EXHIBIT 3.6
RIO VISTA GP LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY
AGREEMENT
DATED AS OF ____________ ____, 2003
THE MEMBERSHIP INTERESTS DESCRIBED IN THIS DOCUMENT HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE BEEN ISSUED PURSUANT TO A CLAIM OF EXEMPTION FROM THE
REGISTRATION OR QUALIFICATION PROVISIONS OF THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE. EXCEPT AS OTHERWISE PROVIDED HEREIN, WITHOUT SUCH
REGISTRATION, SAID MEMBERSHIP INTERESTS MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED, EXCEPT ON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE BOARD OF MANAGERS OF THE COMPANY THAT REGISTRATION IS NOT
REQUIRED FOR THE TRANSFER, OR SUCH OTHER EVIDENCE SATISFACTORY TO THE BOARD OF
MANAGERS THAT THE TRANSFER IS NOT IN VIOLATION OF THE SECURITIES ACT OF 1933 OR
ANY APPLICABLE STATE SECURITIES LAWS. THE SALE, PLEDGE OR OTHER TRANSFER OF
THESE SECURITIES IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN ARTICLE 9 OF
THIS DOCUMENT.
RIO VISTA GP LLC
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
THIS AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of Rio
Vista GP LLC is dated as of __________ ___, 2003.
WHEREAS, the Members wish to enter into this Agreement to provide for,
among other things, the management of the business and affairs of the Company,
the allocation of profits and losses among the Members, the respective rights
and obligations of the Members to each other and to the Company, and certain
other matters.
NOW, THEREFORE, the Members agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, certain capitalized terms have
specifically defined meanings that are either set forth herein or in Exhibit 1
which is attached hereto and incorporated herein by reference.
ARTICLE 2
FORMATION AND PURPOSE
2.1 Formation. The Company was formed pursuant to the Act and the
Members hereby ratify the filing of the Company's Certificate of Formation with
the Secretary of State of the State of Delaware on July 10, 2003. The rights and
liabilities of the Members shall be determined pursuant to the Act and this
Agreement. To the extent that the rights or obligations of any Member are
different by reason of any provision of this Agreement than they would be in the
absence of such provision, this Agreement shall, to the extent permitted by the
Act, control.
2.2 Name. The name of the Company is Rio Vista GP LLC. The
business of the Company may be conducted under that name or, upon compliance
with applicable laws, any other name that the Board of Managers deems
appropriate or advisable. The Board of Managers shall file, or shall cause to be
filed, any assumed name certificates and similar filings, and any amendments
thereto, that the Board of Managers considers appropriate or advisable.
2.3 Registered Office and Agent. The registered office required to
be maintained by the Company in the State of Delaware pursuant to the Act shall
initially be located at 000 Xxxxx XxXxxx Xxxxxxx , Xxxx xx Xxxxx, Xxxxxx of
Xxxx, Xxxxxxxx 00000. The name and address of the registered agent of the
Company pursuant to the Act shall initially be Capitol Services, Inc.. The
Company may, upon compliance with the applicable provisions of the Act, change
its registered office or registered agent from time to time at the sole
discretion of the Board of Managers.
2.4 Term. The term of the Company shall continue indefinitely
unless terminated as hereinafter provided.
2.5 Purpose. The Company is formed for the object and purpose of,
and the nature of the business to be conducted and promoted by the Company is,
engaging in any lawful act or activity for which limited liability companies may
be formed under the Act and engaging in any and all activities necessary,
advisable, convenient or incidental thereto.
2.6 Specific Powers. The Company shall have the power and
authority to take any and all actions necessary, appropriate, proper, advisable,
incidental or convenient to or for the furtherance of the purpose set forth in
Section 2.5.
2.7 Certificate. Xxxxxxx Xxxxx, Jr. and Xxx X. Xxxxxxxx are hereby
designated as authorized persons to execute, deliver and file any amendments or
restatements of the Certificate, and any other certificates and any amendments
or restatements thereof necessary for the Company to qualify to do business in a
jurisdiction in which the Company may wish to conduct business.
2.8 Ownership of Company Property; Waiver of Partition. All
Company property, both real and personal, presently owned or hereafter acquired
by the Company, shall be owned by the Company and held in the name of the
Company. Each Member expressly waives any right such Member might individually
have to require a partition thereof or a dissolution of the Company, except as
otherwise specifically provided herein.
ARTICLE 3
COMPANY AND CAPITAL
3.1 Members. The names and addresses of the Members of the Company
and each Member's Capital Contribution shall be listed on Schedule I attached to
this Agreement, as from time to time amended and supplemented in accordance with
the provisions of this Agreement. Schedule I lists the Members of the Company,
their Capital Contributions, Capital Accounts and the number of Units held by
each of them as of the Effective Date.
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3.2 Capital Accounts. A separate account (each a "Capital
Account") shall be established and maintained for each Member which shall be
increased by (a) the amount of cash and the Fair Market Value of any other
property contributed by such Member to the Company as a Capital Contribution
(net of liabilities secured by such property or that the Company is considered
to assume or take the property subject to pursuant to Code Section 752), (b) the
services rendered by any Member in the amount that the Company is entitled to
take a compensation deduction for federal income tax purposes, (c) such Member's
share of the Net Profit of the Company and (d) any amount required pursuant to
the terms of any option or other equity incentive agreement entered into by the
Company, and shall be reduced by (y) the amount of cash and the Fair Market
Value of any other property distributed to such Member (net of liabilities
secured by such property or that the Member is considered to assume or take the
property subject to pursuant to Code Section 752) and (z) such Member's share of
the Net Loss of the Company. It is the intention of the Members that the Capital
Accounts of the Company be maintained in accordance with the provisions of
Section 704(b) of the Code and the Regulations thereunder and that this
Agreement be interpreted consistently therewith.
3.3 Return of Capital Contributions. No Member shall have the
right to demand a return of all or any part of its Capital Contributions, and
any return of the Capital Contributions to any Member shall be made solely from
the assets of the Company and only in accordance with the terms of this
Agreement. No interest shall be paid to any Member with respect to its Capital
Contributions. Each Member shall look solely to the assets of the Company for
the return of its Capital Contributions, and, if the assets of the Company are
insufficient to return its Capital Contributions, it shall have no recourse
against any other Member for that purpose.
3.4 Additional Members. Except to the extent that the provisions
in Article 10 shall have been complied with in connection with a Transfer
pursuant to Article 9, no Person shall be admitted as a Member of the Company
unless and until the following conditions have been satisfied:
(a) the Board of Managers shall have consented
in writing to the admission of such Person as a Member; and
(b) such other instruments, documents,
certificates and opinions as the Board of Managers deems necessary or desirable
for admission for such Person, including a counterpart of or a joinder to this
Agreement, shall have been executed and delivered.
3.5 Units. The Interests of the Members in the Company shall be
represented by Units. The Board of Managers may, but is not required to, adopt
forms of, and issue to Members, certificates representing the Units. The Units
shall be deemed "securities" within the meaning of Section 8-103(c) of the
Uniform Commercial Code.
3.6 Management Units. The Board of Managers may from time to time
in its sole discretion (a) issue Units, or reserve Units to be issued upon the
exercise of options granted, to employees, consultants, managers or independent
contractors of the Company or its Affiliates, whether in connection with an
investment by such Person or otherwise, and (b) issue options to purchase Units
pursuant to the Company's Unit option plans or otherwise to employees,
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consultants, managers or independent contractors of the Company or its
Affiliates, or other Persons the Board of Managers deems appropriate, all upon
terms, conditions, vesting rights and consideration, if any, as the Board of
Managers deems appropriate; provided, however, that the aggregate number of
Units issued or reserved for options pursuant to this Section 3.6 shall at no
time exceed 10,000 Units. The terms on which any Units are issued pursuant to
this Section 3.6 shall be determined by the Board of Managers.
3.7 Additional Units; Other Securities. In addition to Units
permitted to be issued under Section 3.6, the Board of Managers, subject to the
terms and conditions of this Section 3.7, may issue additional Units after the
Effective Date to such Persons (including but not limited to the Members or
their Affiliates) and for such consideration as the Board of Managers deems
appropriate in accordance with and subject to the terms of this Agreement. The
terms and conditions of any Units issued pursuant to this Section 3.7 shall be
determined by the Board of Managers and such Units may consist of one or more
classes of Units possessing unique rights and preferences. The Board of Managers
is also authorized to cause the issuance of any other type of security of the
Company from time to time on terms and conditions established at the discretion
of the Board of Managers. Such securities may specifically include, without
limitation, unsecured and secured debt obligations of the Company, debt
obligations of the Company convertible into Units, options or warrants to
purchase any Units or any combination of any of the foregoing. The Board of
Managers shall do all things necessary to comply with the Act and is authorized
and directed to do all things it deems necessary or advisable in connection with
any such future issuance of Units, including compliance with any statute, rule,
regulation or guideline of any federal, state or other governmental agency.
3.7.1 Preemptive Rights. The Company hereby grants to each
holder of Units the preemptive right to purchase up to its pro rata share of New
Securities (as defined in this Section 3.7.1) which the Company may, from time
to time, propose to sell and issue. A Unitholder's pro rata share, for purposes
of this preemptive right, is the ratio of the number of Units owned by such
Unitholder immediately prior to the issuance of New Securities, assuming
exercise of any convertible securities, rights, options or warrants to acquire
Units of the Company held by said holder, to the total number of Units
outstanding immediately prior to the issuance of New Securities (minus any Units
held by Management Members excluded pursuant to Section 3.7.1(e)), assuming
exercise of all outstanding convertible securities, rights, options and warrants
to acquire Units of the Company.
(a) "New Securities" shall mean any Units of the
Company and rights, options or warrants to purchase such Units, and securities
of any type whatsoever that are convertible into Units; provided that the term
"New Securities" does not include (i) issuances pursuant to Section 3.6; (ii)
any issuance of additional Units to all holders of Units as a distribution
thereon, pro rata; (iii) any issuance of securities pursuant to the acquisition
of a business entity or business segment of such business entity, in each case
not Affiliated with the Company, by the Company by merger, consolidation,
conversion, reorganization, purchase of shares, purchase of substantially all of
the assets, or similar transaction; (iv) any issuance to vendors, customers,
suppliers, universities, consultants, financial advisors or to other persons in
similar commercial situations with the Company, in each case which are not
Affiliated with the Company; (v) any issuance of securities in connection with
obtaining lease or other debt financing or other borrowings, whether issued to a
financial institution, lessor, guarantor or any
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other Person (collectively, "Equity Kickers"); provided, however, with respect
to the issuance of an Equity Kicker to a Member or its Affiliate, the foregoing
exclusion to the definition of New Securities shall only apply if, in connection
with a transaction to which Section 3.7.2 applies, Section 3.7.2 has been
complied with; (vi) any issuance in connection with partnering transactions,
joint venture arrangements or acquiring a product or service in each case
involving a party not Affiliated with the Company or any of its Members; (vii)
issuance of securities upon the exercise or conversion of any security issued in
compliance with Section 3.7; and (viii) any right, option or warrant to acquire
any security convertible into the securities included in subsections (i) through
(vii) above.
(b) In the event the Company proposes to
undertake an issuance of New Securities, the Board of Managers shall give each
holder of Units written notice of its intention describing the type of New
Securities and their price and the general terms upon which the Company proposes
to issue the same. Each such holder of Units shall have 30 days after any such
notice is mailed to agree to purchase all or any portion of such Unitholder's
pro rata share of such New Securities for the price and upon the terms specified
in the notice by giving written notice to the Board of Managers and stating
therein the quantity of New Securities to be purchased.
(c) In the event such holder of Units fails to
exercise its preemptive right pursuant to Section 3.7.1(b) within said 30 day
period, the Company shall have 120 days thereafter to sell the New Securities
respecting which the Unitholder's preemptive right option set forth in this
Section 3.7.1 was not exercised, at a price and upon terms no more favorable to
the purchasers thereof than specified in the Board of Managers' notice to
Unitholders pursuant to Section 3.7.1(b). In the event the Company has not sold
the New Securities within such 120 day period, the Company shall not thereafter
issue or sell any New Securities without first again offering such securities to
the Unitholders in the manner provided in Section 3.7.1(b) above.
