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EXHIBIT 3.2
LIMITED LIABILITY COMPANY AGREEMENT
OF
JCM PARTNERS, LLC
(A DELAWARE LIMITED LIABILITY COMPANY)
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TABLE OF CONTENTS
PAGE
ARTICLE 1 DEFINITIONS....................................................................................1
ARTICLE 2 THE COMPANY....................................................................................9
2.1. FORMATION......................................................................................9
2.2. COMPANY NAME..................................................................................10
2.3. THE CERTIFICATE...............................................................................10
2.4. PRINCIPAL PLACE OF BUSINESS...................................................................10
2.5. REGISTERED OFFICE AND REGISTERED AGENT........................................................10
2.6. PURPOSES......................................................................................10
2.7. POWERS........................................................................................10
2.8. EFFECTIVENESS OF THIS AGREEMENT...............................................................11
ARTICLE 3 CLASSES OF UNITS; ADMISSIONS OF MEMBERS; CAPITALIZATION.......................................11
3.1. CLASSES OF UNITS..............................................................................11
3.2. MEMBERS.......................................................................................12
3.3. CAPITAL ACCOUNTS..............................................................................13
3.4. TRANSFER OF CAPITAL ACCOUNTS..................................................................14
3.5. TAX MATTERS PARTNER...........................................................................14
ARTICLE 4 ALLOCATIONS...................................................................................15
4.1. ALLOCATION PROCEDURES.........................................................................15
4.2. ALLOCATIONS OF PROFITS AND LOSSES.............................................................15
4.3. SPECIAL ALLOCATIONS...........................................................................15
4.4. TAX ALLOCATIONS AND OTHER MATTERS.............................................................17
ARTICLE 5 DISTRIBUTIONS, REDEMPTIONS AND PUT OPTION.....................................................18
5.1. DISTRIBUTIONS OF CASH GENERALLY...............................................................18
5.2. DISTRIBUTIONS IN LIQUIDATION OF PREFERRED UNITS...............................................18
5.3. MANDATORY DISTRIBUTIONS TO COMMON UNIT HOLDERS................................................20
5.4. DISTRIBUTIONS RELATING TO LIQUIDATION EVENTS..................................................21
5.5. PRIORITY......................................................................................21
5.6. WITHHOLDING...................................................................................21
5.7. DISTRIBUTION LIMITATION.......................................................................22
5.8. COMMON UNIT HOLDER PUT OPTION.................................................................22
ARTICLE 6 MEMBERS.......................................................................................23
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TABLE OF CONTENTS
(CONTINUED)
PAGE
6.1. LIMITED LIABILITY.............................................................................23
6.2. VOTING RIGHTS OF MEMBERS; AUTHORITY OF BOARD OF MANAGERS......................................23
ARTICLE 7 MANAGERS AND OFFICERS.........................................................................25
7.1. GENERAL POWERS OF MANAGERS....................................................................25
7.2. NUMBER AND TERM OF OFFICE OF MANAGERS.........................................................26
7.3. OFFICERS......................................................................................26
ARTICLE 8 LIMITATIONS ON LIABILITY AND INDEMNIFICATION..................................................26
ARTICLE 9 TRANSFERS OF INTERESTS; ADMISSION OF NEW MEMBERS..............................................27
9.1. TRANSFERS GENERALLY...........................................................................27
9.2. REGISTRATION AND TRANSFER OF MEMBERSHIP INTERESTS.............................................27
9.3. RESTRICTIONS ON TRANSFERS.....................................................................29
9.4. ADMISSION OF SUBSTITUTED MEMBER...............................................................29
9.5. LENDER OWNERSHIP LIMIT........................................................................30
ARTICLE 10 DISSOLUTION AND TERMINATION...................................................................31
10.1. EVENTS OF DISSOLUTION.........................................................................31
10.2. APPLICATION OF ASSETS.........................................................................32
10.3. GAIN OR LOSSES IN PROCESS OF LIQUIDATION......................................................32
10.4. PROCEDURAL AND OTHER MATTERS..................................................................32
ARTICLE 11 APPOINTMENT OF ATTORNEY-IN-FACT...............................................................32
11.1. APPOINTMENT AND POWERS........................................................................32
11.2. PRESUMPTION OF AUTHORITY......................................................................33
ARTICLE 12 MISCELLANEOUS PROVISIONS......................................................................33
12.1. NOTICES.......................................................................................33
12.2. WORD MEANINGS.................................................................................33
12.3. BINDING PROVISIONS............................................................................34
12.4. AMENDMENT, MODIFICATION, AND INTERPRETATION...................................................34
12.5. WAIVER........................................................................................34
12.6. APPLICABLE LAW................................................................................34
12.7. SEVERABILITY OF PROVISIONS....................................................................34
12.8. HEADINGS......................................................................................34
12.9. FURTHER ASSURANCES............................................................................34
12.10. COUNTERPARTS..................................................................................35
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TABLE OF CONTENTS
(CONTINUED)
PAGE
12.11. ENTIRE AGREEMENT..............................................................................35
12.12. ARBITRATION...................................................................................35
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LIMITED LIABILITY COMPANY AGREEMENT
OF
JCM PARTNERS, LLC
(a Delaware limited liability company)
This Limited Liability Company Agreement (this "AGREEMENT") of JCM
Partners, LLC, a Delaware limited liability company (the "COMPANY"), dated as of
the Effective Date and as amended on September 13, 2000, is entered into by and
among those Persons who shall become the initial Members of the Company pursuant
to the terms of the Order (the "INITIAL MEMBERS") and those Persons who
hereafter become Members pursuant to the terms of this Agreement.
In consideration of the mutual covenants and obligations set forth in
this Agreement, and other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending legally
to be bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings set
forth above in the preamble or referred to below, except as otherwise expressly
indicated or limited by the context in which they appear in this Agreement. All
terms defined in this Article 1 or in the preamble to this Agreement in the
singular have the same meanings when used in the plural and vice versa.
1.1. "ACT" means the Delaware Limited Liability Company Act, Del. Code
Xxx. Tit. 6, Sections 18-101 et seq., as amended from time to time.
1.2. "ADDITIONAL MEMBER" means a Person admitted to the Company as a
Member pursuant to Section 3.2(b) and Section 3.2(c) and who is shown as such on
the books and records of the Company.
1.3. "ADJUSTED CAPITAL ACCOUNT DEFICIT" means with respect to any
Member, the negative balance, if any, in such Member's Capital Account as of the
end of any relevant Fiscal Year, determined after giving effect to the following
adjustments:
(a) Credit to such Capital Account any portion of such negative
balance which such Member is deemed obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Treasury Regulations; and
(b) Debit to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) of the Treasury Regulations.
1.4. "AFFILIATE" means, with respect to any Person, (a) any Person directly
or indirectly controlling, controlled by or under common control with such
Person; (b) any Person owning or controlling ten percent (10%) or more of the
outstanding voting securities or interests of such Person; (c) any officer,
director, member, manager, trustee, or partner of such Person or of any Person
specified in (a) or (b) above; and (d) any Person in which any officer,
director, member, manager, trustee, or partner of any Person specified in (c)
above is an officer, director, member, manager, trustee, or partner.
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1.5. "AGREEMENT" means this Limited Liability Company Agreement of the
Company, as may be amended, restated, supplemented or otherwise modified from
time to time as herein provided.
1.6. "APPRAISALS" shall have the meaning ascribed thereto in Section
5.8(c)(1).
1.7. "ASSIGNEE" means a Person to whom one or more Membership Interests
have been transferred in a manner permitted under this Agreement and who has
executed and delivered a Transfer Application to the Company as required by this
Agreement, but who has not been admitted as a Substitute Member.
1.8. "BOARD OF MANAGERS" means the board on which all of the Company's
Managers sit, in their capacities as Managers.
1.9. "BOOK GAIN" or "BOOK LOSS" means the gain or loss recognized by
the Company for Code Section 704(b) book purposes in any Fiscal Year by reason
of any sale or disposition with respect to any of the assets of the Company.
Such Book Gain or Book Loss shall be computed by reference to the Book Value of
such property or assets as of the date of such sale or disposition, rather than
by reference to the tax basis of such property or assets as of such date, and
each and every reference herein to "gain" or "loss" shall be deemed to refer to
Book Gain or Book Loss, rather than to tax gain or tax loss, unless the context
manifestly otherwise requires.
1.10. "BOOK VALUE"ERROR! BOOKMARK NOT DEFINED. means, with respect to
any asset of the Company, such asset's adjusted basis for federal income tax
purposes, except as follows:
(a) The initial Book Value of any asset contributed by a Member to
the Company shall be the gross fair market value of such asset, without
reduction for liabilities, as determined by the Board of Managers; provided,
however, that the initial Book Values of the Real Properties contributed to the
Company on the Effective Date pursuant to the Order shall be the appraised value
set forth in the Disclosure Statement to the Amended Plan of Reorganization that
was approved as part of the Order, and the initial Book Value of all other
Properties contributed to the Company on the Effective Date shall be an amount
reasonably determined by the Board of Managers ("INITIAL BOOK VALUES").
(b) If the Board of Managers reasonably determines that an
adjustment is necessary or appropriate to reflect the relative economic
interests of the Members, the Book Values of all Company assets shall be
adjusted in accordance with Sections 1.704-1(b)(2)(iv)(f) and (g) of the
Treasury Regulations to equal their respective gross fair market values, without
reduction for liabilities, as reasonably determined by the Board of Managers, as
of the time of the following events:
(1) A Capital Contribution (other than a de minimis Capital
Contribution) to the Company by a new or existing Member as consideration for a
Membership Interest; or
(2) The distribution by the Company to a Member of more than a
de minimis amount of Company assets as consideration for the repurchase of a
Membership Interest; or
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(3) The liquidation of the Company within the meaning of
Section 1.704-1(b)(2)(ii)(g) of the Treasury Regulations;
(c) The Book Value of Company assets distributed to any Member
shall be the gross fair market values of such assets (taking Section 7701(g) of
the Code into account) without reduction for liabilities, as reasonably
determined by the Board of Managers as of the date of distribution; and
(d) The Book Value of Company assets shall be increased (or
decreased) to reflect any adjustments to the adjusted basis of such assets
pursuant to Sections 734(b) or 743(b) of the Code, but only to the extent that
such adjustments are taken into account in determining Capital Accounts pursuant
to Section 1.704-1(b)(2)(iv)(m) of the Treasury Regulations; provided, however,
that Book Values shall not be adjusted pursuant to this paragraph (d) to the
extent the Board of Managers reasonably determines that an adjustment pursuant
to paragraph (b) above is necessary or appropriate in connection with a
transaction that would otherwise result in an adjustment pursuant to this
paragraph (d).
At all times, Book Value shall be adjusted by any Depreciation taken
into account with respect to the Company's assets for purposes of computing
Profit and Loss.
1.11. "BYLAWS" means the bylaws of the Company attached hereto as
Exhibit A, as amended from time to time by the Board of Managers, governing
various aspects of the operation of the Company and the rights and obligations
of its Members, Board of Managers, officers and other agents. The Bylaws shall
be deemed to be a part of this Agreement. All provisions of the Bylaws not
inconsistent with law or this Agreement shall be valid and binding.
1.12. "CAPITAL ACCOUNT" shall have the meaning ascribed thereto in
Section 3.3 of this Agreement.
1.13. "CAPITAL CONTRIBUTIONS" means the total amount of cash and the
Book Value of other property contributed to the Company on the Effective Date
pursuant to the Contribution Agreements and any such additional contributions,
if any, made thereafter pursuant to the terms of this Agreement.
1.14. "CAPITAL TRANSACTIONS" means any Sale, exchange, taking by
eminent domain, damage, destruction or other disposition of all or any one of
the Real Properties.
1.15. "CASH" or "CASH" means, with respect to a payment or distribution
to be made pursuant to this Agreement, cash, check or cash equivalents.
1.16. "CASH FROM OPERATIONS" means the gross cash proceeds from Company
operations (including Sales of Property, other than Real Properties, in the
ordinary course of business) less the portion thereof used to pay or establish
reserves for all Company expenses, Guaranteed Payments, debt payments, capital
improvements, replacements, and contingencies, all as reasonably determined by
the Board of Managers. Cash From Operations shall not be reduced by
depreciation, amortization, cost recovery deductions or similar allowances, but
shall be increased by any reductions of reserves previously established. Cash
from Operations shall not include any Cash From Sales.
