Exhibit 10.3
ASA INTERPRO SMARTTIME LLC
OPERATING AGREEMENT
Limited Liability Company Operating Agreement, effective as of the 2nd
day of August, 1999, by and between ASA International Ltd. (the "Member") and
InterPro Expense Systems, Inc. (the "Manager").
WHEREAS, ASA InterPro SmartTime LLC (the "LLC") has been formed
pursuant to the provisions of the Delaware Limited Liability Company Act, as
amended (the "Act"), by filing on July 28, 1999 a Certificate of Formation (as
such Certificate may be amended from time to time, the "Certificate of
Formation"), in the office of the Secretary of State of Delaware.
NOW, THEREFORE, in consideration of the mutual covenants herein
expressed, MEMBER and MANAGER hereby agree as follows:
1. MANAGEMENT.
(a) The Manager shall manage the business and affairs of the LLC
until the earlier of (i) August 31, 2000 or (ii) the Manager's exercise of its
option to purchase the assets of the LLC pursuant to the Option Purchase
Agreement dated the date hereof between the LLC, the Manager and the Member (the
"Option Purchase Agreement"). "Person" shall mean an individual, or any other
legal entity, and may, but need not be a Member. No Manager may resign, retire,
abandon or otherwise terminate his status as a Manager, other than by reason of
death, except after 90 days advance written notice to all Members, in which case
said Manager shall designate his, her or its replacement to serve as a successor
Manager.
(b) The LLC is formed for the purpose of engaging in any lawful
act or activity for which limited liability companies may be formed under the
Act and engaging in any and all activities necessary, advisable, convenient or
incidental thereto. The LLC shall have all the powers necessary or convenient to
carry out the purposes for which it is formed, including all powers granted by
the Act.
(c) No Member shall have any authority, power or privilege to act
on behalf of or to bind the LLC except as specifically provided in this
Agreement.
(d) There shall only be one Manager serving at any time
hereunder. The signature of the Manager on any agreement, contract, instrument
or other document shall be sufficient to bind the LLC in respect thereof and
conclusively evidence the authority of the LLC with respect thereto, and no
third party need look to any other evidence or the consent of any other party to
bind the LLC or to evidence such Manager's authority.
(e) The Manager shall be entitled to reimbursement from the LLC
for all expenses incurred by such Manager in managing and conducting the
business and affairs of the LLC and shall be paid a management fee in an amount
equal to the lesser of (a) $50,000 or (b) net income of the LLC as determined
for federal income tax purposes.
(f) The Manager may cause the LLC to enter into one or more
agreements, leases, contracts or other arrangements for the furnishing to or by
the LLC of goods, services or space with the Member or an affiliate thereof, and
may pay compensation thereunder for such goods, services or space.
(g) Except as otherwise required by this Agreement, the Act or
other applicable law, the Manager shall have the authority to (i) exercise all
the powers and privileges granted to an LLC by the Act or any other law or this
Agreement, together with any powers incidental thereto, so far as such powers
are necessary or convenient to the conduct, promotion or attainment of the
business, trade, purposes or activities of the LLC and (ii) take any other
action not prohibited under the Act or other applicable law, to manage, control,
administer, and operate the business and affairs of the LLC for the purposes
herein stated, and to make all decisions affecting such business and affairs,
including, without limitation, the power to:
(i) acquire by purchase, lease, or otherwise, any real or
personal property, tangible or intangible;
(ii) construct, operate, maintain, finance, and improve, and
to own, sell, convey, assign, mortgage, or lease any real estate and any
personal property;
(iii) sell, dispose, trade, or exchange the LLC assets in
the ordinary course of the LLC's business;
(iv) enter into agreements and contracts and to give
receipts, releases and discharges;
(v) purchase liability and other insurance to protect the
LLC's properties and business;
(vi) borrow money for and on behalf of the LLC,
(vii) execute or modify leases with respect to any part or
all of the assets of the LLC;
(viii) prepay, in whole or in part, refinance, amend,
modify, or extend any mortgages or deeds of trust which may affect any asset of
the LLC and in connection therewith to execute for and on behalf of the LLC any
extensions, renewals or modifications of such mortgages or deeds of trust;
(ix) execute any and all other instruments and documents
which may be necessary or in the opinion of the Manager desirable to carry out
the intent and purpose of this Agreement, including, but not limited to,
documents whose operation and effect extend beyond the term of the LLC;
(x) make any and all expenditures which the Manager, in its
sole discretion, deems necessary or appropriate in connection with the
management of the affairs of the LLC and the carrying out of its obligations and
responsibilities under this Agreement, including, without limitation, all legal,
accounting and other related expenses incurred in connection with the
organization and financing and operation of the LLC;
(xi) enter into any kind of activity necessary to, in
connection with, or incidental to, the accomplishment of the purposes of the
LLC; and
(xii) invest and reinvest the LLC reserves in short-term
instruments, money market funds or in any other manner deemed appropriate by the
Manager.