(d) The preemptive right granted under this
Agreement shall expire upon, and shall not be applicable to, any sale of Units
of the Company to the public effected pursuant to a registration statement filed
with, and declared effective by, the Securities and Exchange Commission under
the Securities Act.
3.7.2 Loans, Advances and Guarantees.
(a) In the event that the Board of Managers
determines in its sole discretion that the Company requires funds, the Board of
Managers shall be authorized, at any time and from time to time, to cause the
Company to borrow additional funds sufficient for such purposes and upon such
terms as the Board of Managers may deem appropriate. Moreover, the Board of
Managers shall be authorized to permit one or more Members or their Affiliates
to guaranty any such borrowed funds. In addition, the Board of Managers shall be
authorized to issue Equity Kickers in connection with borrowing of funds or
guarantees.
(b) Any such loans and guarantees may be
provided by third parties or by one or more Members or their Affiliates. Any
loan or guaranty provided by a
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Member shall not be considered contributions to the capital of the Company and
shall not increase the Capital Account of the lending or guarantying Member.
(c) If the Board of Managers desires to request
a loan or a several but not joint guaranty from the Members (or any Member or
their Affiliates), it shall give the Members written notice of such request,
which notice shall include, with respect to any loan, the amount, interest rate,
priority and repayment terms with respect to other indebtedness of the proposed
loan and, with respect to a several but not joint guaranty, the terms upon which
such guaranty will be given (and in both cases details of any proposed Equity
Kicker associated therewith). The Members shall have 30 days from receipt of
such notice to elect to make all or a portion of the requested loan or a several
but not joint guaranty (and receive a pro rata portion of the associated Equity
Kicker) in the amounts mutually agreed upon by the Board of Managers and the
participating Members. Unless otherwise agreed by the participating Members, any
loan or a several but not joint guaranty made by the participating Members to
the Company (and any associated Equity Kicker) will be made pro rata among the
participating Members in accordance with their respective ownership of Units
then outstanding. Notice of any such election to participate shall be given to
the Board of Managers within such 30 day period; failure to timely respond shall
be deemed to be a decision by a Member that it does not desire to participate in
such guaranty, loan or advance. The interest accruing on any such resulting loan
and the expenses of such loan or guaranty, including any origination fee, shall
be paid and charged as an expense of the Company. For each loan made by a
lending Member to the Company, the Company shall execute a note payable to the
lending Member, upon the terms, priority with respect to other indebtedness and
in the principal sum determined by the Board of Managers and the lending Member.
For each guaranty made by a guarantying Member on behalf of the Company, the
Company shall execute a reimbursement agreement in favor of the guarantying
Members on the terms determined by the Board of Managers and the guarantying
Members.
(d) Notwithstanding the foregoing, Management
Members shall not have the right to participate in the loans or guarantees
contemplated in this Section 3.7.2, unless expressly so permitted by the Board
of Managers.
3.8 Issuance Notice. The Board of Managers shall promptly prepare
a revised Schedule I, which shall be deemed to replace the old Schedule I and
constitute an amendment of this Agreement approved by all of the Members, to
reflect the issuance after the Effective Date of additional Units pursuant to
Section 3.6 or 3.7. The Board of Managers shall give notice to all the Members
promptly after the issuance of additional Units pursuant to Section 3.6 or 3.7
informing the Members of such issuance or redemption and the revised number of
Units issued and outstanding following such issuance, and enclosing a copy of
Schedule I hereto, as revised to reflect such transaction. The revised Schedule
I shall also set forth Capital Contributions, if any, made in consideration for
such Units.
3.9 Preemptive Rights. Other than as set forth in this Agreement,
no Unitholder shall have any preemptive right with respect to (a) additional
Capital Contributions to the Company, (b) the issuance or sale of Units or other
interests in the Company, (c) the issuance of any obligation, evidence of
indebtedness or other interest of or in the Company convertible into or
exchangeable for, or carrying or accompanied by any rights to receive, purchase
or subscribe to, any Units, (d) the issuance or any right of subscription to, or
right to receive, any warrant or
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option for the purchase of any Units, or (e) the issuance or sale of any other
securities that may be issued or sold by the Company.
ARTICLE 4
STATUS OF MEMBERS
4.1 Limited Liability. No Member shall be bound by or personally
liable for the expenses, liabilities, or obligations of the Company arising in
contract, tort or otherwise, each of which is solely an obligation of the
Company. The Members shall not be required to make any additional contributions
to the Company. In no event shall any Member be required to make up any deficit
balance in such Member's Capital Account upon the liquidation of the Company or
otherwise. Except as provided in this Agreement, no Members shall be personally
liable, directly or indirectly, by way of indemnification, contribution,
assessment, or otherwise for an obligation solely by reason of being or acting
as a Member.
4.2 Return of Distributions of Capital. Except as otherwise
expressly required by law, a Member, in its capacity as such, shall have no
liability for obligations or liabilities of the Company in excess of (a) the
amount of its Capital Contributions actually made to the Company, (b) its share
of any assets and undistributed profits of the Company, and (c) to the extent
required by the Act, the amount of any Distributions wrongfully distributed to
it. Except as required by the Act, no Member shall be obligated by this
Agreement to return any Distribution to the Company or pay the amount of any
Distribution for the account of the Company or to any creditor of the Company.
However, if any court of competent jurisdiction holds that, notwithstanding the
provisions of this Agreement, any Member is obligated to return or pay any part
of any Distribution, the obligation shall be that of such Member alone and not
of any Manager or any other Member. The amount of any Distribution returned to
the Company by a Member or paid by a Member for the account of the Company or to
a creditor of the Company shall be added to the account or accounts from which
it was subtracted when it was distributed to the Member.
ARTICLE 5
DESIGNATION, RIGHTS, AUTHORITIES, POWERS,
RESPONSIBILITIES, AND DUTIES OF THE BOARD OF MANAGERS
5.1 Management by Board of Managers. Subject to the provisions of
the Act and any limitations in this Agreement as to action to be authorized or
approved by the Members, all management powers over the business and affairs of
the Company shall be exclusively vested in a board of managers (the "Board of
Managers"). Collectively, members of the Board of Managers (each, a "Manager")
shall constitute "managers" of the Company within the meaning of the Act. The
Board of Managers on the Effective Date shall be the Persons set forth in
Exhibit 5.1 hereto. The Board of Managers may delegate certain of its powers to
officers (the "Officers"), who shall be agents of the Company. The Members, by
virtue of their status as members of the Company, shall not have any management
power over the business and affairs of the Company or actual or apparent
authority to enter into contracts on behalf of, or to otherwise bind, the
Company. Except as otherwise specifically provided in this Agreement, the
authority and functions of the Board of Managers and of the Officers shall be
identical to the authority and functions of the board of directors and officers,
respectively, of a corporation organized under
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the Delaware General Corporation Law. Thus, except as otherwise specifically
provided in this Agreement, the business and affairs of the Company shall be
managed under the direction of the Board of Managers, and the day-to-day
activities of the Company shall be conducted on the Company's behalf by the
Officers. In addition to the powers that now or hereafter can be granted to
managers under the Act and to all other powers granted under any other provision
of this Agreement, the Board of Managers (subject to Section 5.2 of this
Agreement) and the Officers (subject to Section 5.3 of this Agreement and the
direction of the Board of Managers) shall have full power and authority to do
all things on such terms as they, in their Sole Discretion, may deem necessary
or appropriate to conduct, or cause to be conducted, the business and affairs of
the Company.
5.2 Board of Managers.
(a) Number and Term.
The Board of Managers shall consist of a number of Managers
determined by a Majority Interest from time to time; provided; that the
Board of Managers may not consists of less than three Managers.
Managers need not be Members. Except as otherwise provided in Section
5.2(d), each Manager shall be elected at the annual meeting of the
Members, and the individuals receiving the most votes at such meeting
shall be elected. No decrease in the number of Managers shall have the
effect of shortening the term of office of any incumbent Manager.
(b) Chairman.
The Board of Managers shall select one Manager to serve as the
Chairman of the Board of Managers, and the Board of Managers shall
elect one other Manager to be the Vice Chairman. The Chairman shall
preside at all meetings of the Members and the Board of Managers. The
Vice Chairman shall perform all the duties of the Chairman in the
absence or disability of the Chairman. The Chairman and Vice Chairman
shall have such other powers and perform such other duties as may be
prescribed from time to time by the Board of Managers.
(c) Quorum and Manner of Action.
At all meetings of the Board of Managers, a majority of the
total number of Managers shall constitute a quorum for the transaction
of business; and the act of a majority of the Managers present at any
meeting at which there is a quorum shall be the act of the Board of
Managers, except as otherwise provided by Law or this Agreement. If at
any meeting of the Board of Managers there shall be less than a quorum
present, a majority of those present may adjourn the meeting from time
to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at such adjourned meeting.
Attendance by a Manager at a meeting shall constitute a waiver of
notice of such meeting except where a Manager attends a meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the ground that the meeting is not
lawfully called or convened.
(d) Vacancies.
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Except as otherwise provided by law or this Agreement, in the
case of any increase in the authorized number of Managers or of any
vacancy in the Board of Managers, however created, the additional
Manager or Managers may be elected or, as the case may be, the vacancy
or vacancies may be filled by majority vote of the Managers remaining
on the whole Board of Managers although less than a quorum, or by a
sole remaining Manager. Any Manager elected or chosen as provided
herein shall serve until the first to occur of (i) the expiration of
the term to which such Manager is elected or appointed, (ii) the
election and qualification of the Manager's successor, or (iii) the
Manager's resignation or removal.
(e) Resignations.
A Manager may resign at any time upon written notice of
resignation to the Company. Any resignation shall be effective
immediately unless a certain effective date is specified therein, in
which event it will be effective upon such date and acceptance of any
resignation shall not be necessary to make it effective.
(f) Removals.
Any Manager or the entire Board of Managers may be removed,
with or without cause, and another person or persons may be elected to
serve for the remainder of his or their term by a Majority Interest. In
case any vacancy so created shall not be filled by the Members, such
vacancy may be filled by the remaining Managers as provided in Section
5.2(d).
(g) Annual Meetings.
The annual meeting of the Board of Managers shall be held, if
a quorum be present, for the purpose of organization and transaction of
any business that might be transacted at a regular meeting thereof, and
no notice of such meeting shall be necessary. If a quorum is not
present, such annual meeting may be held at any other time or place
that may be specified in a notice given in the manner provided in
Section 5.2(i) for special meetings of the Board of Managers or in a
waiver of notice thereof.
(h) Regular Meetings.
Regular meetings of the Board of Managers may be held without
notice at such places and times as shall be determined from time to
time by resolution of the Board of Managers. Except as otherwise
provided by law or this Agreement, any business may be transacted at
any regular meeting of the Board of Managers.
(i) Special Meetings.
Special meetings of the Board of Managers may be called by the
Chief Executive Officer, or shall be called by the Secretary on the
written request of any Manager stating the purpose or purposes of such
meeting. Notices of special meetings shall be given to each Manager not
later than three days before the day the meeting is to be held. No
notice of any meeting need be given to any Manager who files a written
waiver of notice
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thereof with the Secretary either before or after the meeting. Neither
the business to be transacted at, nor the purpose of, any special
meeting need be specified in any notice or written waiver of notice,
unless so required by this Agreement. Except as otherwise provided by
Law or this Agreement, any and all business may be transacted at a
special meeting.
(j) Organization of Meetings.
At any meeting of the Board of Managers, business shall be
transacted in such order and manner as the Chairman may from time to
time determine.
(k) Place of Meetings.
The Board of Managers may hold their meetings at any office or
offices of the Company, or at any other place as they may from time to
time by resolution determine.
