EX-10.40 8 dex1040.htm OPERATING AGREEMENT OF CHEM-MOD INTERNATIONAL LLC OPERATING AGREEMENT OF CHEM-MOD INTERNATIONAL LLC
Exhibit 10.40
OF
CHEM-MOD INTERNATIONAL LLC
TABLE OF CONTENTS
ARTICLE | PAGE | |||
ARTICLE 1 | DEFINITIONS AND INTERPRETATION | D-1 | ||
1.1 | Definitions | D-1 | ||
1.2 | Interpretation | 4 | ||
ARTICLE 2 | FORMATION OF THE COMPANY | 4 | ||
2.1 | Formation | 4 | ||
2.2 | Entire Agreement | 5 | ||
ARTICLE 3 | NAME AND PRINCIPAL OFFICE | 5 | ||
3.1 | Name | 5 | ||
3.2 | Principal Office, Registered Office and Registered Agent | 5 | ||
ARTICLE 4 | PURPOSE | 5 | ||
ARTICLE 5 | TERM AND FISCAL YEAR | 5 | ||
5.1 | Term | 5 | ||
5.2 | Fiscal Year | 5 | ||
ARTICLE 6 | CAPITAL CONTRIBUTIONS, LOANS AND CAPITAL ACCOUNTS | 6 | ||
6.1 | Contribution of License | 6 | ||
6.2 | Contributions of Cash | 6 | ||
6.3 | Additional Contributions | 6 | ||
6.4 | Loans | 6 | ||
6.5 | Return of Capital Contributions | 7 | ||
6.6 | Capital Account | 7 | ||
6.7 | Interest on Capital Contributions | 7 | ||
ARTICLE 7 | ALLOCATION OF PROFITS AND LOSSES | 7 | ||
7.1 | General Allocation of Profits and Losses | 7 | ||
7.2 | Depreciation Recapture | 8 | ||
7.3 | Allocations with Respect to Transferred Interests | 9 | ||
7.4 | Tax Credits | 9 | ||
7.5 | Regulatory Allocations | 9 | ||
7.6 | Section 704(c) Allocation | 10 | ||
7.7 | Allocation of Excess Nonrecourse Liabilities | 10 | ||
ARTICLE 8 | DISTRIBUTIONS | 11 | ||
8.1 | Distribution of Net Cash Receipts | 11 | ||
8.2 | Timing of Distribution; No Third-Party Beneficiaries | 11 | ||
ARTICLE 9 | BOOKS OF ACCOUNT, RECORDS AND REPORTS | 12 | ||
9.1 | Books of Account and Records | 12 | ||
9.2 | Reports to Members | 12 |
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ARTICLE 10 | MANAGEMENT OF THE COMPANY | 13 | ||
10.1 | Management of Company Affairs | 13 | ||
10.2 | Major Decisions | 13 | ||
10.3 | Budgets | 15 | ||
10.4 | Employment of Affiliates | 16 | ||
10.5 | Liability of the Members | 16 | ||
10.6 | Devotion of Time by Members | 16 | ||
10.7 | Other Business of Members | 16 | ||
10.8 | Tax Matters Partner | 17 | ||
10.9 | Election to Adjust Basis | 17 | ||
10.10 | Company Indemnification of Members | 17 | ||
ARTICLE 11 | RIGHTS AND DUTIES OF MEMBERS | 17 | ||
11.1 | Admission of Members | 17 | ||
11.2 | Limited Liability | 17 | ||
11.3 | No Individual Authority | 18 | ||
11.4 | Representations by Members | 18 | ||
11.5 | Indemnification by the Members | 18 | ||
11.6 | Indemnification by the Company | 18 | ||
11.7 | Rights of a Former Member | 18 | ||
11.8 | Covenants | 19 | ||
ARTICLE 12 | TRANSFER OF MEMBER INTERESTS | 23 | ||
12.1 | General Prohibition | 23 | ||
12.2 | Permitted Transfers | 23 | ||
12.3 | Right of First Offer Refusal | 24 | ||
12.4 | Involuntary Transfers | 25 | ||
12.5 | Dissolution or Termination of Members | 25 | ||
12.6 | Transfers of Ownership Interests in Members | 25 | ||
12.7 | Status of Assignee | 26 | ||
12.8 | Admission Requirements | 26 | ||
12.9 | Effective Date of Assignment | 26 | ||
12.10 | Status of Assignor | 27 | ||
12.11 | Cost of Admission | 27 | ||
ARTICLE 13 | TAG-ALONG RIGHT | 27 | ||
ARTICLE 14 | BUY/SELL | 28 | ||
14.1 | Right to Initiate | 28 | ||
14.2 | Initiation and Elections | 28 | ||
14.3 | Closing | 29 | ||
14.4 | Payment of Loans | 29 | ||
14.5 | Other Remedies for Noncompliance | 30 | ||
14.6 | Assignees | 30 | ||
14.7 | Additional Effects of a Buy/Sell | 30 | ||
14.8 | Right to Assign | 30 |
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ARTICLE 15 | DISSOLUTION AND LIQUIDATION OF COMPANY | 31 | ||
15.1 | Dissolution of the Company | 31 | ||
15.2 | Winding Up of Affairs | 31 | ||
15.3 | Accounting | 31 | ||
15.4 | Final Distribution of Company Property | 31 | ||
15.5 | Certificate of Cancellation | 32 | ||
15.6 | No Restoration of Deficit Capital Accounts | 32 | ||
ARTICLE 16 | AMENDMENTS | 32 | ||
16.1 | Amendment of Agreement | 32 | ||
16.2 | Amendment of Certificate | 32 | ||
ARTICLE 17 | NOTICES | 32 | ||
ARTICLE 18 | MISCELLANEOUS PROVISIONS | 33 | ||
18.1 | Severability | 33 | ||
18.2 | Parties Bound | 33 | ||
18.3 | Applicable Law | 33 | ||
18.4 | Additional Documents and Acts | 33 | ||
18.5 | Benefit | 33 | ||
18.6 | Waiver | 34 | ||
18.7 | Survival | 34 | ||
18.8 | Headings | 34 | ||
18.9 | Counterparts | 34 |
EXHIBITS
Exhibit A | - | Copies of patent applications filed comprising the Technology | ||
Exhibit B | - | License | ||
Exhibit C | - | Development Budget | ||
Exhibit D | - | Capital Accounts of the Members | ||
Exhibit E | - | Confidentiality Agreement |
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CHEM-MOD INTERNATIONAL LLC
This Operating Agreement (this βAgreementβ) of CHEM-MOD INTERNATIONAL LLC, an Delaware limited liability company (the βCompanyβ), is made and entered into as of July 8, 2005, by and between NOX II International, Ltd., an Ohio limited liability company (βNOXβ) and AJG Coal, Inc., a Delaware corporation (βAJGβ).
R E C I T A L S:
The parties to this Agreement desire to form a Delaware limited liability company for the purpose of developing, using and commercializing certain coal technology in the International Market related to the remediation of combusted carbonaceous materials and described in the patent applications filed in the United States Patent and Trademark Office (βUSPTOβ), as the same may be supplemented, modified, or expanded upon, including related filings under the Patent Cooperation Treaty (βPCT Filingsβ), copies of which are attached as Exhibit A to this Agreement (collectively, the βTechnologyβ),
By this Agreement, the parties desire to create the Company on the terms and conditions set forth herein.
