1
EXHIBIT 10 (vv)
OPERATING AGREEMENT OF CDW LEASING, L.L.C.
THE MEMBERSHIP INTERESTS EVIDENCED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION, BUT HAVE BEEN ISSUED PURSUANT TO
EXEMPTIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED. FURTHERMORE, SUCH
MEMBERSHIP INTERESTS HAVE NOT BEEN REGISTERED WITH THE SECURITIES COMMISSIONER
OF THE STATE OF ILLINOIS OR ANY OTHER STATE. ACCORDINGLY, THE SALE, TRANSFER,
PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF SUCH MEMBERSHIP INTERESTS IS
RESTRICTED AND MAY NOT BE ACCOMPLISHED EXCEPT IN ACCORDANCE WITH ARTICLE 7 AND
OTHER APPLICABLE PROVISIONS OF THIS AGREEMENT, AND AN APPLICABLE REGISTRATION
STATEMENT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT A
REGISTRATION STATEMENT IS UNNECESSARY.
THIS OPERATING AGREEMENT SETS FORTH SOME, BUT NOT NECESSARILY ALL, OF THE
MATERIAL RIGHTS AND OBLIGATIONS OF, AND PROVISIONS WHICH MAY HAVE A MATERIAL
EFFECT ON, BEING A MEMBER OF THE COMPANY. THE ILLINOIS LIMITED LIABILITY ACT
SETS FORTH NUMEROUS OTHER PROVISIONS WHICH MAY HAVE A MATERIAL IMPACT ON A
PERSON'S MEMBERSHIP INTEREST IN THE COMPANY, INCLUDING, BUT NOT BY WAY OF
LIMITATION, PROVISIONS CONCERNING ADDITIONAL RIGHTS, OBLIGATIONS AND LIABILITIES
THAT MAY BE ASSOCIATED WITH SUCH MEMBERSHIP INTEREST. ANY PERSON CONTEMPLATING
BECOMING A MEMBER IN THE COMPANY IS CAUTIONED TO REFER TO AND BECOME FAMILIAR
WITH THE ACT IN ITS ENTIRETY AND TO CONSULT LEGAL COUNSEL REGARDING ANY
QUESTIONS PRESENTED THEREBY OR ADVICE SOUGHT IN CONNECTION THEREWITH.
2
April 27, 1999
THIS OPERATING AGREEMENT (this "Agreement") of CDW LEASING, LLC, an Illinois
limited liability company (the "Company"), is made and entered into as of the
27th day of April, 1999, by and among those persons whose names and addresses
are set forth on Exhibit A attached hereto.
R E C I T A L S:
A. The parties hereto desire to form a limited liability company
pursuant to the terms of the Act, for the purposes and in accordance with the
provisions hereof.
B. The parties hereto have caused the Articles to be filed with the
Secretary of State of Illinois.
C. The Company will be managed by a Manager.
D. The terms used in this Agreement with their initial letters
capitalized shall, unless the context otherwise requires, or unless otherwise
expressly provided for herein, have the meanings ascribed to them in Article 12
hereof.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth below, the parties hereto agree as follows:
ARTICLE 1
FORMATION
1.1 Organization. The Company is and shall be a limited liability
company organized under the Act.
1.2. Purpose and Authority. The purpose of the Company is the
transaction of any or all lawful businesses for which limited liability
companies may be organized under the Act. To carry out its purpose, the Company
is authorized in furtherance of the Company business and subject to the other
provisions of this Agreement to do any and all acts or take any actions
necessary therefor.
1.3 Registered Agent; Registered Office. The name of the registered
agent and the address of registered office of the Company shall be
Xxxxxxx X. Xxxxxx
Xxxxxxxx & Xxxx
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
3
The registered office and registered agent may be changed by filing the address
of the new registered office and/or the name of the new registered agent with
the Illinois Secretary of State pursuant to the Act.
1.4 Principal Place of Business. The office of the principal place of
business of the Company shall be:
000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
or such other location as may hereafter be determined by the Manager with the
approval of the Members if and as required pursuant to Section 3.2 hereof. The
records of the Company shall be maintained at such office. Upon any change in
the principal place of business or registered office of the Company, the Manager
shall promptly notify the Members of any such change and shall file an amendment
to the Articles stating the address of the new principal place of business or
registered office, as the case may be.
1.5 Term. The term of the Company shall commence upon the filing of
Articles with the Illinois Secretary of State and shall continue thereafter in
perpetuity unless a specific date by which termination shall sooner occur is set
forth in the Articles, or unless sooner terminated as provided by the terms of
this Agreement or applicable law.
1.6 Filing of Articles and Other Documents. Corp-Link Services, Inc.
is designated to act as organizer of the Company, on behalf of the Members, for
purposes of filing the Articles with the Illinois Secretary of State. The
Members agree to execute or cause to be executed such further certificates or
documents and to do or cause to be done such filings, recordings and all other
acts, including the recording of the Articles and any assumed name certificates
in the appropriate offices in the State of Illinois and any other applicable
jurisdictions, as may be required to comply with applicable law. To the fullest
extent permitted by law, the Company shall indemnify, defend, and hold the
organizer and his or her employees and agents, and their respective successors,
executors, administrators or personal representatives harmless from and against
any loss, liability, damage, cost or expense (including reasonable attorneys'
fees) sustained or incurred in connection with the organization of the Company
pursuant to the authority granted herein.
4
1.7 Federal Income Tax Status and Matters. The Members intend that the
Company qualify to be treated as a partnership for, but only for, federal (and
where applicable, state) income tax purposes. The Members do not intend that the
Company be operated or treated as a partnership for any purposes other than
federal (and where applicable state) income tax purposes, including for purposes
of Section 303 of the federal Bankruptcy Code. The Manager shall act as the tax
matters partner ("TMP"), as that term applies under Section 6231(a)(7) of the
Code, and shall have all the powers and duties assigned to the TMP under
Sections 6221-6233 of the Code and the Treasury Regulations thereunder. The
Company shall not be obligated to pay any fees or other compensation to the TMP
in his or her capacity as such, provided that the Company shall reimburse the
TMP for any and all reasonable out-of-pocket costs and expenses (including
reasonable attorneys' and other professional fees) incurred by such Person in
his or her capacity as TMP. The Company shall indemnify, defend, and hold the
TMP harmless from and against any loss, liability, damage, cost, or expense
(including reasonable attorneys' fees) sustained or incurred as a result of any
act or decision concerning Company tax matters and within the scope of the
Manager's responsibilities as TMP.
ARTICLE 2
MEMBERS; MEMBERS' INTERESTS AND CAPITAL ACCOUNTS
2.1 Members.The names, addresses, Capital Contributions and Percentage
Interests of the initial Members shall be as set forth on Exhibit A attached
hereto. The obligation of an initial Member to make the Capital Contribution set
forth on Exhibit A for such Member shall not be excused by the Member's death,
disability or other inability to perform personally. After the organization of
the Company, any Person approved by the Members, as provided for in Section 3.2
hereof, may become an Additional Member of the Company for such consideration as
the Members shall determine, whereupon Exhibit A attached hereto shall be
amended to reflect the Capital Contributions and Percentage Interests of the
Members after the admission of the new Member or Members. Any Additional Member
must acknowledge in writing all of the terms and provisions of this Agreement
and agree to be bound thereby.
2.2 Invested Capital. No certificates or other evidence of ownership
need be issued with respect to the Capital Contributions, Invested Capital,
Percentage Interests or Distributional Interests of the Members, except for this
Agreement, which shall fully represent and evidence the Interest in the Company
owned by each Member. Each Member's Percentage Interest shall be as set forth in
Exhibit A, as amended from time to time if and as new Members are admitted. The
Invested Capital and the Percentage Interests of the Members shall also be
adjusted from time to time as provided in Section 2.3 below. No Member shall be
entitled to interest on any of his or her Invested Capital. Loans by any Member
to the Company, if made as provided for under Section 2.3 hereof or otherwise,
shall not be considered as Invested Capital.
5
2.3 Additional Capital or Loans. Unless otherwise specifically set
forth in this Agreement, no Member shall be required to make any contributions
to the capital of the Company other than as set forth on Exhibit A attached
hereto (or as the same may be amended as provided for herein), or to lend or
advance funds to the Company for any purpose. If the Manager determines it to be
necessary or appropriate for Members to make additional contributions to the
capital of the Company, or to lend or advance funds to the Company for any
purpose, the Members may contribute in proportional amounts any additional
capital, or may lend or advance funds to the Company, in accordance with the
following: (a) if any Member fails to contribute that Member's share of any or
all of the additional capital, the other Members or any one of them may
contribute the additional capital not paid by such refusing Member(s) and shall
receive therefore an increase in the Interest in the Company in direct
proportion to the total capital contributed, as equitably determined by the
Manager, and (b) if any Member fails to lend or advance that Member's share of
any or all the funds, the other Members or any one of them may loan or advance
the additional funds not provided by such refusing Member(s) and those Members
who have so elected to loan or advance funds to the Company shall be entitled to
receive interest on said loans at the rate and upon the other terms and
conditions as mutually agreed between such Members and the Manager. Exhibit A
attached hereto shall be amended from time to time to appropriately reflect any
additional capital contributed to the Company pursuant to the provisions of this
Section 2.3.
Notwithstanding anything contained herein to the contrary, at any time
the Company fails to maintain a "positive net worth", the Manager shall have the
right to require additional capital from the Members, on a pro rata basis, in
relationship to its ownership interest, for the operation of the Company's
business. Additionally, the Manager can require Members to make additional
capital contributions upon dissolution, liquidation or termination if the
Company has "negative" capital or negative net worth in order to fund such
shortfall or deficit. For purposes of this Agreement the term "positive net
worth" means assets greater than liabilities as determined in accordance with
generally accepted accounting principles. If the Manager elects to require
additional capital from the Members, the Manager shall notify each Member of (i)
the amount its pro rata share of additional capital required, and (ii) the
deadline for the contribution of same, which shall be no more than thirty (30)
days from the date of receipt of said notice. Each Member shall contribute such
additional capital in its pro rata share, as determined by Exhibit A. In the
event that any Member shall fail to make such contribution within the time
period set forth in the Manager's notice, (i) the Manager shall have the right
to raise additional capital by admitting Additional Members or by collecting
additional funds from existing Members, (ii) the Percentage Interest of any
non-contributing Member shall be diluted proportionately, and (iii) such event
shall be deemed an event of dissociation.
6
2.4 Capital Accounts. There shall be established on the books of the
Company a Capital Account for each Member which shall be maintained in
accordance with the Code and the regulations promulgated thereunder, including,
but not limited to, the applicable rules set forth in Treasury Regulation
Section 1.704-1. Subject to the immediately preceding sentence, there shall be
credited to each Member's Capital Account (i) the amount of money and the fair
market value of any property (net of related liabilities) contributed by the
Member to the Company as capital, and (ii) the Member's share of income or gain
(or items thereof) of the Company, including income and gain exempt from tax.
There shall be charged against each Member's Capital Account (i) the amount of
money and the fair market value of any property (net of related liabilities)
distributed to the Member by the Company and (ii) the Member's share of loss and
deductions (or items thereof) of the Company. If property is contributed to the
capital of the Company or if there is a revaluation of any Company property so
that the book value of such Company property differs from its adjusted tax
basis, the Members' Capital Accounts shall be appropriately adjusted for income,
gain, loss and deduction as required by Treasury Regulation Section
1.704-1(b)(2)(iv)(g). To the extent a Member's Capital Account is greater than
zero, such excess is hereinafter referred to as a "positive balance." To the
extent that a Member's Capital Account is less than zero, said amount is
hereinafter referred to as a "negative balance" or "deficit balance." Except as
is specifically provided otherwise in this Agreement or in the Act, no Member
shall have any liability or obligation to restore a negative or deficit balance
in such Member's Capital Account, nor shall any negative balance in a Member's
Capital Account create any liability on the part of the Member to any third
party.
