EXHIBIT VIII
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LIMITED LIABILITY COMPANY AGREEMENT
OF
WHITE OWL INVESTORS, L.L.C.
Dated as of January 13, 1998
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Page 53 of 86 Pages
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
ARTICLE II
THE COMPANY AND ITS BUSINESS
2.1 Formation.....................................................................4
2.2 Certificate of Formation......................................................4
2.3 Name..........................................................................4
2.4 Place of Business.............................................................4
2.5 Registered Office and Agent...................................................4
2.6 Purposes......................................................................4
2.7 Title to Property.............................................................5
2.8 Duration......................................................................5
ARTICLE III
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
3.1 Member's Capital..............................................................5
3.2 Limitations on Member's Liability and Return of Capital.......................5
3.3 Capital Accounts..............................................................5
3.4 Member Loans..................................................................6
ARTICLE IV
ALLOCATION OF PROFITS AND LOSSES
4.1 Allocation of Net Profits and Net Loss of the Company.........................6
4.2 Residual Allocations..........................................................7
4.3 Qualified Income Offset.......................................................7
4.4 Minimum Gain Chargeback.......................................................7
4.5 Special Allocations...........................................................7
4.6 Fees to Members or Affiliates.................................................7
4.7 Section 704(c) Allocation.....................................................8
4.8 Distribution in Kind..........................................................8
i Page 54 of 86 Pages
ARTICLE V
DISTRIBUTIONS
5.1 Distributions of Available Cash Flow..........................................8
5.2 Estimated Taxes and Withholding...............................................9
ARTICLE VI
CONTROL AND MANAGEMENT
6.1 Management of the Company.....................................................9
6.2 Authority and Responsibility of the Managers..................................9
6.3 Limitations on Authority of Managers. ......................................11
6.4 Participation by Members. ..................................................11
6.5 Other Activities of Managers or Members......................................12
6.6 Fees and Expenses; Compensation of Managers..................................12
6.7 Liability for Acts and Omissions; Indemnification............................12
6.8 Number, Tenure and Qualifications of Managers................................13
6.9 Resignation of Managers......................................................13
6.10 Removal of a Manager.........................................................13
6.11 Vacancies of Managers........................................................14
6.12 Place of Managers' Meetings..................................................14
6.13 Special Meetings of Managers.................................................14
6.14 Notice of Adjournment........................................................14
6.15 Waiver of Notice.............................................................14
6.16 Action by Managers; Quorum; Voting; Action Without a Meeting.................15
6.17 Meetings by Telephone........................................................15
6.18 Adjournment..................................................................15
6.19 Committees of the Managers...................................................15
ARTICLE VII
MEETINGS OF MEMBERS
7.1 Meetings.....................................................................15
7.2 Place of Meetings............................................................16
7.3 Notice of Meetings...........................................................16
7.4 Record Date..................................................................16
7.5 Quorum.......................................................................16
7.6 Manner of Acting.............................................................16
7.7 Proxies......................................................................16
7.8 Action by Members Without a Meeting..........................................17
7.9 Waiver of Notice.............................................................18
7.10 Voting Agreements............................................................18
ii Page 55 of 86 Pages
ARTICLE VIII
TRANSFERS OF COMPANY INTERESTS
8.1 Investment Representation....................................................18
8.2 Assignment by Members........................................................18
8.3 Void Transfers; Effective Date...............................................19
ARTICLE IX
ACCOUNTING AND RECORDS; CERTAIN TAX MATTERS
9.1 Books and Records............................................................19
9.2 Reports......................................................................20
9.3 Tax Returns..................................................................20
9.4 Section 754 Election.........................................................20
9.5 Tax Matters Partner..........................................................20
9.6 Withholding..................................................................20
9.7 Bank Accounts................................................................21
ARTICLE X
DISSOLUTION AND TERMINATION
10.1 Withdrawal...................................................................21
10.2 Dissolution..................................................................21
10.3 Distribution Upon Liquidation of the Company.................................22
10.4 Capital Account Deficits.....................................................22
10.5 Certificate of Cancellation..................................................23
ARTICLE XI
AMENDMENTS
11.1 Amendments Adopted Solely by the Managers. .................................23
11.2 Amendments to be Adopted by Managers and Members.............................23
ARTICLE XII
VALUATION OF SECURITIES OF XXXXXX
12.1 Normal Valuation.............................................................24
12.2 Legal Restrictions on Transfer...............................................24
12.3 Objection to Valuation.......................................................24
ARTICLE XIII
MISCELLANEOUS
13.1 Notices......................................................................24
13.2 Successors and Assigns.......................................................25
iii Page 56 of 86 Pages
13.3 No Oral Modifications; Amendments............................................25
13.4 Captions.....................................................................25
13.5 Terms........................................................................25
13.6 Invalidity...................................................................25
13.7 Further Assurances...........................................................25
13.8 Complete Agreement...........................................................25
13.9 Attorneys' Fees..............................................................25
13.10 Governing Law................................................................26
13.11 No Third Party Beneficiary...................................................26
13.12 Exhibits and Schedules.......................................................26
13.13 References to this Agreement.................................................26
13.14 Power of Attorney............................................................26
13.15 Reliance on Authority of Person Signing Agreement............................27
13.16 Consents and Approvals.......................................................27
13.17 Xxxxxx Common Stock..........................................................28
Schedule A Members
iv Page 57 of 86 Pages
LIMITED LIABILITY COMPANY AGREEMENT
OF
WHITE OWL INVESTORS, L.L.C.
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This Limited Liability Company Agreement of White Owl Investors,
L.L.C. (the "Company"), dated as of January 13, 1998, is made and entered into
by and among White Owl Capital Partners, a general partnership, as a Member and
the sole initial Manager (the "Managing Member"), and the other Persons listed
on Schedule A hereto, as Members (the "Investor Members"),
W I T N E S S E T H :
In consideration of the mutual agreements made herein, the
Members hereby agree to constitute a limited liability company pursuant to the
Act as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall have the
respective meanings specified in this Article I:
"Accountants" means any firm of independent certified public
accountants as shall be engaged by the Company.
"Act" means the Delaware Limited Liability Company Act, as
amended from time to time.
"Adjusted Capital Account Deficit" means, with respect to any
Member, the deficit balance, if any, in such Member's Capital Account as of the
end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(i) increase such Capital Account by any amounts which such
Member is obligated to contribute to the Company (pursuant to the terms of this
Agreement or otherwise) or is deemed to be obligated to contribute to the
Company pursuant to Treasury Regulations Sections 1.704-2(g) (1) and 1.704-2(i)
(5); and
(ii) reduce such Capital Account by the amount of the items
described in Treasury Regulation Section 1.704-1(b) (2) (ii) (d) (4), (5) and
(6).
"Adjusted Invested Capital" (with respect to each Member) means,
at any time, the sum of all Capital Contributions made by such Member pursuant
to Article III less distributions previously made to that Member pursuant to
Section 5.1 (ii).
Page 58 of 86 Pages
"Affiliate" means, when used with reference to a specified
Person, (i) any Person directly or indirectly controlling, controlled by or
under common control with such Person, (ii) any Person owning or controlling 10%
or more of the outstanding voting interests of such Person, and (iii) any
relative or spouse of such Person.
"Agreement" means this Limited Liability Company Agreement, as
originally executed and as amended from time to time, as the context requires.
"Available Cash Flow" means, with respect to any Fiscal Year or
other period, the sum of all cash receipts of the Company from any and all
sources, less all cash disbursements (including loan repayments, capital
improvements and replacements) and a reasonable allowance for reserves,
contingencies and anticipated obligations as determined by the Managers.
"Bankruptcy" means, with respect to a Person, the occurrence of
any of the following events: (a) the filing by that Person of a petition
commencing a voluntary case in bankruptcy under applicable bankruptcy laws; (b)
entry against that Person of an order for relief under applicable bankruptcy
laws; (c) written admission by that Person of its inability to pay its debts as
they mature, or an assignment by that Person for the benefit of creditors; or
(d) appointment of a receiver for the property or affairs of that Person.
