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EXHIBIT 3.4
XXXXXXXXXXXXXXX.XXX HOLDINGS LLC
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
This Limited Liability Company Operating Agreement (the "Agreement"),
effective as of the 13th day of April, 2000, is entered into by and among the
Persons identified as Members in Schedule A annexed hereto, made a part hereof
and hereby incorporated herein, each (for such period of time as it shall remain
a Member hereunder) referred to individually as a "Member" and collectively as
the "Members."
WHEREAS, XxxxxxxxXxxxxxx.xxx Operations LLC (the "LLC") was formed
pursuant to the Delaware Limited Liability Company Act (the "Act") by the filing
on March 15, 2000 of a Certificate of Formation (as such Certificate may be
amended from time to time, the "Certificate of Formation") in the office of the
Secretary of State of the State of Delaware;
WHEREAS, pursuant to an amendment to the Certificate of Formation filed in
the office of the Secretary of State of the State of Delaware on March 31, 2000,
the name of the LLC was changed to XxxxxxxxXxxxxxx.xxx LLC;
WHEREAS, pursuant to an amendment to the Certificate of Formation filed in
the office of the Secretary of State of the State of Delaware on April 12, 2000,
the name of the LLC was changed to XxxxxxxxXxxxxxx.xxx Holdings LLC; and
WHEREAS, capitalized terms used herein, and not otherwise defined herein,
have the meanings ascribed to them in Appendix I annexed hereto, made a part
hereof and hereby incorporated herein;
NOW, THEREFORE, in consideration of the mutual covenants herein expressed,
the parties hereto agree as follows:
1. Principal Office; Registered Office and Registered Agent. The principal
office of the LLC shall initially be 00 Xxxxx Xxxxx Xxxxxx, Xxxx, XX 00000. The
name and address of the registered agent of the LLC for service of process
pursuant to the Act shall initially be The Corporation Trust Company, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, and the LLC's registered office in
the State of Delaware shall be c/o The Corporation Trust Company, 0000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000. The Board of Managers may, upon compliance
with the applicable provisions of the Act, change the LLC's principal office,
its registered office or registered agent from time to time, all as determined
by the Board of Managers.
2. Purpose. The LLC was formed for the purpose of engaging in any lawful act or
activity for which limited liability companies may be formed under the Act,
including, without limitation, holding membership interests in
XxxxxxxxXxxxxxx.xxx LLC and XxxxxxxxXxxxxxx.xxx Incentive Plan LLC, both
Delaware limited liability companies,
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and engaging in any and all activities necessary, advisable, convenient or
incidental thereto. The LLC shall have all the powers necessary or convenient to
carry out the purposes for which it is formed, including the powers granted by
the Act. Except as otherwise required by the Act or other applicable law, in
connection therewith, the Board of Managers shall have the authority to (i)
exercise all the powers and privileges granted to an LLC by the Act or any other
law or this Agreement, together with any powers incidental thereto, so far as
such powers are necessary or convenient to the conduct, promotion or attainment
of the business, trade, purposes or activities of the LLC in the State of
Delaware or in any other jurisdiction in which the LLC shall conduct business
and (ii) take any other action not prohibited under the Act or other applicable
law; and, except as provided in Section 3(a) hereof, no Member acting in its
capacity as a Member shall have any authority, power or privilege to act on
behalf of or to bind the LLC.
3. Management.
(a) Designation and Removal of Managers. The LLC shall initially have two
managers (each, a "Manager"). For purposes of this Agreement, the term "Board of
Managers" shall mean the Managers of the LLC in the aggregate acting as the
governing body of the LLC. The Managers of the LLC shall initially be Xxxxxx
XxXxxxxx and Xxxxxx Xxxxxxxx. Xx. XxXxxxxx shall have two votes to cast and Xx.
Xxxxxxxx shall have one vote to cast on all matters coming before the Board of
Managers. Additional Managers may be appointed by Consent of the Board of
Managers. No Manager may resign from, retire from, abandon or otherwise
terminate its status as a Manager except upon prior notice to the LLC. Any
vacancy on the Board of Managers may be filled by Consent of the Board of
Managers.
(b) Actions of Board of Managers. Except as otherwise provided in Section
3(a) hereof, all decisions or actions to be made or taken by the Board of
Managers shall require the "Consent of the Board of Managers," which shall mean
the affirmative vote of more than fifty percent (50%) of the votes represented
on the Board of Managers.
(c) Transactions with Affiliates. The Board of Managers may cause the LLC
to enter into one or more agreements, leases, contracts or other arrangements
for the furnishing to or by the LLC of goods, services or space with any Member,
Manager or an Affiliate thereof, and may pay compensation thereunder for such
goods, services or space, provided in each case the Board of Managers has
determined in good faith that the terms of any such arrangements are in, or not
opposed to, the best interests of the LLC.
(d) Power of Managers to Bind the LLC. The signature of any Manager acting
alone on any agreement, contract, instrument or other document shall be
sufficient to bind the LLC in respect thereof and conclusively evidence the
authority of the Board of Managers and the LLC with respect thereto, and no
third party need look to any other evidence or require joinder or consent of any
other party to bind the LLC or to evidence such authority.
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(e) Appointment of Officers and Other Agents. The Board of Managers may
appoint one or more individuals as agents of the LLC with, in each case, such
title and duties and power and authority as the Board of Managers shall
determine from time to time, and such agents may be referred to as officers of
the LLC; provided, however, that no such appointment by the Board of Managers
shall by itself cause any Manager to cease to be a "manager" of the LLC within
the meaning of the Act or this Agreement or restrict the ability of any Manager
to exercise the powers so delegated. Unless the authority of the agent
designated as the officer in question is limited in the document appointing such
officer or is otherwise specified by the Board of Managers, any officer so
appointed shall have the same authority to act for the LLC as a corresponding
officer of a Delaware corporation would have to act for a Delaware corporation
in the absence of a specific delegation of authority.
