OPERATING AGREEMENT
FOR
FORD TEL II, LLC
FEBRUARY 24, 2000
OPERATING AGREEMENT FOR
FORD TEL II, LLC
THIS OPERATING AGREEMENT (this "Agreement") is made and entered into
this 24thday of February 2000, by and among Ford Motor Company ("Ford") and
TeleTech Holdings, Inc. ("TeleTech"), as initial members of Ford Tel II, LLC,
a Delaware limited liability company (the "Company") (Ford, TeleTech and any
other authorized member of the Company may from time to time be referred to
herein together as the "Members" and, individually as a "Member"). The
Company was organized as a limited liability company under the Delaware
Limited Liability Company Act, as amended, Title 6, Chapter 18-101 ET SEQ.
(the "Act"). Certain defined terms used in this Agreement are set forth in
SCHEDULE I (SCHEDULE OF DEFINITIONS) attached hereto and made a part hereof.
In consideration of the mutual covenants and agreements contained in
this Agreement and other good and valuable consideration, and intending to be
legally bound hereby, the undersigned parties hereby agree as follows:
ARTICLE I
PURPOSES
The purposes of the Company are (a) to provide worldwide Customer
Relationship Center ("CRC") services to (i) Ford and its Affiliates and such
related services as requested by Ford customers, (ii) Ford's independent
dealership network (including without limitation customer satisfaction
indexing, market research, dealer research, lead generation, maintenance
scheduling, product recalls, broadcast electronic mail management, credit and
finance, video kiosk, data base management, dealers contact management
platform, loyalty programs, premium fulfillment, data analysis, etc.) and
(iii) automotive-related markets (such as repair, parts and aftermarket
suppliers) and (b) to engage in any act in furtherance of such activities
which limited liability companies may perform under the Act.
ARTICLE II
ORGANIZATIONAL MATTERS
SECTION 2.1. FORMATION. The Company was formed pursuant to the Act
upon the filing of the Certificate of Formation (the "Certificate"). The
rights and obligations of the Members shall be as provided under the Act, the
Certificate and this Agreement.
SECTION 2.2. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be in Denver, Colorado or at such place as may
be established by the Management Committee (as defined in Section 4.1 of this
Agreement) from time to time.
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SECTION 2.3. REGISTERED OFFICE AND REGISTERED AGENT. The Company's
registered office shall be 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 and
the name of its initial registered agent at such address shall be The
Corporation Trust Company. The Company may designate another registered
office or agent at any time by following the procedures set forth in the Act.
SECTION 2.4. DURATION. The existence of the Company shall continue in
perpetuity, unless the Company is sooner dissolved in accordance with ARTICLE
X or the Act.
ARTICLE III
MEMBERS AND CAPITAL STRUCTURE
SECTION 3.1. NAMES AND ADDRESSES OF MEMBERS. All Members of the
Company and their business, residence or mailing address shall be listed on
the attached EXHIBIT A. The Members shall be required to update EXHIBIT A
from time to time as necessary to accurately reflect the information therein,
including the information referred to in SECTION 3.2 below.
SECTION 3.2. UNITS REPRESENTING MEMBERSHIP INTERESTS. The Interests of
Members in the Company are divided into and represented by Units or fractions
thereof. Each Member's respective number of Units is set forth in EXHIBIT A,
as the same shall be amended from time to time to reflect any changes in the
number of Units of Members. The Members agree that each Unit shall entitle
the Member possessing such Unit to:
(a) Subject to ARTICLE VII, an equal proportionate share per Unit
of the Company's net income, gains, losses, deductions and credits; and
(b) Subject to ARTICLE X and ARTICLE XI, an equal proportionate
share per Unit of amounts distributed to the Members in respect of their
Interests both during operation and upon dissolution of the Company.
The Company will not issue certificates representing Units, but at the
written request of a Member, the Company will provide a certified statement
setting forth the total number of Units issued and outstanding and the number
of Units issued to the requesting Member, as of the date of the statement.
SECTION 3.3. CAPITAL CONTRIBUTIONS. The initial Capital Contribution
to the Company of each Member is set forth on EXHIBIT A in accordance with
the Contribution Agreement attached hereto as EXHIBIT B (the "Contribution
Agreement").
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SECTION 3.4. ADDITIONAL CAPITAL.
(a) The Company may, from time to time, issue capital calls
requiring the Members to contribute additional amounts of capital to the
Company, if, but only if, such additional Capital Contribution is authorized
by (i) with respect to any additional Capital Contribution requested on or
prior to December 31, 2000, the Business Plan, after Supermajority Approval,
(ii) the Budget for the fiscal year in which such additional Capital
Contribution is requested or (iii) by Supermajority Approval. Capital calls
for Capital Contributions so authorized may be made by written notice to the
Members by the Management Committee (each, an "Additional Capital
Contribution Notice") in accordance with the needs of the Company. Additional
Capital Contributions shall be paid by each Member within thirty (30) days
after receipt of an Additional Capital Contribution Notice.
(b) If any Member who is required to make an additional Capital
Contribution under Section 3.4(a) herein chooses not to make such Capital
Contribution, the Company shall issue additional Units to the Members making
such Capital Contribution. The additional Units shall be issued at fair
market value based upon the fair market value of the Company's assets, as
determined by the Management Committee. Each time the Company issues
additional Units pursuant to this Section 3.4(b) or Section 3.5, the
Management Committee shall amend EXHIBIT A to reflect the Unit ownership. The
Profits and Losses attributable to the additional Units shall be allocated
among the Members in accordance with the provisions of Article VII.
SECTION 3.5. DELINQUENT MEMBERS. If any Member who is required to
make a Capital Contribution under Section 3.4 fails to make payment when due
of all or any portion of its share of any Capital Contribution required by
this Agreement (a "Delinquent Member"), the Company shall give written notice
of such failure to such Delinquent Member. If the Delinquent Member fails to
pay the amount due within thirty (30) days following delivery of such notice,
then each of the other Members (the "Contributing Members") shall have the
right, but not the obligation, to elect the following
(a) To contribute to the Company its requested additional
capital contribution and, if such Member so elects, its proportionate
share of the capital which the Delinquent Members failed to contribute
based on such Contributing Member's respective percentage Membership
Interest held prior thereto in relation to the Interests held by all
Contributing Members who so elect (any contribution made by the
Contributing Members in respect of the contribution the Delinquent
Members failed to make shall be treated as an additional capital
contribution made by such Contributing Members) and the Interests of the
Members shall be adjusted in accordance with Section 3.4(b); or
(b) To provide to the Company the amount of the capital which
the Delinquent Members failed to contribute, in the form of a loan to
such Delinquent Members (a
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"Member Loan"), which Member Loan shall bear interest at rate equal to
the prime rate reported in the WALL STREET JOURNAL (or successor
publication) for the day prior to the date such Member Loan is made
plus one percentage point. Any such Member Loan, plus interest thereon,
shall be repaid by the Company directly from amounts otherwise
distributable to the Delinquent Member hereunder by remitting such
amount to the Contributing Member who made the Member Loan. Amounts so
paid over to the Contributing Member shall nevertheless be deemed
distributions to the Delinquent Member. At the time the Member Loan is
made, the Delinquent Member shall be deemed to have made a Capital
Contribution to the Company in the amount of the Loan. Upon such
deemed Capital Contribution, the Interests of the Members shall be
adjusted in accordance with the provisions of Section 3.4(b).
SECTION 3.6. CAPITAL ACCOUNTS.
(a) A capital account ("Capital Account") shall be established,
maintained and adjusted for each Member in the manner provided by Treasury
Regulation Section 1.704-1(b)(2)(iv) and such other provisions of Treasury
Regulation Section 1.704-1(b) that must be complied with in order for the
Capital Accounts of the Members to be established, maintained, adjusted and
determined in accordance with the provisions of that Treasury Regulation. The
Capital Account of a Member shall be increased or decreased as provided in
that Treasury Regulation, except to the extent that such adjustment would
materially affect the amount or timing of any amount otherwise distributed
under this Agreement.
(b) The Book Value of all Company assets shall be adjusted to equal
their respective gross fair market values, as determined by the Management
Committee, upon the issuance of additional Units, and the Capital Accounts of
all Members shall be adjusted simultaneously to reflect the aggregate net
adjustment as if the Company recognized gain or loss equal to the amount of
such aggregate net adjustment.
(c) No Member shall have any liability or obligation to restore a
negative or deficit balance in such Member's Capital Account.
SECTION 3.7. NO RIGHTS OF REDEMPTION. No Member shall have the right
to: (a) have that Member's Units or Interest redeemed, (b) have that
Member's Capital Contribution returned, or (c) subject to ARTICLE VII ,
ARTICLE X, and ARTICLE XI, otherwise receive property of the Company; even if
that Member dissociates prior to termination of the Company. At termination,
the Member's rights are limited to those set forth in ARTICLE X and ARTICLE
XI. No Member shall have the right to demand a distribution or return of such
Member's Capital Contributions.
SECTION 3.8. MEMBER LOANS OR SERVICES. Except as set forth in SECTION
3.5, without Supermajority Approval, loans or services by any Member to the
Company shall not be considered Capital Contributions.
