EXHIBIT 10.7
LIMITED LIABILITY COMPANY AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE 1
General Provisions
Section 1.01. Definitions....................................1
Section 1.02. Establishment of Limited Liability Company.....2
Section 1.03. Name of Limited Liability Company..............3
Section 1.04. Principal Business Office of the Company.......3
Section 1.05. Registered Office of the Company...............3
Section 1.06. Registered Agent of the Company................3
Section 1.07. Members........................................3
Section 1.08. Certificate of Formation.......................3
ARTICLE 2
Operation of the Company
Section 2.01. Purpose........................................4
Section 2.02. Powers.........................................4
Section 2.03. Management.....................................4
Section 2.04. Activities of the Company......................6
Section 2.05. Other Business.................................8
Section 2.06. Rights and Duties of the Managers..............9
Section 2.07. Officers......................................11
Section 2.08. Limited Liability.............................11
ARTICLE 3
Certain Distributions
Section 3.01. Certain Contributions.........................11
Section 3.02. Additional Contributions......................13
Section 3.03. Allocation of Profits and Losses..............13
1
Section 3.04. Costs.........................................14
ARTICLE 4
Books, Records and reports
Section 4.01. Books and Records............................15
Section 4.02. Reports......................................15
Section 4.03. Tax Matters..................................15
Section 4.04. Tax Returns and Other Elections..............16
2
ARTICLE 5
Exculpation and Indemnification
Section 5.01. Exculpation and Indemnification..............16
ARTICLE 6
Alienation of Membership Interest
Section 6.01. Assignments..................................17
Section 6.02. Resignation or Retirement....................18
Section 6.03. Admission of Additional Members..............18
ARTICLE 7
Dissolution
Section 7.01. Dissolution..................................18
Section 7.02. Waiver of Partition; Nature of Interest......18
Section 7.03. Benefits of Agreement; No Third-party Rights.19
Section 7.04. Severability of Provisions...................19
Section 7.05. Entire Agreement.............................19
Section 7.06. Binding Agreement............................19
Section 7.07. Governing Law................................19
Section 7.08. Notices......................................19
Section 7.09. Effectiveness................................19
Section 7.10. Rules of Construction........................19
Section 7.11. Execution by Company.........................20
Section 7.12. Counterparts.................................20
3
EXHIBIT 10.7
LIMITED LIABILITY COMPANY AGREEMENT
OF
WW FOODS, LLC
This agreement (hereinafter the "LLC Agreement") by and between X. X.
Xxxxx Company ("Heinz"), a Pennsylvania corporation, and Weight Watchers
International, Inc. ("Weight Watchers"), a Virginia corporation, with their
offices located at 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 and 000
Xxxxxxxxx Xxxxxxxx, Xxxxxxxx, Xxx Xxxx 00000, respectively, or their respective
permitted successors and assigns from time to time (collectively, the
"Members").
WHEREAS, pursuant to the Recapitalization and Stock Purchase Agreement
among Weight Watchers and Heinz and Artal International S.A. dated July ___,
1999 (the "Principal Agreement"), Weight Watchers and Heinz shall jointly
establish WW Foods, LLC (the "Company") with each party contributing US$2,500 in
exchange for a Member's certificate issued by the Company representing fifty
percent (50%) of the limited liability company interest in the Company; and
WHEREAS, the Company shall be hereby established as a limited liability
company pursuant to and in accordance with the provisions of the Delaware
Limited Liability Company Act (as amended from time to time, the "Act")
(6del.c.ss.18-101, et seq.); and
WHEREAS, the parties desire to hereby establish the Company and the terms
and conditions governing the business and operations of the Company.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto intending to be legally bound agree as follows:
ARTICLE
GENERAL PROVISIONS
SECTION .0. Definitions. For purposes of this LLC Agreement:
"Administrative Manager" shall mean, ProMark International, Inc., or its
duly appointed successor as Administrative Manager hereunder.
4
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, or controlled by, or under direct or
indirect common control (that is, ownership of greater than 50% of the voting
securities) of, such Person. "Affiliated with" shall have correlative meaning.
"Associated Food Trademarks" shall mean all Food & Beverage Trademarks the
transfer of which cannot be recorded prior to the closing under the Principal
Agreement because of required association under the laws of a particular
jurisdiction.
"Covered Persons" shall have the meaning set forth in Section 5.01.
"Custodial Trademarks" shall mean the Associated Food Trademarks, the
Non-Recognition Food Trademarks, the Non-Transferable Food Applications, and
those portions of the Multiclass Trademarks in Food Classes.
"Effective Date" shall mean the day and year first above written.
"First Quality Control Manager" shall mean the individual appointed by
Heinz identified in Schedule A hereto, or such Person's duly appointed successor
as First Quality Control Manager hereunder.
"Food & Beverage Trademarks" shall mean all registered trademarks,
trademark applications, and common law trademarks covering food and beverage
product, falling in or that would fall within any Food Class, owned by Weight
Watchers and the Companies as defined in the Principal Agreement as of the
Effective Date.
"Food Classes" shall mean International Classes 1, 5, 29, 30, 31, 32, and
33 (or comparable classes) in relation to food and beverage products.
"Food Trademarks" shall mean the Formation Trademarks and New Food
Trademarks.
"Formation Trademarks" shall mean all Food & Beverage Trademarks less all
Weight Watchers Retained Trademarks, Parent Retained Trademarks, and any "Weight
Watchers From Heinz' trademarks.
"Lien" shall mean any mortgage, lien, pledge, charge, conditional
assignment as security, security interest, encumbrance or adverse claim of any
kind, or any other type of preferential arrangement that has a practical effect
of creating a security interest.
5
"Managers" shall mean the managers of the Company from time to time duly
appointed and acting hereunder.
"Multiclass Trademarks" shall mean all Food & Beverage Trademarks
consisting of registrations or applications for registration in multiple
registration classes, where such classes include both Food Classes and other
classes.