(l) Compensation of Managers; Reimbursement of
Expenses.
The Managers shall not receive any compensation for their
services. Managers shall be reimbursed by the Company for their
reasonable traveling, food, lodging and other expenses incurred in
attending meetings in accordance with policies approved from time to
time by the Board of Managers.
(m) Action by Written Consent.
Unless otherwise restricted by Law or this Agreement, any
action required or permitted to be taken at any meeting of the Board of
Managers may be taken without a meeting if the required number of such
Managers consent thereto in writing and the writing or writings are
filed with the minutes of proceedings of the Board of Managers. If any
action is taken by written consent to which less than all of the
Managers have consented, the consenting Managers shall promptly provide
notice of such action to the other Managers.
(n) Participation in Meetings by Telephone.
The Managers may participate in a meeting of the Board of
Managers by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting
can hear each other, and participation in a meeting in such manner
shall constitute presence in person at such meeting.
5.3 Officers; Agents. The Board of Managers by resolution or vote
of the Board of Managers shall have the power to appoint agents (who may be
referred to as officers) to act for the Company with such titles, if any, as the
Board of Managers deems appropriate and to delegate to such officers or agents
such of the powers as are granted to the Board of Managers hereunder, including
the power to execute documents on behalf of the Company, as the Board of
Managers may in its sole discretion determine. The officers or agents so
appointed may include persons holding titles such as Chief Executive Officer,
President, Executive Vice President, Vice President, Chief Operating Officer,
Chief Financial Officer, Treasurer or Controller. Unless the
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authority of the agent designated as the officer in question is limited in the
document appointing such officer or is otherwise specified by the Board of
Managers, any officer so appointed shall have the same authority to act for the
Company as a corresponding officer of a Delaware corporation would have to act
for a Delaware corporation in the absence of a specific delegation of authority
and as more specifically set forth herein; provided, however, that unless such
power is specifically delegated to the officer in question either for a specific
transaction or generally, no such officer shall have the power to lease or
acquire real property, to borrow money, to issue notes, debentures, securities,
equity or other interests of or in the Company, to make investments in (other
than the investment of surplus cash in the ordinary course of business) or to
acquire securities of any Person, to give guarantees or indemnities, to merge,
liquidate or dissolve the Company or to sell or lease all or any substantial
portion of the assets of the Company. The Board of Managers, in its sole
discretion, may by vote or resolution of the Board of Managers ratify any act
previously taken by an officer or agent acting on behalf of the Company.
5.3.1 Officers. Officers and agents of the Company, if any,
shall be appointed by the Board of Managers from time to time in its discretion.
An officer may be but none need be a Member or Manager. Any two or more offices
may be held by the same person. Any officer may be required by the Board of
Managers to secure the faithful performance of the officer's duties to the
Company by giving bond in such amount and with sureties or otherwise as the
Board of Managers may determine.
5.3.2 Designations and Delegations. Officers may be
designated by the Board of Managers at any time. At any time or from time to
time the Board of Managers may delegate to any officer their power to elect or
appoint any other officer or any agents.
5.3.3 Tenure. Each officer shall retain its authority at
the pleasure of the Board of Managers, or the officer by whom such officer was
appointed or by the officer who then holds agent appointive power.
5.3.4 Resignation; Removal; Vacancies. Any officer or agent
may resign by delivering a written letter of resignation to the Chairman, if
any, the President, the Secretary or to the Board of Managers, which resignation
shall not require acceptance and, unless otherwise specified in the letter of
resignation, shall be effective upon receipt. The Board of Managers or the
officer appointing the officer or agent may remove any officer or agent at any
time without giving any reason for such removal and no officer or agent shall be
entitled to any damages by virtue of such officer's removal from office or such
position as agent. If any office becomes vacant, the position may be filled by
the Board of Managers or in such other manner as the officer in question was
appointed.
5.3.5 President and Vice Presidents. Unless the Board of
Managers otherwise specifies, the President shall be the chief executive officer
and shall have direct charge of all business operations of the Company and,
subject to the control of the Board of Managers, shall have general charge and
supervision of the business of the Company. Any vice presidents shall have
duties as shall be designated from time to time by the Board of Managers or the
President.
5.3.6 Treasurer and Assistant Treasurers. Unless the Board
of Managers otherwise specifies, the Treasurer shall be the chief financial
officer of the Company and shall be
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in charge of its funds and valuable papers, and shall have such other duties and
powers as may be designated from time to time by the Board of Managers or the
President. Any Assistant Treasurers shall have such duties and powers as shall
be designated from time to time by the Board of Managers, the President or the
Treasurer.
5.3.7 Secretary and Assistant Secretaries. The Secretary
shall record all proceedings of the Members and the Board of Managers in a book
or series of books to be kept therefor and shall file therein all actions by
written consent of the Board of Managers. In the absence of the Secretary from
any meeting, an Assistant Secretary, or if there be none or no Assistant
Secretary is present, a temporary secretary chosen at the meeting, shall record
the proceedings thereof. The Secretary shall keep or cause to be kept records,
which shall contain the names and record addresses of all Members. The Secretary
shall have such other duties and powers as may from time to time be designated
by the Board of Managers or the President. Any Assistant Secretaries shall have
such duties and powers as shall be designated from time to time by the Board of
Managers, the President or the Secretary.
5.4 Right of Third Parties to Rely on Authority of Board of
Managers. Notwithstanding any other provision of this Agreement to the contrary,
no lender or purchaser of Company assets shall be required to verify any
representation by the Board of Managers or any officer of the Company duly
authorized by resolution of the Board of Managers as to the extent of the
interest in the assets of the Company which the Board of Managers is entitled to
encumber, sell or otherwise use, and any such lender or purchaser shall be
entitled to rely exclusively on the representations of the Board of Managers or
any officer of the Company duly authorized by resolution of the Board of
Managers as to its individual authority to enter into such financing or sale
arrangements and shall be entitled to deal with the Board of Managers or any
officer of the Company duly authorized by resolution of the Board of Managers as
if they were the sole party in interest therein both legally and beneficially.
5.5 Certain Limitations on Board of Managers and Members
Activities.
5.5.1 Unanimous Consent Required. Notwithstanding any
provision in this Agreement to the contrary, the Board of Managers and Members
shall not do any of the following, and none of the following shall be an act of
the Board of Managers or the Members, without, in each instance, obtaining the
consent of all of the Members:
(a) effect or cause to be effected any Transfer
(including any indirect Transfer by way of a Sale of the Company) of the
Incentive Distribution Rights (as defined in the First Amended and Restated
Agreement of Limited Partnership of Rio Vista Energy Partners L.P.) owned or
subsequently acquired by the Company; and
(b) take any action to amend or modify any of
the provisions of this Section 5.5.1 or any other provision of this Agreement
that would affect the provisions, applicability or effect of this Section 5.5.1
in any way.
5.5.2 Supermajority Consent Required. The Board of Managers
shall not do any of the following without, in each instance, obtaining the
consent of the Members holding 75% of the Units:
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(a) do any act in contradiction of this
Agreement;
(b) do any act which would make it impossible to
carry on the ordinary business of the Company (except for a disposition of
Company assets);
(c) confess a judgment against the Company; or
(d) possess Company assets, or assign the rights
in specific Company assets for other than a Company purpose.
5.6 Transactions with the Members or Affiliates. The Company is
expressly permitted to enter into transactions, agreements or modifications to
transactions or agreements with any Member or any Affiliates thereof or of the
Company, provided that such transactions, agreements or modifications to
transactions or agreements are (a) on terms taken as a whole not less favorable
to the Company than the terms taken as a whole which could reasonably be
obtained (as determined in good faith by the Board of Managers) from an
unrelated party, or (b) approved by the affirmative vote of a majority of the
disinterested members of the Board of Managers, even though the disinterested
members may not constitute a quorum.
5.7 Specific Limitations. Except as provided in this Agreement, no
Member shall have the right or power to: (a) withdraw or reduce its Capital
Contribution except as provided by law, (b) make voluntary Capital Contributions
or contribute any property to the Company other than cash, (c) bring an action
for partition against the Company or any Company assets, (d) cause the
termination and dissolution of the Company, or (e) upon the return of its
Capital Contribution require that property other than cash be distributed in
return for its Capital Contribution. Each Member hereby irrevocably waives any
and all rights that it may have to maintain an action for partition of any of
the Company's property. Except as otherwise set forth in this Agreement, no
Member shall have priority over any other Member either as to the return of its
Capital Contribution or as to Net Profit, Net Loss, or Distributions. Other than
upon the termination and dissolution of the Company as provided by this
Agreement, there has been no time agreed upon when or if all or any portion of
the Capital Contribution of any Member will be returned.
5.8 Meetings of Members.
(a) Annual Meetings.
Annual meetings of the Members may be held on such date and at
such time as shall be determined by the Board of Managers. Notice of
the establishment of such annual meeting, and of any amendments
thereto, shall be given to each Member at least 10 Days prior to the
next annual meeting. No other notices of such annual meetings need be
given.
(b) Special Meetings.
Special meetings of the Members may be called by any Member.
Any such meeting shall be held on such date and at such time as the
Member calling such meeting shall specify in the notice of the meeting,
which shall be delivered to each other Member at least 10 Days prior to
such meeting. Neither the business to be transacted at, nor the
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purpose of, such special meeting need be specified in the notice (or
waiver of notice) of such meeting.
(c) Quorum.
A Majority Interest (represented either in person or by proxy)
shall constitute a quorum for the transaction of business at any
meeting of the Members. With respect to any matter, except any matter
requiring the consent of all the Members under Section 5.5.1, an act of
a Majority Interest shall be the act of the Members. Each Member may,
with respect to any vote, consent or approval that he is entitled to
grant pursuant to this Agreement, grant or withhold such vote, consent
or approval in his Sole Discretion.
(d) Place of Meeting.
Any meeting of the Members shall be held at the principal
place of business of the Company, unless the notice of such meeting
specifies a different place.
(e) Waiver of Notice Through Attendance.
Attendance of a Member at any meeting shall constitute a
waiver of notice of such meeting, except where such Member attends the
meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or
convened.
(f) Proxies.
A Member may vote at any meeting by a written proxy executed
by that Member and delivered to another Member. A proxy shall be
revocable unless it is stated to be irrevocable.
(g) Action by Written Consent.
Any action required or permitted to be taken at such meeting
may be taken without a meeting, without prior notice, and without a
vote if a consent or consents in writing, setting forth the action so
taken, is signed by a Majority Interest. The Company shall give prompt
written notice to the non-consenting Members of any action of Members
taken by less than unanimous written consent of the Members.
(h) Meetings by Telephone.
The Members may participate in and hold any meeting by means
of conference telephone, video conference or similar communications
equipment by means of which all Persons participating in the meeting
can hear each other.
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ARTICLE 6
BOOKS, RECORDS, ACCOUNTING AND REPORTS
6.1 Books and Records. The Company shall maintain at its principal
office all of the following:
(a) a current list of the full name and last
known address of each Member together with information regarding the amount of
cash and a description and the Book Value of any other property or services
contributed by each Member and which each Member has agreed to contribute in the
future, and the date on which each Member became a Member of the Company;
(b) a copy of the Certificate and this
Agreement, including any and all amendments to either thereof, or any amendments
that have been executed;
(c) copies of the Company's federal, state, and
local income tax or information returns and reports, if any, for each taxable
year after the Effective Date, provided that the Company need not retain any
such records for more than four fiscal years;
(d) the financial statements of the Company for
each Fiscal Year after the Effective Date, provided that the Company need not
retain any such records for more than four fiscal years; and
(e) the Company's books and records for each
Fiscal Year after the Effective Date, provided that the Company need not retain
any such records for more than four fiscal years.
6.2 Delivery to Member, Inspection, etc. Upon the request of any
Member, for any purpose reasonably related to such Member's interest as a Member
of the Company, the Board of Managers shall cause to be delivered to the
requesting Member, at the expense of the Company, a copy of the information
required to be maintained by clauses (a) through (e) of Section 6.1. A Member
upon reasonable request may inspect at the Company's offices the Company's books
and records during reasonable business hours.