(f) Standard of Care for Board of Managers. The Managers shall perform
their duties hereunder in good faith and with that degree of care that an
ordinarily prudent Person in a like position would use under similar
circumstances. The Board of Managers shall be entitled to rely, in the
performance of such duties, on information, opinions, reports or statements,
including financial statements, in each case prepared by one or more agents or
employees, counsel, public accountants or other Persons employed by the LLC, as
to matters that such Managers believe to be within such Persons' special
competence.
4. Capital Contributions; Capital Accounts; and Liability of Members.
(a) Capital of Members. The capital contributions that each Member has
made to the LLC on or before the date of this Agreement are set forth on
Schedule A, and the number of Shares owned by such Member is also set forth on
such Schedule A. The Board of Managers shall amend Schedule A from time to time
to properly reflect any changes in the capital contributions made by, or the
number of Shares owned by, the Members.
(b) Additional Capital. No Member shall be obligated to contribute any
additional capital to the LLC.
(c) Capital Accounts. A separate capital account (each, a "Capital
Account") shall be established for each Member and shall be maintained in
accordance with applicable regulations ("Treasury Regulations") under the
Internal Revenue Code of 1986, as amended (the "Code").
(d) Liability of Members. The liability of a Member for the losses, debts
and obligations of the LLC shall be limited to its capital contributions
theretofore made to the LLC by such Member (or its predecessor in interest)
which have not been repaid to or withdrawn by such Member (or its predecessor in
interest) in accordance with the terms of this Agreement. No Member, in its
capacity as a Member, shall have any liability to restore any negative balance
in its Capital Account.
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(e) Admission of Additional Members. Subject to any restrictions or other
applicable procedures imposed by this Agreement (including the Statement of
Designations attached hereto as Appendix II), additional members may be admitted
to the LLC on such terms and conditions as may be specified by the Board of
Managers. In connection with any such admission, including any admission due to
a Transfer of all or part of an interest under Section 8 hereof, Schedule A
shall be amended by the Board of Managers to reflect the inclusion of the
additional Member(s). The Board of Managers is hereby authorized to amend this
Agreement, without the consent of any Member, to provide for additional classes
or groups of members of the LLC having such relative rights, powers and duties
as the Board of Managers shall determine in its sole discretion, including but
not limited to rights, power and duties senior to existing classes or groups of
members.
5. Return of Contributions. No Member shall have the right to withdraw or to be
repaid any capital contributed by it or to receive any other payment in respect
of such Member's interest in the LLC, including without limitation as a result
of the withdrawal or resignation of such Member from the LLC, except as
specifically provided in this Agreement.
6. Distributions.
(a) Statement of Designations Incorporated by Reference. The Statement of
Designations attached hereto as Appendix II (the "Statement of Designations") is
incorporated herein by reference, and its provisions, including without
limitation its provisions regarding distributions with respect to Series A
Preferred Shares, constitute an integral part of this Agreement.
(b) Distributions. Except as otherwise provided in the Statement of
Designations with respect to distributions upon liquidation of the LLC, the
Board of Managers may determine in its sole discretion to cause the LLC to make
distributions of net cash flow available for distribution, less expenses of the
LLC and reasonable reserves, all as determined by the Board of Managers, among
the Members in accordance with the provisions of Section 4 of the Statement of
Designations. All distributions on liquidation of the LLC shall be made in
accordance with the provisions of Section 5 of the Statement of Designations.
(c) Distributions of Cash and Other Property. Except as the Board of
Managers may otherwise determine, all distributions to Members shall be made in
cash. If any assets of the LLC are distributed in kind, such assets shall be
distributed on the basis of their fair market value as determined by the Board
of Managers. Any amounts not distributed upon liquidation of the LLC pursuant to
Section 6(b) hereof on account of expenses and reserves shall serve to reduce
the distributions made to each Member pursuant to Section 6(b) hereof in a
manner reasonably determined by the Board of Managers. Any such reserves as
remain after payment of contingent liabilities shall be distributed to the
Members in the manner in which they served to reduce the distributions thereto.
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(d) Tax Distributions. The Board of Managers shall, to the extent of the
cash then available to the LLC, make a distribution (a "Tax Distribution") to
the Members entitled thereto not later than the date specified below. The LLC
shall make a Tax Distribution prior to the tenth day of April, June, September
and January of each fiscal year in an amount equal to one quarter (1/4) of the
Members' Estimated Tax Liability. For purposes of this Section 6(d), the
"Members' Estimated Tax Liability" means the product of (i) the taxable income
of the LLC for the then current fiscal year (except that the January
distribution shall be for the previous calendar quarter), as projected from time
to time in good faith by the Board of Managers multiplied by (ii) the Tax
Distribution Rate, which amount shall be distributed among the Members pro rata
in proportion to their respective estimated allocable shares of such taxable
income for such year, as so projected; provided, however, that the Tax
Distribution payable to the Members for a fiscal year (or portion thereof) shall
be reduced to reflect net losses and deductions (i.e., the excess of losses and
deductions over income and gains) and credits allocated by the LLC to the
Members generally for federal income tax purposes in any and all earlier periods
(except to the extent previously applied to reduce a Tax Distribution or to the
extent the carryforward period for such losses or credits has expired). For
purposes of this Section 6(d), the "Tax Distribution Rate" shall initially mean
45% or such other percentage as may be approved by the Board of Managers from
time to time as the approximate highest current marginal combined federal and
state income tax rate applicable to an individual resident in Massachusetts
(determined after giving effect to the deduction (if allowable) of state income
taxes for federal income tax purposes). All amounts distributed to Members
pursuant to this Section 6(d) shall be advances of amounts otherwise
distributable to Members under the provisions of Section 6 hereof.
