THIRD
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
CYBERSHOP, L.L.C.
THIRD
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
CYBERSHOP, L.L.C.
This Third Amended and Restated Operating Agreement (this "Operating
Agreement") of CYBERSHOP, L.L.C., a limited liability company organized pursuant
to the New Jersey Limited Liability Company Act, is entered into as of the
10th day of October, 1997 by and among the Company and the persons executing
this Operating Agreement as Members.
WHEREAS, the Company was formed on December 1, 1994;
WHEREAS, the Company and the Existing Members are parties to the
Existing Operating Agreement;
WHEREAS, the parties hereto desire to amend and restate the Existing
Operating Agreement to reflect the issuance of certificates to reflect and
represent the Existing Member's respective Membership Interests, to provide that
any additional Membership Interests issued hereafter shall be represented by
certificates, and to make other changes to the Existing Operating Agreement as
set forth herein;
NOW, THEREFORE, the Existing Operating Agreement is hereby amended and
restated in its entirety as follows:
ARTICLE I
DEFINITIONS
For purposes of this Company Agreement (as defined below), unless the
context clearly indicates otherwise, the following terms shall have the
following meanings:
1. ACT - The New Jersey Limited Liability Company Act and all
amendments to the Act.
2. ADDITIONAL MEMBER - A Person admitted as a Member of the Company
after the Effective Date.
3. ADMISSION AGREEMENT - The agreement between an Additional Member or
Additional Members and the Company pursuant to which such Additional Member or
Members shall purchase Membership Interests in the Company and be admitted as a
Member of the Company and the agreement between an Assignee and the Company
pursuant to which such Assignee is admitted to the Company as a Substitute
Member. Each Admission Agreement shall contain an agreement by such Additional
Member or Substitute Member to be bound by the terms of this Company Agreement.
4. ADVISORY COMMITTEE - A committee initially consisting of
representatives of each of the following five Members or group of Members:
Xxxxxxx Xxxxxx, Xxxxxx X. Xxxxx, Genesis Direct Inc., the GE Group Members and
Big Wave. Each such Member and the majority in interest of each group of
Members, as applicable, shall have the right to designate, and thereafter to
change, its (or their) representative, by written notice to the Company. An
Additional Member or Substitute Member the purchase price for whose Membership
Interests equals or exceeds $1,000,000 shall be permitted one representative on
the Advisory Committee. Xxxxxxx Xxxxxx hereby designates Xxxxxxx
Xxxxxx as his representative, Xxxxxx X. Xxxxx hereby designates Xxxxxx X. Xxxxx
as his representative, Genesis Direct Inc. hereby designates Xxxxxx Xxxxxx as
its representative, the GE Group Members hereby designate Xxxxx X. Xxxxxxxxxx as
their representative and Big Wave hereby designates Xxxx Xxxxxxx as its
representative and if at any time Xxxx Xxxxxxx is not present in the United
States, Big Wave hereby designates Xxxxxxx Xxxxxx as its representative during
such time. Each representative on the Advisory Committee shall have one vote on
all matters to be voted on or approved by the Advisory Committee and, unless
otherwise indicated herein, approvals by the Advisory Committee require a
majority vote by such representatives. Upon the sale by any Member of all of its
Membership Interests, such selling Member shall no longer have a representative
on the Advisory Committee.
5. ASSIGNEE - A transferee of a Membership Interests who has not been
admitted as a Substituted Member.
6. BANKRUPT MEMBER - A Member who: (1) has become the subject of an
Order for Relief under the United States Bankruptcy Code, or (2) has initiated,
either in an original Proceeding or by way of answer in any state insolvency or
receivership proceeding, an action for liquidation arrangement, composition,
readjustment, dissolution, or similar relief.
7. BIG WAVE - Big Wave NV, a Netherlands Antilles corporation.
8. BUSINESS DAY - Any other day than Saturday, Sunday or any legal
holiday observed in New Jersey.
9. CAPITAL ACCOUNT - The account maintained for a Member or Assignee
determined in accordance with Article VII.
10. CAPITAL CONTRIBUTION - Any contribution of Property or services to
the Company or the obligation to contribute Property or services to the Company
made by or on behalf of a Member or Assignee in consideration for the purchase
from the Company of Membership Interests.
11. CERTIFICATE - The Certificate of Formation of the Company as
properly adopted and amended from time to time by the Members and filed with the
Secretary of State of New Jersey.
12. CODE - The Internal Revenue Code of 1986, as amended from time to
time.
13. COMMITMENT - The Capital Contributions that a Member or Assignee
is obligated to make.
14. COMPANY - Cybershop, L.L.C., a limited liability company formed
under the laws of New Jersey, and any successor limited liability company.
15. COMPANY AGREEMENT - This Operating Agreement including all
amendments adopted in accordance with the terms hereof and the Act. References
herein to this Operating Agreement shall mean this Company Agreement.
16. COMPANY LIABILITY - Any enforceable debt or obligation for which
the Company is liable or which is secured by any Company Property.
17. COMPANY MINIMUM GAIN - An amount determined by first computing for
each Company Nonrecourse Liability any gain the Company would realize if it
disposed of the Company Property subject to that liability for no consideration
other than full satisfaction of the liability, and then aggregating the
separately computed gains. The amount of Company Minimum Gain includes such
minimum gain arising from a conversion, refinancing, or other change to a debt
instrument, only to the extent a Member is allocated a share of that minimum
gain. For any Taxable Year, the net increase or decrease in Company Minimum Gain
is determined by comparing the Company Minimum Gain on the
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last day of the immediately preceding Taxable Year with the Minimum Gain on the
last day of the current Taxable Year. Notwithstanding any provision to the
contrary contained herein, Company Minimum Gain and increases and decreases in
Company Minimum Gain are intended to be computed in accordance with Section 704
of the Code and the Regulations issued thereunder, as the same may be issued and
interpreted from time to time. A Member's share of Company Minimum Gain at the
end of any Taxable Year equals: the sum of Nonrecourse Deductions allocated to
that Member (and to that Member's predecessors in interest) up to that time and
the distributions made to that Member (and to that Member's predecessors in
interest) up to that time of proceeds of a Nonrecourse Liability allocable to an
increase in Company Minimum gain minus the sum of that Member's (and that
Member's predecessors in interest) aggregate share of the net decreases in
Company Minimum Gain plus its (or their) aggregate share of decreases resulting
from revaluations of Company Property subject to one or more Company Nonrecourse
Liabilities.
18. COMPANY NONRECOURSE LIABILITY - A Company Liability to the extent
that no Member or Related Person bears the economic risk of loss (as defined in
Section 1.752-2 of the Regulations) with respect to the liability.
19. COMPANY PROPERTY - Any Property owned by the Company.
20. COMPANY SECURITIES - Membership Interests and all rights,
warrants, options or other securities or interests convertible into or
exercisable for limited liability company interests in the Company issued by the
Company and outstanding from time to time.
21. DISTRIBUTION - A transfer of Property to a Member on account of
Membership Interests as described in Article VIII hereof.
22. DISPOSITION (DISPOSE) - Any sale, assignment, transfer, exchange,
mortgage, pledge, grant, hypothecation, or other transfer, absolute or as
security or encumbrance (including dispositions by operation of law).
23. DISSOCIATION - Any action which causes a Person to cease to be a
Member as described in Article XII hereof.
24. DISSOLUTION EVENT - An event, the occurrence of which will result
in the dissolution of the Company under Article XIV hereof unless the Members
agree to the contrary.
25. EXISTING MEMBERS - Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxx, The Xxxxxxx
X. Xxxxxx Grantor Retained Annuity Trust, The Xxxx X. Xxxxxx Grantor Retained
Annuity Trust, Xxxxxx X. Xxxxx, Genesis Direct Inc., Trustees of General
Electric Pension Trust, Xxxxxx X. Xxxx, Xxxxxxx X. Xxxxxxx, Porridge Partners
II, Big Wave, NV and Carinton Partnership.
26. EXISTING OPERATING AGREEMENT - That certain Second Amended and
Restated Operating Agreement in effect as of October 18, 1996, as amended on
June 3, 1997 and as of June 24, 1997.
27. GE GROUP MEMBER(S) - General Electric Pension Trust, Xxxxxx X.
Xxxx, Xxxxxxx X. Xxxxxxx and Porridge Partners II.
28. IMMEDIATE FAMILY - A Member's Immediate Family includes the
Member's spouse, issue (including natural, adopted and step) and parents.
29. INITIAL MEMBERS - Xxxxxxx X. Xxxxxx, Xxxx X. Xxxxxx, the Xxxxxxx
X. Xxxxxx Grantor Retained Annuity Trust, The Xxxx X. Xxxxxx Grantor Retained
Annuity Trust, Xxxxxx X. Xxxxx and Genesis Direct Inc.
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30. MAJORITY - The affirmative vote or consent of Members described as
a "Majority" in Article VI hereof.
31. MANAGING MEMBER - The Person designated as such in Article VI.
32. MEMBER - Initial Members, GE Group Members, Big Wave, Carinton
Partnership, Substituted Members and Additional Members, but, unless the context
expressly indicates to the contrary, excludes Assignees.
33. MEMBER MINIMUM GAIN - An amount determined by first computing for
each Member Nonrecourse Liability any gain the Company would realize if it
disposed of the Company Property subject to that liability for no consideration
other than full satisfaction of the liability, and then aggregating the
separately computed gains. The amount of Member Minimum Gain includes such
minimum gain arising from a conversion, refinancing, or other change to a debt
instrument, only to the extent a Member is allocated a share of that minimum
gain. For any Taxable Year, the net increase or decrease in Member Minimum Gain
is determined by comparing the Member Minimum gain on the last day of the
immediately preceding Taxable Year with the Minimum Gain on the last day of the
current Taxable Year. Notwithstanding any provision to the contrary contained
herein, Member Minimum Gain and increases and decreases in Member Minimum gain
are intended to be computed in accordance with Section 704 of the Code and the
Regulations issued thereunder, as the same may be issued and interpreted from
time to time.
