LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
FIBR HOLDINGS , LLC
A NEW YORK LIMITED LIABILITY COMPANY
DATED AS OF DECEMBER 1, 1999
TABLE OF CONTENTS
Page
ARTICLE I - PURPOSE AND POWERS................................................................................ 1
1.1 Purpose...................................................................................... 1
1.2 Powers....................................................................................... 1
ARTICLE II - MEMBERS AND INTERESTS............................................................................ 1
2.1 Members; Voting Rights....................................................................... 1
2.2 Membership Interests......................................................................... 2
2.3 Preemptive Rights............................................................................ 2
2.4 Meetings..................................................................................... 3
ARTICLE III - MANAGEMENT OF THE COMPANY........................................................................ 3
3.1 Managers..................................................................................... 3
3.2 Number, Term and Election.................................................................... 4
3.3 Officers..................................................................................... 4
3.4 Meetings..................................................................................... 4
3.5 Management Decisions......................................................................... 5
3.6 Management Compensation...................................................................... 5
ARTICLE IV - FINANCIAL INTERESTS OF MEMBERS.................................................................... 5
4.1 General...................................................................................... 5
4.2 Capital Contributions........................................................................ 5
4.3 Capital Accounts............................................................................. 5
4.4 Gains and Losses............................................................................. 6
4.5 Participation Percentages.................................................................... 6
4.6 Allocations of Gains and Losses.............................................................. 6
4.7 Distributions................................................................................ 7
ARTICLE V --TRANSFERS AND THE ADMISSION OF ADDITIONAL MEMBERS................................................. 7
5.1 General Restrictions......................................................................... 7
5.2 Prohibited Transfers......................................................................... 8
5.3 Permissible Transfers........................................................................ 8
5.4 Involuntary Transfers........................................................................ 8
5.5 Right of First Refusal....................................................................... 8
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5.6 Tag Along Right.............................................................................. 10
5.7 Effect of Transfers.......................................................................... 12
5.8 Compliance with Sections 5.5 and 5.6 hereof.................................................. 12
5.9 Costs........................................................................................ 12
5.10 Inapplicability of Right of First Refusal and Tag-Along Right................................ 13
5.11 Admission of Members......................................................................... 13
ARTICLE VI - TERM AND TERMINATION OF THE COMPANY.............................................................. 13
6.1 Term of the Company.......................................................................... 13
6.2 Events of Dissolution........................................................................ 13
6.3 Conclusion of Affairs........................................................................ 13
6.4 Liquidating Distributions.................................................................... 14
6.5 Termination.................................................................................. 14
ARTICLE VII - GENERAL AND ADMINISTRATIVE PROVISIONS........................................................... 14
7.1 Principal Office............................................................................. 14
7.2 Indemnification.............................................................................. 14
7.3 Fiscal Year.................................................................................. 14
7.4 Books and Records............................................................................ 15
7.5 Reports...................................................................................... 15
7.6 Notices...................................................................................... 15
7.7 Headings..................................................................................... 15
7.8 Gender; Number............................................................................... 15
7.9 Amendments................................................................................... 15
7.10 Attorneys' Fees.............................................................................. 15
7.11 Entire Agreement............................................................................. 15
7.12 Counterparts................................................................................. 16
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LIMITED LIABILITY COMPANY
OPERATING AGREEMENT
OF
FIBR Holdings, LLC
a New York Limited Liability Company
This Limited Liability Company Operating Agreement (this
"Agreement") of FIBR Holdings, LLC (the "Company"), dated as of December 1,
1999, is adopted and agreed to by the parties identified in Section 2.1(b)
hereof and each of the other persons who, from time to time may be admitted as a
member of the Company (collectively, the "Members").
ARTICLE I
PURPOSE AND POWERS
1.1 Purpose. The Company has been organized to invest in the common
stock, debt, warrants and/or other ownership interests (collectively, the
"Securities") of Osicom Technologies, Inc. ("FIBR"), to realize the income and
gains to be derived therefrom for the mutual benefit of the Members and to
engage in any other lawful business activity related or incident thereto.
1.2 Powers. The Company shall have the power and authority to enter
into, make and perform all contracts, agreements and undertakings, and to do any
and all acts and things necessary, appropriate, incidental or convenient to the
accomplishment of its purposes and for the protection and benefit of the
Company.
ARTICLE II
MEMBERS AND INTERESTS
2.1 Members; Voting Rights.
(a) There shall be two classes of Members: the Voting Members
and the Nonvoting Members. On any matter requiring a vote, consent or approval
of the Members, the Voting Members shall be the only persons to whom the matter
is required to be submitted, and each shall have one vote. Except as otherwise
provided herein, or as required by applicable law, the vote, consent or approval
of a majority of the Voting Members shall constitute the act of the Company. No
Non-voting Member shall have a voice or vote in any matter, except as
specifically provided herein.
