Exhibit 3.18
COMPANY AGREEMENT OF
GOLFSMITH USA, L.L.C.
(A DELAWARE LIMITED LIABILITY COMPANY)
THESE MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE PROVISIONS OF ANY STATE SECURITIES ACT
CERTAIN RESTRICTIONS ON TRANSFERS OF INTERESTS
ARE SET FORTH HEREIN
TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS........................................................................ 1
ARTICLE 2
ORGANIZATION....................................................................... 5
SECTION 2.1. FORMATION........................................................... 5
SECTION 2.2. NAME, PLACE OF BUSINESS AND OFFICE.................................. 5
SECTION 2.3. CLASSIFICATION OF THE COMPANY....................................... 5
SECTION 2.4. REGISTERED OFFICE AND REGISTERED AGENT.............................. 6
SECTION 2.5. PURPOSES AND CHARACTER OF BUSINESS; POWERS.......................... 6
SECTION 2.6. TERM................................................................ 7
ARTICLE 3
COMPANY CAPITAL.................................................................... 7
SECTION 3.1. INITIAL CAPITAL CONTRIBUTIONS OF THE MEMBERS........................ 7
SECTION 3.2. ADDITIONAL CAPITAL CONTRIBUTIONS OF THE MEMBERS..................... 7
SECTION 3.3. COMPANY CAPITAL..................................................... 8
SECTION 3.4. LIABILITY OF MEMBERS................................................ 8
SECTION 3.5. LOANS BY MEMBERS OR AFFILIATES...................................... 8
SECTION 3.6. CAPITAL ACCOUNTS.................................................... 8
ARTICLE 4
MANAGERS...........................................................................10
SECTION 4.1. NUMBER AND QUALIFICATIONS...........................................10
SECTION 4.2. ELECTION............................................................10
SECTION 4.3. POWERS OF MANAGERS..................................................10
SECTION 4.4. ACTIONS WITH OR WITHOUT A MEETING AND TELEPHONE MEETINGS............10
SECTION 4.5. TRANSACTIONS WITH RELATED PARTIES...................................11
SECTION 4.6. ACTIONS OF MANAGERS REQUIRING CONSENT OF MEMBERS....................11
SECTION 4.7. INDEMNIFICATION OF THE MANAGERS AND OFFICERS........................11
ARTICLE 5
OFFICERS...........................................................................12
SECTION 5.1. NUMBER..............................................................12
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SECTION 5.2. GENERAL DUTIES.....................................................12
SECTION 5.3. ELECTION, TERM OF OFFICE AND QUALIFICATIONS........................12
SECTION 5.4. REMOVAL............................................................12
SECTION 5.5. RESIGNATION........................................................12
SECTION 5.6. VACANCIES..........................................................13
SECTION 5.7. THE PRESIDENT......................................................13
SECTION 5.8. THE VICE PRESIDENTS................................................13
SECTION 5.9. THE SECRETARY......................................................13
SECTION 5.10. THE TREASURER......................................................13
ARTICLE 6
ALLOCATIONS AND DISTRIBUTIONS.....................................................14
SECTION 6.1. DISTRIBUTIONS......................................................14
SECTION 6.2. PROFITS, LOSSES AND DISTRIBUTIVE SHARES OF TAX ITEMS...............14
SECTION 6.3. COMPLIANCE WITH CODE...............................................17
SECTION 6.4. ALLOCATIONS UPON TRANSFER OF MEMBERSHIP INTEREST...................17
ARTICLE 7
TRANSFERABILITY OF MEMBER'S INTEREST..............................................18
SECTION 7.1. RESTRICTIONS ON TRANSFER OF INTEREST OF AND IN A MEMBER............18
SECTION 7.2. ASSIGNEES..........................................................18
SECTION 7.3. SUBSTITUTED MEMBERS................................................19
ARTICLE 8
BOOKS AND RECORDS; ACCOUNTING; REPORTING; TAX ELECTIONS; ETC......................20
SECTION 8.1. BOOKS AND RECORDS..................................................20
SECTION 8.2. ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL YEAR...........20
SECTION 8.3. REPORTS............................................................20
ARTICLE 9
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE MEMBERSHIP........................20
SECTION 9.1. EVENTS CAUSING DISSOLUTION.........................................20
SECTION 9.2. LIQUIDATION; SALE OF SUBSTANTIALLY ALL OF THE ASSETS...............21
SECTION 9.3. DISTRIBUTIONS IN KIND..............................................22
ARTICLE 10
MISCELLANEOUS PROVISIONS..........................................................22
SECTION 10.1. ADDRESS FOR NOTICES................................................22
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SECTION 10.2. ADDITIONAL DOCUMENTS AND ACTS......................................22
SECTION 10.3. ASSUMED NAME.......................................................22
SECTION 10.4. QUALIFICATION IN FOREIGN JURISDICTIONS.............................22
SECTION 10.5. APPLICATION OF DELAWARE LAW........................................23
SECTION 10.6. NO ACTION FOR PARTITION............................................23
SECTION 10.7. HEADINGS AND SECTIONS..............................................23
SECTION 10.8. AMENDMENT OF CERTIFICATE OF FORMATION AND AGREEMENT................23
SECTION 10.9. NUMBERS AND GENDER.................................................23
SECTION 10.10. ENTIRE AGREEMENT...................................................23
SECTION 10.11. BINDING EFFECT.....................................................23
SECTION 10.12. COUNTERPARTS.......................................................24
SECTION 10.13. APPROVALS..........................................................24
SCHEDULE 1 Names, Initial Capital Contributions, and Sharing Ratios of the
Members
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COMPANY AGREEMENT OF GOLFSMITH USA, L.L.C.
This
Company Agreement of Golfsmith USA, L.L.C. ("Agreement") dated
effective as of the 28th day of May, 1998, is hereby duly adopted, approved,
ratified, and confirmed as the
Company Agreement of Golfsmith USA, L.L.C., a
Delaware limited company, by the parties signing this Agreement as the initial
Managers and Members of the Company.
The Certificate of Formation of Golfsmith USA Acquisition, L.L.C., dated
as of May 28, 1998, was filed and accepted in the office of the Secretary of
State of
Delaware on May 28, 1998. Such Certificate of Formation designated Xxxx
X. Xxxx, as the initial Manager. By Certificate of Merger dated effective as of
August 2, 1998, Golfsmith USA, Inc., a
Delaware corporation, was merged with and
into the Company, and the Company was renamed Golfsmith USA, L.L.C.
ARTICLE 1
DEFINITIONS
The definitions used in this Agreement shall, unless the context
otherwise requires, have the meanings specified in this Article.
1. "ACT" means the
Delaware Limited Liability Company Act, as
amended from time to time.
2. "ADDITIONAL CAPITAL CONTRIBUTION" means any amount contributed
or deemed to be contributed to the capital of the Company by the Members
pursuant to Section 3.2 or 3.3.
