OPERATING AGREEMENT
OF
AIR 41 LLC
i
TABLE OF CONTENTS
Section 1.1. General
Section 1.2. Certain Definitions
ARTICLE II: THE COMPANY
Section 2.1a Formation
Section 2.2a Name
Section 2.3a Purposes
Section 2.4a Principal Place of Business
Section 2.5a Term
Section 2.6a Filings; Agent for Service of Process
Section 2.7a Title to Property
Section 2.8a Payments of Individual Obligations
Section 2.9a Independent Activities
ARTICLE III: CAPITAL CONTRIBUTIONS
Section 3.1a Initial Capital Contributions
Section 3.2a Additional Capital Contributions
Section 3.3a Aircraft Loan Capital Contribution
ARTICLE IV: ALLOCATIONS OF PROFIT AND LOSS
Section 4.1a Profits
Section 4.2a Losses
Section 4.3a Special Allocations
Section 4.4a Curative Allocations
Section 4.5a Loss Limitation
Section 4.6a Other Allocation Rules
Section 4.7a Code Section 704(c) Tax Allocations
ARTICLE V: DISTRIBUTIONS
Section 5.1a Definitions
Section 5.2a Distribution of Net Operating Cash Flow
Section 5.3a Distribution of Capital Proceeds
Section 5.4a Amounts Withheld
Section 5.5a Limitations on Distributions
ARTICLE VI: MANAGEMENT
Section 6.1a Managers; Management Committee
Section 6.2a Meetings of the Management Committee
Section 6.3a Management Committee Powers
(a) GENERAL
(b) OFFICERS
Section 6.4a Duties and Obligations of the Management
Committee
Section 6.5. Reimbursements
Section 6.6. Indemnification of the Managers
Section 6.8. Manager Liability
ARTICLE VII: ROLE OF MEMBERS
Section 7.1. Rights or Powers
Section 7.2. Voting Rights
Section 7.3. Meetings of the Members
Section 7.4. Unanimous Consents Required
Section 7.5. Return on or of Capital Contributions
Section 7.6. Member Compensation
Section 7.7. Member Liability
Section 7.8. Partition
Section 7.9. Transactions Between a Member and the Company
Section 7.10. Covenant to Perform
Section 7.11. Confidentiality and Public Relations
ARTICLE VIII: REPRESENTATIONS AND WARRANTIES
Section 8.1. Survival
Section 8.2. Representations and Warranties
ARTICLE IX: ACCOUNTING, BOOKS AND RECORDS
Section 9.1. Books and Records; Accounting
Section 9.2. Reports
Section 9.3. Annual Budgets
Section 9.4. Tax Matters
ARTICLE X: TRANSFERS
Section 10.1. Restrictions on Transfers
Section 10.2. Permitted Transfers
Section 10.3. Other Transfers
Section 10.4. Conditions to Transfers
Section 10.5. Purchase Rights
Section 10.6. Approvals
Section 10.7. Prohibited Transfers
Section 10.8. Covenants and Representations
Section 10.9. Distributions and Allocations in Respect of
Transferred Units
ARTICLE XI: DISSOLUTION AND WINDING UP
Section 11.1. Dissolution Events
Section 11.2. Winding Up
Section 11.3. Compliance With Certain Regulations; Deficit
Capital Accounts
Section 11.4. Deemed Contribution and Distribution
Section 11.5. Rights of Members
Section 11.6. Notice of Dissolution/Termination
Section 11.7. Allocations During Period of Liquidation
Section 11.8. Character of Liquidating Distributions
Section 11.9. The Liquidator
ARTICLE XII: DISPUTE RESOLUTION
Section 12.1. General Provisions
Section 12.2. Consideration by Senior Executives
Section 12.3. Arbitration
ARTICLE XIII: MISCELLANEOUS
Section 13.1. Notices
Section 13.2. Binding Effect; Assignment
Section 13.3. Entire Agreement
Section 13.4. Waiver
Section 13.5. Interpretation
Section 13.6. Severability
Section 13.7. Governing Law
Section 13.8. Counterpart Execution
Section 13.9. Specific Performance
ii
OPERATING AGREEMENT
OF
AIR 41 LLC
THIS LIMITED LIABILITY COMPANY OPERATING AGREEMENT, dated as of
September 9, 1998 (the "AGREEMENT"), by and between AIRCORP, INC., a Texas
corporation ("AIRCORP"), and INTERNATIONAL AIRLINE SUPPORT GROUP, INC., a
Delaware company ("IASG").
WHEREAS, AirCorp and IASG desire to set forth their agreement
concerning the operations of Air 41 LLC (the "COMPANY") and certain other
matters set forth herein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and undertakings of the parties hereto, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as of the date hereof as follows:
****ARTII. : GENERAL; CERTAIN DEFINITIONSARTICLE I GENERAL; CERTAIN
DEFINITIONS
ARTICLE
ARTICLE SECTION 1.1. GENERALSection 1.1. General . References in this
Agreement to "Articles", "Sections", "Exhibits" and "Schedules" are to
articles, sections, exhibits and schedules herein and hereto unless
otherwise indicated. Unless otherwise set forth herein, references in this
Agreement to any document, instrument or agreement (including, without
limitation, this Agreement) (a) shall include all exhibits, schedules and
other attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof and (c) shall mean
such document, instrument or agreement, or replacement or predecessor
thereto, as amended, modified or supplemented from time to time in
accordance with its terms and in effect at any given time. Wherever from
the context it appears appropriate, each term stated in either the singular
or plural shall include the singular and plural.
ARTICLE
ARTICLE SECTION 1.2. CERTAIN DEFINITIONSSection 1.2. Certain
Definitions .
ARTICLE
ARTICLE "ACT" means the Delaware Limited Liability Company Act, 6 Del.
C. 18-101, ET SEQ., as amended from time to time (or any
corresponding provisions of succeeding law).
ARTICLE
ARTICLE "ADDITIONAL CAPITAL CONTRIBUTIONS" means, with respect to each
Member, the Capital Contributions made by such Member pursuant to
Sections 3.2 and 3.3.
ARTICLE
ARTICLE "ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of
the end of the relevant Allocation Year after giving effect to the
following adjustments:
ARTICLE
ARTICLE (i) credit to such Capital Account any amounts that such
Member is deemed to be obligated to restore pursuant to the
penultimate sentences in Sections 1.704-2(g)(1) and 1.704-2(i)(5) of
the Regulations; and
ARTICLE
ARTICLE (ii) debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(D)(4), 1.704-1(b)(2)(ii)(D)(5) and 1.704-
1(b)(2)(ii)(D)(6) of the Regulations.
ARTICLE
ARTICLE This 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.
ARTICLE
ARTICLE "AFFILIATE" means, with respect to a given Member, (i) any
other Person directly or indirectly holding any beneficial interest in such
Member; or (ii) any other Person directly or indirectly controlling,
controlled by, or under common control with such Member; or (iii) any past
or present officer, director, employee, stockholder, member, partner or
beneficial owner of any Person referred to in the foregoing clauses (i) or
(ii); or (iv) any Person controlling, controlled by, or under common
control with any Person referred to in the foregoing clauses (i), (ii) or
(iii).
ARTICLE
ARTICLE "AGREEMENT" means this Limited Liability Company Operating
Agreement, as amended, modified, supplemented or restated from time to
time.
ARTICLE
ARTICLE "AIRCRAFT" means individually or collectively the twenty (20)
XxXxxxxxx Xxxxxxx DC-9-41 aircraft acquired from Scandinavian Airlines
System Denmark-Norway-Sweden, a consortium organized under the laws of
Denmark, Norway and Sweden with its principal office at X-000 00 Xxxxxxxxx,
Xxxxxx, pursuant to that certain Aircraft Purchase Agreement, to be
executed September 10, 1998, including the airframe and the Engines and all
appliances, accessories, instruments, components and other items of
equipment and all replacements, renewals and additions made to the
foregoing in accordance with the Aircraft Purchase Agreement. Where the
context permits, references to "the Aircraft" shall include the Manuals and
Technical Records and shall, unless otherwise provided herein, mean the
Aircraft as a whole and any part thereof.
ARTICLE
ARTICLE "AIRCRAFT LOAN CAPITAL CONTRIBUTION" has the meaning set forth
in Section 3.3.
ARTICLE
ARTICLE "ALLOCATION YEAR" means (i) the period commencing on the
Closing Date and ending on December 31, 1998, (ii) any subsequent
twelve-month period commencing on January 1 and ending on December 31 or
(iii) any portion of the period described in clauses (i) or (ii) of this
definition for which the Company is required to allocate Profits, Losses
and other items of income, gain, loss or deduction pursuant to Article IV.
ARTICLE
ARTICLE "ANNUAL BUDGETS" means the Annual Capital Budget and the
Annual Operating Budget.
ARTICLE
ARTICLE "ANNUAL CAPITAL BUDGET" has the meaning set forth in Section
9.3(a).
ARTICLE
ARTICLE "ANNUAL OPERATING BUDGET" has the meaning set forth in Section
9.3(a).
ARTICLE
ARTICLE "APPLICABLE LAW" means any statute, law, ordinance, rule,
regulation or judicial decision of any Government Authority that governs
the relevant matter, transaction or conduct.
ARTICLE
ARTICLE "BUSINESS DAYS" means Monday through Friday, excluding federal
holidays that fall on those days.
ARTICLE "BUYING PARTY" has the meaning set forth in Section 10.5(a).
ARTICLE
ARTICLE "CAPITAL ACCOUNT" means, with respect to any Member, the
capital account maintained for such Member in accordance with the following
provisions:
ARTICLE
ARTICLE (i) To each Member's Capital Account there shall be
credited (a) such Member's Capital Contributions, (b) such Member's
distributive share of Profits and any items in the nature of income or
gain that are specially allocated pursuant to Section 4.3 or 4.4 and
(c) the amount of any liabilities of the Company assumed by such
Member or secured by any Property distributed to such Member. The
principal amount of a promissory note that is not readily traded on an
established securities market and that is contributed to the Company
by the maker of the note (or a Member related to the maker of the note
within the meaning of Section 1.704-1(b)(2)(ii)(C) of the Regulations)
shall not be included in the Capital Account of any Member until the
Company makes a taxable disposition of the note or until (and to the
extent) principal payments are made on the note, all in accordance
with Section 1.704-1(b)(2)(iv)(D)(2) of the Regulations;
ARTICLE
ARTICLE (ii) To each Member's Capital Account there shall be
debited (a) the amount of money and the Gross Asset Value of any
Property distributed to such Member pursuant to any provision of this
Agreement, (b) such Member's distributive share of Losses and any
items in the nature of expenses or losses that are specially allocated
pursuant to Section 4.3 or 4.4 and (c) the amount of any liabilities
of such Member assumed by the Company or secured by any Property
contributed by such Member to the Company;
ARTICLE
ARTICLE (iii) In the event ownership of Units is transferred in
accordance with the terms of this Agreement, the transferee of such
Units shall succeed to the Capital Account of the transferor of such
Units to the extent such Capital Account relates to the transferred
Units; and
ARTICLE
ARTICLE (iv) In determining the amount of any liability for
purposes of clauses (i) and (ii) of this definition there shall be
taken into account Section 752(c) of the Code and any other applicable
provisions of the Code and the Regulations.
ARTICLE
ARTICLE The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to
comply with Section 1.704-1(b) of the Regulations and shall be interpreted
and applied in a manner consistent with such Regulations. In the event the
Management Committee shall determine that it is prudent to modify the
manner in which the Capital Accounts, or any debits or credits thereto
(including, without limitation, debits or credits relating to liabilities
secured by contributed or distributed Property or assumed by the Company or
any Members), are computed in order to comply with such Regulations, the
Management Committee may make such modification, PROVIDED that such
modification is not likely to have a material effect on the amounts
distributed to any Person pursuant to Article XI upon the dissolution of
the Company. The Management Committee also shall (a) make any adjustments
that are necessary or appropriate to maintain equality between the Capital
Accounts of the Members and the amount of capital reflected on the
Company's balance sheet, as computed for book purposes, in accordance with
Section 1.704-1(b)(2)(iv)(Q) of the Regulations and (b) make any
appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Section 1.704-1(b) of the
Regulations.
ARTICLE
ARTICLE "CAPITAL CONTRIBUTIONS" means, with respect to any Member, the
amount of money and the initial Gross Asset Value of any Property (other
than money) contributed to the Company with respect to the Units held or
purchased by such Member, including, without limitation, Additional Capital
Contributions. To the extent that any Member incurs an expense that is
subsequently reimbursed by the Company, such amount shall not at any time
be construed or treated as a Capital Contribution.
ARTICLE
ARTICLE "CAPITAL PROCEEDS" has the meaning set forth in Section 5.1.
ARTICLE
ARTICLE "CAPITAL TRANSACTION" has the meaning set forth in Section
5.1.
ARTICLE
ARTICLE "CERTIFICATE" means the certificate of formation filed with
the Office of the Secretary of State of the State of Delaware pursuant to
the Act to form the Company, as originally executed and amended, modified,
supplemented or restated from time to time, as the context requires.
ARTICLE
ARTICLE "CERTIFICATE OF CANCELLATION" means a certificate filed in
accordance with 6 Del. C. 18-203.
ARTICLE
ARTICLE "CHIEF EXECUTIVE OFFICER" means the Chief Executive Officer of
the Company, including any interim Chief Executive Officer.
ARTICLE
ARTICLE "CODE" means the Internal Revenue Code of 1986, as amended.
All references to provisions of the Code or to any Regulations promulgated
thereunder shall be deemed to include any successor provisions thereto.
ARTICLE
ARTICLE "COMPANY" means Air 41 LLC.
ARTICLE
ARTICLE "CLOSING DATE" means September 9, 1998, the first date this
Agreement has been executed by both IASG and AirCorp.
ARTICLE
ARTICLE "DEBT" means, with respect to the Company, (i) any
indebtedness for borrowed money or the deferred purchase price of Property
as evidenced by notes, bonds or other instruments, (ii) obligations as
lessee under capital leases, (iii) obligations secured by any Lien existing
on any asset owned or held (whether or not the Company has assumed or
become liable for the obligations secured thereby), (iv) any obligation
under any interest rate swap agreement, (v) accounts payable and (vi)
obligations under direct or indirect guarantees of (including, but not
limited to, obligations (contingent or otherwise) to assure a creditor
against loss in respect of) indebtedness or obligations of the kinds
referred to in clauses (i), (ii), (iii), (iv) and (v) of this definition,
PROVIDED that Debt shall not include obligations in respect of any accounts
payable that are incurred in the ordinary course of the Company's business
and are not delinquent or are being contested in good faith by appropriate
proceedings.
ARTICLE
ARTICLE "DEFAULTER"has the meaning set forth in Section 3.3.
ARTICLE
ARTICLE "DEPRECIATION" means, for each Allocation Year, an amount
equal to the aggregate depreciation, amortization or other cost recovery
deduction allowable with respect to the assets owned by the Company
(including, but not limited to, such assets contributed to the Company by
AirCorp and IASG), except that if the Gross Asset Value of such an asset
differs from its adjusted basis for federal income tax purposes at the
beginning of such Allocation Year, Depreciation therefor shall be an amount
that bears the same ratio to such beginning Gross Asset Value as the
federal income tax depreciation, amortization or other cost recovery
deduction for such Allocation Year bears to such beginning adjusted tax
basis; PROVIDED, HOWEVER, that if the adjusted basis for federal income tax
purposes of such an asset at the beginning of such Allocation Year is zero
(0), Depreciation shall be determined with reference to such beginning
Gross Asset Value using any reasonable method selected by the Management
Committee.
ARTICLE
ARTICLE "DISSOLUTION EVENT" has the meaning set forth in
Section 11.1(a).
ARTICLE
ARTICLE "ENGINE(S)" means the two (2) Xxxxx & Xxxxxxx JT8D-11 engines
installed on each Aircraft at the time of delivery or any other engines
installed on the Aircraft which become the property of the Company or which
having been removed therefrom remain the property of the Company, together
with all equipment and accessories from time to time belonging to,
installed in or appurtenant to such engines.
ARTICLE
ARTICLE "EQUITY INTEREST" has the meaning set forth in Section
10.5(b).
ARTICLE
ARTICLE "EXERCISE NOTICE" has the meaning set forth in Section
10.5(b).
ARTICLE
ARTICLE "EXERCISE NOTICE DATE" has the meaning set forth in Section
10.5(b).
ARTICLE
ARTICLE "FINAL FISCAL YEAR" means, with respect to the Company, the
period commencing on January 1 of the calendar year in which the last of
the Property is distributed to the Members pursuant to Article XI and
ending on the date on which such final distribution is made.
