EXHIBIT 10.71
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EXECUTION COPY
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LIMITED LIABILITY COMPANY AGREEMENT
OF
CERES ORGANICS, LLC
A DELAWARE LIMITED LIABILITY COMPANY
AS OF JULY 2, 2001
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THE SECURITIES THAT ARE THE SUBJECT OF THIS CERES ORGANICS, LLC LIMITED
LIABILITY COMPANY AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE MICHIGAN UNIFORM
SECURITIES ACT AND ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH
HEREIN.
CERES ORGANICS, LLC
LIMITED LIABILITY COMPANY AGREEMENT
This Limited Liability Company Agreement (the "Agreement") is dated as
of July 2, 2001 and is between and among the persons set forth on Exhibit A
(each a "Member" and collectively the "Members").
WHEREAS, the Members have caused a Certificate of Formation for Ceres
Organics, LLC (the "Company") to be filed with the Secretary of State of
Delaware, and they intend to form a limited liability company in accordance with
the Delaware Limited Liability Company Act, Chapter 18, Title 6, Delaware Code,
Section 18-101 ET. SEQ. (the "Act"); and
WHEREAS, the Members wish to provide for the operation and management
of the Company for the purposes stated in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, promises and
agreements contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I
FORMATION OF THE COMPANY
SECTION 1.1. FORMATION.
The Members acknowledge that a Certificate of Formation for the Company
was filed on their behalf with the Delaware Secretary of State as of July 3,
2001. Each Member agrees to be bound by and comply with the provisions of that
Certificate of Formation and this Agreement.
SECTION 1.2. NAME.
The name of the Company will be "Ceres Organics, LLC" or any other name
that the Members may select from time to time.
SECTION 1.3. REGISTERED OFFICE AND AGENT FOR SERVICE OF PROCESS.
The registered office and the Company's resident agent for service of
process in the State of Delaware will be The Corporation Trust Company, 0000
Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
SECTION 1.4. PURPOSE AND CHARACTER OF BUSINESS.
The Company has been organized for the purpose of engaging in all
lawful activities that are or may become reasonably necessary or useful to the
Company or its Members as determined by the Members, and in particular to be a
supplier of certified organic semolina flour, durum patent flour, durum wheat,
other pasta wheat-based flours and products (the "Business").
SECTION 1.5. POWERS.
The Company will have all powers that are lawful and necessary or
convenient to carry out its purpose as described above in section 1.4. Except as
otherwise expressly provided in this Agreement, no Member will have any
authority to act for, to bind, to commit or to assume any obligation or
responsibility on behalf of the Company, its properties or any other Member.
SECTION 1.6. DURATION.
The Company is to have perpetual existence, unless sooner dissolved by
agreement of the Members or by operation of law.
SECTION 1.7. FILINGS, REPORTS AND FORMALITIES.
The Managers will cause the Company to make all filings and to submit
all reports required under the Act with respect to the Company. The Managers
will also cause the Company to make any filings or to take any actions required
of the Company under the laws of each jurisdiction where the Company conducts
its business. The Company will comply with all requirements necessary to
maintain the limited liability of the Company's Members under Delaware law and
under the laws of each jurisdiction in which the Company does its business.
ARTICLE II
MEMBERS
SECTION 2.1. REPRESENTATIONS BY THE MEMBERS.
To induce the other Member to enter into this Agreement, each Member
represents and warrants to the other Member that, as of the date of this
Agreement:
SECTION 2.1.1. Its execution and delivery of this Agreement
and its performance of all obligations under this Agreement do
not and will not result in a breach, violation or default
under any agreement, commitment, order, judgment or decree by
which it or any of its properties are bound, or any statute,
regulation, order or other law to which it is subject;
SECTION 2.1.2. It is capable, financially and in all other
respects, of fulfilling its responsibilities under this
Agreement; and
SECTION 2.1.3. This Agreement is binding upon and enforceable
against it in accordance with the Agreement's terms.
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SECTION 2.2. NEW MEMBERS.
After the filing of the Company's original Certificate of Formation, a
person or entity may be admitted as an additional Member upon the unanimous
written consent of the Members provided that all new Members consent to be bound
by all the terms and conditions of this Agreement and execute a counterpart.
SECTION 2.3. RESTRICTIONS ON TRANSFER.
No Member will sell, transfer, pledge, make a gift of, encumber or
otherwise dispose of or assign any or all of its interest in the Company without
the prior written consent of all the other Members except as set forth in
section 4.6.
SECTION 2.4. RIGHTS OF CREDITOR AGAINST A MEMBER.
On application to a court of competent jurisdiction by any judgment
creditor of a Member, the court may charge the membership interest of the Member
with payment of the unsatisfied amount of the judgment with interest. To the
extent so charged, the judgment creditor has only the rights of an assignee of
the membership interest. This Agreement shall not deprive any Member of the
benefit of any exemption laws applicable to the Member's membership interest.
SECTION 2.5. ANNUAL MEETINGS.
An annual meeting of the Members shall be held at such time and on such
date as shall be fixed by the Managers commencing with the calendar year after
the year in which the Agreement is executed. The purpose of the meeting shall be
to elect the Managers and Officers and the transaction of such other business as
may come prior to the meeting. If the election of the Managers or the Officers
shall not be held on the date designated herein for the annual meeting of the
Members, or at the adjournment thereof, the Managers shall cause the election to
be held at a special meeting of the Members as soon thereafter as may be
convenient.
SECTION 2.5.1. Failure to hold the annual meeting at the
designated time shall not work a forfeiture or dissolution of
the Company.
SECTION 2.5.2. At the first annual meeting of Members and at
each annual meeting thereafter, the Members shall elect the
Managers and Officers to hold office until the next succeeding
annual meeting.
SECTION 2.6. SPECIAL MEETINGS.
Special meetings of the Members may be called by the Managers or by
unanimous consent of the Members entitled to vote at the meeting, or by such
other persons as may be provided in the Certificate of Formation.
SECTION 2.7. PLACE OF MEETINGS.
The Managers may determine whether meetings of Members shall be held:
(i) at the principal office of the Company; (ii) by means of remote
communication; or (iii) at
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such other place, if any, whether within or outside of the State of Delaware, as
may be named in the notice of meeting provided to the Members.
SECTION 2.8. NOTICE OF MEMBERS' MEETINGS.
SECTION 2.8.1. Except where some other notice is required by
law, notice by a form of electronic transmission consented to
by the Member to whom the notice is given or written notice of
each meeting of Members, stating the place, if any, date and
hour of the meeting, the means of remote communications, if
any, by which the Members may be deemed to be present in
person and vote at such meeting, and, in case of a special
meeting, the purpose for which the meeting is called shall be
delivered not less than ten days nor more than fifty days
before the date of the meeting, either personally, by mail or
electronic mail, by or at the direction of the Managers or
person calling the meeting to each Member of record entitled
to vote at such meeting.
SECTION 2.8.2. Notice to Members, if mailed, shall be deemed
delivered as to any Member when deposited in the United States
mail, addressed to the Member, with postage prepaid, but, if
three successive letters mailed to the last-known address of
any Member are returned as undeliverable, no further notices
to such Member shall be necessary until another address for
such Member is made known to the Company.
SECTION 2.8.3. Notice to Members, if sent by electronic
transmission, shall be deemed delivered as to any Member
provided that any such electronic transmission sets forth or
is delivered with information from which the Company can
determine the date on which such electronic transmission was
transmitted and that it was sent to the electronic address the
Member provided to the Company.
SECTION 2.8.4. When a meeting is adjourned to another time or
place, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at
which the adjournment is taken. At the adjourned meeting the
Company may transact any business that might have been
transacted at the original meeting. If the adjournment is for
more than thirty days, a notice of the adjourned meeting shall
be given to each Member entitled to vote at the meeting.
SECTION 2.9. WAIVER OF NOTICE.
SECTION 2.9.1. When any notice is required to be given to any
Member of the Company under the provisions of the Certificate
of Formation or this Agreement, a waiver thereof in writing
signed by the person entitled to such notice or a waiver by
electronic transmission by the person entitled to such notice,
whether before, at, or after the time stated therein, shall be
equivalent to the giving of such notice.
SECTION 2.9.2. By attending a meeting, a Member:
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2.9.2.1. Waives objection to lack of notice or
defective notice of such meeting unless the Member,
at the beginning of the meeting, objects to the
holding of the meeting or the transacting of business
at the meeting; and
2.9.2.2. Waives objection to consideration at such
meeting of a particular matter not within the purpose
or purposes described in the meeting notice unless
the Member objects to considering the matter when it
is presented.
SECTION 2.10. VOTING RECORD.
The person having charge of the membership records of the Company shall
prepare and make, at least ten days before every meeting of Members, a complete
record of the Members entitled to vote at the meeting, arranged in alphabetical
order and showing the address of each Member. Such record shall be open to the
examination of any Member, for any purpose germane to the meeting, during usual
business hours, for a period of at least ten days prior to the meeting: (i) on a
reasonably accessible electronic network, provided that the information required
to gain access to such list is provided with the notice of the meeting, or (ii)
during usual business hours, at the principal place of business of the Company.
The original membership records shall be the only evidence as to the identity of
the Members entitled to examine the record or transfer books or to vote at any
meeting of Members.
SECTION 2.11. QUORUM OF MEMBERS - VOTE REQUIRED.
Unless otherwise provided in the Certificate of Formation, all Members
entitled to vote shall constitute a quorum at the meeting of Members. If a
quorum is present, the unanimous affirmative vote of the Members represented at
the meeting and entitled to vote on the subject matter shall be the act of the
Members. If a quorum is not represented at any meeting of the Members, such
meeting may be adjourned for a period not to exceed sixty days at any one
adjournment.