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1.17. "CASH FROM SALES" means net cash proceeds from all Capital
Transactions, net proceeds received from litigation or compromise of claims in
excess of One Hundred Thousand Dollars ($100,000) and net refinancing proceeds
of Real Property debt less any portion thereof used to pay Guaranteed Payments
and establish reserves, all as reasonably determined by the Board of Managers.
Cash From Sales shall include all principal and interest payments with respect
to any note or obligation received by the Company in connection with Sales and
other dispositions of Real Properties.
1.18. "CERTIFICATE" means the "Certificate of Formation" of the Company
in the form attached hereto as Exhibit B, as originally filed with the office of
the Secretary of State of the State of Delaware, as amended, restated,
supplemented or otherwise modified from time to time as herein provided.
1.19. "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any subsequent federal law of similar import, and, to the
extent applicable, any Treasury Regulations promulgated thereunder.
1.20. "COMMON UNIT" means a Unit representing a fractional part of the
Membership Interests of all Members and Assignees and having the rights and
obligations specified with respect to Common Units in this Agreement.
1.21. "COMPANY" means the limited liability company heretofore formed
and continued hereby in accordance with this Agreement by the parties hereto, as
such limited liability company may from time to time be constituted.
1.22. "XXXXXXXX" means Xxxx Xxxxxxxx IV, or any Entity controlled by
him.
1.23. "XXXXXXXX UNITS" shall have the meaning ascribed thereto in
Section 3.2(a)(2).
1.24. "CONSENT" means either the consent given by vote at a duly called
and held meeting or the prior written consent, as the case may be, of a Person
to do the act or thing for which the consent is solicited, or the act of
granting such consent, as the context may require.
1.25. "CONTRIBUTION AGREEMENTS" means those agreements, including,
without limitation, the merger agreements and transfer documents referenced in
the Order, pursuant to which the Company is capitalized in accordance therewith.
The principal terms of this Agreement and the Contributions Agreements have been
approved by the United States Bankruptcy Court in connection with the Order.
1.26. "CPAS" shall have the meaning ascribed thereto in Section
5.8(c)(2).
1.27. "DEPRECIATION" means, for each Fiscal Year, an amount equal to
the depreciation, amortization or other cost recovery deduction allowable with
respect to an asset for such year or other period for federal income tax
purposes; provided, however, that if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of any such year
or other period, Depreciation shall be an amount that bears the same
relationship to the Book Value of such asset as the depreciation, amortization,
or other cost recovery deduction computed for federal income tax purposes with
respect to such asset for the applicable period bears to the adjusted tax basis
of such asset at the beginning of such period, or if such asset has a zero
adjusted tax basis,
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Depreciation shall be an amount determined under any reasonable method selected
by the Board of Managers.
1.28. "DISTRIBUTION DATE" means the date(s) for distributions to
Members as determined by the Board of Managers from time to time.
1.29. "EFFECTIVE DATE" means June 30, 2000.
1.30. "ENTITY" means any general partnership, limited partnership,
corporation, joint venture, trust, limited liability company, limited liability
partnership, business trust, cooperative, or association.
1.31. "EXCESS UNITS" shall have the meaning ascribed thereto in Section
9.5(b).
1.32. "EXERCISE NOTICE" shall have the meaning ascribed thereto in
Section 5.8(a).
1.33. "EXERCISE PRICE" shall have the meaning ascribed thereto in
Section 5.8(c).
1.34. "FIRST ANNIVERSARY DATE" means the date that falls on the first
anniversary of the Effective Date.
1.35. "FISCAL YEAR" means the fiscal year of the Company and shall be
the same as its taxable year, which shall be the calendar year.
1.36. "FIFTH ANNIVERSARY DATE" means the date that falls on the fifth
anniversary of the Effective Date.
1.37. "FOURTH ANNIVERSARY DATE" means the date that falls on the fourth
anniversary of the Effective Date.
1.38. "GUARANTEED PAYMENT" means a sum equal to ten percent (10%) per
annum, beginning to accrue on the First Anniversary Date, compounded annually,
determined on the basis a year of 365 or 366 days, as the case may be, for the
actual number of days occurring in the period for which the Guaranteed Payment
is being determined, cumulative to the extent not paid in any given calendar
quarter pursuant to Section 5.2(b)(2) hereof, of the average daily balance of
the Preferred Unit Holder's Unreturned Capital from time to time during the
period to which the Guaranteed Payment relates.
1.39. "INITIAL MEMBERS" means those Persons receiving Membership
Interests in the Company on the Effective Date pursuant to Section 3.2(a).
1.40. "IRS" means the Internal Revenue Service.
1.41. "LENDER" shall have the meaning ascribed thereto in Section
9.5(c).
1.42. "LIQUIDATION PRICE" shall have the meaning ascribed thereto in
Section 5.2(a)(3).
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1.43. "MANAGERS" means those individuals serving on the Board of
Managers of the Company, including successor or additional Managers duly elected
in accordance with the terms of this Agreement in their capacities as "Managers"
of the Company within the meaning of the Act.
1.44. "MANDATORY DISTRIBUTION AMOUNT" shall have the meaning ascribed
thereto in Section 5.3(b).
1.45. "MEASUREMENT DATE" means March 31, 2001.
1.46. "MEMBER" means, unless the context otherwise requires, each
Initial Member, each Substituted Member, and each Additional Member, or for
purpose of Sections 3.3, 3.4 and 3.5 (Capital Accounts and Tax Matters Partner),
Article 4 (Allocations), Article 5 (Distributions), Section 9.5 (Lender
Ownership Limits), and the inclusion or exclusion of such section or other
sections and appropriate definitions of this Agreement as the Board of Managers
may from time to time determine, each Assignee.
1.47. "MEMBERSHIP INTEREST" means the ownership interest of a Member or
Assignee in the Company, which may be evidenced by Common Units or Preferred
Units or a combination thereof or interest therein, and includes any and all
benefits to which such Member or Assignee is entitled as provided in this
Agreement, together with all obligations of such Member or Assignee to comply
with the terms and provisions of this Agreement.
1.48. "NONRECOURSE DEDUCTIONS" has the meaning set forth in Sections
1.704-2(b)(1) and 1.704-2(c) of the Treasury Regulations.
1.49. "NONRECOURSE LIABILITIES" has the meaning set forth in Section
1.704-2(b)(3) of the Treasury Regulations.
1.50. "ORDER" means that certain Order filed on June 2, 2000, with the
United States Bankruptcy Court for the Eastern District of California (docketed
on June 5, 2000), which confirmed the Amended Joint Plan of Reorganization dated
May 9, 2000, in reference to the IRM Corporation jointly administered Cases Nos.
98-32231-A-11, et. seq, and in the Gamma Secured Investments and Gamma
Investment Fund, LLC, Cases Nos. 98-33134-A-11 and 98-33135-A-11, respectively.
1.51. "PARTNER MINIMUM GAIN" means an amount, with respect to each
Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would
result if such Partner Nonrecourse Debt were treated as a Nonrecourse Liability,
determined in accordance with Treasury Regulations Section 1.704-2(i)(3).
1.52. "PARTNER NONRECOURSE DEBT" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(4).
1.53. "PARTNER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Treasury Regulations Section 1.704-2(i)(2), with the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Company
taxable year being determined in accordance with the rules of Treasury
Regulations Section 1.704-2(i)(2).
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1.54. "PARTNERSHIP MINIMUM GAIN" has the meaning set forth in Treasury
Regulations Section 1.704-2(b)(2), with the amount of Partnership Minimum Gain,
as well as any net increase or decrease in a Partnership Minimum Gain, for a
Company taxable year being determined in accordance with the rules of Treasury
Regulations.
1.55. "PAYMENT DATE" shall have the meaning ascribed thereto in Section
5.2(a)(5).
1.56. "PERCENTAGE INTEREST" means, with respect to any Member or
Assignee as of any date, the ratio (expressed as a percentage) of the number of
Units held by such Member or Assignee on such date to the aggregate number of
Units held by all Members and Assignees on such date.
1.57. "PERSON" means any individual or Entity, and the heirs,
executors, administrators, legal representatives, successors, and assigns of
such Person where the context requires.
1.58. "PREFERRED NOTICE" shall have the meaning ascribed thereto in
Section 5.2(a)(2).
1.59. "PREFERRED UNIT" means a Unit representing a fractional part of
the Membership Interests of all Members and Assignees and having the rights and
obligations specified with respect to Preferred Units in this Agreement.
1.60. "PRICING DATE" shall have the meaning ascribed thereto in Section
5.2(a)(3).
1.61. "PROFIT" and "LOSS" means, for each Fiscal Year or other period
for which allocations to Members are made, an amount equal to the Company's
taxable income or loss for such year or period, determined in accordance with
Section 703(a) of the Code (provided, that for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code 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 Profit or Loss pursuant to
this provision shall be added to such taxable income or loss;
(b) Any expenditure of the Company described in Section
705(a)(2)(B) of the Code or treated as Code Section 705(a)(2)(B) expenditures
pursuant to Section 1.704-1(b)(2)(iv)(i) of the Treasury Regulations, and not
otherwise taken into account in computing Profit or Loss pursuant to this
provision, shall be subtracted from such taxable income or loss;
(c) Book Gain or Book Loss from a Capital Transaction shall be
taken into account in lieu of any tax gain or tax loss recognized by the Company
by reason of such Capital Transaction;
(d) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such Fiscal Year or other
period, computed as provided in this Agreement; and
(e) Notwithstanding any other provision of this definition, any
items which are specially allocated pursuant to Section 4.3 hereof shall not be
taken into account in computing Profit or Loss.
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If the Company's taxable income or loss for such Fiscal Year or other
period, as adjusted in the manner provided above, is a positive amount, such
amount shall be the Company's Profit for such Fiscal Year or other period; and
if a negative amount, such amount shall be the Company's Loss for such Fiscal
Year or other period.
1.62. "PROPERTY", individually, and "PROPERTIES" collectively means all
the assets contributed to the Company on the Effective Date and which may
thereafter be acquired by the Company.
1.63. "PUT RIGHT" shall have the meaning ascribed thereto in Section
5.8.
1.64. "PUT RIGHT RECORD DATE" shall have the meaning ascribed thereto
in Section 5.8.
1.65. "REAL PROPERTIES" means those real estate assets contributed to
the Company on the Effective Date pursuant to the Contribution Agreements and
any additional real properties acquired, directly or indirectly, by the Company
after the Effective Date.
1.66. "REDEMPTION OPTION" shall have the meaning ascribed thereto in
Section 5.2(a)(1).
1.67. "REDEMPTION PRICE" shall have the meaning ascribed thereto in
Section 9.5(b).
1.68. "REGULATORY ALLOCATIONS" shall have the meaning ascribed thereto
in Section 4.3(i).
1.69. "SALE" means the sale or other disposition of a Company Property
to a third party; provided, however, that this term shall not include the
pledge, mortgage or encumbrance of a Real Property, or of any interest therein,
in connection with the financing, refinancing or other leveraging of such Real
Property or otherwise or any assignment of any leases or rents related to such
Real Property.
1.70. "SECOND ANNIVERSARY DATE" means the date that falls on the second
anniversary of the Effective Date.
1.71. "SEVENTH ANNIVERSARY DATE" means the date that falls on the
seventh anniversary of the Effective Date.
1.72. "SIXTH ANNIVERSARY DATE" means the date that falls on the sixth
anniversary of the Effective Date.
1.73. "SUBSTITUTED MEMBER" means a Person who is admitted as a Member
of the Company pursuant to Section 9.4 in place of and with all the rights of a
Member and who is shown as a Member on the books and records of the Company.
1.74. "TAX BASIS" shall have the meaning ascribed thereto in Section
4.4(b).
1.75. "TAX MATTERS PARTNER" shall have the meaning ascribed thereto in
Section 3.5.
1.76. "THIRD ANNIVERSARY DATE" means the date that falls on the third
anniversary of the Effective Date.
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1.77. "TRANSFER" (or "TRANSFERRED") means to give, sell, assign,
devise, bequeath, or otherwise dispose of, transfer, or permit to be transferred
a Membership Interest or any interest therein, during life or at death. The word
"Transfer," when used as a noun, shall mean any Transfer transaction.