2.5 Interpretation and Changes. The foregoing provisions of this
Article 2 and the other provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with the Code and applicable Treasury
Regulations and shall be interpreted and applied in a manner consistent
therewith. In the event the Manager shall determine, after consultation with
Company counsel, that it is prudent to modify the manner in which the Capital
Accounts, or any debits or credits thereto are allocated or computed, in order
to comply with such applicable federal law, the Manager shall make such
modification without the consent of any other Member, provided the Manager
determines in good faith that such modification is not likely to have a material
adverse effect on the amounts properly distributable to any Member upon the
dissolution of the Company and that such modification will not increase the
liability of any Member to third parties. The Manager shall give written notice
to each of the Members of any actions taken pursuant to the provisions of this
Section 2.5.
ARTICLE 3
RIGHTS AND OBLIGATIONS OF MEMBERS
3.1 No Management Rights. Except insofar as the vote, consent or
approval of the Members shall be otherwise expressly required or provided for by
this Agreement or the Act, (i) no Member, as such, shall have any power or
authority with respect to the management, operation or control of the business
or affairs of the Company, or transact any business in the name, or on behalf,
of the Company, and (ii) no Member, as such, shall have the power or authority
to bind the Company or to sign any agreement, document or other legal instrument
in the name, or on behalf, of the Company. The foregoing shall not apply,
however, to a Member who is also a Manager with respect to acts in his or her
capacity as a Manager.
7
3.2 Right to Vote on or Approve Certain Actions. For purposes of the
actions with respect to which the Act or this Agreement requires, permits or
otherwise provides for the vote, consent or approval of the Members, or a
requisite percentage of the Percentage Interests of the Members, the following
provisions shall apply (unless otherwise expressly provided to the contrary in
this Agreement) and, to the extent permitted by law, take precedence over any
provisions in the Act to the contrary:
(a) The unanimous vote, consent or approval of all of the Members
shall be required for any of the following actions:
(i) the amendment of this Agreement in any respect;
(ii) the amendment of the Articles;
(iii) the determination not to make mandatory income tax
payment Distributions as provided for in Section 6.1
hereof;
(iv) the use of the Company's property to redeem a
Distributional Interest subject to a charging order,
as restricted pursuant to Section 4.10(g) hereof;
(v) the approval of the Company's recognition of, and
giving effect to, an assignment or other transfer of
a Distributional Interest under any of the otherwise
restrictive circumstances set forth in Section 7.1(a)
hereof;
(vi) the waiver of the right to have the Company's
business wound up after the dissolution of the
Company, as provided for in Section 9.2 hereof; and
(vii) the approval of any actions of the Manager, as
restricted pursuant to Section 4.10(k) hereof, which
involve any act in contravention of this Agreement.
(b) Except for those matters for which the unanimous vote, consent or
approval of the Members shall be required, as provided for in Section 3.2(a)
above, the affirmative vote, consent or approval of the Members representing not
less than a majority of the Percentage Interests shall be sufficient to
authorize all other acts or actions for which the vote, consent or approval of
the Members shall be required under the Act or this Agreement. Set forth below,
by way of example and not by way of limitation, are certain of the acts or
actions for which such majority approval shall be required, and sufficient:
8
(i) the compromise of the obligation to make a capital
contribution by a Member who dies or becomes legally
incompetent or otherwise unable to perform
personally, as provided for in Section 4.10(c)
hereof, or otherwise;
(ii) the compromise, as among Members, of an obligation of
a Member to make a capital contribution or return
money or other property paid or distributed in
violation of this Agreement or the Act, as provided
for in Section 4.10(d), or otherwise;
(iii) the making of a Distribution, other than a tax
payment Distribution as provided for in Section 6.1
hereof, prior to the dissolution and winding up of
the Company, including a Distribution in redemption
of a Distributional Interest, as provided for in
Section 4.10(e) hereof or otherwise;
(iv) the admission of a Person as an Additional Member or
Substitute Member, by the Manager as provided for in
Section 4.10(f) hereof, or otherwise as provided for
in Section 2.1;
(v) the voluntary dissolution and winding up the affairs
of the Company, as provided for Section 4.10(h)
hereof or as otherwise provided for in Section 9.1(a)
hereof;
(vi) the merger of the Company with any other entity, as
provided for in Section 4.10(i) hereof or otherwise;
(vii) the sale, lease or other disposal of all or
substantially all of the assets or the business of
the Company, with or without goodwill, as provided
for in Section 4.10(j) hereof or otherwise;
(viii) the purchase of the Distributional Interest of a
Dissociated Member as provided for in Section 4.10(l)
hereof, or otherwise;
(ix) the determination of the consideration to be paid by
an Additional Member for his or her Percentage
Interest, as provided for in Section 4.10(m) hereof
or as otherwise provided for in Section 2.1 hereof
(x) the approval of the compensation to be paid to the
Manager, as provided for in Section 4.3 hereof, or
otherwise;
(xi) the removal of the Manager, as provided for in
Section 4.4 hereof, or otherwise;
9
(xii) the appointment of a new Manager, except as otherwise
provided for in Section 4.4 hereof, or otherwise;
(xiii) the consent to an effective date which is less than
thirty (30) days from the date of a notice of
resignation by a Manger, as provided for in Section
4.4 hereof;
(xiv) the determination of the fair market value of
Property contributed to the Company, as provided for
in Section 5.5 hereof;
(xv) the release of a transferor Member in connection with
the transfer of his or her Distributional Interest
pursuant to Section 7.6 hereof;
(xvi) payment provisions other than as provided for in
Exhibit E hereto for the purchase of the
Distributional Interest of a Dissociated Member
pursuant to the provisions of Section 8.2(d) hereof;
(xvii) payment provisions other than as provided for in
Exhibit F hereto for the purchase of the
Distributional Interest of a Dissociated Member if
the Company is obligated to purchase such interest
pursuant to the provisions of Section 8.2(e) hereof
or otherwise;
(xviii) the keeping of any applicable books and records of
the Company on a basis other than in accordance with
generally accepted principles of accounting;
(xix) the holding of a meeting of the Members at a location
outside the state of Illinois, as provided for in
Section 11.2(a) hereof; and
(xx) the locating the office of the principal place of
business of the Company, as provided for in Section
1.4 hereof, outside the state of Illinois.
3.3 Distributional Interest. A Member (or Member Transferee) shall
have an interest in the Distributions provided for in this Agreement with
respect to such Member's Percentage Interest thereof. Such Distributional
Interest is personal property and, subject to the Act and the further
limitations and restrictions contained herein, may be transferred in whole or
in part. A Member is not a co-owner of, and has no transferable interest in,
the assets of the Company.
10
3.4 Limitation on Liability of Member. Except as otherwise provided
herein, the liability of each Member shall be limited to the amount required to
be paid or the contribution of capital to be made by such Member as set forth on
Exhibit A hereto, as amended from time to time as provided in Article 2. Except
as expressly provided to the contrary in this Agreement, or as otherwise
provided in the Act or by other applicable law, (a) a Member shall not have any
liability to contribute money or make loans to the Company nor shall a Member be
liable for any obligations or liabilities of the Company, and (b) a Member who
has fully paid or made the Capital Contribution required of such Member as set
forth on Exhibit A hereto, as amended from time to time as provided in Article
2, shall have no liability to restore his or her Capital Account balance to the
amount set forth on Exhibit A hereto, as amended from time to time as provided
in Article 2, notwithstanding that such Member has received Distributions from
the Company as authorized and provided for herein.
3.5 Other Activities. Neither the Company nor any of the Members shall
have any rights by virtue of this Agreement with respect to Members that may
engage in or possess interests in other business ventures, including those
engaged in the same business as that of the Company, and, except as otherwise
provided by the Act or applicable law, neither the Company nor any of the
Members shall have any rights by virtue of this Agreement in or to such business
ventures or to the income or profits derived therefrom.
3.6 Good Faith and Fair Dealing. In discharging any duties or
exercising any rights a Member may have under the Act or this Agreement, the
Member shall comply with the obligation of good faith and fair dealing pursuant
to the Act.
ARTICLE 4
RIGHTS, OBLIGATIONS AND
POWERS OF THE MANAGER
11
4.1 Management of Company Affairs. The management of the Company shall
be vested in the Manager. The initial Manager shall be XXXXX XXXXXXX, XXXXXXX
XXXXX, XXXX XXXXX and XXXXXXX XXXXXX. The Manager shall have full, exclusive and
complete discretion in the management and control of the business and affairs of
the Company and shall make all decisions affecting the Company's business and
affairs, and any action taken by the Manager shall constitute the act of and
serve to bind the Company. The Manager may designate one or more employees,
agents or Affiliates to carry out his or her duties and responsibilities to the
Company. The officers designated by the Manager pursuant to Sections 4.12 and
4.13 hereof shall have full day to day power and authority to make all decisions
based upon the authority granted to each officership. Persons dealing with the
Company shall be entitled to rely conclusively on the power and authority of the
Manager as set forth in this Agreement. The Manager shall execute and place with
the records of the Company, and deliver a copy thereof to each Member, a written
acceptance of his or her appointment hereunder wherein he or she agrees to
become bound by and observe the terms and conditions of this Agreement. The
failure of the Manager to execute and maintain such written acceptance with the
Company records, and deliver a copy thereof to each Member, shall not be deemed
to be or constitute a waiver or release of any rights the Company or the Members
may otherwise have against the Manager nor of any obligations the Manager may
otherwise have to the Company and its Members, and the Manager, by acting as
such, shall be deemed to have become bound by the terms and conditions of this
Agreement whether or not he or she executes and maintains such written
acceptance with the Company records, and delivers a copy thereof to the Members.
4.2 Annual and Tax Information. The Manager shall use his or her best
efforts to deliver to each Member within 60 days after the end of each fiscal
year all information necessary for the preparation of such Member's federal
income tax return. The Manager shall use his or her best efforts to provide,
within 60 days after the end of each fiscal year, each Member with audited
financial statements of the Company for such period. The Manager shall also
provide each Member (and former Member if and as required under the Act), and
his or her agents and attorneys, such information and access to the Company's
books and records, and in the manner, as is otherwise provided for in the Act
and Section 9.1 of this Agreement.
4.3 Fees; Reimbursement of Expenses. The Manager shall be entitled to
reasonable fees or other compensation for the performance of duties as mutually
agreed among the Manager and the Members, as provided for in Section 3.2 hereof.
The Company shall reimburse the Manager for all direct costs incurred by him or
her on behalf of the Company.
4.4 Resignation, Removal and Replacement of a Manager. A Manager may
resign as Manager upon written notice to the Members specifying an effective
date for the resignation which shall be not less than thirty (30) days after the
date of such notice unless a shorter notice period shall be otherwise consented
to by Members possessing the requisite percentage of the Percentage Interests as
provided for in Section 3.2 hereof. For purposes of this Section 4.4, any
Manager who is also a Member and becomes Dissociated as provided for in Section
8.1 hereof, or any Manager who is not a Member but with respect to whom an event
occurs which would have resulted in such Person's becoming Dissociated had he or
she also been a Member, shall be deemed to have resigned as Manager. Members may
remove a Manager with or without cause by the requisite vote or consent as
provided for in Section 3.2 hereof. If at any time the Person serving as the
Manager ceases to be the Manager for any reason, the Members shall appoint a new
Manager by the requisite vote or consent as provided for in Section 3.2 hereof;
provided however, that the Member entity from whom the person serving as a
Manager ceases to be that Manager shall have the first right to identify,
appoint and elect the new Manager from such Member entity group.