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Definitions. In addition to capitalized terms defined elsewhere in this Agreement, the following capitalized terms shall have the meanings set forth below.
Act. The Delaware Limited Liability Company Act, as amended from time to time and any successor to the Act.
Adjusted Capital Account Deficit. With respect to any Member, the deficit balance, if any, in such Memberβs Capital Account, as of the end of the relevant fiscal year, after giving effect to the following adjustments: (i) crediting thereto (A) the amount of such Memberβs share of Minimum Gain, including any βpartner nonrecourse debt minimum gainβ (as defined in Treasury Regulations Section 1.704-2(i)), and (B) the amount of Company liabilities allocated to such Member under Section 752 of the Code with respect to which such Member bears the economic risk of loss (as defined in Treasury Regulations Section 1.752-2(a)), to the extent such liabilities do not constitute βpartner nonrecourse debtβ under Treasury Regulations Section 1.752-2 and (ii) reduced by all reasonably expected adjustments, allocations and distributions described in Treasury Regulations Sections 1.704-l(b)(2)(ii)(d)(4), (5) and (6).
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Annual Budget. As defined in Section 10.3(b).
Capital Account. The capital account maintained for each Member pursuant to Section 6.6.
Capital Contributions. With respect to any Member, the amount of money and the fair market value (as agreed by the Members) of any property or services contributed to the Company by such Member.
Certificate. The Certificate of Formation of the Company, as amended from time to time.
Code. The United States Internal Revenue Code of 1986, as amended from time to time, or any replacement or successor law.
Cumulative Tax Liability. For each Member, as of any date during the term of this Agreement, the product of (a) forty percent (40%) multiplied by (b) the excess, if any, of: (i) the amount of all items of taxable income and gain of the Company for federal income tax purposes allocated to such Member for all periods beginning on the date of this Agreement through the end of the fiscal year immediately preceding such date of calculation, over (ii) the amount of all items of deductible expense and loss of the Company allocated to such Member for all periods beginning on the date of this Agreement through the end of the fiscal year immediately preceding such date of calculation (with any excess of amounts in clause (ii) over amounts in clause (i) in prior fiscal periods being carried forward as an item of loss in clause (ii) until absorbed in the subsequent fiscal period).
Cross Cash Receipts. With respect to any period, the amount of all cash funds received by the Company from all sources.
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Investor. AJG, and its respective successors and assigns.
License. The Technology License Agreement attached to this Agreement as Exhibit B, pursuant to which NOX grants the Company an exclusive, royalty-free right to use the Intellectual Property in perpetuity in the International Market.
Major Decisions. As defined in Section 10.2.
Members. NOX and AJG, and each Person who may become a substituted or additional Member pursuant to the provisions hereof and applicable law.
Minimum Gain. As such term is defined in Treasury Regulation Section 1.704-2(d), which shall generally mean the amount by which the nonrecourse liabilities secured by any assets of the Company exceed the adjusted tax basis of such assets as of the date of determination. A Memberβs share of Minimum Gain (and any net decrease thereof) at any time shall be determined in accordance with Treasury Regulation Section 1.704-2(g).
Net Cash Receipts. With respect to any period, the amount by which the Gross Cash Receipts in such period exceed the sum of the following: (a) all principal and interest payments on any indebtedness of the Company, and all other sums paid to such lenders in such period, but excluding any payments made pursuant to Article 8; (b) all cash expenditures (including expenditures for capital improvements) made in such period incident to the operation of the Company business, including but not limited to those expenses of the Members paid, either directly or indirectly, by the Company; and (c) working capital and other reserves in such amounts and for such purposes as the Members deem necessary for proper current and future operation of the Company business.
Participating Percentage. For each Member, the percentage set forth opposite such Memberβs name below, as adjusted from time to time as provided in Section 6.2:
Member | Participating Percentage | |
NOX II INTERNATIONAL, LTD. | 90% | |
AJG | 10% |
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Permitted Transferee. As defined in Section 12.2.
Person. A natural person, corporation, limited liability company, trust, partnership, estate, unincorporated association, governmental entity or other entity.
Priority Return. For the Investor, and other Members to the extent of any cash capital contributions, as of any date, the sum of (a) the Capital Contributions in the form of cash or other immediately available funds of such Investor, plus (b) the Cumulative Tax Liability of such Investor as of such date.
1.2 Interpretation. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Wherever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine and neuter forms. For all purposes of this Agreement, the term βcontrolβ and variations thereof shall mean the direct or indirect possession of the power to direct or cause the direction of the management and policies of the specified entity, through the ownership of equity interests therein, by contract or otherwise. As used in this Agreement, the words βinclude,β βincludesβ and βincludingβ shall be deemed to be followed by the phrase βwithout limitationβ. As used in this Agreement, the terms βherein,β βhereofβ and βhereunderβ shall refer to this Agreement in its entirety. Any references in this Agreement to βSections,β βArticlesβ of βExhibitsβ shall, unless otherwise specified, refer to Sections, Articles, or Exhibits, respectively, in or attached to this Agreement.
ARTICLE 2
FORMATION OF THE COMPANY
2.1 Formation. The parties hereto agree to and do hereby form a limited liability company under and pursuant to the provisions of the Act; and the rights and obligations of the Members shall be as provided therein except as otherwise expressly provided in this Agreement. The Members agree to execute such certificates or documents and to do such filings and recordings and all other acts, including the filing or recording of the Certificate, and any assumed name filings in the appropriate offices in the State of Delaware and any other applicable jurisdictions as may be required to comply with applicable law.
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2.2 Entire Agreement. Each and every other agreement or understanding, oral or written, relating in any way to the formation or operation of the Company is hereby superseded in its entirety. From and after the execution of this Agreement, the same shall constitute the only Operating Agreement of the Company except as the same may hereafter be amended pursuant to the provisions hereof. This Agreement represents the entire agreement and understanding of the parties hereto concerning the Company and their relationship as Members, and all prior or concurrent agreements, understandings, representations and warranties in regard to the subject matter hereof are and have been merged herein.
ARTICLE 3
NAME AND PRINCIPAL OFFICE
3.1 Name. The business of the Company shall be conducted under the name of βChem-Mod International LLC,β or such other name as the Members may designate.
3.2 Principal Office, Registered Office and Registered Agent. The principal office of the Company shall be located at 0000 Xxxxxxxxxx Xxxxx, Xxxx, Xxxx 00000. The registered agent and the registered office of the Company shall be Xxxxxxx X. Xxxxx, 0000 Xxxxxxxxxx Xxxxx, Xxxx, Xxxx 00000. The Members may from time to time designate another registered agent or another location for the principal office or registered office of the Company upon notice to all Members.
ARTICLE 4
PURPOSE
The purpose of the Company is to engage in developing, commercializing, using, licensing and otherwise exploiting Intellectual Property pursuant to the License; financing any of the foregoing; and making prudent interim investments of Company funds, including, without limitation, investments in obligations of federal, state and local governments or their agencies, mutual funds, money market funds and bank certificates of deposit; and engaging in any and all activities related or incidental thereto. Except as specifically limited or prohibited by this Agreement, the Company is empowered to perform such actions and engage in such activities consistent with, useful or necessary to carry out the purpose of the Company.