(b) The initial Members of the Company are Xxxxxxxx, Xxxxxxxx
& Co., L.P. ("Xxxxxxxx Xxxxxxxx"), which shall be a Voting Member, and each of
the other persons who has delivered a duly executed subscription agreement to
the Company (which agreement has been
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accepted by the Company) (a "Subscription Agreement") together with a duly
executed signature page to this Agreement, who shall be Non-Voting Members.
Other persons may hereafter be admitted as Members in accordance herewith; but
unless otherwise specifically provided by amendment to this Agreement, any such
additional Member shall be a Non-Voting Member. Each Member shall execute a
counterpart of this Agreement indicating his agreement to the terms and
provisions hereof.
2.2 Membership Interests. Each Member's ownership interest in the
Company is herein referred to generally as a "Membership Interest." The
respective rights of each Member to share in the capital of the Company, either
by way of distributions or on liquidation, will be determined by reference to
the Capital Account (as defined herein) of such Member; and each Member's
interest in the profits and losses of the Company shall be established as
provided herein. Each Member shall have the rights and powers set forth in this
Agreement. Xxxxxxxx Xxxxxxxx shall have the ability to assign all or any portion
of its Membership Interest to any of its affiliates.
2.3 Preemptive Rights.
(a) The Company shall not issue (an "Issuance") additional
membership interests of the Company ("Interests") (other than an Exempt Issuance
(as defined below)) unless not less than thirty (30) days prior to such
Issuance, the Company notifies the Members in writing of the Issuance and grants
to each of the Members the right (the "Preemptive Right") to subscribe for and
purchase the additional Interests so issued at the same price and upon the same
terms as issued in the Issuance such that, after giving effect to the Issuance
and exercise of the Preemptive Right (including, for purposes of this
calculation, the issuance of the Interests upon conversion, exchange or exercise
of any security so convertible, exchangeable or exercisable issued in the
Issuance or subject to the Preemptive Right), the Interests owned by such Member
(rounded to the nearest whole percentage) shall represent the same percentage of
the outstanding Interests as was owned by such Member prior to the Issuance.
(b) The Preemptive Right may be exercised by any Member at any
time by written notice to the Company which is received by the Company within
fifteen (15) days after receipt of notice from the Company of the Issuance, and
the closing of the purchase and sale pursuant to the exercise of the Preemptive
Right shall occur at least ten (10) days after the Company receives notice of
the exercise of the Preemptive Right and prior to or concurrently with the
closing of the Issuance.
(c) "Exempt Issuance" means any Issuance (i) in a public
offering pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), (ii) in compliance with Rule 144A promulgated under the Securities Act,
or (iii) as to which a nationally recognized member of the National Association
of Securities Dealers, Inc. acted as placement agent or underwriter and as to
which the Members were given an opportunity to participate on at least a pro
rata basis.
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2.4 Meetings.
(a) The Members shall have a regular annual meeting each year
beginning in 2000, on October 15 or such other date established by the Managers,
for the purpose of electing Managers and conducting such other business as may
properly come before the meeting. Special meetings of the Members may be called
by the Managers.
(b) Written notice stating the place, day and hour of each
meeting of Members and the general purpose or purposes for which the meeting is
called shall be given not less than seven (7) nor more than thirty (30) days
before the date of the meeting to each Member, including the Non-voting Members.
(c) A Member may waive any notice required by law or this
Agreement, before or after the date and time of the meeting that is the subject
of such notice. Except as provided in the next sentence, the waiver shall be in
writing, signed by the Member entitled to the notice and delivered to the
Managers for inclusion in the Company's minutes or records. A Member's
attendance at or participation in a meeting waives any required notice to such
Member of the meeting unless the Member, at the beginning of the meeting or
promptly upon such Member's arrival, objects to the transaction of any business
at such meeting on the ground that such meeting is not lawfully called or
convened. A Member may participate in a meeting in person or by proxy.
(d) Any vote, consent or approval of the Members may be
accomplished by written consent in lieu of a meeting signed by Members
constituting the required vote for the action so taken.
(e) Members may participate in a regular or special meeting
by, or conduct the meeting through, the use of any means of communication by
which all Members participating may simultaneously hear each other during the
meeting. Any Member who participates in a meeting in this manner is deemed to be
present in person at the meeting, except where a Member participates in the
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
ARTICLE III
MANAGEMENT OF THE COMPANY
3.1 Managers. Except as otherwise limited by this Agreement or
applicable law, all powers of the Company shall be exercised by or under the
authority of, and the business and affairs of the Company shall be managed under
the direction of, the Company's Managers (which term shall be synonymous with
the term "managers" as used in the New York Limited Liability Company Law).