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SECTION 3.9. ADMISSION OF ADDITIONAL MEMBERS. The Company may issue or
sell Interests in the Company to additional Members ("Additional Members")
only with Supermajority Approval. Thereafter, such Additional Members will
have the rights of Members as described in SECTION 3.2 and will be allocated
net income, gains, losses, deductions and credits by such method as may be
provided in this Agreement, and if no method is specified, then as may be
permitted by Section 706(d) of the Code.
SECTION 3.10. NO MEMBER RESPONSIBLE FOR OTHER MEMBER'S COMMITMENT. In
the event that any Member (or any of such Member's shareholders, partners,
members, owners, or Affiliates ) has incurred any indebtedness or obligation
prior to the date of this Agreement that relates to or otherwise affects the
Company, neither the Company nor any other Member shall have any liability or
responsibility for or with respect to such indebtedness or obligation.
SECTION 3.11. COMPANY RESPONSIBLE FOR CERTAIN ORGANIZATION EXPENSES.
The Company shall pay or reimburse all expenses directly incurred by the
Company in connection with the formation of the Company and listed on
SCHEDULE 3.11; provided that any expenses incurred by Ford in connection with
middleware development by IBM in North America incurred during the first two
years shall not be reimbursable.
ARTICLE IV
MEETINGS OF MEMBERS
SECTION 4.1. MANAGEMENT COMMITTEE.
(a) FORMATION, DESIGNATION AND AUTHORITY OF MANAGEMENT COMMITTEE.
The Members hereby acknowledge and agree that the business and affairs of the
Company shall be conducted by a Management Committee (the "Management
Committee"). The Management Committee shall have the full power and authority
of the Members. Each action of the Management Committee taken in accordance
with this Agreement shall constitute an action of each of the Members and
shall be final and binding on the Members for all purposes. The Management
Committee shall devote such time to the Company as may be reasonably required
for the achievement of the purposes of the Company.
(b) APPOINTMENT AND REMOVAL OF REPRESENTATIVES. The Management
Committee shall consist of an equal number of representatives appointed by
each Member. Initially, the Management Committee shall consist of a total of
eight representatives, with four representatives appointed by TeleTech and
four representatives appointed by Ford; provided that at least one of the
representatives appointed by both Ford and TeleTech shall be outside
representative not employed by the appointing Member. SCHEDULE 4.1(b) lists
the initial representatives of the Management Committee and will be updated
from time to time with any changes in such representatives made in accordance
with this Section 4.1. The Chairman of
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the Management Committee may be selected by a majority vote of the Management
Committee; provided however, that in the event of a deadlock, the
representatives appointed by TeleTech shall select the Chairman. A Member
may remove and replace its representative to the Management Committee at any
time upon written notice to the other Member, it being understood and agreed
that a representative to the Management Committee may only be removed by the
Member appointing such representative. If any representative of a Member is
unable to attend any meeting of the Management Committee, such Member shall
be entitled to designate an alternate representative to attend and vote at
such meeting in lieu of such Member's regular representative. No member of
the Management Committee shall be compensated by the Company, including
reimbursement for out-of-pocket expenses.
(c) MANAGEMENT COMMITTEE APPROVALS. Notwithstanding any provision
of this Agreement to the contrary, Supermajority Approval of the Management
Committee is required to authorize or permit the Company to:
(i) appoint or change the Company's independent accountants
(the "Accountants") or make any change in any method of accounting or
accounting practice or policy other than those required by GAAP;
(ii) merge or consolidate with any other entity;
(iii) take any action to dissolve or liquidate the Company;
(iv) sell, assign, transfer or convey a significant portion
of its properties or assets other than in the ordinary course of business
or as contemplated by the Business Plan or the Budget;
(v) except as set forth in the Business Plan, make any
investment in or acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof, or (B) any assets that are material, individually or in the
aggregate, to the Company;
(vi) engage in any business or operations other than as set
forth in clause (a) of Article I hereof;
(vii) approve any Budget or Business Plan;
(viii) except as provided in Section 5.1, hire, terminate and
set the compensation of the Company's officers;
(ix) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness , issue or sell any debt securities or
warrants or other rights to acquire any
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debt securities or indebtedness of the Company, guarantee any debt
securities of another person or entity, enter into any "keep well" or
other agreement to maintain any financial statement condition of another
person or enter into any arrangement having the economic effect of any
of the foregoing, except as contemplated by the Business Plan or any
Budget, or (B) make any loans, advances or capital contributions to, or
investments in, any other person or entity, except as contemplated by
the Business Plan or any Budget;
(x) execute, terminate or materially amend or modify (A) any
contract or agreement for the annual sale of services to non-Affiliates
exceeding $5,000,000 or (B) any other contract, expenditure or
transaction (other than the sale of services to Affiliates) that was not
in any Budget or the Business Plan and exceeds $1,000,000 or, if in the
Business Plan or Budget, where the expenditure involved exceed those
contemplated by the Budget or the Business Plan by $1,000,000;
(xi) execute, terminate or materially amend or modify any
contract or agreement that commits the Company to contingent liabilities
of more than $1,000,000.
(xii) enter into any trademark, patent, copyright, know-how,
licensing or technology agreement and undertaking any non-routine matter
relating to the intellectual property rights of the Company;
(xiii) mortgage or encumber in any manner any assets of the
Company;
(xiv) pay, discharge, settle or satisfy any litigation or
disputed third party claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction, in an amount not to
exceed $50,000;
(xv) make any contribution to a charitable or non-profit
organization in excess of $10,000;
(xvi) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of,
any of the Units, except as expressly permitted under Section 7.11(c) of
this Agreement;
(xvii) request or consent to any Bankruptcy;
(xviii) issue, deliver, sell, pledge or otherwise encumber any
Interest, any other voting securities or any securities convertible into,
or any rights, warrants or options to acquire, any such Interest, voting
securities or convertible securities;
(xix) amend its Certificate of Formation or Articles of
Organization; and
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(xx) delegate any of its authority with respect to any of the
actions listed in clauses (i)-(xix) above.
(d) INDEMNIFICATION. The Company shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person (including any Member) who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he or she or a person for whom he or
she is the legal representative, is or was a Member, a representative of the
Management Committee or an officer of the Company designated pursuant to Article
V below, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation or of a partnership, joint
venture, trust, enterprise or nonprofit entity, including service with respect
to employee benefit plans (an "Indemnitee"), against all liability and loss
suffered and expenses (including attorneys' fees) reasonably incurred by such
indemnitee, provided, however, that nothing in this Section 4.l(d) shall require
the Company to indemnify any Member or any Affiliate, employee or agent of any
Member against or on account of any claim, loss, expense or liability resulting
from the actions of such Member, Affiliate, employee or agent in a capacity
other than as a Member Management Committee representative, officer, employee or
agent of the Company, including in its capacity as franchisor, lender or
supplier. The Company shall be required to indemnify an Indemnitee in connection
with a proceeding (or part thereof) initiated by such Indemnitee only if the
initiation of such proceeding (or part thereof) by the Indemnitee was authorized
by the Management Committee of the Company.
(i) PREPAYMENT OF EXPENSES. The Company shall pay the
expenses (including attorneys' fees) incurred by an Indemnitee in
defending any proceeding in advance of its final disposition, PROVIDED,
HOWEVER, that the payment of expenses incurred by a representative to
the Management Committee or officer in advance of the final disposition
of the proceeding shall be made only upon receipt of an undertaking by
such individual to repay all amounts advanced if it should be ultimately
determined that the individual is not entitled to be indemnified under
this Section 4.l(d) or otherwise.
(ii) CLAIMS. If a claim for indemnification or payment of
expenses under this Section 4. l(d) is not paid in full within sixty (60)
days after a written claim therefor by the Indemnitee has been received
by the Company, the Indemnitee may file suit to recover the unpaid amount
of such claim and, if successful in whole or in part, shall be entitled
to be paid the expenses of prosecuting such claim. In any such action the
Company shall have the burden of proving that the Indemnitee was not
entitled to the requested indemnification or payment of expenses under
applicable law.
(iii) NONEXCLUSIVITY OF RIGHTS. The rights conferred on any
person by this Section 4.l(d) shall not be exclusive of any other rights
which such person may have or
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hereafter acquire under any statute, provision of the Certificate,
agreement, vote of Members or otherwise.
(iv) OTHER INDEMNIFICATION. The Company's obligation, if any,
to indemnify any person who was or is serving at its request as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust, enterprise, or nonprofit entity shall be reduced by
any amount such person may collect as indemnification from such other
corporation, partnership, joint venture, trust, enterprise or nonprofit
enterprise, provided that such person shall not be required to collect
first from such other corporation, partnership, joint venture, trust,
enterprise, or nonprofit enterprise.
(v) AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provisions of this Section 4.1(d) shall not adversely affect
any right or protection hereunder of any person in respect of any act or
omission occurring prior to the time of such repeal or modification.
SECTION 4.2. REGULAR MEETINGS. The Management Committee shall meet at
least once during each fiscal quarter of the Company or more or less frequently
and on such specific dates as designated by the Members. Meetings of the
Management Committee shall take place at the principal offices of the Company or
at such other place as may be designated by a majority of the Members.
