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EXHIBIT 3.6
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ LLC
FIRST AMENDED AND RESTATED
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
This First Amended and Restated Limited Liability Company Operating
Agreement (the "Agreement"), effective as of the 13th day of April, 2000, is
entered into by and among the Persons identified as Members in Schedule A
annexed hereto, made a part hereof and hereby incorporated herein, each (for
such period of time as it shall remain a Member hereunder) referred to
individually as a "Member" and collectively as the "Members."
WHEREAS, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ LLC (the "LLC") has been formed pursuant to
the Delaware Limited Liability Company Act (the "Act") by the filing on November
5, 1999 of a Certificate of Formation (as such Certificate may be amended from
time to time, the "Certificate of Formation") in the office of the Secretary of
State of the State of Delaware;
WHEREAS, pursuant to an amendment to the Certificate of Formation filed in
the office of the Secretary of State of the State of Delaware on March 29, 2000,
the name of the LLC was changed to ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings LLC;
WHEREAS, pursuant to an amendment to the Certificate of Formation filed in
the office of the Secretary of State of the State of Delaware on April 12, 2000,
the name of the LLC was changed to ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ LLC;
WHEREAS, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ entered into that certain ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ LLC
Limited Liability Company Operating Agreement, effective as of November 5, 1999
(the "Original Agreement");
WHEREAS, the Members (including those Persons being admitted as Members
pursuant to the execution hereof) hereby wish to amend and restate the Original
Agreement in its entirety; and
WHEREAS, capitalized terms used herein, and not otherwise defined herein,
have the meanings ascribed to them in Appendix I annexed hereto, made a part
hereof and hereby incorporated herein;
NOW, THEREFORE, in consideration of the mutual covenants herein expressed,
the Original Agreement is hereby amended and restated in its entirety as
follows:
1. Principal Office; Registered Office and Registered Agent. The principal
office of the LLC shall initially be ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇, ▇▇ ▇▇▇▇▇. The
name and address of the registered agent of the LLC for service of process
pursuant to the Act shall initially be The Corporation Trust Company, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
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and the LLC's registered office in the State of Delaware shall be c/o The
Corporation Trust Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. The
Manager may, upon compliance with the applicable provisions of the Act, change
the LLC's principal office, its registered office or registered agent from time
to time, all as determined by the Manager.
2. Purpose. The LLC was formed for the purpose of engaging in any lawful act or
activity for which limited liability companies may be formed under the Act,
including, without limitation, serving as the e-commerce distribution channel of
Learning Express, Inc., a Massachusetts corporation ("LE Inc."), and engaging in
any and all activities necessary, advisable, convenient or incidental thereto.
The LLC shall have all the powers necessary or convenient to carry out the
purposes for which it is formed, including the powers granted by the Act. Except
as otherwise required by the Act or other applicable law, in connection
therewith, the Manager shall have the authority to (i) exercise all the powers
and privileges granted to an LLC by the Act or any other law or this Agreement,
together with any powers incidental thereto, so far as such powers are necessary
or convenient to the conduct, promotion or attainment of the business, trade,
purposes or activities of the LLC in the State of Delaware or in any other
jurisdiction in which the LLC shall conduct business and (ii) take any other
action not prohibited under the Act or other applicable law; and, except as
provided in Section 3(a) hereof, no Member acting in its capacity as a Member
shall have any authority, power or privilege to act on behalf of or to bind the
LLC.
3. Management.
(a) Designation and Removal of Manager. The sole manager (the "Manager")
of the LLC shall be ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings LLC, a Delaware limited
liability company. Additional Managers may be appointed by approval of a
Majority in Interest of the Members. If at any time there is no Manager, the
number of Managers may be determined and one or more Managers may be designated
by approval of a Majority in Interest of the Members. A Manager's status as a
Manager may be terminated at any time by approval of a Majority in Interest of
the Members. The Manager may resign from, retire from, abandon or otherwise
terminate its status as a Manager upon prior notice to the LLC.
(b) Transactions with Affiliates. The Manager may cause the LLC to enter
into one or more agreements, leases, contracts or other arrangements for the
furnishing to or by the LLC of goods, services or space with any Member, Manager
or an Affiliate thereof, and may pay compensation thereunder for such goods,
services or space, provided in each case the Manager has determined in good
faith that the terms of any such arrangements are in, or not opposed to, the
best interests of the LLC.
(c) Power of Manager to Bind the LLC. The signature of the Manager acting
alone on any agreement, contract, instrument or other document shall be
sufficient to bind the LLC in respect thereof and conclusively evidence the
authority of the Manager and the LLC with respect thereto, and no third party
need look to any other evidence or require joinder or consent of any other party
to bind the LLC or to evidence such authority.
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(d) Appointment of Officers and Other Agents. The Manager may appoint one
or more individuals as agents of the LLC with, in each case, such title and
duties and power and authority as the Manager shall determine from time to time,
and such agents may be referred to as officers of the LLC; provided, however,
that no such appointment by the Manager shall by itself cause the Manager to
cease to be a "manager" of the LLC within the meaning of the Act or this
Agreement or restrict the ability of the Manager to exercise the powers so
delegated. Unless the authority of the agent designated as the officer in
question is limited in the document appointing such officer or is otherwise
specified by the Manager, any officer so appointed shall have the same authority
to act for the LLC 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.
