AMENDED AND RESTATED OPERATING AGREEMENT
OF
UPSYS-CERPROBE, L.L.C.
by and between
CERPROBE CORPORATION
a Delaware corporation
and
UPSYS
a French corporation
(societe anonyme)
as Members
Dated as of February 12, 1997
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TABLE OF CONTENTS
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ARTICLE I Formation . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Formation . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Intent . . . . . . . . . . . . . . . . . . . . . . . .1
1.3 Definitions . . . . . . . . . . . . . . . . . . . . . .2
1.4 Effective Date. . . . . . . . . . . . . . . . . . . . .2
ARTICLE II General Provisions 2
2.1 Name. . . . . . . . . . . . . . . . . . . . . . . . . .2
2.2 Principal Office and Place of Business. . . . . . . . .2
2.3 Company Purposes. . . . . . . . . . . . . . . . . . . .2
2.4 The Products. . . . . . . . . . . . . . . . . . . . . .2
2.5 Term. . . . . . . . . . . . . . . . . . . . . . . . . .3
2.6 Agent for Service of Process. . . . . . . . . . . . . .3
2.7 Territory . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE III Capital Contributions. . . . . . . . . . . . . . . . . . . . .3
3.1 Capital Contributions by the Members. . . . . . . . . .3
3.2 Additional Capital Contributions. . . . . . . . . . . .3
3.3 Member Loans. . . . . . . . . . . . . . . . . . . . . .3
3.4 Debt/Equity Ratio . . . . . . . . . . . . . . . . . . .4
ARTICLE IV Source and Uses of Cash Flow . . . . . . . . . . . . . . . . .4
4.1 Amount and Time of Distributions. . . . . . . . . . . .4
4.2 Distributions of Available Cash Flow. . . . . . . . . .5
4.3 Distribution Upon Withdrawal. . . . . . . . . . . . . .5
4.4 Return of Capital . . . . . . . . . . . . . . . . . . .5
ARTICLE V Profits and Losses . . . . . . . . . . . . . . . . . . . . . .5
5.1 Profit and Loss Allocations . . . . . . . . . . . . . .5
5.2 Special Tax Allocations . . . . . . . . . . . . . . . .5
5.3 Recharacterization of Fees or Distributions . . . . . .6
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(continued)
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5.4 Allocation of Profits and Losses and Distributions
in Respect of Transferred Interest. . . . . . . . . .7
5.5 Knowledge of Tax Consequences . . . . . . . . . . . . .7
ARTICLE VI Management . . . . . . . . . . . . . . . . . . . . . . . . . .7
6.1 Manager-Managed . . . . . . . . . . . . . . . . . . . .7
6.2 Rights and Powers of the Manager. . . . . . . . . . . .7
6.3 Duties and Responsibilities of the Manager. . . . . . .9
6.4 Actions Requiring a Vote. . . . . . . . . . . . . . . .10
6.5 Related Agreements; Legal Opinion . . . . . . . . . . .12
6.6 Consents and Approvals. . . . . . . . . . . . . . . . .12
6.7 Filing of Documents . . . . . . . . . . . . . . . . . .12
6.8 Indemnification and Liability . . . . . . . . . . . . .12
ARTICLE VII The Members. . . . . . . . . . . . . . . . . . . . . . . . . .14
7.1 Meetings of the Members . . . . . . . . . . . . . . . .14
7.2 Voting of the Members . . . . . . . . . . . . . . . . .14
7.3 Other Business Interests of the Members . . . . . . . .15
7.4 Transaction With Members or Affiliates. . . . . . . . .15
7.5 Rights and Obligations of Members . . . . . . . . . . .15
7.6 Defaulting Member . . . . . . . . . . . . . . . . . . .15
7.7 NonCompetition. . . . . . . . . . . . . . . . . . . . .16
ARTICLE VIII Books, Records, Reports and Accounting . . . . . . . . . . . .16
8.1 Records . . . . . . . . . . . . . . . . . . . . . . . .16
8.2 Fiscal Year and Accounting. . . . . . . . . . . . . . .16
8.3 Statements and Reports. . . . . . . . . . . . . . . . .17
8.4 Preparation of Tax Returns. . . . . . . . . . . . . . .17
8.5 Tax Elections . . . . . . . . . . . . . . . . . . . . .17
8.6 Tax Controversies . . . . . . . . . . . . . . . . . . .17
8.7 Withholding and Tax Advances. . . . . . . . . . . . . .18
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TABLE OF CONTENTS
(continued)
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ARTICLE IX Transfers, Withdrawals, Deadlock . . . . . . . . . . . . . . .19
9.1 Transfers . . . . . . . . . . . . . . . . . . . . . . .19
9.2 Withdrawal of a Member. . . . . . . . . . . . . . . . .19
9.3 Deadlock. . . . . . . . . . . . . . . . . . . . . . . .19
9.4 Consequences of a Deadlock. . . . . . . . . . . . . . .20
ARTICLE X Liquidation and Winding Up . . . . . . . . . . . . . . . . . .20
10.1 Dissolution . . . . . . . . . . . . . . . . . . . . . .20
10.2 Penalty in the Event of Breach of the Agreement . . . .21
10.3 Effects of Dissolution. . . . . . . . . . . . . . . . .21
10.4 Continuation of the Business of the Company
After Dissolution . . . . . . . . . . . . . . . . . .22
10.5 Filing Upon Dissolution . . . . . . . . . . . . . . . .22
10.6 Liquidation . . . . . . . . . . . . . . . . . . . . . .22
10.7 Reasonable Time for Winding Up. . . . . . . . . . . . .23
10.8 Deficit Capital Account . . . . . . . . . . . . . . . .23
10.9 Articles of Termination . . . . . . . . . . . . . . . .23
ARTICLE XI Change of Control. . . . . . . . . . . . . . . . . . . . . . .23
ARTICLE XII Intellectual Property. . . . . . . . . . . . . . . . . . . . .24
12.1 Ownership . . . . . . . . . . . . . . . . . . . . . . .24
12.2 Proprietary Protection. . . . . . . . . . . . . . . . .24
12.3 Confidential Information; Nondisclosure . . . . . . . .25
12.4 Research and Development. . . . . . . . . . . . . . . .26
ARTICLE XIII Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . .26
13.1 Governing Law, Jurisdiction and Venue . . . . . . . . .26
13.2 Notices . . . . . . . . . . . . . . . . . . . . . . . .26
13.3 Severability. . . . . . . . . . . . . . . . . . . . . .26
13.4 Binding Effect. . . . . . . . . . . . . . . . . . . . .27
13.5 Titles and Captions . . . . . . . . . . . . . . . . . .27
13.6 Pronouns and Plurals. . . . . . . . . . . . . . . . . .27
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13.7 No Third Party Rights . . . . . . . . . . . . . . . . .27
13.8 Time is of Essence. . . . . . . . . . . . . . . . . . .27
13.9 Further Assurances. . . . . . . . . . . . . . . . . . .27
13.10 Estoppel Certificates . . . . . . . . . . . . . . . . .27
13.11 Schedules Included in Exhibits; Incorporation
by Reference. . . . . . . . . . . . . . . . . . . . .27
13.12 Amendments. . . . . . . . . . . . . . . . . . . . . . .27
13.13 Creditors . . . . . . . . . . . . . . . . . . . . . . .27
13.14 Representations . . . . . . . . . . . . . . . . . . . .27
13.15 Entire Agreement. . . . . . . . . . . . . . . . . . . .28
13.16 Construction. . . . . . . . . . . . . . . . . . . . . .28
13.17 Remedies Cumulative . . . . . . . . . . . . . . . . . .28
13.18 Arbitration . . . . . . . . . . . . . . . . . . . . . .28
ARTICLE XIV Definitions. . . . . . . . . . . . . . . . . . . . . . . . . .29
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AMENDED AND RESTATED OPERATING AGREEMENT
OF
UPSYS-CERPROBE, L.L.C.