"New Food Trademarks" shall mean all new common law trademarks, trademark
applications, and trademark registrations that may be acquired by or contributed
to the LLC from time to time.
"Non-Recognition Food Trademarks" shall mean all Food & Beverage
Trademarks in jurisdictions where the local law or regulatory authority does not
permit, or will not recognize the validity of, ownership of trademarks by a
limited liability corporation or an entity that owns but does not use the
trademarks (use is by a licensee or a permitted or registered user).
Non-Transferable Food Applications" shall mean all Food & Beverage
Trademarks that are pending applications or intent-to-use applications in
jurisdictions where the local law or regulatory authority does not permit, or
will not recognize the validity of, an assignment or transfer of such
applications.
"Officers" shall have the meaning set forth in Section 2.07.
"Parent Retained Trademarks" shall mean certain Food & Beverage Trademarks
to be transferred by Weight Watchers to Heinz and to be retained by Heinz, as
identified in Schedule 8.1 of the Principal Agreement.
"Person" shall mean any individual, corporation, partnership, joint
venture, limited liability company, limited liability partnership, association,
joint-stock company, trust, unincorporated organization, or other organization,
whether or not a legal entity, and any governmental authority.
"Program Information" shall mean the terminology used in connection with
the Weight Watchers Program, such information owned by Weight Watchers as is
reasonably necessary to develop, manufacture, market and distribute food and
beverage products in accordance with such Weight Watchers Program and to
calculate Points(R) or other measurements relating thereto, as well as those
trademarks owned by Weight Watchers and used to identify such terminology and
Weight Watchers Program, as such Weight Watchers Program may exist from time to
time
6
"Program Information Trademarks" shall mean trademarks owned by Weight
Watchers and used to identify such terminology and Weight Watchers Program, as
such Weight Watchers Program may exist from time to time.
"Quality Control Managers" means the First Quality Control Manager and the
Second Quality Control Manager, collectively.
"Quality Control Requirements" shall have the meaning set forth in Section
2.06(c).
"Second Quality Control Manager" shall mean the individual appointed by
Weight Watchers identified in Schedule [ ] hereto, or such Person's duly
appointed successor as Second Quality Control Manager hereunder.
"Weight Watchers Program" shall mean current and future eating or
lifestyle regimens employed, designed, marketed or adopted by or on behalf of
Weight Watchers or Weight Watchers Affiliates to facilitate weight loss or
weight control throughout the world under the Weight Watchers trademark or
servicemark.
"Weight Watchers Retained Trademarks" shall mean all Associated Food
Trademarks, Non-Recognition Food Trademarks, Non-Transferable Food Applications,
Multiclass Trademarks, and Program Information Trademarks.
SECTION 1.02. Establishment of Limited Liability Company. Heinz and Weight
Watchers, by execution of this LLC Agreement on the date above written, hereby
establish WW Foods, LLC, the Company, a limited liability company pursuant to
and in accordance with the provisions of the Act, with each party contributing
US$2,500 in exchange for a Members certificate issued by the Company
representing fifty percent (50%) of the limited liability company interest in
the Company.
SECTION .03. Name of Limited Liability Company. The name of the limited
liability company formed hereby is WW Foods, LLC.
SECTION .04. Principal Business Office of the Company. The principal business
office of the Company shall be located at Xxxxx 000, 000 Xxxx Xxxx Xxxxxx,
Xxxxx, Xxxxx 00000, Attention: Xxxxxx Xxxxxxx, or such other location as may
hereafter be determined by the Administrative Manager.
SECTION .05. Registered Office of the Company. The address of the registered
office of the Company in the State of Delaware is c/o CT Corporation.
SECTION .06. Registered Agent of the Company. The name and address of the
registered agent of the Company for service of process on the Company in the
State of Delaware is CT Corporation.
SECTION .07. Members. () Schedule C hereto contains the address of each Member
as of the date of
7
this LLC Agreement. Schedule C shall be revised by the Administrative Manager
from time to time to reflect the admission or withdrawal of a Member, the
transfer or assignment of interests in the Company and other modifications to or
changes in the information set forth therein, all in accordance with the terms
of this LLC Agreement. The Members' certificates received by the Members are in
the form set forth in Schedule D hereto. Such certificates are fully paid and
nonassessable except as otherwise set forth in this LLC Agreement.
() Subject to Sections 2.03(f) and 2.04(a), the Members may act by written
consent.
SECTION .08. Certificate of Formation. Xxxx X. Xxxxxxx is hereby designated as
an "authorized person" within the meaning of the Act, and has executed,
delivered and filed the Certificate of Formation of the Company with the
Secretary of State of the State of Delaware on September 15, 1999. Upon the
filing of the Certificate of Formation with the Secretary of State of the State
of Delaware, his powers as an "authorized person" ceased, and the Administrative
Manager thereupon became a designated "authorized person" and shall continue as
a designated "authorized person" within the meaning of the Act. ARTICLE
OPERATION OF THE COMPANY
SECTION .0. Purpose. The purpose for which the Company is formed is to engage in
the following activities:
() Ownership, Control and Preservation of Food Trademarks and
Program Information. The Company is established for the purpose of owning,
controlling and preserving the Food Trademarks, controlling and preserving
the Custodial Trademarks, granting rights in and preserving the Program
Information, [and exercising such rights respecting use of the Program
Information Trademarks as may be delegated to it by Weight Watchers as the
owner and licensor thereof]. In connection with the foregoing, the Company
shall be responsible for maintaining or renewing registrations, and for
filing and prosecuting new and existing applications worldwide, for the
Food Trademarks.
() Food Trademark and Program Information Licensing. The Company, by
or through the Administrative Manager on behalf of the Company, shall
enter into license agreements with the Members in the form attached hereto
as Exhibits I and II . The Company, by or through the Administrative
Manager on behalf of the Company, may perform and administer such
agreements and execute all documents, agreements or certificates
contemplated thereby or related thereto, all without any further act, vote
or approval of the Members.