12
4.5 Fiduciary Duties of the Manager. The Manager shall have the
fiduciary obligations imposed by the Act with respect to the duty of loyalty,
the duty of care and the obligation to discharge his or her duties and exercise
any rights he or she may have under the Act or this Agreement consistent with
the obligation of good faith and fair dealing. As provided in the Act, the duty
of loyalty includes the duty to account to the Company and to hold as trustee
for it any property, profit, or benefit derived in the conduct or winding up of
the Company's business or derived from a use of the Company's property,
including the appropriation of a company's opportunity; to act fairly when
dealing with the Company in the conduct or winding up of the Company's business
as or on behalf of a party having an interest adverse to the Company; and to
refrain from competing with the Company in the conduct of the Company's business
before dissolution of the Company. As provided in the Act, the duty of care is
limited to refraining from engaging in grossly negligent or reckless conduct,
intentional misconduct, or a knowing violation of law. As further provided in
the Act, the Manager is not regarded as violating a duty or obligation under the
Act or this Agreement merely because his or her conduct furthers his or her own
interest. This Agreement may not be amended or modified to eliminate or vary the
Manager's fiduciary duties and obligations as set forth in the preceding
sentences of this Section 4.5 except for amendments or modifications which (a)
delegate managerial authority to the Members (in which case the Manager is
relieved of liability imposed by law for violations of the standards prescribed
on the Manager) or (b) identify specific types or categories of activities that
do not violate these duties, if not manifestly unreasonable, or specify the
number or percentage of Members or disinterested Managers, if there be more than
one Manager, that may authorize or ratify, after full disclosure of all material
facts, a specific act or transaction that otherwise would violate these duties,
or determine the standards by which the performance of the obligation of good
faith and fair dealing is to be measured, if not manifestly unreasonable, or (c)
are otherwise permitted by the Act or by law. For purposes of this Section and
clarification of the duties hereunder, the Company shall from time to time
promulgate various duties, responsibilities and obligations in a written policy
established from time to time. Without limiting anything contained herein, the
Manager and Members shall not otherwise compete with the Company in a fashion
which otherwise would cause or create a conflict of interests with the Company
or with any affiliate or related entity of any Member of the Company. Nothing
contained herein or in Section 4.6 hereof shall restrict, limit or otherwise
prevent FPC, or any affiliate of FPC, from operating its equipment leasing and
financing business, except that FPC shall not, during such time as it is a
member hereof, form or enter into any joint venture or like entity to provide
services which are similar or substantially similar to those set forth in the
Servicing Agreement between FPC and Company that competes, directly or
indirectly, with CDW Computer Centers, Inc. or CDW Government, Inc.
13
4.6 Devotion of Time by the Manager. The Manager shall devote such time
to the business and affairs of the Company as he or she may reasonably determine
to be necessary to manage and supervise the Company in an efficient manner and
to accomplish the purposes of the Company. Subject to the provisions of Section
4.5 hereof, the Manager shall be free to engage in other business ventures
whether or not directly competing with the Company, or to exploit business
opportunities whether or not arising from the conduct of Company business.
4.7 Liability of the Manager. Subject to the provisions of Section 4.5
hereof, no Manager shall be liable, responsible or accountable in damages or
otherwise to the Company or any of the Members for any acts performed or omitted
within the scope of his or her authority, including the results of any
investment made by the Manager on behalf of the Company, provided that the
Manager shall have acted in good faith.
4.8 Company Indemnification of the Manager. Provided that the actions
of such Person were within the scope of his or her authority and not in
violation of the duties and obligations imposed by this Agreement or the Act,
the Company shall indemnify, defend, and hold the Manager and his or her
employees and agents, and their respective successors, executors, administrators
or personal representatives harmless from and against any loss, liability,
damage, cost or expense (including reasonable attorneys' fees) sustained or
incurred as a result of any act or omission concerning the business or
activities of the Company to the fullest extent permitted by law.
4.9 Manager's Specific Authority. Without limiting the generality of
the powers of the Manager as set forth in Section 4.1 above, the Manager shall,
exercising sole discretion, have the following rights and powers, except to the
extent such rights and powers may be limited by other provisions of this
Agreement or provisions of the Act with respect to which this Agreement does not
provide otherwise:
(a) The making of any expenditures incurred in connection with the
business of the Company.
(b) The use of the assets of the Company in connection with the
business of the Company.
(c) The negotiation, execution and performance of any contracts,
conveyances or other instruments or documents.
(d) The selection, on behalf of and at the expense of the Company, and
the dismissal of, employees and such persons, firms or corporations (including
Affiliates of Members) as the Manager in his or her reasonable judgment shall
deem advisable for the conduct and operation of the business of the Company,
including brokers, agents, lawyers, accountants, consultants, contractors and
providers of other services or materials for the Company, on such terms and for
such compensation or costs as the Manager, in his or her reasonable judgment,
shall determine.
14
(e) The maintenance of insurance for the benefit of the Company and
its Members.
(f) If reasonably required by any lender providing a loan to the
Company, the making of modifications to this Agreement, without the consent of
but with notice to the Members, so as to comply with the requirements of such
lender, provided that such amendments do not adversely affect the Members in any
material manner.
(g) The control of any matters affecting the rights and obligations of
the Company, including the conduct of litigation and the incurring of legal
expense and the settlement of claims and pending or threatened litigation.
(h) The filing on behalf of the Company of all required local, state
and federal tax returns and other documents relating to the Company and the
making or revoking of any applicable elections with respect thereto or with
respect to the status of the Company thereunder.
(i) The filing of such amendments to the Articles as may be required
or as the Manager may reasonably deem necessary from time to time provided that
unless otherwise approved by the Members as provided for in Section 3.2 hereof,
no such amendment shall be made which involves (i) the purpose for which the
Company has been organized, (ii) a change in any of the events of dissolution in
a manner that is inconsistent with the provisions of this Agreement, (iii) the
term of the Company's existence, (iv) a change with respect to any fiduciary
duties of the Manager or any Member, (v) an increase in any rights of the
Manager or a waiver, release or discharge of any obligation of the Manager to
the Company or a Member, (vi) any indemnification of the Manager by the Company,
or (vii) any of the other provisions for the regulation of the internal affairs
of the Company in a manner that is inconsistent with the provisions of this
Agreement.
4.10 Limitations on the Authority of the Manager. Except as otherwise
provided for or authorized in this Agreement, the Manager shall not take any of
the following actions unless specifically authorized by the Members as provided
for in Section 3.2 hereof:
(a) The amendment of this Agreement;
(b) The amendment of the Articles;
(c) The compromise the obligation to make a capital contribution by a
Member who dies or becomes legally incompetent or otherwise unable to perform
personally;
(d) The compromise, as among Members, of an obligation of a Member to
make a capital contribution or return money or other property paid or
distributed in violation of this Agreement or the Act;
15
(e) The making of a Distribution, other than a tax payment
Distribution as provided for in Section 6.1 hereof, prior to the dissolution and
winding up of the Company, including a Distribution in redemption of a
Distributional Interest;
(f) The admission of a Person as an Additional Member or a Substitute
Member;
(g) The use of any of the Company's property to redeem a
Distributional Interest that is subject to a charging order;
(h) The taking of any voluntary action to dissolve the Company;
(i) The merger of the Company with any other entity;
(j) The taking of any act in contravention of this Agreement;
(k) The purchase of the Distributional Interest of any Member or
Member Transferee; and
(l) The determination of the consideration to be paid by an Additional
Member for his or her Percentage Interest, as provided for in Section 2.1
hereof, or otherwise.
(m) The incurring of indebtedness or the pledging of assets of the
Company where such actions are either financially material or outside the
ordinary course of business. This subsection is specifically governed by the
fiduciary duties of the Manager as set forth in Section 4.5 hereof and the
duties, responsibilities and authorizations from time to time promulgated by the
Company.
4.11 Requisite Vote for Multiple Managers. If at any time there are two
or more Persons acting as Manager, all references to the Manager herein shall
include each of such Persons, jointly and severally, but any action or decision
which is necessary, required, or appropriate of the Manager shall be pursuant to
the determination or approval thereof by a majority of the Persons acting as
Manager. If at any time there are two or more Persons acting as Manager of the
Company, at least two (2) Manager signatures shall be required to take any
action which requires the authorized signature of a Manager of the Company.
4.12 Appointment of Officers by Manager. The Manager hereby appoints
the following slate of initial officers of the Company to serve until their
respective successors are duly designated or until their respective earlier
death, resignation or removal: Xxxxxxx Xxxxx - President, Xxxxxx Xxxxxx - Vice
President Finance and Administration, Xxxxx Xxxxxxx - Vice President Sales and
Marketing. The Company shall from time to time promulgate written duties,
responsibilities and authorizations of the various officers.
16
4.13 Officers of the Company. The officers of the Company shall be
President, Vice President Finance and Administration, Vice President Sales and
Marketing, and such other officers as may be appointed by the Manager from time
to time. Any two or more offices may be held by the same person.
4.14 Appointment and Term of Office. The officers of the Company shall
be appointed periodically by the Manager and such individuals shall continue to
serve unless and until specific action is taken to the contrary by the Manager.
Vacancies may be filled or new offices created and filled at the discretion of
the Manager.
ARTICLE 5
PROFITS AND LOSSES
5.1 Allocations of Profits and Losses. Unless otherwise provided in
Exhibit B attached hereto, Profits and Losses are intended to and shall be
allocated among the Members (and Member Transferees, as applicable) in
accordance with their respective Percentage Interests. In those instances where
the Code and applicable Treasury Regulations are reasonably determined by the
Manager to require either contrary or more specific profit and loss allocation
provisions due to applicable circumstances, the following additional provisions
shall apply:
(a) Profits shall be allocated among the Members (and Member
Transferees, as applicable) in the following order of priority:
(1) first, to those Persons having deficit balances in
their Capital Accounts, in proportion to and to the
extent of such deficit balances;
(2) second, to those Persons, in proportion to and to the
extent of the respective amounts necessary to
increase the Capital Account balance of each such
Person to an amount equal to his or her Invested
Capital;
(3) third, to those Persons in proportion to and to the
extent of the amounts, if any, necessary to cause
their Excess Balances to be in proportion to their
respective Percentage Interests; and
(4) fourth, in accordance with their respective
Percentage Interests;
(b) Losses shall be allocated among the Members (and Member
Transferees, as applicable) in the following order of priority:
17
(1) first, in proportion to and to the extent of the
amounts, if any, necessary to cause the excess of
each Person's positive Capital Account balance over
such Person's Invested Capital (such excess amounts,
if any, are referred to in this Section 5.1 as
"Excess Balances"), to be in proportion to their
respective Percentage Interests;
(2) second, to those Persons having Excess Balances in
proportion to and to the extent of such Excess
Balances;
(3) third, to those Persons, in proportion to and to the
extent of their respective positive Capital Account
balances; and
(4) fourth, in accordance with their respective
Percentage Interests.
5.2 Allocations With Respect to Transferred Distributional Interests.
Unless otherwise required by the Code or agreed to by the Manager, any Profit or
Loss allocable to a Member (or Member Transferee) whose Distributional Interest
has been transferred during any year shall be allocated among the Persons who
were the holders of such interest during such year in proportion to the number
of days during such year that each holder was recognized as the holder of the
interest, without regard to the results of Company operations during the period
the holder was recognized as the owner thereof.