"Capital Account" means, with respect to each Member, an account
determined in accordance with the provisions of Section 3.4 of this Agreement.
"Capital Contribution" means, with respect to each Member, the
total amount of money and fair market value of any property contributed to the
Company by such Member.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Company" means the limited liability company formed under this
Agreement.
"Company Minimum Gain" means the amount determined by computing
with respect to each nonrecourse liability of the Company, the amount of gain
(of whatever character), if any, that would be realized by the Company if it
disposed (in a taxable transaction) of the Company's property subject to such
liability in full satisfaction thereof, and by then aggregating the amounts so
computed as set forth in Treasury Regulation Section 1.704-2(d).
"Fiscal Year" means the fiscal year of the Company as determined
the Managers. As used in this Agreement, a Fiscal Year shall include any partial
Fiscal Year at the beginning and end of the Company term.
"Interest" means a Member's percentage interest in the Company.
"Investor Member" means a Person who or which is listed in
Schedule A hereto and executes a counterpart of this Agreement as an Investor
Member and each Person who or which may hereafter become a party to this
Agreement as a substitute Investor Member.
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"Majority-in-Interest of the Members" means such of the Members
whose Interests equal (at the time of determination) more than 50% of the total
Interests of all Members.
"Managers" means the Managing Member or any other Persons who or
which succeed the Managing Member or are added as Managers pursuant to this
Agreement.
"Member" means the Managing Member and each Person who or which
is listed in Schedule A hereto and executes a counterpart of this Agreement as
an Investor Member and each Person who or which may hereafter become a party to
this Agreement as a substitute Member.
"Net Profits" and "Net Loss" shall mean, for each Fiscal Year or
other period, an amount equal to the Company's taxable income or loss for such
year or period, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:
(a) Any income of the Company that is exempt from Federal income
tax and not otherwise taken into account in computing Net Profits or Net Loss
shall be added to such taxable income or loss; and
(b) Any expenditures of the Company described in Code Section
705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into
account in computing Net Profits or Net Loss shall be subtracted from such
taxable income or loss.
"Person" means an individual, trust, estate, tax-exempt entity,
partnership, joint venture, association, company, corporation, limited liability
company, government or agency thereof, or other entity.
"Xxxxxx" means Xxxxxx Industries, Inc., a Delaware corporation,
or any successor thereto.
"Prime Rate" means the base rate of interest announced from time
to time by Chase Bank, New York, N.Y.
"Priority Return" means, with respect to a Member, an amount
equivalent to the Priority Return Rate, cumulative but not compounded (pro rated
for any partial year), of the amount of the Adjusted Invested Capital of such
Member from time to time, calculated from time to time during the period to
which the Priority Return relates, commencing on the date the Member is admitted
to the Company.
"Priority Return Rate" means six percent (6%) per annum for the
first one-year period to which the Priority Return Relates; nine percent (9%)
for the second one-year period;
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twelve percent (12%) for the third one-year period; fifteen percent (15%) for
the fourth one-year period; and eighteen percent (18%) for the fifth one-year
period.
"Treasury Regulations" means all proposed, temporary and final
regulations promulgated under the Code, as such regulations may be amended from
time to time.
"Two-Thirds-in-Interest of the Members" means such of the Members
whose Interests equal (at the time of determination) more than 66 2/3% of the
total Interests of all Members.
ARTICLE II
THE COMPANY AND ITS BUSINESS
2.1 Formation. The Members hereby form a limited liability
company under and pursuant to the provisions of the Act and upon the terms and
conditions set forth in this Agreement.
2.2 Certificate of Formation. A Certificate of Formation has been
filed in the office of the Delaware Secretary of State in accordance with the
provisions of the Act. The Managers shall take any and all other actions
reasonably necessary to perfect and maintain the status of the Company as a
limited liability company under the Act.
2.3 Name. The name of the Company shall be White Owl Investors,
L.L.C., and all business of the Company shall be conducted in such name.
2.4 Place of Business. The office of the Company shall be located
at such place within or without the State of Delaware as may be determined by
the Managers.
2.5 Registered Office and Agent. The registered office of the
Company in the State of Delaware shall be at 0000 Xxxxxx Xxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000. The registered agent of the Company for service of process
at the address shall be Corporation Service Company. The Company may, upon
compliance with the Act, change the location of its registered office in the
State of Delaware or its registered agent for service of process in the State of
Delaware as the Managers deem appropriate.
2.6 Purposes. The purposes of the Company shall be (i) to invest
in Xxxxxx, an oilfield service and tool rental company, which investment is more
fully described in the Private Placement Memorandum of the Company dated
December 23, 1997, as the same may hereafter be amended, pursuant to which the
membership interests in the Company were offered, and (ii) to enter into any
lawful transaction and engage in any lawful activities in furtherance of or
incidental to the foregoing purposes. The Company shall not engage in any other
activity except as set forth above.
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2.7 Title to Property. All real and personal property owned by
the Company shall be owned by the Company as an entity and, insofar as permitted
by applicable law, no Member shall have any ownership interest in such property
in its individual name or right and each Member's Interest shall be personal
property for all purposes.
2.8 Duration. The Company shall commence as of the date the
Certificate of Formation for the Company is filed in the office of the Delaware
Secretary of State and shall continue for a period of five (5) years thereafter,
unless sooner dissolved or terminated pursuant to statute or any provision of
this Agreement.
ARTICLE III
CAPITAL CONTRIBUTIONS; CAPITAL ACCOUNTS
3.1 Member's Capital. Prior to or upon the execution of this
Agreement, each of the Members shall contribute to the capital of the Company
the sum designated opposite his or its name under the heading "Capital
Contribution" on Schedule A.
3.2 Limitations on Member's Liability and Return of Capital.
Subject to compliance with the other terms of this Agreement, the personal
liability of each Member (in his capacity as a Member) arising out of or in any
manner relating to the Company and its activities and obligations shall be
limited to and shall not exceed the Member's Capital Contributions, except as
provided by the Act. A Member shall not (i) be obligated to lend or advance
funds to the Company for any purpose except as expressly provided in this
Agreement, (ii) be liable for the obligations of any other Member, (iii) be
entitled to the return of his or its Capital Contribution at any fixed time or
upon demand, or (iv) receive any interest on capital.
3.3 Capital Accounts. The Company shall maintain for each Member
a separate Capital Account in accordance with the rules of Treasury Regulations
Section 1.704-1(b). Such Capital Account shall be increased by (i) such Member's
cash contributions, (ii) the agreed fair market value of property contributed by
such Member (net of liabilities secured by such contributed property that the
Company is considered to assume or take subject to under Code Section 752), and
(iii) all items of Company income and gain (including income and gain exempt
from tax) allocated to such Member pursuant to Article IV or other provisions of
this Agreement and decreased by (i) the amount of cash distributed to such
Member, (ii) the agreed fair market value of all actual and deemed distributions
of property made to such Member pursuant to this Agreement (net of liabilities
secured by such distributed property that the Member is considered to assume or
take subject to under Code Section 752), and (iii) all items of Company
deduction and loss allocated to such Member pursuant to Article IV or other
provisions of this Agreement.
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In the event any Member transfers any Interest in accordance with
the terms of this Agreement, the transferee shall succeed to the Capital Account
of the transferor to the extent it relates to the transferred Interest.
The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Treasury Regulations Section 1.704-1(b), and shall be interpreted and
applied in a manner consistent with such Regulations and any amendment or
successor provision thereto.
