OPERATING AGREEMENT
OF
XXXXXXXXXX.XXX, LLC
THIS OPERATING AGREEMENT is made and entered into the 19th day of
April, 2000, by and among Covenant Transport, Inc., a Nevada corporation, X.X.
Xxxx Transport Services, Inc., an Arkansas corporation, M.S. Carriers, Inc., a
Tennessee corporation, Swift Transportation Co., Inc., a Nevada corporation,
U.S. Xpress Enterprises, Inc., a Nevada corporation and Xxxxxx Enterprises,
Inc., a Nebraska corporation, or the respective affiliates of the foregoing six
corporations (collectively the "Members") and Xxxxxxxxxx.xxx, LLC, a Nevada
limited liability company (the "Company"), to govern certain aspects of the
operations of the Company and to set forth the rights and obligations of the
Members, any Persons subsequently becoming Members, and their respective
successors and assigns.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and in consideration of becoming a Member of the Company, the
undersigned (including parties who subsequently become parties hereto after the
effective date of this Agreement) agree as follows:
ARTICLE I
DEFINITIONS AND GENERAL PROVISIONS
SECTION 1.1. DEFINITIONS. Unless the context or rules of grammar
otherwise require or unless otherwise expressly provided in this Agreement, the
following capitalized terms used in this Agreement (and the respective plural or
singular forms thereof) shall have the meanings specified in this Section as
follows:
"ACT" means Chapter 86 of Title 7 of the Nevada Revised Statutes, as
amended from time-to-time.
"AFFILIATE" means any Person that is, directly or indirectly, through
one or more intermediaries, controlling, controlled by, or under common control
with a Member. The term "control," as used in the immediately preceding
sentence, means, with respect to a limited liability company or corporation, the
right to exercise, directly or indirectly, more than 50% of the voting rights of
such limited liability company or corporation and, with respect to any other
Person, the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies thereof.
"AGREEMENT" means this Operating Agreement, as amended from
time-to-time.
"ARTICLES" mean the Articles of Organization of the Company filed with
the Nevada Secretary of State, as amended or restated from time-to-time.
"AVAILABLE CASH" of the Company means all cash funds of the Company on
hand from
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time-to-time (other than cash funds obtained as contributions to the capital of
the Company by the Members and cash funds obtained from loans to the Company)
after (i) payment of all operating expenses of the Company as of such time, (ii)
provision for payment of all outstanding and unpaid current obligations of the
Company as of such time, and (iii) provision for a reasonable working capital
reserve if such a reserve is established by the Board of Managers.
"BOARD OF MANAGERS" has the meaning set forth in Section 4.1 of this
Agreement.
"CAPITAL ACCOUNT" means the account established and maintained for each
Member in the manner prescribed by Article III and in the manner provided in
Treasury Regulation Section 1.704-l(b)(2)(iv), as amended from time-to-time.
"CAPITAL CONTRIBUTIONS" means the total value of any cash, property,
services rendered, or a promissory note or other binding obligation to
contribute cash or property or to perform services, that a person transfers to
the Company in the capacity as a Member, as shown on Exhibit B attached to and
made a part of this Agreement, as the same may be amended from time-to-time. Any
reference in this Agreement to the Capital Contributions of a Member shall
include all Capital Contributions previously made by any prior Member for the
interest of such Member, and shall be reduced by any distributions to such prior
Member in return of the Member's Capital Contributions as contemplated in this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended. All
references in this Agreement to Code Sections shall include any and all
corresponding provisions of succeeding law.
"COMPANY" means Xxxxxxxxxx.xxx, LLC
"FORMER MEMBER" means a Person who previously was, but is no longer, a
Member of the Company.
"INITIAL MEMBERS" means Covenant Transport, Inc., X.X. Xxxx Transport
Services, Inc., M.S. Carriers, Inc., Swift Transportation Co., Inc., U.S. Xpress
Enterprises, Inc., and Xxxxxx Enterprises, Inc., or any Affiliate of any of the
foregoing companies.
"INTEREST" means the entire ownership interest of a Member in the
Company at any particular time, including the right of such Member to any and
all benefits to which a Member may be entitled as provided in this Agreement and
under the Act, together with the obligations of such Member to comply with all
of the terms and provisions of this Agreement.
"LOSSES" or "LOSSES" means losses, and each item of income, gain, loss,
deduction or credit entering into the computation thereof, as determined in
accordance with Treasury Regulation Section 1.704-l(b)(2)(iv).
"MANAGER" means any Person or Persons designated as a Manager or
Managers of the Company pursuant to Article IV.
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"MEMBER" means a Person that (i) owns an Interest in the Company, (ii)
has been admitted to membership in the Company in accordance with the Act, the
Articles and this Agreement, and (iii) has not ceased to be a Member in
accordance with the Act, the Articles and/or this Agreement.
"MEMBERSHIP" means all of the Members.
"PERCENTAGE INTEREST" of a Member means the percentage of issued and
outstanding Units of the Company held by such Member as set forth opposite the
name of such Member under the column "Percentage Interest" on Exhibit B, as such
percentage may be adjusted from time-to-time pursuant to the terms of this
Agreement.
"PERSON" means and includes an individual, corporation, general
partnership (including a limited liability partnership), limited partnership,
association, limited liability company, business trust, or any other legal or
commercial entity.
"PROFITS" or "PROFITS" means income, and each item of income, gain,
loss, deduction or credit entering into the computation thereof, as determined
in accordance with Treasury Regulation Section 1.704-l(b)(2)(iv).
"TAX MATTERS MANAGER" means the "Tax Matters Partner" of the Company as
that term is defined in Code Section 6231.
"TREASURY REGULATIONS" means regulations of the United States
Department of the Treasury under the Code, as amended from time-to-time.
"UNITS" refers to an interest in the Company to be measured in such
units as may be established pursuant to Article III. Whenever reference is made
to the "Percentage Interest" of a Member, a Member's Units may be converted into
the same by dividing the Member's number of Units by the total of all Units
outstanding.
SECTION 1.2. REFERENCES TO ARTICLES, SECTIONS AND EXHIBITS. References
in this Agreement to numbered or lettered "Article" or "Section" or "subsection"
shall, unless the context clearly indicates otherwise, be construed as referring
to a particular Article, Section or subsection in this Agreement, and references
in this Agreement to "this Article" or "this Section" or "this subsection" shall
be construed as referring, as applicable, to the Article, Section or subsection
in which such reference is located. References in this Agreement to an "Exhibit"
are to a document so identified that is attached to, and a part of, this
Agreement.
SECTION 1.3. COORDINATION WITH THE ACT. The Act contains a number of
provisions that govern various aspects of the conduct of the business and
affairs of limited liability companies that can be "overruled", so to speak, by
the provisions of a written operating agreement adopted by the members of the
limited liability company or by the articles of organization of such company. In
construing this Agreement and the Articles and in coordinating the provisions
hereof and
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thereof with the Act, it is the intent of the Members that whenever this
Agreement or the Articles contain provisions addressing a certain subject or
matter, those provisions of this Agreement or the Articles will control over the
provisions of the Act with respect to that same subject or matter and shall be
construed as overruling any conflicting or different provisions of the Act with
respect thereto even though the provisions of this Agreement or the Articles do
not specifically state that they are intended to overrule such provisions of the
Act. If this Agreement and the Articles are silent as to a subject or matter
covered by the Act, the provisions of the Act with respect thereto shall
control.
ARTICLE II
ORGANIZATION AND TERM
SECTION 2.1. ARTICLES OF ORGANIZATION. The Company was formed by filing
the Articles with the Nevada Secretary of State pursuant to the Act. The rights
and liabilities of the Members shall be as provided under the Act, the Articles
and this Agreement. The Members agree to each of the provisions of the Articles.
SECTION 2.2. NAME. The name of the Company is Xxxxxxxxxx.xxx, LLC.
SECTION 2.3. PRINCIPAL PLACE OF BUSINESS. The principal place of
business of the Company shall be located in or about Dallas, Texas, at such
address as may from time-to-time be established by the Board of Managers.
SECTION 2.4. REGISTERED OFFICE AND REGISTERED AGENT. The Company's
registered office shall be at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxxxxx
00000, and the name of its registered agent at such address is Corporate
Services of Nevada. The Company may designate another registered office or agent
at any time by following the procedures set forth in the Act.
SECTION 2.5. PURPOSE. The purpose of the Company is to engage in any
and all lawful business activities.