ARTICLE 5
TERM AND FISCAL YEAR
5.1 Term. The term of the Company shall commence as of the date hereof and shall continue in perpetuity, unless sooner terminated pursuant to the provisions of this Agreement or as otherwise provided by law.
5.2 Fiscal Year. The fiscal year of the Company shall be the calendar year.
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ARTICLE 6
CAPITAL CONTRIBUTIONS, LOANS AND CAPITAL ACCOUNTS
6.1 Contribution of License. Concurrently with the execution of this Agreement, NOX shall enter into the License. Immediately after a PTC Filing and/or patent application with respect to all or any portion of the Technology has been filed, NOX and AJG shall be provided with a copy of such patent application or filing.
6.2 Contributions of Cash. AJG shall contribute Seven Hundred Fifty Thousand Dollars ($750,000.00) to the company, in cash, in return for its membership interests. Three Hundred Seventy-Five Thousand Dollars ($375,000.00) shall be paid to NOX or its assigns in exchange for the License and Technology rights obtained herein, and Three Hundred Seventy-Five Thousand Dollars ($375,000.00) shall remain in the Company for use as working capital.
6.3 Additional Contributions. Except as specifically set forth in Section 6.1 and Section 6.2 of this Agreement, no Member shall be required to make any additional contributions to the capital of the Company.
6.4 Loans.
(a) If at any time in the opinion of the Members, the Companyβs revenues and funds are not sufficient to satisfy the obligations and liabilities of the Company or to preserve, protect and develop the property of the Company, the Members may arrange for the Company to borrow such required funds from a third party on such terms and conditions as the Members deem advisable, provided that:
(i) No Member shall have any personal liability for repayment of any loan without such Memberβs prior written consent; and
(ii) No Member shall be required to make a loan to the Company.
(b) If at any time the Members determine that the Companyβs revenues and funds are not sufficient to satisfy the obligations and liabilities of the Company or to develop, preserve and protect the property of the Company, and the Company cannot borrow the required funds from commercial lenders on terms that are reasonable under the circumstances (including but not limited to the terms described in Section 6.4(a) above), then one or more of the Members or their Affiliates, in such personβs sole discretion, may loan the required funds to the Company. Loans made available to the Company by Members shall not be considered Capital Contributions. Any such loans shall be made by the lending Members or their Affiliates in proportion to the applicable lending Membersβ respective Participating Percentages or in such other proportion as the lending Members or their Affiliates may agree upon. All such loans (i) shall be payable only from the assets of the Company without any recourse against or right of contribution from any Member, (ii) shall bear interest at an annual rate equal to the Prime Rate plus
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three percent (3%), adjusting when and as the Prime Rate shall adjust, compounded annually; and (iii) shall mature and be due and payable, to the extent not paid pursuant to other provisions of this Agreement, upon termination of the Company.
6.5 Return of Capital Contributions. Except as specifically provided in this Agreement, a Member shall not be entitled to the return of its capital contribution to the Company.
6.6 Capital Account. A separate Capital Account shall be established and maintained for each Member in accordance with the Code and the regulations promulgated thereunder, including but not limited to the rules regarding the maintenance of partnersβ capital accounts set forth in Treasury Regulation Section 1.704-1. Subject to the immediately preceding sentence, there shall be credited to each Memberβs Capital Account (i) the amount of money and the fair market value (as determined by the Members) of any property (net of related liabilities) contributed by the Member to the Company, and (ii) the Memberβs share of income or gain (or items thereof) of the Company, including income and gain exempt from tax. There shall be charged against each Memberβs Capital Account (i) the amount of money and the fair market value (as determined by the Members) of any property (net of related liabilities) distributed to the Member by the Company and (ii) the Memberβs share of loss and deduction (or items thereof) of the Company. If property is contributed to the capital of the Company or if there is a revaluation of any Company property such that the book value of such property differs from its adjusted tax basis, the Membersβ Capital Accounts shall be appropriately adjusted for income, gain, loss and deduction as required by Treasury Regulation Section 1.704-1(b)(2)(iv)(g). To the extent a Memberβs Capital Account is greater than zero, such excess is hereinafter referred to as a βpositive balance.β To the extent that a Memberβs Capital Account is less than zero, said amount is hereinafter referred to as a βdeficit balance.β The initial Capital Accounts of the Members are set forth on Exhibit D attached hereto.
6.7 Interest on Capital Contributions. Except as specifically provided in this Agreement, the Company shall not pay interest on Capital Contributions or undistributed Profits.
ARTICLE 7
ALLOCATION OF PROFITS AND LOSSES
7.1 General Allocation of Profits and Losses. After giving effect to the allocations set forth in Sections 7.5 and 7.6, all Profits and Losses (including all items of income and expense entering into the determination of such Profits and Losses), as finally determined for federal income tax purposes for each fiscal year of the Company, shall be allocated among the Members as follows:
(a) Profits. Profits shall be allocated among the Members in the following order of priority:
(i) First, to the Members in proportion to and to the extent of the excess, in the case of each Member, of (A) all Losses allocated to such Member
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pursuant to Section 7.l(b)(iii), over (B) all Profits previously allocated to such Member pursuant to this Section 7.1(a)(i).
(ii) Second, to the Members in proportion to and to the extent of the excess, in the case of each Member, of (A) all Losses allocated such Member pursuant to Section 7.1(b)(ii), over (B) all Profits previously allocated to such Member pursuant to this Section 7.1(a)(ii).
(iii) Third, to the Investor, and if applicable, the other Members, in proportion to and to the extent of the excess of (A) the amount of all distributions of Net Cash Receipts to such Investor pursuant to Section 8.1(b) over (B) all prior allocations of Profits to such Member pursuant to this Section 7.1(a)(iii).
(iv) Fourth, to the Members in proportion to and to the extent of the excess, in the case of each Member, of (A) the amount of all distributions of Net Cash Receipts to such Member pursuant to Section 8.1(c) over (B) all prior allocations of Profits to such Member pursuant to this Section 7.1(a)(iv).
(v) Fifth, any remaining Profits shall be allocated to the Members in accordance with their Participating Percentages.
(b) Losses. Losses shall be allocated among the Members in the following order of priority:
(i) First, to the Members in proportion to and to the extent of the excess, in the case of each Member, of (A) all Profits allocated to such Member pursuant to Section 7.1(a)(v), over (B) all Losses previously allocated to such Member pursuant to this Section 7.1(b)(i).
(ii) Second, to the Members having positive balances in their Capital Accounts in proportion to and to the extent of such positive balances.
(iii) Third, to the Members in accordance with their Participating Percentages.
7.2 Depreciation Recapture. Subject to Section 7.6, if any portion of Profit recognized from the disposition of property by the Company represents the βrecaptureβ of previously allocated deductions by virtue of the application of Code Section 1(h)(1)(D), 1245 or 1250 (βRecapture Gainβ), such Recapture Gain shall be allocated as follows:
(a) First, to the Members in proportion to the lesser of each Memberβs (i) allocable share of the total Profit recognized from the disposition of such property and (ii) share of depreciation or amortization with respect to such property (as determined in the manner provided in Treasury Regulations Sections 1.1245-1(e)(2) and (3)), until each such Member has been allocated Recapture Gain equal to such lesser amount.