34. MEMBER NONRECOURSE DEDUCTIONS - The net increase in any Taxable
Year in Member Minimum Gain attributable to Member Nonrecourse Liabilities
reduced (but not below zero) by proceeds of the Member Nonrecourse Liability
distributed during the year to the Member bearing the economic risk of loss for
such liability that are both attributable to such liability and allocable to an
increase in the Member Minimum Gain.
35. MEMBER NONRECOURSE LIABILITY - Any Company Liability to the
extent the liability is nonrecourse under state law, and on which a Member or
Related Person bears the economic risk of loss under Section 1.752-2 of the
Regulations because, for example, the Member or Related Person is the creditor
or a guarantor.
36. MEMBERSHIP INTEREST - Membership Interest means a limited
liability company interest in the Company which includes the rights of a Member
or, in the case of an Assignee, the rights of the assigning Member to its
Sharing Ratio amount of Distributions (liquidating or otherwise) and allocations
of the profits, losses, gains, deductions, and credits of the Company. As
provided in Article IV, all Membership Interests existing on the date hereof and
all Membership Interests issued or sold after the date hereof will be
represented by Membership Interest Certificates.
37. MEMBERSHIP INTEREST CERTIFICATE - Membership Interest Certificate
has the meaning given to such term in Section 4.1 of this Company Agreement.
38. MONEY - Cash or other legal tender of the United States, or any
obligation that is immediately reducible to legal tender without delay or
discount. Money shall be considered to have a fair market value equal to its
face amount.
39. NET LOSSES - The losses and deductions of the Company determined
in accordance with accounting principles consistently applied from year to year
employed under the method of accounting adopted by the Company and as reported
separately or in the aggregate, as appropriate, on the tax return of the Company
filed for federal income tax purposes.
40. NET PROFITS - The income and gains of the Company determined in
accordance with accounting principles consistently applied from year to year
employed under the method of accounting
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adopted by the Company and as reported separately or in the aggregate, as
appropriate, on the tax return of the Company filed for federal income tax
purposes.
41. NONRECOURSE LIABILITIES - Nonrecourse liabilities include Company
Nonrecourse Liabilities and Member Nonrecourse Liabilities.
42. NOTICE - Notice shall be in writing. Notice to the Company shall
be considered given when received by registered or certified mail, return
receipt requested, or by Federal Express or similar service providing receipt
against delivery, addressed to the Company at the address of its Principal
Office. Notice to a Member shall be considered given when received by registered
or certified mail, return receipt requested, or by Federal Express or similar
service providing receipt against delivery, addressed to the Member at the
address reflected in Exhibit A to this Company Agreement unless the Member has
given the Company a Notice of a different address.
43. OFFSETTABLE DECREASE - Any allocation that unexpectedly causes or
increases a deficit in the Member's Capital Account as of the end of the taxable
year to which the allocation relates attributable to depletion allowances under
Section 1.704(b)(2)(iv)(k) of the Regulations, allocations of loss and
deductions under Sections 704(e)(2) or 706(d) of the Code or under Section
1.751-1(b)(2)(ii) of the Regulations, or distributions that, as of the end of
the year are reasonably expected to be made to the extent they exceed the
offsetting increases to such Member's Capital Account that reasonably are
expected to occur during or (prior to) the taxable years in which the such
distributions are expected to be made (other than increases pursuant to a
Minimum Gain Chargeback).
44. ORGANIZATION - A Person other than a natural person. Organization
includes, without limitation, corporations (both non-profit and other
corporations), partnerships (both limited and general), joint ventures, limited
liability companies, and unincorporated associations, but the term does not
include joint tenancies and tenancies by the entirety.
45. PERSON - An individual, trust, estate, or any incorporated or
unincorporated organization permitted to be a member of a limited liability
company under the laws of New Jersey.
46. PRINCIPAL - Xxxxxxx Xxxxxx and Xxxx X. Xxxxxx.
47. PROCEEDING - Any judicial or administrative trial, hearing or
other activity, civil criminal or investigative, the result of which may be that
a court, arbitrator, or governmental agency may enter a judgment, order, decree,
or other determination which, if not appealed and reversed, would be binding
upon the Company, a Member or other person subject to the jurisdiction of such
court, arbitrator, or governmental agency.
48. PROPERTY - Any property, real or personal, tangible or intangible,
including money and any legal or equitable interest in such property, but
excluding services and promises to perform services in the future.
49. REGULATIONS - Except where the context indicates otherwise, the
permanent and temporary regulations of the United States Department of the
Treasury under the Code, as such regulations may be lawfully from time to time.
50. RELATED PERSON - A person having a relationship to a Member that
is described in Section 1.752-4(b) of the Regulations.
51. SHARING RATIO - With respect to each Member, such Member's
percentage ownership of all outstanding Membership Interests an any given date
calculated by dividing the number of Membership Interests owned by such Member
by the total number of Membership Interests outstanding on such given date.
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52. SUBSTITUTE MEMBER - An Assignee who has been admitted to all of
the rights of membership in accordance with this Company Agreement and pursuant
to an Admission Agreement.
53. TAXABLE YEAR - The taxable year of the Company as determined
pursuant to Section 706 of the Code.
54. TAXING JURISDICTION - Any state, local, or foreign government that
collects tax, interest or penalties, however designated, on any Member's share
of the income or gain attributable to the Company.
55. TRANSFER - Any sale, assignment, transfer, pledge (other than a
pledge to the Company), mortgage, hypothecation or other encumbrance other than
a transfer to an affiliate or pursuant to will or by law.
ARTICLE II
FORMATION
1. ORGANIZATION - The Company has been organized as a New Jersey
limited liability company pursuant to the provisions of the Act. The Certificate
was duly filed with the Secretary of State of the State of New Jersey on
December 1, 1994.
2. AGREEMENT - For and in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Members executing this Company
Agreement hereby agree to the terms and conditions hereof, as it may from time
to time be amended according to its terms. It is the express intention of the
Members that this Company Agreement shall be the sole operating agreement of the
Company and the sole source of agreement among all of the parties hereto, and,
except to the extent a provision of this Company Agreement expressly
incorporates federal income tax rules by reference to sections of the Code or
Regulations or is expressly prohibited or ineffective under the Act, this
Company Agreement shall govern, even when inconsistent with, or different than,
the provisions of the Act or any other law or rule. To the extent any provision
of this Company Agreement is prohibited or ineffective under the Act, this
Company Agreement shall be considered amended to the smallest degree possible in
order to make this Company Agreement effective under the Act. In the event the
Act is subsequently amended or interpreted in such a way to make any provision
of this Company Agreement that was formerly invalid valid, such provision shall
be considered to be valid from the effective date of such interpretation or
amendment.
3. NAME - The name of the Company is Cybershop, L.L.C., and all
business of the Company shall be conducted under that name or under any other
name, but in any case, only to the extent permitted by applicable law.
4. EFFECTIVE DATE - This Company Agreement shall be effective upon the
execution and delivery hereof by each party hereto to each other party hereto.
5. TERM - The Company shall be dissolved and its affairs wound up in
accordance with the Act and this Company Agreement on December 1, 2044, unless
the term shall be extended by amendment to this Company Agreement and the
Certificate, or unless the Company shall be sooner dissolved and its affairs
would up in accordance with the Act or this Company Agreement.
6. REGISTERED AGENT AND OFFICE - The registered agent for the service
of process and the registered office shall be that Person and location reflected
in the Certificate as filed in the office of the Secretary of State of New
Jersey. The Managing Member, may, from time to time, change the registered agent
or office through appropriate filings with the Secretary of State of New Jersey.
In the event the registered agent ceases to so act as such for any reason or the
registered office shall change,
6
the Managing Member shall promptly designate a replacement registered agent or
file a notice of change of address as the case may be. If the Managing Member
shall fail to so designate a replacement registered agent or change of address
of the registered office, any Member may designate a replacement registered
agent or file a notice of change of address.
7. PRINCIPAL OFFICE - The Principal Office of the Company shall be
located at 000 Xxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
ARTICLE III
NATURE OF BUSINESS
The Company may engage in any lawful business permitted by the Act or
the laws of any jurisdiction in which the Company may do business. The Company
shall have the authority to do all things necessary or convenient to accomplish
its purpose and operate its business as described in this Article III.
ARTICLE IV
ACCOUNTING, RECORDS AND CERTIFICATES
1. RECORDS TO BE MAINTAINED - The Company shall maintain its books and
records at its Principal Office.
2. REPORTS TO MEMBERS:
2.1. The Company shall provide reports at least annually to
the Members other than Assignees at such time and in such manner as the Managing
Member may determine reasonable.
2.2. The Company shall provide all Members with those
information returns required by the Code and the laws of any applicable state.
3. ACCOUNTS - The Company shall maintain a record of the Capital
Account for each Member in accordance with Article VII hereof.
4. CERTIFICATES
4.1. Certificates representing Membership Interests shall be
in the form attached hereto as Exhibit C and bearing the legend required by
Section 14 of Article XIX hereof (each, a "Membership Interest Certificate") and
shall be executed by the Managing Member. Each Member shall be entitled to a
Membership Interest Certificate (or Certificates) certifying the Membership
Interests owned by such Member. All Membership Interests issued hereafter shall
be represented by a Membership Interest Certificate. The Company has delivered
to each existing Member a Membership Interest Certificate representing the
number of Membership Interests set forth opposite such Member's name on Exhibit
A hereto.