SECTION 2.6. EFFECTIVE DATE. This Agreement shall become effective upon
execution.
SECTION 2.7. TERM. The term of the Company shall continue in perpetuity
and until the Company is dissolved in accordance with the provisions of this
Agreement or the Act.
SECTION 2.8. OTHER INSTRUMENTS. Each Member hereby agrees, within ten
(10) days after receipt of a written request therefor, to execute and deliver
such other and further documents and instruments, statements of interest and
holdings, designations, powers of attorney and other instruments, and to take
such other action, as the Company deems necessary, useful, or appropriate to
comply with any laws, rules or regulations or as may be necessary to enable the
Company to fulfill its responsibilities under this Agreement.
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ARTICLE III
MEMBERS AND CAPITAL STRUCTURE
SECTION 3.1. NAMES AND ADDRESSES OF MEMBERS. All Members and Former
Members of the Company, and their last known business, residence or mailing
address, shall be listed on Exhibit A. The Members shall be required to update
Exhibit A from time-to-time as necessary to accurately reflect the information
therein.
SECTION 3.2. UNITS REPRESENTING INTERESTS. Interests in the Company
shall be represented by the Units held by each Member. Each Member's respective
Units in the Company shall be set forth on Exhibit B (which shall be updated by
the Members from time-to-time as required to accurately reflect the information
therein). The Members hereby agree that each Unit shall entitle the Member
possessing such Unit to, except as otherwise provided in Articles VIII and XII,
the allocation of an equal proportionate share per Unit of the Company's Profits
and Losses.
SECTION 3.3. CAPITAL CONTRIBUTIONS AND PERCENTAGE INTERESTS OF MEMBERS.
The agreed fair market value of the Capital Contributions to the Company and
Percentage Interests of each Member are set forth on Exhibit B (as same exists
at the Effective Date). Any subsequent Capital Contributions shall be in such
amounts and in such types of property as may be agreed upon by all of the
Members, and shall also be reflected on Exhibit B (as updated).
SECTION 3.4. ADDITIONAL CAPITAL CONTRIBUTIONS. Members shall be
permitted from time-to-time to make such additional or further Capital
Contributions, for such consideration and/or Units, as shall be determined by
all the Members. Except to the extent that a Member shall agree to do so or
shall be contractually obligated to do so, no Member shall be required to make
any additional Capital Contributions to the Company.
SECTION 3.5. CAPITAL ACCOUNTS.
(a) An individual Capital Account shall be established
and maintained on behalf of each Member in the manner
provided by Treasury Regulation Section
1.704-l(b)(2)(iv). To the extent consistent with
Treasury Regulation Section 1.704-l(b)(2)(iv), the
Capital Account of each Member shall consist of (i)
the amount of cash such Member has contributed to the
Company, plus (ii) the agreed fair market value of
any property such Member has contributed to the
Company, net of any liabilities assumed by the
Company or to which such property is subject, plus
(iii) the amount of Profits (including tax-exempt
income) allocated to such Member, less (iv) the
amount of Losses allocated to such Member, less (v)
the amount of all cash distributed to such Member,
less (vi) the fair market value of any property
distributed to such Member, net of any liability
assumed by such Member or to which such property is
subject, less (vii) such Member's share of any other
expenditures which are not deductible by the Company
for federal income tax purposes or which are not
allowable as additions to the basis of
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Company property, and (viii) subject to such other
adjustments as may be required under the Code. The
Capital Account of a Member shall be increased or
decreased, as relevant or applicable, to reflect
adjustments to basis made pursuant to the Code or
Treasury Regulations.
(b) Except as may be specifically provided otherwise in
this Agreement, no Member shall have any liability or
obligation to the Company, or to any Member or any
other Person, to restore a negative or deficit
balance in such Member's Capital Account.
SECTION 3.6. NO REDEMPTION RIGHTS. Except as may otherwise be
specifically provided in this Agreement or be determined by all the Members, no
Member or Former Member shall be entitled, at or after the time the Member
ceases to be a Member of the Company or at any other time, to demand or receive
from the Company a return of any of the Member's Capital Contributions or the
purchase or redemption of, or other payment for, the Member's Units or Interest.
SECTION 3.7. MEMBER LOANS OR SERVICES. Unless otherwise determined by
all the Members, loans or services by any Member to the Company shall not be
considered Capital Contributions.
SECTION 3.8. PRIOR OBLIGATIONS. In the event that any Member (or any of
such Member's shareholders, partners, members, owners, or Affiliates
(collectively, the "Liable Member")) has incurred any indebtedness or obligation
prior to the effective date of this Agreement that relates to or otherwise
affects the Company, neither the Company nor any Other Member shall have any
liability or responsibility for or with respect to such indebtedness or
obligation unless such indebtedness or obligation is assumed by the Company
pursuant to a written instrument signed by all the Members. All cost and
expenses incurred by any Member arising by way of organizing expenses for
activities undertaken on behalf of the Company shall be reimbursed to such
Member, subject to approval of the Board.
SECTION 3.9. CERTIFICATES FOR UNITS. The Units or Interest of a Member
in the Company may be represented by such Certificates of Membership, Unit
Certificates or similar instruments, if any, as may from time-to-time be
determined by the Board.
ARTICLE IV
BOARD OF MANAGERS
SECTION 4.1. MANAGEMENT BY BOARD OF MANAGERS. The business and affairs
of the Company shall be managed by, and shall be under the exclusive control and
direction of, a Board of Managers consisting of no fewer than seven (7) nor more
than nine (9) Managers (the "Board"). One (1) Manager shall be appointed by each
of the Initial Members of the Company; provided, however, that any Initial
Member shall lose such power of appointment upon the Transfer or
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attempted Transfer (as defined in Section 11.1 below) of any portion of its
Membership Interest prior to any public offering of equity interests in the
Company. One Manager shall be the individual elected by the Board to serve as
the Company's Chief Executive Officer. The remaining Managers shall be elected
by the majority vote of the appointed Managers. Any Manager appointed by an
Initial Member may only be removed, or replaced in the event of resignation, by
that Initial Member. Managers elected by the other Managers may be removed at
any time for any reason by the affirmative vote of a majority of the Board. The
Board shall elect from among the Managers, and may remove at any time for any
reason, a Chairman, who shall preside at all Board meetings and exercise such
other duties as are usually vested in the office of chairman of the board. In
the absence of the Chairman, the Tax Matters Manager shall preside at Board
meetings as Acting Chairman.
SECTION 4.2. AUTHORITY OF BOARD. The Board, in its sole and absolute
discretion, shall have full and complete power and authority to make all
decisions and to take all actions incident to the management and conduct of the
Company's business and affairs except that the Board may not, without the
unanimous consent of the Members, do any of the following:
(a) take any action in contravention of this Agreement or
the Act;
(b) take any action resulting in personal liability of
any Member in any jurisdiction;
(c) take any action or make any decision reserved to the
Members in this Agreement or in the Articles;
(d) pledge or assign any of the Company's property as
collateral for the debt of any other person,
corporation or entity or commit the Company to act as
an endorser, guarantor or surety for the obligations
of any other person, corporation or entity.
SECTION 4.3. VOTE REQUIRED. Unless otherwise specified herein, all
actions of the Board shall be taken by the affirmative vote of a majority of the
Managers then appointed or elected and acting, which must include a majority of
the Managers appointed by the Initial Members.
SECTION 4.4. EXECUTION OF INSTRUMENTS. All instruments, contracts,
agreements and documents of any type whatsoever to be executed on behalf of the
Company may be executed by such officer or officers of the Company as shall have
been so authorized by this Agreement or by the Board.
SECTION 4.5. AUTHORITY OF MEMBERS. Members (in their capacities as
Members) shall not have authority to act for or to bind the Company except such
authority as may from time-to-time be specifically granted or approved in
writing by all Members. No Member (in the capacity as a Member) shall have the
authority to sign agreements or other instruments on behalf of the Company or to
otherwise act as an authorized agent or other representative of the
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Company except as such Member shall have been specifically authorized as
provided in this Agreement.
SECTION 4.6. QUALIFICATIONS, NUMBER, APPOINTMENT AND VACANCIES. Any
Person appointed as provided herein, whether or not such Person is a Member, is
qualified to serve as a Manager of the Company. Managers shall be appointed, and
may from time-to-time be removed and/or replaced (with or without cause), and
vacancies in such position shall be filled, as provided in Section 4.1 above.