5.3 Tax Credits. Unless otherwise required by the Code, any tax
credit of the Company shall be allocated among the Members (and Member
Transferees, as applicable) in accordance with their respective Percentage
Interests. Any recapture of tax credits shall be allocated among the Members
(and Member Transferees, as applicable) in the same ratio as the applicable tax
credits were allocated to the Members (and Member Transferees, as applicable).
5.4 Regulatory Allocations. If and to the extent reasonably deemed
necessary by the Manager to satisfy the requirements of the Code and Treasury
Regulations, the provisions set forth in Exhibit C attached hereto shall apply
and take precedence over any other provisions of this Agreement.
18
5.5 Section 704(c) Allocation. Notwithstanding the foregoing
allocations of Profits and Losses, if any property contributed to the Company
has a fair market value (as agreed by the Members as provided in Section 3.2
hereof) that differs from its adjusted basis for federal income tax purposes at
the time of such contribution, or if there is a revaluation of any Company
Property such that the book value of such property differs from its adjusted
basis for federal income tax purposes, items of income, gain, loss, and
deduction with respect to any such property shall be allocated among the Members
(and Member Transferees, as applicable) so as to take account of such
difference, in the manner intended by Section 704(c) of the Code and the
Treasury Regulations from time to time promulgated thereunder, using such method
permitted by such Treasury Regulations as the Manager may determine.
ARTICLE 6
DISTRIBUTIONS
6.1 Mandatory Tax Payment Distributions. Unless otherwise consented to
or acquiesced in by the Members as provided for in Section 3.2 hereof, the
Manager shall use his or her reasonable good faith efforts to see to it that
Distributions are made annually to the Members (and Member Transferees, as
applicable), on a consistent basis, as reasonably determined to be necessary to
enable such Persons to pay the federal income taxes on the Profits allocated to
them pursuant to this Agreement. For purposes of determining the amount of the
tax payment Distributions provided for in this Section 6.1, the Manager shall
select what he or she reasonably believes to be the most equitable single rate
to be applied uniformly to all Members regardless of the fact that some Members
(and Member Transferees, as applicable) may be subject to different effective or
marginal tax rates than others. The Manager shall use his or her reasonable good
faith efforts to see to it that such Distributions are made in such a fashion
that the Persons receiving the same may use such Distributions to satisfy in a
timely manner their income tax payment obligations.
6.2 Interim Operating Distributions. Unless otherwise provided in
Exhibit D attached hereto, all Distributions prior to liquidation shall be made
to the Members (and Member Transferees, as applicable) pro rata in proportion to
their respective Percentage Interests on the record date of such Distributions.
Unless otherwise provided in Section 6.1 hereof, all such Distributions shall be
made at such time as determined by the Manager.
6.3 Liquidating Distributions. Unless otherwise provided in Exhibit D
attached hereto, upon the liquidation and termination of the Company, Cash
Available for Distribution shall be distributed on the same basis as is provided
for in Section 6.2 hereof with respect to Distributions prior to liquidation and
termination of the Company.
19
6.4 Limitations on Distributions. Notwithstanding the provisions of
the other Sections of this Article 6, a Distribution shall not be made if the
Company would not be able to pay its debts as they become due in the ordinary
course of business or the Company's total assets would be less than the sum of
its total liabilities plus the amount that would be needed, if the Company were
to be dissolved, wound up and terminated at the time of the Distribution, to
satisfy the preferential rights of Members whose preferential rights are
superior to those receiving the Distribution. A payment of principal or interest
on the Company's indebtedness issued or created in connection with the purchase,
redemption or other acquisition of a Distributional Interest is considered to be
a Distribution for purposes of this Agreement and the effect of each such
payment shall be measured on the date the payment is made. In all other cases,
the effect of a Distribution shall be measured as of the date the Distribution
is authorized if payment occurs within 120 days after the date of authorization
or as of the date payment is made if it occurs more than 120 days after the date
of authorization. Members (and Member Transferees) who receive Distributions in
violation of the provisions of this Section 6.4 or the Act may be compelled to
return the amount wrongfully received. The Manager and any Member who votes for
or assents to a Distribution in violation of the provisions of this Section 6.4
or the Act may be personally liable to the Company, as provided for in the Act,
for the amount in excess of that which could have been rightfully distributed if
such Person fails to perform the duties of loyalty, due care and good faith and
fair dealing as imposed by this Agreement or the Act.
ARTICLE 7
TRANSFERS OF INTERESTS
7.1 General Provisions Regarding Transfers.
(a) Except to the extent otherwise required by law or otherwise
directed pursuant to the affirmative vote of the Members as provided for in
Section 3.2 hereof, the Company need not recognize or give effect to any
transfer, in whole or in part, of a Distributional Interest under any of the
following circumstances: (i) if such transfer will, in the opinion of counsel to
the Company, result in a termination of certain elections or tax treatments of
the Company for federal income tax purposes; (ii) if such transfer will, in the
opinion of counsel to the Company, result in the Company's failure to qualify
for, or the loss by the Company or any Member of, an exemption from the
registration requirements of the federal or any applicable state securities
laws; (iii) if such transfer would otherwise result in adverse tax consequences
to the Company or the other Members; (iv) if such transferee is a "foreign
person" as that term is defined in the Foreign Investment in Real Property Tax
Act of 1980, as amended; or (v) if such transfer will, in the opinion of counsel
to the Company, result in a default under any loan agreement, contract or other
agreement to which the Company or any of its assets are bound, unless if the
only default is due to not obtaining a valid consent, for which the Company will
then seek such consent.
20
(b) Except as otherwise expressly provided for in this Agreement, no
Person to whom all or any part of a Member's Interest in the Company is
transferred (by sale, assignment or other transfer, whether voluntarily or by
operation of law) shall become a Substitute Member without complying with the
other requirements set forth in this Article 7. Any Person who acquires all or
any part of a Member's Interest in the Company without complying with the other
requirements set forth in this Article 7 shall obtain thereby only the rights of
an assignee or transferee as provided for in this Agreement. Subject to the
satisfaction of the conditions set forth herein, each Member hereby consents to
the admission of any assignee or transferee of a Member's Interest in the
Company as a Substitute Member.
(c) No Person shall be admitted as a Substitute Member under this
Agreement unless and until:
(1) such admission has been approved by the Members,
other than the transferring Member, as provided for
in Section 3.2 hereof;
(2) a duplicate original of a written instrument of
assignment or transfer, in form and substance as
reasonably required by the Manager, signed by the
assigning Member if applicable, and accepted in
writing by the assignee or transferee, is delivered
to the Manager;
(3) the Company receives an opinion of counsel, by legal
counsel and in form and of substance reasonably
satisfactory to it, to the effect that any of the
adverse consequences, if applicable, referred to
Section 7.1(a)(i), Section 7.1(a)(ii) or Section
7.1(a)(v) will not in fact result from such
assignment or other transfer, or the Company waives
this requirement; and
(4) the prospective new Member executes and delivers to
the Company a written agreement, in form reasonably
satisfactory to the Manager, pursuant to which said
Person agrees to be bound by and confirms the
agreements, representations, warranties, and any
power of attorney, if applicable, contained in this
Agreement.
(d) In the event an assignment of any portion or all of a Member's
Interest in the Company is made or a transfer thereof otherwise occurs,
regardless of whether the assignee or transferee becomes a Substitute Member,
then unless otherwise required by the Code:
(1) the effective date of such assignment or transfer
shall be the date the written instrument of
assignment or transfer is delivered to the Company
or, if applicable, such other date as may be
specified in such written instrument as the effective
date thereof provided that such date is approved as
such by the Manager; and
21
(2) the Company, the Manager and the other Members shall
be entitled to treat the assignor or transferor of
the assigned or transferred interest as the absolute
owner thereof in all respects and shall incur no
liability for allocations of Profits and Losses and
Distributions made in good faith to such assignor or
transferor until such time as the written instrument
of assignment or transfer has actually been received
and a reasonable time has been afforded the Manager
to have the same recorded in the books of the
Company.
(e) The cost of processing and perfecting an admission contemplated by
this Section 7.1 (including reasonable attorneys' fees and out-of-pocket
expenses incurred by the Company) shall be borne by the party seeking admission
as a Member to the Company.
(f) Notwithstanding any of the provisions of Sections 7.2,7.3, 7.4 and
7.5 below to the contrary, if at any time when there is only one remaining
Member such Member dies or becomes legally incompetent or, in the case of a
Member who is a partnership, limited liability company, corporation, trust or
other entity, such entity terminates, the legal representative or
successor-in-interest of such terminated Member shall have the right, by filing
a written instrument with the records of the Company so stating, to
automatically become a substituted Member for the deceased, incompetent or
terminated Member for purposes of waiving the right to have the Company's
business wound up and the Company terminated by reason of the Dissociation of
the deceased, incompetent or terminated Member, as provided for in Section
35-3(b) of the Act. In such circumstances, it shall not be necessary to comply
with such of the other provisions of this Section 7.1 as the Manager may
reasonably determine to be unnecessary for purposes of such legal representative
or successor-in-interest becoming a Substitute Member for the deceased,
incompetent or terminated Member, but the Manager may require compliance with
those provisions, and such other or additional procedures, as reasonably
determined to be necessary or appropriate to evidence the legal effectiveness of
such transfer. If the deceased or incompetent Member was also the Manager, a
replacement Manager may be designated by such legal representative or
successor-in-interest and an amendment to the Articles shall be filed by such
replacement Manager as required by the Act.
(g) Notwithstanding the other provisions of Section 7.1(b) and Section
7.1(c) of this Agreement to the contrary, a Member shall have the right to
transfer his or her Interest in the Company to a grantor trust of which he or
she is and remains the trustee (or a co-trustee) and sole income beneficiary
during his or her lifetime, retaining the full and unrestricted power to amend
and revoke such trust agreement during his or her lifetime, provided the trustee
of said grantor trust complies with the provisions of Section 7.1(c)(2), Section
7.1(c)(4), Section 7.1(d) and Section 7.1(e) of this Agreement. In such case,
the grantor trust shall automatically become a Substitute Member.
22
7.2 Involuntary Transfers. Except as otherwise provided in Section
7.1(f) hereof, in the event (i) of the death or incompetency of an individual
Member, or (ii) any Member shall be the subject of a Bankruptcy, the personal
representative or trustee (or successor-in-interest) of the deceased or
incompetent Member or Bankrupt Member shall be an assignee of such Member's
Distributional Interest having the rights set forth in Section 7.5 and shall not
become a Substitute Member unless and until the conditions set forth in Section
7.1 are satisfied; and any such Member's estate (or successor-in-interest) shall
be, and continue to be, liable for all of the obligations of such Member.
7.3 Dissolution or Termination of Members.Except as otherwise provided
in Section 7.1(f) hereof, in the event of the dissolution or termination, as
applicable, of a Member that is a partnership, limited liability company,
corporation, trust or other entity, the successor(s)-in-interest to the
dissolved or terminated Member shall, for the purposes of winding up the affairs
of the dissolved or terminated Member, have the rights of an assignee of such
Member's Interest in the Company, as described in Section 7.5, and shall not
become a Substitute Member unless and until the conditions set forth in Section
7.1 are satisfied.
7.4 Transfers of Ownership Interests in Members. For purposes of this
Article 7, any transfer or assignment of any direct or indirect ownership or
other interests in a Member that (taking into account any prior such transfers
or assignments) results in such Member being controlled by a Person or Persons
other than the Person or Persons that control such Member on the date of
becoming a Member shall be deemed an assignment of such Member's Distributional
Interest and therefore subject to all of the restrictions and provisions of this
Article 7; however, such transferor may seek consent for such transfer from the
Company and such consent shall not be unreasonably withheld.