3.4 Member Loans. In the event that additional funds (in excess
of the Members' agreed Capital Contributions) are required by the Company for
any purpose relating to the business of the Company or for any of its
obligations, expenses, costs, or expenditures, including operating deficits, the
Company may borrow such funds as are needed from any Member or other Person for
such period of time and on such reasonable business terms as the Managers and
the lender may agree and at the rate of interest then prevailing for comparable
loans, or if such loan is from a Member or Affiliate, at an interest rate equal
to the rate at which the lending Member or Affiliate has borrowed such funds,
provided that such rate charged by a Member or Affiliate may not exceed the
Prime Rate plus four percent (4%) per annum. Any security interest in the
property of the Company which is given to any Member or Affiliate shall be
subordinate to any security interest in Company property given by the Company to
any lender who is not a Member or Affiliate of a Member. Loans made under this
Section may be repaid out of Available Cash Flow, but any amount of any such
loan that is outstanding at the time of the occurrence of any of the events
described in Article X shall be repaid as provided in Article X.
ARTICLE IV
ALLOCATION OF PROFITS AND LOSSES
4.1 Allocation of Net Profits and Net Loss of the Company. Except
as otherwise provided in this Article IV, Net Profits and Net Loss of the
Company in each Fiscal Year shall be allocated among the Members as follows:
(a) Net Profits. Net Profits shall be allocated among the Members
as follows:
(i) first, to each of the Members until the cumulative Net
Profits allocated to such Member pursuant to this Section 4.1(a) is equal to the
cumulative Net Loss previously allocated to the Member pursuant to Section
4.1(b);
(ii) second, to the Members until the cumulative Net
Profits allocated to the Members pursuant to this Section 4.1(a)(ii) is equal to
the sum of (A) fifty percent (50%) of such Member's Capital Contribution plus
(B) one hundred percent (100%) of the accrued amount of the Members' Priority
Return; and
-6- Page 63 of 86 Pages
(iii) thereafter, (A) 25% to the Managing Member and (B)
75% to the Members (including the Investor Members and the Managing Member), in
proportion to their Capital Contributions.
(b) Allocation of Net Loss. Except as otherwise provided in this
Article, Net Loss shall be allocated among the Members as follows:
(i) first, in proportion to the positive balances, if any,
in the Members' respective Capital Accounts, until such balances are reduced to
zero; and
(ii) thereafter, to the Members, in proportion to their
Capital Contributions.
4.2 Residual Allocations. Except as otherwise provided in this
Agreement, all items of Company income, gain, loss, deduction, and any other
allocations not otherwise provided for shall be divided among the Members in the
same proportions as they share Net Profits or Net Losses, as the case may be,
for the Fiscal Year.
4.3 Qualified Income Offset. If any Member unexpectedly receives
any adjustments, allocation or distributions described in clauses (4), (5) or
(6) of Treasury Regulations Section 1.704-1(b)(2)(ii)(d), items of Company
income shall be specially allocated to such Member in an amount and manner
sufficient to eliminate the Adjusted Capital Account Deficit created by such
adjustments, allocations or distributions as quickly as possible. This Section
4.3 is intended to constitute a "qualified income offset" within the meaning of
Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(3).
4.4 Minimum Gain Chargeback. If there is a net decrease in
Company Minimum Gain during a Fiscal Year, each Member will be allocated, before
any other allocation under this Article IV, items of income and gain for such
Fiscal Year (and if necessary, subsequent years) in proportion to and to the
extent of an amount equal to such Member's share of the net decrease in Company
Minimum Gain determined in accordance with Treasury Regulations Section
l.704-2(g)(2). This Section 4.4 is intended to comply with, and shall be
interpreted consistently with, the "minimum gain chargeback" provisions of
Treasury Regulations Section l.704-2(f).
4.5 Special Allocations. Any special allocations of items of Net
Profits pursuant to Sections 4.3 and 4.4 shall be taken into account in
computing subsequent allocations of Net Profits pursuant to Section 4.l, so that
the net amount of any items so allocated and the gain, loss and any other item
allocated to each Member pursuant to Section 4.l shall, to the extent possible,
be equal to the net amount that would have been allocated to each such Member
pursuant to the provisions of this Article if such special allocations had not
occurred.
4.6 Fees to Members or Affiliates. Notwithstanding the provisions
of Section 4.l, in the event that any fees, interest, or other amounts paid to
any Member or any Affiliate thereof pursuant to this Agreement or any other
agreement between the Company and any
-7- Page 64 of 86 Pages
Member or Affiliate thereof providing for the payment of such amount, and
deducted by the Company in reliance on Section 707(a) and/or 707(c) of the Code,
are disallowed as deductions to the Company on its federal income tax return and
are treated as Company distributions, then
(i) the Net Profits or Net Loss, as the case may be, for the
Fiscal Year in which such fees, interest, or other amounts were paid shall be
increased or decreased, as the case may be, by the amount of such fees,
interest, or other amounts that are treated as Company distributions; and
(ii) there shall be allocated to the Member to which (or to whose
Affiliate) such fees, interest, or other amounts were paid, prior to the
allocations pursuant to Section 4.l, an amount of gross income for the Fiscal
Year equal to the amount of such fees, interest, or other amounts that are
treated as Company distributions.
4.7 Section 704(c) Allocation. Any item of income, gain, loss,
and deduction with respect to any property (other than cash) that has been
contributed by a Member to the capital of the Company and which is required or
permitted to be allocated to such Member for income tax purposes under Section
704(c) of the Code so as to take into account the variation between the tax
basis of such property and its fair market value at the time of its contribution
shall be allocated to such Member solely for income tax purposes in the manner
so required or permitted.
4.8 Distribution in Kind. If assets of the Company are
distributed in kind, Net Profits and Net Losses shall be allocated as if such
assets had been sold for their fair market value on the date of distribution.
For purposes of this allocation, the fair market value of any securities of
Xxxxxx shall be determined as provided in Article XII hereof and the fair market
value of any other assets shall be determined by the Managers, in their sole and
absolute discretion.
ARTICLE V
DISTRIBUTIONS
5.1 Distributions of Available Cash Flow. Available Cash Flow
shall be distributed as soon as practicable, and securities of Xxxxxx may be
distributed from time to time, to and among the Members as follows:
(i) first, to each of the Members to the extent of its
accrued Priority Return, reduced by any prior distributions made under this
Section 5.1(i);
(ii) second, to each of the Members to the extent of its
Adjusted Invested Capital;
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(iii) third, and to each of the Members to the extent of
fifty percent (50%) its Capital Contribution; and
(iv) thereafter, (A) 25% to the Managing Member and (B)
75% to the Members (including the Investor Members and the Managing Member), in
proportion to their Capital Contributions.
For the purposes hereof, securities of Xxxxxx distributed to the Members shall
be valued in accordance with Article XII hereof.
5.2 Estimated Taxes and Withholding Notwithstanding the
provisions of Section 5.1, distributions of Available Cash Flow with respect to
any Fiscal Year or other applicable period shall be made on a quarterly basis,
based on estimated results of operations through any applicable quarter, to all
Members to pay any required quarterly estimated federal and state income taxes
with respect to any profits of the Company attributable to such Fiscal Year or
other applicable period, assuming that all Members are subject to the highest
marginal federal and New York income tax rates. Distributions on account of
estimated income taxes shall be made at least ten (10) days prior to the due
date of any quarterly estimated tax payment. Any amounts withheld by the Company
with respect to any profits allocated to any Member as required under the Code
or any provision of applicable state and local income tax law shall be treated
as amounts distributed to the Members pursuant to this Article V. To the extent
any distributions under this Section 5.2 exceed the amounts distributable to the
Members under Section 5.1, any such excess shall be deemed to be an interest
free advance to the Members receiving such excess distributions, payable to the
Company from subsequent distributions as made. The foregoing distributions with
respect to federal and state income taxes shall be made even if as of the
applicable period the Company does not have sufficient Available Cash Flow to
cover such distributions.
ARTICLE VI
CONTROL AND MANAGEMENT
6.1 Management of the Company. The overall management and control
of the business and affairs of the Company shall be vested solely in the
Managers, who shall be responsible for the management of the Company's business.