(h) Notwithstanding anything to the contrary in this Agreement,
the Manager shall not undertake any of the following without the "Consent of the
Member" which, for the purposes of this Agreement, means the written consent of
the Member:
(i) the sale of all or substantially all of the assets of
the LLC;
(ii) the entering into or amending one or more agreements,
leases, or contracts with the Manager or an affiliate thereof;
(iii) the admission of additional Members to the LLC;
(iv) liquidating, dissolving or merging the LLC;
(v) commencing any voluntary bankruptcy, insolvency or
similar proceeding with the LLC as debtor; or
(vi) obligating the Member for any obligations or
liabilities of the LLC.
(i) The Manager agrees to execute all documents as reasonably
requested by the Member to assist the Member in its pursuit of a "like-kind
exchange" under the provisions of Section 1031 of the Internal Revenue Code of
1986, as amended (the "Code") in connection with the disposition of the LLC's
assets.
2. CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS; AND LIABILITY OF MEMBERS.
(a) The Member has contributed to the capital of the LLC the
property set forth opposite such Member's name on SCHEDULE A hereto and the
Member's percentage interest in the ownership of the LLC ("Percentage
Interest"), is also set forth thereon.
(b) No Member shall be obligated to contribute any additional
capital to the LLC. No interest shall accrue on any contributions to the capital
of the LLC for the benefit of a Member.
(c) A separate capital account ("Capital Account") shall be
established for each Member, and shall be maintained in accordance with
applicable regulations under Section 704(b) of the Code.
(d) Other than as set forth in the Option Purchase Agreement and
the Asset Purchase Agreement dated the date hereof between the LLC, the Manager
and the Member (the "Purchase Agreement"), the liability of the Members for the
losses, debts and obligations of the LLC shall be limited to their capital
contributions not then previously repaid to or withdrawn by them in accordance
with the terms of this Agreement. No Member shall have any liability to restore
any negative balance in his Capital Account. In no event shall any Member be
personally liable for any liabilities or obligations of the LLC.
3. RETURN OF CONTRIBUTIONS. No Member shall have the right to withdraw
or to be repaid any capital contributed by him or to receive any other payment
in respect of such Member's interest in the LLC, including, without limitation,
as a result of the withdrawal or resignation of such Member from the LLC, except
as specifically provided in this Agreement.
4. SHARE OF PROFITS AND OTHER ITEMS.
(a) Except as may be required by the Code or this Operating
Agreement, as amended from time to time, profits, losses, and other items of
income, gain, loss, deduction and credit of the LLC shall be allocated among the
Members in accordance with their Percentage Interests.
(b) The Manager may make distributions to Members from time to
time. Distributions may be made only after the Manager determines in its
reasonable judgment that the LLC has cash on hand sufficient for the current and
anticipated needs of the LLC to fulfill its business purposes. All distributions
shall be made to the Members in accordance with this Agreement. Distributions
may be in cash or property or partially in both, as determined by the Manager.
No distribution shall be declared or made if, after giving it effect, the LLC
would not be able to pay its debts as they become due in the usual course of
business or the LLC's total assets would be less than the sum of its total
liabilities.
(c) Notwithstanding the foregoing, the Manager shall distribute
to the Members, immediately upon their receipt by the LLC, all payments received
by the LLC from the Manager pursuant to (i) the Option Purchase Agreement and
(ii) the Intellectual Property License Agreement and the Customer Intangibles
License Agreement, each dated of even date herewith between the Manager and the
LLC.