ARTICLE
ARTICLE "FISCAL QUARTER" means, with respect to the Company, (i) the
period commencing on the Closing Date and ending on September 30, (ii) any
subsequent three-month period commencing on each of January 1, April 1,
July 1, and October 1 and ending on the last date before the next such date
and (iii) the period commencing on the last to occur of January 1, April 1,
July 1 or October 1 in the Final Fiscal Year and ending on the final day of
the Final Fiscal Year.
ARTICLE
ARTICLE "FISCAL YEAR" means, with respect to the Company, (i) the
period commencing on the Closing Date and ending on December 31, (ii) any
subsequent twelve-month period commencing on January 1 and ending on
December 31 and (iii) the Final Fiscal Year.
ARTICLE
ARTICLE "GOVERNMENTAL AUTHORITY" means any court, arbitrator,
department, commission, board, bureau, agency, authority, instrumentality
or other governmental body, whether federal, state, municipal, foreign or
other.
ARTICLE "GROSS ASSET VALUE" means, with respect to any asset, such
asset's adjusted basis for federal income tax purposes, except as follows:
ARTICLE
ARTICLE (i) the initial Gross Asset Value of any asset contributed by
a Member to the Company shall be the gross fair market value of such
asset, as determined by the Management Committee;
ARTICLE
ARTICLE (ii) the Gross Asset Values of all assets of the Company
shall be adjusted to equal their respective gross fair market values
(taking Section 7701(g) of the Code into account), as determined by
the Management Committee as of the following times: (a) the
acquisition of Units by any new or existing Member in exchange for
more than a DE MINIMIS Capital Contribution; (b) the distribution by
the Company to a Member of more than a DE MINIMIS amount of Property
as consideration for Units; and (c) the liquidation of the Company
within the meaning of Section 1.704-1(b)(2)(ii)(G) of the Regulations,
PROVIDED that an adjustment described in clauses (a) and (b) of this
paragraph shall be made only if the Management Committee reasonably
determines that such adjustment is necessary to reflect the relative
economic interests of the Members in the Company;
ARTICLE
ARTICLE (iii) the Gross Asset Value of any item of assets of the
Company distributed to any Member shall be adjusted to equal the gross
fair market value (taking Section 7701(g) of the Code into account) of
such asset on the date of distribution as determined by the Management
Committee; and
ARTICLE
ARTICLE (iv) the Gross Asset Values of assets of the Company shall be
increased (or decreased) to reflect any adjustments to the adjusted
basis of such assets pursuant to Section 734(b) or 743(b) of the Code,
but only to the extent that such adjustments are taken into account in
determining Capital Accounts pursuant to Section 1.704-1(b)(2)(iv)(M)
of the Regulations and clause (vi) of the definition of Profits and
Losses or Section 4.3(c); PROVIDED, HOWEVER, that Gross Asset Values
shall not be adjusted pursuant to this clause (iv) to the extent that
an adjustment pursuant to clause (ii) of this definition is required
in connection with a transaction that would otherwise result in an
adjustment pursuant to this clause (iv).
ARTICLE
ARTICLE If the Gross Asset Value of an asset has been determined or
adjusted pursuant to clause (ii) or (iv) of this definition, such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of computing Profits and
Losses.
ARTICLE
ARTICLE "INTERVENOR" has the meaning set forth in Section 3.3.
ARTICLE
ARTICLE "ISSUANCE ITEMS" has the meaning set forth in Section 4.3(h).
ARTICLE
ARTICLE "LENDER" means FINOVA Capital Corporation and its successors
and assigns with respect to the Loan.
ARTICLE
ARTICLE "LIEN" means a lien (statutory or otherwise), security
interest, deed of trust, deed to secure debt, claim, charge, pledge,
license, equity, option, conditional sales contract, easement, assessment,
levy, covenant, condition, right of way, reservation, restriction,
exception, limitation, charge or encumbrance of any nature whatsoever.
ARTICLE
ARTICLE "LIQUIDATION PERIOD" has the meaning set forth in Section
11.7.
ARTICLE
ARTICLE "LIQUIDATOR" means a Person appointed by the Management
Committee to oversee the liquidation of the Company in accordance with the
terms hereof.
ARTICLE
ARTICLE "LOAN" shall mean the principal amount of the loan made by the
Lender pursuant to the Loan Agreement and outstanding from time to time and
due the Lender under the Loan Agreement.
ARTICLE
ARTICLE "LOAN AGREEMENT" shall mean the Secured Loan Agreement between
FINOVA Capital Corporation, as Lender, and AIR 41 LLC, as Borrower.
ARTICLE
ARTICLE "LOAN DOCUMENTS" means the Loan Agreement and any and all
other documents that are executed and delivered in connection with
obtaining the Loan.
ARTICLE
ARTICLE "LOSSES" has the meaning set forth in the definition of
"PROFITS" and "LOSSES".
ARTICLE
ARTICLE "MANAGEMENT COMMITTEE" has the meaning set forth in Section
6.1(a).
ARTICLE
ARTICLE "MANAGER" means any of the individuals designated by a Member
in accordance with Article VI to serve on the Management Committee and
"MANAGERS" means all of such individuals.
ARTICLE
ARTICLE "MANUALS AND TECHNICAL RECORDS" means all such manuals,
technical data, log books and other records pertaining to the Aircraft.
ARTICLE
ARTICLE "MEMBER" means, for the period such Person has not ceased to
be a member of the Company, AirCorp, IASG or any permitted successor to
their respective Units in accordance with Section 10.3, and "MEMBERS" means
all of such Persons.
ARTICLE
ARTICLE "MEMBER NONRECOURSE DEBT" has the meaning given the term
"partner nonrecourse debt" in Section 1.704-2(b)(4) of the Regulations.
ARTICLE
ARTICLE "MEMBER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with
respect to each Member Nonrecourse Debt, equal to the Minimum Gain that
would result if such Member Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
ARTICLE
ARTICLE "MEMBER NONRECOURSE DEDUCTIONS" has the meaning given the term
"partner nonrecourse deductions" in Sections 1.704-2(i)(1) and 1.704-
2(i)(2) of the Regulations.
ARTICLE
ARTICLE "MINIMUM GAIN" has the meaning given the term "partnership
minimum gain" in Sections 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
ARTICLE
ARTICLE "NET OPERATING CASH FLOW" has the meaning set forth in Section
5.1.
ARTICLE
ARTICLE "NONRECOURSE DEDUCTIONS" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
ARTICLE
ARTICLE "NONRECOURSE LIABILITY" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
ARTICLE
ARTICLE "PERCENTAGE INTEREST" means, with respect to any Member as of
any date, the ratio (expressed as a percentage) of the number of Units held
by such Member on such date to the aggregate Units held by all Members on
such date. The initial Percentage Interest of each Member is set forth in
Section 3.1.
ARTICLE
ARTICLE "PERSON" means an individual, partnership, joint venture,
corporation, trust or other association or entity.
ARTICLE
ARTICLE "PERMITTED TRANSFEREE" has the meaning set forth in Section
10.2.
ARTICLE
ARTICLE "PREFERRED RETURN" has the meaning set forth in Section 5.1.
ARTICLE
ARTICLE "PROFITS" and "LOSSES" mean, for each Allocation Year, an
amount equal to the Company's taxable income or loss for such Allocation
Year, determined in accordance with Section 703(a) of the Code (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Section 703(a)(1) of the Code shall be included in
taxable income or loss), with the following adjustments (without
duplication):
ARTICLE
ARTICLE (i) any income of the Company that is exempt from federal
income tax and not otherwise taken into account in computing Profits
or Losses pursuant to this definition shall be added to such taxable
income or loss;
ARTICLE
ARTICLE (ii) any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B)
expenditures pursuant to Section 1.704-1(b)(2)(iv)(I) of the
Regulations, and not otherwise taken into account in computing Profits
or Losses pursuant to this definition shall be subtracted from such
taxable income or loss;
ARTICLE
ARTICLE (iii) in the event the Gross Asset Value of any asset of
the Company is adjusted pursuant to clauses (ii) or (iii) of the
definition of Gross Asset Value, the amount of such adjustment shall
be treated as an item of gain (if such adjustment increases the Gross
Asset Value of such asset) or an item of loss (if such adjustment
decreases the Gross Asset Value of such asset) from the disposition of
such asset and shall be taken into account for purposes of computing
Profits or Losses;
ARTICLE (iv) gain or loss resulting from any disposition of
Property with respect to which gain or loss is recognized for federal
income tax purposes shall be computed by reference to the Gross Asset
Value of Property disposed of, notwithstanding that the adjusted tax
basis of such Property differs from its Gross Asset Value;
ARTICLE
ARTICLE (v) in lieu of the depreciation, amortization and other
cost recovery deductions taken into account in computing such taxable
income or loss, there shall be taken into account Depreciation for
such Allocation Year;
ARTICLE
ARTICLE (vi) to the extent an adjustment to the adjusted tax
basis of any asset of the Company in accordance with Section 734(b) of
the Code is required, pursuant to Section 1.704-(b)(2)(iv)(M)(4) of
the Regulations, to be taken into account in determining Capital
Accounts as a result of a distribution other than in liquidation of a
Member's interest in the Company, the amount of such adjustment shall
be treated as an item of gain (if such adjustment increases the basis
of such asset) or loss (if such adjustment decreases such basis) from
the disposition of such asset and shall be taken into account for
purposes of computing Profits or Losses; and
ARTICLE
ARTICLE (vii) notwithstanding any other provision of this
definition, any items that are specially allocated pursuant to Section
4.3 or 4.4 shall not be taken into account in computing Profits or
Losses.
ARTICLE
ARTICLE The amounts of the items of income, gain, loss or deduction
available to be specially allocated pursuant to Sections 4.3 and 4.4 shall
be determined by applying rules analogous to those set forth in clauses (i)
through (vi) of this definition.
ARTICLE
ARTICLE "PROPERTY" means all real property and personal property
acquired by the Company (including, without limitation, cash) and any
improvements thereto, and shall include both tangible and intangible
property.
ARTICLE
ARTICLE "REGULATIONS" means the Income Tax Regulations, including
Temporary Regulations, promulgated under the Code, as such Regulations are
amended from time to time.
ARTICLE
ARTICLE "REGULATORY ALLOCATIONS" has the meaning set forth in Section
4.4.
ARTICLE
ARTICLE "SELLING PARTY" has the meaning set forth in Section 10.5(a).
ARTICLE
ARTICLE "SIGNIFICANT TRANSACTION" has the meaning set forth in Section
6.7.
ARTICLE
ARTICLE "TAX MATTERS MEMBER" has the meaning set forth in Section
9.4(a).
ARTICLE
ARTICLE "TRANSFER" has the meaning set forth in Section 10.1(a).
ARTICLE
ARTICLE "UNITS" means the ownership interest in the Company, which
includes, but is not limited to, any and all benefits to which the holder
of such Unit may be entitled as provided in this Agreement, together with
all obligations with which such interest holder must comply in accordance
with the terms and provisions of this Agreement. The number of initial
Units of each Member is set forth in Section 3.1.
ARTICLE
ARTICLE "UNPAID PREFERRED RETURN ACCOUNT" has the meaning set forth in
Section 5.1.
ARTICLE
ARTICLE "WHOLLY OWNED AFFILIATE" of any Person means (i) an Affiliate
of such Person one hundred percent (100%) of the voting stock or beneficial
ownership of which is owned directly by such Person or by any Person that,
directly or indirectly, owns one hundred percent (100%) of the voting stock
or beneficial ownership of such Person, (ii) an Affiliate of such Person
that, directly or indirectly, owns one hundred percent (100%) of the voting
stock or beneficial ownership of such Person and (iii) any Person one
hundred percent (100%) of the voting stock or beneficial ownership of which
is owned directly by an Affiliate described in clause (i) or (ii) of this
definition.
ARTICLE
****ARTII. : THE COMPANYARTICLE II THE COMPANY
ARTICLE
ARTICLE SECTION 2.1A FORMATIONSection 2.1a Formation . The Company
has been formed prior to the Closing Date as a limited liability company
under and pursuant to the provisions of the Act. The fact that the
Certificate is on file in the Office of the Secretary of State of the State
of Delaware shall constitute notice that the Company is a limited liability
company. Simultaneously with the execution of this Agreement, each of
AirCorp and IASG shall be admitted as members of the Company. The rights
and liabilities of the Members shall be as provided under the Act, the
Certificate and this Agreement. The Certificate, as amended, presented to
the Members prior to the Closing Date is hereby approved by the Members and
all actions taken by the Company's counsel, King & Spalding, in connection
with the formation of the Company are hereby ratified and approved by the
Members. A copy of such Certificate is attached as Exhibit A hereto.
ARTICLE
ARTICLE SECTION 2.2A NAMESection 2.2a Name . All business of the
Company shall be conducted in its name. The Management Committee may from
time to time change the name of the Company upon ten (10) Business Days'
prior written notice to the Members.
ARTICLE
ARTICLE SECTION 2.3A PURPOSESSection 2.3a Purposes . Notwithstanding
any other provision of this Agreement or any provision of law that
otherwise so empowers the Company, the purposes for which the Company is
organized are limited solely to (a) acquiring, owning, holding, leasing,
maintaining, managing, financing, pledging, mortgaging, selling,
transferring, exchanging and otherwise dealing with and exploiting the
Aircraft, the Engines and the airframes, (b) obtaining the Loan, entering
into the Loan Agreement and the other Loan Documents, and consummating the
transactions contemplated by the Loan Documents, and (c) transacting any
and all lawful business for which a limited liability company may be
organized under the laws of the State of Delaware that is incident,
necessary and appropriate to accomplish the foregoing.
ARTICLE
ARTICLE SECTION 2.4A PRINCIPAL PLACE OF BUSINESSSection 2.4a Principal
Place of Business . The principal place of business of the Company shall
initially be 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, 00000. The
registered office of the Company in the State of Delaware shall initially
be at 0000 Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
The Management Committee may from time to time change the principal place
of business or the registered office of the Company to any other place upon
ten (10) Business Days' prior written notice to the Members.
ARTICLE
ARTICLE SECTION 2.5A TERMSection 2.5a Term . The term of the Company
shall commence on the date the Certificate is filed in the office of the
Secretary of State of the State of Delaware in accordance with the Act and
shall continue until the dissolution and the completion of the winding up
and liquidation of the Company in accordance with Article XI.
ARTICLE
ARTICLE SECTION 2.6A FILINGS; AGENT FOR SERVICE OF PROCESSSection 2.6a
Filings; Agent for Service of Process .
ARTICLE
*a)DELAWARE FILINGS. Subject to the terms hereof and Applicable Law,
the Management Committee shall take any and all actions reasonably
necessary to perfect and maintain the status of the Company as a limited
liability company under the Applicable Laws of the State of Delaware,
including, but not limited to, the preparation and filing of such
documents, instruments and publications as may be required by Applicable
Law.
(
*b)OTHER FILINGS. The Members and the Management Committee shall
execute and cause to be filed original or amended certificates and shall
take any and all other actions as may be reasonably necessary to perfect
and maintain the status of the Company as a limited liability company or
its qualification to do business under the Applicable Laws of any other
jurisdictions in which the Company engages in business.
(
*c)AGENT FOR SERVICE OF PROCESS. The registered agent for service of
process on the Company in the State of Delaware shall be the Corporation
Trust Company or any successor as appointed by the Management Committee
upon ten (10) Business Days' prior written notice to the Members.
(
*d)CERTIFICATE OF CANCELLATION. Upon the dissolution and completion
of the winding up and liquidation of the Company in accordance with Article
XI, the Management Committee shall promptly execute and cause to be filed a
Certificate of Cancellation in accordance with the Act and any similar
filing under the Applicable Laws of any other jurisdiction in which the
Management Committee deems such filing necessary or advisable.
(
(SECTION 2.7A TITLE TO PROPERTYSection 2.7a Title to Property . All
Property owned by the Company shall be owned by the Company as an entity
and no Member shall have any ownership interest in such Property in such
Member's name. At all times after the Closing Date, the Company shall hold
title to all Property in the name of the Company and not in the name of any
Member. Units shall be the personal property of the owner thereof for all
purposes.
(
(SECTION 2.8A PAYMENTS OF INDIVIDUAL OBLIGATIONSSection 2.8a Payments
of Individual Obligations . The Company's credit and assets shall be used
solely for the benefit of the Company, and no asset of the Company shall be
transferred or encumbered for, or in payment of, any individual obligation
of any Member.