SECTION 4.7. OFFICERS AND COMMITTEES. The Board may from time-to-time
establish such offices and Committees of the Company, and elect or appoint and
grant authority to act to such officers of the Company, as shall be deemed
advisable by the Board for the day-to-day management and conduct of the
Company's business and affairs. Officers may, but need not, be Members and/or
Managers of the Company. The initial offices and officers of the Company are
described and designated in Article VII. Officers may be removed (with or
without cause) and vacancies in offices may be filled at any time and from
time-to-time by the Board.
SECTION 4.8. REIMBURSEMENT OF EXPENSES. Each Manager shall be entitled
to reimbursement from the Company of all expenses reasonably incurred and paid
by such Manager on behalf of the Company. Any question as to whether a Manager
is entitled to reimbursement of expenses under this Section shall be determined
by the Board.
SECTION 4.9. LIABILITY. Managers shall not be personally liable for the
debts, obligations or liabilities of the Company, whether arising in contract,
tort or otherwise, or for the acts or omissions of any other Manager, agent or
employee of the Company. A Manager is not liable for any action taken as a
Manager, or for any failure to take any action, unless the Manager has breached
or failed to perform the Manager's duties to the Company and the breach or
failure to perform constitutes willful, fraud, or a knowing violation.
SECTION 4.10. PERFORMANCE OF DUTIES AND RELIANCE ON OTHERS. A Manager
shall perform the Manager's duties in good faith, in a manner the Manager
reasonably believes to be in the best interest of the Company, and with such
care as an ordinarily prudent person in a like position would use under similar
circumstances. In performing the Manager's duties, a Manager shall be entitled
to rely on information, opinions, reports, or statements of the following
persons or groups unless the Manager has knowledge concerning the matter in
question that would cause such reliance to be unwarranted:
(a) another Manager in the Company or one or more
employees or other agents in the Company whom the
Manager reasonably believes to be reliable and
competent in the matters presented;
(b) any attorney, public accountant or other person as to
matters which the Manager reasonably believes to be
within such person's professional or expert
competence; or
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(c) a committee upon which the Manager does not serve,
duly designated in accordance with the provision of
the articles of this Agreement, as to matters within
its designated authority, which committee the Manager
reasonably believes to merit confidence.
SECTION 4.11. COMPENSATION. Managers shall be entitled to such
reasonable compensation, if any, as shall from time-to-time be determined by all
the Members. Compensation payable to Managers shall be treated as expenses of
the Company and shall not be deemed to constitute distributions to the recipient
of any profit, loss or capital of the Company, even though the Manager to whom
payment is made is also a Member.
SECTION 4.12. APPOINTMENT OF TAX MATTERS MANAGER. Xxxxx Xxxxxxxx is
hereby designated as the Tax Matters Manager (the "TMM"). The TMM shall be
responsible for all matters involving Federal, state, local or other taxes of
any type. The TMM shall serve as such until a successor is duly elected by a
majority of the Board and qualified, or until the earlier withdrawal or
retirement of the TMM or removal by a majority of the Board.
SECTION 4.13. APPOINTMENT OF INITIAL MANAGER(S). The initial Managers
of the Company are: Xxx X. Xxxxxx (U.S. Xpress), Xxxxx Xxxxxxxx (X.X. Xxxx),
Jun-Xxxxx Xx (Chief Executive Officer), Xxxxx X. Xxxxx (Swift), Xxxxx X. Xxxxxx
(Covenant), Xxxxxxx X. Xxxxxxx (M.S. Carriers), and Xxxxxxxx X. Xxxxxx (Xxxxxx).
SECTION 4.14. MEETINGS OF THE BOARD. Regular meetings of the Board may
be held periodically on fixed, predetermined dates and times if the Board
determines that regular meetings should be held and fixes the dates and times
for such meetings in advance and each Manager is notified of such action. Other
meetings of the Board may be called at any time by the Chairman, Chief Executive
Officer, or a majority of the Managers.
SECTION 4.15. NOTICE OF MEETINGS. No notice of regular meetings shall
be required unless the date or time of any such meeting is changed from the date
and time fixed for such meeting, in which case each Manager shall be notified of
such change orally or in writing at least twenty-four hours before such meeting.
The Company shall give written or oral notice stating the date, time, and place
of any other meeting of the Board to each Manager of record entitled to vote at
the meeting at least twenty-four hours before the meeting.
SECTION 4.16. WAIVER OF NOTICE. A Manager may waive notice of any
meeting, before or after the date and time of the meeting as stated in the
notice, by delivering a signed waiver to the Company for inclusion in the
minutes. A Manager's attendance at any meeting in person or by proxy (a) waives
objection to lack of notice or defective notice of the meeting unless the
Manager at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting, and (b) waives objection to consideration
of a particular matter at the meeting that is not within the purposes described
in the meeting notice unless the Manager objects to considering the matter when
it is presented.
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SECTION 4.17. VOTING BY PROXY. A Manager may appoint a proxy to vote
or otherwise act for the Manager pursuant to a written appointment form
executed by the Manager or the Manager's duly authorized attorney-in-fact. An
appointment of a proxy is effective when received by the Secretary or other
officer or agent of the Company authorized to tabulate votes. The general
proxy of a fiduciary is given the same effect as the general proxy of any
other Manager. A proxy appointment is valid for 11 months unless otherwise
expressly stated in the appointment form.
SECTION 4.18. ACTION BY CONSENT. Any action required or permitted to
be taken at a meeting of the Board may be taken without a meeting if the
action is taken in writing by all the Managers. The action must be evidenced
by one or more written consents describing the action taken, signed by all
the Managers entitled to vote on the action, and delivered to the Company for
inclusion in the minutes.
SECTION 4.19. PRESENCE. Any or all Managers may participate in any
regular or other meeting of the Board by, or through the use of, any means of
communication by which all Managers participating may simultaneously hear
each other during the meeting. A Manager so participating is deemed to be
present in person at the meeting.
SECTION 4.20. CONDUCT OF MEETINGS. At any meeting of the Board, the
Secretary of the Company shall prepare minutes of the meeting, which shall be
placed in the minute books of the Company.
ARTICLE V
THE MEMBERSHIP
SECTION 5.1. THE MEMBERSHIP. The Members as a group shall be
designated and referred to as the Membership.
SECTION 5.2. MEETINGS OF THE MEMBERSHIP. Regular meetings of the
Membership may be held periodically on fixed, predetermined dates and times
if a majority of the Members determines that regular meetings should be held
and fixes the dates and times for such meetings in advance and each Member is
notified of such action. Other meetings of the Membership may be called at
any time by a majority of the Members.
SECTION 5.3. NOTICE OF MEETINGS. No notice of regular meetings shall
be required unless the date or time of any such meeting is changed from the
date and time fixed for such meeting, in which case each Member shall be
notified of such change orally or in writing at least twenty-four hours
before such meeting. The Company shall give written or oral notice stating
the date, time, and place of any other meeting of the Membership to each
Member of record entitled to vote at the meeting at least twenty-four hours
before the meeting.
SECTION 5.4. WAIVER OF NOTICE. A Member may waive notice of any
meeting, before or after the date and time of the meeting as stated in the
notice, by delivering a signed waiver
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to the Company for inclusion in the minutes. A Member's attendance at any
meeting in person or by proxy (a) waives objection to lack of notice or
defective notice of the meeting unless the Member at the beginning of the
meeting objects to holding the meeting or transacting business at the
meeting, and (b) waives objection to consideration of a particular matter at
the meeting that is not within the purposes described in the meeting notice
unless the Member objects to considering the matter when it is presented.
SECTION 5.5. VOTING BY PROXY. A Member may appoint a proxy to vote
or otherwise act for the Member pursuant to a written appointment form
executed by the Member or the Member's duly authorized attorney-in-fact. An
appointment of a proxy is effective when received by the Secretary or other
officer or agent of the Company authorized to tabulate votes. The general
proxy of a fiduciary is given the same effect as the general proxy of any
other Member. A proxy appointment is valid for 11 months unless otherwise
expressly stated in the appointment form.
SECTION 5.6. ACTION BY CONSENT. Any action required or permitted to
be taken at a meeting of the Membership may be taken without a meeting if the
action is taken in writing by all the Members. The action must be evidenced
by one or more written consents describing the action taken, signed by all
the Members entitled to vote on the action, and delivered to the Company for
inclusion in the minutes.
