 Notices.......................................................24
14.03 Entire Agreement..............................................25
14.04 Effect of Waiver or Consent...................................25
14.05 Amendment or Modification.....................................25
14.06 Arbitration...................................................25
14.07 Binding Act...................................................25
14.08 Governing Law; Severability...................................25
14.09 Further Assurances............................................25
14.10 No Third Party Benefit........................................26
14.11 Waiver of Certain Rights......................................26
14.12 Indemnification...............................................26
14.13 Counterparts..................................................26
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OPERATING AGREEMENT
OF
RBE HOLDINGS, LLC
(A Delaware Limited Liability Company)
This OPERATING AGREEMENT OF RBE, LLC (this "Agreement"), dated August
2, 2004, has been executed and adopted by all persons who were the Members (as
defined below) of the Company on that date. This Agreement, as it may be amended
from time to time shall be binding on any person who at the time is a Member
regardless of whether or not the person has executed this Agreement or any
amendment hereto.
ARTICLE I - DEFINITIONS
1.01 Definitions. As used in this Agreement, the following terms shall
have the following meanings set forth below.
"Act" means the Delaware Limited Liability Company Act, as
amended from time to time.
"Additional Capital" has the meaning set forth in Section
4.01(b) of the Agreement.
"Adjusted Capital Account Deficit" shall mean with respect to
any Member, the deficit balance, if any, in such Member's Capital
Account as of the end of the relevant fiscal year, after giving effect
to the following adjustments: (i) credit to such Capital Account any
amounts which such Member is obligated to restore or is deemed to be
obligated to restore pursuant to Treasury Regulations Sections
1.704-2(g)(1) and 1.704-2(i)(5); and (ii) debit to such Capital Account
the items described in Sections 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d)
of the Regulations and shall be interpreted consistently therewith.
"Agreement" has the meaning given that term in the
introductory paragraph.
"Affiliate" of, or a Person, association, partnership or
corporation "affiliated" with, a specified Person, association,
partnership or corporation, is a Person, association, partnership or
corporation that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, the specified Person, association, partnership or corporation.
"Bankrupt" means, with respect to any Person, a person (a)
that (i) makes a general assignment for the benefit of creditors; (ii)
files a voluntary bankruptcy petition; (iii) becomes the subject of an
order for relief or is declared insolvent in any federal or state
bankruptcy or insolvency proceedings; (iv) files a petition or answer
seeking for the person a reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any
law; (v) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against the person
in a proceeding of the type described in subclauses (i) through (iv) of
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this clause (a); or (vi) seeks, consents to, or acquiesces in the
appointment of a trustee, receiver, or liquidator of the Person's or of
all or any substantial part of the Person's properties; or (b) against
which, a proceeding seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution, or similar relief under any law
has been commenced and 120 days have expired without dismissal thereof
or with respect to which, without the person's consent or acquiescence,
a trustee, receiver, or liquidator of the Person or of all or any
substantial part of the Person's properties has been appointed and 90
days have expired without the appointment having been vacated and
stayed, or 90 days have expired after the date of expiration of a stay,
if the appointment has not previously been vacated.
"Business Day" means any day other than a Saturday, a Sunday,
or a holiday on which national banking associations in the State of
Delaware are closed.
"Capital Account(s)" shall mean the individual account(s)
maintained by the Company with respect to each Member as provided in
Section 4.04 of this Agreement.
"Capital Contribution(s)" shall mean the amount of cash or the
agreed value of the property or services (as determined by the Members
and the Company) contributed by each Member to the Company as provided
in Section 4.01 of this Agreement.
"Class A Member shall have the meaning ascribed to such term
in Sectin 2.2.
"Class A Percentage Interest: shall mean the fraction
(expressed as a percentage), the numerator of which is the Percentage
Intrest of the applicable Class A Member and the denominator of which
is the aggregate Percentage Interest of all Class A Members on the
applicable date of computation.
"Class B Member" shall have the meaning ascribed to such term
in Section 2.2.
"Class B Percentage Interest" shall mean the fraction
(expressed as a percentage), the numerator of which is the Percentage
Interest of the applicable Class B Member and the denominator of which
is the aggregate Percentage Interest of all Class B Members on the
applicable date of computation.
"Code" means the Internal Revenue Code of 1986 and any
successor statute, as amended from time to time.
"Company" means RBE, LLC., a Delaware limited liability
company.
"Company Minimum Gain" has the same meaning as "Partnership
Minimum Gain" set forth in Treasury Regulations Sections 1.704-2(b)(2)
and 1.704-2(d).
"Depreciation" shall mean for each fiscal year or other
period, an amount equal to the depreciation, amortization, or other
cost recovery deduction allowable with respect to an asset for such
year or other period, except that if the Gross Asset Value of an asset
differs from its adjusted basis for Federal income tax purposes at the
beginning of such year or other period, Depreciation shall be an amount
which bears the same ratio to such beginning Gross Asset Value as the
Federal income tax depreciation, amortization, or other cost recovery
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deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the Federal income tax
depreciation, amortization, or other cost recovery deduction for such
year is zero, Depreciation shall be determined with reference to such
beginning Gross Asset Value using any reasonable method selected by the
Managers.
"Dispose", "Disposing" or "Disposition" means a sale,
assignment, transfer, exchange, mortgage, pledge, grant of a security
interest, gift or other disposition or encumbrance (including, without
limitation, by operation or law), or the acts thereof.
"Gross Asset Value" with respect to any asset shall mean the
asset's adjusted basis for Federal income tax purposes, except as
follows:
(i) The initial Gross Asset Value of any asset
contributed by a Member to the Company shall be the gross fair market
value of such asset, as determined by the contributing Member and the
Company;
(ii) The Gross Asset Values of all Company assets
shall be adjusted to equal their respective gross fair market values,
as determined by the Managers, as of the following times:
(a) the acquisition of an additional interest
in the Company by any new or existing Member in exchange for more than
a de minimis Capital Contribution;
(b) the distribution by the Company to a
Member of more than a de minimis amount of Company property other than
money, as consideration for an interest in the Company;
(c) the liquidation of the Company for
Federal income tax purposes within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(g); provided, however, that the adjustments
pursuant to clauses (a) and (b) above shall be made only if the
Managers reasonably determine that such adjustments are necessary or
appropriate to reflect the relative economic interests of the Members
in the Company;
(iii) The Gross Asset Value of any Company asset
distributed to any Member shall be the gross fair market value of such
asset on the date of distribution;
(iv) The Gross Asset Values of Company assets shall
be increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Code Section 734(b) or Code Section
743(b), but only to the extent that such adjustments are taken into
account in determining Capital Accounts pursuant to Regulations Section
1.704-1(b)(2)(iv)(m) and Section 4.06 hereof; provided, however, that
Gross Asset Values shall not be adjusted pursuant to this clause (iv)
to the extent the Managers determine that an adjustment pursuant to
clause (ii) hereof is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to
this clause (iv); and
(v) If the Gross Asset Value of an asset has been
determined pursuant to subparagraphs (i), (ii), or (iv) hereof, such
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Gross Asset Value shall thereafter be adjusted by the Depreciation
taken into account with respect to such asset for purposes of computing
Profits and Losses.
"Initial Capital Contribution" means, subject in each case to
adjustments on account of Dispositions of Membership Interests
permitted by this Agreement, (a) in the case of a Member executing this
Agreement as of the date hereof or a person acquiring that Membership
Interest, the amount specified for that Member as its Initial Capital
Contribution on Exhibit A, and (b) in the case of a Membership Interest
issued pursuant to Section 3.08, the Initial Capital Contribution
established pursuant thereto and set forth on Exhibit A.
"Majority-In-Interest" means with respect to the Members whose
aggregate Percentage Interests exceed fifty percent (50%) of the
Percentage Interests of all Members in the Company who are entitled to
vote on, consent to, or approve a particular matter.
"Manager" means Xxxxxxx RBE Holdings, LLC, a Delaware Limited
Liability Company and any Person hereafter elected or appointed as a
manager of the Company as provided in this Agreement, but does not
include any person who has ceased to be a manager of the Company.