4.2. Upon surrender to the Company of a Membership Interest
Certificate duly endorsed or accompanied by proper evidences of authority to
Transfer, it shall be the duty of the Company to issue a new Membership Interest
Certificate to the person or entity entitled thereto and cancel the old
certificate, assuming that such Transfer is otherwise in accordance with the
terms of this Company Agreement. Upon surrender to the Company of a Membership
Interest Certificate duly endorsed or accompanied by proper evidences of
authority to Transfer some, but not all, of the Membership Interests evidenced
by such Membership Interest Certificate, it shall be the duty of the Company to
issue a new Membership Interest Certificate to the person or entity entitled
thereto on account of such Transfer for such Membership Interests so
Transferred, issue a new Membership
7
Interest Certificate to the Member effecting such Transfer for the Membership
Interests not so Transferred and cancel the old certificate, assuming that such
Transfer is otherwise in accordance with the terms of this Company Agreement.
Every such Transfer shall be entered on the transfer book of the Company which
shall be kept at its principal office. The Members of the Company shall have the
right to inspect the transfer book of the Company at the principal office of the
Company during business hours upon prior notice to the Managing Member.
4.3. Upon written notice to the Company that a Member's certificate
has been lost, mutilated or destroyed accompanied by such representations,
warranties and indemnifications that the Company shall reasonably request in
connection therewith, the Company shall issue a new Membership Interest
Certificate to such Member to replace such lost, mutilated or destroyed
Membership Interest Certificate.
ARTICLE V
NAMES AND ADDRESSES OF MEMBERS
The names and addresses of the Initial Members and the Additional
Members who have been admitted to the Company as of the date hereof are as
reflected on Exhibit A attached hereto and by this reference made a part hereof
as if set forth fully herein.
ARTICLE VI
RIGHTS AND DUTIES OF MEMBERS AND THE ADVISORY COMMITTEE
1. MANAGEMENT
1.1. The Company shall be managed by a Managing Member, who
must be a Member. Xxxxxxx Xxxxxx is hereby designated to continue to serve as
the Managing Member.
1.2. The Managing Member shall have full, exclusive, and
complete discretion, power, and authority, subject in all cases to the other
provisions of this Company Agreement (including, without limitation, Sections
1.3, 1.5 an 7 of this Article VI) and the requirements of applicable law, to
manage, control, administer, and operate the business and affairs of the Company
for the purposes herein stated, and to make all decisions affecting such
business and affairs, including, without limitation, for Company purposes, the
power to:
1.2.1. acquire by purchase, lease or otherwise, any
real or personal property, tangible or intangible;
1.2.2. construct, operate, maintain, finance, and
improve, and to own, sell, convey, assign, mortgage, or lease any real estate
and any personal property;
1.2.3. sell, dispose, trade, or exchange Company
assets in the ordinary course of the Company's business;
1.2.4. enter into agreements and contracts and to
give receipts, releases, and discharges;
1.2.5. purchase liability and other insurance to
protect the Company's properties and business;
1.2.6. borrow money for and on behalf of the
Company, and, in connection therewith, execute and deliver instruments
authorizing the confession of judgment against the Company.
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1.2.7. execute or modify leases with respect to any
part or all of the assets of the Company;
1.2.8. prepay, in whole or in part, refinance,
amend, modify, or extend any mortgages or deeds of trust which may affect any
asset of the Company and in connection therewith to execute for and on behalf of
the Company any extensions, renewals, or modifications of such mortgages or
deeds of trust;
1.2.9. execute any and all other instruments and
documents which may be necessary or in the opinion of the Managing Member
desirable to carry out the intent and purpose of this Company Agreement;
1.2.10. make any and all expenditures which the
Managing Member, in its sole discretion, deems necessary or appropriate in
connection with the management of the affairs of the Company and the carrying
out of its obligations and responsibilities under this Company Agreement,
including, without limitation, all legal, accounting and other related expenses
incurred in connection with the organization and financing and operation of the
Company;
1.2.11. enter into any kind of activity necessary
to, in connection with, or incidental to, the accomplishment of the purposes of
the Company; and
1.2.12. invest and reinvest Company reserves in
short-term instruments or money market funds.
Notwithstanding anything to the contrary in this Company Agreement,
the Managing Member shall not engage in business in any jurisdiction which does
not provide for the registration of limited liability companies.
1.3. Upon the death or incapacity of the Managing Member ("Prior
Manager"), a successor Managing Member shall be selected by the Advisory
Committee (not including any representative of the Prior Manager on the Advisory
Committee) provided that if the Prior Manager is Xxxxxxx Xxxxxx, such successor
Managing Member so approved by the Advisory Committee must also be approved by
Xxxx X. Xxxxxx if she is then a Member. The Managing Member may be removed as
Managing Member for Cause (as hereafter defined), and in such event or upon the
resignation of the Managing Member, a successor Managing Member will be elected,
by a majority vote of the representatives on the Advisory Committee other than
any representative of such removed or resigned Managing Member on such
committee. For purposes hereof, "Cause" shall mean (i) an action or course of
conduct or failure to act by the Managing Member in carrying out his duties as
Managing Member which action, course of conduct or failure to act constitutes
willful misconduct or gross negligence by the Managing Member and either has had
a material adverse effect on the Company or its business or would reasonably
likely have had a material adverse effect on the Company or its business had
such action, course of conduct or failure to act not been detected and remedied
or discontinued and (ii) a breach or violation by the Managing Member of a
material term of this Company Agreement which breach or violation remains
uncured for a period of 30 days (or if such breach or violation cannot with
reasonably commercial efforts be cured within such period, such longer period as
may be required under the circumstances) after notice in writing to the Managing
Member by any other Member.
1.4. The Managing Member shall use his best efforts to continue the
business of the Company, including but not limited to seeking additional
financing, by way of debt and/or equity, consistent with the terms and
instructions contained in this Company Agreement, for at least two years from
the date of this Company Agreement.
1.5. The Company and each of the Members agree that the following
actions may not be taken without the prior written consent of a majority of the
representatives on the Advisory
9
Committee provided, that the representative of the GE Group Members must be
included in the majority of the representatives so consenting:
(i) Amend or change the provisions of the Company's
Certificate of Formation;
(ii) Declare the bankruptcy of or dissolve, voluntarily
liquidate or voluntarily wind-up the Company or any subsidiary thereof;
(iii) Enter into or be subject to any transactions between
the Company or any subsidiary thereof and any owner or beneficial holder of any
Company Securities or any officer, manager or member of the Company (except for
employment agreements with the Company or such subsidiary as the employer,
subject to any other requirements contained in this Company Agreement);
(iv) Declare or pay any dividends, distributions or other
payments to the owners or beneficial holders of the Company Securities (except
to the extent necessary to cover each Member's respective income tax liability
with respect to his, her or its ownership of the Company Securities);
(v) Redeem or repurchase any Company Securities or, except as
otherwise provided in this Operating Agreement, issue any additional Company
Securities;
(vi) Borrowings by the Company individually or in the
aggregate in excess of $50,000;
(vii) Approve any initial public offering of securities of
the Company; or
(viii) Effect any merger, corporate reorganization, business
combination, joint venture or similar transaction or arrangement that, in any
such case, fundamentally changes the Company or any subsidiary thereof or the
sale of the Company or all or substantially all of its assets or Business.
2. MAJORITY - Unless otherwise indicated herein, whenever any matter
is required or allowed to be approved by a "Majority of the Members" or a
"Majority of the remaining Members" under the Act or this Company Agreement (but
not including approvals by the Advisory Committee), such matter shall be
considered approved or consented to upon the receipt of the affirmative approval
or consent, either in writing or at a meeting of the Members, of both (i) the
Managing Member and (ii) those Members having Sharing Ratios in excess of
one-half of the Sharing Ratios of all the Members (other than the Managing
Member) entitled to vote on a particular matter. Assignees and, in the case of
approvals to resignation where consent of the remaining Members is required,
dissociating Members shall not be considered Members entitled to vote for the
purpose of determining a Majority.
3. LIABILITY OF MEMBERS - No Member shall be liable as such for the
liabilities of the Company. The failure of the Company to observe any
formalities or requirements relating to the exercise of its powers or management
of its business or affairs under this Company Agreement or the Act shall not be
grounds for imposing personal liability on the Members or managers for
liabilities of the Company.
4. INDEMNIFICATION - The Company shall indemnify the Members and
agents for all costs, losses, liabilities, and damages paid or accrued by such
Member or agent in connection with the business of the Company, to the fullest
extent provided or allowed by the laws of New Jersey.
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5. REPRESENTATIONS AND WARRANTIES OF THE MEMBERS - Each Member, for
himself, herself or itself, severally and not jointly, hereby represents and
warrants to the Company and each other member each of the following
representations and warranties:
5.1. Such Member has duly and validly executed and delivered
this Company Agreement (and, in the case of any Member that is an Organization,
such Member has duly authorized this Company Agreement and such execution and
delivery). This Company Agreement is a valid and binding obligation of such
Member enforceable against him or it in accordance with its terms.