(
(SECTION 2.9A INDEPENDENT ACTIVITIESSection 2.9a Independent
Activities . Each Manager shall be required to devote such time to the
affairs of the Company as may be necessary to fulfill such Manager's
responsibilities and obligations hereunder and under the Act, and shall be
free to serve any other Person or enterprise in any capacity that such
Manager may deem appropriate in such Manager's discretion.
(
****ARTIII. : CAPITAL CONTRIBUTIONSARTICLE III CAPITAL CONTRIBUTIONS
ARTICLE
ARTICLE SECTION 3.1A INITIAL CAPITAL CONTRIBUTIONSSection 3.1a Initial
Capital Contributions . The name, address, initial Capital Contribution
and initial Percentage Interest of each of the Members are as follows:
ARTICLE
ARTICLE
ARTICLE ARTICLE ARTICLE ARTICLE
ARTICLE NAMES AND ADDRESSES ARTICLE ARTICLE ARTICLE
INITIAL PERCENTAGE INITIAL
CAPITAL INTEREST UNITS
CONTRIBUTION
ARTICLE ARTICLE ARTICLE
ARTICLE AirCorp, Inc. ARTICLE $2 ARTICLE ARTICLE
ARTICLE 0000 Xxxx Xxxxxxxxx Xxxxxxx million in 50% 2,000
ARTICLE Xxxxxx, XX 00000 cash
ARTICLE ARTICLE ARTICLE
ARTICLE International Airline Support ARTICLE $2 ARTICLE ARTICLE
Group, Inc. million in 50% 2,000
ARTICLE 0000 Xxxxxxx Xxxx, Xxxxx 000 cash
ARTICLE Xxxxxxx, XX 00000
ARTICLE
ARTICLE SECTION 3.2A ADDITIONAL CAPITAL CONTRIBUTIONSSection 3.2a
Additional Capital Contributions . Except as provided in Section 3.3
herein, the Members may make Additional Capital Contributions only with the
written consent of all Members. Except as provided in Section 3.3 herein,
the making of any Additional Capital Contribution shall not change the
Percentage Interest and Units of each Member unless the Members unanimously
agree otherwise.
ARTICLE
ARTICLE SECTION 3.3A AIRCRAFT LOAN CAPITAL CONTRIBUTIONSection 3.3a
Aircraft Loan Capital Contribution .
ARTICLE
*a)GENERAL. AirCorp and IASG shall each be obligated to make an
Additional Capital Contribution in accordance with the terms of the Loan
Documents (the "AIRCRAFT LOAN CAPITAL CONTRIBUTION"). The amount and
nature of the Aircraft Loan Capital Contribution may vary from time to
time, as provided for under the Loan Documents. At all times that the
Aircraft Loan Capital Contribution is in effect, AirCorp and IASG shall
each be liable for one-half ( 1/2 ) of such obligation. In lieu of
contributing cash, AirCorp and IASG may contribute a letter of credit or
other instrument, provided the Management Committee approves and provided
such instrument is permitted under the terms of the Loan Documents. The
Aircraft Loan Capital Contribution shall specifically not include the
"Limited Guarantee" provided by AirCorp under the Loan Documents.
(
*b)UNITS. As a result of the Aircraft Loan Capital Contribution, the
Company shall allocate an additional Units equal to (x) the amount of the
Aircraft Loan Capital Contribution divided by (y) one thousand dollars
($1,000). The Company will allocate these additional Units to the Members
in proportion to the respective shares of the Aircraft Loan Capital
Contribution made or maintained by the Members as of any given date.
(
*c)FAILURE OF MEMBER TO SATISFY ITS SHARE. If a Member, be it AirCorp
or IASG (the "DEFAULTER"), fails, in whole or in part, to make or maintain
its share of the Aircraft Loan Capital Contribution at any time that such
obligation is in effect, then the other Member (the "INTERVENOR") shall
have the rights described in this Section 3.3(c).
(
*(1)The Intervenor shall have the right, at its sole discretion,
to make and maintain all or a part of the portion of the Aircraft Loan
Capital Contribution that the Defaulter failed to make or maintain.
(
*(2)The Intervenor shall maintain a record of the costs and
expenses incurred in exercising its rights under this Section 3.3(c),
including, without limitation, any and all applicable banking,
accounting and legal fees, any interest expense (whether actual or a
reasonable deemed interest expense), and actual cash contributions.
The Intervenor shall provide a written summary of such costs and
expenses to the Company and the Defaulter on a periodic basis. Such
costs and expenses shall constitute a claim of the Intervenor against
the Defaulter. Notwithstanding anything else in this Agreement, the
Company shall offset the entire amount of any distributions to the
Defaulter to satisfy such claim, until such time as the entire claim
has been satisfied. The Intervenor shall also have all other remedies
provided for under Applicable Law.
(
*(3)On any day on which the Intervenor makes or maintains all or
a part of the Defaulter's share of the Aircraft Loan Capital
Contribution under this Section 3.3(c), the Company shall allocate the
additional Units described in Section 3.3(b) in accordance with each
Member's share of the Aircraft Loan Capital Contribution, after taking
into account the Intervenor's exercise of its rights under this
Section 3.3(c). The parties agree and acknowledge that except in the
case where AirCorp and IASG make and maintain equal shares of the
Aircraft Loan Capital Contribution, the Percentage Interests of such
Members shall increase or decrease, as the case may be, to reflect the
Company's allocation of additional Units, and the Intervenor may, as a
result, be allocated a greater share than the Defaulter of the
Company's Profit and Loss, and receive a greater distribution than the
Defaulter of the Company's Net Operating Cash Flow (including the
Preferred Return) and Capital Proceeds.
(
*(4)At any time after the Intervenor's exercise of its rights
under this Section 3.3(c), the Defaulter may provide notice to the
Company and the Intervenor of its intention to make and maintain its
full share of the Aircraft Loan Capital Contribution. The Defaulter
shall be entitled to make and maintain the portion of its share of the
Aircraft Loan Capital Contribution that it failed to make or maintain
at such earlier time only after the Defaulter has reimbursed the
Intervenor in cash the balance of any costs and expenses described in
Section 3.3(c)(ii). Upon the Defaulter making and maintaining its
full share of the Aircraft Loan Capital Contribution, the Company
shall allocate the additional Units in accordance with Section 3.3(b),
but in no event shall the Defaulter's reimbursement of costs and
expenses be treated as a Capital Contribution by the Defaulter or a
reduction in Capital Contributions with respect to the Intervenor.
(
****ARTIII. : ALLOCATIONS OF PROFIT AND LOSSARTICLE IV ALLOCATIONS OF
PROFIT AND LOSS
ARTICLE
ARTICLE SECTION 4.1A PROFITSSection 4.1a Profits . After giving
effect to the special allocations set forth in Sections 4.3 and 4.4,
Profits for any Allocation Year shall be allocated to each Member in
proportion to such Member's Percentage Interest.
ARTICLE
ARTICLE SECTION 4.2A LOSSESSection 4.2a Losses . After giving effect
to the special allocations set forth in Sections 4.3 and 4.4 and subject to
Section 4.5, Losses for any Allocation Year shall be allocated to each
Member in proportion to such Member's Percentage Interest.
ARTICLE
ARTICLE SECTION 4.3A SPECIAL ALLOCATIONSSection 4.3a Special
Allocations . The following special allocations shall be made in the
following order:
ARTICLE
*a)MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Article IV, if there is a net decrease in Minimum Gain during any
Allocation Year, each Member shall be specially allocated items of income
and gain for such Allocation Year (and, if necessary, subsequent Allocation
Years) in an amount equal to such Member's share of the net decrease in
Minimum Gain, determined in accordance with Section 1.704-2(g) of the
Regulations. Allocations pursuant to the previous sentence shall be made
in proportion to the respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated shall be determined
in accordance with Sections 1.704-2(f)(6) and 1.704-2(j)(2) of the
Regulations. This Section 4.3(a) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(f) of the Regulations and
shall be interpreted consistent therewith.
(
*b)MEMBER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other
provision of this Article IV, if there is a net decrease in the Member
Nonrecourse Debt Minimum Gain attributable to a Member Nonrecourse Debt
during any Allocation Year, each Member who has a share of such Member
Nonrecourse Debt Minimum Gain, determined in accordance with Section 1.704-
2(i)(5) of the Regulations, shall be specially allocated items of income
and gain for such Allocation Year (and, if necessary, subsequent Allocation
Years) in an amount equal to such Member's share of the net decrease in
such Member Nonrecourse Debt, determined in accordance with Section 1.704-
2(i)(4) of the Regulations. Allocations pursuant to the previous sentence
shall be made in proportion to the respective amounts required to be
allocated to each Member pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-
2(j)(2) of the Regulations. This Section 4.3(b) is intended to comply with
the minimum gain chargeback requirement in Section 1.704-2(i)(4) of the
Regulations and shall be interpreted consistent therewith.
(
*c)QUALIFIED INCOME OFFSET. In the event any Member unexpectedly
receives any adjustments, allocations or distributions described in Section
1.704-1(b)(2)(ii)(D)(4), 1.704-1(b)(2)(ii)(D)(5) or 1.704-1(b)(2)(ii)(D)(6)
of the Regulations, items of income and gain shall be specially allocated
to such Member in an amount and manner sufficient to eliminate, to the
extent required by the Regulations, the Adjusted Capital Account Deficit of
such Member as soon as possible, PROVIDED that an allocation pursuant to
this Section 4.3(c) shall be made only if and to the extent that such
Member would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Article IV have been tentatively made as
if this Section 4.3(c) were not in this Agreement.
(
*d)GROSS INCOME ALLOCATION. In the event any Member has a deficit
Capital Account at the end of any Allocation Year that is in excess of the
sum of (i) the amount such Member is obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations, each such Member shall be specially allocated items of income
and gain in the amount of such excess as quickly as possible, PROVIDED that
an allocation pursuant to this Section 4.3(d) shall be made only if and to
the extent that such Member would have a deficit Capital Account in excess
of such sum after all other allocations provided for in this Article IV
have been made as if Section 4.3(c) and this Section 4.3(d) were not in
this Agreement.
(
*e)NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Allocation
Year shall be specially allocated to each Member in proportion to such
Member's Percentage Interest.
(
*f)MEMBER NONRECOURSE DEDUCTIONS. Any Member Nonrecourse Deductions
for any Allocation Year shall be specially allocated to the Member who
bears the economic risk of loss with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are attributable in accordance
with Section 1.704-2(i)(1) of the Regulations.
(
*g)SECTION 754 ADJUSTMENTS. To the extent an adjustment to the
adjusted tax basis of any asset of the Company pursuant to Section 734(b)
or 743(b) of the Code is required, in accordance with Section
1.704-1(b)(2)(iv)(M)(2) or 1.704-1(b)(2)(iv)(M)(4) of the Regulations, to
be taken into account in determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of such Member's interest
in the Company, the amount of such adjustment to Capital Accounts shall be
treated as an item of gain (if such adjustment increases the basis of the
asset) or loss (if such adjustment decreases such basis) and such gain or
loss shall be specially allocated (i) to each Member in accordance with
such Member's Percentage Interest in the event
Section 1.704-1(b)(2)(iv)(M)(2) of the Regulations applies or (ii) to the
Member to whom such distribution was made in the event
Section 1.704-1(b)(2)(iv)(M)(4) of the Regulations applies.
(
*h)ALLOCATIONS RELATING TO TAXABLE ISSUANCE OF UNITS. Any income,
gain, loss or deduction realized as a direct or indirect result of the
issuance of Units by the Company to a Member (the "ISSUANCE ITEMS") shall
be allocated among the Members so that, to the extent possible, the net
amount of such Issuance Items, together with all other allocations under
this Agreement to each Member shall be equal to the net amount that would
have been allocated to each such Member if the Issuance Items had not been
realized.
(
(SECTION 4.4A CURATIVE ALLOCATIONSSection 4.4a Curative Allocations .
The allocations set forth in Sections 4.3(a), (b), (c), (d), (e), (f), (g)
and 4.5 (collectively, the "REGULATORY ALLOCATIONS") are intended to comply
with certain requirements of the Regulations. It is the intent of the
Members that, to the extent possible, all Regulatory Allocations shall be
offset either with other Regulatory Allocations or with special allocations
of other items of income, gain, loss or deduction pursuant to this
Section 4.4. Therefore, notwithstanding any other provision of this
Article IV (other than the Regulatory Allocations), the Management
Committee shall make such offsetting special allocations of income, gain,
loss or deduction in whatever manner it determines appropriate so that,
after such offsetting allocations are made, each Member's Capital Account
balance is, to the extent possible, equal to the Capital Account balance
such Member would have had if the Regulatory Allocations were not part of
this Agreement and all the Company items were allocated pursuant to
Sections 4.1, 4.2 and 4.3(h).
(
(SECTION 4.5A LOSS LIMITATIONSection 4.5a Loss Limitation . Losses
allocated pursuant to Section 4.2 shall not exceed the maximum amount of
Losses that can be allocated without causing any Member to have an Adjusted
Capital Account Deficit at the end of any Allocation Year. In the event
some but not all of the Members would have Adjusted Capital Account
Deficits as a consequence of an allocation of Losses pursuant to Section
4.2, Losses not allocable to any Member as a result of the limitation set
forth in this Section 4.5 shall be allocated to the other Members in
accordance with the positive balances in such Member's Capital Accounts so
as to allocate the maximum permissible Losses to each Member under Section
1.704-1(b)(2)(ii)(D) of the Regulations.
(
(SECTION 4.6A OTHER ALLOCATION RULESSection 4.6a Other Allocation
Rules .
(
*i)PERIOD. For purposes of determining the Profits, Losses or any
other items allocable to any period, Profits, Losses and any such other
items shall be determined on a daily, monthly or other basis as determined
by the Management Committee using any permissible method under Section 706
of the Code and the Regulations thereunder.
(
*j)REPORTING. Each of the Members is aware of the income tax
consequences of the allocations made by this Article IV and shall be bound
by the provisions of this Article IV in reporting such Member's share of
the Company income and loss for income tax purposes.
(
*k)EXCESS NONRECOURSE LIABILITIES. Solely for purposes of determining
a Member's proportionate share of the "excess nonrecourse liabilities" of
the Company within the meaning of Section 1.752-3(a)(3) of the Regulations,
each Member's interest in the profits of the Company is in proportion to
such Member's Percentage Interest.
(
*l)NET CASH FLOW DISTRIBUTIONS. To the extent permitted by Section
1.704-2(h)(3) of the Regulations, the Management Committee shall endeavor
to treat distributions of Net Cash Flow as having been made from the
proceeds of a Nonrecourse Liability or a Member Nonrecourse Debt only to
the extent that such distributions would cause or increase an Adjusted
Capital Account Deficit for any Member.
(
(SECTION 4.7A CODE SECTION 704(C) TAX ALLOCATIONSSection 4.7a Code
Section 704(c) Tax Allocations . In accordance with Section 704(c) of the
Code and the Regulations thereunder, income, gain, loss and deduction with
respect to any Property contributed to the capital of the Company shall,
solely for tax purposes, be allocated among the Members so as to take
account of any variation between the adjusted basis of such Property to the
Company for federal income tax purposes and its initial Gross Asset Value
using the remedial allocation method pursuant to the Regulations under
Section 704(c) of the Code.
(
(In the event the Gross Asset Value of any asset of the Company is
adjusted pursuant to clause (ii) of the definition of Gross Asset Value,
subsequent allocations of income, gain, loss and deduction with respect to
such asset shall take account of any variation between the adjusted basis
of such asset for federal income tax purposes and its Gross Asset Value in
the same manner as under Section 704(c) of the Code and the Regulations
thereunder. Any elections or other decisions relating to such allocations
shall be made by the Management Committee in any manner that reasonably
reflects the purpose and intention of this Agreement. Allocations pursuant
to this Section 4.7 are solely for purposes of federal, state and local
taxes and shall not affect, or in any way be taken into account in
computing, any Member's Capital Account or share of Profits, Losses, other
items or distributions pursuant to any provision of this Agreement.
(
****ARTIIII. : DISTRIBUTIONSARTICLE V DISTRIBUTIONS
ARTICLE
ARTICLE SECTION 5.1A DEFINITIONSSection 5.1a Definitions .
ARTICLE
ARTICLE "CAPITAL PROCEEDS" means the gross receipts received by the
Company or a Wholly Owned Affiliate from a Capital Transaction.