THIS OPERATING AGREEMENT is made and entered into as of the 12th day of
February, 1997, by and between CERPROBE CORPORATION, a Delaware corporation
("Cerprobe"), and UPSYS, a French corporation (societe anonyme) ("Upsys"), as
Members.
RECITALS
A. Upsys is a world leader in the manufacturing and sale of advanced test
probe technology through a line of products known as the Upsys Cobra
Probe.
B. Upsys is engaged in, among other things, the design, engineering and
manufacture of the Products using the Upsys Technology.
C. Cerprobe is a leading manufacturer of probe cards and the present
exclusive distributor for the Products in the United States and the
non-exclusive distributor of the Products in Asia.
D. Cerprobe and Upsys wish to form a joint company in order to engage
exclusively in the assembly, testing, repair and distribution of all
versions of the Products in the Territory, as defined hereafter.
E. Cerprobe and Upsys entered into an operating agreement dated as of
February 12, 1997 relating to the Company and want to amend and restate
the operating agreement.
ARTICLE
I
Formation
1.1 Formation. Cerprobe, on behalf of the parties to this Agreement, will
form the Company by filing Articles of Organization pursuant to the
Arizona Limited Liability Company Act (the "Act"), within five (5) days
of the Effective Date of this Agreement, and the parties will operate
the Company in accordance with the terms and conditions of this
Agreement. Upon the request of the Manager or as required by law, the
parties shall promptly execute all amendments of the Articles of
Organization and all other documents that are needed to enable the
Manager to accomplish all filing, recording, publishing and other acts
necessary or appropriate to comply with all requirements for the
formation and operation of the Company under the Act.
1.2 Intent. It is the intent of the Members that the Company be operated in
a manner consistent with its treatment as a "partnership" for federal
and state income tax purposes. It is also the
intent of the Members that the Company not be operated or treated as a
"partnership" for purposes of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Bankruptcy Code. No Member shall take any action inconsistent with the
express intent of the parties hereto as set forth herein.
1.3 Definitions. Capitalized terms used in this Agreement are defined in
Article XIV.
1.4 Effective Date. This Agreement will become effective (the "Effective
Date") upon the occurrence, on or before May 30, 1997, of both of the
following: (1) approval by each party of the royalty conditions
proposed by IBM for the Products assembled, sold, or repaired by the
Company; and (2) approval by each party of the First Approved Plan and
Budget. The parties shall evidence such agreements in a letter signed
by each party. If the foregoing approvals do not occur on or before May
30, 1997, this Agreement shall terminate and be of no further force or
effect, all without any liability of either party to the other in
connection herewith.
ARTICLE
II
General Provisions
2.1 Name. The name of the Company shall be "Upsys-Cerprobe, L.L.C." or such
other name as the Members unanimously from time to time shall select.
2.2 Principal Office and Place of Business. The Principal Office and place
of business of the Company shall be located at 000 Xxxxx Xxxxxxxx
Xxxxx, Xxxxx, Xxxxxxx 00000, or such other place as the Members
unanimously from time to time shall determine.
2.3 Company Purposes. The Company is being formed to assemble, test, repair
and distribute the Products, designed and manufactured by Upsys, in the
American Territory and in the Asian Territory, under the terms of
Article 2.7 hereafter.
2.4 The Products. The Products utilize Upsys Technology and consist of
three elements: (i) the probes formed in an arc, (ii) space
transformers and (iii) printed circuit boards, used in probing
semiconductor wafers (the "Product Components"). Upsys shall
exclusively be responsible for the design, engineering and manufacture
of the Products and Product Components as a function of client demands.
Certain elements of the Products and Product Components (in particular,
custom-designed space transformers and the printed circuit boards) may
be supplied to Upsys by Cerprobe or by other suppliers, or may be
provided to Upsys by the clients as agreed to by Upsys, after
consultation with Cerprobe, as a function of the client's needs.
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2.5 Term. The term of the Company shall commence on the filing of the
Articles of Organization, the form of which is set forth in Exhibit A,
and shall continue until dissolved in accordance with Section 10.1 of
this Agreement.
2.6 Agent for Service of Process. The name and business address of the
Agent for Service of Process for the Company is Xxxx X. Xxxxxx, Esq.,
X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, P.A., Xxx Xxxx
Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000, or such other
person as the Members shall appoint from time to time.
2.7 Territory. The Company shall assemble the Products in the American
Territory and shall have the right to distribute the Products only as
provided in the Supply Agreement and Distribution Agreement. Due to the
rapid expansion of the market in the Asian Territory, the parties agree
that it may be necessary for the requirements of the Company's business
that a separate structure be established in the Asian Territory. The
parties agree that if it is determined during the term of this
Agreement that such a separate structure is necessary in the Asian
Territory, they shall enter into discussions with a local partner. The
parties agree that in such case, the Supply Agreement and the
Distribution Agreement shall be modified accordingly.
ARTICLE
III
Capital Contributions
3.1 Capital Contributions by the Members. Within fifteen (15) days of the
Effective Date, the Members shall make initial Capital Contributions to
the Company as follows:
Member Amount
------ ------
Cerprobe ________________________ US$122,100
Upsys ________________________ US$100,000
3.2 Additional Capital Contributions. The Members shall make additional
Capital Contributions pro rata based upon their Participating
Percentages as unanimously agreed to by the Members on a case-by-case
basis.
3.3 Member Loans.
3.4 (a) Initial Member Loan. Upon the formation of the Company, the
Members shall collectively lend to the Company a total of
$200,000 (the "Initial Member Loan"). Each Member shall
advance an amount equal to the total loan amount multiplied by
such Member's Participating Percentage.
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(b) Terms of Initial Member Loan. Unless the Members otherwise
agree, the Initial Member Loan shall bear interest at the
Prime Rate plus two percentage points, but not to exceed 12
percent per annum, shall compound annually, shall be fully
recourse, shall have a term not to exceed three years, shall
be prepayable in whole or part at any time without a penalty,
and shall be evidenced by a promissory note executed by the
Manager on behalf of the Company which shall contain such
other terms and conditions as are commercially reasonable and
agreed to by the Members.
(c) Repayment of Member Loans. Unless otherwise agreed by the
Members, the amount of principal and interest payable on the
Initial Member Loan shall be paid from available funds prior
to any distribution to the Members pursuant to Section 4.2.
All payments with respect to the Initial Member Loan shall be
treated as first reducing accrued interest and then principal.
The Company shall make payments to the Members in proportion
to the amount of principal that each Member has advanced with
respect to the Initial Member Loan.
3.4 Debt/Equity Ratio. The Members will try to assure that the Company's
debt to equity ratio does not exceed 1:1. If such debt to equity ratio
exceeds 1:1, the Members will meet and try to establish a plan to
reduce the ratio.
ARTICLE
IV
Source and Uses of Cash Flow
4.1 Amount and Time of Distributions. Distributions of Available Cash Flow
shall be made from time to time as the Members deem proper, but not
less frequently than annually, as set forth in Section 4.2. Unless the
Members otherwise agree, no Available Cash Flow shall be distributed
until all Member Loans are repaid in full. "Available Cash Flow" means
the gross cash proceeds of the Company from any source less principal
and interest payments on all Company debt (including Member Loans),
capital improvements, replacements and contingencies, reasonable
reserves for future expenses, as specifically agreed to by each of the
Members, and any other ordinary and necessary fees, costs and expenses
associated with the Company's business, including without limitation,
inventory costs, lease payments, taxes, utilities, maintenance and
security for the Company's space at Cerprobe's facility, salaries and
fringe benefit costs for Company employees, professional and accounting
services, and other administrative costs, all as set forth in a budget
approved by the Members. Available Cash Flow shall not be reduced by
depreciation, amortization or other similar non-cash allowances, and
shall be increased by any reductions in reserves which, when previously
established, reduced Available Cash Flow.