"Member" means any Person executing this Agreement as of the
date of this Agreement as a Member or hereafter admitted to the Company
as a Member as provided in this Agreement, but does not include any
Person who has ceased to be a Member in the Company.
"Membership Interest" means the interest of a Member in the
Company, as more fully described herein and set forth on Exhibit A
attached hereto, as amended from time to time.
"Member Nonrecourse Debt" has the same meaning as "partner
nonrecourse debt" set forth in Sections 1.704-2(b)(4) and 1.704-2(i) of
the Treasury Regulations.
"Member Nonrecourse Debt Minimum Gain" shall have the same
meaning as "partner nonrecourse debt minimum gain" set forth in
Treasury Regulations Section 1.704-2(i) and shall be determined in
accordance with the principles of such Section of the Treasury
Regulations.
"Member Nonrecourse Deductions" has the same meaning as
"partner nonrecourse deductions" set forth in Sections 1.704-2(i)(1)
and 1.704-2(i)(2) of the Treasury Regulations.
"Nonrecourse Deductions" are deductions having the meaning set
forth in Sections 1.704-2(b)(1) and 1.704-2(c) of the Treasury
Regulations.
"Percentage Interest" shall mean the numerator of which is the
Member's Membership Interest and the denominator is the total of all
Membership Interests in the Company outstanding on the date of
computation as set forth on Exhibit A attached hereto and as amended
from time to time.
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"Permanent Disability" means mental or physical incapacity
preventing the duties of the type performed by such Member immediately
prior to such disability for six (6) consecutive months, and such
disability shall be reasonably determined by the Company and shall be
deemed to occurred on the last day of such six (6) month period.
"Person" means natural persons, corporations, partnerships,
limited liability companies, trusts, or other entities.
"Prime Rate" means a rate per annum equal to a varying rate
per annum that is equal to the interest rate published by the Wall
Street Journal from time to time as the prime commercial or similar
reference interest rate, with adjustments in that varying rate to be
made on the same date as any change in that rate.
"Profits and Losses" shall mean for each fiscal year or other
period, except as otherwise provided herein, an amount equal to the
Company's taxable income or loss for such year or period, determined in
accordance with Code Section 703(a) (for these purposes, all items of
income, gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income
or loss), with the following adjustments:
(i) Any income of the Company that is exempt from
Federal income tax and not otherwise taken into account in computing
Profits or Losses pursuant to the foregoing shall be added to such
taxable income or loss;
(ii) Any expenditures of the Company described in
Code Section 705(a)(2)(B) or that are treated as Code Section
705(a)(2)(B) expenditures pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i) and not otherwise taken into account in computing
Profits or Losses pursuant to the foregoing shall be subtracted from
such taxable income or loss;
(iii) In the event the Gross Asset Value of any
Company asset is adjusted pursuant to clause (ii) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for purposes
of computing Profits or Losses;
(iv) Gain or loss resulting from any disposition of
Company property with respect to which gain or loss is recognized for
Federal income tax purposes shall be computed by reference to the Gross
Asset Value of the property disposed of, notwithstanding that the
adjusted tax basis of such property differs from its Gross Asset Value;
(v) In lieu of the depreciation, amortization, and
other cost recovery deductions taken into account in computing such
taxable income or loss, there shall be taken into account Depreciation
for such fiscal year or other period, computed in accordance with the
definition of Depreciation under this Agreement; and
(vi) Notwithstanding the above, any items which are
specially allocated pursuant to Sections 5.03, 5.04 or 5.05 hereof
shall not be taken into account in computing Profits and Losses.
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Other terms defined herein have the meanings so given them.
1.02 Construction. Whenever the context requires, the gender of all
words used in this Agreement includes the masculine, feminine, and neuter. All
references to articles and sections refer to articles and sections of this
Agreement, and all references to exhibits are to exhibits attached hereto, each
of which is made a part hereof for all purposes.
ARTICLE II - ORGANIZATION
2.01 Formation. The Company has heretofore been organized as a Delaware
limited liability company by the filing of a Certificate of Formation (the
"Certificate") with the Secretary of State of the State of Delaware under and
pursuant to the Act.
2.02 Name. The name of the Company is RBE, LLC, and all Company
business must be conducted in that name or such other names that comply with
applicable law as the Managers may select from time to time.
2.03 Registered Office; Principal Place of Business; Other Offices. The
registered office of the Company required by the Act to be maintained in the
State of Delaware shall be 0000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxxxx, XX 00000 or
such other office (which need not be a place of business of the Company) as the
Managers may designate from time to time in the manner provided by law. The
principal place of business of the Company shall be at 000 Xxxx Xxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, or at such other place as the Managers may designate from
time to time, which need not be in the State of Delaware, and the Company shall
maintain such records there as are set forth on Exhibit B hereto. The Company
may have such other offices as the Managers may designate from time to time.
2.04 Purposes. The Company's principal purpose shall be to acquire,
explore, drill and develop natural gas and oil properties, acquire ownership
interests in natural gas and oil properties, projects or entities engaged in the
acquisition, drilling or exploration of natural gas and oil properties or
projects, and to engage in any other business activity that now or hereafter may
be necessary, appropriate, desirable, incidental, advisable or convenient to
accomplish the foregoing purpose (including obtaining financing therefor), and
that is not forbidden by the Act or the law of the jurisdiction in which the
Company engages in business.
2.05 Foreign Qualification. Prior to the Company's conducting business
in any jurisdiction other than the State of Delaware, the Managers shall cause
the Company to comply, to the extent procedures are available and those matters
are reasonably within the control of the Managers, with all requirements
necessary to qualify the Company as a foreign limited liability company in that
jurisdiction. At the request of the Managers, each Member shall execute,
acknowledge, swear to, and deliver all certificates and other instruments
conforming with this Agreement that are necessary or appropriate to qualify,
continue, and terminate the Company as a foreign limited liability company in
all such jurisdictions in which the Company may conduct business.
2.06 Term. The Company commenced on the date the Certificate was filed
with the Department of the State of Delaware and shall continue until December
31, 2054 unless its existence is earlier terminated pursuant to this Agreement.
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2.07 No State-Law Partnership. The Members intend that the Company not
be a partnership (including, without limitation, a limited partnership) or joint
venture, and that no Member or Manager be a partner or joint venturer of any
other Member or Manager, for any purposes other than Federal tax purposes and,
to the extent permitted, state tax purposes, and this Agreement shall not be
construed to produce a contrary result.
ARTICLE III - MEMBERSHIP, DISPOSITIONS OF MEMBERSHIP INTERESTS
3.01 Initial Members. The Initial Members of the Company are the
persons executing this Agreement as of the date hereof as Members, each of which
is admitted to the Company as a Member as of the effective date of this
Agreement.
3.02 Restrictions on the Disposition of an Interest. Dispositions of
Membership Interests shall be subject to and made only in accordance with this
Article III and any purported Disposition to the contrary shall be null and void
ab initio and shall not be recognized by or binding upon the Company.
3.03 Grant of Option. Unless consented to by the Manager, any Member
for whom any of the events set forth in this Section 3.03 occurs hereby grants
to the Company, or any Person designated by the Company to purchase such
Membership Interest (a "Designated Person"), in consideration of the mutual
covenants herein contained, an option to purchase any and all of the Membership
Interests now owned or held, or hereafter acquired, by such Member, such option
to be exercisable upon the occurrence of any of the following events:
(a) Any attempt by such Member to sell, assign, transfer or in
any way dispose of any or all of such Membership Interests, or the beneficial
interest therein, to any Person who is not an Affiliate of such Member or a
Member; or
(b) Any pledge or the creation of any encumbrance on any or
all of the Membership Interests held by such Member; or
(c) Any other transfer of any or all of the Membership
Interests held by such Member, or the beneficial interest therein, whether
voluntary or involuntary, by operation of law or otherwise, including but not
limited to, all executions or legal processes (including, without limitation,
pursuant to the divorce code or law in any jurisdiction) attaching such
Membership Interests and all processes affecting the interest of any Member with
respect to such Membership Interests; or
(d) Such Member becoming Bankrupt;
(e) The receipt by such Member of a bona fide offer from a
third party to purchase all, but not less than all, of such Member's Membership
Interests (a "Bona Fide Offer"), which offer such Member desires to accept; or
(f) Such Member shall default with respect to any obligation
under Section 4.01(b).