ARTICLE
ARTICLE "CAPITAL TRANSACTION" means any transaction not in the
ordinary course of business which results in the Company's receipt of cash
or other consideration (exclusive of Capital Contributions), including
without limitation, the sale, exchange, or other disposition of Property
not in the ordinary course of business, financings, refinancings,
condemnations, recoveries of damage awards, and insurance proceeds. The
sale of Aircraft for cash or other property shall constitute a Capital
Transaction.
ARTICLE
ARTICLE "NET OPERATING CASH FLOW" means, with respect to a given
period, the amount equal to the excess (if any) of (a) the gross cash
proceeds of the Company (not including any proceeds of Capital
Transactions) for such period over (b) the portion thereof used during such
period to pay or establish reserves for all the Company expenses, Debt
payments, capital improvements, replacements and contingencies, all as
determined by the Management Committee (including for this purpose any
expenses incurred by AirCorp or IASG that are reimbursed by the Company).
Net Operating Cash Flow shall not be reduced by depreciation, amortization,
cost recovery deductions or similar allowances, but shall be increased by
any reductions of reserves previously established pursuant to the first
sentence of this definition. If any maintenance reserves or security
deposits are held by the Company incident to a lease of Aircraft, such
amounts shall not be treated as assets or income of the Company unless and
until and only to the extent such amounts become property of the Company
under the terms of the lease under which such amounts where delivered to
the Company. Such reversion to the Company shall not be treated as a
Capital Transaction and such amounts shall not be treated as Capital
Proceeds.
ARTICLE
ARTICLE "PREFERRED RETURN" means, with respect to a given period, the
amount equal to five percent (5%) of all rental payments received by the
Company with respect to leases of the Aircraft.
ARTICLE
ARTICLE "UNPAID PREFERRED RETURN ACCOUNT" means that account
maintained by the Company for AirCorp and IASG, computed as follows: (a) if
the Net Operating Cash Flow of the Company for a given period is less than
the Preferred Return for the same period, then the Unpaid Preferred Return
Account for each Member shall be increased by an amount equal to the
product of (x) such Member's Percentage Interest during such Period and (y)
the total shortfall during such period; and (b) the balance of the Unpaid
Preferred Return Account for each Member shall be decreased by the actual
amount of any distributions to such Member pursuant to Section 5.2(b).
Neither AirCorp nor IASG shall have any right to the balance of the Unpaid
Preferred Return Account except as provided in this Article V.
ARTICLE
ARTICLE SECTION 5.2A DISTRIBUTION OF NET OPERATING CASH FLOWSection
5.2a Distribution of Net
Operating Cash Flow . The Net Operating Cash Flow shall be distributed, no
more frequently than monthly, in the following order:
ARTICLE
*a)FIRST, to AirCorp and IASG in proportion to their Percentage
Interests and to the extent of the Preferred Return;
(
*b) SECOND, to AirCorp and IASG in proportion to and to the extent of
the balance of each such Member's Unpaid Preferred Return Account; and,
(
*c)THIRD, to AirCorp and IASG, in proportion to their Percentage
Interests.
(
(SECTION 5.3A DISTRIBUTION OF CAPITAL PROCEEDSSection 5.3a
Distribution of Capital Proceeds . Reasonably soon after the occurrence of
a Capital Transaction, the Capital Proceeds arising from such Capital
Transaction shall be distributed in the following order:
(
*d)FIRST, to the payment of all Debts of the Company;
(
*e)SECOND, to the payment of all expenses of the Company incident to
the Capital Transaction;
(
*f)THIRD, to the establishment of any reserves which the Management
Committee deems necessary for Debts of the Company;
(
*g)FOURTH, to AirCorp and IASG in proportion to and to the extent of
their Capital Accounts; and,
(
*h)FIFTH, to AirCorp and IASG in proportion to their Percentage
Interests.
(
(SECTION 5.4A AMOUNTS WITHHELDSection 5.4a Amounts Withheld . The
Company is authorized to withhold from payments and distributions (or with
respect to allocations) to the Members and to pay over to any Governmental
Authority, any amounts required to be so withheld pursuant to the Code or
any provisions of any other Applicable Law, and shall allocate any such
withheld amounts to the Members based upon the amount of such payment,
distribution or allocation thereto. All amounts so withheld shall be
treated as amounts paid, distributed or allocated, as the case may be, to
the Members with respect to such payment, distribution or allocation, as
the case may be, for all purposes under this Agreement.
(
(SECTION 5.5A LIMITATIONS ON DISTRIBUTIONSSection 5.5a Limitations on
Distributions .
(
*i)GENERAL. The Company shall make no distributions to the Members
except (i) as provided in this Article V and Article XI or (ii) as
otherwise agreed to by all of the Members.
(
*j)INSOLVENCY. A Member may not receive a distribution from the
Company to the extent that, after giving effect to the distribution, all
liabilities of the Company, other than liabilities to Members on account of
their Capital Contributions, would exceed the fair value of the Company's
assets.
(
****ARTIIV. : MANAGEMENTARTICLE VI MANAGEMENT
ARTICLE
ARTICLE SECTION 6.1A MANAGERS; MANAGEMENT COMMITTEESection 6.1a
Managers; Management Committee .
ARTICLE
*a)MANAGEMENT COMMITTEE. The management of the Company shall be
vested in the committee of Managers designated by the Members as provided
in this Section 6.1 (the "MANAGEMENT COMMITTEE").
(
*b)NUMBER AND DESIGNATION. The Management Committee shall consist of
four (4) Managers of which each of AirCorp and IASG has the right to
designate two (2) Managers. Each of AirCorp and IASG hereby designate the
individuals identified on Exhibit B as Managers of the Company until their
successors are designated, each such Manager being deemed designated by the
Member set forth opposite such Manager indicated on Exhibit B. Other than
with respect to the initial Managers listed on Exhibit B, each Member shall
designate its Managers by delivering to the Company its written statement
designating its Managers and setting forth the business address and
telephone number of such Managers. A Manager shall remain a member of the
Management Committee until removed by the Member designating such Manager
in accordance with Section 6.1(c). Any Manager shall be free to designate
an alternate to serve in his or her place.
(
*c)REMOVAL. Each Member shall have the right, in its sole discretion,
to cause the removal at any time, with or without cause, of the Managers
that such Member has previously designated. Such removal shall be effected
by such Member delivering written notice to the Company of such removal.
Such notice shall also designate the individual who shall fill the position
of the removed Manager, which designation shall be effected immediately
following such removal.
(
*d)VACANCY. If, as the result of death, disability, retirement or
resignation, there shall exist or occur any vacancy on the Management
Committee, the Member entitled to designate such former Manager shall
promptly following the creation of such vacancy designate another
individual to be the successor of such former Manager.
(
*e)VOTING; QUORUM. Each Manager shall have one (1) vote. Except as
otherwise provided in this Agreement or required by Applicable Law, all
actions of the Management Committee and all subcommittees thereof shall be
taken in accordance with the terms hereof and shall require the affirmative
vote of the majority of the entire Management Committee or entire
subcommittee thereof at a duly called and convened meeting at which quorum
is present. The presence in person or by proxy of not less than a majority
of the entire Management Committee shall constitute a quorum for the
transaction of business by the Management Committee. The presence in
person or by proxy of not less than a majority of an entire subcommittee of
the Management Committee shall constitute a quorum for the transaction of
business by such subcommittee.
(
*f)SIGNIFICANT TRANSACTION. Each party hereto shall take all
necessary action to prevent the Company and any Person controlled by the
Company or by a Member from taking any action with respect to any
Significant Transaction without (i) the prior approval of the Management
Committee, such approval to be in accordance with Section 6.1(e), (ii) the
appropriate vote of the Members, if any, as required by Applicable Law,
which vote shall be made in accordance with this Agreement, and (iii) the
prior written consent of the Lender, if required pursuant to Section 6.4.
(
*g)STANDARD. Each Manager shall perform his duties as a Manager in
good faith, in a manner he reasonably believes to be in the best interest
of the Company, and with such care as an ordinarily prudent individual in a
like position would use under similar circumstances. An individual who so
performs his duties shall not have any liability by reason of being or
having been an Manager.
(
*h)SUBCOMMITTEES. The Management Committee shall have the power to
delegate authority to such subcommittees of Managers, officers, employees,
agents and representatives of the Company as it may from time to time deem
appropriate. Any delegation of authority to take any action must be
approved in the same manner as would be required for the Management
Committee to approve such action directly.
(
*i)NO LIABILITY. A Manager shall not be liable under a judgment,
decree or order of court, or in any other manner, for a Debt, obligation or
liability of the Company.
(
*j)DEADLOCK. If an action (such as a lease, sale, or other activity)
is proposed with respect to an Aircraft, Engine, or airframe, and the
Managers on the Management Committee cannot agree because an equal number
of Managers oppose the action as support the action, then the deadlock
procedure of this Section 6.1(j) shall apply. In such event, the Member(s)
who designated the Manager(s) who oppose the action (the "Opposing
Members") shall be required to purchase for cash the Aircraft, Engine
and/or airframe which is the subject of the action within thirty (30) days
after the other Member(s) (the "Proposing Members") give notice to the
Opposing Members of (i) the existence and nature of the deadlock, and (ii)
that such Proposing Members are seeking remedy under this deadlock
procedure. The Opposing Members shall be obligated to purchase the
Aircraft for an amount equal to the sum of (x) the then-scheduled debt
balance with respect to such Aircraft plus (y) the portion of the Company's
Capital Contributions allocable to such Aircraft. In the event the action
relates to an Engine or airframe, the amount in the preceding sentence
shall be adjusted to reflect the relative values of the two components.
(
*k)INITIAL MANAGERS. As provided in the Certificate, the Company
shall initially have two Managers, Xxxxxxx X. Xxxx, III, and Xxxxx Xxxxxx,
who shall constitute the initial Management Committee of the Company, and
who shall be the initial officers of the Management Committee, each holding
the title of "Managing Director" of the Company, with the powers set forth
herein and in the Certificate.
(
(SECTION 6.2A MEETINGS OF THE MANAGEMENT COMMITTEESection 6.2a
Meetings of the Management Committee .
(
*l)REGULAR MEETINGS. The Management Committee shall establish times,
dates and places and requisite notice requirements (not shorter than those
provided in Section 6.2(b)) for regular meetings of the Management
Committee and shall adopt rules or procedures with respect to such meetings
(and special meetings of the Management Committee) consistent with the
terms of this Agreement. Unless otherwise approved by the Management
Committee, each regular meeting of the Management Committee shall be held
at the Company's principal place of business. At such meetings, the
Management Committee shall transact such business as may properly be
brought before such meeting, whether or not notice of such meeting
referenced the action taken at such meeting.
(
*m)SPECIAL MEETINGS. A special meeting of the Management Committee
may be called by any Manager. Notice of each such meeting shall be given
to each Manager in person or by overnight courier, telecopy or telegram (in
each case, notice shall be given at least two (2) days before the meeting
is to take place) unless a longer notice period is established by the
Management Committee. Each such notice shall state (i) the time, date,
place or other means of conducting such meeting and (ii) the purpose of
such meeting. No actions other than those specified in the notice therefor
may be considered at a special meeting of the Management Committee unless
such consideration is unanimously approved by all the members thereof.
(
*n)WAIVER OF NOTICE. Any Manager may waive notice of any meeting of
the Management Committee in writing before, at, or after, such meeting.
The attendance of a Manager at a meeting of the Management Committee shall
constitute a waiver of notice of such meeting thereby, except when such
Manager attends such meeting for the express purpose of objecting to the
transaction of any business thereat because such meeting was not properly
called.
(
*o)MEETINGS BY CONFERENCE CALL. Any action required to be taken, or
that may be taken, at a meeting of the Management Committee may be taken at
a meeting thereof held by means of conference telephone or other
communications equipment by means of which all individuals participating in
such meeting can hear each other. Participation in such a meeting shall
constitute presence in person at such meeting.
(
*p)WRITTEN CONSENT. Notwithstanding anything to the contrary in this
Section 6.2, the Management Committee may take without a meeting thereof
any action that may be taken by the Management Committee under this
Agreement or the Act if a consent or consents in writing, setting forth the
action so taken, shall be signed by the Managers having not less than the
minimum number of votes that would be necessary to authorize or take such
action at a meeting of the Management Committee.
(
*q)PARTICIPATION RIGHTS. At any meeting of the Management Committee,
any Manager may be accompanied by one or more individuals, who may attend
and participate in the deliberations at such meeting; PROVIDED, HOWEVER,
such individuals shall not be deemed Managers for any purposes whatsoever,
nor shall such individuals be entitled to vote on any issue voted upon by
the Members or the Management Committee or be counted for quorum purposes;
and PROVIDED FURTHER, that nothing in this Section 6.2(f) shall prevent the
Management Committee (upon the joint determination of the Chairman of the
Management Committee and the deputy chairman of the Management Committee or
upon the request of either one of them if both are not present at such
meeting) from conducting any part of any such meeting in executive session
without the presence of any such individuals.
(
(SECTION 6.3A MANAGEMENT COMMITTEE POWERSSection 6.3a Management
Committee Powers .
(
*r)GENERAL(a) General . Except as otherwise provided in this
Agreement or by Applicable Law, all powers to control and manage the
business and affairs of the Company shall be exclusively vested in the
Management Committee and the Management Committee may exercise all powers
of the Company and do all such lawful acts as are not by Applicable Law,
the Certificate or this Agreement directed or required to be exercised or
done by the Members and in so doing shall have the right and authority to
take all actions that the Management Committee deems necessary, useful or
appropriate for the management and conduct of the business of the Company.
(
*s)OFFICERS(b) Officers . The Management Committee shall (i) appoint
the Chief Executive Officer and the other officers of the Company,
(ii) prescribe the respective duties and powers of the Chief Executive
Officer and such other officers and (iii) establish policies and guidelines
for the hiring of employees, if necessary in the sole discretion of the
Management Committee, to permit the Company to act as an operating company
with respect to its business. The Management Committee may adopt
appropriate management incentive plans and employee benefit plans. The
initial officers of the Company, including their respective titles, are set
forth on Exhibit C. The officers of the Company shall be responsible for
the day-to-day management of the Company, conducting, in the name and on
behalf of the Company, the day-to-day business and affairs thereof, the
preparation and execution of business plans and Annual Budgets and the
implementation of the actions and decisions of the Management Committee.
(
(SECTION 6.4A DUTIES AND OBLIGATIONS OF THE MANAGEMENT
COMMITTEESection 6.4a Duties and
Obligations of the Management Committee .
(
*t)SEPARATE OPERATIONS. Notwithstanding any other provision of this
Agreement or any provision of law that otherwise so empowers the Company,
(i) from and after the date of this Agreement and until the Loan and all
other monetary obligations of the Company under the Loan Documents are
indefeasibly and fully satisfied, the Company shall not take any of the
following actions without the prior written consent of the
Lender: (1) incur any indebtedness or liabilities other than the Loan and
other monetary obligations under the Loan Documents, trade payables and
taxes incurred in the ordinary course of the Company's business, and
indebtedness or liabilities permitted by the terms of the Loan Agreement,
(2) dissolve or liquidate, in whole or in part, consolidate or merge with
or into any other Person, or sell, convey, or transfer any of its assets
(except to the extent such actions are permitted by the terms of the Loan
Agreement); (3) amend, alter, change or repeal any of the provisions of
Sections 2.3 or 6.4(a) of this Agreement, and (ii) the Company shall
conduct its dealings with its Affiliates on an independent and arm's-length
basis and on commercially reasonable terms, and shall observe and maintain
its legal existence as separate and distinct from any other Person.
Without limiting the generality of the foregoing, the Company shall, in
order to preserve and ensure its separate and distinct
identity: (A) maintain books, financial records and bank accounts that are
separate and distinct from the books, financial records and bank accounts
of any other Person; (B) not commingle any of its assets, funds or
liabilities with the assets, funds or liabilities of any other Person;
(C) observe all appropriate limited liability company procedures and
formalities; (D) pay its own liabilities, losses and expenses only out of
its own funds; (E) not guarantee or become obligated for the debts or
obligations of any other Person; (F) not hold out its credit as being
available to satisfy the debts or obligations of any other Person; (G) hold
itself out as an entity separate and distinct from any other Person
(including its Affiliates); (H) correct any known misunderstanding
regarding its separate identity; (I) not make any loans to any Person or
buy or hold any indebtedness issued by any other Person (except for cash
and investment-grade securities); (J) conduct its own business in its own
name; (K) hold all of its assets in its own name; (L) not pledge its assets
for the benefit of any other Person; (M) not identify itself as a division
or department of any other Person; (N) conduct transactions between the
Company and third parties in the name of the Company and as an entity
separate and independent from each of its Affiliates; (O) cause
representatives, employees and agents of the Company to hold themselves out
to third parties as being representatives, employees or agents, as the case
may be, of the Company; and (P) not acquire or assume the obligations of
its Affiliates.