7.5 Status of Member Transferee. Unless and until the conditions of
Section 7.1 hereof are satisfied, no Person who acquires all or any portion of a
Member's Interest in the Company shall become a Member of the Company, but such
Person shall, to the extent of the interest acquired, be entitled only to the
transferor Member's rights, if any, in the Profits and Losses and Distributions
provided for with respect to the transferor Member's Percentage Interest
pursuant to this Agreement, subject to the liabilities and obligations of the
transferor Member hereunder; and such Person shall have no right to participate
in the management of the business and affairs of the Company and shall be
disregarded in determining whether the approval, consent or any other action has
been given or taken by the Members. Any such Member Transferee shall have the
same right, subject to the same limitations, as the transferor Member had under
the provisions of this Article 7 to assign such transferred interest, but any
such further assignee or transferee thereof shall likewise have only the rights
set forth in this Section 7.5, shall be subject to the provisions of Section 7.1
hereof, and shall not become a Substitute Member of the Company unless and until
the conditions of Section 7.1 have been satisfied.
23
7.6 Transferor Not Released. Whether or not a transferee of a Member's
Distributional Interest becomes a Member, the transferor Member shall not be
released from liability to the Company under this Agreement or the Act unless
otherwise consented to or acquiesced in by the other Members as provided for in
Section 3.2 hereof.
7.7 Unilateral Right to Purchase Ownership Interest. Notwithstanding
anything to the contrary contained herein, CDW Capital Corp., or its successor
or assign, shall have the unilateral right to purchase all of an other Member
interest upon thirty (30) days prior written notice at price consistent with the
terms and conditions set forth of Exhibit E hereof.
ARTICLE 8
DISSOCIATION OF A MEMBER
8.1 Events of Dissociation. A Member shall be dissociated from the
Company upon the occurrence of any of the following events:
(a) The Company's having notice of the Member's express will to
withdraw upon the date of notice or on a later date specified by the Member.
(b) The transfer of all of a Member's Distributional Interest, other
than a transfer for security purposes or a court order charging the Member's
Distributional Interest that has not been foreclosed.
(c) The Member's expulsion by unanimous vote of the other Members if
it is unlawful to carry on the Company's business with the Member.
(d) On application by the Company or another Member, the Member's
expulsion by judicial determination because the Member (i) engaged in wrongful
conduct that adversely and materially affected the Company's business, or (ii)
willfully or persistently committed a material breach of this Agreement or a
duty owed the Company or the other Members under Section 15-3 of the Act.
(e) The Member's becoming a debtor in Bankruptcy; executing an
assignment for the benefit of creditors; seeking, consenting to, or acquiescing
in the appointment of a trustee, receiver, or liquidator of the Member or of all
or substantially all of the Member's property; or failing, within 90 days after
the appointment, to have vacated or stayed the appointment of a trustee,
receiver, or liquidator of the Member of all or substantially all of the
Member's property obtained without the Member's consent or acquiescence, or
failing within 90 days after the expiration of a stay to have the appointment
vacated.
(f) In the case of a Member who is an individual:
24
(1) The Member's death;
(2) The appointment of a guardian or general conservator
for the Member; or
(3) A judicial determination that the Member has
otherwise become incapable of performing the Member's
duties under this Agreement.
(g) In the case of a Member that is a trust or is acting as a Member
by virtue of being a trustee of a trust, distribution of the trust's entire
rights to receive Distributions from the Company, but not merely by reason
of the substitution of a successor trustee.
(h) In the case of a Member that is an estate or is acting as a Member
by virtue of being a personal representative of an estate, distribution of the
estate's entire rights to receive Distributions from the Company, but not merely
the substitution of a successor personal representative.
(i) Termination of the existence of a Member if the Member is no an
individual, estate or trust other than a business trust.
(j) In the case of First Portland Corporation ("FPC"), which is a
Member of the Company as set forth on Exhibit A:
(1) FPC actions or omissions cause the Company to be in
breach or default under that certain Loan and
Security Agreement (the "Loan Agreement") dated April
27, 1999 by and between the Company and CDW Capital
Corp. ("CDWCC") or any future agreements or
amendments thereto and such breach or default is not
cured within fifteen (15) days after written notice
to FPC;
(2) FPC is in breach or default under that certain
Servicing Agreement dated (the "Servicing Agreement")
April 27, 1999 by and between FPC and the Company or
any amendments thereto and such breach or default
results in an early termination of the Servicing
Agreement;
25
(3) The occurrence of any one or more of the following
without the prior written consent of the Company,
which consent shall not be unreasonably withheld: (A)
any person or entity, other than the existing
shareholders of FPC or a trustee or other fiduciary
holding securities under an employee benefit plan of
FPC, or a corporation owned directly or indirectly by
the stockholders of FPC in substantially the same
proportions as their ownerships of stock in FPC,
becomes the beneficial owner, directly or indirectly,
of securities of FPC, representing more than 50% of
the combined voting power of FPC's then outstanding
securities; (B) the individuals who as of the date of
this Agreement compose the Board of Directors of FPC
cease for any reason to constitute a majority
thereof; (C) the stockholders of FPC approve (i) a
plan of complete liquidation of FPC, (ii) an
agreement for the sale or disposition of all or
substantially all of FPC's assets, or (iii) a merger,
consolidation, or reorganization of FPC with or
involving any other corporation, other than a merger,
consolidation, or reorganization that would result in
the voting securities of FPC outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) at least
51% of the combined voting power of the voting
securities of FPC (or such surviving entity)
outstanding immediately after such merger,
consolidation, or reorganization; (D) failure by FPC
to file any tax returns; or
26
(4) No earlier than one year after the date of this
Agreement, and at anytime thereafter, CDWCC shall
have the right to dissociate FPC by purchasing FPC's
entire Interest in the Company by delivering written
notice to the Manager and FPC. If CDWCC so elects,
the closing of such purchase shall take place no
later than thirty (30) days from the date of said
notice, and the purchase price CDWCC shall pay to FPC
for FPC's entire Interest in the Company shall be
equal to FPC's capital account, determined in
accordance with generally accepted accounting
principles, as adjusted to record the Company's lease
portfolio and related accounts at fair market value,
as hereafter defined. The fair market value of the
lease portfolio shall be determined in good faith by
CDWCC and FPC, collectively, by obtaining three (3)
independent and bona fide offers to acquire the
entire lease portfolio. CDWCC may, entirely at their
option, utilize the middle value of the three (3)
offers to determine the purchase price of FPC's
proportionate interest or accept one of the bona fide
offers, sell the lease portfolio and accordingly
adjust FPC's capital account to reflect the sale of
the lease portfolio and final purchase price. If
CDWCC is the purchaser hereunder, simultaneously with
CDWCC's delivery of the purchase price to FPC for
FPC's entire Interest in the Company, FPC shall
deliver a duly executed assignment agreement in favor
of CDWCC which assigns the portfolio of leases, and
all rights and interests related thereto, to CDWCC,
and FPC and CDWCC shall execute an Agreement
terminating the Servicing Agreement as of such date;
however, CDWCC shall have the right to extend the
Servicing Agreement month to month, for up to six (6)
months consistent with Section 10 of the Servicing
Agreement.
(k) In the case of CDWCC, which is a Member as set forth on Exhibit A,
CDWCC breaches or is in default under the Loan Agreement.
(l) If a Member fails to contribute additional capital pursuant to the
terms of Section 2.3.
8.2. Consequences of a Member's Dissociation. A Member's Dissociation
shall not cause dissolution of the Company. Upon a Member's Dissociation the
following shall apply:
(a) The Dissociated Member shall cease to be a Member. Any right the
Dissociated Member previously had to participate in the management and conduct
of the Company's business shall terminate, including, but not limited to , that
Member's right to determine any value or continuing interest in the Portfolio,
except as otherwise provided in Section 35-4 of the Act. The Dissociated Member
shall have no right to be provided with access to the Company's books and
records with respect to any of the Company's business or affairs occurring after
the date of the Dissociation except insofar as it may be necessary to
appropriately address or dispose of matters related to the period during which
such Person was a Member.
(b) The Dissociated Member's fiduciary duties shall terminate except
that the Dissociated Member's duty of loyalty and duty of care, as provided in
this Agreement and the Act, shall continue with regard to matters arising and
events occurring before the Dissociation as and to the extent provided for in
the Act.
(c) The transferee or successor(s)-in-interest to the Dissociated
Member's Distributional Interest, and any Dissociated Member who retains his or
her Distributional Interest, shall be a Member Transferee, and be subject to the
provisions of Section 7.5
27
hereof, unless, in the case of a transferee or successor-in-interest, such
Person is accepted as or deemed to be a Substitute Member as provided for in
Article 7 hereof or, if Article 7 fails to so provide or the provisions of
Article 7 are judicially determined to be invalid, as provided by the Act. A
Member Transferee (including a Person who withdraws as a Member pursuant to
Section 8.1(a) hereof) shall be subject to all of the terms and provisions of
this Agreement that pertain to a Member Transferee's Distributional Interest,
including the Company's right to purchase, or cause its designee to purchase,
such Distributional Interest as provided for in Section 8.2(d) hereof.
(d) The Company shall have the right (but not the obligation) to
purchase, or cause its designee to purchase, the Distributional Interest of a
Dissociated Member or Member Transferee as provided for in Exhibit E attached
hereto.
(e) The Company shall have an obligation to purchase the
Distributional Interest of a Dissociated Member or Member Transferee unless
otherwise expressly so provided for in Exhibit F attached hereto.
(f) If the Dissociated Member's Dissociation is wrongful, as provided
in Section 8.3 hereof, such Dissociated Member shall be liable to the Company
and the other Members for damages caused by the Dissociation, which shall be in
addition to any other obligation of the Dissociated Member to the Company and
the other Members. If the Company does not dissolve and wind up its business
following a Member's wrongful Dissociation, damages sustained by the Company for
the wrongful Dissociation must be offset against Distributions otherwise due the
Dissociated Member after the Dissociation.
8.3 Wrongful Dissociation. A Member's Dissociation from the Company
shall be deemed to be wrongful unless such Dissociation is by reason of any of
the following:
(a) The Member's death or legal disability or physical or mental
inability to perform his or her duties under this Agreement;
(b) The transfer of a Member's Distributional Interest to a Person who
is a Member or who thereafter becomes an additional or substitute Member in
compliance with the provisions of Article 7 hereof; or
(c) A Dissociation pursuant to the provisions of Section 8.1(g) or
Section 8.1(h) hereof.
28
ARTICLE 9
DISSOLUTION AND LIQUIDATION
9.1 Events of Dissolution. The following shall be events which shall
cause the dissolution of the Company and, unless continued as provided for in
Section 9.2 hereof, the winding up of the Company's business:
(a) The determination by the Members to dissolve and wind up the
affairs of the Company, as provided for in Section 3.2 hereof;
(b) An event that makes it unlawful for all or substantially all of
the business of the Company to be continued, except to the extent that
any illegality can be and is cured within 90 days after notice to the Company
of such event, in which case such cure shall be considered effective retroactive
to the date of the event;
(c) On application by a Member or Dissociated Member, upon entry of a
judicial decree that
(i) The economic purpose of the Company is likely to be
unreasonably frustrated;
(ii) Another Member has engaged in conduct relating to the
Company's business that makes it not reasonably
practicable to carry on the Company's business with
that Member;
(iii) It is not otherwise reasonably practicable to carry
on the Company's business in conformity with the
Articles and this Agreement;
(iv) The Company has failed to purchase the petitioner's
Distributional Interest as required by Section 8.2(c)
hereof or the Act; or
(v) The Manager or Members in control of the Company have
acted, are acting, or will act in a manner that is
illegal, oppressive or fraudulent with respect to the
petitioner.