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4.2 Distributions of Available Cash Flow. The Available Cash Flow shall be
distributed to the Members, pro rata, based upon their Participating
Percentages.
4.3 Distribution Upon Withdrawal. No withdrawing Member shall be entitled
to receive any distribution or the value of such Member's Interest in
the Company as a result of withdrawal from the Company prior to the
liquidation of the Company, except as specifically provided in this
Agreement.
4.4 Return of Capital. No Member shall be entitled to the return of, or
interest on, that Member's Capital Contributions except as provided in
this Agreement.
ARTICLE
V
Profits and Losses
5.1 Profit and Loss Allocations. For each Fiscal Year, the Profits or
Losses of the Company shall be allocated to the Members, pro rata,
based upon their Participating Percentages.
5.2 Special Tax Allocations.
(a) Qualified Income Offset. In the event any Member unexpectedly
receives any adjustment, allocation or distribution described
in paragraph (4), (5) or (6) of Treasury Regulation section
1.704-1(b)(2)(ii)(d), or any other event creates a deficit
balance in such Member's Capital Account in excess of such
Member's share of the Company's minimum gain, items of Company
income and gain shall be specially allocated to the Members in
an amount and manner sufficient to eliminate, to the extent
required by the Treasury Regulations, the Adjusted Capital
Account Deficit of that Member as quickly as possible.
"Adjusted Capital Account Deficit" means with respect to any
Member, the deficit balance, if any, in that Member's Capital
Account as of the end of the relevant Fiscal Year, after given
effect to the following adjustments: (i) credit to that
Capital Account the amount by which that Member is obligated
to restore or is deemed to be obligated to restore pursuant to
the penultimate sentences of Treasury Regulation sections
1.704- 2(g)(1) and 1.704-2(i)(5), and (ii) debit to that
Capital Account the items described in paragraphs (4), (5) and
(6) of Treasury Regulation section 1.704-1(b)(2)(ii)(d). This
definition of Adjusted Capital Account Deficit is intended to
comply with the provisions of Treasury Regulation section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently
therewith. Any special allocations of items of income and gain
pursuant to this Article 5.2(a) will be taken into account in
computing subsequent allocations of income and gain pursuant
to this Article V so that the net amount of any item so
allocated and the income, gain and losses allocated to each
Member pursuant to this Article V will, to the extent
possible, be equal to the net amount that would have
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been allocated to each such Member pursuant to this Article
5.2(a) if such unexpected adjustments, allocations or
distributions had not occurred.
(b) Nonrecourse Deductions. The allocations set forth in Section
5.1 are intended generally to comply with requirements of
Treasury Regulation sections 1.704-1(b) and 1.704-2. If the
Company incurs "nonrecourse deductions" or "partner
nonrecourse deductions" or if there is any change in the
Company's "minimum gain," as those terms are defined in such
Treasury Regulations, the allocation of Profits, Losses and
items thereof to the Members shall be modified as deemed
reasonably necessary or advisable by the Members to comply
with such Treasury Regulations.
(c) Curative Allocation. The allocations set forth in Sections
5.2(a) and (b) (the "Regulatory Allocations") are intended to
comply with certain requirements of Treasury Regulation
sections 1.704-1(b) and 1.704-2. Notwithstanding any other
provision of this Article V (other than the Regulatory
Allocations), the Regulatory Allocations shall be taken into
account in allocating other items of income, gain, loss and
deduction among the Members so that, to the extent possible,
the net amount of such allocation of other items and the
Regulatory Allocations to each Member should be equal to the
net amount that would have been allocated to each such Member
if the Regulatory Allocations had not occurred.
(d) Built-in Gain Allocation. If necessary or required under Code
section 704(c) or Treasury Regulation section
1.704-1(b)(2)(iv)(f), the Members shall make special tax
allocations to account for the variation, if any, between the
adjusted tax basis of an asset and its Gross Asset Value. Any
elections or decisions relating to the allocations under this
Section 5.2(d) shall be made by the Members in any manner that
reasonably reflects the purpose and intention of this
Agreement. Allocations pursuant to this Section 5.2(d) are
solely for purposes of federal, state and local taxes and
shall not affect or in any way be taken into account in
computing any Member's Capital Account or share of Profits,
Losses, other items or distributions pursuant to any provision
of this Agreement.
5.3 Recharacterization of Fees or Distributions. In the event that a
guaranteed payment to a Member is ultimately recharacterized (as the
result of an audit of the Company's return or otherwise) as a
distribution for federal income tax purposes, and if such
recharacterization has the effect of disallowing a deduction or
reducing the adjusted basis of any asset of the Company, then an amount
of Company gross income equal to such disallowance or reduction shall
be allocated to the recipient of such payment. In the event that a
distribution to a Member is ultimately recharacterized (as a result of
an audit of the Company's return or otherwise) as a guaranteed payment
for federal income tax purposes, and if any such recharacterization
gives rise to a deduction, such deduction shall be allocated to the
recipient of the distribution.
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5.4 Allocation of Profits and Losses and Distributions in Respect of
Transferred Interest. If any Interest is transferred, or is increased
or decreased by reason of the admission of a new Member or otherwise,
during any Fiscal Year of the Company, each item of income, gain, loss,
deduction or credit of the Company for such Fiscal Year will be
assigned pro rata to each day in the particular period of such Year to
which such item is attributable (i.e., the day on or during which it is
accrued or otherwise incurred) and the amount of each such item so
assigned to any such day will be allocated to the Member based upon his
or her respective Interest at the close of the day. However, for the
purpose of accounting convenience and simplicity, the Company will
treat a transfer of, or an increase or decrease in, an Interest which
occurs at any time during a semi-monthly period (commencing with the
semi-monthly period that includes the date of this Agreement) as having
been consummated on the last day of such semi-monthly period,
regardless of when during such semi-monthly period such transfer,
increase or decrease actually occurs (e.g., sales and dispositions made
during the first fifteen (15) days of any month will be deemed to have
been made on the fifteenth (15th) day of the month). Notwithstanding
any provision above to the contrary, gain or loss of the Company
realized in connection with a sale or disposition of any of the assets
of the Company will be allocated solely to the parties owning Interests
as of the date such sale or other disposition occurs.
5.5 Knowledge of Tax Consequences. The Members are aware of the income tax
consequences of the allocations made by this Article V and the economic
impact of the allocations on the amounts receivable by them under this
Agreement. The Members hereby agree to be bound by the provisions of
this Article V in reporting their share of Company income and loss for
income tax purposes.
ARTICLE
VI
Management
6.1 Manager-Managed. The Members agree that the management of the Company
shall be vested in a Manager. The Members agree that a wholly-owned
Cerprobe subsidiary shall be the Manager ("Cerprobe Subsidiary").
6.2 Rights and Powers of the Manager.
(a) Exclusive Rights in Manager. Except as otherwise provided in
this Agreement or the Related Agreements, the Manager shall
have full, exclusive and complete power to manage and control
the business and affairs of the Company and shall have all of
the rights and powers provided to a manager of a limited
liability company by law, including the power to execute
instruments and documents and to take any other actions on
behalf of the Company; provided, however, that such actions
are
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consistent with an Approved Plan and Budget, this Operating
Agreement and the Articles of Organization.