SECTION 4.3. SPECIAL MEETINGS. A special meeting of the Management
Committee may be called by any representative of the Management Committee, for
any purpose or purposes, unless otherwise prescribed by statute, at any time
upon notice in writing to the Company of the proposed meeting and the matters
proposed to be acted upon.
SECTION 4.4. NOTICE OF MEETINGS. The Company shall deliver notice by
electronic mail regular mail, courier service or facsimile stating the date,
time and place of any meeting of the Management Committee and, in the case of a
special meeting or when otherwise required by law, a description of the purposes
for which the meeting is called, to each Member of record and each
representative of the Member on the Management Committee entitled to vote at the
meeting, at such address as appears in the records of the Company and at least
ten (10), but no more than sixty (60), days before the date of the meeting.
SECTION 4.5. WAIVER OF NOTICE. A representative of the Management
Committee may waive notice of any meeting, before or after the date and time of
the meeting as stated in the notice, by delivering a signed written waiver to
the Company for inclusion in the minutes. A representative's attendance at any
meeting, in person or by proxy (a) waives objection to lack of notice or
defective notice of the meeting, unless such individual at the beginning of the
meeting objects to holding the meeting or transacting business at the meeting,
and (b) waives objection to consideration of a particular matter at the meeting
that is not within the purposes described in
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the meeting notice, unless such individual objects to considering the matter
when it is presented.
SECTION 4.6. VOTING RIGHTS. The presence of the representatives of a
Supermajority of the Members shall constitute a quorum for any meeting of the
Management Committee. Except as otherwise provided in this Agreement,
approval of any action requires the approval of a Supermajority of the
Members using the Voting Interest of each Member listed on EXHIBIT A. The
representatives (or designated alternates) of the Management Committee
appointed by each Member who are present (in person or by written proxy) at
any meeting of the Management Committee (or who are acting by written consent
in lieu of a meeting) shall together (or separately if only one
representative (or designated alternate) designated by a Member is present at
such meeting) have voting power equal to such Member's Voting Interest at the
time of such meeting.
SECTION 4.7. ACTION BY CONSENT. Any action required or permitted to be
taken at a meeting of the Management Committee may be taken without a meeting
if a consent in writing, setting forth the action so taken, shall be signed
by all the representatives or their designated alternatives. The written
consent or consents of the representatives or their designees shall be
delivered to the Company for inclusion in its minutes.
SECTION 4.8. PRESENCE. A representative of the Management Committee
shall be entitled to participate in any regular or special meeting of the
Management Committee by, or through the use of, any means of communication by
which all representatives participating may simultaneously hear each other
during the meeting. A representative so participating is deemed to be present
in person at the meeting.
SECTION 4.9. CONDUCT OF MEETINGS. The Management Committee shall
appoint one of its representatives to preside at the meeting and shall
appoint a person to act as secretary of the meeting. The secretary of the
meeting shall prepare minutes of the meeting which shall be maintained in the
minute book of the Company.
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ARTICLE V
MANAGEMENT
SECTION 5.1. OVERSIGHT BY MANAGEMENT COMMITTEE. The Management
Committee shall, by Supermajority Approval, select a Chief Executive Officer
and such other executive officers of the Company as the Management Committee
shall determine. The Chief Financial Officer shall be appointed and
terminable by Ford, however, such appointee shall be a person acceptable to
TeleTech.
SECTION 5.2. CHIEF EXECUTIVE OFFICER. Subject to the oversight of the
Management Committee, the CEO shall manage the business operations of the
Company in accordance with the operating guidelines and policies adopted from
time to time by the Management Committee. The CEO shall implement the
Business Plan (as defined in Section 5.3 below) and conduct the business of
the Company in accordance with the Business Plan and the relevant Budget. The
CEO and such other officers of the Company as further delegated by the CEO or
the Management Committee shall have the authority to execute on behalf of the
Company all contracts and other documents within the ordinary scope of the
business of the Company and as contemplated by the Business Plan, the
relevant Budget or as specifically authorized by the Management Committee.
SECTION 5.3. INITIAL BUSINESS PLAN; ANNUAL BUDGETS. As promptly as
practicable after the date hereof, the Management Committee shall adopt and
approve, by Supermajority Approval a business plan (the "Business Plan")
which shall contain income statements, balance sheets and statements of cash
flows, the overall business objectives of the Company, projected revenues and
itemized operating and capital expenditures of the Company for the Company's
2000 and 2001 fiscal years, a description of any proposed acquisitions for
the Company and an assessment of the Company's working capital needs over the
period covered. Prior to the commencement of each fiscal year of the
Company, the Management Committee shall, by a Supermajority Approval, adopt
and approve a Business Plan and a Budget for the upcoming fiscal year of the
Company. If, for whatever reason, the Management Committee is unable to adopt
and approve a Business Plan or a Budget prior to the commencement of any
fiscal year of the Company then the Company shall be operated, until a Budget
and Business Plan are approved, subject to the expense limitations set forth
in the Business Plan or a Budget for the immediately preceding fiscal year,
excluding any one-time or extraordinary operating expenses and excluding all
capital expenditures except those which are determined by the CEO to be
reasonably necessary in order to keep the Company's assets in good working
condition.
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ARTICLE VI
ACCOUNTING AND RECORDS
SECTION 6.1. RECORDS AND ACCOUNTING. The books and records of the
Company shall be kept, and the financial position and the results of its
operations recorded, in accordance with generally accepted accounting
principles consistently applied ("GAAP"). The books and records of the
Company shall reflect all Company transactions and shall be appropriate and
adequate for the Company's business. The fiscal year of the Company for
financial reporting and for federal income tax purposes shall be the calendar
year. So long as Ford and TeleTech are Members, the Company shall use
reasonable efforts to maintain and report all required accounting data in
accordance with directions established by Ford and TeleTech.
SECTION 6.2. ACCESS TO ACCOUNTING RECORDS. All books and records of
the Company shall be maintained at an office of the Company or at the
Company's principal place of business, and each Member, and his, her, or its
duly authorized representative, may inspect and copy such books and records
upon reasonable notice and request, during normal business hours.
SECTION 6.3. ANNUAL TAX INFORMATION. The Company shall use its best
efforts to deliver to each Member within 60 days after the end of each fiscal
year all information necessary for the preparation of such Member's federal
and state income tax returns. The Company shall also use its best efforts to
prepare, within 60 days after the end of each fiscal year, a financial report
of the Company for such fiscal year containing a balance sheet as of the last
day of the year then ended, an income statement for the year then ended, a
statement of sources and applications of funds, and a statement of
reconciliation of the Capital Accounts of the Members.
SECTION 6.4. FEDERAL INCOME TAX TREATMENT. The Members intend that the
Company be treated as a partnership for Federal income tax purposes.
SECTION 6.5. NO STATE-LAW PARTNERSHIP. It is the intent of the
Members that the Company shall be operated in a manner consistent with its
treatment as a partnership for federal and state income tax purposes, and no
Member shall take any action inconsistent with such intent. In this regard,
the Members shall make a good faith effort to exercise all measures
reasonably necessary to ensure that the Company is characterized as a
partnership for federal and state tax purposes, either by means of an
affirmative election, or as a result of the applicable default provisions
pursuant to the regulations under Section 301.7701-1,-2 and -3 of the
Treasury regulations relating to entity classifications (the "check-the-box"
regulations). No provision of this Agreement shall be deemed or construed to
constitute the Company a partnership (including, without limitation, a
limited partnership) or joint venture, or any Member or director or Affiliate
of a Member a partner or joint venturer of or with any other Member or
Affiliate of a Member, for any purpose other than federal and state income
tax purposes.
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ARTICLE VII
ALLOCATIONS AND DISTRIBUTIONS
SECTION 7.1. ALLOCATIONS OF PROFITS AND LOSSES. The Company's Profits
and Losses shall be allocated as follows:
(a) LOSSES. The Company's Losses, if any, arising in a fiscal year,
shall be; allocated among the Members in the priorities set forth below:
(i) FIRST: To the extent required so that the Members'
respective Capital Accounts are in proportion to each such Member's
Percentage Interest; and
(ii) SECOND: Pro Rata to the Members in accordance with each
such Member's Percentage Interest.
(b) PROFITS. The Company's Profits arising in a fiscal year shall be
allocated among the Members in the priorities set forth below:
(i) FIRST: To the extent required so that the Members'
respective Capital Accounts are in proportion to each such Member's
Percentage Interest; and
(ii) SECOND: Pro Rata to the Members in accordance with their
respective Percentage Interests.
(c) PRIORITY. Items of income, gain, deduction and loss shall first be
allocated in accordance with Section 7.2. Profits and Losses, as reduced or
increased as the case may be, and shall then be allocated under this Section
7.1.
SECTION 7.2. CODE SECTION 704(b) LIMITATIONS.
(a) MINIMUM GAIN CHARGEBACK. The Company shall (i) keep track of
all minimum gain (within the meaning of Treasury Regulation Section 1.704-2),
and (ii) specifically allocate items of deduction and income of the Company
among the Members, in each case to the extent required to satisfy the
requirements of Treasury Regulation Sections 1.704-2(f) and 1.704-2(i)(4).
