EXHIBIT 10.42
ATG CATALYTICS L.L.C.
---------------------
OPERATING AGREEMENT
-------------------
THIS OPERATING AGREEMENT, dated as of the 1st day of December 1998, is
adopted, executed and agreed to, for good and valuable consideration, by the
Members, who are set forth on Schedule A attached hereto.
-----------
WHEREAS, ATG CATALYTICS L.L.C. (the "LLC" or the "Company") has been formed
as a limited liability company under the Delaware Limited Liability Company Act
(the "Act") by the filing on November 30, 1998 of a Certificate of Formation
(the "Certificate") in the office of the Secretary of State of the State of
Delaware; and
WHEREAS, the Members and the Company adopted an Operating Agreement wish to
set out their respective rights, obligations and duties with respect to the
Company and its business, management and operations; and
WHEREAS, the Members wish to amend and restate their respective rights,
obligations and duties with respect to the LLC and its business, management and
operations.
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
---------
Definitions
-----------
The following capitalized terms used in this Agreement shall have the
respective meanings ascribed to them below:
"Act" means the Delaware Limited Liability Company Act, in effect at the
time of the initial filing of the Certificate with the Office of the Secretary
of State of the State of Delaware, and as thereafter amended from time to time.
"Affiliate" shall mean, with respect to any specified person or entity,
(i)any person or entity that directly or indirectly controls, is controlled by,
or is under common control with such specified person or entity; (ii) any person
or entity that directly or indirectly controls 10 percent or more of the
outstanding equity securities of the specified entity or of which the specified
person or entity is directly or indirectly the owner of 10 percent or more of
any class of equity securities; (iii)any person or entity that is an officer of,
director of, manager of, partner in, or trustee of, or serves in a similar
capacity with respect to, the specified person or entity or of which the
specified person or entity is an officer, director, partner, manager or trustee,
or with respect to which the specified person or entity serves in a similar
capacity; or (iv) any person that
is a member of the immediate family (i.e., spouse, father, mother or sibling) of
the specified person.
"Bankruptcy" means the occurrence of any of the following events:
(i) a Member makes an assignment for the benefit of creditors;
(ii) a Member files a voluntary petition in bankruptcy;
(iii) a Member is adjudged a bankrupt or insolvent, or has entered against
it an order for relief, in any bankruptcy or insolvency proceeding;
(iv) a Member files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any statute, law or regulation;
(v) a Member files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in any
proceeding of this nature;
(vi) a Member seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of the Member or of all or any substantial part
of his or her or its properties; or
(vii) 120 days after the commencement of any proceeding against a Member
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, if the
proceeding has not been dismissed, or if, within 90 days after the appointment
without its consent or acquiescence of a trustee, receiver or liquidator of the
Member or of all or any substantial part of its properties, the appointment is
not vacated or stayed, or within 90 days after the expiration of any such stay,
the appointment is not vacated.
"Budget" means an annual operating budget of the LLC that has been approved
by the Manager.
"Capital Account" means a separate account maintained for each Member and
adjusted in accordance with Treasury Regulations under Section 704 of the Code.
"Certificate" means the Certificate of Formation creating the LLC, as it
may, from time to time, be amended in accordance with the Act.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Common Units" means Common Units having the rights and obligations
specified in this Agreement with respect to Common Units.
2
"Consent" means the consent or approval of the Members holding Units
representing 51% or more of the Percentage Interests calculated solely with
reference to Units that are entitled to vote.
"Initial Capital Contribution" has the meaning specified in Section 3.01
below.
"Legal Representative" means, with respect to any individual, a duly
appointed executor, administrator, guardian, conservator, personal
representative or other legal representative appointed as a result of the death
or incompetency of such individual.
"Liquidity Event" means a Public Offering or an Approved Sale.
"Manager" shall refer to any person named to serve as a Manager in this
Agreement and any person who becomes an additional, substitute or replacement
Manager as permitted by this Agreement, in each such person's capacity as (and
for the period during which such person serves as) a Manager of the LLC.
"Managers" shall refer collectively to all of such persons in their capacities
(and for the period during which such persons serve) as a Manager of the LLC.
"Member" shall refer severally to any person named as a Member in this
Agreement and any person who becomes an additional, substitute or replacement
Member as permitted by this Agreement. "Members" shall refer collectively to all
such persons.
"Net Profits" and "Net Losses" mean the taxable income or loss, as the case
may be, for a period as determined in accordance with Section 703(a) of the
Code, computed with the following adjustments'
(i) Any tax-exempt income received by the LLC shall be included as an item
of gross income; and
(ii) Any expenditure of the LLC described in Section 705(a)(2)(B) of the
Code, including any expenditures treated as being described in Section
705(a)(2)(B) pursuant to Treasury Regulations under Section 704(b) of the Code,
shall be treated as a deductible expense.
"Non-Voting Common Units" means Units having the preferences, rights and
obligations set forth in this Agreement with respect to Non-Voting Common Units;
provided that such Units shall have no voting rights.
"Percentage Interest" means the percentage interest (rounded to the third
decimal) of a Member, calculated by using a numerator equal to the aggregate
number of Units held by such Member and a denominator equal to the aggregate
number of issued and outstanding Units.
"Securities Act" means the Securities Act of 1933, as amended.
3
"Transfer" and any variation thereof shall refer to any sale, exchange,
issuance, redemption, assignment, distribution, encumbrance, hypothecation,
gift, pledge, retirement, resignation, transfer, or other withdrawal,
disposition or alienation in any way (whether voluntarily, involuntarily or by
operation of law) as to any interest as a Member. Transfer shall specifically,
without limitation of the above, include assignments and distributions resulting
from death, incompetency, Bankruptcy, liquidation and dissolution.
"Units" means Common Units and Non-Voting Common Units, as further defined
in Section 3.03 below.