8
() Quality Control of Custodial Trademarks. The Company, by and
through the Administrative Manager on behalf of the Company, shall and
hereby does accept from Weight Watchers the delegation of certain rights
and obligations of Weight Watchers regarding quality control of the
Custodial Trademarks (as specified in the license running from Weight
Watchers to Heinz regarding the use thereof), [and regarding use of the
Program Information Trademarks (as specified in the license thereto
granted to the Company by Weight Watchers and attached hereto as Exhibit
II)], which rights and obligations shall be exercised by the Company in
the manner specified in Sections 2.06(c) and (d) below.
SECTION .0. Powers. Subject to Section 2.04(a), the Company (i) shall have and
exercise all powers necessary, convenient or incidental to accomplish its
purposes as set forth in Section 2.01 and (ii) shall have and exercise all of
the powers and rights conferred upon limited liability companies formed pursuant
to the Act.
SECTION .0. Management.
() Managers. On the Effective Date, the Administrative Manager, the First
Quality Control Manager and the Second Quality Control Manager shall become
Managers of the Company. Each Manager shall be appointed in accordance with this
Section 2.03. The initial Managers (and any successor Managers duly appointed
hereunder) shall indicate acceptance of appointment as a Manager hereunder by
execution of a counterpart of this LLC Agreement or by delivery to the Company
of a letter indicating such acceptance in substantially the form attached hereto
as Schedule [ ]. Each Manager shall hold office until a successor is selected
and qualified or until such Manager's earlier death, resignation or, subject to
Section 2.03(d), removal. The business, property and affairs of the Company
shall be managed solely by or under the direction of the Managers, as and to the
extent set forth in this Section 2.03. The Members (in their capacity as members
of the Company) shall have no power or authority with regard to the management
of the business and affairs of the Company in any respect except as may be
specified in this LLC Agreement, and the Members (in their capacity as members
of the Company) shall have no authority to act for or bind the Company.
() Powers. Subject to Section 2.04(a), the Managers shall collectively
have the power to do any and all acts necessary, convenient or incidental to or
for the furtherance of the purposes set forth in Section 2.01, including all
powers, statutory or otherwise, provided, however, that the Quality Control
Managers shall have the power to act on behalf of the Company solely in respect
of the matters referred to in Sections 2.06(c) and (d), and the Administrative
Manager shall have the power to act on behalf of the Company solely in respect
of all other matters as to which the Managers have the power to act. Subject to
the foregoing and to Sections 2.01 and 2.04(a), each Manager has the authority
individually to bind the Company.
9
() Compensation of the Administrative Manager. The Administrative Manager
shall be entitled to annual compensation for its services pursuant to a
management agreement to be entered into by the Company and the Administrative
Manager, in the form annexed hereto as Schedule F . The Quality Control Officers
shall not be entitled to any compensation for their services, subject to Article
5 below.
() Removal of Managers; Appointment of Successors.
() For a period of eighteen (18) months following the Effective
Date, the Administrative Manager may be removed at any time () by any
Member, for failure to perform its duties or for other cause, and () by
the owners of a majority of the ownership interests in the Company at any
time, with or without cause. Thereafter, the Administrative Manager may be
removed at any time by any Member for any reason or no reason, with or
without cause. Any vacancy caused by any such removal, or by the death or
resignation of the Administrative Manager, may be filled by the owners of
a majority of the ownership interests in the Company; provided, however,
that if the owners of a majority of the ownership interests in the
Company, following good faith consultation, are unable to agree upon the
appointment of a successor within ninety (90) days following the removal,
death or resignation of the Administrative Manager, until such time as
such owners are able to agree upon the appointment of a successor, the
powers of the Administrative Manager shall be exercised on an interim
basis by a law firm of national reputation having expertise in relevant
areas of trademark law that is not in an attorney-client relationship with
any Member. Such law firm shall be appointed by the owners of a majority
of the ownership interests in the Company or, if they are unable to agree,
by the Executive Director of the International Trademark Association or
such other person as he or she may designate to make such appointment. In
all events, the Administrative Manager shall hold office until an interim
or successor Administrative Manager has been appointed and has accepted
such appointment.
() The First Quality Control Manager may be removed by Heinz, with
or without cause, at any time. Any vacancy caused by any such removal, or
by the death or resignation of the First Quality Control Manager, may be
filled by Heinz.
() The Second Quality Control Manager may be removed by Weight
Watchers, with or without cause, at any time. Any vacancy caused by any
such removal, or by the death or resignation of the Second Quality Control
Manager, may be filled by Weight Watchers.
() Managers as Agents. To the extent of their respective powers set forth herein
and subject to
10
Section 2.04(a), Managers are agents of the Company for the purpose of the
Company's business, and the actions of the Managers taken in accordance with the
powers set forth herein shall bind the Company.
() Amendment of LLC Agreement. Neither the Members nor the Managers shall
amend, alter, change or repeal any of Sections 1.01 and Articles 2-7. The
Managers shall have no duty or obligation to approve any amendment or other
modification of this LLC Agreement which affects the rights, duties or
immunities of the Managers.
SECTION .0. Activities of the Company. () The Company shall not engage in any
business or investment activities other than the ownership, control and
preservation of the Food Trademarks, the control and preservation of the
Custodial Trademarks, the preservation of the Program Information, and the
licensing of Food Trademarks and Program Information, [and the exercise of such
rights respecting use of the Program Information Trademarks as may be delegated
to it by Weight Watchers as the owner and licensor thereof]; provided that the
Company, by or through the Administrative Manager on behalf of the Company, may
make temporary investments of funds to provide for anticipated expenses in the
upcoming year in instruments with maturities of no longer than one year,
including certificates of deposit, securities issued by the United States or its
instrumentalities, and investments of similar liquidity and quality.