(e) Standard of Care for Manager. The Manager shall perform its duties
hereunder in good faith and with that degree of care that an ordinarily prudent
Person in a like position would use under similar circumstances. The Manager
shall be entitled to rely, in the performance of such duties, on information,
opinions, reports or statements, including financial statements, in each case
prepared by one or more agents or employees, counsel, public accountants or
other Persons employed by the LLC, as to matters that the Manager believes to be
within such Persons' special competence.
4. Capital Contributions; Capital Accounts; and Liability of Members.
(a) Capital of Members. The capital contributions that each Member has
made to the LLC on or before the date of this Agreement are set forth on
Schedule A, and the number of Shares owned by such Member is also set forth on
such Schedule A. The Manager shall amend Schedule A from time to time to
properly reflect any changes in the capital contributions made by, or the number
of Shares owned by, the Members.
(b) Additional Capital. No Member shall be obligated to contribute any
additional capital to the LLC.
(c) Capital Accounts. A separate capital account (each, a "Capital
Account") shall be established for each Member and shall be maintained in
accordance with applicable regulations ("Treasury Regulations") under the
Internal Revenue Code of 1986, as amended (the "Code").
(d) Liability of Members. The liability of a Member for the losses, debts
and obligations of the LLC shall be limited to its capital contributions
theretofore made to the LLC by such Member (or its predecessor in interest)
which have not been repaid to or withdrawn by such Member (or its predecessor in
interest) in accordance with the terms of this Agreement. No Member, in its
capacity as a Member, shall have any liability to restore any negative balance
in its Capital Account.
(e) Admission of Additional Members. Subject to any restrictions or other
applicable procedures imposed by this Agreement (including the Statement of
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Designations attached hereto as Appendix II), additional members may be admitted
to the LLC on such terms and conditions as may be specified by the Manager. In
connection with any such admission, including any admission due to a Transfer of
all or part of an interest under Section 8 hereof, Schedule A shall be amended
by the Manager to reflect the inclusion of the additional Member(s). The Manager
is hereby authorized to amend this Agreement, without the consent of any Member,
to provide for additional classes or groups of members of the LLC having such
relative rights, powers and duties as the Manager shall determine in its sole
discretion, including but not limited to rights, power and duties senior to
existing classes or groups of members.
5. Return of Contributions. No Member shall have the right to withdraw or to be
repaid any capital contributed by it or to receive any other payment in respect
of such Member's interest in the LLC, including without limitation as a result
of the withdrawal or resignation of such Member from the LLC, except as
specifically provided in this Agreement.
6. Distributions.
(a) Statement of Designations Incorporated by Reference. The Statement of
Designations attached hereto as Appendix II (the "Statement of Designations") is
incorporated herein by reference, and its provisions, including without
limitation its provisions regarding distributions with respect to Series A
Preferred Shares, constitute an integral part of this Agreement.
(b) Distributions. Except as otherwise provided in the Statement of
Designations with respect to distributions upon liquidation of the LLC, the
Manager may determine in its sole discretion to cause the LLC to make
distributions of net cash flow available for distribution, less expenses of the
LLC and reasonable reserves, all as determined by the Manager, among the Members
in accordance with the provisions of Section 4 of the Statement of Designations.
All distributions on liquidation of the LLC shall be made in accordance with the
provisions of Section 5 of the Statement of Designations.
(c) Distributions of Cash and Other Property. Except as the Manager may
otherwise determine, all distributions to Members shall be made in cash. If any
assets of the LLC are distributed in kind, such assets shall be distributed on
the basis of their fair market value as determined by the Manager. Any amounts
not distributed upon liquidation of the LLC pursuant to Section 6(b) hereof on
account of expenses and reserves shall serve to reduce the distributions made to
each Member pursuant to Section 6(b) hereof in a manner reasonably determined by
the Manager. Any such reserves as remain after payment of contingent liabilities
shall be distributed to the Members in the manner in which they served to reduce
the distributions thereto.
(d) Tax Distributions. The Manager shall, to the extent of the cash then
available to the LLC, make a distribution (a "Tax Distribution") to the Members
entitled thereto not later than the date specified below. The LLC shall
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make a Tax Distribution prior to the tenth day of April, June, September and
January of each fiscal year in an amount equal to one quarter (1/4) of the
Members' Estimated Tax Liability. For purposes of this Section 6(d), the
"Members' Estimated Tax Liability" means the product of (i) the taxable income
of the LLC for the then current fiscal year (except that the January
distribution shall be for the previous calendar quarter), as projected from time
to time in good faith by the Manager multiplied by (ii) the Tax Distribution
Rate, which amount shall be distributed among the Members pro rata in proportion
to their respective estimated allocable shares of such taxable income for such
year, as so projected; provided, however, that the Tax Distribution payable to
the Members for a fiscal year (or portion thereof) shall be reduced to reflect
net losses and deductions (i.e., the excess of losses and deductions over income
and gains) and credits allocated by the LLC to the Members generally for federal
income tax purposes in any and all earlier periods (except to the extent
previously applied to reduce a Tax Distribution or to the extent the
carryforward period for such losses or credits has expired). For purposes of
this Section 6(d), the "Tax Distribution Rate" shall initially mean 45% or such
other percentage as may be approved by the Manager from time to time as the
approximate highest current marginal combined federal and state income tax rate
applicable to an individual resident in Massachusetts (determined after giving
effect to the deduction (if allowable) of state income taxes for federal income
tax purposes). All amounts distributed to Members pursuant to this Section 6(d)
shall be advances of amounts otherwise distributable to Members under the
provisions of Section 6 hereof.