(b) Approved Plan and Budget. The Manager shall establish, subject
to the unanimous written approval of the Members, a business
plan and a budget for each Fiscal Year as long as not
inconsistent with this Agreement or the Related Agreements
(the "Agreements"). The Manager may take any action consistent
with the Approved Plan and Budget and the Agreements. Within
45 days prior to the expiration of any Approved Plan and
Budget, or if the Manager proposes to take any action that
deviates from the Approved Plan and Budget, the Manager shall
prepare and submit to the Members for review and approval a
revised or new plan and budget. Within 21 days after receiving
such new or revised plan and budget from the Manager, the
Members shall, by written notice to the Manager, either
approve the new or revised plan and budget or state the
reasons for not approving the new or revised plan and budget.
If any Member fails to approve or disapprove a revised or new
plan and budget within the time period mentioned hereabove,
then such Member's approval shall be presumed. If any Member
disapproves of any new or revised plan and budget, then the
Members shall meet within 10 days after such notice that such
plan and budget was not approved and seek in good faith to
agree upon acceptable revisions to the new or revised plan and
budget. If the Members cannot agree on a revised plan and
budget, the Manager may take only those actions or incur those
obligations that are consistent with the existing plan and
budget. If the Members cannot agree upon a new plan and budget
and the existing plan and budget has expired, the Manager may
take only those actions or incur those obligations that are
consistent with the prior plan and budget, until such time as
a new plan and budget has been approved; provided, however,
that any existing plan and budget deemed in effect shall
automatically be adjusted for increases, if any, in
Non-discretionary Expenditures. "Non-discretionary
Expenditures" shall mean expenditures to third parties (other
than Affiliates of a Member), that are beyond the reasonable
control of the Manager, including, but not limited to,
required debt service, taxes, utilities and insurance. Should
the Members not be able to agree on a new plan or budget after
two consecutive meetings on the subject, it will be considered
a Deadlock under the terms of Articles 9.3 and 9.4 of this
Agreement.
(c) Reliance by Third Parties. Any third party shall be entitled
to rely on all actions of the Manager and shall be entitled to
deal with the Manager as if it was the sole party in interest
therein, both legally and beneficially. Every instrument
purporting to be the action of the Company and executed by the
Manager shall be conclusive evidence in favor of any person
relying thereon or claiming thereunder that, at the time of
delivery thereof, this Agreement was in full force and effect
and that the execution and delivery of that instrument is duly
authorized by such Manager and the Company.
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(d) Banking Resolution. The Members hereby unanimously authorize
the Manager to open all banking accounts as its deems
necessary and to enter into any deposit agreements as are
required by the financial institution at which such accounts
are opened. The Manager and any of its representatives
designated in writing shall have signing authority with
respect to such banking accounts. Checks shall be drawn upon
the Company account or accounts only for the purposes of the
Company and shall be signed by duly authorized representatives
of the Company designated by the Manager with the approval of
the Members. All checks of an amount of USD $ 10,000 or more
must be signed jointly by two authorized representatives of
the Company. The funds of the Company shall not be commingled
with the funds of any other individual or legal entity. Funds
deposited into such accounts shall be used only for the
business of the Company.
6.3 Duties and Responsibilities of the Manager. The Manager shall devote
all of its time to the Company and may not engage in businesses or
ventures which are competitive with that of the Company. The Manager
shall be responsible for implementing or causing to be implemented the
following:
(a) Performing all normal business functions and otherwise
operating and managing the business and affairs of the Company
in accordance with and as limited by this Agreement and the
Related Agreements;
(b) Protecting the interests of the Company and its property,
improvements and other assets;
(c) Preparing a proposed business plan and budget for each Fiscal
Year;
(d) To the extent that funds of the Company are available, paying
all taxes, assessments, rents and other impositions applicable
to the Company's property;
(e) Causing all books of account and other records of the Company
to be kept in accordance with the terms of this Agreement;
(f) Preparing and delivering to each Member all reports required
by the terms of this Agreement;
(g) To the extent that funds of the Company are available, paying
all debts and other obligations of the Company as they come
due;
(h) Maintaining all funds of the Company in a Company account in a
bank or banks, and being the signatory to such account or
accounts;
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(i) Making distributions periodically to the Members in accordance
with the provisions of this Agreement;
(j) Undertaking such actions as are necessary or desirable so that
the Company, within reason, promptly complies with all
material present and future laws, ordinances, orders, rules,
regulations and requirements of all governmental authorities
having jurisdiction which may be applicable to the Company,
its property, and the operations and management of the
Company; and
(k) Performing all other duties required by this Agreement and the
Related Agreements to be performed by the Manager.
6.4 Actions Requiring a Vote. The Manager shall not undertake any of the
following acts ("Major Decisions") without the unanimous written
approval of the Members:
(a) Making any direct or consequential change in a Member's rights
under this Agreement or any Related Agreement between the
Company and a Member or its Affiliate;
(b) Implementing any significant changes in the organization of
the Company;
(c) Appointing or terminating key officers and executives of the
Company or determining the remuneration of such officers and
executives;
(d) Dissolving the Company pursuant to Section 10.1(b);
(e) Amending the Articles of Organization, this Operating
Agreement or the Related Agreements;
(f) Changing the Company's Fiscal Year or accounting period,
accounting method or the nomination or replacement of the
external auditors;
(g) Changing the business or purpose of the Company as set forth
in Section 2.3, including, but not limited to, the expansion
into new markets outside of the Territory;
(h) Approving any proposed business plan or budget, or approving
quarterly updates, the annual accounts, or modifying or
revising any Approved Plan and Budget;
(i) Selling, transferring or exchanging substantial assets of the
Company other than in the ordinary course of business;
(j) Incurring any liabilities by the Company extending for a
period in excess of one year;
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(k) Incurring any liabilities by the Company, for any period of
time, in an amount exceeding $25,000 other than in the
ordinary course of business and within the Approved Plan and
Budget;
(l) Making loans on behalf of the Company or causing the Company
to guarantee the obligations of others;
(m) Creating any mortgage, pledge, security interest, charge, lien
or other encumbrance upon all or part of the Company's
property or assets;
(n) Entering into or modifying any licensing, sub-licensing or
distribution agreements;
(o) Modifying the purchase price and/or general conditions of
sales, including the payment terms, of the Products provided
in the Distribution Agreement;
(p) Making or giving any warranties by the Company other than in
the ordinary course of business;
(q) Initiating any suit or judicial, administrative or arbitration
proceeding in the Company's name, or abandoning or settling
any claim of the Company, except with respect to labor or
commercial matters arising in the ordinary course of business;
(r) Purchasing, acquiring or owning the shares or any other
capital or equity interest in, or the debt securities of, any
other Person;
(s) Making any capital investment or improvement in an amount
exceeding $25,000 other than an investment or improvement
contained in the Approved Plan and Budget for the Fiscal Year
in which it is made;
(t) Entering into or amending any contracts or agreements between
the Company and any Member or any Affiliate of a Member,
including, but not limited to, determining or varying the
consideration provided for therein;
(u) Entering into or amending any contracts or agreements between
the Company and any other Person providing for the
distribution of the Products in any country inside or outside
of the Territory, including, but not limited to, determining
or varying the consideration provided for therein;
(v) Approving any retirement, deferred compensation or pension
plans for employees of the Company;
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(w) Executing any bond in the Company's name other than in the
ordinary course of business;
(x) Using the Company's funds or capital in any way other than for
the business and purpose of the Company as set forth in
Section 2.3;
(y) Commingling any Company funds or capital with the funds of any
other Person;
(z) Making any publications or press releases with respect to the
Company, the Company's business or any transactions,
communications or disputes between the Members; or
(aa) Taking any other action which this Agreement or any Related
Agreement specifically requires to be unanimously approved in
writing by the Members.