(
*u)CONTINUED EXISTENCE; ACCOMPLISHMENT OF PURPOSES. The Management
Committee shall take all actions that may be necessary or appropriate (i)
for the continuation of the Company's valid existence as a limited
liability company under the Applicable Laws of the State of Delaware and of
each other jurisdiction in which such existence is necessary to protect the
limited liability of the Members or to enable the Company to conduct the
business in which it is then engaged and (ii) for the accomplishment of the
purposes of the Company set forth in Section 2.3(a), including, without
limitation, the acquisition, development, maintenance, preservation and
operation of Property in accordance with the provisions of this Agreement
and Applicable Laws.
(
*v)RIGHTS OF INSPECTION; AUDIT. Within one (1) month following the
commencement of each calendar year, each Member shall consult with the
Management Committee regarding the number (if any), time, nature,
objective and scope of reviews, meetings, audits, inspections and visits
such Member intends to conduct under this Section 6.4(c) for such year.
Notwithstanding the foregoing, in the event a Member, from time to time,
has a question with respect to the Company operations, such Member shall be
entitled, upon reasonable notice to the Company, during regular business
hours, (a) to inspect and audit the books and records of the Company (and
its Wholly Owned Affiliates) relating to the Company operations, or
otherwise, and (b) to visit and inspect, to the extent the Company has
physical access thereto, any of the assets owned, leased, operated or
managed by the Company and any of the facilities at which the Company
operations take place. The purpose of any audit, inspection or visit under
this Section 6.4(c) may include, but shall not be required to be limited
to, financial auditing and the review and analysis of the business
procedures and operations of the Company. The Company shall cooperate with
all audits, inspections and visits under this Section 6.4(c), including,
but not limited to, the Management Committee, the Company's senior
management and other appropriate officers and employees of the Company
participating in reasonable interviews with employees or agents of such
Member and responding to any reasonable questions that such Member or its
agents may have. Any audit, inspection or visit under this Section 6.4(c)
shall be conducted by the personnel of a Member or its Affiliates or by an
independent certified public accounting firm or other qualified
representatives with relevant experience selected by such Member and
reasonably acceptable to the Company. Such Member shall be responsible for
its costs incurred in connection with such audit, inspection or visit and
the out-of-pocket expenses of the Company directly incurred as a result of
such audit, inspection and visit. The Company shall provide such
personnel, firm and other representatives, during regular business hours,
with access to its books and records and, to the extent the Company has
physical access thereto, any of the assets owned, leased, operated or
managed by the Company and any of the facilities at which its operations
take place. Such Member shall provide the Company and each other Member
with a copy of any report of the findings of, and recommendations with
respect to, such audit, inspection or visit prepared by or on behalf of
such Member, subject to legal privilege restrictions.
(
(SECTION 6.5. REIMBURSEMENTSSection 6.5. Reimbursements . The Company
shall reimburse the Members and the Managers for all expenses incurred and
paid by any of them as authorized by the Company in the conduct of the
Company's business. Such expenses shall not include any expenses incurred
in connection with the exercise of the rights of a Member or a Manager
apart from the authorized conduct of the Company's business. The
Management Committee's sole determination of which expenses are allocated
to and reimbursed as a result of the Company's activities or business and
the amount of such expenses shall be conclusive. Such reimbursement shall
be treated as expenses of the Company and shall not be deemed to constitute
distributions to any Member of Profit, Loss or capital of the Company.
(
(SECTION 6.6. INDEMNIFICATION OF THE MANAGERSSection 6.6.
Indemnification of the Managers .
(
*w)ACTIONS AND OMISSIONS OF MANAGERS. Subject to Section 6.6(d), the
Company, its receiver or its trustee shall indemnify, save harmless and pay
all judgments and claims (in the case of such receiver or trustee, to the
extent of Property) against any Manager relating to any liability or damage
incurred by reason of any act performed or omitted to be performed by any
Manager in connection with the business, including reasonable attorneys'
fees incurred by the Manager in connection with the defense of any action
based on any such act or omission, which attorneys' fees may be paid as
incurred.
(
*x)DERIVATIVE SUIT. Subject to Section 6.6(d), in the event of any
action by a Member against any Manager, including, but not limited to, a
Company derivative suit, the Company shall indemnify, save harmless and pay
all expenses of such Manager, including reasonable attorneys' fees incurred
in the defense of such action.
(
*y)CERTAIN ACTIONS ON BEHALF OF THE COMPANY. Subject to Section
6.6(d), in the event a Manager for the benefit of the Company and in
accordance with this Agreement makes any deposit or makes any other similar
payment or assumes any obligation in connection with any property proposed
to be acquired by the Company and suffers any financial loss as the result
of such action, the Company shall indemnify, save harmless and pay all such
losses.
(
*z)LIMITATION. Notwithstanding the provisions of Sections 6.6(a), (b)
and (c), such Sections shall be enforced only to the maximum extent
permitted by Applicable Law and no Manager shall be indemnified from any
liability for fraud, intentional misconduct, gross negligence or a knowing
violation of Applicable Law that was material to the subject cause of
action or indemnified matter.
(
*27)THIRD-PARTY BENEFICIARY. The obligations of the Company set forth
in this Section 6.6 are expressly intended to create third party
beneficiary rights in each of the Managers.
(
(SECTION 6.7. SIGNIFICANT TRANSACTION. A "Significant Transaction"
means, with respect to the Company, any of the following actions (whether
taken directly by the Company or by or through one or more Wholly Owned
Affiliates thereof):
(
*28)any acquisition of businesses or assets (including, without
limitation, by way of merger or consolidation) by the Company or any of its
Wholly Owned Affiliates, other than an acquisition specifically approved in
the Annual Budgets or by a meeting of the Management Committee, or which
falls within parameters established for acquisitions at the meeting of the
Management Committee immediately preceding the date of such acquisition;
(
*29)any disposition, including, without limitation, by way of
receivables financings, securitizations or similar transactions, of any of
the assets of the Company or any of its Wholly Owned Affiliates, other than
a disposition specifically approved in the Annual Budgets or by a meeting
of the Management Committee, or which falls within parameters established
for dispositions at the meeting of the Management Committee immediately
preceding the date of such disposition;
(
*30)any merger, consolidation or other business combination involving
the Company or any of its Wholly Owned Affiliates and any third party and
any relocation of the Company or any of its Wholly Owned Affiliates to
another jurisdiction;
(
*31)subject to the rights of the Members to Transfer their Units as
contemplated in this Agreement, any transaction that would constitute a
"change of control" of the Company (which, for the purposes of this
definition, means the acquisition of the power, directly or indirectly, to
direct the affairs of the Company or the ability to designate a majority of
the Management Committee);
(
*32)any liquidation or dissolution of the Company, or any action by
the Company relating to bankruptcy, insolvency, reorganization or relief
from creditors seeking to adjudicate it bankrupt or seeking reorganization,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to the Company or seeking appointment of a receiver,
trustee, custodian or other similar official for the Company or all or any
substantial part of its assets, or making a general assignment for the
benefit of its creditors;
(
*33)any (i) creation of any additional class of equity interest of the
Company or any Wholly Owned Affiliate of the Company or any equity interest
having a direct or indirect equity participation in the Company or any
entity controlled by the Company, (ii) sale or issuance by the Company of
Units or warrants, options or rights to acquire Units or other equity
interests convertible into or exchangeable for Units or any other equity
interest having a direct or indirect equity participation in the Company or
any entity controlled by the Company, (iii) disposition of Units, whether
by issuance or secondary disposition and whether by public or private
offering, or (iv) redemption or purchase of Units (except as provided in
this Agreement), any reorganization of Units or any variation of the rights
attaching to Units;
(
*34)any amendment to or modification of any provision of this
Operating Agreement or the Certificate or of the equivalent or similar
organizational documents of any of the Company's Wholly Owned Affiliates;
(
*35)any incurring of indebtedness for borrowed money at any time
outstanding in excess of $100,000 per occurrence;
(
*36)any declaration of distributions on, or redemptions of or with
respect to, any Units;
(
*37)any adoption of, or material amendment or modification to, (i) the
Annual Capital Budget, or (ii) the Annual Operating Budget;
(
*38)any adoption or revision of any policy for the Company with
respect to customer credit, risk management, financial accounting, public
relations or business ethics and integrity;
(
*39)any commencement or participation in any business other than the
business described in Section 2.3(a) and any activities incidental,
necessary and appropriate to such business, making any investment in, loan
to, or guarantee of the obligations of, any other Person, or creating any
Wholly Owned Affiliate of the Company;
(
*40)any adoption or amendment of (i) any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing or other
employee benefit plan or (ii) any stock option, stock purchase or other
equity-based plan;
(
*41)any acquisition of Property other than as approved in the Annual
Budgets;
(
*42)any (ii) appointment or dismissal of outside legal counsel or
outside auditors, or (ii) change in accounting principles, methods or
practices or any change in the taxable year or Fiscal Year or method of tax
accounting for income tax purposes of the Company or any of the Company's
Wholly Owned Affiliates;
(
*43)any initiation or settlement of any judicial, administrative or
arbitration proceedings involving the Company or any of its Wholly Owned
Affiliates or the payment or settlement of any material claim involving the
Company or any of its Wholly Owned Affiliates, excluding litigation and
proceedings against defaulting lessees, manufacturers supplying the Company
and their respective assets;
(
*44)the removal or appointment of an individual to any of the offices
of the Company set forth on Exhibit C;
*45)any agreement or other binding commitment to do any of the
foregoing unless such agreement or commitment is contingent upon the
approval of the Management Committee; or
(
*46)any press release by the Company.
(
(SECTION 6.8. MANAGER LIABILITYSection 6.8. Manager Liability . No
Manager shall have any personal liability for the repayment of any Capital
Contributions of any Member.
(
****ARTIV. : ROLE OF MEMBERSARTICLE VII ROLE OF MEMBERS
ARTICLE
ARTICLE SECTION 7.1. RIGHTS OR POWERSSection 7.1. Rights or Powers .
Except as set forth herein, the Members shall not have any right or power
to take part in the management or control of the Company or its business
and affairs or to act for or bind the Company in any way. Notwithstanding
the foregoing, the Members have all the rights and powers specifically set
forth in this Agreement and, to the extent not inconsistent with this
Agreement, in the Act.
ARTICLE
ARTICLE SECTION 7.2. VOTING RIGHTSSection 7.2. Voting Rights . No
Member has any voting right except with respect to those matters
specifically reserved for a Member vote that are set forth in this
Agreement and as required in the Act.
ARTICLE
ARTICLE SECTION 7.3. MEETINGS OF THE MEMBERSSection 7.3. Meetings of
the Members .
ARTICLE
*a)NOTICE; VOTING; QUORUM. Meetings of the Members may be called upon
the written request of any Member. Any such request shall state the
location of the meeting and the nature of the business to be transacted.
Notice of any such meeting shall be given to all Members not less than
seven (7) Business Days nor more than thirty (30) calendar days prior to
the date of such meeting. No actions other than those specified in the
notice therefor may be considered at a meeting of the Members unless such
consideration is unanimously approved by the Members. Members may vote in
person or by proxy at such meeting and may waive advance notice of such
meeting. The Management Committee shall adopt rules and procedures for the
operation of such meetings. The owner of Units shall have one (1) vote for
each Unit owned thereby. Except as otherwise provided in this Agreement or
required by Applicable Law, all actions of the Members shall be taken in
accordance with the terms hereof and shall require the affirmative vote of
the holders of a majority of the Units at a duly called and convened
meeting of the Members at which quorum is present. The presence in person
or by proxy of Members holding a majority of the Units shall constitute a
quorum for the transaction of business by the Members. Any action of the
Company required by this Agreement or Applicable Law to be approved by the
Members must also, subject to Applicable Law, be approved by the Management
Committee.
(
*b)RECORD DATE. For the purpose of determining the Members entitled
to vote on, or to vote at, any meeting of the Members, the Management
Committee or the Member requesting such meeting may fix, in advance, a date
as the record date for any such determination. Such date shall not be more
than thirty (30) calendar days nor less than ten (10) Business Days before
any such meeting.
(
*c)PROXIES. Each Member may authorize any individual to act for such
Member by proxy with respect to all matters in which a Member is entitled
to participate, including, but not limited to, waiving notice of any
meeting of the Members or voting or participating at such a meeting. All
such proxies must be signed by the applicable Member or its
attorney-in-fact. No proxy shall be valid after the expiration of eleven
(11) months from the date thereof unless otherwise provided in such proxy.
Every proxy shall be revocable by a written instrument executed by the
Member executing such proxy.
(
*d)CONDUCT OF MEETING. Each meeting of Members shall be conducted by
the Chief Executive Officer or such other individual as the Chief Executive
Officer deems appropriate.
(
*e)WAIVER OF NOTICE. Any Member may waive notice of any meeting of
the Members in writing before, at, or after, such meeting. The attendance
of a Member at a meeting of the Members shall constitute a waiver of notice
of such meeting thereby, except when such Member attends such meeting for
the express purpose of objecting to the transaction of any business thereat
because such meeting was not properly called.
(
*f)MEETINGS BY CONFERENCE CALL. Any action required to be taken, or
that may be taken, at a meeting of the Members may be taken at a meeting
thereof held by means of conference telephone or other communications
equipment by means of which all individuals participating in such meeting
can hear each other. Participation in such a meeting shall constitute
presence in person at such meeting.
(
*g)WRITTEN CONSENT. Notwithstanding anything to the contrary in this
Section 7.3, with respect to any action that may be taken by the Members at
a meeting thereof under this Agreement or the Act, the Members may take
such action without a meeting if a consent or consents in writing, setting
forth the action so taken, shall be executed by the Members having not less
than the minimum number of votes that would be necessary to authorize or
take such action at a meeting of the Members.
(
*h)PARTICIPATION RIGHTS. At any meeting of the Members, the
authorized voting representative of a Member may be accompanied by one or
more individuals, who may attend and participate in the deliberations at
such meeting; PROVIDED, HOWEVER, such individuals shall not be deemed the
authorized voting representative of such Member for any purposes
whatsoever, nor shall such individuals be entitled to vote on any issue
voted upon by the Members or be counted for quorum purposes; and PROVIDED
FURTHER, that nothing in this Section 7.3(h) shall prevent the Members
(upon the joint determination of the Chairman of the Management Committee
and the deputy chairman of the Management Committee or upon the request of
either one of them if both are not present at such meeting) from conducting
any part of any such meeting in executive session without the presence of
any such individuals.
(
(SECTION 7.4. UNANIMOUS CONSENTS REQUIREDSection 7.4. Unanimous
Consents Required . Notwithstanding any other provision of this Agreement,
to the extent required by the Act, no action may be taken by the Company
(whether by the Management Committee or otherwise) to transfer or transfer
and continue pursuant to Section 18-213 of the Act without the unanimous
consent of the Management Committee and the Members. In the event the Act
is amended to no longer require unanimous approval for transfers or
transfers and continuances under Section 18-213 thereof, then such a
transfer or transfer and continuance shall require the same vote as for a
merger of the Company under this Agreement and the first sentence of this
Section 7.4 shall be null and void.
(
(SECTION 7.5. RETURN ON OR OF CAPITAL CONTRIBUTIONSSection 7.5. Return
on or of Capital Contributions . Except as otherwise provided in Articles
V and XI, no Member shall receive a return on or of its Capital
Contributions.
(
(SECTION 7.6. MEMBER COMPENSATIONSection 7.6. Member Compensation .
No Member shall receive any interest, compensation or drawing with respect
to its Capital Contributions or its Capital Account or for services
rendered on behalf of the Company, or otherwise, in its capacity as a
Member, except as otherwise provided in this Agreement.
(
(SECTION 7.7. MEMBER LIABILITYSection 7.7. Member Liability . No
Member shall be liable under a judgment, decree or order of a court, or in
any other manner, for the Debts or any other obligations or liabilities of
the Company. A Member shall be liable only to make its Capital
Contributions and shall not be required to restore a deficit balance in its
Capital Account or to lend any funds to the Company or, after its Capital
Contributions have been made, to make any additional contributions,
assessments or payments to the Company, PROVIDED that a Member may be
required to repay distributions made to it as provided in Section 18-607 of
the Act.
(
(SECTION 7.8. PARTITIONSection 7.8. Partition . While the Company
remains in existence, each Member, on behalf of itself, its successors and
its assigns, hereby waives its rights to have any Property partitioned or
to file a complaint or to institute any proceeding to have any Property
partitioned.