3.04 Exercise of Option. Immediately upon the occurrence of any of the
events set forth in Section 3.03 hereof, the Members whose Membership Interests
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are so affected shall send notice in writing to the Company of such fact. If
such Member desires to sell such Member's Membership Interests as a result of a
Bona Fide Offer, such notice in writing shall contain the name and address of
the Person who made the offer and the price and all of the terms of such offer.
During the period which shall begin with the occurrence of such event, and (a)
if the notice is given, shall end ninety (90) days after such notice is given,
or (b) if no notice is given, shall continue without end, the Company shall have
the right to exercise its option to purchase (or have a Designated Person
purchase) the Member's Membership Interests on the terms and conditions set
forth herein.
If the option becomes exercisable other than as a result of a Bona Fide
Offer, the Company (or Designated Person) shall have the right to purchase such
Member's Membership Interests at a purchase price equal to the Fair Market Value
of such Member's Membership Interests by providing written notice to such Member
within ninety (90) days after the occurrence of such event. The Purchase Price
shall be paid in equal monthly installments over a twelve (12) month period.
Fair Market Value shall mean the value determined by agreement between the
Member whose Membership Interests are being purchased and the Company or
Designated Person, as applicable. If the Member whose Membership Interests are
being purchased and the Company or Designated Person, as applicable, cannot
agree upon the Fair Market Value of such Membership Interests within thirty (30)
days, the Fair Market Value thereof shall be determined by appraisal, the
Company and the Member whose Membership Interests are being purchased each to
chose one appraiser and the two appraisers so chosen shall select a third
appraiser. The decision of the majority of the appraisers as to the Fair Market
Value of such Membership Interests shall be final and binding and may be
enforced by legal proceedings. The Member whose Membership Interests are being
purchased and the Company or Designated Person, as applicable, shall each
compensate the appraiser appointed by it and the compensation of the third
appraiser shall be borne equally be such parties.
3.05 Bona Fide Offer. In the event a Bona Fide Offer occurs pursuant to
which the Company (or Designated Person) may exercise its option to purchase and
the Company (or Designated Person) fails to so exercise its option to purchase
all of the Member's Membership Interests offered for sale within the allotted
time, said option to purchase with respect to such Bona Fide Offer shall
terminate; provided, however, in the event a proposed transfer or sale as a
result of a Bona Fide Offer is not consummated either (i) substantially in
accordance with the price and on the terms set forth in the notice sent to the
Company pursuant to Section 3.04 hereof or otherwise contained in a Bona Fide
Offer or (ii) within sixty (60) days of the date of said notice, such Member
shall not be entitled to sell such Member's Membership Interests unless
reoffered to the Company under the terms of this Agreement and at any lower
price and on any different terms.
3.06 Transferee Bound by Agreement. Any transferee of a Member shall
become bound by the terms of this Agreement as fully and effectively as if an
original signatory hereto. Such transferee shall only be entitled to the
benefits of being a Member hereunder if such transfer was completed in
accordance with the provisions of this Agreement and such transferee executes an
agreement, in form satisfactory to the Company, that such transferee is bound by
the terms hereof.
3.07 Retained Membership Interests. A Member may sell, pursuant to a
Bona Fide Offer, subject to the provisions of Section 3.03 above, less than all
of the Member's Membership Interests owned or held by him, provided that the
Member's Membership Interests not sold shall remain subject to the restrictions
contained in this Agreement and shall not thereafter be sold, pledged or
transferred except in compliance with the applicable provisions of this
Agreement.
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3.08 Additional Members. Additional persons may be admitted to the
Company as Members and Membership Interests may be created and issued to those
persons and to existing Members upon the consent of the Manager. The terms of
admission or issuance must specify the Percentage Interest and the Initial
Capital Contribution applicable thereto. Any such admission shall be effective
only after the new Member has executed and delivered to the Managers a document
including the new Member's notice address and its agreement to be bound by this
Agreement.
3.09 Indemnity. If a Member shall, or shall attempt to, sell, assign,
transfer, pledge, subject to any security interest, or otherwise Dispose of his
or her Membership Interest (except in a transaction with or consented to by the
other Members or permitted hereunder) without compliance with the requirements
of this Article III, such Member shall indemnify and hold harmless the other
Members and the Company against and from any and all liabilities, obligations,
costs and expenses the other Members or the Company may incur as a result of
such failure.
3.10 Liability. No Member or Manager shall be liable for the debts,
obligations or liabilities of the Company, including under a judgment decree or
order of a court.
3.11 Lack of Authority. No Member (other than a Member who is, and who
is acting in the capacity of, a Manager) has the authority or power to act for
or on behalf of the Company, to do any act that would be binding on the Company,
or to incur any expenditures on behalf of the Company.
ARTICLE IV - CAPITAL CONTRIBUTIONS
4.01 Capital Contributions.
(a) Initial Capital Contribution. Each Member has made or will
make the Initial Capital Contributions, in cash or property, described for that
Member in Exhibit "A".
(b) Additional Capital Contribution. Except as hereinafter
provided, no Member shall be required to make any additional Capital
Contributions to the Company not specifically agreed to in writing between the
Member and the Company. Notwithstanding the above, the Company may, from time to
time, as determined by the Manager, in order to meet the Company's operating and
capital needs, request that each Member provide the Company as determined by the
Manager, with his pro rata share (as determined in accordance with each Member's
Percentage Interest in the Company) of such capital needed by the Company (the
"Additional Capital"). In the event that the Company requests Additional Capital
from the Members in accordance with this Section 4.01(b): (i) the Company shall
notify each Member of the need for the Additional Capital, which notice must
include a statement in reasonable detail of the proposed uses of the Additional
Capital and a date (which date may be no earlier than thirty (30) days following
9
the delivery of such notice) before which each such Member's share of the
Additional Capital should be delivered to the Company, and (ii) if any one or
more of the Members fails to contribute all or any portion of his share of such
requested Additional Capital ("Non-Contributing Member(s)"), the Percentage
Interests (and Membership Interests) in the Company of all of the Members will
be recalculated pro rata to reflect a reduction in the Percentage Interests (and
Membership Interests) in the Company held by the Non-Contributing Member(s) and
an increase in the Percentage Interests (and Membership Interests) in the
Company held by those Members who timely complied with subsection (b)(i) of this
Section 4.01.
4.02 Return of Contributions. A Member is not entitled to the return of
any part of its Capital Contributions or to be paid interest in respect of
either its Capital Account or its Capital Contributions. An unrepaid Capital
Contribution is not a liability of the Company or of any Member. A Member is not
required to contribute or to lend any cash or property to the Company to enable
the Company to return any Member's Capital Contributions.
4.03 Advances by Members. If the Company does not have sufficient cash
to pay its obligations after making commercially reasonable attempts to borrow
such funds, no Member shall be required to make Advances to the Company.
However, any Member(s) that may agree to do so with the Managers' consent may
advance all or part of the needed funds to or on behalf of the Company. An
advance described in this Section 4.03 constitutes a loan from the Member to the
Company, bears interest at the Prime Rate from the date of the advance until the
date of payment, and is not a Capital Contribution.