3. "ADJUSTED CAPITAL ACCOUNT" means, with respect to any Member,
such Member's Capital Account as of the end of any relevant date after giving
effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such
Member is deemed to be obligated to restore pursuant to Treasury
Regulations Section 1.704-1(b)(2)(ii)(c), 1.704-2(g)(1) and
1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Treasury Regulations Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
The foregoing definition of "Adjusted Capital Account" is intended to
comply with the provisions of Treasury Regulations Section 1.704-1(b)(2)(ii)(d)
and 1.704-2, and shall be interpreted consistently therewith.
4. "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Member, the deficit balance, if any, in that Member's Adjusted Capital Account.
5. "AGREEMENT" means this
Company Agreement of Golfsmith USA,
L.L.C.
6. "AFFILIATE" means any person that directly, or indirectly
through one or more intermediaries, controls, is controlled by or is under
common control with the person to whom reference is made. The term "control" as
used herein (including the terms "controlling," "controlled by," and "under
common control with") means the possession, direct or indirect, of the power (a)
to vote fifty percent (50%) or more of the outstanding voting securities of a
person, or (b) otherwise to direct the management policies of such person by
contract or otherwise.
7. "AVAILABLE FUNDS" means Company cash on hand, as of the date of
computation, including (without limitation) cash derived from any one or more of
the following sources: (a) the Capital Contributions of the Members made
pursuant to the terms of this Agreement, (b) the proceeds of any sale or other
disposition of all or any portion of the assets, including, but not limited to,
any insurance proceeds, (c) any distributions (including liquidating
distributions) received from any partnership or other entity in which the
Company holds an interest, and (d) all Company operating income.
8. "BOOK VALUE" means, with respect to any asset, the asset's
adjusted basis for federal income tax purposes, except (a) the initial Book
Value of any asset contributed by a Member to the Company shall be the fair
market value of such asset, as determined by the Managers; (b) the Book Value of
all Company assets shall be adjusted in the event of a revaluation as provided
in Section 3.7(d); (c) the Book Value of any Company asset distributed to any
Member shall be the fair market value of such asset on the date of distribution
as determined by the Managers; and (d) such Book Value shall be adjusted by the
Depreciation taken into account with respect to such asset for purposes of
computing Profits and Losses.
9. "CAPITAL ACCOUNT" means with respect to any Member, the account
maintained for such member in a manner which the Managers determine is in
accordance with Treasury Regulations Section 1.704-1(b)(2)(iv).
10. "CAPITAL CONTRIBUTIONS" means the total of all capital
contributions of the Members pursuant to Sections 3.1 and 3.2, including, but
not limited to, the Initial Capital Contributions and the Additional Capital
Contributions.
11. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
12. "COMPANY" means Golfsmith USA, L.L.C., a
Delaware limited
liability company.
13. "DEPRECIATION" means, 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
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such year or other period, except that if the Book Value of an asset differs
from its adjusted basis for federal income tax purposes at the beginning of
such year or other period (as a result of property contributions or adjustments
to such values). Depreciation shall be adjusted as necessary so as to be an
amount which bears the same ratio to such beginning Book Value as the federal
income tax depreciation, amortization, or other cost recovery 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 or other period is zero, Depreciation for
such year or other period shall be determined with reference to such beginning
Book Value using any reasonable method selected by the Managers.
14. "DISTRIBUTABLE CASH FLOW" means any Available Funds not required to
meet current or anticipated obligations of the Company, as determined by the
Managers in their sole discretion. In determining what cash is available for
distribution, the Managers may retain such amounts as the Managers in their
sole discretion determine will be required to pay the Company's debts,
obligations and expenses, whether then accrued or anticipated to accrue in the
future.
15. "FISCAL YEAR" means the fiscal year of the Company as established in
Section 7.2.
16. "GOLFSMITH INVESTMENTS" means any direct or indirect investment,
including any equity or debt instruments, in real or personal, tangible or
intangible property purchased by or transferred to the Company and used in
connection with the ownership and operation of retail distribution of golf
equipment and services and related operations and any trademarks, licenses or
other intellectual property used in connection therewith.
17. "INITIAL CAPITAL CONTRIBUTION" means, as to any Member, any amount
contributed to the capital of the Company by a Member pursuant to Section 3.1.
18. "MAJORITY IN INTEREST" means with respect to any referenced group of
Members, a combination of any such Members who, in the aggregate, own more than
fifty percent (50%) of the aggregate of the Sharing Ratios of such Members.
19. "MANAGER" means any person or persons that are elected to act as
managers of the Company as provided herein. "Managers" means all such persons
collectively in their capacity as managers of the Company.
20. "MEMBER" means one of the parties listed as Members on Schedule 1 of
this Agreement or any successor or successors to all or part of any such
Member's interest, or any party admitted as an additional member to the Company
in accordance with this Agreement and the Act, each in the capacity as a Member
of the Company.
21. "MEMBER NONRECOURSE DEBT MINIMUM GAIN" means, for each Member, the
amount of Minimum Gain for the Fiscal Year or other period attributable to such
Member's "partner nonrecourse debt," determined in accordance with Treasury
Regulations Section 1.704-2(i)(2).
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22. "MEMBER NONRECOURSE DEDUCTIONS" means any Losses or other losses or
deductions of the Company that must be allocated to a Member who bears the
economic risk of loss for the "partner nonrecourse liability" to which the
Losses or other losses or other deductions relate, determined in accordance
with Treasury Regulations Section 1.704-2(i)(1).
23. "MEMBERSHIP INTEREST" means all of the rights and obligations of a
Member in respect of such Member's ownership interest in the Company, including
but not limited to the right to receive distributions and any obligation to
make Capital Contributions under this Agreement.
24. "MINIMUM GAIN" means, with respect to all nonrecourse liabilities of
the Company, the minimum amount of gain that would be realized by the Company if
the Company disposed of the Company property subject to such liability in full
satisfaction thereof computed in accordance with Treasury Regulations Section
1.704-2(d).
25. "MINIMUM GAIN SHARE" means, for each Member, such Member's share of
Minimum Gain for the Fiscal Year (after taking into account any decrease in
Minimum Gain for such year), such share to be determined under Treasury
Regulations Section 1.704-2(g).
26. "NONRECOURSE DEDUCTIONS" means, for each Fiscal Year or other period,
an amount of Company deductions that are characterized as "nonrecourse
deductions" under Treasury Regulations Section 1.704-2(c).
