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OPERATING AGREEMENT
OF
GREENMARINE HOLDINGS LLC
dated as of August 7, 1997
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TABLE OF CONTENTS
Section Page
ARTICLE 1
DEFINITIONS..................................................................................................... 1
ARTICLE 2
FORMATION AND OFFICES........................................................................................... 10
2.1 Formation............................................................................................ 10
2.2 Principal Office..................................................................................... 10
2.3 Registered Office and Registered Agent............................................................... 10
2.4 Purpose of Company................................................................................... 10
2.5 Date of Dissolution.................................................................................. 11
2.6 Certificate; Qualification........................................................................... 11
ARTICLE 3
CAPITALIZATION OF THE COMPANY................................................................................... 11
3.1 Initial Capital Contributions........................................................................ 11
3.2 Additional Capital Contributions..................................................................... 11
3.3 Loans................................................................................................ 13
3.4 Certain Expenses..................................................................................... 13
3.5 Maintenance of Capital Accounts...................................................................... 14
3.6 Capital Withdrawal Rights, Interest and Priority..................................................... 15
3.7 Preemptive Rights.................................................................................... 15
3.8 Stock Contributors Preferred Return; Cash Contributors Preferred Return.............................. 17
3.9 Right of First Offer................................................................................. 17
ARTICLE 4
DISTRIBUTIONS................................................................................................... 19
4.1 Distributions of Net Cash Flow....................................................................... 19
4.2 Persons Entitled to Distributions.................................................................... 19
4.3 Limitations on Distributions......................................................................... 20
ARTICLE 5
ALLOCATIONS..................................................................................................... 20
5.1 Profits.............................................................................................. 20
5.2 Losses............................................................................................... 20
5.3 Loss Limitation...................................................................................... 20
5.4 Tax Allocations: Code Section 704(c)................................................................ 20
5.5 Change in Percentage Interests....................................................................... 21
5.6 Withholding.......................................................................................... 21
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ARTICLE 6
MEMBERS' MEETINGS............................................................................................... 22
6.1 Meetings of Members; Place of Meetings............................................................... 22
6.2 Quorum; Voting Requirement........................................................................... 22
6.3 Proxies.............................................................................................. 22
6.4 Action Without Meeting............................................................................... 23
6.5 Notice............................................................................................... 23
6.6 Waiver of Notice..................................................................................... 23
6.7 No Authority......................................................................................... 23
ARTICLE 7
MANAGEMENT AND CONTROL.......................................................................................... 23
7.1 Management Committee................................................................................. 23
7.2 Management Committee Meetings; Authority; Proxies.................................................... 24
7.3 Management Committee's Authority; Certain Limitations................................................ 25
7.4 Officers; Agents..................................................................................... 25
7.5 Resignation of a Management Committee Member......................................................... 26
7.6 Compensation......................................................................................... 26
ARTICLE 8
LIABILITY AND INDEMNIFICATION................................................................................... 26
8.1 Liability of Members................................................................................. 26
8.2 Indemnification...................................................................................... 27
ARTICLE 9
TRANSFERS OF MEMBERSHIP INTERESTS............................................................................... 29
9.1 General Restrictions................................................................................. 29
9.2 Permitted Transferees................................................................................ 29
9.3 Substitute Members................................................................................... 30
9.4 Effect of Admission as a Substitute Member........................................................... 31
9.5 Consent.............................................................................................. 31
9.6 No Dissolution....................................................................................... 31
9.7 Additional Members; Certain Representations of Members............................................... 31
9.8 Right of First Offer................................................................................. 31
9.9 Tag-Along Rights..................................................................................... 33
9.10 Piggyback Registration............................................................................... 35
ARTICLE 10
DISSOLUTION AND TERMINATION..................................................................................... 37
10.1 Events Causing Dissolution........................................................................... 37
10.2 Notices to Secretary of State........................................................................ 37
10.3 Cash Distributions Upon Dissolution.................................................................. 37
10.4 In-Kind.............................................................................................. 38
10.5 No Action for Dissolution............................................................................ 38
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ARTICLE 11
TAX MATTERS MEMBER.............................................................................................. 39
11.1 Tax Matters Member................................................................................... 39
11.2 Certain Authorizations............................................................................... 39
11.3 Indemnity of Tax Matters Member...................................................................... 40
11.4 Information Furnished................................................................................ 40
11.5 Notice of Proceedings, etc........................................................................... 41
11.6 Notices to Tax Matters Member........................................................................ 41
11.7 Preparation of Tax Returns........................................................................... 41
11.8 Tax Elections........................................................................................ 41
11.9 Taxation as a Partnership............................................................................ 41
ARTICLE 12
ACCOUNTING AND BANK ACCOUNTS.................................................................................... 42
12.1 Fiscal Year and Accounting Method.................................................................... 42
12.2 Books and Records.................................................................................... 42
12.3 Delivery to Members; Inspection...................................................................... 42
12.4 Financial Statements................................................................................. 43
12.5 Filings.............................................................................................. 43
12.6 Non-Disclosure....................................................................................... 43
12.7 Bank Accounts........................................................................................ 44
ARTICLE 13
MISCELLANEOUS................................................................................................... 44
13.1 Title to Property.................................................................................... 44
13.2 Waiver of Default.................................................................................... 44
13.3 Amendment............................................................................................ 45
13.4 No Third Party Rights................................................................................ 45
13.5 Severability......................................................................................... 45
13.6 Nature of Interest in the Company.................................................................... 45
13.7 Binding Agreement.................................................................................... 46
13.8 Headings............................................................................................. 46
13.9 Word Meanings........................................................................................ 46
13.10 Counterparts......................................................................................... 46
13.11 Entire Agreement..................................................................................... 46
13.12 Partition............................................................................................ 46
13.13 Governing Law; Consent to Jurisdiction and Venue..................................................... 46
13.14 Discretion........................................................................................... 47
SCHEDULE 1 ..................................................................................................... 49
SCHEDULE 7.5.................................................................................................... 51
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OPERATING AGREEMENT
OF
GREENMARINE HOLDINGS LLC
THIS OPERATING AGREEMENT (this "Agreement") of GREENMARINE HOLDINGS LLC
(the "Company"), is made and entered into as of the 7th day of August, 1997 by
and among the Persons executing this Agreement on the signature pages hereto as
a member (together with such other Persons that may hereafter become members as
provided herein, referred to collectively as the "Members" or, individually, as
a "Member").
WHEREAS, the Members have caused Greenmarine Holdings LLC to be formed on
August 4, 1997 as a limited liability company under the Delaware Limited
Liability Company Act by causing a certificate of formation of the Company to be
filed with the Delaware Secretary of State and, as required thereunder, do
hereby adopt this Agreement as the limited liability company agreement of the
Company pursuant to Section 18-201(d) of the Act effective as of the date
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties agree as follows:
ARTICLE 2
DEFINITIONS
As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:
"Act" means the Delaware Limited Liability Company Act, 6 Del. L. Section
18-101, et seq., as amended from time to time.
"Acquisition" shall have the meaning set forth in Section 2.4.
"Adjusted Capital Account Deficit" means, with respect to a Member, the
deficit balance, if any, in such Member's Capital Account as of the end of the
relevant Taxable Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account any amounts which such
Member is obligated to restore pursuant to any provision of this
Agreement or is deemed to be obligated to restore pursuant to the
penultimate sentences of
Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and
1.704-1(b)(2)(ii)(d)(6).
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Regulation Section 1.704-1(b)(2)(ii)(d) and shall
be interpreted consistently therewith.
"Affiliate" of a specified Person means any Person (a) who directly or
indirectly controls, is controlled by, or is under common control with, such
Person or (b) who has any relationship with such Person by blood, marriage or
adoption, not more remote than first cousin. With respect to the Group A
Members, the term Affiliate shall include one or more of Xxxxxx Xxxxx or Xxxxx
Fund Management LLC or Affiliates thereof, and any Person for which any such
Person acts as investment advisor or investment manager. With respect to the
Group B Members, the term Affiliate shall include one or more of Xxxxxx X.
Xxxxxxxx or Xxxx X. Xxxxxxxxxx or Affiliates thereof, and any Person for which
any such Person acts as investment advisor or investment manager.
"Agreement" means this Operating Agreement, which shall constitute the
limited liability company agreement of the Company for purposes of the Act, as
amended from time to time.
"Business" shall have the meaning set forth in Section 3.9(a).
"Business Day" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the state of New York) on which banks are open for
business in New York City.
"Capital Account" means, with respect to any Member, a separate account
established by the Company and maintained for each Member in accordance with
Section 3.5 hereof.
"Capital Contribution" means, with respect to any Member, the amount of
money and the initial Gross Asset Value of any Property (other than money)
contributed to the Company with respect to the interests purchased by such
Member pursuant to the terms of this Agreement, in return for which the Member
contributing such capital shall receive a Membership Interest.
"Cash Contributors" shall mean those Members contributing cash as their
initial
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Capital Contributions as reflected on Schedule 1 hereto.
"Cash Contributors Preferred Return" shall have the meaning set forth in
Section 3.8(b).
"Certificate" means the Certificate of Formation of the Company filed
with the Secretary of State of Delaware, as amended or restated from time to
time.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Company" means Greenmarine Holdings LLC.
"Company Affiliate" shall have the meaning set forth in Section 8.2.
"Depreciation" means, for each Taxable Year or other period, an amount
equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such Taxable Year, except that if the
Gross Asset Value of an asset differs from its adjusted basis for federal income
tax purposes at the beginning of such Taxable Year, Depreciation shall be an
amount which bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery deduction
for such Taxable Year bears to such beginning adjusted tax basis; provided,
however, that if the adjusted basis for federal income tax purposes of an asset
at the beginning of such Taxable Year is zero, Depreciation shall be determined
with reference to such beginning Gross Asset Value using any reasonable method
selected by the Management Committee.
"Disposition" shall have the meaning set forth in Section 3.9(a).
"Disposition Notice" shall have the meaning set forth in Section 3.9(a).
"GAC" shall mean Greenmarine Acquisition Corp., a Delaware corporation.
"Gross Asset Value" means with respect to any asset, the asset's adjusted
basis for federal income tax purposes, except as follows and as otherwise
provided in clause (ii) of Section 3.2(b):
(a) The initial Gross Asset Value of any asset contributed by
a Member to the Company shall be the gross fair market value of such
asset, as reasonably determined by the Management Committee; provided,
however, that the initial Gross Asset Values of the assets contributed to
the Company pursuant to Section 3.1 hereof shall be as set forth in such
section or the schedule referred to therein;
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(b) The Gross Asset Values of all Company assets shall be
adjusted to equal their respective gross fair market values (taking Code
Section 7701(g) into account), as reasonably determined by the Management
Committee as of the following times: (i) the acquisition of an additional
interest in the Company by any new or existing Member in exchange for
more than a de minimis Capital Contribution; (ii) the distribution by the
Company to a Member of more than a de minimis amount of Company property
as consideration for an interest in the Company; and (iii) the
liquidation of the Company within the meaning of Regulation Section
1.704-1(b)(2)(ii)(g); provided, however, that an adjustment described in
clauses (i) and (ii) of this paragraph shall be made only if the
Management Committee reasonably determines that such adjustment is
necessary to reflect the relative economic interests of the Members in
the Company; and
(c) The Gross Asset Value of any item of Company assets
distributed to any Member shall be adjusted to equal the gross fair
market value (taking Code Section 7701(g) into account) of such asset on
the date of distribution as reasonably determined by the Management
Committee.