Notwithstanding any other provision of this LLC Agreement, the Company (by or
through the Administrative Manager or otherwise) shall not execute any
instrument, assignment, deed of transfer or any other form of document
transferring or purporting to transfer ownership of any Food Trademark or
Custodial Trademark to or from the Company before providing each Member with an
authentic copy (and translation, where appropriate) of any such instrument,
assignment, deed of transfer or other form of document, and providing each
Member with a reasonable opportunity to review and comment thereupon. The
Company acting by or through the Administrative Manager, shall give due and
deliberate consideration to the comments of the Members regarding such
instrument, assignment, deed of transfer, or other form of document, but shall
in all events be entitled to rely upon the advice of counsel to the Company
(which, for purposes of such reliance, shall not also be employed by or acting
as counsel to either Member) in determining whether to execute any such
instrument, assignment, deed of transfer, or other form of document.
() The Members shall cause the Company to operate separately and
independently from any other party and be the sole owner of its properties.
Without limiting the generality of the foregoing and notwithstanding any other
provision of this LLC Agreement, the Company shall, and the Managers shall cause
the Company to:
() act solely in its own name and through its own agents;
() maintain its own separate books, records and financial
statements, which shall be
11
audited annually by certified public accountants of nationally recognized
standing at the request of either Member, who shall bear the cost thereof;
() maintain a place of business separate from that of the Members
and maintain its own separate bank accounts;
() maintain its assets, investments and funds in its own name and
separately from those of any other party;
() incur liability solely in the ordinary course of its activities;
() not borrow money;
() not incur any liabilities that are guaranteed by any third party;
() not acquire obligations or securities of, or make loans or
advances to any Member, or any affiliate, licensee or franchisee thereof;
() not enter into any future business transactions with the Members
not expressly contemplated herein;
() not consolidate or merge with or into any Person, or convey,
transfer or lease the properties and assets of the Company substantially
as an entirety to any Person, or permit any Person to consolidate or merge
into the Company or convey, transfer or lease its properties and assets
substantially as an entirety to the Company;
() not dissolve, liquidate or wind-up the Company;
(xii) at all times hold itself out to the public (including, without
limitation, any creditors of any Member or any of their Affiliates) under
the Company's own name and as a separate and distinct legal entity from
the Members, any of their Affiliates or any other Person;
(xi) allocate and apportion fairly any overhead (including cost of
office space, utilities and routine services, if any) or other expenses
(including employee salaries and benefits) shared between the Company and
any other Person, if any, provided, however, that this principle shall not
be used to alter or vary the terms of the Management Agreement with the
initial Administrative Manager or any successor agreement thereto;
12
(x) use its own stationery, invoices and checks;
(x) correct any known misunderstanding regarding its separate
identity;
(xi) maintain adequate capital in light of its contemplated business
purposes;
(xi) to the fullest extent permitted by law, not institute
proceedings to have the Company be adjudicated bankrupt or insolvent, or
consent to the institution of bankruptcy or insolvency proceedings against
the Company, or file a petition seeking, or consent to, reorganization or
relief with respect to the Company under any applicable federal or state
law relating to bankruptcy, or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the Company or a substantial part of its property, or make any assignment
for the benefit of creditors of the Company, or admit in writing the
Company's inability to pay its debts generally as they become due, or take
any corporate or other action in furtherance of any such action at any
time when the Company is able to pay its debts generally as they become
due; and
(xi) not transfer, encumber or dispose of any right, title or
interest in or to any of the Food Trademarks, Custodial Trademarks or of
rights in the Program Information or attempt to take any of such actions,
except as expressly permitted by this LLC Agreement, and not grant any
right, license or consent to use any of the Food Trademarks, Custodial
Trademarks or Program Information to any Person who is not a Member.
SECTION .0. Other Business. Subject to the provisions of any other agreement
between or among them or between any Member and the Company, the Members and any
of their Affiliates may engage in or possess an interest in other business
ventures (unconnected with the Company) of every kind and description,
independently or with others. The Company shall not have any rights in or to
such independent ventures or the income or profits therefrom by virtue of this
LLC Agreement. SECTION .0. Rights and Duties of the Managers. () To the fullest
extent permitted by Section 18-1101(c) of the Act, the Managers shall consider
only the interests of the Company in acting on the matters referred to in
Sections 2.03(b), 2.03(f), 2.04(a), 2.06(c) and 2.06(d); provided, however, that
the Company shall also consider the interests of Weight Watchers in exercising
those rights and obligations delegated to it by Weight Watchers concerning the
Custodial Trademarks [and Program Information Trademarks]. No resignation or
retirement of an Administrative Manager, and no appointment of a successor
Administrative Manager, shall be effective until the successor Administrative
Manager shall have accepted appointment by executing a copy of the appointment
letters attached in Schedule G. All right, power and authority of
13
the Managers shall be limited to the extent necessary to exercise those rights
and perform those duties of the respective Managers specifically set forth in
this LLC Agreement. Notwithstanding any other provision of this LLC Agreement,
in exercising their rights and performing their duties under this LLC Agreement
each of the Managers is authorized, at the expense of the Company, to consult
with and rely upon the advice of counsel, and in relying upon such advice the
Managers shall be conclusively presumed to have acted in good faith.
() Each Manager who accepts the rights and authority of a Manager under
this LLC Agreement pursuant to Section 2.03(a) agrees to perform and discharge
the duties and obligations of such Manager under this LLC Agreement, and, in the
case of the Administrative Manager, further agrees that such rights,
authorities, duties and obligations under this LLC Agreement shall continue
until his successor as Administrative Manager or any interim Administrative
Manager has accepted appointment in accordance with this LLC Agreement.