(e) Withholding of Taxes. Each Member hereby authorizes the LLC to
withhold and pay over any withholding or other taxes payable by the LLC as a
result of such Member's status as a Member. Such Member shall be deemed for all
purposes of this Agreement to have received a distribution from the LLC in the
amount and as of the time each such withholding is paid by the LLC.
7. Allocations and Certain Tax Matters.
(a) Allocations of Income, Gain, Deduction and Loss. All items of income,
gain, deduction and loss of the LLC as determined for federal income tax
purposes shall be allocated among the Members, and shall be credited or debited
to their respective Capital Accounts in accordance with Treasury Regulation
Section 1.704-1(b)(2)(iv), so as to ensure to the maximum extent possible that
such allocations satisfy the economic effect equivalence test of Treasury
Regulation Section 1.704-1(b)(2)(ii)(i). In accordance therewith, all items that
can have economic effect shall be allocated in such a manner that the balance of
each Member's Capital Account at the end of any taxable year of the LLC
(increased by the sum of (1) such Member's "share of partnership minimum gain"
as defined in Treasury Regulation Section 1.704-2(g)(1) plus (2) such Member's
"share of partner nonrecourse debt minimum gain" as defined in Treasury
Regulation Section 1.704-2(i)(5)) would be positive in the amount of cash that
such Member would receive if
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the LLC sold all of its assets for an amount of cash equal to the book value (as
determined pursuant Treasury Regulation Section 1.704-1(b)(2)(iv)(g)) of such
assets (reduced, but not below zero, by the amount of nonrecourse debt to which
such property is subject) and all of the cash of the LLC remaining after payment
of all liabilities (other than nonrecourse liabilities) of the LLC were
distributed in liquidation of the LLC immediately following the end of such
taxable year pursuant to Section 6(b) hereof. All items of income, gain,
deduction and loss that cannot have economic effect (including nonrecourse
deductions) shall be allocated in accordance with the Members' interests in the
LLC, which, unless otherwise required by Code Section 704(b) and the Treasury
Regulations thereunder, shall be in proportion to the number of Common Shares
held by each Member (treating all Series A Preferred Shares as having been
converted into Common Shares for purposes of this calculation).
(b) Tax Allocations. Items of income, gain, deduction and loss for
purposes of determining the Members' Capital Accounts (that is, for "book
purposes") shall be determined in accordance with the same principles as such
items are determined for reporting such items on the LLC's federal income tax
return. All items of income, gain, deduction, loss or credit for tax purposes
shall be determined in accordance with the Code and, except to the extent
otherwise required by the Code, allocated to and among the Members in the same
percentages in which the Members share in such items for book purposes.
Notwithstanding the foregoing, if the book value of property differs from its
tax basis, then for the purposes of this Agreement, all determinations of
income, gain, deduction and loss for tax purposes shall be determined with
respect to such book value in accordance with the rules of Treasury Regulation
Section 1.704-1(b)(2)(iv)(g).
(c) Certain Allocations with Respect to Contributed Property. In
accordance with Code Section 704(c) and the Treasury Regulations thereunder,
items of depreciation, amortization, gain, loss, and deduction with respect to
any property contributed to the capital of the LLC shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of such property to the LLC for federal income tax
purposes and its initial book value, such allocation to be made by the Board of
Managers in accordance with the so-called "traditional method with curative
allocations solely in the case of a sale of property" as provided under Treasury
Regulation Section 1.704-3(c)(iii)(B).
(d) Tax Elections. Any elections or other decisions relating to
allocations of income, gain, deduction, loss or credit hereunder or any other
tax elections (including elections under Code Section 754) that must be made at
the LLC level (as opposed to by the LLC's Members) shall be made (or not made)
by the Board of Managers in its sole discretion.
(e) Shares Held During Portion of Taxable Year. For purposes of
determining the income, gain, loss, deduction or credit, or any other items
allocable to any period, such items shall be determined on a daily, monthly, or
other basis, as determined by the Board of Managers using any permissible method
under Code Section 706 and the Treasury Regulations thereunder.
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(f) Consistent Reporting. The Members are aware of the income tax
consequences of the allocations made by this Section 7 and hereby agree to be
bound by the provisions of this Section 7 in reporting their distributive shares
of LLC income and loss for income tax purposes.
8. Restrictions on Transfers of Shares.
(a) Restrictions in General. Prior to the completion of a firm commitment
underwritten initial public offering of equity securities of the LLC or a
successor, without the written consent of the Board of Managers, no Common
Member may Transfer such Member's interest in the LLC or any part thereof, or in
all or any part of the assets of the LLC, and no Common Member may withdraw
from, resign from, retire from, abandon or otherwise terminate its status as a
Member, except as follows:
(1) as a collateral pledge of its economic interest only, to an
institutional lender, and the lender will not have the right to be admitted to
the LLC as a Member; or
(2) to an individual Common Member's family members (or the family
members of any individual who controls an entity that is a Common Member) and
trusts for the benefit of such family members for estate planning purposes or to
a deceased individual Common Member's executor or administrator.
Notwithstanding anything to the contrary herein, no Member shall transfer its
interest in the LLC to the extent that such transfer would violate the
Securities Act of 1933, as amended, or any other federal or state securities or
blue sky laws. Subject to the immediately preceding sentence and Section 8(c)
hereof, Shares held by the Series A Members (including, without limitation,
Common Shares issued upon conversion of Series A Preferred Shares) shall be
freely transferable.