(b) QUALIFIED INCOME OFFSET. The Company shall specifically
allocate items of Company income and gain to Members with deficit Capital
Account balances to the extent required to satisfy the "qualified income
offset" requirements in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(3).
14
(c) CURATIVE ALLOCATIONS. The allocations set forth in Section
7.2(a) and (b), above (the "Regulatory Allocations") are intended to comply
with certain requirements of Treasury Regulation Sections 1.704-l(b) and
1.704-2. The Regulatory Allocations may not be consistent with the manner in
which the Members intend to allocate Profits or Losses or make distributions.
Accordingly, notwithstanding the other provisions of this Article VII but
subject to the Regulatory Allocations, the Tax Matters Member is hereby
directed to reallocate items of income, gain, deduction or loss among the
Members so as to eliminate the effect of the Regulatory Allocations and
thereby to cause the respective Capital Accounts of the Members to be in
proportion to their respective Percentage Interests.
SECTION 7.3. FEDERAL INCOME TAX ALLOCATIONS.
(a) Sections 7.1 and 7.2 provide for the allocation of Profits and
Losses for Capital Account maintenance purposes. Generally, the Company's
taxable income and loss as determined for federal income tax purposes (and
each item of income, gain, loss or deduction entering into the computation
thereof) will be allocated to the Members in the same proportion as the
corresponding items are allocated for Capital Account maintenance purposes.
(b) Notwithstanding Section 7.3(a), federal income tax items
relating to assets that have a Book Value that is not equal to their adjusted
tax basis will be allocated in accordance with Code Section 704(c). The
Company shall adopt the traditional method of Code Section 704(c) and
Treasury Regulation Section 1.704-3(b) for allocating loss or deduction
(solely for tax purposes) in respect of such assets.
SECTION 7.4. INTEREST IN THE COMPANY PROFITS. Pursuant to Section
1.752-3(a)(3) of the Treasury Regulations, the Members' interests in the
Company profits for purposes of determining the Members' proportionate shares
of the excess nonrecourse liabilities (as defined in Section 1.752-3(a)(3) of
the Treasury Regulations) of the Company shall be determined in accordance
with their respective Membership Interests.
SECTION 7.5. SPECIAL ALLOCATIONS. In the event that the Internal
Revenue Service determines either (a) that any Member's or an Affiliate's
income or expense attributable to any transaction between the Company and any
Member or its Affiliate (other than, with respect to a Member, in its
capacity as a Member) (a "Member Transaction") is greater than or less than
the amount paid by the Company with respect to such Member Transaction or (b)
the Company's income or expense with respect to any such Member Transaction
is greater than or less than the amount paid by the Company with respect to
such Member Transaction, the Company shall specially allocate any resulting
deduction or gain, as the case may be, attributable to such excess to the
Member who (or whose Affiliate) entered into the Member Transaction.
SECTION 7.6. COOPERATION. Each Member agrees to cooperate with and to
take or cause the Company to take all reasonable actions requested by any other
Member with the view to
15
minimize federal, state, and local taxes, levies and assessments applicable
to the Company; provided, however, that no Member will be obligated to take
any such action that would, in such Member's reasonable judgment, be
detrimental to such Member. The Company shall make commercially reasonable
efforts to keep its books and records in such a manner and take tax reporting
positions which maximize the tax benefit to the Members; provided that, the
Company shall not be required to take any such position if the effect would
be detrimental to another Member or the Company and such Member of the
Company was not compensated for such detriment or cost by the Member(s)
receiving any such tax benefit.
SECTION 7.7. OTHER TAX AGREEMENTS. The Company shall not elect to be
classified as an association taxable as a corporation pursuant to Treasury
Regulation Section 301.7701-3 and, accordingly, shall be treated as a
partnership for federal income tax purposes and, to the extent possible,
state income tax purposes. The Tax Matters Member shall cause all tax returns
of the Company to be timely filed.
SECTION 7.8. PREPARATION AND FILING OF INCOME TAX RETURNS; ELECTIONS.
The Company shall cause the Accountants to timely prepare and file all the
Company tax returns and shall timely make all other filings required by any
governmental authority having jurisdiction to require filings, the cost of
which shall be borne by the Company. Each Member shall be provided a draft of
such income tax return as soon as available and in no event later than sixty
(60) days after the end of each fiscal year, which Member may respond to the
Accountants with comments within fifteen (15) Business Days of receipt
thereof. The Accountants shall in good faith consult with, and consider the
views of, each other Member regarding the timing and manner of preparation of
such tax returns, reports and similar statements and any tax elections made
thereon and shall make a good faith attempt to reach a consensus on all
issues. In the event that a consensus cannot be reached on any material
issue relating to any substantive position to be taken on such tax returns,
such issue shall be submitted to another mutually acceptable independent
accounting firm of national reputation for a binding resolution of such
issue, provided, however, that in all events positions taken on the Company's
tax returns shall be consistent with the form of the transactions
contemplated by and reflected in this Agreement and the Ancillary Agreements.
The Company shall pay the Accountants their reasonable fees and expenses
relating to carrying out their obligations pursuant to this Section 7.8.
Neither the Company nor any Member shall elect to be excluded from the
provisions of subchapter K of the Code or from any similar provision of state
tax laws. The Management Committee may make, or may cause the Company to
make, those elections that the Management Committee may consider advisable
and in the interests of the Company under any applicable tax law, including
an election in accordance with applicable Treasury Regulations to cause the
basis of any Property to be adjusted for federal income tax purposes as
provided in Code Sections 734, 743, and 754. So long as Ford or TeleTech
shall hold an interest in the Company, the Company shall use reasonable
efforts to maintain and complete all required tax accounting and tax
reporting
16
requirements in accordance with the direction of Ford or TeleTech and to
deliver the materials in time to meet Ford's or TeleTech's quarterly and
annual tax return filing deadlines.
SECTION 7.9. CONTROVERSIES WITH TAXING AUTHORITIES. If there is any
controversy with the Internal Revenue Service or any other taxing authority
involving the Company or the amount of the allocation of income, gain, loss,
deduction, or credit of the Company to any Member, the Company shall incur
those expenses that the Management Committee deems necessary or advisable in
the interest of the Company in connection with any such controversy,
including, without limitation, reasonable attorneys' and accountants' fees.
The Company will promptly send to each Member a copy of all material
correspondence the Company sends to or receives from the Internal Revenue
Service with respect to any controversy.
SECTION 7.10. TAX MATTERS MEMBER. The Members hereby designate Ford as
the "tax matters partner" of the Company within the meaning of Code Section
6231(a)(7) (the "Tax Matters Member") and in that capacity Ford shall
represent the Company in any disputes, controversies or proceedings with the
Internal Revenue Service or other taxing authority. The Tax Matters Member
shall act in a similar capacity under applicable state, local and foreign
laws. The Management Committee may at any time hereafter designate another
Member of the Company as a new Tax Matters Member; provided, however, that so
long as Ford is a Member, such designation shall require a Supermajority of
the Members. The Tax Matters Member shall take such action as reasonably may
be necessary to cause each other Member to become a "notice partner" within
the meaning of Section 6231(a)(8) of the Code. The Tax Matters Member shall
notify each other Member of all material matters that may come to its
attention in its capacity as Tax Matters Member. The Tax Matters Member is
authorized to engage legal counsel and accountants and to incur reasonable
expenses on behalf of the Company in contesting, challenging and defending
against any audits, assessments and administrative or judicial proceedings
conducted or participated in by any tax authority with respect to the
Company's operations and affairs so long as such legal counsel and
accountants are approved by the Management Committee. The Tax Matters Member
shall not enter into any settlement, concession, compromise or other form or
type of agreement (other than an agreement to extend the assessment period
described in Section 6229 of the Code) in connection with any such matter
that may adversely affect the Members, or any of them, without the express
approval of a Supermajority of the Members.
17
SECTION 7.11. CURRENT DISTRIBUTIONS.
(a) DISTRIBUTION OF PROFITS The Company shall make distributions
of Profits (each, a "Profit Distribution") to the Members in proportion to
their Percentage Interests annually, within 120 days following the end of the
fiscal year. The aggregate Profit Distribution for a fiscal year shall equal
the excess of the cumulative Profits of the Company for the current period
and all prior periods over all prior Tax Distributions and all prior Profit
Distributions, less the amount of any required reserves (the "Required
Reserves") as determined by the Management Committee. In determining the
amount of Required Reserves, the Management Committee shall reasonably take
into account the amount necessary: (i) to maintain a reasonably prudent
Debt-to-Equity Ratio; (ii) to fund expected capital expenditures required by
the Business Plan; (iii) to restore prior year Losses; and (iv) to provide
such additional reserves as the Management Committee determines are necessary.
(b) DISTRIBUTION OF NET CASH FROM CAPITAL TRANSACTIONS. Net Cash
from Capital Transactions, other than from a sale of assets pursuant to a
dissolution, which is distributed under Article XI, shall be distributed to
the Members pro rata in accordance with their respective Percentage Interests.