() The Quality Control Managers shall have sole responsibility on behalf
of the Company with respect to setting and monitoring compliance with
appropriate standards for the use of the Food Trademarks, Custodial Trademarks
and [Program Information Trademarks] ("Quality Control Requirements"), as set
forth in Schedule H hereto, as well as for the enforcement of Quality Control
Requirements against licensees of the Company. Subject to the provisions of
Section 2.06(d) below, and the terms of any license between the Company and any
licensee, (or, with respect to the Custodial Trademarks, the terms of any
license between the Members) either Quality Control Manager may take on behalf
of the Company such actions as he deems necessary or appropriate to assure
compliance with Quality Control Requirements, including, without limitation, the
retention of counsel or other professionals, and the commencement of legal
action on behalf of the Company. If both Quality Control Managers agree upon the
propriety of the commencement of legal action, the expenses relating thereto
(including attorneys' fees) shall be borne by the Company and shared equally by
the Members; if both Quality Control Managers do not agree, the expenses
(including attorneys' fees) shall be borne exclusively by the Member having the
right to appoint the Quality Control Manager determining to commence legal
action.
() In the event a Quality Control Manager identifies a failure to comply
with Quality Control Requirements, such Quality Control Manager (the "Notifying
Manager") shall promptly notify the other Quality Control Manager and each
Member of the details of such failure. The Notifying Manager shall, to the
greatest extent possible consistent with protection of the Food Trademarks,
Custodial Trademarks, and [Program Information Trademarks], initially endeavor
to cause such failure to be rectified through voluntary action on the part of
the non-complying party and shall confer promptly and in good faith with the
other Quality Control Manager concerning the nature of the failure to comply and
the measures that would be sufficient to cure the failure to comply, if any. If
such failure
14
to comply is, in the reasonable judgment of the Notifying Manager, susceptible
to cure but is not cured within thirty (30) days of receipt of notice by the
other Quality Control Manager, then the Notifying Manager may, after further
consultation with the other Quality Control Manager, take such other action as
may be available to the Company pursuant to the terms of any relevant license
agreement with respect to enforcement of Quality Control Requirements as the
Notifying Manager, in his sole reasonable judgment (exercised pursuant to the
provisions of Section 2.06(a) above), deems necessary or appropriate to protect
and preserve the value of the Food Trademarks, Custodial Trademarks and the
[Program Information Trademarks]; provided, however, that the Notifying Manager
shall not cause the Company to commence any legal proceeding concerning such
failure to comply if the failure is susceptible to cure and any Member can
demonstrate that (i) substantial, good faith efforts have been made to cure the
failure, (ii) the failure is reasonably likely to be cured within a period of
time reasonable in relation to the nature of the failure, and (iii) neither the
Food Trademarks, Custodial Trademarks nor the [Program Information Trademarks]
will be materially damaged if an additional period of time to achieve cure is
allowed. In no event shall any Quality Control Manager, without the written
approval of the other Quality Control Manager, commence any legal proceeding or
take any action of any nature on behalf of the Company seeking monetary damages
of any nature from any Member or Affiliate of a Member or licensee or
sublicensee thereof relating to any failure to comply with any Quality Control
Requirement. In exercising their powers under this provision, neither Quality
Control Manager shall contend that the continued sale of any product, or of any
product substantially similar in quality to a comparable product, that was sold
by any Member, its Affiliates or their respective licensees or sublicensees as
of the Effective Date fails to comply with the Quality Control Requirements.
() Each Manager agrees, solely in such Manager's capacity as a creditor of
the Company on account of any indemnification or other payment owing to such
Manager by the Company, not to petition or otherwise invoke or cause the Company
to invoke the process of any court or governmental authority for the purpose of
commencing or sustaining a case against the Company under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Company or any substantial part of the property of the Company, acquiesce in any
such event, or order or acquiesce in the ordering of the winding up or
liquidation of the affairs of the Company.
SECTION .0. Officers. The Administrative Manager may, from time to time as he
deems advisable, select natural persons who are employees or agents of the
Company and designate them as officers of the Company (the "Officers") and
assign titles (including, without limitation, President, Vice President,
Secretary, and Treasurer) to any such person. Unless the Administrative Manager
decides otherwise, if the title is one commonly used for officers of a business
corporation formed under the Delaware General Corporation Law, the assignment of
such title shall constitute the delegation to such person of
15
the authorities and duties of the Administrative Manager that are normally
associated with that office. Any delegation pursuant to this Section 2.07 may be
revoked at any time by the Administrative Manager. An Officer may be removed as
an Officer with or without cause by the Administrative Manager.
SECTION .0. Limited Liability. Except as otherwise expressly provided by the
Act, the debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be the debts, obligations and liabilities
solely of the Company, and neither the Members nor any Manager shall be
obligated personally for any such debt, obligation or liability of the Company
solely by reason of being or acting as a Member or a Manager of the Company.
ARTICLE
CERTAIN DISTRIBUTIONS
SECTION .0. Certain Distributions. () Simultaneously with the execution hereof,
() Heinz shall transfer and assign its entire interest in the Formation
Trademarks to the Company, and () Weight Watchers shall execute the license
attached hereto as Schedule [ ] conveying rights in the Program Information to
the Company and shall deliver to the Company, pursuant to such license, such
documents and other materials as may be necessary for the Company to exercise
its rights with regard to all material Program Information existing at such
time.
() Heinz represents and warrants to the Company that the transfer and
assignment of the Formation Trademarks accomplished pursuant to Section 3.01(a)
above will be accomplished and completed as necessary to effectuate the valid
assignment of the Formation Trademarks to the Company, and that it will cause
such assignments to be duly and properly recorded in any jurisdiction where such
recordation is allowed.
() Each of the Members respectively represents, warrants and agrees on the
date hereof as follows:
() Such Member is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, with power
and authority (corporate and other) to carry on its business as now
conducted.
() The execution, delivery and performance by such Member of this
LLC Agreement, and consummation of the transactions contemplated hereby,
have been duly authorized by all necessary action on the part of such
Member. This LLC Agreement is being
16
duly and validly executed and delivered by such Member and constitutes a
valid and binding agreement of such Member, enforceable against such
Member in accordance with its terms.
() The execution, delivery and performance of this LLC Agreement by
such Member will not (x) result in a breach or violation of, conflict
with, or constitute a default under such Member's organizational
documents, or any material law or regulation or any material judgment,
agreement or instrument to which such Member is a party or by which such
Member or any of its properties are bound, or (y) result in the creation
or imposition of any Lien on any asset of such Member.