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(b) Second, the balance of Recapture Gain shall be allocated among the Members whose allocable shares of total Profit from the disposition of such property exceed their shares of depreciation or amortization with respect to such property (as determined in the manner provided in Treasury Regulations Sections 1.1245-1(e)(2) and (3)), in proportion to their shares of total Profit (including Recapture Gain) from the disposition of such property; provided, however, that no Member shall be allocated Recapture Gain under this Section 7.2 in excess of the total Profit otherwise allocated to such Member from such disposition.
7.3 Allocations with Respect to Transferred Interests. Except as otherwise provided below or unless otherwise required by the provisions of the Code or agreed by the Members, any Profit or Loss allocable to an interest in the Company which has been transferred during any year shall be allocated among the Persons who were holders of such interest during such year in proportion to the number of days during such year that each holder was recognized as the holder of the interest, without regard to the results of Company operations during the period the holder was recognized as the owner thereof.
7.4 Tax Credits. Unless otherwise required by the Code, any tax credits of the Company shall be allocated among the Members in accordance with their Participating Percentages. Any recapture of tax credits shall be allocated among the Members in the same ratio as the applicable tax credits were allocated to the Members.
7.5 Regulatory Allocations.
(a) Minimum Gain Chargeback. Notwithstanding any other provision of this Agreement, if there is a net decrease in Minimum Gain for a Company taxable year, each Member shall be allocated, before any other allocation of Company items for such taxable year, items of gross income and gain for such year (and, if necessary, for subsequent years) in proportion to, and to the extent of, the amount of such Memberβs share of the net decrease in Minimum Gain during such year. The income allocated pursuant to this Section 7.5(a) in any taxable year shall consist first of gains recognized from the disposition of property subject to one or more nonrecourse liabilities of the Company, and any remainder shall consist of a pro rata portion of other items of income or gain of the Company. The allocation otherwise required by this Section 7.5(a) shall not apply to a Member to the extent provided in Treasury Regulation Section 1.704-2(f)(2) through (5).
(b) Qualified Income Offset. Notwithstanding any other provision of this Agreement, if a Member unexpectedly receives an adjustment, allocation or distribution described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6) that causes or increases an Adjusted Capital Account Deficit with respect to such Member, items of Company gross income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate such Adjusted Capital Account Deficit as quickly as possible.
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(c) Gross Income Allocation. If at the end of any Company taxable year, a Member has an Adjusted Capital Account Deficit, such Member shall be specially allocated items of Company income or gain in an amount and manner sufficient to eliminate such deficit Adjusted Capital Account Deficit as quickly as possible.
(d) Nonrecourse Deductions. Any deductions attributable to partnership nonrecourse liabilities (as determined pursuant to Treasury Regulation Section 1.704-2(c)) of the Company for any taxable year shall be allocated among the Members in the same proportion as Profits or Losses (as may apply) for such year are allocated.
(e) Member Nonrecourse Debt. Notwithstanding any other provision of this Agreement, any item of Company Loss, deduction or expenditures described in Code Section 705(a)(2)(B) that is attributable to a partner nonrecourse debt (as defined in Treasury Regulation Section 1.704-2(b)(4)) of a Member shall be allocated to those Members that bear the economic risk of loss for such partner nonrecourse debt, and among such Members in accordance with the ratios in which they share such economic risk, determined in accordance with Treasury Regulation Section 1.704-2(i). If there is a net decrease for a Company taxable year in any partner nonrecourse debt minimum gain of the Company, each Member with a share of such partner nonrecourse debt minimum gain as of the beginning of such year shall be allocated items of gross income and gain in the manner and to the extent provided in Treasury Regulation Section 1.704-2(i)(4).
(f) Interpretation. The foregoing provisions of this Section 7.5 are intended to comply with Treasury Regulation Sections 1.704-1(b) and 1.704-2 and shall be interpreted consistently with this intention. Any terms used in such provisions that are not specifically defined in this Agreement shall have the meaning, if any, given such terms in the Regulations cited above.
7.6 Section 704(c) Allocation. Notwithstanding the foregoing allocations of Profits and Losses, if any property contributed to the Company has a fair market value (as agreed by the Members) that differs from its adjusted basis for federal income tax purposes at the time of such contribution, or if there is a revaluation of any Company property such that the book value of such property differs from its adjusted basis for federal income tax purposes, items of income, gain, loss, and deduction with respect to any such property shall be allocated among the Members so as to take account of such difference, in the manner intended by Section 704(c) of the Code and the Treasury Regulations from time to time promulgated thereunder, using such method permitted by such Treasury Regulations as the Members may determine.
7.7 Allocation of Excess Nonrecourse Liabilities. Solely for the purpose of allocating excess nonrecourse liabilities of the Company among the Members in connection with the determination of the Membersβ adjusted tax bases for their interests in the Company, in accordance with Section 752 of the Code and the Treasury Regulations from time to time promulgated thereunder, the Members agree that each Memberβs interest in Company Profits equals such Memberβs Participating Percentage.
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ARTICLE 8
DISTRIBUTIONS
8.1 Distribution of Net Cash Receipts. Net Cash Receipts, if any, shall be applied and distributed in the following order of priority:
(a) First, to pay principal and unpaid accrued interest on any loans made to the Company by any Member or any Affiliate thereof pursuant to Section 6.4(b), in proportion to the respective amounts of the outstanding principal and accrued interest of such loans.
(b) Second, until each Investor, and if applicable, the other Members to the extent that the other Members make cash capital contributions pursuant to this Agreement, has received distributions of Net Cash Receipts pursuant to this Section 8.1(b) in the amount of its Priority Return, to the Investor (other Members) in proportion to and to the extent of the excess, in the case of each Investor (other Members), of (i) such Investorβs (other Members) Priority Return over (ii) all prior distributions of Net Cash Receipts to such Investor (other Members) pursuant to this Section 8.1(b).
(c) Third, from and after such time as each Investor has received aggregate distributions pursuant to Section 8.1(b) in the amount of such Investorβs Priority Return, Net Cash Receipts shall be distributed to the Members in accordance with their Participating Percentages. To the extent that Net Cash Receipts are available for distribution pursuant to this Section 8.1(c), the Company shall distribute Net Cash Receipts pursuant to this Section 8.1(c) on a quarterly basis in an amount sufficient to distribute to each Member pursuant to this Section 8.1(c) not less than twenty-five percent (25%) of such Memberβs Annual Tax Liability for the immediately preceding fiscal year.
8.2 Timing of Distribution; No Third-Party Beneficiaries. Subject to Section 8.1(c), Net Cash Receipts shall be distributed to the Members in such amounts and at such intervals as the Members, in their sole discretion, may determine, but no less frequently than annually. The foregoing priorities of application of Net Cash Receipts are for the benefit of the Members only and not for the benefit of any third party or creditor of the Company or of any Member and neither the Company nor any Member shall be liable or responsible to any third party or creditor of the Company or of any Member for any deviation from such priorities.
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ARTICLE 9
BOOKS OF ACCOUNT, RECORDS AND REPORTS
9.1 Books of Account and Records.
(a) The Members shall maintain at the principal place of business of the Company all of the following:
(i) a list of the full name and last known business address of each Member setting forth the amount of cash each Member has contributed, a description and statement of the agreed value of any other property or services each Member has contributed or has agreed to contribute in the future, and the date on which each became a Member;
(ii) a copy of the Certificate and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any such instrument was executed;
(iii) copies of the Companyβs federal, state and local income tax returns and reports, if any, for the three most recent years;
(iv) copies of this Agreement and any amendments hereto;
(v) copies of the financial statements, if any, of the Company for the three most recent years; and
(vi) Proper and complete records and books of account for the Company.