ARTICLE II
----------
General
-------
2.01 Name of the Limited Liability Company. The name of the limited
liability company formed hereby is ATG Catalytics L.L.C. The name of the LLC may
be changed at any time or from time to time with the approval of the Manager and
the Consent of the Members.
2.02 Office of the Limited Liability Company; Agent for Service of
Process. The address of the registered office of the LLC for purposes of Section
18-103 of the Act is c/o CT Corporation System, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000. The name and address of the resident agent for service of
process for the LLC is c/o CT Corporation System, 0000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000. The Manager may establish places of business of the
LLC within and without the State of Delaware, as and when required by the LLC's
business and in furtherance of its purposes set forth in Section 2.04 hereof,
and may appoint agents for service of process in all jurisdictions in which the
LLC shall conduct business. The Manager may cause the LLC to change from time to
time its resident agent for service of process, or the location of its
registered office in Delaware.
2.03 Organization. The Manager shall cause to be filed such certificates
and documents as may be necessary or appropriate to comply with the Act and any
other applicable requirements for the operation of a limited liability company
in accordance with the laws of the State of Delaware and any other jurisdictions
in which the LLC shall conduct business, and shall continue to do so for so long
as the LLC conducts business therein.
2.04 Purposes and Powers. The general character of the business of the LLC
is to engage in the processing and treatment of hazardous waste, and, any
activities directly or indirectly related or incidental thereto, and to carry on
any business activity permissible under the Act.
Subject to all other provisions of this Agreement, in furtherance of the
conduct of its business, the LLC is hereby authorized:
4
(a) to enter into, execute, modify, amend, supplement, acknowledge,
deliver, perform and carry out contracts of any kind, including operating
agreements of limited liability companies (whether as a member or manager),
joint venture agreements, limited partnership and general partnership
agreements, contracts with Affiliates, including other contracts establishing
business arrangements or organizations necessary to, in connection with, or
incidental to the accomplishment of the purposes of the LLC;
(b) to borrow money and issue evidences of indebtedness or guarantees in
furtherance of any or all of the purposes of the LLC, and to secure the same by
mortgages, pledges or other liens on the property of the LLC;
(c) to the extent that funds of the LLC are available therefor, to pay
all expenses, debts and obligations of the LLC,
(d) to enter into or engage in any kind of activity necessary to, in
connection with, or incidental to the accomplishment of the purposes of the LLC,
so long as said activities may be lawfully carried on or performed by an LLC
under the laws of the State of Delaware; and
(e) to take any other action not prohibited under the Act or other
applicable law.
2.05 Members. The Members of the LLC are identified on Schedule A hereto.
-----------
Additional Members may be admitted to the LLC pursuant to and in accordance with
Article III hereof.
2.06 Designation of Manager. ATG, Inc. is hereby designated as the initial
and sole Manager of the LLC. The Manager may hold an interest in the LLC as a
Member, and such person's rights and interest as a Manager shall be distinct and
separate from such person's rights and interest as a Member. Any Manager may
withdraw or be removed as a Manager of the LLC and other persons added or
substituted to serve as Managers pursuant to Section 6.05 herein.
2.07 Liability of Members. The liability of the Members for the losses,
debts and obligations of the LLC shall be limited to their capital
contributions; provided, however, that under applicable law, the Members may
under certain circumstances be liable to the LLC to the extent of previous
distributions made to them in the event that the LLC does not have sufficient
assets to discharge its liabilities. Notwithstanding the foregoing, (i) no
Member, in its capacity as a Member (or, if applicable, as a Manager), shall
have any liability to restore any negative balance in its Capital Account and
(ii) the failure of the LLC to observe any formalities or requirements relating
to the exercise of its powers or the management of its business or affairs under
this Agreement or the Act shall not be grounds for imposing personal liability
on the Members or Managers for liabilities of the LLC.
2.08 Notices of Default. No Member or Manager shall be obliged to give
notice of an existing or potential default of any obligation of the LLC to any
of the Members, nor shall any
5
Member or Manager be obligated to make any capital contributions or loans to the
LLC or otherwise supply or make available any funds to the LLC, even if the
failure to do so would result in a default of any of the LLC's obligations or
the loss or termination of all or any part of the LLC's assets or business.
2.09 Investment Representations. Each Member, by execution of this
Agreement or an amendment hereto reflecting such Member's admission to the LLC,
hereby represents and warrants to the LLC the following:
(a) It is acquiring an interest in the LLC for its own account for
investment only, and not with a view to, or for sale in connection with, any
distribution thereof in violation of the Securities Act, or any role or
regulation thereunder.
(b) It understands that (i) the interest in the LLC it is acquiring has
not been registered under the Securities Act or applicable state securities laws
and cannot be resold unless subsequently registered under the Securities Act and
such laws or unless an exemption from such registration is available; (ii) such
registration under the Securities Act and such laws is unlikely at any time in
the future and neither the LLC nor the Members or Manager are obligated to file
a registration statement under the Securities Act or such laws; and (iii) the
assignment, sale, transfer, exchange or other disposition of the interests in
the LLC is restricted in accordance with the terms of this Agreement.
(c) It has had such opportunity as it has deemed adequate to ask
questions of and receive answers from the Manager or other representatives of
the LLC concerning the LLC, and to obtain from representatives of the LLC such
information that the LLC possesses or can acquire without unreasonable effort or
expense, as is necessary to evaluate the merits' and risks of an investment in
the LLC.
(d) It has, either alone or with its professional advisers, sufficient
experience in business, financial and investment matters to be able to evaluate
the merits and risks involved in investing in the LLC and to make an informed
investment decision with respect to such an investment.
(e) It can afford a complete loss of the value of its investment in the
LLC and is able to bear the economic risk of holding such investment for an
indefinite period.