() No consent, approval, authorization, order, license, registration
or qualification of or with any court or governmental agency or body is
required for the entry of such Member into this LLC Agreement or
performance of its obligations hereunder.
() There is no action, suit or proceeding pending against, or, to
the best knowledge of such Member, threatened against, or affecting, such
Member before any court or arbitrator or any governmental body, agency or
official, which in any manner involves this LLC Agreement or any
transaction contemplated hereby or thereby.
SECTION .0. Additional Contributions. The Members are not required to make any
additional capital contribution to the Company. The provisions of this LLC
Agreement, including this Section 3.02, are intended solely to benefit the
Members and, to the fullest extent permitted by law, shall not be construed as
conferring any benefit upon any creditor of the Company (and no such creditor of
the Company shall be a third-party beneficiary of this LLC Agreement) and the
Members shall not have any duty or obligation to any creditor of the Company to
make any contribution to the Company or to issue any call for capital pursuant
to this LLC Agreement.
SECTION .0. Allocation of Profits and Losses. () If any income, gain, deduction,
loss or credit is imputed to the Company for any income or franchise tax
purposes in respect of a license, or other use, of the Food Trademarks and/or
the Program Information to or by a Member (or an Affiliate of a Member), such
imputed income or gain shall be allocated to the Member that is licensing or
using (or whose Affiliate is licensing or using) the Food Trademark and/or
Program Information in respect of which such income, gain, deduction, loss or
credit is imputed.
() Notwithstanding anything to the contrary in Section 3.03(a), if a
Member pays, directly or indirectly, any costs or expenses of the Company, or
contributes cash or other property to the Company in order to allow it to pay
such costs or expenses, the amount of such costs or expenses shall be allocated
to the Member who paid, or who provided or contributed the funds for the payment
of, such costs or expenses.
17
() Any other income, gains, losses, deductions and credits of the Company
that is not allocated to a Member pursuant to Section 3.03(a) or (b) above or
Section 3.03(d) below) shall be allocated to the Members, in accordance with
their respective interests in the Company.
() Notwithstanding anything to the contrary in this Section 3.03, any
portion of any income, gain, loss or deduction with respect to property
contributed to the Company by a Member shall be allocated among the Members in
accordance with Internal Revenue Code Section 704(c) and any applicable Treasury
Regulations thereunder so as to take into account the variation, if any, between
the adjusted tax basis of the property to the Company and its fair market value
at the time of the contribution, provided however that allocations to Members
under this subsection shall not offset the respective ownership interests of the
Members.
SECTION .0. Costs. () The parties shall reimburse the Company for its costs of
operations. The parties agree to the following allocation of costs:
() Administrative costs are the costs and expenses of the
Administrative Manager and related costs of administration of the LLC
Agreement. Such costs shall be paid equally by the Members, except that if
ProMark is the Administrative Manager during the period, Weight Watchers
shall not be obligated to pay more than a maximum payment to be phased in
over 5 years as follows.
Year 1 US$2,500
Year 2 US$5,000
Year 3 US$7,500
Year 4 US$10,000
Year 5 US$12,500.
() Weight Watchers, at Weight Watchers' option, may use ProMark as
its Quality Control Manager. If Weight Watchers so elects to utilize
ProMark as its Quality Control Manager, then administrative costs in
combination with the procurement by Weight Watchers of quality control
services from ProMark under this LLC Agreement shall be payable equally by
the Members, except that Weight Watchers shall not be obligated to pay
more than a maximum annual payment to be phased in as follows:
Year 1 US$20,000
Year 2 US$40,000
Year 3 US$60,000
18
Year 4 US$80,000
Year 5 US$100,000.
() Maintenance costs shall be those costs to renew and/or file use
registrations for the Food Trademarks hereunder. Maintenance costs (with
the exception of maintenance costs for newly initiated registrations,
which shall be paid by the party requesting such registrations) shall be
shared equally by Heinz and Weight Watchers. Heinz currently estimates,
but does not warrant, that such Maintenance costs will be approximately
US$30,000 per year. Costs to maintain the Custodial Trademarks shall be
paid for as may be agreed to by Heinz and Weight Watchers. The costs to
transfer and assign the Formation Trademarks to the Company in accordance
with Section 3.01(a)(i), and to transfer and assign any Custodial
Trademarks to the Company at any time, shall be paid and borne entirely by
Heinz and shall not be subject to sharing with Weight Watchers.
() The parties agree that the foregoing estimated payments will be
reviewed by the Members and the Administrative Manager eighteen (18)
months following the Effective Date and yearly thereafter. If the Members
and the Administrative and/or Quality Control Managers are unable to agree
on their respecting compensation, the Administrative and/or Quality
Control Managers for the following year may resign at such time.
(v) If and to the extent any payment of costs to be made by Weight
Watchers in this Section 3.04 does not constitute full reimbursement of
the Company for the costs of the Company outlined in this Section 3.04,
then any such additional costs of the Company shall be paid by Heinz
during the first 5 years of this Agreement.
() For the years subsequent to the first five years after the Effective
Date, the maximum payment amounts of Weight Watchers stated in subparts (i) and
(ii) of Section 3.04(a) shall automatically increase each year by a percentage
equal to the increase or decrease in the U.S. consumer products index for the
previous twelve month period.
() The costs of any Food Trademark or Custodial Trademark enforcement
matter shall be borne by the Member requesting such enforcement. Enforcement
includes requiring the Company to initiate legal proceedings and any costs of
settlement. Where such enforcement is requested by both Members, such costs
shall be shared equally.