SECTION 5.7. PRESENCE. Any or all Members may participate in any
annual, regular or special meeting of the Membership by, or through the use
of, any means of communication by which all Members participating may
simultaneously hear each other during the meeting. A Member so participating
is deemed to be present in person at the meeting.
SECTION 5.8. CONDUCT OF MEETINGS. At any meeting of the Membership,
a majority of the Members shall preside or appoint a person to preside at the
meeting and shall appoint a person to act as secretary of the meeting. The
secretary of the meeting shall prepare minutes of the meeting which shall be
placed in the minute books of the Company.
SECTION 5.9. VOTING AND ATTENDING BY REPRESENTATIVES. Any Member
that is a corporation, partnership, limited liability company or other entity
that is not a natural person may attend and vote at meetings of the
Membership by such representatives as such Member may select from
time-to-time in its sole discretion. No written proxy or other appointment
shall be required with respect to any such representatives unless a majority
of the Members determines otherwise.
ARTICLE VI
RIGHTS AND OBLIGATIONS OF MEMBERS
SECTION 6.1. RIGHTS OF MEMBERS. None of the following actions may be
taken absent the unanimous consent of the Members:
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(a) any action taken in contravention of this Agreement
or the Act;
(b) any action taken by the Company resulting in personal
liability of any Member in any jurisdiction;
(c) the pledge or assignment of any of the Company's
property as collateral for the debt of any other
person, corporation or entity or act committing the
Company to act as an endorser, guarantor or surety
for the obligations of any other person, corporation
or entity;
(d) any distribution of Individual Subscription Capital
(as defined in the Initial Subscription Agreement
entered into by each of the Initial Members) to the
Members;
(e) additional contributions of capital as described in
Section 3.4 hereof;
(f) the Company's redemption of any Member's Interest as
described in Section 3.6 hereof;
(g) characterizing Member loans or services as Capital
Contributions as provided in Section 3.7 hereof;
(h) dissolution of the Company as provided in Section
12.1(b) hereof; and
(i) any amendments to this Operating Agreement purporting
to limit or alter the rights of the Members as
provided in Section 13.2 hereof.
SECTION 6.2. MANAGEMENT FEES AND OVERHEAD ALLOCATIONS. Members
and/or Affiliates may from time-to-time provide property and assets for use
by the Company, and in consideration thereof be entitled to reasonable rents
or other compensation or reimbursement as the Board determines is
appropriate. In addition, Members and/or Affiliates may from time-to-time
provide management, administrative or other services for the Company, as
Managers or otherwise, and in consideration thereof may be entitled to
reasonable management fees, overhead allocations and/or other compensation as
from time-to-time determined by the Board. In that regard, a Member to whom
such sums are payable may participate as a Manager of the Company in making a
determination of the amount of any such management fees, overhead
allocations, rents, or other compensation or reimbursement payable to the
Member by the Company and such Member will owe no fiduciary or other duties
to any other Members or to the Company with respect to determining the
amounts thereof. All such payments made to any Member pursuant to this
Section shall be treated as expenses of the Company and shall not be deemed
to constitute distributions to the recipient of any profit, loss or capital
of the Company.
SECTION 6.3. REIMBURSEMENT OF EXPENSES. Each Member shall be
entitled to reimbursement from the Company of all expenses reasonably
incurred and paid by such Member
Page 13 of 31 Xxxxxxxxxx.xxx Operating Agreement
on behalf of the Company. Any question as to whether a Member is entitled to
reimbursement of expenses under this Section shall be determined by the Board.
SECTION 6.4. WAIVER OF PARTITION. Each Member, on behalf of such
Member, its successors and its assigns, hereby waives any rights to have any
Company property partitioned.
SECTION 6.5. LIABILITY. Members shall not be personally liable for
the debts, obligations or liabilities of the Company, whether arising in
contract, tort or otherwise, or for the acts or omissions of any other
Member, agent or employee of the Company. A Member is not liable for any
action taken as a Member, or any failure to take any action, unless the
Member has breached or failed to perform the Member's duties to the Company
and the breach or failure to perform constitutes willful misconduct, fraud,
or a knowing violation of law.
SECTION 6.6. PERFORMANCE OF DUTIES AND RELIANCE ON OTHERS. A Member
shall perform the Member's duties as a Member in good faith, in a manner the
Member reasonably believes 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. In performing the Member's duties, a Member
shall be entitled to rely on information, opinions, reports, or statements of
the following persons or groups unless the Member has knowledge concerning
the matter in question that would cause such reliance to be unwarranted:
(a) a Manager of the Company or one or more employees or
other agents of the Company whom the Member
reasonably believes to be reliable and competent in
the matters presented;
(b) any attorney, public accountant, or other person as
to matters which the Member reasonably believes to be
within such person's professional or expert
competence; or
(c) a committee upon which the Member does not serve,
duly designated in accordance with a provision of the
Articles or this Agreement, as to matters within its
designated authority, which committee the Member
reasonably believes to merit competence.
SECTION 6.7. COMPENSATION. The Company may, but shall not be
obligated to pay any Member or other Person a salary and/or bonus as
compensation for services rendered to the Company. Such salaries and/or
bonuses shall be treated as expenses of the Company and shall not be deemed
to constitute distributions to the recipient of any profit, loss or capital
of the Company, even though such recipient is a Member of the Company.
SECTION 6.8. NO RIGHT TO WITHDRAW. Members shall not have any right
to withdraw as Members. However, a Member may be permitted to withdraw as a
Member with the written consent of the Board.
ARTICLE VII
Page 14 of 31 Xxxxxxxxxx.xxx Operating Agreement
OFFICERS
SECTION 7.1. OFFICERS. Except as may from time-to-time be determined
otherwise by the Board, the officers of the Company shall be a President and
a Secretary. The Board may also choose and appoint one or more Vice
Presidents, one or more Assistant Secretaries or Assistant Treasurers and
such other officers and assistant officers as may be deemed necessary or
appropriate by the Board. Officers may, but need not, be Members and/or
Managers of the Company.
SECTION 7.2. PRESIDENT/CHIEF EXECUTIVE OFFICER. Unless the Board
otherwise provides, the President of the Company shall be the Chief Executive
Officer of the Company with such general executive powers and duties of
supervision and management as are usually vested in the office of the Chief
Executive Officer, shall carry into effect all directions of the Board, shall
sign all notes, agreements or other instruments in writing made and entered
into for or on behalf of the Company, shall have general supervision over the
business and affairs of the Company, and, shall preside at all meetings of
the Membership.
SECTION 7.3. VICE PRESIDENT. Each Vice President of the Company
shall report directly to the President, or such other person as the Board may
direct from time-to-time, and shall have such powers and duties as the Board
or the President may from time-to-time prescribe.
SECTION 7.4. SECRETARY. The Secretary of the Company shall keep an
accurate record of the proceedings of the meetings of the Membership and
shall perform such other duties as are usually incident to the office of the
Secretary.
SECTION 7.5. TREASURER. The Treasurer of the Company is responsible
for (a) keeping correct and complete books of account which show accurately
at all times the financial condition of the Company, (b) safeguarding all
funds, notes, securities, and other valuables which may from time-to-time
come into the possession of the Company, and (c) depositing all funds of the
Company with such depositories as the Board shall designate. The Treasurer
shall furnish at meetings of the Membership, or when otherwise requested, a
statement of the financial condition of the Company. The Treasurer has such
other duties as the Board may from time-to-time prescribe. The Treasurer
shall be entitled to rely and shall be deemed to be acting in good faith in
relying upon the advice of counsel or the public accountants of the Company.
ARTICLE VIII
ALLOCATIONS AND DISTRIBUTIONS
SECTION 8.1. ACCOUNTING DEFINITIONS. The following capitalized
terms, which are used predominantly in this Article, shall have the following
meanings for purposes of this Agreement:
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit
Page 15 of 31 Xxxxxxxxxx.xxx Operating Agreement
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:
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 the penultimate
sentences of Treasury Regulation Sections 1.704-2(g)(1) and
1.704-2(i)(5); and
Debit to such Capital Account the items described in Treasury
Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5)
and 1.704-1(b)(2)(ii)(d)(6) .
The foregoing definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation Section
1.704-l(b)(2)(ii)(d) and shall be applied in a manner consistent with such
intent.
"COMPANY MINIMUM GAIN" has the meaning set forth in Treasury
Regulation Sections 1.704-2(b)(2) and 1.704-2(d) with respect to "partnership
minimum gain," substituting the word "member" for "partner" and "company" for
"partnership" wherever they appear.