4.04 Capital Account. A Capital Account shall be established and
maintained for each Member. Each Member's Capital Account (a) shall be increased
by (i) the amount of money contributed by that Member to the Company, (ii) the
fair market value of property contributed by that Member to the Company (net of
liabilities secured by the contributed property that the Company is considered
to assume or take subject to under Section 752 of the Code), and (iii)
allocations to that Member of Company income and gain (or items thereof),
including income and gain exempt from tax and income and gain described in
Treasury Regulations Section 1.704-1(b)(2)(iv)(g), but excluding income and gain
described in Treasury Regulations Section 1.704-1(b)(4)(i), and (b) shall be
decreased by (i) the amount of money distributed to that Member by the Company,
(ii) the fair market value of property distributed to that Member by the Company
(net of liabilities secured by the distributed property that the Member is
considered to assume or take subject to under Section 752 of the Code), (iii)
allocations to that Member of expenditures of the Company described in Section
705(a)(2)(B) of the Code, and (iv) allocations of Company loss and deduction (or
items thereof), including loss and deduction described in Treasury Regulations
Section 1.704-1(b)(2)(iv)(g), but excluding items described in clause (b)(iii)
above and loss of deduction described in Treasury Regulations Section
1.704-1(b)(4)(i) or 1.704-1(b)(4)(iii). The Members' Capital Accounts also shall
be maintained and adjusted as permitted by the provisions of Treasury
Regulations Section 1.704-1(b)(2)(iv)(f) and as required by the other provisions
of Treasury Regulations Section 1.704-1(b)(2)(iv) and ss.1.704-1(b)(4),
including adjustments to reflect the allocations to the Members of depreciation,
depletion, amortization, and gain or loss as computed for book purposes rather
than the allocation of the corresponding items as computed for tax purposes, as
required by Treasury Regulations Section 1.704-1(b)(2)(iv)(g). On the transfer
or all or part of a Membership Interest, the Capital Account of the transferor
that is attributable to the transferred Membership Interest or part thereof
shall carry over to the transferee Member in accordance with the provisions of
Treasury Regulations Section 1. 704-1(b)(2)(iv)(l).
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ARTICLE V - ALLOCATIONS OF PROFITS AND LOSSES
5.01 Profits. Profits and all items of Company income or gain for any
fiscal year shall be allocated among the Members as follows:
(a) First to take into account the allocations required by
Sections 5.03, 5.04 and 5.05; and
(b) Second, Profits, if any, in excess of those allocated
pursuant to subparagraph (a) shall be allocated to the Members in proportion to
their respective cash distribution percentages set forth in Section 6.01.
5.02 Losses.
(a) Losses, determined after giving effect to the special
allocations set forth in Sections 5.03, 5.04 and 5.05, shall be allocated among
the Members in proportion to their respective cash distribution percentages set
forth in Section 6.01.
(b) The Losses allocated pursuant to Section 5.02(a) hereof
shall not exceed the maximum amount of Losses that can be so allocated without
causing any Member to have an Adjusted Capital Account Deficit at the end of any
fiscal year. In the event some but not all of the Members would have Adjusted
Capital Account Deficits as a consequence of an allocation of Losses pursuant to
Section 5.02(a) hereof, the limitation set forth in this Section 5.02(b) shall
be applied on a Member by Member basis so as to allocate the maximum permissible
Losses to each Member under Section 1.704-1(b)(2)(ii)(d) of the Regulations.
5.03 Special Allocations. The following special allocations shall be
made in the following order:
(a) Minimum Gain Chargeback. Notwithstanding any other
provision of this Article V, if there is a net decrease in Company Minimum Gain
during any Company taxable year, each Member shall be specially allocated items
of Company income and gain for such year (and, if necessary, subsequent years)
in accordance with Treasury Regulations Section 1.704-2(f). Allocations pursuant
to the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. This Section 5.03(a)
is intended to comply with the minimum gain chargeback requirement in such
Section of the Regulations and shall be interpreted consistently therewith.
(b) Member Minimum Gain Chargeback. Notwithstanding any other
provision of this Article V except Section 5.03(a), if there is a net decrease
in Member Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse
Debt during any Company fiscal year, each Member who has a share of the Member
Nonrecourse Debt Minimum Gain attributable to such Member Nonrecourse Debt,
determined in accordance with Treasury Regulations Section 1.704-2(i)(5), shall
be specially allocated items of Company income and gain for such year (and, if
necessary, subsequent years) in accordance with Treasury Regulations Section
1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in
proportion to the respective amounts required to be allocated to each Member
pursuant thereto. The items to be so allocated shall be determined in accordance
with Section 1.704-2(i)(4) of the Treasury Regulations. This Section 5.03(b) is
intended to comply with the minimum gain chargeback requirement in such Section
of the Regulations and shall be interpreted consistently therewith.
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(c) Qualified Income Offset. In the event any Member who is
not obligated (or treated as obligated) to restore a deficit balance in its
Capital Account unexpectedly receives any adjustments, allocations, or
distributions described in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company income and
gain shall be specially allocated to each such Member in an amount and manner
sufficient to eliminate, to the extent required by the Regulations, the Adjusted
Capital Account Deficit of such Member as quickly as possible, provided that an
allocation pursuant to this Section 5.03(c) shall be made if and only to the
extent that such Member would have an Adjusted Capital Account Deficit after all
other allocations provided for in this Article V have been tentatively made as
if this Section 5.03(b) were not in the Agreement.
(d) Gross Income Allocation. In the event any Member has a
deficit Capital Account at the end of any Company fiscal year that is in excess
of the sum of (i) the amount such Member is obligated to restore, and (ii) the
amount such Member is deemed to be obligated to restore pursuant to Sections
1.704-2(g)(1) and 1.704-2(i)(5) of the Treasury Regulations, each such Member
shall be specially allocated items of Company income and gain in the amount of
such excess as quickly as possible, provided that an allocation pursuant to this
Section 5.03(d) shall be made if and only to the extent that such Member would
have a deficit Capital Account balance in excess of such sum after all other
allocations provided for in this Article V have been tentatively made as if
Section 5.03(c) hereof and this Section 5.03(d) were not in the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for any
taxable year or other period shall be allocated among the Members in proportion
to their respective Percentage Interests.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any fiscal year or other period shall be specially allocated to
the Member who bears the economic risk of loss with respect to the Member
Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in
accordance with Treasury Regulations Section 1.704-2(i).
(g) Section 754 Adjustment. To the extent an adjustment to the
adjusted tax basis of any Company asset is required pursuant to Code Section
734(b), Code Section 743(b) and Treasury Regulations Section
1.704-1(b)(2)(iv)(m), are 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 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
Section of the Treasury Regulations.
(h) Allocations Relating to Taxable Issuance of Membership
Interests. Any income, gain, loss or deduction realized as a direct or indirect
result of the issuance of an interest by the Company to a Member (the "Issuance
Items") shall be allocated among the Members so that, to the extent possible,
the net amount of such Issuance Items, together with all other allocations under
this Agreement to each Member shall be equal to the net amount that would have
been allocated to each such Member if the Issuance Items had not been realized.
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5.04 Curative Allocations. The allocations set forth in Section 5.02(b)
and in Section 5.03 hereof (the "Regulatory Allocations") are intended to comply
with certain requirements of Treasury Regulations Section 1.704-1(b).
Notwithstanding any other provisions of this Article V (other than the
Regulatory Allocations), the Regulatory Allocations shall be taken into account
in allocating Profits, Losses, and items of income, gain, loss, and deduction
among the Members so that, to the extent possible, the net amount of such
allocations of Profits, Losses and other items and the Regulatory Allocations to
each Member shall be equal to the net amount that would have been allocated to
each such Member if the Regulatory Allocations had not occurred. Notwithstanding
the preceding sentence, Regulatory Allocations relating to (a) Nonrecourse
Deductions shall not be taken into account except to the extent that there has
been a reduction in Company Minimum Gain, and (b) Member Nonrecourse Deductions
shall not be taken into account except to the extent that there would have been
a reduction in Member Minimum Gain if the loan to which such deductions are
attributable were not made or guaranteed by a Member within the meaning of
Treasury Regulations Sections 1.704-2(b)(4) and 1.704-2(i) or a person related
to a Member within the meaning of such sections of the Treasury Regulations.
5.05 Tax Allocations.
(a) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gain, loss, and deduction with respect to any
property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the Company for federal income
tax purposes and its initial Gross Asset Value.