If the Gross Asset Value of an asset has been determined or adjusted pursuant to
subparagraph (b), such Gross Asset Value shall thereafter be adjusted by the
Depreciation taken into account with respect to such asset, for purposes of
computing Profits and Losses.
"Group A Members" means the Persons listed on Schedule 1 as Group A
members and their respective permitted successors or assigns.
"Group B Members" means, the Persons listed on Schedule 1 as Group B
members and their respective permitted successors or assigns.
"Initial Capital Contribution Date" means the earlier to occur of (i) one
day prior to the date on which any subsidiary of the Company is required to
accept shares of OMC Stock for payment pursuant to a tender offer commenced by
such subsidiary for shares of OMC Stock under the Securities Exchange Act of
1934, as amended, or (ii) such date as may be determined by the Management
Committee upon not less than three Business Days' notice to the Members of such
date.
"Initial Tag-Along Notice" shall have the meaning set forth in Section
9.9(a).
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"Losses" has the meaning set forth in the definition of "Profits" and
"Losses".
"Majority in Interest" means, with respect to the Members or to any
specified group or class of Members, Members owning more than fifty percent
(50%) of the total Percentage Interests held by all Members or such specified
group or class of Members, as applicable.
"Management Committee" means the management committee of the Company
established pursuant to Section 7.1.
"Managers" means, collectively, the Persons designated and serving in
accordance with Article 7 as members of the Management Committee.
"Member" or "Members" shall have the meaning set forth in the preamble
hereof.
"Membership Interest" means a Member's limited liability company interest
in the Company which refers to all of a Member's rights and interests in the
Company in such Member's capacity as a Member, all as provided in this Agreement
and the Act.
"Net Cash Flow" shall mean the gross cash proceeds from the Company's
operations and any distributions received from its subsidiaries (excluding the
proceeds of Company borrowings and capital contributions) and from all sales and
other dispositions of the Company's Property and any amount released by the
Management Committee from Reserves, less the portion of gross proceeds (other
than the proceeds of the Company's borrowings and capital contributions) used to
pay or establish Reserves for all the Company's expenses, debt payments
(including principal, interest and required redemption payments), capital
improvements, replacements and contingencies, all as reasonably determined by
the Management Committee. Net Cash Flow shall not be reduced by Depreciation or
similar allowances (but shall be reduced by the Stock Contributors Preferred
Return and the Cash Contributors Preferred Return, if any, as accrued pursuant
to Section 3.8 unless Section 3.8(d) shall be applicable) and shall include the
net cash proceeds of all principal and interest payments actually received by
the Company with respect to any promissory note or other deferred payment
obligation held by the Company in connection with sales and other dispositions
of the Company's Property.
"Notice" means a writing, containing the information required by this
Agreement to be communicated to a party, and shall be deemed to have been
received (a) when personally delivered or sent by telecopy, (b) one day
following delivery by overnight delivery courier, with all delivery charges
pre-paid, or (c) on the third Business Day following the date on which it was
sent by United States mail, postage prepaid, to such party at the address or fax
number, as the case may be, of such
5
party as shown on the records of the Company.
"Notice of Acceptance" shall have the meaning set forth in Section
3.9(a).
"OMC" shall mean Outboard Marine Corp., a Delaware corporation.
"OMC Stock" shall mean shares of common stock par value $.15 per share of
OMC.
"Percentage Interest" of a Member means the aggregate limited liability
company percentage interest set forth on Schedule 1 hereto, as the same may be
modified from time to time as provided herein.
"Permitted Transferee" shall have the meaning set forth in Section 9.2.
"Person" means any individual, partnership, limited liability company,
corporation, cooperative, trust, estate or other entity.
"Profits" and "Losses" means, for each Taxable Year, an amount equal to
the Company's taxable income or loss for a taxable year, determined in
accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(a) Any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits or
Losses shall be added to such taxable income or loss;
(b) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Regulation Section 1.704-1(b)(2)(iv)(i), and not
otherwise taken into account in computing Profits or Losses, shall be
subtracted from such taxable income or loss;
(c) In the event the Gross Asset Value of any Company asset
is adjusted pursuant to subparagraphs (b) or (c) of the definition of
Gross Asset Value, the amount of such adjustment shall be treated as
an item of gain (if the adjustment increases the Gross Asset Value of
the asset) or an item of loss (if the adjustment decreases the Gross
Asset Value of the asset) from the disposition of such asset and shall
be taken into account for purposes of computing Profits or Losses;
6
(d) Gain or loss resulting from any disposition of Property
with respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
Property disposed of, notwithstanding that the adjusted tax basis of such
Property differs from its Gross Asset Value;
(e) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such Taxable
Year, computed in accordance with the definition of Depreciation; and
(f) To the extent an adjustment to the adjusted tax basis of
any Company asset pursuant to Code Section 734(b) or Code Section 743(b)
is required, pursuant to Regulation Sections 1.704-(b)(2)(iv)(m)(4) to be
taken into account in determining Capital Accounts as a result of a
distribution other than in liquidation of a Member's interest in the
Company, the amount of such adjustment shall be treated as an item of
gain (if the adjustment increases the basis of the asset) or loss (if the
adjustment decreases such basis) from the disposition of such asset and
shall be taken into account for purposes of computing Profits or Losses.
"Property" means all assets, real or intangible, that the Company may own
or otherwise have an interest in from time to time.
"Purchasing Group B Members" shall have the meaning set forth in Section
3.9(a).
"Regulations" means the regulations, including temporary regulations,
promulgated by the United States Department of Treasury with respect to the
Code, as such regulations are amended from time to time, or corresponding
provisions of future regulations.
"Regulatory Allocations" shall have the meaning set forth in Section 5.4.
"Reserves" means the cash reserves established by the Management
Committee to provide for working capital, future investments, debt service and
such other purposes as may be deemed reasonably necessary or advisable by the
Management Committee.
"SEC" means the Securities and Exchange Commission.
"Secretary" shall mean the Secretary of the Treasury or his/her delegate
or the Internal Revenue Service.
7
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Section 9.8 Offeree" shall have the meaning set forth in Section 9.8(a).
"Section 9.8 Proposed Purchaser" shall have the meaning set forth in
Section 9.8(a).
"Section 9.8 Selling Member" shall have the meaning set forth in Section
9.8(a).
"Section 9.9 Participating Tagged Members" shall have the meaning set
forth in Section 9.9(a).
"Section 9.9 Proposed Purchaser" shall have the meaning set forth in
Section 9.9(a).
"Section 9.9 Tag-Along Membership Interest" shall have the meaning set
forth in Section 9.9(a).
"Section 9.9 Tagged Members" shall have the meaning set forth in Section
9.9(a).
"Stock Contributors" shall mean those Members contributing OMC Stock as
their initial Capital Contributions as reflected on Schedule 1 hereto.
"Stock Contributors Preferred Return" shall have the meaning set forth in
Section 3.8(b).
"Tag-Along Right" shall have the meaning set forth in Section 9.9(a).
"Tag-Along Notice" shall have the meaning set forth in Section 9.9(a).
"Taxable Year" shall mean the taxable year of the Company in accordance
with the provisions of Section 706 of the Code.
"Tax Distribution" means an amount equal to the taxable income of the
Company allocated to the Members for a Taxable Year multiplied by the sum of (x)
the highest federal income tax rate applicable to individuals for such Taxable
Year and (y) the highest (net of the federal income tax deduction therefor)
combined New York State and New York City income tax rate applicable to
individuals for such Taxable Year. Cash Distributions in respect of the Tax
Distribution shall be made quarterly as provided in
8
Section 4.1 hereof, based on a reasonable estimate of the amount of Tax
Distribution for such Taxable Year. The amount of Tax Distribution shall be
computed by the Company's regular independent public accounting firm.
"Tax Matters Member" shall have the meaning set forth in Article 11.
"Transfer" or "Transferred" means (a) when used as a verb, to give, sell,
exchange, assign, transfer, pledge, hypothecate, bequeath, devise or otherwise
dispose of or encumber, and (b) when used as a noun, the nouns corresponding to
such verbs, in either case voluntarily or involuntarily, by operation of law or
otherwise. When referring to a Membership Interest, "Transfer" shall mean the
Transfer of such Membership Interest whether of record, beneficially, by
participation or otherwise.
ARTICLE 3
FORMATION AND OFFICES
3.1 Formation. Pursuant to the Act, the Members have formed a Delaware
limited liability company effective upon the filing of the Certificate of the
Company with the Secretary of State of Delaware. To the extent that the rights
or obligations of any Member are different by reason of any provision of this
Agreement than they would be in the absence of such provision, to the extent
permitted by the Act, this Agreement shall control.
3.2 Principal Office. The principal office of the Company shall be located
at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other place(s) as the
Management Committee may determine from time to time.
3.3 Registered Office and Registered Agent. The location of the registered
office and the name of the registered agent of the Company in the State of
Delaware shall be as stated in the Certificate, as determined from time to time
by the Management Committee.
3.4 Purpose of Company. The Company's purposes, and the nature of the
business to be conducted and promoted by the Company are, (a) to form GAC and to
acquire all of the outstanding capital stock of GAC (b) to seek to cause GAC to
acquire OMC Stock pursuant to a tender offer and, thereafter, to merge with and
into OMC following which the Company shall own all of the issued and outstanding
shares of OMC (the "Acquisition"), (c) to engage in any other lawful act or
activity for which limited liability companies may be formed under the Act;
provided, however, that the Company shall not engage in any business that would
cause the Company to be engaged in a trade or business in the United States (it
being understood that neither the Company, nor any
9
Manager or Member shall have any liability to any Member if, for any reason, the
Company is determined to have engaged in a trade or business in the United
States), and (d) to engage in any and all activities necessary, advisable,
convenient or incidental to the foregoing.
3.5 Date of Dissolution. The term of the Company shall continue until the
close of business on August 1, 2032 or until the earlier dissolution under
Article 10 hereof. The existence of the Company as a separate legal entity shall
continue until cancellation of the Certificate in the manner required by the
Act.
3.6 Certificate; Qualification. The execution, delivery and filing of the
Certificate by Xxxx X. Xxxxxxxxxx, in his capacity as an authorized person,
within the meaning of the Act, is hereby ratified, approved and confirmed in all
respects. The President and Chief Executive Officer, any Vice President, the
Secretary and any Assistant Secretary of the Company is hereby authorized to
qualify the Company to do business as a foreign limited liability company in any
state or territory in the United States in which the Company may wish to conduct
business and each is hereby designated as an authorized person, within the
meaning of the Act, to execute, deliver and file any amendments or restatements
of the Certificate and any other certificates and any amendments or restatements
thereof necessary for the Company to so qualify to do business in any such state
or territory.