SECTION 2.12. VOTING OF MEMBERSHIPS BY CERTAIN MEMBERS.
SECTION 2.12.1. Membership standing in the name of a
corporation may be voted by such officer, agent or proxy as
the by-laws of such corporation may prescribe, or, in the
absence of such provision, as the Board of Directors of such
corporation may determine. If a Member is a corporation,
trust, or other entity and is dissolved or terminated, the
powers of that Member may be exercised by its legal
representative or successor.
SECTION 2.12.2. If a Member who is an individual dies or a
court of competent jurisdiction adjudges the Member to be
incompetent to manage the Member's person or the Member's
property, the Member's executor, administrator, guardian,
conservator, or other legal representative may exercise all of
the Member's rights for the purpose of settling the Member's
estate or administering the Member's property.
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SECTION 2.12.3. A Member whose shares are pledged shall be
entitled to vote such membership until the membership has been
transferred into the name of the pledgee. No transfer to a
pledgee may occur without the unanimous consent of the
remaining Members.
SECTION 2.13. INFORMAL ACTION BY MEMBERS.
SECTION 2.13.1. Unless the Certificate of Formation provides
otherwise, action required or permitted to be taken at a
Members' meeting may be taken without a meeting if the action
is evidenced by one or more written consents describing the
action taken, signed by each Member entitled to vote. Action
taken under this subsection 2.13.1 is effective when all
Members entitled to vote have signed the consent, unless the
consent specifies a different effective date. Any copy,
facsimile, electronic transmission or other reliable
reproduction of a consent in writing may be substituted or
used in lieu of the original writing for any and all purposes
for which the original could be used, provided that such copy,
facsimile, electronic transmission or other reproduction shall
be a complete reproduction of the entire writing.
SECTION 2.13.2. A telegram, cablegram or other electronic
transmission consenting to an action taken and transmitted by
a Member or a person authorized to act for a Member, shall be
deemed to be written, signed and dated for the purposes of
this subsection 2.13.2, provided that any such telegram,
cablegram or other electronic transmission sets forth or is
delivered with information from which the Company can
determine (i) that the telegram, cablegram or other electronic
transmission was transmitted by the Member or by a person
authorized to act for the Member and (ii) the date on which
such Member or authorized person transmitted such telegram,
cablegram or other electronic transmission. The date on which
such telegram, cablegram or other electronic transmission is
transmitted shall be deemed to be the date on which such
consent was signed. No consent given by telegram, cablegram or
other electronic transmission shall be deemed to have been
delivered until such consent is reproduced in paper form and
until such paper form shall be delivered to the Secretary of
the Company.
SECTION 2.13.3. Unanimous written consent of the Members
entitled to vote has the same force and effect as a unanimous
vote of such Members and may be stated as such in any
document.
SECTION 2.14. VOTING BY BALLOT.
Voting on any question or in any election may be by voice vote unless
the presiding officer shall order or any Member shall demand that voting be by
ballot.
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SECTION 2.15. RESPONSIBILITIES OF MEMBERS.
The day-to-day business and affairs of the Company shall be allocated
among the Members as follows (or as otherwise determined by the Managers):
SECTION 2.15.1. ANNIE'S RESPONSIBILITIES. Annie's Homegrown,
Inc. ("Annie's") shall be responsible for providing the
following day-to-day services for the Company: the financial,
accounting, marketing and administrative aspects, including
billing customers, paying vendors, overseeing licensing,
certification, taxation, legal, and certain selling and
marketing tasks as mutually agreed upon by all Members. Upon
execution of this Agreement and on behalf of the Company,
Annie's shall:
2.15.1.1. Proceed to collect the remaining
receivables that the Company assumes from Ceres
Organic Harvest, Inc. ("Ceres") and all on-going
receivables;
2.15.1.2. Pay the payables and other liabilities that
the Company assumes from Ceres, which shall be no
greater than $125,000, and all on-going payables and
liabilities; and
2.15.1.3. Prepare an opening balance sheet, attached
as Exhibit B, setting forth the assets and
liabilities on which the Company's working capital is
based (the "Opening Balance Sheet").
SECTION 2.15.2. CERES' RESPONSIBILITIES. Ceres shall be
responsible for providing the following day-to-day services
for the Company: the sourcing, manufacturing, marketing and
quality control aspects, including purchasing, logistics,
overseeing production, inspection, maintaining compliance with
organic certification rules and regulations, quality control
and certain selling and marketing tasks as mutually agreed
upon by all Members.
SECTION 2.15.3. MANAGEMENT FEES. Each Member is entitled to
receive management fees to fully reimburse it for all services
and out-of-pocket costs rendered on behalf of the Company.
Each Member shall submit a monthly management fee invoice to
the Company for all agreed, out-of-pocket costs and relevant
management services rendered by such Member, including but not
limited to consulting, management, accounting services, rent
and licenses, at cost on a pro-rated basis of percentage of
use. The other Member shall approve each monthly management
fee invoice submitted by a Member prior to payment by the
Company.
SECTION 2.15.4. PAYMENT FOR BORROWING COSTS. If the Managers
determine at any time that additional funds are needed to meet
the expenses and obligations of the Company, Annie's shall
have the right to lend the Company the amount of the
additional funds needed by establishing a revolving line of
credit in the Company's favor (the
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"Revolving Loans"), pursuant to the Revolving Line of Credit
Agreement, Revolving Demand Note and Security Agreement
attached as Exhibits C, D and E respectively. The Company
agrees to repay all Revolving Loans under the following terms
and conditions:
2.15.4.1. All Revolving Loans that Annie's makes to
the Company shall bear interest at a rate mutually
agreed upon by the Members and Annie's at the time
such Revolving Loans are made; and
2.15.4.2. Annie's shall submit to the Company a
monthly invoice for Annie's borrowing costs on any
such Revolving Loans and the Company shall remit such
payment on the last day of the following month.
ARTICLE III
MANAGEMENT OF THE COMPANY
SECTION 3.1. MANAGERS.
The initial Managers of the Company shall be as stated in Exhibit A to
this Agreement. The number of Managers may be increased or decreased by
amendment to this Agreement, but no decrease shall have the effect of shortening
the term of any incumbent Managers. The initial Managers shall hold office until
the first annual meeting of Members and until their successor or successors have
been elected and qualified. With respect to the rights of Members to vote for
the Managers, the Managers shall be elected by unanimous vote of the Members.
The Managers shall hold office until the next annual meeting of Members or until
their successor or successors shall have been elected and qualified.
SECTION 3.2. BOARD OF DIRECTORS.
The Managers shall act as the Company's Board of Directors.
SECTION 3.3. ELECTION OF OFFICERS.
The Officers of the Company shall be a President, a Vice-President, a
Treasurer, a Secretary and such other officers as the Managers may elect or
appoint (individually, an "Officer" and collectively, the "Officers"). The
initial Officers of the Company shall be as stated in Exhibit A to this
Agreement. The number of Officers may be increased or decreased by amendment to
this Agreement, but no decrease shall have the effect of shortening the term of
any incumbent Officer. The initial Officers shall hold office until the first
annual meeting of Members and until their successor or successors have been
elected and qualified. With respect to the rights of Members to vote for the
Officers, the Officers shall be elected by unanimous vote of the Members. The
Officers shall hold office until the next annual meeting of Members or until
their successor or successors shall have been elected and qualified.
SECTION 3.3.1. PRESIDENT. The President shall be the chief
executive officer of the Company. Subject to the direction of
the Managers, the
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President shall have general and active charge, control and
supervision over the overall management and direction of the
business, property and affairs of the Company and for all
other matters not expressly reserved to the other Officers and
the Board of Directors. The President shall further be
responsible for overseeing that the responsibilities of Ceres
under subsection 2.15.2 are discharged. The President shall
preside, when present, at all meetings of the Members and of
the Officers. In the absence or disability of the President,
or in case of an unfilled vacancy in that office, the Managers
may designate the Vice-President or other Officer of the
Company to perform the duties and exercise the powers of the
President.
SECTION 3.3.2. VICE-PRESIDENT. Unless another Officer of the
corporation is so designated by the Managers, the
Vice-President shall be the chief operating officer of the
Company and shall, subject to the direction of the Managers,
have general responsibility for its day-to-day operations and
for all other matters not expressly reserved to the other
Officers and the Board of Directors. The Vice-President shall
further be responsible for overseeing that the
responsibilities of Annie's under subsection 2.15.1 are
discharged. In addition, the Vice-President shall have such
other powers and perform such other duties as may be assigned
him by the Managers. In the absence or disability of the
Vice-President, or in case of an unfilled vacancy in that
office, the Managers may designate the Secretary or other
Officer of the Company to perform the duties and exercise the
powers of the Vice-President.
SECTION 3.3.3. TREASURER. The Treasurer shall have
responsibility for the care and custody of the funds and books
of account of the Company and shall have and exercise all the
powers and duties commonly incident to such office. The
Treasurer may endorse for deposit or collection all checks,
notes, drafts and instruments for the payment of money,
payable to the Company or to its order. He shall cause to be
kept accurate books of account of all monies received and paid
on account of the Company.
SECTION 3.3.4. SECRETARY. The Secretary shall keep accurate
records of all meetings and actions of the Members and the
Managers and shall perform all the duties commonly incident to
such office and shall perform such other duties and have such
other powers as the Members shall from time to time designate
or as may be otherwise provided for in this Agreement. An
Assistant Secretary, upon appointment by the Managers, shall
have all the powers of the Secretary except as specifically
limited by a vote of the Managers. In the absence of the
Secretary and any Assistant Secretary, a Secretary Pro Tempore
may be elected or appointed by the Managers to perform the
Secretary's duties.