5.2. Neither the execution or delivery nor the performance of
this Company Agreement by such Member will, with or without notice or the lapse
of time or both, conflict with, constitute a default or breach under, give any
right to any Person to terminate, to accelerate any liability or impose any
penalty under or to otherwise modify, or otherwise violate, any agreement to
which such Member is a party;
5.3. No consent, approval, permit of, designation,
declaration, registration or other filing with or notification to any Person by
or on behalf of such Member is required relating to, arising out of or in
connection with the execution, delivery or performance by such Member of this
Company Agreement or any related document;
5.4. There is no material litigation, legal action or other
proceeding pending or, to such Member's knowledge, threatened against, involving
or affecting the Company, or pending or, to such Member's knowledge, threatened
against, involving or affecting the execution, delivery or performance of this
Company Agreement by such Member;
5.5. There is no existing material breach or default known to
such Member under, or right of any Person to terminate, or to accelerate any
liability or impose any penalty under, or otherwise modify, any agreement to
which such Member is or is expected to become a party relating to the Company's
business or this Company Agreement or by which the proposed or existing assets
of the Company may be bound or under which the Company has or is expected to
have rights, or event known to such Member that with or without notice or the
lapse of time or both would constitute a breach or default by the Company or
such Member or give any Person any of the foregoing rights under any such
agreement. Notwithstanding anything contained herein to the contrary, all of the
representations and warranties of the Existing Members contained in the Existing
Operating Agreement and in the Members' respective Admission Agreements shall
survive execution and delivery of this Company Agreement.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY - The Company hereby
represents and warrants to each Existing Member as follows:
6.1. In consideration for Capital contributions received by
the Company from each Existing Member, each Existing Member currently owns the
number of fully-paid and non-assessable Membership Interests in the Company
opposite such Member's name on Exhibit A hereto (which on the date hereof
represents a Sharing Ratio set forth opposite such Member's name on Exhibit A
hereto (without taking into account dilution which will result from the exercise
of the outstanding or anticipated options disclosed on Exhibit B hereto);
6.2. The Company has duly and validly executed and delivered
this Company Agreement. This Company Agreement is a valid and binding obligation
of the Company enforceable against it in accordance with its terms;
6.3. Neither the execution or delivery nor the performance of
this Company Agreement by the Company will, with or without notice or the lapse
of time or both, conflict with, constitute a default or breach under, give any
right to any Person to terminate, to accelerate any
11
liability or impose any penalty under or to otherwise modify, or otherwise
violate, any agreement to which the Company is a party;
6.4. No consent, approval, permit of, designation,
declaration, registration or other filing with or notification to any Person by
or on behalf of the Company is required relating to, arising out of or in
connection with the execution, delivery or performance by the Company of this
Company Agreement or any related document;
6.5. There is no material litigation, legal action or other
proceeding pending or, to the Company's knowledge, threatened against, involving
or affecting the Company, or pending or, to the Company's knowledge, threatened
against, involving or affecting the execution, delivery or performance of this
Company Agreement by the Company; and
6.6. There is no existing material breach or default known to
the Company under, or right of any person to terminate, or to accelerate any
liability or impose any penalty under, or otherwise modify, any agreement to
which the Company is or is expected to become a party relating to the Company's
business or this Company Agreement or by which the proposed or existing assets
of the Company may be bound or under which the Company has or is expected to
have rights, or event known to the Company that with or without notice or the
lapse of time or both would constitute a breach or default by the Company or
give any Person any of the foregoing rights under any such agreement.
7. CONFLICTS OF INTEREST
7.1. Except as set forth in Article XVII, a Member shall be
entitled to enter into transactions that may be considered to be competitive
with , or a business opportunity that may be beneficial to, the Company, it
being expressly understood that some of the Members may enter into transactions
that are similar to the transactions into which the Company may enter. Members
shall account to the Company and hold as trustee for it any property, profit, or
benefit derived by the Member, without the consent of the other Members, in the
conduct and winding up of the Company business or from a use or appropriation by
the Member of Company Property including information developed exclusively for
the Company and opportunities expressly offered to the Company.
7.2. A Member does not violate a duty or obligation to the
Company merely because the Member's conduct furthers the Member's own interest.
A Member may lend money to and transact other business with the Company. The
rights and obligations of a Member who lends money to or transacts business with
the Company are the same as those of a person who is not a Member, subject to
other applicable law. No transaction with the Company shall be voidable solely
because a Member has a direct or indirect interest in the transaction if either
the transaction is fair to the Company or the disinterested Members, knowing the
material facts of the transaction and the Member's interest, authorize, approve,
or ratify the transaction.
8. COMPENSATION OF MANAGING MEMBER AND KEY EMPLOYEES - The Managing
Member shall be reimbursed for all reasonable expenses incurred in managing the
Company and shall be entitled to compensation which, if it shall exceed $150,000
per year, shall require advance approval by the Advisory Committee provided that
the representative of the GE Group Members on the Advisory Committee is included
in the majority of representatives so approving. Compensation to any other
employee of the Company in excess of $100,000 per year shall require the
approval of the Advisory Committee.
9. OPTIONS - By executing and delivering this Company Agreement, the
Existing Members acknowledge and agree (and each Member admitted hereafter shall
be conclusively deemed to have acknowledged and agreed) that (a) the Company has
issued options to purchase Membership Interests to the persons identified on
Exhibit B hereto (the "Optionees"); (b) that, in connection with the execution
and delivery of this Company Agreement, the Company will enter into new or
revised option
12
agreements with each of the Optionees to reflect, among other things, the
certification of Membership Interests to provide that such Optionees will have
the option to purchase the number of Membership Interests set forth opposite
each Optionees respective name on Exhibit B; and (c) that upon exercise of his
or her options to purchase Membership Interests, an Optionee or his or her
permitted assigns shall be permitted to be admitted as a Member of the Company
without any further action on the part of the other then existing Members. By
executing and delivering this Company Agreement, the Existing Members further
consent to (and each Member admitted hereafter shall be deemed to have consented
to) (a) the grant by the Company to certain of its employees, consultants and
other advisors of the right to purchase from the Company up to an aggregate of
300,000 of the Company's Membership Interests at an exercise price of $1.79 per
Membership Interest, and (b) the execution and delivery by the Company of an
option agreement with each such employee, consultant and advisor in
substantially the form attached hereto as Exhibit D, with such changes thereto
(including, without limitation, with respect to vesting) as the Managing Member
shall approve, the execution and delivery thereof to be conclusive evidence of
such approval.
ARTICLE VII
CONTRIBUTIONS AND CAPITAL ACCOUNTS
1. INITIAL CONTRIBUTIONS - No interest shall accrue on any Capital
Contribution and no Member shall have the right to withdraw or be repaid any
Capital Contribution except as provided in this Company Agreement. Each
Additional Member shall make the Capital Contribution described in its Admission
Agreement. The value of the Additional Member's Capital Contribution and the
time for making such contribution shall be set forth in its Admission Agreement.
Except to the extent of a Member's unpaid Commitment, if any, no Member shall be
obliged to make any additional contributions.
2. MAINTENANCE OF CAPITAL ACCOUNTS - The Company shall establish and
maintain Capital Accounts for each Member and Assignee. Each Member's Capital
Account shall be increased by (1) the amount of any Money actually contributed
by the Member to the capital of the Company, (2) the fair market value of any
Property contributed, as determined by the Company and the contributing Member
at arm's length at the time of contribution (net of liabilities assumed by the
Company or subject to which the Company takes such Property, within the meaning
of Section 752 of the Code), and (3) the Member's share of Net Profits and of
any separately allocated items of income or gain. Each Member's Capital Account
shall be decreased by (1) the amount of any Money actually distributed to the
Member from the Company, (2) the fair market value of any Property distributed
to the Member, as determined by the Company and the distributee Member at arm's
length at the time of distribution (net of liabilities of the Company assumed by
the Member or subject to which the Member takes such Property within the meaning
of Section 752 of the Code), and (3) the Member's share of Net Losses and of any
separately allocated items of deduction or loss.
3. DISTRIBUTION OF ASSETS - If the Company at any time distributes any
of its assets in-kind to any Member, the Capital Account of each Member shall be
adjusted to account for that Member's allocable share (as determined under
Article IX below) of the Net Profits or Net Losses that would have been realized
by the Company had it sold the assets that were distributed at their respective
fair market values immediately prior to their distribution.
4. SALE OR EXCHANGE OF INTEREST - In the event of a sale or exchange
of some or all of a Member's Membership Interests in the Company, the Capital
Account of the Transferring Member shall become the capital account of the
Assignee, to the extent of the Membership Interests transferred.
5. COMPLIANCE WITH SECTION 704(b) OF THE CODE - The provisions of this
Article VII as they relate to the maintenance of Capital Accounts are intended,
and shall be construed, and, if necessary, modified to cause the allocations of
profits, losses, income, gain and credit pursuant to Article IX hereof to have
substantial economic effect under the Regulations promulgated under Section
704(b)
13
of the Code, in light of the distributions made pursuant to Articles VIII and
XIV hereof and the Capital Contributions made pursuant to this Article VII.
Notwithstanding anything herein to the contrary, the Company Agreement shall not
be construed as creating a deficit restoration obligation or otherwise
personally obligate any Member to make a Capital Contribution in excess of its
Initial Contribution.
ARTICLE VIII
DISTRIBUTIONS
1. INTERIM DISTRIBUTIONS
1.1 The Company shall make cash Distributions to its Members in
accordance with their Sharing Ratios to pay the federal and state income taxes
on the income that passes through from the Company under the respective
provisions of the Code and applicable state law. The total amount required to be
distributed hereunder shall be determined by conclusively presuming that all
taxable income passed through to each Member will be taxed at the maximum
federal and maximum New Jersey rate at which income of any individual can be
taxed in the calendar year that includes the last day of the Company's taxable
year. The Company shall make the distributions required in this Section 1.1 in a
timely manner to allow the tax (including, without limitation, estimated tax
payments) attributable to the income passed through to any Member to be paid
when due.
1.2 In addition to the Distributions required in Section 1.1, the
Managing Member, from time to time, may determine in his reasonable judgment to
what extent, if any, the Company's cash on hand exceeds the current and
anticipated needs, including, without limitation, needs for operating expenses,
debt service, acquisitions, reserves, and mandatory Distributions, if any. To
the extent such excess exists, the Managing Member may make Distributions to the
Members in accordance with their Sharing Ratios. Such Distributions shall be in
cash or Property (which need not be distributed proportionately) or partly in
both, as determined by the Members.
2. LIMITATIONS ON DISTRIBUTIONS - No Distribution shall be declared and
paid unless, after the Distribution is made, the assets of the Company are in
excess of all liabilities of the Company, except liabilities to Members on
account of their Capital Accounts.
ARTICLE IX
ALLOCATIONS
1. ALLOCATIONS OF NET PROFITS AND NET LOSSES FROM OPERATIONS - Except as
may be required by Sections 2, 3, 4, 5 and 6 of this Article IX, Net Profits,
Net Losses, and other items of income, gain, loss, deduction and credit shall be
apportioned among the Members in proportion to their Sharing Ratios.