(f) If it is an entity, (i) it is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization; (ii) it has
full organizational power to both execute and deliver this Agreement and perform
its obligations hereunder; (iii) its execution, delivery and performance of this
Agreement has been authorized by all requisite action on behalf of the entity;
and (iv) it has duly executed and delivered this Agreement.
6
2.10 No State Law Partnership. The Members intend that the Company shall
not be a partnership (including, without limitation, a limited partnership) or
joint venture, and that no Member or the Company shall be a partner or joint
venturer of any other Member or the Company, for any purposes other than
federal, if applicable, state and local tax purposes, and this Agreement Shall
not be construed to the contrary. The Members intend that the Company shall be
treated as a partnership for federal and, if applicable, state and local tax
purposes, and each Member and the Company shall file all tax returns and shall
otherwise take all tax and financial reporting positions in a manner consistent
with such treatment.
ARTICLE III
-----------
Membership; Member Units
------------------------
3.01 Members. The Company shall, at all times, have one or more Members.
On or prior to the date hereof, each Member has made a contribution to the
capital of the Company in the aggregate amount and in the manner set forth
opposite its name on Schedule A attached hereto (each member's contribution, the
-----------
"Initial Capital Contribution"). Each Member shall execute a counterpart to this
Agreement. When a person or entity is admitted as a new Member in accordance
with the provisions of this Agreement, it shall execute a counterpart to this
Agreement and its name shall be added to Schedule A.
-----------
3.02 No Authority to Bind the Company. No Member (in its capacity as a
Member) shall have the authority or power to represent or act for or on behalf
of the Company, to do any act that would be binding on the Company or to make
any expenditures or incur any obligations on behalf of the Company (unless such
Member is an officer or Manager of the Company authorized to do such act, make
such expenditure or incur such expenditure and such Member is acting in such
capacity). The management of the business and affairs of the Company shall be
vested in the Manager of the Company and, pursuant to the delegation of
authority by the Manager, the Company's officers.
3.03 Member Units; Voting Rights. Each Member's interest in the Company
(including such Member's interest, if any, in the capital, income, gains,
losses, deductions and expenses of the Company and the right to vote, if any, on
certain Company matters as provided herein) shall be represented by "Units"
(each, individually a "Unit," and any number of Units, including fractions
thereof, "Units"). Initially, the Units shall be comprised of Common Units and
Non-Voting Common Units. The ownership by a Member of Units shall entitle such
Member to allocations of profits and losses and other items and distributions of
cash and other property as set forth in Article V hereof. The Company may issue
Common Units in accordance with the terms set forth in this Agreement upon the
approval of the Manager. Except as otherwise expressly provided in this
Agreement, Members holding Non-Voting Common Units shall not be, by reason of
such ownership, entitled to vote on matters voted on by the Members holding
Common Units. The Manager may cause the Company to issue to the Members
certificates representing the Units held by such Members.
7
3.04 Issuance of Additional Units and Interests. Subject to Section 3.03
and Article IX, the Manager shall have the right to cause the Company to issue
(a) additional Units or other interests in the Company (including other classes
or series thereof having different rights); (b) obligations, evidences of
indebtedness or other securities or interests convertible or exchangeable into
Units or other interests in the Company; and (c) warrants, options or other
rights to purchase or otherwise acquire Units or other interests in the Company;
provided that the Company shall not issue Units to any person or entity unless
such person or entity shall have executed a counterpart to this Agreement and
completed the information required on Schedule A.
-----------
3.05 Repurchase or Vesting of Units. The Manager may, in his sole
discretion, determine that any or all Units may be subject to vesting and/or
repurchase restrictions. Such vesting and/or repurchase restrictions shall be
set forth in a separate equity restriction agreement by and among the Company
and each such member holding Units subject to vesting and/or repurchase
restrictions.
3.06 Meetings of Members. Meetings of the Members may be called by the
Manager at any time or by Members holding at least 51% of the Percentage
Interests based on then-outstanding Units entitled to vote. The Manager or the
Members calling such meeting, as applicable, shall designate any place as the
place of such meeting of the Members. Written notice stating the place, day and
hour of the meeting and the purpose therefor shall be delivered to each Member
not less than seven nor more than 30 days before such meeting. If all of the
Members meet at any time and place and consent to the holding of a meeting at
such time and place, such meeting shall be valid without notice and any Company
action which may be taken at a meeting of the Members may be taken at such
meeting.
3.07 Quorum; Manner of Acting. At each meeting of the Members, the Members
holding Units representing Percentage Interests of 51% or more, calculated
solely with reference to Units having a right to vote, shall constitute a quorum
for the transaction of any business which may be taken at such a meeting. In the
absence of a quorum, any Member present at such meeting shall have the power to
adjourn such meeting until a quorum shall be constituted. The Consent of the
Members entitled to vote and represented at such meeting where a quorum is
present shall constitute the act of the Members.
3.08 Proxies; Written Actions; Telephonic Participation. At any meeting
of the Members, a Member may vote by proxy executed in writing by such Member.
Any action required to be, or which may be, taken by Members may be taken
without a meeting if Consented thereto in a writing setting forth the action so
taken and signed by Members holding Percentage Interests equal to 51% or more,
calculated solely with reference to Units which are entitled to vote thereon.
Members may participate in any meeting through telephonic or similar
communications equipment by which all persons participating in the meeting can
hear one another and such participation shall constitute presence in person at
such meeting.
8
ARTICLE IV
----------
Capital Accounts
----------------
4.01 Capital Accounts. There shall be established on the books of the
Company a Capital Account for each Member that shall consist of such Member's
Initial Capital Contribution to the Company as reflected in the books and
records of the Company, and shall be:
(a) increased by (i) any additional capital contributions made by
such Member as so reflected, and (ii) any amounts from time to time
added to the Capital Account of such Member pursuant to Article V;
(b) decreased by (i) any distributions made to such Member pursuant
to Article V and (ii) any amounts from time to time subtracted from
the Capital Account of such Member pursuant to Article V; and
(c) otherwise adjusted in accordance with the tax accounting
principles set forth in Treasury Regulations Section 1.704-
1(b)(2)(iv).