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SECTION 3.4. DUTIES OF THE MANAGERS AND OFFICERS.
The Managers and Officers shall perform the duties of Managers and
Officers in good faith, in a manner the Managers and the Officers reasonably
believe to be in the best interests of the Company, and with such care as an
ordinarily prudent person in a like position would use under similar
circumstances. A person who so performs the Managers' or Officers' duties shall
not have any liability by reason of being or having been a Manager or an Officer
of the Company.
SECTION 3.5. RESIGNATION OF MANAGERS AND OFFICERS.
The Managers or any Officer of the Company may resign at any time by
giving written notice to the Members. The resignation of a Manager or an Officer
shall take effect upon receipt of notice thereof or at such later time as shall
be specified in such notice; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective. At a
Members' meeting called expressly for the purpose of electing a new Manager or a
Managers' meeting called expressly for the purpose of electing a new Officer, a
new Manager or Officer, as the case may be, may be elected by the unanimous vote
of the Members then entitled to vote.
SECTION 3.6. REMOVAL OF MANAGERS AND OFFICERS.
At a Members' meeting called expressly for the purpose of removing a
Manager or an Officer, the Manager or Officer may be removed, with or without
cause by the unanimous vote of the Members then entitled to vote.
SECTION 3.7. COMMITTEES.
By vote of the Managers, the Board of Directors may designate two or
more Officers to constitute a committee, any of which shall have such authority
in the management of the Company as outlined in the resolution approved
unanimously by the Members and as shall be prescribed by the Act.
SECTION 3.8. COMPENSATION OF MANAGERS AND OFFICERS.
The Managers and each Officer shall receive such compensation for his
services as may be approved from time to time by the Board of Directors. In
addition, the Managers and Officers shall be entitled to reimbursement for
out-of-pocket expenses incurred by them in connection with the performance of
their duties for the Company.
SECTION 3.9. MANAGEMENT OF THE COMPANY.
The following matters will require, and be determined by, the unanimous
approval or consent of the Managers:
SECTION 3.9.1. The admission of a new Member;
SECTION 3.9.2. Any modification of or amendment to this
Agreement;
SECTION 3.9.3. The execution of any agreement or contract by
the Company;
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SECTION 3.9.4. The execution of any financing agreement;
SECTION 3.9.5. The execution of any lease of real estate;
SECTION 3.9.6. The incorporation of any new business venture
into the Company;
SECTION 3.9.7. Any application for or consent to the
appointment of a receiver, trustee or liquidator of the
Company or any of its properties or assets;
SECTION 3.9.8. Any filing of a voluntary petition in
bankruptcy or petition or answer seeking reorganization or an
arrangement with creditors or to take advantage of any
bankruptcy, reorganization, insolvency or
readjustment-of-debts law or statute or any answer admitting
the material allegations of a petition filed against it in any
proceeding under any such law;
SECTION 3.9.9. Dissolution of the Company;
SECTION 3.9.10. Any general assignment for the benefit of
creditors; and
SECTION 3.9.11. The selection and retention of the Company's
accountant.
ARTICLE IV
CONTRACTING DEBT AND COMPANY PROPERTY
SECTION 4.1. CONTRACTING DEBT.
Except as otherwise provided in the Act, or the Certificate of
Formation, no debt shall be contracted or liability incurred by or on behalf of
the Company, except by the Manager, acting unanimously.
SECTION 4.2. COMPANY PROPERTY.
Real and personal property owned or purchased by the Company shall be
held and owned, and conveyance made, in the Company name. Instruments and
documents providing for the acquisition, mortgage, or disposition of property of
the Company shall be valid and binding upon the Company if executed by one or
more Managers of the Company.
SECTION 4.3. THE ASSUMPTION OF CERES' SUPPLY BUSINESS.
SECTION 4.3.1. Upon execution of this Agreement, Ceres:
4.3.1.1. Will obtain all necessary waivers and
consents from its bank, ComericA, in connection with
the joint venture created by this Agreement between
Annie's and Ceres, including without limitation
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waivers and consents authorizing the transfer of
certain assets and collateral identified herein;
4.3.1.2. Will notify its bank of its intention to
transfer certain assets listed on Exhibit A to the
Company;
4.3.1.3. Will provide ComericA and Annie's, on or
about March 31, 2001, an accounts receivable report
listing all sales made that are receivable in
relation to the Company's business;
4.3.1.4. Shall unconditionally and irrevocably
transfer and assign to ComericA all of its right,
title and interest in open receivables in an amount
sufficient to satisfy the Credit Line balance with
ComericA pursuant to the Amendment, Assignment and
Assumption Agreement, attached hereto as Exhibit F;
4.3.1.5. Shall unconditionally and irrevocably
transfer and assign to the Company all of its right,
title and interest in all remaining receivables that
are directly related to the Company's business
pursuant to the Amendment, Assignment and Assumption
Agreement, attached hereto as Exhibit F;
4.3.1.6. Shall unconditionally and irrevocably
transfer and assign to the Company all of its right,
title and interest in all of its inventory that is
related to the Company's business pursuant to the
Amendment, Assignment and Assumption Agreement,
attached hereto as Exhibit F;
4.3.1.7. Shall unconditionally and irrevocably
transfer and assign to the Company all of its right,
title and interest in all of its remaining payables
and other liabilities, up to a maximum of $125,000,
that are related to the Company's business pursuant
to the Amendment, Assignment and Assumption
Agreement, attached hereto as Exhibit F;
4.3.1.8. Shall unconditionally and irrevocably
transfer and assign to the Company all of its right,
title and interest in the Supply Agreement, effective
as of January 1, 1999, entered into between Annie's
and Ceres, pursuant to the Amendment, Assignment and
Assumption Agreement, attached hereto as Exhibit F;
and
4.3.1.9. Shall notify all of its vendors and
customers that the Company will assume the
performance of all of Ceres' contractual duties
related to supplying certified organic semolina
flour, durum patent flour, durum wheat, other pasta
wheat-based flours and products, other pasta related
products, and anything that relates thereto.
SECTION 4.3.2. As of April 1, 2001, the Company will assume up
to a maximum of $125,000 of the net working capital, whether
positive or
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negative, that is associated with the assets contributed by
Ceres as identified in Exhibit A.
SECTION 4.3.3. If, at any time during the term of this
Agreement, Annie's and Ceres shall mutually agree that the
Company shall assume Ceres' additional supply business (the
"Additional Business"), then the Company shall assume any
negative working capital equal to an agreed projection of one
year's net profit, and the first year's total profit for the
Additional Business shall be applied to such negative working
capital, with any remainder, overage or underage, being
applied to Ceres.
SECTION 4.4. SUPPLY AGREEMENT AMENDED, ASSIGNED AND ASSUMED.
The five-year term supply agreement, effective as of January 1, 1999,
entered into between Annie's and Ceres, is hereby amended and assigned by Ceres
to the Company and is otherwise ratified and confirmed, and attached hereto as
Exhibit G (the "Supply Agreement"). Notwithstanding the forgoing, the Members
may mutually agree to lower the semolina fees that Annie's pays at a certain
volume pursuant to the Supply Agreement; and if such agreement is reached the
original $2.50/cwt semolina fee shall be used to calculate the Formula should
Annie's elect to exercise its Option to purchase the Company as set forth in
section 4.6.
SECTION 4.5. BUSINESS TRANSACTIONS WITH MEMBERS.
Except as may be provided in the Certificate of Formation, a Member may
lend money to, act as surety for, and transact other business with the Company
and, subject to other applicable law, has the same rights and obligations with
respect thereto as a person who is not a Member.
SECTION 4.6. ANNIE'S OPTION TO PURCHASE THE COMPANY.
Annie's shall have the option to purchase Ceres' interest in the
Company five years following the execution of this Agreement (the "Option") for
a price equal to one-times net operating profit after interest and depreciation,
before taxes for the previous consecutive twelve months (the "Formula"). Prior
to Annie's exercise of the Option, the Net Profits and Net Losses of the
Company, for the then current fiscal year, shall be allocated among the Members
in the manner set forth in section 5.4 of this Agreement. The Formula will be
calculated in accordance with generally accepted accounting principles ("GAAP").
ARTICLE V
FISCAL MATTERS
SECTION 5.1. FISCAL YEAR.
The Fiscal Year of the Company shall end on the last day of December in
each calendar year.
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SECTION 5.2. FORM OF CONTRIBUTION.
The contributions of a Member may be in cash, property, or services
rendered or a promissory note or other obligation to contribute cash or property
or to perform services. The contributions of each Member shall be as provided in
Exhibit A to this Agreement.
SECTION 5.3. LIABILITY FOR CONTRIBUTIONS.
SECTION 5.3.1. A Member is obligated to the Company to perform
any enforceable promise to contribute cash or property or to
perform services, even if the Member is unable to perform
because of death, disability, or any other reason.
SECTION 5.3.2. The obligation of a Member to make a
contribution or return money or other property paid or
distributed in violation of this section may be compromised
only by consent in writing of all the Members. Notwithstanding
the compromise, a creditor of the Company who extends credit
or otherwise acts in reliance on the original obligation may
enforce the original obligation.
SECTION 5.4. ALLOCATION OF NET PROFITS AND NET LOSSES.