"MEMBER NONRECOURSE DEBT" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(4) with respect to "partner nonrecourse debt,"
substituting the word "member" for "partner" and "company" for "partnership"
wherever they appear.
"MEMBER NONRECOURSE DEBT MINIMUM GAIN" means an amount, with respect
to each Member Nonrecourse Debt, equal to the Company Minimum Gain that would
result if such Member Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Treasury Regulation Section
1.704-2(i)(3).
"MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth in
Treasury Regulation Sections 1.704-2(i)(1) and 1.704-2(i)(2) with respect
to "partner nonrecourse deductions," substituting the word "member" for
"partner" and "company" for "partnership" wherever they appear.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Treasury
Regulation Section 1.704-2(b)(1).
"NONRECOURSE LIABILITY" has the meaning set forth in Treasury
Regulation Section 1.7042(b)(3).
SECTION 8.2. ALLOCATION OF PROFITS AND LOSSES. Except as may be
expressly provided otherwise in this Article, and subject to the provisions
of Sections 704(b) and 704(c) of the Code, the Profits and Losses of the
Company for each fiscal year of the Company shall be allocated to the Members
pro rata in accordance with their respective Percentage Interests.
SECTION 8.3. SPECIAL ALLOCATIONS. The following special allocations
shall be made in the following order:
Page 16 of 31 Xxxxxxxxxx.xxx Operating Agreement
(a) Minimum Gain Chargeback. Except as otherwise provided
in Treasury Regulation Section 1.704-2(f),
notwithstanding any other provision of this Article,
if there is a net decrease in Company Minimum Gain
during any fiscal year, each Member shall be
specially allocated items of Company income and gain
for such fiscal year (and, if necessary, subsequent
fiscal years) in an amount equal to such Member's
share of the net decrease in Company Minimum Gain,
determined in accordance with Treasury Regulation
Section 1.704-2(g). Allocations pursuant to the
previous sentence shall be made in proportion to the
respective amounts required to be allocated to each
Member pursuant thereto. The items to be so allocated
shall be determined in accordance with Treasury
Regulation Sections 1.704-2(f)(6) and 1.704-2(j)(2).
This subsection is intended to comply with the
minimum gain chargeback requirement in Treasury
Regulation Section 1.704-2(f) and shall be
interpreted consistently therewith.
(b) Member Nonrecourse Debt Minimum Gain Chargeback.
Except as otherwise provided in Treasury Regulation
Section 1.704-2(i)(4), notwithstanding any other
provision of this Article, if there is a net decrease
in Member Nonrecourse Debt Minimum Gain attributable
to a Member Nonrecourse Debt during any fiscal year,
each Member who has a share of the Member Nonrecourse
Debt Minimum Gain attributable to such Member
Nonrecourse Debt, determined in accordance with
Treasury Regulation Section 1.704-2(i)(5), shall be
specifically allocated items of Company income and
gain for such fiscal year (and, if necessary,
subsequent fiscal years) in an amount equal to such
Member's share of the net decrease in Member
Nonrecourse Debt Minimum Gain attributable to such
Member Nonrecourse Debt, determined in accordance
with Treasury Regulation Section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall
be made in proportion to the respective amounts
required to be allocated to each Member pursuant
thereto. The items to be so allocated shall be
determined in accordance with Treasury Regulation
Sections 1.704-2(i)(4) and 1.704-2(j)(2). This
subsection is intended to comply with the minimum
gain chargeback requirement in Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted
consistently therewith.
(c) Qualified Income Offset. In the event any Member
unexpectedly receives any adjustments, allocations,
or distributions described in Treasury Regulation
Sections 1.704-1(b)(2)(ii)(d)(4),1.704-1(b)(2)(ii)
(d)(5) or 1.704-1(b)(2)(ii)(d)(6) that cause such
Member to have an Adjusted Capital Account Deficit
as of the end of any fiscal year or that increase
such Member's Adjusted Capital Account Deficit,
items of Company gross income and gain shall be
specially allocated to each such Member in an amount
and manner sufficient to eliminate, to the extent
and in the manner required by the Treasury
Regulations, the Adjusted Capital Account Deficit
Page 17 of 31 Xxxxxxxxxx.xxx Operating Agreement
of such Member as quickly as possible; provided,
however, that an allocation pursuant to this
subsection shall be made only if and to the extent
that such Member would have an Adjusted Capital
Account Deficit after all other allocations provided
for in this Section have been tentatively made as if
this subsection were not in this Agreement. This
subsection is intended to constitute a "qualified
income offset" within the meaning of Treasury
Regulation Section 1.704-1(b)(2)(ii)(d).
(d) Avoidance of Adjusted Capital Account Deficit. To the
extent feasible no Losses shall be allocated to any
Member who, after giving effect to such allocation
and other expected allocations then anticipated,
would have an Adjusted Capital Account Deficit as of
the end of any fiscal year of the Company. Any such
Losses that cannot be allocated to a Member by reason
of this subsection shall be allocated, to the extent
possible, to other Members as to which this
subsection is not applicable in proportion to their
Interests. In the event that any Member is
nevertheless allocated Losses that cause such Member
to have, or that increase, an Adjusted Capital
Account Deficit, items of Company gross income and
gain shall be specially allocated to each such Member
in an amount and manner sufficient to eliminate, to
the extent and in the manner required by the Treasury
Regulations, the Adjusted Capital Account Deficit of
each such Member as quickly as possible. The
allocations pursuant to this subsection shall be made
only if and to the extent that such Member would have
an Adjusted Capital Account Deficit after all other
allocations provided for in this Article have been
tentatively made as if this subsection were not in
the Agreement.
(e) Nonrecourse Deductions. Nonrecourse Deductions for
any fiscal year shall be specifically allocated among
the Members in proportion to their Percentage
Interests.
(f) Member Nonrecourse Deductions. Any Member Nonrecourse
Deductions for any fiscal year shall be specially
allocated to the Member who bears the economic risk
of loss with respect to the Member Nonrecourse Debt
to which such Member Nonrecourse Deductions are
attributable in accordance with Treasury Regulation
Section 1.704-2(i)(1).
(g) Section 754 Adjustments. To the extent an adjustment
to the adjusted tax basis of any Company asset
pursuant to Section 734(b) or Section 743(b) of the
Code is required pursuant to Treasury Regulation
Section 1.704-l(b)(2)(iv)(m)(2) or
1.704-l(b)(2)(iv)(m)(4) to be taken into account in
determining Capital Accounts as the result of a
distribution to a Member in complete liquidation of
the Member's Interest in the Company, the amount of
such adjustment to Capital Accounts shall be treated
as an item of gain (if the adjustment increases the
basis of the asset) or loss (if the adjustment
Page 18 of 31 Xxxxxxxxxx.xxx Operating Agreement
decreases such basis), and such gain or loss shall
be specially allocated to the Members in accordance
with their Interests in the Company in the event
Treasury Regulation Section 1.704(b)(2)(iv)(m)(2)
applies, or to the Member to whom such distribution
was made in the event Treasury Regulation Section
1.704-l(b)(2)(iv)(m)(4) applies.
SECTION 8.4. CURATIVE ALLOCATIONS. The allocations set forth in
Section 8.3 (the "Regulatory Allocations") are intended to comply with
certain requirements of the Treasury 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 Profits or Losses pursuant to this Section.
Therefore, notwithstanding any other provision of this Article (other than
the Regulatory Allocations), the Members shall make such offsetting special
allocations of Company Profits or Losses 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 if
the Regulatory Allocations were not part of the Agreement and all Company
items were allocated pursuant to Section 8.2.
SECTION 8.5. ALLOCATIONS WHEN INTERESTS VARY. Allocations of Profits
and Losses, or each item thereof, shall be made to or among Members whose
Interests vary during any taxable year of the Company, whether such varying
Interests are attributable to Transfers of Interests, the issuance of
additional Units or otherwise, shall be made in accordance with the
applicable provisions of the Code and the Treasury Regulations, using any
permitted method or convention selected by the Managers.
SECTION 8.6. DISCRETIONARY DISTRIBUTIONS OF AVAILABLE CASH. Subject
to the provisions of Article XII and Section 6.1(a), the Board may from
time-to-time direct that some or all of the Available Cash, if any, be
distributed to the Members, pro rata in accordance with their respective
Percentage Interests or in such other manner as all the Managers shall from
time-to-time unanimously determine.