6.3 Financial Statements. The Board of Managers shall cause books
of account to be maintained reflecting the operations of the Company on an
annual basis and shall cause to be prepared for and delivered to the Members at
least annually, at the Company's expense, financial statements of the Company
prepared in accordance with generally accepted accounting principles.
6.4 Filings. At the Company's expense the Board of Managers shall
cause the income tax returns for the Company to be prepared and timely filed
with the appropriate authorities and to have prepared and to furnish to each
Member such information with respect to the Company as is necessary to enable
the Members to prepare their federal and state income tax returns. The Board of
Managers, at the Company's expense, shall also cause to be prepared and timely
filed, with appropriate federal and state regulatory and administrative bodies,
all reports required to be filed by the Company with those entities under then
current applicable laws, rules,
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and regulations. The reports shall be prepared on the accounting or reporting
basis required by the regulatory bodies.
6.5 Nondisclosure. Each Member agrees that, except as otherwise
consented to by the Board of Managers, all nonpublic information furnished to it
pursuant to this Agreement or otherwise with respect to the Company will be kept
confidential and will not be disclosed by such Member, or by any of its agents,
representatives, or employees, in any manner whatsoever, in whole or in part,
except that (a) each Member shall be permitted to disclose such information to
those of its agents, representatives, and employees who need to be familiar with
such information in connection with such Member's investment in the Company and
who are charged with an obligation of confidentiality, (b) each Member shall be
permitted to disclose such information to financial institutions, investment
bankers and prospective purchasers and capital investors, (c) each Member shall
be permitted to disclose such information to its partners and stockholders or to
prospective purchasers or Assignees of its Units so long as each of them agree
to keep such information confidential on the terms set forth herein, (d) each
Member shall be permitted to disclose information to the extent required by law,
so long as such Member shall have first afforded the Company with a reasonable
opportunity to contest the necessity of disclosing such information, and (e)
each Member shall be permitted to disclose information to the extent necessary
for the enforcement of any right of such Member arising under this Agreement.
ARTICLE 7
DISTRIBUTIONS AND ALLOCATIONS OF PROFIT AND LOSS
7.1 Board of Managers' Determination. The Board of Managers shall
have the sole authority to determine the timing and the aggregate amount of any
Distributions to Members.
7.2 Distributions. Subject to Section 7.1, Distributions from the
Company to its Members shall be made as follows:
7.2.1 If the Company expects that as of the end of any Tax
Estimation Period the Company will have Adjusted Taxable Income, then the
Company shall distribute to each Member on or before the 15th day after the end
of the Tax Estimation Period cash in an amount equal to the Company's estimate
of the Adjusted Taxable Income allocable to each such Member during such Tax
Estimation Period multiplied by the Combined Effective Marginal Tax Rate. On or
before April 15th of each year the Company shall adjust the distributions
pursuant to this Section 7.2.1 with respect to the previous Fiscal Year to
conform with the Company's income tax returns for such Fiscal Year. Tax
Distributions made pursuant to this Section 7.2.1 shall not be deemed to
constitute an advance against any distributions provided for in Section 7.2.2
below. In the event that the proportion of the Company's Adjusted Taxable Income
allocable to a Member is greater than the proportion of the Company's Net Profit
or Net Loss allocable to the Member for the same period, the Tax Distributions
to such Member shall reflect the Adjusted Taxable Income allocable to that
Member and the Tax Distributions to the other Members shall be adjusted so that
Tax Distributions under this Section 7.2.1 are made in proportion to Unit
ownership.
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7.2.2 The Company shall make all remaining Distributions to
the holders of Units in proportion to their Unit ownership.
7.3 No Violation. Notwithstanding any provision to the contrary
contained in this Agreement, the Company, and the Board of Managers on behalf of
the Company, shall not be required to make a Distribution to any Member on
account of its interest in the Company if such Distribution would violate
applicable law.
7.4 Withholding. All amounts withheld pursuant to the Code or any
provision of any state, local or foreign tax law with respect to any payment,
distribution, or allocation to the Company shall be treated as amounts paid to
the Company. Such amounts shall in turn be allocated to and treated as
distributed to the Members for all purposes under this Agreement. The Board of
Managers is authorized to withhold from Distributions to the Members and to pay
over to the appropriate federal, state, local or foreign government any amounts
required to be so withheld. The Board of Managers shall allocate any such
amounts to the Members in respect of whose Distribution or allocation the tax
was withheld and shall treat such amounts as actually distributed to such
Members.
7.5 Property Distributions. If any assets of the Company shall be
distributed in kind pursuant to this Article 7, such assets shall be distributed
to the Members entitled thereto in the same proportions as the Members would
have been entitled to cash Distributions. The amount by which the Fair Market
Value of any property to be distributed in kind to the Members exceeds or is
less than the Book Value of such property shall, to the extent not otherwise
recognized by the Company, be taken into account in determining Net Profit and
Net Loss and determining the Capital Accounts of the Members as if such property
had been sold at its Fair Market Value immediately prior to the Distribution.
7.6 Allocations of Net Profit or Net Loss. Subject to Section
7.7.2, 7.7.3 and 7.7.4 hereof, the Net Profit or Net Loss of the Company shall
be allocated among the Members so as to ensure, to the extent possible, that the
Capital Accounts of the Members as of the end of each Fiscal Year reflect the
aggregate Distributions that the Members would be entitled to receive if all of
the assets of the Company were sold for their Book Values and the proceeds were
distributed as of the end of such Fiscal Year in accordance with Section 7.2.2.
7.7 Other Capital Account and Income Tax Adjustments. Prior to
making the allocations of Net Profit or Net Loss for the Fiscal Year in
accordance with Section 7.6 hereof, the Board of Managers shall allocate income,
gain, loss, deduction and credit (and items thereof) in accordance with the
provisions of this Section 7.7 to the extent required by the Code and applicable
Regulations.
7.7.1 Certain Contributions of Property. In the event there
is a difference between the Book Value at which any property is accepted as a
contribution to the capital of the Company (or deemed accepted pursuant to
Regulation Section 1.704-1 (b)(2)(iv)(g)) and the adjusted tax basis of such
property to the Company, the Board of Managers shall, solely for federal income
tax purposes (and not for purposes of allocating Net Profit or Net Loss under
Section 7.6 or computing Net Profit or Net Loss), specially allocate the income,
gain, loss and deduction attributable to such property to the extent required by
Section 704(c) of the Code or
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any applicable Regulations under Code Section 704(b) or 704(c) using the
traditional method under Regulation Section 1.704-3(b).
7.7.2 Certain Adjustments. To the extent that an adjustment
to the adjusted tax basis of any Company asset is required pursuant to Section
732(d), Section 734(b) or Section 743(b) of the Code, adjustments to the Capital
Accounts shall be made as required pursuant to Regulation Section
1.704-1(b)(2)(iv)(m).
7.7.3 Nonrecourse Deductions; Member Nonrecourse
Deductions; Qualified Income Offset, etc. There are hereby included in the
Agreement such provisions governing the allocation of taxable income, gain,
loss, deduction and credit (and items thereof) determined under the Code as may
be necessary to provide that the Company's allocation provisions contain a
so-called "Qualified Income Offset" and comply with all provisions relating to
the allocation of so-called "Nonrecourse Deductions" and "Member Nonrecourse
Deductions" and the chargeback thereof as set forth in the Regulations under
Section 704(b) of the Code; provided, however, that the incorporation of such
provisions shall affect only the computation of taxable net income and loss and
the allocation thereof as between Members and shall not otherwise affect the
amount or timing of any distribution of cash or property to any Member provided
for in this Agreement. Allocations of Nonrecourse Deductions shall be made
ratably among the Members in accordance with the number of Units held by the
Members. Allocations of Member Nonrecourse Deductions shall be made in
accordance with Regulation Section 1.704-2(i).
7.7.4 Limitation on Loss Allocation. Notwithstanding any
other provision of this Agreement to the contrary, no item of loss or deduction
of the Company shall be allocated to any Member if such allocation would cause
such Member to have an Adjusted Capital Account Deficit or would increase such
Member's Adjusted Capital Account Deficit. Such loss shall be allocated among
the Members in accordance with their interest in the Company as determined under
Regulation Section 1.704-1(b)(3); provided, however, that the Board of Managers
will notify the Members of any material loss allocation required under this
sentence at least 30 days prior to the date on which any Company return is filed
reporting such loss and will provide the Members with the proposed allocation
and supporting calculations, all in reasonable detail.
7.8 Changes in Members' Units. If during any Fiscal Year of the
Company there is a change in any Member's Units in the Company, the Board of
Managers shall confer with the tax advisors to the Company and, in conformity
with such advice, allocate the Net Profit or Net Loss to the Members so as to
take into account the varying interests of the Members in the Company in a
manner that complies with the provisions of Section 706 of the Code and the
Regulations thereunder.
7.9 Adjustment of Capital Accounts. Unless the Board of Managers
shall determine otherwise, the Book Values of all the Company's assets shall be
adjusted to equal their respective gross fair market values, as determined by
the Board of Managers (and the Capital Accounts of the Members shall be adjusted
accordingly), as of the following times: (a) the acquisition of additional Units
by any new or existing Member in exchange for more than a de minimis additional
Capital Contribution, services rendered or to be rendered or the exercise of an
option to acquire such Units; (b) the distribution by the Company to a Member of
more than a de minimis amount of assets of the Company as consideration for
Units; and (c) the liquidation of
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the Company; provided, however, that adjustments pursuant to clauses (a) and (b)
above shall be made only if the Board of Managers reasonably determines that
such adjustments are necessary or appropriate to reflect the relative economic
interests of the Members in the Company.
7.10 Allocations for Tax and Section 704(b) Book Purposes. Except
as otherwise provided herein, any allocation, for purposes of maintaining
Capital Accounts, to a Member for a Fiscal Year or other period of a portion of
Net Profit or Net Loss (or of a specially allocated item) shall be determined to
be an allocation to that Member of the same proportionate part of each item of
income, gain, loss, deduction or credit, as the case may be, as is earned,
realized or available by or to the Company for federal income tax purposes.
7.11 Interpretation. It is the intent of the Members that the
provisions hereof relating to each Member's distributive share of income, gain,
loss, deduction and credit (and items thereof) shall comply with the provisions
of Sections 704(b), 704(c), 706 and other relevant provisions of the Code and
the applicable Regulations. In furtherance of the foregoing, the Board of
Managers is hereby directed to resolve any ambiguity in the provisions of this
Agreement in a manner that will preserve and protect the allocations provided
for in this Article 7 for federal income tax purposes and, subject to the last
sentence hereof, to adopt such curative provisions to this Article 7 as the
Board of Managers may deem necessary or appropriate. In the event of any
dispute, the decision of the independent tax counsel employed by the Company
shall be final. Notwithstanding the foregoing, no Member shall have the right to
require or compel any distribution of cash or property not authorized or
provided for by the provisions of this Agreement and the Board of Managers shall
not have the right to alter any distribution of cash or property provided for by
the provisions of this Agreement on the ground that such action is necessary to
cause the provisions hereof to conform to the provisions of the Regulations.
ARTICLE 8
TAX MATTERS MEMBER
8.1 Tax Matters Member. Unless and until another Member is
designated as the tax matters member by the Board of Managers, Penn Octane
Corporation shall be the tax matters member of the Company as provided in the
Regulations under Code Section 6231 and any analogous provisions of state law
and in such capacity is referred to as the "Tax Matters Member".
8.2 Certain Authorizations. The Tax Matters Member shall represent
the Company, at the Company's expense, in connection with all examinations of
the Company's affairs by tax authorities including any resulting administrative
or judicial proceedings.