(b) In the event the Gross Asset Value of any Company asset is
adjusted pursuant to clause (ii) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss, and deduction with respect to such
asset shall take account of any variation between the adjusted basis of such
asset for federal income tax purposes and its Gross Asset Value in the same
manner as under Code Section 704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating to allocations
pursuant to this Section 5.05 shall be made by the Managers in any manner that
reasonably reflects the purpose and intention of this Agreement. Allocations
pursuant to this Section 5.05 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 Profits, Losses, other
items, or distributions pursuant to any provision of this Agreement.
5.06 Miscellaneous.
(a) For purposes of determining the Profits, Losses or any
other items allocable to any period, Profits, Losses, and any such other items
shall be determined on a daily, monthly, or other basis, as determined by the
Managers using any permissible method under Code Section 706 and the Treasury
Regulations promulgated thereunder.
(d) Except as otherwise provided in this Agreement, all items
of Company income, gain, loss, deduction, and any other allocations not
otherwise provided for shall be divided among the Members in the same
proportions as they share Profits or Losses, as the case may be, for the year.
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(e) For the purpose of determining each Member's share of
excess nonrecourse liabilities pursuant to Treasury Regulations Section
1.752-3(a)(3), and solely for such purpose, each Member's interest in Company
Profits is hereby specified to be such Member's Percentage Interest.
5.07 Establishment of Reserves. The Managers shall have the right to
establish reasonable reserves for anticipated and or contingent Company
obligations as the Managers may deem reasonably necessary or appropriate for
that purpose.
ARTICLE VI - DISTRIBUTIONS
6.01 Distributions.
(a) The time and amount of all distributions shall be as
determined by the Manager, in its sole discretion. Notwithstanding the forgoing,
the Manager shall endeavor to cause the Company to distribute Available Cash
Flow in the manner set forth in Section 6.01(b) below, subject however, to
limitations on distributions contained herein or in agreements with third
parties.
(b) "Available Cash Flow" (as such term is defined in Section
6.02(a) below) shall be applied and/or distributed in the following order of
priorities:
(i) First, to establish a reserve as the Manager may
believe reasonably necessary to meet anticipated and/or contingent Company
obligations, including any unpaid Operating Expenses;
(ii) then, to the Class A Members until the aggregate
Distributions made to the Class A Members under this Section 4.2 equal
$1,000,000;
(iii) then, 50% to the Class A Members and 50% to the
Class B Members.
Distributions made to Class A Members shall be allocated among the Class A
Members in proportion to each Class A Member's respective Class A Percentage
Interest and Distributions made to Class B Members shall be allocated among the
Class B Members in proportion to each Class B Member's respective Class B
Percentage Interest.
6.02 Definitions.
(a) "Available Cash Flow" shall mean, with respect to any
period, the sum of Gross Receipts, Reduction of Reserve and proceeds from the
sale of all or substantially all of the assets of the Company less (i) debt
service payments under all Company indebtedness and (ii) "Operating Expenses"
for such period.
(b) "Gross Receipts" shall mean all monies actually received
by the Company from any means.
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(d) "Operating Expenses" shall mean all expenses, outlays
advanced paid or otherwise incurred in the ordinary course of establishing and
maintaining the operations of the Company, including without limitation,
marketing, legal and accounting fees and expenses, fees for outside advisory
services and insurance.
(e) "Reduction of Reserve" shall mean any reduction in the
cash reserve established by the Company, in accordance with Section 6.01(b)(i)
hereof.
6.03 Tax Distributions. Notwithstanding the provisions of Section 6.01
above, the Managers shall, within ninety (90) days after the end of each fiscal
year, declare and pay to each Member owning a Membership Interest as of the last
day of that fiscal year, a distribution (the "Tax Distribution") equal to (a)
the maximum individual income tax rates for federal and state purposes
(expressed as a percentage) of each Member's share (in accordance with their
Percentage Interests) of the Company's Profit for such fiscal year, less (b) any
distributions made to such Member during the prior fiscal year excluding any Tax
Distribution relating to such prior fiscal year.
ARTICLE VII - MANAGERS
7.01 Number and Term of Office of Managers; Initial Manager. The number
of Managers of the Company shall be no less than one (1) and no greater than
three (3). The initial Manager shall be Xxxxxxx RBE Holdings, LLC., a Delaware
Limited Liability Company. The initial Manager shall have the sole authority to
appoint up to two (2) additional Managers. Each Manager shall hold office until
his, her or its successor shall have been appointed or elected and qualified, or
until his, her or its earlier death, resignation or removal. Managers need not
be Members, and need not be residents of the State of Delaware.
7.02 Management by Managers.
(a) The management of the business and affairs of the Company
shall be the sole and complete responsibility of the Managers. No Member (other
than a Manager) shall take part in, or interfere in any manner with, the
management, conduct or control of the business and affairs of the Company. No
Member (other than a Manager or a Member specifically designated by the
Managers) shall have any right or authority to act for or bind the Company. If
there is more than one Manager, then each Manager shall have the right or
authority to act for or bind the Company only upon the consent of the majority
of the Managers. All of the Managers may designate any Manager to act for all of
the Managers.
(b) Whenever in this Agreement or elsewhere it is provided
that consent is required of, or a demand shall be made by, or an act or thing
shall be done by or at the direction of the Company, or whenever any words of
like import are used, all such consents, demands, acts and things are to be
made, given or done by the Managers, unless a contrary intention is expressly
indicated in this Agreement.
(c) The Managers may delegate the right, power and authority
to manage the day-to-day business, affairs, operations and activities of the
Company to any officer, employee or agent of any Manager or of the Company,
subject to the ultimate direction, control and supervision of the Managers.
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(d) The Managers need not devote services to the Company on a
substantially full time basis and need only devote so much time to the Company's
activities as the Managers determine to be necessary for the efficient conduct
thereof.
7.03 Delegation.
The Managers may delegate the right, power and authority to manage the
day-to-day business, affairs, operations and activities of the Company to any
officer, employee or agent of any Member or of the Company, subject to the
ultimate direction, control and supervision of the Managers. If the Managers
appoint any officer of the Company with a title that is commonly used for
officers of a business corporation formed under the Delaware General Corporation
Law, the assignment of such title shall constitute the delegation of the
authority and duties that are normally associated with that office, subject to
any specific delegation of authority and duties made by the Managers. Any number
of offices may be held by the same Person. The salaries or other compensation,
if any, of the officers and agents of the Company shall be fixed from time to
time by the Managers.
7.04 Vacancies; Removal; Resignation. In the event of a vacancy
occurring in the Managers, the Members shall designate a Manager to fill such
vacancy by affirmative vote of a Majority-In- Interest of such Members. Any
Manager may be removed by the affirmative vote of a Majority-In-Interest of the
Members for any reason or no reason. Any Manager may be removed by affirmative
vote of a Majority-In-Interest of the Members, for gross negligence, willful
misconduct or embezzlement. Any Manager may resign at any time. Such resignation
shall be made in writing and shall take effect at the time specified therein, or
if no time be specified, at the time of its receipt by the remaining Managers.
The acceptance of a resignation shall not be necessary to make it effective,
unless expressly so provided in the resignation.
7.05 Meetings.
(e) Unless otherwise required by law or provided in the
Certificate or this Agreement, a majority of the total number of Managers fixed
by, or in the manner provided in, the Certificate or this Agreement shall
constitute a quorum for the transaction of business of the Managers, and the act
of a majority of the Managers present at a meeting at which a quorum is present
shall be the act of the Managers. A Manager who is present at a meeting of the
Managers at which action on any Company matter is taken shall be presumed to
have assented to the action unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent of such action with
the person acting as secretary of the meeting before the adjournment thereof or
shall deliver such dissent to the Company immediately after the adjournment of
the meeting. Such right to dissent shall not apply to a Manager who voted in
favor of such action.
(f) Meetings of the Managers may be held at such place or
places as shall be determined from time to time by resolution of the Managers.
Attendance of a Manager at a meeting constitutes a waiver of notice of such
meeting, except where a Manager attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
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(g) Regular meetings of the Managers shall be held at such
times and places as shall be designated from time to time by resolution of the
Managers. Notice of such regular meetings shall not be required.