(d) On application by a Member Transferee, a judicial determination
that it is equitable to wind up the Company's business; or
(e) Administrative action by the Secretary of State of Illinois as
provided for under Section 35-23 of the Act except and to the extent provided in
connection with reinstatement following such action as provided for in the Act.
29
9.2 Continuation After Dissolution. At any time after the dissolution
of the Company and before the winding up of its business is completed, the
Members, including a Dissociated Member whose Dissociation caused the
dissolution, if applicable, may waive the right to have the Company's business
wound up and the Company terminated, as provided for in Section 3.2 hereof. In
such event, the Company shall resume carrying on its business as if the
dissolution had never occurred and any liability incurred by the Company or a
Member after the dissolution and before the waiver shall be determined as if the
dissolution had never occurred but the rights of a third party pursuant to
Section 35-7(a) of the Act or arising out of conduct in reliance on the
dissolution before the third party knew or received notice of the waiver shall
not be adversely affected.
9.3 Winding Up of Affairs. Except as otherwise provided in Section 9.2
hereof, in the event of the dissolution of the Company for any reason, the
Manager shall promptly commence to wind up the affairs of the Company and shall
convert all of the Company's assets to cash or cash equivalents within such
reasonable period of time as may be required to receive fair value therefor.
During the period of winding up the affairs and business of the Company, the
rights and obligations of the Manager set forth herein with respect to the
management of the Company shall continue. The Manager retains the right to "run
out" the existing Portfolio during any wind up period. In the event the Manager
ceases or fails to act, a Member who has not wrongfully Dissociated may
participate in the winding up of the Company's business, or the legal
representative of the last surviving Member may wind up the Company's business.
On application of any Member, Member's legal representative or Member
Transferee, the court, for good cause shown, may order judicial supervision of
the winding up. A Person winding up the Company's business may prosecute and
defend actions and proceedings, whether civil, criminal or administrative,
settle and close the Company's business, dispose of and transfer the Company's
property, discharge the Company's liabilities, distribute the Company's assets
as provided for herein, settle disputes by mediation or arbitration, and perform
other necessary acts. The Company shall be bound by a Person's act after
dissolution that is appropriate for winding up the Company's business or would
have bound the Company under Section 13-5 of the Act before dissolution if the
other party to the transaction did not have notice of the dissolution. A Person
who, with knowledge of the dissolution, subjects the Company to liability by an
act that is not appropriate for winding up the Company's business shall be
liable to the Company for any damage caused to the Company from such liability.
The assets of the Company shall be applied or distributed in liquidation in the
following order of priority: (1) in payment of debts and obligations of the
Company owed to third party creditors (including Members who are creditors) and
(2) to Members in the manner set forth in Section 6.3 hereof. All items of
income, gain, loss, deduction and credit during the period of liquidation shall
be allocated among the Members in the same manner as before the dissolution.
9.4 Accounting. In the case of the dissolution and termination of the
Company, prior to any distributions to Members pursuant to Section 6.3, a proper
accounting shall be made of the Capital Accounts of the Members and Member
Transferees, and of each item of income, gain, loss, deduction and credit of the
Company from the date of the last previous accounting to the date of
dissolution. The Manager shall provide a copy of such accounting to all Members
and Member Transferees.
30
9.5 No Right to Partition. Each Member hereby waives any and all
rights to partition the interest of the Company in the Property, or any other
asset of the Company, or any part thereof, or otherwise to divide (whether
through an action in equity or through some other means) the beneficial
interest in any nominee holding title to any such assets.
9.6 No Personal Liability for Return of Capital. The Manager shall not
be liable personally for the return or repayment of all or any portion of the
capital of any Member, or for the repayment of all or any portion of any loan
made by any Member to the Company, it being expressly understood that any such
return of capital or repayment of any such loan shall be made solely from the
assets (which shall not include any right of contribution from the Manager) of
the Company.
9.7 Articles of Dissolution. When all debts, liabilities and
obligations of the Company have been paid and discharged or adequate provision
has been made therefor and all of the remaining property and assets of the
Company have been distributed to the Members, Articles of Dissolution shall be
filed by the Manager as required under the Act, whereupon the existence of the
Company shall terminate. Thereafter, the Manager and any remaining Members shall
be trustee for the Members and creditors of the terminated Company and, in that
capacity, shall have authority to convey or distribute any Company property
discovered after termination and take any other action that may be necessary on
behalf of and in the name of the terminated Company.
ARTICLE 10
BOOKS AND RECORDS; ACCOUNTING;
TAX ELECTIONS AND OTHER MATTERS
10.1 Books and Records. Except to the extent otherwise acquiesced in by
the Members as provided for in Section 3.2 hereof, the books and records of the
Company shall be maintained in accordance with generally accepted accounting
principles. Within ninety (90) days after each respective fiscal year end, the
Company shall cause audited annual financial statements to be prepared by a
reputable certified public accounting firm, with delivery of a copy thereof to
each Member. These and all other records of the Company, including information
relating to the status of the Property and information with respect to the sale
by the Manager or any Affiliate of goods or services to the Company, shall be
kept at the principal office of the Company or at such other reasonable
locations as determined by the Manager provided that written notice of any such
other location, and the books and records maintained at such other location, is
given to the Members. The books and records of the Company shall include but not
be limited to the following:
31
(a) A list of the full name and the last known address of each Member
setting forth the amount of cash each Member has contributed, a description and
statement of the agreed value of the other property or services each Member has
contributed or has agreed to contribute in the future, and the date on which
each became a Member.
(b) A copy of the Articles and all amendments thereto, and executed
copies of any powers of attorney pursuant to which the Articles, any amendment
to or restatement of the Articles, or any application or certificate, have been
executed.
(c) Copies of the Company's federal, state and local income tax or
information returns and reports, if any, for the three (3) most recent taxable
years.
(d) Copies of the original Agreement and all amendments to the
Agreement.
(e) A binder or file which contains, in chronological or other
reasonable order, a record of all actions taken by the Members in the form of
voting at a meeting, written consent or other approval or acquiescence as
provided for herein.
(f) Financial statements of the Company for the three (3) most recent
fiscal years, if applicable.
Each Member, and his or her agents and attorneys, shall have a right of access
to the Company's books and records, from time to time and during normal business
hours at the Company's principal place of business or such other reasonable
location as may be designated by the Manager, for inspection and copying. The
Company may impose a reasonable charge for the expenses, including labor,
associated with providing such inspection and copying, except that upon written
request by a Member a copy of the Agreement, and all amendments thereto, shall
be provided at the expense of the Company. A former Member, and his or her
agents and attorneys, and the legal representative of a deceased Member or
Member under a legal disability, shall have the same rights as a Member to
access to the Company's books and records, for proper purposes, pertaining to
the period during which such former Member was a Member.
10.2 Company Funds; Bank Accounts; Investments.
(a) The funds of the Company shall not be commingled with the funds of
any other Person and the Manager shall not use, or permit any other Person to
use, such funds in any manner except for the benefit of the Company.
(b) All funds of the Company not otherwise invested shall be deposited
in the name of the Company in one or more accounts maintained in such financial
institutions as the Manager shall reasonably determine.
32
10.3 Section 754 Elections. In the event of a transfer of all or any
part of the interest of a Member permitted by this Agreement, the Company, with
the approval of the Manager, may elect, pursuant to Section 754 of the Code (or
any corresponding provision of succeeding law), to adjust the basis of the
Company Property. All costs incurred by the Company in making such election
shall be borne prorata by the Members benefitting from such election. Each
Member agrees to furnish the Company with all information necessary to give
effect to such election.
10.4 Fiscal Year. The fiscal year of the Company shall be the calendar
year.
ARTICLE 11
CONSENTS, MEETINGS AND VOTING
11.1 Consents.
(a) Any request for consent of the Members pursuant to this Agreement
shall be made by delivery of a written request to each Member whose consent or
approval is requested.
(b) Each Member who receives a request for consent or approval shall
respond by delivery of a written consent, approval or declination to the
requesting party within fifteen (15) days of the delivery of the request for
consent or approval unless another time period is specified in this Agreement.
Failure to respond as provided in this Section 11.1(b) shall constitute a
consent or approval for all purposes of this Agreement.
(c) Any action which could otherwise be taken by vote of the Members
at a meeting may be taken by the Members without a meeting and by means of a
written consent to such action signed by those Members representing the
Percentage Interests necessary to take or approve such action at a meeting,
provided such written consent is filed with the records of the Company. Any such
consent may be executed in counterparts and each counterpart shall constitute a
single consent of the Members.
11.2 Meetings of Members.
(a) Meetings of Members shall be held at such location in Illinois, or
such location outside the state of Illinois as approved or consented to by the
Members as provided for in Section 3.2 hereof, as provided in any proper Notice
of meeting. A Notice of a meeting shall state, with reasonable particularity,
the purposes of the meeting and shall be sent to all Members not more than 30,
nor less than 10, days before the date scheduled for the meeting. Attendance at
a meeting by a Member (in person or by proxy or by telephone) shall constitute
waiver of Notice of such meeting as well as a waiver of such Member's right to
contest to the location of such meeting, if outside the state of Illinois and
not otherwise approved as provided for in Section 3.2 hereof. Waiver of Notice
of a meeting may also be given by written waiver by the Member.
33
(b) Meetings shall be held only when called by the Manager or by those
Members possessing the requisite percentage of the Percentage Interests of the
Members, as provided for in Section 3.2 hereof, but in no event any less often
than one (i) time per year.
(c) The presence (in person or by proxy)at a meeting, for which proper
Notice has been given or waivers of Notice have been received, of those Members
possessing a majority of the Percentage Interests shall constitute a quorum.
(d) Voting at any meeting at which a quorum is present shall be by
written ballot (including proxies) unless otherwise agreed by all Members
present. The Manager (or in his or her absence, the Member selected by those
Members in attendance possessing a majority of the Percentage Interests of those
Members in attendance) shall record all votes and maintain or cause to be
maintained with the Company records an accurate record of the voting results and
actions agreed upon at the meeting.
(e) All matters which may or are required to be submitted to a vote of
the Members shall be determined by the affirmative vote, consent or approval of
those Members representing the Percentage Interests required therefor as set for
in Section 3.2 hereof.
11.3 Dispute Resolution. The Members retain the right to adjudicate any
and all disputes in any court of competent jurisdiction subject to the governing
law principles contained herein and further whereas venue shall lie in Xxxx
County, Illinois and/or in the Northern District of Illinois with respect to any
federal action.
ARTICLE 12
DEFINITIONS
As used in this Agreement, the terms with their initial letters
capitalized, shall, unless the context otherwise requires or unless otherwise
expressly provided herein, have the meanings specified below:
"Act" means the Limited Liability Company Act of the state of Illinois.
"Additional Member" means any Person, other than an Initial Member, who
by contributing to the capital of the Company and by being approved as such, in
the manner herein provided, becomes a Member.
34
"Affiliate" means any Person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control
with any other Person, with "control" meaning the power, directly or indirectly,
to direct the management or policies of such Person, whether by the ownership of
voting securities, by contract or otherwise.
"Agreement" or "Operating Agreement" means this Operating Agreement as
initially executed, or as amended from time to time, unless the context
otherwise requires.
"Articles" means the Articles of Organization of the Company and any
amendment to such Articles filed in the Office of the Secretary of State of the
State of Illinois.