4.02 Accounting for Distributions in Kind. For purposes of maintaining
Capital Accounts when Company property is distributed in kind,
(a) the Company shall treat such property as if it had been sold for
its fair market value on the date of distribution,
(b) any difference between the fair market value of such property as
so determined and the adjusted tax basis (determined without regard to any
election made pursuant to Section 754 of the Internal Revenue Code of 1986, as
amended (the "Code")) of such property shall be allocated to the Capital Account
of the Partners pursuant to Article V; and
(c) the Capital Account of any Member receiving a distribution of
such property shall be reduced by the fair market value of the property so
received, net of any liabilities that such Member is considered to assume or
take subject to under Section 752 of the Code.
4.03 Compliance with Treasury Regulations. The foregoing provisions and
the other provisions of this Agreement relating to the maintenance of Capital
Accounts are intended to comply with Code Section 704(b) and Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such regulations.
4.04 Interest. No Member shall be paid interest on any Capital
Contribution to the Company or on the balance of such Member's Capital Account.
9
4.05 Loans from Members. Any Member may make a loan to the Company and any
loan by a Member to the Company shall not be considered a Capital Contribution.
4.06 Effect of Assignment. In the event of any assignment of Units
pursuant to Article IX, the assignee shall succeed to the Capital Account of the
assignor with respect to the Units transferred.
ARTICLE V
---------
Allocations and Distributions
-----------------------------
5.01 General. Subject to the provisions of Section 18-607 of the Act, and
except as required by this Agreement, including Section 5.02 hereof,
distributions may be made to Members holding Units at such time and in such
amounts as the Manager deems necessary or appropriate, in his sole discretion.
Notwithstanding the foregoing, the net proceeds of an Approved Sale shall be
distributed to Members within five business days following the consummation of
such Approved Sale. All distributions (i) shall be subject to the retention and
establishment of such reserves as the Manager deems necessary with respect to
the reasonable business needs of the Company, including reserves with respect to
any contingent liabilities of the Company as a result of an Approved Sale, and
(ii) except with respect to Tax Distributions pursuant to Section 5.02, shall be
made only in the following order and priority'
All distributions shall be made to the Members holding Units pro rata
according to their respective Capital Accounts.
5.02 Tax Distributions. To the extent funds of the Company may be legally
available for distribution by the Company, the Manager shall cause the Company
to distribute to the Members holding Units with respect to each fiscal quarter
of the Company an amount of cash (a "Tax Distribution") which equals (a) the
amount of taxable income allocable to such Members with respect to such fiscal
quarter, multiplied by (b) a percentage determined, in the sole discretion of
the Manager, to be a reasonable estimate of the applicable combined marginal
federal, state and local income tax rates to which a Member may be subject and
taking into account the deductibility of state income tax for federal income tax
purposes, with such distribution to be made to the Members in the same
proportions that taxable income was allocated to the Members during such fiscal
quarter. Tax Distributions shall be made prior to distributions pursuant to
Section 5.01 hereof and shall not be considered distributions of Unreturned
Capital to Members.
5.03 Allocations of Net Profits and Net Losses. Net Profits and Net Losses
for any fiscal year shall be allocated among the Members holding Units in
accordance with their respective Percentage Interests.
5.04 Amounts Withheld. All amounts withheld from or offset against any
distribution to a Member, whether pursuant to Section 10.04 hereof, by reason of
a required tax withholding,
10
or pursuant to an equity restriction agreement between the Company and such
Member, shall be treated as amounts distributed to such Member pursuant to this
Article V for all purposes under this Agreement.
5.05 Tax Allocations; Code Section 704(c).
(a) The income, gains, losses, deductions and expenses of the Company
shall be allocated, for federal, state and local income tax purposes, among the
Members holding Units in accordance with the allocation of such income, gains,
losses, deductions and expenses among the Members holding Units for computing
their Capital Accounts, except that if any such allocation is not permitted by
the Code or other applicable law, the Company's subsequent income, gains,
losses, deductions and expenses shall be allocated among the Members holding
Units so as to reflect as nearly as possible the allocation set forth herein in
computing their Capital Accounts.
(b) In accordance with Code Section 704(c) and the Treasury
Regulations thereunder, income, gains, loss, deduction and expense with respect
to any property contributed to the capital of the Company shall, solely for tax
purposes, be allocated among the Members holding Units so as to take account of
any variation between the adjusted basis of such property to the Company for
federal income tax purposes and its fair market value at the time of
contribution.
(c) If the Book Value of any Company asset is adjusted pursuant to
Section 4.02, subsequent allocations of items of taxable income, gain, loss,
deduction and expense with respect to such asset shall take account of any
variation between the adjusted basis of such asset for federal income tax
purposes and its Book Value in the same manner as under Code Section 704(c).
(d) Allocations pursuant to this Section 5.05 are solely for purposes
of federal, state and local taxes and shall not effect, or in any way be taken
into account in computing, any Member's Capital Account or share of profits,
losses, other items or distributions pursuant to any provisions of this
Agreement.
ARTICLE VI
----------
Management of the Company
-------------------------
6.01 Management of the LLC. Subject to the provisions of this Agreement,
the overall management and control of the business and affairs of the LLC shall
be vested in the Manager, who may, in his discretion, delegate such management
and control to officers of the LLC. The Manager shall devote, and shall cause
the officers to devote, such time to the affairs of the LLC as may be reasonably
necessary for performance of their respective duties hereunder.