From the Company's inception, the Net Profits and Net Losses of the
Company for each fiscal year shall be allocated among the Members in the manner
provided in Exhibit A to this Agreement. Subject to the foregoing, distributions
to the Members shall be made at such time, in such amounts and in the manner, as
the Members shall determine provided that:
SECTION 5.4.1. The Company's Net Assumed Negative Working
Capital (the "NANWC") is equal to or greater than zero; -----
and
SECTION 5.4.2. The amount and timing of the Net Profits
distributions to each Member is sufficient to cover the
Member's state and federal taxes owed on account of the
Member's interest in the Company for the current fiscal year.
SECTION 5.5. DISTRIBUTIONS.
Provided that the Company's NANWC is equal to or greater than zero,
distributions of cash or other assets of the Company shall be allocated among
the Members and shall be made at such time, in such amounts and in the manner,
as the Managers shall determine.
SECTION 5.6. ACCOUNTING DECISIONS, TAX ELECTIONS AND REQUIRED
REGULATORY ALLOCATIONS.
SECTION 5.6.1. ACCOUNTING DECISIONS. All decisions as to
accounting matters, except as specifically provided to the
contrary herein, shall be made by the Managers in accordance
with generally accepted accounting principles ("GAAP").
14
SECTION 5.6.2. LIMITATION ON AND REALLOCATION OF LOSSES. At no
time shall any allocations of Net Losses, or any item of loss
or deduction, be made to a Member if and to the extent such
allocation would cause such Member to have, or would increase
the deficit in, any Adjusted Capital Account Deficit of such
Member at the end of any fiscal year. To the extent any Net
Losses or items are not allocated to one or more Members
pursuant to the preceding sentence, such Net Losses shall be
allocated to the Members to which such losses or items may be
allocated without violation of this section 5.6.
SECTION 5.6.3. MINIMUM GAIN CHARGEBACK. If there is a net
decrease in the Minimum Gain of the Company during any fiscal
year, then items of income or gain of the Company for such
fiscal year (and, if necessary, subsequent fiscal years) shall
be allocated to each Member in an amount equal to such
Member's share of the net decrease in the Minimum Gain,
determined in accordance with Treasury Regulations Section
1.704-2(d)(1). A Member's share of the net decrease in the
Minimum Gain of the Company shall be determined in accordance
with Treasury Regulations Section 1.704-2(g). The items of
income and gain to be so allocated shall be determined in
accordance with Treasury Regulations Sections
1.704-2(j)(2)(i).
SECTION 5.6.4. NONRECOURSE DEDUCTIONS. Nonrecourse Deductions
for any fiscal year or other period (not including any Member
Nonrecourse Deductions allocated pursuant to subsection 5.6.5)
shall be allocated among the Members in proportion to their
respective Percentage Interests. Solely for purposes of
determining each Member's proportionate share of the "excess
nonrecourse liabilities" of the Company, within the meaning of
Treasury Regulations Section 1.752-3(a)(3), each Member's
interest in the Company's Net Profits shall be equal to his,
her or its Percentage Interest. The items of losses,
deductions and IRC Section 705(a)(2)(b) expenditures to be so
allocated shall be determined in accordance with Treasury
Regulations Section 1.704-2(j)(1)(ii).
SECTION 5.6.5. MEMBER NONRECOURSE DEDUCTIONS. Any Member
Nonrecourse Deductions for any fiscal year or other period
shall be allocated to the Member who bears the economic risk
of loss with respect to the nonrecourse liability, as
determined and defined under Treasury Regulations Section
1.704-2(b)(4) to which such Member Nonrecourse Deductions are
attributable in accordance with Treasury Regulations Section
1.704-2(i)(1). The items of losses, deductions and IRC Section
705(a)(2)(b) expenditures to be so allocated shall be
determined in accordance with Treasury Regulations Section
1.704-2(j)(1)(ii).
SECTION 5.6.6. MEMBER MINIMUM GAIN CHARGEBACK. Notwithstanding
any contrary provisions of this Article V, other than
subsection 5.6.3 above, if there is a net decrease in Member
Minimum Gain attributable to Member Nonrecourse Debt during
any fiscal year, then each Member who
15
has a share of such Member Minimum Gain, determined in
accordance with Treasury Regulations Section 1.704-2(i), shall
be allocated items of income and gain of the Company,
determined in accordance with Treasury Regulations Section
1.704-2(j)(2)(ii), for such fiscal year (and, if necessary,
subsequent fiscal years) in an amount equal to each such
Member's share of the net decrease in such Member Minimum
Gain, determined in accordance with Treasury Regulations
Section 1.704-(2)(i)(3) and (2)(i)(5).
SECTION 5.6.7. QUALIFIED INCOME OFFSET. If any Member
unexpectedly receives an item described in Treasury
Regulations Section 1.704-(b)(2)(ii)(d)(4), (5) or (6), items
of income and gain shall be allocated to each such Member in
an amount and manner sufficient to eliminate, as quickly as
possible and to the extent required by Treasury Regulations
Section 1.704-1(b)(2)(ii)(d), the Adjusted Capital Account
Deficit of such Member, provided that an allocation pursuant
to this subsection 5.6.7 shall be made if and only to the
extent that such Member would have an Adjusted Capital Account
Deficit after all other allocations provided for in this
Article V have been tentatively made as if this subsection
5.6.7 were not in the Agreement.
SECTION 5.6.8. BASIS ADJUSTMENT. To the extent an adjustment
to the adjusted tax basis of any Company asset pursuant to
either of IRC Sections 734(b) or 743(b) is required pursuant
to Treasury Regulations Section 1.704-1(b)(2)(iv)(m) to be
taken into account in determining Capital Accounts, the amount
of such adjustment to the Capital Accounts shall be treated as
an item of gain (if the adjustment increases the basis of the
asset) or loss (if the adjustment decreases such basis) and
such gain or loss shall be allocated to the Members in a
manner consistent with the manner in which their Capital
Accounts are required to be adjusted pursuant to such Section
of the Treasury Regulations.
SECTION 5.6.9. GROSS INCOME ALLOCATION. In the event any
Member has a Capital Account deficit at the end of any Company
fiscal year, which is in excess of the sum of the items to be
credited to a Member's Capital Account under Clause (a) of the
definition of Adjusted Capital Account Deficit, then each such
Member shall be allocated items of income and gain in the
amount of such excess as quickly as possible provided that an
allocation pursuant to this subsection 5.6.9 shall be made if
and only to the extent that such Member would have a Capital
Account deficit in excess of such sum after all other
allocations provided for in this Article V have been
tentatively made as if this subsection 5.6.9 were not in this
Agreement. As among Members having such excess if there are
not sufficient items of income and gain to eliminate all such
excesses, such allocations shall be made in proportion to the
amount of any such excess.
SECTION 5.6.10. MANAGER SHARE. Any other provision of this
Agreement notwithstanding, the Managers in their capacity as
Members
16
shall at all times have allocated and distributed to them not
less than an aggregate of 1% of each item of income, gain,
loss deduction and credit allocated or distributed hereunder.
SECTION 5.7. CURATIVE ALLOCATIONS.
The allocations set forth in subsection 5.6 are intended to comply with
certain requirements of Treasury Regulations Section 1.704-1(b) and 1.704-2 and
shall be interpreted consistently therewith. Such allocations may not be
consistent with the manner in which the Members intend to divide Company
distributions and to make Net Profit and Net Loss allocations.
SECTION 5.8. TAX ALLOCATIONS AND BOOK ALLOCATIONS.
Except as otherwise provided in this section 5.8, for federal income
tax purposes, each item of income, gain, loss and deduction shall, to the extent
appropriate, be allocated among the Members in the same manner as its
correlative item of "book" income, gain, loss or deduction has been allocated
pursuant to the other provisions of this Article V.
SECTION 5.8.1. In accordance with IRC Section 704(c) and the
Treasury Regulations thereunder, depreciation, amortization,
gain and loss, as determined for tax purposes, with respect to
any property whose Book Value differs from its adjusted basis
for federal income tax purposes shall, for tax purposes, be
allocated among the Members so as to take account of any
variation between the adjusted basis of such property to the
Company for federal income tax purposes and its Book Value,
such allocation to be made by Approval of the Managers in any
manner which is permissible under said IRC Section 704(c) and
the Treasury Regulations thereunder and the Treasury
Regulations under IRC Section 704(b).
SECTION 5.8.2. In the event the Book Value of any property of
the Company is subsequently adjusted, subsequent allocations
of income, gain, loss and deduction with respect to any such
property shall take into account any variation between the
adjusted basis of such assets for federal income tax purposes
and its Book Value in the manner provided under Section 704(c)
of the IRC and the Treasury Regulations thereunder.
SECTION 5.8.3. Allocations pursuant to this section 5.8 are
solely for purposes of federal, state and local taxes and
shall not affect, or in any way be taken into account in
computing, any Member's Capital Account or share of Net
Profits, Net Losses, other items, or distributions pursuant to
any provision of this Agreement.
SECTION 5.9. GENERAL ALLOCATION AND DISTRIBUTION RULES.
SECTION 5.9.1. For purposes of determining the Net Profits,
Net Losses or any other items allocable to any period, Net
Profits, Net Losses and any such other items shall be
determined on a daily, monthly, or other basis,
17
as determined by Approval of the Managers using any
permissible method under IRC Section 706 and the Treasury
Regulations thereunder. Except as otherwise provided in this
Agreement, all items of income, gain, loss and deduction shall
be allocable among the Members in the same proportions as the
Net Profits or Net Losses for the fiscal year in which such
item is included is allocated.