ARTICLE 4
CAPITALIZATION OF THE COMPANY
4.1 Initial Capital Contributions. On the Initial Capital Contribution
Date, each Member shall make Capital Contributions to the capital of the Company
consisting of cash and/or OMC Stock as specified and as set forth opposite such
Member's name on Schedule 1 hereto. For purposes hereof, the Gross Asset Value
of shares of OMC Stock shall be $18.00 per share. The amount of Cash Capital
Contributions, and the Gross Asset Value of any OMC Stock to be contributed as
Capital Contributions, and the Percentage Interest of each Member following such
Capital Contributions on the Initial Capital Contribution Date, is likewise set
forth on Schedule 1.
4.2 Additional Capital Contributions.
(a) Except as otherwise expressly provided in this Agreement, no Member
shall be required to make any additional Capital Contribution. No Member shall
be permitted to make any additional Capital Contribution without the approval of
the Management Committee.
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(b) Subject to the rights of each Member to purchase its proportionate
share of additional Membership Interests issued by the Company in accordance
with Section 3.7, the Company may offer additional Membership Interests to:
(i) any person that is not an Affiliate of a Member with the
approval of the Management Committee; or
(ii) any person that is a Member or is an Affiliate of a
Member with the approval of (A) the Management Committee, (B) a Majority in
Interest of the Group A Members and (C) a Majority in Interest of the Group B
Members, it being expressly understood that such approval of the Members shall
also include their approval of any related valuations of Gross Asset Value by
the Management Committee and, if such Members approve the Transfer without
approving said valuation, Gross Asset Value shall be determined by a third
Person familiar with the valuation of such transactions selected jointly by a
Majority in Interest of the Group A Members and a Majority in Interest of the
Group B Members not later than ten (10) days after their approval of the
Transfer or, if the Members fail to so select a third Person, then such third
Person will be selected in accordance with the rules and procedures of the
American Arbitration Association in New York, New York.
If any additional Capital Contributions are made by Members
but not in proportion to their respective Percentage Interests, the Percentage
Interest of each Member shall be adjusted such that each Member's revised
Percentage Interest determined immediately following the additional Capital
Contributions shall be equal to a fraction (1) the numerator of which is the sum
of (a) the positive Capital Account balance of the Member determined immediately
preceding the date the additional Capital Contribution is made (such Capital
Account to be computed by adjusting the book value for Capital Account purposes
of each Company asset to equal its Gross Asset Value as of such date, as
provided in subparagraph (b) of the definition herein of "Gross Asset Value"),
and (b) the additional Capital Contribution, if any, made by such Member, and
(2) the denominator of which is the sum of the positive Capital Account balances
and additional Capital Contributions of all Members, including any new Members
(in each case calculated as provided in Section 3.2(b)(ii)(1)). The names,
addresses and Capital Contributions of the Members shall be reflected in the
books and records of the Company.
4.3 Loans. (a) No Member shall be obligated to loan funds to the Company.
Loans by a Member to the Company shall not be considered Capital Contributions.
The amount of any such purchases shall be a debt of the Company owed to such
Member in accordance with the terms and conditions upon which such purchases are
made.
(b) A Member may (but shall not be obligated to) guarantee a loan made to
11
the Company. If a Member guarantees a loan made to the Company and is required
to make payment pursuant to such guarantee to the maker of the loan, then the
amounts so paid to the maker of the loan shall be treated as a loan by such
Member to the Company and not as an additional capital contribution.
4.4 Certain Expenses. (a) Subject to Section 3.8, in the event that the
Acquisition is not consummated, each of the Members shall pay or reimburse the
Company for its pro rata share (based on Percentage Interests) of the following
fees, costs and expenses (including, but not limited to, those fees, costs and
expenses incurred by the Members): costs and expenses incurred in connection
with the formation of the Company and GAC; fees, costs and expenses incurred in
connection with obtaining financing in connection with the proposed Acquisition
including any bank or other commitment fees or finder's fees relating thereto;
fees, costs and expenses incurred in connection with the preparation of
documentation relating to the proposed acquisition, including any tender offer
documentation and filings with the Securities and Exchange Commission; any
printing expenses; any fees and disbursements of attorneys, accountants and
other advisors; any indemnity obligations of the Company under Section 8.2 or
elsewhere hereunder and any fees, costs or expenses related thereto.
(b) The Management Committee shall provide notice to the Members of the
amount, from time to time, the amounts paid or reimbursed by the Members
pursuant to Section 3.4(a) and cash such Members should pay its pro rata share
of such amounts within five (5) Business Days of the date of the Company's
Notice therefor.
4.5 Maintenance of Capital Accounts.
(a) The Company shall maintain for each Member, a separate Capital Account
with respect to the Membership Interest owned by such Member in accordance with
the following provisions:
(i) To each Member's Capital Account there shall be credited
(A) such Member's Capital Contributions, (B) such Member's distributive
share of Profits and (C) the amount of any Company liabilities assumed by
such Member or which are secured by any Property distributed to such
Member. The principal amount of a promissory note which is not readily
traded on an established securities market and which is contributed to the
Company by the maker of the note (or a Member related to the maker of the
note within the meaning of Regulation Section 1.704-1(b)(2)(ii)(c)) shall
not be included in the Capital Account of any Member until the Company
makes a taxable disposition of the note or until (and only to the extent)
principal payments are made on the note, all in accordance with Regulation
Section 1.704-1(b)(2)(iv)(d)(2);
(ii)To each Member's Capital Account there shall be debited
(A) the
12
amount of money and the Gross Asset Value of any Property distributed or
treated as an advance distribution to such Member pursuant to any provision
of this Agreement (including without limitation any distributions pursuant
to Section 4.1(a)), (B) such Member's distributive share of Losses and (C)
the amount of any liabilities of such Member assumed by the Company or
which are secured by any Property contributed by such Member to the
Company;
(iii) In the event Membership Interests are Transferred in
accordance with the terms of this Agreement, the transferee shall succeed
to the Capital Account of the transferor to the extent it relates to the
Transferred Membership Interests; and
(iv) In determining the amount of any liability for purposes
of Sections 3.5(a)(i) and 3.5(a)(ii) there shall be taken into account Code
Section 752(c) and any other applicable provisions of the Code and
Regulations.
(b) The foregoing Section 3.5(a) and the other provisions of this Agreement
relating to the maintenance of Capital Accounts are intended to comply with
Regulation Section 1.704-1(b) and, to the greatest extent practicable, shall be
interpreted and applied in a manner consistent with such Regulation. The
Management Committee in its discretion and to the extent otherwise consistent
with this Agreement shall (i) make any adjustments that are necessary or
appropriate to maintain equality between the Capital Accounts of the Members and
the amount of capital reflected on the Company's balance sheet, as computed for
book purposes, in accordance with Regulation Section 1.704-1(b)(2)(iv)(q), and
(ii) make any appropriate modifications in the event unanticipated events might
otherwise cause this Agreement not to comply with Regulation Section 1.704-1(b).
4.6 Capital Withdrawal Rights, Interest and Priority. Except as expressly
provided in this Agreement, no Member shall be entitled (a) to withdraw or
reduce such Member's Capital Contribution or to receive any distributions from
the Company, or (b) to receive or be credited with any interest on the balance
of such Member's Capital Contribution at any time.
4.7 Preemptive Rights. Subject to Section 3.2, if the Company elects to
offer and sell Membership Interests other than the Membership Interests set
forth on Schedule 1, such additional Membership Interests shall be in the form
of Membership Interests having such Percentage Interest, designations and such
rights and provisions, including, but not limited to, provisions relating to
distributions and allocations of Profits and Losses, as shall be reasonably
determined by the Management Committee to be in the best interest of the
Company; provided, however, that the Company may not offer and sell any
Membership Interests having preferences to the rights of Group A Members or
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the Group B Members with respect to distributions, allocations or rights upon
liquidation, without the prior written consent of a Majority in Interest of the
Group A Members, and a Majority in Interest of the Group B Members (it being
understood that no such consent shall be required for the offering or sale of
Membership Interests that are entitled to distributions, allocations and rights
upon liquidation that are pari passu to the rights of the Group A Members and
the Group B Members). Prior to the consummation of any sale of additional
Membership Interests, the Company shall offer the additional Membership
Interests to the Members, on the terms and conditions set forth below:
(a) The Company shall give Notice to each Member, setting
forth the price, terms and conditions of the proposed sale of the
additional Membership Interests.
(b) Each Member shall have the option to acquire all or a
portion of such Member's pro rata portion (which shall be in proportion to
the Percentage Interest of all the Members) at the time of the offering of
the additional Membership Interests proposed to be sold, on the same terms
and conditions as are set forth in the Notice. The option of Members to
purchase all or a portion of their pro rata portions of the additional
Membership Interests shall be exercised by delivery of a Notice to the
Company of exercise within thirty (30) days following receipt of the
Company's Notice of the price, terms and conditions of the sale of the
additional Membership Interests. If any Member fails or declines to
purchase all or a portion of such Member's pro rata portion of the
additional Membership Interests, then such Member's remaining portion of
the additional Membership Interests shall be offered to the Members who
have exercised their options to purchase their pro rata portions. This
procedure shall continue until such time as all the Membership Interests
offered hereby have been purchased by such Members or until no such Member
desires to purchase any additional Membership Interests hereunder. Each
such Member shall have the right to offer to acquire such additional
Membership Interests by delivering to the Company such Member's Notice of
such offer within ten (10) days following receipt of the Company's Notice
that additional portions are available. If less than all the Membership
Interests to be sold by the Company are purchased by the Members, the
Company may within one hundred twenty (120) days from the initial Notice
sell such Membership Interests as shall not have been purchased by the
Members upon terms and conditions no less favorable to the Company than
those set forth in the Notice.
(c) The sale of additional Membership Interests to Members who
exercise their options to purchase additional Membership Interests shall
occur on the date set forth in a Notice from the Company to such Members,
which date shall not be earlier than thirty (30) days after the date of
expiration of the last such offer to expire under Section 3.7(b).
14
4.8 Stock Contributors Preferred Return; Cash Contributors Preferred
Return. In the event that the Acquisition is not consummated and the Company
sells shares of OMC Stock contributed by the Stock Contributors that exceeds
$16.00 per share or the Company receives cash or other consideration of or such
shares as the result of a merger or other business combination of OMC that
exceeds $16.00 per share, the aggregate amount of such excess price or
consideration shall be applied as follows:
(a) first, to the payment of the expenses referred to in
Section 3.4, and
(b) the balance, if any, shall be distributed as follows: (i)
80% to the Stock Contributors on a pro rata basis based upon the respective
shares of OMC Stock contributed by them as initial Cash Contributions (the
"Stock Contributors Preferred Return") and (ii) 20% to the Cash
Contributors on a pro rata basis based upon the respective amounts of cash
contributed by them as initial Cash Contributions (the "Cash Contributors
Preferred Return").
(c) Anything to the contrary herein notwithstanding, the Stock
Contributors Preferred Return and the Cash Contributors Preferred Return
shall be paid or distributed to such members, as applicable, on a priority
basis prior to the making of any other distribution or allocation hereunder
to Members.