Any of the foregoing may be inspected and copied by any Member or its duly authorized representatives, at the expense of such Member, during ordinary business hours.
(b) If a Member reasonably requests the Company to assemble or compile information, the Members shall have the authority to pass on all costs of labor, duplicating or other related charges so incurred to the Member making the request.
9.2 Reports to Members. The Members, at Company expense, shall cause to be furnished to each of the Members as soon as practicable after the end of each calendar year the following:
(a) A copy of the federal income tax return filed by the Company for the calendar year, except for Schedules K-1 applicable to other Members;
(b) All information relative to the Company necessary for the preparation of the Membersβ federal and state income tax returns; and
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(c) A balance sheet as of the close of such calendar year and statements of Profits or Losses, and Net Cash Receipts, if any, all of which shall be prepared in accordance with generally accepted accounting principles or tax accounting principles, with or without audit or review by an independent certified public accountant, in each case in the discretion of the Members.
In addition, the Company shall provide each Member with copies of any additional reports in existence regarding the Company or the Intellectual Property as such Member may reasonably request; provided the information requested does not jeopardize the ability of the Company to obtain foreign patents.
ARTICLE 10
MANAGEMENT OF THE COMPANY
10.1 Management of Company Affairs. Except as otherwise specifically provided in this Agreement, the management of the Company shall be vested in the Members. Except as provided in Section 10.2 or as otherwise specifically provided in this Agreement, all rights and authority granted to the Members under this Agreement or the Act, and all decisions and determinations to be made by the Members may be exercised or made only upon the approval of Members having more than fifty percent (50.0%) of the aggregate Participating Percentages of all Members at such time. Any action (authorized in accordance with this Agreement) taken by a Member (in its capacity as such) shall constitute the act of and serve to bind the Company. Each Member may designate one or more of its employees, agents or Affiliates to carry out its duties and responsibilities to the Company. Persons dealing with the Company shall be entitled to rely conclusively on the power and authority of each Member as set forth in this Agreement. The Members shall not employ, or permit another Person to employ any funds or assets of the Company in any manner other than for the exclusive benefit of the Company. Except as all Members may agree from time to time, the Members shall not be entitled to any fees or other compensation for the performance of their duties as such; provided, however, the Company shall reimburse each Member for all direct costs incurred by such Member, its Affiliates, employees or agents on behalf of the Company or otherwise in connection with performance of the duties of a Member.
10.2 Major Decisions. Notwithstanding the provisions of Section 10.1 or any other provision of this Agreement, the following actions and decisions (βMajor Decisionsβ) by or on behalf of the Company shall require the prior written approval of all Members:
(a) The adoption of Annual Budgets pursuant to Section 10.3.
(b) Any modification or amendment to any Approved Budget.
(c) Any expenditure in excess of one hundred ten percent (110%) of the amount set forth in an Approved Budget for such expenditure.
(d) Any modification or amendment to the License.
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(e) Any sale, sublicense or other grant or disposition of the ownership of or right to use all or any portion of the property of the Company, including the Intellectual Property.
(f) Any decisions relating to applying for or obtaining any patents with respect to any of the Intellectual Property.
(g) The amount and timing of any distributions of Net Cash Receipts other than in accordance with Article 8.
(h) Subject to Section 10.4, any decisions relating to any transaction between the Company and any Member or any Affiliate of any Member.
(i) The borrowing of any funds or other incurrence of any indebtedness which is either (i) secured by any assets of the Company, or (ii) in excess of Twenty Thousand Dollars ($20,000); and any refinancing of or material modification of the terms of any such indebtedness.
(j) Any expenditures or commitments to make expenditures in excess of Thirty Thousand Dollars ($30,000).
(k) The acquisition or lease of any real property.
(1) The issuance of any membership interest in the Company, any options or other rights to acquire any membership interest in the Company, or any other securities convertible into any membership interest in the Company, and any purchase or redemption by the Company of any membership interest in the Company (provided that if any additional membership interests in the Company are issued with the consent of the Members, in no event shall the Participating Percentage of either Investor be reduced).
(m) The employment and the dismissal of any employee of the Company, and any changes in salaries or benefits of any employee of the Company.
(n) Any commitments with respect to pensions, phantom equity or deferred compensation to the Companyβs employees, any bonuses for the Companyβs employees in excess of their base salaries, and any arrangements concerning the private use of vehicles belonging to the Company.
(o) The organization of any subsidiaries of the Company, the investment in any other entity or the acquisition of any equity securities of any other entity.
(p) The merger or consolidation of the Company or any subsidiary of the Company with any other entity.
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(q) Any conversion or reorganization of the Company into any other form of legal entity.
(r) The engagement or termination of any independent contractor, the terms of any such engagement and any material modification to any of the foregoing.
(s) The engagement of any accountant or attorneys on behalf of the Company.
(t) The establishment of or addition to any cash reserve, except to the extent required by any agreement to which the Company is a party.
(u) Any material tax elections or decisions required in the preparation and filing of Company tax returns and any decisions or agreements in connection with any examination or controversy relating to the tax returns or positions of the Company.
(v) The commencement, compromise or settlement of any lawsuit, legal proceeding, bankruptcy proceeding or arbitration proceeding involving the Company or affecting the Intellectual Property.
(w) The decision to dissolve the Company.
(x) Any transaction outside the ordinary course of the day-to-day business of the Company.
10.3 Budgets.
(a) Development Budget. The Members hereby approve and adopt the Corporate Development and Marketing Budget (βDevelopment Budgetβ) attached hereto as Exhibit C. The Development Budget shall constitute an Approved Budget through December 31, 2006.
(b) Annual Budgets. On or before November 1 of each year starting in 2006, NOX shall prepare a preliminary annual budget for the Company for the next calendar year, and shall submit such preliminary annual budget to each Member. Each preliminary annual budget shall set forth reasonably itemized estimates of all revenues, expenses, reserves, capital expenditures and receipts from capital transactions of the Company, as well as any relevant business plans for the Company for the next calendar year. On or before December 1 of each year, the Members, by the written approval of all Members, shall approve and adopt an annual budget for the Company for the next calendar year. Each annual budget described above and approved by all Members is referred to herein as an βAnnual Budgetβ and shall constitute an Approved Budget for the period covered by such Annual Budget. If the Members do not approve an Annual Budget for any calendar year prior to the commencement of such calendar year then, until the Members shall agree upon an Annual Budget for such year, the Annual Budget in effect for the immediately preceding calendar year shall constitute the Annual Budget for such calendar year, except that any items or portion of the preliminary annual budget for
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such calendar year upon which all Members agree shall be substituted for the corresponding items in the preceding yearβs Annual Budget.
(c) Separate Approval Not Required. Any expenditures or other matters set forth in an Approved Budget shall be deemed approved by all Members for purposes of Section 10.2 for the period covered by such Approved Budget, and the separate approval of the Members of any such matters shall not be required.