SECTION 5.9.2. Upon the admission of a new Member or the
Transfer of an interest, the new and old Members or the
transferor and transferee shall be allocated shares of Net
Profits and Net Losses and other allocations and shall receive
distributions, if any, based on the portion of the fiscal year
that the new or transferred Company interest was held by the
new and old Members, or the transferor and transferee,
respectively. For the purpose of allocating Net Profits and
Net Losses and other allocations and distributions, (i) such
admission or Transfer shall be deemed to have occurred on the
first day of the month in which it occurs, or if such date
shall not be permitted for allocation purposes under the IRC
or the Treasury Regulations, on the nearest date otherwise
permitted under the IRC or the Treasury Regulations, and (ii)
if required by the IRC or the Treasury Regulations, the
Company shall close its books on an interim basis on the last
day of the previous calendar month.
SECTION 5.10. TAX WITHHOLDING.
If the Company incurs a withholding tax obligation with respect to the
share of income allocated to any Member, (a) any amount which is (i) actually
withheld from a distribution that would otherwise have been made to such Member
and (ii) paid over in satisfaction of such withholding tax obligation shall be
treated for all purposes under this Agreement as if such amount had been
distributed to such Member, and (b) any amount which is so paid over by the
Company, but which exceeds the amount, if any, actually withheld from a
distribution which would otherwise have been made to such Member, shall be
treated as an interest-free advance to such Member. Amounts treated as advanced
to any Member pursuant to this subparagraph (i) shall be repaid by such Member
to the Company within thirty-days after the Managers, acting by Approval, give
notice to such Member making demand therefor. Any amounts so advanced and not
timely repaid shall bear interest, commencing on the expiration of said
thirty-day period, compounded monthly on unpaid balances, at an annual rate
equal to the Applicable Federal Rate as of such expiration date. The Company
shall collect any unpaid amounts from any Company distributions that would
otherwise be made to such Member.
SECTION 5.11. DISTRIBUTIONS TO COVER MEMBERS' TAX LIABILITY.
The Managers shall, at a minimum, distribute to Members amounts
intended to cover the potential federal, state or local tax obligations of such
Members on account of the cumulative allocation to them of taxable income in
excess of tax losses pursuant to this Agreement. For purposes of the foregoing,
such federal, state and local tax obligations of each Member shall be assumed to
equal the highest effective combined
18
federal and state income tax rate applicable to any Member multiplied by each
Member's Percentage Interest multiplied by the cumulative allocation to all
Members of taxable income in excess of tax losses determined as described in the
definition of Net Profits and Net Losses without the adjustments listed therein,
with the result reduced by the cumulative amount previously distributed pursuant
to this section 5.11. Partial distributions made to Members pursuant to this
section 5.11 shall be made in proportion to their respective amounts calculated
under the previous sentence. For purposes of applying section 5.11 to subsequent
distributions to the Members, distributions made pursuant to this section 5.11
shall be disregarded and shall not be deemed to have been made pursuant to
section 5.11.
SECTION 5.12. TAX ELECTIONS AND DEPRECIATION.
The Company will treat elections for federal income tax purposes as
follows:
SECTION 5.12.1. In the event of a transfer of all or any part
of the Membership Interest of any Member or in the event an
election pursuant to Section 754 of the IRC (or corresponding
provisions of succeeding law) is made by a Member, the Company
shall elect if requested by the transferee or by a Member (as
the case may be), pursuant to Sections 734, 743 and 754 of the
IRC (or corresponding provisions of future law) and pursuant
to similar provisions of applicable state or local income tax
laws, to adjust the basis of the assets of the Company.
SECTION 5.12.2. In the event a Member is admitted to the
Company at any time during a given month, the Member will be
deemed to have been admitted to the Company as of the first
day of such month.
SECTION 5.12.3. All other elections required or permitted to
be made by the Company under the Code shall be made by the
Managers, after consultation with the accountants of the
Company, in such manner as will, in their opinion, be most
advantageous to the Members.
SECTION 5.13. TAX MATTERS PARTNER.
Xxxx Xxxxx is hereby designated as the Tax Matters Partner. The Tax
Matters Partner shall be vested with the authority and responsibility necessary
to comply with the provisions of Sections 6221 through 6232 of the IRC and the
applicable Treasury Regulations. In the event that the Tax Matters Partner shall
cease to serve in such capacity, the Company shall designate a successor Tax
Matters Partner in accordance with Treasury Regulation Sections 301.6231(a)
(7)-1(T) or any successor Regulation. The cost of attorneys' and accountants'
filing fees and out of pocket expenses reasonably related to the execution of
the duties and obligations of the Tax Matters Partner shall be deemed Company
expenses. In the event the Company's funds available for such expenses do not
appear to be adequate, the Tax Matters Partner may condition its continuation of
any administrative proceeding upon the receipt of assurances from the Members
for the prompt reimbursement of such expenses not expected to be payable from
available Company funds.
19
ARTICLE VI
LIABILITY AND INDEMNIFICATION
SECTION 6.1. LIABILITY OF MEMBERS AND MANAGERS.
Members and the Managers of the Company are not liable under a
judgment, decree, or order of a court, or in any other manner, for a debt,
obligation, or liability of the Company.
SECTION 6.2. INDEMNIFICATION OF MANAGERS, EMPLOYEES OR AGENTS.
SECTION 6.2.1. AS USED IN THIS SECTION 6.2:
6.2.1.1. "Expenses" includes attorneys' fees.
6.2.1.2. "Liability" means the obligation to pay a
judgment, settlement, penalty, fine, including an
excise tax assessed with respect to an employee
benefit plan, or reasonable expense incurred with
respect to a proceeding.
6.2.1.3. "Official capacity" when used with respect
to the Managers means the office of Manager in the
Company and when used with respect to a person other
than the Manager, means the employment or agency
relationship undertaken by the employee or agent on
behalf of the Company. Official capacity does not
include service for any other foreign or domestic
limited liability company or for any corporation,
partnership, joint venture, trust, other enterprise,
or employee benefit plan.
6.2.1.4. "Party" includes an individual who was, is,
or is threatened to be made a named defendant or
respondent in a proceeding.
6.2.1.5. "Proceeding" means any threatened, pending
or completed action, suit, or proceeding whether
civil, criminal, administrative or investigative and
whether formal or informal.
6.2.1.6. The Company may indemnify against liability
incurred in any proceeding an individual made a party
to the proceeding because the individual is or was
the Manager if:
i) The individual acted in good faith;
ii) The individual reasonably believed:
(a) In the case of conduct in the individual's
official capacity, that the individual's
conduct was in the Company's best interests; or
20
(b) In all other cases, that the individual's
conduct was at least not opposed to the
Company's best interests; and
iii) In the case of any criminal proceeding, the
individual had no reasonable cause to believe the
individual's conduct was unlawful.
6.2.1.7. The termination of any proceeding by
judgment, order, settlement or conviction, or upon a
plea of NOLO CONTENDERE or its equivalent is not of
itself determinative that the individual did not meet
the standard of conduct set forth in section 6.2.
6.2.1.8. The Company may not indemnify the Managers
under this subsection 6.2.1.6 either:
i) In connection with a proceeding by or in the
right of the Company in which a Manager was
adjudged liable to the Company; or
ii) In connection with any proceeding charging
improper personal benefit to a Manager, whether or
not involving action in the Manager's official
capacity in which the Manager was adjudged liable
on the basis that personal benefit was improperly
received by the Manager.
6.2.1.9. Indemnification permitted under this
subsection 6.2.1 in connection with a proceeding by
or in the right of the Company is limited to
reasonable expenses incurred in connection with the
proceeding.
SECTION 6.2.2. Unless limited by the Certificate of Formation,
the Company shall be required to indemnify a Manager of the
Company who was wholly successful, on the merits or otherwise,
in defense of any proceeding in which the Manager was a party,
against reasonable expenses incurred by the Manager in
connection with the proceeding.
SECTION 6.2.3. Unless limited by the Certificate of Formation,
a Manager who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to
another court of competent jurisdiction. On receipt of an
application, the court, after giving any notice the court
considers necessary, may order indemnification in the manner
provided by law.
6.2.3.1. The Company may not indemnify the Manager
under subsection 6.2 unless authorized in the
specific case after a determination has been made
that indemnification of the Manager is permissible in
the circumstances because the Manager has met the
standard of conduct set forth in subsection 6.2.1.6.
21
6.2.3.2. Any indemnification or advance under
subsections 6.2.3.1 or 6.2.3.4 shall be made
promptly, and in any event within ninety days, upon
the written request of the person seeking to be
indemnified, unless a determination is reasonably and
promptly made by unanimous vote of disinterested
Members that such person acted in a manner set forth
in such subsections so as to justify the Company's
not indemnifying such person or making such an
advance. In the event that there are no disinterested
Members, the Members shall promptly appoint
independent legal counsel to decide whether the
person acted in the manner set forth in such
subsections so as to justify the Company's not
indemnifying such person or making such an advance.
The right to indemnification or advances as granted
by this Article VI shall be enforceable by such
person in any court of competent jurisdiction, if the
disinterested Members or independent legal counsel
denies the claim therefore, in whole or in part, or
if no disposition of such claim is made within ninety
days.
6.2.3.3. Authorization of indemnification and
evaluation as to reasonableness of expenses shall be
made in the same manner as the determination that
indemnification is permissible.
6.2.3.4. The Company may pay for or reimburse the
reasonable expenses incurred by the Manager who is a
party to a proceeding in advance of the final
disposition of the proceeding if:
i) The Manager furnishes the Company a written
affirmation of the Manager's good-faith belief
that the Manager has met the standard of conduct
described in subsection 6.2.1.6; and
ii) The Managers furnishes the Company a written
undertaking executed personally or on the
Manager's behalf, to repay the advance if it is
determined that the Manager did not meet such
standard of conduct.