4.9 Right of First Offer on Sale of the Business.
(a) If (i) the Management Committee proposes to sell all or substantially
all of the business and operations of the Company (the "Business") to any Person
by means of merger, sale of assets or otherwise (a "Disposition"), other than
pursuant to a sale of outstanding Membership Interests (as to which the
provisions of Article 9 shall be applicable) and (ii) a Majority in Interest of
the Group B Members shall not have consented in writing to such Disposition,
then the Management Committee shall provide Notice of the proposed Disposition
to the Group B Members setting forth in reasonable detail the price, terms and
conditions of the proposed Disposition (the "Disposition Notice"). In the event
that the consideration proposed to be received by the Company in the Disposition
consists all or in part of securities, the Disposition Notice shall specify a
cash price that reflects the value, as determined in the reasonable discretion
of the Management Committee, of such securities (the "Cash Alternative Price").
One or more of the Group B Members (the "Purchasing Group B Members") shall have
the option, exercisable by a Notice to the Company delivered within thirty (30)
days after the date of the Disposition Notice and signed by a Majority in
Interest of the Group B Members (the "Notice of Acceptance"), to elect to
acquire the Business on the price, terms and conditions set forth in the
Disposition Notice. The Notice of Acceptance shall indicate
15
the (A) identity of the Purchasing Group B Members, (B) state their acceptance
of the price, the terms and conditions of the proposed Disposition, (C) in the
event that the Disposition involves the proposed receipt of securities by the
Company, whether the Purchasing Group B Members will pay the Cash Alternative
Price in respect thereof or will arrange for the delivery of securities which
have equivalent value, and (D) may provide that consummation of the proposed
Disposition is conditioned upon the Purchasing Group B Members obtaining
financing therefor; provided, however, that if such consummation is conditioned
upon obtaining financing therefor, the Notice of Acceptance shall be accompanied
by commitments from recognized financial institutions evidencing their
commitment to provide any financing required to consummate the proposed
Disposition, which commitments shall be customary in form and substance and,
provided further, in the event that the Management Committee shall determine, in
its reasonable discretion, that any securities proposed to be delivered by the
Purchasing Group B Members do not have equivalent value to the securities
proposed to be received in the Disposition, it shall provide Notice thereof to
the Purchasing Group B Members and they shall have five (5) Business Days to
elect by Notice to the Company whether to pay the Cash Alternative Price in lieu
of delivering such securities or not to proceed with the transaction (it being
understood that failure to provide any such Notice within such five (5) Business
Days shall be deemed to be an election not to proceed). If the Purchasing Class
B Members fail or for any reason (other than a default or breach by the Company)
are unable to consummate the proposed Disposition within sixty (60) days from
the date of the Disposition Notice in accordance with Section 3.9(b), the
Company may effect a Disposition to any Person upon terms and conditions no less
favorable to the Company than those set forth in the Disposition Notice during a
period of 180 days after the expiration of such 60-day period. Thereafter, any
Disposition will again be subject to the rights of the Group B Members under the
provisions of this Section 3.9(a).
(b) The sale of the Business to the Purchasing Group B Members pursuant to
this Section 3.9 shall occur at the office of the Company on a Business Day
specified by not less than five (5) Business Days' prior Notice from the
Purchasing Group B Members to the Company, which Business Day shall not be later
than sixty (60) days after the date of the Disposition Notice. At the closing,
the Purchasing Group B Members shall deliver the consideration payable pursuant
to the Disposition Notice (or Cash Alternative Price, if applicable) in the form
and amount specified therein against the simultaneous delivery of instruments of
assignment in form and substance reasonably satisfactory to the Purchasing Group
B Members, evidencing the sale of the Business contemplated by the Disposition
Notice.
16
ARTICLE 5
DISTRIBUTIONS
5.1 Distributions of Net Cash Flow. Except as otherwise provided in Section
3.8, distributions of Net Cash Flow to the Members shall be made as follows:
(a) quarterly, to the Group A Members and Group B Members in
proportion to and to the extent of their relative Percentage Interests, an
amount not in excess of the Tax Distribution for the Taxable Year;
provided, however, that distributions under this Section 4.1(a) shall be
treated as advance distributions under Section 4.1(b), with the result that
distributions otherwise made under Section 4.1(b) to such Member shall be
reduced by the amount of advances made pursuant to this Section 4.1(a));
and
(b) upon the approval of and in the amount so approved by the
Management Committee acting in its sole discretion, to the Group A Members
and Group B Members in proportion to their relative Percentage Interests.
5.2 Persons Entitled to Distributions. All distributions of Net Cash Flow
to the Members under this Article 4 shall be made to the Persons shown on the
records of the Company to be entitled thereto as of the last day of the fiscal
period prior to the time for which such distribution is to be made, unless the
transferor and transferee of any Membership Interest otherwise agree in writing
to a different distribution and such distribution is consented to in writing by
the Management Committee.
5.3 Limitations on Distributions. Notwithstanding anything to the contrary
herein provided, no distribution hereunder shall be permitted to the extent
prohibited by Section 18-607 of the Act.
ARTICLE 6
ALLOCATIONS
6.1 Profits. Profits for any Taxable Year shall be allocated to the Group A
Members and Group B Members first to reimburse them to the extent of any prior
Losses so as to bring each Member's Capital Account to zero, pro rata in
accordance with the sum of each Member's Losses, and then in proportion to their
Percentage Interests; provided, however, in the event that the Acquisition is
not consummated and there is a Stock Contributors Preferred Return and a Cash
Contributors Preferred Return distributable pursuant to Section 3.8, allocations
of Profits shall be made in accordance with such distributions.
6.2 Losses. Subject to the limitation in Section 5.4 hereof and subject to
Section 5.6 hereof, Losses for any Taxable Year shall be allocated to the Group
A Members and Group B Members in proportion to their Percentage Interests.
17
6.3 Loss Limitation. Losses allocated pursuant to Section 5.2 hereof shall
not exceed the maximum amount of Losses that can be allocated without causing
any Member to have an Adjusted Capital Account Deficit at the end of any Taxable
Year. In the event some but not all the Members would have Adjusted Capital
Account Deficits as a consequence of an allocation of Losses pursuant to Section
5.2 hereof, the limitation set forth in this Section 5.4 shall be applied on a
Member by Member basis and Losses not allocable to any Member as a result of
such limitation shall be allocated to the other Members pro rata in accordance
with the positive balances in such Members' Capital Accounts so as to allocate
the maximum permissible Losses to each Member under Section 1.704-1(b)(2)(ii)(d)
of the Regulations.
6.4 Tax Allocations: Code Section 704(c).
(a) In accordance with Code Section 704(c) and the Regulations thereunder,
income, gain, loss and deduction with respect to any Property contributed to the
capital of the Company shall, solely for tax purposes, be allocated among the
Members so as to take account of any variation between the adjusted basis of
such Property to the Company for federal income tax purposes and its initial
Gross Asset Value (computed in accordance with the definition of Gross Asset
Value).
(b) In the event the Gross Asset Value of any Company asset is adjusted
pursuant to subparagraph (b) of the definition of Gross Asset Value, subsequent
allocations of income, gain, loss and deduction with respect to such asset shall
take account of any variation between the adjusted basis of such asset for
federal income tax purposes and its Gross Asset Value in the same manner as
under Code Section 704(c) and the Regulations thereunder.
(c) Any elections or other decisions relating to such allocations shall be
made by the Management Committee in any manner that reasonably reflects the
purpose and intention of this Agreement; provided, that the Company, in the
discretion of the Management Committee, may make, or not make, "curative" or
"remedial" allocations (within the meaning of the Regulations under Code Section
704(c)) including, but not limited to, "curative" allocations which offset the
effect of the "ceiling rule" for a prior Taxable Year (within the meaning of
Regulation Section 1.704-3(c)(3)(ii) and "curative" allocations from disposition
of contributed property (within the meaning of Regulation Section
1.704-3(c)(3)(iii)(B). Allocations pursuant to this Section 5.6 are solely for
purposes of federal, state, and local taxes and shall not affect, or in any way
be taken into account in computing, any Member's Capital Account or share of
Profits, Losses, other items, or distributions (other than Tax Distributions)
pursuant to any provision of this Agreement.
18
6.5 Change in Percentage Interests. In the event that the Members'
Percentage Interests change during a Taxable Year, Profits and Losses shall be
allocated taking into account the Members' varying Percentage Interests for such
Taxable Year, determined on a daily, monthly or other basis as determined by the
Management Committee, using any permissible method under Code Section 706 and
the Regulations thereunder.
6.6 Withholding. Each Member hereby authorizes the Company to withhold and
to pay over any taxes payable by the Company or any of its Affiliates as a
result of such Member's participation in the Company; if and to the extent that
the Company shall be required to withhold any such taxes, such Member shall be
deemed for all purposes of this Agreement to have received a payment from the
Membership as of the time such withholding is required to be paid, which payment
shall be deemed to be a distribution to such Member to the extent that the
Member is then entitled to receive a distribution. To the extent that the
aggregate of such payments in respect of a Member for any period exceeds the
distributions to which such Member is entitled for such period, the amount of
such excess shall be considered a demand loan from the Company to such Member,
with interest at 8% per annum, which interest shall be treated as an item of
Company income, until discharged by such Member by repayment, which may be made
in the sole discretion of the Management Committee out of distributions to which
such Member would otherwise be subsequently entitled. The withholdings referred
to in this Section 5.6 shall be made at the maximum applicable statutory rate
under the applicable tax law unless the Management Committee shall have received
an opinion of counsel or other evidence, satisfactory to the Management
Committee, to the effect that a lower rate is applicable, or that no withholding
is applicable.
ARTICLE 7
MEMBERS' MEETINGS
7.1 Meetings of Members; Place of Meetings. Regular meetings of the Members
may be held on an annual basis or more frequently as determined by a Majority in
Interest of the Members. All meetings of the Members shall be held in New York,
New York at a location as designated from time to time by the Management
Committee and stated in the Notice of the meeting or in a duly executed waiver
of the Notice thereof. Special meetings of the Members may be held for any
purpose or purposes, unless otherwise prohibited by law, and may be called by
the Management Committee or by Members owning not less than twenty-five percent
(25%) of the Percentage Interests. Members may participate in a meeting of the
Members by means of conference telephone or other similar communication
equipment whereby all Members participating in the meeting can hear each other.
Participation in a meeting in this manner shall constitute presence in person at
the meeting.
19
7.2 Quorum; Voting Requirement. The presence, in person or by proxy, of a
Majority in Interest of the Members shall constitute a quorum for the
transaction of business by the Members. The affirmative vote of a Majority in
Interest of the Members present, in person or by proxy, at any meeting shall
constitute a valid decision of the Members, except where a larger vote is
required by the Act.
7.3 Proxies. At any meeting of the Members, every Member having the right
to vote thereat shall be entitled to vote in person or by proxy appointed by an
instrument in writing signed by such Member and bearing a date not more than one
year prior to such meeting.
7.4 Action Without Meeting. Any action required or permitted to be taken at
any meeting of Members of the Company may be taken without a meeting, without
prior notice and without a vote if a consent in writing setting forth the action
so taken is signed by Members having not less than the minimum Percentage
Interests that would be necessary to authorize or take such action at a meeting
of the Members. Prompt Notice of the taking of any action taken pursuant to this
Section 6.4 by less than the unanimous written consent of the Members shall be
given to those Members who have not consented in writing.