SECTION 8.7. DISTRIBUTIONS OF PROPERTY. To the extent that a Member
is entitled to a distribution of assets from the Company or to a return of
the Member's Capital Contributions, the Member shall have only the right to
demand and receive cash in satisfaction thereof.
SECTION 8.8. DISTRIBUTIONS TO MEMBERS OF RECORD. Distributions of
Company assets in respect of an Interest shall be made only to the Members
who, according to the books and records of the Company, are the holders of
record of the Interests in respect of which such distributions are made on
the actual date of distribution. Neither the Company nor any Member shall
incur any liability for making distributions in accordance with the
provisions of the preceding sentence, whether or not the Company or the
Member has knowledge or notice of any transfer or purported transfer of
ownership of an Interest.
ARTICLE IX
RECORDS AND ACCOUNTING
Page 19 of 31 Xxxxxxxxxx.xxx Operating Agreement
SECTION 9.1. RECORDS AND ACCOUNTING. The fiscal year of the Company
for financial reporting and for Federal income tax purposes shall be the
calendar year. The books and records of the Company shall be kept, and the
financial position and the results of its operations recorded, in accordance
with generally accepted accounting principles. The books and records of the
Company shall reflect all Company transactions and shall be appropriate and
adequate for the Company's business. The Company shall keep the following
records and information, and any other records and information required by
the Act, at its principal office:
(a) A list with the full name and last known mailing
address of each Person who is or has been a Member or
Manager of the Company from the date of the Company's
organization.
(b) A copy of the Articles and all amendments or
restatements thereof.
(c) Copies of the Company's Federal, state and local
income tax returns and financial statements for the
three (3) most recent years, or if the returns and
statements were not prepared, copies of the
information and statements provided to or that should
have been provided to the Members to enable them to
prepare their Federal, state and local tax returns
for the same period.
(d) Copies of this Agreement and all amendments hereto
and copies of any written operating agreements no
longer in effect.
(e) A writing setting out the following:
(i) The amount of cash, if any, and a statement
of the agreed fair market value of any other
property or services contributed by each
Member and the times at which or events upon
the happening of which any additional
contributions agreed to be made by each
Member are to be made.
(ii) The events, if any, upon the happening of
which the Company is to be dissolved and its
affairs wound up.
(iii) Any other writings required by this
Agreement.
SECTION 9.2. ACCESS TO ACCOUNTING RECORDS. Each Member, and the
Member's duly authorized representative, shall have the right, at the
Member's own expense, to inspect and copy the records listed in Section 9.1
at the principal office of the Company, upon reasonable request, during
ordinary business hours.
SECTION 9.3 ACCOUNTING DECISIONS. All decisions as to accounting
matters, except as otherwise specifically set forth herein, shall be made by
the Board. The Board may rely upon the advice of the Company's public
accountants as to whether such decisions are in accordance with
Page 20 of 31 Xxxxxxxxxx.xxx Operating Agreement
generally accepted accounting principles.
SECTION 9.4 FEDERAL INCOME TAX ELECTIONS. The Company may make any
and all elections for Federal income tax purposes, including, but not limited
to, the following:
(a) to the extent permitted by applicable law and
regulations, an election to use an accelerated
depreciation method with respect to any depreciable
asset of the Company; and
(b) in case of a transfer of all or part of the Interest
of any Member, an election to adjust the tax basis of
the assets of the Company pursuant to Code Sections
734, 743, and 754.
SECTION 9.5 COMPANY EXPENSES. All of the Company's expenses,
including any expenses incurred by the Managers and Members on behalf of the
Company, shall be paid by the Company. The expenses to be paid by the Company
in connection with the Company's business shall include, but not be limited
to: (a) costs of personnel employed by the Company and involved in the
business of the Company; (b) costs of borrowed money, taxes and assessments
applicable to the Company; (c) legal, audit, accounting, appraisal and
engineering fees; (d) printing, photocopying and other expenses and taxes
incurred in connection with the issuance, distribution, transfer,
registration and recording of documents evidencing ownership of Units or in
connection with the business of the Company; (e) fees and expenses in
connection with the acquisition, sale, exchange, or other disposition or
financing of the assets of the Company; (f) the cost of insurance in
connection with the business of the Company; (g) expenses of forming or
converting, modifying or terminating the Company; (h) the cost of preparing
and disseminating to Members the reports contemplated by this Agreement and
the cost of preparing and filing reports and tax returns with governmental
agencies; and (i) the costs incurred in connection with any litigation or
regulatory proceedings in which the Company is involved. The Managers and
Members shall be entitled to reimbursement from the Company for all expenses
of the Company reasonably incurred and paid by them on behalf of the Company
whether prior to or after the date of the Company's organization.
ARTICLE X
ADDITIONAL MEMBERS AND UNITS
SECTION 10.1. ISSUANCE OF ADDITIONAL UNITS. The Company may from
time-to-time issue additional Units by sale or other issuance to existing
Members or other Persons for such consideration, and upon such terms and
conditions, as the Board shall from time-to-time unanimously determine. Any
such sales or other issuances of Units shall be made in accordance with the
Articles and this Agreement.
SECTION 10.2. CONDITIONS TO ISSUANCE. As a condition to such
issuances, new Members acquiring such Units shall execute this Agreement and
all Members acquiring such Units shall
Page 21 of 31 Xxxxxxxxxx.xxx Operating Agreement
execute all other documents and instruments as the Company may require.
ARTICLE XI
TRANSFER OF UNITS AND OPTION TO PURCHASE
SECTION 11.1. DEFINITION OF TRANSFER. For purposes of this Agreement
the term "Transfer" means, with respect to all or any portion of a Member's
Interest in the Company, any sale, gift, bequest, assignment, conveyance,
transfer, pledge, grant of a security interest, collateral assignment or
other disposition of all or any portion of such Interest, whether voluntary
or involuntary, including any of the foregoing that occur by operation of
law. The transfer of any Membership Interest by a Member to any of its
Affiliates is specifically permitted, and excluded from the definition of
"Transfer" described in this paragraph.
SECTION 11.2. SECURITIES LAW COMPLIANCE. In addition to any other
restrictions applicable to the Transfer of an Interest, and unless such
requirement shall be waived in writing by the Company, no Member shall
Transfer any Interest in the Company without registration under applicable
federal and state securities laws unless such Member furnishes to the Company
an opinion of counsel satisfactory to the Company to the effect that
registration under such laws is not required.
SECTION 11.3. REGULATORY COMPLIANCE. In addition to any other
restrictions applicable to the Transfer of an Interest, and unless such
requirement shall be waived in writing by the Company, no Member, either
individually or in concert with other Members, shall Transfer any Interest in
the Company if such Transfer will give rise to a requirement that the Company
effect any regulatory or antitrust filings (including filings under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, 15 U.S.C. Section 18a),
or obtain any regulatory or antitrust approvals, including the expiration or
early termination of mandatory waiting periods without adverse government
action (collectively, "Antitrust and Regulatory Activities"). Each of the
Members will support the Company's Antitrust and Regulatory Activities.
SECTION 11.4. EFFECT OF TRANSFER OF INTEREST. A Transfer (or
attempted Transfer) of any Interest (a) that is prohibited by the terms of
this Agreement or that is prohibited by the terms of any other contract or
agreement by which the Member whose Interest is the subject of a Transfer (or
attempted Transfer) and the Company are bound; (b) that is made in violation
of or without first complying with any applicable restrictions (including,
without limitation, restrictions providing for a right of first refusal or
option to purchase in favor of another Person and/or restrictions requiring
notice to another Person or Persons prior to a Transfer) under the terms of
this Agreement or under the terms of any other contract or agreement by which
the Member whose Interest is the subject of a Transfer (or attempted
Transfer) and the Company are bound; or (c) that is made, prior to any public
offering of equity interests in the Company, to any party which is not an
Affiliate of the transferring party (any such Transfer or attempted Transfer
described in clauses (a), (b) or (c) above is a "Prohibited Transfer"), shall
be absolutely void and of no effect and the Company shall not give any
recognition whatsoever thereto.
Page 22 of 31 Xxxxxxxxxx.xxx Operating Agreement
SECTION 11.5. MEMBERSHIP CONDITIONS. A Transferee who has been
approved to become a Member as provided in this Agreement must comply with or
satisfy each of the following conditions in order to be admitted as a Member:
(a) any conditions or requirements established or imposed
by the Managers in connection with the approval of
the Transferee's admission as a Member; and
(b) such Transferee must execute an instrument acceptable
to the Company whereby the Transferee accepts the
terms of and becomes a party to and bound by this
Agreement.