SECTION 6.2.4. Unless limited by the Certificate of Formation:
6.2.4.1. The Company may indemnify and advance
expenses pursuant to subsection 6.2.3.4 of this
section to an employee or agent of the Company who is
not the Manager to the same extent as the Manager;
and
6.2.4.2. The Company may indemnify and advance
expenses to an employee or agent of the Company who
is not the Manager to a greater extent if consistent
with law.
SECTION 6.2.5. The Company may purchase and maintain insurance
on behalf of a person who is or was a Manager, employee,
fiduciary, or agent of the Company or who, while the Manager,
employee, fiduciary, or agent
22
of the Company, is or was serving at the request of the
Company as Manager, officer, partner, trustee, employee,
fiduciary or agent of any other foreign or domestic limited
liability company or any corporation, partnership, joint
venture, trust, other enterprise, or employee benefit plan
against any liability asserted against or incurred by such
person in any such capacity or arising out of such person's
status as such, whether or not the Company would have the
power to indemnify such person against such liability under
the provisions of the Act. Any such insurance may be procured
from any insurance company designated by the Members of the
Company, whether such insurance company is formed under the
laws of this state or any other jurisdiction of the United
States or elsewhere.
SECTION 6.2.6. Any indemnification of or advance of expenses
to a Manager in accordance with this section, if arising out
of a proceeding by or on behalf of the Company, shall be
reported in writing to the Members with or before the notice
of the next Members' meeting.
ARTICLE VII
RECORDS
SECTION 7.1. RECORDS.
SECTION 7.1.1. The Company shall keep at the Company office
or, if none, at the registered office, the following:
7.1.1.1. A current list of the full name and last
known business, residence, or mailing address of each
Member and Manager, both past and present;
7.1.1.2. A copy of the Certificate of Formation and
all amendments thereto, together with executed copies
of any powers of attorney pursuant to which any
amendment has been executed;
7.1.1.3. Copies of the Company's federal, state, and
local income tax returns and reports, if any, for the
three most recent years;
7.1.1.4. Copies of any currently effective written
operating agreements, copies of any writings
permitted or required under Section 5.3, and copies
of any financial statements of the Company for the
three most recent years;
7.1.1.5. Minutes of every annual and special meeting
and any meeting ordered pursuant to Section 2.5 and
2.6;
7.1.1.6. Any written consents obtained from Members
pursuant to Section 2.13.
23
SECTION 7.1.2. Such records are subject to inspection and
copying at the reasonable request, and at the expense, of any
Member during ordinary business hours.
ARTICLE VIII
INFORMATION AND ACCOUNTING
SECTION 8.1. INFORMATION AND ACCOUNTING.
A Member of the Company shall have the right to:
SECTION 8.1.1. Inspect and copy Company records, as provided
in Section 8.1;
SECTION 8.1.2. Obtain from the Managers from time to time,
subject to such reasonable standards as may be set forth in
the Agreement or otherwise established by the Managers, upon
reasonable demand for any purpose reasonably related to the
Member's interest as a Member:
8.1.2.1. True and full information regarding the
state of the business and financial condition of the
Company and any other information regarding the
affairs of the Company;
8.1.2.2. Promptly after becoming available, a copy of
the Company's federal, state, and local income tax
returns for each year; and
SECTION 8.1.3. Have a formal accounting of Company affairs
whenever circumstances render it just and reasonable.
ARTICLE IX
POWERS OF THE COMPANY
SECTION 9.1. POWERS.
The Company may conduct any business that a partnership with limited
partners may lawfully conduct and may not conduct any business that is
prohibited by law to such partnership. The Company may:
SECTION 9.1.1. Xxx and be sued, complain and defend, and
participate in administrative or other proceedings, in its
name;
SECTION 9.1.2. Purchase, take, receive, lease or otherwise
acquire, own, hold, improve, use, and otherwise deal in and
with real or personal property, or an interest in it, wherever
situated;
SECTION 9.1.3. Sell, convey, assign, encumber, mortgage,
pledge, lease, exchange, transfer, and otherwise dispose of
all or any part of its property and assets;
24
SECTION 9.1.4. Lend money to and otherwise assist its Members
and employees, except as otherwise provided in the Agreement;
SECTION 9.1.5. Purchase, take, receive, subscribe for or
otherwise acquire, own, hold, vote, use, employ, sell,
mortgage, lend, pledge, or otherwise dispose of, and otherwise
use and deal in and with, shares of other interests in or
obligations of other limited liability companies, domestic or
foreign corporations, associations, general or limited
partnerships, or individuals or direct or indirect obligations
of the United States or of any government, state, territory,
governmental district, or municipality or of any
instrumentality of any of them;
SECTION 9.1.6. Make contract and guarantees and incur
liabilities, borrow money at such rates of interest as the
Company may determine, issue its notes, bonds, and other
obligations, and secure any of its obligations by mortgage or
pledge of all or any part of its property, franchises, and
income;
SECTION 9.1.7. Lend money for its proper purposes, invest and
reinvest its funds and take and hold real property and
personal property for the payment of funds so loaned or
invested;
SECTION 9.1.8. Conduct its business, carry on its operations,
and have and exercise the powers granted by this article in
any state, territory, district, or possession of the United
States or in any foreign country;
SECTION 9.1.9. Elect the Managers and appoint Officers and
agents of the Company and define their duties and fix their
compensation;
SECTION 9.1.10. Make and alter operating agreements, not
inconsistent with its Certificate of Formation or with the
laws of this state, for the administration and regulation of
the affairs of the Company;
SECTION 9.1.11. Indemnify a Member or a Manager or former
Members or Managers of the Company as provided in Section 6.2.
SECTION 9.1.12. Cease its activities and surrender its
Certificate of Formation;
SECTION 9.1.13. Have and exercise all powers necessary or
convenient to effect any or all of the purposes for which the
Company is organized; and
SECTION 9.1.14. Become a Member of a general partnership,
limited partnership, joint venture, or similar association or
any other limited liability company.
25
ARTICLE X
DISSOLUTION
SECTION 10.1. DISSOLUTION.
SECTION 10.1.1. The Company shall be dissolved upon the
occurrence of any of the following events:
10.1.1.1. When the period fixed for the duration of
the Company in the Certificate of Formation expires;
10.1.1.2. By the unanimous written agreement of all
Members;
10.1.1.3. Upon ninety-days prior written notice of a
Member if: (i) the Company's financial statements
show two or more quarters of consecutive losses, or
(ii) the Managers cannot agree on key business
issues; or
10.1.1.4. Upon the resignation, expulsion,
bankruptcy, or dissolution of a Member or the
occurrence of any other event which terminates the
continued membership of a Member in the Company.
SECTION 10.1.2. As soon as possible following the
occurrence of any of the events specified in section
10.1.1 effecting the dissolution of the Company, the
Company shall execute a statement of intent to
dissolve in such form as shall be prescribed by the
Secretary of State of Delaware. A Manager of the
Company shall execute the statement of intent to
dissolve.
SECTION 10.2. EXECUTION BY JUDICIAL ACT.
Any person who is adversely affected by the failure or refusal of the
Company to execute and file any amendment, statement of intent to dissolve, or
other document to be filed under the Act may petition the Delaware Court of
Chancery to direct the execution and filing of the amendment, statement of
intent to dissolve, or other document. If the Delaware Court of Chancery finds
that it is proper for the amendment, statement of intent to dissolve, or other
document to be executed and filed and that there has been a failure or refusal
to execute and file such document, it shall order the secretary of state to
record an appropriate amendment, statement of intent to dissolve, or other
document.
SECTION 10.3. LIQUIDATION AND DISTRIBUTION OF ASSETS.
Notwithstanding anything to the contrary in this Agreement, upon a
liquidation within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Treasury
regulations, if any Member has a deficit Capital Account (after giving effect to
all contributions, distributions, allocations and other Capital Account
adjustments for all taxable years, including the year during which such
liquidation occurs), such Member shall have the obligation to make a Capital
Contribution to the Company in the amount of such deficit;
26
and, until such Capital Contribution is made, the negative balance of such
Member's Capital Account shall be considered a debt owed by such Member to the
Company.
SECTION 10.4. NON-COMPETITION FOLLOWING DISSOLUTION
In the event that Annie's terminates its continued membership in the
Company pursuant to subsection 10.1.1.3, for a period of three (3) years
following dissolution of the Company, Annie's agrees that it will not directly
or indirectly engage in the Business conducted by the Company as defined in
section 1.4 as such Business was conducted at the date of dissolution or as
conducted during the six (6) months prior thereto, anywhere in the United States
without the written consent of Ceres, provided, however, that nothing in this
Section shall prevent or restrict in any way Annie's ability to procure organic
semolina flour for its own branded products.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. GOVERNING LAW.
This Agreement and all rights and liabilities of the Members hereunder
will be subject to and governed by the laws of the State of Delaware, without
respect to the choice of law rules.
SECTION 11.2. NEGOTIATION, MEDIATION AND ARBITRATION.
Any controversies, disputes, disagreements or claims arising out of or
relating to this Agreement or the breach of this Agreement, in law or equity, to
enforce or interpret this Agreement or to resolve disputes between the Members
arising out of this Agreement, shall be decided first by negotiation, then by
mediation and finally by neutral binding arbitration under the American
Arbitration Association's Expedited Procedures of the Commercial Arbitration
Rules. If the Managers or Members are unable to resolve any dispute by
negotiation, either Member may require that the dispute go before a mediator,
mutually agreeable to the Managers or Members, as the case may be, to resolve
the dispute. If the Members are unable to reach an agreement through mediation,
or if the Members cannot agree upon a mediator, the Members shall submit the
underlying dispute to binding arbitration which shall be conducted in Delaware.