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3.2 Number, Term and Election. Unless otherwise agreed by a unanimous
vote of the Members, there shall be two (2) Managers of the Company. The initial
Managers shall be Xxxxxxxxxxx Xxxxxxxx and Xxxxx X. Xxxxxxxxxx . Each Manager
shall hold office until his or her death, resignation or retirement or until his
or her successor is elected A Manager need not be a Member of the Company.
3.3 Officers. The Managers may appoint such officers who shall have
such power and authority as may be specified in a resolution of the Managers.
Officers shall serve at the pleasure of the Managers.
3.4 Meetings.
(a) An annual meeting of the Managers shall be held
immediately following each annual meeting of Members for the purpose of
appointing officers, if any, and carrying on such other business as may properly
come before the meeting.
(b) Special meetings of the Managers may be called by any
Manager.
(c) Notices of meetings of the Manager shall be given to each
Manager not less than twenty four (24) hours before the meeting. Any such notice
shall set forth the time and place of the meeting.
(d) A Manager may waive any notice required by law or this
Agreement before or after the date and time stated in the notice and such waiver
shall be equivalent to the giving of such notice. The waiver shall be in
writing, signed by the Manager entitled to the notice and filed with the
Company's minutes or records; provided that a Manager's attendance at or
participation in a meeting waives any required notice to him, her or it of the
meeting.
(e) A quorum for the transaction of business at a meeting of
the Managers shall consist of all of the Managers.
(f) Any or all Managers may participate in a regular or
special meeting by, or conduct the meeting through, the use of any means of
communication by which all Managers participating may simultaneously hear each
other during the meeting. A Manager participating in a meeting in this manner is
deemed to be present in person at the meeting.
(g) Any action of the Company that may be authorized by the
Managers at a meeting may be authorized by written consent in lieu of meeting of
the Managers signed by Managers constituting the required vote for the action so
taken, and any such consent shall be filed with the Company's minutes or
records.
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3.5 Management Decisions.
(a) Except to the extent that the Managers agree to delegate
the authority with respect to specified matters, all decisions shall be made by
a unanimous vote of the Managers.
(b) Any disbursement of funds of the Company will require such
signatures as may be determined by the Managers.
3.6 Management Compensation. The Company shall pay the Managers as
compensation for their services to the Company, an amount determined by the
Members; and the Managers shall be entitled to reimbursement for all reasonable
expenses incurred on the Company's behalf.
ARTICLE IV
FINANCIAL INTERESTS OF MEMBERS
4.1 General. The Company has been organized with the intention that it
qualify for taxation as a partnership for U.S. federal income tax purposes. The
Members acknowledge that the provisions of Subchapter K of the Internal Revenue
Code of 1986, as amended (the "Code"), and the Treasury Regulations (the
"Regulations") promulgated thereunder will apply to the Company, and intend that
the allocations of taxable income and loss, distributions to the Members and
maintenance of capital accounts all conform to the requirements of the Code and
the applicable Regulations.
4.2 Capital Contributions.
(a) Each Non-Voting Member shall make capital contributions
(the "Capital Contributions") to the Company provided for in the Subscription
Agreement executed by such Member.
(b) To the extent expenses are incurred by the Company in
excess of cash reserves available for the payment thereof, the Managers may call
upon the Members to fund such expenses. Within ten (10) days after receiving a
written call notice from the Managers, each Member shall contribute his pro rata
share of the expense deficiency, which may include up to a $10,000 reserve for
projected expenses. For purposes of this provision, Xxxxxxxx Xxxxxxxx shall
contribute 50% of the required amount, and the remaining Members shall
contribute the balance in proportion (and as an addition) to their Capital
Contributions.
4.3 Capital Accounts.
(a) A separate capital account ("Capital Account") shall be
established and maintained for each Member on the books of the Company which
will reflect the Capital Contributions, distributions and share of profits and
losses of the Company of the Member in accordance with the Regulations.
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(b) No Member shall be entitled to receive interest on his
Capital Contributions.
(c) No Member shall be entitled to withdraw all or any part of
his Capital Account.
(d) Loans or advances by any Member to the Company shall not
be considered Capital Contributions and shall not increase the Capital Account
of the lending or advancing Member.
(e) Except as provided in Section 4.2 above, no Member shall
be required under any circumstances to contribute or lend any additional money
or property to the Company.
4.4 Gains and Losses. For purposes hereof, "Gains" means income and
gains, and "Losses" means losses, in each case as determined for federal income
tax purposes. "Cumulative Gain" means the excess of the sum of realized Gains of
the Company over the sum of realized Losses of the Company from the date hereof
to the date of determination; and "Cumulative Loss" means the excess of the sum
of realized Losses of the Company over the sum of realized Gains of the Company
from the date hereof to the date of determination.