(h) Special meetings of the Managers may be called by any
Manager on at least 24 hours notice to each other Manager. Such notice need not
state the purpose or purposes of, nor the business to be transacted at, such
meeting, except as may otherwise be required by law or provided for by the
Articles or this Agreement.
7.06 Action by Written or Telephone Conference. Any action permitted or
required by the Act, the Certificate or this Agreement to be taken at a meeting
of the Managers or of any committee designated by the Managers may be taken
without a meeting if a consent in writing, setting forth the action to be taken,
is signed by all the Managers or members of such committee, as the case may be.
Such consent shall have the same force and effect as a unanimous vote at a
meeting and may be stated as such in any document or instrument filed with the
Secretary of the State of Delaware, and the execution of such consent shall
constitute attendance or presence in person at a meeting of the Managers or any
such committee, as the case may be. Subject to the requirements of the Act, the
Certificate or this Agreement for notice of meetings, Managers, or members of
any committee designated by the Managers, may participate in and hold a meeting
of the Managers or any committee of Managers, as the case may be, by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
7.07 Compensation of Managers. The Managers shall not be entitled to
compensation for their services rendered as Managers. The Managers shall be
entitled to be reimbursed for out-of-pocket costs and expenses incurred in the
course of their services hereunder. Notwithstanding the forgoing, a Manager may
receive compensation from the Company for providing services to the Company.
7.08 Conflicts of Interest. Subject to the other express provisions of
this Agreement, each Manager and Member of the Company at any time and from time
to time may invest in other business ventures of any and every type and
description, independently or with others, so long as same does not interfere
with their ability to perform his, her or its duties to the Company, with no
obligation to offer to the Company or any other Member or Manager the right to
participate, therein, unless otherwise herein provided. The Company may transact
business with any Manager, Member or affiliate thereof. Nothing in this
Agreement shall preclude transactions between the Company and any Member hereto,
Manager or an affiliate of any Member hereto or Manager acting in and for its
own account, provided that any services performed or products provided by the
Member, Manager or any such affiliate are services and/or products that the
Company reasonably believes, at the time of requesting such services and/or
products, to be in the best interests of Company.
7.09 Limitation of Liability. The Managers shall not be personally
liable, as such, for monetary damages (other than under criminal statutes and
under Federal, state and local laws imposing liability on managers for the
payment of taxes) for any action taken, or any failure to take any action,
unless the person's conduct constitutes willful misconduct or recklessness. No
17
amendment or repeal of this Section shall apply to or have any effect on the
liability or alleged liability of any person who is or was the Manager of the
Company for or with respect to any acts or omissions of the Managers occurring
prior or the effective date of such amendment or repeal. If the Act is amended
to permit a Delaware limited liability company to provide greater protection
from personal liability for its managers than the express terms of this Section
this Section shall be construed to provide for such greater protection.
ARTICLE VIII - MEMBERS
8.01 Voting. The Members shall be entitled to cast that number of votes
on each action to be taken by vote of the Members as shall equal the Percentage
Interest of the Member multiplied by 100. (For example, a Member whose
Percentage Interest is 50% shall be entitled to cast 50 votes). Except as
otherwise set forth herein, the Members shall be entitled to vote on all matters
submitted to a vote of the Members.
8.02 Meetings.
(a) A quorum shall be present at a meeting of Members if
Members holding a majority of all Membership Interests entitled to vote at such
meeting are represented at the meeting in person or by proxy. Except as
otherwise provided in this Agreement, with respect to any matter, the
affirmative vote of a Majority-In-Interest of the Membership Interests, as
applicable, entitled to vote on, consent to, or approve a particular matter
represented at the meeting in which a quorum is present shall be the act of the
Members.
(b) All meetings of the Members shall be held at the principal
place of business of the Company or at such other place within or without the
State of Delaware as shall be specified or fixed in the notices or waivers of
notice thereof; provided that any or all Members may participate in any such
meeting by means of conference telephone or similar communications equipment
pursuant to Section 8.05.
(c) The chairman of the meeting or the holders of a majority
of the Percentage Interests of the Members entitled to vote and represented at a
meeting in which a quorum is present shall have the power to adjourn such
meeting from time to time, without any notice other than announcement at the
meeting of the time and place of the holding of the adjourned meeting.
(d) Special meetings of the Members for any proper purpose or
purposes may be called at any time by the Managers or the holders of at least
ten percent (10%) of the Percentage Interests of all Members entitled to vote at
such meeting. Only business within the purpose or purposes described in the
notice (or waiver thereof) required by this Agreement may be conducted at a
special meeting of the Members.
(e) Written or printed notice stating the place, day and hour
of the meeting and, in the case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than 5 nor more
than 30 days before the date of the meeting, either personally, or by mail, by
or at the direction of the Managers or person calling the meeting, to each
Member. If mailed, any such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the Member at such Member's
address provided for in Section 14.02, with postage thereon prepaid.
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8.03 Proxies. A Member may vote either in person or by proxy executed
in writing by the Member. A telegram, telex, cablegram or similar transmission
by the Member, or a photographic, photostatic, facsimile or similar reproduction
of a writing executed by the Member shall be treated as an execution in writing
for purposes of this Section. A proxy shall be revocable unless the proxy form
conspicuously states that the proxy is irrevocable.
8.04 Conduct of Meetings. All meetings of the Members shall be presided
over by the chairman of the meeting, who shall be a Manager (or representative
thereof) designated by a majority of the Managers. The chairman of any meeting
of Members shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him or her in order.
8.05 Action by Written Consent or Telephone Conference.
(a) Any action required or permitted to be taken at any annual
or special meeting of Members may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of Percentage Interests
representing a Majority-In-Interest of those Members entitled to vote on the
action if a meeting were held.
(b) Members may participate in and hold a meeting by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in
such meeting shall constitute attendance and presence in person at such meeting,
except where a person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.
8.06 Liability of Members. The Members, as such, shall not be liable
for the debts, obligations or liabilities of the Company except to the extent
required by the Act.
ARTICLE IX - INDEMNIFICATION
9.01 Right to Indemnification. Subject to the limitations and
conditions as provided in this Article IX, each person who was or is made a
party or is threatened to be made a party to or is involved in any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative (hereinafter a "Proceeding"), or
any appeal in such a Proceeding or any inquiry or investigation that could lead
to such a Proceeding, by reason of the fact that he or she, or a person of whom
he or she is the legal representative, is or was a Manager of the Company or
while a Manager of the Company is or was serving at the request of the Company
as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise, shall be indemnified by the
Company to the fullest extent permitted by the Act and the Delaware General
Corporation Law, as the same exist or may hereafter be amended, against
judgments, penalties (including excise and similar taxes and punitive damages),
fines, settlements and reasonable expenses (including, without limitation,
attorneys' fees) actually incurred by such person in connection with such
19
proceeding, and indemnification under this Article IX shall continue as to a
person who has ceased to serve in the capacity which initially entitled such
person to indemnity hereunder. The rights granted pursuant to this Article IX
shall be deemed contract rights, and no amendment, modification or repeal of
this Article IX shall have the effect of limiting or denying any such rights
with respect to actions taken or proceedings arising prior to any such
amendment, modification or repeal. It is expressly acknowledged that the
indemnification provided in this Article IX could involve indemnification for
negligence or under theories of strict liability but may not extend to any
matter involving willful misconduct or recklessness.
9.02 Advance Payment. Upon the adoption of a resolution signed by all
of the Managers, the right to indemnification conferred in this Article IX may
include the right to be paid or reimbursed by the Company the reasonable
expenses incurred by a person of the type entitled to be indemnified under
Section 9.01 who was, is or is threatened to be made a named defendant or
respondent in a Proceeding and without any determination as to the person's
ultimate entitlement to indemnification; provided, however, that the payment of
such expenses incurred by any such person in advance of the final disposition of
a Proceedings, shall be made only upon delivery to the Company of a written
affirmation by such person of his or her good faith belief that he or she has
met the standard of conduct necessary for indemnification under this Article IX
and a written undertaking, by or on behalf of such person, to repay all amounts
so advanced if it shall ultimately be determined that such indemnified person is
not entitled to be indemnified under this Article IX or otherwise.