11
Specifically, but not by way of limitation, and subject to all other
provisions of this Agreement, the Manager shall be authorized in the name of and
on behalf of the LLC, or in its own name and on its own behalf, as appropriate,
to do all things necessary or appropriate to carry on the business and purposes
of the LLC, including, without limitation, the following:
(i) sell all or substantially all of the assets or Units of the LLC;
(ii) liquidate, reorganize or dissolve the Company;
(iii) engage in a Section 351 Transaction (as defined in Section 9.06
herein);
(iv) to acquire by purchase, lease, exchange or otherwise, and to sell,
finance, refinance. encumber and otherwise deal with, any personal property;
(v) to borrow money and issue evidences of indebtedness, guarantee loans
and secure the same by mortgage, deed of trust, pledge or other lien on any
assets or property of the LLC, and pay, prepay, extend, amend or otherwise
modify the terms of any such borrowings;
(vii) to employ executive, administrative and support personnel in
connection with the business of the LLC; and to pay salaries, expense
reimbursements, employee benefits, fringe benefits, bonuses and any other form
of compensation or employee benefit to such persons and entities, at such times
and in such amounts as may be determined by the Manager in his sole discretion;
and to issue Units to such persons and determine the repurchase/vesting
provisions, if any, applicable to such Units;
(viii) to hire or employ such agents, employees, managers, accountants,
attorneys, consultants and other persons necessary or appropriate to carry out
the business and operations of the LLC, and to pay fees, expenses, salaries,
wages and other compensation to such persons;
(ix) to pay, extend, renew, modify, adjust, submit to arbitration,
prosecute, defend or compromise, upon such terms as it may determine and upon
such evidence as it may deem sufficient, any obligation, suit, liability, cause
of action or claim, including taxes, either in favor of or against the LLC;
(x) to determine the appropriate accounting method or methods to be used
by the LLC;
(xi) to establish and maintain reserves for such purposes and in such
amounts as it deems appropriate from time to time;
(xii) to pay all organizational expenses and general and administrative
expenses of the LLC;
12
(xiii) to deal with, or otherwise engage in business with, and provide
services to and receive compensation therefor from, any person who has provided
or may in the future provide any services to, lend money to, sell property to or
purchase property from the LLC;
(xiv) to engage in any kind of activity and to perform and carry out
contracts of any kind necessary to, or in connection with, or incidental to the
accomplishment of the purposes of the LLC,
(xv) to pay any and all fees and to make any and all expenditures that
the Manager, in his sole discretion, deems necessary or appropriate in
connection with the organization of the LLC, the management of the affairs of
the LLC, and the carrying out of the LLC's obligations and responsibilities
under this Agreement;
(xvi) to cause the LLC and its properties and assets to be maintained and
operated in such a manner as the Manager may determine; subject, however, to
obligations imposed by applicable laws or by any mortgage or security interest
encumbering the LLC and such properties and assets from time to time, and by any
lease, rental agreement or other agreement pertaining thereto;
(xvii) to cause to be obtained and continued in force all policies of
insurance required by any mortgage, lease or other agreement relating to the
LLC's business or any part thereof, or determined by the Manager to be in the
best interests of the LLC;
(xviii) to cause to be paid any and all taxes, charges and assessments that
may be levied, assessed or imposed on any of the assets of the LLC unless the
same are contested by the Company;
(xix) to perform any other act the Manager may deem necessary, convenient
or desirable for the LLC for the conduct of the LLC's business;
(xx) to approve and adopt the Budget;
(xxi) to acquire the assets or stock of any other business or equity; and
(xxii) to exercise all powers and authority granted by the Act to
Managers, except as otherwise provided in this Agreement.
6.02 Compensation of Managers. Payment shall be made by the LLC to any
Manager or Member for such Manager's or Member's services as a Manager in such
amounts and for such services as is set forth in a Management Agreement to be
entered into by and between the Company and the Manager. 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.
13
6.03 Exculpation and Indemnification; Fiduciary Duty.
(a) The Members' respective obligations to each other are limited to the
express obligations described in this Agreement, which obligations the Members
shall carry out with ordinary prudence and in a manner characteristic of
business persons in similar circumstances. No Member shall be a fiduciary of, or
have any fiduciary obligations to, the other Members in connection with the LLC,
this Agreement, or such Member's performance of its obligations under this
Agreement; and each Member hereby waives to the fullest extent permitted by
applicable law any rights it may have to claim any breach of fiduciary
obligation under this Agreement or in connection with the LLC.
(b) No Manager or its Affiliates shall have any liability to the LLC or
to any Member for any loss suffered by the LLC that arises out of any action or
inaction of any Manager or its Affiliates, if such Manager or its Affiliates, as
the case may be, in good faith, determined that such course of conduct was in
the best interests of the LLC and such course of conduct did not constitute
gross negligence or willful misconduct of such Manager or its Affiliates.
(c) Each Member and Manager and its Affiliates shall be indemnified by
the LLC against any losses, judgments, liabilities, expenses and amounts paid in
settlement of any claims sustained by it with respect to actions taken by such
Member and Manager or its Affiliates on behalf of the LLC; provided that no
indemnification shall be provided for any person or entity with respect to any
matter as to which it shall have been adjudicated in any proceeding not to have
acted in good faith in the reasonable belief that its action was in the best
interests of the LLC.
Without limiting the foregoing, the LLC shall cause such indemnification to
include payment by-the LLC of expenses incurred in defending a civil or criminal
action or proceeding in advance of the final disposition of such action or
proceeding, upon receipt of an undertaking by the person or entity indemnified
to repay such payment if it shall be adjudicated not to be entitled to
indemnification under this Section 6.03, which undertaking may be accepted
without reference to the financial ability of such person or entity to make
repayment. Any indemnification to be provided hereunder shall be provided even
if the person or entity to be indemnified is no longer a Member or Manager or an
Affiliate of a Member or Manager.
6.04 Other Activities. The Members, Manager and any of their Affiliates
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 directors, officers, stockholders, managers, members and
general or limited partners of corporations, partnerships or other LLCs with
purposes similar to or the same as those of the LLC. Neither the LLC nor any
other Member or Manager shall have any rights in or to such ventures or
opportunities or the income or profits therefrom.
