AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF FRANKLIN COVEY COACHING, L. L. C.
Exhibit 10.12
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXXXX XXXXX COACHING, L. L. C.
TABLE OF CONTENTS
Page
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1. DEFINITIONS..............................................................................................1
1.1. Adjusted Capital Account Deficit.................................................................1
1.2. Affiliate........................................................................................2
1.3. Agreement........................................................................................2
1.4. AMS..............................................................................................2
1.5. Auditors.........................................................................................2
1.6. Bankrupt.........................................................................................2
1.7. Bankruptcy Code..................................................................................2
1.8. Business.........................................................................................2
1.9. Capital Account..................................................................................2
1.10. Capital Call.....................................................................................3
1.11. Cash Flow........................................................................................3
1.12. Certificate......................................................................................3
1.13. Class A Member...................................................................................3
1.14. Class A Interests................................................................................3
1.15. Class B Member...................................................................................3
1.16. Class B Interests................................................................................3
1.17. Code.............................................................................................3
1.18. Communication....................................................................................3
1.19. Company..........................................................................................3
1.20. Company Act......................................................................................3
1.21. Company's Office.................................................................................3
1.22. Confidential Information.........................................................................3
1.23. Control..........................................................................................3
1.24. Deemed Delivery..................................................................................4
1.25. Effective Date...................................................................................4
1.26. Excepted Transfer................................................................................4
1.27. Fiscal Year......................................................................................4
1.28. Xxxxxxxx Xxxxx...................................................................................4
1.29. Xxxxxxxx Xxxxx Programs..........................................................................4
1.30. Xxxxxxxx Xxxxx Program Income....................................................................4
1.31. Xxxxxxxx Xxxxx Program Share.....................................................................4
1.32. Gross Asset Value................................................................................4
1.33. Management Board.................................................................................5
1.34. Manager..........................................................................................5
1.35. Member...........................................................................................5
1.36. Membership Interest..............................................................................5
1.37. Net Profits or Losses............................................................................5
1.38. Non-Contributing Member..........................................................................5
1.39. Officer..........................................................................................5
1.40. Operating Margin.................................................................................5
1.41. Organization Transactions........................................................................5
1.42. Percentage Interest..............................................................................6
1.43. Person...........................................................................................6
1.44. Profits..........................................................................................6
1.45. Regulations......................................................................................6
1.46. Securities Act...................................................................................6
1.47. Transfer.........................................................................................6
1.48. Unit.............................................................................................7
2. FORMATION, PURPOSES AND DURATION.........................................................................7
2.1. Formation and Name...............................................................................7
2.2. Purposes of the Company..........................................................................7
2.3. Scope of the Members' Authority..................................................................7
2.4. Principal Place of Business......................................................................7
2.5. Title to Company Properties......................................................................7
2.6. Term.............................................................................................8
2.7. Assumed Name Certificate.........................................................................8
2.8. Other Business Activities; Waive.................................................................8
3. CERTAIN MATTERS RELATING TO THE BUSINESS.................................................................8
3.1. Business Opportunities...........................................................................8
3.2. Noncompetition; Confidential Information.........................................................8
4. MEMBERSHIP INTERESTS, CAPITAL CONTRIBUTIONS AND DISTRIBUTIONS............................................9
4.1. Membership Interests.............................................................................9
4.2. Initial Capital Contribution....................................................................10
4.3. Capital Accounts................................................................................10
4.4. Limitation on Members' Liabilities..............................................................11
4.5. Distributions of Net Cash Flow..................................................................11
4.6. Time of Determination and Distribution of Distributable Cash....................................12
5. MANAGEMENT OF THE COMPANY...............................................................................12
5.1. Members; No Control of Business or Right to Act for Company.....................................12
5.2. The Management Board............................................................................12
5.3. Officers........................................................................................12
6. ACCOUNTING AND TAXES....................................................................................13
6.1. Books and Records...............................................................................13
6.2. Rights of Inspection............................................................................13
6.3. Bank Accounts...................................................................................13
6.4. Financial Statements............................................................................13
6.5. Other Accounting Decisions......................................................................13
6.6. Preparation of Tax Returns......................................................................13
6.7. Allocation of Profits, Gains and Losses.........................................................14
6.8. Tax Decisions Not Specified.....................................................................14
6.9. Notice of Tax Audit.............................................................................14
6.10. Tax Matters Partner.............................................................................14
7. SALE, TRANSFER AND REDEMPTION...........................................................................15
7.1. General.........................................................................................15
7.2. Securities Law Limitations......................................................................15
7.3. Agreement with Transferees......................................................................15
7.4. Automatic Redemption of Class B Interests.......................................................15
8. DISSOLUTION.............................................................................................15
8.1. Causes of Dissolution...........................................................................15
8.2. Procedure in Dissolution and Liquidation........................................................16
9. AMENDMENT...............................................................................................16
9.1. Amendment.......................................................................................16
10. DISPUTES................................................................................................17
10.1. Escalation......................................................................................17
10.2. Arbitration.....................................................................................17
11. GENERAL PROVISIONS......................................................................................18
11.1. Entire Agreement................................................................................18
11.2. Notices.........................................................................................18
11.3. Validity........................................................................................19
11.4. Attorneys' Fees.................................................................................19
11.5. Survival of Rights..............................................................................19
11.6. No Strict Construction..........................................................................19
11.7. Governing Law; Jurisdiction.....................................................................19
11.8. No Partition....................................................................................19
11.9. Waiver..........................................................................................19
11.10. Waiver of Notice................................................................................19
11.11. Remedies Not Exclusive..........................................................................20
11.12. Construction....................................................................................20
11.13. Incorporation by Reference......................................................................20
11.14. Counterparts....................................................................................20
11.15. Further Assurances..............................................................................20
11.16. No Broker's Fees................................................................................20
11.17. No Third Party Rights...........................................................................20
AMENDED AND RESTATED
LIMITED LIABILITY COMPANY AGREEMENT
OF
XXXXXXXX XXXXX COACHING, L.L.C.
This Amended and Restated Limited Liability Company Agreement (this “Agreement”) is made as of August 31, 2002 (the “Effective Date”) by and among those parties who, from time to time, execute this Agreement as members and are listed on attached Exhibit A. Such signatories to this Agreement are collectively called the “Members,” and each is sometimes individually called a “Member.”
Recitals
WHEREAS, AMS and Xxxxxxxx Xxxxx are parties to that certain Limited Liability Company Agreement of Xxxxxxxx Xxxxx Coaching, LLC, dated as of September 1, 2000 (the “Original Agreement”);
WHEREAS, a dispute has arisen concerning the calculation of Modified Fair Market Value (as defined in the Original Agreement) in connection with the anticipated exercise by AMS of its rights under Section 7.5 of the Original Agreement;
WHEREAS, in resolution of such dispute, AMS and Xxxxxxxx Xxxxx have mutually agreed that: (i) the Company shall issue to Xxxxxxxx Xxxxx a profits interest in the Company designated as the Class B Membership Interest pursuant to this Agreement, and that all other outstanding membership interests in the Company shall be reclassified as Class A Membership Interests, (ii) the Company shall not dissolve but instead shall continue in existence for all purposes, (iii) AMS and/or its assigns shall purchase Xxxxxxxx Xxxxx’x entire Class A Membership Interest, pursuant to a Membership Interest Purchase Agreement of even date herewith between AMS and Xxxxxxxx Xxxxx (the “Purchase Agreement”), and (iv) the Original Agreement shall be amended and restated in its entirety as set forth herein.