27. "PROFITS" and "LOSSES" means, for each Fiscal Year or other period,
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 this purpose,
all items of income, gain, loss, or deduction required to be stated separately
pursuant to Code Section 703(a)(1) shall be included in taxable income or
loss), with the following adjustments:
(a) 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 this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses pursuant to
this definition, shall be subtracted from such taxable income or loss;
(c) 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 Book Value of the property
disposed of, notwithstanding that the adjusted tax basis of such property
differs from such Book Value;
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(d) 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" herein; and
(e) Notwithstanding any other provision of this definition, any items
which are specifically allocated pursuant to section 6.2(c) shall not be
taken into account in computing Profits or Losses.
28. "SHARING RATIO" means the percentage ownership interest of a Member
as stated on Schedule 1 attached hereto.
29. "TREASURY REGULATIONS" means the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
ARTICLE 2
ORGANIZATION
SECTION 2.1. FORMATION
The Company was formed upon the filing of the Certificate of Formation of
the Company on May 28, 1998, pursuant to the Act.
SECTION 2.2. NAME, PLACE OF BUSINESS AND OFFICE
(a) The name of the Company is Golfsmith USA, L.L.C., although such
business may be conducted under any other name to the extent permitted by local
law. The Company shall maintain its principal office at the following address:
00000 X. 0-X 00, Xxxxxx, Xxxxx 00000-0000. The Managers may at any time change
the location of the Company's office and may establish additional offices, if
they deem it advisable. The Managers shall promptly give the Members written
notice of any change in location of the principal office of the Company.
SECTION 2.3. CLASSIFICATION OF THE COMPANY
The Members intend that the Company be classified as a partnership for
federal and state tax purposes and shall be subject to all federal tax laws
governing partnerships and limited liability companies; provided, however, that
if at any time the Company has only one Member, the Company shall be
disregarded as an entity separate from such single Member for federal tax
purposes pursuant to Treasury Regulations Section 301.7701-3. The Members
intend that the Company not be a partnership (including, without limitation, a
limited partnership) or joint venture, for any purposes
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other than federal and state tax purposes, and this Agreement may not be
construed to suggest otherwise.
SECTION 2.4. REGISTERED OFFICE AND REGISTERED AGENT
The Company's initial registered office shall be 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, and the name of its initial registered agent at
such address is Corporation Service Company.
SECTION 2.5. PURPOSES AND CHARACTER OF BUSINESS; POWERS
(a) The purposes and character of the business of the Company are to
transact any or all lawful business for which limited liability companies may
be organized under the Act, including but not limited to:
(1) to acquire, hold, lease, manage, finance, own, develop,
maintain, operate or improve facilities for the Golfsmith Investments;
(2) to sell, exchange, lease or otherwise dispose of all or any
portion of any interest in any Golfsmith Investments;
(3) to establish, acquire or invest in partnerships, corporations,
joint ventures, limited liability companies, associations, trusts and
other entities engaged in all or any of the foregoing activities;
(4) to acquire, hold, lease, own, develop or improve all or any
portion of any property required in connection therewith, including, but
not limited to, any equity or debt instruments;
(5) to purchase or otherwise acquire an interest in all or any
portion of any real or personal property;
(6) to incur financing to acquire, develop, or improve any real or
personal property;
(7) to obtain permanent or additional financing for any property
held by the Company;
(8) to mortgage, sell, lease, assign, transfer, exchange or
otherwise encumber or dispose of all of the property of the Company, or
any portion thereof or interest therein;
(9) to make any investment and expenditure, to borrow money and to
take any and all other actions which are incidental or reasonably related
to any of the specific purposes recited above; and
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(10) to do any and all things necessary or desirable to carry out the
foregoing activities and any other activity contemplated by this Agreement.
(b) The Company shall have any and all powers which are necessary or
desirable to carry out the purposes and business of the Company. The Company
shall carry out the foregoing activities pursuant to the arrangements set forth
in this Agreement.
SECTION 2.6. TERM
The term of existence of the Company shall be perpetual unless the Company
is earlier dissolved in accordance with either the provisions of this Agreement
or the Act.
ARTICLE 3
COMPANY CAPITAL
SECTION 3.1. INITIAL CAPITAL CONTRIBUTIONS OF THE MEMBERS
(a) Upon the execution of this Agreement, each Member shall contribute
cash to the Company in the amount set forth as the Initial Capital Contribution
of such Member on Schedule 1 attached hereto and hereby made a part hereof.
Such cash shall be the Initial Capital Contribution of each such Member and
each such Member agrees to make its Initial Capital Contribution.
(b) Upon making the Initial Capital Contribution each Member shall
receive its Membership Interest and its Sharing Ratio, as set forth on Schedule
1.
SECTION 3.2. ADDITIONAL CAPITAL CONTRIBUTIONS OF THE MEMBERS
(a) If the Managers determine that the amounts contributed to the Company
by the Members with regard to the Initial Capital Contributions are
insufficient to carry out the purposes of the Company, the Managers may request
that the Members make Additional Capital Contributions to the Company. No
Member shall be required to make any Additional Capital Contribution without
the consent of all of the Members.
(b) If any Member makes a payment directly to a creditor or another
Member in satisfaction of any indebtedness of the Company pursuant to any
indemnity, guaranty or contribution obligation of such Member which has been
approved by the Managers in respect of Company indebtedness, or if any
collateral interest granted by such Member to such creditor or other Member
which has been approved by the Managers to secure any such indebtedness is
foreclosed and the proceeds of such foreclosure are applied to reduce or
satisfy such indebtedness and any foreclosure-related expenses, such Member
shall be deemed to have made a permitted Additional Capital
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Contribution equal to such amount and shall receive a credit to its Capital
Account in the amount thereof.
SECTION 3.3. COMPANY CAPITAL
(a) Except as may be otherwise specifically provided in this Agreement,
no Member shall be paid interest on any Capital Contribution to the Company.
(b) No Member shall have the right to withdraw all or any part of its
Capital Contribution or to receive any return on any portion of its Capital
Contribution, except as may be otherwise specifically provided in this
Agreement.
(c) Under circumstances involving a return of any Capital Contribution,
no Member shall have the right to receive property other than cash.
SECTION 3.4. LIABILITY OF MEMBERS
(a) No Member shall be liable for the debts, liabilities, contracts or
any other obligation of the Company, except to the extent expressly provided
herein or in the Act. No Member shall be liable for the debts or liabilities of
any other Member.
(b) No Member shall be required to contribute to the capital of, or loan
the Company any funds other than as expressly required in this Agreement.
(c) The Managers shall not be liable for the return of all or any portion
of the Capital Contributions of any Member.
(d) Except as otherwise expressly provided herein, no Member shall have
any priority over any other Member as to the return of its contributions to
capital or as to compensation by way of income.