(
(SECTION 7.9. TRANSACTIONS BETWEEN A MEMBER AND THE COMPANYSection
7.9.
Transactions Between a Member and the Company . Except as otherwise
provided by Applicable Law and subject to Section 6.1(g), any Member may,
but shall not be obligated to, lend money to the Company, act as surety for
the Company and transact other business with the Company and has the same
rights and obligations when transacting business with the Company as a
Person who is not a Member. Subject to Section 6.1(g), a Member, any
Affiliate thereof or an employee, stockholder, agent, director or officer
of a Member or any Affiliate thereof, may also be an employee or be
retained as an agent of the Company. The existence of these relationships
and acting in such capacities shall not result in the Member being deemed
to be participating in the control of the business of the Company or
otherwise affect the limited liability of the Member.
(
(SECTION 7.10. COVENANT TO PERFORMSection 7.10. Covenant to Perform .
(
*i)ACTIONS OF THE COMPANY AND MANAGEMENT COMMITTEE. Any agreement by
the Members herein to cause (or any requirement herein for) the Management
Committee or the Company to perform certain acts shall be deemed, in each
instance, to include an agreement by each Member to use such Member's best
efforts and to take all actions necessary to call, or cause the Company to
call, as promptly as practicable, a meeting of Members or to act by written
consent pursuant to the terms hereof.
(
*j)ACTIONS OF MEMBERS. When any action is required to be taken by a
Member pursuant to this Agreement, such Member shall take all steps
necessary to implement such action, including, without limitation,
executing or causing to be executed, as promptly as practicable, a written
consent in lieu of a meeting of Members in accordance with the terms
hereof.
(
(SECTION 7.11. CONFIDENTIALITY AND PUBLIC RELATIONSSection 7.11.
Confidentiality and Public Relations . Except as may be required by this
Agreement, Applicable Law (including laws applicable to disclosures
required by companies whose securities are listed on the American Stock
Exchange) or any applicable listing agreement with a national securities
exchange, none of the Members shall publicly disclose any financial or
other forecasts regarding the Company without the mutual agreement of IASG
and AirCorp. In addition, any press releases, analyst statements, investor
relations statements, question and answer holding statements or other
similar oral or written disclosures by any Member or its representatives
concerning the Company shall be subject to the prior consultation of IASG
and AirCorp.
(
(SECTION 7.12. AMENDMENTS. Amendments to this Agreement may be
proposed by any Manager or any Member. Following such proposal, the
Management Committee shall submit to the Members a verbatim statement of
such proposed amendment and the Management Committee shall include in any
such submission a recommendation as to the proposed amendment. The
Management Committee shall seek the written vote of the Members on the
proposed amendment or shall call a meeting to vote thereon and to transact
any other business that it may deem appropriate. A proposed amendment
shall be adopted and be effective as an amendment hereto if it receives the
affirmative vote of all Members.
(
(SECTION 7.13. OTHER ACTIVITIES. The Members and their Affiliates may
engage in or possess an interest in other business ventures of every nature
and description for their own account, independently or with others,
including, without limitation, the purchase, sale and lease of aircraft,
whether or not such other enterprises shall be in competition with any
activities of the Company; and neither the Company nor any other Member
shall have any rights by virtue of this Agreement in and to such
independent ventures or to the income or profits derived therefrom. Without
limiting the generality of the foregoing statement, AirCorp agrees that
IASG may sell aircraft parts to any entity that from time to time operates
the Aircraft on such terms as IASG shall deem appropriate.
(
****ARTIVI. : REPRESENTATIONS AND WARRANTIESARTICLE VIII REPRESENTATIONS
AND WARRANTIES
ARTICLE
ARTICLE SECTION 8.1. SURVIVALSection 8.1. Survival . Each of the
representations and warranties set forth in Section 8.2 shall survive the
execution of this Agreement.
ARTICLE
ARTICLE SECTION 8.2. REPRESENTATIONS AND WARRANTIESSection 8.2.
Representations and Warranties . Each of AirCorp and IASG hereby
represents and warrants, as of the date hereof and the Closing Date, that:
ARTICLE
*a)DUE INCORPORATION OR FORMATION; AUTHORIZATION OF AGREEMENT. Such
Member is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation and has
the corporate power and authority to own its property and carry on its
business as owned and carried on at the date hereof and as contemplated
hereby. Such Member is duly licensed or qualified to do business and in
good standing in each of the jurisdictions in which the failure to be so
licensed or qualified would have a material adverse effect on its financial
condition or its ability to perform its obligations hereunder. Such Member
has the corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and the execution, delivery and
performance of this Agreement has been duly authorized by all necessary
corporate action. This Agreement constitutes the legal, valid and binding
obligation of such Member.
(
*b)NO CONFLICT WITH RESTRICTIONS; NO DEFAULT. Neither the execution,
delivery and performance of this Agreement nor the consummation by such
Member of the transactions contemplated hereby (i) shall conflict with,
violate or result in a breach of any of the terms, conditions or provisions
of any Applicable Law applicable to such Member or any of its Wholly Owned
Affiliates, (ii) shall conflict with, violate, result in a breach of, or
constitute a default under any of the terms, conditions or provisions of
the articles of incorporation, bylaws or other organizational documents of
such Member or any of its Wholly Owned Affiliates or of any material
Contract to which such Member, its Parent or any of its Wholly Owned
Affiliates is a party or by which such Member or any of its Wholly Owned
Affiliates is or may be bound or to which any of its material properties or
assets is subject, (iii) shall conflict with, violate, result in a breach
of, constitute a default under (whether with notice or lapse of time or
both), accelerate or permit the acceleration of the performance required
by, give to others any material interests or rights, or require any
consent, authorization or approval under any indenture, mortgage, lease
agreement or instrument to which such Member or any of its Wholly Owned
Affiliates is a party or by which such Member or any of its Wholly Owned
Affiliates is or may be bound or (iv) shall result in the creation or
imposition of any Lien upon any of the material properties or assets of
such Member or any of its Wholly Owned Affiliates.
(
*c)GOVERNMENTAL APPROVALS. Any approvals by Governmental Authorities
that are required in connection with the valid execution, delivery,
acceptance and performance by such Member of this Agreement or the
consummation by such Member of any transaction contemplated hereby have
been completed, made or obtained on or before the Closing Date.
(
*d)LITIGATION. There are no proceedings pending or, to the knowledge
of such Member or any of its Wholly Owned Affiliates, threatened against or
affecting such Member or any of its Wholly Owned Affiliates or any of their
properties, assets or businesses before any Governmental Authority that
could, if adversely determined, reasonably be expected to materially impair
such Member's ability to perform its obligations under this Agreement or to
have a material adverse effect on the consolidated financial condition of
such Member; and such Member or any of its Wholly Owned Affiliates has not
received any currently effective notice of any default, and such Member or
any of its Wholly Owned Affiliates is not in default, under any applicable
order, writ, injunction, decree, permit, determination or award of any
Governmental Authority that could reasonably be expected to materially
impair such Member's ability to perform its obligations under this
Agreement or to have a material adverse effect on the consolidated
financial condition of such Member.
(
*e)INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT.
Neither such Member nor any of its Affiliates is, nor shall the Company as
a result of such Member's status as such be, an "investment company" as
defined in, or subject to regulation under, the Investment Company Act of
1940. Neither such Member nor any of its Affiliates is, nor shall the
Company as a result of such Member's status as such be, a "holding
company," "an affiliate of a holding company," or a "subsidiary of a
holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
(
*f)INVESTIGATION. Such Member is acquiring its Units based upon its
own investigation, and the exercise by such Member of its rights and the
performance of its obligations under this Agreement shall be based upon its
own investigation, analysis and expertise. Such Member's acquisition of
its Units is being made for its own account for investment and not with a
view to the sale or distribution thereof. Such Member is a sophisticated
investor possessing an expertise in analyzing the benefits and risks
associated with acquiring investments that are similar to the acquisition
of its Units.
(
****ARTIVII. : ACCOUNTING, BOOKS AND RECORDSARTICLE IX ACCOUNTING, BOOKS
AND RECORDS
ARTICLE
ARTICLE SECTION 9.1. BOOKS AND RECORDS; ACCOUNTINGSection 9.1. Books
and Records; Accounting .
ARTICLE
*a)BOOKS AND RECORDS. The Company shall keep on site at its principal
place of business each of the following:
(
*(1)separate books of account for the Company that show a true
and accurate record of all costs and expenses incurred, all charges
made, all credits made and received and all income derived in
connection with the conduct of the Company and the operation of its
business;
(
*(2)a current list of the full name and last known business,
residence or mailing address of each Member and Manager, both past and
present;
(
*(3)a copy of the Certificate certified by the Secretary of State
of the State of Delaware as to its filing therewith;
(
*(4)copies of the Company's federal, state and local income tax
returns and reports, if any, for the three (3) most recent years;
(
*(5)a fully executed copy of this Agreement;
(
*(6)copies of any writings permitted or required under Section
18-502 of the Act regarding the obligation of a Member to perform any
enforceable promise to contribute cash or property or to perform
services as consideration for such Member's Capital Contribution;
(
*(7)unless contained in this Agreement, a statement prepared and
certified as accurate by the Management Committee that describes: (A)
the amount of cash and the agreed value of any other property or
services then contributed or agreed to be contributed in the future by
each Member; and (B) the times at which or events on the happening of
which any Additional Capital Contributions agreed to be made by each
Member are to be made; and
(
*(8)any written consents obtained from Members pursuant to
Section 18-302 of the Act regarding action taken by Members without a
meeting thereof.
(
*b)ACCOUNTING. The Company shall use the accrual method of accounting
in preparation of its financial reports and for tax purposes and shall keep
its books and records accordingly.
(
(SECTION 9.2. REPORTSSection 9.2. Reports .
(
*c)GENERAL. The chief financial officer of the Company shall be
responsible for causing the preparation of financial reports of the Company
and the coordination of financial matters of the Company with the Company's
accountants.
(
*d)PERIODIC AND OTHER REPORTS. The Company shall cause to be
delivered to each Member the financial statements set forth in Sections
9.2(b)(i), (ii) and (iii), prepared, in each case (other than with respect
to Member's Capital Accounts, which shall be prepared in accordance with
this Agreement) in accordance with generally accepted accounting principles
(GAAP), and such other reports as any Member may reasonably request from
time to time; PROVIDED that, if the Management Committee so determines
within thirty (30) calendar days of such request, such other reports shall
be provided at such requesting Member's sole cost and expense.
(
*(1)As soon as practicable following the end of each Fiscal Year
(and in any event not later than ninety (90) calendar days after the
end of such Fiscal Year) and at such time as distributions are made to
the Members pursuant to Article XI following the occurrence of a
Dissolution Event, a balance sheet of the Company as of the end of
such Fiscal Year and the related statements of operations, Members'
Capital Accounts (and changes therein), and cash flows for such
Fiscal Year, together with appropriate notes to such financial
statements and supporting schedules, all of which shall be audited and
certified by the Company's accountants, and in each case, to the
extent the Company was in existence, setting forth in comparative form
the corresponding figures for the two (2) immediately preceding Fiscal
Years.
(
*(2)As soon as practicable following the end of each of the first
three Fiscal Quarters of each Fiscal Year (and in any event not later
than sixty (60) calendar days after the end of each such Fiscal
Quarter), a balance sheet of the Company as of the end of such Fiscal
Quarter and the related statements of operations and cash flows for
such Fiscal Quarter and for the Fiscal Year to date, in each case, to
the extent the Company was in existence, setting forth in comparative
form the corresponding figures for the prior Fiscal Year's Fiscal
Quarter and the interim period corresponding to the Fiscal Quarter and
the interim period just completed.
(
*(3)As soon as practicable following the end of each calendar
month (and in any event not later than the last Business Day of the
immediately succeeding calendar month) statements of operations of the
Company for such month and for the Fiscal Year to date, in each case,
to the extent the Company was in existence, setting forth in
comparative form the corresponding figures for the prior Fiscal Year's
calendar month and the interim period corresponding to the calendar
month and the interim period just completed.
(
*(4)Financial and other information relating to the Company and
its business and operation necessary for the Members to prepare and
timely file all reports and other materials and information required
to be filed with, or provided to, any Taxing Authority or other
Governmental Authority with respect to a Member's ownership of Units.
(
(SECTION 9.3. ANNUAL BUDGETSSection 9.3. Annual Budgets .
(
*e)OPERATING AND CAPITAL BUDGETS. The Members shall take all actions
necessary to assist and cause the Company to prepare and deliver proposed
Annual Budgets to each Member no later than one (1) month prior to the
beginning of each Fiscal Year. The "ANNUAL OPERATING BUDGET" shall include
the then-current Fiscal Year's budgeted and actual results up to the end of
the third Fiscal Quarter of such Fiscal Year and forecast for the final
Fiscal Quarter of such Fiscal Year and the next Fiscal Year's budgeted
items of operating income and expenses (including, but not limited to,
budgeted amounts for repair and maintenance). The "ANNUAL CAPITAL BUDGET"
shall include the then-current Fiscal Year's budgeted and actual capital
expenditures up to the end of the third Fiscal Quarter of such Fiscal Year
and forecast for the final Fiscal Quarter of such Fiscal Year and the next
Fiscal Year's budgeted amount for capital expenditures.
(
*f)PROCEDURE. The Members shall cause a meeting of the Management
Committee to be held no later than one (1) month following the beginning of
each Fiscal Year to take action with respect to the Annual Budgets for such
Fiscal Year. The Annual Budgets shall be approved by the Management
Committee in accordance with Section 6.1(e). Until an Annual Operating
Budget is approved for such Fiscal Year by the Management Committee, the
Annual Operating Budget in effect for the immediately preceding Fiscal Year
shall continue to operate as the operating budget for such Fiscal Year.
Until an Annual Capital Budget is approved for the then-current Fiscal Year
by the Management Committee, seventy-five percent (75%) of the Annual
Capital Budget in effect for the immediately preceding Fiscal Year shall
constitute the capital budget for such current Fiscal Year.
(
(SECTION 9.4. TAX MATTERSSection 9.4. Tax Matters .
(
*g)TAX ELECTIONS. The Management Committee shall, without any further
consent of the Members being required (except as specifically required
herein), make any and all elections for federal, state, local and foreign
tax purposes, including, without limitation, any election, if permitted by
Applicable Law: (i) to adjust the basis of Property pursuant to Sections
754, 734(b) and 743(b) of the Code, or comparable provisions of state,
local or foreign law, in connection with Transfers of Units and the Company
distributions; (ii) with the consent of all of the Members, to extend the
statute of limitations for assessment of tax deficiencies against the
Members with respect to adjustments to the Company's federal, state, local
or foreign tax returns; and (iii) to the extent provided in Sections 6221
through 6231 of the Code and similar provisions of Applicable Law, to
represent the Company before Taxing Authorities or courts of competent
jurisdiction in tax matters affecting the Company, and to file any tax
returns and execute any agreements or other documents relating to or
affecting such tax matters. IASG is specifically authorized to act as the
"TAX MATTERS MEMBER" under the Code and in any similar capacity under state
or local law.
(
*h)TAX CLASSIFICATION. The Management Committee shall take such
action as may be required under the Code and the Regulations and other
Applicable Law to cause the Company to be taxable as a partnership for
federal, state and local income tax purposes.
(
****ARTIVIII. : TRANSFERSARTICLE X TRANSFERS
ARTICLE
ARTICLE SECTION 10.1. RESTRICTIONS ON TRANSFERSSection 10.1.
Restrictions on Transfers .
ARTICLE
*a)REQUIREMENTS. Except as set forth on Exhibit D, no Member shall,
directly or indirectly, offer, sell, transfer, assign, grant a
participation in, pledge or otherwise dispose of (collectively, "TRANSFER")
any of such Member's Units, except in a transaction that is expressly
contemplated by this Agreement and satisfies the applicable conditions set
forth in Section 10.4.
(
*b)OWNERSHIP AND POWER. Except as expressly permitted by this
Agreement, each Member shall, from and after the date hereof, (i) be the
record and beneficial owner of such Units indicated in the Company's
register of members (which register shall be conclusive with respect to the
Company membership and Unit ownership, absent manifest error) as being
owned by such Member, in each case free and clear of any Lien, and
(ii) have sole voting power with respect to such Member's Units and shall
not, except as permitted in accordance with the terms hereof, grant any
proxy with respect to such Units, enter into any voting trust or other
voting agreement or arrangement with respect to such Units or grant any
other rights to vote such Units.