"Bankruptcy" of a Member means the occurrence of any of the following
events: (i) the filing by such Person of a voluntary case or the seeking of
relief under any chapter of Title 11 of the United States Code, as now
constituted or hereafter amended ("Bankruptcy Code"), (ii) the making by such
Person of a general assignment for the benefit of its creditors, (iii) the
admission in writing by such Person of the inability to pay his or her debts as
they mature, (iv) the filing by such Person of an application for, or consent
to, the appointment of any receiver or a permanent or interim trustee of such
Person or of all or any portion of his or her property, including, without
limitation, the appointment or authorization of a trustee, receiver, or agent
under applicable law or under a contract to take charge of his or her property
for the purposes of enforcing a lien against such property or for the purpose of
general administration of such property for the benefit of his or her creditors,
(v) the filing by such Person of a petition seeking a reorganization of his or
her financial affairs or to take advantage of any bankruptcy, reorganization,
insolvency, readjustment of debt, dissolution, or liquidation law or statute, or
an answer admitting the material allegations of a petition filed against such
Person in any proceeding under any such law or statute, (vi) an involuntary case
is commenced against such Person by the filing of a petition under any chapter
of the Bankruptcy Code and within sixty (60) days after filing of such case
either the petition is not dismissed or an order for relief is entered therein;
(vii) an order, judgment, or decree is entered appointing a receiver or a
permanent or interim trustee of such Person or of all or any portion of his or
her property, including, without limitation, the entry of an order, judgment or
decree appointing or authorizing a trustee, receiver, or agent to take charge of
the property of such Person for the purpose of enforcing a lien against such
property or for the purpose of general administration of such property for the
benefit of the creditors of such Person, and such order, judgment or decree
shall continue unstayed and in effect for a period of sixty (60) days; or (viii)
an order, judgment, or decree is entered, without the approval or consent of
such Person, approving or authorizing the reorganization, insolvency,
readjustment of debt, dissolution or liquidation of such Person under any such
law or statute, and such order, judgment or shall continue unstayed and in
effect for a period of sixty (60) days.
"Book Value" means the present value of cash flows discounted at the
inherent rate of the lease less the cost of ongoing maintenance of the lease.
35
"Capital Account" means the account established and maintained for each
Member (and Member Transferee, as applicable) on the books of the Company
pursuant to Article 2 hereof.
"Cash Available for Distribution" means (i) all cash received by the
Company from sources including, but not limited to, (a) Company operations, (b)
sales or other dispositions of Company Property and (c) financing or refinancing
proceeds, condemnation awards, insurance proceeds, or proceeds derived from the
disposition of other Company assets; less (ii) all out-of-pocket costs and
expenses of the Company incurred in connection with such events, and all debt
service on all third-party loans and reasonable reserves to pay for anticipated
expenses and obligations of the Company as determined in the reasonable
discretion of the Manager, and all amounts previously distributed to the
Members.
"Capital Contribution" means (i) the amount of cash contributed and/or
(ii) the fair market value of property contributed. Such Capital Contribution
shall be reflected on Exhibit A as amended from time to time as provided for
herein.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Property" or "the Property" means all property, whether real
or personal, tangible or intangible, now owned or hereafter acquired by the
Company.
"Dissociation" means, with respect to a Person who was a Member
immediately preceding, the occurrence of any of the events set forth in Section
8.1 of this Agreement pursuant to which such Person ceases to be a Member as
provided in this Agreement and by applicable law.
"Dissociated Interest" means the interest of a Dissociated Member in
the payments owing with respect to such Person's Distributional Interest in the
Company as provided for in this Agreement and by applicable law.
"Dissociated Member" means a Person who has ceased to be a Member by
reason of the occurrence of an event of Dissociation as provided in this
Agreement and by applicable law.
"Distributional Interest" means all of a Member's (or Member
Transferee's, as applicable) interest in and right to receive the Distributions
to be made by the Company with respect to the Percentage Interest associated
therewith.
36
"Distribution" means any money, property or other benefit, from any
source, transferred by the Company to a Member in the capacity as a Member or to
a Member Transferee, but shall not include any payments made to a Member on
account of any indemnity contained herein.
"Event of Dissociation" means the occurrence of any of the events set
forth in Section 8.1 hereof which give rise to the dissociation of a Member.
"Initial Member" means each of the Persons listed on Exhibit A as of
the time of the filing of the Articles with the Illinois Secretary of State's
Office.
"Interest in the Company" means for each Member all of a Member's
right, title and interest in and to the Company and its assets, including,
without limitation, such Member's Capital Account, the right to receive
Distributions, such Member's allocable share of Company Profits and Losses, and
such Member's right to manage the Company as provided for herein and by
applicable law.
"Invested Capital" means, with respect to any Member, the amount of the
Capital Contributions made by such Member to the Company as provided in Article
2 hereof less Distributions made to such Member pursuant to Article 6 hereof in
payment of all or any portion of the previously existing amount of Invested
Capital, but not less than zero. In the case of a Member Transferee, such term
shall mean the transferor Member's Invested Capital immediately prior to such
transfer, less Distributions made to such Member Transferee subsequent to such
transfer in payment of all or any portion of such previously existing Invested
Capital.
"Manager" means one or more managers as appointed in or pursuant to
Article 3 hereof. References to the Manager in the singular or as him, her, it,
itself or other like references shall also, where the context so requires, be
deemed to include the plural or the neuter, masculine or feminine reference, as
the case may be.
"Market Value" means the bona fide fair market value of the portfolio
of leases which an unrelated third party would pay the Company in a lump sum and
on a non-recourse basis for the Company's entire portfolio of leases.
"Member Transferee" means a Person to whom the interest of a Member in
Profits and Losses and Distributions has been transferred but who has not become
an additional or substitute Member pursuant to the provisions hereof and
applicable law.
"Members" means those Persons designated as Members on Exhibit A and
each Person who may become an additional or substitute Member pursuant to the
provisions hereof and applicable law.
37
"Notice" means a written statement containing the information required
by this Agreement to be communicated to a Person and sent to such Person in
accordance with Section 13.9.
"Percentage Interest" means for each Member (and Member Transferee, as
applicable), the percentage set forth opposite such Member's name on Exhibit A,
as the same may be adjusted from time to time pursuant to Article 2 hereof,
which shall be represent the pro rata share of Profits and Losses to be
allocated, and Distributions to be made, to such Person as provided for in this
Agreement or otherwise by applicable law.
"Person" means any individual, company, limited liability company,
corporation, unincorporated association, partnership, trust or other entity.
"Profits" and "Losses" mean the net profits or losses of the Company as
determined by the Company's accountants in accordance with federal income tax
accounting principles as of the close of each fiscal year of the Company.
"Substitute Member" means any Person to whom the Distributional
Interest of a Member has been transferred and who is approved as such, in the
manner herein provided, and thereby becomes a Member.
"Treasury Regulations" means the federal income tax regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
ARTICLE 13
GENERAL PROVISIONS
13.1 Burden and Benefit. Subject to the provisions of Article 7 hereof,
the covenants and agreements contained herein shall be binding upon and inure to
the benefit of the heirs, executors, administrators, successors and assigns of
the respective parties hereto. Any Person acquiring or claiming an interest in
the Company, in any manner whatsoever, shall be subject to and bound by all
terms, conditions and obligations hereof to which such Person's predecessor in
interest was subject or bound, without regard to whether such a Person has
executed a counterpart hereof or any other document contemplated hereby. No
Person, including the legal representatives, heirs or legatees of a deceased
Member, shall have any rights or obligations greater than those set forth herein
and no Person shall acquire an Interest in the Company or become a Member
thereof except as permitted hereby.
38
13.2 Applicable Law. This Agreement shall be construed and enforce in
accordance with the laws of the State of Illinois, without giving effect to the
principles of conflicts of law thereof.
13.3 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one agreement binding on all parties hereto,
notwithstanding that all the parties shall not have signed the same counterpart,
and the original of this Agreement shall be a counterpart signed by all the
Members.
13.4 Separability of Provisions. Each provision of this Agreement shall
be considered separable and if for any reason any provision which is not
essential to the effectuation of the basic purposes of the Agreement is
determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those provisions of this
Agreement which are valid.
13.5 Entire Agreement. This Agreement, together with schedules and
exhibits attached hereto and any other documents executed concurrently herewith,
sets forth all (and is intended by all parties to be an integration of all) of
the promises, agreements and understandings among the parties hereto with
respect to the Company, the Company business and the property of the Company,
and there are no promises, agreements, or understandings, oral or written,
express or implied, among them other than as set forth or incorporated herein.
13.6 Additional Requirements. Each Member agrees to do all acts and
things to make, execute and deliver such written instruments as may from time to
time be reasonably required by the Manager to carry out the terms and provisions
hereof, including, but not limited to, any assignments or amendments hereto as
may be required by any lender providing financing.
13.7 Creditors. None of the provisions of this Agreement shall be for
the benefit of or enforceable by any of the creditors of the Company or the
Members.
13.8 Gender and Captions. Wherever the context so requires, the use of
the singular number shall be deemed to include the plural and vice versa. Each
gender shall be deemed to include any other gender, and each shall include a
Person wherever the context so requires. The captions and headings of the
various Articles and Sections of this Agreement are intended only as a matter of
reference and convenience and in no way define, limit or prescribe the scope or
intent of this Agreement or any Article or Section.
13.9 Notice. All notices required or permitted to be given shall be
sufficient if and when given in the following manner:
39
If to the Company: to the attention of the Manager, at the address or fax number
of the principal office of the Company
If to a Member: at the address or fax number of the Member as indicated on
Exhibit A, as amended from time to time or to such other address or fax number
as may be specified in a written notice as conforming hereto. A notice may be
given by personal delivery, by certified U.S. Mail, return receipt requested, or
by fax the receipt of which is confirmed by printed report acknowledging receipt
at the receiving fax machine. A notice given by personal delivery shall be
deemed given when delivered. A notice given by certified U. S. mail shall be
deemed given on the third day following deposit with the sending post office. A
notice given by fax shall be deemed given as of the date and time shown on the
delivery confirmation report.
13.10 Amendments. Except as otherwise provided herein, any amendments
hereto shall require the written consent of the Members as provided for in
Section 3.2 hereof.
13.11 Jurisdiction; Prevailing Party Expenses. Each party hereto
consents and submits to (i) the jurisdiction of the courts of the state of
Illinois and of the courts of the United States for a judicial district within
the territorial limits of the state of Illinois for all purposes of this
Agreement and any ancillary document to which it is a party and (ii) the venue
of any action or proceeding arising out of or relating to this Agreement being
Xxxx County, Illinois or, if such proceeding cannot be lawfully held in such
location, as near thereto as applicable law permits. The prevailing party or
parties in any such action or proceeding arising shall be reimbursed by the
party or parties who do not prevail for the reasonable fees and costs of their
attorney, accountants and experts and for the costs of such proceeding. In the
event that two or more parties are deemed liable for a specific amount payable
or reimbursable under this Section 13.11, such parties shall be jointly and
severally liable.
13.12 Members' Investment Representations. Each Member hereby
represents that, with respect to his or her interest in the Company: (i) he or
she is or has acquired such interest for purposes of investment only, for his or
her own account (or a trust account if such Member is a trustee), and not with a
view to resell or distribute the same or any part thereof, and (ii) no other
Person has any interest in such interest or in the rights of such Member under
this Agreement other than a spouse who may have rights as provided by applicable
law. Each Member also represents to the Company and the other Members that he or
she has the business and financial knowledge and experience necessary to acquire
an interest in the Company on the terms contemplated herein and that he or she
has the ability to bear the risks of such investment (including the risk of
sustaining a complete loss of all its capital contributions) without the need
for the investor protections provided by the registration requirements of the
Securities Act of 1933, as amended.