1.78. "TRANSFER AGENT" means such bank, trust company or other Person,
including without limitation, the Company, as shall be appointed from time to
time by the Board of Managers to act as registrar and Transfer Agent for the
Units.
1.79. "TRANSFER APPLICATION" means an application and agreement for the
transfer of Units, in the form as set forth hereto in Exhibit C, as may be
changed, modified, amended, replaced or substituted from time to time as
determined by the Board of Managers without the Consent of Members. For purposes
of this Agreement, references to Transfer Application shall also include the
Transfer Instructions.
1.80. "TRANSFER INSTRUCTIONS" means instructions for the Transfer of
Units, in the form attached hereto as Exhibit D, as may be amended from time to
time in the sole discretion of the Board of Managers.
1.81. "TRANSFEREE" means any Person to whom Units are Transferred by a
Member, or successor in interest, for any reason or by any means.
1.82. "TREASURY REGULATIONS" means the federal income tax regulations,
including any temporary or proposed regulations, promulgated under the Code, as
such Treasury Regulations may be amended from time to time (it being understood
that all references herein to specific sections of the Treasury Regulations
shall be deemed also to refer to any corresponding provisions of succeeding
Treasury Regulations).
1.83. "UNIT" means, as the context requires, a Preferred Unit or a
Common Unit. The term "UNITS" means the aggregate number of Preferred Units and
Common Units held by a Member or Members as the context requires.
1.84. "UNIT CERTIFICATE" means a certificate substantially in the form
of Exhibit E, or in such other form and containing such other terms as may be
adopted from time to time by the Board of Managers in its discretion, issued by
the Company evidencing ownership of one or more Units.
1.85. "UNIT HOLDERS" means all Persons who hold Units, shall have the
same meaning as the word "Members", and to the extent applicable, all Assignees.
1.86. "UNRETURNED CAPITAL" of a Preferred Unit Holder means on any
date, an amount equal to the excess, if any, of (a) the positive Capital Account
balance of such Preferred Unit Holder as of the Measurement Date, over (b) the
aggregate distributions to such Preferred Unit Holder pursuant to Sections 5.1,
5.2 and 5.4 hereof, made on or after the Measurement Date.
ARTICLE 2
THE COMPANY
2.1. Formation. Pursuant to the Order, the Initial Members hereby form
the Company as a limited liability company under and pursuant to the provisions
of the Act upon the terms and
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conditions set forth in this Agreement. The rights and liabilities of the
Members shall be as provided under the Act, the Certificate, and this Agreement.
Pursuant to Section 18-209(b) of the Act, the terms and conditions contained in
the Contribution Agreements are deemed approved and the Company is authorized
and empowered to execute, perform and consummate the transactions contemplated
therein without any further approval or Consent from the Members or the Board of
Managers.
2.2. Company Name. The name of the Company is "JCM Partners, LLC". The
business of the Company shall be conducted under such name or such other names
as the Board of Managers may from time to time determine.
2.3. The Certificate. The Chief Executive Officer, and any other Person
designated by the Board of Managers, shall be an "authorized person" within the
meaning of the Act and is hereby authorized to execute, file and record all such
certificates and documents, including amendments to the Certificate, and to do
such other acts as may be appropriate to comply with all requirements for the
formation, continuation, and operation of a limited liability company, the
ownership of property, and the conduct of business under the laws of the State
of Delaware and any other jurisdiction in which the Company may own property or
conduct business.
2.4. Principal Place of Business. The principal place of business of
the Company shall be located at 0000 Xxxxxx Xx., Xxx 000, Xxxxxxx, XX 00000, or
at such location as may hereafter be determined by the Board of Managers. The
principal business office, as well as the registered office and the registered
agent, of the Company may be changed by the Board of Managers from time to time
in accordance with the then applicable provisions of the Act and any other
applicable laws, as well as the terms and conditions of this Agreement.
2.5. Registered Office and Registered Agent. The street address of the
initial Registered Office of the Company and the Company's Registered Agent
shall be as set forth in the Certificate.
2.6. Purposes. The purposes of the Company are (a) to own, exchange,
manage, sell and dispose of the Properties and distribute the excess proceeds
therefrom to the Members in an orderly manner to attain appropriate investment
potential and return to the Members or reinvest such excess proceeds in any type
of investment determined appropriate by the Board of Managers; (b) to invest
excess funds in any type of investment; (c) to engage in any other activities
relating to, and compatible with, the purposes set forth above; and (d) to take
such other actions, or do such other things, as are necessary or appropriate as
determined by the Board of Managers to carry out the provisions of this
Agreement.
2.7. Powers. In furtherance of its purposes, but subject to all of the
provisions of this Agreement, the Company shall have the power and is hereby
authorized to (a) invest (at any time during the term of the Company) in real
property and in other assets which are designed to accomplish the foregoing
purposes or in any manner consistent with the Company's investment criteria and
objectives, and to distribute the proceeds (to the extent permitted by this
Agreement) of any Sales by the Company of Company assets; (b) to exercise all of
the powers, duties, rights and responsibilities associated therewith; (c) take
any and all actions necessary, convenient or appropriate as the holder of any
such interests or positions; (d) operate, purchase, maintain, finance, improve,
own, sell, convey, assign, mortgage, lease, construct, demolish or otherwise
dispose of any real property or personal property that may be necessary,
convenient or incidental to the
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accomplishment of the purposes of the Company; (e) borrow money and issue
evidences of indebtedness in furtherance of any or all of the purposes of the
Company, and secure the same by mortgage, pledge or other lien or encumbrance on
any assets of the Company; (f) invest any funds of the Company pending
distribution or payment of the same pursuant to the provisions of this
Agreement; (g) prepay in whole or in part, refinance, recast, increase, modify
or extend any indebtedness of the Company and, in connection therewith, execute
any extensions, renewals or modifications of any mortgage or security agreement
securing such indebtedness; (h) enter into, perform and carry out contracts of
any kind necessary to, in connection with or incidental to the accomplishment of
the purposes of the Company; (i) establish reserves for capital expenditures,
working capital, debt service taxes, assessments, insurance premiums, repairs,
improvements, depreciation, obsolescence and general maintenance of buildings or
other property out of the rents, profits or other income received; (j) employ or
otherwise engage employees, managers, contractors, advisors and consultants, and
pay reasonable compensation for such services, and enter into employee benefit
plans of any type; (k) purchase or repurchase Units from any Person for such
consideration as the Board of Managers may determine in its sole discretion
(whether more or less than the original issuance price of such Unit or the then
trading price, if any, of such Unit); (l) enter into rights plans or other plans
relating to Units, options or bonuses, and to issue Units, options or warrants
thereunder (or other derivatives relating thereto) for any consideration
determined by the Board (even if such consideration is less than the market
value of such Units); (m) transfer one or more of the Real Properties to one or
more single-member limited liability company(ies) which is a disregarded entity
for federal income tax purposes and which is wholly-owned by the Company for any
purpose reasonably related to the holding of the Real Properties; and (n) do
such other things and engage in such other activities as may be necessary,
convenient or advisable with respect to the conduct of the business of the
Company, and have and exercise all of the other powers and rights conferred upon
limited liability companies formed pursuant to the Act.
2.8. Effectiveness of this Agreement. This Agreement shall govern the
operations of the Company and the rights and restrictions applicable to the
Members and Assignees, to the extent permitted by law. Pursuant to Section
18-101(7)(a) of the Act: (a) all Initial Members who become Unit Holders
pursuant to the Order and all Additional Members who become Unit Holders
pursuant to the terms of this Agreement shall be bound by the provisions of this
Agreement and shall be admitted as Members at such times as such Persons become
Unit Holders of record; (b) each Transferee shall be bound by the provisions of
this Agreement and shall be admitted as an Assignee upon full compliance with
the transfer provisions of Article 9 of this Agreement; and (c) each such
Assignee who is admitted as a Substituted Member in accordance with the terms of
this Agreement shall have the rights, duties and obligations of a Member
hereunder.
ARTICLE 3
CLASSES OF UNITS; ADMISSIONS OF MEMBERS; CAPITALIZATION
3.1. Classes of Units. The Company shall have the authority to issue a
total of one hundred and fifty million (150,000,000) Units for all classes,
designated as follows: (a) one hundred and twenty-five million (125,000,000) of
Common Membership Interest Units ("COMMON UNITS"), and (b) twenty-five million
(25,000,000) of Preferred Membership Interest Units ("PREFERRED UNITS"). The
Company may create one or more series of Units within each class to track the
historical income tax characteristics associated with the Units arising from the
Properties contributed to the Company in connection with the Contribution
Agreements, and in all other respects, each series of Units within a class shall
have the same rights, preferences, and privileges.
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(a) Each Unit shall have the rights and be governed by the
provisions set forth in this Agreement and none of such Units shall have any
preemptive rights, or give the holders thereof any rights to convert into any
other securities of the Company, or give the holders thereof any cumulative
voting rights except as specifically set forth in Section 6.2(f). Each Member
shall be entitled to one (1) vote for each Unit held by such Member, and except
as provided in Section 3.2(c), Section 5.2(b)(4), Section 6.2(b) and Section
12.4, Common Units and Preferred Units shall Consent together as one class and
not as two classes in all matters.
(b) The Board of Managers, without any Consent of any Member being
required, may effect a split or reverse split of Units of any class, by adopting
a resolution therefor. If the Board of Managers determines that it is necessary
or desirable to make any filings under the Act or otherwise in order to
reference the existence of such a split or reverse split, the Board of Managers
may cause such filings to be made, which filings might take the form of
amendments to the Certificate; provided, however, that, unless specifically
required by the Act, no approval or Consent of any Member shall be required in
connection with the making of any such filing.
(c) Notwithstanding any other provisions of this Agreement, the
Board of Managers may, without the Consent of any Member, amend this Agreement
to the extent required to allow the Board of Managers to exercise the powers
granted to it by this Section 3.1.
3.2. Members:
(a) On the Effective Date, the Company shall issue:
(1) Membership Interests to the Initial Members in exchange
for the receipt of the Properties identified in the Contribution Agreements. The
initial Capital Account for each Initial Member shall be deemed to be equal to
the agreed upon value of the Units issued to such Member on the Effective Date.
The number of Units of each class and series issued to the Initial Members shall
be pursuant to the Order and the Contribution Agreements. Each of the Initial
Members shall automatically and without any further act be admitted as Members
of the Company on the Effective Date.
(2) A profits interest for ten (10) Common Units to Xxxxxxxx
(the "XXXXXXXX UNITS"), who shall automatically and without any further act be
admitted as a Member of the Company on the Effective Date. The agreed upon value
of and the initial Capital Account for such Common Units shall be zero dollars
($0). Notwithstanding anything to the contrary herein, (i) while Xxxxxxxx is an
employee, Manager, or officer of the Company, Xxxxxxxx shall not Transfer the
Xxxxxxxx Units to any Person, other than the Company, and (ii) the Board of
Managers may reduce, in any reasonable manner, the proportionate distributions
(whether current or liquidating) otherwise applicable with respect to the
Xxxxxxxx Units to take into account the difference in the per-Unit fair market
value of the Common Units held by other Members on the Effective Date and the
fair market value of the profits interest Common Units held by Xxxxxxxx on the
Effective Date.
(b) The Board of Managers may in its sole discretion and without
the Consent of Members cause the Company to issue additional:
(1) Common Units to officers, directors, employees, or agents
of the Company for compensatory or incentive-based performance, including,
without limitation, the
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issuance of Common Units pursuant to options, rights, warrants or appreciation
rights; provided, however, that the aggregate number of Common Units issued for
or subject to such purposes shall not exceed one percent (1%) of the number of
Common Units issued to the Initial Members on the Effective Date, as such number
may be appropriately adjusted to account for splits or reverse splits of Units.
(2) Common Units and Preferred Units to any Person claiming to
be a Class 22 or 23 Investor as identified in the Order, or related party, whose
claim or action is not finally determined until after the Effective Date whether
by way of settlement, judgment, or otherwise.
(c) Except as provided in Section 3.2(b), the Board of Managers
shall not cause the Company to issue additional Units without first receiving
the affirmative Consent of not less than a majority of each class (with Common
Units voting as a class and Preferred Units voting as a class) of the then
outstanding Unit Holders.