(c) DISTRIBUTION FOR TAXES. The Company shall make periodic
distributions to the Members in proportion to their Percentage Interests (the
"Tax Distributions") in an aggregate amount equal to the estimated
incremental tax deposit required to be made with respect to the taxable
income of the Company (the "Quarterly Tax Deposit"), as reasonably determined
by the Independent Accountants. The Tax Distributions shall be made no later
than 5 days before Quarterly Tax Deposits are required to be made to the
Internal Revenue Service. The amount of the Quarterly Tax Deposit shall be
determined using the following assumptions: (i) the applicable tax rate shall
be the highest marginal effective federal, state, and local corporate income
tax rate, as reasonably determined by the Accountants for the relevant fiscal
year of the Company, and (ii) any tax losses of the Company will be carried
forward to offset subsequent tax profits. If the Independent Accountants
reasonably determine that the aggregate Tax Distributions for any Fiscal Year
are not sufficient for or shall exceed the aggregate tax liability (computed
in a manner consistent with the computation of the Tax Distributions) for
such fiscal year of the Company, then subsequent Tax Distributions shall be
appropriately adjusted.
(d) DISTRIBUTION IN KIND. If any asset is distributed in kind, such
asset shall be valued to determine the amount of Profits or Losses that would
result if such asset were to be sold at its fair market value on the
distribution date, and such Profits or Losses shall be allocated among the
Capital Accounts of the Members in accordance with Article VII, as
appropriate.
18
SECTION 7.12. LIQUIDATION DISTRIBUTIONS. Upon dissolution of the
Company, distributions of the remaining assets of the Company ("Liquidating
Distributions") shall be made as provided in Section 11.3.
SECTION 7.13. GENERAL. Except as specifically provided herein, no
Member shall have the right to receive or power to demand a distribution in
a form other than cash, and no Member shall be required or compelled to
accept a distribution of any asset in kind to the extent that the interest
distributed would exceed the Member's Pro Rata share. No Member shall have
the right to receive interest on any distribution to the Member by the
Company. Notwithstanding anything contained in this Agreement or the
Certificate to the contrary, no Distribution shall be made to a Member in
violation of the Act.
SECTION 7.14. AMOUNTS WITHHELD. All amounts withheld pursuant to any
provision of any federal, state or local tax law with respect to any payment,
distribution or allocation to a Member shall be treated as amounts
distributed to such Member pursuant to this Article VII for all purposes
under this Agreement. The Company is authorized to withhold from
distributions and to pay over to any federal, state or local government any
amounts required to be so withheld pursuant to any federal, state or local
law and shall treat these amounts as distributed to the Members with respect
to which the amount was withheld.
SECTION 7.15. ALLOCATION OF INCOME AND LOSS AND DISTRIBUTIONS IN
RESPECT OF INTERESTS TRANSFERRED.
(a) If any Interest is transferred, or is increased or decreased by
reason of the admission of an Additional Member or otherwise, during any
fiscal year of the Company, each item of net income, gain, loss, deduction,
or credit of the Company for such fiscal year shall be assigned Pro Rata to
each day in the particular period of such fiscal year to which such item is
attributable (i.e., the day on or during which it is accrued or otherwise
incurred), and the amount of each such item so assigned to any such day shall
be allocated among the Members based upon each Member's respective Percentage
Interest at the close of such day.
(b) Authorized distributions of Company assets in respect of an
Interest shall be made only to the Members who, according to the books and
records of the Company, are the holders of record of the Interests in respect
of which such distributions are made on the actual date of distribution.
Neither the Company nor any Member shall incur any liability for making
distributions in accordance with the provisions of the preceding sentence,
whether or not the Company or the Member has knowledge or notice of any
transfer or purported transfer of ownership of an Interest which has not met
the requirements of Article III. Notwithstanding any provision above to the
contrary, gain or loss of the Company realized in connection with a sale or
other disposition of any of the assets of the Company shall be allocated
solely to the parties owning Interests as of the date such sale or other
disposition occurs.
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ARTICLE VIII
RESTRICTIONS ON WITHDRAWAL AND TRANSFERS OF INTERESTS
SECTION 8.1. BASIC RESTRICTIONS ON TRANSFER AND PERMITTED TRANSFERS.
(a) Except as set forth in this Section, Section 8.5 and Section
8.6, none of the Units (Interest) of a Member or any portion thereof shall be
the subject of a Transfer, unless the Member has obtained the prior written
consent of each Member holding a Percentage Interest greater than forty
percent (40%). Any Transfer or purported Transfer not in compliance with this
Article VIII shall be null and void.
(b) A Member may make a Transfer of an interest (in whole or in
part) to any wholly-owned or majority-owned subsidiary of such Member without
the consent of the Management Committee; provided however that such transfer
shall be conditioned and effective upon the execution by the transferee of an
agreement (reasonably satisfactory to each of the Members) to be bound by the
terms of this Agreement.
SECTION 8.2. FURTHER RESTRICTIONS ON TRANSFER. In addition to the
restrictions set forth in Section 8.1, no Member shall Transfer all or any
part of the Member's interest: (a) without registration under applicable
state or federal securities laws, unless an exemption therefrom applies and,
if requested by the Company, the Member delivers an opinion of counsel
satisfactory to the Company, that registration under any such laws is not
required; or (b) if the Interest or portion thereof, when added to the total
of all other Interests sold or exchanged in the preceding 12 consecutive
months prior thereto, would result in the termination of the Company for tax
purposes under Section 708 of the Code.
SECTION 8.3. STATUS OF TRANSFEREE AND TRANSFEROR. Notwithstanding
anything contained in this Agreement to the contrary except as set forth in
Section 8.1(b), any transferee or recipient of a Unit or Units (or any
portion thereof) subject to an effective Transfer shall be an Assignee and
shall have no right to (a) vote any Units or portion thereof subject to the
Transfer or to otherwise participate in the management of the business or
affairs of the Company, (b) become a substitute Member or otherwise exercise
any rights of a Member, or (c) have access to the Company records; provided,
however, an Assignee may become a Substitute Member upon approval by each
Member holding a Percentage Interest greater than forty percent (40%), in
their sole and absolute discretion, which approval shall be conditioned and
effective upon the execution by Assignee of an agreement (satisfactory to
each of the Members) to be bound by the terms of this Agreement. The Assignee
shall pay all reasonable fees and expenses of the Company in connection with
his or her admission as a Substitute Member. Upon any Transfer, the
transferor of any interest to an Assignee shall cease to be a Member with
respect to the portion of such Interest subject to the Transfer, and shall
not have any power to exercise any rights of a Member thereto; provided,
however, that such transferor shall not be released from
20
any unpaid capital contributions or liabilities owing to the Company that
were due and payable before the effective date of the Transfer. A transferee
of an Interest shall have the right to become a Substitute Member only if the
requirements of this Agreement, including Article VIII, are met.
SECTION 8.4. PLEDGE OF INTERESTS. The pledge or granting of a security
interest, lien or other encumbrance in or against all or any portion of a
Member's Interest shall not be a Transfer subject to the restrictions of this
Article VIII; provided, that, in any event, the foreclosure, or exercise of
other secured party remedies, with respect to such pledge, security interest,
lien or other encumbrance resulting in a Transfer of any such Interest shall
nonetheless be a Transfer subject to the restrictions of this Article VIII.
SECTION 8.5. PUT AND CALL RIGHTS. Notwithstanding the foregoing
restrictions on Transfers:
(a) TELETECH PUT. At any time after December 31, 2004, TeleTech
shall have the right, but not the obligation, to require Ford to purchase
(the "Put") the Interest then held by TeleTech at a price equal to such
Interest's Fair Market Value at the time of the Put by delivery of written
notice (a "Put Notice") to Ford.
(b) FORD CALL. At any time after December 31, 2004, Ford shall have
the right, but not the obligation, to require TeleTech to sell (the "Call")
TeleTech's Interest at a price equal to such Interest's Fair Market Value at
the time of the Call by delivering written notice (a "Call Notice") to
TeleTech.
(c) VALUATION. For a period of 30 days after a Member's receipt of
a Put Notice or a Call Notice, Ford and TeleTech shall negotiate in good
faith in order to determine the Fair Market Value of TeleTech's Interest,
determined on the basis of the Company as a public entity. If, at the end of
such 30-day period, Ford and TeleTech are unable to agree on such Interest's
Fair Market Value, the Fair Market Value of TeleTech's Interest shall be
determined by a panel of two independent investment banking firms (each an
"Independent Investment Banker"), one of which shall be designated by Ford
and the other of which shall be designated by TeleTech. Such designations
shall be made as promptly as possible after expiration of the foregoing
thirty (30) day good faith negotiation period. The Company shall, upon
reasonable notice, afford each Independent Investment Banker and its
representatives full access during normal business hours to the properties,
books and records of the Company and the Company's subsidiaries and shall
cause the Company's officers and employees and the officers and employees of
the Company's subsidiaries to furnish such additional financial and operating
data and other information as the Independent Investment Bankers and their
representatives shall from time to time reasonably request. Each Independent
Investment Banker shall submit its written determination of the Fair Market
Value of TeleTech's Interest as of the date of the Put Notice or
21
Call Notice, as applicable, within 30 days after the date of retention. If
the higher determination of the two Independent Investment Bankers is not
greater than 110% of the lower determination, the Fair Market Value of
TeleTech's Interest as of the date of the Put Notice or Call Notice, as
applicable, shall be an average of such two determinations. If the higher
determination is greater than 110% of the lower determination, then such two
Independent Investment Bankers shall jointly select, within ten days after
the date on which they are informed of such difference, a third Independent
Investment Banker. Such third Independent Investment Banker shall deliver its
written determination of the Fair Market Value within 30 days after its
selection, and the Fair Market Value of TeleTech Interest shall be the
average of the two closest determinations, or if there are not two closest
determinations, the average of all three determinations. The fees and
expenses of such Independent Investment Bankers shall be shared equally by
Ford and TeleTech.