4.5 Participation Percentages. Each Member shall have a "Participation
Percentage" which shall be determined by dividing the sum of such Member's
Capital Contributions by the sum of the Capital Contributions of all Members.
4.6 Allocations of Gains and Losses.
(a) Except as provided in the following paragraphs of this
Section 4.6, Gains and Losses shall be allocated to the Members in accordance
with their Participation Percentages.
(b) If the Company does not have Cumulative Loss, 20% of the
Gain otherwise allocable to the Members under paragraph (a) shall be allocated
to Xxxxxxxx Xxxxxxxx.
(c) If the Company has Cumulative Gain, 20% of the Loss
otherwise allocable to the Members under paragraph (a) shall be allocated to
Xxxxxxxx Xxxxxxxx until such Cumulative Gain is eliminated.
(d) Notwithstanding the foregoing, Losses shall not be
allocated to any Member if, or to the extent that, such allocation would create
or increase a deficit balance in such Member's Capital Account, taking into
account all subsequent adjustments, allocations and distributions which are
reasonably expected, as described in Regulations ss.1.704-1(b)(2)(ii)(d). Any
Loss, the allocation of which is prohibited by this Section 4.6(d), shall be
allocated among the Members in accordance to their relative interests in the
Company (as determined under Regulations ss.1.704-1(b)(3)). If for any reason a
deficit balance should result in the Capital Account of a Member, in each
subsequent
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period in which the Company has Gains, such Gains shall be allocated first to
such Member until such deficit balance is reduced to zero.
(e) It is the intention of the provisions of this Agreement
with respect to maintenance of Capital Accounts and allocations of Gains and
Losses and distributions to assure that, over the term of the Company, the
Members bear any Cumulative Loss in accordance with their Capital Contributions
and that Xxxxxxxx Xxxxxxxx share in 20% of any Cumulative Gain which would
otherwise be allocable to the Members based on Participation Percentages. The
provisions of this Agreement shall be construed in accordance with this
intention. Xxxxxxxx Xxxxxxxx shall have the ability to waive the allocation of
such 20% of Cumulative Gain with respect to any distribution to any of the
Members.
4.7 Distributions.
(a) Until such time as amounts equal to the Capital
Contributions of the Members have been repaid to the Members, distributions to
the Members shall be made from time to time in the discretion of the Managers
pro rata among the Members in accordance with Participation Percentages.
Thereafter, the Managers may from time to time make distributions to or among
the Members pro rata in accordance with Capital Accounts, provided, that in no
event shall distributions be made which would result in any Member having, as
the result thereof, a negative balance in his Capital Account.
(b) The Managers may distribute cash or, in their discretion,
Securities; provided that no distribution of Securities shall be made except
with the consent of the Member receiving such distribution; and, in the case of
any such in-kind distribution, the Securities shall be marked-to- market and the
unrealized gains or losses shall be reflected in the Capital Accounts of the
Members in order to assure the proper accounting for the allocations to be made
pursuant to Section 4.6.
(c) Rights with respect to any Securities distributed pursuant
hereto shall remain subject to the provisions of, and agreements of the Members
contained in, the Subscription Agreements.
ARTICLE V
TRANSFERS AND THE ADMISSION OF ADDITIONAL MEMBERS
5.1 General Restrictions.
(a) For so long as this Agreement shall remain in effect, no
Member may directly or indirectly (including by operation of law) offer for
sale, sell, assign, transfer, pledge, encumber, or otherwise dispose of, or
subject to a security interest, any Interest or any interest therein whether now
owned or hereafter acquired (each of the above-described actions being referred
to herein as a "Transfer") except in strict compliance with the provisions of
this Agreement.
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(b) Interests shall be subject to such restrictions on
Transfer as are required to ensure compliance with the Securities Act, and any
other applicable securities laws.
5.2 Prohibited Transfers. Except as otherwise required by law, any
Transfer of Interest in violation of this Agreement (a "Prohibited Transfer")
shall be null and void. The Company shall not record any Prohibited Transfer on
its books and shall not recognize any equitable or other claim to, or any
interest in, any Interest that is the subject of a Prohibited Transfer on the
part of any person other than the Member that attempted to Transfer the Interest
in violation of this Agreement.
5.3 Permissible Transfers. Notwithstanding any provision to the
contrary contained in this Agreement, a Member may transfer his Interest to (a)
his spouse or any lineal ancestor or descendant of such Member, (b) any person
receiving such Interest from such Member or a Permissible Transferee (as herein
defined) of such Member, at such Member's or Permissible Transferee's death
pursuant to a will or the laws of intestate succession, (c) any trust
established for the benefit of any of the foregoing, (d) any corporation or
other entity directly or indirectly wholly owned by a Member or which directly
or indirectly wholly owns a Member or to any one or more other corporations or
other entities that are directly or indirectly wholly owned by any such
corporation or other entity, or (e) another Member. Any such Permissible
Transfer may be made without complying with the provisions of Sections 5.5 and
5.6.