(e) Withholding of Taxes. Each Member hereby authorizes the LLC to
withhold and pay over any withholding or other taxes payable by the LLC as a
result of such Member's status as a Member. Such Member shall be deemed for all
purposes of this Agreement to have received a distribution from the LLC in the
amount and as of the time each such withholding is paid by the LLC.
7. Allocations and Certain Tax Matters.
(a) Allocations of Income, Gain, Deduction and Loss. All items of income,
gain, deduction and loss of the LLC as determined for federal income tax
purposes shall be allocated among the Members, and shall be credited or debited
to their respective Capital Accounts in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv), so as to ensure to the maximum extent possible that
such allocations satisfy the economic effect equivalence test of Treasury
Regulation Section 1.704-1(b)(2)(ii)(i). In accordance therewith, all items that
can have economic effect shall be allocated in such a manner that the balance of
each Member's Capital Account at the end of any taxable year of the LLC
(increased by the sum of (1) such Member's "share of partnership minimum gain"
as defined in Treasury Regulation Section 1.704-2(g)(1) plus (2) such Member's
"share of partner nonrecourse debt minimum gain" as defined in Treasury
Regulation Section 1.704-2(i)(5)) would be positive in the amount of cash that
such Member would receive if the LLC sold all of its assets for an amount of
cash equal to the book value (as determined pursuant Treasury Regulation Section
1.704-1(b)(2)(iv)(g)) of such assets
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(reduced, but not below zero, by the amount of nonrecourse debt to which such
property is subject) and all of the cash of the LLC remaining after payment of
all liabilities (other than nonrecourse liabilities) of the LLC were distributed
in liquidation of the LLC immediately following the end of such taxable year
pursuant to Section 6(b) hereof. All items of income, gain, deduction and loss
that cannot have economic effect (including nonrecourse deductions) shall be
allocated in accordance with the Members' interests in the LLC, which, unless
otherwise required by Code Section 704(b) and the Treasury Regulations
thereunder, shall be in proportion to the number of Common Shares held by each
Member (treating all Series A Preferred Shares as having been converted into
Common Shares for purposes of this calculation).
(b) Tax Allocations. Items of income, gain, deduction and loss for
purposes of determining the Members' Capital Accounts (that is, for "book
purposes") shall be determined in accordance with the same principles as such
items are determined for reporting such items on the LLC's federal income tax
return. All items of income, gain, deduction, loss or credit for tax purposes
shall be determined in accordance with the Code and, except to the extent
otherwise required by the Code, allocated to and among the Members in the same
percentages in which the Members share in such items for book purposes.
Notwithstanding the foregoing, if the book value of property differs from its
tax basis, then for the purposes of this Agreement, all determinations of
income, gain, deduction and loss for tax purposes shall be determined with
respect to such book value in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv)(g).
(c) Certain Allocations with Respect to Contributed Property. In
accordance with Code Section 704(c) and the Treasury Regulations thereunder,
items of depreciation, amortization, gain, loss, and deduction with respect to
any property contributed to the capital of the LLC 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 LLC for federal income tax
purposes and its initial book value, such allocation to be made by the Manager
in accordance with the so-called "traditional method with curative allocations
solely in the case of a sale of property" as provided under Treasury Regulation
Section 1.704-3(c)(iii)(B).
(d) Tax Elections. Any elections or other decisions relating to
allocations of income, gain, deduction, loss or credit hereunder or any other
tax elections (including elections under Code Section 754) that must be made at
the LLC level (as opposed to by the LLC's Members) shall be made (or not made)
by the Manager in its sole discretion.
(e) Shares Held During Portion of Taxable Year. For purposes of
determining the income, gain, loss, deduction or credit, or any other items
allocable to any period, such items shall be determined on a daily, monthly, or
other basis, as determined by the Manager using any permissible method under
Code Section 706 and the Treasury Regulations thereunder.
(f) Consistent Reporting. The Members are aware of the income tax
consequences of the allocations made by this Section 7 and hereby agree to be
bound by
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the provisions of this Section 7 in reporting their distributive shares of LLC
income and loss for income tax purposes.
8. Restrictions on Transfers of Shares.
(a) Restrictions in General. No Member may Transfer such Member's interest
in the LLC or any part thereof, or in all or any part of the assets of the LLC,
and no Member may withdraw from, resign from, retire from, abandon or otherwise
terminate its status as a Member, without the prior written consent of the
Manager. Notwithstanding anything to the contrary herein, no Member shall
transfer its interest in the LLC to the extent that such transfer would violate
the Securities Act of 1933, as amended, or any other federal or state securities
or blue sky laws.