7.5 Notice. Notice stating the place, day and hour of the meeting and the
purpose for which the meeting is called shall be delivered personally or sent by
mail or by telecopier not less than five (5) days nor more than sixty (60) days
before the date of the meeting by or at the direction of the Management
Committee or other persons calling the meeting, to each Member entitled to vote
at such meeting.
7.6 Waiver of Notice. When any Notice is required to be given to any Member
hereunder, a waiver thereof in writing signed by the Member, whether before, at
or after the time stated therein, shall be equivalent to the giving of such
Notice.
7.7 No Authority. Unless expressly authorized herein or by action of the
Members or the Management Committee in accordance herewith and the Act, no
Member shall have any authority to act on behalf of the Company or bind the
Company in any manner whatsoever, including, without limitation, entering into
any agreement on behalf of the Company.
20
ARTICLE 8
MANAGEMENT AND CONTROL
8.1 Management Committee; Managers.
(a) Except as otherwise provided hereunder, the business and affairs of the
Company shall be managed by a Management Committee comprised of up to a total of
four (4) Managers, (i) two of whom shall be designated by a Majority in Interest
of the Group A Members and (ii) two of whom shall be designated by a Majority in
Interest of the Group B Members, provided, however, that from and after the date
that is 12 months after the Initial Capital Contribution Date, the Group A
Members shall have the right to elect to have the Management Committee consist
of a total of five (5) Managers, (i) three of whom shall be designated by a
Majority in Interest of the Group A Members and (ii) two of whom shall be
designated by a Majority in Interest of the Group B Members. The Group A Members
shall have the right to remove or replace (following death or resignation) any
or all of the Managers designated by the Group A Members and designate their
successors, and the Group B Members shall have the right to remove or replace
(following death or resignation) any or all of the Managers designated by the
Group B Members and designate their successors. The initial Managers shall be
Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxxxx and Xxxxxxx Xxxx.
(b) Except as otherwise expressly provided herein, the power and authority
granted to the Management Committee hereunder shall include all those necessary
or convenient for the furtherance of the purposes of the Company and shall
include the power to make all decisions with regard to the management,
operations, assets, financing and capitalization of the Company.
(c) Anything to the contrary herein notwithstanding, no Manager shall have
any authority to bind the Company or the Management Committee in his individual
capacity in any manner whatsoever, except for such authority as shall be
expressly delegated to a Manager in this Agreement or by the Management
Committee.
(d) The board of directors (or similar governing body) of any subsidiary of
the Company shall be comprised of such members as may be approved by the
Management Committee of the Company; provided, however, that the Class B Members
shall have the right to designate one member of any such board of directors (or
similar governing body).
8.2 Management Committee Meetings; Authority; Proxies.
(a) The Management Committee will establish a regular meeting schedule, and
will use its reasonable best efforts to meet at least once every quarter. Unless
otherwise agreed by a majority of the Managers, meetings of the Management
Committee shall be held in New York, New York. Meetings may be conducted in
person, by telephone or in any other manner agreed to by the Management
Committee. Any two (2)
21
Managers may call a meeting of the Management Committee
upon delivery of written or telephonic Notice at least three (3) Business Days
prior to the date of such meeting, which Notice shall be accompanied by a
proposed agenda or statement of purpose and by copies of all documents,
agreements and information to be considered at such meeting; provided, however,
at any such meeting, the Managers may address any and all business matters which
may come before it, whether or not such items were provided for in the proposed
agenda.
(b) A quorum shall exist when three of the Managers are present in person
or by proxy. Each Manager is entitled to vote at any meeting of the Management
Committee. The vote of three of the Managers present in person or by proxy at
any meeting of the Management Committee shall be required for action by the
Management Committee.
(c) At each meeting of the Management Committee, every Manager shall be
entitled to vote in person or by proxy appointed by instrument in writing,
subscribed by such Manager.
8.3 Management Committee's Authority; Certain Limitations. (a) Except as
expressly set forth herein, the Management Committee shall have the maximum
power and authority with respect to the business and operations of the Company
permitted by law, including, without limitation, the right to cause the Company
to merge or consolidate with, or sell all, or substantially all, of its asset to
any Person.
(b) Notwithstanding the grant of authority to the Management Committee
pursuant to Section 7.3(a) and except as otherwise contemplated in Sections
10.1(a), (b) and (c), the Management Committee shall not authorize the Company
to merge or consolidate with, or sell all, or substantially all, of its assets
to, a Member or an Affiliate of a Member without the prior written consent of a
Majority in Interest
22
of the Group A Members and a Majority in Interest of the Group B Members.
8.4 Officers; Agents. The Management Committee shall have the power to
appoint any Person or Persons as agents (who may be referred to as officers) to
act for the Company with such titles, if any, as the Management Committee deems
appropriate and to delegate to such officers or agents such of the powers as are
granted to the Management Committee hereunder, provided, however, that without
the express approval of the Management Committee, no officer or agent shall have
the authority to take any action (i) outside the ordinary course of business of
the Company or (ii) material to the Company and its subsidiaries taken as a
whole. Any decision or act of an officer appointed under this Section 7.4 within
the scope of the officer's designated or delegated authority shall control and
shall bind the Company. The officers or agents so appointed may have such titles
as the Management Committee shall deem appropriate, which may include (but need
not be limited to) President and Chief Executive Officer, Executive Vice
President, Vice President, Chief Operating Officer, Chief Financial Officer,
Treasurer or Controller. The initial officers of the Company are set forth on
Schedule 7.4. Unless the authority of the agent designated as the officer in
question is limited by the Management Committee, any officer so appointed shall
have the same authority to act for the Company as a corresponding officer of a
Delaware corporation would have to act for a Delaware corporation in the absence
of a specific delegation of authority, provided, however, that without the
express approval of the Management Committee, no officer or agent shall have the
authority to take any action outside the ordinary course of business of the
Company or (ii) material to the Company and its subsidiaries taken as a whole.
The Management Committee, in its sole discretion, may by vote, resolution or
otherwise ratify any act previously taken by an officer or agent acting on
behalf of the Company.
8.5 Resignation of a Management Committee Member. A Manager may resign from
such position at any time upon giving Notice to the Management Committee. Any
vacancy created by any such resignation of a Manager shall be filled by the
Persons or Person who designated such vacating Manager in accordance with the
provisions of Section 7.1(a).
8.6 Compensation Except as otherwise provided herein, each Manager shall be
entitled to reimbursement from the Company for all reasonable direct
out-of-pocket expenses incurred on behalf of the Company and shall not be
entitled to further compensation except as may be approved by a Majority in
Interest by the Group A Members and a Majority in Interest of the Group B
Members.
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ARTICLE 9
LIABILITY AND INDEMNIFICATION
9.1 Liability of Members. A Member shall only be liable to make the payment
of its Capital Contribution. No Member, except as otherwise specifically
provided in the Act, shall be obligated to pay any distribution to or for the
account of the Company or any creditor of the Company.
9.2 Indemnification.
(a) The Company shall indemnify and hold harmless each Manager and Member
and their respective Affiliates and all officers, directors, members, partners,
stockholders, managers and employees thereof, and each officer of the Company
and any Person serving in any similar capacity for another Person affiliated
with the Company at the request of the Company (solely for purposes of this
Section 8.2, each such Person being referred to as, a "Company Affiliate"), from
and against any and all losses, claims, demands, costs, damages, liabilities,
expenses of any nature (including reasonable attorneys' fees and disbursements),
judgments, fines, settlements and other amounts arising from any and all claims,
demands, actions, suits or proceedings, whether civil, criminal, administrative
or investigative, in which a Company Affiliate may be involved, or threatened to
be involved, as a party or otherwise, arising out of or incidental to the
business of the Company, including, without limitation, liabilities under the
Federal and state securities laws, regardless of whether a Company Affiliate
continues to be a Company Affiliate, at the time any such liability or expense
is paid or incurred, if (i) the Company Affiliate acted in good faith and in a
manner it or he reasonably believed to be in, or not opposed to, the interests
of the Company and, with respect to any criminal proceeding, had no reason to
believe its or his conduct was unlawful, and (ii) the Company Affiliate's
conduct did not constitute actual fraud, gross negligence or willful or wanton
misconduct. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere, or its
equivalent, shall not, in and of itself, create a presumption or otherwise
constitute evidence that the Company Affiliate acted in a manner contrary to
that specified in (i) or (ii) above.
(b) Expenses (including reasonable legal fees and expenses) incurred in
defending any proceeding subject to subsection (a) of this Section 8.2 shall be
paid by the Company in advance of the final disposition of such proceeding upon
receipt of a written affirmation by the Company Affiliate of his or its good
faith belief that he or it has met the standard of conduct necessary for
indemnification under this Section 8.2 and a written undertaking (which need not
be secured) by or on behalf of the Company Affiliate to repay such amount if it
shall ultimately be determined, by a court of competent jurisdiction or
otherwise, that the Company Affiliate is not entitled to be indemnified by the
Company as authorized hereunder.
(c) The indemnification provided by this Section 8.2 shall be in addition
to any other rights to which each Company Affiliate may be entitled under any
agreement or vote of the Management Committee by the vote of Managers that are
disinterested and
24
unaffiliated with such Company Affiliate, as a matter of law or otherwise, both
as to action in the Company Affiliate's capacity as a Company Affiliate or as a
Person serving at the request of the Company and shall continue as to a Company
Affiliate who has ceased to serve in such capacity and shall inure to the
benefit of the heirs, successors, assigns, administrators and personal
representatives of such Company Affiliate.
(d) The Company may purchase and maintain directors and officers insurance
or, similar coverage, for its Managers and its officers in such amounts and with
such deductibles or self-insured retentions as are customary for Persons engaged
in businesses similar in size and type to those engaged in by the Company.
(e) Except as provided in Section 3.4, any indemnification hereunder shall
be satisfied only out of the assets of the Company and the Members shall not be
subject to personal liability by reason of these indemnification provisions. To
the extent the Company does not have adequate cash available to satisfy its
obligations under this Article 8, the Company shall pay its obligations under
this Article 8 out of Net Cash Flow prior to making any distributions (other
than distributions under Section 4.1(a) hereof) to the Members.
(f) A Company Affiliate shall not be denied indemnification in whole or in
part under this Section 8.2 because the Company Affiliate had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement and all material facts
relating to such indemnitee's interest were adequately disclosed to the
Management Committee at the time the transaction was consummated.
(g) The provisions of this Section 8.2 are for the benefit of the Company
Affiliates and the heirs, successors, assigns, administrators and personal
representatives of the Company Affiliates and shall not be deemed to create any
rights for the benefit of any other Persons.
(h) Any repeal or amendment of any provisions of this Section 8.2 shall be
prospective only and shall not adversely affect any Company Affiliates's right
existing at the time of such repeal or amendment.
ARTICLE 10
TRANSFERS OF MEMBERSHIP INTERESTS
10.1 General Restrictions.
(a) No Member may Transfer all or any part of such Member's Membership
Interest, except as provided in this Agreement. Any purported Transfer or
purported
25
purchase of a Membership Interest or a portion thereof in violation of the terms
of this Agreement shall be null and void and of no effect. A permitted Transfer
shall be effective as of the date specified in the instruments relating thereto.