SECTION 8.6. RIGHT OF FIRST OFFER. At any time after December 31,
2004, if any Member who holds a Percentage Interest equal to or greater than
40% proposes to Transfer, directly or indirectly (the "Offering Member"), all
or any portion of its Interest (the "Offered Interest"), then, except as set
forth in Section 8.1(b), the Offering Member shall comply with SECTIONS
8.6(a) through 8.6(g).
(a) The Offering Member shall give a written notice (the "Offering
Notice") to all other Members, but excluding any persons or entities becoming
Members pursuant to Section 13.2 (each an "Eligible Purchaser" and
collectively, the "Eligible Purchasers") which shall state (i) that the
Offering Member desires to Transfer the Offered Interest, (ii) the minimum
sale price (the "Offer Price") for the Offered Interest, and (iii) the other
material terms and conditions of the proposed Transfer. Each Offering Notice
shall constitute an offer by the Offering Member to the Eligible Purchasers
to sell the Offered Interest at the Offer Price in cash.
(b) Within 30 days of receipt of an Offering Notice, each Eligible
Purchaser may elect (the "Right of First Offer") to purchase its pro rata
portion of the Offered Interest at the Offer Price in cash upon delivery to
the Offering Member of a notice (a "Buyer's Notice") (i) stating that the
Eligible Purchaser elects to purchase its pro rata portion (based on the
proportion that its Percentage Interest bears to the Percentage Interests of
all Eligible Purchasers) of the Offered Interest (each Eligible Purchaser who
elects to purchase its pro rata portion of the Offered Interest is referred
to as a "Participating Member," and each Eligible Purchaser who does not
elect to purchase its pro rata portion of the Offered Interest is referred to
as a "Non-Participating Member") at the Offer Price in cash, (ii) stating
that the election is irrevocable, and (iii) identifying the source of
financing for the purchase or providing other evidence that the Participating
Member is able to effect the purchase without financing. Failure of an
Eligible Purchaser to exercise its right within the 30-day period shall be
regarded as a waiver of the right.
22
(c) Subject to the rights of the other Participating Members to
participate in such purchase as set forth below, each Participating Member
shall have the right to purchase all (but not less than all) of the Offered
Interest as to which the Non-Participating Members, if any, did not elect to
acquire (the "Remaining Offered Interest"). The right shall be exercised by
delivery of a written notice to the Offering Member and all other
Participating Members within 30 days after receipt of the Offering Notice
(but not less than five days after the Participating Members have received
notice from the Offering Member specifying the portion of the Offered
Interest that remains available). If more than one Participating Member
timely elects to exercise its option with respect to the Remaining Offered
Interest, the right to purchase the Remaining Offered Interest shall be
allocated pro rata among the Participating Members so electing based on the
proportion that a Participating Member's Percentage Interest bears to the
Percentage Interests of all Participating Members who have elected to
increase their purchase. Failure of any Participating Member to exercise its
right within the 30-day period shall be regarded as a waiver of its right to
purchase its pro rata portion of the Remaining Offered Interest.
(d) If Participating Members have not delivered a Buyer's Notice
electing to purchase 100% of the Offered Interest within the period specified
in this SECTION 8.6, the Company shall have the right, by delivering to the
Offering Member a Buyer's Notice, upon a vote of Members (other than the
Offering Member) having 75% or more of the Interests held by such Members,
which Buyer's Notice shall be given to the Offering Member within ten days
after the expiration of the period otherwise specified in this SECTION 8.6(b)
AND (c), to purchase the remaining portion of such Offered Interest; provided
that no Member who does not consent thereto shall be required to make any
additional contribution in or loan to or to incur or assume any personal
liability in order to enable the Company to exercise or finance its right to
purchase such interests.
(e) Delivery of a Buyer's Notice pursuant to SECTION 8.6(b) and the
notice pursuant to SECTION 8.6(c) relating to any Remaining Offered Interest
each shall constitute a contract between the Offering Member and the
Participating Member or the Company, as the case may be, for the sale and
purchase of the relevant portion of the Offered Interest and Remaining
Offered Interest, as the case may be, at the Offer Price in cash and upon the
other terms and conditions set forth in the Offer Notice; provided, however,
that the Offering Member shall be required to sell its Offered Interest to
the participating Members or the Company only if the Participating Members or
the Company agree collectively to purchase all, and not less than all, of the
Offered Interest, including any and all Remaining Offered Interest pursuant
to any provision of this SECTION 8.6.
(f) If the Eligible Purchasers or the Company do not collectively
elect to purchase all of the Offered Interest (pursuant to this SECTION 8.6),
the Offering Member may, within one year of the expiration of the 30-day
period specified in SECTION 8.6(c), Transfer (or enter into an
23
agreement to Transfer) all or any portion of the Offered Interest, to one or
more Persons at a price not less than 97.5% of the Offer Price.
(g) The closing of any purchase of the Offered Interest by the
Participating Members shall be held at the principal office of the Company at
11:00 a.m. local time on a Business Day chosen by the Offering Member (upon
at least ten days' notice to the other parties to the transaction), which
date shall be no later than 10 days after the scheduled closing date provided
for in the Offering Notice; provided, however, that the closing may be held
at any other time and place as the parties to the transaction may agree. At
the closing, the Offering Member shall deliver those instruments, executed by
it and in form and substance reasonably satisfactory to the Participating
Members, as shall be necessary to transfer, assign and convey the Offered
Interest to the Participating Members, free and clear of all liens or other
encumbrances (other than those created by the provisions of this Agreement),
against payment of the purchase price therefor. Each party to the purchase
of the Offered Interest shall bear his, her or its own legal, accounting and
other expenses.
SECTION 8.7. EFFECT OF A VIOLATION. Any attempted or purported
Transfer of a Member's Interest in the Company in violation of this
Agreement shall be void and of no force or effect. Without limiting the
preceding sentence in any way, if the transferee of any such attempted or
purported Transfer is nonetheless found to have rights in the subject
Interest, the Transferee shall be an Assignee subject to the rights and
obligations set forth in this Agreement and the Certificate.
ARTICLE IX
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 9.1. AFFIRMATIVE COVENANTS. The Company shall provide to each
Member the following:
(a) as soon as available after the end of each month but no later
than fifteen days after, unaudited consolidated statements of income and cash
flows of the Company for such month, and consolidated balance sheets of the
Company as of the end of such month, all prepared in accordance with GAAP,
subject to the absence of footnote disclosures and to normal year-end
adjustments;
(b) within 60 days after the end of each fiscal year, audited
consolidated statements of income and cash flows of the Company for such
fiscal year, and consolidated balance sheets of the Company as of the end of
such fiscal year, all prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by an opinion of
an independent accounting firm mutually selected by the Members;
24
(c) within 10 days, after knowledge of any breach of any provision
of this Agreement, regardless of materiality, or any material adverse change
or event, notification of such breach or event which provides a description
thereof ("material adverse change or event" meaning any change or event that
is materially adverse to the business, properties, assets, financial
condition or results of operations of the Company);
(d) upon request by any Member, reasonable access to the
properties, books, records, or personnel of the Company; and
(e) prior to 30 days preceding the commencement of a fiscal year, a
Budget approved by the Management Committee in accordance with this Agreement.
ARTICLE X
DISSOCIATION OF A MEMBER
SECTION 10.1. DISSOCIATION. A person ceases to be a Member upon the
occurrence of any of the following events (each an "Event of Dissociation"):
(a) The Member withdraws from membership in the Company;
(b) The Member Transfers its entire Interest, whether or not the
Assignee is admitted as a Substitute Member;
(c) In the case of a Member who is a Member by virtue of being a
trustee of a trust, the termination of the trust, but not merely the
substitution of a new trustee;
(d) In the case of a Member that is a partnership, limited
partnership, limited liability partnership or limited liability company, the
dissolution and commencement of winding up of the partnership, limited
partnership, limited liability partnership or limited liability company;
(e) In the case of a Member that is a corporation, the dissolution
of the corporation;
(f) In the case of a Member that is an estate, the distribution by
the fiduciary of the estate's entire Interest in the Company; or
(g) Bankruptcy of the Member.