6.5 Related Agreements; Legal Opinion. Within five (5) days of the
Effective Date, the Members and the Company shall enter into those
Related Agreements to which they are a party and Cerprobe will cause
the Legal Opinion to be delivered to Upsys substantially in the form
provided in Exhibit E.
6.6 Consents and Approvals. Except as otherwise provided herein, consent or
approval by a Member with respect to actions of the Manager shall not
be unreasonably withheld, and any request or consent or approval or
refusal to consent or approve shall be in writing and shall specify
with particularity the reasons therefor. The Manager shall provide
timely written notice to each Member of each proposed action requiring
the consent or approval of the Members, which notice shall specify with
reasonable particularity the decisions to be made by the Members, the
recommendation of the Manager with respect thereto, and a summary of
the reasons supporting the Manager's recommendation.
6.7 Filing of Documents. The Manager shall file or cause to be filed all
certificates or documents as may be determined by such Manager to be
necessary or appropriate for the formation, continuation, qualification
and operation of a limited liability company in the State of Arizona
and any other state in the Territory in which the Company may elect to
do business. To the extent that the Manager determines the action to be
necessary or appropriate, such Manager shall do all things to maintain
the Company as a limited liability company under the laws of the State
of Arizona and any other state in the Territory in which the Company
may elect to do business.
6.8 Indemnification and Liability.
(a) Company Indemnification. The Manager, and the Members (each of
the foregoing being referred to herein as an "Indemnitee"),
shall be indemnified, defended and held harmless by the
Company for, from and against any and all losses, claims,
damages,
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liabilities, expenses (including attorneys' fees and costs),
judgments, fines, settlements, demands, actions, or suits
relating to or arising out of the business of the Company, or
the exercise by the Member of any authority conferred on it
hereunder or the performance by the Member of any of its
duties and obligations hereunder. Notwithstanding anything
contained in this Agreement to the contrary, no Indemnitee
shall be entitled to indemnification hereunder with respect to
any claim, issue or matter: (i) in respect of which it (or the
Company as the result of an act or omission of it) has been
adjudged liable for fraud, negligence or wilful and wanton
misconduct; or (ii) based upon or relating to a material
breach by it of any term or provision of this Agreement or any
Related Agreement.
(b) Liability. The Members shall not be liable, responsible,
accountable in damages or otherwise to the Company or the
Members for any act or failure to act in connection with the
Company and its business unless the act or omission is
attributed to negligence, wilful and wanton misconduct or
fraud or constitutes a material breach by such Manager or
Member of any term or provision of this Agreement or any
Related Agreement.
(c) Terms of Indemnification. Each indemnity provided for under
this Agreement shall be subject to the following provisions:
(i) The indemnity shall cover the costs and expenses of
the indemnitee, including reasonable attorneys' fees
and court costs, related to any actions, suits or
judgments incident to any of the matters covered by
such indemnity as provided in Section 6.8(a)
hereabove.
(ii) The indemnitee shall notify the indemnitor of any
claim against the indemnitee covered by the indemnity
within 45 days after the indemnitee has notice of
such claim, but failure to notify the indemnitor
shall in no case prejudice the rights of the
indemnitee under this Agreement unless the indemnitor
shall be prejudiced by such failure and then only to
the extent the indemnitor shall be prejudiced by such
failure. The indemnitor will inform the indemnitee of
its action with respect to any claim. Should the
indemnitor fail to discharge or undertake to defend
the indemnitee against such liability within sixty
(60) days, upon learning of the same, then the
indemnitee may settle such liability, and the
liability of the indemnitor hereunder shall be
conclusively established by such settlement, which
amount of such liability shall include both the
settlement consideration and the reasonable costs and
expenses, including attorneys' fees, incurred by the
indemnitee in effecting such settlement.
(iii) No indemnity hereunder shall be construed to limit or
diminish the coverage of any Manager or any Member
under any insurance obtained by the
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Company. Payment shall not be a condition precedent
to any indemnification provided in this Agreement.
ARTICLE
VII
The Members
7.1 Meetings of the Members. The Members will meet at least twice per
calendar year. Each Member will appoint two delegates to such meetings,
it may change delegates at any time at its sole option upon
notification to the other Member and to the Company. Upsys's initial
delegates will be Xxxx-Xxxxxx Xxxx and Philippe Oudot, and Cerprobe's
initial delegates will be X. Xxxx Close and Xxxxxxx X. Xxxxxx. Meetings
of the Members will also be held on the call of any Member; provided
that at least seven days' notice shall be given to all Members with
respect to any meeting, including an annual meeting; and further
provided that any Member may require that such meeting be held by
telephone. A waiver of any required notice shall be equivalent to the
giving of such notice if such waiver is in writing and signed by the
Person entitled to such notice, whether before, at or after the time
stated therein. The Members may make use of telephones and other
electronic devices to hold meetings, provided that each Member may
simultaneously participate with the other Members with respect to all
discussions and votes of the Members. The Members may act without a
meeting if the action taken is reduced to writing (either prior to or
thereafter) and approved and signed by the required vote of Members in
accordance with the other voting provisions of this Agreement. Written
minutes shall be taken at each meeting of the Members.
7.2 Voting of the Members.
(a) Number of Votes. The total number of votes to be cast on any
issue requiring a vote of the Members shall be 100, with each
Member entitled, in the aggregate, to the number of votes
equal to such Member's Participating Percentage multiplied by
100.
(b) Required Vote. Unless the specific language of this Agreement
expressly states otherwise, all votes, actions, approvals,
elections and consents required in this Agreement to be made
by "the Members" shall be effective when approved by a
Majority Vote. If all or any portion of an Interest is
transferred to an assignee who does not become a Member, the
Member from whom the Interest is transferred shall no longer
be entitled to vote the Interest transferred nor shall the
transferred Interest be considered outstanding for any purpose
pertaining to meetings or voting. All voting rights of a
Member shall immediately cease upon the Withdrawal Event of
that Member.
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7.3 Other Business Interests of the Members. This Agreement shall not be
construed to grant any right, privilege or option to a Member to
participate in any manner in any other business, corporation,
partnership or investment in which the other Member may participate,
including those which may be the same as or similar to the Company's
business or in direct competition therewith. Each Member expressly
waives the doctrine of corporate opportunity (or any analogous
doctrine) with respect to any other such business, corporation,
partnership or investment of any other Member or Affiliate. Each Member
hereby acknowledges that a Member may engage in businesses or
activities in the Territory that may be in direct competition with the
Company's business, except as concerns products that use the same Upsys
Technology as the Products and as provided in Article 7.7 hereafter.
7.4 Transaction With Members or Affiliates. A Member or Affiliate thereof
shall have the right to contract or otherwise deal with the Company in
connection with the sale of goods or services by the Member or its
Affiliate to the Company only where the compensation paid or promised
for such goods or services is reasonable and the terms for the
furnishing of such goods or services is at least as favorable to the
Company as would be attainable in an arm's-length transaction with
third parties.
7.5 Rights and Obligations of Members.
(a) Limitation of Liability. Each Member's liability for the debts
and obligations of the Company shall be limited as set forth
in the Act and other applicable law.
(b) List of Members. Upon written request of any Member, the
Manager shall provide a list showing the names and last known
addresses of all Members in the Company.
(c) Company Records. Upon written request, each Member shall have
the right, during ordinary business hours, to inspect and copy
the Company records required to be maintained by the Manager
at the Company's Principal Office as set forth in Section 8.1
hereof as well as any other documents pertinent to the
activity of the Company.