ARTICLE
19
BOOKS, RECORDS AND REPORTS
SECTION .0. Books and Records. The Company shall keep or cause to be kept
complete and accurate books of account and records with respect to the Company's
business. The Members and their duly authorized representatives shall have the
right to examine the Company's books, records and documents during normal
business hours. The Company, and the Managers on behalf of the Company, shall
not have the right to keep confidential from the Members any information that
the Managers would otherwise be permitted to keep confidential from the Members
pursuant to Section 18-305(c) of the Act. The Company's books of account shall
be kept using the method of accounting determined by the owners of a majority of
the ownership interests in the Company; in the absence of agreement by the
Members with respect thereto, the Managers shall decide based on the best
interests of the Company. Any Member may, at its own expense, cause an audit to
be conducted of the Company books and records by an independent public
accounting firm selected by it.
SECTION .0. Reports. () For each fiscal quarter and for each fiscal year, the
Administrative Manager shall cause to be prepared a report setting forth as of
the end of such fiscal quarter or such fiscal year, as the case may be:
() a balance sheet of the Company;
() an income statement of the Company; and
() a report of the affairs of the Company regarding its activities
and expenses in the preceding period, including registrations, renewals,
prosecution, enforcement, quality control and general administrative
matters.
() The Administrative Manager shall, after the end of each fiscal year,
which shall correspond to the fiscal calendar then employed by Weight Watchers,
cause the preparation of and shall transmit to the Members or their assignees
such tax information as may be reasonably necessary to enable the Members or
their assignees to prepare all federal, state and local income tax returns
relating to such fiscal year.
SECTION .0. Tax Matters. Weight Watchers shall be the "Tax Matters
Partner" under Internal Revenue Code Section 6231(a)(7). Weight Watchers shall
not take any action in respect of any tax matter, including making any election,
without the prior written consent of all Members. The Members shall cooperate
with each other with respect to any proposed assessment or other proceedings
brought by the Internal Revenue Service against the Company.
20
SECTION .0. Tax Returns and Other Elections. The Administrative Manager shall
cause the preparation and timely filing of all tax returns required to be filed
by the Company pursuant to the Internal Revenue Code and all other tax returns
deemed necessary and required in each jurisdiction in which the Company does
business. Copies of such returns, or pertinent information therefrom, shall be
furnished to the Members within a reasonable time after the end of the Company's
fiscal year. Any election permitted to be made by the Company under federal or
state laws shall be made only with the prior written consent of all Members.
ARTICLE
EXCULPATION AND INDEMNIFICATION
SECTION .0. Exculpation and Indemnification. () No Officer or Manager of the
Company (collectively, the "Covered Persons") shall be liable to the Company or
any other Person who has an interest in or claim against the Company for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Covered Person in good faith on behalf of the Company and in a
manner reasonably believed to be within the scope of the authority conferred on
such Covered Person by this LLC Agreement, except that such limitation shall not
limit the liability, if any, of a Covered Person to the Company or the Members
for any such loss, damage or claim to the extent incurred by reason of such
Covered Person's gross negligence or willful misconduct.
() To the fullest extent permitted by applicable law, the Company hereby
indemnifies each Covered Person for any loss, damage or claim incurred by such
Covered Person by reason of any act or omission performed or omitted by such
Covered Person in good faith on behalf of the Company and in a manner reasonably
believed to be within the scope of the authority conferred on such Covered
Person by this LLC Agreement, except that no Covered Person shall be indemnified
in respect of any loss, damage or claim incurred by such Covered Person by
reason of such Covered Person's gross negligence or willful misconduct with
respect to such acts or omissions.
() To the fullest extent permitted by applicable law, expenses (including
legal fees) incurred by a Covered Person defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by the Company prior to
the final disposition of such claim, demand, action, suit or proceeding upon
receipt by the Company of an undertaking by or on behalf of the Covered Person
to repay such amount if it shall be determined that the Covered Person is not
entitled to be indemnified as authorized in this Section 5.01.
21
() A Covered Person shall be fully protected in relying in good faith upon
the records of the Company and upon such information, opinions, reports or
statements presented to the Company by any Person as to matters the Covered
Person reasonably believes are within such other Person's professional or expert
competence and who, if selected by the Covered Person, has been selected with
reasonable care.
() To the extent that, at law or in equity, a Covered Person has duties
(including fiduciary duties) and liabilities relating thereto to the Company or
to the Members, a Covered Person acting under this LLC Agreement shall not be
liable to the Company or to the Members for its good faith reliance on the
provisions of this LLC Agreement or any approval or authorization granted by the
Company or the Members. To the extent that the provisions of this LLC Agreement
restrict the duties and liabilities of a Covered Person otherwise existing at
law or in equity, such provisions are agreed by the Members to replace such
other duties and liabilities of such Covered Person.
() The foregoing provisions of this Section 5.01 shall survive any
termination of this LLC Agreement.
ARTICLE
ALIENATION OF MEMBERSHIP INTEREST
SECTION .0. Assignments. Any Member can sell, assign or transfer its entire
membership interest, but not any partial interest therein, under this LLC
Agreement without the consent of any other Member (i) to an Affiliate or (ii) in
the event of a sale by the Member of substantially all of the assets to which
the Member's use of the Food Trademarks relates, provided that (x) the
Affiliate, buyer, assignee or transferee agrees in writing to be bound to all of
the terms of this LLC Agreement and (y) that the transferring Member's license
with the Company is simultaneously assigned to the Affiliate, buyer, assignee or
transferee of the transferring Member's interest. Except as specified in this
provision, no sale, assignment or transfer of all or any portion of a Member's
interest shall be made without the written consent of all other Members, and any
purported sale, transfer or assignment made in violation of this provision shall
be null and void. This LLC Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the Members and their respective
successors and assigns. For the avoidance of doubt, it is expressly understood
and agreed that a change in control of either party by means of an acquisition
of a controlling interest in the ownership of stock, or the issuance of a
majority of shares to the public, shall not, standing alone, constitute an event
requiring the other party's consent
22
pursuant to this provision.
SECTION .0. Resignation or Retirement. No Member may resign as Member, except by
transferring its membership interest in the Company pursuant to Section 6.01.
Neither the bankruptcy nor dissolution of a Member nor any other event or
circumstance referenced in Section 18-304 of the Act shall cause the Member to
cease to be a member of the Company.