(d) Notwithstanding the foregoing, the Manager shall distribute
annually to each Member such amounts as are necessary to pay the tax liability
(other than a tax liability arising in connection with a distribution
contemplated by subsection (c) above) of such Member due as a result of such
Member's interest hereunder.
5. NO TRANSFERS. Without the Consent of the Manager, no Member may
"Transfer" such Member's interest in the LLC or any part thereof or in all or
any part of the assets of the LLC. For this purpose, "Transfer" shall mean any
sale, assignment, gift, pledge, hypothecation, encumbrance or other transfer,
including, without limitation, any assignment or transfer by operation of law or
by order of court in a bankruptcy proceeding or otherwise. In the event of any
attempted or purported Transfer of a Member's interest in the LLC in
contravention of any of the provisions of this Agreement (an "Ineffective
Transfer"), such Transfer shall be null and void and ineffective to transfer any
interest in the LLC and shall not bind, or be recognized by or on the books of,
the LLC, and any purported transferee or assignee shall not be a Member for any
purpose. In the event of such Ineffective Transfer, the LLC, the Manager and
each other Member shall, in addition to all rights and remedies at law and
equity, be entitled to a decree or order restraining and enjoining such
Ineffective Transfer, and the offending Member shall not plead in defense
thereto that there would be an adequate remedy at law, it being acknowledged and
agreed that damages at law would be an inadequate remedy for a breach or
threatened breach of the provisions set forth in this Agreement concerning any
such attempted or purported Transfer.
6. PRIORITIES. No Member shall have any rights or priority over any
other Members as to contributions or as to distributions or compensation by way
of income, except as specifically provided in this Agreement or by Consent of
the Members.
7. DISSOLUTION AND CONTINUATION OF THE LLC.
(a) The LLC shall be dissolved and its affairs wound up upon:
(i) the election to dissolve the LLC by Consent of the
Members at any time after the earlier of (i) August 31, 2000 or (ii) the
Manager's exercise of its option to purchase the assets of the LLC pursuant to
the Option Purchase Agreement; or
(ii) the withdrawal, bankruptcy or dissolution of a Member,
if there is no election pursuant to Section 7(b) to continue the LLC.
(b) The Members may continue the business of the LLC upon the
occurrence of any event of dissolution described in Section 7(a) by electing to
do so within 90 days after the occurrence of any of such event. Any such
election shall be made by Consent of the Members.
(c) In the event of a dissolution or liquidation of the LLC, the
Manager shall have the right to immediately exercise the option granted to it
under the Option Purchase Agreement.
8. BOOKS AND RECORDS; BANK ACCOUNTS.
(a) The Manger shall keep or cause to be kept complete and
accurate books and records of the LLC, using the same methods of accounting that
are used in preparing the Federal income tax returns of the LLC to the extent
applicable and otherwise in accordance with generally accepted accounting
principles consistently applied. Such books and records shall be maintained and
be available, in addition to any documents and information required to be
furnished to the Members under the Act, at an office of the LLC for examination
and copying by any Member or Manager, or his duly authorized representative, at
his reasonable request and at his expense during ordinary business hours. A
current list of the following items shall be kept by the LLC: (i) full name and
last known address of each Member and Manager, (ii) a copy of this Agreement and
any amendments thereto, (iv) the Certificate of Formation, (v) executed copies
of all powers of attorney, if any, pursuant to which this Agreement, any
amendment, or the Certificate of Formation has been executed, (vi) copies of the
LLC's financial statements, and (vii) Federal, State and local income tax
returns and reports, if any, for each year. All of the above-referenced items
shall be maintained at the registered office of the LLC along with such other
information, if any, as may be required to be made available to Members pursuant
to the Act. On or before the due date (including extensions) of the Federal
income tax return of the LLC for each fiscal year of the LLC, each Member shall
be furnished with copies of the LLC's Federal income tax return for the fiscal
year then ended and any other tax information reasonably required for State or
local tax purposes. Any Member may, at any time, at his own expense, and upon
reasonable notice, cause an audit or review of the XXX xxxxx to be made by a
certified public accountant of his own selection.