Any transferee desiring to make a further Transfer shall become subject to all
the provisions of this Article 9 to the same extent and in the same manner as
any Member desiring to make any Transfer. No Member shall have the right to
withdraw as a Member of the Company.
(b) In the event that the Membership Interests are registered under the
Securities Act, the Transfer restrictions set forth in this Article 9 shall
terminate.
10.2 Permitted Transferees.
(a) Notwithstanding the provisions of Sections 9.8 and 9.9, each Member
shall have the right to Transfer (but not to substitute the transferee as a
substitute Member in such Member's place, except in accordance with Section
9.3), by a written instrument, all or any part of a Member's Membership
Interest, to any of its Affiliates (each a "Permitted Transferee"); it being
understood that any such Permitted Transferee shall be deemed to be an
additional or substitute Member as of the date of such Transfer and each Member
agrees to take such action and execute such documents as such transferee may
deem reasonably necessary and appropriate for such transferee to become a
substitute or additional Member. Notwithstanding the provisions of Sections 9.8
and 9.9, each Member shall have the right to pledge such Member's interest as
collateral security for a loan to another Member or to a financial institution
generally in the business of making commercial loans (including by means of a
total equity return swap or similar financing technique); provided, however,
that no such pledge shall be made for the purpose of effecting a disguised sale
to the pledgee and; provided further, that any such pledgee shall agree in a
writing delivered to the Company to be bound by all the terms and conditions of
this Agreement, including,without limitation, the terms and conditions set forth
in Section 9.10.
(b) Unless and until admitted as a substitute Member pursuant to Section
9.3, a transferee of a Member's Membership Interest in whole or in part shall be
an assignee with respect to such Transferred Membership Interest and shall not
be entitled to participate in the management of the business and affairs of the
Company or to become or to exercise the rights of a Member, including the right
to vote, the right to require any information or accounting of the Company's
business or the right to inspect the Company's books and records. Such
transferee shall only be entitled to receive, to the extent of the Membership
Interest transferred to such transferee, the share of distributions and profits,
including distributions representing the return of Capital Contributions, to
which the transferor would otherwise be entitled with respect to the Transferred
Interest. The transferror shall have the right to vote such Transferred Interest
until the transferee is
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admitted to the Company as a substituted Member with respect to the Transferred
Interest.
10.3 Substitute Members. No transferee of all or part of a Member's
Membership Interest shall become a substitute Member in place of the transferor
unless and until:
(a) the transferee has executed an instrument in form and
substance reasonably satisfactory to the Management Committee accepting and
adopting the terms and provisions of the Certificate and this Agreement;
and
(b) the transferee has caused to be paid all reasonable
expenses of the Company in connection with the admission of the transferee
as a substitute Member.
Upon satisfaction of all the foregoing conditions with respect to a
particular transferee, the President and Chief Executive Officer shall cause the
books and records of the Company to reflect the admission of the transferee as a
substitute Member to the extent of the Transferred Interest held by the
transferee.
10.4 Effect of Admission as a Substitute Member. A transferee who has
become a substitute Member has, to the extent of the transferred Membership
Interest, all the rights, powers and benefits of, and is subject to the
restrictions and liabilities of a Member under the Certificate, this Agreement
and the Act. Upon admission of a transferee as a substitute Member, the
transferor of the Membership Interest so held by the substitute Member shall
cease to be a Member of the Company to the extent of such transferred Membership
Interest.
10.5 Consent. Each Member hereby agrees that upon satisfaction of the terms
and conditions of this Article 9 with respect to any proposed Transfer, the
Person proposed to be such transferee may be admitted as a Member.
10.6 No Dissolution. If a Member transfers all of its Membership Interest
pursuant to this Article 9 and the transferee of such Membership Interest is
admitted as a Member pursuant to Section 9.3, such Person shall be admitted to
the Company as a Member effective on the effective date of the Transfer or such
other date as may be specified when the Member is admitted. In such event, the
Company shall not dissolve if the business of the Company is continued without
dissolution in accordance with clause (c) of Section 10.1 hereof.
10.7 Additional Members; Certain Representations of Members. Subject to
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Section 3.7, after the formation of the Company, any Person acceptable to the
Management Committee may become an additional Member of the Company for such
consideration as the Management Committee shall determine, provided that such
additional Member complies with all the requirements of a transferee under
Sections 9.3(a) and (b).
10.8 Right of First Offer.
(a) Subject to Section 9.1(c), if at any time any Member (hereinafter for
purposes of this Section 9.8, the "Section 9.8 Selling Members") proposes to
Transfer to any Person other than a Permitted Transferee (hereinafter for
purposes of this Section 9.8, the "Section 9.8 Proposed Purchaser") its
Membership Interest (or any portion thereof), such Section 9.8 Selling Member
shall provide Notice of the proposed Transfer to the other Members (hereinafter
for purposes of Section 9.8, the "Section 9.8 Offerees") setting forth the
price, terms and conditions of the proposed sale of the Membership Interest.
Each of the Section 9.8 Offerees shall have the option to acquire such Member's
pro rata portion (which shall be in proportion to the Percentage Interests of
all Section 9.8 Offerees) at the time of such Notice on the terms and conditions
set forth in such Notice. The option of Section 9.8 Offerees to purchase their
pro rata portions of the Membership Interest shall be exercised by delivery of a
Notice to the Section 9.8 Selling Member and the Company of exercise within
twenty-one (21) days following receipt of the Section 9.8 Selling Member's
Notice of the price, terms and conditions of the sale. A Section 9.8 Offeree may
exercise such Member's option to purchase such Membership Interest only as to
the entire portion thereof that such Member is entitled to purchase. If any
Section 9.8 Offeree fails or declines to purchase such Member's pro rata portion
of such Membership Interest, then such Member's portion of such Membership
Interest shall be offered to the Section 9.8 Offerees who have exercised their
options to purchase their pro rata portions. This procedure shall continue until
such time as the entire Membership Interest offered hereby has been purchased by
such Section 9.8 Offerees or until no such Member desires to purchase any
additional Membership Interest hereunder. Each Section 9.8 Offeree shall have
the right to offer to acquire such Membership Interest by delivering to the
Section 9.8 Selling Member and the Company such Member's Notice of acceptance
within three (3) Business Days following receipt of the Company's Notice that
additional portions are available. If less than the entire Membership Interest
to be sold by the Section 9.8 Selling Member is purchased by the Section 9.8
Offerees, the Section 9.8 Selling Member may sell the entire Membership Interest
to be sold within thirty (30) days from the Notice referred in the preceding
sentence, upon terms and conditions no less favorable to the Section 9.8 Selling
Member than were set forth in the initial Notice (it being understood that such
terms may include the receipt by the Selling Member of consideration consisting
of only cash and/or securities with a readily ascertainable market value).
28
(b) The sale of any Membership Interest to Section 9.8 Offerees who
exercise their options to purchase any Membership Interest shall occur
twenty-one (21) days after the expiration of the last option to expire under
Section 9.8(a) above. At the closing, each of the Section 9.8 Offerees shall
deliver a certified or bank cashier's check in the appropriate amount to the
Section 9.8 Selling Member against the simultaneous delivery of an assignment in
form and substance reasonably satisfactory to each Section 9.8 Offeree of the
Member Interest (or portion thereof) being transferred to such Section 9.8
Offeree, such assignment shall be made free and clear of all liens, claims and
encumbrances, except as provided by this Agreement or as otherwise agreed to by
such Section 9.8 Offeree.
10.9 Tag-Along Rights. (a) In the event of any proposed Transfer by any
Member (hereinafter for purposes of this Section 9.9, the "Section 9.9 Selling
Member") of its Membership Interests (or any portion thereof) to any Person
(such Person being hereinafter referred to as the "Section 9.9 Proposed
Purchaser"), other than to a Permitted Transferee or in a bona fide public
distribution pursuant to an effective Registration Statement under the
Securities Act, each of the other Members (hereinafter for purposes of this
Section 9.9, the "Section 9.9 Tagged Members") shall have the irrevocable and
exclusive right, but not the obligation (the "Tag-Along Right"), to require the
Section 9.9 Proposed Purchaser to purchase from each of them such Section 9.9
Tagged Member's pro rata portion (i.e., such Tagged Member's Percentage
Interest) of the Membership Interests proposed to be sold by the Section 9.9
Selling Members to the Section 9.9 Proposed Purchaser (collectively, the
"Section 9.9 Tag-Along Membership Interest"). The Section 9.9 Selling Members
shall give Notice (the "Initial Tag-Along Notice") to the Section 9.9 Tagged
Members at least thirty (30) days prior to the date of the proposed Transfer and
at least three (3) Business Days after the expiration of the last option to
expire under Section 9.8(a) above, stating:
(i) the name and address of the Section 9.9 Proposed
Purchaser;
(ii) the proposed amount of consideration and terms and
conditions of payment offered by such Section 9.9 Proposed Purchaser (if
the proposed consideration is not cash, the Notice shall describe the terms
of the proposed consideration) and any other material terms and conditions
of the Section 9.9 Proposed Purchaser's offer;
(iii) the Membership Interest proposed to be transferred; and
(iv) that the Section 9.9 Proposed Purchaser has been informed
of the Tag-Along Right and has agreed to purchase Membership Interests in
accordance with the terms hereof.
29
The Tag-Along Right shall be exercised by any or all of the Section 9.9
Tagged Members by giving Notice to the Company ("Tag-Along Notice") with a copy
to each Section 9.9 Selling Member, within five (5) days following receipt of
the Initial Tag-Along Notice, indicating its election to exercise the Tag-Along
Right (hereinafter referred to for purposes of this Section 9.9, the "Section
9.9 Participating Tagged Members"). The Tag-Along Notice shall state the amount
of Membership Interests that such Section 9.9 Participating Tagged Member
proposes to include in such transfer to the Section 9.9 Proposed Purchaser.
Failure by any Section 9.9 Tagged Member to give such Tag-Along Notice within
such 5 day period shall be deemed an election by such Section 9.9 Tagged Member
not to sell its Membership Interests pursuant to the Tag-Along Notice. The
closing with respect to any sale to a Section 9.9 Proposed Purchaser pursuant to
this Section shall be held at the time and place specified in the Tag-Along
Notice but in any event within sixty (60) days of the date the Tag-Along Notice
is given. Consummation of the sale of Membership Interests by any Section 9.9
Selling Member to a Section 9.9 Proposed Purchaser shall be conditioned upon
consummation of the sale by each Section 9.9 Participating Tagged Member to such
Section 9.9 Proposed Purchaser of the Section 9.9 Tag-Along Membership Interest,
if any.
(b) In the event that the Section 9.9 Proposed Purchaser does not purchase
the Section 9.9 Tag-Along Membership Interest from the Section 9.9 Participating
Tagged Members on the same terms and conditions as purchased from the Section
9.9 Selling Member, then the Section 9.9 Selling Member making such Transfer
shall purchase on such terms and conditions such Section 9.9 Tag-Along
Membership Interest if the Transfer occurs.