6.2 Authority and Responsibility of the Managers.
(a) Except as expressly provided in this Agreement, all decisions
respecting any matter set forth in this Agreement or otherwise affecting or
arising out of the conduct of the business of the Company shall be made by the
Managers, and the Managers shall have the exclusive right and full authority to
manage, conduct and operate the Company's business. Specifically, but not by way
of limitation, the Managers shall be authorized and responsible,
-9- Page 66 of 86 Pages
subject to the limitations elsewhere set forth in this Agreement, in the name
and on behalf of the Company:
(i) to borrow and lend money and, as security therefor, to
mortgage, pledge or otherwise encumber the assets of the Company;
(ii) to cause to be paid on or before the due date thereof
all amounts due and payable by the Company to any Person, including, without
limitation, to Affiliates of the Managers to the extent permitted under this
Agreement;
(iii) to employ such agents, employees, managers,
accountants, attorneys, consultants and other Persons, (including, without
limitation, itself and its Affiliates to the extent permitted under this
Agreement) necessary or appropriate to carry out the business and affairs of the
Company, and to pay such fees, expenses, salaries, wages and other compensation
to such Persons as it shall, in its sole discretion, determine;
(iv) 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 Company;
(v) to pay any and all fees and to make any and all
expenditures which it, in its sole discretion, deems necessary or appropriate in
connection with the organization of the Company, the management of the affairs
of the Company, and the carrying out of its obligations and responsibilities
under this Agreement;
(vi) to cause to be paid any and all taxes, charges and
assessments that may be levied, assessed or imposed upon any of the assets of
the Company;
(vii) to cause all payments and other income which become
due with respect to the Company's investments to be collected;
(viii) to sign checks and make proper disbursements of
Company funds and to issue receipts for and on behalf of the Company;
(ix) to sell or refinance all or any portion of the
Company's investments;
(x) to enter into the agreements and engage in
transactions with entities and persons with which or whom the Managers are, is
or may be affiliated or with other Persons;
(xi) to make all elections required or permitted to be
made by the Company under the Code, except as provided in Section 9.4; and
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(xii) to assume and exercise all rights, powers, and
responsibilities granted to Managers by the Act and, subject to the limitations
set forth in this Agreement, to do any and all acts and things which shall be in
furtherance of the Company's business as set forth in this Agreement.
(b) With respect to all of its rights, powers and
responsibilities under this Agreement, the Managers are authorized to execute
and deliver, in the name and on behalf of the Company, such notes and other
evidence of indebtedness, contracts, assignments, deeds, leases, loan
agreements, mortgages and other security instruments as it deems proper, all on
such terms and conditions as they deem proper.
6.3 Limitations on Authority of Managers. Notwithstanding
anything to the contrary contained in this Agreement, the Managers shall not
have the authority,
(a) Without the approval of all the Members:
(i) to do any willful act in contravention of this
Agreement;
(ii) to confess a judgment in a material amount against
the Company;
(iii) to convert property of the Company to its own use,
or assign any rights in specific property of the Company for other than a
purpose of the Company;
(iv) to perform any act that would subject the Members
to liability other than as members of a limited liability company in any
jurisdiction;
(v) to pay for any services performed by the Managers
or an Affiliate thereof, except as otherwise permitted in this Agreement;
(vi) to execute or deliver any general assignment for
the benefit of the creditors of the Company; or
(vii) to make any loan to a Manager or its Affiliates; or
(b) without the vote or written consent of a
Majority-in-Interest of the Members:
(i) to admit additional or substitute Members, except
as permitted hereunder; or
(ii) to admit any new Managers, except as permitted
hereunder.
6.4 Participation by Members. No Investor Member shall
participate in or interfere with the management of the Company or the operation
of its business. The exercise by an Investor Member of any of his rights or
powers granted in this Agreement shall not be deemed
-11- Page 68 of 86 Pages
taking part in control of the business of the Company and shall not constitute a
violation of this Section 6.4. No Investor Member shall have any power or
authority to sign for or to bind the Company in any manner or for any purpose
whatsoever. No Investor Member shall have priority over any other Member with
respect to any rights or duties contained in this Agreement, unless expressly
provided for in this Agreement.
6.5 Other Activities of Managers or Members.
(a) The Managers shall not be required to devote their full time
and effort to the affairs of the Company, but shall devote such time and effort
as may reasonably be required to adequately promote the Company's interests.
(b) The parties hereto expressly agree that any Manager or Member
may at any time engage in and possess interests in other business ventures of
any and every nature and description, independently or with others, including,
but not limited to, engaging in activities which parallel or compete with the
business of the Company, and neither the Company nor any Member shall by virtue
of this Agreement have any right, title or interest in or to such independent
activities or to the income or profits derived therefrom.
6.6 Fees and Expenses; Compensation of Managers.
(a) Except as specifically provided in this Agreement, no fees
shall be paid to any Member or Manager by the Company. However, the Managers
(and/or any Affiliate of the Managers, as the case may be) shall be entitled to
receive fees or other compensation from Xxxxxx for services that it may render
to Xxxxxx, and reimbursement for all reasonable out-of-pocket costs and expenses
incurred on behalf of the Company.
(b) Nothing in this Agreement shall be deemed to limit or
restrict the rights of the Managers or any of their Affiliates to contract for
and receive separate fees and benefits, directly or indirectly, as a result of
their interests in any Person which supplies goods or services to, or otherwise
transacts business with the Company or Xxxxxx; provided, however, that the
material terms of any such transaction with the Company shall be (i) disclosed
to each Member or a predecessor in interest in writing at or prior to his or its
admission to the Company, or (ii) approved by a Majority-in-Interest of the
Members, or (iii) not materially less favorable to the Company than those which
would be obtainable from an unrelated party in an arm's-length transaction.
6.7 Liability for Acts and Omissions; Indemnification. The
Managers shall not be liable, responsible, or accountable in damages or
otherwise to any of the Members for, and the Company shall indemnify and save
harmless the Managers from, any loss or damage incurred by any of them by reason
of an act or omission performed or omitted by any of them in good faith on
behalf of the Company and in a manner reasonably believed by any of them to be
within the scope of the authority granted to them by this Agreement and in the
best interests of the Company, except for willful misconduct.
-12- Page 69 of 86 Pages
6.8 Number, Tenure and Qualifications of Managers. The number of
Managers of the Company may be amended from time to time by the vote or written
consent of at least Two-Thirds-in-Interest of the all Members. Each Manager
shall hold office until the next annual meeting of Members or until a successor
shall have been elected and qualified. Managers shall be elected by the vote or
written consent of at least a Majority-in-Interest of the Members and need not
be residents of the State of Delaware or Members of the Company. Notwithstanding
the foregoing, the Managing Member shall be the sole Manager of the Company
until it has resigned or been removed for cause as herein provided.
6.9 Resignation of Managers. Any Manager may resign at any time
by giving written notice to the Company. The resignation of any Manager shall
take effect upon receipt of such notice or at any later time specified in such
notice. Unless otherwise specified in such notice, the acceptance of the
resignation shall not be necessary to make it effective. The resignation of the
Manager who is also a Member shall not affect the Manager's rights as a Member
and shall not constitute a withdrawal as a Member.
6.10 Removal of a Manager.
(a) The Members, at any time, upon the consent of
Two-Thirds-in-Interest of the Members, may remove a Manager for "cause." For
purposes hereof, "cause" means the occurrence of any one or more of the
following acts on the part of the Manager(s):
(1) willful and persistent inattention to the Manager's
duties hereunder;
(2) an act or acts amounting to gross negligence or
willful malfeasance to the material detriment of the Company; or
(3) a material breach of a Manager's obligations and
duties pursuant to this Agreement.