3.3. Capital Accounts. A separate capital account (a "CAPITAL ACCOUNT")
shall be established and maintained for each Member, including any Substituted
Member or Additional Member who shall hereafter acquire a Membership Interest,
in accordance with the following provisions:
(a) To each Member's Capital Account there shall be credited the
fair market value of the property contributed to the Company by such Member
pursuant to Section 3.2 hereof, such Member's allocable share of Profit, and the
amount of any Company liabilities that are assumed by such Member or that are
secured by any Company property distributed to such Member.
(b) To each Member's Capital Account there shall be debited the
amount of cash and the fair market value of any Company property distributed or
deemed distributed to such Member pursuant to any provision of this Agreement,
such Member's allocable share of Loss, and the amount of any liabilities of such
Member that are assumed by the Company or that are secured by any property
contributed by such Member to the Company.
(c) If any asset of the Company is distributed in kind, the
Company shall be deemed to have realized Profit or Loss thereon in the same
manner as if the Company had sold such asset for an amount equal to the greater
of (i) the fair market value of such asset, or (ii) the fair market value of any
nonrecourse debts to which such asset is then subject, in each case as
determined by the Board of Managers. If at any time after the date of this
Agreement, the Book Value of any Company asset is adjusted pursuant to the last
sentence of the definition of Book Value set forth in Article 1 hereof, the
Capital Accounts of all Members shall be adjusted simultaneously to reflect the
aggregate net adjustments, as if the Company recognized Profit or Loss equal to
the respective amounts of such aggregate net adjustments.
(d) The provisions of this Agreement relating to the maintenance
of Capital Accounts are intended to comply with Section 1.704-1(b)(2)(iv) and
Section 1.704-2 of the Treasury Regulations, and shall be interpreted and
applied in a manner consistent with such Treasury Regulations.
(e) A Member shall not be entitled to withdraw any part of its
Capital Account or to receive any distributions from the Company, except as
provided in Article 5 hereof, nor shall a
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Member be entitled to make any loan or Capital Contribution to the Company other
than as expressly provided herein.
(f) No Member shall have any liability for the return of the
Capital Contribution of any other Member. A Member who has more than one class
of interest in the Company may have a separate Capital Account for each
different class of interest owned.
3.4. Transfer of Capital Accounts. The original Capital Account
established for each Transferee shall be in the same amount as the Capital
Account or portion thereof of the Member which such Transferee succeeds, at the
time such Transferee became a Transferee provided such Transferee is admitted to
the Company as an Assignee. The Capital Account of any Member whose Membership
Interest shall be increased by means of the Transfer to it of all or part of the
Units of another Member shall be appropriately adjusted to reflect such
Transfer. Any reference in this Agreement to a Capital Contribution of, or
distribution to, a then-Member shall include a Capital Contribution or
distribution previously made by or to any prior Member on account of the Units
of such then-Member.
3.5. Tax Matters Partner.
(a) Xxxxxxxx shall be the Company's initial "TAX MATTERS PARTNER"
(as such term is defined in Section 6231(a)(7) of the Code), with all of the
powers that accompany such status (except as otherwise provided in this
Agreement). To the extent reasonably practicable, the Tax Matter Partner shall
obtain approval of the Board of Managers prior to taking any action in his
capacity as the Tax Matters Partner. Notwithstanding the foregoing, if the Tax
Matters Partner reasonably believes in good faith that an action must be taken
without first receiving the approval of the Board of Managers on account of time
limitations, such action may taken without first receiving the approval of the
Board of Managers, but the Tax Matters Partners shall promptly thereafter inform
the Board of Managers of such action.
(b) The Tax Matters Partner or any successor shall serve at the
pleasure of the Board of Managers and may be removed at any time for any reason
or no reason. A successor Tax Matters Partner may be any Person selected by the
Board of Managers who is qualified to hold such position under the applicable
Treasury Regulations. Notwithstanding Section 7.2(d), the Tax Matters Partner
may receive such compensation as the Board of Managers determines for acting as
the Tax Matters Partner.
(c) Promptly following written request of the Tax Matters Partner,
the Company shall to the fullest extent permitted by law, defend (with counsel
reasonably satisfactory to the Tax Matters Partner), indemnify and hold the Tax
Matters Partner harmless from and against any and all reasonable expenses,
including reasonable legal and accounting fees, penalties, claims, liabilities,
losses and damages incurred which arise out of or relate to any action or
inaction in his capacity as Tax Matters Partner which is made in good faith and
in a manner the Tax Matters Partner reasonably believed to be in the best
interests of the Company and the Members. For purposes of this Section 3.5, the
fact that an action, omission to act or decision is taken on the advice of a
professional tax advisor shall be evidence of good faith. The provisions of
Section 3.5 shall survive the termination of the Company or the removal,
resignation or termination of the Tax Matters Partner and shall remain binding
on the Company and Members for as long a period of time as is
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necessary to resolve with the IRS any and all matters regarding the federal
income taxation of the Company or the Members.
ARTICLE 4
ALLOCATIONS
4.1. Allocation Procedures. Within forty-five (45) days after the end
of each calendar month, the Company shall conduct an interim closing of the
books as of the end of the last day of that calendar month. On the basis of the
closing of the books for each calendar month, Profits and Losses for such month
shall be determined in accordance with the accounting methods followed by the
Company for federal income tax purposes. Such month-end allocations are subject
to normal and usual year-end adjustments as determined by the Tax Matters
Partner.
4.2. Allocations of Profits and Losses. Subject to Section 4.3, all
allocations to the Members of items included within the Company's Profits and
Losses attributable to each calendar month shall be allocated solely among the
Members recognized as Members as of the first day of that calendar month as
follows:
(a) The Profits and Losses shall be allocated to the Unit Holders
in accordance with their respective Percentage Interests.
(b) The Tax Matters Partner is authorized to make reasonable
determinations regarding the allocation of Profit and Loss under this Section
4.2, including determinations relating to the calculation of Profit or Loss, and
such other items of the Company's income, gain, loss, deduction and credit as
may be appropriate to carry out the intent of this Section 4.2.
4.3. Special Allocations.
(a) Notwithstanding any other provision of this Agreement, to the
extent an allocation of Profit or Loss or any item thereof to any Member
pursuant to Section 4.2 of this Agreement would be in violation of the
requirements of the Treasury Regulations under Section 704(b) of the Code, the
Tax Matters Partner shall comply with the requirements of such Treasury
Regulations and adjust such allocations to comply with such requirements in a
manner that will, in the reasonable judgment of the Tax Matters Partner, have
the least effect on the amounts to be allocated and distributed under this
Agreement. The Members agree that if this Section 4.3(a) becomes applicable, the
Tax Matters Partner is authorized to review and adjust the allocations made
pursuant to Section 4.2 of this Agreement without the Consent of Members.
(b) In the event a Member unexpectedly receives any adjustment,
allocation or distribution described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) that causes or increases an Adjusted
Capital Account Deficit, items of Profit shall be specially allocated to such
Member so as to eliminate such negative balance as quickly as possible. This
subparagraph is intended to constitute a "qualified income offset" under Section
1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently
therewith.
(c) Except as otherwise provided in Section 1.704-2(f) of the
Treasury Regulations, if there is a net decrease in Partnership Minimum Gain for
any Fiscal Year, each Member shall be specially allocated items of Company
income and gain for such year (and, if necessary, subsequent years) in an amount
equal to such Member's share of the net decrease in Partnership Minimum Gain
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to the extent required by Treasury Regulations Section 1.704-2(f). The items to
be so allocated shall be determined in accordance with Sections 1.704-2(f) and
(j)(2) of the Treasury Regulations. This subparagraph is intended to comply with
the minimum gain chargeback requirement in said section of the Treasury
Regulations and shall be interpreted consistently therewith. Allocations
pursuant to this subparagraph shall be made in proportion to the respective
amounts required to be allocated to each Member pursuant hereto.
(d) Except as otherwise provided in Section 1.704-2(i)(4) of the
Treasury Regulations, if there is a net decrease in Partner Minimum Gain
attributable to a Partner Nonrecourse Debt during any Fiscal Year, each Member
who has a share of the Partner Minimum Gain attributable to such Partner
Nonrecourse Debt, determined in accordance with Section 1.704-2(i)(5) of the
Treasury Regulations, shall be specially allocated items of Company income and
gain for such year (and, if necessary, subsequent years) in an amount equal to
that Member's share of the net decrease in the Partner Minimum Gain attributable
to such Partner Nonrecourse Debt to the extent and in the manner required by
Section 1.704-2(i) of the Treasury Regulations. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and (j)(2) of the
Treasury Regulations. This subparagraph is intended to comply with the minimum
gain chargeback requirement with respect to Partner Nonrecourse Debt contained
in said section of the Treasury Regulations and shall be interpreted
consistently therewith. Allocations pursuant to this subparagraph shall be made
in proportion to the respective amounts to be allocated to each Member pursuant
hereto.
(e) Partner Nonrecourse Deductions for any Fiscal Year or other
applicable period with respect to a Partner Nonrecourse Debt shall be specially
allocated to the Members that bear the economic risk of loss for such Partner
Nonrecourse Debt as determined under Sections 1.704-2(b)(4) and 1.704-2(i)(1) of
the Treasury Regulations.
(f) Nonrecourse Deductions for any taxable period shall be
allocated to the Members in accordance with their respective Percentage
Interests.
(g) In the event any Member has a deficit Capital Account at the
end of any Fiscal Year which is in excess of the sum of the amount such Member
is obligated to restore pursuant to the penultimate sentences of Treasury
Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be
specially allocated items of Company income and gain in the amount of such
excess as quickly as possible, provided that an allocation pursuant to this
Section 4.3(g) shall be made only if any to the extent that such Member would
have a deficit Capital Account in excess of such sum after all other allocations
provided for in this Article 4 have been made as if Section 4.3(b) and this
Section 4.3(g) were not in the Agreement.
(h) Losses allocated pursuant to Section 4.2 hereof shall not
exceed the maximum amount of Losses that can be allocated without causing any
Member to have an Adjusted Capital Account Deficit at the end of any Fiscal
Year. In the event some but not all of the Members would have Adjusted Capital
Account Deficits as a consequence of an allocation of losses pursuant to Section
4.1 hereof, the limitation set forth in this Section 4.3(h) shall be applied on
a Member by Member basis and losses not allocable to any Member as a result of
such limitation shall be allocated to the other Members in accordance with the
positive balances in such Member's Capital Accounts so as to allocate the
maximum permissible losses to each Member under Section 1.704-1(b)(2)(ii)(d) of
the Treasury Regulations.
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(i) The allocations set forth in Sections 4.3(b) through 4.3(h)
(the "REGULATORY ALLOCATIONS") are intended to comply with certain requirements
of the Regulations. It is the intent of the Members that, to the extent
possible, all Regulatory Allocations shall be offset either with other
Regulatory Allocations or with special allocations of other items of Company
income, gain, loss or deduction pursuant to this Section 4.3(i). Therefore,
notwithstanding any other provision of this Section 4.3 (other than the
Regulatory Allocations), the Tax Matters Partner shall make such offsetting
special allocations of Company income, gain, loss or deduction in whatever
manner it determines appropriate so that, after such offsetting allocations are
made, each Member's Capital Account balance is, to the extent possible, equal to
the Capital Account balance such Member would have had the Regulatory
Allocations were not part of the Agreement and all Company items were allocated
pursuant to Section 4.2.
4.4. Tax Allocations and Other Matters.
(a) For federal income tax purposes, except as otherwise provided
in this Section 4.4, each item of Profit, gain, Loss and deduction of the
Company shall be allocated among the Members in the same proportion as the
corresponding items are allocated pursuant to Sections 4.2 and Section 4.3
hereof.
(b) In the event that the Book Value of any asset contributed to
and held by the Company differs from its basis for federal income tax purposes
("TAX BASIS"), allocations of income, gain, loss or deduction with respect to
such asset shall, solely for tax purposes, be allocated among the Members so as
to take account of any variation between Book Value and Tax Basis in accordance
with the provisions of Section 704(c) of the Code and Treasury Regulations
thereunder. The Tax Matters Partner may elect any reasonable method or methods
for making such allocations.
(c) If the Book Value of any asset of the Company is adjusted
pursuant to Section 1.10 hereof, subsequent allocations of Profit, gain, Loss
and deductions with respect to such asset shall take into account any variation
between the Book Value and Tax Basis in accordance with the provisions of
Section 704(c) of the Code and the Treasury Regulations thereunder.