7.6 Defaulting Member.
(a) Events of Default. The occurrence of any of the following
events shall constitute an event of default and the Member so
defaulting (herein referred to as the "Defaulting Member")
shall (except as otherwise provided in Section 7.6(a)(iv)
hereof) thereafter be deemed to be in default without any
further action whatsoever on the part of the Company or the
other Member: (i) attempted dissolution of the Company by any
Member other than pursuant to the provisions contained
elsewhere in this Agreement; (ii) the Bankruptcy of a Member;
(iii) a Withdrawal Event of a Member; or (iv) failure of any
Member to perform any obligation, act or acts required of that
Member by the provisions of this Agreement, which shall be
necessary for or in connection with the fulfillment of the
purposes of the Company, or a violation or a
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breach of any of the other terms or provisions of this
Agreement; provided, however, that a Member shall not be
deemed to be in default of this Section 7.6(a)(iv) until after
30 days' written notice thereof, and, if such default is a
nonmonetary default and cannot reasonably, with due diligence
and in good faith, be cured within said 30-day period, and if
the Defaulting Member immediately commences and proceeds to
complete the cure of such default with due diligence and in
good faith, the 30-day period with respect to such default
shall be extended to 60 days to cure such default.
(b) Remedies on Default. Upon the occurrence of a default by a
Member, the non-Defaulting Member shall have all the rights
and remedies available at law and equity and may institute
arbitration against the Defaulting Member with respect to any
damages or losses incurred by the non-Defaulting Member in
addition to the termination rights as per Article 10.1(h).
7.7 Non-Competition. Each Member agrees and undertakes not to, either
directly or indirectly via its Affiliates, manage or carry or otherwise
conduct or acquire a share holding in excess of 5% in any business in
competition with the business of the Company in the Territory (defined
for the purposes of this Article 7.7 as the manufacture, marketing,
distribution, repair or sale of products that use the same Upsys
Technology as the Products), so long as such Member or its Affiliates
shall hold Shares of the Company.
ARTICLE
VIII
Books, Records, Reports and Accounting
8.1 Records. The Manager shall keep or cause to be kept at the Principal
Office of the Company the following: (a) a current list of the full
name and last known business, residence or mailing address of each
Member, (b) a copy of the initial articles of organization and all
amendments thereto, (c) copies of all written agreements and all
amendments to the agreements, including any prior written agreements no
longer in effect, (d) copies of any written and signed promises by a
Member to make Capital Contributions to the Company, (e) copies of the
Company's federal, state and local income tax returns and reports, if
any, for the three most recent years, (f) copies of any prepared
financial statements of the Company for the three most recent years,
and (g) minutes of every meeting of the Members as well as any written
consents of Members or actions taken by Members without a meeting. Any
such records maintained by the Company may be kept on or be in the form
of any information storage device, provided that the records so kept
are convertible into legible written form within a reasonable period of
time.
8.2 Fiscal Year and Accounting. The Fiscal Year of the Company shall be the
calendar year. All amounts computed for the purposes of this Agreement
and all applicable questions concerning the rights of Members shall be
determined using the method of accounting
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unanimously agreed to by the Members, as provided in Article 6.4
hereabove. All decisions as to other accounting matters, including the
selection of the Company's independent auditors and accountants, shall
be made by the unanimous decision of the Members.
8.3 Statements and Reports.
(a) Annual Reports. Within 15 days after the close of each Fiscal
Year, the Manager shall cause to be furnished to the Members,
reports containing unaudited financial statements of the
Company for the Fiscal Year, presented in accordance with
generally accepted accounting principles or tax accounting
principles, consistently applied. Within 45 days after the
close of each Fiscal Year, the Manager shall cause to be
furnished to the Members as of the last day of that Fiscal
Year reports containing audited financial statements of the
Company for the Fiscal Year, presented in accordance with
generally accepted accounting principles or tax accounting
principles, consistently applied.
(b) Quarterly Reports. Within 10 days after the close of each
fiscal quarter, the Manager shall cause to be furnished to the
Members as of the last day of that fiscal quarter, reports
containing unaudited financial statements of the Company for
such fiscal quarter, presented in accordance with generally
accepted accounting principles or tax accounting principles,
consistently applied.
(c) Monthly Reports. Within 10 days after the end of each month,
the Manager shall cause to be furnished to the Members,
unaudited, monthly operating statements for the applicable
month.
8.4 Preparation of Tax Returns. The Manager shall arrange for the
preparation and timely filing of all returns of Company income, gains,
deductions, losses and other items necessary for federal and state
income tax purposes and shall cause to be furnished to the Members the
tax information reasonably required for foreign, federal state and
local income tax reporting purposes. The classification, realization
and recognition of income, gain, losses and deductions and other items,
for federal income tax purposes, shall be on that method of accounting
as agreed to by the Members.
8.5 Tax Elections. The Members shall determine whether to make any
available elections pursuant to the Code.
8.6 Tax Controversies. Subject to the provisions hereof, the Cerprobe is
designated the Tax Matters Member, and is authorized and required to
represent the Company (at the Company's expense) in connection with all
examinations of the Company's affairs by tax authorities, including
resulting administrative and judicial proceedings, and to expend
Company funds for professional services and costs associated therewith.
The Members agree to cooperate with the Tax Matters Member and to do or
refrain from doing any or all things reasonably
-17-
required by the Tax Matters Member to conduct those proceedings. The
Tax Matters Member agrees to promptly notify the other Member upon the
receipt of any correspondence from any foreign, federal, state or local
tax authorities relating to any examination of the Company's affairs.
The Tax Matters Member shall be prohibited from entering into any
settlement or arrangement on behalf of the Company with respect to any
foreign, federal, state or local tax authorities without the express
written approval of the other Member.
8.7 Withholding and Tax Advances.
(a) Authority to Withhold. To the extent the Company is required
by law to withhold or to make tax payments on behalf of or
with respect to a Member (e.g., (i) backup withholding, (ii)
withholding with respect to Members that are neither citizens
nor residents of the United States, or (iii) withholding with
respect to Members that are not residents of the State of
Arizona) ("Tax Advances"), the Company may withhold such
amounts and make such tax payments as may be required.
(b) Repayment of Tax Advances. All Tax Advances made on behalf of
a Member will, at the option of the concerned Member, either
be (i) promptly paid to the Company by that Member, or (ii)
repaid by reducing the amount of the current or next
succeeding distribution or distributions which would otherwise
have been made to that Member (or, if such distributions are
not sufficient for that purpose, by so reducing the proceeds
of liquidation otherwise payable to that Member). Whenever the
Manager selects option (ii) pursuant to the preceding sentence
for repayment of a Tax Advance by a Member, for all other
purposes of this Agreement such Member will be treated as
having received all distributions (whether before or upon
liquidation) unreduced by the amount of such Tax Advance.
(c) Indemnification. Each Member hereby agrees to indemnify and
hold harmless the Company and the Manager for, from and
against any liability with respect to Tax Advances made on
behalf of or with respect to such Member. However, the Company
and the Manager shall remain fully responsible as concerns the
tax return preparations, elections, representation of the
Company for controversies and withholding obligations as
provided in this Section 8.7.
(d) Certification. Each Member will promptly give the Company any
certification or affidavit that the Manager may request in
connection with this Section 8.7.
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ARTICLE
IX
Transfers, Withdrawals, Deadlock
9.1 Transfers.
(a) Restrictions. A Member shall not make any direct or indirect
Transfer of all or any portion of its Interest including,
without limitation, a Transfer of a right to Profits, Losses
or distributions to a Transferee unless the requirements of
Section 9.1(b) hereof have been complied with. If a Member
purports to transfer its Interest in breach of this Section
9.1, such purported Transfer shall be void and of no effect.