Agreement
NOW, THEREFORE, in consideration of the foregoing recital, each of which is hereby incorporated herein, and the mutual promises, terms and conditions contained herein, the receipt and sufficiency of which are hereby acknowledged, the Members hereby agree as follows:
1. DEFINITIONS
The following words, terms or phrases have the respective meanings set forth thereafter:
1.1. "Adjusted Capital Account Deficit" shall mean, with respect to any Member, the deficit balance, if any, in such Member's
Capital Account as of the end of any Fiscal Year after giving effect to the following adjustments: (i) credit to such Capital Account
the sum of (A) any amount which such Member is obligated to restore to such Capital Account pursuant to any provision of this
Agreement, plus (B) an amount equal to such Member's share of Partnership Minimum Gain as determined under Section 1.704-2(g)(1) of
the Regulations and such Member's share of Partner Nonrecourse Debt Minimum Gain as determined under Section 1.704-2(i)(5) of the
Regulations, plus (C) any amounts which such Member is deemed to be obligated to restore pursuant to Section 1.704-l(b)(2)(ii)(c) of
the Regulations; and (ii) debit to such Capital Account the items described in Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6) of the
Regulations.
The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith.
1.2. "Affiliate" shall mean, with respect to any Person, any Person Controlled by, under common Control with or Controlled or managed by such Person.1.3. "Agreement" shall mean this Amended and Restated Limited Liability Company Agreement as the same may be amended or supplemented from time to time in accordance with the provisions hereof.
1.4. "AMS" shall mean AMS Direct, Inc., a Delaware corporation.
1.5. "Auditors" shall mean Ernst & Young, LLP or another independent certified public accountant as from time to time may be engaged for the Company by the Management Board.
1.6. "Bankrupt" shall mean, with respect to any Member, the occurrence of any one or more of the following: (i) the making by such Member of an assignment for the benefit of creditors; (ii) the filing against such Member of an involuntary petition seeking an adjudication of bankruptcy under Chapter 7 of the Bankruptcy Code, which filing is not dismissed within sixty (60) days of the filing; (iii) the filing of a voluntary petition by such Member under Chapter 7 of the Bankruptcy Code; (iv) the entry of an order of relief against such Member under Chapter 7 of the Bankruptcy Code; (v) the filing of a voluntary or involuntary petition by or against such Member under Chapters 11 or 13 of the Bankruptcy Code which is not dismissed within sixty (60) days of the filing; (vi) the entry of an order, judgment or decree by a court of competent jurisdiction providing for the liquidation of the assets of such Member or appointing a receiver, trustee or other administrator of such Member's assets which continues in effect and unstayed for a period of sixty (60) days; (vii) the confirmation of any plan of reorganization under either Chapter 11 or 13 of the Bankruptcy Code providing for the liquidation of substantially all of such Member's assets or (viii) a written admission by such Member of inability to pay debts.
1.7. "Bankruptcy Code" shall mean Title 11 of the United States Code, as now in effect or as hereafter amended.
1.8. "Business" shall mean, as of any date, developing, marketing, and/or providing, in person or through any form of communication or media, personalized coaching programs and/or services, involving one-on-one interaction, of the same general type and nature as those provided by the Company as of such date; provided, that Business shall not include any proprietary businesses of AMS or Xxxxxxxx Xxxxx that are not related specifically to coaching and shall not include seminar training or product sales, public or corporate training programs, works of authorship, intellectual property development or the licensing or sale of any other goods or services provided by any subsidiary or division of AMS or Xxxxxxxx Xxxxx other than the Xxxxxxxx Xxxxx personal coaching division as of the date of execution of the Original Agreement.
1.9. "Capital Account" shall mean the record of a Member's contributions, distributions, allocable share of income, gain, loss and deduction maintained by the Company in accordance with the capital account rules of Section 1.704-1(b) of the Regulations. The Company shall adjust Capital Accounts to reflect the fair market value of Company property in accordance with Section 1.704-1(b)(2)(iv)(f) of the Regulations in connection with any events described in Section 1.704-1(b)(2)(iv)(f)(5) of the Regulations.
1.10. "Capital Call" shall have the meaning given such term in Section 4.7(b) hereof.
1.11. "Cash Flow" shall mean, for any period, any and all cash receipts from any source whatsoever except contributions to capital and proceeds from financings, borrowings or other extensions of credit after deducting (i) all cash expenditures, expenses, debts and obligations of the Company payable in such period, including those due to the Managers and Officers, and all capital expenditures made during such period; and (ii) such reserves, or increase of any existing reserves, necessary or appropriate for outstanding expenses and anticipated cash needs of the Company, including without limitation, reserves for capital investments, business expansion and anticipated operating expenses, which deductions shall be, in each case (at all times prior to the Class B Redemption Date (as defined in Section 7.4)), made in a manner and rate not materially inconsistent with past practices.
1.12. "Certificate" shall mean the Certificate of Formation of the Company, duly filed and amended in accordance with the laws of the State of Delaware.
1.13. "Class A Member" shall mean a holder of Class A Membership Interests who has been accepted as a Member of the Company pursuant to this Agreement.
1.14. "Class A Interests" shall mean those Class A Membership Interests in the Company described more fully in Section 4.1.
1.15. "Class B Member" shall mean a holder of Class B Interests who has been accepted as a Member of the Company pursuant to this Agreement.
1.16. "Class B Interests" shall mean those of Class B Interests in the Company described more fully in Section 4.1.
1.17. "Code" shall mean the Internal Revenue Code of 1986, as now in effect or as hereafter amended including, but not limited to, any successor or substitute federal tax codes or legislation.
1.18. "Communication" shall mean any and all notices, requests, demands, elections and other communications given in connection with this Agreement.
1.19. "Company" shall mean Xxxxxxxx Xxxxx Coaching, L.L.C., a Delaware limited liability company.
1.20. "Company Act" shall mean the Limited Liability Company Act of the State of Delaware, as amended from time to time.
1.21. "Company's Office" shall have the meaning given to such term in Section 2.4.
1.22. "Confidential Information" shall have the meaning given to such term in Section 3.2(b).
1.23. "Control" shall mean, with respect to a Person (i) direct or indirect ownership of fifty percent (50%) or more of the total combined voting power of all classes of equity interests in the controlled entity entitled to vote, or (ii) being an officer, director, manager, trustee or general partner of the controlled entity (or an officer, director, manager, general partner or trustee of a manager, trustee or general partner of the controlled entity).
1.24. "Deemed Delivery" shall mean, with respect to a written Communication sent to a recipient Member or the Company (the "Recipient"), the earlier of (a) the date it shall be delivered to the address of the Recipient on the records of the Company (the "Recipient's Address"), (b) the date delivery shall have been refused at the Recipient's Address, (c) with respect to a Communication sent by mail, the date as of which the postal service shall have indicated such Communication to be undeliverable at the Recipient's Address, or (d) with respect to a Communication sent by facsimile to the facsimile number of the Recipient on the records of the Company and in respect of which a facsimile receipt confirmation statement is printed, (i) the next business day after receipt, if the Communication is received at or after five (5) p.m. in the time zone of the Recipient, or (ii) the day of receipt if the Communication is received before five (5) p.m. in the time zone of the Recipient.
1.25. "Effective Date" shall have the meaning given such term in the preamble hereto.
1.26. "Excepted Transfer" shall mean any Transfer by a Member of a Membership Interest to a controlled subsidiary or affiliate of such Member (or a family member of such Member or a trust for the benefit of such Member and/or such Member's family members, in the case of any individual Member); provided that the transferee first agrees to become a party to this Agreement and bound hereby and provided that no such Transfer shall relieve the transferring Member of its obligations hereunder without the prior written consent of the other Members.
1.27. "Fiscal Year" shall mean the period from September 1 to August 31 of each year, or such other period as may hereafter be adopted by the Managers.
1.28. "Xxxxxxxx Xxxxx" shall mean Xxxxxxxx Xxxxx Co., a Utah corporation.