SECTION 11.3. MULTIPLE COUNTERPARTS.
This Agreement may be executed and acknowledged in multiple
counterparts, each of which will be an original, but all of which will be and
constitute one instrument.
SECTION 11.4. ENTIRE AGREEMENT.
This Agreement and all Exhibits and Schedules attached hereto
constitute the entire agreement between the Members with respect to the subject
matter hereof. This Agreement supersedes any prior agreement or understanding
among the Members, written or oral, except the Revolving Line of Credit
Agreement, Demand Note, Security
27
Agreement, Assignment and Assumption Agreement, and Supply Agreement, and may
not be modified or amended in any manner other than as set forth herein.
SECTION 11.5. SEVERABILITY.
If one or more of the covenants, agreements or provisions (or their
application) hereof will be invalid, illegal or unenforceable in any respect,
the validity of the remaining covenants, agreements or provisions (or their
application) hereof will be in no way affected, prejudiced or disturbed thereby.
SECTION 11.6. GENDER; WORD USAGE.
For the purpose of this Agreement, pronouns in one gender shall include
all other genders, where appropriate. The singular will include the plural,
where appropriate. The term "includes" will not be restrictive and the term "or"
will not be exclusive.
ARTICLE XII
DEFINITIONS AND APPLICATION
SECTION 12.1. DEFINITIONS.
As used in this Agreement, unless the context otherwise requires:
SECTION 12.1.1. "Adjusted Capital Account Deficit" means, with
respect to any Member, the deficit balance, if any, in such
Member's Capital Account as of the end of the relevant fiscal
year, after giving effect to the following adjustments:
12.1.1.1. Credit to such Capital Account any amounts
which such Member is obligated to restore pursuant to
any provision of this Agreement or is deemed to be
obligated to restore pursuant to Treasury Regulations
Sections 1.704-2(g)(l) and 1.704-2(i)(5); and
12.1.1.2. Debit to such Capital Account the items
described in Treasury Regulations Section
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
12.1.1.3. The foregoing definition is intended to
comply with the provisions of Treasury Regulations
Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
consistently therewith.
SECTION 12.1.2. "Agreement" means this agreement which is a
valid written agreement of the Members as to the affairs of
the Company and the conduct of its business.
SECTION 12.1.3. "Applicable Federal Rate" means the Applicable
Federal Rate as that term is defined in IRC Section 7872,
whether the short-term, mid-term or long-term rate, as the
case may be, as published from time to time by the Secretary
of the Treasury based on average market yields for relevant
recent periods.
28
SECTION 12.1.4. "Bankrupt" means bankrupt or a debtor under
the federal bankruptcy code of 1978, Title 11 of the United
States Code, as amended, or an insolvent under any state
insolvency act.
SECTION 12.1.5. "Book Value" means, with respect to any asset
of the Company, such asset's adjusted basis for federal income
tax purposes, except that:
12.1.5.1. The initial Book Value of any asset
contributed by a Member to the Company shall be the
gross fair market value of such asset (not reduced
for any liabilities to which it is subject or which
the Company assumes), as such value is determined and
for which credit is given to the contributing Member
under this Agreement;
12.1.5.2. The Book Values of all assets of the
Company shall be adjusted to equal their respective
gross fair market values, as determined by Approval
of the Managers, at and as of the following times:
i) The acquisition of an additional or new
interest in the Company by a new or existing
Member in exchange for other than a de minimis
capital contribution by such Member, if the
Managers acting by Approval reasonably determine
that such adjustment is necessary or appropriate
to reflect the relative economic interests of the
Members;
ii) The distribution by the Company to a Member of
more than a de minimis amount of any assets of the
Company (including cash or cash equivalents) as
consideration for all or any portion of an
interest in the Company, if the Managers acting by
Approval reasonably determine that such adjustment
is necessary or appropriate to reflect the
relative economic interests of the Members;
iii) The liquidation of the Company within the
meaning of Treasury Regulations Section
1.704-1(b)(2)(ii)(g);and
12.1.5.3. The Book Value of the assets of the Company
shall be increased (or decreased) to reflect any
adjustment to the adjusted basis of such assets
pursuant to Section 734(b) or Section 743(b) of the
IRC, but only to the extent such adjustments are
taken into account in determining Capital Accounts
pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(m); provided, however, that Book
Value shall not be adjusted pursuant to this clause
(iii) to the extent that the Managers, acting by
Approval, determine that an adjustment pursuant to
clause (ii) hereof is necessary or
29
appropriate in connection with the transaction that
would otherwise result in an adjustment pursuant to
this clause (iii).
12.1.5.4. If the Book Value of an asset has been
determined or adjusted pursuant to the preceding
clauses (i), (ii) or (iii), such Book Value shall
thereafter be adjusted by the Depreciation taken into
account with respect to such asset for purposes of
computing Net Profits and Net Losses, and the amount
of the adjustment shall thereafter be taken into
account as gain or loss from the distribution of such
asset for purposes of computing Net Profits or Net
Losses.
SECTION 12.1.6. "Business" means any trade, occupation,
profession or other commercial activity engaged in for gain,
profit, or livelihood.
SECTION 12.1.7. "Capital Account" shall mean a capital account
maintained and adjusted in accordance with the IRC and the
Treasury Regulations, including the Treasury Regulations under
Sections 704(b) and (c) of the IRC. The Capital Account of
each Member shall be:
12.1.7.1. Credited with all payments made to the
Company by such Member on account of capital
contributions (and as to any property other than cash
or a promissory note of the contributing Member, the
agreed (as between the Members) fair market value of
such property, net of liabilities secured by such
property and assumed by the Company or subject to
which such contributed property is taken) and by such
Member's allocable share of Profits and items in the
nature of income and gain of the Company;
12.1.7.2. Charged with the amount of any
distributions to such Member (and as to any
distributions of property other than cash or a
promissory note of a Member of the Company, by the
agreed fair market value of such property, net of
liabilities secured by such property and assumed by
such Member or subject to which such distributed
property is taken), and by such Member's allocable
share of Losses and items in the nature of losses and
deductions of the Company;
12.1.7.3. Adjusted simultaneously with the making of
any adjustment to the Book Value of the Company's
assets pursuant to the definition thereof, to reflect
the aggregate net adjustments to such Book Value as
if the Company recognized Net Profit or Net Loss
equal to the respective amount of such aggregate net
adjustments immediately before the event causing such
adjustments; and
12.1.7.4. Otherwise appropriately adjusted to reflect
transactions of the Company and the Members.
30
SECTION 12.1.8. "Certificate of Formation" means the
Certificate of Formation filed with the secretary of state for
the purpose of forming a limited liability Company as
specified in Section 18-101(a) of the Act.
SECTION 12.1.9. "Capital Contribution" shall mean any
contribution to the capital of the Company in cash or property
by a Member whenever made.
SECTION 12.1.10. "Court" includes every court and judge having
jurisdiction in a case.
SECTION 12.1.11. "Fiscal Year" shall mean the period
terminating on December 31 of each year during the term hereof
or on such earlier date in any year in which the Company shall
be dissolved as provided herein.
SECTION 12.1.12. The "Delaware Limited Liability Company Act"
shall be known and cited as "the Act".
SECTION 12.1.13. "Foreign Limited Liability Company" means a
limited liability Company formed under the laws of any
jurisdiction other than this jurisdiction.
SECTION 12.1.14. "IRC" shall mean the Internal Revenue Code of
1986 or corresponding provisions of subsequent superseding
federal revenue laws.
SECTION 12.1.15. "Limited Liability Company" or "Company"
means this limited liability Company which is organized and
existing under the Act and which has two or more Members.
SECTION 12.1.16. "Managers" means a person elected by the
Members of this Company to manage the Company pursuant to this
agreement.
SECTION 12.1.17. "Member" means a person with an ownership
interest in this limited liability Company with the rights and
obligations specified under this agreement.
SECTION 12.1.18. "Membership Interest" means a Member's share
of the Net Profits and Net Losses of this Company and the
right to receive distributions of such Company's assets.
SECTION 12.1.19. "Minimum Gain" shall have the meaning given
in Treasury Regulations Section 1.704-2(d).
SECTION 12.1.20. "Member Minimum Gain" shall mean "Member
nonrecourse debt minimum gain" as set forth in Treasury
Regulations Section 1.704-2(i)(3).
SECTION 12.1.21. "Member Nonrecourse Debt" shall have the
meaning given in Treasury Regulations Section 1.704-2(b)(4).
31
SECTION 12.1.22. "Member Nonrecourse Deductions" shall have
the meaning given in Treasury Regulations Section
1.704-2(i)(2).
SECTION 12.1.23. "Net Assumed Negative Working Capital" shall
mean the excess of current liabilities over current assets
that are shown on the .
SECTION 12.1.24. "Net Profits" and "Net Losses" shall mean the
income, gain, loss, deductions, and credits of the Company in
the aggregate or separately stated as appropriate, as of the
close of each Fiscal Year on the Company's tax return filed
for federal income tax purposes.
SECTION 12.1.25. "Nonrecourse Deductions" shall have the
meaning given in Treasury Regulations Section 1.704-2(b)(1).
SECTION 12.1.26. "Percentage Interest" shall be the percentage
interest of a Member set forth in Exhibit A, as amended from
time to time.