(c) The Section 9.9 Selling Members who are parties to a sale to a Section
9.9 Proposed Purchaser shall arrange for payment directly by the Section 9.9
Proposed Purchaser to each Section 9.9 Participating Tagged Member, upon
delivery of an appropriate assignment in form and substance reasonably
satisfactory to the Section 9.9 Proposed Purchaser, which assignment shall be
made free and clear of all liens, claims and encumbrances except as provided by
this Agreement or as otherwise agreed to by such Section 9.9 Proposed Purchaser.
(d) If at the end of 60 days following the date on which a Tag-Along Notice
was given, the sale of Membership Interests by the Section 9.9 Selling Members
and the sale of the Section 9.9 Tag-Along Membership Interests have not been
completed in accordance with the terms of the Section 9.9 Proposed Purchaser's
offer, all the restrictions on sale, transfer or assignment contained in this
Agreement with respect to Membership Interests owned by the Members shall again
be in effect.
30
10.10 Piggyback Registration.
(a) For the purposes of this Section 9.11, the following capitalized terms
shall have the following meanings:
(i) "Common Stock" shall mean the common stock of the Company
issued upon conversion of the Company to a corporation;
(ii) "Other Shares" shall mean at any time those shares of
Common Stock or other securities of the Company which do not constitute
Primary Shares or Registrable Shares;
(iii) "Primary Shares" shall mean at any time authorized but
unissued shares of Common Stock or shares of Common Stock held by the
Company in its treasury;
(iv) "Registrable Shares" shall mean the shares of Common Stock
held by the Members in the Company which constitute Restricted Shares
and which are not then eligible for sale to the public pursuant to Rule
144 (other than Rule 144(k)) in a single transaction (and including
Membership Interests held by Members prior to the conversion of the
Company to a corporation).
(v) "Restricted Shares" shall mean any Membership Interests,
shares of Common Stock or other securities received in respect thereof
held or which may be acquired from the Company by the Members as of the
applicable date, and which theretofore have not been sold to the public
pursuant to a registration statement under the Securities Act or
pursuant to Rule 144; and
(vi) "Rule 144" shall mean Rule 144 promulgated under the
Securities Act or any successor rule thereto or any complementary rule
thereto (such as Rule 144A).
(b) If the Company at any time proposes for any reason to register
Primary Shares or Other Shares under the Securities Act (other than on Form S-4
or Form S-5 promulgated under the Securities Act or any successor forms
thereto), it shall promptly give Notice to the Members of its intention so to
register the Primary Shares or Other Shares and, upon the written request, given
within 30 days after delivery of any such Notice by the Company, of the Members
to include in such registration Registrable Shares (which request shall specify
the number of Registrable Shares proposed to be included in such registration),
the Company shall use its best efforts to cause all such Registrable Shares to
be included in such registration on the same terms and conditions as the
securities otherwise being sold in such registration; provided, however, that if
the
31
managing underwriter advises the Company that the inclusion of all Registrable
Shares or Other Shares proposed to be included in such registration would
interfere with the successful marketing (including pricing) of Primary Shares
proposed to be registered by the Company, then the number of Primary Shares,
Registrable Shares and Other Shares proposed to be included in such registration
shall be included in the following order:
(i) first, the Primary Shares; and
(ii) second, the Registrable Shares and Other Shares requested
to be included in such registration pro rata, based upon the respective
numbers of Restricted Shares owned at the time by each Member and the
respective numbers of Other Shares owned at the time by each holder of
Other Shares.
(c) If at any time after giving written notice pursuant to this Section
9.10 of its intention to register any securities and prior to the effective date
of the registration statement filed in connection with such registration, the
Company shall determine for any reason either not to register or to delay
registration of such securities, the Company may, at its election, give Notice
of such determination to the Members and, thereupon, (i) in the case of a
determination not to register, shall be relieved of its obligation to register
any Registrable Securities in connection with such registration and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registerable Securities, for the same period as the delay in
registering such other securities.
(d) If a registration under this Section 9.11 involves an underwritten
offering, the underwriter or underwriters and any additional investment bankers
and managers to be used in connection with such registration shall be selected
by the Company, and any Member desiring to have Registrable Shares included in
such registration, and any such Investor shall be required to sign an
underwriting agreement in customary form with such underwriter or underwriters.
ARTICLE 11
DISSOLUTION AND TERMINATION
11.1 Events Causing Dissolution. The Company shall be dissolved and its
affairs wound up upon the first to occur of the following events:
(a) The vote of a Majority in Interest of the Group A Members
and a Majority in Interest of the Group B Members to dissolve;
(b) The sale, Transfer or other disposition of substantially
all of the assets of the Company and the receipt and distribution of
all the proceeds therefrom;
32
(c) The death, retirement, resignation, insanity, expulsion,
bankruptcy or dissolution of a Member, or any other event which
terminates the continued membership of a Member in the Company, unless
there is at least one remaining Member;
(d) The entry of a decree of judicial dissolution pursuant to
Section 18-802 of the Act; or
(e) The expiration of the term of the Company as provided in
Section 2.5.
11.2 Notices to Secretary of State. When all the remaining property and
assets of the Company have been distributed, the Certificate shall be cancelled
by filing a certificate of cancellation with the Secretary of State of Delaware.
11.3 Cash Distributions Upon Dissolution. Upon the dissolution of the
Company as a result of the occurrence of any of the events set forth in Section
10.1, the Management Committee shall proceed to wind up the affairs of and
liquidate the Company and any cash and proceeds therefrom shall be applied and
distributed in the following order of priority:
(a) First, to the payment (or the making of reasonable
provision for payment) of debts and liabilities of the Company in the
order of priority as provided by law (including any loans or advances
that may have been made by any of the Members to the Company) and the
expenses of liquidation including the establishment of any Reserves
which the Management Committee may reasonably deem necessary for any
contingent, conditional or unasserted claims or obligations of the
Company. Such Reserves may be paid over by the Company to an escrow
agent to be held for disbursement in payment of any of the
aforementioned liabilities and, at the expiration of such period as
shall be reasonably deemed advisable by the Management Committee, for
distribution of the balance in the manner provided in this Article 10;
(b) Finally, the remaining balance, if any, to the Members in
proportion to their respective positive Capital Accounts, after giving
effect to all contributions, distributions and allocations for all
periods, in accordance with the requirements of Regulation Section
1.704-1(b)(2)(ii)(b)(2).
11.4 In-Kind. Notwithstanding the foregoing but subject to Section
18-804(a)(1) of the Act, in the event the Management Committee shall determine
that an immediate sale of part of or all the Property would cause undue loss to
the Members, or the Management Committee determines that it would be in the best
interest of the
33
Members to distribute the Property to the Members in-kind (which distributions
do not, as to the in-kind portions, have to be in the same proportions as they
would be if cash were distributed, but all such in-kind distributions shall be
equalized, to the extent necessary, with cash), then the Management Committee
may either defer liquidation of, and withhold from distribution for a reasonable
time, any of the Property except that necessary to satisfy the Company's debts
and obligations, or distribute the Property to the Members in-kind.
11.5 No Action for Dissolution. The Members acknowledge that
irreparable damage would be done to the goodwill and reputation of the Company
if any Member should bring an action in court to dissolve the Company under
circumstances where dissolution is not required by Section 10.1. Accordingly,
except where the Manager has failed to liquidate the Company as required by
Section 10.1 and except as specifically provided in Section 18-802 and Section
18-803(a) of the Act, each Member hereby to the fullest extent permitted by law
waives and renounces his right to initiate legal action to seek dissolution of
the Company or to seek the appointment of a receiver or trustee to wind up the
affairs of the Company, except in the cases of fraud, violation of law, bad
faith, gross negligence, willful misconduct or willful violation of this
Agreement.
ARTICLE 12
TAX MATTERS MEMBER
12.1 Tax Matters Member. Greenlake Holdings LLC shall be the initial
Tax Matters Member of the Company as provided in the Regulations under Section
6231 of the Code and analogous provisions of state law. The Management Committee
shall have the authority to remove or replace (following death or resignation)
the Tax Matters Member of the Company and designate its successor.
12.2 Certain Authorizations. The Tax Matters Member shall represent the
Company, at the Company's expense, in connection with all examinations of the
Company's affairs by tax authorities including any resulting administrative or
judicial proceedings. Without limiting the generality of the foregoing, and
subject to the restrictions set forth herein, the Tax Matters Member, but only
with the consent or approval or at the director of the Management Committee, is
hereby authorized:
(a) to enter into any settlement with the Secretary with
respect to any tax audit or judicial review, in which agreement the Tax
Matters Member may expressly state that such agreement shall bind the
other Members except that such settlement agreement shall not bind any
Member that has not approved such settlement agreement in writing;
34
(b) if a notice of a final administrative adjustment at the
Company level of any item required to be taken into account by a Member
for tax purposes is mailed to the Tax Matters Member, to seek judicial
review of such final adjustment, including the filing of a petition for
readjustment with the Tax Court, the District Court of the United
States for the district in which the Company's principal place of
business is located, or elsewhere as allowed by law, or the United
States Claims Court;
(c) to intervene in any action brought by any other Member
for judicial review of a final adjustment;
(d) to file a request for an administrative adjustment with
the Secretary at any time and, if any part of such request is not
allowed by the Secretary, to file a petition for judicial review with
respect to such request;
(e) to enter into an agreement with the Internal Revenue
Service to extend the period for assessing any tax that is attributable
to any item required to be taken into account by a Member for tax
purposes, or an item affected by such item; and
(f) to take any other action on behalf of the Members (with
respect to the Company) or the Company in connection with any
administrative or judicial tax proceeding to the extent permitted by
applicable law or the Regulations.
Each Member shall have the right to participate in any such actions and
proceedings to the extent provided for under the Code and Regulations.
12.3 Indemnity of Tax Matters Member. To the maximum extent permitted
by applicable law and without limiting Article 8, the Company shall indemnify
and reimburse the Tax Matters Member for all expenses (including reasonable
legal and accounting fees) incurred as Tax Matters Member pursuant to this
Article 13 in connection with any administrative or judicial proceeding with
respect to the tax liability of the Members as long as the Tax Matters Member
has determined in good faith that the Tax Matters Member's course of conduct was
in, or not opposed to, the best interest of the Company. The taking of any
action and the incurring of any expense by the Tax Matters Member in connection
with any such proceeding, except to the extent provided herein or required by
law, is a matter in the sole discretion of the Tax Matters Member.
12.4 Information Furnished. To the extent and in the manner provided by
applicable law and Regulations, the Tax Matters Member shall furnish the name,
address,
35
profits and loss interest, and taxpayer identification number of each Member to
the Internal Revenue Service.
12.5 Notice of Proceedings, etc. The Tax Matters Member shall use best
efforts to keep each Member informed of any administrative and judicial
proceedings for the adjustment at the Company level of any item required to be
taken into account by a Member for income tax purposes or any extension of the
period of limitations for making assessments of any tax against a Member with
respect to any Company item, or of any agreement with the Internal Revenue
Service that would result in any material change either in Income or Loss as
previously reported.
12.6 Notices to Tax Matters Member. Any Member that receives a notice
of an administrative proceeding under Section 6233 of the Code relating to the
Company shall promptly provide Notice to the Tax Matters Member of the treatment
of any Company item on such Member's Federal income tax return that is or may be
inconsistent with the treatment of that item on the Company's return. Any Member
that enters into a settlement agreement with the Internal Revenue Service or any
other government agency or official with respect to any Company item shall
provide Notice to the Tax Matters Member of such agreement and its terms within
sixty (60) days after its date.