SECTION 3.5. LOANS BY MEMBERS OR AFFILIATES
Subject to obtaining any approvals required under this Agreement for the
Company to borrow funds, any Member or Affiliate may (but shall not be obligated
to) at any time, upon obtaining the consent of the Managers, loan money or
guarantee a loan to the Company to finance Company operations, to finance or
refinance any assets of the Company, to pay the debts and obligations of the
Company, or for any other Company purpose. If any Member or its Affiliate lends
funds or guarantees a loan of funds to the Company, such Member or Affiliate
shall be entitled to receive interest on such loan, or a fee for guaranteeing
any such loan, at an interest rate or fee to be agreed upon by such Member or
Affiliate and the Managers.
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SECTION 3.6. CAPITAL ACCOUNTS
(a) A Capital Account shall be established and maintained for each Member.
(b) A Member's Capital Account shall be credited with (i) the amount of
cash and the initial Book Value of any property contributed by such Member to
the Company as a Capital Contribution pursuant to Section 3.1 or 3.2, (ii) such
Member's allocable share of Profits, income and gain and (iii) the amount of any
Company liabilities that are expressly assumed by such Member or that are
secured by any Company property distributed to such Member.
(c) A Member's Capital Account shall be debited with (i) the amount of
cash and the Book Value of any Company property distributed to such Member
pursuant to any provision of this Agreement, (ii) such Member's allocable share
of Losses, deductions and other losses and (iii) the amount of any liabilities
of such Member that are expressly assumed by the Company or that are secured by
any property contributed by such Member to the Company.
(d) Upon the occurrence of certain events described in Treasury
Regulations Sections 1.704-1(b)(2)(iv)(f), 1.704-1(b)(4) and 1.704-2, the
Managers may elect to increase or decrease the Capital Accounts of the Members
to reflect a reevaluation of Company property on the Company's books.
(e) The Capital Account of each Member shall be determined after giving
effect to all transactions which have been effected prior to the time when such
determination is made giving rise to the allocation of Profits and Losses and to
all contributions and distributions theretofore made. Any person who acquires a
Membership Interest directly from a Member, or whose Sharing Ratio shall be
increased by means of a transfer to it of all or part of the interest of another
Member, shall have a Capital Account which includes all or part of the Capital
Account balance of the Membership Interest so acquired or transferred.
(f) In the event that any Member makes a loan to the Company, such loan
shall not be considered a contribution to the capital of the Company and shall
not increase the Capital Account of the lending Member. Repayment of such loans
shall not be deemed withdrawals from the capital of the Company.
(g) Any fees, salary or similar compensation payable to a Member pursuant
to this Agreement shall be deemed a guaranteed payment for federal income tax
purposes and not a distribution to such Member for such purposes. Such payments
to a Member shall not reduce the Capital Account of such Member, except to the
extent of its distributive share of any Company Losses or other downward capital
adjustment resulting from such payment.
(h) From time to time the Managers may make such modifications to the
manner in which the Capital Accounts are computed to comply with Treasury
Regulations Sections 1.704-1(b)
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and 1.704-2 provided that such modification is not likely to have a material
effect on the amounts distributable to any Member pursuant to this Agreement.
(i) The foregoing provisions and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted
and applied in a manner consistent with such Treasury Regulations.
(j) No Member with a deficit balance in its Capital Account shall have
any obligation to the Company or any other Member to restore such deficit
balance. In addition, no venturer or partner in any Member shall have any
liability to the Company or any other Member for any deficit balance in such
venturer's or partner's capital account in the Member in which it is a partner
or venturer. Furthermore, a deficit Capital Account balance of a Member (or a
deficit capital account of a partner or venturer in a Member) shall not be
deemed to be a Company asset or Company property.
ARTICLE 4
MANAGERS
SECTION 4.1. NUMBER AND QUALIFICATIONS
The powers of the Company shall be exercised by or under the authority of,
and the business and affairs of the Company shall be managed under the direction
of one or more Managers, as may be determined by the Members or the existing
Managers from time to time. Managers need not be Members or residents of the
State of
Delaware.
SECTION 4.2. ELECTION
The Manager shall hold office for the time until a successor is elected
and qualified unless the Managers are sooner removed by action of the Members.
Any vacancy occurring in the Managers may be filled by the affirmative vote of
a Majority in Interest of the Members. All meetings of the Managers of the
Company may be held either within or without the State of
Delaware.
SECTION 4.3. POWERS OF MANAGERS
In addition to the powers and authorities expressly conferred by this
Agreement upon them, the Managers may exercise all such powers of the Company
and do all such lawful acts and things as not directed or required to be
exercised or done by the Members by statute or by the Certificate of Formation
or this Agreement.
SECTION 4.4. ACTIONS WITH OR WITHOUT A MEETING AND TELEPHONE MEETINGS
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Notwithstanding any provision contained in this
Company Agreement, all
actions of the Managers provided for herein shall be taken either at a meeting
and evidenced by written minutes thereof executed by an authorized Manager or
Officer or by written consent without a meeting. Any meeting of the Managers
may be held by means of a telephone conference. Any action which may be taken
by the Managers without a meeting shall be effective only if the written
consent (or consents) set forth the action to taken, and is signed by the
number of Managers constituting not less than the minimum number of Managers
that would be necessary to take such action if all of the Managers entitled to
vote on the action were present and voted thereon.
SECTION 4.5. TRANSACTIONS WITH RELATED PARTIES
The Managers may agree, contract, or arrange with any Manager, any Member
or any Affiliates or any Manager or Member in the name and on behalf of the
Company, for the performance of services for the Company, and the payment of
compensation therefor, in carrying out the business of the Company as if such
Manager, Member or Affiliate were an independent contractor, provided that the
compensation for such services shall be (a) at rates comparable to the charges
made to the third parties for rendering comparable services in the geographical
area where the services are performed and (b) paid only for actual services
rendered to the Company.
SECTION 4.6. ACTIONS OF MANAGERS REQUIRING CONSENT OF MEMBERS
Notwithstanding anything to the contrary contained in this Article 4,
without the consent of a Majority in Interest of the Members, the Managers
shall not have the power of authority:
(a) to dissolve and wind up the Company;
(b) to confess a judgment against the Company; or
(c) to possess Company property, or assign, pledge or hypothecate its
rights in specific Company other than for the Company purpose.
SECTION 4.7. INDEMNIFICATION OF THE MANAGERS AND OFFICERS
(a) To the fullest extent allowed by the Act and other applicable law,
the Company shall indemnity, defend against and save harmless the Managers
from, any expenses (including reasonable attorneys' fees and court costs),
liabilities, claims, causes of action, losses or damages incurred by reason of
any act or omission performed or omitted by the Managers in good faith on
behalf of the Company or the Members and in a manner reasonably believed by
such Managers to be within the scope of the authority granted to it by this
Agreement. REGARDLESS OF WHETHER SUCH ACT OR OMISSION CONSTITUTED THE SOLE,
PARTIAL OR CONCURRENT NEGLIGENCE (WHETHER ACTIVE OR PASSIVE) OF SUCH MANAGER.