(b) Issuance of Shares. During the term of this Agreement, the LLC shall
not issue any Shares to any Person (other than a Person which is already a
Member hereunder) unless such Person agrees in writing to be bound by all of the
provisions of this Agreement applicable to a Member of the relevant Member
Group.
(c) Market Stand-Off Agreement. No Member shall sell, dispose of,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any interest or other securities of the LLC or any successor-in-interest held by
such Member or, as the case may be, the respective successors, successors in
title, heirs and assigns of each such Member (including the Common Shares), for
a period of time specified by a managing underwriter (not to exceed one hundred
eighty (180) days in the case of any initial public offering and not to exceed
ninety (90) days) in the case of any subsequent public offering) following the
effective date of a registration statement of the LLC or any
successor-in-interest filed under the Securities Act with respect to a firm
commitment
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underwritten public offering. Each Member agrees to execute and deliver such
other agreements as may be reasonably requested by the LLC or any
successor-in-interest thereof and/or the managing underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the LLC or any
successor-in-interest may impose stop-transfer instructions with respect to the
Common Shares until the end of such period.
9. Priorities. No Member shall have any rights or priority over any other
Members as to contributions or as to distributions or compensation by way of
income, except as specifically provided in this Agreement (including the
Statement of Designations).
10. Term; Dissolution of the LLC.
(a) Term. The term of the LLC shall be perpetual, unless sooner terminated
as hereinafter provided.
(b) Events of Dissolution or Liquidation. The LLC shall be dissolved upon
the happening of any of the following events:
(1) the Consent of the Board of Managers;
(2) the sale of all or substantially all of the assets of the LLC;
or
(3) the entry of a decree of judicial dissolution under the Act.
Following any of the foregoing events, the Board of Managers shall proceed
diligently to liquidate the assets of the LLC in a manner consistent with
commercially reasonable business practices.
(c) Distributions upon Liquidation. In connection with the liquidation of
the LLC, the assets of the LLC shall be applied and distributed in the following
order of priority:
(1) to creditors of the LLC, including Members, in the order of
priority provided by law, and the creation of a reserve of cash or other
assets of the LLC for contingent liabilities in an amount, if any,
determined by the Board of Managers to be appropriate for such purposes;
and
(2) to the Members in accordance with the provisions of Section 6.
11. Financial and Accounting Matters.
(a) Books and Records. The Board of Managers shall keep or cause to be
kept complete and accurate books and records of the LLC, using the same methods
of accounting that are used in preparing the federal income tax returns of the
LLC to the extent applicable and otherwise in accordance with generally accepted
accounting
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principles consistently applied. Such books and records shall be maintained and
available, in addition to any documents and information required to be furnished
to the Members under the Act, at the principal business office of the LLC for
examination and copying by any Member or Manager, or its duly authorized
representative, at its reasonable request and at its expense during ordinary
business hours. A current list of the full name and last known address of each
Member and Manager, a copy of this Agreement, any amendments thereto and the
Certificate of Formation, executed copies of all powers of attorney, if any,
pursuant to which this Agreement, any amendment, or the Certificate of Formation
has been executed, copies of the LLC's financial statements and federal, state
and local income tax returns and reports, if any, for each of the last 6 fiscal
years, shall be maintained at the principal business office of the LLC along
with such other information, if any, as may be required to be made available to
Members pursuant to Section 18-305 of the Act. On or before the due date
(including extensions) of the federal income tax return of the LLC for each
fiscal year of the LLC, each Member shall be furnished with copies of the LLC's
federal income tax return for the fiscal year then ended and any other tax
information reasonably required for state or local tax purposes.
(b) Bank Accounts. Bank accounts and/or other accounts of the LLC shall be
maintained in such banking and/or other financial institution(s) as shall be
selected by the Board of Managers, and withdrawals shall be made and other
activity conducted on such signature or signatures as shall be designated by the
Board of Managers.
(c) Fiscal Year. Except as otherwise required by the Code, the fiscal year
(and taxable year) of the LLC shall end on December 31 of each year.
(d) Tax Matters Partner. Xxxxxx Xxxxxxxx shall be the "tax matters
partner" of the LLC for purposes of the Code, until his bankruptcy, insolvency,
resignation or the designation of his successor, whichever occurs sooner. Any
subsequent "tax matters partner" shall be designated from time to time by the
Board of Managers.
12. Indemnity; Other Business.
(a) Indemnity. Each Member, each Manager and any other entity or
individual authorized to act on behalf of the LLC shall be entitled to indemnity
from the LLC for any liability incurred and/or for any act performed within the
scope of the authority conferred, and/or for any act omitted to be performed,
which indemnification shall include all reasonable expenses incurred, including
reasonable legal and other professional fees and expenses; provided, however,
that such Person acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the LLC.
(b) Outside Interests. The Members, the Managers, and any Affiliates of
any of them may engage in and possess interests in other business ventures and
investment opportunities of every kind and description, independently or with
others, including serving as manager and general partner of other limited
liability companies and partnerships; provided, however, that no such other
business venture or investment
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opportunity shall be in direct competition with the business and activities of
the LLC. Neither the LLC nor any other Member or Manager shall have any rights
in or to such ventures or opportunities or the income or profits therefrom.
13. Miscellaneous.
(a) Binding Effect. Subject to the restrictions on Transfers set forth
herein, the terms of this Agreement shall be binding upon and shall inure to the
benefit of the Members, their respective successors, successors-in-title, heirs
and assigns; and each and every successor-in-interest to any Member, whether
such successor acquires a Share by way of inheritance, gift, purchase,
foreclosure or any other method, shall hold such Share subject to all of the
terms and provisions of this Agreement. None of the provisions of this Agreement
shall be for the benefit of or enforceable by any Person not a party hereto who
is a creditor of the LLC (including any Member acting in its capacity as a
creditor of the LLC), or any creditor of any Member.