8.3 Indemnity of Tax Matters Member. The Company shall indemnify
and reimburse the Tax Matters Member for all expenses (including legal and
accounting fees) incurred as Tax Matters Member pursuant to this Article 8 in
connection with any administrative or judicial proceeding with respect to the
tax liability of the Members as long as the Tax Matters Member has determined in
good faith that its course of conduct was in, or not opposed to, the best
interest of the Company. The payment of all such expenses shall be made before
any Distributions are made to the Members. The taking of any action and the
incurring of any expense by the Tax Matters Member in connection with any such
proceeding, except to the extent provided herein or
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required by law, is a matter in the sole discretion of the Tax Matters Member
and the provisions on limitations of liability of the Tax Matters Member, and
indemnification set forth in Article 12 shall be fully applicable to the Tax
Matters Member in its capacity as such.
8.4 Notices to Tax Matters Member. Any Member that receives a
notice of an administrative proceeding under Code Section 6233 relating to the
Company shall promptly notify the Tax Matters Member of the treatment of any
Company item on such Member's federal income tax return that is or may be
inconsistent with the treatment of that item on the Company's return. Any Member
that enters into a settlement agreement with the Secretary with respect to any
Company item shall notify the Tax Matters Member of such agreement and its terms
within 60 days after its date.
ARTICLE 9
TRANSFER OF UNITS
9.1 Transfer by Members.
9.1.1 Except as permitted by Section 9.3, no Member shall
Transfer all or any part of the economic or other rights that comprise its Units
and no Assignee shall Transfer any portion of its Economic Interest unless such
Transfer is first approved by the Board of Managers, which approval may be given
or refused in the sole and absolute discretion of the Board of Managers.
9.1.2 Notwithstanding Section 9.1.1, but subject to the
provisions of Sections 9.1.4, 9.1.5 and 9.3, a Member who is an individual shall
be entitled to Transfer all or any portion of its Units to a trust for the
benefit of such Member or a Member of the immediate family of such Member
(herein referred to as a "Permitted Transferee") so long as the Person
controlling such trust is satisfactory to the Board of Managers, provided that
the Permitted Transferee in question shall not be admitted as a Member of the
Company, but shall remain an Assignee with respect to the interest transferred
unless admitted as a Member pursuant to Article 10.
9.1.3 Any holder of Units may pledge such Units to any bank
or other financial institution to secure any debt of the Company to such bank or
financial institution for borrowed money; provided, however, that no such pledge
may be made unless such pledge is first approved by the Board of Managers, which
approval may be given or refused in the sole and absolute discretion of the
Board of Managers.
9.1.4 No Transfer (including a Transfer to a Permitted
Transferee) of all or any part of a Member's Units or an Assignee's Economic
Interest may be made pursuant to Section 9.1 or Section 9.3 hereof unless and
until the Board of Managers shall have received all of the following (to the
extent applicable to the proposed Transfer):
(a) if requested by the Board of Managers, an
opinion of responsible counsel (who may be counsel for the Company),
satisfactory in form and substance to the Board of Managers to the effect that:
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(i) such Transfer would not violate the
Securities Act or any state securities or blue sky laws applicable to the
Company or the Units to be transferred;
(ii) such Transfer would not cause the
Company to be considered a publicly traded partnership under Section 7704(b) of
the Code;
(iii) such Transfer would not cause the
Company to lose its status as a partnership for federal income tax purposes;
(iv) such Transfer would not require the
Company or the Board of Managers to register as an investment adviser under the
Investment Advisers Act of 1940, as amended, or to register as an investment
company under the Investment Company Act of 1940, as amended; and
(v) such Transfer would not cause a
termination of the Company for federal income tax purposes; and
(b) the agreement in writing of such Assignee to
comply with all of the terms and provisions of this Agreement and the grant of
the power of attorney set forth in Section 15.4.
9.1.5 Each Member hereby severally agrees that:
(a) it will not transfer all or any part of its
Units in the Company except as permitted by this Agreement;
(b) in no event shall all or any part of a Unit
be transferred to a minor or an incompetent except in trust or pursuant to the
Uniform Gifts to Minors Act; and
(c) it will pay all reasonable expenses,
including attorneys' fees, incurred by the Company in connection with such
Transfer.
9.1.6 A transferee of Units or an Economic Interest shall
not be admitted as a Member of the Company, but shall remain an Assignee with
respect to the Units or Economic Interest transferred unless and until admitted
as a Member pursuant to Article 10. Unless a transferee is admitted as a Member
of the Company pursuant to Article 10, the Transfer of all of a Member's
interest in the profits, losses and capital of the Company shall not cause such
Member to cease to be a Member of the Company.
9.1.7 Any Transfer in contravention of any of the
provisions of this Article 9 shall be void and of no effect, and shall not bind
nor be recognized by the Company.
9.1.8 In the event of a Transfer or the admission of any
Assignee as a Member of the Company, the Board of Managers shall promptly
prepare a revised Schedule I, which shall be deemed to replace the old Schedule
I and constitute an amendment of this Agreement approved by all of the Members,
to reflect such Transfer or admission, as the case may be, and shall promptly
send a copy of such revised Schedule I to all Members.
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9.2 Assignees. If the provisions of this Article 9 have been
complied with, an Assignee shall be entitled to receive all distributions of
cash or other property from the Company, and to be allocated Net Profit and Net
Loss and items of taxable income, deduction, gain, loss or credit attributable
to the Economic Interest assigned to the Assignee from and after the effective
date of the Transfer; shall succeed to the portion of the Capital Account of the
transferor as of the effective date of the Transfer attributable to the Economic
Interest which was transferred; and shall have the right to receive a copy of
the financial statements and tax information required herein to be provided to
all Members. An Assignee shall have no rights of a Member, including without
limitation the right to vote as a Member on matters set forth herein or in the
Act, which rights of a Member shall continue to be held by the Member from whom
the Economic Interest derives, unless and until such Assignee is admitted as a
Member pursuant to the provisions of Article 10. The Economic Interest of an
Assignee shall be subject to all of the restrictions and limitations to which
the Units from which the Economic Interest was transferred and to which the
Member holding such Units are subject. The Company and Board of Managers shall
be entitled to treat the transferor of the Economic Interest transferred to the
Assignee as the absolute owner in all respects, and shall incur no liability for
Distributions, allocations of Net Profit or Net Loss, or transmittal of reports
and notices required to be given to the Assignee that are made in good faith to
the transferor Member until the effective date of the Transfer. Unless otherwise
agreed by the Board of Managers, the effective date of the Transfer shall be the
first day of the calendar month following the month in which the Board of
Managers has received all documents with respect to such Transfer required by
Section 9.1.4 and an executed instrument of assignment in compliance with this
Article 9 or the first day of a later month if specified in the executed
instrument of assignment.
9.3 Penn Octane Units. Penn Octane Corporation shall have the
right to sell 25,000 of its Units to each of Shore Capital LLC (or its designee)
and Xxxxxx X. Xxxxxxx (or his designee) pursuant to purchase rights granted to
by Penn Octane Corporation to such Persons.
ARTICLE 10
ADMISSION OF ASSIGNEE AS MEMBER
10.1 Requirements. An Assignee shall not be admitted to the Company
as a Member unless all of the following conditions are first satisfied:
(a) a duly executed and acknowledged written
instrument of Transfer is filed with the Company, specifying the Units being
transferred and setting forth the intention of the Member effecting the Transfer
that the Assignee succeed to a portion or all of such Member's Units as a
Member;
(b) the Assignee qualifies as an Accredited
Investor;
(c) if requested by the Board of Managers, the
Assignee delivers to the Company an opinion of counsel, in form and substance
satisfactory to the Board of Managers, to the effect provided in clause (a) of
Section 9.1.4 with respect to the admission of the Assignee as a Member;
-22-
(d) the Member effecting the Transfer and
Assignee execute and acknowledge any other instruments that the Board of
Managers deems necessary or desirable for admission of the Assignee, including
the written acceptance and adoption by the Assignee of the provisions of this
Agreement and execution, acknowledgment and delivery to the Board of Managers of
a special power of attorney as provided in Section 15.4;
(e) the Member effecting the Transfer or the
Assignee pays to the Company a transfer fee sufficient to cover all reasonable
expenses connected with the admission;
(f) Article 9 of this Agreement has been or is
complied with; and
(g) the Board of Managers approves such
admission, which approval may be given or refused in its reasonable discretion.
10.2 Resignation of Member; No Dissolution. If a Member Transfers
all of its interest in the profits, losses and capital of the Company pursuant
to Section 9.1 and the transferee of such interest is admitted as a Member
pursuant to Section 10.1, such Person shall be admitted to the Company as a
Member effective on the effective date of the Transfer or such other date as may
be specified when the Member is admitted, and immediately following such
admission, the transferor Member shall cease to be a Member of the Company.
ARTICLE 11
DISSOLUTION OF COMPANY
11.1 Termination of Company. No Member shall resign or withdraw
from the Company except that, subject to the restrictions set forth in Articles
9 and 10 hereof, any Member may Transfer its Units in the Company to an Assignee
and an Assignee may become a Member in place of the Member which assigned its
Units. If any Member ceases to be a Member for any reason, the business of the
Company shall be continued by the remaining Members.
11.2 Events of Dissolution or Liquidation. The Company shall be
dissolved upon the happening of any of the following events: (a) the written
determination of the Board of Managers or (b) the Sale of the Company.
11.3 Liquidation. Upon dissolution of the Company for any reason,
the Company shall immediately commence to wind up its affairs. A reasonable
period of time shall be allowed for the orderly termination of the Company's
business, discharge of its liabilities, and distribution or liquidation of the
remaining assets so as to enable the Company to minimize the normal losses
attendant to the liquidation process. The Company's property and assets or the
proceeds from the liquidation thereof shall be distributed so as not to
contravene the Act but in compliance with Section 7.2; provided, however, that
Distributions to Members shall be made after their Capital Accounts have been
adjusted to reflect all Net Profits and Net Losses of the Company through the
date of distribution.
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11.4 No Action for Dissolution. The Members acknowledge that
irreparable damage would be done to the goodwill and reputation of the Company
if any Member should bring an action in court to dissolve the Company under
circumstances where dissolution is not required by Section 11.2. This Agreement
has been drawn carefully to provide fair treatment of all parties and equitable
payment in liquidation of the Units of all Members. Accordingly, except where
the Board of Managers has failed to liquidate the Company as required by Section
11.2 and except as specifically provided in the Act, each Member hereby waives
and renounces its right to initiate legal action to seek dissolution or to seek
the appointment of a receiver or trustee to liquidate the Company.
11.5 No Further Claim. Upon dissolution, each Member shall look
solely to the assets of the Company for the return of its capital, and if the
Company's property remaining after payment or discharge of the debts and
liabilities of the Company, including debts and liabilities owed to one or more
of the Members, is insufficient to return the aggregate Capital Contributions of
each Member, such Members shall have no recourse against the Company, the Board
of Managers or any other Member.
ARTICLE 12
INDEMNIFICATION
12.1 General. The Company shall indemnify, defend and hold harmless
the Board of Managers and each member of the Board of Managers, each Member,
including the Tax Matters Member, each Assignee and each such Persons officers,
directors, shareholders, members, partners, employees and agents; and the
employees, officers and agents of the Company (all indemnified persons being
referred to as "Indemnified Persons") from any liability, loss or damage
incurred by the Indemnified Person by reason of any act performed or omitted to
be performed by the Indemnified Person in connection with the business of the
Company and from liabilities or obligations of the Company imposed on such
Person by virtue of such Person's position with the Company, including
reasonable attorneys' fees and costs and any amounts expended in the settlement
of any such claims of liability, loss or damage; provided, however, that if the
liability, loss, damage or claim arises out of any action or inaction of an
Indemnified Person, indemnification under this Section 12.1 shall be available
only if (a) either (i) the Indemnified Person, at the time of such action or
inaction, determined in good faith that its, his or her course of conduct was
in, or not opposed to, the best interests of the Company, or (ii) in the case of
inaction by the Indemnified Person, the Indemnified Person did not intend its,
his or her inaction to be harmful or opposed to the best interests of the
Company, and (b) the action or inaction did not constitute fraud, gross
negligence or willful misconduct by the Indemnified Person or a breach of this
Agreement; and provided, further, that indemnification under this Section 12.1
shall be recoverable only from the assets of the Company and not from any assets
of the Members. THE FOREGOING INDEMNITY IS INTENDED TO INDEMNIFY EACH
INDEMNIFIED PERSON FOR HIS OWN ACTS OF NEGLIGENCE AND SHALL APPLY IRRESPECTIVE
OF ANY CLAIM OF CONCURRENT OR CONTRIBUTORY NEGLIGENCE ON THE PART OF SUCH
INDEMNIFIED PERSON. The Company may pay or reimburse attorneys' fees of an
Indemnified Person as incurred, if such Indemnified Person executes an
undertaking to repay the amount so paid or reimbursed if there is a final
determination by a court of competent jurisdiction that such Indemnified Person
is not entitled to indemnification under this Article 12. The Company may
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pay for insurance covering liability of the Indemnified Persons for negligence
in operation of the Company's affairs.