SECTION 11.6. RIGHTS NOT ABROGATED. A Transfer of an Interest shall
not, in the absence of an effective waiver thereof or an agreement doing so,
abrogate or preclude the exercise or enforcement of any rights of any Person
(other than the transferor) with respect to the Interest transferred, and the
Transferee shall take such Interest subject thereto.
ARTICLE XII
DISSOLUTION AND WINDING UP
SECTION 12.1. DISSOLUTION. The Company shall be dissolved and its
affairs wound up on the first of the following to occur:
(a) the occurrence of any event specified in the Articles
or this Agreement as an event that will cause the
dissolution of the Company;
(b) the determination of all the Members to dissolve the
Company; or
(c) entering of a decree of judicial dissolution.
The occurrence of an "event of dissociation" with respect to a Member (as the
term "event of dissociation" is defined in the Act) shall not result in the
dissolution of the Company, and the existence of and conduct of business by
the Company shall continue without interruption following any such occurrence.
SECTION 12.2. WINDING UP. Upon dissolution, the Board shall proceed
to wind up and liquidate the business and affairs of the Company, and the
Company may only carry on business that is appropriate to wind up and
liquidate the business and affairs of the Company, including the following:
(a) collecting the Company's assets; (b) disposing of properties that will
not be distributed in kind to Members; (c) discharging or making provision
for discharging liabilities; (4) distributing the remaining property among
the Members; and (5) doing every other act necessary
Page 23 of 31 Xxxxxxxxxx.xxx Operating Agreement
to wind up and liquidate the business and affairs of the Company. The Board
shall follow the procedure for disposing of known claims set forth in the Act.
SECTION 12.3. DISTRIBUTION OF ASSETS. Upon or in anticipation of the
winding up of the Company, the assets shall be distributed in the following
order:
(a) first, to creditors, including Members and Managers
who are creditors to the extent permitted by law, to
satisfy the liabilities of the Company whether by
payment or by the establishment of adequate reserves,
excluding distributions to Members pursuant to
ARTICLE VIII;
(b) next, to Members and former Members to satisfy the
Company's liabilities for distributions pursuant to
ARTICLE VIII;
(c) next, to Members of the Company in proportion to
their respective positive balances in their Capital
Accounts to the extent each such Member has a
positive balance in his Capital Account as provided
in Treasury Regulation Section
1.704-1(b)(2)(ii)(b)(2); and
(d) next, to Members of the Company in proportion to
their respective Percentage Interests.
ARTICLE XIII
AMENDMENTS
SECTION 13.1. PROPOSAL OF AMENDMENTS. Amendments to the Articles and
this Agreement may be proposed in writing by the Board. If any such proposed
amendment could adversely affect the classification of the Company as a
partnership for federal income tax purposes, the proposed amendment must be
accompanied by an opinion of counsel as to the legality and effect on the
Company and the Members. Copies of any amendments proposed to be made
pursuant to this Section shall be sent to each of the Members.
SECTION 13.2. APPROVAL BY BOARD. A proposed amendment of the
Articles or this Agreement shall be approved by the affirmative vote of the
Board cast at either a regular meeting or a special meeting of the Board duly
called for the purpose of voting on the amendment or by the written consent
of all the Managers, provided, however, that no amendment purporting to limit
or change the rights of the Members as described in Section 6.1 hereof will
be binding upon the Company or the Members absent the unanimous consent of
the Members thereto. Upon approval of any amendment as provided in this
Section, all Managers, whether or not they voted for or consented to such
amendment, shall be deemed to have consented to such amendment and shall be
bound by the terms and provisions thereof as if they had so consented.
ARTICLE XIV
Page 24 of 31 Xxxxxxxxxx.xxx Operating Agreement
MISCELLANEOUS
SECTION 14.1. COMPLETE AGREEMENT. This Agreement and the Articles
constitute the complete and exclusive statement of agreement among the
Members with respect to their subject matter. This Agreement and the Articles
replace and supersede all prior agreements by and among the Members or any of
them. This Agreement and the Articles supersede all prior written and oral
statements and no representation, statement, or condition or warranty not
contained in this Agreement or the Articles will be binding on the Members or
have any force or effect whatsoever.
SECTION 14.2. GOVERNING LAW. This Agreement and the rights of the
parties under this Agreement will be governed by, interpreted, and enforced
in accordance with the laws of the State of Nevada.
SECTION 14.3. BINDING EFFECT. Subject to the provisions of this
Agreement relating to transferability, this Agreement will be binding upon
and inure to the benefit of the Members, and their respective Transferees,
successors and assigns.
SECTION 14.4. HEADINGS: INTERPRETATION. All headings herein are
inserted only for convenience and ease of reference and are not to be
considered in the construction or interpretation of any provision of this
Agreement. The singular shall include the plural, and the masculine gender
shall include the feminine and neuter, and vice versa, as the context
requires.
SECTION 14.5. SEVERABILITY. If any provision of this Agreement is
held to be illegal, invalid, unreasonable, or unenforceable under the present
or future laws effective during the term of this Agreement, such provision
will be fully severable; this Agreement will be construed and enforced as if
such illegal, invalid, unreasonable, or unenforceable provision had never
comprised a part of this Agreement; and the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by
the illegal, invalid, unreasonable, or unenforceable provision or by its
severance from this Agreement. Furthermore, in lieu of such illegal, invalid,
unreasonable, or unenforceable provision, there will be added automatically
as a part of this Agreement a provision as similar in terms to such illegal,
invalid, unreasonable, or unenforceable provision as may be possible and be
legal, valid, reasonable, and enforceable.
SECTION 14.6. MULTIPLE COUNTERPARTS. This Agreement may be executed
in several counterparts, each of which will be deemed an original but all of
which will constitute one and the same instrument. However, in making proof
with respect to this Agreement it will be necessary to produce only one copy
hereof signed by the party to be charged.
SECTION 14.7. ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to
execute and deliver such additional documents and instruments and to perform
such additional acts as may be necessary or appropriate to effectuate, carry
out and perform all of the terms, provisions, and conditions of this
Agreement and the transactions contemplated by this Agreement.
SECTION 14.8. NO THIRD PARTY BENEFICIARY. This Agreement is made
solely and specifically among and for the benefit of the Members and their
respective successors and assigns
Page 25 of 31 Xxxxxxxxxx.xxx Operating Agreement
subject to the express provisions of this Agreement relating to successors
and assigns; and no other person will have any rights, interest, or claims
under the Agreement or be entitled to any benefits under or on account of
this Agreement as a third party beneficiary or otherwise.
SECTION 14.9. NOTICES. Any notice to be given or to be served upon
the Company or any Member in connection with this Agreement must be in
writing and will be deemed to have been given and received when delivered to
the address specified by the party to receive the notice. Such notices will
be given to a Member at the address specified on EXHIBIT A. Any Member or the
Company may, at any time by giving five days' prior written notice to the
other Members and the Company, designate any other address in substitution of
the foregoing address to which such notice will be given.
SECTION 14.10. TITLE TO COMPANY PROPERTY. Legal title to all
property of the Company will be held and conveyed in the name of the Company.
SECTION 14.11. RELIANCE ON AUTHORITY OF PERSON SIGNING AGREEMENT. In
the event that a Member is not a natural person, neither the Company nor any
Member will (a) be required to determine the authority of the individual
signing this Agreement to make any commitment or undertaking on behalf of
such Person or to determine any fact or circumstance bearing upon the
existence of the authority of such individual, or (b) be required to see to
the application or distribution of proceeds paid or credited to individuals
signing this Agreement on behalf of such entity.
SECTION 14.12. INDEMNIFICATION. To the fullest extent allowable by
Nevada law (including pursuant to the expanded rights and financial
arrangements that may be granted to persons under articles of organization,
operating agreement, vote of members or disinterested managers, if any, or
otherwise under such law), the Company shall indemnify Indemnifiable Persons
(as defined below), in the manner and under the circumstances described in
this Section 14.12.