(b) Requirements for Transferee Becoming a Substituted Member. No
Transferee, including an Affiliate, shall become a substituted
Member in the Company unless the following conditions
precedent are satisfied: (i) each Member, in their sole
discretion, shall have consented in writing to the Transferee
becoming a Member; (ii) the Transferee shall have assumed any
and all of the obligations under this Agreement and the
Related Agreements with respect to the Interest to which the
Transfer relates; (iii) all reasonable expenses required in
connection with the Transfer shall have been paid by or for
the account of the Transferee; and (iv) all agreements,
articles, minutes, written consents and all other necessary
documents and instruments shall have been executed and filed
and all other acts shall have been performed which the other
Member deems necessary to make the Transferee a substitute
Member of the Company and to preserve the status of the
Company as a limited liability company.
9.2 Withdrawal of a Member. A Member shall not have the right to withdraw
from the Company. If a Member withdraws from the Company in breach of
this Agreement ("Withdrawn Member"), that Member shall not be entitled
to receive the value of its Interest; rather, the Company shall have
the right to admit a new Member and continue the Company, and the
Withdrawn Member shall be treated as an assignee of its Interest and
shall have no Member rights except the right to continue to receive
distributions pursuant to Articles IV and X to the extent the Company
is continued pursuant to Section 10.1(d); provided, however, that any
damages incurred by the Company or the other Member as a result of a
Withdrawal Event of a Member shall be offset against any amounts
distributable by the Company to the Withdrawn Member.
9.3 Deadlock.
(a) For the purposes hereof, the term "Deadlock" shall mean a
fundamental and protracted failure of the Members to agree on
a common course of action for the Company after two
consecutive meetings of the Members which disagreement
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threatens the fundamental interest of one of the Members or a
Major Decision as listed in Article 6.4 above and which cannot
be resolved in good faith by mutual agreement within thirty
(30) days of the first meeting of the Members at which the
issue is voted upon.
(b) It is expressly agreed that the term Deadlock shall include:
(i) the failure of either Member to have at least one of
its delegates be present or represented at two
consecutive meetings of the Members; or
(ii) the failure of the Members to agree on a Major
Decision.
9.4 Consequences of a Deadlock. In the event of the occurrence of a
Deadlock, the Company shall be liquidated and wound up in accordance
with this Agreement, the Articles of Organization and the Act, and the
Company shall not be continued as would otherwise be permitted by
Section 10.4 of this Agreement.
ARTICLE
X
Liquidation and Winding Up
10.1 Dissolution. The Company shall dissolve only upon:
(a) December 31, 2046;
(b) the unanimous written consent of the Members;
(c) upon the acquisition by one Person of all of the outstanding
Interests, except as allowed under Section 10.4;
(d) upon any Withdrawal Event of a Member, unless the business of
the Company is continued by the consent of all remaining
Members given within 90 days after the discovery by one or
more such remaining Members of such Withdrawal Event;
(e) the occurrence of any event which makes it unlawful for the
business of the Company to be carried on or for the Members to
carry on that business in the Company;
(f) the sale or other disposition of all or substantially all of
the Company's assets and properties and the collection of all
notes received in connection with such sale or other
disposition;
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(g) the Bankruptcy of any Member;
(h) the breach of this Agreement or any Related Agreement by a
Member, but only after written notice by the non-breaching
Member to the breaching Member and only if such breach is not
remedied within 60 days after written notice of such breach;
(i) at any time after 18 months from the execution of this
Agreement, by any Member upon six months' prior written notice
to the other Members;
(j) Deadlock;
(k) should the Company not be considered by the federal or Arizona
tax authorities as qualifying as a partnership; or
(l) should IBM terminate the License Agreement with Upsys.
10.2 Penalty in the Event of Breach of the Agreement. The Members expressly
agree that the material breach of this Agreement would cause a
considerable prejudice to the non-breaching Member which would be
difficult to evaluate; the Members therefore agree that, in addition to
the right to dissolve the Company as per Section 10.1 hereabove, any
material breach of this Agreement by either of the Members during the
term thereof, will oblige the breaching Member, without the need for
the non-breaching Member to prove any other act other than material
breach, to pay the non-breaching Member a penalty equal to the Capital
Contribution of the non-breaching Member as well as the non-reimbursed
amounts of any loans by such Member to the Company, which had been
unanimously approved as provided in Section 6.4(t) hereabove. This
penalty is in addition to any other remedies under the terms of this
Agreement.
10.3 Effects of Dissolution. If the Company is dissolved for any reason set
forth in Section 10.1, the dissolution shall give rise to following
events:
(a) Termination of Related Agreements. All Related Agreements
shall automatically terminate.
(b) Return of Inventory. The Company may return to Upsys the
inventory of standard unused and non-obsolete Product
Components purchased from Upsys, but such returned inventory
shall be limited to 45 days of inventory of such components
measured by the average inventory for the prior six months of
operations and the refund payable or creditable by Upsys for
such returned inventory shall be an amount equal to 85 percent
of the purchase price originally paid by the Company for such
items.
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(c) Completion of Pending Orders. Notwithstanding the automatic
termination of the Related Agreements, the Company is
authorized to finish orders it is in the process of filling
for a time period to be agreed upon by the Members, which time
period shall not be less than 60 days.
(d) Use of Upsys Intellectual Property Rights. Neither the Company
nor Cerprobe shall have the right to use the Upsys Technology
in the Territory or elsewhere. Nothing in this Agreement or in
any of the Related Agreements shall be interpreted to prohibit
Cerprobe from utilizing any information contained in U.S.
Patent No. 4,027,935, dated June 7, 1977, regarding Contact
for an Electrical Contactor Assembly.
10.4 Continuation of the Business of the Company After Dissolution. If the
Withdrawal Event of a Member leaves only one remaining Member, that
remaining Member shall have the right within 90 days of the discovery
of such Withdrawal Event to admit an additional Member (or to re-admit
the Withdrawn Member or its successor-in-interest) to the Company, and
that newly admitted (or re-admitted) Member along with the remaining
Member may elect to continue the business of the Company as set forth
in Section 10.1(d) hereof.
10.5 Filing Upon Dissolution. As soon as possible following the dissolution
of the Company, the liquidating trustee of the Company shall execute
and file a Notice of Winding Up with the Arizona Corporation Commission
as required by the Act. Upon the dissolution of the Company, the
Company shall cease to carry on its business, except insofar as may be
necessary for the winding up of its business, but its separate
existence shall continue until the Articles of Termination have been
filed with the Arizona Corporation Commission as required by the Act or
until a decree dissolving the Company has been entered by a court of
competent jurisdiction.
10.6 Liquidation. Upon dissolution of the Company, the business and affairs
of the Company shall be wound up and liquidated as rapidly as business
circumstances permit, the Manager shall act as the liquidating trustee,
and the assets of the Company shall be liquidated and the proceeds
thereof shall be paid (to the extent permitted by applicable law) in
the following order:
(a) first, to creditors, including Members that are creditors, in
the order of priority as required by applicable law and by
this Agreement;
(b) second, to a reserve for contingent liabilities to be
distributed at the time and in the manner as the liquidating
trustee determines in its discretion; and
(c) thereafter, to the Members, pro rata, based upon their
positive Capital Account balances.
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10.7 Reasonable Time for Winding Up. A reasonable time shall be allowed for
the orderly winding up of the business and affairs of the Company and
the liquidation of its assets pursuant to Section 10.6 to minimize any
losses otherwise related to that winding up. A reasonable time shall
include the time necessary for the completion of pending orders as
provided in Section 10.3(c) hereof.