(b) To accomplish removal, the Members shall give notice to the
Manager, who shall have sixty (60) days from such notice to cure the reason or
reasons for such removal, and in the event of such cure he shall remain as a
Manager. If, at the end of sixty (60) days such Manager has not cured the reason
or reasons for such removal, upon a further notice from the Members, the powers
and authorities conferred on such Manager as a Manager under this Agreement
shall cease. If the Manager shall: (i) at or before the expiration of the 60-day
period notify the Members that in his reasonable opinion there is no cause for
such Manager's removal under the standards set forth in this Section 6.10 or
(ii) upon its receipt from the Members of the notice stating he is being
removed, notify the Members that in such Manager's reasonable opinion such
Manager has cured the reason for the proposed removal, then the question of
whether the Manager is to be removed shall be referred to an impartial
arbitrator mutually agreeable to the Manager and the Members, or, failing such
agreement within ten (10) business days, the parties shall apply within fifteen
(15) business days to the American Arbitration Association for appointment of an
independent arbitrator, who, in either case, shall have had no prior dealings
with any Manager or Member. The determination of the arbitrator shall be made
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within sixty (60) business days of the date upon which the arbitrator receives
the question and shall be final, conclusive and binding upon such Manager and
the Members. The costs of the arbitrator shall be borne equally by the Manager
and the Company.
(c) The removed Manager shall have no further right or obligation
to bind or manage the Company. Otherwise, the removal of the Manager shall not
affect any existing rights or obligations of such Manager with respect to the
Company, including such Manager's right to exoneration and indemnification under
Section 6.7 for acts or omissions prior to the date of such removal, or to such
Manager's interest, if any, as a Member in the Company's capital, distributions,
income, gains, losses and deductions.
6.11 Vacancies of Managers. Any vacancy occurring for any reason
in the number of Managers may be filled by the vote or written consent of at
least a majority of the remaining Managers then in office; provided, however,
that if there are no remaining Managers, each vacancy shall be filled by the
vote or written consent of at least a Majority-in-Interest of the Members. A
Manager elected to fill a vacancy shall be elected for the unexpired term of the
Manager's predecessor in office and shall hold office until the expiration of
such term and until the Manager's successor has been elected and qualified. A
Manager chosen to fill a position resulting from an increase in the number of
Managers shall hold office until the next annual meeting of Members and until a
successor has been elected and qualified.
6.12 Place of Managers' Meetings. Regular and special meetings of
the Managers shall be held at any place within or without the State of Delaware
which has been designated from time to time by resolution of the Managers. In
the absence of such designation, all meetings shall be held at the principal
office of the Company.
6.13 Special Meetings of Managers. Special meetings of the
Managers for any purpose or purposes shall be called at any time by any Manager.
Notice of such special meetings, unless waived by attendance thereat or by
written consent to the holding of the meeting, shall be given by written notice
mailed at least ten (10) days before the date of such meeting or be hand
delivered or sent by facsimile at least ten (10) days before the date such
meeting is to be held.
6.14 Notice of Adjournment. Notice of the time and place of
holding an adjourned meeting need not be given to absent Managers if the time
and place be fixed at the meeting adjourned.
6.15 Waiver of Notice. The transactions approved or the actions
taken at any meeting of the Managers, however called and noticed or wherever
held, shall be as valid as though such transactions had been approved or such
other actions taken at a meeting duly held after regular call and notice, if (a)
a quorum be present, and (b) either before or after the meeting, each of the
Managers not present signs a written waiver of notice, or a consent to holding
such meeting, or an approval of the minutes thereof. All such waivers, consents
or approvals shall be filed with the Company records or made a part of the
minutes of the meeting.
-14- Page 71 of 86 Pages
6.16 Action by Managers; Quorum; Voting; Action Without a
Meeting.
(a) A majority of the total number of Managers shall be necessary
to constitute a quorum for the transaction of business, except to adjourn as
hereinafter provided. Every act or decision done or made by a majority of the
Managers present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Company, unless a greater number be required by the
Act. The Managers present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment, notwithstanding the
withdrawal of enough Managers to have less than a quorum.
(b) Each Manager shall have one vote. Any action which under any
provision of this Agreement may be taken at a meeting of the Managers may be
taken without a meeting if authorized by a writing signed by a majority of
Managers who would be entitled to vote upon such action at a meeting, unless the
Agreement requires such action to be taken by the unanimous vote of all of the
Managers, in which case such writing shall be signed by all of the Managers who
would be entitled to vote upon such action at a meeting, in each case filed with
the records of the Company.
6.17 Meetings by Telephone. Managers, or any committee designated
by the Managers, may participate in a meeting of the Managers by means of
conference telephone or similar communications equipment, by means of which all
persons participating in the meeting can hear one another, and such
participation in a meeting shall constitute presence in person at the meeting.
6.18 Adjournment. A majority of the Managers present may adjourn
any Managers' meeting to meet again at a stated day and hour or until the time
fixed for the next regular meeting of the Managers.
6.19 Committees of the Managers. The Managers, by resolution, may
designate from among the Managers one or more committees, each of which shall
comprise one or more of the Managers, and may designate one or more of the
Managers as alternate members of any committee, who may, subject to any
limitations imposed by the Managers, replace absent or disqualified Managers at
any meeting of that committee. Any such committee, to the extent provided in
such resolution, shall have and may exercise all of the authority of the
Managers, subject to the restrictions contained in the Act and hereunder.
ARTICLE VII
MEETINGS OF MEMBERS
7.1 Meetings. Meetings of the Members, for any purpose or
purposes, may be called by any Manager or by any Member or Members holding not
less than twenty percent (20%) of the Members' Interests.
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7.2 Place of Meetings. Meetings of the Members may be held at any
place, within or outside the State of Delaware, for any meeting of the Members
designated in any notice of such meeting. If no such designation is made, the
place of any such meeting shall be the principal office of the Company.
7.3 Notice of Meetings. Written notice stating the place, day and
hour of the meeting indicating that it is being issued by or at the direction of
the person or persons calling the meeting, stating the purpose or purposes for
which the meeting is called shall be delivered no fewer than ten (10) nor more
than sixty (60) days before the date of the meeting.
7.4 Record Date. For the purpose of determining the Members
entitled to notice of or to vote at any meeting of Members or any adjournment of
such meeting, or Members entitled to receive payment of any distribution, or to
make a determination of Members for any other purpose, the date on which notice
of the meeting is mailed or the date on which the resolution declaring a
distribution is adopted, as the case may be, shall be the record date for making
such a determination. When a determination of Members entitled to vote at any
meeting of Members has been made pursuant to this Section, the determination
shall apply to any adjournment of the meeting.
7.5 Quorum. Members holding not less than a majority of all
Members' Interests, represented in person or by proxy, shall constitute a quorum
at any meeting of Members. In the absence of a quorum at any meeting of Members,
a majority of the Members' Interests so represented may adjourn the meeting from
time to time for a period not to exceed sixty (60) days without further notice.
However, if the adjournment is for more than sixty (60) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each Member of record entitled to vote
at such meeting. At an adjourned meeting at which a quorum shall be present or
represented, any business may be transacted that might have been transacted at
the meeting as originally noticed. The Members present at a meeting may continue
to transact business until adjournment, notwithstanding the withdrawal during
the meeting of Members' Interests whose absence results in less than a quorum
being present.
7.6 Manner of Acting. If a quorum is present at any meeting, the
vote or written consent of Members holding not less than a majority of Members'
Interests shall be the act of the Members, unless the vote of a greater or less
proportion or number is otherwise required by the Act or this Agreement.
7.7 Proxies.
(a) A Member may vote in person or by proxy executed in writing
by the Member or by a duly authorized attorney-in-fact.
(b) Every proxy must be signed by the Member or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless
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otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Member executing it, except as otherwise provided in this Section.
(c) The authority of the holder of a proxy to act shall not be
revoked by the incompetence or death of the Member who executed the proxy
unless, before the authority is exercised, written notice of an adjudication of
such incompetence or of such death is received by any Manager.