2. COMPANY MINIMUM GAIN CHARGEBACK - If there is a net decrease in
Company Minimum Gain for a Taxable Year, each Member must be allocated items of
income and gain for that Taxable Year equal to that Member's share of the net
decrease in Company Minimum Gain. A Member's share of the net decrease in
Company Minimum Gain is the amount of the total net decrease multiplied by the
Member's percentage share of the Company Minimum Gain at the end of the
immediately preceding taxable Year. A Member's share of any decrease in Company
Minimum Gain resulting from a revaluation of Company Property equals the
increase in the Member's Capital Account attributable to the revaluation to the
extent the reduction in minimum gain is caused by revaluation. A Member is not
subject to this Company Minimum Gain Chargeback requirement to the extent the
Member's share of the net decrease in Company Minimum Gain is caused by a
guarantee, refinancing, or to the change in the debt instrument causing it to
become partially or wholly a Recourse Liability or a Member Nonrecourse
Liability, and the Member bears the economic risk of loss (within the meaning of
Section 1.752-2 of the Regulations) for the newly guaranteed, refinanced, or
otherwise changed liability.
14
3. MEMBER MINIMUM GAIN CHARGEBACK - If during a Taxable Year there is a
net decrease in Member Minimum Gain, any Member with a share of that Member
Minimum Gain (as determined under Section 1.704-2(i)(5) of the Regulations) as
of the beginning of that Taxable Year must be allocated items of income and gain
for that Taxable Year (and, if necessary, for succeeding Taxable Years) equal to
that Member's share of the net decrease in the Company Minimum Gain. A Member's
share of the net decrease in Member Minimum Gain is determined in a manner
consistent with the provisions of Section 1.704-2(g)(2) of the Regulations. A
Member is not subject to this Member Minimum Gain Chargeback requirement,
however, to the extent the net decrease in Member Minimum Gain arises because
the liability ceases to be Member Nonrecourse Liability due to a conversion,
refinancing, or other change in the debt instrument that causes it to become
partially or wholly a Company Nonrecourse Liability. The amount that would
otherwise be subject to the Member Minimum Chargeback is added to the Member's
share of Company Minimum Gain. In addition, rules consistent with those
applicable to Company Minimum Gain shall be applied to determine the shares of
Member Minimum Gain and Member Minimum Gain Chargeback to the extent provided
under the Regulations issued pursuant to Section 704(b) of the Code.
4. QUALIFIED INCOME OFFSET - In the event any Member, in such capacity,
unexpectedly receives an Offsettable Decrease, such Member will be allocated
items of income and gain (consisting of a pro rata portion of each item of
Company income and gain for such year) in an amount and manner sufficient to
offset such Offsettable Decrease as quickly as possible.
5. MEMBER NONRECOURSE DEDUCTIONS - Any Member Nonrecourse Deductions
shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Liability to which such Member
Nonrecourse Deductions are attributable.
6. CONTRIBUTED PROPERTY - In accordance with Code Section 704(c) and the
Regulations thereunder, as well as Section 1.704-1(b)(2)(iv)(d)(3) of the
Regulations, income, gain, loss, and deduction with respect to any property
contributed (or deemed contributed) to the Company shall, solely for tax
purposes, be allocated among the Members so as to take account of any variation
between the adjusted basis of the property to the Company for federal income tax
purposes and its fair market value at the date of contribution (or deemed
contribution). If the adjusted book value of any Company asset is adjusted as
provided herein, subsequent allocations of income, gain, loss, and deduction
with respect to the asset shall take account of any variation between the
adjusted basis of the asset for federal income tax purposes and its adjusted
book value in the manner required under Code Section 704(c) and the Regulations
thereunder.
ARTICLE X
TAXES
1. ELECTIONS - The Members may make any tax elections for the Company
allowed the Code or the tax laws of any state or other jurisdiction having
taxing jurisdiction over the Company.
2. TAXES OF TAXING JURISDICTIONS - To the extent that the laws of any
Taxing Jurisdiction require, each Member requested to do so by the Managing
Member will submit an agreement indicating that the Member will make timely
income tax payments to the Taxing Jurisdiction and that the Member accepts
personal jurisdiction of the Taxing Jurisdiction with regard to the collection
of income taxes attributable to the Member's income, and interest, and penalties
assessed on such income. If the Member fails to provide such agreement, the
Company may withhold and pay over to such Taxing Jurisdiction the amount of tax,
penalty and interest determined under the laws of the Taxing Jurisdiction with
respect to such income. Any such payments with respect to the income of a Member
shall be treated as a distribution for purposes of Article VIII. The Company
may, where permitted by the rules of any Taxing Jurisdiction, file a composite,
combined or aggregate tax return reflecting the income of the Company and pay
the tax, interest and penalties of some or all of the Members on such income to
15
the Taxing Jurisdiction, in which case the Company shall inform the Members of
the amount of such tax, interest and penalties so paid.
3. TAX MATTERS PARTNER - The Members shall designate one of their number
as the tax matters partner of the Company pursuant to Section 6231(a)(7) of the
Code. Any Member designated as tax matters partner shall take such action as may
be necessary to cause each other Member to become a notice partner within the
meaning of Section 6223 of the Code. Any Member who is designated tax matters
partner may not take any action contemplated by Sections 6222 through 6233 of
the Code without the consent of the Managing Member. The Members hereby
designate Xxxxxxx Xxxxxx to continue to act as the tax matters partner.
4. METHOD OF ACCOUNTING - The records of the Company shall be maintained
on a method of accounting determined by the Managing Member.
ARTICLE XI
DISPOSITION OF MEMBERSHIP INTERESTS
1. DISPOSITION - No Member or Assignee may dispose of all or any amount
of such Member's or Assignee's Membership Interests without the written consent
of the Managing Member; provided that such consent shall not be required for a
disposition to a Member's or Assignee's Immediate Family or a trust(s) for their
benefit or, in the case of a Member that is an Organization, to a Person that
controls, is controlled by or is under common control with, such Member.
2. ADDITIONAL REQUIREMENTS - No Membership Interests shall be Disposed
of:
2.1. if such disposition, alone or when combined with other
transactions, would result in a a termination of the Company within the meaning
of Section 708 of the Code;
2.2. without an opinion of counsel satisfactory to the Managing
Member that such assignment is subject to an effective registration under, or
exempt from the registration requirements of, the applicable state and federal
securities laws;
2.3. unless and until the Company receives from the Assignee the
information and agreements that the Managing Member may reasonably require,
including but not limited to any taxpayer identification number and any
agreement that may be required by any Taxing Jurisdiction.
3. FURTHER RESTRICTIONS ON TRANSFERS BY MEMBERS
3.1. Tag-Along Right - The Principals agree that if at any time a
Principal receives an offer to Transfer, all or a portion of such Principal's
Membership Interests constituting 15% or more of the then total outstanding
Membership Interests (determined by reference to the Sharing Ratios represented
thereby) or other Company Securities, such Principal shall not, and shall not
permit any Affiliate to, directly or indirectly, Transfer such Membership
Interests (or such amount thereof equal to or in excess of such 15%) or other
Company Securities, unless contemporaneously with the Transfer of such
Membership Interests by such Principal, the transferee thereof simultaneously
acquires or causes to be acquired on the same terms and conditions all of the
Membership Interests and other Company Securities owned or beneficially held by
the GE Group Members.
3.2. Drag-Along Right - In the event that Members owning or
beneficially holding more than 65% of either the Company Securities or the
Membership Interests (determined by reference to the Sharing Ratios represented
thereby) approves a transaction (such Members, the "Approving Members") pursuant
to which any person(s) or entity(ies) who is not affiliated with any of the
Members will acquire 80% or more of the Company Securities or the Membership
Interests (determined by reference to the Sharing Ratios represented thereby)
(by purchase of Membership
16
Interests, merger or otherwise), each of the Members hereby agrees, upon the
written request of the Approving Members, to sell all of its, a pro rata portion
of his, her or its Company Securities or Membership Interests, to such
persons(s) or entity(ies) on the same terms and conditions that the Company
Securities and Membership Interests of the Approving Members will be sold.
3.3 First Offer Right
(i) At any time any Member proposes to Transfer to a third
party any Company Secutities issued to such Member, such Member shall
deliver written notice (the "Offer") to the Company and each other Member
which shall set forth the number of such Company Securities (the "Member
Securities") and the terms on which the Member Securities are to be
offered. Within 20 days following the effectiveness of the offer, each
other Member shall give notice (the "Purchase Notice") to such Member, with
a copy to the Company, stating the maximum percentage of the Secutities
each such other Member is willing to purchase upon the terms set forth in
the Offer.
(ii) For the purpose of this Section 3.3, if any Member does
not deliver a Purchase Notice within the time required by this Section 3.3
such Member shall be deemed to have provided a Purchase Notice on the last
day on which a Purchase Notice may be provided specifying no interest in
purchasing the Member Securities.
(iii) In the event that the total number of Member Securities
that the other Members are willing to purchase from such selling Member
equals the number of offered Member Securities, then such selling Member
shall be bound to sell to the other Members and the other Members shall be
bound to purchase from such Member the Member Securities. If the total
number of Member Securities that the other Members are willing to purchase
from such selling Member is less than the number of offered Member
Securities, then, such selling Member shall be permitted to sell all, but
not less than all, of the Member Securities to a third party on terms not
less favorable than those set forth in the Offer. If the total number of
Member Securities that the other Members are willing to purchase from such
selling Member is more than the number of offered Member Securities, then,
each other Member shall be permitted to purchase up to its ratable portion
of the Member Securities based on its current interest in the Company
Securities on an as converted or exercised basis.