1.29. "Xxxxxxxx Xxxxx Programs" means all coaching programs and other services and materials provided by the Company with respect to (i) proprietary coaching programs now or hereafter developed, produced and/or marketed by Xxxxxxxx Xxxxx or its Affiliates (other than the Company), and/or (ii) any of the third party programs identified on Exhibit B attached hereto.
1.30. "Xxxxxxxx Xxxxx Program Income" means, for any period, the Operating Margin generated by Xxxxxxxx Xxxxx Programs during such period, minus the Xxxxxxxx Xxxxx Program Share of all remaining operating expenses (other than those included in Xxxxxxxx Xxxxx'x Operating Margin) incurred by the Company during such period.
1.31. "Xxxxxxxx Xxxxx Program Share" means, for any period, the percentage equivalent of a fraction, the numerator of which shall be the total revenue from Xxxxxxxx Xxxxx Programs during such period, and the denominator of which shall be the total revenue of the Company during such period.
1.32. "Gross Asset Value" shall mean, with respect to any Company asset, the asset's adjusted basis for federal income tax purposes, except as follows:
a. The initial Gross Asset Value of an asset contributed by a Member to the Company shall be the gross fair market value of
such asset as of the date of contribution.
b. The Gross Asset Values of all Company assets shall be adjusted to equal the assets' respective gross fair market values, as
determined by the Company using such reasonable and uniform methods of valuation as it may adopt, as of the
following times: (i) the acquisition of additional Membership Interests in the Company by any new or existing
Member in exchange for more than a de minimus capital contribution, or the distribution by the Company of more than
a de minimus amount of money or other property to a Member as consideration for all or part of its Membership
Interests in the Company; and (ii) the liquidation of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g)
of the Regulations.
c. The Gross Asset Value of any Company asset distributed to a Member shall be the gross fair market value of such asset on the
date of contribution.
d. The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis
of such assets pursuant to Code Sections 734(b) or 743(b), but only to the extent such adjustments are taken into
account in determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(m) of the Regulations.
e. In the event of dissolution or liquidation, the Gross Asset Value of any Company asset distributed to a Member shall be the
gross fair market value of such asset on the date of distribution.
If the Gross Asset Value of an asset has been determined or adjusted pursuant to subsections a., b., c. or d., above, such Gross Asset Value shall thereafter be adjusted by the depreciation, cost recovery or amortization taken into account with respect to such asset for purposes of computing Profits or Losses. Such items shall be computed in accordance with Section 1.704-1(b)(2)(iv)(g)(3) of the Regulations.
1.33. "Management Board" shall mean the Management Board of the Company described in Section 5.2.1.34. "Manager" shall have the meaning given such term in Section 5.2(b) hereof.
1.35. "Member" shall have the meaning given such term in the preamble hereto.
1.36. "Membership Interest" shall mean a Member's entire ownership interest in the Company, including the Member's interest in the capital, Net Profits or Losses, gains, losses and credits of the Company (whether expressed in terms of the Member's Percentage Interest, Units or otherwise) and all rights and obligations with respect to the Company under this Agreement and the Company Act, including, but not limited to, the right to receive distributions from the Company.
1.37. "Net Profits or Losses" shall mean the Profits or Losses for the Fiscal Year computed under the accrual method of accounting.
1.38. "Non-Contributing Member" shall have the meaning given such term in Section 4.7(c) hereof.
1.39. "Officer" shall mean those Persons appointed by the Management Board pursuant to Section 5.3 herein.
1.40. "Operating Margin" means, during any period with respect to the Xxxxxxxx Xxxxx Programs, the total revenue generated by such Programs during such period, minus the costs directly attributable to such Programs (including without limitation, business promotion costs of such Program) during such period.
1.41. "Organization Transactions" shall mean all transactions in connection with the contribution to and/or acquisition by the Company of (a) Xxxxxxxx Xxxxx'x coaching services business and all related assets and liabilities, pursuant to that certain Contribution Agreement dated as of September 1, 2000 between the Company and Xxxxxxxx Xxxxx, and (b) AMS' contributed assets pursuant to that certain Contribution Agreement dated as of September 1, 2000 between the Company and AMS.
1.42. "Percentage Interest" shall mean a Class A Member's percentage interest in the aggregate share of Cash Flow, Net Profits or Losses, gains, losses and tax credits and distributions of the Company to be made and/or allocated to the Class A Interests as a whole, as well as the Class A Member's percentage vote on matters requiring a vote of the Members, in each case represented by such Class A Member's Membership Interest in the Company. The initial Percentage Interests of the Class A Members shall be as set forth on Exhibit A attached hereto and shall be changed from time to time as provided in this Agreement.
1.43. "Person" shall mean an individual, general partnership, limited partnership, limited liability company, corporation, joint venture, trust, estate, business trust, cooperative or association and their heirs, executors, administrators, legal representatives, successors, and assigns of such Person where the context so permits.
1.44. "Profits" or "Losses" shall mean, for each Fiscal Year or other period, an amount equal to the Company's taxable income or loss for such Fiscal Year or period, determined in accordance with Section 703(a) of the Code (all items of income, gain, loss or deduction required to be stated separately pursuant to Section 703(a)(1) of the Code being included in taxable income or loss for this purpose), with the following adjustments;
a. Any income of the Company described in Section 705(a)(1)(B) of the Code that is exempt from federal income tax and not
otherwise taken into account in computing Profits or Losses shall be added to such taxable income or subtracted from
such taxable loss.
b. Any expenditures of the Company described in Section 705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv)(i) of the Regulations and not otherwise taken into account in
computing Profits or Losses shall be subtracted from such taxable income or added to such taxable loss.
c. In the event the Gross Asset Value of any Company asset is adjusted upon the occurrence of any of the events specified in
clauses (c) or (d) of the definition of "Gross Asset Value" herein the amount of such adjustment shall be taken into
account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses.
d. Gain or loss resulting from any disposition of an asset with respect to which gain or loss is recognized for federal income
tax purposes shall be computed by reference to the Gross Asset Value of such asset.
1.45. "Regulations" shall mean the federal income tax regulations promulgated by the Department of the Treasury under the Code, including temporary (but not proposed) regulations, as such regulations shall be in effect from time to time.
1.46. "Securities Act" shall mean the Securities Act of 1933, as amended.
1.47. "Transfer" shall mean the sale, assignment, conveyance, gift, pledge or other transfer or encumbrance of Membership Interests.
1.48. "Unit" shall mean a divisible portion of a Member's Membership Interests carrying with it a proportionate amount of each aspect of the rights, privileges, duties and obligations of the Member relating to such Member's Membership Interests. Initially, each one percent (1%) of Membership Interest of a given class shall be comprised of one (1) Unit of such class.
2. FORMATION, PURPOSES AND DURATION
2.1. Formation and Name.
a. Pursuant to the Original Agreement, the Members formed a company pursuant to the Company Act to be known as "Xxxxxxxx Xxxxx
Coaching, L.L.C." The Company shall change its name to a name dissimilar to "Xxxxxxxx Xxxxx Coaching, L.L.C" within
180 days after the Class B Redemption Date.
b. The business of the Company shall be conducted under the name indicated in Section 2.1.a, or such other name as the Company
may from time to time adopt, and all assets of the Company shall be held under such name except as provided in
Section 2.5.
c. The ownership interests, rights and obligations of the Members as members in the Company shall be as provided in the Company
Act, except and to the extent otherwise provided in this Agreement.
d. The Company shall bear the expenses directly incident to its formation, including, but not limited to, filing and recording
fees, taxes and legal and accounting fees incident to the formation and operation of the Company.
2.2. Purposes of the Company. The purposes of the Company shall be:
a. To engage in the Business, and any and all other business and activities that the Managers may in their discretion
determine; and
b. To perform any and all lawful acts incidental to the foregoing purpose or reasonably necessary to the fulfillment of the
foregoing purpose.