11
(b) The satisfaction of any indemnification under this Section shall be
from and limited to Company assets, including insurance proceeds, if any, and
no Member shall have any personal liability on account thereof.
ARTICLE 5
OFFICERS
SECTION 5.1. NUMBER
The principal Officers of the Company shall consist of the president, one
or more vice presidents, the secretary, the treasurer, and such other officers
and assistant Officers and agents as may be deemed necessary and elected or
appointed by the Managers, or chosen in such other manner as may be prescribed
by this Agreement, at such time and in such manner and for such terms as the
Managers may prescribe. Any two or more offices may be held by the same person.
SECTION 5.2 GENERAL DUTIES
All Managers, Officers, Members and agents of the Company, as between
themselves and the Company, shall have such authority, perform such duties and
manage the Company as may be provided in this Agreement or as may be determined
by resolution of the Members not inconsistent with this Agreement.
SECTION 5.3 ELECTION, TERM OF OFFICE AND QUALIFICATIONS
The Officers shall be chosen by the Managers from time to time. Each
Officer shall hold office until a successor is chosen and qualified or until the
death, resignation, or removal of such Officer.
SECTION 5.4 REMOVAL
Any Officer or agent elected or appointed by the Managers may be removed
(with or without cause) by the Managers whenever in their judgment the best
interests of the Company will be served by such removal, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
SECTION 5.5 RESIGNATION
Any Officer may resign at any time by giving written notice to the
Managers or to the president or secretary. Such resignation shall take effect
at the time specified in the notice, and, unless otherwise specified in the
notice, the acceptance of such resignation shall not be necessary to make it
effective. Such resignation shall be without prejudice to the contract rights,
if any, of the Company.
12
SECTION 5.6. VACANCIES
Any vacancy in any office because of death, resignation, removal or any
other cause shall be filled for the unexpired portion of the term in the manner
prescribed in this Agreement for election or appointment to such office.
SECTION 5.7. THE PRESIDENT
The president shall have active, executive management of the operations of
the Company, subject, however, to the control of the Managers. The president
shall have general supervision of the business of the Company and shall see
that all orders and resolutions of the Members are carried into effect. The
president shall have the power to execute all bonds, mortgages, contracts and
other instruments of the Company requiring a seal, under seal of the Company,
except where required or permitted by law to be otherwise signed and executed
and except that the other officers of the Company may sign and execute
documents when so authorized by these bylaws, the Managers or the president.
The president shall also perform such other duties and may exercise such other
powers as from time-to-time may be assigned to him by this Agreement or by the
Managers.
SECTION 5.8. THE VICE PRESIDENTS
Each vice president shall have such powers and perform such duties as the
Managers may from time to time prescribe or as the president may from time to
time delegate to him or her. At the request of the president, any vice
president may temporarily act in place of the president. In the case of the
death, absence, or inability to act of the president, the Managers may
designate any vice president to perform the duties of the president.
SECTION 5.9. THE SECRETARY
The secretary shall keep or cause to be kept in books provided for that
purpose, minutes of the meetings of the Members and Managers; shall see that
all notices are duly given in accordance with the provisions of this Agreement
and as required by law; shall be custodian of the records and, in general,
shall perform all duties incident to the office of the secretary and such other
duties as may from time to time be assigned by the Managers or by the president.
SECTION 5.10. THE TREASURER
The treasurer shall be the principal financial officer of the Company;
shall have charge and custody of and be responsible for all funds of the
Company and deposit all such funds in the name of the Company in such banks,
trust companies or other depositories as shall be selected by the Managers;
shall receive and give receipts for moneys due and payable to the Company from
any source; and, in general, shall perform all the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
by the Managers or by the president. The treasurer shall render to the
president and the Managers, whenever the same shall be required, an account of
all
13
transactions accomplished as treasurer and of the financial condition of
the Company. The treasurer shall, if required to do so by the Managers, give
the Company a bond in such amount and with such surety or sureties as may be
ordered by the Managers, for the faithful performance of the duties of office
and for the restoration to the Company, in the case of death, resignation,
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind belonging to the Company which are held or
controlled by the treasurer.
ARTICLE 6
ALLOCATIONS AND DISTRIBUTIONS
SECTION 6.1. DISTRIBUTIONS
Except as otherwise provided in Section 9.2 regarding liquidation
proceeds, the Managers shall distribute Distributable Cash Flow to the Members
pro rata based on their respective Sharing Ratios at such time and in such
manner as the Managers may, in their sole discretion, determine.
SECTION 6.2. PROFITS, LOSSES AND DISTRIBUTIVE SHARES OF TAX ITEMS
(a) PROFITS. Except as provided in Section 6.2(c), Profits for any
Fiscal Year will be allocated in the following order:
(1) First, to each Member until the cumulative Profits allocated to
such Member under this Section 6.2(a) equals the cumulative amount of
Losses allocated to such Member under Section 6.2(b) for all prior
periods; and
(2) Then, the balance, if any, to the Members in proportion to their
respective Sharing Ratios.
(b) LOSSES. Except as provided in Section 6.1(c), Losses for any Fiscal
Year will be allocated in the following order:
(1) First, to each Member until the cumulative Profits allocated to
such Member under this Section 6.2(a) equals the cumulative amount of
Losses allocated to such Member under Section 6.2(b) for all prior
periods; and
(2) Then, the balance, if any, to the Members in proportion to their
respective Sharing Ratios.
(c) SPECIAL ALLOCATIONS. Except as otherwise provided in this Agreement,
the following special allocations will be made in the following order and
priority:
14
(1) COMPANY MINIMUM GAIN CHARGEBACK. Notwithstanding any other
provision of this Section, if there is a net decrease in Company Minimum
Gain during any taxable year or other period for which allocations are
made, the Members will be specially allocated items of Company income and
gain for that period (and, if necessary, subsequent periods). The amount
allocated to each Member under this Section shall be an amount equal to the
total net decrease in the Member's Minimum Gain Share at the end of the
immediately preceding taxable year. The items to be allocated will be
determined in accordance with Treasury Regulations Section 1.704-2(g)(2).
This Section 6.2(c)(1) is intended to comply with the "partnership minimum
gain chargeback" requirements of the Treasury Regulations and the
exceptions thereto and will be interpreted consistently therewith.
(2) MEMBER NONRECOURSE DEBT MINIMUM GAIN CHARGEBACK. Notwithstanding
any other provision of this Section (other than Section 6.2(c)(1) which
shall be applied first), if there is a net decrease in Member Nonrecourse
Debt Minimum Gain during any taxable year or other period for which
allocations are made, any Member with a share of such Member Nonrecourse
Debt Minimum Gain attributable to any Member nonrecourse debt (determined
under Treasury Regulations Section 1.704-(2)(i)(5)) as of the beginning of
the year shall be specially allocated items of Company income and gain for
that period (and, if necessary, subsequent periods) in proportion to the
portion of such Member's share of the net decrease in the Member
Nonrecourse Debt Minimum Gain with respect to such Member nonrecourse debt
that is allocable to the disposition of Company property subject to such
Member nonrecourse debt. The items to be so allocated shall be determined
in accordance with Regulations Section 1.704-2(g). This Section is intended
to comply with the "partner minimum gain chargeback" requirements of the
Treasury Regulations and the exceptions thereto and shall be interpreted
consistently therewith.