(b) Issuance of Shares. During the term of this Agreement, the LLC shall
not issue any Shares to any Person (other than a Person which is already a
Member hereunder) unless such Person agrees in writing to be bound by all of the
provisions of this Agreement.
(c) Market Stand-Off Agreement. No Member shall sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any interest in or other securities of the LLC or any successor-in-interest held
by such Member or, as the case may be, the respective successors, successors in
title, heirs and assigns of each such Member, for a period of time specified by
a managing underwriter (not to exceed one hundred eighty (180) days in the case
of any initial public offering and not to exceed ninety (90) days) in the case
of any subsequent public offering) following the effective date of a
registration statement of the LLC or any successor-in-interest filed under the
Securities Act with respect to a firm commitment underwritten public offering.
Each Member agrees to execute and deliver such other agreements as may be
reasonably requested by the LLC or any successor-in-interest and/or the managing
underwriter which are consistent with the foregoing or which are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the LLC
or any successor-in-interest may impose stop-transfer instructions with respect
to the Shares until the end of such period.
9. Priorities. No Member shall have any rights or priority over any other
Members as to contributions or as to distributions or compensation by way of
income, except as specifically provided in this Agreement (including the
Statement of Designations).
10. Term; Dissolution of the LLC.
(a) Term. The term of the LLC shall be perpetual, unless sooner terminated
as hereinafter provided.
(b) Events of Dissolution or Liquidation. The LLC shall be dissolved upon
the happening of any of the following events:
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(1) the consent of the Manager;
(2) the sale of all or substantially all of the assets of the LLC;
or
(3) the entry of a decree of judicial dissolution under the Act.
Following any of the foregoing events, the Manager shall proceed diligently to
liquidate the assets of the LLC in a manner consistent with commercially
reasonable business practices.
(c) Distributions upon Liquidation. In connection with the liquidation of
the LLC, the assets of the LLC shall be applied and distributed in the following
order of priority:
(1) to creditors of the LLC, including Members, in the order of
priority provided by law, and the creation of a reserve of cash or other
assets of the LLC for contingent liabilities in an amount, if any,
determined by the Manager to be appropriate for such purposes; and
(2) to the Members in accordance with the provisions of Section 6.
11. Financial and Accounting Matters.
(a) Books and Records. The Manager shall keep or cause to be kept complete
and accurate books and records of the LLC, using the same methods of accounting
that are used in preparing the federal income tax returns of the LLC to the
extent applicable and otherwise in accordance with generally accepted accounting
principles consistently applied. Such books and records shall be maintained and
available, in addition to any documents and information required to be furnished
to the Members under the Act, at the principal business office of the LLC for
examination and copying by any Member or Manager, or its duly authorized
representative, at its reasonable request and at its expense during ordinary
business hours. A current list of the full name and last known address of each
Member and Manager, a copy of this Agreement, any amendments thereto and the
Certificate of Formation, executed copies of all powers of attorney, if any,
pursuant to which this Agreement, any amendment, or the Certificate of Formation
has been executed, copies of the LLC's financial statements and federal, state
and local income tax returns and reports, if any, for each of the last 6 fiscal
years, shall be maintained at the principal business office of the LLC along
with such other information, if any, as may be required to be made available to
Members pursuant to Section 18-305 of the Act. On or before the due date
(including extensions) of the federal income tax return of the LLC for each
fiscal year of the LLC, each Member shall be furnished with copies of the LLC's
federal income tax return for the fiscal year then ended and any other tax
information reasonably required for state or local tax purposes.
(b) Bank Accounts. Bank accounts and/or other accounts of the LLC shall be
maintained in such banking and/or other financial institution(s) as shall be
selected by the
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Manager, and withdrawals shall be made and other activity conducted on such
signature or signatures as shall be designated by the Manager.
(c) Fiscal Year. Except as otherwise required by the Code, the fiscal year
(and taxable year) of the LLC shall end on December 31 of each year.
(d) Tax Matters Partner. ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings LLC shall be the
"tax matters partner" of the LLC for purposes of the Code, until its bankruptcy,
insolvency, resignation or the designation of its successor, whichever occurs
sooner. Any subsequent "tax matters partner" shall be designated from time to
time by the Manager.
12. Indemnity; Other Business.
(a) Indemnity. Each Member, the Manager and any other entity or individual
authorized to act on behalf of the LLC shall be entitled to indemnity from the
LLC for any liability incurred and/or for any act performed within the scope of
the authority conferred, and/or for any act omitted to be performed, which
indemnification shall include all reasonable expenses incurred, including
reasonable legal and other professional fees and expenses; provided, however,
that such Person acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the LLC.
(b) Outside Interests. The Members, the Manager, and any Affiliates of any
of them may engage in and possess interests in other business ventures and
investment opportunities of every kind and description, independently or with
others, including serving as manager and general partner of other limited
liability companies and partnerships; provided, however, that no such other
business venture or investment opportunity shall be in direct competition with
the business and activities of the LLC, except for activities required or
permitted under franchisee agreements. Neither the LLC nor any other Member or
Manager shall have any rights in or to such ventures or opportunities or the
income or profits therefrom.