(iv) The closing of the sale of the Member Securities to the
other Members shall occur at such selling Member's election at a time and
place specified by such selling Member during business hours and no more
than 180 days after the delivery of the Offer. In the event that the other
Members do not purchase the Member Securities within such 180 day period,
such selling Member may sell the offered Member Securities to a third
party.
(v) If, prior to the closing of the sale of the Members
Securities, such selling Member receives an offer to purchase the Member
Securities from a third party at a price that is greater than that in the
Offer, the other Members shall have not less than 20 days to accept such
higher price before any Member Securities are sold to a third party.
(vi) Notwithstanding the foregoing, if approved in accordance
with Section 1.5 of Article VI, the Company may repurchase the Member
Securities (to the exclusion of the other Members) from the offering
Member, subject to compliance by the Company with the procedures set forth
in the foregoing clauses of this Section 3.3 with respect to Members (other
than the offering Member).
4. DISPOSITION NOT IN COMPLIANCE WITH THIS ARTICLE VOID - Any attempted
Disposition of Membership Interest or other Company Securities, or any part
thereof, not incompliance with this Article is null and void ab initio.
17
ARTICLE XII
DISSOCIATION OF A MEMBER
1. DISSOCIATION - A Person shall cease to be a Member upon the happening of
any of the following events:
1.1 the resignation of a Member with the consent of a Majority of the
remaining Members prior to December 1, 2044;
1.2 the bankruptcy of a Member;
1.3 in the case of a Member who is a natural person, the death of the
Member or the entry of an order by a court of competent jurisdiction
adjudicating the Member incompetent to manage the Member's person or estate;
1.4 in the case of a Member who is acting as a Member by virtue of being
a trustee of a trust, the termination of the trust (but not merely the
substitution of a new trustee);
1.5 in the case of a Member that is separate Organization other than a
corporation, the dissolution and commencement of winding up of the separate
Organization;
1.6 in the case of a Member that is a corporation, the filing of a
certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter;
1.7 in the case of an estate, the distribution by the fiduciary of the
estate's entire interest in the Company; or
1.8 any event under the Act which causes the Member to cease to be a
Member.
2. RIGHTS OF DISSOCIATING MEMBER - In the event any Member dissociates
prior to the expiration of the Term:
2.1 if the dissociation causes a dissolution and winding up of the
Company under Article XIV, the Member shall be entitled to participate in the
winding up of the Company to the same extent as any other Member except that any
distributions to which the Member would have been entitled shall be reduced by
the damages sustained by the Company as a result of the Dissolution and winding
up:
2.2 if the dissociation does not cause a dissolution and winding up of
the Company under Article XIV, the Member and his successors shall be deemed an
Assignee and his successors shall not have any right to receive the value of
such Membership Interests in the Company except as provided in Article XIII
hereof.
ARTICLE XIII
ADMISSION OF ASSIGNESS AND ADDITIONAL MEMBER
1. RIGHTS OF ASSIGNESS - The Assignee of Membership Interests has no right
to participate in the management of the business and affairs of the Company or
to become a Member. The Assignee is only entitled to receive the distributions
and return of capital, and to be allocated the Net Profits and Net Losses
attributable to the Membership Interests so assigned.
2. ADMISSION OF SUBSTITUTE MEMBERS - An Assignee of Membership Interests
(other than from a Managing Member) shall be admitted as a Substitute Member and
admitted to all the rights of the Member who initially assigned the Membership
Interests only with the approval of a majority in
18
interest of the Manging Members and the execution by such Assignee of an
Admission Agreement, which approval may be withheld in the sole and absolute
discretion of the Managing Members. An Assignee of Membership Interests of a
Managing Member shall be admitted as a Substitute Member and admitted to all the
rights of the Member who initially assigned the Membership Interests (but not
the right to be a Managing Member) only with the approval of a majority in
interest of the Members unrelated to the person assigning such interest and the
execution by such Assignee of an Admission Agreement, which approval may be
withheld in the sole and absolute discretion of such Members. If so admitted,
the Substitute Member shall have all the rights and powers and be subject to all
the restrictions and liabilities of the Member originally assigning the
Membership Interests. The admission of a Substitute Member, without more, shall
not release the Member originally assigning the Membership Interests from any
liability to the Company that may have existed prior to the approval.
3. ADMISSION OF ADDITIONAL MEMBERS; ADDITIONAL SALES TO EXISTING MEMBERS -
Subject to the restrictions contained in this Company Agreement (including,
without limitation, the immediately succeeding sentence and Article XVIII), the
Managing Member may permit the admission of Additional Members and determine the
Capital Contributions of such Members. The Company hereby grants to each Member
the right to purchase an amount of Membership Interests or other Company
Securities equal to that portion of any additional Membership Interests or other
Company Securities issued or sold by the Company after the date hereof necessary
to maintain unchanged such Member's proportionate ownership interest and Sharing
Ratio in the Company after giving effect to the issuance or sale of such
additional Membership Interests or other Company Securities (at the same price
per Membership Interest as shall be paid by such Additional Members).
ARTICLE XIV
DISSOLUTION AND WINDING UP
1. DISSOLUTION - The Company shall be dissolved and its affairs wound up,
upon the first to occur of the following events (which, unless the Members agree
to continue the business, shall constitute Dissolution Events):
1.1 the expiration of the Term, unless the business of the Company is
continued with the consent of a Majority of the Members;
1.2 the unanimous written consent of all of the Members;
1.3 the Dissociation of any Member, unless the business of the Company
is continued with the consent of those Members holding a majority of the capital
and profit interest in the Company then held by the remaining Members within 90
days after such Dissociation.
2. EFFECT OF DISSOLUTION - Upon dissolution, the Company shall cease
carrying on as distinguished from the winding up of the Company business, but
the Company is not terminated and it shall continue until the winding up of the
affairs of the Company is completed and the Certificate of Cancellation has been
filed with the Secretary of State of New Jersey.
3. DISTRIBUTION OF ASSETS ON DISSOLUTION - Upon the winding up of the
Company, the Company Propery shall be distributed:
3.1 to creditors, including Members who are creditors, to the extent
permitted by law, in satisfaction of Company Liabilities;
3.2 to Members in accordance with positive Capital Account balances
taking into account all Capital Account adjustments for the Company's Taxable
Year in which the liquidation occurs. Liquidation proceeds shall be paid within
60 days of the end of the Company's Taxable Year or, if later, within 90 days
after the date of liquidation. Such distributions shall be in cash or Property
19
(which need not be distributed proportionately) or party in both, as determined
by a Majority of the Members.
4. WINDING UP AND CERTIFICATE OF CANCELLATION - The winding up of the
Company shall be completed when all debts, liabilities, and obligations of the
Company have been paid and discharged or reasonably adequate provision therefor
has been made, and all of the remaining property and assets of the Company have
been distributed to the Members. Upon the completion of winding up of the
Company, a Certificate of Cancellation shall be delivered to the Secretary of
State of New Jersey for filing. The Certificate of Cancellation shall set forth
the information required by the Act.
ARTICLE XV
AMENDMENT
This Company Agreement may be amended or modified from time to time only by
a written instrument executed by all of the Members; provided, however, that
Exhibit A hereto may be amended from time to time by the Company without such
consent to reflect changes in the information contained therein resulting from
Transfers or Dispositions of Membership Interests and issuances of new
Membership Interests, in each case, that have been effected in accordance with
all the applicable provisions of this Company Agreement. The Managing Member
shall deliver copies of each such amendment to each Member promptly following
the effectiveness thereof.
ARTICLE XVI
LIFE INSURANCE
The Company shall purchase and maintain insurance on the life of Xxxxxxx
Xxxxxx in an amount not less than One Hundred Fifty Thousand Dollars ($150,000).
The Company shall pay the premiums for such insurance policy and shall name
Xxxxxx X. Xxxxx as the beneficiary of such insurance policy in an amount not
less than One Hundred Fifty Thousand Dollars ($150,000). The requirement
hereinabove set forth for the Company to maintain life insurance shall cease
upon the earlier of (i) the date on which ownership interests in the Company, or
any successor entity or subsidiary operating the business of the Company, shall
have been registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended, and such interest shall be listed for
trading on the New York Stock Exchange, the American Stock Exchange or
authorized for trading on NASDAQ, (ii) the date on which all of the assets of
the Company are sold or all of the Membership Interests of the Company are sold
or (iii) when Xxxxxx X. Xxxxx has received Distributions pursuant to Section 1.2
of Article VIII of this Company Agreement (but not pursuant to Section 1.1 of
Article VIII of the Company Agreement) in an amount equal to or in excess of the
amount of the Capital Contribution(s) made by Xxxxxx X. Xxxxx.
The Company shall purchase and maintain an additional insurance policy of
the life of Xxxxxxx Xxxxxx in an amount not less than One Million Dollars
($1,000,000). The Company shall pay the premiums of such insurance policy and
shall name each of the GE Group Members as the beneficiaries of such insurance
policy, in an aggregate amount not less than One Million Dollars ($1,000,000),
allocated to each GE Group Member pro rata in accordance with their Capital
Contributions set forth on Exhibit A. Such requirement by the Company to
maintain such life insurance shall cease upon the earliest of (i) the date on
which ownership interests in the Company, or any successor entity or subsidiary
operating the business of the Company, shall have been registered pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
and such interest shall be listed for trading on the New York Stock Exchange,
the American Stock Exchange or authorized for trading on NASDAQ, (ii) the date
on which all of the assets of the Company are sold or all of the Membership
Interests of the Company are sold or (iii) when each GE Group Member has
received Distributions pursuant to Section 1.2 of Article VIII of this Company
Agreement (but not pursuant to Section 1.1 of
20
Article VIII of the Company Agreement) in an amount equal to or in excess of the
amount of the Capital Contribution(s) made by such GE Group Member.