14
6.05 Withdrawal or Termination of the Manager. The Manager may resign
from, retire from, abandon or otherwise terminate his, her or its status as a
Manager after 60 days' written notice to all Members. If a Manager has given
such notice, such Manager shall not unreasonably withhold his, her or its
approval of any proposed new Manager who has the Consent of the other Members. A
Manager's status as a Manager may be terminated at any time by action of at
least 70% of the Percentage Interests held by the Common Members. If the
terminated Manager is also a Member, no such termination shall modify such
person's rights or obligations as a Member.
6.06 Additional or Substituted Manager. Managers may be selected from
among the Common Members (or may be admitted, as both Managers and Members, to
the LLC) at any time upon the written approval of, and with such rights,
obligations, responsibilities and economic interest as may be approved by all
other Managers, if any, with the unanimous approval of the Common Members.
6.07 Action by Manager. Any action required to be, or which may be, taken
by the Manager may be taken without a meeting if consented thereto in a writing
setting forth the action so taken and signed by the Manager (or a majority of
the Managers is there is more than one). Such consent shall have the same force
and effect as a vote at a meeting.
ARTICLE VII
-----------
Officers
--------
7.01 Designation of Officers. The Manager may, from time to time,
designate one or more persons to be officers of the Company. No officer need be
a resident of the State of Delaware or a Member. Any officers so designated
shall have such authority and perform such duties as the Manager may, from time
to time, proscribe or as may be provided in this Agreement. The Manager may
assign titles to particular officers and the officers of the Company may
include, without limitation, a Chairman of the Company, a Vice Chairman of the
Company, President, Executive Vice President, Treasurer, Secretary and Assistant
Secretary. Unless the Manager otherwise specifies, if the title is one commonly
used for officers of a business corporation, the assignment of such title shall
constitute the delegation to such officer of the authority and duties that are
normally associated with that office, subject to any specific delegation of
authority and duties made to such officer by the Manager. Each officer shall
hold office until his or her successor shall be duly designated and shall
qualify or until his or her death or until he or she shall resign or shall have
been removed. Any number of offices may be held by the same individual. The
salaries and other compensation, if any, of the officers and agents of the
Company shall be fixed from time to time by the Manager.
7.02 Resignation. Any officer of the Company may resign at any time by
giving written notice to the Manager, and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Any officer may be removed as such, either with or without cause, by the Manager
whenever in its judgment the best interests of the Company shall be served
thereby; provided that such removal shall be without prejudice to the
15
contract rights, if any, of the individual so removed. Designation of an officer
shall not of itself create contract rights. Any vacancy occurring in any office
of the Company may be filled by the Manager.
7.03 Duties of Officers Generally. Each officer shall owe to the Company
and its Members the same duties of care and loyalty that such person would owe
to a corporation and its stockholders as an officer thereof under the laws of
the State of Delaware.
7.04 Binding the LLC. The signature of the Manager, Chairman, Vice
Chairman, President, or any other officer so designated by the Manager,
Chairman, Vice Chairman or the President, as applicable, on any agreement,
contract, instrument or other document shall be sufficient to bind the LLC in
respect thereof, and conclusively evidence the authority of such officer and the
LLC with respect thereto, and no third party need look to any other evidence or
require the joinder or consent of any other party.
ARTICLE VIII
------------
Fiscal Matters
--------------
8.01 Books and Records. The Company shall keep complete and accurate books
and records of the LLC, which shall be maintained and be available, in addition
to any documents and information required to be furnished to the Members under
the Act, at the office of the LLC for examination and copying by any Member or
Manager, or his, her or its duly authorized representative, at its reasonable
request and at its expense during ordinary business hours. The LLC shall have no
obligation to deliver or mail a copy of the Certificate or any amendment thereto
to the Members.
8.02 Bank Accounts. The Manager shall be responsible for causing one or
more accounts to be maintained in a bank (or banks) which is a member of the
F.D.I.C., which accounts shall be used for the payment of the expenditures
incurred by the Company in connection with the business of the LLC, and in which
shall be deposited any and all cash receipts of the LLC. All deposits and funds
not needed for the operations of the LLC may be invested in short-term
investments, including securities issued or fully guaranteed by United States
government agencies, certificates of deposit of banks, bank repurchase
agreements coveting the securities of the United States government, commercial
paper, money market funds, interest-bearing time deposits in banks and thrift
institutions and such other similar investments as the Manager may approve. All
such amounts (including, without limitation, interest and other investment
profits) shall be and remain the property of the LLC, and shall be received,
held and disbursed by the Manager for the purposes specified in this Agreement.
There shall not be deposited in any of said accounts any funds other than funds
belonging to the LLC, and no other funds shall in any way be commingled with
such funds. Withdrawals from any LLC bank or similar account shall be made and
other activity conducted on such signature or signatures as shall be approved by
the Manager.
16
8.03 Fiscal Year. The fiscal year of the LLC shall end on December 31 of
each year.
8.04 Tax Matters Partner. The Manager shall designate the "tax matters
partner" of the LLC, who shall initially be Xxxxxxx Xxxxxx. If at any time such
person is not eligible under the Code to serve, or refuses to serve, as the tax
matters partner, another Member shall be designated by the Managers to serve as
the tax matters partner. The tax matters partner is hereby authorized to and
shall perform all duties of a tax matters partner under the Code and shall serve
as tax matters partner until its resignation or until the designation of its
successor, whichever occurs sooner.