(d) If the Company is required by the IRS to change the method of
allocating for the difference between the Tax Basis and the Book Value of the
Real Properties, the Tax Matters Partner may change or amend the method of
allocating such difference as required by the IRS or upon receiving the advice
of its tax advisors that a change is necessary to comply with applicable law,
and any such change may be made without obtaining further Consent or approval of
the Members.
The Tax Matters Partner shall have the sole discretion to make special
allocations of items of income, gain, loss and deductions that are consistent
with the principles of Section 704(c) of the Code and to amend the provisions of
this Agreement (without Member Consent), as appropriate, to reflect the proposal
or promulgation of Treasury Regulations under Subchapter K of the Code. The Tax
Matters Partner may adopt and employ such methods for (A) the maintenance of
capital accounts for book and tax purposes, (B) the determination and allocation
of adjustments under Sections 704(c), 734, 743, and 755 of the Code, (C) the
determination and allocation of taxable income, tax loss and items thereof under
this Agreement and pursuant to the Code, (D) the determination of the identities
and tax classification of Members, (E) the provision of tax information and
reports to the Members, (F) the adoption of reasonable conventions and methods
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for the valuation of assets and the determination of tax basis, (G) the
allocation of asset values and Tax Basis, (H) conventions for the determination
of depreciation, cost recovery and amortization deductions and the adoption and
maintenance of accounting methods, (I) the recognition of the Transfer of Units,
and (J) tax compliance and other tax-related requirements, including without
limitation, the use of computer software, and to use filing and reporting
procedures similar to those employed by publicly-traded partnerships, as it
determines in its sole discretion are necessary and appropriate to execute the
provisions of this Agreement and to comply with federal, state and local tax
law. If an election is made under Code Section 754, in determining the aggregate
adjustments under Section 734(b) to common basis of Property on account of
distributions to Members, the Tax Matters Partner may use any reasonable method
to estimate the outside tax basis of Members and the gain or loss resulting
therefrom on account of a current or liquidating distribution, and in
determining the aggregate adjustments to the tax basis of Property relating to
the Member under Section 743(b) of the Code, the Tax Matters Partner may use any
reasonable method to determine the fair market value of the Units Transferred,
including, but not limited to, a Transfer of Units on account of the death of
the Member. The Tax Matters Partner shall have the authority, in its discretion,
to allocate Company liabilities among the Members in accordance with Section 752
of the Code and the Treasury Regulations promulgated thereunder.
ARTICLE 5
DISTRIBUTIONS, REDEMPTIONS AND PUT OPTION
5.1. Distributions of Cash Generally. Subject to Section 5.2:
(a) If the Board of Managers declares a distribution of Cash From
Operations payable on a Distribution Date, then the Unit Holders as of the
record date shall be entitled to receive all such distributions which the Board
has declared, with each Unit Holder entitled to receive a pro-rata portion (with
reference to the number of Units then-held by such Unit Holder to the total
number of Units then-held by all Persons) of such available distributions.
(b) If the Board of Managers declares a distribution of Cash From
Sales payable on a Distribution Date, then the Unit Holders as of the record
date shall be entitled to receive all such distributions which the Board of
Managers has declared, with each Unit Holder entitled to receive a pro-rata
portion (with reference to the number of Units then-held by such Unit Holder to
the total number of Units then-held by all Persons) of such available
distributions. Notwithstanding the foregoing, no Cash From Sales shall be
distributed with respect to Common Units until such time as the Company has
redeemed and completely liquidated all of the Preferred Units in accordance with
Section 5.2
5.2. Distributions in Liquidation of Preferred Units. The Preferred
Units are subject to redemption and liquidation at the sole option of the
Company pursuant to the terms of this Section 5.2.
(a) The Company shall follow the procedures set forth below
regarding distributions in liquidation of Preferred Units:
(1) The Company is hereby granted an option to redeem all or
any portion of the Preferred Units at any time prior to an event of dissolution
pursuant to Section 10.1 (the "REDEMPTION OPTION"). The Company may, at any
time, elect to redeem all, or any portion, of the
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Preferred Units, which option may be exercised on one or more occasions in
accordance herewith. In the event of a partial redemption, each Preferred Unit
Holder will have an equal percentage of such Unit Holders Preferred Units
(rounded to the next whole number) redeemed as compared to the Preferred Units
of all Preferred Unit Holders. The Percentage Interests of Members shall be
appropriately adjusted to reflect the reduction in the number of Preferred Units
outstanding.
(2) The Company shall provide at least twenty (20) days
advance notice (the "PREFERRED NOTICE") to all Preferred Unit Holders of the
Company's intention to exercise its Redemption Option. The Company shall be
obligated to redeem and completely liquidate the number of Preferred Units
identified in the Preferred Notice in accordance with this Section 5.2(a) upon
delivery of the Preferred Notice, and the Company shall not revoke or otherwise
terminate its obligation thereunder once the Preferred Notice is delivered. If
the Company fails (for any or no reason) to pay the aggregate Liquidation Price
(defined below) on the Payment Date (defined below), the Company shall be in
default to the Preferred Unit Holders. In such a case, the Preferred Unit
Holders shall have those additional rights specified in Section 5.2(b).
(3) The redemption price per Unit shall be an amount (the
"LIQUIDATION PRICE") equal to the positive Capital Account balances with respect
to the Preferred Units of all Preferred Unit Holders as of the last day of the
month specified in the Preferred Notice for determining the Liquidation Price
(the "PRICING DATE") divided by the number of Preferred Units outstanding on
such date, which Capital Account balances shall be determined using the interim
closing of the books method of accounting. If a Member owns Units other than
Preferred Units, the Liquidation Price shall relate only to that portion of the
Member's Capital Account relating to the Preferred Units.
(4) Within forty-five (45) days after the Pricing Date, the
Company shall determine the Liquidation Price.
(5) On the date no more than sixty-two (62) days after the
Pricing Date (the "PAYMENT DATE"), the Company shall distribute (i) the
Liquidation Price in cash to the Preferred Unit Holders in partial or complete,
as applicable, liquidation of the Preferred Units relating thereto, and (ii) any
accrued but unpaid Guaranteed Payment, if any, relating to the redeemed
Preferred Units. The Board of Managers may establish procedures, including,
without limitation, the establishment of an escrow and the requirement that the
Preferred Unit Holders endorse and return any Certificates in their possession
and execute and deliver transmittal letters and assignments separate from
certificate as a condition precedent to distributing the Liquidation Price to
such Preferred Unit Holders.
(6) The Company may adopt procedures, regulations and policies
from time to time to implement the provisions of Section 5.2(a).
(b) If the Company fails or elects not to completely redeem and
liquidate all of the Preferred Units on or before the First Anniversary Date,
the Preferred Units then outstanding shall have the following additional rights,
preferences and privileges beginning effective on the First Anniversary Date and
which shall continue with respect to all outstanding Preferred Units until all
Preferred Units are redeemed:
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(1) The Company shall not declare or make any distribution to
any Common Unit Holder.
(2) Not later than the tenth (10th) day after the end of each
calendar quarter beginning after the First Anniversary Date, the Company shall
pay cash to the Preferred Unit Holders in an amount equal to the excess, if any,
of (i) the cumulative Guaranteed Payment from the First Anniversary Date to the
end of such calendar quarter, over (ii) the sum of all prior payments made to
the Preferred Unit holders pursuant to this Section 5.2(b)(2). Amounts paid
pursuant to this Section 5.2(b)(2) are intended to constitute guaranteed
payments within the meaning of Code Section 707(c) and shall not be treated as
distributions for purposes of computing the recipients' Capital Accounts. The
Guaranteed Payment will be made to those Preferred Unit Holders of record as of
the first day of the last month in each such calendar quarter.
(3) The Preferred Units shall continue to participate in (i)
Profits and Losses and other allocations in accordance with Article 4 in
addition to the Guaranteed Payment; and (ii) distributions in accordance with
Article 5.
(4) The Preferred Unit Holders, as a class, shall have the
immediate right to nominate and elect two (2) of the Managers on the Board of
Managers, and if necessary to accomplish such result, the Company shall call a
meeting of Members to replace all of the Managers, other than the CEO-Manager.
The Company shall take such additional actions as appropriate to enable the
Preferred Unit Holders to nominate and select such two Managers to the Board of
Managers. In addition to the foregoing rights, the Preferred Unit Holders will
continue to participate in the election of the remaining members of the Board of
Managers on the same basis as Common Unit Holders.
5.3. Mandatory Distributions To Common Unit Holders.
(a) Notwithstanding anything set forth in this Section 5.3, no
distribution shall be made to any Common Unit Holder under this Section 5.3
until all Preferred Units have been redeemed and completely liquidated in
accordance with Section 5.2.
(b) The "MANDATORY DISTRIBUTION AMOUNT" shall be an amount equal
to the excess, if any, of: (i) the sum of (x) Twenty Million Dollars
($20,000,000) and (y) the excess, if any, of Fifteen Million Dollars
($15,000,000) over the aggregate initial Capital Account balances of the
Preferred Unit Holders on the Effective Date, over (ii) the total aggregate
distributions to all Common Unit Holders pursuant to Section 5.1 on or before
the Second Anniversary Date.
(c) On or before the Second Anniversary Date, the Company shall
make a pro rata distribution to Common Unit Holders in an amount not less than
the lesser of (x) Ten Million Dollars ($10,000,000) or (y) the Mandatory
Distribution Amount, with the remaining amount, if any, of the Mandatory
Distribution Amount to be distributed pro rata to the Common Unit Holders on or
before the Third Anniversary Date.
(d) If the Company fails, for any reason, to distribute cash to
the Common Unit Holders pursuant to section 5.3(c), the Company shall liquidate
more of its Properties as quickly as is commercially reasonable so that the
Company will have sufficient liquidity to make the
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distributions to Common Unit Holders under Section 5.3(c) as quickly as is
commercially reasonable.
5.4. Distributions Relating to Liquidation Events. Upon the
dissolution, liquidation or winding-up of the Company, after satisfaction of all
of the Company's liabilities (whether by payment or the making of reasonable
provision for payment therefor), the balance, if any, of the Company's assets
(including cash or in-kind property as determined by the liquidator selected by
the Board of Managers) shall be distributed first proportionately to the
Preferred Unit Holders to the extent of their Unreturned Capital, and second to
the Members in accordance with the positive balance in their Capital Accounts,
after giving effect to all contributions, distributions and allocations for all
periods. For this purpose only, any accrued, but unpaid, Guaranteed Payments
shall be considered a liability of the Company to be paid prior to the
liquidating distributions to the Members.
5.5. Priority. Notwithstanding any other provision of this Agreement,
it is specifically acknowledged and agreed by each Member that the Company's
failure to pay any amounts to such Member, whether as a distribution, redemption
payment or otherwise, even if such payment is specifically required hereunder,
shall not give such Member creditor status with regard to such unpaid amount;
but rather, such Member shall be treated only as a Member of whatever class such
Person is a Member, and not as a creditor, of the Company. This Section 5.5 is,
as permitted by Section 18-606 of the Act, intended to override the provisions
of Section 18-606 of the Act relating to a member's status and remedies as a
creditor, to the extent that such provisions would be applicable in the absence
of this Section 5.5.
5.6. Withholding.
(a) With respect to any withholding tax or other similar tax
liability or obligation to which the Company may be subject as a result of any
act or status of any Member or to which the Company becomes subject with respect
to any Unit, the Company shall have the right to withhold amounts distributable
to such Member or with respect to such Units, to the extent of the amount of
such withholding tax or other similar tax liability or obligation, pursuant to
the provision contained in Section 5.6(b).
(b) Each Member hereby authorizes the Company to withhold from, or
pay on behalf of or with respect to such Member any amount of federal, state,
local or foreign taxes that the Tax Matters Partner determines that the Company
is required to withhold or pay with respect to any amount distributable or
allocable to such Member pursuant to this Agreement, including, without
limitation, any taxes required to be withheld or paid by the Company pursuant to
Sections 1441, 1442, 1445 or 1446 of the Code. Any amount paid on behalf of or
with respect to a Member shall constitute a loan by the Company to such Member,
which loan shall be repaid by such Member within fifteen (15) days after notice
from the Board of Managers that such payment must be made unless (i) the Company
withholds such payment from a distribution which would otherwise be made to the
Member; or (ii) the Board of Managers determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Company which would, but for such payment, be distributed to the Member. Any
amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated
as having been distributed to such Member.