(b) Amendment. No change, modification or amendment of this Agreement
shall be valid or binding unless such change, modification or amendment is made
with the consent of a Majority in Interest of the Members.
(c) Liquidation upon IPO of XxxxxxxxXxxxxxx.xxx LLC or any Affiliate. Each
Member hereby acknowledges and agrees that, unless determined otherwise by the
Board of Managers, effective upon determination of the Board of Managers in
connection with completion of an initial public offering of equity securities by
a corporate successor to XxxxxxxxXxxxxxx.xxx LLC or any of its Affiliates, the
LLC will be liquidated, without further consent or agreement of any Member, and
the Members will receive shares of capital stock of the corporate successor to
XxxxxxxxXxxxxxx.xxx LLC or such Affiliate having substantially similar
preferences, rights, qualifications and restrictions as pertain to their Shares
immediately prior to such liquidation.
(d) Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and interpreted and enforced in
accordance with the laws of the State of Delaware, notwithstanding any choice of
law rules to the contrary.
(e) Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the Members notwithstanding that all Members have not
signed the same counterpart.
(f) Notices. Any and all notices under this Agreement shall be effective
(i) on the fifth business day after being sent by registered or certified mail,
return receipt requested, postage prepaid, or (ii) on the first business day
after being sent by express mail, telecopy, or commercial expedited delivery
service providing a receipt for delivery. All such notices in order to be
effective shall be addressed, if to the LLC at its registered office under the
Act, if to a Member at the last address of record on the LLC's books, and
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copies of such notices shall also be sent to the last address for the recipient
which is known to the sender, if different from the address so specified. Copies
of such notices shall also be sent to Goulston & Storrs, P.C., 000 Xxxxxxxx
Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxx Xxxxxxxx, Esquire.
(g) Interpretation. As used herein, the singular shall include the plural
and the masculine gender shall include the feminine and neuter, and vice-versa,
unless the context otherwise requires.
(h) Entire Agreement. This Agreement, including all Schedules and
Appendices attached hereto and the Certificate of Formation, which are hereby
incorporated herein, embodies the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings relating to such subject matter.
(i) Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of this
Agreement shall be interpreted as if such provision were so excluded, and (c)
the balance of this Agreement shall be enforceable in accordance with its terms.
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IN WITNESS WHEREOF, the Managers and Members have executed this Agreement
as of the date first above written.
MANAGERS:
/s/ Xxxxxx XxXxxxxx
-------------------------
Xxxxxx XxXxxxxx
/s/ Xxxxxx X. Xxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxx
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MEMBER SIGNATURE PAGES
COMMON MEMBERS:
/s/ Xxxxxx XxXxxxxx
-------------------------
Xxxxxx XxXxxxxx
SERIES A MEMBERS:
/s/ Xxxxxx XxXxxxxx
-------------------------
Xxxxxx XxXxxxxx
/s/ Xxxxx XxXxxxxx
-------------------------
Xxxxx XxXxxxxx
/s/ Xxxxxxx Will
-------------------------
Xxxxxxx Will
/s/ Xxxxxx X. Xxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxx
/s/ Xxx Xxxx
-------------------------
Xxx Xxxx
/s/ Xxxxx Xxxx
-------------------------
Xxxxx Xxxx
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SCHEDULE A
TO
LIMITED LIABILITY COMPANY OPERATING AGREEMENT
OF
XXXXXXXXXXXXXXX.XXX HOLDINGS LLC
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MEMBER CAPITAL CLASS OF SHARES NUMBER OF
CONTRIBUTION SHARES
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Xxxxxx XxXxxxxx $ 0 Common 14,250
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Xxxxxx XxXxxxxx $149,999.50 Series A Preferred 85,714
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Xxxxx XxXxxxxx $149,999.50 Series A Preferred 85,714
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Xxxxxx X. Xxxxxxxx $200,000.00 Series A Preferred 114,286
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Xxx Xxxx $250,000.00 Series A Preferred 142,857
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Xxxxxxx Will $200,000.00 Series A Preferred 114,286
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Xxxxx Xxxx $100,000.00 Series A Preferred 57,143
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TOTAL $ 1,049,999 FULLY DILUTED 614,250
COMMON SHARES
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APPENDIX I
DEFINED TERMS
The following capitalized terms shall have the meanings specified in this
Appendix I. Other capitalized terms are defined in the Statement of Designations
attached hereto as Appendix II, and those terms shall have the meanings
respectively ascribed to them.
"Act" shall have the meaning set forth in the first recital to this
Agreement.
"Affiliate" means, with respect to a specified Person, any other Person
that directly or indirectly controls, is under common control with, or is
controlled by the specified Person. As used herein, the term "control" means the
possession by a Person, directly or indirectly, of the power to direct or cause
the direction of the management and policies of another Person, whether through
ownership of voting securities, by contract or otherwise.
"Agreement" shall have the meaning set forth in the Preamble to this
Agreement.
"Board of Managers" shall have the meaning set forth in Section 3(a).
"Capital Account" shall have the meaning set forth in Section 4(c).
"Certificate of Formation" shall have the meaning set forth in the first
recital to this Agreement.
"Code" shall have the meaning set forth in Section 4(c).
"Common Member" means any holder of Common Shares who is not a Series A
Member.
"Common Shares" means the Shares in the LLC other than Series A Preferred
Shares.
"Consent of the Board of Managers" shall have the meaning set forth in
Section 3(b).