SECTION .0. Admission of Additional Members. Except with the prior written
concurrence of the owners of one hundred percent (100%) of the membership
interests in the Company, no additional Members of the Company may be admitted
to the Company.
ARTICLE
DISSOLUTION
SECTION .0. Dissolution. () The Company shall not be dissolved, nor shall its
affairs be wound up, upon the occurrence of any of the retirement, resignation,
expulsion, bankruptcy or dissolution of any Member or the occurrence of any
other event that terminates the continued membership of any Member in the
Company, unless within 90 days following the occurrence of any such event, and
subject to Section 2.04(a), all of the Members agree in writing to dissolve the
Company (as contemplated in Section 18-801(b) of the Act).
() The Company shall be dissolved and its affairs shall be wound up upon
the entry of a decree of judicial dissolution under Section 18-802 of the Act.
() In the event of dissolution, the Company shall conduct only such
activities as are necessary to wind up its affairs (including the sale of the
assets of the Company in an orderly manner), and the assets of the Company shall
be applied in the manner, and in the order of priority, set forth in Section
18-804 of the Act.
() The Company shall terminate when (i) all of the assets of the Company,
after payment of or due provision for all debts, liabilities and obligations of
the Company shall have been distributed to the Members in the manner provided
for in this LLC Agreement and (ii) the Certificate of Formation shall have been
canceled in the manner required by the Act.
SECTION .0. Waiver of Partition; Nature of Interest. Except as otherwise
expressly provided in this LLC
23
Agreement, to the fullest extent permitted by law, the Members hereby
irrevocably waive any right or power that the Members might have to cause the
Company or any of its assets to be partitioned, to cause the appointment of a
receiver for all or any portion of the assets of the Company, to compel any sale
of all or any portion of the assets of the Company pursuant to any applicable
law or to file a complaint or to institute any proceeding at law or in equity to
cause the dissolution, liquidation, winding up or termination of the Company.
The Members shall not have any interest in any specific assets of the Company,
and the Members shall not have the status of a creditor with respect to any
distribution. The interest of the Members in the Company is personal property.
SECTION .0. Benefits of Agreement; No Third-party Rights. None of the provisions
of this LLC Agreement shall be for the benefit of or enforceable by any creditor
of the Company or by any creditor of the Members. Nothing in this LLC Agreement
shall be deemed to create any right in any Person not a party hereto, and this
LLC Agreement shall not be construed in any respect to be a contract in whole or
in part for the benefit of any such Person.
SECTION .0. Severability of Provisions. Each provision of this LLC Agreement
shall be considered severable and if for any reason any provision or provisions
herein are determined to be invalid, unenforceable or illegal under any existing
or future law, those portions of this LLC Agreement which are valid, enforceable
and legal shall remain in force and operation as among the parties and this LLC
Agreement shall be construed, so far as possible, in such a manner as would give
effect to the original intention of the parties in entering into the LLC
Agreement notwithstanding the invalidity, unenforceability or illegality of one
or more of its provisions.
SECTION .0. Entire Agreement. This LLC Agreement constitutes the entire
agreement of the Members and the Company with respect to the formation,
governance and conduct of the Company.
SECTION .0. Binding Agreement. Notwithstanding any other provision of this LLC
Agreement, the Members agree that this LLC Agreement constitutes a legal, valid
and binding agreement of the Members.
SECTION .0. Governing Law. This LLC Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to conflict
of laws principles of the State of Delaware or any other jurisdiction that would
call for the application of the substantive laws of any jurisdiction other than
the State of Delaware.
SECTION .0. Notices. Any notices required to be delivered hereunder shall be in
writing and personally delivered, mailed or sent by facsimile or other similar
form of rapid transmission, and shall be deemed
24
to have been duly given upon receipt (a) in the case of the Company, to the
Company at its address in Section 1.03; (b) in the case of the Members, to such
Member at its address in Section 1.06; and (c) in the case of either of the
foregoing, at such other address as may be designated by written notice to the
other party.
SECTION .0. Effectiveness. Pursuant to Section 18-201(d) of the Act, this LLC
Agreement shall be effective as of the time of the filing of the Certificate of
Formation in the Office of the Delaware Secretary of State on September 15,
1999.
SECTION .. Rules of Construction. Definitions in this LLC Agreement (including
Section 1.01) apply equally to both the singular and plural forms of the defined
terms. The words "include" and "including" shall be deemed to be followed by the
phrase "without limitation." The terms "herein," "hereof" and "hereunder" and
other words of similar import refer to this LLC Agreement as a whole and not to
any particular Section, paragraph or subdivision. The Section titles appear as a
matter of convenience only and shall not affect the interpretation of this LLC
Agreement. All Section, paragraph, clause, Exhibit or Schedule references not
attributed to a particular document shall be references to such parts of this
LLC Agreement.
SECTION .. Execution by Company. The parties hereto hereby acknowledge and agree
that the Company will become a party to this LLC Agreement by execution of a
copy hereof by the Administrative Manager on behalf of the Company and, in
connection therewith, the Company shall have the right to enforce the terms of
this LLC Agreement.
SECTION .. Counterparts. This LLC Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this LLC Agreement
and all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby,
have duly executed this Limited Liability Company Agreement as of September __,
1999.
X.X. XXXXX COMPANY
By:
Name: Xxxxxxxx X. Ring
Title: Vice President, Business Development
25
WEIGHT WATCHERS INTERNATIONAL, INC.
By:
Name: Xxxxxx X. Xxxxxxx
Title: Vice President, General Counsel
26
In accordance with Section 7.11 of this LLC Agreement, WW Foods, LLC
hereby executes this LLC Agreement for the purpose of becoming a party hereto
and agreeing to perform its obligations and duties hereunder and becoming
entitled to enjoy its rights and benefits hereunder.
WW Foods, LLC
By:
Name: Xxxx X. Xxxxxx
Title: Vice President
27