(d) Except when other provision shall have been made by written
agreement between the parties, the record holder of a Member's Interest which he
or it holds as pledgee or otherwise as security or which belong to another,
shall issue to the pledgor or to such owner of such Member's Interest, upon
demand therefor and payment of necessary expenses thereof, a proxy to vote or
take other action thereon.
(e) A proxy which is entitled "irrevocable proxy" and which
states that it is irrevocable, is irrevocable when it is held by (i) a pledgee,
(ii) a Person who has purchased or agreed to purchase the Member's Interest,
(iii) a creditor or creditors of the corporation who extend or continue credit
to the corporation in consideration of the proxy if the proxy states that it was
given in consideration of such extension or continuation of credit, the amount
thereof, and the name of the person extending or continuing credit, (iv) a
Person who has contracted to perform services for the Company, if a proxy is
required by the contract of employment, if the proxy states that it was given in
consideration of such contract of employment, the name of the employee and the
period of employment contracted for, or (v) a nominee of any of the Persons
described in clauses (i)-(iv) of this sentence.
(f) Notwithstanding a provision in a proxy described in Section
7.7(e)(i), (iii) or (iv) stating that it is irrevocable, the proxy becomes
revocable after the pledge is redeemed, or the debt of the Company is paid, or
the period of employment provided for in the contract of employment has
terminated and, in a case provided for in Section 7.7(e)(iii) or (iv) of this
Agreement, becomes revocable three (3) years after the date of the proxy or at
the end of the period, if any, specified therein, whichever period is less,
unless the period of irrevocability is renewed from time to time by the
execution of a new irrevocable proxy as provided in this Section 7.7. This
paragraph does not affect the duration of a proxy under paragraph (b) of this
Section 7.7.
(g) A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of a Member's Interest without knowledge of the
existence of such proxy.
7.8 Action by Members Without a Meeting.
(a) Whenever the Members of the Company are required or permitted
to take any action by vote, such action may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken shall be signed by the Members who hold the voting
interests having not less than the minimum number of votes that
-17- Page 74 of 86 Pages
would be necessary to authorize or take such action at a meeting at which all of
the Members entitled to vote therein were present and voted and shall be
delivered to the office of the Company, its principal place of business or a
Manager, employee or agent of the Company.
(b) Every written consent shall bear the date of signature of
each Member who signs the consent, and no written consent shall be effective to
take the action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this Section to the
Company, written consents signed by a sufficient number of Members to take the
action are delivered to the office of the Company, its principal place of
business or a Manager, employee or agent of the Company having custody of the
records of the Company.
(c) Prompt notice of the taking of the action without a meeting
by less than unanimous written consent shall be given to each Member who has not
consented in writing but who would have been entitled to vote thereon had such
action been taken at a meeting.
7.9 Waiver of Notice. Notice of a meeting need not be given to
any Member who submits a signed waiver of notice, in person or by proxy, whether
before or after the meeting. The attendance of any Member at a meeting, in
person or by proxy, without protesting prior to the conclusion of the meeting
the lack of notice of such meeting, shall constitute a waiver of notice by him.
7.10 Voting Agreements. An agreement between two or more Members,
if in writing and signed by the parties thereto, may provide that in exercising
any voting rights, the Members' Interest held by them shall be voted as therein
provided, or as they may agree, or as determined in accordance with a procedure
agreed upon by them.
ARTICLE VIII
TRANSFERS OF COMPANY INTERESTS
8.1 Investment Representation.
(a) Each Member represents and warrants that it is acquiring its
Interest for its own account for investment purposes only and not with a view to
the distribution or resale thereof, in whole or in part.
(b) Each Member agrees that he will not sell, assign or otherwise
transfer his Interest or any fraction thereof to any Person who does not
similarly represent and warrant and similarly agree not to sell, assign or
transfer such Interest or fraction thereof to any Person who does not similarly
represent and warrant and agree.
8.2 Assignment by Members. Except as otherwise expressly provided
in this Section 8.2, a Member shall not sell, assign, transfer or encumber all
or any part of his Interest to any other Person, whether or not a Member, unless
the assignment is effected by substitution of the assignee as a Member in
compliance with the following conditions:
-18- Page 75 of 86 Pages
(a) the assignment shall be set forth in a written instrument in
the form and substance acceptable to legal counsel to the Company which (i)
states that the assignee desires to be substituted as a Member and accepts and
adopts all of the terms and provisions of this Agreement, and (ii) provides for
the payment by the parties to the assignment of all reasonable expenses incurred
by the Company in connection with the substitution, including, but not limited
to, the cost of obtaining opinions of legal counsel, preparing the necessary
amendment to this Agreement, the filing of an amendment to the Certificate of
Formation, if required, and all legal fees in connection with any of the
foregoing;
(b) a majority of the Managers that are also Members shall
consent to the assignment, which any Manager/Member may refuse to do with or
without cause; and
(c) if requested by the Managers, the Company shall obtain an
opinion of legal counsel acceptable to the Managers, or shall require the
parties to the assignment to provide to the Company an opinion of legal counsel
acceptable to the Managers, to the effect that (i) the assignment is exempt from
registration and qualification under the Securities Act of 1933, as amended, and
all applicable state securities laws and (ii) the assignment will not cause a
termination of the Company for Federal income tax purposes.
8.3 Void Transfers; Effective Date.
(a) Assignment of a Member's Interest to a minor or person
adjudged insane or incompetent is prohibited (unless by will or intestate
succession), and consent of the Managers to any such assignment shall be void
and of no effect.
(b) Any purported assignment of a Member's Interest otherwise
than by way of substitution in accordance with this Article VIII shall be of no
effect as between the Company and the purported assignee and shall be
unenforceable as against the Company and the Members or the Managers. The
Managers shall not be charged with actual or constructive notice of any such
purported assignment and are expressly prohibited from making allocations and
distributions under this Agreement in accordance with any such purported
assignment.
(c) Any substitution of Members shall (unless otherwise agreed by
the Managers or required by law) become effective for all purposes as of the
first day of the month in which all the conditions of the substitution have been
satisfied. Any Person substituted as a Member pursuant to Section 8.2 shall
(except as otherwise expressly provided in this Agreement) be a Member for all
purposes of this Agreement to the extent of the Interest acquired by that
Person.
ARTICLE IX
ACCOUNTING AND RECORDS; CERTAIN TAX MATTERS
9.1 Books and Records. The Managers shall keep at the Company's
principal office separate books of account for the Company which shall show a
true and accurate record of
-19- Page 76 of 86 Pages
all costs and expenses incurred, all charges made, all credits made and received
and all income derived in connection with the operation of the Company business
in accordance with generally accepted accounting principles consistently
applied.
Each Member shall, at its sole expense, have the right, upon
reasonable notice to the Managers, to examine, copy and audit the Company's
books and records during normal business hours.
9.2 Reports. The Managers, at the expense of the Company, shall
cause to be prepared and distributed to the Members within ninety (90) days
after the expiration of each Fiscal Year, a balance sheet and profit and loss
statement prepared by the Accountants.
9.3 Tax Returns. The Managers shall cause the Accountants to
prepare all income and other tax returns of the Company to be filed not later
than the date when such filings are required by law. The Managers shall furnish
to each Member a copy of each such return as soon as it has been filed, together
with any schedules or other information which each Member may require in
connection with such Member's own tax affairs. Each of the Members shall, in its
respective income tax return and other statements filed with the Internal
Revenue Service or other taxing authority, report taxable income in accordance
with the provisions of this Agreement.
9.4 Section 754 Election. In connection with any assignment or
transfer of an Interest described in Sections 734(b) and 743(b) of the Code and
which is permitted by the terms of this Agreement, the Managers shall in their
reasonable discretion cause the Company, at the written request of the
transferor, the transferee or the successor to such Interest, on behalf of the
Company and at the time and in the manner provided in Treasury Regulations
Section 1.754-1(b) (or any like statute or regulation then in effect) to make an
election to adjust the basis of the Company's property in the manner provided in
Section 755 of the Code provided such adjustment increases the basis of Company
property, and such transferee shall pay all costs incurred by the Company in
connection therewith, including, without limitation, reasonable attorneys' and
accountants' fees.