2.3. Scope of the Members' Authority. Except as otherwise expressly and specifically provided in this Agreement, no Member shall
have any authority in such capacity to bind or act for, or assume any obligation or responsibility on behalf of, the Company or any
other Member or the Company. Neither the Company nor any Member shall be responsible or liable for any indebtedness or obligation of
any other Member or otherwise relating to the Company property, except as to those responsibilities, liabilities, indebtedness or
obligations incurred by separate agreement or instrument or incurred on or after the date hereof pursuant to and as limited by the
terms of this Agreement. Except as may otherwise be expressly required by law or this Agreement, the Class B Interests shall have no
right to vote.
2.4. Principal Place of Business. The Company shall have its principal place of business at 0000 Xxxxx Xxxxxx Xxxx Xxxxxxxxx, 0xx Xxxxx, Xxxx Xxxx Xxxx, Xxxx 00000 (the "Company's Office") or such other place as determined by the Management Board from time to time.
2.5. Title to Company Properties. Legal title to all Company properties shall be taken and at all times held in the name of the Company, except that any real estate held by the Company may alternatively be held in the name of a trustee for the Company, provided that the Company is specifically designated by name as sole beneficiary or principal under a written trust agreement executed by any such trustee.
2.6. Term. The term of the Company shall commence on the date of the filing of the Articles with the appropriate authorities of the State, and shall be perpetual until the Company is dissolved in accordance with the provisions of this Agreement or the Company Act.
2.7. Assumed Name Certificate. The Officers shall execute, file and publish an assumed name certificate, if necessary, and such other certificates and documents as may be required by applicable law with respect to the Company, in Delaware, Utah and all other states in which the Company engages in business.
2.8. Other Business Activities; Waiver. Subject to Section 3.2., below, any Member or any officer, manager, director, employee, partner, shareholder, member or other Person holding a legal or beneficial interest in any entity which is a Member or any Affiliate of a Member may engage in, broker, or possess an interest in other business ventures of every nature and description other than the Business, independently or with others, and neither the Company nor the Members shall have any right by virtue of this Agreement in or to such independent ventures or to the income or profits derived therefrom except those rights, if any, in and to any New Business Opportunity as defined in Section 3.1 below.
3. CERTAIN MATTERS RELATING TO THE BUSINESS
3.1. Business Opportunities. It is the express intent of the Members that the Company shall be the exclusive vehicle to develop and provide all personal coaching and related programs and services relating to the proprietary programs and materials of each Member. Therefore, no Member shall at any time when such Person is a Member, without the prior unanimous consent of the Managers, (i) directly or indirectly (including through any contract, license or other arrangement with third parties) develop, market, or provide any personal coaching, training or personal interactive learning program or service related thereto of the same or similar nature as the Business ("Scope" and any such proposed service offering or program within such Scope being a "New Business Opportunity") with or for any Person other than the Company; (ii) license or otherwise provide any program content or materials for use in any New Business Opportunity to any Person other than the Company; or (iii) sell or license any customer lists, inquiry lists, or other information relating to customers or potential customers, and/or any marketing rights relating thereto ("Leads") to any Person for the purpose, in whole or in part, of having such Person provide and/or offer to provide any products or services with respect to such New Business Opportunity or otherwise within the Scope to such Leads; other than to or through the Company
3.2. Noncompetition; Confidential Information.
a. At all times while a Person is a Member, neither such Person nor any Affiliate of such Person may (1) engage, directly or
indirectly, in the Business, (2) contact, solicit, or direct any Person to contact or solicit, any of the customers
of the Company for the purpose of providing any services that are the same or similar to those offered by the
Company (and the restriction in this clause (2) will continue for eighteen (18) months after such Person is no
longer a Member), or (3) solicit, or accept if offered to it with or without solicitation, the services of any
individual who is an Officer or employee of the Company at the time of such solicitation or acceptance or has been
an employee of the Company within the one year prior to such solicitation or acceptance (and the restriction in this
clause (3) will continue for eighteen (18) months after such Person is no longer a Member). The provisions of this
Section 3.2.a. shall not apply to Members in the event of dissolution or liquidation of the Company.
b. The Company has furnished to each Member certain information that is either non-public, confidential, or proprietary in
nature. The Company may also impart to the Members from time to time additional non-public, confidential, or
proprietary information, including, without limitation, one or more business plans and other procedures, concepts,
methods, trade secrets, documentation, diagrams, manuals, handbooks, training or processing materials, marketing
techniques or development plans, financial and pricing information, and the like, whether oral or written. All such
material heretofore or hereafter furnished to the Members which at the time of disclosure was or is marked with a
suitable legend, such as "Confidential," together with any analysis, compilations, studies, summaries, or documents
prepared for review by the Members, their agents, or their employees, is hereinafter referred to as the
"Confidential Information." If Confidential Information is disclosed orally or visually, the Company agrees to
identify the same as "Confidential" at the time of disclosure. The Confidential Information also includes any
information described above which the Company obtains from third parties and which the Company treats as
confidential or proprietary, regardless of whether such information is owned or developed by the Company.
Confidential Information shall not include information that: (i) is in or comes into the public domain without any
breach of any obligation of confidentiality owed to the Company; (ii) was in a Member's possession prior to the
Effective Date without the breach or existence of any obligation of confidentiality to the Company; (iii) is
independently developed by or comes into the possession of a Member at any time hereafter without reference to any
information from the Company and without any breach of any obligation of confidentiality owed to the Company; or
(iv) is required to be disclosed under or by applicable law, regulation or lawful court order.
c. Each Member agrees (at all times while a Member and for two years thereafter) to maintain the Confidential Information in
secrecy and confidence and not to, directly or indirectly, without the prior written consent of the Company,
disclose or cause to be disclosed, or use or make known, or suffer or permit any former, current, or prospective
employee or agent of such Member or any Affiliate of such Member to disclose or cause to be disclosed, or use or
make known, any of the Confidential Information, except in connection with the conduct of the Company's business.
d. Each Member agrees that any material violations of this Section 3.2. would cause irreparable harm to the Company and its
Members. Therefore, each Member consents and agrees that if such Member materially violates the terms of this
Section 3.2., the Company shall be entitled, in addition to any other rights and remedies that it may have
(including monetary damages), to apply to any court of competent jurisdiction for specific performance and/or
injunctive or other relief in order to enforce, or prevent any continuing or threatened violation of, the provisions
of this Section 3.2 by such Member. If the Company shall institute any action or proceeding to enforce the
provisions of this Section 3.2, each Member hereby waives the claim or defense that this is an adequate remedy at
law, and each Member agrees in any such action or proceeding not to interpose the claim or defense that such remedy
exists at law.
4. MEMBERSHIP INTERESTS, CAPITAL CONTRIBUTIONS AND DISTRIBUTIONS
4.1. Membership Interests.
a. The Company shall have two classes of Membership Interests, known as Class A Interests and Class B Interests.
b. After giving effect to the transactions contemplated by the Purchase Agreement and this Agreement, the respective Classes of
Interest (and in the case of Class A Interests, Percentage Interests) of each Member shall be set forth on Exhibit A attached hereto:
4.2. Initial Capital Contribution.
a. Each Member has previously contributed the property and/or rights indicated opposite such Member's name on Exhibit A to the
Original Agreement in consideration for the Class A Interests. The holder of the Class B Interests has made no
contribution to the capital of the Company in consideration for such holder's Class B Interests.
b. Subject to Section 4.3.f., the Capital Account of each of the Members shall be credited with the current total of all
capital contributions by such Member to the Company less any distributions to such Member.
c. No Member shall be entitled to any interest on such Member's capital contributions to the Company.