ARTICLE IX
-----------
Transfers of Interests
----------------------
9.01 General Restrictions on Transfer of Interests by Member
(a) No Member may Transfer his, her or its legal or beneficial
interest in the LLC (including without limitation, by resignation as a member of
the LLC), unless such Transfer of Units (a) is pursuant to applicable laws of
descent and distribution (b) is Consented to by the Members holding Common
Units, (c) are Units that are repurchased by the Company pursuant to equity
restriction agreements between the Company and the holder of such Units. Except
for transfers pursuant to (c) above, the restrictions on Transfer shall continue
to be applicable to the Units granted after any such transfer, the transferees
of such Units shall have agreed in writing to be bound by the provisions of this
Agreement and the Member effecting such Transfer (the "Transferring Member") or
its estate notifies the Company of the name of the transferees. Unless an
assignee becomes a substituted Member in accordance with the provisions of
Section 9.01 (b), it shall not be entitled to any of the rights granted to a
Member hereunder.
(b) An assignee of the interest of a Member, or any portion thereof,
shall become a substituted Member entitled to all the rights of a Member if, and
only if:
(i) the assignor gives the assignee such right;
(ii) the other Members, acting by Consent, shall have approved
such substitution, and if the Transferring Member is a Manager, which approval
shall specify whether such assignee shall assume the role and duties of Manager
in respect of the assigned interest, and, if such assignee is not to assume such
role and duties, that there is a least one remaining Manager; or, if there is no
remaining Manager, the Members, acting by Consent, shall have elected to
continue the LLC and, if they so desire, have selected a new Manager or Managers
and entered into an agreement with such new Manager(s) as to their economic
interests, if any, in the LLC, and their other rights, duties and
responsibilities;
(iii) the assignee pays to the LLC all costs and expenses
incurred in connection with such substitution, including, specifically, without
limitation, costs incurred in the
17
review and processing of the assignment and in amending the LLC's current
Certificate and/or Operating Agreement, if required; and
(iv) the assignee executes and delivers an Amendment to this
Agreement (and to the Certificate, if required), which Amendment shall be
executed by the Manager and such assignee, and such other instruments, in form
and substance satisfactory to the Manager (or, if clause (iii), above, is
applicable, to the Members acting by Consent. in connection with such
substitution), as may be necessary, appropriate or desirable to effect such
substitution and to confirm the agreement of the assignee to be bound by the
terms and provisions of this Agreement.
(c) The LLC and the Manager shall be entitled to treat the record
owner of any LLC interest as the absolute owner thereof in all respects, and
shall incur no liability for distributions of cash or other property made in
good faith to such owner until such time as a written assignment of such
interest has been received and accepted by the Manager and recorded in the books
of the LLC. In no event shall any membership interest, or any portion thereof,
be sold, transferred or assigned to a minor or incompetent, and any such
attempted sale, transfer or assignment shall be void and ineffectual and shall
not bind the LLC or the Manager.
9.02 Termination of Restrictions. The restrictions on the transfer of
Units set forth herein shall continue with respect to each Unit following any
transfer thereof.
9.03 Void Transfers. Any transfer by any Member of any Units or other
interests in the Company in contravention of this Agreement shall be void and
ineffectual and shall not bind or be recognized by the Company or any other
party. No purported assignee shall have any right to vote on any matter or any
right to any profits, losses, or distributions, receive reports or other
information or to inspect the records, of the Company.
9.04 Effect of Assignment.
(a) An assignment pursuant to this Agreement entitles the assignee to
receive any allocations of income, gain, loss, deduction, credit or similar
item, and to receive any distribution or distributions, that assignor was
entitled to receive prior to the assignment with respect to the Units assigned.
An assignor shall cease to be a Member, and shall not be entitled to exercise
any rights or powers of a Member, upon assignment of all of the assignor's Units
and the admission of the assignee (or assignees) as a Member (or Members). The
pledge of, or granting of, a security interest, lien or other encumbrance in or
against, any or all of the Units of a Member shall not cause the Member to cease
to be a Member or to cease to have the power to exercise any rights or powers of
a Member
(b) No assignee shall participate in the management, business or
affairs of the Company unless and until such assignee is admitted to the Company
as a Member in the manner provided herein.
18
(c) Until an assignee of a Unit(s) becomes a Member, the assignee
shall have no liability as a Member solely as a result of the assignment.
9.05 Section 351 Transaction. Upon the Consent of the Members holding
Common Units to a plan to incorporate the Company (the "Incorporation Plan"),
each Member will transfer such Member's Units to a corporation specifically
formed for such purpose (the "Successor Corporation") in exchange for stock of
the Corporation in a transaction (the "Section 351 Transaction") intended to
qualify under Section 351 of the Internal Revenue Code of 1954, as amended. Each
Unit will be valued as if the Company had effectuated a complete liquidation
hereunder. Pursuant to the Incorporation Plan, each Common Unit will be
exchanged for one share of common stock of the Successor Corporation. The
Company shall pay any and all organizational, legal and accounting expenses and
filing fees incurred in connection with the Section 351 Transaction. The
Successor Corporation shall issue its stock in the Section 351 Transaction in
accordance with the Incorporation Plan, which shall specify the classes of stock
for which the Units shall be exchanged and which shall attach as exhibits the
form of organizational document which shall set forth the rights and privileges
of such classes of stock and, if applicable, such other documents and agreements
as shall be necessary to confer the rights, privileges and preferences conferred
on the holders of Units in Article IX of this Agreement on the holders of such
classes or series of stock which shall be issued in exchange for such Units.
ARTICLE X
---------
Miscellaneous
-------------
10.01 Events Causing Dissolution. The LLC shall be dissolved and its
affairs wound up upon the following:
(a) the sale or other disposition of all or substantially all of the
assets of the LLC;
(b) the election to dissolve the LLC made in writing by the Members
holding Common Units;
(c) any consolidation or merger of the LLC with or into any entity,
following which the LLC is not the resulting or surviving entity; or
(d) upon the occurrence of an event specified under the laws of the
State of Delaware as one effecting dissolution; except that where, under the
terms of this Agreement or the Act, the LLC is not to terminate, the LLC shall
immediately be reconstituted and reformed on all the applicable terms,
conditions and provisions of this Agreement.