12.7 Preparation of Tax Returns. The Tax Matters Member shall arrange
for the preparation and timely filing of all returns of Company income, gains,
deductions, losses and other items necessary for Federal, state and local income
tax purposes and shall use all reasonable efforts to furnish to the Members
within ninety (90) days of the close of the taxable year a Schedule K-1 and such
other tax information reasonably required for Federal, state and local income
tax reporting purposes. The classification, realization and recognition of
income, gain, losses and deductions and other items shall be on the cash or
accrual method of accounting for Federal income tax purposes, as the Management
Committee shall determine in its sole discretion in accordance with applicable
law.
12.8 Tax Elections. The Management Committee shall, in its sole
discretion, determine whether to make any available election.
12.9 Taxation as a Partnership. No election shall be made by the
Company or any Member for the Company to be excluded from the application of any
of the provisions of Subchapter K, Chapter I of Subtitle A of the Code or from
any similar provisions of any state tax laws or to be treated as a corporation
for federal tax purposes.
36
ARTICLE 13
ACCOUNTING AND BANK ACCOUNTS
13.1 Fiscal Year and Accounting Method. The fiscal year and taxable
year of the Company shall be as designated by the Management Committee in
accordance with the Code. The Company shall use an accrual method of accounting.
13.2 Books and Records. The Company shall maintain at its principal
office, or such other office as may be determined by the Management Committee,
all the following:
(a) A current list of the full name and last known business or
residence address of each Member and of the Manager together with
information regarding the amount of cash and a description and
statement of the agreed value of any other property or services
contributed by each Member and which each Member has agreed to
contribute in the future, and the date on which each Member became a
Member of the Company;
(b) A copy of the Certificate and this Agreement, including
any and all amendments to either thereof, together with executed copies
of any powers of attorney pursuant to which the Certificate, this
Agreement, or any amendments have been executed;
(c) Copies of the Company's Federal, state, and local income
tax or information returns and reports, if any, which shall be retained
for at least six fiscal years;
(d) The financial statements of the Company, which shall be
retained for at least six fiscal years; and
(e) The Company's books and records, which shall be retained
for at least six fiscal years.
13.3 Delivery to Members; Inspection. Upon the request of any Member,
for any purpose reasonably related to such Member's interest as a member of the
Company, the Management Committee shall cause to be made available to the
requesting Member the information required to be maintained by clauses (a)
through (d) of Section 14.2 and such other information regarding the business
and affairs of the Company as any Member may reasonably request.
13.4 Financial Statements. The Management Committee shall cause to be
prepared for the Members at least annually, at the Company's expense, financial
statements of the Company, and its subsidiaries, prepared in accordance with
generally
37
accepted accounting principles and audited by a nationally recognized
accounting firm. The financial statements so furnished shall include a balance
sheet, statement of income or loss, statement of cash flows, and statement of
Members' equity. In addition, the Management Committee shall provide on a timely
basis to the Members [monthly and] quarterly financials, statements of cash
flow, any available internal budgets or forecast or other available financial
reports, as well as any reports or notices as are provided by the Company, or
any of its subsidiaries to any financial institution.
13.5 Filings. At the Company's expense, the Management Committee shall
cause the income tax returns for the Company to be prepared and timely filed
with the appropriate authorities and to have prepared and to furnish to each
Member such information with respect to the Company as is necessary (or as may
be reasonably requested by a Member) to enable the Members to prepare their
Federal, state and local income tax returns. The Management Committee, at the
Company's expense, shall also cause to be prepared and timely filed, with
appropriate Federal, state and local regulatory and administrative bodies, all
reports required to be filed by the Company with those entities under then
current applicable laws, rules, and regulations. The reports shall be prepared
on the accounting or reporting basis required by the regulatory bodies.
13.6 Non-Disclosure. Each Member agrees that, except as otherwise
consented to by the Management Committee in writing, all non-public and
confidential information furnished to it pursuant to this Agreement will be kept
confidential and will not be disclosed by such Member, or by any of its agents,
representatives, or employees, in any manner whatsoever, in whole or in part,
except that (a) each Member shall be permitted to disclose such information to
those of its agents, representatives, and employees who need to be familiar with
such information in connection with such Member's investment in the Company, so
long as such agents, representatives and employees agree to keep such
information confidential on the terms set forth herein, (b) each Member shall be
permitted to disclose such information to its partners, stockholders and
affiliates so long as they agree to keep such information confidential on the
terms set forth herein, (c) each Member shall be permitted to disclose
information to the extent required by law, legal process or regulatory
requirements, so long as such Member shall have used its reasonable efforts to
first afford the Company with a reasonable opportunity to contest the necessity
of disclosing such information, (d) each Member shall be permitted to disclose
such information to possible purchasers of all or a portion of the Member's
Interest, provided that such prospective purchaser shall execute a suitable
confidentiality agreement containing terms not less restrictive than the terms
set forth herein, and (e) each Member shall be permitted to disclose information
to the extent necessary for the enforcement of any right of such Member arising
under this Agreement.
13.7 Bank Accounts. All funds of the Company shall be deposited in a
separate bank, money market or similar account(s) approved by the Management
38
Committee and in the Company's name. Withdrawals therefrom shall be made only by
Persons authorized to do so by the Management Committee.
ARTICLE 14
MISCELLANEOUS
14.1 Title to Property. Title to the Property shall be held in the name
of the Company. No Member shall individually have any ownership interest or
rights in the Property except indirectly by virtue of such Member's ownership of
a Membership Interest.
14.2 Waiver of Default. No consent or waiver, express or implied, by
the Company or a Member with respect to any breach or default by the Company or
a Member hereunder shall be deemed or construed to be a consent or waiver with
respect to any other breach or default by any party of the same provision or any
other provision of this Agreement. Failure on the part of the Company or a
Member to complain of any act or failure to act of the Company or a Member or to
declare such party in default shall not be deemed or constitute a waiver by the
Company or the Member of any rights hereunder.
14.3 Amendment.
(a) Except as otherwise expressly provided elsewhere in this Agreement,
this Agreement shall not be altered, modified or changed except by an amendment
approved by Members holding a Majority in Interest of the Group A Members and a
Majority in Interest of the Group B Members; provided, however, that if any such
amendment adversely effects the economic rights of a Member, such amendment
shall only be effective if consented to in writing by such Member.
(b) In addition to any amendments otherwise authorized herein, the
Manager or Management Committee may make any amendments to any of the Schedules
to this Agreement from time to time to reflect transfers of Membership Interests
and issuances of additional Membership Interests. Copies of such amendments
shall be delivered to the Members upon execution thereof.
(c) The Manager shall cause to be prepared and filed any amendment to
the Certificate that may be required to be filed under the Act as a consequence
of any amendment to this Agreement.
(d) Any modification or amendment to this Agreement or the Certificate
made in accordance with this Section 13.3 shall be binding on all Members and
the Manager.
39
14.4 No Third Party Rights. Except as provided in Article 8, none of
the provisions contained in this Agreement shall be for the benefit of or
enforceable by any third parties, including creditors of the Company. Subject to
Article 8, the parties to this Agreement expressly retain any and all rights to
amend this Agreement as herein provided, notwithstanding any interest in this
Agreement or in any party to this Agreement held by any other Person.
14.5 Severability. In the event any provision of this Agreement is held
to be illegal, invalid or unenforceable to any extent, the legality, validity
and enforceability of the remainder of this Agreement shall not be affected
thereby and shall remain in full force and effect and shall be enforced to the
greatest extent permitted by law.
14.6 Nature of Interest in the Company. A Member's Membership Interest
shall be personal property for all purposes.
14.7 Binding Agreement. Subject to the restrictions on the disposition
of Membership Interests herein contained, the provisions of this Agreement shall
be binding upon, and inure to the benefit of, the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns.
14.8 Headings. The headings of the Certificate and sections of this
Agreement are for convenience only and shall not be considered in construing or
interpreting any of the terms or provisions hereof.
14.9 Word Meanings. The words such as "herein", "hereinafter",
"hereof", and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise requires.
The singular shall include the plural, and vice versa, unless the context
otherwise requires.
14.10 Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
14.11 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto and thereto and supersedes all prior writings or
agreements with respect to the subject matter hereof.
14.12 Partition. The Members agree that the Property is not and will
not be suitable for partition. Accordingly, each of the Members hereby
irrevocably waives any and all right such Member may have to maintain any action
for partition of any of the Property. No Member shall have any right to any
specific assets of the Company upon
40
the liquidation of, or any distribution from, the Company.
14.13 Governing Law; Consent to Jurisdiction and Venue. This Agreement
shall be construed according to and governed by the laws of the State of
Delaware without regard to principles of conflict of laws. The parties hereby
submit to the exclusive jurisdiction and venue of the state courts of New York
County, New York or to the Court of Chancery of the State of Delaware and the
United States District Court for the Southern District of New York and of the
United States District Court for the District of Delaware, as the case may be,
and agree that the Company or Members may, at their option, enforce their rights
hereunder in such courts.
14.14 Discretion. Whenever a Manager shall have discretion to act
hereunder, such Person agrees to act in a reasonable manner on behalf of the
Company and its Affiliates.
41
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
Group A Members:
QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ Xxx Xxxxx
-----------------------
Xxx Xxxxx
Attorney-in-fact
QUASAR STRATEGIC PARTNERS LDC
By: /s/ Xxx Xxxxx
-----------------------
Xxx Xxxxx
Attorney-in-fact
Group B Member:
GREENLAKE HOLDINGS LLC
By: /s/ Xxxx X. Xxxxxxxxxx
------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Duly Authorized Member
42
SCHEDULE 1
A. Group A Members
Total Capital Percentage
Name and Address Cash Contributed Contribution Interest(1)
--------------------------------------- --------------------- ----------------------- ------------------
Quantum Industrial Partners LDC $96,250,000 $96,250,000 34.7473%
Xxxx Xxxxxxxxx 0
Xxxxxxxxxx
XxxxXxx,
Xxxxxxxxxxx Antilles
Quasar Strategic Partners LDC $96,250,000 $96,250,000 34.7473%
Xxxx Xxxxxxxxx 0
Xxxxxxxxxx
XxxxXxx,
Xxxxxxxxxxx Antilles
----------
(1) Includes both Group A Members and Group B Members.
43
B. GROUP B MEMBERS
Shares of
OMC Stock Total Capital Percentage
Name and Address Cash Contributed Contributed Gross Asset Value Contribution Interest(1)
----------------------- ------------------- ---------------- ------------------- ------------------- ---------------
Greenlake Holdings LLC $48,500,000 2,000,000 $36,000,000 $84,500,000 30.5054%
c/o Greenway
Partners, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
----------
(1) Includes both Group A Members and Group B Members.
44
SCHEDULE 7.5
Initial Slate of Officers
Xxxxxx X. Xxxxxxxx, President and Chief Executive Officer
Xxxx X. Xxxxxxxxxx, Vice President, Secretary and Treasurer
45