4.3. Capital Accounts.
a. A Capital Account shall be established and maintained for each Member in accordance with the Code and with the Regulations
and shall be subject to adjustment as provided in Section 4.3.b.
b. In accordance with and subject to the Regulations, the Capital Account of each Member shall from time to time be:
(1) Increased by (i) the amount of cash and the Gross Asset Value of property contributed by such Member, (ii) such Member's
share of the Profits, determined pursuant to Section 6.7 for Capital Account purposes, whether or not
distributed, and (iii) the amount of any Company liabilities assumed by such Member or which are secured by
any Company property distributed to such Member;
(2) Decreased by (i) the amount of cash and the Gross Asset Value of property distributed to such Member, (ii) such Member's
share of Losses, determined pursuant to Section 6.7 for Capital Account purposes, and (iii) the amount of
any liabilities of such Member assumed by the Company or which are secured by any property contributed by
such Member to the Company; and
(3) Increased or decreased, as the case may be, to reflect the fair market value of Company property in accordance with Section
1.704-1(b)(2)(iv)(f) of the regulations in connection with any events described in Section
1.704-1(b)(2)(iv)(f)(5) of the regulations.
c. Except as otherwise provided in this Agreement, whenever it becomes necessary to ascertain the balance of any Member's
Capital Account, such a determination shall be made after giving effect to all allocations of Profits and Losses and
other applicable adjustments for the current taxable year and all distributions for such year in respect of
transactions effected prior to the date as of which such determination is to be made. No Member shall be entitled
to (i) make any withdrawal from its Capital Account or to receive any distribution from the Company, except as
expressly provided in this Agreement, or (ii) make any additional capital contribution to the Company other than as
provided herein.
d. Any dispute between the Members with respect to determination of Capital Accounts or otherwise with respect to the manner or
method of accounting by the Company shall be resolved by an independent third party accounting firm mutually
acceptable to the Members in question.
e. In the event that property is distributed by the Company to a Member (including distributions in liquidation of the
Company), the Capital Accounts of the Members shall be adjusted immediately before such distribution, in accordance
with the applicable allocation of Profits and Losses, to reflect the Profits or Losses and other applicable
adjustments that would have been realized by the Company if the distributed property had been sold on the date of
its distribution for its fair market value.
f. The Capital Account of any Person who acquires Membership Interests from a Member (including, without limitation, Membership
Interests transferred pursuant to the Purchase Agreement) shall include the Capital Account of the Member from whom
the Membership Interest was acquired.
4.4. Limitation on Members' Liabilities. A Member shall not be bound by, or be personally liable for, the expenses, liabilities
or obligations of the Company, and the liability of each Member shall be limited solely to the amount of such Member's contribution
to the capital of the Company, except as otherwise required by the laws of the State of Delaware.
4.5. Distributions of Net Cash Flow.
a. For purposes hereof, the "Distributable Cash Flow" with respect to each Fiscal Year or portion of a Fiscal Year shall mean
the Cash Flow for such Fiscal Year or portion of a Fiscal Year, after first deducting, in all periods up through
September 30, 2003, any Xxxxxxxx Xxxxx Program Income generated during such period. The Company shall distribute
Distributable Cash Flow for each Fiscal Year or portion of a Fiscal Year (with such frequency as required under
Section 4.6), 60% to the Class A Members, pro rata according to the Class A Members' respective Percentage
Interests, and 40% to the Class B Member; provided that the Class B Interests shall no longer be entitled to receive
any further distributions pursuant to this Section 4.5.a after the Company has distributed a total of $2,000,000 to
the Class B Interests pursuant this Section 4.5.a (the "Class B Maximum"), and the Company shall distribute all
further Distributable Cash Flow thereafter to the Class A Members, pro rata according to the Class A Members'
respective Percentage Interests. The Company may, but shall not be obligated to, make special distributions to the
Class B Interests in an amount up to the positive difference between (A) the Class B Maximum and (B) the aggregate
total of all prior distributions previously made to the Class B Interests pursuant to this Section 4.5.a from and
after September 1, 2002.
b. After September 30, 2002, and on or prior to October 15, 2003, the Company shall determine, report to the Class B Member and
distribute to the Class B Member the positive amount, if any, equal to the lesser of (i) the Xxxxxxxx Xxxxx Program
Income generated during the thirteen month period ending September 30, 2003, or (ii) $1,225,000 (the "Special FC
Distribution"). Upon calculation and receipt of the Special FC Distribution, if any, the Class B Interests shall no
longer be entitled to receive any distributions pursuant to this Section 4.5.b and all Xxxxxxxx Xxxxx Program
Income, if any, shall thereafter be part of Distributable Cash Flow to be distributed pursuant to Section 4.5.a.
4.6. Time of Determination and Distribution of Distributable Cash Distributable Cash Flow shall, except as otherwise provided in
this Agreement, be determined by the Management Board, and shall be distributed from time to time by the Officers pursuant to the
directions of the Management Board. Until the Class B Maximum has been distributed, the Company shall determine, report and
distribute Distributable Cash Flow at least as often as quarterly, promptly following the end of each fiscal quarter of the Company.
5. MANAGEMENT OF THE COMPANY
5.1. Members; No Control of Business or Right to Act for Company. Other than as otherwise provided in this Agreement, a Member shall take no part (in such capacity) in the management, conduct or control of the business of the Company and shall have no right or authority (in such capacity) to act for or to bind the Company.
5.2. The Management Board.
a. The overall management and control of the business and affairs of the Company shall be vested in the Management Board, which
shall have all the powers and authority of managers under the Company Act, or necessary or advisable in connection,
or consistent, therewith. All actions approved by the Management Board (including through its appointed Officers)
shall be binding on the Company and each of the Members. In this regard, all actions taken by any Managers or
Officers in connection with the Organization Transactions shall be deemed to be and treated for all purposes as
actions approved by the Management Board.
b. The Management Board shall be composed of up to five (5) individuals (the "Managers"), who shall be elected annually by the
Class A Members who hold a majority of the outstanding Percentage Interests.
c. At all times while the Class B Interests are outstanding, the Company shall invite a representative designated by the holder
of the Class B Interests to attend all meetings, including without limitation, informational meetings, of the
Management Board in a nonvoting observer capacity and, in this respect, shall give such representative copies of all
notices, minutes, consents, and other material that it provides to its directors, except that such representative
shall not be entitled to so attend and observe and shall not be entitled to such information if the Management Board
in good faith determines that such attendance, observation or disclosure would be likely to result in a loss of
attorney-client privilege with respect to discussions at such meetings or with respect to such materials; and
provided further that the representative shall agree to sign a protective agreement or such other documents as the
Management Board reasonably deems necessary to protect and maintain the confidentiality of its confidential
information. Such representative may participate in discussions of matters brought to the Management Board. The
initial representative shall be Val Xxxx Xxxxxxxxxxx and the Company shall have the right to reasonably approve any
change in this representative.
5.3. Officers. The Management Board shall elect officers for the Company from time to time. The authority and specific
responsibilities of each of the Company's officers are set forth in the Bylaws and shall be limited to the express authority
contained therein or in resolutions adopted from time to time by the Management Board.
6. ACCOUNTING AND TAXES
6.1. Books and Records.
a. At all times during the term hereof, the Management Board shall use its best efforts to cause accurate books and records of
account to be maintained in which are to be entered all matters relating to the business and operations of the
Company, including all income, expenditures, assets and liabilities thereof. The Company's financial records shall
be maintained on an accrual basis in accordance with generally accepted accounting principles.
b. Such books and records of account should be maintained on the accrual basis and shall be adequate to provide each Member
with all such financial information as may be needed by such Member for purposes of satisfying the financial
reporting obligations of such Member.
c. Each Member is entitled to any information reasonably necessary for the preparation of such Member's federal or state tax
returns.