(a) The Company shall indemnify any person who was or is
a party, or is threatened to be made a party, to any
threatened, pending or completed investigation,
claim, action, suit or proceeding, whether civil,
criminal, administrative, or investigative, including
any action by or in the right of the Company, by
reason of the fact that he is or was a Manager,
Member, officer, employee, or agent of the Company,
or is or was serving at the request of the Company as
a Manager, Member, director, officer, employee, or
agent of another limited liability company,
partnership, joint venture, trust, or other
enterprise (any such person, an "Indemnifiable
Person"), against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection
with such Indemnifiable Claim, unless a final
adjudication by a court of competent jurisdiction
establishes that his acts or omissions involved
intentional misconduct, fraud, or a knowing violation
of law and were material to the cause of action. The
termination of any Indemnifiable Claim by judgment,
order, settlement, conviction, or upon a plea of nolo
Page 26 of 31 Xxxxxxxxxx.xxx Operating Agreement
contendere or its equivalent, shall not, of itself,
create a presumption that the person's acts or
omissions involved intentional misconduct, fraud, or
a knowing violation of law.
(b) To the extent that an Indemnifiable Person has been
successful on the merits or otherwise in defense of
any Indemnifiable Claim, or in defense of any claim,
issue or matter therein, he shall be indemnified by
the Company against expenses, including attorneys'
fees, actually and reasonably incurred by him in
connection with such defense.
(c) Expenses incurred in defending an Indemnifiable Claim
shall be paid by the Company in advance of the final
disposition of such Indemnifiable Claim upon receipt
of an undertaking by or on behalf of the
Indemnifiable Person to repay such amount if final
adjudication by a court of competent jurisdiction
establishes that his acts or omissions involved
intentional misconduct, fraud, or a knowing violation
of law and were material to the cause of action.
(d) The indemnification provided by this Section 14.12
does not exclude any other rights to which a person
seeking indemnification may be entitled under any
law, articles of organization, insurance, agreement,
vote of Members or disinterested Managers or
otherwise, both as to action in his official capacity
and as to action in another capacity while holding
such office. The indemnification provided by this
Section 14.12 shall continue as to a person who has
ceased to be a Member, Manager, officer, employee or
agent and shall inure to the benefit of the heirs,
executors and administrators of such a person. No
amendment to repeal this Section 14.12 shall apply to
or have any effect on the rights of any Indemnifiable
Person under this Section 14.12, which rights came
into existence by virtue of acts or omissions of such
person occurring prior to such amendment or repeal.
(e) The Company may purchase and maintain insurance on
behalf of any person who is or was a Member, Manager,
officer, employee or agent of the Company, or is or
was serving at the request of the Company as a
Member, Manager, director, officer, employee or agent
of another limited liability company, corporation,
partnership, joint venture, trust or other enterprise
(a "Business Entity") against any liability asserted
against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not
the Company would have the power to indemnify him
against such liability under the provisions of this
Section 14.12.
(f) For the purposes of this Section 14.12, references to
"the Company" include, in addition to the Company
itself, any corporation resulting from converting the
Company into corporate form, any surviving Business
Entity
Page 27 of 31 Xxxxxxxxxx.xxx Operating Agreement
in any merger or similar business combination, any
constituent Business Entity (including any
constituent of a constituent) absorbed in
consolidation or merger which, if its separate
existence had continued, would have had power and
authority to indemnify its members, managers,
directors, officers, employees and agents so that any
person who is or was a member, manager, director,
officer, employee or agent of such constituent
Business Entity, or is or was serving at the request
of such constituent Business Entity as a director,
officer, employee or agent of another Business
Entity, shall stand in the same position under the
provisions of this Section 14.12 with respect to the
resulting or surviving Business Entity as he or she
would have with respect to such constituent Business
Entity if its separate existence had continued.
(g) For purposes of this Section 14.12, references to
"other enterprise" shall include employee benefit
plans; references to "fine" shall include any excise
tax assessed on a person with respect to an employee
benefit plan; references to "serving at the request
of the Company" shall include any service as a
member, manager, trustee, director, officer, employee
or agent of the Business Entity that imposes duties
on, or involves services by, such member, manager,
director, officer, employee, or agent with respect to
an employee benefit plan, its participants, or
beneficiaries; and masculine references shall include
the feminine.
SECTION 14.13. LOCATION OF RECORDS. The Company shall not be
required to keep the records and documents specified in Section 86.241 of the
Nevada law applicable to limited liability companies at its office in Nevada.
[THE FOLLOWING PAGE IS THE SIGNATURE PAGE]
Page 28 of 31 Xxxxxxxxxx.xxx Operating Agreement
SIGNATURE PAGE OF OPERATING AGREEMENT
OF XXXXXXXXXX.XXX, LLC
DATE INITIAL SUBSCRIBERS
COVENANT TRANSPORT, INC.
April 19, 2000 BY: /s/ XXXXX X. XXXXXX
-----------------------------------
PRINTED NAME: XXXXX X. XXXXXX
-------------------------
TITLE: CHAIRMAN, PRES./CEO
--------------------------------
X.X. XXXX TRANSPORT SERVICES, INC.
April 19, 2000 BY: /s/ XXXXX XXXXXXXX
-----------------------------------
PRINTED NAME: XXXXX XXXXXXXX
-------------------------
TITLE: CHAIRMAN
--------------------------------
M.S. CARRIERS, INC.
April 19, 2000 BY: /s/ XXXXXXX X. XXXXXXX
-----------------------------------
PRINTED NAME: XXXXXXX X. XXXXXXX
-------------------------
TITLE: CHAIRMAN, PRESIDENT AND CEO
--------------------------------
SWIFT TRANSPORTATION CO., INC.
April 19, 2000 BY: /s/ XXXXX X. XXXXX
-----------------------------------
PRINTED NAME: XXXXX X. XXXXX
-------------------------
TITLE: CHAIRMAN, PRESIDENT AND CEO
--------------------------------
U.S. XPRESS ENTERPRISES, INC.
April 19, 2000 BY: /s/ XXX X. XXXXXX
-----------------------------------
PRINTED NAME: XXX X. XXXXXX
-------------------------
TITLE: CO-CHAIRMAN
--------------------------------
XXXXXX ENTERPRISES, INC.
April 19, 2000 BY: /s/ XXXXXXXX X. XXXXXX
-----------------------------------
PRINTED NAME: XXXXXXXX X. XXXXXX
-------------------------
TITLE: CHAIRMAN AND CEO
--------------------------------
Page 29 of 31 Xxxxxxxxxx.xxx Operating Agreement
EXHIBIT A
TO
OPERATING AGREEMENT
OF
XXXXXXXXXX.XXX, LLC
CURRENT MEMBERS
XXXXXXXX TRANSPORT, INC. SWIFT TRANSPORTATION CO., INC.
000 XXXXXXXXXX XXXXXXX 0000 XXXXX 00XX XXXXXX
XXXXXXXXXXX, XX 00000 XXXXXXX, XX 00000
X.X. XXXX TRANSPORT SERVICES, INC U.S. XPRESS ENTERPRISES, INC.
615 X.X. XXXX CORPORATE DRIVE 0000 XXXXXXX XXXX
XXXXXX, XX 00000 XXXXXXXXXXX, XX 00000
M.S. CARRIERS, INC. XXXXXX ENTERPRISES, INC.
3171 DIRECTORS ROW 00000 XXXXXXXX XXXX
XXXXXXX, XX 00000 XXXXX, XX 00000
Page 30 of 31 Xxxxxxxxxx.xxx Operating Agreement
EXHIBIT B
TO
OPERATING AGREEMENT
OF
XXXXXXXXXX.XXX, LLC
------------------------------------------------------------------------------------------------------------------
CAPITAL CONTRIBUTION
------------------------------------------------------------------------------------------------------------------
MEMBER TYPE AGREED VALUE UNITS PERCENT INTEREST
------------------------------------------------------------------------------------------------------------------
Covenant Transport, Inc. Cash & Assets To be determined 130 13%
------------------------------------------------------------------------------------------------------------------
X.X. Xxxx Transport Services, Inc. Cash & Assets To be determined 280 28%
------------------------------------------------------------------------------------------------------------------
M.S. Carriers, Inc. Cash & Assets To be determined 140 14%
------------------------------------------------------------------------------------------------------------------
Swift Transportation Co., Inc. Cash & Assets To be determined 160 16%
------------------------------------------------------------------------------------------------------------------
U.S. Xpress Enterprises, Inc. Cash & Assets To be determined 130 13%
------------------------------------------------------------------------------------------------------------------
Xxxxxx Enterprises, Inc. Cash & Assets To be determined 160 16%
------------------------------------------------------------------------------------------------------------------
TOTAL 1,000 100%
------------------------------------------------------------------------------------------------------------------
Page 31 of 31 Xxxxxxxxxx.xxx Operating Agreement