10.4 Employment of Affiliates. Subject to Section 10.2, the Members may, on behalf and at the expense of the Company, engage any Member or an Affiliate of any Member to render services or provide goods to the Company. Notwithstanding Section 10.2 or any other provision of this Agreement, all decisions relating to any contract or other arrangements between the Company and any Member or any Affiliate of any Member, including the License, shall be made solely by the Members that are not parties to such arrangement and whose Affiliates are not parties to such arrangement (the βOther Membersβ). Any such decision shall require the approval of all of the Other Members if such matter is a Major Decision or the approval of Members having a majority of the Participating Percentages of the Other Members if such matter is not a Major Decision. Such matters shall include any decision to exercise or waive any rights or remedies of the Company under, or to amend or modify, the License or any other contract or arrangement from time to time in effect between the Company and any Member or any Affiliate of any Member.
10.5 Liability of the Members. A Member and its respective Affiliates, agents and employees shall not be liable, responsible or accountable in damages or otherwise to the Company or any of the Members or their successors or assigns for any acts performed or omitted within the scope of his authority as a Member, or otherwise conferred on the Member and such Affiliates, agents and employees by this Agreement, including the execution and delivery of deeds in lieu of foreclosure, provided that such Member or such Affiliates, agents or employees shall action good faith and shall not be guilty of willful misconduct or gross negligence.
10.6 Devotion of Time by Members. Each Member and its agents, Affiliates, employees and agents of Affiliates shall devote such time to the Company business as is reasonably necessary to manage and supervise the Company business and affairs in an efficient manner and to accomplish the purposes of the Company. Each Member and each employee, agent or Affiliate thereof shall be free to engage in other business ventures whether or not directly competing with the Company, or to exploit business opportunities whether or not arising from the conduct of Company business.
10.7 Other Business of Members. Subject to Section 11.8, each Member and its Affiliates may engage in or possess any interests in other business ventures of any kind, independently or with others. Subject to Section 11.8, neither the Company, any Member, nor the holder of any interest in the Company shall have any right by virtue of this Agreement or the relationship created hereby in or to such ventures or activities or to the income or profits derived therefrom, and the pursuit of such ventures, even if competitive with the business of the Company, shall not be deemed wrongful or improper.
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10.8 Tax Matters Partner. AJG, for so long as it shall be a Member, shall be the βtax matters partnerβ (within the meaning of Section 6231 of the Code) of the Company, and as such, subject to Section 10.2, shall have all powers and authorities granted tax matters partners under the applicable provisions of the Code and any regulations promulgated thereunder. All costs and expenses incurred by the tax matters partner in connection with an audit by the Internal Revenue Service or other government tax agency of a Company income tax return shall be borne by the Company.
10.9 Election to Adjust Basis. In the event of a distribution of property made in the manner provided in Section 734 of the Code (or any comparable provision of any succeeding law), or in the event of a transfer of any membership interest in the Company permitted by this Agreement made in the manner provided in Section 743 of the Code, the Members, in their sole discretior, may make or revoke on behalf of the Company the election referred to in Section 754 of the Code permitting adjustments to basis as provided in Sections 734 and 743 of the Code. Any additional costs or expenses incurred by the Company as a result of such an election shall be borne pro rata by the Member or Members benefiting from such an election.
10.10 Company Indemnification of Members. The Company shall indemnify, defend, and hold the Members and their respective Affiliates, officers, directors, employees and agents, on their respective successors, executors, administrators or personal representatives harmless from and against any loss, liability, damage, cost or expense (including reasonable attorneysβ fees) sustained or incurred as a result of any act or omission concerning the business or activities of the Company; provided that the Member or any Affiliate, employee, or agent is not guilty of gross negligence, willful misconduct or violation of fiduciary duty and was acting in good faith within what it reasonably believed to be the scope of its authority for a purpose which it reasonably believed to be not opposed to the best interests of the Company. The foregoing indemnity shall not be enforceable against any Member personally but solely from such Memberβs interest in the Company.
ARTICLE 11
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Member shall cease to be a Member, and if the Company is not then dissolved, then (i) such former Member shall be in breach of this Agreement, and (ii) notwithstanding the terms of Section 18-604 of the Act, such former Member shall not thereby be entitled to receive the fair value of such former Memberβs membership interest in the Company or any other payment or any other distribution except as specifically provided in this Agreement.
11.8 Covenants. Notwithstanding anything contrary herein, each Member covenants as follows:
(i) divulge, furnish, make available or disclose any Confidential Information in any manner to any person, firm, corporation, partnership, limited liability company, association or other entity, except with respect to business of the Company where a Confidentiality Agreement in substantially the form of Exhibit E attached hereto has been obtained for the benefit of the Company;
(ii) use any Confidential Information for itself or for any other Person except as may be necessary in connection with the performance of its duties hereunder; or
(iii) bring to the Companyβs offices nor use, disclose to the Company, or induce the Company to use, any confidential information or documents belonging to a third party.
As used herein, the term βConfidential Informationβ shall mean all information used in or relating to the Intellectual Property or the business of the Company which is not generally known to the competitors of the Company, whether or not a trade secret as defined under applicable law, and which gives an advantage to the Company, including, without limitation, its patents, know-how and other intellectual property, its development plans, designs, specifications, flow charts, processes, formulas, data, all such information relating to the identity of the potential and actual customers of the Company, their respective methods of operation, financial data and pricing policies. Notwithstanding the foregoing, the term βConfidential Informationβ shall not include (i) any information which is or becomes publicly known through no wrongful act of a Member; (ii) any information which is rightfully received by a Member from any third party who is not known by the Member to be bound by any similar restriction; and (iii) any information required to be disclosed by order of a court of competent jurisdiction, administrative body or governmental body, or by subpoena, summons or legal process, or by law, rule or regulation, but only to the extent required by law and after the Member required to make such disclosure has provided to the Company prompt notice of such disclosure, if such notice is permitted by law.
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As used herein, the term βConfidential Restricted Periodβ with respect to each Member shall mean with respect to each particular item of Confidential Information: (a) the period commencing with the date such Member first becomes a Member of the Company and ending three (3) years after such Member ceases to be a Member of the Company if the item of Confidential Information at issue does not constitute a trade secret; or (b) the period commencing with the date such Member first becomes a Member of the Company and continuing indefinitely, if the item of Confidential Information at issue constitutes a trade secret, until such item of Confidential Information at issue ceases to be a trade secret, but in no event ending earlier than three (3) years after such Member ceases to be a Member of the Company.
Each Member shall provide at least the same care to avoid disclosure or unauthorized use of the Confidential Information as it generally provides to protect its own proprietary information, which shall, in all events, equal or exceed a standard and level of care generally recognized as being reasonable for the protection of highly confidential information.
Notwithstanding anything herein to the contrary, each Member (and each employee, representative, or other agent of such Member) may (i) consult any tax advisor regarding the U.S. federal income tax treatment or tax structure of the transaction, and (ii) disclose to any and all persons, without limitation of any kind, the U.S. federal income tax treatment and tax structure of the transaction and all materials of any kind (including opinions or other tax analyses) that are provided to the Member relating to such tax treatment and tax structure. For this purpose, βtax structureβ is limited to any facts relevant to the U.S. federal income tax treatment of the transaction and does not include information relating to the identity of the Members.