13. Miscellaneous.
(a) Binding Effect. Subject to the restrictions on Transfers set forth
herein, the terms of this Agreement shall be binding upon and shall inure to the
benefit of the Members, their respective successors, successors-in-title, heirs
and assigns; and each and every successor-in-interest to any Member, whether
such successor acquires a Share by way of inheritance, gift, purchase,
foreclosure or any other method, shall hold such Share subject to all of the
terms and provisions of this Agreement. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any Person not a party hereto who
is a creditor of the LLC (including any Member acting in its capacity as a
creditor of the LLC), or any creditor of any Member.
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(b) Amendment. No change, modification or amendment of this Agreement
shall be valid or binding unless such change, modification or amendment is made
with the consent of a Majority in Interest of the Members.
(c) Conversion to Corporation. Each Member hereby acknowledges and agrees
that, unless determined otherwise by the Manager, effective upon determination
of the Manager in connection with completion of an initial public offering of
securities by the LLC or one of its Affiliates, the LLC will be converted,
through a merger, exchange of securities or otherwise, without further consent
or agreement of any Member, into a corporation and that each membership interest
will be converted into shares of capital stock of such corporation having
substantially similar preferences, rights, qualifications and restrictions as
pertain to such membership interest immediately prior to such conversion.
(d) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and interpreted and enforced in
accordance with the laws of the State of Delaware, notwithstanding any choice of
law rules to the contrary.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the Members notwithstanding that all Members have not
signed the same counterpart.
(f) Notices. Any and all notices under this Agreement shall be effective
(i) on the fifth business day after being sent by registered or certified mail,
return receipt requested, postage prepaid, or (ii) on the first business day
after being sent by express mail, telecopy, or commercial expedited delivery
service providing a receipt for delivery. All such notices in order to be
effective shall be addressed, if to the LLC at its registered office under the
Act, if to a Member at the last address of record on the LLC's books, and copies
of such notices shall also be sent to the last address for the recipient which
is known to the sender, if different from the address so specified. Copies of
such notices shall also be sent to Goulston & Storrs, P.C., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire.
(g) Interpretation. As used herein, the singular shall include the plural
and the masculine gender shall include the feminine and neuter, and vice-versa,
unless the context otherwise requires.
(h) Entire Agreement. This Agreement, including all Schedules and
Appendices attached hereto and the Certificate of Formation, which are hereby
incorporated herein, embodies the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.
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(i) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of this
Agreement shall be interpreted as if such provision were so excluded, and (c)
the balance of this Agreement shall be enforceable in accordance with its terms.
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IN WITNESS WHEREOF, the Manager and Members have executed this Agreement
as of the date first above written.
MANAGER:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ HOLDINGS LLC
/s/
By: _____________________
Its Manager
MEMBERS:
COMMON MEMBERS:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ HOLDINGS LLC
/s/
By: _____________________
Its Manager
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ INCENTIVE PLAN LLC
By: ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ HOLDINGS LLC
Its Manager
/s/
By: ______________________
Its Manager
SERIES A MEMBER:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ HOLDINGS LLC
/s/
By: _____________________
Its Manager
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SCHEDULE A
TO
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ LLC
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MEMBER CAPITAL CLASS OF SHARES NUMBER OF
CONTRIBUTION SHARES
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▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ $ 0 Common 2,622,000
Holdings LLC
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▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ $ 0 Common 2,000,000
Incentive Plan LLC
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▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ $1,049,999.00 Series A Preferred 2,150,000
Holdings LLC
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TOTAL $1,049,999.00 FULLY DILUTED 6,772,000
COMMON SHARES
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APPENDIX I
DEFINED TERMS
The following capitalized terms shall have the meanings specified in this
Appendix I. Other capitalized terms are defined in the Statement of Designations
attached hereto as Appendix II, and those terms shall have the meanings
respectively ascribed to them.
"Act" shall have the meaning set forth in the first recital to this
Agreement.
"Affiliate" means, with respect to a specified Person, any other Person
that directly or indirectly controls, is under common control with, or is
controlled by the specified Person. As used herein, the term "control" means the
possession by a Person, directly or indirectly, of the power to direct or cause
the direction of the management and policies of another Person, whether through
ownership of voting securities, by contract or otherwise.
"Agreement" shall have the meaning set forth in the Preamble to this
Agreement.
"Capital Account" shall have the meaning set forth in Section 4(c).
"Certificate of Formation" shall have the meaning set forth in the first
recital to this Agreement.
"Code" shall have the meaning set forth in Section 4(c).
"Common Member" means any holder of Common Shares who is not a Series A
Member.
"Common Shares" means the Shares in the LLC other than Series A Preferred
Shares.
"LE Inc." shall have the meaning set forth in Section 2.
"LLC" shall have the meaning set forth in the first recital to this
Agreement.
"Majority in Interest" means, with respect to any Member Group (or all
Members when voting collectively as a single group), more than fifty percent
(50%) of the number of Common Shares owned by all Members of such Member Group
(or such combined Member Groups) in the aggregate. For purposes of this
definition, the Series A Member shall be deemed to own the number of Common
Shares into which its Series A Preferred Shares are convertible, and the number
of the Series A Member' Series A Preferred Shares shall be disregarded.
"Manager" shall have the meaning set forth in Section 3(a).
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"Member" and "Members" shall have the meanings set forth in the Preamble
to this Agreement.