5.4 Involuntary Transfers. If, at any time, there shall be an
Involuntary Transfer (as defined herein) of any Interest held by a Member, and
as a result thereof the other parties hereto shall be prevented as a matter of
law from exercising their rights hereunder, the transferee of such Interests
shall take and hold such Interests subject to this Agreement. For purposes of
this Agreement, the term "Involuntary Transfer" shall mean any Transfer by or in
which any Member shall be deprived or divested of any right, title or interest
in or to any Interests, including, without limitation, any levy or execution,
transfer in connection with bankruptcy, insolvency or similar proceedings or any
transfer to a public officer or agency pursuant to any abandoned property or
escheat law; provided, however, that notwithstanding the foregoing the term
"Involuntary Transfer" shall not include any Permitted Transfers.
5.5 Right of First Refusal. Except in the case of a Permissible
Transfer, if at any time on or after the date hereof any Member (the "Selling
Member") desires to transfer or otherwise dispose of all or any portion of the
Interest owned, either beneficially or of record, by the Selling Member, the
Selling Member shall deliver written notice ("Offer Notice"), to the Company and
to each other Member ("Offerees") stating its desire to make such transfer and
the amount of the Interest proposed to be transferred (the "Offered Interest"),
and certifying that such transfer that such Selling Member desires to make is
pursuant to a bona fide third party offer to acquire the Offered Interest for
consideration (a "Bona Fide Third-Party Offer"). The Offer Notice shall further
state the name of the person who made the Bona Fide Third-Party Offer (the
"Offeror"), the terms thereof, including a description and a statement of the
aggregate cash value of all consideration and including any consideration other
than cash (the "Offered Price") and a representation that the Offeror has been
informed of the Right of First Refusal (as defined below) and has agreed to
purchase the Interest in
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accordance with the terms thereof. Each Offeree shall have the irrevocable and
exclusive right of first refusal (the "Right of First Refusal"), as hereinafter
provided, to purchase any or all of its Pro Rata Portion (as defined below) of
the Offered Interest at a purchase price determined pursuant to subparagraph (c)
below.
(a) Amount of Interest. Each Offeree's "Pro Rata Portion" of
the Offered Interest shall be determined by multiplying the Offered Interest
times a fraction, the numerator of which shall be the amount of the Interest, on
a fully diluted basis, then owned by such Offeree and the denominator of which
shall be the amount of the Interests, on a fully diluted basis, then owned by
all Offerees electing to purchase the Offered Interest pursuant to the Right of
First Refusal.
(b) Exercise. Any exercise of the Right of First Refusal to
purchase the Offered Interest pursuant to this Section 5.5 shall be by a written
notice (the "Acceptance Notice") delivered by each Offeree to the Selling Member
within fifteen (15) days after delivery by the Selling Member of an Offer
Notice. An Acceptance Notice shall state that such Offeree elects to purchase
such Offeree's Pro Rata Portion of the Offered Interest (as well as the amount,
if any, of additional Offered Interest that such Offeree would be willing to
purchase in the event all of the Offered Interest is not being purchased by the
Offerees) and shall fix a date for the closing of such purchase (the "Closing
Date"), which date shall be not less than ten (10) and not more than twenty (20)
business days after the date on which the Acceptance Notice is given.
(c) Purchase Price.
(i) Determination of Purchase Price. Unless otherwise
agreed upon by the Offerees and the Selling Member or unless otherwise
determined pursuant to subparagraph (ii) below, the purchase price for the
Offered Interest purchased (other than by the Offeror) pursuant to this Section
5.5 shall be the Offered Price, payable as provided in subparagraph (e) below.
(ii) Consideration other than Cash. If the
consideration to be paid for the Offered Interest by the Offeror shall include
any consideration other than cash, then the Offer Notice shall include a cash
valuation of such non-cash consideration and if an Offeree shall object to such
valuation, the Acceptance Notice shall set forth such objection. If thereafter
the Offerees and the Selling Member shall fail to agree on a valuation within
ten (10) business days following the delivery of the Acceptance Notice, then the
items in dispute shall be referred to a nationally recognized independent
investment banking firm (an "Appraiser") selected jointly by the Offerees and
the Selling Member. If there shall be no agreement on the selection of an
Appraiser, then each party (the Offerees on the one side and the Selling Member
on the other) shall select one investment banking firm and such firms shall
designate an Appraiser to determine the aggregate value of all consideration to
be paid for the Offered Interest by the person who made the Bona Fide
Third-Party Offer. The expenses of such investment banking firms and the
Appraiser shall be paid one-half by each such party. All determinations made
pursuant to this subparagraph (c)(ii) shall be final, conclusive and binding on
the Members.