9.5 Tax Matters Partner. The Managers shall designate one Manager
as the "Tax Matters Partner" under Code Section 6231(a)(7), with all powers
attendant thereto, who shall be authorized and required to represent the Company
(at the Company's expense) in connection with all examinations of the Company's
affairs by tax authorities, including resulting administrative and judicial
proceedings, and to expend Company funds for professional services and costs
associated therewith. Each Member agrees to cooperate with the Managers and the
Tax Matters Partner and to do or refrain from doing any or all things reasonably
required by them to conduct such proceedings. The Managing Member shall be the
initial Tax Matters Partner.
9.6 Withholding. If the Managers, in their reasonable judgment,
determine that the Code requires the Company to withhold any tax with respect to
a Member's distributive share of Company income, gain, loss, deduction or
credit, distributions of Available Cash Flow,
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or liquidating distributions, the Managers shall cause the Company to withhold
and pay the tax. If at any time the amount required to be withheld exceeds the
amount that would otherwise be distributed to the Member to whom the withholding
requirement applies, that Member shall, as a condition to receiving any further
distribution, make an additional Capital Contribution equal to the excess of the
amount required to be withheld (and interest and penalties, if applicable) over
the amount, if any, that would otherwise be distributed to that Member and which
is available to be withheld. Any amount withheld with respect to a Member shall
be deducted from the amount that would otherwise be distributed to that Member
but shall be treated as though it had been distributed to that Member for all
purposes of this Agreement.
9.7 Bank Accounts. The bank accounts of the Company shall be
maintained in such banking institutions as the Managers determine and
withdrawals shall be made only in the regular course of Company business and as
otherwise authorized in this Agreement on such signature or signatures as the
Managers may determine. The funds of the Company shall not be commingled with
the funds of any other person.
ARTICLE X
DISSOLUTION AND TERMINATION
10.1 Withdrawal. Except as otherwise provided in this Agreement,
no Member shall at any time retire or withdraw from the Company or withdraw any
amount out of its Capital Account. Any Member retiring or withdrawing in
contravention of this Section 10.1 shall indemnify, defend and hold harmless the
Company and all other Members (other than a Member who is, at the time of such
withdrawal, in default under this Agreement) from and against any losses,
expenses, judgments, fines, settlements or damages suffered or incurred by the
Company or any such other Member arising out of or resulting from such
retirement or withdrawal.
10.2 Dissolution. The Company shall be dissolved and its business
wound-up upon the earliest to occur of:
(i) the expiration of the term;
(ii) the Managers and a Majority-in-Interest of the Members
determine that the Company should be dissolved;
(iii) the Bankruptcy of the Company;
(iv) the Bankruptcy, dissolution, death, incapacity or withdrawal
of any Manager that is also a Member or the occurrence of any other event that
terminates the continued membership of any such Manager, unless within one
hundred eighty (180) days after such event the Company is continued by the
consent of a Majority-in-Interest of all of the remaining Members; and
-21- Page 78 of 86 Pages
(v) the sale or other disposition of all or substantially all of
the Company's assets.
Except as otherwise set forth herein, upon the dissolution of the
Company, the Managers shall take all actions deemed necessary or appropriate in
their sole discretion to wind-up the business affairs of the Company.
10.3 Distribution Upon Liquidation of the Company. Any proceeds
received by the Company in connection with the liquidation of the Company, or
other distributions made on liquidation (including distributions of securities
of Xxxxxx), shall be distributed (after giving effect to all charges and credits
to Capital Accounts resulting from allocations and prior distributions) as
follows and in the following order or priority:
(a) first, to the payment of debts and liabilities of the Company
to the extent required (including all expenses of the Company incident to any
such liquidation of the Company, other than loans or other debts and liabilities
of the Company due to any Member or any Affiliate of any Member);
(b) second, to the setting up of any reserves which the Managers
deem reasonably necessary for contingent, unmatured or unforeseen liabilities or
obligations of the Company;
(c) third, to the repayment of any unrepaid loans theretofore
made by any Member or any Affiliate of any Member to the Company for Company
obligations, and to the payment of any other debts and liabilities of the
Company to any Member or any Affiliate of any Member;
(d) fourth, to each of the Members to the extent of its accrued
Priority Return, reduced by any prior distributions made under Section 5.1;
(e) fifth, to each of the Members to the extent of its Adjusted
Invested Capital;
(f) sixth, to each of the Members to the extent of fifty percent
(50%) of its Capital Contribution; and
(g) thereafter, (A) 25% to the Managing Member and (B) 75% to the
Members (including the Investor Members and the Managing Member), in proportion
to their Capital Contributions.
For the purposes hereof, securities of Xxxxxx distributed to the Members shall
be valued in accordance with Article XII hereof.
10.4 Capital Account Deficits. If any Member has a deficit
balance in its Capital Account following the liquidation of its Interest, as
determined after taking into account
-22- Page 79 of 86 Pages
all adjustments to such Capital Account for the Fiscal Year of the Company
during which such liquidation occurs (other than those made pursuant to this
Section 10.4), such Member shall have no obligation to make any Capital
Contribution, and the negative balance of any Capital Account shall not be
considered a debt owed by the Member to the Company or to any other Person for
any purpose.
10.5 Certificate of Cancellation. Following the dissolution of
the Company, or at any time there are less than two Members, the Managers shall
file a Certificate of Cancellation with the Secretary of State of Delaware
pursuant to the Act.
ARTICLE XI
AMENDMENTS
11.1 Amendments Adopted Solely by the Managers. The Managers may,
without the consent of any Member, amend any provision of this Agreement and
execute whatever documents may be required in connection therewith to reflect:
(a) a change in the name of the Company or the location of the
principal place of business of the Company;
(b) the admission of a substituted Member in accordance with this
Agreement;
(c) a change which is necessary to qualify the Company under the
laws of any jurisdiction or which is necessary and advisable in the opinion of
the Managers to assure that the Company will not be treated as an association
taxable as a corporation and not as a limited liability company;
(d) a change of address of any Member; or
(e) any other amendment which is ministerial or similar to the
foregoing.
11.2 Amendments to be Adopted by Managers and Members. All
amendments to this Agreement shall be in writing and, except as provided in
Section 11.1, shall be approved by the Managers and by a Majority-in-Interest of
the Members, unless a greater vote or the specific approval of a Member is
required by this Agreement, in which case such greater vote or specific consent
shall be required.
-23- Page 80 of 86 Pages
ARTICLE XII
VALUATION OF SECURITIES OF XXXXXX
12.1 Normal Valuation. For the purposes of this Agreement, the
value of any security of Xxxxxx as of the date of distribution to the Members
(or, in the event such date is a holiday or other day which is not a business
day, as of the next preceding business day) will be determined as follows:
(a) a security which is listed on a recognized securities
exchange or the National Market System will be valued at its last sales price
or, if no sale occurred on such date, at the last "bid" price; and
(b) a security which is traded on the Nasdaq Bulletin Board will
be valued at its last sales price or, if no sale occurred on such date, at the
last "bid" price;
(c) a security which is traded over-the-counter (other than on
the National Market System or the Nasdaq Bulletin Board) will be valued at the
last "bid" price; and
(d) all other securities will be valued on such date by the
Managing Member at fair market value in such manner as it may reasonably
determine.
12.2 Legal Restrictions on Transfer. Any security which is held
under a representation that it has been acquired for investment and not with a
view to public sale or distribution, or which is held subject to any other legal
restrictions, will be valued at such discount, if any, from the value determined
under 12.1 above as the Managing Member deems reasonably necessary in its sole
discretion to reflect properly the effect of such legal restriction on the
marketability of such security.