6.2. Rights of Inspection. Each Member and/or its authorized representatives shall have the right to inspect, examine and copy
(at such Member's expense) the books, records, files, securities and other documents of the Company, for a proper purpose consistent
with such Member's rights under this Agreement and during the regular business hours of the Company upon giving reasonable prior
written notice.
6.3. Bank Accounts. All funds of the Company, including, without limitation, all funds representing capital contributions to the Company, and the proceeds of all borrowings of the Company, shall be deposited in such "Operating Accounts" of a type, in a form and in a bank or banks selected by the Management Board. All Company expenses and distributions are to be paid from such Operating Accounts.
6.4. Financial Statements. The Company shall retain independent certified accountants independent from the audit firm of either Member. Within forty-five (45) days after the end of each of the first three quarters of each Fiscal Year, the Company shall send to the Members unaudited statements of operations and cash flows for such fiscal quarter and for the period from the beginning of such Fiscal Year to the end of such fiscal quarter and an unaudited balance sheet as of the close of such fiscal quarter. As soon as practicable after the end of each Fiscal Year ending on or after the Effective Date, but not later than ninety (90) days after the beginning of the following Fiscal Year, the Company shall provide to each Member audited statements of operations, Member's equity and cash flows, for such ended Fiscal Year, and an audited balance sheet (including a breakdown of each Member's Capital Account and a statement of allocations to each Member of its respective portion of the Company's taxable income for such Fiscal Year) as of the close of such ended Fiscal Year, including appropriate notes to such financial statements, audited by the Auditors, all of which shall be prepared in accordance with generally accepted accounting principles and/or requirements for tax accounting pursuant to the Regulations.
6.5. Other Accounting Decisions. All accounting decisions for the Company (other than those specifically provided for in any other Section of this Agreement) shall be made by the Management Board.
6.6. Preparation of Tax Returns. Upon being provided by the Members with all information required for their preparation, the Management Board or its agents shall, on behalf of the Company, use their best efforts to cause all federal, state and local income tax returns of the Company to be prepared. The Management Board will use its best efforts to cause copies of all tax returns of the Company to be made available for review by the Members at least thirty days prior to the statutory date for filing, including extensions thereof, if any.
6.7. Allocation of Profits, Gains and Losses. Except as otherwise provided in this Agreement, net profits, net gains, net losses, deductions and Federal tax credits, if any, for any Fiscal Year shall be allocated among the Members in accordance with Regulations underss.704(b) pursuant to the terms of this Section 6.7.
a. Profits. All items of Profits, income and gain of the Company with respect to any Fiscal Year shall be allocated to the
Members in the same proportions and to the same extent as distributions of Distributable Cash Flow and Special FC
Distribution were actually made to the Members pursuant to this Agreement with respect to such period. In the event
that, pursuant to the terms of this Section 6.7, the items of Profits, income or gain with respect to any Fiscal
Year exceed all of the distributions of Distributable Cash Flow and Special FC Distribution actually made to the
Members with respect to such Fiscal Year, such excess with respect to such Fiscal Year shall be allocated to the
Class A Members pro rata according to their Percentage Interests.
b. Losses. Losses and credits shall be allocated to the Members proportionately with respect to their respective positive
Capital Account balances, or to the extent such Losses or credits allocable herein exceed the foregoing amounts so
that any Losses or credits have not otherwise been allocated, such excess shall be allocated to the Class A Members
pro rata according to their Percentage Interests.
c. Allocations with Respect to Mid-year Transferred Membership Interests. In the event of a Transfer of a Member's Membership
Interest or any portion thereof, the Member's items of Profits and Losses shall be allocated between the Transferor
(as defined in Section 7.3 below) and the Transferee (as defined in Section 7.3 below) in the ratio of the number of
days in the fiscal year of the Company before and after the effective date of the Transfer.
6.8. Tax Decisions Not Specified. Tax decisions and elections for the Company not provided for herein shall be made in the
discretion of the Management Board.
6.9. Notice of Tax Audit. The Company will use its best efforts to give prompt notice to the Members upon receipt of advice that the Internal Revenue Service intends to examine Company income tax returns for any Fiscal Year.
6.10. Tax Matters Partner. AMS will be the tax matters partner (the "Tax Matters Partner") for purposes of Sections 6221-6231 of the Code and the Regulations. The Tax Matters Partner agrees to use its best efforts to comply in good faith with all provisions of the Code concerning a tax matters partner and to take all actions necessary to make each Member a notice partner under the Code. The Tax Matters Partner will use its best efforts to give each Member copies of all notices or other material communications delivered to or by him with respect to federal, state or local tax matters, negotiations, decisions, settlements or other events. The Tax Matters Partner may not initiate or take material action with respect to any litigation without the prior consent of the Members in accordance with Section 5.5.
7. SALE, TRANSFER AND REDEMPTION
7.1. General. Except for any Transfer which is an Excepted Transfer, no Member shall (i) Transfer all or any part of its Membership Interests, or (ii) contract to Transfer all or any part of its Membership Interests, whether voluntarily or by operation of law, without in each instance obtaining the prior written consent of the Managers, which consent may be withheld in the Managers' sole discretion. Any attempt to Transfer Membership Interests without the required consent shall be void. The giving of consent in connection with one or more Transfers shall not limit or waive the need for such consent in connection with any other Transfers.
7.2. Securities Law Limitations. Notwithstanding anything in this Agreement, no Membership Interests may be Transferred except as permitted under the Securities Act and applicable state securities laws or exemption therefrom. Further, no Transfer of any Membership Interests or portions thereof shall be permitted without the Member first having presented to the Company or its counsel both (a) a written opinion of securities counsel, retained and compensated by the Member but reasonably satisfactory to counsel for the Company, describing the proposed Transfer and stating such counsel's opinion that the Transfer will not violate any of the registration provisions of the Securities Act, any applicable state securities law or the respective rules thereunder, and (b) such additional documents or written assurances as the Company may reasonably request to support the Member's request for Transfer.
7.3. Agreement with Transferees. In the event that, pursuant to the provisions of this Section 7, without regard as to whether any prior written consent of the majority of the non-transferring Members as set forth in Section 7.1. is required, any Member (as "Transferor") shall Transfer any Membership Interests to any Person (a "Transferee"), no such Transfer shall be made or shall be effective to make such Transferee a Member or entitle such Transferee to any benefits or rights hereunder until the proposed Transferee agrees in writing to (i) assume and be bound by all of the terms and provisions of this Agreement and all of the obligations of the transferring Member, and (ii) be subject to all the restrictions to which the transferring Member is subject under the terms of this Agreement and any further agreements with respect to the Company property or as contemplated by this Agreement to which the Transferor is then subject or is then required to be a party.
7.4. Automatic Redemption of Class B Interests. Immediately upon the later of (i) the date upon which aggregate distributions to the Class B Member under Section 4.5.a total the Class B Maximum or (ii) the calculation of the Special FC Distribution pursuant to Section 4.5.b and the payment of the Special FC Distribution, if any (such time being referred to herein as the "Class B Redemption Date"), the Class B Interests shall automatically be redeemed for no further consideration, without any further action by any party. From and after the Class B Redemption Date, the Class B Interests shall no longer be outstanding, the holder thereof shall no longer be a Member or hold any Membership Interest in the Company.
8. DISSOLUTION
8.1. Causes of Dissolution.
The Company shall be dissolved only in the event:
a. Of the death, removal, liquidation, dissolution, withdrawal or bankruptcy of the final Member (each a "Member's Withdrawal
Event");
b. That the Class A Members holding more than fifty percent (50%) of the Percentage Interests vote to terminate the Company;
c. That there is a general assignment of the assets of the Company for the benefit of its creditors, or the adjudication of the
Company as Bankrupt; or
d. That the Company is dissolved by operation of law.