(
*c)ADMISSION OF SUBSTITUTED MEMBERS. A transferee of the ownership of
Units made in a manner that complies with the terms of this Agreement shall
be deemed a substituted Member.
(
(SECTION 10.2. PERMITTED TRANSFERSSection 10.2. Permitted Transfers .
Notwithstanding any other provision of this Article X, subject to the
conditions and restrictions set forth in Section 10.4, and fifteen-days'
prior written notice to the Company and the other Members, any Member at
any time may Transfer all or any portion of its Units to any Affiliate of
such Member (a "PERMITTED TRANSFEREE"). Any such Transfer to such
Permitted Transferee shall not relieve the transferring Member of its
obligations under this Agreement with respect to the Units so Transferred.
Prior to and as a condition to such Transfer of Units to a Permitted
Transferee, the Permitted Transferee shall agree in writing to (a) be bound
by all of the terms and conditions of this Agreement in the same manner as
the Transferring Member, and (b) reassign its Units to the Transferring
Member if such Permitted Transferee is no longer an Affiliate of such
Transferring Member.
(
(SECTION 10.3. OTHER TRANSFERSSection 10.3. Other Transfers . A
Member may, subject to the conditions and restrictions set forth in Section
10.4, sell its Units only (a) to a Permitted Transferee, (b) pursuant to an
Significant Transaction approved by the Management Committee or (c) in
accordance with Section 10.5.
(SECTION 10.4. CONDITIONS TO TRANSFERSSection 10.4. Conditions to
Transfers . The conditions set forth in Section 10.4 are as follows:
(
*d)WRITTEN AGREEMENT. The proposed transferee of Units shall execute
and deliver to each Member, prior to the proposed transfer, an original
counterpart to an agreement acceptable to the Members whereby such
transferee shall be bound by all the applicable terms and provisions hereof
and which shall become effective upon the subsequent consummation of such
transfer.
(
*e)CERTAIN INFORMATION. The transferor and proposed transferee shall
furnish the Company with such proposed transferee's taxpayer identification
number, sufficient information to determine such proposed transferee's
initial tax basis in the Units proposed to be transferred, and any other
information reasonably necessary to permit the Company to file all required
federal and state tax returns and other legally required information
statements or returns.
(
*f)NO TERMINATION. Unless otherwise approved by the Management
Committee, no Transfer of Units shall be made except upon terms that would
not, in the opinion of counsel chosen by the Management Committee, result
in the termination of the Company within the meaning of Section 708 of the
Code or cause the application of the rules of Sections 168(g)(1)(B) and
168(h) of the Code or similar rules to apply to the Company. In
determining whether a particular proposed Transfer shall result in a
termination of the Company, such counsel shall take into account the
existence of prior written commitments to Transfer Units made pursuant to
this Agreement and such commitments shall always be given precedence over
subsequent proposed Transfers.
(
(SECTION 10.5. PURCHASE RIGHTSSection 10.5. Purchase Rights .
(
*g)CHANGE OF CONTROL. Each of AirCorp and IASG shall have the right
to purchase (such empowered party, the "BUYING PARTY") the entire Equity
Interest of such other Member in the Company, at the fair market value of
such Equity Interest determined pursuant to Section 10.5(b), in the event
that a change of control has occurred with respect to such other party (the
"SELLING PARTY"), PROVIDED, that prior to the time of such change in
control there has not occurred a sale pursuant to Section 10.3 of Units to
an Affiliate of the Selling Party. For the purposes of this Section 10.5,
a "change of control" shall mean the acquisition of the power, directly or
indirectly, to direct the affairs of the Selling Party, or to elect a
majority of the board of directors of the Selling Party, except that such
term shall not include the acquisition of such power with respect to the
Selling Party by any Affiliates of the Selling Party.
(
*h)NOTICE. At any time within six (6) months following the change in
control, the Buying Party may provide written notice (the "EXERCISE
NOTICE", and the date of its delivery, the "EXERCISE NOTICE DATE") to the
Selling Party of the Buying Party's exercise of its right to purchase the
entire equity interest of the Selling Party in the Company (the "EQUITY
INTEREST"). Thereafter, the Buying Party and the Selling Party shall
engage in good faith discussions to determine the fair market value of the
Equity Interest. If the Buying Party and the Selling Party cannot reach
agreement as to the fair market value of the Equity Interest within thirty
(30) calendar days following the Exercise Notice Date, then the fair market
value shall be deemed to be equal to the sum of (x) the balance of Capital
Contributions as of the Exercise Notice Date by the Selling Party (as
reduced by distributions of Capital Proceeds), and (y) a sum equal to a
fifteen percent (15%) compounded return on the Capital Contributions made
by the Selling Party (so computed to reflect any fluctuation in such amount
on account of the distribution of Capital Proceeds from time to time). The
Buying Party shall provide a computation of such fair market value within
ten (10) Business Days following the expiration of such thirty-day period.
(
*i)FAIR MARKET VALUE. A closing shall be held on the date, occurring
within sixty (60) days after the date on which the Buying Party delivered
such notice of computation of the amount described in Section 10.5(b) to
the Selling Party (subject to extension to permit any applicable
governmental reviews or to obtain any necessary approvals by Governmental
Authorities or to comply with applicable waiting periods), as is designated
by the Buying Party upon ten (10) Business Days' prior written notice,
which notice may only be given contemporaneously with or subsequent to the
date on which such acceptance notice has been given, or if such a date is
not so designated, on such sixtieth day (or the next succeeding Business
Day, if such sixtieth day is not a Business Day). The Selling Party shall,
not later than the date set for such closing, deliver to the Buying Party,
and the Buying Party shall accept, the transfer documentation required
hereby with respect to the Equity Interest (which Equity Interest shall be
free and clear of any Lien other than those Liens created by the Buying
Party), together with appropriate documentation of the corporate action
necessary to effect the transfer.
(
(SECTION 10.6. APPROVALSSection 10.6. Approvals . If any transfer of
ownership of a Member's Units in accordance with this Article X requires
any approvals by Governmental Authorities or the consent, approval, waiver
or authorization of the equity owners of a Member as a condition to the
lawful and valid transfer of such Member's Units to the proposed transferee
thereof, then each Member shall use its diligent efforts to obtain, or to
assist the affected Member or the Management Committee in obtaining, any
such approvals by Governmental Authorities or consent, approval, waiver or
authorization and shall cooperate and use its diligent efforts to respond
as promptly as practicable to all inquiries received by it, by the affected
Member or by the Management Committee from any Governmental Authority or
such equity owner for initial or additional information or documentation in
connection therewith.
(
(SECTION 10.7. PROHIBITED TRANSFERSSection 10.7. Prohibited Transfers
. Any attempt to Transfer any Units in a manner that does not comply with
this Agreement shall be null and void, and neither the Company nor any
transfer agent of such Units shall be required to (and the Company shall
not) give any effect to such attempted Transfer on its records. The
Company shall take all actions that are necessary to cause such transfer
agent not to give effect to any such attempted Transfer. Each Member shall
take all actions that are necessary, and shall cause its designated
Managers to take all actions that are necessary, to cause the Company and
such transfer agent not to give effect to any such attempted Transfer.
Notwithstanding the foregoing, if the Company is required by Applicable Law
or a Governmental Authority to recognize an attempted transfer of ownership
of Units that does not comply with this Agreement, the rights of the
transferor of such Units shall be strictly limited to rights to allocations
and distributions as provided by this Agreement with respect to such Units,
which allocations and distributions may be applied (without limiting any
other legal or equitable rights of the Company) to satisfy any debts,
obligations or liabilities for damages that the transferor or transferee of
such Units may have to the Company. Such transferee shall have no right to
any information or accounting of the affairs of the Company, shall not be
entitled to inspect the books or records of the Company and shall not have
any of the other rights of a Member under the Act or this Agreement.
(
(In the case of a Transfer or attempted Transfer of Units that does
not comply with this Agreement, the parties engaging or attempting to
engage in such Transfer shall be liable to indemnify and hold harmless the
Company and the other Members from and against all cost, liability and
damage that the Company or any of such indemnified Members may incur
(including, without limitation, incremental tax liabilities and attorneys'
fees and expenses) as a result of such Transfer or attempted Transfer and
efforts to enforce the indemnity granted hereby.
(
(SECTION 10.8. COVENANTS AND REPRESENTATIONSSection 10.8. Covenants
and Representations .
(
*j)COVENANTS. Each Member hereby covenants and agrees that (i) it is
not currently making a market in Units and shall not in the future make a
market in Units, (ii) it shall not Transfer its Units on an established
securities market, a secondary market (or the substantial equivalent
thereof) within the meaning of Section 7704(b) of the Code (and any
Regulations, proposed Regulations, revenue rulings or other official
pronouncements of the Internal Revenue Service or Treasury Department that
may be promulgated or published thereunder) and (iii) in the event such
Regulations, revenue rulings or other pronouncements treat any or all
arrangements that facilitate the selling of Units and that are commonly
referred to as "matching services" as being a secondary market or
substantial equivalent thereof, it shall not Transfer any Units through a
matching service that is not approved in advance by the Company.
(
*k)REPRESENTATIONS. Each Member hereby represents and warrants to the
Company and the other Members that such Member's acquisition of Units
hereunder is made for such Member's own account and not for resale or
distribution of such Units.
(
(SECTION 10.9. DISTRIBUTIONS AND ALLOCATIONS IN RESPECT OF TRANSFERRED
UNITSSection 10.9.
Distributions and Allocations in Respect of Transferred Units . If the
ownership of any Units is transferred during any Allocation Year in
compliance with the provisions of this Article X, Profits, Losses, each
item thereof and all other items attributable to the transferred Units for
such Allocation Year shall be divided and allocated between the transferor
and the transferee thereof by taking into account their varying Percentage
Interests during such Allocation Year in accordance with Section 706(d) of
the Code, using any conventions permitted by Applicable Law and selected by
the Management Committee. All distributions on or before the date of such
transfer shall be made to such transferor, and all distributions thereafter
shall be made to such transferee. Solely for purposes of making such
allocations and distributions, the Company shall recognize such transfer
not later than the end of the calendar month during which it is given
notice of such transfer, PROVIDED that, if the Company is given notice of a
transfer of ownership of Units at least ten (10) Business Days prior to
such transfer, the Company shall recognize such transfer as of the date of
such transfer, and PROVIDED FURTHER that if the Company does not receive a
notice stating the date such Units were transferred within thirty (30)
calendar days after the end of the Allocation Year during which such
transfer occurs, then all such items shall be allocated, and all
distributions shall be made, to the Person who, according to the books and
records of the Company, was the owner of the Units on the last day of such
Allocation Year. Neither the Company nor any Member shall incur any
liability for making allocations and distributions in accordance with the
provisions of this Section 10.9, whether or not the Company or any Member
or Manager has knowledge of any transfer of ownership of any Units.
(
****ARTIIX. : DISSOLUTION AND WINDING UPARTICLE XI DISSOLUTION AND
WINDING UP
ARTICLE
ARTICLE SECTION 11.1. DISSOLUTION EVENTSSection 11.1. Dissolution
Events .
ARTICLE
*a)DISSOLUTION. The Company shall dissolve and shall commence winding
up and liquidating upon the first to occur of any of the following (each, a
"DISSOLUTION EVENT"):
(
*(1)the unanimous vote of the Members to dissolve, wind up and
liquidate the Company; or
(
*(2)a judicial determination that an event has occurred that
makes it unlawful, impossible or impractical to carry on the business
of the Company.
(
(Notwithstanding any provision of the Act, the Company shall not
dissolve prior to the occurrence of a Dissolution Event.
(
*b)RECONSTITUTION. If it is determined, by a court of competent
jurisdiction, that the Company has dissolved prior to the occurrence of a
Dissolution Event, upon such determination all of the Members shall be
deemed to have elected to reconstitute the Company and to continue its
business on the same terms and conditions set forth in this Agreement in a
new limited liability company on terms identical to those set forth in this
Agreement. Promptly following such determination, but in no event more
that ninety (90) calendar days following such determination, the Members
shall form such new limited liability company. The Certificate, this
Agreement and the Managers shall automatically constitute the certificate
of formation, operating agreement and managers, respectively, of such
reconstituted limited liability company. All of the assets and liabilities
of the dissolved the Company shall be deemed to have been automatically
assigned, assumed, conveyed and transferred to the reconstituted limited
liability company. No bond, collateral, assumption or release of any
liabilities of the Company or any Member shall be required.
Notwithstanding the foregoing, such automatic election by the Members to
reconstitute and continue the business of the Company in accordance with
this Section 11.1(b) shall not be effective unless the Company prior to the
formation of such new limited liability company has received an opinion of
counsel that (i) the exercise of such right would not result in the loss of
limited liability of any Member and (ii) neither the Company nor the
reconstituted limited liability company would cease to be treated as a
partnership for federal income tax purposes upon the exercise of such right
to continue.
(
(SECTION 11.2. WINDING UPSection 11.2. Winding Up . Upon the
occurrence of (a) a Dissolution Event or (b) the determination by a court
of competent jurisdiction that the Company has dissolved prior to the
occurrence of a Dissolution Event (unless the Company is reconstituted
pursuant to Section 11.1(b)), the Company shall continue solely for the
purposes of winding up its affairs in an orderly manner, liquidating its
assets and satisfying the claims of its creditors and Members, and no
Member shall take any action that is inconsistent with, or not necessary to
or appropriate for, the winding up of the Company's business and affairs,
PROVIDED that all covenants contained in this Agreement and obligations
provided for in this Agreement shall continue to be fully binding upon the
Members until such time as all Property has been distributed pursuant to
this Section 11.2 and the Certificate has been canceled pursuant to the
Act. The Liquidator shall be responsible for overseeing the winding up and
dissolution of the Company, which winding up and dissolution shall be
completed within ninety (90) calendar days of the occurrence of the
Dissolution Event or within ninety (90) calendar days after the last day on
which the Company may be reconstituted pursuant to Section 11.1(b), as
applicable. The Liquidator shall take full account of all liabilities of
the Company and all Property and shall cause such Property or the proceeds
from the sale thereof (as determined pursuant to Section 11.9), to the
extent sufficient therefor, to be applied and distributed, to the maximum
extent permitted by Applicable Law, in the following order:
(
*c)FIRST, to creditors (including, but not limited to, Members and
Managers who are creditors, to the extent permitted by Applicable Law) in
satisfaction of all Debt and other liabilities of the Company, including,
without limitation, any claims and obligations as required by Section 18-
804(b) of the Act (whether by payment or the making of reasonable provision
for payment thereof), other than liabilities for which reasonable provision
for payment has been made and liabilities for distribution to Members under
Section 18-601 or 18-604 of the Act;
(
*d)SECOND, except as provided in this Agreement, to Members and former
Members in satisfaction of liabilities for distribution under Sections 18-
601 or 18-604 of the Act;
(
*e)THIRD, to the Members in proportion to and to the extent of the
positive balance in their Capital Accounts after giving effect to all
contributions, distributions and allocations for all periods; and
(
*f)FOURTH, to the Members in proportion to their Percentage Interests.
(
(No Member or Manager shall receive additional compensation for any
services performed pursuant to this Article XI.
(
(SECTION 11.3. COMPLIANCE WITH CERTAIN REGULATIONS; DEFICIT CAPITAL
ACCOUNTSSection 11.3.
Compliance With Certain Regulations; Deficit Capital Accounts . In the
event the Company is "liquidated" within the meaning of Section 1.704-
1(b)(2)(ii)(G) of the Regulations, (a) distributions shall be made pursuant
to this Article XI to the Members who have positive Capital Accounts in
compliance with Section 1.704-1(b)(2)(ii)(B)(2) of the Regulations. If any
Member has a deficit balance in its Capital Account (after giving effect to
all contributions, distributions and allocations for all Allocation Years,
including, but not limited to, the Allocation Year during which such
liquidation occurs), such Member shall have no obligation to make any
contribution to the capital of the Company with respect to such deficit,
and such deficit shall not be considered a debt owed to the Company or to
any other Person for any purpose whatsoever. In the discretion of the
Liquidator, a pro rata portion of the distributions that would otherwise be
made to the Members pursuant to this Article XI may be:
(
((a) Distributed to a trust established for the benefit of the Members
for the purposes of liquidating the assets of the Company, collecting
amounts owed to the Company and paying any contingent or unforeseen
liabilities or obligations of the Company. The assets of any such trust
shall be distributed to the Members from time to time, in the reasonable
discretion of the Liquidator, in the same proportions as the amount
distributed to such trust by the Company would otherwise have been
distributed to the Members pursuant to Section 11.2; or
(
((b) Withheld to provide a reasonable reserve for the liabilities
(contingent or otherwise) of the Company and to reflect the unrealized
portion of any installment obligations owed to the Company, PROVIDED that
such withheld amounts shall be distributed to the Members as soon as
practicable.