SECTION 10.2. RIGHTS OF DISSOCIATING MEMBER. Upon an Event of
Dissociation as to a Member:
(a) If the Event of Dissociation causes a dissolution and winding
up of the Company under ARTICLE XI, the Member shall be entitled to
participate in the winding up of the Company to
25
the same extent as any other Member, except that if the Event of
"Dissociation is a breach of this Agreement, any distributions to which the
Member would have been entitled shall be reduced by any damages sustained by
the Company as a result of the dissolution and winding up; and
(b) If the Event of Dissociation does not cause a dissolution and
winding up of the Company under ARTICLE XI the Member shall not be entitled
to (i) any distribution solely by reason of the Members dissociation, and
thereafter shall only be entitled to participate as an Assignee in the
Company, (ii) a redemption of the Member's Interest or otherwise receive the
value of the Member's Interest until such time, and in the manner, provided
under Article XI for the dissolution and winding up of the Company, and (iii)
any voting rights or any further representation on the Management Committee.
ARTICLE XI
DISSOLUTION AND WINDING UP
SECTION 11.1. DISSOLUTION. The Company shall be dissolved and its
affairs wound up on the first of the following to occur:
(a) A determination by a Supermajority of the Members that the
Company shall be dissolved;
(b) An Event of Dissociation occurs, unless the remaining Members
elect to continue the business of the Company within 90 days after the
remaining Members are notified in writing of the Event of Dissociation; or
(c) At such earlier time as may be provided by applicable law.
SECTION 11.2. WINDING UP. Upon dissolution, the Members shall proceed
to wind up and liquidate the business and affairs of the Company, and the
Company may only carry on business that is appropriate to wind up and
liquidate the business and affairs of the Company, including the following:
(a) collecting the Company's assets, (b) disposing of properties that will
not be distributed in kind to Members, (c) discharging or making provision
for discharging liabilities, (d) distributing the remaining property among
the Members, and (e) doing every other act necessary to wind up and liquidate
the business and affairs of the Company. The Members shall follow the
procedure for disposing of known claims set forth in the Act and shall
publish notice of the dissolution of the Company pursuant to the Act.
SECTION 11.3. DISTRIBUTION OF ASSETS. Upon the winding up of the
Company, the assets shall be distributed as follows:
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(a) To creditors, including Members who are creditors to the extent
permitted by law, in the order of priority as provided by law to satisfy the
liabilities of the Company whether by payment or by the establishment of
adequate reserves, excluding liabilities for distributions to Members
pursuant to ARTICLE VII;
(b) To Members to repay any loans to the Company or to satisfy any
liabilities for distributions pursuant to Article VII which remain unpaid;
(c) To Members in an amount equal to the aggregate positive Capital
Account balances of all Members, pro rata in proportion to each such Member's
positive Capital Account balance as provided in Treasury Regulation 1.704-1
(b)(2)(ii)(b)(2).
(d) To Members pro rata in proportion to their respective
Percentage Interests.
SECTION 11.4. FINAL AUDIT. Within a reasonable time following the
completion of the liquidation, the liquidator shall supply each Member a
statement that shall set forth the assets and liabilities of the Company as
of the date of the complete liquidation and each Member's pro rata portion of
the distributions.
ARTICLE XII
AMENDMENTS
SECTION 12.1. PROPOSAL OF AMENDMENTS. Amendments to the Articles and
this Agreement may be proposed in writing by any Member. If any such proposed
amendment could adversely affect the classification of the Company as a
partnership for federal income tax purposes, the proposed amendment must be
accompanied by an opinion of counsel as to the legality and effect on the
Company and the Members. Copies of any amendments proposed to be made
pursuant to this Section 12.1 shall be sent to the Members.
SECTION 12.2. APPROVAL OF AMENDMENTS. A proposed amendment shall be
voted upon at either a regular or a special meeting of the Management
Committee duly called for the purpose of voting on the amendment. Such votes
shall be exercised as provided in Article IV, and such amendment shall be
approved only by a Supermajority of the Members.
ARTICLE XIII
PUBLIC OFFERING AND INCENTIVES
FOR EMPLOYEES AND
CONSULTANTS TO COMPANY
The Members anticipate that (a) at a later date, direct or indirect
interests in the Company, or its successor, may be sold in a public offering,
and (b) in order for the Company to
27
attract and retain key employees and consultants, it will be necessary to
offer direct or indirect interests in the Company, or its successor, through
option and grant arrangements. The Members agree that upon approval of
Members by a Supermajority Approval, additional Interests (or their
equivalent) may be offered to Additional Members (or their equivalent) for
the foregoing purposes. Any issuances of Interests pursuant to the foregoing
two sentences will be dilutive of all then-existing Members and their
Interests. For purposes of the foregoing, the Members further agree to the
following provisions:
SECTION 13.1. PUBLIC OFFERING PROVISIONS. Interests in the Company
may be sold in a public offering through one of the following three methods,
as selected by Members by a Supermajority Approval.
(a) CONVERSION TO CORPORATION. The Company may be converted into a
corporation ("Successor Corporation"), formed under the laws of a state of
the United States, pursuant to (i) a merger or consolidation of the Company
into a corporation formed for such purpose, (ii) pursuant to a transfer to
the Successor Corporation of all of the assets and all of the liabilities of
the Company, (iii) through a conversion of the Company into a corporation
pursuant to provisions of Section 18-216 of the Act (or successor provisions
thereto), or (iv) through any substantially equivalent method. In connection
with any of the foregoing, the Interests of Members would be converted into
or exchanged for shares of capital stock in the Successor Corporation. The
method used to convert the Company into a Successor Corporation shall be
determined by the Members by a Supermajority Approval. The constituent
documents of the Successor Corporation shall provide that all matters
submitted to shareholders for approval, including mergers, consolidations,
sale or other disposition of all or substantially all of the assets,
amendments to articles of incorporation, dissolutions, and winding up, shall
require the approval of a Supermajority of the votes entitled to vote thereon
and shall otherwise be as determined by the Members by a Supermajority
Approval. The capital stock that each of the Members receive in the Successor
Corporation in exchange for each Interest (or fraction thereof) shall be
identical in all material respects to the capital stock received by all other
Members in the Successor Corporation in exchange for each Interest (or
fraction thereof) (the Members acknowledge that the capital stock in the
Successor Corporation offered to the public or other non-Member Persons may
have different voting rights than the capital stock provided to the Members).
Following conversion of the Company into the Successor Corporation, the
Successor Corporation would sell in a public offering such capital stock of
the Successor Corporation on such terms and conditions as may be determined
by the Members by a Supermajority Approval.
(b) Formation of a Member Corporation for Purposes of a Public
Offering. The Company may cause to be formed a new corporation ("Public
Corp") under the laws of a state of the United States, the sole purpose of
which would be to hold an Interest in the Company. The constituent documents
of Public Corp shall be as determined by the Members by a
28
Supermajority Approval. Public Corp would sell its capital stock in a public
offering on such terms and conditions as may be determined by the Members by
a Supermajority Approval. The net proceeds of the Public Offering would be
used by Public Corp to make a Capital Contribution to the Company and acquire
a Interest in the Company, on such terms as may be determined by the Members
by a Supermajority Approval. Upon the making of such Capital Contribution,
Public Corp would be admitted as a Member of the Company. In connection with
a Public Offering by Public Corp, if the Members determine, by a
Supermajority Approval, that Public Corp must have special management or
other rights in order to avoid registration under the Investment Company Act
of 1940, this Agreement may be amended, by determination of the Members by a
Supermajority Approval, to accommodate such special management and other
rights. Pursuant to the foregoing, but not by way of limitation, the Members
may determine, by Supermajority Approval, that in order to undertake the
Public Offering, Public Corp must become sole Manager of the Company, with
sole and exclusive power to direct the business and affairs of the Company.
In such a case, the Interests shall be restructured so that a substantial
Supermajority of each Member's Interests are converted into Interests with no
votes and the balance of such Interests retain votes. The Interests that
retain votes would in turn be contributed by the Members to Public Corp in
exchange for capital stock of Public Corp that would provide to the Members,
at a minimum, a percentage of the votes in the selection of the board of
directors of Public Corp and on matters submitted to the shareholders of
Public Corp for their approval equivalent to the percentage of Membership
Interests held by the Members in the Company. In connection with any such
restructure, each Member's Interest shall be converted into non-voting and
voting Interests by applying the same conversion ratio and the capital stock
that each of the Members receive in Public Corp in exchange for each voting
Interest shall be identical in all material respects to the capital stock
received by all other Members in Public Corp in exchange for each voting
Interest. Following completion of the contribution of voting Interests to
Public Corp in exchange for Public Corp stock, the Company would be converted
into a Manager-managed limited liability company.
(c) CONTRIBUTION OF ASSETS AND LIABILITIES TO NEW CORPORATION. The
Company may contribute all or substantially all of its assets and liabilities
to a corporation formed under the laws of a state of the United States in
exchange for capital stock of that corporation. That corporation would then
sell in a public offering stock in that corporation on such terms and
conditions as may be determined by the Members by a Supermajority Approval.