9.03 Indemnification of Employees and Agents. The Company, by adoption
of a resolution signed by all of the Managers, may indemnify and advance
expenses to an employee or agent of the Company to the same extent and subject
to the same conditions under which it may indemnify and advance expenses to
Managers under this Article IX; and the Company may indemnify and advance
expenses to persons who are not or were not Managers, employees or agents of the
Company but who are or were serving at the request of the Company as a Manager,
director, officer, partner, venturer, proprietor, trustee, employee, agent or
similar functionary of another foreign or domestic limited liability company,
corporation, partnership, joint venture, sole proprietorship, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in such a capacity or arising out of his status as such a person
to the same extent that it may indemnify and advance expenses to Managers under
this Article IX.
9.04 Appearance as a Witness. Notwithstanding any other provision of
this Article IX, the Company may pay or reimburse expenses incurred by a Manager
in connection with his or her appearance as a witness or other participation in
a Proceeding at a time when he or she is not a named defendant or respondent in
the Proceeding.
9.05 Nonexclusivity of Rights. The right to indemnification and the
advancement and payment of expenses conferred in this Article IX shall not be
exclusive of any other right which a Manager or other person indemnified
pursuant hereto may have or hereinafter acquire under any law (common or
statutory), agreement, provision of the Certificate or this Agreement, vote of
Members or disinterested Managers or otherwise.
9.06 Insurance. The Company may purchase and maintain insurance, at its
expense, to protect itself and any person who is or was serving as a Manager,
employee or agent of the Company or is or was serving at the request of the
Company as a Manager, director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or domestic limited
liability company, corporation, partnership, joint venture, sole proprietorship,
trust, employee benefit plan or other enterprise against any expense, liability
or loss, whether or not the Company would have the power to indemnify such
person against such expense, liability or loss under this Article IX.
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9.07 Savings Clause. If this Article IX or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify and hold harmless each Manager or any other
person indemnified pursuant to this Article IX as to costs, charges and expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
with respect to any action, suit or proceeding, whether civil, criminal,
administrative or investigative to the full extent permitted by any applicable
portion of this Article IX that shall not have been invalidated and to the
fullest extent permitted by applicable law.
ARTICLE X - TAXES
10.01 Tax Returns. The Managers shall cause to be prepared and filed
all necessary federal and state income tax returns for the Company, including
making the elections described in Section 10.02. Each Member shall furnish to
the Managers all pertinent information in its possession relating to Company
operations that is necessary to enable the Company's income tax returns to be
prepared and filed.
10.02 Tax Elections. To the extent permitted by applicable tax law, the
Company shall make the following elections on the appropriate tax returns:
(a) to adopt the calendar year as the Company's fiscal year;
(b) to adopt the cash method of accounting and to keep the
Company's books and records on the income-tax method;
(c) if a transfer of a Membership Interest as described in
Section 743 of the Code occurs, on written request of any transferee Member, or
if a distribution of Company property is made on which gain described in Section
734(b)(1)(A) of the Code is recognized or there is an excess of adjusted basis
as described in Section 734(b)(1)(B) of the Code, to elect, pursuant to Section
754 of the Code, to adjust the basis of Company properties;
(d) to elect to amortize the organizational expenses of the
Company and the start-up expenditures of the Company ratably over a period of 60
months as permitted by Sections 195 and 709(b) of the Code; and
(e) any other election the Managers may deem appropriate and
in the best interests of the Members.
Neither the Company nor any Manager or Member may make an election for
the Company to be excluded from the application of the provisions of subchapter
K of chapter 1 of subtitle A of the Code or any similar provisions of applicable
state law, and no provision of this Agreement shall be construed to sanction or
approve such an election.
10.03 Tax Matters Partner. A majority of the Managers shall designate
one Manager to be the "Tax Matters Partner" of the Company pursuant to Section
6231(a)(7) of the Code. Any Manager who is designated "Tax Matters Partner"
shall take such action as may be necessary to cause each Member to become a
"Notice Partner" within the meaning of Section 6223 of the Code. Any Manager who
is designated "Tax Matters Partner" shall inform each Member of all significant
matters that may come to its attention in its capacity as "Tax Matters Partner"
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by giving notice thereof on or before the fifth Business Day after becoming
aware thereof and, within that time, shall forward to each Member copies of all
significant written communications it may receive in that capacity. Any Manager
who is designated "Tax Matters Partner" may not take any action contemplated by
Section 6222 through 6232 of the Code without the consent of a
Majority-In-Interest of the Members and a Majority-In-Interest of the Members,
but this sentence does not authorize such Manager (or any other Manager) to take
any action left to the determination of an individual Member under Sections 6222
through 6232 of the Code.
ARTICLE XI - BOOKS, RECORDS, REPORTS, AND BANK ACCOUNTS
11.01 Maintenance of Books. The Company shall keep books and records of
accounts and shall keep minutes of the proceedings of its Members, its Managers
and each committee of the Managers. The Company shall also maintain the books
and records set forth on Exhibit B. The books of account for the Company shall
be maintained on a cash basis in accordance with the terms of this Agreement,
except that the Capital Accounts of the Members shall be maintained in
accordance with Section 4.04. The calendar year shall be the accounting year of
the Company.
11.02 Reports. On or before the 120th day following the end of each
fiscal year during the term of the Company, the Managers shall cause each Member
to be furnished with a balance sheet, an income statement, and a statement of
changes in Members' capital of the Company for, or as of the end of, that year,
such financial statements to be compiled by a firm of independent certified
public accountants selected by the Managers. The Managers also may cause to be
prepared or delivered such other reports as they may deem appropriate. The
Company shall bear the costs of all of these reports.
11.03 Accounts. The Managers shall establish and maintain one or more
separate bank and investment accounts in the Company name with financial
institutions and firms that the Managers determine. The Managers may not
commingle the Company's funds with the funds of any Member; however, Company
funds may be invested in a manner the same as or similar to the Managers'
investment of their own funds or investments by their affiliates.
ARTICLE XII - DISSOLUTION, LIQUIDATION, AND TERMINATION
12.01 Dissolution. The Company shall dissolve and its affairs shall be
wound up on the first to occur of the following:
(a) the written consent of a majority of the Managers or a
Majority-In-Interest of the Members;
(b) the sale of all or substantially all of the assets of the
Company;
(c) the expiration of the period (if any) fixed for the
duration of the Company in this Agreement; or
(d) entry of a decree of judicial dissolution of the Company
under Section 18-802 of the Act.
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12.02 Liquidation and Termination. On dissolution of the Company, the
Managers shall act as liquidator or may appoint one or more Members as
liquidator. The liquidator shall proceed diligently to wind up the affairs of
the Company and make final distributions as provided herein and in the Act. The
costs of liquidation shall be borne as a Company expense. Until final
distribution, the liquidator shall continue to operate the Company properties
with all of the power and authority of the Managers. The steps to be
accomplished by the liquidator are as follows:
(a) as promptly as possible after dissolution and again after
final liquidation, the liquidator shall cause a proper accounting to be made by
a recognized firm of certified public accountants of the Company's assets,
liabilities, and operations through the last day of the calendar month in which
the dissolution occurs or the final liquidation is completed, as applicable;
(b) the liquidator shall pay, satisfy or discharge from
Company funds all of the debts, liabilities and obligations of the Company
(including, without limitation, all debts owed to Members, and all expenses
incurred in liquidation and any advances described in Section 4.03) or otherwise
make adequate provision for payment and discharge thereof (including, without
limitation, the establishment of a cash escrow fund for contingent liabilities
in such amount and for such term as the liquidator may reasonably determine),
all in accordance with the provisions of the Act as may be applicable; and
(c) all remaining assets of the Company shall be distributed
to the Members as follows:
(i) the liquidator may sell any or all Company
property, including to Members, and any resulting gain or loss from each sale
shall be computed and allocated to the Capital Accounts of the Members;
(ii) with respect to all Company property that has
not been sold, the fair market value of that property shall be determined and
the Capital Account of the Members shall be adjusted to reflect the manner in
which the unrealized income, gain, loss, and deduction inherent in property that
has not been reflected in the Capital Accounts previously would be allocated
among the Members if there were a taxable disposition of that property for the
fair market value of that property on the date of distribution; and
(iii) To the Members in accordance with positive
Capital Account balances:
All distributions in kind to the Members shall be made subject to the liability
of each distributee for costs, expenses, and liabilities theretofore incurred or
for which the Company has committed prior to the date of termination and those
costs, expenses, and liabilities shall be allocated to the distributee pursuant
to this Section 12.02. The distribution of cash and/or property to a Member in
accordance with the provisions of this Section 12.02 constitutes a complete
return to the Member of its Capital Contributions and a complete distribution to
the Member of its Membership Interest and all the Company's property. To the
extent that a Member returns funds to the Company, it has no claim against any
other Member for those funds.