(3) QUALIFIED INCOME OFFSET. A Member who unexpectedly receives any
adjustment, allocation or distribution described in Treasury Regulations
Sections 1.704-1(b)(2)(ii)(d)(4), (5) or (6) will be specially allocated
items of Company income and gain in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations, the Adjusted
Capital Account Deficit of the Member as quickly as possible.
(4) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any taxable
year or other period for which allocations are made will be allocated among
the Members in proportion to their respective Sharing Ratios in the
Company.
(5) MEMBER NONRECOURSE DEDUCTIONS. Notwithstanding anything to the
contrary in this Agreement, any Member Nonrecourse Deductions for any
taxable year or other period for which allocations are made will be
allocated to the Member who bears the economic risk of loss with respect
to the Member nonrecourse debt to which the Member Nonrecourse Deductions
are attributable in accordance with Treasury Regulations Section
1.704-2(i).
15
(6) CODE SECTION 754 ADJUSTMENTS. To the extent an adjustment to the
adjusted tax basis of any Company asset under Code Sections 734(b) or
743(b) is required to be taken into account in determining Capital Accounts
under Treasury Regulations Section 1.704-1(b)(2)(iv)(m), the amount of the
adjustment to the Capital Accounts will be treated as an item of gain (if
the adjustment increases the basis of the asset) or loss (if the adjustment
decreases the basis), and the gain or loss will be specially allocated to
the Members in a manner consistent with the manner in which their Capital
Accounts are required to be adjusted under Treasury Regulations Section
1.704-1(b)(2)(iv)(m).
(7) DEPRECIATION RECAPTURE. In the event there is any recapture of
Depreciation or investment tax credit, the allocation of gain or income
attributable to such recapture shall be shared by the Members in the same
proportion as the deduction for such Depreciation or investment tax credit
was shared.
(8) INTEREST IN COMPANY. Notwithstanding any other provision of
this Agreement, no allocation of Profit or Loss or item of Profit or Loss
will be made to a Member if the allocation would not have "economic
effect" under Treasury Regulations Section 1.704-1(b)(2)(ii) or otherwise
would not be in accordance with the Member's interest in the Company
within the meaning of Treasury Regulations Section 1.701-1(b)(3) or
1.704-1(b)(4)(iv). The Managers will have the authority to reallocate any
item in accordance with this Section 5.2(c)(8).
(d) CURATIVE ALLOCATIONS. The allocations set forth in Section 6.2(c)(1)
through (8) (the "Regulatory Allocations") are intended to comply with certain
requirements of Treasury Regulations Section 1.704-1(b) and 1.704-2. The
Regulatory Allocations may not be consistent with the manner in which the
Members intend to divide Company distributions. Accordingly, the Managers are
authorized to further allocate Profits, Losses, and other items among the
Members so as to prevent the Regulatory Allocations from distorting the manner
in which Company distributions would be divided among the Members under
Sections 6.1 and 9.2 but for application of the Regulatory Allocations. In
general, the reallocation will be accomplished by specially allocating other
Profits, Losses and items of income, gain, loss and deduction, to the extent
they exist, among the Members so that the net amount of the Regulatory
Allocations and the special allocations to each Member is zero. The Managers
will have discretion to accomplish this result in any reasonable manner that is
consistent with Code Section 704 and the related Treasury Regulations.
(e) TAX ALLOCATIONS -- CODE SECTION 704(c). In accordance with Code
Section 704(c) and the related Treasury Regulations, income, gain, loss and
deduction with respect to any property contributed to the capital of the
Company, solely for tax purposes, will be allocated among the Members so as to
take account of any variation between the adjusted basis to the Company of the
property for federal income tax purposes and the initial Book Value. If the
Book Value of any Company asset is adjusted, subsequent allocations of income,
gain, loss and deduction with respect to that asset will take account of any
variation between the adjusted basis of the asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c) and
the
16
related Treasury Regulations. Any elections or other decisions relating to
allocations under this Section 6.2(e) will be made in any manner that the
Managers determine reasonably reflects the purpose and intention of this
Agreement. Allocations under this Section are solely for purposes of federal,
state and local taxes and will not affect, or in any way be taken into account
in computing, any Member's Capital Account or share of Profits, Losses or other
items or distributions under any provision of this Agreement.
(f) OTHER ALLOCATION RULES. The following rules will apply to the
calculation and allocation of Profits, Losses and other items:
(1) Except as otherwise provided in the Agreement, all Profits,
Losses and other items allocated to the Members will be allocated among
them in proportion to their Sharing Ratios determined at the beginning of
the applicable Allocation Month.
(2) For purposes of determining the Profits, Losses or any other item
allocable to any period, Profits, Losses and other items will be determined
on a daily, monthly or other basis, as determined by the Managers using any
permissible method under Code Section 706 and the related Treasury
Regulations.
(3) Except as otherwise provided in this Agreement, all items of
Company income, gain, loss, deduction, credit and other allocations not
provided for in this Agreement will be divided among the Members in the
same proportions as they share Profits and Losses.
(g) MEMBER ACKNOWLEDGEMENT. The Members agree to be bound by the
provisions of this Section in reporting their shares of Company income and loss
for income tax purposes.
SECTION 6.3. COMPLIANCE WITH CODE
The foregoing provisions of this Article relating to the allocation of
Profits, Losses and other items for federal income tax purposes are intended to
comply with Treasury Regulations Sections 1.704-1(b) and 1.704-2, and shall be
interpreted and applied in a manner consistent with such Treasury Regulations.
Notwithstanding anything to the contrary, nothing in this Article shall apply
if it lacks "economic effect."
SECTION 6.4. ALLOCATION UPON TRANSFER OF MEMBERSHIP INTEREST
Profits or Losses attributable to any Membership Interest which has been
transferred shall be allocated between the transferor and the transferee as
follows:
(a) For the days prior to and including the date of the transfer, to the
transferor.
(b) For the days subsequent to the date of the transfer, to the
transferee.
17
ARTICLE 7
TRANSFERABILITY OF MEMBER'S INTEREST
SECTION 7.1. RESTRICTIONS ON TRANSFER OF INTEREST OF AND IN A MEMBER
(a) Except as otherwise provided in this Article, no Member shall withdraw
or retire from the Company, substitute any person in its stead or sell,
exchange, transfer, give, assign, pledge, hypothecate, mortgage or dispose of
all or any portion of its Membership Interest without the consent of all other
Members; and any such prohibited sale, exchange, transfer, gift, assignment,
pledge, hypothecation, mortgage or disposition shall be void.