(b) Bank accounts and/or other accounts of the LLC shall be
maintained in such banking and/or other financial institution(s) as shall be
selected by the Manger, and withdrawals shall be made and other activity
conducted on such signature or signatures as shall be designated by the Manager.
(c) The fiscal year of the LLC shall end on March 31 of each
year.
9. INDEMNITY; OTHER BUSINESS.
(a) Each Member, the Manager and any other entities or
individuals authorized to act on behalf of the LLC, shall be entitled to
indemnity from the LLC for any liability incurred and/or for any act performed
within the scope of the authority conferred to them by this Agreement, and/or
for any act omitted to be performed, except for gross negligence or willful
misconduct, which indemnification shall include all reasonable expenses
incurred, including reasonable legal and other professional fees and expenses
that are to be paid within forty-five 45 days receipt by the LLC of any invoice
for such expenses.
(b) Subject to the provisions of the Purchase Agreement, the
Members, the Manager, and any affiliates of any of them may engage in and
possess interests in other business ventures and investment opportunities of
every kind and description, independently or with others, including serving as
manager, member and general partner of other limited liability companies and
partnerships with purposes similar to those of the LLC. Neither the LLC nor any
other Member or the Manager shall have any rights in or to such ventures or
opportunities or the income or profits therefrom.
10. MISCELLANEOUS.
(a) Subject to the restrictions on transfers set forth herein,
the terms of this Agreement shall be binding upon and shall inure to the benefit
of the LLC, the Manager, and the Members, their respective successors,
successor-in-title, heirs and assigns; and each and every successor-in-interest
to any Member, whether such successor acquires such interest by way of
inheritance, gift, purchase, foreclosure or any other method, and the Members
shall hold such interest subject to all of the terms and provisions of this
Agreement. None of the provisions of this Agreement shall be for the benefit of
or enforceable by any other person, including without limitation, any creditor
of any Member (including any Member acting in his capacity as a creditor of the
LLC).
(b) No change, modification or amendment of this Agreement shall
be valid or binding unless such change, modification or amendment shall be in
writing and duly executed by all of the Manager and Members.
(c) This Agreement and the rights and obligations of the parties
hereunder shall be governed by and interpreted and enforced in accordance with
the laws of the State of Delaware, notwithstanding any choice of law rules to
the contrary.
(d) This Agreement may be executed in any number of counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all the Members notwithstanding that all Members have not signed the same
counterpart.
(e) Any and all notices under this Agreement shall be effective
(i) on the fourth business day after being sent by registered or certified mail,
return receipt requested, postage prepaid, or (ii) on the first business day
after being sent by express mail, courier (with receipt) or telecopy. All such
notices in order to be effective shall be addressed, if to the LLC at its
registered office under the Act, if to a Member at the last address of record on
the XXX xxxxx, and copies of such notices shall also be sent to the last address
for the recipient which was recorded in the records of the LLC, if different
from the address so specified.
(f) As used herein, the singular shall include the plural and the
masculine gender shall include the feminine and neuter, and vice versa, unless
the context otherwise requires.
(g) This Agreement, including the Certificate of Formation, which
is hereby incorporated herein, embodies the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter.
(h) The Members shall reimburse the Manager for any professional,
legal, accounting or other costs reasonably incurred by the Manager in
performing its duties as Manager, provided such costs have been approved in
writing in advance by the Members.
(i) DISPUTE RESOLUTION. Any dispute between the parties arising
out of or related to this Agreement shall be settled by arbitration in
accordance with the provisions of the Purchase Agreement.
IN WITNESS WHEREOF, the undersigned have signed and sworn to this
Agreement as of the date first above written.
MEMBER:
ASA INTERNATIONAL LTD.
By: /S/ XXXXXX X. XXXXXXXX
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Title: CEO
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MANAGER:
INTERPRO EXPENSE SYSTEMS, INC.
By: /S/ XX XXXXXXXXX
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Title: CEO
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SCHEDULE A
MEMBERS
PERCENTAGE CAPITAL
INTEREST CONTRIBUTION
ASA International Ltd. 100% Assets of ASA International
Ltd.'s SmartTime Division