"LLC" shall have the meaning set forth in the first recital to this
Agreement.
"Majority in Interest" means, with respect to any Member Group (or
multiple Member Groups when voting collectively as a single group), more than
fifty percent (50%) of the number of Common Shares owned by all Members of such
Member Group (or such combined Member Groups) in the aggregate. For purposes of
this definition, Series A Members shall be deemed to own the number of Common
Shares into which
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their Series A Preferred Shares are convertible, and the number of such Series A
Members' Series A Preferred Shares shall be disregarded.
"Manager" shall have the meaning set forth in Section 3(a).
"Member" and "Members" shall have the meanings set forth in the
Preamble to this Agreement.
"Member Group" means a group of Members consisting solely of the Common
Members collectively or the Series A Members collectively, as the context may
indicate.
"Members' Estimated Tax Liability" shall have the meaning set forth in
Section 6(d).
"Person" means any natural person or any general partnership, limited
partnership, limited liability partnership, corporation, joint venture, trust,
business trust, cooperative, association, or limited liability company, and
shall include the heirs, executors, administrators, legal representatives,
successors and assigns of such Person where the context so admits.
"Series A Members" means the Members holding Series A Preferred Shares
(and any Common Shares issued upon conversion of Series A Preferred Shares) and
their respective successors and assigns in respect of such Shares. All Series A
Members shall retain their status as such regardless of the conversion of all or
any portion of their Series A Preferred Shares into Common Shares.
"Series A Preferred Shares" means the Series A Convertible Preferred
Shares, having the rights, limitations and preferences established by the
Statement of Designations.
"Shares" means all units of membership interest in the LLC held by each
Member, whether now owned or hereafter acquired. The term "Shares" includes,
collectively, Common Shares and Series A Preferred Shares.
"Statement of Designations" shall have the meaning set forth in Section
6(a).
"Tax Distribution" shall have the meaning set forth in Section 6(d).
"Tax Distribution Rate" shall have the meaning set forth in Section
6(d).
"Transfer" means, when used as a noun, any disposition of Shares or any
interest therein, for value or otherwise, including, without limitation, any
sale, gift, bequest, assignment, pledge or encumbrance, and whether effected by
contract, by operation of law or otherwise. "Transfer," when used as a verb,
shall have a correlative meaning.
"Treasury Regulations" shall have the meaning set forth in Section 4(c).
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APPENDIX II
STATEMENT OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF COMMON SHARES AND SERIES A CONVERTIBLE PREFERRED SHARES OF
XXXXXXXXXXXXXXX.XXX HOLDINGS LLC
This Statement of Designations (the "Statement of Designations")
constitutes an integral part of the Limited Liability Company Operating
Agreement (the "Operating Agreement"), effective as of the April 13, 1999, by
and among the Persons listed as Members on Schedule A of the Operating
Agreement, and any other Person who may be admitted as a Member pursuant to
Section 4(e) thereof, for all purposes as if the Statement of Designations had
been contained in the main section thereof rather than attached thereto as an
Appendix. The following is a statement of the designation and the preferences,
rights, qualifications and restrictions relating to the Common Shares and the
Series A Convertible Preferred Shares:
1. Definitions. All capitalized terms used in this Statement of
Designations, and not otherwise defined herein, shall have the meanings ascribed
to them below. Other capitalized terms shall have the same meanings ascribed to
them in the Operating Agreement. Section references used herein are to Sections
of this Statement of Designations (unless otherwise specified).
(a) "Convertible Securities" shall mean any evidences of
indebtedness, Shares or other securities directly or indirectly convertible into
or exchangeable for Common Shares.
(b) "Conversion Price" shall have the meaning set forth in Section
7(a) hereof.
(c) "Conversion Rights" shall have the meaning set forth in Section
7(a) hereof.
(d) "Equity Securities" means any Share or other similar security of
the LLC, including, without limitation, securities containing equity features
and securities containing profit participation features, and any debt or equity
security convertible or exchangeable, with or without consideration, into or for
any Share or similar security, or any security carrying any warrant, option or
right to subscribe for or to purchase any of the foregoing.
(e) "Mandatory Conversion Date" shall have the meaning set forth in
Section 7(c)(ii) hereof.
(f) "Original Issue Date" shall mean the date on which the first
Series A Preferred Share is originally issued.
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(g) "Public Offering" shall mean an underwritten public offering of
Common Shares of XxxxxxxxXxxxxxx.xxx LLC or any of its Affiliates (including the
LLC) (or common stock of any successor corporation to XxxxxxxxXxxxxxx.xxx LLC or
any such Affiliate), subsequent to which the Common Shares of
XxxxxxxxXxxxxxx.xxx LLC or such Affiliates (or shares of XxxxxxxxXxxxxxx.xxx
LLC's or such Affiliate's successor's common stock) are listed on a national
securities exchange or on the Nasdaq Stock Market pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or any
successor federal statute thereto.
(h) "Security" means Common Shares, Series A Preferred Shares and
any other securities of any type whatsoever convertible or exchangeable for
Equity Securities.
(i) "Series A Liquidation Value" shall have the meaning set forth in
Section 5(a) hereof.
2. Designation. The series of Shares designated hereunder shall be (a) the
"Common Shares" and (b) the "Series A Convertible Preferred Shares."
3. Authorized Number. The number of Common Shares shall be 5,000,000. The
number of Series A Preferred Shares shall be 3,000,000.
4. Distributions.
All distributions made by the LLC with respect to Shares (other than
distributions in liquidation governed by Section 5 hereof) shall be made to all
Members in proportion to the number of Common Shares held by each Member. For
purposes of this Section 4, all Series A Preferred Shares will be deemed to have
been converted into Common Shares.