40
13.13 Set-off. In the event any Member owes any amount to the Company,
by reason of a breach of such Member's obligations hereunder or otherwise, the
Company may set-off and deduct the amount so owing from such Member from any
Distributions otherwise required to be made to such Member (or Member
Transferee, as applicable).
13.14 Company Deemed a Party to this Agreement. All Members and the
Manager hereby intend and agree that the Company shall be deemed to be a party
to this Agreement and bound by the terms hereof. The Manager shall promptly
execute, place on file with this Agreement and maintain with the Company's books
and records a written acknowledgment of the provisions of this Section 13.14,
evidencing the Company's becoming a party hereto and being bound hereby, but the
failure to do so shall not be deemed to be a release, waiver or other act which
results in the Company's not being deemed to be a party hereto or bound hereby.
IN WITNESS WHEREOF, the parties hereto have agreed to the terms of this
Agreement as of the day and date first written above.
CDW CAPITAL CORP. FIRST PORTLAND CORPORATION
By: ___________________________ By: ___________________________
Name: ________________________ Name: ________________________
Its: ___________________________ Its: ___________________________
41
EXHIBIT A
MEMBERS, INTERESTS AND CONTRIBUTIONS
Percentage Capital
Member Interest Contribution
Name CDW Capital Corp. 50% $100,000.00
Street 000 Xxxxx Xxxxxxxxx Xxxxxx
Xxxx Xxxxxx Xxxxx
Xxxxx, XXX Xxxxxxxx 00000
FEIN 00-0000000
Telephone # 000-000-0000
Fax # 000-000-0000
Name First Portland Corporation 50% $100,000.00
Street 0000 Xxxxx Xxxx Xxxxx Xxxxxx
Xxxx Xxxxxxxx
Xxxxx, XXX Xxxxxx 00000
FEIN 00-0000000
Telephone # 000-000-0000
Fax # 000-000-0000
A-1
42
EXHIBIT B
ALLOCATIONS OF PROFITS AND LOSSES
Profits and Losses shall be allocated prorata among the Members (and Member
Transferees, as applicable) in proportion to their respective Percentage
Interests.
B-1
43
EXHIBIT C
REGULATORY ALLOCATIONS
As provided in Section 5.4 of the Agreement, the following provisions shall
apply and take precedence over any other provisions in the Agreement if and to
the extent reasonably deemed necessary by the Manager to satisfy the
requirements of the Code and applicable Treasury Regulations:
(a) Minimum Gain Chargeback. If there is a net decrease in Minimum Gain
(as defined below) for a Company taxable year, each Member (or Member
Transferee, as applicable) shall be allocated, before any other allocation of
Company items for such taxable year, items of gross income and gain for such
year (and, if necessary, for subsequent years) in proportion to, and to the
extent of, the amount of such Person's share of the net decrease in Minimum Gain
during such year, as required by and in accordance with Treasury Regulation
Sections 1.704-2(f)(1) and 1.704-2(i)(4). The income allocated pursuant to this
paragraph in any taxable year shall consist first of gains recognized from the
disposition of property subject to one or more nonrecourse liabilities of the
Company, and any remainder shall consist of a pro rata portion of other items of
income or gain of the Company. The allocation otherwise required by this
paragraph shall not apply to a Member to the extent provided in Treasury
Regulation Sections 1.704-2(f)(2) through (5).
(b) Qualified Income Offset. If a Person unexpectedly receives an
adjustment, allocation or distribution described in Treasury Regulation Section
1.704-l(b)(2)(ii)(d)(4), (5) or (6) that causes or increases an excess deficit
Capital Account balance with respect to such Person, items of Company gross
income and gain shall be specifically allocated to such Person in an amount and
manner sufficient to eliminate such excess deficit Capital Account balance as
quickly as possible.
(c) Gross Income Allocation. If at the end of any Company taxable year,
a Person has an excess deficit Capital Account balance, such Person shall be
specially allocated items of Company income or gain in an amount and manner
sufficient to eliminate such excess deficit Capital Account balance as quickly
as possible.
(d) Nonrecourse Deductions. Any deductions attributable to partnership
nonrecourse liabilities (as determined pursuant to Treasury Regulation Section
1.704-2(c)) of the Company shall be allocated among the Members (and Member
Transferees, as applicable) in accordance with their Percentage Interests.
C-1
44
(e) Definitions Regarding Regulatory Allocations.
(1) "Minimum Gain" shall have the meaning given such term in
Treasury Regulation Section 1.704-2(d), and shall generally mean the
amount by which the nonrecourse liabilities secured by any assets of
the Company exceed the adjusted tax basis of such assets as of the date
of determination. A Person's share of Minimum Gain (and any net
decrease thereof) at any time shall be determined in accordance with
Treasury Regulation Section 1.704-2(g).
(2) The "excess deficit Capital Account balance" of any Person
shall be the Capital Account balance of such Person, adjusted as
provided in the immediately following sentence, to the extent, if any,
that such balance is a deficit (after adjustment). For purposes of
determining the existence and amount of an excess deficit Capital
Account balance, the Capital Account balance of a Person shall be
adjusted by: (i) crediting thereto (A) that portion of any deficit
Capital Account balance that such Person is required to restore under
the terms of this Agreement, and (B) the amount of such Person's share
of Minimum Gain, including any "partner nonrecourse debt minimum gain"
(as defined in Treasury Regulation Section 1.704-2(i)); and (ii)
charging thereto the items described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6) that apply to such Person. The
existence and amount of any excess deficit Capital Account balance at
the end of any year shall be determined before any other allocations
provided for in this Exhibit C for such year have been made.
(f) Nonrecourse Debt. Any item of Company Loss, deduction or
expenditures described in Code Section 705(a)(2)(B) that is attributable to a
partner nonrecourse debt (as defined in Treasury Regulation Section
1.704-2(b)(4)) of a Person shall be allocated to those Persons that bear the
economic risk of loss for such partner nonrecourse debt, and among such Persons
in accordance with the ratios in which they share such economic risk, determined
in accordance with Treasury Regulation Section 1.704-2(i). If there is a net
decrease for a Company taxable year in any partner nonrecourse debt minimum gain
of the Company, each Person with a share of such partner nonrecourse debt
minimum gain as of the beginning of such year shall be allocated items of gross
income and gain in the manner and to the extent provided in Treasury Regulation
Section 1.704-2(i)(4).
(g) Interpretation. The foregoing provisions of this Exhibit C are
intended to comply with Treasury Regulation Sections 1.704-1 and 1.704-2 and
shall be interpreted consistently with this intention. Any terms used in such
provisions that are not specifically defined in this Agreement shall have the
meaning, if any, given such terms in the Regulations cited above.
C-2
45
(h) Curative Allocations. If any allocation of gain, income, loss,
expense or any other item is made pursuant to this Exhibit C (the "Regulatory
Allocations") with respect to one or more Persons (the "Deficit Persons"), then
the Regulatory Allocations shall be taken into account in allocating Profits and
Losses and other items of income, gain, loss and deduction among the Persons
such that, to the extent possible (taking into account the provisions of the
applicable Treasury Regulations), the net amount of such allocations of Profits
and Losses and other items, and the Regulatory Allocations, to each Person shall
be equal to the net amount that would have been allocated to each such Person if
the Regulatory Allocations had not been made.
C-3
46
EXHIBIT D
DISTRIBUTIONS
To the extent necessary to comply with any applicable requirements of the Code
and Treasury Regulations, Cash Available for Distribution shall be distributed
first to those Persons having positive balances in their Capital Accounts (after
giving effect to allocations of Profits and Losses as provided in this
Agreement) in proportion to and to the extent of such positive balances.
All other Distributions shall be made prorata to the Members (and Member
Transferees, as applicable) in proportion to their respective Percentage
Interests as of the record date of such Distributions.
D-1
47
EXHIBIT E
CALL RIGHTS OF THE COMPANY UPON DISSOCIATION
In the event the Company becomes entitled to purchase the Distributional
Interest of a Dissociated Member or Member Transferee pursuant to the provisions
of Section 8 of this Agreement, the price to be paid for such Distributional
Interest shall be the greater of (i) the amount of the Member Transferee's
Capital Account as of the date of Dissociation or (ii) the Transferee's actual
or pro-forma capital account calculation as described and set forth in Section
8.1(j)(4). The amount so determined as above provided shall be herein referred
to as the "Purchase Price."
The Purchase Price shall be paid at such time, in full or in installments, as
the Company and the Member Transferee shall, each acting in good faith, mutually
agree within a reasonable period of time after the Purchase Price has been
determined, not to exceed fully amortizable quarterly payments not to exceed two
(2) years in total from the date of the Dissociation unless otherwise mutually
agreed.
Any amount of the Purchase Price that is paid in installments shall be evidenced
by the promissory note of the Company which shall bear interest at such rate as
is mutually agreed between the Member Transferee and the Company, each acting in
good faith, or if the parties cannot agree on such interest rate, then at the
current prime rate being charged by the Company's commercial lender, or, if
none, then by such commercial banking institution as the Company may reasonably
designate. Such promissory note shall be subordinated, without affecting any
payments due thereon, to (i) any indebtedness of the Company then existing to
the Company's commercial lender if a lender other than a Member if and to the
extent that such subordination is required to prevent such commercial lender
from calling due such indebtedness, if entitled to do so, under the terms of any
applicable loan documentation, and (ii) any refinancing of any such indebtedness
referred to in (i) above undertaken by the Company in good faith and without
unduly causing the deferral of payment of the unpaid balance of the Purchase
Price owing to the Member Transferee.
X-0
00
XXXXXXX X
FAIR VALUE AND PAYMENT FOR
A DISSOCIATED MEMBER'S DISTRIBUTIONAL INTEREST
In the case of a Dissociated Member who has withdrawn pursuant to Section 8.1 of
this Agreement, if such Person has indicated clearly and unequivocally in his or
her notice of withdrawal that he or she elects to have the Company purchase his
or her Distributional Interest as provided for in this Exhibit F, the following
shall apply.
The price to be paid for such Distributional Interest shall be the greater of
(i) the amount of the Dissociated Member's Capital Account as of the date of
Dissociation or (ii) the Dissociated Member's actual or pro-forma capital
account calculation as described and set forth in Section 8.1(j)(4). The amount
so determined as above provided shall be herein referred to as the "Purchase
Price."
The Purchase Price shall be paid at such time, in full or in installments, as
the Company and the Dissociated Member shall, each acting in good faith,
mutually agree within a reasonable period of time after the Purchase Price has
been determined, not to exceed fully amortizable quarterly payments not to
exceed two (2) years in total from the date of the Dissociation unless otherwise
mutually agreed.
Any amount of the Purchase Price that is paid in installments shall be evidenced
by the promissory note of the Company which shall bear interest at such rate as
is mutually agreed between the Dissociated Member and the Company, each acting
in good faith, or if the parties cannot agree on such interest rate, then at the
current prime rate being charged by the Company's commercial lender, or, if
none, then by such commercial banking institution as the Company may reasonably
designate. Such promissory note shall be subordinated, without affecting any
payments due thereon, to (i) any indebtedness of the Company then existing to
the Company's commercial lender if and to the extent that such subordination is
required to prevent such commercial lender if a lender other than a Member from
calling due such indebtedness, if entitled to do so, under the terms of any
applicable loan documentation, and (ii) any refinancing of any such indebtedness
referred to in (i) above undertaken by the Company in good faith and without
unduly causing the deferral of payment of the unpaid balance of the Purchase
Price owing to the Dissociated Member.
F-1