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5.7. Distribution Limitation. Notwithstanding any other provision of
this Agreement: (a) neither the Company, nor the Board of Managers on behalf of
the Company, shall make a distribution to any Member on account of its Units if
such distribution would violate the Act or other applicable law, and (b) no
distribution shall be made to any Unit Holder that would result in such holder
having a deficit balance in its Capital Account until such time as the balance
of each Unit Holder's Capital Account is zero.
5.8. Common Unit Holder Put Option. Each Common Unit Holder owning
Common Units as of the Fifth Anniversary Date (the "PUT RIGHT RECORD DATE") will
have the right (the "PUT RIGHT") to require the Company to redeem some or all
such Member's Common Units for the Exercise Price (defined below) on the Seventh
Anniversary Date. The Exercise Price and the manner of exercising the Put Right
are as follows:
(a) Within twenty (20) days after the Put Right Record Date the
Company shall send a notice ("EXERCISE Notice") by first class mail to all
Common Unit Holders of record informing such Common Unit Holders of the Exercise
Price and the time in which to notify the Company of their election to exercise
their Put Right(s).
(b) Each Common Unit Holder who desires to exercise its Put
Right(s) shall do so by notifying the Company of such exercise no later than the
ninetieth (90th) day after the Fifth Anniversary Date, on an exercise form to be
prepared by the Company and delivered to the Common Unit Holders concurrent with
the Exercise Notice. Any Common Unit Holder who fails to timely exercise their
Put Right will forfeit such Put Right(s).
(c) The "EXERCISE PRICE" for each Common Unit will be determined
as follows:
(1) Within ninety (90) days preceding the Put Right Record
Date the Company will obtain an appraisal on each of its Real Properties from
one or more MAI appraisers to be selected by the Board of Managers, and may
retain a business appraiser, investment bank, or other qualified Person, to
appraise the Company's other assets; such appraisals collectively referred to as
the ("APPRAISALS").
(2) The Company's Board shall retain Certified Public
Accountants ("CPAS") to calculate the value of the issued and outstanding Common
units by preparing a pro forma balance sheet using the appraised values from the
Appraisals with allowance for anticipated costs and expenses, and using the
profit and loss allocation provisions of Article 4 of this Agreement and
otherwise in accordance with Generally Accepted Accounting Principles, all of
which may be determined by the Board of Managers pursuant to specific written
instructions to the CPAs.
(3) The total value of the Common Units as calculated by the
CPAs shall then be divided by the total number of Common Units then outstanding.
This resulting amount is the Exercise Price for each Common Unit, and, if
accepted by the Board of Managers, shall be final and incontestable.
(d) All distributions from Cash From Sales distributed to electing
Common Unit Holders subsequent to the Put Right Record Date will be credited
against the Exercise Price. The Percentage Interest of remaining Members shall
be equitably adjusted, as determined by the Board of Managers in its discretion,
to account for the reduced number of Common Units outstanding.
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The Board may establish procedures, including, without limitation, the
establishment of an escrow and the requirement that the Common Unit Holder
endorse and return any Certificates in their possession and execute and deliver
transmittal letters and assignments separate from certificate, as a condition
precedent to distributing the Liquidation Price to such Common Unit Holders.
(e) If a sufficient number of Common Unit Holders exercise their
Put Rights, the continued operation of the Company beyond the Seventh
Anniversary Date may not be reasonably feasible. Therefore, no later than the
Sixth Anniversary Date, the Board of Managers will meet to determine whether the
Company should continue operations beyond the Seventh Anniversary Date. If the
Board of Managers determines in its sole discretion that the Company's
operations should not continue beyond the Seventh Anniversary Date the following
will occur:
(1) The Put Rights shall be null and void, and no Common Unit
Holder will be entitled to receive the Exercise Price.
(2) All of the Company's Properties will be sold as soon as
practicable, but in no event later than the Seventh Anniversary Date.
(3) All owners of Common Units (including, without limitation,
Common Unit Holders who exercised their Put Right(s)), will receive the
liquidation distributions to which they are entitled under this Agreement.
(4) The Company will inform all owners of Common Units of this
decision within thirty (30) days after the Sixth Anniversary Date.
(f) Notwithstanding any other provision of this Section 5.8, no
payments or distributions under this Section 5.8 shall be made to Common Unit
Holders until all Preferred Units have been redeemed.
ARTICLE 6
MEMBERS
6.1. Limited Liability. Except as otherwise provided by the Act, the
debts, obligations and liabilities of the Company, whether arising in contract,
tort or otherwise, shall be solely the debts, obligations and liabilities of the
Company, and the Members shall not be obligated personally for any such debt,
obligation or liability of the Company solely by reason of being a Member of the
Company. The Members shall not be required to lend any funds to the Company.
Each of the Members shall be liable to make payment of his, her or its
respective contributions, if any, pursuant to the Contribution Agreements and
other payments as expressly provided in this Agreement. If, and to the extent, a
Member's contribution shall be fully paid by complying with the Contribution
Agreements, such Member shall not, except as required by the express provisions
of the Act regarding repayment of sums wrongfully distributed to Members, be
required to make any further contributions.
6.2. Voting Rights of Members; Authority of Board of Managers.
(a) The Board of Managers, in its sole discretion, has full,
complete and exclusive right, power and authority in the management and control
of the Company business to do any and all things necessary to effectuate the
purpose of the Company, except as expressly set forth herein.
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The members of the Board of Managers shall devote such time as is necessary to
the affairs of the Company, and shall receive such compensation from the Company
and such reimbursement for expenses as is permitted by this Agreement and the
Bylaws. No Person dealing with the Board of Managers shall be required to
determine its authority to make any undertaking on behalf of the Company or to
determine any facts or circumstances bearing upon the existence of such
authority.
(b) Notwithstanding Section 6.2(a) above, but subject to Section
10.1(a), any merger or consolidation of the Company (where the Company is not
the surviving Entity) or vote to dissolve the Company must, (i) receive the
approval of the Board of Managers, and (ii) receive the Consent of more than
fifty percent (50%) in interest of each class of the total then outstanding
Units (or such greater percentage as is then required under the Act). The
Company may, but is not required to, provide and implement procedures for
appraisal rights for dissenting Members, and if so provided in a merge
agreement, may contain any provisions reasonably determined by the Board of
Managers.
(c) The annual meeting of the Unit Holders of the Company for the
election of Managers and for the transaction of such other business as properly
may come before such meeting shall be held in accordance with the Bylaws. The
Bylaws shall govern matters relating to, among other things, annual and special
meetings, notice, waiver of notice, adjournment, proxies, written consents,
procedures, and telephonic meetings, to the extent not inconsistent with this
Agreement.
(d) Notwithstanding any other provision of this Agreement, Members
have voting rights with respect to a particular matter (to the extent provided
herein with regard to categories of Members permitted to vote on particular
matters, and otherwise) only after such matter has first been approved by the
Board of Managers, except with regard to (i) the removal of a Manager (and the
election of a replacement therefor) as provided in this Agreement, (ii) the
amendment of this Agreement, and (iii) any matter presented at a special meeting
of Members called upon the written request of holders of at least ten percent
(10%) of the outstanding Units.
(e) For purposes of this Agreement, in order for a meeting of
Members to be considered duly held with regard to a particular question, a
quorum of more than 50% in interest of the Units which are entitled to vote at
such meeting on the particular question must be present (in person or by proxy).
Except as specifically provided otherwise in this Agreement, all Members shall
vote as one class.
(f) A Unit Holder shall be entitled to cumulate votes either (i)
by giving one (1) candidate for the office of Manager a number of votes equal to
the number of Managers to be elected multiplied by the number of votes to which
that Unit Holder's Units are normally entitled, or (ii) by distributing the Unit
Holder's votes on the same principle among as many candidates as the Unit Holder
thinks fit, if the candidate or candidate's names have been placed in nomination
prior to the voting and the Unit Holder has given notice at least ten (10) days
prior to the voting of the Unit Holder's intention to cumulate the Unit Holder's
votes. If any one Unit Holder has given such a notice, then every Unit Holder
entitled to vote may cumulate votes for candidates in nomination. The candidates
receiving the highest number of affirmative votes, up to the number of Managers
to be elected, shall be elected; votes against any candidate and votes withheld
shall have no legal effect. Cumulative voting shall not be required or allowed
for any other matter voted upon by the Unit Holders other than the election or
removal of Managers. No Manager may be removed from the Board, without cause, if
the votes against his removal would be sufficient to elect such Member if
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such votes were voted cumulatively at a meeting where all Managers, other than
the CEO-Manager, are being elected. Managers may not be elected by written
consent, and instead, may be elected only by a vote at a meeting of Members.
ARTICLE 7
MANAGERS AND OFFICERS
7.1. General Powers of Managers.
(a) Except as may otherwise be provided by the Act or by this
Agreement, the property, affairs and business of the Company shall be managed by
or under the direction of the Board of Managers. The Board of Managers may
exercise all the powers of the Company (including but not limited to deciding
whether to make any tax elections), and the Members shall have no right to act
on behalf of or bind the Company. The Board of Managers shall have the power and
authority, on behalf of the Company, to (i) hire employees and such other
agents, who may be designated as officers, consultants and Persons necessary or
appropriate to effectuate the purpose of the Company, and (ii) delegate to one
or more Persons (or to committees of the Board of Managers) its rights and
powers to manage and control the affairs of the Company. Such delegation may be
in the Bylaws or by a management agreement or other agreement with such Persons
and such delegation shall not cause the Managers to cease to be "managers"
(within the meaning of the Act) of the Company. The management agreement or
other agreement may designate a Person or Persons to be "managers" (within the
meaning of the Act) of the Company. The officers other than the CEO-Manager
shall not be "managers" (within the meaning of the Act) of the Company. The
Managers shall act only as a Board, and the individual Managers shall have no
power as such in its capacity as a Manager. Subject to the provisions of this
Agreement and the Bylaws with regard to Board of Managers, the approval of a
matter by a majority of the Managers present at a meeting at which a quorum is
present shall constitute approval by the Board of Managers (or, in the case of a
written Consent without a meeting, the approval of a matter by all of the
Managers shall constitute approval by the Board of Managers.)
(b) No contract or transaction among the Company and one or more
of its Affiliates, Managers or officers, or among the Company and any other
Entity in which one or more of the Company's Affiliates, Managers or officers
are directors or officers, or have a financial interest, shall be void or
voidable solely for this reason, or solely because the Manager or officer is
present at or participates in the meeting of the Board of Managers or of a
committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if:
(1) The material facts as to such Affiliate's, Manager's or
officer's relationship or interest as to the contract or transaction are
disclosed or are known to the Board of Managers or the committee, and the Board
of Managers or committee in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested Managers, even though
the disinterested Managers be less than a quorum; or
(2) The contract or transaction is fair as to the Company.
Interested Managers may be counted in determining the presence of a
quorum at a meeting of the Board of Managers or of a committee which authorizes
the contract or transaction.
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7.2. Number and Term of Office of Managers.
(a) The number of seats constituting the entire Board of Managers
shall be at least seven (7), and no more than thirteen (13), with the exact
number of seats on the Board of Managers to be ten (10) until changed from time
to time by resolution of the Board of Managers. Each Manager (whenever elected)
shall hold office until his or her successor has been duly elected and
qualified, or until his or her earlier death, resignation, or removal. A Manager
shall not be required to be a Member or a resident of the States of Delaware or
California. The Chief Executive Officer shall sit as a Manager and occupy one of
the seats on the Board, but shall be subject to removal and replacement solely
by the Board of Managers with or without cause for any or no reason, subject to
the rights, if any, of the CEO-Manager under a contract of employment or
management services agreement, and not by the Members. The remaining seats on
the Board will be filled by the Members.
(b) At all times the Board of Managers shall consist of only one
class, with the term of office expiring each year (with the first such
expiration to occur at the first annual meeting of Members). At the first annual
meeting of the Members, all of the Managers (other than the CEO-Manager) shall
be elected by the Members (in accordance with Section 6.2 hereof), and such
Persons shall hold office thereafter for a term of one (1) year expiring at the
next annual meeting.
(c) Notwithstanding any other provision of this Agreement, the
initial Board of Managers shall be those persons named as such in the Order.
Each initial Manager shall serve until the first meeting of the Members, or
until his or her successor is duly elected.