For purposes of this Section 4, unless the context requires otherwise,
"distribution" shall mean the transfer of cash or property without
consideration, whether by way of distribution or otherwise, payable other than
in Common Shares or other securities of the LLC, or the purchase or redemption
of Shares of the LLC for cash or property, including any such transfer, purchase
or redemption by an Affiliate of the LLC.
5. Liquidation, Dissolution or Winding Up.
(a) Series A Members. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the LLC, the Series A Members shall be
entitled to be paid out of the assets of the LLC available for distribution to
its Members before any payment shall be made to the Common Members, or owners of
any other class or series of Shares, by reason of their ownership thereof, an
amount equal to the greater of (i) $1.75 per Series A Preferred Share (subject
to appropriate adjustment in the event of any Share distribution, Share split,
combination or other similar recapitalization affecting such Shares) (the
"Series A Liquidation Value"), together with an amount equal to an
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annual cumulative distribution of 8%, compounded annually, of the Series A
Liquidation Value, calculated from the Original Issue Date to the date of such
distribution, or (ii) such amount per Share as would have been payable to the
Series A Members had such Series A Preferred Shares (and any other outstanding
Convertible Securities) been converted into Common Shares pursuant to Section 7
hereof immediately prior to such liquidation, dissolution or winding up. If upon
any such liquidation, dissolution or winding up of the LLC, the remaining assets
of the LLC available for distribution to its Members shall be insufficient to
pay the Series A Members the full amount to which they shall be entitled under
clause (i) above, the Series A Members and Members owning any class or series of
Shares ranking on liquidation on a parity with the Series A Preferred Shares
shall share ratably in any distribution of the remaining assets and funds of the
LLC in proportion to the respective amounts that would otherwise be
distributable in respect of the Shares held by them upon such distribution if
all amounts distributable on or with respect to such Shares were paid in full.
(b) Liquidation in Connection with IPO of XxxxxxxxXxxxxxx.xxx LLC or
an Affiliate. For purposes of this Section 5, the liquidation of the LLC
pursuant to Section 13(c) of the Operating Agreement shall not be treated as a
dissolution and liquidation of the LLC.
6. Voting. Except as otherwise provided herein or by law, with respect to
any matter requiring a vote of the Members, each Common Share shall entitle its
owner to cast one vote, and each Series A Preferred Share shall entitle its
owner to cast, with respect to each such matter, a number of votes equal to the
number of whole Common Shares into which such Share shall then be convertible.
7. Conversion of Series A Preferred Shares into Common Shares. The Series
A Members shall have conversion rights, and shall be subject to mandatory
conversion, as follows:
(a) Right to Convert. Each Series A Preferred Share shall be
convertible, at the option of the Series A Member that owns such Share, and
without the payment of additional consideration by such Member, into such number
of Common Shares as is determined by dividing (i) the Series A Liquidation Value
by (ii) the Conversion Price (as defined below) in effect at the time of
conversion. The "Conversion Price" shall initially be $1.75 per Series A
Preferred Share. Such initial Conversion Price, and the rate at which Series A
Preferred Shares may be converted into Common Shares, shall be subject to
adjustment as provided below.
In the event of the liquidation of the LLC or any redemption of
Series A Preferred Shares, the rights of the Series A Members to convert such
Shares as provided in this Section 7 (the "Conversion Rights") shall terminate
at the close of business on (i) the third full business day preceding the date
fixed for the payment of any amounts distributable on liquidation or redemption
to the Series A Members or (ii) any earlier Mandatory Conversion Date.
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(b) Automatic Conversion. Each Series A Preferred Share shall,
without any action required on the part of any Series A Member, automatically be
converted into such number of Common Shares as is determined by dividing (i) the
Series A Liquidation Value by (ii) the Conversion Price in effect at the time of
conversion, upon the occurrence of a Public Offering. Upon such occurrence, any
Member entitled to receive the Common Shares issuable upon conversion of the
Series A Preferred Shares shall not be deemed to have converted such Series A
Preferred Shares until immediately prior to the closing of such Public Offering.
(c) Mechanics of Conversion.
(i) Before any Series A Member shall be entitled to receive Common
Shares issuable upon conversion of Series A Preferred Shares pursuant to Section
7(a) hereof, it shall give written notice to the LLC that it elects to convert
the same and shall state therein its name or the name or names of its nominees
in which it wishes the Common Shares to be issued. The Board of Managers shall,
as soon as practicable after receipt of such notice by the LLC or after
conversion pursuant to Section 7(b) hereof, amend Schedule A of the Operating
Agreement accordingly.
(ii) Voluntary conversions pursuant to Section 7(a) hereof shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the Series A Preferred Shares, and the Person or Persons
entitled to receive the Common Shares issuable upon conversion shall be treated
for all purposes as the record owner or owners of such Common Shares on such
date. Automatic conversions pursuant to Section 7(b) hereof shall be deemed to
have been made on the date (the "Mandatory Conversion Date") and at the time
specified in Section 7(b) hereof and the Person or Persons entitled to receive
the Common Shares issuable upon conversion shall be treated for all purposes as
the record owner or owners of such Common Shares on such date and at such time.
(d) Adjustment for Share Splits and Combinations. If the LLC shall
at any time or from time to time after the Original Issue Date effect a
subdivision of the outstanding Common Shares, the Conversion Price then in
effect with respect to the Series A Preferred Shares immediately before that
subdivision shall be proportionately decreased. If the LLC shall at any time or
from time to time after the Original Issue Date combine the outstanding Common
Shares, the Conversion Price with respect to the Series A Preferred Shares then
in effect immediately before the combination shall be proportionately increased.