12.2 Persons Entitled to Indemnity. Any Person who is within the
definition of "Indemnified Person" at the time of any action or inaction in
connection with the business of the Company shall be entitled to the benefits of
this Article 12 as an Indemnified Person with respect thereto, regardless if
such Person continues to be within the definition of "Indemnified Person" at the
time of such Indemnified Person's claim for indemnification or exculpation
hereunder.
12.3 Procedure Agreements. The Company may enter into an agreement
with any of its officers, employees and agents, or the members of the Board of
Managers, setting forth procedures consistent with applicable law for
implementing the indemnities provided in this Article 12.
12.4 Fiduciary and Other Duties. An Indemnified Person acting under
this Agreement shall not be liable to the Company or to any other Indemnified
Person for its good faith reliance on the provisions of this Agreement. The
provisions of this Agreement, to the extent that they restrict the duties
(including fiduciary duties) and liabilities of an Indemnified Person otherwise
existing at law or in equity, are agreed by the parties hereto to replace such
other duties and liabilities of such Indemnified Person.
12.5 Exculpation. No Indemnified Person shall be liable, in damages
or otherwise, to the Company or to any Member for any loss that arises out of
any act performed or omitted to be performed by it or him pursuant to the
authority granted by this Agreement if (a) either (i) the Indemnified Person, at
the time of such action or inaction, determined, in good faith, that such
Indemnified Person's course of conduct was in, or not opposed to, the best
interests of the Company, or (ii) in the case of inaction by the Indemnified
Person, the Indemnified Person did not intend such Indemnified Person's inaction
to be harmful or opposed to the best interests of the Company, and (b) the
conduct of the Indemnified Person did not constitute fraud, gross negligence, or
willful misconduct by such Indemnified Person or a breach of this Agreement.
12.6 Except as otherwise provided by the Act, the debts,
obligations and liabilities of the Company, whether arising in contract, tort or
otherwise, shall be solely the debts, obligations and liabilities of the
Company, and no Indemnified Person shall be obligated personally for any such
debt, obligation or liability of the Company solely by reason of being an
Indemnified Person. All persons dealing with the Company shall look solely to
the assets of the Company for the payment of the debts, obligations or
liabilities of the Company.
ARTICLE 13
REPRESENTATIONS AND COVENANTS BY THE MEMBERS
Each Member hereby represents and warrants to, and agrees with, the
Board of Managers, the other Members and the Company as follows:
13.1 Investment Intent. It is acquiring its Units with the intent
of holding the same for investment for its own account and without the intent or
a view of participating directly or indirectly in any distribution of such Units
within the meaning of the Securities Act or any applicable state securities
laws.
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13.2 Securities Regulation.
13.2.1 It acknowledges and agrees that its Units are being
issued and sold in reliance on the exemption from registration contained in
Section 4(2) of the Securities Act and exemptions contained in applicable state
securities laws, and that its Units cannot and will not be sold or transferred
except in a transaction that is exempt under the Securities Act and those state
acts or pursuant to an effective registration statement under the Securities Act
and those state acts or in a transaction that is otherwise in compliance with
the Securities Act and those state acts.
13.2.2 It understands that it has no contractual right for
the registration under the Securities Act of its Units for public sale and that,
unless its Units are registered or an exemption from registration is available,
its Units may be required to be held indefinitely.
13.3 Knowledge and Experience. It has such knowledge and experience
in financial, tax and business matters as to enable it to evaluate the merits
and risks of its investment in the Company and to make an informed investment
decision with respect thereto.
13.4 Economic Risk. It is able to bear the economic risk of its
investment in its Units.
13.5 Binding Agreement. It has all requisite power and authority to
enter into and perform this Agreement and that this Agreement is and will remain
its valid and binding agreement, enforceable in accordance with its terms
(subject, as to the enforcement of remedies, to any applicable bankruptcy,
insolvency or other laws affecting the enforcement of creditors rights).
13.6 Tax Position. Unless it provides prior written notice to the
Company, it will not take a position on its federal income tax return, in any
claim for refund, or in any administrative or legal proceedings that is
inconsistent with any information return filed by the Company or with the
provisions of this Agreement.
13.7 Information. It has received all documents, books and records
pertaining to an investment in the Company requested by it. It has had a
reasonable opportunity to ask questions of and receive answers concerning the
Company, and all such questions have been answered to its satisfaction.
13.8 Amendments to Agreement. This Agreement may be modified or
amended with the prior written consent of the Board of Managers; provided;
however, that this Agreement may not be amended (a) without the approval of each
Member or Assignee materially adversely affected if the amendment would reduce
any such Person's number of Units or would reduce the allocation to such Person
of the amount of any Net Profit, Net Loss or distribution of cash or property
from that which is provided or contemplated herein, unless (i) such amendment is
being executed to reflect any dilution in such Person's interest resulting from
the issuance of Units as contemplated by Article 3 or to reflect the preference
over any such Units of any new Units issued under Article 3, (ii) such amendment
is being executed to reflect the acceptance of an Assignee as a new Member
pursuant to Article 10 or (iii) such amendment adversely affects all Members
(and their Assignees) equally. Notwithstanding the foregoing sentence,
Amendments to this Agreement that (a) are necessary or desirable to cure any
ambiguity, to correct or
-26-
supplement any provision herein that would be inconsistent with law or with any
other provision herein, or to make any other provision with respect to matters
or questions arising under this Agreement that will not be inconsistent with law
or with the provisions of this Agreement; (b) are necessary or desirable to
satisfy any requirements, conditions or guidelines contained in any opinion,
directive, order, ruling or regulation of any federal or state agency or
contained in any federal or state statute; or (c) contemplated by this Agreement
in Section 2.2 in respect of the name of the Company, Section 2.3 in respect of
the registered office and registered agent of the Company, Section 2.7 in
respect to persons authorized to act on behalf of the Company and Schedule I of
this Agreement, may be made by the Board of Managers without the consent of any
Members, and such amendments and revised Schedule I shall be deemed to
constitute an amendment of this Agreement approved by all of the Members.
All amendments to this Agreement will be sent to each Member and, after
the effective date of the Transfer to such Assignee, to each Assignee promptly
after the effectiveness thereof. Any modification or amendment to this Agreement
pursuant to this Article 13 shall be binding on all Members.
ARTICLE 14
RIGHT TO CONVERT FORM OF COMPANY
14.1 Election. With the prior written consent of the Supermajority
Vote of the Board of Managers, but without any need for consent or approval of
any other Member, the Board of Managers may elect at any time and for any
purpose to require that the Company be converted into a corporation (in
connection with an initial public offering or otherwise), which conversion shall
be effected by merger or by such other form of transaction as may be available
under applicable law. No Member shall have any voting rights with respect to the
election to convert the Company into a corporation or partnership. In such
conversion, the Units of the Members (determined as though such Units included
Distributions to which the Members would then be entitled under Section 11.3 if
the Company were liquidated at the value of the Company determined in connection
with such conversion) as well as any unvested Units shall be the basis for the
allocation of shares or options in the corporation. Upon such an election, the
Members shall as soon as practicable thereafter execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, all instruments
and documents that may be reasonably requested by the Board of Managers to best
effectuate the conversion of the Company to a corporation while continuing in
full force and effect, to the extent consistent with such conversion, the terms,
provisions and conditions of this Agreement, including those provisions granting
the Board of Managers exclusive authority to manage the operations and affairs
of the Company subject to the provisions hereof, restricting the Transfer of
Units, and granting rights to repurchase Units or rights to participate in
certain transactions.
ARTICLE 15
MISCELLANEOUS
15.1 Additional Documents. At any time and from time to time after
the date of this Agreement, upon the request of the Board of Managers, each
Member shall do and perform, or cause to be done and performed, all such
additional acts and deeds, and shall execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, all such
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additional instruments and documents as may be required to effectuate the
purposes and intent of this Agreement.
15.2 General. This Agreement: (a) shall be binding upon the
executors, administrators, estates, heirs and legal successors of the Members;
(b) shall be governed by and construed in accordance with the laws of the State
of Delaware, without regard to principles of conflict of laws; (c) may be
executed in more than one counterpart as of the day and year first above
written; and (d) contains the entire contract among the Members as to the
subject matter hereof. The waiver of any of the provisions, terms or conditions
contained in this Agreement shall not be considered as a waiver of any of the
other provisions, terms or conditions hereof.
15.3 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery or receipt (which may be evidenced by a return receipt if
sent by registered mail or by signature if delivered by courier or delivery
service) addressed (a) if to any Member, at the address of such Member set forth
in the records of the Company or at such other address as such Member shall have
furnished to the Company in writing as the address to which notices are to be
sent hereunder, and (b) if to the Company or to the Board of Managers, to it.
15.4 Execution of Papers. The Members agree to execute such
instruments, documents and papers as the Board of Managers deems necessary or
appropriate to carry out the intent of this Agreement. Each Member, including
each new and substituted Member, by the execution of this Agreement or by
agreeing in writing to be bound by the provisions of this Agreement, irrevocably
constitutes and appoints each member of the Board of Managers and/or any Person
designated by the Board of Managers to act on its behalf for purposes of this
Section 15.4 its true and lawful attorney-in-fact with full power and authority
in its name, place and stead to execute, acknowledge, deliver, swear to, file
and record at the appropriate public offices such documents as may be necessary
or appropriate to carry out the provisions of this Agreement, including but not
limited to:
(a) all certificates and other instruments
(specifically including counterparts of this Agreement), and any amendment
thereof, that the Board of Managers deems appropriate to qualify or continue the
Company as a limited liability company in any jurisdiction in which the Company
may conduct business or in which such qualification or continuation is, in the
opinion of the Board of Managers, necessary to protect the limited liability of
the Members;
(b) all amendments to this Agreement adopted in
accordance with the terms hereof and all instruments that the Board of Managers
deems appropriate to reflect a change or modification of the Company in
accordance with the terms of this Agreement; and
(c) all conveyances and other instruments that
the Board of Managers deems appropriate to reflect the dissolution of the
Company.
The appointment by each Member of each member of the Board of Managers
and/or any Person designated by the Board of Managers as its attorney-in-fact
shall be deemed to be a power coupled with an interest, in recognition of the
fact that each of the Members under this
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Agreement will be relying upon the power of the Board of Managers to act as
contemplated by this Agreement in any filing and other action by it on behalf of
the Company, and shall survive and shall not be affected by the subsequent
disability, incapacity, the bankruptcy, dissolution, death, adjudication of
incompetence or insanity of any Member giving such power and the transfer or
assignment of all or any part of such Member's Units; provided, however, that in
the event of a Transfer by a Member of all of its Units, the power of attorney
given by the transferor shall survive such assignment only until such time as
the Assignee shall have been admitted to the Company as a substituted Member and
all required documents and instruments shall have been duly executed, filed and
recorded to effect such substitution.