(
(SECTION 11.4. DEEMED CONTRIBUTION AND DISTRIBUTIONSection 11.4.
Deemed Contribution and Distribution . Notwithstanding any other provision
of this Article XI, in the event the Company is liquidated within the
meaning of Section 1.704-1(b)(2)(ii)(G) of the Regulations but no
Dissolution Event has occurred, Property shall not be liquidated, Debts and
other liabilities of the Company shall not be paid or discharged and the
Company's affairs shall not be wound up. Instead, solely for federal
income tax purposes, the Company shall be deemed to have contributed all
Property and all its liabilities to a new limited liability company in
exchange for an interest in such new company and, immediately thereafter,
the Company shall be deemed to liquidate by distributing interests in such
new limited liability company to the Members.
(
(SECTION 11.5. RIGHTS OF MEMBERSSection 11.5. Rights of Members .
Except as otherwise provided in this Agreement, each Member shall look
solely to Property for the return of its Capital Contribution.
(
(SECTION 11.6. NOTICE OF DISSOLUTION/TERMINATIONSection 11.6. Notice
of Dissolution/Termination .
(
*g)In the event a Dissolution Event occurs or an event occurs that
would, but for provisions of Section 11.1, result in a dissolution of the
Company, the Management Committee shall, within thirty (30) calendar days
thereafter, provide written notice thereof to each of the Members and to
all other parties with whom the Company regularly conducts business (as
determined in the discretion of the Management Committee) and shall publish
notice thereof in a newspaper of general circulation in each place in which
the Company regularly conducts business (as determined in the discretion of
the Management Committee).
(
*h)Upon completion of the distribution of all Property as provided in
this Article XI, the Company shall be terminated, and the Liquidator shall
cause the filing of the Certificate of Cancellation pursuant to Section 18-
203 of the Act and shall take all such other actions as may be necessary to
terminate the Company.
(
(SECTION 11.7. ALLOCATIONS DURING PERIOD OF LIQUIDATIONSection 11.7.
Allocations During Period of Liquidation . During the period commencing on
the first day of the Fiscal Year during which a Dissolution Event occurs
and ending on the date on which all Property has been distributed pursuant
to Section 11.2 (the "LIQUIDATION PERIOD"), the Members shall continue to
share Profits, Losses, and other items of income, gain, loss or deduction
in the manner provided in Article IV.
(SECTION 11.8. CHARACTER OF LIQUIDATING DISTRIBUTIONSSection 11.8.
Character of Liquidating Distributions . All payments made in liquidation
of the interest of a Member in the Company shall be made in exchange for
the interest of such Member in Property pursuant to Section 736(b)(1) of
the Code, including, but not limited to, the interest of such Member in the
goodwill of the Company.
(
(SECTION 11.9. THE LIQUIDATORSection 11.9. The Liquidator .
(
*i)FEES. The Company is authorized to pay a reasonable fee to the
Liquidator for services performed pursuant to this Article XI and to
reimburse the Liquidator for reasonable costs and expenses incurred in
performing such services.
(
*j)INDEMNIFICATION. The Company may indemnify, save harmless and pay
all judgments and claims against the Liquidator or any officers, directors,
managers, agents or employees thereof relating to any liability or damage
incurred by reason of any act performed or omitted to be performed by the
Liquidator or any officers, directors, managers, agents or employees
thereof in connection with the liquidation of the Company, including
reasonable attorneys' fees incurred thereby in connection with the defense
of any action based on any such act or omission, which attorneys' fees may
be paid as incurred, except to the extent such liability or damage is
caused by the fraud, intentional misconduct or knowing violation of
Applicable Law by the Liquidator or any officers, directors, managers,
agents or employees thereof that was material to the subject cause of
action.
(
*k)FORM OF LIQUIDATING DISTRIBUTIONS. For purposes of making
distributions required by Section 11.2, the Liquidator may determine
whether to distribute all or any portion of Property in-kind or to sell all
or any portion of Property and distribute the proceeds therefrom.
(
****ARTIX. : DISPUTE RESOLUTIONARTICLE XII DISPUTE RESOLUTION
ARTICLE
ARTICLE SECTION 12.1. GENERAL PROVISIONSSection 12.1. General
Provisions .
ARTICLE
*a)DISPUTE. Any dispute, controversy or claim arising out of or
relating to this Agreement or any related agreement or the validity,
interpretation, breach or termination hereof or thereof (other than a
dispute, controversy or claim (x) brought by a Person who is not a Member
or an Affiliate of a Member or (y) otherwise involving a Person who is not
a Member or an Affiliate of a Member and such Person is an indispensable
party for appropriate resolution of such dispute, controversy or claim) (a
"DISPUTE"), including, without limitation, claims seeking redress or
asserting rights under Applicable Law, shall be settled by arbitration in
New York City in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The decision and award of the arbitrator
shall be final and binding on all parties in interest. Judgment upon the
decision award (including the allocation of costs of any arbitration)
rendered by the arbitrator may be entered in any Court having jurisdiction
thereof. Until completion of such arbitration, no party hereto may take
any action not contemplated herein to force a resolution of the Dispute by
any judicial, arbitral or similar process, except to the limited extent
necessary to avoid expiration of a claim that might eventually be permitted
hereby or as provided in Section 12.3.
(
*b)All communications between the parties hereto that are a party to a
Dispute (each, a "DISPUTE PARTY") or their respective representatives in
connection with the attempted resolution of any Dispute shall be deemed to
have been delivered in furtherance of a Dispute settlement and shall be
exempt from discovery and production, and shall not be admissible in
evidence (whether as an admission or otherwise), in any arbitral or other
proceeding for the resolution of the Dispute.
(
*c)In connection with any Dispute, the parties hereto expressly waive
and forego any right to trial by jury.
(
(SECTION 12.2. CONSIDERATION BY SENIOR EXECUTIVESSection 12.2.
Consideration by Senior Executives . If a Dispute cannot be resolved at an
operational level, any Dispute Party may, by notice to the other Dispute
Parties, request referral to the highest officer of each Member (or such
officer's designee) for their consideration. Such request shall be
accompanied by a written statement of the Dispute and of each Dispute
Party's position. Within fifteen (15) calendar days after such request,
each of the non-requesting Dispute Parties shall either concur in such
statement or prepare its own, and such statement(s) shall be delivered to
the officers named above. Such officers shall meet in person or by
telephone within thirty (30) days thereafter to seek a resolution. If no
resolution is reached by the expiration of forty-five (45) calendar days
from the referral request, then any Dispute Party may submit such Dispute
to resolution as further provided in Section 12.3 by notice to the other
Dispute Parties.
(
(SECTION 12.3. ARBITRATIONSection 12.3. Arbitration .
(
*d)The arbitration shall be conducted in New York City. Each Dispute
Party shall present its case, witnesses and evidence, if any, in the
presence of the other Dispute Parties. A written transcript of the
proceedings shall be made and furnished to the Dispute Parties. The
arbitrator shall determine (i) any Dispute relating to the governance of
the Company in accordance with the law of the state of Delaware, and (ii)
any other Dispute in accordance with the law of the state of New York, in
each case without giving effect to any conflict of law rules or other rules
that might render such law inapplicable or unavailable, and shall apply
this Agreement according to its terms.
(
*e)The parties hereto shall be bound by any award or order resulting
from any arbitration conducted hereunder and:
(
((i) any monetary award shall include pre-award interest, to the
extent appropriate, and shall be made and payable in United States
currency through a bank selected by the recipient of such award, free
of any withholding tax or other deduction, together with interest
thereon at LIBOR in effect on the date of the award, from the date the
award is granted to the date it is paid in full;
(
((ii) in the context of an attempt by any Dispute Party to
enforce an arbitral award or order, the parties hereto hereby waive
any defenses relating to the Dispute Parties' capacity or the validity
of this Agreement or any related agreement under any law; and
(
((iii) judgment on any award or order resulting from an
arbitration conducted under this Section 12.3 may be entered and
enforced in any court (in any country) having jurisdiction thereof or
having jurisdiction over any of the Dispute Parties or any of their
assets.
(
*f)Except as expressly permitted by this Agreement, no party hereto
shall commence or voluntarily participate in any court action or proceeding
concerning a Dispute, except (I) for enforcement as contemplated by Section
12.3(b)(iii), (II) to restrict or vacate an arbitral decision based on the
grounds specified under Applicable Law and not waived in Section
12.3(b)(ii), or (III) for interim relief as provided in Section 12.3(d).
For purposes of the foregoing or enforcement of any undisputed obligation,
each of the parties hereto hereby irrevocably submits to the non-exclusive
jurisdiction of the courts of any state or federal court sitting in New
York City and any appellate court from any thereof.
(
*g)In addition to the authority otherwise conferred on the arbitral
tribunal, such tribunal hereunder shall have the authority to make such
orders for interim relief, including, without limitation, injunctive relief
and specific performance, as it may deem just and equitable. If the
tribunal shall not have been appointed, any Dispute Party may seek interim
relief from a court having jurisdiction if the award to which the applicant
may be entitled may be rendered ineffectual without such interim relief.
Upon appointment of the tribunal following any grant of interim relief by a
court, the tribunal may affirm or disaffirm such relief, and the Dispute
Parties shall seek modification or rescission of the court action as
necessary to accord with the tribunal's decision.
(
*h)The prevailing Dispute Party in any arbitration conducted under
this Section 12.3 shall be entitled to recover from the other Dispute
Parties (as part of the arbitral award or order) such prevailing Dispute
Party's reasonable attorneys' fees and other costs of arbitration.
(
*i)Insofar as it is within the control of the Dispute Parties, and
notwithstanding anything to the contrary in the applicable arbitration
rules:
(
((i) the arbitrator shall be selected within thirty (30) calendar
days after such Dispute is submitted to arbitration hereunder;
(
((ii) any discovery that may be permitted (A) shall be completed
within sixty (60) calendar days, (B) shall not exceed single
depositions of more than five (5) individuals per side who are
directly involved and (C) shall not exceed a single, reasonable
request for directly relevant documents;
(
((iii) any hearing that may be held shall take place within
ninety (90) calendar days after completion of discovery, and each
Dispute Party's presentation at the hearing shall not require more
than three (3) full days;
(
((iv) any written briefs submitted to the arbitrator shall not
exceed a total of twenty-five (25) pages prior to the hearing and
fifteen (15) pages subsequently, in each case excluding exhibits; and
((v) the decision shall be issued in writing, with reasons
therefor, within thirty (30) days after the hearing.
(
****ARTIXI. : MISCELLANEOUSARTICLE XIII MISCELLANEOUS
ARTICLE
ARTICLE SECTION 13.1. NOTICESSection 13.1. Notices . Except as
otherwise set forth herein, all notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered if delivered by hand, by
telecopier (confirmed by hand delivery or overnight courier service) or by
overnight courier service to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
ARTICLE
ARTICLE
ARTICLE ARTICLE
ARTICLE IF TO IASG: ARTICLE WITH A COPY TO:
ARTICLE
ARTICLE International Airline Support Group, Inc. ARTICLE King & Spalding
ARTICLE 0000 Xxxxxxx Xxxx, Xxxxx 000 ARTICLE 191 Peachtree
ARTICLE Xxxxxxx, XX 00000 Street
ARTICLE Attention: Chief Financial Officer ARTICLE Atlanta, GA
ARTICLE Telephone: 000-000-0000 30303-1763
ARTICLE Telecopier: 000-000-0000 ARTICLE Attention:
Xxxxxx X. Xxxxxxxx,
Esq.
ARTICLE Telephone: 000-000-0000
ARTICLE Telecopier: 404-572-5100
ARTICLE
ARTICLE IF TO AIRCORP: ARTICLE WITH A COPY TO:
ARTICLE
ARTICLE AirCorp, Inc. ARTICLE
ARTICLE 0000 Xxxx Xxxxxxxxx Xxxxxxx, Xxxxx 000
XXXXXXX Xxxxxx, XX 00000
ARTICLE Attention: Xxx Xxxxxx
ARTICLE Telephone: 000-000-0000
ARTICLE Telecopier: 000-000-0000
ARTICLE
ARTICLE SECTION 13.2. BINDING EFFECT; ASSIGNMENTSection 13.2. Binding
Effect; Assignment . Except as otherwise provided in this Agreement, every
covenant, term and provision of this Agreement shall be binding upon and
inure to the benefit of the Members and their respective successors
transferees and assigns. Notwithstanding the preceding sentence, neither
this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by any party hereto
without the prior written consent of all other parties hereto, except for
such transfers that comply with Article X.
ARTICLE
ARTICLE SECTION 13.3. ENTIRE AGREEMENTSection 13.3. Entire Agreement .
This Agreement, together with the Omnibus Agreement, represents the entire
understanding of the parties hereto with reference to the matters set forth
herein and supersede all prior negotiations, discussions, correspondence,
communications and prior agreements among the parties hereto or their
Affiliates relating to the subject matter herein.
ARTICLE
ARTICLE SECTION 13.4. WAIVERSection 13.4. Waiver . Any failure of any
party hereto to comply with any obligation, covenant, agreement or
condition contained herein may be waived by the party entitled to the
benefits thereof, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
ARTICLE
ARTICLE SECTION 13.5. INTERPRETATIONSection 13.5. Interpretation .
ARTICLE
*a)CONSTRUCTION. Every covenant, term and provision of this Agreement
shall be construed simply according to its fair meaning and not strictly
for or against any Member.
(
*b)TIME. In computing any period of time pursuant to this Agreement,
the day of the act, event or default from which the designated period of
time begins to run shall not be included, but the time shall begin to run
on the next succeeding day.
(
*c)HEADINGS. Article, Section and other headings contained in this
Agreement are for reference purposes only and are not intended to describe,
interpret, define or limit the scope, extent or intent of this Agreement or
any provision hereof.
(
*d)INCORPORATION BY REFERENCE. Every exhibit, schedule and other
appendix attached to this Agreement and referred to herein is not
incorporated in this Agreement by reference unless this Agreement expressly
otherwise provides.
(
*e)VARIATION OF TERMS. All terms and any variations thereof shall be
deemed to refer to masculine, feminine or neuter, singular or plural, as
the identity of the Person or Persons may require.
SECTION 13.6. SEVERABILITYSection 13.6. Severability . Except as
otherwise provided in the succeeding sentence, every provision of this
Agreement is intended to be severable and, if any term or provision of this
Agreement is illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the validity or legality of the remainder of
this Agreement. The preceding sentence of this Section 13.6 shall be of no
force or effect if the consequence of enforcing the remainder of this
Agreement without such illegal or invalid term or provision would be to
cause any Member to lose the material benefit of its economic bargain.
SECTION 13.7. GOVERNING LAWSection 13.7. Governing Law . Except as
set forth in Section 12.3(a), this Agreement shall be governed by, and
construed in accordance with the laws of, the state of Delaware.
SECTION 13.8. COUNTERPART EXECUTIONSection 13.8. Counterpart Execution
. This Agreement may be executed in any number of counterparts with the
same effect as if all of the Members had signed the same document. All
counterparts shall be construed together and shall constitute a single
agreement.
SECTION 13.9. SPECIFIC PERFORMANCESection 13.9. Specific Performance .
Each Member hereby acknowledges and agrees that (a) the other Members would
be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that monetary damages
would not provide
an adequate remedy in such event and (b) in addition to any other remedy to
which the non-breaching Members may be entitled, at law or in equity, the
non-breaching Members shall be entitled to injunctive relief to prevent
breaches of the provisions of this Agreement and specifically to enforce
the terms and provisions hereof in any action instituted in any court of
competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed and entered into this
Operating Agreement of the Company as of the day first above set forth.
AIRCORP, INC.
By:
Name:
Title:
INTERNATIONAL AIRLINE SUPPORT GROUP, INC.
By:
Name:
Title:
[August 30, 1999 (5:06PM)] [0-000000-0]
EXHIBIT A:
THE CERTIFICATE OF FORMATION
FILED WITH THE OFFICE OF THE SECRETARY OF STATE OF
THE STATE OF DELAWARE
EXHIBIT B:
THE MANAGERS OF THE COMPANY
Name Address Designated by
EXHIBIT C:
THE INITIAL OFFICERS OF THE COMPANY
Name Address Title
EXHIBIT D:
EXCEPTIONS TO NONTRANSFER RULE OF SECTION 10.1