(d) The initial Managers, other than the CEO-Manager, shall serve
without compensation, but shall be reimbursed for reasonable expenses incurred
in connection with performing their duties as Managers. Other Managers may be
paid compensation as determined by the Board of Managers.
7.3. Officers. Pursuant to the Bylaws, the Company will have officers,
who need not be employees of the Company, who will have the rights and be
subject to the restrictions provided therein.
ARTICLE 8
LIMITATIONS ON LIABILITY AND INDEMNIFICATION
(a) No Manager or officer of the Company shall be liable,
responsible or accountable in damages or otherwise to the Company or any of the
Members for any act or omission performed or omitted by him or her, or for any
decision, except in the case of fraudulent or illegal conduct of such Person.
For purposes of this Article 8, the fact that an action, omission to act or
decision is taken on the advice of counsel for the Company shall be evidence of
good faith and lack of fraudulent conduct.
(b) To the fullest extent permitted by law, all Managers and
officers of the Company shall be entitled to indemnification from the Company
for any loss, damage or claim (including any reasonable attorney's fees incurred
by such person in connection therewith) due to any act or omission made by him
or her, except in the case of fraudulent or knowingly illegal conduct of such
Person; provided, however, that any indemnity shall be paid out of the assets of
the Company only (or
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any insurance proceeds available therefor), and no Member shall have any
personal liability on account thereof.
(c) The termination of any action, suit or proceeding by judgment,
order, settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Person acted
fraudulently or knowingly illegally.
(d) The indemnification provided by this Article 8 shall not be
deemed exclusive of any other rights to which those indemnified maybe entitled
under any agreement, vote of Members or Managers, the Order, or otherwise, and
shall inure to the benefit of the heirs, executors and administrators of such a
Person.
(e) Any repeal or modification of this Article 8 shall not
adversely affect any right or protection of a Manager or officer of the Company
existing at the time of such repeal of modifications.
The Company may, if the Board of Managers of the Company deems it
appropriate in its sole discretion, obtain insurance for the benefit of the
Company's Managers and officers, or enter into indemnification agreements with
such Managers and officers, relating to the liability of such Persons.
ARTICLE 9
TRANSFERS OF INTERESTS; ADMISSION OF NEW MEMBERS
9.1. Transfers Generally. No Membership Interest shall be Transferred,
in whole or in part, except in accordance with the terms and conditions set
forth in this Article 9 and the Transfer Application. Any Transfer or purported
Transfer of a Membership Interest not made in accordance with this Article 9
shall be null and void. The Transfer of any Membership Interests and the
admission of any new Member shall not constitute an amendment to this Agreement.
In accordance with the terms of this Agreement, the Board of Managers may, from
time to time adopt, repeal, add or replace provisions of the Bylaws to implement
the provisions of this Article 9. From time to time, the Company may, in its
sole discretion, adopt, amend or replace procedures for determining the date to
recognize a Transfer of Units, notwithstanding (i) the receipt of a duly
executed Transfer Application subsequent to the date of the Transfer, or (ii)
the receipt of notice in appropriate form in accordance with applicable law of a
Transfer by operation of law subsequent to the date of the Transfer. The Company
may conclusively rely upon any Transfer Application that is completed in
material conformity with the instructions thereto or any other evidence of
authority described in the Transfer Instructions, without any duty to
investigate or inquire into the validity or veracity of the Transfer.
9.2. Registration and Transfer of Membership Interests.
(a) The Company shall keep or cause to be kept on behalf of the
Company a register in which, subject to such reasonable regulations as it may
prescribe from time to time and subject to the provisions of Section 9.3, the
Company will provide for the registration and transfer of Membership Interests.
The Transfer Agent is hereby appointed registrar and transfer agent for the
purpose of registering Units and Transfers of such Units as herein provided. The
Company shall
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not recognize Transfers of Unit Certificates evidencing Membership Interests
unless such Transfers are effected in the manner described in this Article 9.
(b) Except as otherwise provided in Section 9.3:
(1) If the Company delivers physical possession of the Unit
Certificates to the Members: The Company shall not recognize any Transfer of
Membership Interests until the Unit Certificates evidencing such Membership
Interests are surrendered for registration of transfer and such Unit
Certificates are accompanied by a Transfer Application duly executed by the
Transferee (or the Transferee's attorney-in-fact duly authorized in writing).
Upon surrender of a Unit Certificate and delivery of the duly executed Transfer
Application, the appropriate officers on behalf of the Company shall execute and
deliver, and in the case of Units, the Transfer Agent shall countersign and
deliver, in the name of the holder or the designated Transferee or Transferees,
as required pursuant to the holder's instructions, one or more new Unit
Certificates evidencing the same aggregate number and type of Membership
Interests as was evidenced by the Unit Certificate so surrendered.
(2) If the Company retains physical possession of the Unit
Certificates: Notwithstanding Section 9.2(b)(1), the Board of Managers may, in
its sole discretion, retain (or cause the Transfer Agent to retain) physical
custody of all original Unit Certificates, and in such case, the Company (or the
Transfer Agent) shall provide only a photostat copy of the Unit Certificates to
the Unit Holders of record. In such case, the Company shall not recognize any
Transfer of Membership Interests until the Transfer Application has been duly
executed and delivered to the Company by the Transferee (or the Transferee's
attorney-in-fact duly authorized in writing). The Transfer Agent shall
countersign and retain physical possession of, in the name of the holder or the
designated Transferee or Transferees, as required pursuant to the holder's
instructions, one or more new Unit Certificates evidencing the same aggregate
number and type of Membership Interests as was evidenced by the Unit Certificate
so surrendered.
(3) No charge shall be imposed by the Company for such
Transfer; provided, that as a condition to the issuance of any new Unit
Certificate under this Section 9.2, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed
with respect thereto. If a Transferee fails to notify the Company of a Transfer
within the time period specified in the Transfer Application, the Company may
charge such Transferee, or successor in interest, a reasonable fee for any
additional costs incurred by the Company as a consequence thereof, which fee
will be deducted from any distributions otherwise to be made to such Transferee.
(c) Until admitted as a Substituted Member pursuant to Section
9.4, the Transferee of a record holder of a Membership Interest who has properly
executed and delivered a Transfer Application to the Company shall be an
Assignee in respect of such Membership Interest. Members may include custodians,
nominees of any other individual or entity in its own or any representative
capacity.
(d) A Transferee of a Membership Interest who has completed and
delivered a Transfer Application shall be deemed to have (i) requested admission
as a Substituted Member, (ii) agreed to comply with and be bound by and to have
executed this Agreement, (iii) represented and warranted that such Transferee
has the right, power and authority and, if an individual, the capacity
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to enter into this Agreement, (iv) granted the powers of attorney set forth in
this Agreement, (v) given the Consents and approvals and made the waivers
contained in this Agreement, (vi) directed the Secretary of the Company (or
other Person designated by the Board of Managers) to execute this Agreement on
such Person's behalf which shall be deemed to be a sufficient act to comply with
the requirements of Section 18-101(7)(a) of the Act to cause that Person to
become an Assignee and to bind that Person to the terms and conditions of this
Agreement. If any Unit Certificate, and the Membership Interest represented
thereby, is Transferred to an Transferee by operation of law (in any manner or
by any means) and not otherwise in compliance with this Article 9, the
acceptance by such Transferee of any interest in or benefits of such Transferred
Units shall be deemed to be a sufficient act to comply with Section 18-101(7)(a)
of the Act and shall have the same consequences as set forth in the previous
sentence, and such Transferee shall provide such information as reasonably
requested by the Company to properly maintain its books and records and to
comply with applicable law, and if the Company determines that it does not have
sufficient information, the Company may make any assumption relating thereto as
it may determine in its sole discretion.
9.3. Restrictions on Transfers.
(a) Notwithstanding the other provisions of this Article 9, no
Transfer of any Membership Interests shall be made if such Transfer would (i)
violate the then applicable federal or state securities laws or rules and
regulations of the Securities Exchange Commission, any state securities
commission or any other governmental authority with jurisdiction over such
Transfer, (ii) terminate the existence or qualification of the Company under the
laws of the jurisdiction of its formation, or (iii) cause the Company to be
treated as an association taxable as a corporation or otherwise to be taxed as
an entity for federal income tax purposes.
(b) The Board of Managers may impose restrictions on the Transfer
of Membership Interests if it determines based upon a subsequent opinion of
counsel that such restrictions are necessary to avoid a significant risk of the
Company being treated as an association taxable as a corporation or otherwise
being taxed as an entity.
(c) Subject to applicable law, the Board of Managers may, by
resolution, (i) impose restrictions on Transfer or registration of transfer of
Units of the Company, and (ii) require as a condition to the issuance or
Transfer of such Units that the person or persons to whom such Units are to be
issued or Transferred agree in writing to such restrictions. In the event that
any such restrictions on Transfer or registration of transfer are so imposed,
the Company shall require that such restrictions be conspicuously noted on all
Unit Certificates representing such Units.
9.4. Admission of Substituted Member. By Transfer of a Membership
Interest in accordance with Article 9.2, the transferor shall be deemed to have
given the Transferee the right to seek admission as a Substituted Member subject
to the conditions of, and in the manner permitted under, this Agreement. A
transferor of a Unit Certificate representing a Membership Interest shall,
however, only have the authority to convey to a purchaser or other Transferee
who does not execute and deliver a Transfer Application (a) the right to
negotiate such Unit Certificate to a purchaser or other Transferee and (b) the
right to Transfer the right to request admission as a Substituted Member to such
purchaser or other Transferee in respect of the Transferred Membership
Interests; and, unless and until a duly executed Transfer Application is
delivered by the Transferee to the Company with respect to such Units, the
transferor will be deemed to be the owner of record thereof for all purposes of
this Agreement, including, without limitation, the allocation of profits
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and losses and the party to who distributions will be made. Each Transferee of a
Membership Interest (including any nominee holder or an agent acquiring such
Membership Interest for the account of another Person) who executes and delivers
a Transfer Application shall, by virtue of such execution and delivery, be an
Assignee and be deemed to have applied to become a Substituted Member with
respect to the Membership Interests so Transferred to such Person. Such Assignee
shall become a Substituted Member (x) at such time as the Board of Managers, or
its designate, consents thereto, which consent may be given or withheld in the
Board of Manager's discretion, and (y) when any such admission is shown on the
books and records of the Company. If such Consent is withheld, such Transferee
shall be an Assignee. An Assignee shall have an interest in the Company
equivalent to that of a Member with respect to allocations and distributions,
including liquidating distributions, of the Company. With respect to voting
rights attributable to Membership Interests that are held by Assignees, the
Board of Managers shall be deemed to be the Member with respect thereto and
shall, in exercising the voting rights in respect of such Membership Interests
on any matter, vote such Membership Interests at the written direction of the
Assignee who is the holder of such Membership Interests. If no such written
direction is received, such Membership Interests will not be voted. An Assignee
shall have no other rights of a Member.
9.5. Lender Ownership Limit.
(a) No Lender (as defined below) may own Units nor shall Units be
accepted, purchased, or in any manner acquired by any Lender if such issuance or
Transfer would result in a Lender owning Units.
(b) If any Units are accepted, purchased, or in any manner
acquired by any Lender resulting in a violation of Section 9.5(a) hereof, any
such purchase or acquisition shall be null and void with respect to such Units
("EXCESS UNITS"). If the last clause of the foregoing sentence is determined to
be invalid by virtue of any legal decision, statute, rule or regulation, such
Lender shall be conclusively deemed to have acted as an agent on behalf of the
Company in acquiring the Excess Units and to hold such Excess Units on behalf of
the ultimate owner of such Excess Units. Any Lender who receives any
distribution paid on account of Excess Units shall hold and retain such
distributions an agent for the ultimate owner of such Excess Units.
While the Excess Units are so held on behalf of the ultimate owner of
such Excess Units, such Excess Units shall not have any voting rights and shall
not be considered for purposes of any Member vote and/or for determining a
quorum for such a vote. The Excess Units shall be treated as outstanding Units.
In the event that a Member knowingly holds Excess Units and the other
Members' basis for federal income tax purposes is reduced, such Member shall be
required to indemnify the Company for the full amount of any damages and
expenses (including the Company's estimate of the costs (including tax costs) to
the other Members, reasonable attorneys' fees and administrative costs)
resulting from the shift of basis for federal income tax purposes.