Notwithstanding anything in this Agreement to the contrary, at no time prior to the Class B Redemption Date shall the holders of Class A Interests cause or permit the Company to be dissolved without the prior consent of the holder of the Class B Interest, unless the holder of Class B Interests shall receive an amount in connection with such dissolution which, when added to all prior distributions pursuant to this Agreement, totals at least $3,225,000.
8.2. Procedure in Dissolution and Liquidation. a. Upon dissolution of the Company pursuant to Section 8.1, the Management Board shall immediately commence to wind up the
affairs of and shall proceed with reasonable promptness to liquidate the business of the Company.
b. During the period of the winding up of the affairs of the Company, the rights and obligations of the Management Board set
forth herein with respect to the management of the Company shall continue.
c. The assets of the Company shall be applied or distributed in liquidation in the following order of priority:
(1) In payment of debts and obligations of the Company owed to third parties who are not Members;
(2) In payment of debts and obligations of the Company to any Member made in accordance with the terms of this Agreement;
(3) To the Members pro rata, in accordance with and to the extent of their respective positive Capital Account balances; and
(4) Any excess, 40% to the Class B Member, and 60% to the Class A Members in proportion to their respective Percentage
Interests; provided that no amount shall be distributed to the Class B Interests if such dissolution occurs
after the Class B Redemption Date, and provided further that no amount shall be distributed to the Class B
Interests that would cause the amount distributed hereunder, together with the aggregate total of all prior
distributions to the Class B Interest pursuant to all other provisions of this Agreement, to exceed
$3,225,000.
9. AMENDMENT
9.1. Amendment. This Agreement may not be amended, altered or modified except by a writing signed by the Class A Members holding
more than fifty percent (50%) of the total number of Percentage Interests; provided, that no amendment to this Agreement that would
have a material adverse affect on the rights of the Class B Member shall be effective without the prior consent of the Class B Member.
10. DISPUTES
10.1. Escalation. Any dispute or controversy between the Members arising out of this Agreement or any document, instrument or agreement executed and delivered pursuant hereto (a "Dispute"), shall first be submitted to non-binding mediation in the State of Delaware, or such other location as the parties may agree, under the mediation rules of the American Arbitration Association. Each party shall bear its own costs in connection with such mediation and shall bear one-half of the cost of the American Arbitration Association and the mediator.
10.2. Arbitration.
a. In the event that a Dispute is not resolved by non-binding mediation pursuant to Section 10.1 above, such dispute shall be
submitted to binding arbitration in the State of Delaware, or such other location as the parties may agree.
b. Either party requesting arbitration shall serve a written demand for arbitration on the other party by registered or
certified mail. The demand shall set forth a statement of the nature of the dispute, the amount involved and the
remedies sought. Each party shall have the right to be represented by counsel and shall have the right only to such
expedited discovery as the arbitrator may authorize upon a showing of good cause. Except as specifically provided
herein, the arbitration shall be conducted by and in accordance with the commercial rules of the American
Arbitration Association, and the arbitrator's ruling shall be in accordance with law and the terms of this
Agreement. The arbitrator shall not have the power to amend this Agreement in any respect.
c. No later than twenty (20) calendar days after a demand for arbitration is served, the Members shall jointly select and
appoint a disinterested person to act as the arbitrator. In the event that the Members do not agree on the
selection of an arbitrator, each Member shall select an arbitrator within ten (10) days after the date on which the
Members do not agree on the selection of a sole arbitrator and the two arbitrators so selected shall select a third
arbitrator within ten (10) days after the Members select their arbitrators; the provisions set forth herein
regarding the single arbitrator shall apply to the three arbitrators so selected. Any arbitrator designated
hereunder shall not now or in the three years preceding such arbitration be an employee, consultant, officer,
director or shareholder of any party hereto or any Affiliate of any Member or have now or in the three years
preceding such arbitration any business relationship with any Member or any Affiliate of any Member.
d. No later than ten (10) calendar days after the arbitrator is appointed, the arbitrator shall schedule the arbitration for a
hearing to commence on a mutually convenient date. The hearing shall commence no later than thirty (30) calendar
days after the arbitrator is appointed and shall continue from day to day until completed.
e. Each Member shall direct the arbitrator to use his or her best efforts to rule on each disputed issue within 30 days after
the completion of the hearings described in paragraph (d) above. The determination of the arbitrator as to the
resolution of any dispute shall be binding and conclusive upon all Members; provided, that the arbitrator may not
award any punitive damages. All rulings of the arbitrator shall be in writing, shall set forth the basis for the
decision and shall be delivered to the Members.
f. The prevailing Member in any arbitration shall be entitled to an award of reasonable attorneys' fees incurred in connection
with the arbitration and the disputed issues with respect thereto. The non-prevailing Member shall pay such fees,
together with the fees of the arbitrator and the costs and expenses of the arbitration. For purposes hereof, a
Member seeking payment of any amount in arbitration shall be deemed to be the prevailing Member if it is determined
that such party is entitled to receive at least 75% of the payment initially claimed by it to be due to such Member
in such arbitration, and the Member from which such payment is sought shall be deemed to be the "prevailing Member"
if the other Member is not so deemed to be the prevailing Member.
g. Judgment on any arbitration award may be entered by any court having jurisdiction over the parties and subject matter.
11. GENERAL PROVISIONS
11.1. Entire Agreement. This Agreement constitutes the entire agreement among the Members, and supersedes all agreements, representations, warranties, statements, promises and understandings, whether oral or written, with respect to the subject matter hereof. None of the Members shall be bound by nor charged with any oral or written agreements, representations, warranties, statements, promises or understandings with respect to the subject matter hereof not specifically set forth in this Agreement or the exhibits hereto.
11.2. Notices.
a. Communications given in connection with this Agreement shall be deemed adequately given only if in writing to the Person for
whom such Communications are intended and sent by (1) personal delivery, (2) first class registered or certified
mail, postage prepaid, return receipt requested, (3) facsimile, (4) nationally recognized overnight delivery service
or (5) other means at least as fast and reliable as first class mail. The addresses and facsimile numbers required
by this Agreement, unless changed pursuant to Section 12.2.c, are:
(1) To the Company or the Management Board:
x/x Xxxxxxxx Xxxxx Xxxxxxxx, X.X.X.
0000 Xxxx Xxxxxxx Xxxx. Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
(2) To Members:
As set forth on Exhibit A hereto.
b. All Communications shall be effective upon such Communication's Deemed Delivery only.
c. By giving to the Company at least ten (10) days' written notice thereof, Persons shall have the right from time to time and
at any time during the term of this Agreement to change their respective addressee, address and/or facsimile number
for notices, and each shall have the right to specify as its address and/or facsimile number for notices any other
address and/or facsimile number.
11.3. Validity. In the event that any provision of this Agreement shall be held to be invalid or unenforceable, the same shall
not affect in any respect whatsoever the validity or enforceability of the remainder of this Agreement.
11.4. Attorneys' Fees. Should any arbitration or litigation be commenced by the Company against any Member or between the Members hereto or their representatives, or should any Member institute any proceeding in a bankruptcy or similar court which has jurisdiction over any other Member hereto or any or all of such Member's property or assets concerning any provision of this Agreement or the rights and duties of any Person or entity in relation thereto, the party or parties prevailing in such litigation shall be entitled, in addition to such other relief as may be granted, to a reasonable sum as and for its or their attorneys' fees and court costs in such litigation which shall be determined by the court in such litigation or in a separate action brought for that purpose.
11.5. Survival of Rights. Except as provided herein to the contrary, this Agreement shall be binding upon and inure to the benefit of the Members signatory hereto, and their respective permitted successors and assigns.
11.6. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the Members hereto to express their collective mutual intent. This Agreement shall be construed as if drafted jointly by the Members hereto, and no rule of strict construction will be applied against any Person.