"Member Group" means a group of Members consisting solely of the Common
Members collectively.
"Members' Estimated Tax Liability" shall have the meaning set forth in
Section 6(d).
"Original Agreement" shall have the meaning set forth in the fourth
recital to this Agreement.
"Person" means any natural person or any general partnership, limited
partnership, limited liability partnership, corporation, joint venture, trust,
business trust, cooperative, association, or limited liability company, and
shall include the heirs, executors, administrators, legal representatives,
successors and assigns of such Person where the context so admits.
"Series A Member" means ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings LLC and its
successors and assigns. ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Holdings LLC shall retain its status
as such regardless of the conversion of all or any portion of their Series A
Preferred Shares into Common Shares.
"Series A Preferred Shares" means the Series A Convertible Preferred
Shares, having the rights, limitations and preferences established by the
Statement of Designations.
"Shares" means all units of membership interest in the LLC held by each
Member, whether now owned or hereafter acquired. The term "Shares" includes,
collectively, Common Shares and Series A Preferred Shares.
"Statement of Designations" shall have the meaning set forth in Section
6(a).
"Tax Distribution" shall have the meaning set forth in Section 6(d).
"Tax Distribution Rate" shall have the meaning set forth in Section 6(d).
"Transfer" means, when used as a noun, any disposition of Shares or any
interest therein, for value or otherwise, including, without limitation, any
sale, gift, bequest, assignment, pledge or encumbrance, and whether effected by
contract, by operation of law or otherwise. "Transfer," when used as a verb,
shall have a correlative meaning.
"Treasury Regulations" shall have the meaning set forth in Section 4(c).
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APPENDIX II
STATEMENT OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF COMMON SHARES AND SERIES A CONVERTIBLE PREFERRED SHARES OF
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ LLC
This Statement of Designations (the "Statement of Designations")
constitutes an integral part of the Limited Liability Company Operating
Agreement (the "Operating Agreement"), effective as of the ___ day of
_______________, 2000, by and among the Persons listed as Members on Schedule A
of the Operating Agreement, and any other Person who may be admitted as a Member
pursuant to Section 4(e) thereof, for all purposes as if the Statement of
Designations had been contained in the main section thereof rather than attached
thereto as an Appendix. The following is a statement of the designation and the
preferences, rights, qualifications and restrictions relating to the Common
Shares and the Series A Convertible Preferred Shares:
1. Definitions. All capitalized terms used in this Statement of
Designations, and not otherwise defined herein, shall have the meanings ascribed
to them below. Other capitalized terms shall have the same meanings ascribed to
them in the Operating Agreement. Section references used herein are to Sections
of this Statement of Designations (unless otherwise specified).
(a) "Convertible Securities" shall mean any evidences of
indebtedness, Shares or other securities directly or indirectly convertible into
or exchangeable for Common Shares.
(b) "Conversion Price" shall have the meaning set forth in Section
7(a) hereof.
(c) "Conversion Rights" shall have the meaning set forth in Section
7(a) hereof.
(d) "Equity Securities" means any Share or other similar security of
the LLC, including, without limitation, securities containing equity features
and securities containing profit participation features, and any debt or equity
security convertible or exchangeable, with or without consideration, into or for
any Share or similar security, or any security carrying any warrant, option or
right to subscribe for or to purchase any of the foregoing.
(e) "Mandatory Conversion Date" shall have the meaning set forth in
Section 7(c)(ii) hereof.
(f) "Original Issue Date" shall mean the date on which the first
Series A Preferred Share is originally issued.
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(g) "Public Offering" shall mean an underwritten public offering of
Common Shares of the LLC (or common stock of any successor corporation to the
LLC), subsequent to which the Common Shares of the LLC (or shares of its common
stock) are listed on a national securities exchange or on the Nasdaq System
pursuant to an effective registration statement under the Securities Act of
1933, as amended, or any successor federal statute thereto.
(h) "Security" means Common Shares, Series A Preferred Shares and
any other securities of any type whatsoever convertible or exchangeable for
Equity Securities.
(i) "Series A Liquidation Value" shall have the meaning set forth in
Section 5(a) hereof.
2. Designation. The series of Shares designated hereunder shall be (a) the
"Common Shares" and (b) the "Series A Convertible Preferred Shares."
3. Authorized Number. The number of Common Shares shall be 5,000,000. The
number of Series A Preferred Shares shall be 3,000,000.
4. Distributions.
All distributions made by the LLC with respect to Shares (other than
distributions in liquidation governed by Section 5 hereof) shall be made to all
Members in proportion to the number of Common Shares held by each Member. For
purposes of this Section 4, all Series A Preferred Shares will be deemed to have
been converted into Common Shares.
For purposes of this Section 4, unless the context requires otherwise,
"distribution" shall mean the transfer of cash or property without
consideration, whether by way of distribution or otherwise, payable other than
in Common Shares or other securities of the LLC, or the purchase or redemption
of Shares of the LLC for cash or property, including any such transfer, purchase
or redemption by an Affiliate of the LLC.