15.5 Disputed Matters. Except as otherwise provided in this
Agreement, any controversy or dispute arising out of this Agreement, the
interpretation of any of the provisions hereof, or the action or inaction of any
Member hereunder shall be submitted to arbitration in Houston, Texas, pursuant
to the provisions set forth in Exhibit 15.5 hereto. To the fullest extent
permitted by law, no action at law or in equity based upon any claim arising out
of or related to this Agreement shall be instituted in any court by any Member
except (a) an action to compel arbitration pursuant to this Section 15.5, or (b)
an action to enforce an award obtained in an arbitration proceeding in
accordance with this Section 15.5.
15.6 Gender and Number. Whenever required by the context, as used
in this Agreement the singular number shall include the plural, the plural shall
include the singular, and all words herein in any gender shall be deemed to
include the masculine, feminine and neuter genders.
15.7 Severability. If any provision of this Agreement is determined
by a court to be invalid or unenforceable, that determination shall not affect
the other provisions hereof, each of which shall be construed and enforced as if
the invalid or unenforceable portion were not contained herein. That invalidity
or unenforceability shall not affect any valid and enforceable application
thereof, and each said provision shall be deemed to be effective, operative,
made, entered into or taken in the manner and to the full extent permitted by
law.
15.8 Headings. The headings used in this Agreement are used for
administrative convenience only and do not constitute substantive matter to be
considered in construing the terms of this Agreement.
15.9 No Third Party Rights. The provisions of this Agreement are
for the benefit of the Company, the Board of Managers, the Members and Assignees
and no other Person, including creditors of the Company, shall have any right or
claim against the Company, the Board of Managers or any Member by reason of this
Agreement or any provision hereof or be entitled to enforce any provision of
this Agreement.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Limited Liability
Company Agreement as of the day and year first set forth above.
MEMBERS:
PENN OCTANE CORPORATION
By: _________________________________
Xxx X. Xxxxxxxx
Chief Financial Officer
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SCHEDULE I
Members: Capital Contributions Units Per Unit Value
------- --------------------- ----- --------------
Penn Octane Corporation $1,000 100,000 $.01
Schedule I-1
EXHIBIT 1
DEFINED TERMS
"Accredited Investor" has the meaning assigned to such term under
Regulation D promulgated pursuant to Section 4(2) of the Securities Act.
"Act" shall mean the Delaware Limited Liability Company Act as amended
and in effect from time to time.
"Adjusted Capital Account Deficit" means, with respect to any Member,
the deficit balance, if any, in such Member's Capital Account as of the end of
the relevant Fiscal Year after giving effect to the following adjustments:
(i) credit to such Capital Account any amounts which such Member
is obligated to restore pursuant to any provision of this Agreement or
is deemed to be obligated to restore pursuant to the next to the last
sentences of Regulation Sections 1.704-2(g)(1) and 1.704-2(i)(5) after
taking into account any changes during such year in Company minimum
gain and Member minimum gain (as determined under such Regulations);
and
(ii) debit to such Capital Account the items described in Section
1.704-1 (b)(2)(1)(d)(4), (5) and (6) of the Regulations.
"Adjusted Taxable Income" shall mean the Company's cumulative items of
income or gain less cumulative items of loss or deduction under the Code,
computed from the Effective Date through the date such Adjusted Taxable Income
is being computed, except that gain or loss from a Sale of the Company.
"Affiliate" shall mean, with respect to any specified Person, any
Person that directly or through one or more intermediaries controls or is
controlled by or is under common control with the specified Person. As used in
this definition, the term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract or otherwise.
"Agreement" shall mean this Amended and Restated Limited Liability
Company Agreement of the Company dated as of the Effective Date, as amended from
time to time.
"Assignee" shall mean a Person that has acquired the right from a
Member to (i) share in Net Profit and Net Loss of the Company, (ii) receive
Distributions and (iii) receive the allocation of taxable income, gain, loss,
deductions or credits (and items thereof) of the Company to which the transferor
Member was entitled in accordance with the provisions of Article 9, but has not
been admitted as a Member of the Company in accordance with the provisions of
Article 10.
"Board of Managers" shall mean the board of managers elected and
determined as provided in Section 5.1.
"Book Gain" or "Book Loss" shall mean the gain or loss recognized by
the Company for Code Section 704(b) book purposes in any Fiscal Year or other
period by reason of the sale,
Exhibit 1-1
exchange or other disposition of any Company asset. Such Book Gain or Book Loss
shall be computed by reference to the Book Value of such asset as of the date of
such sale, exchange or other disposition, rather than by reference to the tax
basis of such asset as of such date, and each and every reference herein to
"gain" or "loss" shall be deemed to refer to Book Gain or Book Loss, rather than
to tax gain or tax loss, unless otherwise expressly provided herein.
"Book Value" of an asset shall mean, as of any particular date, the
value at which the asset is properly reflected on the books and records of the
Company as of such date. The initial Book Value of each asset shall be its cost,
unless such asset was contributed to the Company by a Member, in which case the
initial Book Value shall be the Fair Market Value of such asset at the time of
contribution, as agreed to by the Members or determined by the Board of
Managers, and such Book Value shall thereafter be adjusted for Depreciation with
respect to such asset rather than for the cost recovery deductions to which the
Company is entitled for federal income tax purposes with respect thereto.
"Capital Account" is defined in Section 3.2. An Assignee may acquire an
interest in a Capital Account as provided in Section 9.2.
"Capital Contribution" shall mean with respect to any Member, the
amount of money plus the Fair Market Value of any other property (net of
liabilities assumed or to which the property is subject) contributed to the
Company with respect to the Units held by such Member pursuant to the terms of
this Agreement.
"Certificate" shall mean the Certificate of Formation of the Company
and any and all amendments thereto and restatements thereof filed on behalf of
the Company with the office of the Secretary of State of the State of Delaware
pursuant to the Act.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the corresponding provisions of any future federal tax law.
"Combined Effective Marginal Tax Rate" shall mean the highest single
combined rate (expressed as a percentage) of United States federal, state and
local income taxation applicable to any individual residing in California
determined as of the last day of each Tax Estimation Period, without giving
effect to any limitation on the deductibility of state and local taxes and other
itemized deductions in computing United States federal taxable income and
assuming that such individual is subject to the highest United States federal
and highest state and local marginal ordinary income tax rates on all income
allocated by the Company.
"Company" shall mean the Limited Liability Company formed by virtue of
this Agreement and the filing of the Certificate in accordance with the Act.
"Depreciation" shall mean for each Fiscal Year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period for federal
income tax purposes, except if the Book Value of an asset differs from its
adjusted basis for federal income tax purposes at the beginning of any such year
or other period, Depreciation shall be an amount that bears the same
relationship to the Book Value of such asset as the depreciation, amortization,
or other cost recovery deduction computed
Exhibit 1-2
for tax purposes with respect to such asset for the applicable period bears to
the adjusted tax basis of such asset at the beginning of such period, or if such
asset has a zero adjusted tax basis, Depreciation shall be an amount determined
under any reasonable method selected by the Board of Managers, with the advice
of its independent accountants.
"Distribution" shall mean cash or property (net of liabilities assumed
or to which the property is subject) distributed to a Member or an Assignee in
respect of the Member's Units in the Company.
"Economic Interest" shall mean all of the rights of an Assignee with
respect to an Interest.
"Effective Date" shall mean ___________ ___, 2003.
"Equity Kickers" is defined in Section 3.7.1.
"Fair Market Value" means, as of any date, the Board of Managers' good
faith determination of the fair value of one Unit of the applicable class as of
the applicable reference date.
"Fiscal Year" shall mean the fiscal year of the Company, which shall be
the calendar year, or such other fiscal year as determined by the Board of
Managers.
"Indemnified Persons" is defined in Section 12.1.
"Interest" shall mean the entire interest of a Member in the capital,
profits and Distributions of the Company, including any and all rights and
benefits to which a Member may be entitled as provided in this Agreement,
together with the obligations of such Member to comply with all the terms and
provisions of this Agreement.
"Majority Interest" shall mean the vote or consent of the Members
holding a majority of the Units.
"Management Members" shall mean such employees, managers, independent
contractors or consultants of the Company, a Member or its Affiliates, who are
granted Units of the Company in connection with such employment or services
rendered or to be rendered or who acquired such Units pursuant to the exercise
of an option granted in connection with such employment or services rendered or
to be rendered or as an investment in the Company.
"Member Nonrecourse Deductions" shall have the meaning set forth in
Regulation Section 1.704-2(i)(1).
"Members" shall mean the Persons listed as Members on Schedule I to
this Agreement and any other Person that both acquires an Interest in the
Company and is admitted to the Company as a Member of the Company.
"Net Profit" and "Net Loss" shall mean, for each Fiscal Year or other
period, an amount equal to the Company's taxable income or loss, respectively,
for such year or period, determined
Exhibit 1-3
in accordance with Section 703(a) of the Code (taking into account all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code), with the following adjustments:
(i) any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Net Profit or Net
Loss pursuant to this provision shall be added to such taxable income
or loss;
(ii) any expenditures of the Company described in Section
705(a)(2)(B) of the Code (relating to expenditures which are neither
deductible nor properly chargeable to capital) or treated as Code
Section 705(a)(2)(B) expenditures pursuant to Section
1.704-1(b)(2)(iv)(i) of the Regulations, and not otherwise taken into
account in computing Net Profit or Net Loss pursuant to this provision,
shall be subtracted from such taxable income or loss;
(iii) Book Gain or Book Loss from the sale or other disposition of
any asset of the Company shall be taken into account in lieu of any tax
gain or tax loss recognized by the Company by reason of such sale or
other disposition; and
(iv) in lieu of the depreciation, amortization and other cost
recovery deductions taken into account in computing such taxable income
or loss, there shall be taken into account Depreciation for such fiscal
year or other period, computed as provided in this Agreement.
"New Securities" is defined in Section 3.7.1.
"Nonrecourse Deductions" shall have the meaning set forth in Regulation
Section 1.7042(b)(1).
"Permitted Transferee" is defined in Section 9.1.2.
"Person" shall mean an individual, partnership, joint venture,
association, corporation, trust, estate, limited partnership, limited liability
company, limited liability partnership, or any other legal entity.
"Qualified Income Offset" shall have the meaning set forth in
Regulation Section 1.704-1(b)(2)(ii)(d).
"Regulations" shall mean the Treasury regulations, including temporary
regulations, promulgated under the Code, as such regulations may be amended from
time to time (including the corresponding provisions of any future regulations)
as such regulations are applicable to the Company or transactions of the
Company.
"Sale of the Company" shall mean, in each case as determined in good
faith by the Board of Managers, to have been occasioned by, or to have occurred
upon, the acquisition of the Company by another Person by means of any
transaction or series of related transactions (including, without limitation,
any merger, consolidation, sale, assignment, transfer distribution
Exhibit 1-4
or issuance of Units) that results in the Members immediately prior to such
transaction not holding, directly or indirectly, at least 50% of the voting
power of the surviving or continuing entity.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Sole Discretion" means, with respect to any Person, that Person's sole
and absolute discretion, with or without cause, and subject to such conditions
as he shall deem appropriate.
"Supermajority Vote" shall mean the vote or consent of a majority of
the Managers of the Board of Managers.
"Tax Distribution" is defined in Section 7.2.1.
"Tax Estimation Period" shall mean (i) January, February and March (ii)
April and May, (iii) June, July and August, and (iv) September, October,
November and December of each year during the term of the Company, or other
periods for which estimates of individual federal income tax liability are
required to be made under the Code, provided that the Company's first Tax
Estimation Period shall begin on the Effective Date of this Agreement.
"Tax Matters Member" is defined in Section 8.1.
"Transfer" shall mean a sale, assignment, pledge, encumbrance,
abandonment, disposition, contribution, distribution, exchange or other
transfer, including but not limited to, any distribution to partners of any
partnership, shareholders of any corporation or members of any limited liability
company, and may be used either as a verb or a noun.
"Units" shall mean any of the Units of the Company.
Exhibit 1-5
EXHIBIT 5.1
BOARD OF MANAGERS
The Members hereby appoint the following individuals as the members of
the Board of Managers:
XXXXXXX XXXXX, JR.