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(d) Closing Date. The closing of any purchase by Offerees of
the Offered Interest under this Section 5.5 shall be held at the principal
offices of the Company or at such other locations as the Selling Member and the
Offerees purchasing such Interest shall agree, on the Closing Date set forth in
the Acceptance Notice; provided, however, that if the purchase price for the
Offered Interest has not been determined pursuant to subparagraph (c) above
prior to the scheduled Closing Date, the Closing Date shall be deferred until
the fifth business day following such determination, or at such other time or
place as the parties to the transaction may agree upon.
(e) Closing. At the closing of any purchase by any Offeree,
(i) the Selling Member shall deliver the Offered Interest free and clear of all
liens and encumbrances other than liens or encumbrances created pursuant to this
Agreement and shall deliver the certificate or certificates (if any)
representing the Offered Interest to such Offeree, which certificate or
certificates (if any) shall be duly endorsed in blank and accompanied by all
other documents necessary for the effective transfer thereof, and (ii) such
Offeree shall deliver to the Selling Member cash or a certified or official bank
check or checks in the amount of the total purchase or redemption price for the
Offered Interest being purchased by it.
5.6 Tag Along Right. Except in the case of a Permissible Transfer, in
the event that a Member or Members (the "Transferring Member") proposes to
Transfer his Interest in such amount as shall constitute a majority of the
Interest, on a fully diluted basis (the "Sale Interest"), in one or more related
transactions (a "Company Sale") to a bona fide third party purchaser (the
"Proposed Purchaser"), subject to the Right of First Refusal provided for in
Section 5.5 above, each other Member (each a "Tag-Along Seller" and collectively
the "Tag-Along Sellers") shall have the right (the "Tag-Along Right") to require
the Proposed Purchaser to purchase from each of them, all or any portion of the
Membership Interests held by them (such amount for the Tag-Along Sellers in the
aggregate being herein referred to as the "Tag-Along Amount") on the same terms
and conditions and at the same price as the Transferring Member.
(a) Notices. The Transferring Member shall notify the
Tag-Along Sellers in writing of such proposed Transfer (the "Company Sale
Notice"). The Company Sale Notice shall set forth: (i) the name and address of
the Proposed Purchaser; (ii) a copy of the written proposal pursuant to which a
Company Sale will be effected containing all of the material terms and
conditions thereof, including the amount of the Sale Interest, on a fully
diluted basis, proposed to be transferred by the Transferring Member; (iii) the
price of the Sale Interest, on a fully diluted basis, to be paid (the "Tag-Along
Purchase Price"); (iv) the terms and conditions of payment offered by the
Proposed Purchaser; (v) that the Proposed Purchaser has been informed of the
Tag-Along Right provided for in this Section 5.6 and has agreed to purchase the
Tag-Along Amount in accordance with the terms hereof and to be bound by such
terms subsequent to such purchase to the same extent as the Tag-Along Seller
immediately prior to that sale; and (vi) the date and location of and procedures
for selling the Sale Interest to the Proposed Purchaser. The Tag-Along Right
shall be exercised by delivery of a written notice to the Transferring Member
(the"Tag-Along Acceptance Notice") within 15 (fifteen) days following receipt of
the Company Sale Notice. The Tag-Along
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Acceptance Notice shall state the amount of Membership Interests that such
Member proposes to include in the Company Sale.
(b) Closing Date. The closing of any purchase by the Proposed
Purchaser under this Section 5.6 shall be held at the principal offices of the
Company or at such other locations as the Transferring Member and the Proposed
Purchaser shall agree, on the closing date set forth in the Company Sale Notice.
(c) Closing. At the closing of any purchase by the Proposed
Purchaser, (i) the Tag-Along Sellers shall deliver their Interest free and clear
of all liens and encumbrances other than liens or encumbrances created pursuant
to this Agreement and shall deliver the certificate or certificates (if any)
representing their Interest to the Proposed Purchaser, which certificate or
certificates (if any) shall be duly endorsed in blank and accompanied by all
other documents necessary for the effective transfer thereof, and (ii) the
Proposed Purchaser shall deliver to the Tag- Along Sellers the Purchase Price
for their Interest in accordance with the terms and conditions set forth in the
Company Sale Notice.