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As used herein, the term βInventionsβ shall mean any and all inventions, developments, discoveries, improvements, works of authorship, concepts or ideas or expressions thereof, whether or not subject to patent, copyright, trademark, trade secret protection or other intellectual property right protection, and whether or not reduced to practice, which both (i) relate to or result from any Intellectual Property or the actual or anticipated business, work, research or investigation of the Company, and (ii) are conceived or developed by a Member while such Member has an interest in the Company or within one (1) year following termination of such Memberβs interest in the Company.
The Members agree that the Inventions contemplated by this Section are only those inventions related to the remediation of combusted carbonatious materials.
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ARTICLE 12
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Notwithstanding anything in this Section 12.2 to the contrary, a Member may not assign all or part of its interest in the Company if such assignment would, in the opinion of counsel to the Company, (v) result in a termination of the Company for federal income tax purposes (or the transferring Member and its transferee jointly and severally indemnify the Company and each other Member against any and all loss or cost arising from such termination), (w) result in the Company not qualifying for an exemption from the registration requirements of the federal or any applicable state securities laws, (x) result in the imposition of fiduciary responsibility on the Company, any Member, or any Affiliate of any of the foregoing under ERISA, or (y) result in the violation of any term or provision of any agreement to which the Company is a party or the acceleration of any indebtedness of the Company.
Notwithstanding the right of a Member to transfer all or any portion of its interest to a Permitted Transferee, a Permitted Transferee shall not be admitted as an additional or substituted Member of the Company unless and until the provisions of Section 12.8 are satisfied. Until the provisions of Section 12.8 are satisfied with respect to a Permitted Transferee, such Permitted Transferee shall not be a Member but shall be an assignee having the rights described in Section 1 2.7.
(a) If a Member (the βTransferring Memberβ) shall desire to transfer all or any portion of its interest as a Member of the Company (the βOffered Membership Interestβ) to any Person other than a Permitted Transferee or pursuant to a transaction that has been approved by all of the other Members pursuant to clause (e) of Section 12.1, pursuant to a bona fide written offer (a βThird-Party Offerβ) for the purchase of such interest in exchange for a cash price payable entirely at closing, the Transferring Member shall deliver written notice (the βOffer Noticeβ) to each other Member (the βOfferee Membersβ) setting forth the Participating Percentage that the Transferring Member desires to transfer and a copy of the Third-Party Offer. The Offer Notice shall constitute an offer (the βOfferβ) by the Transferring Member to the Offeree Members to purchase the Offered Membership Interest in exchange for the price and on the terms set forth in the Third-Party Offer. The Offeree Members shall have the right, for a period of thirty (30) days after the Offer Notice is delivered, to accept the Offer in proportion to their Participating Percentages or in such other proportion as they may agree upon. The Offeree Members shall accept the Offer, if at all, by delivering of written notice setting forth such acceptance to the Transferring Member within the 30-day period described above.
(b) If the Offeree Members, in the aggregate, accept the Offer with respect to the entire Offered Membership Interest, the purchase and sale of the Offered Membership Interest shall close not later than sixty (60) days following the expiration of the 30-day period described in Section 12.3(a). At the closing, the Transferring Member shall deliver to those Offeree Members accepting the Offer an assignment of the Offered Membership Interest, free and clear of all liens and encumbrances. At the closing, the Offeree Members purchasing the Offered Membership Interest shall pay to the
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Transferring Member immediately available funds in the aggregate amount of the price set forth in the Third-Party Offer.
(c) If the Offeree Members, in the aggregate, fail to accept the Offer with respect to the entire Offered Membership Interest within the 30-day period described in Section 12.3(a), then the Transferring Member may transfer the Offered Membership Interest to the Person submitting the Third-Party Offer, at the price and on the terms set forth therein, without the consent of any other Member provided that (i) such transfer is completed within one hundred twenty (120) days following the expiration of the 30-day period described in Section 12.3(a); (ii) such transfer complies with the limitations set forth in clauses (v) through (y) of Section 12.2; and (iii) such transfer shall be subject to Article 13, if applicable. Any Person acquiring an interest in the Company pursuant to this Section 12.3(c) shall not be a Member but shall be an assignee having the rights described in Section 12.7, until the provisions of Section 12.8 are satisfied with respect to such Person.
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such interest, would (taking into account any prior transfers or assignments described above and any prior such pledges, encumbrances or collateral assignments) result in such Member being controlled by a Person or Persons other than the Person or Persons that control such Member on the date hereof shall be deemed an assignment of the interest in the Company of such Member and therefore subject to all of the restrictions and provisions of this Article 12.
(a) such admission has been approved in writing by all of the other Members, which approval may be given or withheld in the sole discretion of each Member;
(b) such assignment is made in writing, signed by the assigning Member (or its successor) and accepted in writing by the assignee, and a duplicate original of such assignment has been delivered to each Member;
(c) the Company has received an opinion of counsel as contemplated by Section 12.1 or each Member has waived this requirement; and
(d) the assignee executes and delivers to the Company and each other Member a written agreement in form reasonably satisfactory to all of the other Members, pursuant to which such assignee agrees to be bound by and confirms the obligations, representations and warranties contained in this Agreement.
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(a) the effective date of such assignment shall be the first date that both the written instrument of assignment is received by the other Members and, if required, approved by the other Members; provided that such assignee shall not be admitted as a Member unless and until the approvals and other requirements of Section 12.8 are satisfied;
(b) the Company and the other Members shall be entitled to treat the assignor of the assigned interest as the absolute owner thereof in all respects and shall incur no liability for allocations of Profits or Losses and distributions of Net Cash Receipts or other amounts made in good faith to such assignor until such time as the written instrument of assignment has been actually received by each Member, and recorded in the books of the Company, and, if required, approved by the Members described in Section 12.1; and
(c) any Profits and Losses shall be allocated between the assignor and the assignee of the assigned interest in the manner described in Section 7.3.
ARTICLE 13
If at any time Members owning seventy-five percent (75%) or more of the Participating Percentages (βControlling Membersβ) shall desire to sell 50% or more of their aggregate membership interests in the Company to any third party (other than a Permitted Transferee), and the other Members do not elect to purchase such interests pursuant to Section 12.3, such Controlling Members shall give written notice thereof (a βTag-Along Noticeβ) to each of the other Members (βMinority Membersβ) specifying the Participating Percentage to be sold and the price and terms of such sale. Each Minority Member may elect to participate in any such transaction as an additional selling Member on identical terms and conditions (with the aggregate price to be paid to the Controlling Members and the Minority Members electing to participate in the transaction allocated among them in proportion to the amounts each such Member would receive upon a hypothetical distribution of the aggregate purchase price pursuant to Section 15.4(c) in complete liquidation of the Company), by delivering a written notice thereof (a βTag-Along Election Noticeβ) to the Controlling Members within fifteen (15) days after such
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Minority Memberβs receipt of such Tag-Along Notice, thereby electing to sell in such transaction any portion of its interest in the Company specified in the Tag-Along Election Notice which is less than or equal to the product of (i) the aggregate Participating Percentage which the Controlling Members propose to transfer in such transaction, multiplied by (ii) a fraction, the numerator of which is the Participating Percentage owned by such Minority Member, and the denominator of which is the aggregate Participating Percentage owned by the Controlling Members and all Minority Members electing to participate in such transaction. If Minority Members elect to sell interests pursuant to this Article 13, the aggregate Participating Percentage to be sold or transferred to such third party by the Controlling Members and the Minority Members shall remain constant.