10.02 Continuation of the LLC. Notwithstanding the occurrence of an event
described in Section 10.01 (a) or (c) above, the LLC shall not be dissolved, and
its business and affairs shall not be discontinued, and the LLC shall remain in
existence as a limited liability company under
19
the laws of the State of Delaware if the remaining Members, acting by Consent,
elect within 90 days after such occurrence to continue the LLC and the LLC's
business, and designate from among the Members one or more Managers.
10.03 Procedures on Dissolution. Dissolution of the LLC shall be effective
on the day on which occurs the event giving rise to the dissolution, but the LLC
shall not terminate until its Certificate shall have been canceled and the
assets of the LLC shall, have been distributed as provided herein.
Notwithstanding the dissolution of the LLC, prior to the termination of the LLC,
as aforesaid, the business of the LLC and the affairs of the Members, as such,
shall continue to be governed by this Agreement. The remaining Manager or, if
there be none, a liquidator appointed with the Consent of the Members, shall
liquidate the assets of the LLC, apply and distribute the proceeds thereof as
contemplated by this Agreement and cause the cancellation of the Certificate.
10.04 Distributions upon Liquidation.
(a) After paying liabilities owed to creditors, the Manager or such
liquidator shall set up such reserves as it deems reasonably necessary for any
contingent or unforeseen liabilities or obligations of the LLC. Said reserves
may be paid over by such Manager or such liquidator to a bank, to be held in
escrow for the purpose of paying any such contingent or unforeseen liabilities
or obligations and, at the expiration of such period as such Manager or such
liquidator may deem advisable, such reserves shall be distributed to the Members
or their assigns in the manner set forth in paragraph (b), below.
(b) After paying such liabilities and providing for such reserves, the
Manager or liquidator shall cause the remaining net assets of the LLC to be
distributed to and among the Members in the order of priority set forth in
Article V hereof. In the event that any part of such net assets consists of
notes or accounts receivable or other noncash assets, the Manager or liquidator
may take whatever steps it deems appropriate to convert such assets into cash or
into any other form that would facilitate the distribution thereof. If any
assets of the LLC are to be distributed in kind, such assets shall be
distributed on the basis of their fair market value, net of any liabilities.
ARTICLE XI
----------
General Provisions
------------------
11.01 Notices. Any and all notices under this Agreement shall be given in
writing, and shall be effective (a) on the fourth business day after being sent
by registered or certified mail. return receipt requested, postage prepaid; (b)
on the first business day after being sent by express mail, or commercial
overnight delivery service providing a receipt for delivery; (c) on the date of
hand delivery; or (d) on the date actually received, if sent by any other
method. To be effective, all such notices shall be addressed, if to the LLC,
both at its registered office under the Act and
20
its principal executive offices, and if to a Member or Manager, at the last
address of record on the XXX xxxxx.
11.02 Binding Provisions. Subject to the restrictions on transfers set
forth herein, the covenants and agreements contained herein shall be binding
upon, and inure to the benefit of, the parties hereto, their heirs, legal
representatives, successors and assigns.
11.03 Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, including the Act, as
interpreted by the courts of the State of Delaware, notwithstanding any roles
regarding choice of law to the contrary.
11.04 Counterparts. This Agreement may be executed in several
counterparts, and, as so executed, shall constitute one agreement binding on all
parties hereto, notwithstanding that all of the parties have not signed the same
counterpart.
11.05 Separability of Provisions. Each provision of this Agreement shall
be considered separable. To the extent that any provision of this Agreement is
prohibited or ineffective under the Act, this Agreement shall be considered
amended to the smallest degree possible to make the Agreement effective under
the Act (and, if the Act is subsequently amended or interpreted in such manner
as to make effective any provision of this Agreement that was formerly rendered
invalid, such provision shall automatically be considered valid from the
effective date of such amendment or interpretation).
11.06 Amendments. Except as otherwise specifically provided in this
Agreement, this Agreement may be amended or modified by the Manager with the
consent of the holders of the Common Units.
11.07 Third-Party Beneficiaries. The provisions of this Agreement are not
intended to be for the benefit of any creditor (other than a Member who is a
creditor) or other person (other than a Member in his, her or its capacity as a
Member) to whom any debts, liabilities or obligations are owed by (or who
otherwise has any claim against) the LLC or any of the Members. Moreover,
notwithstanding anything contained in this Agreement, no such creditor or other
person shall obtain any rights under this Agreement or shall, by reason of this
Agreement, make any claim in respect of any debt, liability or obligation (or
otherwise) against the LLC or any Member or Manager.
11.08 Entire Agreement. This Agreement 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. The Members and the Manager hereby agree that each Member and
each Manager shall be entitled to rely on the provisions of this Agreement, and
no Member or Manager shall be liable to the LLC or any other Member or Manager
for any action or refusal to act taken in good faith reliance on the terms of
this Agreement.
21
11.09 Gender. Whenever used herein, the singular number shall include the
plural, the plural shall include the singular, and the use of any gender shall
include all genders, unless the context requires otherwise.
22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal as of the day and year first above written.
ATG, INC.
By: /s/ Xxxxxxx Xxxxxx
--------------------------------
Its duly authorized officer
QUANTUM CATALYTIC, LLC
By: /s/ Xxxx Xxxxxxx
-----------------------------------
Xxxx Xxxxxxx, Manager
23
SCHEDULE A TO OPERATING AGREEMENT
---------------------------------
MEMBERS
NAMES AND ADDRESSES CAPITAL
OF MEMBERS TYPE OF UNIT NO. OF UNITS CONTRIBUTION
----------- ------------ ------------ ------------
1. ATG, Inc. Common 900 $900
00000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
2. Quantum Catalytics, L.L.C. Non-Voting Common 100 $100
000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
24