(d) Limitations. If the Proposed Purchaser does not agree to
purchase the Sale Interest from the Tag-Along Sellers at the same price and on
the same terms and conditions as the Proposed Purchaser has agreed to purchase
from the Transferring Member, then the Transferring Member shall not be
permitted to Transfer any Interest to the Proposed Purchaser in the proposed
Transfer. The Transferring Member and the Tag-Along Sellers shall have the
right, for a 150-day period following the dispatch of the Company Sale Notice,
to transfer to the Proposed Purchaser the Sale Interest and Tag-Along Amount
proposed to be transferred on terms and conditions no more favorable to the
Transferring Member and the Tag-Along Sellers than those stated in the Company
Sale Notice. Any Membership Interests that continue to be held by the
Transferring Member or any Tag-Along Seller after the earlier of the
consummation of the proposed transfer or the expiration of such 150-day period
shall again be subject to the provisions of this Section 5.6.
5.7 Effect of Transfers.
(a) Except as provided in paragraph (b) below, (i) any
Transfer of a Membership Interest by a person (the "Transferor") shall be
effective only to give the transferee (the "Transferee") the right to the share
of allocations and distributions to which the Transferor would otherwise be
entitled, and no Transferee of any Interest shall be admitted as a Member, (ii)
the Transferee shall have no right to vote on or consent to any matter submitted
to the Members or otherwise participate in the management of the business and
affairs of the Company, and (iii) subject to 5.7(c) below, the Transferor, if he
retains any Interest, shall retain such rights and shall have the power to
exercise any rights of a Member, except the right to receive allocations and
distributions to the extent those rights are assigned.
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(b) A Transferee of any Interest shall, upon such Transfer, be
admitted as a Member with all the rights and powers of his Transferor if, prior
to such Transfer, all of the Managers consent to the admission of the Transferee
as a Member.
(c) The Managers may, in their discretion, charge a reasonable
fee to cover the expenses incurred by the Company in connection with or as a
consequence of the Transfer of all or part of a Membership Interest.
(d) The Company, the Managers, each Member and any other
person or persons having business with the Company, need deal only with holders
of the Interest who are admitted as Members of the Company, and shall not be
required to deal with any Transferee who has not been admitted as a Member.
5.8 Compliance with Sections 5.5 and 5.6 hereof. In the event a Member
desires to effect a Transfer of the Interest, he shall be bound by any and all
of the provisions of Sections 5.5 and 5.6 hereof, applicable by their terms to
such Transfer, and any Transfer of the Interest by such Member must comply with
the terms of each such applicable provision. Without limiting the generality of
the foregoing, when a Member desires to effect a Transfer of the Interest which
is subject to Section 5.5 or 5.6 hereof he must permit all Members who validly
exercise their Right of First Refusal or Tag-Along Right to purchase or sell, as
the case may be, their Interest in such Transfer and must arrange for the
Transfer of the Interest to the extent required by Section 5.5 or 5.6 hereof.
5.9 Costs. All reasonable costs and expenses incurred by any seller in
connection with a Transfer under Section 5.5 or 5.6 hereof, including without
limitation all reasonable attorneys' fees, costs and disbursements and any
reasonable finders' fees or brokerage commissions, shall be allocated pro rata
among the Members transferring the Interest in such Transfer, with each bearing
that portion of such costs and expenses equal to the aggregate of such costs and
expenses multiplied by a fraction, the numerator of which is the amount of the
gross proceeds received by such Member from such Transfer, and the denominator
of which is the total amount of the gross proceeds received by all Members from
such Transfer.
5.10 Inapplicability of Right of First Refusal and Tag-Along Right.
Neither the Right of First Refusal nor the Tag-Along Right provided for in this
Article V shall apply to any Transfer of the Interest pursuant to either a
public offering pursuant to the Securities Act or in compliance with Rule 144A
promulgated under the Securities Act.
5.11 Admission of Members. Subject to the provisions of Section 2.3,
the Managers may from time to time admit additional Members to the Company on
such terms and conditions, including such contributions to the capital of the
Company, as the Managers shall determine. Any such additional Members shall join
in and agree to be bound by the terms of this Agreement.
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ARTICLE VI
TERM AND TERMINATION OF THE COMPANY
6.1 Term of the Company. The term of the Company commenced upon the
filing of the articles of organization with the Secretary of State of New York
on November 30, 1999. The Company shall have perpetual existence from the date
of formation unless the Company is dissolved and terminated as provided in this
Agreement.
6.2 Events of Dissolution. The Company shall be dissolved upon the
occurrence of any of the following events:
(a) The unanimous determination of the Managers to dissolve
the Company;
(b) The vote of the Members to dissolve the Company;
(c) The sale of all or substantially all of the business and
assets of the Company; and
(d) As otherwise required by the New York Limited Liability
Company Law.