ARTICLE XVII
RESTRICTIVE COVENANT
During any Person's tenure as a Managing Member of the Company and for a
period of two (2) years thereafter, such Person and its Affliates shall not (i)
directly or indirectly, alone or with any other Person(s) participate in any
business which competes with the business of the Company as an employee,
partner, shareholder, member, officer, director or consultant, or in any other
capacity, and (ii) if the business of the Company is no longer being conducted,
directly or indirectly, alone or with any other Person(s), participate in any
business conducting substantially the same business as that previously conducted
by the Company, as an employee, partner, shareholder, member, officer, director
or consultant, or in any other capacity. This restriction is for the benefit of
the Company as well as its Members and shall survive the termination of this
Company Agreement.
ARTICLE XVIII
RESTRICTIONS ON ADMITTING ADDITIONAL MEMBERS
In addition to the restrictions on admitting Additional Members to the
Company contained in Section 3 of Article XIII, no Membership Interests shall be
issued by the Company and no Additional Members shall be admitted to the Company
without the consent of all of the Members unless the formula used for
determining the Capital Contribution of such Additional Member requires a
Capital Contribution with respect to each one (1%) percent in Sharing Ratio to
be received by such Additional Member (after giving effect to the issuance of
such additional Membership Interests) of the greater of (i) One Hundred Thousand
Dollars ($100,000) and (ii) the amount so required and paid in connection with
the most recent prior issuance of additional Membership Interests. The admission
of an Additional Member upon the approval of the Managing Member shall be
subject to the fiduciary obligations of the Managing Member not to permit the
Company to sell Membership Interests in the Company for less than fair value.
ARTICLE XIX
MISCELLANEOUS PROVISIONS
1. ENTIRE AGREEMENT - This Company Agreement represents the entire
agreement among all the Members and between all the Members and the Company.
2. NO PARTNERSHIP INTENDED FOR NONTAX PURPOSES - The Members have formed
the Company under the Act, and expressly do not intend hereby to form a
partnership (but do intend that the Company be treated as a partnership for tax
purposes). The Members do not intend to be partners one to another, or partners
as to any third party. To the extent any Member, by word or action, represents
to another person that any other Member is a partner or that the Company is a
partnership, the Member making such wrongful representation shall be liable to
any other Member who incurs personal liability by reason of such wrongful
representation.
3. RIGHTS OF CREDITORS AND THIRD PARTIES UNDER COMPANY AGREEMENT- This
Company Agreement is entered into amoung the Company and Members for the
exclusive benefit of the Company, its Members, and their successors and
assignees. This Company Agreement is expressly not intended for the benefit of
any creditor of the Company or any other Person. Except and only to the extent
provided by applicable statute, no such creditor or third party shall have any
rights under this Company Agreement or any agreement between the Company and any
Member with respect to any Capital Contribution or otherwise.
21
4. GOVERNING LAW - This Company Agreement shall be construed, interpreted
and enforced in accordance with the internal laws of the State of New Jersey
without regard to conflicts of laws principles.
5. HEADINGS - The headings used in this Company Agreement are used for
administrative purposes only and shall not be considered in construing the terms
of this Company Agreement.
6. PARTIES BOUND - This Company Agreement shall be binding on, and inure to
the benefit of, the parties and their respective heirs, executors,
administrators, legal representatives, successors, and assigns when permitted by
this Company Agreement.
7. LEGAL CONSTRUCTION - In case any one or more of the provisions contained
in this Company Agreement shall, for any reason, be held invalid, illegal, or
unenforceable in any respect, that invalidity, illegality, or unenforceability
shall not affect any other provision of this Company Agreement, and this Company
Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained in this Company Agreement.
8. COUNTERPARTS - This Company Agreement may be executed in any number of
counterparts and each counterpart shall, for all purposes, be deemed to be an
original.
9. WAIVERS IN WRITING - No consent or waiver, express or implied, by a
Member to or of any breach by a Member in the performance by him or her of any
of his or her respective obligations hereunder shall be deemed or construed to
be a consent or waiver to or of the breach in the performance by such Member of
the same or any other obligation of such Member hereunder. Failure on the part
of a Member or the Company to complain of any act or failure to act of a Member
or to declare such Member in default, irrespective of how long such failure
shall continue, shall not, unless otherwise herein expressly provided to the
contrary, constitute a waiver by a Member or the Company of his, her or its
rights hereunder. All consents and waivers shall be in writing.
10. JOINT EFFORT AND REPRESENTATIONS - Each of the Members agree that in
the event a conflict among them arises hereafter, such party will not object to
the representation of either the Company or Xxxxxxx Xxxxxx (or his affiliates)
(and, in the absence of an actual conflict of interest, all such parties) by
Xxxxx Xxxxxx Xxxxxxxxx Xxxxx Tischman Xxxxxxx & Xxxxx, P.A. ("Xxxxx Cummis")
with respect to such matter.
The Company and the Initial Members understand and accept responsibility
for the fact that they have substantial conflicting interests. The Initial
Members (other than Genesis Direct L.L.C.) have been advised by Xxxxx Xxxxx,
Esq. of Xxxxx Cummis of their right to and need for independent counsel and with
full knowledge and understanding, have declined to retain independent counsel.
Such parties have read and fully understand the terms, conditions and provisions
of this Company Agreement. They acknowledge that all the terms, conditions and
provisions of this Agreement have been negotiated by them without any influence
whatsoever by any attorney associated with Xxxxx Xxxxxx. Such parties
acknowledge and understand that this Company Agreement is necessary to preserve
harmony and continuity with respect to the management of the Company. As part of
the consideration for Xxxxx Cummis performing the legal work necessary to
prepare this Company Agreement, the Company and the Initial Members hereby
jointly and severally agree to indemnify Xxxxx Xxxxxx, and all its members,
shareholders, directors and employees who are such on the date of this Company
Agreement, or any time
22
thereafter for, and hold such firm, its members, shareholders, directors and
employees harmless from, any claims made by (and expenses incurred in defending
against such claims) any of the parties or any of their heirs, assignees,
administrators, legal or personal representatives, executors or successors based
upon such firm's involvement in the transactions which are the subject of this
Company Agreement. This agreement to "hold harmless" shall be binding upon the
Company and the Initial Members and their heirs, executors, administrators,
successors and assignees, and shall inure to the benefit of all members,
shareholders, directors and employees of Xxxxx Cummis who are such on the date
of this Company Agreement, or any time thereafter, and all such members,
shareholders', directors' and employees' heirs, executors, administrators,
successors an assignees.
11. SPECIFIC PERFORMANCE OR RESCISSION - The Members acknowledge that
inasmuch as the Membership Interests are closely-held and the market therefor is
limited, irreparable damage would result if this Company Agreement is not
complied with and not specifically enforced. Therefore, the restrictions on
transfers or other disposition of Membership Interests may be enforceable in a
court of equity by a decree of specific performance or rescission, and
appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have any under
this Company Agreement or otherwise.
12. FURTHER ASSURANCES - Without limiting the generality of any provisions
of this Company Agreement, each Member agrees that upon request of any other
Member, he or it shall, from time to time, do any and all other acts and things
(including without limitation, the execution and delivery of documents) as may
reasonably be required to carry out his or its obligations hereunder, to
consummate the transactions contemplated hereby, and to effectuate the purposes
hereof.
13. EXPIRATION OF CERTAIN RIGHTS - Notwithstanding any other provision of
this Company Agreement, the parties hereto hereby agree that the rights granted
to the GE Group members pursuant to Section 3 of Article XI of this Company
Agreement shall expire and be of no further force and effect (i) as of the date
on whch the respective GE Group Members ceases to be the record or beneficial
holder of any Company Securities, or (ii) at the option of a majority in
interest of the GE Group Members, in connection with any initial public offering
of securities of the Company or otherwise.
14. RESTRICTIVE LEGEND ON CERTIFICATED INTERESTS - The Membership Interest
Certificates shall include the following restrictive legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURTIES LAWS. THESE SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANY EXEMPTION
THEREFROM UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAWS.
ADDITIONALLY, THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE AND/OR RIGHTS OF THE HOLDER OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN RESPECT OF VOTING OR
OTHER CONSENT RIGHTS AND THE ADMISSION TO THE COMPANY OF SUBSTITUTE OR
ADDITIONAL MEMBERS ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE THIRD
AMENDED AND RESTATED OPERATING AGREEMENT DATED AS OF THE 10th DAY OF
OCTOBER ,1997, AMONG CYBERSHOP, L.L.C., AND CERTAIN HOLDERS OF THE
OUTSTANDING LIMITED LIABILITY COMPANY INTERESTS AND OTHER SECURITIES OF
SUCH LIMITED LIABILITY COMPANY (AS SAME MAY BE AMENDED OR RESTATED FROM
TIME TO TIME). COPIES OF SUCH AGREEMENT AND ANY AMENDMENTS TO OR
RESTATEMENT OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST
MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO CYBERSHOP, L.L.C.
ISSUANCE OF THIS CERTIFICATE TO ANY NAMED PERSON OR ENTITY DOES NOT, IN AND
OF ITSELF, CONSTITUTE THE ADMISSION OF SUCH PERSON OR
23
ENTITY AS A "MEMBER" (AS DEFINED IN SUCH OPERATING AGREEMENT) OF CYBERSHOP,
L.L.C.
15. TRUSTEES NOT LIABLE - Any obligation of the Trustees of General
Electric Pension Trust hereunder shall be enforceable solely against the assets
of such Pension Trust and not against any Trustee individually (except with
respect to the actual fraud or willful misconduct of any such Trsutee).
IN WITNESS WHEREOF, we have hereunto executed this document as of the 10th
day of October, 1997.
COMPANY:
CYBERSHOP, L.L.C.
By: /s/ Xxxxxxx Xxxxxx
--------------------
XXXXXXX XXXXXX, Member
WITNESS:
/s/ Xxxxxxx Xxxxxx
--------------------------------- ---------------------------------
XXXXXXX XXXXXX
/s/ Xxxx Xxxxxx
--------------------------------- ---------------------------------
XXXX XXXXXX
/s/ Xxxxxx X. Xxxxx
--------------------------------- ---------------------------------
XXXXXX X. XXXXX
GENESIS DIRECT INC.