(b) Notwithstanding anything to the contrary contained herein, unless all
of the Members shall consent, no Member may sell, transfer or assign all or any
portion of its Membership Interest if such sale, transfer or assignment:
(1) when added to the total of all other sales, transfers or
assignments of Membership Interests within the preceding twelve (12)
months, would result in the Company being considered to have terminated
within the meaning of Code Section 708;
(2) would otherwise cause the Company to lose its status as a
partnership for federal income tax purposes; or
(3) would violate any federal securities laws or any applicable state
securities laws (including suitability standards).
SECTION 7.2. ASSIGNEES
(a) The Company shall not recognize for any purpose any purported sale,
assignment or transfer of all or any fraction of the interest of a Member unless
the provisions of this Article have been satisfied, all costs of such assignment
have been paid by the assigning Member, such sale, assignment or transfer is
exempt from registration under the Securities Act of 1933, as amended, the
Delaware General Corporation Law, as amended, and any other applicable state or
federal securities act, and there is delivered to the Managers, upon request of
the Managers, an opinion of counsel acceptable to the Managers with respect
thereto, and there is filed with the Company a written and dated notification of
such sale, assignment or transfer, in form satisfactory to the Managers,
executed and acknowledged by both the seller, assignor or transferor and the
purchaser, assignee or transferee and such notification (1) contains the
acceptance by the purchaser, assignee or transferee of and agreement to be bound
by all the terms and provisions of this Agreement and (2) represents that such
sale, assignment or transfer was made in accordance with all applicable
securities laws and regulations (including suitability standards). Any sale,
assignment or transfer shall be recognized by the Company as effective on the
first day of the month following the month of the date such notification is
filed with the Company.
18
(b) Any Member who assigns all its interest in the Company shall cease to
be a Member, except that, unless and until a substituted Member has been
admitted into the Company, such assigning Member shall retain the statutory
rights of the assignor of a Member's interest under the Act; provided, however,
that such assigning Member shall have no right to vote on, consent to or
approve any matter or decision (it being intended that the Sharing Ratio of
such assigning Member shall be ignored in determining whether the requisite
vote, consent or approval of the Members has been obtained).
(c) A person who is the assignee of all or any fraction of the interest
of a Member, but does not become a substituted Member, and desires to make a
further assignment of such interest, shall be subject to all the provisions of
this Article to the same extent and in the same manner as any Member desiring
to make an assignment of its interest.
(d) A person who is the assignee of all or any fraction of the interest of
a Member and who is an individual shall not become a substituted Member unless
and until the spouse of such assignee binds his or her community interest in the
assignee's Membership Interest and consents to the rights and obligations
incurred pursuant to the terms of this Agreement.
SECTION 7.3. SUBSTITUTED MEMBERS
(a) Except as otherwise provided in Section 6.1, no Member shall have the
right to substitute in its place a purchaser, assignee, transferee, donee,
heir, legatee, or other recipient of all or any portion of the Membership
Interest of such Member. Any such purchaser, assignee, transferee, donee,
legatee, distributee or other recipient of an interest shall be admitted to the
Company as a substituted Member only with the consent of a Majority in Interest
of the Members, which consent may be granted or withheld by any Member in its
sole discretion.
(b) No person shall become a substituted Member until such person has
satisfied the requirements of this Article; provided, however, that for the
purpose of allocating Profits, Losses and other items and distributing cash
available for distribution, a person shall be treated as having become, and as
appearing in the records of the Company as, a Member, as the case may be, on
such date as the sale, assignment or transfer to such person was recognized by
the Company pursuant to Section 7.2.
(c) Any purchaser, assignee, transferee, donee, heir, legatee or other
recipient of all or any portion of a Membership Interest who is not admitted to
the Company as a substituted Member (1) shall be entitled only to allocations
and distributions with respect to such Membership Interest in accordance with
this Agreement, (2) shall not have any right to vote on, consent to or approve
any matter or decision (it being intended that the Sharing Ratio of such person
shall be ignored for purposes of determining whether the requisite vote,
consent or approval of the Members has been obtained), (3) shall not have any
other rights of a Member under the Act or this Agreement, except as expressly
provided in this Section 7.3, but (4) shall be subject to all of the duties,
obligations and restrictions applicable to a Member under this Agreement, the
Article of Organization of the
19
Company and applicable law, including but not limited to the provisions of
Article 3 to the same extent and in the same manner as any Member.
ARTICLE 8
BOOKS AND RECORDS; ACCOUNTING; REPORTING; TAX ELECTIONS; ETC.
SECTION 8.1. BOOKS AND RECORDS
The books and records of the Company shall be maintained by the Secretary
at the principal office of the Company and shall be available for examination
at such office by any Member or its duly authorized representatives during
regular business hours.
SECTION 8.2. ACCOUNTING BASIS FOR TAX REPORTING PURPOSES; FISCAL YEAR
The books and records of the Company shall be kept on an accrual basis.
The Managers contemplate that each Fiscal Year shall end on the Saturday
closest to December 31 of each calendar year.
SECTION 8.3. REPORTS
Within ninety (90) days after the end of each Fiscal Year, the Managers
shall cause the Company to send to each Member a copy of each federal and, if
applicable, state income tax return of the Company for the Fiscal Year that
ended, together with such other tax information as shall be reasonably necessary
for the preparation by each member of its federal and state income tax returns.
ARTICLE 9
DISSOLUTION, LIQUIDATION AND TERMINATION OF THE MEMBERSHIP
SECTION 9.1. EVENTS CAUSING DISSOLUTION
(a) The Company shall be dissolved upon the first of the following to
occur:
(1) The sale, condemnation, or other disposition of all or
substantially all of the assets of the Company;
(2) The entry of a final judgment, order or decree of a court of
competent jurisdiction adjudicating the Company to be bankrupt and the
expiration without appeal of the period, if any, allowed by applicable law
in which to appeal therefrom;
(3) Upon the election to dissolve the Company by the Managers and a
Majority in Interest of the Members; or
20
(4) The entry of a decree of judicial dissolution under Section
18-801 of the Act.
(b) Upon dissolution of the Company, the business and affairs of the
Company shall terminate, and the assets of the Company shall be liquidated
under this Article 9. Dissolution of the Company shall be effective as of the
day on which the event occurs giving rise to the dissolution, but the Company
shall not terminate until there has been a winding up of the Company's business
and affairs, and the assets of the Company have been distributed as provided in
Section 9.2.