6.3 Conclusion of Affairs. In the event of dissolution of the Company
for any reason, the Managers, or if no Managers remain, the Members, by majority
vote, shall appoint a person (the "Liquidator"), who may but need not be a
Manager and/or Member, and the Liquidator shall proceed, as soon as reasonably
practicable, to wind up the affairs of the Company. The Members (and their
successors in interest) shall continue to share in allocations of income and
loss and distributions during the period of winding up in the same manner as
before the dissolution. The Liquidator shall have reasonable discretion to
determine the time, manner and terms of any sale or sales of Company property
pursuant to such winding up, having due regard to the activity and the condition
of the Company and relevant market and financial and economic conditions, and
consistent with his obligations to the Members.
6.4 Liquidating Distributions. After paying or providing for the
payment of all debts and liabilities of the Company and all expenses of winding
up, and subject to the right of the Liquidator to set up such reserves as it may
deem reasonably necessary for any contingent or unforeseen liabilities or
obligations of the Company, the proceeds of the liquidation, and any other
remaining assets of the Company, shall be distributed to or for the benefit of
the Members (and their successors in interest) in accordance with their
respective Capital Accounts. No Member shall have any right to demand or receive
property other than cash upon dissolution and winding up of the Company;
provided, however, the Liquidator shall have the right and power to distribute
assets in kind (whether to some or all of the persons entitled to such
distributions), valued at the then estimated fair market value of such assets,
as a liquidating distribution to the Members (and their successors in interest).
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6.5 Termination. Within a reasonable time following the completion of
the winding up of the Company, the Liquidator shall supply to each Member a
statement which shall set forth the assets and the liabilities of the Company as
of the date of complete winding up and each Member's portion of the
distributions pursuant to this Agreement. Upon completion of the winding up of
the Company and the distribution of all Company assets, the Company shall
terminate, and the Liquidator shall execute and file a certificate of
cancellation of the Company with the Secretary of State of New York, and shall
take all other action necessary to effectuate the dissolution and termination of
the Company.
ARTICLE VII
GENERAL AND ADMINISTRATIVE PROVISIONS
7.1 Principal Office. The principal office of the Company shall be at
such location or locations as may be determined by the Managers from time to
time.
7.2 Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless, and may advance expenses to, any
Member or Manager (collectively, the "Indemnitees"), from and against any and
all claims and demands whatsoever arising out of the business and affairs of the
Company; provided, however, that no indemnification may be made to or on behalf
of any Indemnitee if a judgment or other final adjudication adverse to such
Indemnitee establishes (a) that his acts were committed in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated or (b) that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled. The provision of
this section shall continue to afford protection to each Indemnitee regardless
of whether such Indemnitee remains a Member, Manager, employee or agent of the
Company.
7.3 Fiscal Year. The fiscal year of the Company shall end on the thirty
first of December.
7.4 Books and Records. At all times during the term of the Company, the
Managers shall keep, or cause to be kept at the Company's principal office, the
books and records of the Company.
7.5 Reports. As soon as practicable following the end of each fiscal
year, the Company shall provide each Member a financial report of the results of
operations, including audited or unaudited financial statements, as determined
by the Managers.
7.6 Notices. Any notice to be given under this Agreement may be given
either personally or by mail, telephone, telegraph, teletype, telecopy or other
form of wire or wireless communication, or by overnight courier. If mailed,
notice shall be deemed to be effective three (3) days after deposited in
registered or certified mail with postage thereon prepaid addressed if to a
Member at its address as it appears on the signature page to this Agreement (or
at such other address for any party as such party shall notify the other
parties), and if to the Company at its principal office. If given in any other
manner, such notice shall be deemed to be effective (i) when given personally,
(ii) when given by telephone, teletype, telecopy or other form of wire or
wireless communication
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(if followed by a copy delivered by registered or certified mail) or (iii) one
(1) day after given to an overnight courier to be delivered.
7.7 Headings. The headings of the sections hereof are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.
7.8 Gender; Number. Where the context so requires, the masculine gender
shall be construed to include the female, a corporation, a trust or other
entity, and the singular shall be construed to include the plural and the plural
the singular.
7.9 Amendments. This Agreement may be modified or amended with the
consent of Members holding two-thirds of the Membership Interests; provided,
that, except as otherwise specifically provided herein, no amendment may modify
the economic interest of a Member without such Member's consent. Notwithstanding
the foregoing, the Managers may amend the Agreement as necessary to effect the
issuance of new Interests, including interests which have priority over existing
Interests, and the admission of new Members.
7.10 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
7.11 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto.
7.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned has affixed its signature
signifying its adoption of this Limited Liability Company Operating Agreement.
MEMBER:
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(Print Name)
By:
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Name:
Title:
Address:
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Telephone:
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Telecopy:
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Tax I.D. Number:
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