--------------------------------- By: /s/ Xxxxxx Xxxxxx
-------------------
Name: Xxxxxx Xxxxxx
Title: CEO
XXXXXXX X. XXXXXX GRANTOR
RETAINED ANNUITY TRUST
--------------------------------- By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Xxxxxxx X. Xxxxxx, Trustee
XXXX X. XXXXXX GRANTOR
RETAINED ANNUITY TRUST
24
--------------------------------- By: /s/ Xxxx X. Xxxxxx
-------------------
Xxxx X. Xxxxxx, Trustee
WITNESS: TRUSTEES OF GENERAL ELECTRIC
PENSION TRUST
--------------------------------- By: /s/ Xxxxxx Xxxxx
-------------------
Name: Xxxxxx Xxxxx
Title: Trustee
--------------------------------- /s/ Xxxxxx X. Xxxx
-----------------------
XXXXXX X. XXXX
--------------------------------- /s/ Xxxxxxx X. Xxxxxxx
-----------------------
XXXXXXX X. XXXXXXX
PORRIDGE PARTNERS II
--------------------------------- By: /s/ Xxxxxx X. Xxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxx
Title: General Partner
BIG WAVE, NV
--------------------------------- By: /s/ Xxxxxxx Xxxxx
--------------------
Name: Xxxxxxx Xxxxx
Title: President
CAIRNTON PARTNERSHIP
--------------------------------- By: /s/ G A Cubbin
--------------------
Name: G A Cubbin
Title: Director
25
EXHIBIT A
MEMBERS
==================================================================================
NAME, MEMBERSHIP SHARING
ADDRESS INTERESTS AS RATIO AS OF
AND T.I.N. OF AUGUST __, 1997 AUGUST __, 1997
----------------------------------------------------------------------------------
Initial Member ........................... 1,439,183 21.492%
Xxxxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
T.I.N. ###-##-####
----------------------------------------------------------------------------------
Initial Member ........................... 1,439,183 21.492%
Xxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
T.I.N. ###-##-####
----------------------------------------------------------------------------------
The Xxxxxxx X. Xxxxxx Grantor
Retained Annuity Trust .................. 874,746 13.063%
c/o Xxxxxxx Xxxxxx, Trustee
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
T.I.N. ###-##-####
----------------------------------------------------------------------------------
The Xxxx X. Xxxxxx Grantor
Retained Annuity Trust .................. 874,746 13.063%
c/o Xxxx X. Xxxxxx, Trustee
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
T.I.N. ###-##-####
----------------------------------------------------------------------------------
Initial Member ........................... 300,000 4.476%
Xxxxxx X. Xxxxx
00 Xxxxxxxxx Xxxxx
Xxxxx Xxxxx, Xxx Xxxxxx
T.I.N. ###-##-####
----------------------------------------------------------------------------------
Initial Member ........................... 100,000 1.480%
Genesis Direct, Inc.
0 Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Xxxxxx
T.I.N. 00-0000000
----------------------------------------------------------------------------------
A-1
================================================================================
NAME, MEMBERSHIP SHARING
ADDRESS INTERESTS AS RATIO AS OF
AND T.I.N. OF AUGUST , 1997 AUGUST , 1997
--------------------------------------------------------------------------------
GE Group Member ............... 889,143 13.278%
Trustees of General Electric
Pension Trust
0000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxxxxx and
Xxxxx Xxxxxxx
--------------------------------------------------------------------------------
GE Group Member ............... 83,369 1.245%
Porridge Partners II
c/o Xxxxxx-Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
T.I.N. 00-0000000
--------------------------------------------------------------------------------
GE Group Member ............... 69,575 1.039%
Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
T.I.N. ###-##-####
--------------------------------------------------------------------------------
GE Group Member ............... 69,575 1.039%
Xxxxxx X. Xxxx
000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
T.I.N. ###-##-####
--------------------------------------------------------------------------------
Big Wave, NV 279,037 4.167%
c/o Hecht and Company
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX ___
T.I.N. ..................
--------------------------------------------------------------------------------
Cairnton Partnership 279,037 4.167%
00 Xxxx Xxxxxx
Xxxxxx
0,000, Xxx Xxxxx Xxxxx
Xxxxxxxxx
T.I.N. ______
--------------------------------------------------------------------------------
Total 6,697,594 100%
================================================================================
A-2
EXHIBIT B
OPTIONS
NUMBER OF MEMBERSHIP INTERESTS
NAME OF OPTIONEE SUBJECT TO THE OPTION
------------------ -------------------------------
X. Xxxxxx 37,000
X. Xxxxxxxxxx 85,000
X. Xxxxxxxxxx 50,000
X. Xxxxxx 3,646
X. Xxxxxxxxxxxx 4,200
X. Xxxxx 13,395
-------
193,241
B-1
EXHIBIT C
FORM OF CERTIFICATE
See attached.
C-1
EXHIBIT D
FORM OF OPTION AGREEMENTS
See attached.
D-1
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS .................................................... 1
ARTICLE II
FORMATION ...................................................... 6
1. Organization ............................................ 6
2. Agreement ............................................... 6
3. Name .................................................... 6
4. Effective Date .......................................... 6
5. Term .................................................... 6
6. Registered Agent and Office ............................. 6
7. Principal Office ........................................ 7
ARTICLE III
NATURE OF BUSINESS ............................................. 7
ARTICLE IV
ACCOUNTING, RECORDS AND CERTIFICATES ........................... 7
1. Records to be Maintained ................................ 7
2. Reports to Members: ..................................... 7
3. Accounts ................................................ 7
4. Certificates ............................................ 7
ARTICLE V
NAMES AND ADDRESSES OF MEMBERS ................................. 8
ARTICLE VI
RIGHTS AND DUTIES OF MEMBERS AND THE ADVISORY COMMITTEE ........ 8
1. Management .............................................. 8
2. Majority ................................................ 10
3. Liability of Members .................................... 10
4. Indemnification ......................................... 10
5. Representations and Warranties of the Members ........... 11
6. Representations and Warranties of the Company ........... 11
7. Conflicts of Interests .................................. 12
8. Compensation of Managing Member and Key Employees ....... 12
9. Options ................................................. 12
ARTICLE VII
CONTRIBUTIONS AND CAPITAL ACCOUNTS ............................. 13
1. Initial Contributions ................................... 13
2. Maintenance of Capital Accounts ......................... 13
3. Distribution of Assets .................................. 13
4. Sale or Exchange of Interest ............................ 13
5. Compliance with Section 704(b) of the Code .............. 13
ARTICLE VIII
DISTRIBUTIONS .................................................. 14
1. Interim Distributions ................................... 14
2. Limitations on Distributions ............................ 14
ARTICLE IX
ALLOCATIONS ................................................................... 14
1. Allocations of Net Profits and Net Losses from Operations .............. 14
2. Company Minimum Gain Chargeback ........................................ 14
3. Member Minimum Gain Chargeback ......................................... 14
4. Qualified Income Offset ................................................ 15
5. Member Nonrecourse Deductions .......................................... 15
6. Contributed Property ................................................... 15
ARTICLE X
TAXES ......................................................................... 15
1. Elections .............................................................. 15
2. Taxes of Taxing Jurisdiction ........................................... 15
3. Tax Matters Partner .................................................... 15
4. Method of Accounting ................................................... 16
ARTICLE XI
DISPOSITION OF MEMBERSHIP INTERESTS ........................................... 16
1. Disposition ............................................................ 16
2. Additional Requirements ................................................ 16
3. Further Restrictions on Transfers by Members ........................... 16
4. Disposition not in Compliance with this Article Void ................... 17
ARTICLE XII
DISSOCIATION OF A MEMBER ...................................................... 18
1. Dissociation ........................................................... 18
2. Rights of Dissociation Member .......................................... 18
ARTICLE XIII
ADMISSION OF ASSIGNEES AND ADDITIONAL MEMBERS ................................. 18
1. Rights of Assignees .................................................... 18
2. Admission of Substitute Members ........................................ 18
3. Admission of Additional Members; Additional Sales to Existing Members .. 19
ARTICLE XIV
DISSOLUTION AND WINDING UP .................................................... 19
1. Dissolution ............................................................ 19
2. Effect of Dissolution .................................................. 19
3. Distribution of Assets on Dissolution .................................. 19
4. Winding Up and Certificate of Cancellation ............................. 20
ARTICLE XV
AMENDMENT ..................................................................... 20
ARTICLE XVI
LIFE INSURANCE ................................................................ 20
ARTICLE XVII
RESTRICTIVE COVENANT .......................................................... 21
ii
ARTICLE XVIII
RESTRICTIONS ON ADMITTING ADDITIONAL MEMBERS ......................... 21
ARTICLE XIX
MISCELLANEOUS PROVISIONS ............................................. 21
1. Entire Agreement ............................................. 21
2. No Partnership Intended for Nontax Purposes .................. 21
3. Rights of Creditors and Third Parties under Company Agreement 21
4. Governing Law ................................................ 22
5. Headings ..................................................... 22
6. Parties Bound ................................................ 22
7. Legal Construction ........................................... 22
8. Counterparts ................................................. 22
9. Waivers in Writing ........................................... 22
10. Joint Effort and Representations ............................. 22
11. Specific Performance or Rescission ........................... 23
12. Further Assurances ........................................... 23
13. Expiration of Certain Rights ................................. 23
14. Restrictive Legend on Certificated Interests ................. 23
15. Trustees Not Liable .......................................... 24
EXHIBIT A - MEMBERS .................................................... A-1
EXHIBIT B - OPTIONS .................................................... B-1
EXHIBIT C - FORM OF CERTIFICATE ........................................ C-1
EXHIBIT D - FORM OF OPTION AGREEMENTS .................................. D-1
iii