ARTICLE 14
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shown for them on the books of the Company, applied such cash in full payment of all liabilities on the books of the Company, and the amount of such cash not so applied was available for distribution to the Members pursuant to Section 15.4(c) upon liquidation of the Company as of the date of the closing of this buy/sell.
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loans shall be paid in full at the Closing in the same manner as the Reply Price or the Buy/Sell Price (as may apply) is paid. At the Closing, the selling Member (or any Affiliates thereof) shall deliver and endorse without recourse to the purchasing Member each note or other instrument evidencing such loans and all documents securing such loans (including any loans referred to in Section 8.1(a)).
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ARTICLE 15
DISSOLUTION AND LIQUIDATION OF COMPANY
(a) the agreement of the Members pursuant to Section 10.2 to dissolve and wind up the affairs of the Company;
(b) any event that makes it unlawful for the Company business to be continued; or
(c) the sale, disposition, or abandonment of all or substantially all of the non-cash assets of the Company.
The death, retirement, resignation, bankruptcy, court declaration of incompetence, or dissolution of any one or more Members or the occurrence of any other event that terminates the continued membership of any one or more Members (except as provided in the immediately preceding sentence) shall not cause the dissolution of the Company.
(a) first, all of the Companyβs debts and liabilities shall be paid and discharged, except any debts (i) described in Section 8.1, or (ii) that are nonrecourse to the extent that the Members elect not to pay such debts;
(b) second, to establish any reserve which the Members may deem reasonably necessary for any contingent or unforeseen liabilities or obligations of the Company. Such funds may be placed in escrow by the Members for the purposes of disbursing such funds in payment of any of the contingencies, liabilities, or obligations, and, at the
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expiration of such period as the Members shall deem advisable, the balance then remaining shall be distributed pursuant to Section 15.4(c); and
(c) third, to apply and distribute the balance in the manner and priority set forth in Section 8.1.
ARTICLE 16
ARTICLE 17
Any and all notices to be served hereunder shall be in writing and shall be personally delivered, sent by private courier, sent by certified mail, postage prepaid, or sent by facsimile transmission and (a) if intended for the Company, to the Company at the address of the principal place of business of the Company set forth herein, with a copy to each Member or (b) if intended for a Member, to such Member at the address set forth below; or to such other address or facsimile telecopier number as the Members, on behalf of the Company, or a Member, on his own behalf, may designate from time to time in a written notice served upon the Company and each other Member in accordance herewith. Any notice personally delivered shall be deemed delivered on the date actually delivered. Any notice sent by private courier shall be deemed delivered on the date of delivery or rejection of delivery, as shown on the receipt for delivery. Any notice sent by certified mail as provided above shall be deemed delivered on the third (3rd) business day next following the postmark date which it bears. Any notice sent by facsimile
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transmission shall be deemed delivered on the date shown on the evidence of completed transmission. The addresses of the Members are as follows:
NOX: | Xxxxxxx X. Xxxxx 0000 Xxxxxxxxxx Xxxxx Xxxx, Xxxxxxxx 00000 Fax No.: 000-000-0000 | |
AJG: | AJG Coal, Inc. | |
Xxx Xxxxxx Xxxxx Xxxxxx, Xxxxxxxx 00000-0000 Attn: Xxxxx Xxxxxx Fax No.: (000)000-0000 |
ARTICLE 18
18.3 Applicable Law. The Company and this Agreement shall be governed by the laws of the State of Delaware.
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[signature page follows]
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NOX II INTERNATIONAL LTD., an | ||
Ohio limited liability company | ||
By: | /s/ Xxxxxxx X. Xxxxx | |
Name: | Xxxxxxx X. Xxxxx | |
Title: | President |
AJG COAL, INC., a Delaware corporation | ||||
By: | /s/ Xxxxx Xxxxxxxxxx | |||
Name: | Xxxxx Xxxxxxxxxx | |||
Title: | Vice President |
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NOX II INTERNATIONAL LTD., an | ||
Ohio limited liability company | ||
By: | /s/ Xxxxxxx X. Xxxxx | |
Name: | Xxxxxxx X. Xxxxx | |
Title: | Managing Member |
AJG COAL, INC., a Delaware corporation | ||||
By: |
| |||
Name: |
| |||
Title: |
|
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NOX II INTERNATIONAL LTD., an | ||
Ohio limited liability company | ||
By: |
| |
Name: |
| |
Title: |
|
AJG COAL, INC., a Delaware corporation | ||||
By: | /s/ Xxxxx Xxxxxxxxxx | |||
Name: | Xxxxx Xxxxxxxxxx | |||
Title: | Vice President |
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NOX II INTERNATIONAL LTD., an | ||
Ohio limited liability company | ||
By: | /s/ Xxxxxxx X. Xxxxx | |
Name: | Xxxxxxx X. Xxxxx | |
Title: | Managing Member |
AJG COAL, INC., a Delaware corporation | ||||
By: |
| |||
Name: |
| |||
Title: |
|
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NOX II INTERNATIONAL LTD., an | ||
Ohio limited liability company | ||
By: | /s/ Xxxxxxx X. Xxxxx | |
Name: | Xxxxxxx X. Xxxxx | |
Title: | President |
AJG COAL, INC., a Delaware corporation | ||||
By: | /s/ Xxxxx Xxxxxxxxxx | |||
Name: | Xxxxx Xxxxxxxxxx | |||
Title: | Vice President |
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AMENDMENT NO. 1 TO
CHEM-MOD INTERNATIONAL LLC
This Amendment No. 1 (this βAmendmentβ) to the Operating Agreement of Chem-Mod International LLC, a Delaware limited liability company (the βCompanyβ), is entered into as of August 2, 2005 by and between the undersigned members (the βMembersβ) of the Company.
The Members have entered into the Operating Agreement of the Company dated as of July 8, 2005 (the βAgreementβ).
The Members desire to amend the Agreement as set forth herein.
AGREEMENTS
2. Amendment to Agreement. The Agreement is hereby amended as follows:
2.1 The definition of βParticipating Percentageβ located in Section 1.1 of the Agreement is hereby deleted in its entirety and replaced as follows:
Participating Percentage. For each Member, the percentage set forth opposite such Memberβs name below, as adjusted from time to time:
Member | Participating Percentage | |
NOX II INTERNATIONAL, LTD. | 80% | |
AJG | 20% |
2.2 Section 6.2 of the Agreement is hereby deleted in its entirety and replaced as follows:
6.2 Contributions of Cash AJG shall contribute One Million Five Hundred Thousand Dollars ($1,500,000.00) to the company, in cash, in return for its membership interests. Three Hundred Seventy-Five Thousand Dollars ($375,000.00) shall be paid to NOX or its assigns in
exchange for the License and Technology rights obtained herein, and Three Hundred Seventy-Five Thousand Dollars ($375,000.00) shall remain in the Company for use as working capital.
[signature page follows]
NOX II INTERNATIONAL LTD., an Ohio | ||
limited liability company | ||
By: | /s/ Xxxxxxx X. Xxxxx | |
Name: | Xxxxxxx X. Xxxxx | |
Title: | President | |
AJG COAL, INC., a Delaware corporation | ||
By: | /s/ Xxxxx Xxxxxxxxxx | |
Name: | Xxxxx Xxxxxxxxxx | |
Title: | Vice President |