11.7. Governing Law; Jurisdiction. The Agreement shall be governed by and construed exclusively in accordance with laws of the State of Delaware without regard to the conflicts of law principles thereof.
11.8. No Partition. No Member shall have the right to, and each Member hereby covenants that it will not, bring any action to dissolve, terminate or liquidate the Company, except as provided in this Agreement, and no Member at any time shall have the right to petition or to take any action to subject the Company assets or any part thereof to the authority of any court of bankruptcy, insolvency, receivership or similar proceeding, unless the same is approved by a vote of Members.
11.9. Waiver. No consent or waiver, express or implied, by a Member to or of any breach or default by another Member in the performance by such other Member of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance by such other Member of the same or any other obligations of such other Member hereunder. A failure on the part of a Member to complain of any act or failure to act on the part of another Member or a failure to declare the other Member in default, irrespective of how long such failure continues, shall not constitute a waiver by such Member of its rights hereunder unless such default is cured prior to the date upon which the non-defaulting Member declares such default. The giving of consent by a Member in any one instance shall not constitute a waiver by such Member in any other instance and shall not limit or waive the necessity to obtain such Member's consent in any future instance.
11.10. Waiver of Notice. Whenever any notice whatever is required to be given to any Person under the provisions of this Agreement or under the provisions of the Articles or under the Company Act, a waiver thereof in writing, signed by the Person or Persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance at any meeting shall constitute waiver of notice thereof unless the Person at the meeting objects to the holding of the meeting because proper notice was not given.
11.11. Remedies Not Exclusive. The rights and remedies of the Members and the Company hereunder shall not be mutually exclusive, i.e., the exercise of one or more of the provisions hereof shall not preclude the exercise of any other provisions hereof. Each of the Members confirms that damages at law will be an inadequate remedy for a breach or threatened breach of this Agreement and agrees that, in the event of a breach or threatened breach of any provision hereof, the respective rights and obligations hereunder shall be enforceable by specific performance, injunction or other equitable remedy, but nothing herein contained is intended to, nor shall it, limit or affect any rights at law or by statute or otherwise of any Member aggrieved as against another for a breach or threatened breach of any provision hereof, it being the intention of this Section to make clear the agreement of the Members that the respective rights and obligations of the Members hereunder shall be enforceable in equity as at law or otherwise.
11.12. Construction. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; and the singular shall include the plural and vice versa. Titles of Sections and Subsections are for convenience only, and neither limit nor amplify the provisions of this Agreement itself. References to Sections or Subsections shall refer to Sections or Subsections of this Agreement, unless otherwise indicated. The use herein of the word "including," when following any general statement, term or matter, shall not be construed to limit such statement, term or matter to the specific items or matters set forth immediately following such word or to similar items or matters, whether or not non-limiting language (such as "without limitation," or "but not limited to," or words of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or matters that could reasonably fall within the broadest possible scope of such general statement, term or matter. For the purposes of this Agreement, "and/or" means one or the other or both, or anyone or more or all, of the things or Persons in connection with which the conjunction is used.
11.13. Incorporation by Reference. Any exhibits referred to herein are those attached to this Agreement and shall be deemed to be incorporated as a part of this Agreement.
11.14. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which shall constitute one and the same agreement.
11.15. Further Assurances. Each party hereto agrees to do all acts and things, and to make, execute and deliver such written instruments, as shall from time to time be reasonably required to carry out the terms and provisions of this Agreement.
11.16. No Broker's Fees. No broker's fees or other such fees or commissions shall be payable by the Company with respect to this Agreement or any of the transactions pursuant to which the Members make their initial capital contributions to the Company, and each Member agrees to and shall indemnify and hold harmless the Company against and from any such obligations to which the Member has committed itself or the Company.
11.17. No Third Party Rights. This Agreement shall not (directly, indirectly, contingently or otherwise) confer or be construed as conferring any rights or benefits on any Person that is not a named Member, the holder directly or indirectly of Membership Interests or a permitted Transferee of a Member hereunder.
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IN WITNESS WHEREOF, this Amended and Restated Limited Liability Company Agreement is executed as of the date first stated above.
AMS DIRECT, INC., XXXXXXXX XXXXX CO., a Delaware Corporation a Utah Corporation By:_______________________________ By:_____________________________________ Xxxx X. Xxxxxxx Xxx Xxxx Xxxxxxxxxxx, Chairman Executive Vice President COACHING INVESTMENTS, LLC, a Delaware limited partnership By:_______________________________ Xxxx X. Xxxxxxx Manager The following Persons hereby join in and agree to be bound (to the same extent as the Affiliate of such Person who is a Member) by Sections 3.1 and 3.2 of this Agreement: XXXXXXXX XXXXX CLIENT SALES, INC., a Utah corporation By:_______________________________________ Val Xxxx Xxxxxxxxxxx Title: Vice President AMERICAN MARKETING SYSTEMS, INC., an Illinois corporation By:_______________________________________ Xxxx X. Xxxxxxx Title: Chairman
EXHIBIT A
MEMBERS
THIS SCHEDULE MAY BE AMENDED FROM TIME TO TIME WITH THE REQUIRED CONSENT OF THE MEMBERS, IF ANY, TO REFLECT THE ADDITION OF NEW MEMBERS, THE ISSUANCE OF NEW MEMBERSHIP INTERESTS, THE SALE OR EXCHANGE OF MEMBERSHIP INTERESTS, OR OTHER SHIFTS OF MEMBERSHIP INTERESTS PROVIDED ALL SUCH CHANGES ARE PURSUANT TO THE AGREEMENT OR A CHANGE OF ADDRESS OR FACSIMILE NUMBER OF A PERSON FOR WHICH NOTICE WAS GIVEN TO THE COMPANY PURSUANT TO THIS AGREEMENT.
CLASS A MEMBERS
| Name and Address |
Facsimile Number |
Class |
Percentage Interest |
| AMS Direct, Inc. 0000 Xxxx Xxxxx Xxxxxxxxx Xxxx Xxxxx, Xxxxxxxx 00000 |
(630) 382-3282 | A | [51%] |
| Coaching Investments, LLC | A | 49% |
| Total | 100% |
---------------------------------------- -------------------------------------- -------------------------------------- CLASS B MEMBER Fax Number Percentage of Class ---------------------------------------- -------------------------------------- -------------------------------------- Xxxxxxxx Xxxxx Co. (000) 000-0000 100% 0000 Xxxx Xxxxxxx Xxxxxxxxx Xxxx Xxxx Xxxx, Xxxx 00000 (000) 000-0000 ---------------------------------------- -------------------------------------- --------------------------------------
EXHIBIT B
Xxxxxxxx Xxxxx Programs
Current Programs o Xxx Xxxxxx Corporation o Xxx Xxxxxx Network o Xxxxx Xxxxxxx Inc. / International Learning Technologies Inc. o Home Mortgage Network o Xxx Xxxxxxx International o Xxxxx Xxxxx o Inc. Magazine, Inc. Consulting o National Association of Realtors o Personal Selling Power Pending Contracts o Money / Time Inc. Brand Licensing o Xxxxxx Xxxxxxx Xxxxx Foundation / Guideposts o Great Life Network o xxxxxxxxxxxxxx.xxx
Xxxxxxxx Xxxxx and the Company hereby agree that, at any time after December 31, 2002, Xxxxxxxx Xxxxx may, upon prior written notice to the Company, direct the Company to exclude the financial results of any of the above programs from the calculation of Xxxxxxxx Xxxxx Program Income, if and only if the financial performance of such program is negatively impacting Xxxxxxxx Xxxxx Program Income, such exclusion to begin thirty (30) days after the Company’s receipt of such notice and to be subject to completion of pre-existing coaching client commitments.