Any adjustment under this Section 7(d) shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(e) Adjustment for Certain Distributions. In the event the LLC at
any time or from time to time after the Original Issue Date shall make or issue,
or fix a record date for the determination of Common Members entitled to
receive, a distribution payable in additional Common Shares, then and in each
such event the Conversion Price for the Series A Preferred Shares then in effect
shall be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of
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business on such record date, by multiplying the Conversion Price then in effect
by a fraction:
(1) the numerator of which shall be the total number of Common
Shares issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
(2) the denominator of which shall be the total number of
Common Shares issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date plus
the number of Common Shares issuable in payment of such
distribution;
provided, however, if such record date shall have been fixed and such
distribution is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Conversion Price for the Series A Preferred Shares
shall be recomputed accordingly as of the close of business on such record date,
and thereafter the Conversion Price for the Series A Preferred Shares shall be
adjusted pursuant to this Section 7(e) as of the time of actual payment of such
distributions; and provided further, however, that no such adjustment shall be
made if the Series A Members simultaneously receive a distribution of Common
Shares in a number equal to the number of Common Shares they would have received
if all outstanding Series A Preferred Shares had been converted into Common
Shares on the date of such event.
(f) Adjustments for Other Distributions. In the event the LLC at any
time or from time to time after the Original Issue Date of the Series A
Preferred Shares shall make or issue, or fix a record date for the determination
of Common Members entitled to receive, a distribution payable in Securities of
the LLC other than Common Shares, then, and in each such event, provision shall
be made so that the Series A Members shall receive upon conversion thereof in
addition to the number of Common Shares receivable thereupon, the amount of
Securities of the LLC that they would have received had the Series A Preferred
Shares been converted into Common Shares on the date of such event and had they
thereafter, during the period from the date of such event to and including the
conversion date, retained such Securities receivable by them as aforesaid during
such period, giving application to all adjustments called for during such period
under this Section 7(f) with respect to the rights of the Series A Members; and
provided further, however, that no such adjustment shall be made if the Series A
Members simultaneously receive a distribution of such Securities in an amount
equal to the amount of such securities they would have received if all
outstanding Series A Preferred Shares had been converted into Common Shares on
the date of such event.
(g) Adjustment for Reclassification, Exchange or Substitution. If
the Common Shares shall be changed into the same or a different number of Shares
of any class or classes of Shares, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or combination of
Shares or distribution of Shares provided for above, or a reorganization,
merger, consolidation, or sale of assets provided for below), then, and in each
such event, the Series A Members shall have the right thereafter to
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convert such Common Shares into the kind and amount of Shares and other
securities and property receivable upon such reorganization, reclassification,
or other change, as would be received by owners of the number of Common Shares
into which such Series A Preferred Shares might have been converted immediately
prior to such reorganization, reclassification, or change, all subject to
further adjustment as provided herein.
(h) Adjustment for Merger or Reorganization, Etc. In case of any
consolidation or merger of the LLC with or into another entity or the sale of
all or substantially all of the assets of the LLC to another entity, each Series
A Preferred Share shall thereafter be convertible (or shall be converted into a
security which shall be convertible) into the kind and amount of Shares or other
securities or property to which an owner of the number of Common Shares
deliverable upon conversion of such Series A Preferred Share would have been
entitled upon such consolidation, merger or sale; and, in such case, appropriate
adjustment (as determined in good faith by the Board of Managers) shall be made
in the application of the provisions set forth in this Section 7 with respect to
the rights and interest thereafter of the Series A Members, to the end that the
provisions set forth in this Section 7 (including provisions with respect to
changes in and other adjustments of the Conversion Price applicable to such
Series A Preferred Shares) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any Shares or other property thereafter
deliverable upon the conversion of the Series A Preferred Shares.
(i) No Impairment. The LLC will not, by amendment of its Certificate
of Formation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of Securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the LLC, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 7 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the Series A Members against impairment.
(j) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price applicable to any Series A
Preferred Shares pursuant to this Section 7, the LLC at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Series A Member a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The LLC shall, upon the written request at
any time of any Series A Member, furnish or cause to be furnished to such Member
a similar certificate setting forth (i) such adjustments and readjustments, (ii)
the Conversion Price applicable to the Series A Preferred Shares then in effect,
and (iii) the number of Common Shares and the amount, if any, of other property
which then would be received upon the conversion of a Series A Preferred Share.
(k) Notice of Record Date. In the event:
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(i) that the LLC makes a distribution with respect to its Common
Shares payable in Common Shares or other Securities of the LLC;
(ii) that the LLC subdivides or combines its outstanding Common
Shares;
(iii) of any reclassification of the Common Shares of the LLC (other
than a subdivision or combination of its outstanding Common Shares
or a distribution of Shares with respect to Common Shares), or of
any consolidation or merger of the LLC into or with another entity,
or of the sale of all or substantially all of the assets of the LLC;
or
(iv) of the involuntary or voluntary dissolution, liquidation or
winding up of the LLC;
then the LLC shall cause to be filed at its principal office or at the office of
the transfer agent of Series A Preferred Shares, and shall cause to be mailed to
the Members at their last known addresses as shown on the records of the LLC or
such transfer agent, at least ten days prior to the date specified in (1) below
or twenty days before the date specified in (2) below, a notice stating:
(1) the record date of such distribution, subdivision or
combination, or, if a record is not to be taken, the date as of which the
Common Members of record to be entitled to such distribution, subdivision
or combination are to be determined, or
(2) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that Common Members of
record shall be entitled to exchange their Common Shares for securities or
other property deliverable upon such reclassification, consolidation,
merger, sale, dissolution or winding up.
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