12.1.26.1. "Person" means any natural person,
partnership (whether general or limited), limited
liability company, trust, estate, association or
corporation.
SECTION 12.1.27. "Registered Office" means the business
address of the registered agent on file with the secretary of
state.
SECTION 12.1.28. "Transfer" and any grammatical variation
thereof shall refer to any sale, exchange, issuance,
redemption, assignment, distribution, encumbrance,
hypothecation, gift, pledge, retirement, resignation, transfer
or other withdrawal, disposition or alienation in any way as
to any interest as a Member. Transfer shall specifically,
without limitation of the above, include assignments and
distributions resulting from death, incompetency, bankruptcy,
liquidation and dissolution.
SECTION 12.1.29. "Treasury Regulations" shall include
proposed, temporary, and final regulations promulgated under
the IRC in effect as of the date of filing the Certificate of
Formation and the corresponding sections of any regulations
subsequently issued that amend or supersede those regulations.
[SIGNATURE PAGE FOLLOWS.]
32
MEMBERS:
ANNIE'S HOMEGROWN, INC. (50%)
By: _____________________________
Xxxx Xxxxxxx, President
CERES ORGANIC HARVEST, INC. (50%)
By: _____________________________
Xxxxxxx Xxxxxx, President
MANAGERS:
_____________________________
Xxxxxxx Xxxxxx
_____________________________
Xxxx Xxxxxxx
33
EXHIBIT A
MANAGEMENT, CONTRIBUTIONS AND ALLOCATIONS
1. MANAGERS. (Section 3.1)
There shall be two Managers. The names of the initial Managers are as
follows:
--------------------------- ------------------------------------------
POSITION NAME
--------------------------- ------------------------------------------
Manager Xxxxxxx Xxxxxx
--------------------------- ------------------------------------------
Manager Xxxx Xxxxxxx
--------------------------- ------------------------------------------
2. OFFICERS. (Section 3.3)
There shall be four Officers of the Company. The names and titles of
the initial Officers are as follows:
--------------------------- ------------------------------------------
OFFICE NAME
--------------------------- ------------------------------------------
President Xxxxxxx Xxxxxx
--------------------------- ------------------------------------------
Vice-President Xxxx Xxxxxxx
--------------------------- ------------------------------------------
Secretary Xxxxx Xxxxx
--------------------------- ------------------------------------------
Treasurer Xxxx Xxxxx
--------------------------- ------------------------------------------
3. CONTRIBUTIONS OF MEMBERS. (Sections 4.3.1.1, 4.3.2 and 5.2)
The contributions of each Member shall be as follows:
--------------------------- ------------------------------------------
MEMBER DESCRIPTION OF CONTRIBUTIONS
--------------------------- ------------------------------------------
ANNIE'S HOMEGROWN, INC. All
goodwill and intangible
assets related to the
Company's business,
including relationships
with vendors, customers,
both potential and current,
all working capital and
financing structures to
fund the Company's
business.
--------------------------- ------------------------------------------
CERES ORGANIC HARVEST, INC. Certified organic semolina flour, durum
patent flour, durum wheat, other pasta
wheat-based flours and products, and other
pasta related products; including any
purchase order or pending transaction, any
accounts receivable, any accounts payable,
and any inventory purchased that relates to
the Company's business; all goodwill and
intangible assets related to the Company's
business, including relationships with
potential and current vendors and
customers.
--------------------------- ------------------------------------------
A-1
4. ALLOCATION OF NET PROFITS AND NET LOSSES (Section 5.4)
Subject to the provisions of Section 5.4, the Net Profits and Net
Losses of the Company for each fiscal year will be allocated as follows:
--------------------------- ------------------------------------------
MEMBER ALLOCATION
--------------------------- ------------------------------------------
Annie's Homegrown, Inc. 50%
--------------------------- ------------------------------------------
Ceres Organic Harvest, Inc. 50%
--------------------------- ------------------------------------------
A-2
EXHIBIT B
OPENING BALANCE SHEET (Section 2.15.1.3)
B-1
EXHIBIT C
REVOLVING LINE OF CREDIT AGREEMENT (Section 2.15.4)
C-1
EXHIBIT D
REVOLVING DEMAND NOTE (Section 2.15.4)
D-1
EXHIBIT E
SECURITY AGREEMENT (Section 2.15.4)
E-1
EXHIBIT F
AMENDMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT (Section 4.3)
F-1
EXHIBIT G
SUPPLY AGREEMENT (Section 4.4)
G-1
TABLE OF CONTENTS
ARTICLE I FORMATION OF THE COMPANY............................1
SECTION 1.1. Formation...........................................1
SECTION 1.2. Name................................................1
SECTION 1.3. Registered Office and Agent for Service of Process..1
SECTION 1.4. Purpose and Character of Business...................2
SECTION 1.5. Powers..............................................2
SECTION 1.6. Duration............................................2
SECTION 1.7. Filings, Reports and Formalities....................2
ARTICLE II MEMBERS.............................................2
SECTION 2.1. Representations by the Members......................2
SECTION 2.2. New Members.........................................3
SECTION 2.3. Restrictions on Transfer............................3
SECTION 2.4. Rights of Creditor Against a Member.................3
SECTION 2.5. Annual Meetings.....................................3
SECTION 2.6. Special Meetings....................................3
SECTION 2.7. Place of Meetings...................................3
SECTION 2.8. Notice of Members' Meetings.........................4
SECTION 2.9. Waiver of Notice....................................4
SECTION 2.10. Voting Record.......................................5
SECTION 2.11. Quorum of Members - Vote Required...................5
SECTION 2.12. Voting of Memberships by Certain Members............5
SECTION 2.13. Informal Action by Members..........................6
SECTION 2.14. Voting by Ballot....................................6
SECTION 2.15. Responsibilities of Members.........................7
ARTICLE III MANAGEMENT OF THE COMPANY...........................8
SECTION 3.1. Managers............................................8
SECTION 3.2. Board of Directors..................................8
SECTION 3.3. Election of Officers................................8
SECTION 3.4. Duties of the Managers and Officers................10
SECTION 3.5. Resignation of Managers and Officers...............10
SECTION 3.6. Removal of Managers and Officers...................10
SECTION 3.7. Committees.........................................10
SECTION 3.8. Compensation of Managers and Officers..............10
SECTION 3.9. Management of the Company..........................10
ARTICLE IV CONTRACTING DEBT AND COMPANY PROPERTY..............11
SECTION 4.1. Contracting Debt...................................11
SECTION 4.2. Company Property...................................11
SECTION 4.3. The Assumption of Ceres' Supply Business...........11
i
SECTION 4.4. Supply Agreement Amended, Assigned and Assumed.....13
SECTION 4.5. Business Transactions with Members.................13
SECTION 4.6. Annie's Option to Purchase the Company.............13
ARTICLE V FISCAL MATTERS.....................................13
SECTION 5.1. Fiscal Year........................................13
SECTION 5.2. Form of Contribution...............................14
SECTION 5.3. Liability for Contributions........................14
SECTION 5.4. Allocation of Net Profits and Net Losses...........14
SECTION 5.5. Distributions......................................14
SECTION 5.6. Accounting Decisions, Tax Elections and Required
Regulatory Allocations...........................14
SECTION 5.7. Curative Allocations...............................17
SECTION 5.8. Tax Allocations and Book Allocations...............17
SECTION 5.9. General Allocation and Distribution Rules..........17
SECTION 5.10. Tax Withholding....................................18
SECTION 5.11. Distributions to Cover Members' Tax Liability......18
SECTION 5.12. Tax Elections and Depreciation.....................19
SECTION 5.13. Tax Matters Partner................................19
ARTICLE VI LIABILITY AND INDEMNIFICATION......................20
SECTION 6.1. Liability of Members and Managers..................20
SECTION 6.2. Indemnification of Managers, Employees or Agents...20
ARTICLE VII RECORDS............................................23
SECTION 7.1. Records............................................23
ARTICLE VIII INFORMATION AND ACCOUNTING.........................24
SECTION 8.1. Information and Accounting.........................24
ARTICLE IX POWERS OF THE COMPANY..............................24
SECTION 9.1. Powers.............................................24
ARTICLE X DISSOLUTION........................................25
SECTION 10.1. Dissolution........................................26
SECTION 10.2. Execution by Judicial Act..........................26
SECTION 10.3. Liquidation and Distribution of Assets.............26
SECTION 10.4. Non-Competition following Dissolution..............27
ARTICLE XI MISCELLANEOUS......................................27
SECTION 11.1. Governing Law......................................27
ii
SECTION 11.2. Negotiation, Mediation and Arbitration.............27
SECTION 11.3. Multiple Counterparts..............................27
SECTION 11.4. Entire Agreement...................................27
SECTION 11.5. Severability.......................................28
SECTION 11.6. Gender; Word Usage.................................28
ARTICLE XII DEFINITIONS AND APPLICATION........................28
SECTION 12.1. Definitions........................................28
EXHIBIT A MANAGEMENT, CONTRIBUTIONS AND ALLOCATIONS.........A-1
EXHIBIT B OPENING BALANCE SHEET.............................B-1
EXHIBIT C REVOLVING LINE OF CREDIT AGREEMENT ...............C-1
EXHIBIT D REVOLVING DEMAND NOTE.............................D-1
EXHIBIT E SECURITY AGREEMENT................................E-1
EXHIBIT F AMENDMENT, ASSIGNMENT AND ASSUMPTION AGREEMENT....F-1
EXHIBIT G SUPPLY AGREEMENT..................................G-1
iii