5. Liquidation, Dissolution or Winding Up.
(a) Series A Member. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the LLC, the Series A Member shall be
entitled to be paid out of the assets of the LLC available for distribution to
its Members before any payment shall be made to the Common Members, or owners of
any other class or series of Shares, by reason of their ownership thereof, an
amount equal to the greater of (i) $1.75 per Series A Preferred Share (subject
to appropriate adjustment in the event of any Share distribution, Share split,
combination or other similar recapitalization affecting such Shares) (the
"Series A Liquidation Value"), together with an amount equal to an annual
cumulative distribution of 8%, compounded annually, of the Series A Liquidation
Value, calculated from the Original Issue Date to the date of such distribution,
or (ii)
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such amount per Share as would have been payable to the Series A Member had such
Series A Preferred Shares (and any other outstanding Convertible Securities)
been converted into Common Shares pursuant to Section 7 hereof immediately prior
to such liquidation, dissolution or winding up. If upon any such liquidation,
dissolution or winding up of the LLC, the remaining assets of the LLC available
for distribution to its Members shall be insufficient to pay the Series A Member
the full amount to which it shall be entitled under clause (i) above, the Series
A Member and Members owning any class or series of Shares ranking on liquidation
on a parity with the Series A Preferred Shares shall share ratably in any
distribution of the remaining assets and funds of the LLC in proportion to the
respective amounts that would otherwise be distributable in respect of the
Shares held by them upon such distribution if all amounts distributable on or
with respect to such Shares were paid in full.
(b) Conversion to Corporation Not Treated as Liquidation. For
purposes of this Section 5, the conversion of the LLC into a corporation
pursuant to Section 13(c) of the Operating Agreement shall not be treated as a
dissolution and liquidation of the LLC.
6. Voting. Except as otherwise provided herein or by law, with respect to
any matter requiring a vote of the Members, each Common Share shall entitle its
owner to cast one vote, and each Series A Preferred Share shall entitle its
owner to cast, with respect to each such matter, a number of votes equal to the
number of whole Common Shares into which such Share shall then be convertible.
7. Conversion of Series A Preferred Shares into Common Shares. The Series
A Member shall have conversion rights, and shall be subject to mandatory
conversion, as follows:
(a) Right to Convert. Each Series A Preferred Share shall be
convertible, at the option of the Series A Member, and without the payment of
additional consideration by such Member, into such number of Common Shares as is
determined by dividing (i) the Series A Liquidation Value by (ii) the Conversion
Price (as defined below) in effect at the time of conversion. The "Conversion
Price" shall initially be $1.75 per Series A Preferred Share. Such initial
Conversion Price, and the rate at which Series A Preferred Shares may be
converted into Common Shares, shall be subject to adjustment as provided below.
In the event of the liquidation of the LLC or any redemption of
Series A Preferred Shares, the rights of the Series A Member to convert such
Shares as provided in this Section 7 (the "Conversion Rights") shall terminate
at the close of business on (i) the third full business day preceding the date
fixed for the payment of any amounts distributable on liquidation or redemption
to the Series A Member or (ii) any earlier Mandatory Conversion Date.
(b) Automatic Conversion. Each Series A Preferred Share shall,
without any action required on the part of the Series A Member, automatically be
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converted into such number of Common Shares as is determined by dividing (i) the
Series A Liquidation Value by (ii) the Conversion Price in effect at the time of
conversion, upon the occurrence of a Public Offering. Upon such occurrence, any
Member entitled to receive the Common Shares issuable upon conversion of the
Series A Preferred Shares shall not be deemed to have converted such Series A
Preferred Shares until immediately prior to the closing of such Public Offering.
(c) Mechanics of Conversion.
(i) Before the Series A Member shall be entitled to receive Common
Shares issuable upon conversion of Series A Preferred Shares pursuant to Section
7(a) hereof, it shall give written notice to the LLC that it elects to convert
the same and shall state therein its name or the name or names of its nominees
in which it wishes the Common Shares to be issued. The Board of Managers shall,
as soon as practicable after receipt of such notice by the LLC or after a
conversion pursuant to Section 7(b) hereof, amend Schedule A of the Operating
Agreement accordingly.
(ii) Voluntary conversions pursuant to Section 7(a) hereof shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the Series A Preferred Shares, and the Person or Persons
entitled to receive the Common Shares issuable upon conversion shall be treated
for all purposes as the record owner or owners of such Common Shares on such
date. Automatic conversions pursuant to Section 7(b) hereof shall be deemed to
have been made on the date (the "Mandatory Conversion Date") and at the time
specified in Section 7(b) hereof and the Person or Persons entitled to receive
the Common Shares issuable upon conversion shall be treated for all purposes as
the record owner or owners of such Common Shares on such date and at such time.
(d) Adjustment for Share Splits and Combinations. If the LLC shall
at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Shares, the Conversion Price then in
effect with respect to the Series A Preferred Shares immediately before that
subdivision shall be proportionately decreased. If the LLC shall at any time or
from time to time after the Original Issue Date combine the outstanding Common
Shares, the Conversion Price with respect to the Series A Preferred Shares then
in effect immediately before the combination shall be proportionately increased.