12.3 Objection to Valuation. If a Majority-in-Interest of the
Members object to the valuation of any security, the Managing Member will (at
the Company's expense) cause an independent securities expert (mutually
acceptable to the Managing Member and a Majority-in-Interest of the Members),
to review such valuation, and such expert's determination will be binding on the
parties.
ARTICLE XIII
MISCELLANEOUS
13.1 Notices. All notices required or permitted by this Agreement
shall be in writing and may be delivered by hand to the party to be served or
may be sent by registered or certified mail, with postage prepaid, return
receipt requested, or may be transmitted by overnight courier service, and
addressed in the case of the Company to 0000 Xxxxxx Xxxx, Xxxxxxxxxx,
-24- Page 81 of 86 Pages
Delaware 19805-1297, with a copy to Xxxxxxx X. Xxxxxxx, Esq., c/x Xxxxxx & Xxxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and in the case of the Members
as set forth on Schedule A hereto, or to such other address as shall from time
to time be supplied in writing by any party to the other. Notice sent by
registered or certified mail, post-paid, with return receipt requested,
addressed as above provided, shall be deemed given four (4) days after deposit
of same in the United States mail. Any notice or other document sent or
delivered in any other manner shall be effective only if and when received.
13.2 Successors and Assigns. Subject to the restrictions on
transfer set forth herein, this Agreement shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, successors and
assigns.
13.3 No Oral Modifications; Amendments. No oral amendment of this
Agreement shall be binding on the Members or the Company. Unless otherwise set
forth hereunder, any modification or amendment of this Agreement must be in
writing signed by all of the Members.
13.4 Captions. Any article, section or paragraph titles or
captions contained in this Agreement and the table of contents are for
convenience of reference only and shall not be deemed a part of this Agreement.
13.5 Terms. Common nouns and pronouns shall be deemed to refer to
the masculine, feminine, neuter, singular and plural, as the identity of the
Person may in the context require. Any references to the Code or other statutes
or laws shall include all amendments, modifications or replacements of the
specific sections and provisions concerned.
13.6 Invalidity. If any provision of this Agreement shall be held
invalid, it shall not affect in any respect whatsoever the validity of the
remainder of this Agreement.
13.7 Further Assurances. The parties hereto agree that they will
cooperate with each other and will execute and deliver or cause to be delivered,
all such other instruments, and will take all such other actions, as either
party hereto may reasonably request from time to time in order to effectuate the
provisions and purposes hereof.
13.8 Complete Agreement. This Agreement constitutes the complete
and exclusive statement of the agreement between the Members. It supersedes all
prior written and oral statements and no representation, statement, condition or
warranty not contained in this Agreement shall be binding on the Members or have
any force or effect whatsoever.
13.9 Attorneys' Fees. If any proceeding is brought by one Member
against one or more of the other Members to enforce, or for breach of, any of
the provisions in this Agreement, the prevailing Member(s) shall be entitled in
such proceeding to recover reasonable attorneys' fees together with the costs of
such proceeding therein incurred.
-25- Page 82 of 86 Pages
13.10 Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware.
13.11 No Third Party Beneficiary. Any agreement to pay any amount
and any assumption of liability herein contained, express or implied, shall be
only for the benefit of the Members and their respective heirs, successors and
assigns, and such agreements and assumption shall not inure to the benefit of
the obligees of any indebtedness or any other Person, whomsoever, it being the
intention of the Members that no one shall be deemed to be a third party
beneficiary of this Agreement.
13.12 Exhibits and Schedules. Each of the Exhibits and Schedules
attached hereto are hereby incorporated herein and made a part hereof for all
purposes, and references herein thereto shall be deemed to include this
reference and incorporation.
13.13 References to this Agreement. Numbered or lettered
articles, sections and subsections herein contained refer to articles, sections
and subsections, respectively, of this Agreement unless otherwise expressly
stated. The words "herein," "hereof," "hereunder," "hereby," "this Agreement"
and other similar references shall be construed to mean and include this
Agreement and all amendments thereof and supplements thereto unless the context
shall clearly indicate or require otherwise.
13.14 Power of Attorney.
(a) Each of the Members and each successor or assign thereof
irrevocably constitutes and appoints each Manager his true and lawful attorney,
in his name, place and xxxxx, to make, execute, acknowledge, swear to and file
any of the following documents:
(i) any modifications or amendments of this Agreement
as required under the laws of the State of Delaware or any other state;
(ii) any modifications or amendments of the Certificate
of Formation or other instrument which may be required to be filed by the
Company under the laws of the State of Delaware or any other state;
(iii) a certificate of fictitious name for the Company;
(iv) any other instrument which may be required to be
filed by the Company under the laws of any state or government or by any
governmental agency, or which the Managers deem it advisable to file; and
(v) any documents which may be required to effect the
continuation of the Company, the admission of an additional or substituted
Member or the dissolution and termination of the Company, provided such
continuation, admission or dissolution and termination are in accordance with
the terms of this Agreement.
-26- Page 83 of 86 Pages
(b) The within and foregoing power of attorney:
(i) is a special power of attorney coupled with an
interest and is irrevocable; and
(ii) may be exercised by any Manager for each Member by
listing all of the Members executing any instrument with a single signature of
the Manager acting as attorney-in-fact for all of them.
(c) Pursuant to the power of attorney hereinabove granted by each
Member to each Manager with the execution of this Agreement, as hereinabove
described, each Member authorizes said attorney to take any further action which
said attorney shall consider necessary or convenient in connection with any of
the foregoing, hereby giving said attorney full power and authority to do and
perform each and every act and thing whatsoever requisite and necessary to be
done in and about the foregoing as fully as said Member might or could do if
personally present, and hereby ratifying and confirming all that said attorney
shall lawfully do or cause to be done by virtue hereof.
13.15 Reliance on Authority of Person Signing Agreement. If a
Member is a trust (with or without disclosed beneficiaries), general
partnership, limited partnership, limited liability company, estate,
corporation, or any entity other than a natural person, the Company and the
Members shall:
(a) not be required to determine the authority of the person
signing this Agreement to make any commitment or undertaking on behalf of such
entity or to determine any fact or circumstance bearing upon the existence of
the authority of such entity or to determine any fact or circumstance bearing
upon the existence of the authority of such person;
(b) not be required to see to the application or distribution of
proceeds paid or credited to persons signing this Agreement on behalf of such
entity;
(c) be entitled to rely on the authority of the person signing
this Agreement with respect to the voting of the Interest of such entity and
with respect to the giving of consent on behalf of such entity in connection
with any matter for which consent is permitted or required under this Agreement;
and
(d) be entitled to rely upon the authority of any general
partner, joint partner, or successor trustee, or president or vice president, as
the case may be, of any such entity the same as if such person were the person
originally signing this Agreement on behalf of such entity.
13.16 Consents and Approvals. Whenever the consent or approval of
a Member is required by this Agreement, such Member shall have the right to give
or withhold such consent or approval in his or its sole discretion, unless
otherwise specified.
-27- Page 84 of 86 Pages
13.17 Xxxxxx Common Stock. Each of the Members agrees, so long as
he is a Member, not to establish or maintain a short position in the Common
Stock of Xxxxxx.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first written above.
MANAGING MEMBER: WHITE OWL CAPITAL PARTNERS
By: /s/ XXXXXXX X. XXXXXXX
_____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Partner
-28- Page 85 of 86 Pages
Investor Member Signature Page
INVESTOR MEMBER:
________________________________________________
(Signature of Investor)
________________________________________________
(Please print name)
________________________________________________
($ Amt. of Investment, at $100,000 per Interest)
Residence Address of Investor (please Mailing Address if different from residence
print): address (please print):
________________________________ ________________________________
(Street) (Street)
________________________________ ________________________________
(City) (State) (Zip Code) (City) (State) (Zip Code)
________________________________ ________________________________
(Telephone Number) (Telephone Number)
-29- Page 86 of 86 Pages