SECTION 9.2. LIQUIDATION; SALE OF SUBSTANTIALLY ALL OF THE ASSETS
(a) Subject to the restrictions and limitations contained in this
Agreement, upon dissolution of the Company the Managers may cause any part or
all of the Company assets to be sold in such manner as the Managers shall
determine in an effort to obtain the best prices for such assets (provided,
however, that the Managers may distribute Company assets in kind to the Members
to the extent practicable). During the liquidation period, the Managers shall
have the right to continue to operate and otherwise to deal with Company
property to the same extent the Managers have such right prior to dissolution
of the Company. In the event that the sole remaining Manager has dissolved,
withdrawn or becomes bankrupt or legally incapacitated, the Members may, within
thirty (30) days after any such occurrence, appoint a person to perform the
functions of the Managers in liquidating the assets of the Company and winding
up its affairs.
(b) In settling accounts after dissolution, the assets of the Company
shall be paid or distributed in the following order:
(1) first, to third party creditors, in the order of priority as
provided by law;
(2) then, to the Members and their respective Affiliates for any
fees or other compensation or any unreimbursed costs and expenses to the
Members or their respective Affiliates, and then to the repayment of any
loans with interest, made by any Member to the Company;
(3) then, an amount equal to the then remaining positive balances in
the Capital Accounts of the Members shall be distributed to the Members in
proportion to the amount of such balances; and
(4) then, any remainder shall be distributed to the Members, pro
rata, in accordance with their respective Sharing Ratios.
Notwithstanding the foregoing, no distributions shall be made pursuant to
this Section 9.2 before giving effect to the allocations of Profits, Losses and
other items, pursuant to Section 6.2.
21
SECTION 9.3. DISTRIBUTIONS IN KIND
If any assets of the Company are distributed in kind pursuant to this
Agreement, such assets shall be distributed to the Members entitled thereto as
tenants-in-common in the same proportions as the Members would have been
entitled to cash distributions if such property had been sold for cash at its
fair market value and the net proceeds thereof distributed to the Members. In
the event that distributions in kind are made to the Members upon dissolution
and liquidation of the Company, the Capital Account balances of such Members
shall be adjusted to reflect the Members' allocable share of gain or loss which
would have resulted if the distributed property had been sold at its fair
market value (as determined in accordance with the method for determining Book
Value).
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. ADDRESS FOR NOTICES
All notices, demands, consents and reports provided for in this Agreement
shall be in writing and shall be given to the parties at the addresses set
forth herein or at such other addresses as the Member may hereafter specify in
writing. Such notices may be delivered by hand, or by telex, telegram,
facsimile or telecopy, or may be mailed, postage prepaid, by certified or
registered mail, by a deposit in a depository for the receipt of mail regularly
maintained by the United States Postal Service. All notices which are hand
delivered or given by telex, telegram, facsimile or telecopy shall be deemed
given on the date of delivery. Except as otherwise provided herein, all notices
which are mailed in the manner provided above shall be deemed given three (3)
days after being mailed.
SECTION 10.2. ADDITIONAL DOCUMENTS AND ACTS
In connection with this Agreement, as well as all transactions contemplated
by this Agreement, the Members agree to execute such additional documents and
papers, and to perform and do such additional acts as may be necessary and
proper to effectuate and carry out all of the provisions of this Agreement.
SECTION 10.3. ASSUMED NAME
The Members shall execute and file all assumed name certificates required
by applicable law.
SECTION 10.4. QUALIFICATION IN FOREIGN JURISDICTIONS
The Managers shall take such steps as are necessary or desirable to allow
the Company to conduct business in any jurisdiction where the Company desires to
conduct business.
22
SECTION 10.5. APPLICATION OF DELAWARE LAW
This Agreement and the application or interpretation hereof, shall be
governed exclusively by the laws of the State of Delaware, and specifically the
Act.
SECTION 10.6. NO ACTION FOR PARTITION
No Member shall xxxx any right to maintain any action for partition with
respect to the property of the Company.
SECTION 10.7. HEADINGS AND SECTIONS
The headings in this Agreement are inserted for convenience only and are in
no way intended to describe, interpret, define, or limit the scope, extent or
intent of this Agreement or any provision hereof. Unless the context requires
otherwise, all references in this Agreement to Sections or Articles shall be
deemed to mean and refer to Sections or Articles of this Agreement.
SECTION 10.8. AMENDMENT OF CERTIFICATE OF FORMATION AND AGREEMENT
Except as otherwise expressly set forth in this Agreement, the Certificate
of Formation of the Company and this Agreement may be amended, supplemented or
restated by the Managers without the consent of the Members provided (a) the
amendment will not affect the method of calculating allocations and
distributions to any Member hereunder; and (b) the Managers gives written notice
to each Member of the proposed amendment no less than sixty (60) days prior to
the effective date of the proposed amendment.
SECTION 10.9. NUMBERS AND GENDER
Where the context so indicates, the masculine shall include feminine and
neuter, and the neuter shall include the masculine and feminine, the singular
shall include the plural and any reference to a "person" shall mean a natural
person or a corporation, limited liability company, association, partnership,
joint venture, estate, trust or other entity.
SECTION 10.10. ENTIRE AGREEMENT
The Agreement and the Exhibits hereto, if any, contain all of the
understandings and agreements of whatsoever kind and nature existing between
the Members with respect to the subject matter hereof and thereof and supersede
all prior agreements and undertakings with respect thereto.
23
SECTION 10.11. BINDING EFFECT
Except as herein otherwise provided to the contrary, this Agreement shall
be binding upon and inure to the benefit of the Members, their distributees,
heirs, legal representatives, executors, administrators, successors and assigns.
SECTION 10.12. COUNTERPARTS
This Agreement may be executed in multiple counterparts, each of which
shall be deemed to be an original and shall be binding upon the Member who
executed the same, but all of such counterparts shall constitute the same
Agreement.
SECTION 10.13. APPROVALS
Except where otherwise indicated, all approval, consent and other similar
rights of the Members or Managers, or of any portion of the Members or
Managers, pursuant to this Agreement may be exercised by such Members or
Managers, and such approvals and consents may be granted or denied by such
Members or Managers, in their sole and absolute discretion.
IN WITNESS WHEREOF, the undersigned, being all of the Members and Managers
of the Company have caused this Agreement to be duly adopted by the Company
effective as of the day first written above.
MANAGER: MEMBER:
GOLFSMITH INTERNATIONAL, INC., a Delaware
corporation
/s/ XXXX X. XXXX
----------------------------------
Xxxx X. Xxxx
By: /s/ XXXX X. XXXX
---------------------------------
Name:
-------------------------------
Title:
------------------------------
24
GOLFSMITH USA, L.L.C.
SCHEDULE 1
Names, Addresses, Initial Capital Contributions and Sharing Ratios
Initial Capital
Names and Addresses Contributions Sharing Ratios
------------------- --------------- --------------
Golfsmith International, Inc. $1,000.00 100%
00000 X. X-X 00
Xxxxxx, Xxxxx 00000
25