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12.03 Deficit Capital Accounts. Notwithstanding anything to the
contrary contained in this Agreement, and notwithstanding any custom or rule of
law to the contrary, to the extent that the deficit, if any, in the Capital
Account of any Member results from or is attributable to deductions and losses
of the Company (including non-cash items such as depreciation), or distributions
of money pursuant to this Agreement to all Members in proportion to their
respective Percentage Interests, upon dissolution of the Company such deficit
shall not be an asset of the Company and such Members shall not be obligated to
contribute such amount to the Company to bring the balance of such Member's
Capital Account to zero.
12.04 Certificate of Cancellation. On completion of the distribution of
Company assets as provided herein, the Company is terminated, and the Managers
(or such other person or persons as the Act may require or permit) shall file a
Certificate of Cancellation with the Secretary of State of the State of
Delaware, cancel any other filings made pursuant to Section 2.05, and take such
other actions as may be necessary to terminate the Company.
ARTICLE XIII - MEMBERSHIP INTERESTS
13.01 Membership Interests. The maximum number of Membership Interests
which the Company is authorized to have outstanding is One Hundred (100). The
Membership Interests shall have the powers, preferences and rights described in
this Agreement. The Company may, in its sole discretion, issue fractional
Membership Interests.
The number of Membership Interests held by each Member as of
the date of this Agreement is set forth in Exhibit A. The Managers may from time
to time issue authorized but unissued Membership Interests for such
consideration as the Managers determine to be in the best interests of the
Company. Any person acquiring Membership Interests shall become a member upon
(a) the payment to the Company of the consideration for which such Membership
Interests are being issued, and (b) the execution and delivery by such person of
a counterpart of this Agreement evidencing such person's agreement to be bound
by and comply with the terms and provisions hereof as if such person were an
original signatory to this Agreement and Exhibit A to this Agreement shall be
amended to reflect such person's name, and the consideration paid by such person
for such person's Membership Interests.
13.02 Reissuance. Membership Interests repurchased by the Company
pursuant to this Agreement may be reissued by the Company.
ARTICLE XIV - GENERAL PROVISIONS
14.01 Offset. Whenever the Company is to pay any sum to any Member, any
amounts that a Member owes the Company may be deducted from that sum before
payment.
14.02 Notices. Except as expressly set forth to the contrary in this
Agreement, all notices, requests, or consents provided for or permitted to be
given under this Agreement must be in writing and must be given either by
depositing that writing in the United States mail, addressed to the recipient,
postage paid, and registered or certified with return receipt requested or by
delivering that writing to the recipient in person, by courier, or by facsimile
transmission; and a notice, request, or consent given under this Agreement is
effective on receipt by the person to receive it. All notices, requests, and
consents to be sent to a Member must be sent to or made at the addresses given
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for that Member on Exhibit A, or such other address as that Member may specify
by notice to the other Members. Any notice, request, or consent to the Company
must be given at the following address: 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000, any notice, request or consent to the Managers must be given to the
Managers at their addresses set forth on Exhibit A or such other address as the
Company or that Manager may specify by notice to the Company. Whenever any
notice is required to be given by law, the Certificate or this Agreement, a
written waiver thereof, signed by the person entitled to notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
14.03 Entire Agreement. This Agreement constitutes the entire agreement
of the Members and their affiliates relating to the Company and supersedes all
prior contracts or agreements with respect to the Company, whether oral or
written.
14.04 Effect of Waiver or Consent. A waiver or consent, express or
implied, to or of any breach or default by any person in the performance by that
person of its obligations with respect to the Company is not a consent or waiver
to or of any other breach or default in the performance by that person of the
same or any other obligations of that person with respect to the Company.
Failure on the part of a person to complain of any act of any person or to
declare any person in default with respect to the Company, irrespective of how
long that failure continues, does not constitute a waiver by that person of its
rights with respect to that default until the applicable statute-of-limitations
period has run.
14.05 Amendment or Modification. Except as otherwise specifically
provided herein, this Agreement may be amended or modified from time to time
only by a written instrument adopted by the Managers and the affirmative vote of
a Majority-In-Interest of the Members entitled to vote thereon.
14.06 Arbitration. Any dispute between the parties hereto arising out
of or relating to this Agreement shall be settled by arbitration conducted in
Philadelphia, Pennsylvania (or as close thereto as possible) in accordance with
the Commercial Arbitration Rules, as applicable, of the American Arbitration
Association, and judgment upon the award, which shall be binding and conclusive
and non-appealable upon the parties hereto, may be entered in any court having
jurisdiction thereof. Liability for related legal expenses and costs shall be
determined by the arbitrators, it being understood that it is the is the
intention of the parties hereto that any breaching party shall reimburse the
other party for all costs and expenses, including, without limitation,
attorneys' and experts' fees, and the costs of the arbitration and the
arbitrators incurred with respect to the enforcement of this Agreement.
14.07 Binding Act. Subject to the restrictions on Dispositions set
forth in this Agreement, this Agreement is binding on and inures to the benefit
of the Members and their respective heirs, legal representatives, successors,
and assigns.
14.08 Governing Law; Severability. THIS AGREEMENT IS GOVERNED BY AND
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF DELAWARE,
EXCLUDING ANY CONFLICT-OF-LAWS RULE OR PRINCIPLE THAT MIGHT REFER THE GOVERNANCE
OR THE CONSTRUCTION OF THIS AGREEMENT TO THE LAW OF ANOTHER JURISDICTION. If any
provision of this Agreement or the application thereof to any person or
circumstance is held invalid or unenforceable to any extent, the remainder of
this Agreement and the application of that provision to other persons or
circumstances is not affected thereby and that provision shall be enforced to
the greatest extent permitted by law.
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14.09 Further Assurances. In connection with this Agreement and the
transactions contemplated hereby, each Member shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and those transactions.
14.10 No Third Party Benefit. The provisions hereof are solely for the
benefit of the Company and its Members and Managers and are not intended to, and
shall not be construed to, confer a right or benefit on any creditor of the
Company or any other person.
14.11 Waiver of Certain Rights. Each Member irrevocably waives any
right it may have to maintain any action for dissolution of the Company or for
partition of the property of the Company.
14.12 Indemnification. To the fullest extent permitted by law, each
Member shall indemnify the Company, each Manager and each other Member and hold
them harmless from and against all losses, cost, liabilities, damages, and
expenses (including, without limitation, costs of suit and attorney's fees) they
may incur on account of any breach by that Member of this Agreement.
14.13 Counterparts. This Agreement may be executed in any number of
counterparts and by facsimile signature with the same effect as if all signing
parties had signed the same document. All counterparts and facsimiles shall be
construed together and constitute the same instrument.
IN WITNESS WHEREOF, the initial Members and the Company have caused
this Operating Agreement to be executed as of the day and year first above
written.
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CLASS A MEMBER
XXXXXXX RBE HOLDINGS, LLC
MANAGER
By: /s/ Xxxx Xxxxxxx
---------------------------------
Xxxx Xxxxxxx, Manager
CLASS B MEMBER
XXXXXXX RBE HOLDINGS, LLC
By: /s/ Xxxx Xxxxxxx
---------------------------------
Xxxx Xxxxxxx, Manager
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