The Company shall remain in existence after the public offering, as a
shareholder of the public company. In connection with any public offering
pursuant to the foregoing, but subject to the restrictions and limitations of
the foregoing, this Agreement may be amended as deemed necessary or
convenient by Company counsel or by the Company's anticipated underwriters in
such public offering to permit the public offering upon approval by the
Members by a Supermajority Approval. In addition, each Member agrees to take
all steps, and execute all documents and instruments as may be reasonably
necessary to carry out a public offering pursuant to any of
29
the foregoing methods. The restructuring and transactions contemplated by
this Section 13.1 shall be carried out so as to minimize, to the maximum
extent reasonably possible, adverse tax consequences to the Company, its
successor, and the Members and their Affiliates. In connection with a public
offering, each of the Members shall be afforded substantially the same rights
pro rata (based on relative Interests) as are offered to other Members to
exchange their Interests for registered or registrable shares in Public Corp
or to register pursuant to the Securities Act their direct or indirect
interests in the Company. Nothing herein, or elsewhere, shall however be
construed as a commitment or understanding of any Member (or any of its
Affiliates) to undertake a Public Offering in connection with the Company and
the Members acknowledge that no such commitment or understanding has been
made or reached.
SECTION 13.2. INCENTIVE PROVISIONS. Any offering of direct or
indirect interests in the Company to key employees and consultants of the
Company shall be pursuant to such plans and arrangements as may be approved
by the Members by a Supermajority Approval; provided that any such offerings
shall not alter the relative Membership percentages then held by Ford and
TeleTech.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1. COMPLETE AGREEMENT. This Agreement, the Ancillary
Agreements and the Certificate constitute the complete and exclusive
statement of agreement among the Members with respect to its subject matter.
This Agreement and the Articles replace and supersede all prior agreements by
and among the Members or any of them. This Agreement and the Certificate
supersede all prior written and oral statements, and no representation,
statement, or condition or warranty not contained in this Agreement or the
Articles will be binding on the Members or have any force or effect
whatsoever.
SECTION 14.2. DISPUTE RESOLUTION. If any dispute involving the
Members arises out of or relates to the business of the Company or arises out
of or relates to this Agreement, including, without limitation, any dispute
with respect to any alleged breach of this Agreement or the management of the
Company, the Members shall meet promptly (through representatives with
authority to resolve the dispute). If the Members cannot resolve the dispute
within 30 days (the "Resolution Date"), the Company and any former or current
Member shall arbitrate the dispute in accordance with the Commercial
Arbitration Rules of the American Arbitration Association . Each Member to
the dispute shall select one non-neutral arbitrator expert in the subject
matter of the dispute. In the event that either Member fails to select an
arbitrator as set forth herein within 20 business days from the Resolution
Date, then the matter shall be resolved by the arbitrator selected by the
other party. The two arbitrators shall select a third independent, neutral
arbitrator experienced in the subject matter of the dispute, and the three
30
arbitrators so selected shall resolve the matter according to the procedures
set forth in this Section 14.2. If the two arbitrators selected by the
parties are unable to agree upon a third arbitrator within twenty days after
their selection, the third arbitrator shall be selected by the President of
the AAA. The arbitrators shall so conduct the arbitration that a final
result, determination, finding, judgment and/or award (the "Final
Determination") is made or rendered as soon as practicable, but in no event
later than 90 business days after the selection of the arbitrators, nor later
than ten business days after completion of the arbitration proceeding. The
Final Determination must be agreed upon and signed by the sole arbitrator or
by at least two of the three arbitrators (as the case may be). Except as set
forth in this Section 14.2, arbitration shall be the sole and exclusive
remedy between the parties with respect to any dispute, protest, controversy
or claim arising out of or relating to this Agreement. Unless all the parties
to an arbitration otherwise consent in writing, the location of the
arbitration hearings and the place of entry of the award shall be in
Wilmington, Delaware. The parties consent to exclusive jurisdiction of, and
agree that sole venue will lie in, the state and federal courts in
Wilmington, Delaware or the state of the otherwise agreed location for any
allowable judicial proceeding relating to any arbitration under this
Agreement, including entry of a judgment on the award. The Final
Determination shall be final and binding and shall not be reviewable in any
court on any gounds except corruption, fraud or undue means of a party or for
evident partiality or corruption of the arbitrator. The parties intend to
eliminate all other court review of the award and the arbitration
proceedings. Except for a proceeding to enforce or confirm an award or a
proceeding brought by all parties to the dispute to vacate or modify an
award, the initiation of any suit relating to a dispute that is arbitrable
under this Agreement shall constitute a material breach of this Agreement.
Except as necessary in a judicial proceeding allowable under this Section
14.2, all matters relating to any arbitration shall be confidential.
Notwithstanding the provisions of this Section 14.2, the Members hereby
acknowledge that any breach of the provisions of Article VIII may give rise
to irreparable injury to the Company and/or the Members, inadequately
compensable in monetary damages. Notwithstanding anything to the contrary
stated herein, the parties hereto will be able to seek and obtain equitable
relief, including injunctive relief, against the breach or threatened breach
of any of the provisions for which monetary damages are not adequate and the
non-breaching party shall be entitled to recover from the breaching party its
reasonable attorneys' fees and costs incurred in obtaining such equitable
remedies. This Section 14.2 shall survive any dissolution of the Company and
any termination of this Agreement.
SECTION 14.3. GOVERNING LAW. This Agreement and the rights of the
parties under this Agreement will be governed by, interpreted, and enforced
in accordance with the laws of the State of Delaware.
SECTION 14.4. BINDING EFFECT: CONFLICTS. Subject to the provisions
of this Agreement relating to transferability, this Agreement will be binding
upon and inure to the benefit of the Members and their respective
distributees, successors and assigns. This Agreement is subject
31
to, and governed by, the Act and the Certificate. In the event of a direct
conflict between the provisions of this Agreement and the mandatory
provisions of the Act or the provisions of the Certificate, the provisions of
the Act or the Certificate, as the case may be, will be controlling.
SECTION 14.5. HEADINGS: INTERPRETATION. All headings herein are
inserted only for convenience and ease of reference and are not to be
considered in the construction or interpretation of any provision of this
Agreement. The singular shall include the plural, and the masculine gender
shall include the feminine and neuter, and vice versa, as the context
requires.
SECTION 14.6. SEVERABILITY. If any provision of this Agreement is
held to be illegal, invalid, unreasonable, or unenforceable under the present
or future laws effective during the term of this Agreement, such provision
will be fully severable; this Agreement will be construed and enforced as if
such illegal, invalid, unreasonable, or unenforceable provision had never
comprised a part of this Agreement; and the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by
the illegal, invalid, unreasonable, or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid,
unreasonable, or unenforceable provision, there will be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid, unreasonable, or unenforceable provision as may be possible and be
legal, valid, reasonable, and enforceable.
SECTION 14.7. MULTIPLE COUNTERPARTS. This Agreement may be executed
in several counterparts, each of which will be deemed an original but all of
which will constitute one and the same instrument. However, in making proof
with respect to this Agreement it will be necessary to produce only one copy
hereof signed by the party to be charged.
SECTION 14.8. ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to
promptly execute and deliver to the Company such additional documents,
statements of interest and holdings, designations, powers of attorney, and
other instruments, and to perform such additional acts, as the Company may
determine to be necessary, useful or appropriate to complete the organization
of the Company, effectuate, carry out and perform all of the terms,
provisions, and conditions of this Agreement and the transactions
contemplated by this Agreement, and to comply with all applicable laws, rules
and regulations.
SECTION 14.9. NO THIRD PARTY BENEFICIARY. This Agreement is made
solely and specifically among and for the benefit of the Members and their
respective successors and assigns subject to the express provisions of this
Agreement relating to successors and assigns. This Agreement is expressly not
intended for the benefit of any creditor of the Company or any other third
party. No creditor or other third party will have any rights, interest, or
claims under the Agreement or be entitled to any benefits under or on account
of this Agreement as a third party beneficiary or otherwise.
32
SECTION 14.10. NOTICES. Any notice, demands or other communications
to be given or delivered under or by reason of any provision of this
Agreement shall be in writing and shall be deemed to have been given and
received when delivered personally to the recipient, sent to the recipient by
overnight courier service (charges prepaid) or mailed to, the recipient by
certified or registered mail, return receipt requested and postage prepaid.
Such notices, demands and other communications shall be sent to each Member
at the address indicated on EXHIBIT A and to the Company at the address of
its principal place of business or to such other address or the attention of
such other person as the recipient party has specified by giving five (5)
days written notice to the sending party.
SECTION 14.11. TITLE TO COMPANY PROPERTY. Legal title to all
property of the Company will be held and conveyed in the name of the Company.
SECTION 14.12. OTHER VENTURES. Subject to any separate
noncompetition agreements to which a Member may be a party, each of the
Members and their Affiliates may engage, directly or indirectly, in any other
business venture or ventures of any nature and description, independently or
with others; provided that TeleTech agrees that so long as it is a Member any
new business, customers or technology generated or developed by TeleTech or
its Affiliates coming within the scope of the purposes of the Company set
forth in clause (a) of Article I shall be offered to the Company first.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Members have executed this Agreement on the
date set forth opposite their signatures, to be effective on the Effective
Date.
TELETECH HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------
Its: Treasurer
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FORD MOTOR COMPANY
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Its: Vice President
----------------------------------
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