Upon discovering the ownership of any Excess Units, the Board of
Managers may (i) cause the Company to immediately redeem such Excess Units at
the Redemption Price (as defined below) or (ii) grant the holder thereof thirty
(30) days to Transfer such Excess Units to any Person whose ownership of such
Excess Units would not result in a violation of Section 9.5(a) hereof. Upon such
permitted Transfer, the Company shall pay or distribute to the Transferee any
distributions on the
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Excess Units not previously paid or distributed. If such Excess Units are not
Transferred within such 30 day period, the Company will redeem such Units at the
Redemption Price (as defined below). For purposes of this Section 9.5, the
"REDEMPTION PRICE" shall mean the lesser of the price paid for such Excess Units
by the Member in whose possession the redeemed Units were Excess Units or the
book value of the Excess Units represented by the positive balance in the
Capital Account relating to such Units.
(c) For purposes of this Section 9.5, the term "LENDER" shall mean
(i) any Person who is currently owed money by the Company in an amount exceeding
Five Hundred Thousand ($500,000), and (ii) any Person related to a Person
described in (i) under the rules of Treasury Regulation Section 1.752-4(b).
(d) The Board of Managers may exempt a Lender from the provisions
of this Section 9.5 upon receipt of an opinion of counsel that other Members
will not suffer any material negative affects as a consequence of such Lender's
owning Units.
(e) If any provision of this Section 9.5 or any application
thereof is determined to be invalid by any federal or state court having
jurisdiction over the issue, the validity of the remaining provisions shall not
be affected and other applications of such provision shall be affected only to
the extent necessary to comply with the determination of such court.
ARTICLE 10
DISSOLUTION AND TERMINATION
10.1. Events of Dissolution.
(a) In accordance with Section 18-801 of the Act, and the
provisions therein permitting this Agreement to specify the events of the
Company's dissolution, the Company has perpetual existence but shall be
dissolved and the affairs of the Company wound up upon the occurrence of any of
the following events:
(i) the vote of the Board of Managers and the Members pursuant
to Sections 6.2(b) and (e) hereof;
(ii) the entry of a decree of judicial dissolution under
Section 18-802 of the Act, or
(iii) the sale of all or substantially all of the Properties
of the Company.
The death, retirement, resignation, expulsion, bankruptcy (as defined
in Section 18-304 of the Act) or dissolution of a Member or the occurrence of
any other event that terminates the continued membership of a Member in the
Company, shall not cause the dissolution of the Company except to the extent
specified above in this Section 10.1(a).
(b) Dissolution of the Company shall be effective on the day on
which the event occurs which gives rise to the dissolution, but the Company
shall not terminate until the assets of the Company shall have been distributed
as provided herein and a certificate of cancellation of the Certificate has been
filed with the Secretary of State of the State of Delaware.
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10.2. Application of Assets. In the event of dissolution, the Company
shall conduct only such activities as are necessary to wind up its affairs
(including the sale of the assets of the Company in an orderly manner), and the
assets of the Company shall be applied, first, as required by Section
18-804(a)(1) of the Act, and then in the manner, and in the order of priority,
set forth in Article 5. Notwithstanding anything herein to the contrary, in the
event the Company is liquidated within the meaning of Treasury Regulation
Section 1.704-1(b)(2)(ii)(g), liquidation distributions shall be made by the end
of the taxable year in which the Company liquidates or, if later, within ninety
(90) days of the date of such liquidation. Distributions may be made to a trust
for the purposes of an orderly liquidation of the Company by the trust in
accordance with the Act.
10.3. Gain or Losses in Process of Liquidation. Any gain or loss on the
disposition of Company Property in the process of liquidation shall be credited
or charged to the Capital Accounts of Members in accordance with the provisions
of Article 4. Any property distributed in-kind in the liquidation shall be
valued and treated as though the property were sold at its fair market value and
the cash proceeds were distributed. The difference between the fair market value
of property distributed in kind and its Book Value shall be treated as a gain or
loss on the sale of such property and shall be credited or charged to the
Capital Account of Members in accordance with Article 4; provided, that no
Member shall have the right to request or require the distribution of the assets
of the Company in kind.
10.4. Procedural and Other Matters.
(a) Upon dissolution of the Company and until the filing of a
certificate of cancellation as provided in Section 10.4(b), the Persons winding
up the affairs of the Company may, in the name of, and for and on behalf of, the
Company, prosecute and defend suits, whether civil, criminal or administrative,
settle and close the business of the Company, dispose of and convey the property
of the Company, discharge or make reasonable provision for the liabilities of
the Company, and distribute to the Members any remaining assets of the Company,
in accordance with this Article 10 and all without affecting the liability of
Members and Managers and without imposing liability on a liquidating trustee.
(b) The Certificate may be canceled upon the dissolution and the
completion of winding up of the Company, by any Person authorized by the Board
of Managers to cause such cancellation in connection with such dissolution and
winding up.
ARTICLE 11
APPOINTMENT OF ATTORNEY-IN-FACT
11.1. Appointment and Powers.
(a) Each Member hereby irrevocably constitutes and appoints the
Secretary with full power of substitution, as his, her or its true and lawful
attorney-in-fact, with full power and authority in his, her or its name, place
and stead to execute, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents, instruments and conveyances as may be
necessary or appropriate to carry out the provisions or purposes of this
Agreement, including, without limitation, the following: (i) the Certificate;
(ii) all other certificates and instruments and amendments thereto that the
Board of Managers deems appropriate to qualify or continue the Company as a
limited liability company in the jurisdiction in which the Company may conduct
business; (iii) all
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instruments that the Board of Managers deems appropriate to reflect a change or
modification of this Agreement in accordance with the terms of this Agreement;
(iv) all conveyances and other instruments that the Board of Managers deems
appropriate to reflect the dissolution and termination of the Company; (v) all
fictitious or assumed name certificates required or permitted to be filed on
behalf of the Company; (vi) any and all documents necessary to admit Members to
the Company, or to reflect any change or Transfer of a Member's Units, or
relating to the admission or increased Capital Contribution of a Member; (vii)
any amendment or other document to be filed as referenced in Section 3.1; and
(viii) all other instruments that may be required or permitted by law to be
filed on behalf of or relating to the Company and that are not inconsistent with
this Agreement.
The authority granted by this Section 11.1 is a special power of
attorney coupled with an interest, is irrevocable, and shall not be affected by
the subsequent incapacity or disability of the Member who granted it; may be
exercised by a signature for each Member or by a single signature of any such
Person acting as attorney-in-fact for all of them; and shall survive the
Transfer by a Member of the whole or any portion of his, her or its Units.
11.2. Presumption of Authority. Any Person dealing with the Company may
conclusively presume and rely upon the fact that any instrument referred to
above, executed by such Person acting as attorney-in-fact, is authorized,
regular and binding, without further inquiry.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1. Notices.
(a) Except as otherwise provided in this Agreement or in the
Bylaws, any and all notices, consents, offers, elections and other
communications required or permitted under this Agreement shall be deemed
adequately given only if in writing and the same shall be delivered either in
hand or by U.S. mail or Federal Express or similar expedited commercial carrier,
addressed to the recipient of the notice, postage prepaid and registered or
certified with return receipt requested (if by mail), or with all freight
charges prepaid (if by Federal Express or similar carrier).
(b) All notices, demands, and requests to be sent hereunder shall
be deemed to have been given for all purposes of this Agreement upon the date of
receipt or refusal.
(c) All such notices, demands and requests shall be addressed as
follows: (i) if to the Company, to its principal place of business, as set forth
in Article 2 hereof, and (ii) if to a Member, to the address of such Member
listed on the Company's Member register.
(d) By giving to the other parties written notice thereof, parties
hereto and their respective successors and assigns shall have the right from
time to time and at any time during the term of this Agreement to change their
respective addresses effective upon receipt or refusal by the other parties of
such notice and each shall have the right to specify as its address any other
address.
12.2. Word Meanings. The words such as "herein", "hereinafter",
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to
the subdivision in which such words appear unless the context otherwise
requires. The singular shall include the plural and the masculine gender shall
include the feminine and neuter, and vice versa, unless the context otherwise
requires.
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12.3. Binding Provisions. The covenants and agreements contained herein
shall be binding upon, and insure to the benefit of, the heirs, legal
representatives, successors and assigns of the respective parties hereto.
12.4. Amendment, Modification, and Interpretation. Except with respect
to those provisions of this Agreement which may be modified by the Board of
Managers alone, this Agreement may be amended, modified, or supplemented upon
receiving the affirmative Consent of more than fifty percent (50%) in interest
of each of the Preferred Units (voting as a class) and the Common Units (voting
as a class); provided, however, that once the Preferred Units have been
completely redeemed and liquidated, the Consent of the Preferred Units as a
class shall terminate and no longer be applicable. Notwithstanding anything to
the contrary contained herein, the Bylaws may be amended by the affirmative vote
of a majority of all members of the Board of Managers as provided in the Bylaws
without any further vote, consent or approval of any Member or other Person. The
Board of Managers shall have the authority and power to reasonably interpret
this Agreement and Bylaws, and may resolve actual or perceived ambiguities
therein or herein as it reasonably determines.
12.5. Waiver. The waiver by any party hereto of a breach of any
provisions contained herein shall be in writing, signed by the waiving party,
and shall in no way be construed as a waiver of any succeeding breach of such
provision or the waiver of the provision itself.
12.6. Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, without regard to such
state's laws concerning conflicts of laws. In the event of a conflict between
any provisions of this Agreement and any nonmandatory provisions of the Act, the
provision of this Agreement shall control and take precedence.
12.7. Severability of Provisions. Each provision of this Agreement
shall be deemed severable, and if any part of any provision is held to be
illegal, void, voidable, invalid, nonbinding or unenforceable in its entirety or
partially or as to any party, for any reason, such provision may be changed,
consistent with the intent of the parties hereto, to the extent reasonably
necessary to make the provision, as so changed, legal, valid, binding and
enforceable. If any provision of this Agreement is held to be illegal, void,
voidable, invalid, nonbinding or unenforceable in its entirety or partially or
as to any party, for any reason, and if such provision cannot be changed
consistent with the intent of the parties hereto to make it fully legal, valid,
binding and enforceable, then such provision shall be stricken from this
Agreement, and the remaining provisions of this Agreement shall not in any way
be affected or impaired, but shall remain in full force and effect.
12.8. Headings. The headings contained in this Agreement have been
inserted for the convenience of reference only, and neither such headings nor
the placement of any term hereof under any particular heading shall in any way
restrict or modify any of the terms or provisions hereof.
12.9. Further Assurances. The Members shall execute and deliver such
further instruments and do such further acts and things as may be required to
carry out the intent and purposes of this Agreement.
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12.10. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
12.11. Entire Agreement. This Agreement and the Exhibits constitute the
entire agreement among the parties hereto with respect to the transactions
contemplated herein, and supersede all prior understandings or agreements, oral
or written, among the parties.
12.12. Arbitration. If there is a dispute between any party to this
Agreement (including any party hereof pursuant to Section 18-101(7)(a) of the
Act) relating to or arising out of this Agreement, the dispute shall be
submitted to the American Arbitration Association for arbitration in Sacramento,
California. The costs of the arbitration, including any American Arbitration
Association administration fee, the arbitrator's fee, and costs for the use of
facilities during the hearings, shall be born equally by the parties. Each party
shall bear and pay the cost of its own attorney's fees. The arbitrator shall not
have any power to alter, amend, modify or change any of the terms of this
Agreement, nor to grant any remedy which is either prohibited by the terms of
this Agreement or not available in a court of law. The decision of the American
Arbitration Association shall be binding on the parties. The parties hereby
consent to the personal jurisdiction and venue in the courts in Sacramento,
California. Should any dispute or claim arise that is not subject to arbitration
as set forth above, then all parties waive any rights they may have to a jury
trial.
IN WITNESS WHEREOF, all Persons becoming Initial Members as of the
Effective Date; all Persons thereafter who become Additional Members; all
Transferees who become Assignees, and all Persons who become a party hereto in
accordance with Section 2.8:
By:
-----------------------------------
Name: Xxxxx X. Ing
Title: Secretary/Attorney-In-Fact
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INDEX OF EXHIBITS
Exhibit A......... Bylaws of JCM Partners, LLC
Exhibit B......... Certificate of Formation
Exhibit C......... Transfer Application
Exhibit D......... Transfer Instructions
Exhibit E......... Unit Certificate