Any adjustment under this Section 7(d) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(e) Adjustment for Certain Distributions. In the event the LLC at
any time or from time to time after the Original Issue Date shall make or issue,
or fix a record date for the determination of Common Members entitled to
receive, a distribution payable in additional Common Shares, then and in each
such event the Conversion Price for the Series A Preferred Shares then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date, by multiplying the Conversion Price then in effect by a fraction:
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(1) the numerator of which shall be the total number of Common
Shares issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of
Common Shares issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date plus
the number of Common Shares issuable in payment of such
distribution;
provided, however, if such record date shall have been fixed and such
distribution is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Conversion Price for the Series A Preferred Shares
shall be recomputed accordingly as of the close of business on such record date,
and thereafter the Conversion Price for the Series A Preferred Shares shall be
adjusted pursuant to this Section 7(e) as of the time of actual payment of such
distributions; and provided further, however, that no such adjustment shall be
made if the Series A Member simultaneously receives a distribution of Common
Shares in a number equal to the number of Common Shares it would have received
if all outstanding Series A Preferred Shares had been converted into Common
Shares on the date of such event.
(f) Adjustments for Other Distributions. In the event the LLC at any
time or from time to time after the Original Issue Date of the Series A
Preferred Shares shall make or issue, or fix a record date for the determination
of Common Members entitled to receive, a distribution payable in Securities of
the LLC other than Common Shares, then, and in each such event, provision shall
be made so that the Series A Member shall receive upon conversion thereof in
addition to the number of Common Shares receivable thereupon, the amount of
Securities of the LLC that it would have received had the Series A Preferred
Shares been converted into Common Shares on the date of such event and had they
thereafter, during the period from the date of such event to and including the
conversion date, retained such Securities receivable by it as aforesaid during
such period, giving application to all adjustments called for during such period
under this Section 7(f) with respect to the rights of the Series A Member; and
provided further, however, that no such adjustment shall be made if the Series A
Member simultaneously receives a distribution of such Securities in an amount
equal to the amount of such securities it would have received if all outstanding
Series A Preferred Shares had been converted into Common Shares on the date of
such event.
(g) Adjustment for Reclassification, Exchange or Substitution. If
the Common Shares shall be changed into the same or a different number of Shares
of any class or classes of Shares, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
Shares or distribution of Shares provided for above, or a reorganization,
merger, consolidation, or sale of assets provided for below), then, and in each
such event, the Series A Member shall have the right thereafter to convert such
Common Shares into the kind and amount of Shares and other securities and
property receivable upon such reorganization, reclassification, or other change,
as would
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be received by owners of the number of Common Shares into which such Series A
Preferred Shares might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further adjustment
as provided herein.
(h) Adjustment for Merger or Reorganization, Etc. In case of any
consolidation or merger of the LLC with or into another entity or the sale of
all or substantially all of the assets of the LLC to another entity, each Series
A Preferred Share shall thereafter be convertible (or shall be converted into a
security which shall be convertible) into the kind and amount of Shares or other
securities or property to which an owner of the number of Common Shares
deliverable upon conversion of such Series A Preferred Share would have been
entitled upon such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Manager) shall be made in the
application of the provisions set forth in this Section 7 with respect to the
rights and interest thereafter of the Series A Member, to the end that the
provisions set forth in this Section 7 (including provisions with respect to
changes in and other adjustments of the Conversion Price applicable to such
Series A Preferred Shares) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any Shares or other property thereafter
deliverable upon the conversion of the Series A Preferred Shares.
(i) No Impairment. The LLC will not, by amendment of its Certificate
of Formation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of Securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the LLC, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 7 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the Series A Member against impairment.
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price applicable to any Series A
Preferred Shares pursuant to this Section 7, the LLC at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to the Series A Member a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The LLC shall, upon the written request at
any time of the Series A Member, furnish or cause to be furnished to such Member
a similar certificate setting forth (i) such adjustments and readjustments, (ii)
the Conversion Price applicable to the Series A Preferred Shares then in effect,
and (iii) the number of Common Shares and the amount, if any, of other property
which then would be received upon the conversion of a Series A Preferred Share.
(k) Notice of Record Date. In the event:
(i) that the LLC makes a distribution with respect to its Common
Shares payable in Common Shares or other Securities of the LLC;
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(ii) that the LLC subdivides or combines its outstanding Common
Shares;
(iii) of any reclassification of the Common Shares of the LLC (other
than a subdivision or combination of its outstanding Common Shares
or a distribution of Shares with respect to Common Shares), or of
any consolidation or merger of the LLC into or with another entity,
or of the sale of all or substantially all of the assets of the LLC;
or
(iv) of the involuntary or voluntary dissolution, liquidation or
winding up of the LLC;
then the LLC shall cause to be filed at its principal office or at the office of
the transfer agent of Series A Preferred Shares, and shall cause to be mailed to
the Members at their last known addresses as shown on the records of the LLC or
such transfer agent, at least ten days prior to the date specified in (1) below
or twenty days before the date specified in (2) below, a notice stating:
(1) the record date of such distribution, subdivision or
combination, or, if a record is not to be taken, the date as of which the
Common Members of record to be entitled to such distribution, subdivision
or combination are to be determined, or
(2) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that Common Members of
record shall be entitled to exchange their Common Shares for securities or
other property deliverable upon such reclassification, consolidation,
merger, sale, dissolution or winding up.
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