XXXXXX X. XXXXXXX
Exhibit 5.1-1
EXHIBIT 15.5
ARBITRATION POLICY
1. Disputes Covered. This Arbitration Policy ("Policy") applies to any
claim, dispute or controversy arising out of or relating to the terms
and conditions of any incentive plan, partnership agreement or other
plan, document or agreement that expressly refers to and incorporates
the terms of this Policy; any such claim, dispute or controversy so
covered by the terms of this Policy shall, except as otherwise
expressly provided, be settled by binding arbitration in accordance
with the procedures and conditions set forth herein.
The scope of this Policy is intended to be applied broadly so as to
include any and all disputes, controversies and claims that touch upon
any incentive plan, partnership agreement or other plan, document or
agreement covered by this Policy, whether such disputes, controversies
or claims involve a breach of contract, contract interpretation, tort
law, common law principles or statutes, rules or regulations.
Any dispute, controversy or claim to which this Policy applies is
hereinafter called a "Dispute." A person, corporation or entity who is
subject to this agreement is hereinafter called a "Party."
2. Mediation. The Parties to a Dispute agree to try in good faith to
settle the Dispute by mediation administered by the American
Arbitration Association ("AAA") under its Commercial Mediation Rules
before resorting to binding arbitration. The Parties shall split the
cost of the mediator equally. To qualify as a mediator, the mediator
must be a lawyer admitted to the Bar of any State who has practiced for
at least ten years. Nothing in this clause shall preclude any Party
from initiating arbitration if the mediation does not reach a
resolution within 30 days after the mediation commences.
3. Arbitration. Any Dispute not resolved by mediation shall be finally
resolved by binding arbitration administered by the AAA pursuant to the
Commercial Arbitration Rules of the AAA (the "Rules") as in force at
the time the arbitration is commenced, except as modified by this
Policy. In the event of any conflict between the Rules and this Policy,
the provisions of this Policy will control.
4. Commencement of Arbitration. Subject to prior compliance with paragraph
2 above, any Party may at any time initiate an arbitration hereunder by
giving a written notice ("Demand for Arbitration") to the other Party
at any time consistent with any applicable statutes of limitation.
5. Number of Arbitrators. If the Dispute involves an amount in controversy
less than $500,000, then the arbitration of such Dispute shall be
conducted before one neutral arbitrator. If the Dispute involves an
amount in controversy of $500,000 or more, the arbitration of such
Dispute shall be conducted before a tribunal composed of three neutral
arbitrators. Whether one or three arbitrators is required, the arbitral
tribunal that is to conduct the arbitration is hereinafter called the
"Arbitral Panel."
Exhibit 15.5-1
6. Appointment of Arbitral Panel of One. If an Arbitral Panel of one
neutral arbitrator is to conduct the arbitration, the arbitrator shall
be chosen from a panel of five proposed arbitrators drawn by the AAA.
Each Party shall have the right to exercise unlimited challenges for
cause and two peremptory strikes within ten days of its receipt of the
list of proposed arbitrators. If one panel member remains after strikes
are made, such person shall serve as the arbitrator. If more than one
panel member remains after strikes are made, the AAA shall choose the
arbitrator from the remaining panel members. If all of the panel
members are struck by the Parties pursuant to permitted strikes, the
AAA shall draw successive new panels of five proposed arbitrators and
apply the foregoing procedures with respect to such panel(s) until the
arbitrator is selected.
7. Appointment of Arbitral Panel of Three. If an Arbitral Panel of three
neutral arbitrators is to conduct the arbitration, each Party shall
choose one neutral arbitrator that is chosen from a panel of five
proposed arbitrators drawn by the AAA. Each Party shall give the other
Party written notice of its selection of one neutral arbitrator within
20 days after its receipt of the Demand for Arbitration. The two
arbitrators so selected shall choose the third arbitrator from a panel
of five proposed arbitrators drawn by the AAA. If the two arbitrators
do not agree on the selection of the third arbitrator within ten days
after their receipt of the list of proposed arbitrators, the third
arbitrator shall be selected by the Regional Vice President of the AAA
from the panel proposed by the AAA. The third arbitrator shall serve as
the Chairperson of the Arbitral Panel. If an Arbitral Panel of three
conducts the arbitration, all decisions and rulings, as well as any
interim or final awards, shall be pursuant to the majority vote of the
Arbitral Panel.
8. Place of Arbitration. The place of arbitration shall be Houston, Texas
or such other location as the Parties may mutually agree.
9. Limitations and Laches. The Arbitral Panel is directed to consider any
defense that all or part of the claim is not timely by reason of laches
or statute of limitations as a preliminary issue and to render a
signed, written award determining the merits of such defense before
considering the substantive merits of the arbitration claim, unless the
Arbitral Panel determines that the merits of such defense of laches or
statute of limitations are so intertwined with the substantive merits
of the arbitration claim as to make impractical the determination of
the defense of laches or limitations as a preliminary matter.
10. Preliminary Issues of Law. The Arbitral Panel shall hear and determine
any preliminary issue of law asserted by a Party to be dispositive of
any claim, in whole or part, in the manner of a federal court hearing a
motion to dismiss for failure to state a claim or for summary judgment,
pursuant to such terms and procedures as the Arbitral Panel deems
appropriate.
11. Consolidation of Disputes. Any court with jurisdiction may order the
consolidation of any arbitrable dispute with any related arbitrable
dispute, controversy or claim not covered by this Policy, as the court
may deem necessary in the interests of justice or efficiency or on such
other grounds as the court may deem appropriate.
Exhibit 5.1-2
12. Time of Proceedings. It is the intent of the Parties that, barring
extraordinary circumstances, any arbitration shall be conducted in a
reasonably expeditious manner and shall be concluded, in any event,
within 150 days of the date the Demand for Arbitration is received by
the AAA. Unless the Parties otherwise agree, once commenced, hearings
shall be held four days a week, three weeks a month, with each hearing
day to begin at 9:30 a.m. and to conclude at 4:45 p.m. until the
arbitration is completed. The Parties may upon agreement extend these
time limits, or the Arbitral Panel may extend them if they determine
that the interests of justice otherwise requires. The Arbitral Panel
shall use its best efforts to issue the final award or awards within a
period of 20 days after closure of the proceedings. However, failure to
do so shall not be a basis for challenging the award.
13. Pre-Hearing Conference. Within ten days after the appointment of the
Arbitral Panel, the Arbitral Panel shall hold a pre-hearing conference
to discuss discovery matters, to schedule the hearing, to decide
procedural matters and to address all other questions that may be
presented.
14. Discovery and Evidence. Except as may be modified by the Arbitral Panel
for good cause shown, the following procedures shall be followed in
addition to those set forth within the Rules themselves. At least 20
days before the arbitration, the Parties must exchange a list of
witnesses, including any experts, and copies of all exhibits intended
to be used at the arbitration. Except for good cause, the Arbitral
Panel may refuse to allow into evidence the testimony of any witness
not timely disclosed. In addition, except for good cause, the Arbitral
Panel may exclude from evidence any exhibit not previously tendered to
the opposing Party in a timely fashion. Each Party may take the
deposition of three individuals and any or all expert witnesses
designated by another Party. Additional discovery, including but not
limited to interrogatories and requests for production of documents,
medical or psychological examinations, may be had, upon a showing of
substantial need, where the Arbitral Panel so orders.
15. Record of Hearing. If requested by any Party, the Arbitral Panel shall
keep records of all proceedings and decisions, and a verbatim record of
all oral hearings. The cost of any such transcript will be borne by the
requesting party.
16. Cross-examination. It is the intent of the Parties that the testimony
of witnesses be subject to cross-examination.
17. Evidence. Strict rules of evidence shall not apply in an arbitration
conducted pursuant to this Policy. The Parties may offer such evidence
as they desire and the Arbitral Panel shall accept such evidence as the
Arbitral Panels deems relevant to the issues and accord it such weight
as the Arbitral Panel deems appropriate.
18. Affidavits. The Parties may submit evidence in the form of sworn
affidavits, provided that upon the request of another Party, the Party
submitting the affidavit will make the affiant available for
cross-examination. If the affiant is not made available for
cross-examination, the affidavit shall not be considered as evidence by
the Arbitral Panel except as to matters relating to authentication of
documents or signatures and other such nonmaterial facts except if the
Arbitral Panel finds that the affiant is beyond the control
Exhibit 5.1-3
of the Party offering the affidavit, the affiant is unavailable and the
interests of justice require consideration of the evidence submitted by
the affiant.
19. Punitive Damages Prohibited. The Parties hereby waive any claim to any
damages in the nature of punitive, exemplary, or statutory damages in
excess of compensatory damages, or any form of damages in excess of
compensatory damages, and the Arbitral Panel is specially divested of
any power to award any damages in the nature of punitive, exemplary, or
statutory damages in excess of compensatory damages, or any form of
damages in excess of compensatory damages.
20. Written Opinion. The arbitration award shall be based on and
accompanied by a signed, written opinion containing findings of fact
and conclusions of law. Any arbitrator dissenting from an award or
portion thereof shall issue a dissent stating the reasons for the
dissent. The results of the arbitration, unless otherwise agreed by the
Parties, are confidential and may not be reported by any news agency or
legal publisher or service.
21. Entry of Judgment. A judgment on the arbitration award may be entered
in any court having jurisdiction thereof.
22. Costs. The Party prevailing on substantially all of its claims shall be
entitled to recover its reasonable costs, including the arbitrators'
fees, and its attorneys' fees for the arbitration proceedings, as well
as for any ancillary proceeding, including a proceeding to compel or
enjoin arbitration, to request interim measures or to confirm or set
aside an award.
23. Confidentiality. The Parties and Arbitral Panel shall treat all aspects
of the arbitration proceedings, including without limitation the filing
of any demand, discovery, testimony and other evidence, briefs and the
award, as strictly confidential.
24. Forum Selection. The courts located in the State of Texas shall have
exclusive jurisdiction over an action brought to enforce the rights and
obligations created or arising under this Policy, and each Party
irrevocably submits to the jurisdiction of said courts.
25. Governing Substantive Law. The Arbitral Panel shall apply the
substantive law (and the law of remedies, if applicable) of the State
of Delaware, or federal law or both, as applicable to the claim(s)
asserted. The Arbitral Panel shall recognize all applicable privileges
recognized by the law of the State of Delaware, or federal law or both,
as applicable to the claim(s) asserted. The Parties expressly prohibit
the Arbitral Panel from reaching decisions as amicable
compounder/amiables compositeur, specifically, an Arbitral Panel is not
authorized to xxxxx the application of law in favor of natural equity.
The Arbitral Panel shall have the authority to entertain a motion to
dismiss, a motion for summary judgment and/or a motion for judgment as
a matter of law and shall apply the standards governing such motions
under the Federal Rules of Civil Procedure.
26. Governing Arbitration Law. The law applicable to the validity of the
arbitration clause, the conduct of the arbitration, including any
resort to a court for provisional remedies, the enforcement of any
award and any other question of arbitration law or procedure shall be
the Federal Arbitration Act. The Parties agree that this Policy shall
be amended if, and to
Exhibit 5.1-4
the extent, necessary to cure any defect affecting enforceability of
the duty to arbitrate under the Federal Arbitration Act, it being the
intent of the Parties to resolve any dispute by arbitration.
27. Binding Effect. This Policy shall be binding upon the Parties and their
respective successors, assigns, heirs, personal representatives and
estates.
28. Severability. Should one or more provisions of this Policy be rendered
or declared invalid by reason of any existing or subsequently enacted
legislation, or by a decree of a court of competent jurisdiction, such
invalidation of such provision or provisions hereof shall not affect
the remaining portions of this Policy.
29. Entirety Agreement. This Policy reflects the entire agreement between
the Parties with regard to the subject matter hereof. No Party has made
any promises, guarantees or assurances with respect to the subject
matter hereof except as contained herein.
Exhibit 5.1-5