10.8 Deficit Capital Account. Upon liquidation, each Member shall look
solely to the assets of the Company for the return of that Member's
Capital Contribution. No Member shall be personally liable for a
deficit Capital Account balance of that Member, it being expressly
understood that the distribution of liquidation proceeds shall be made
solely from existing Company assets.
10.9 Articles of Termination. When all debts, liabilities and obligations
have been paid and discharged or adequate provisions have been made
therefore and all of the remaining property and assets have been
distributed to Members, Articles of Termination shall be executed and
filed with the Arizona Corporation Commission as required by the Act.
ARTICLE
XI
Change of Control
If at any time during the time the signatories hereto are Members of the
Company, more than fifty percent (50%) of the share capital or equity interest
of a Member is proposed to be sold or otherwise transferred to a buyer or group
of buyers which is a direct competitor of the Company or the other Member,
therefore constituting a change of Control ("Change of Control"), the other
Member shall have a right to either cause the dissolution of the Company or buy
such Member's Interest, according to the procedures set forth herebelow:
11.1 The value of the Interest shall be the fair market value being the
value of the Interest determined by an expert appointed for that
purpose by the Members on a going concern basis as at the end of the
fiscal quarter for which the most recent financial statements of the
Company are available, without taking into consideration the effect of
the proposed sale or transfer.
11.2 If the parties cannot jointly agree on an expert, each shall name an
investment or merchant bank of international standing as an expert and
the two experts shall chose a third.
11.3 The expert or experts shall determine the valuation based on standard
procedures used to value businesses similar to the Company on the world
market.
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ARTICLE
XII
Intellectual Property; Research and Development
12.1 Ownership.
(a) Except as otherwise provided herein, or in the Related
Agreements, the Intellectual Property Rights of the Members
shall not be transferred to the Company, but shall remain the
property of such Members. Should the Company make any
improvements in the Products or the Product Components or in
the process of assembly, testing, or repairs of the Products,
the Company transfers all related Intellectual Property Rights
to Upsys and will have a nontransferable, non-exclusive right
to use such Intellectual Property Rights.
(b) Each Member further acknowledges and agrees that by this
Agreement neither Member nor the Company acquire any right,
use, title, or interest in the Intellectual Property Rights of
the other Member. Any unauthorized use of the Intellectual
Property Rights owned by one of the Members will constitute an
infringement of such Member's rights.
12.2 Proprietary Protection.
(a) Each Member agrees that, except as is specifically provided in
the Related Agreements, it will not, and that it will cause
the Company to not, directly or indirectly, at any time during
the term of this Agreement or thereafter: (i) represent that
it has any ownership interest in or rights to the Intellectual
Property Rights owned by the other Member or the Company or
(ii) register or attempt to register or use in any manner
whatsoever such Intellectual Property Rights, without such
Member's or the Company's specific prior written consent.
(b) If a Member or any of its directors, officers, employees or
Affiliates registers any Intellectual Property Rights
belonging to the other Member or the Company, the respective
Member hereby agrees to cause the assignment of such to the
other Member or the Company, as applicable, immediately upon
request, and without charge therefor.
(c) Upon the termination of this Agreement for any reason, or the
replacement of a Member under the terms of Article IX, each
Member and the Company shall immediately return to the other
Member or the Company, as appropriate, all originals and any
copies of Intellectual Property Rights belonging to such
Member or the Company in its possession or control.
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12.3 Confidential Information; Nondisclosure.
(a) The Members agree that, except to the extent necessary to
comply with applicable law and regulatory and supervisory
requirements, including the filing of tax returns, each Member
shall keep, and cause their respective Affiliates to keep, the
terms and conditions of this Agreement and the transactions
contemplated by this Agreement confidential. In no event shall
any publication or press release be made by any Member or any
Affiliate thereof, with respect to the Company, the Company's
business, or any transactions, communications or disputes
between the Members, without the prior written consent of each
Member, which consent may be given or denied in the sole
discretion of such Member.
(b) Both prior to and during the term of this Agreement, the
Members have received and will receive certain trade secrets
and confidential information relating to each Member's
business and operations ("Confidential Information"). The
Members shall hold in strictest confidence and not disclose to
any third party any such Confidential Information designated
in writing or which by its nature should reasonably be deemed
confidential. Further, none of the Members shall use or permit
the use of any such Confidential Information in any manner
other than in furtherance of the purposes hereof.
(c) Notwithstanding the foregoing, the Members will be permitted
to make use of or disclose Confidential Information:
(i) which is in or comes into the public domain other
than through the default of a Member;
(ii) which was already in the possession of a Member prior
to disclosure by the disclosing Member hereto as
evidenced by documentation in such Member's
possession;
(iii) which is lawfully acquired from a third party who did
not obtain it directly or indirectly from the
disclosing Member;
(iv) which is required to be disclosed by or to a court or
governmental agency, but only to the extent and for
the purpose so required; and
(v) with a Member's financial advisors, attorneys,
accountants or any other third party engaged by it to
the extent strictly necessary to effect the purposes
and intent of this Agreement, it being understood
that, in the case of any such disclosure, the Member
shall have made such third parties aware of the duty
of confidentiality undertaken herein, and shall cause
such third parties to respect such undertakings.
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(d) The Members acknowledge and agree that the unauthorized use or
disclosure of such Confidential Information would constitute,
inter alia, an act of unfair competition and cause irreparable
harm to the non disclosing Member, its competitive position
and goodwill, and each Member acknowledges responsibility for
damages caused to the others by such unauthorized use or
disclosure.
(e) This obligation of confidentiality shall remain in effect
during the term of this Agreement and for five (5) years
thereafter.
12.4 Research and Development. The Company shall not engage in any research
or development concerning the Products or Product Components without
the express, unanimous consent of the parties.
ARTICLE
XIII
Miscellaneous
13.1 Governing Law, Jurisdiction and Venue. This Agreement and all questions
relating to its validity, interpretation, performance and enforcement,
will be governed by and construed, interpreted, and enforced in
accordance with the laws of the State of Arizona, notwithstanding any
conflict of laws rules to the contrary and in accordance with the
United States Arbitration Act, 9 U.S.C. Sections 1 et seq. Subject to
the mandatory arbitration provision in Section 13.18 below, the
exclusive jurisdiction and venue of any action relating to this
Agreement will be the United States District Court for the Southern
District of New York and each of the parties to this Agreement submits
to the exclusive jurisdiction and venue of such courts for the purpose
of any such action.
13.2 Notices. Notices may be delivered either by private messenger service
or mail. Any notice or document required or permitted hereunder to a
Member shall be in writing and shall be deemed to be given on the date
received by the Member; provided, however, that all notices and
documents mailed to a Member, postage prepaid, certified mail, return
receipt requested, addressed to the Member at its respective address as
shown in the records of the Company, shall be deemed to have been
received seven days (168 hours) after mailing. The address of each of
the Members shall for all purposes be as set forth in the Company's
Articles of Organization unless otherwise changed by the applicable
Member by notice to the other Members and the Manager as provided
herein.
13.3 Severability. If any provision of this Agreement shall be conclusively
determined by a court of competent jurisdiction to be invalid or
unenforceable to any extent, the remainder of this Agreement shall not
be affected thereby.
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13.4 Binding Effect. Except as otherwise provided herein, this Agreement
shall inure to the benefit of and be binding upon the Members and their
respective successors and, where permitted, assigns.
13.5 Titles and Captions. All article, section and paragraph titles and
captions contained in this Agreement are for convenience only and are
not a part of the context hereof.
13.6 Pronouns and Plurals. All pronouns and any variations thereof are
deemed to refer to the masculine, feminine, neuter, singular or plural
as the identity of the appropriate Person(s) may require.
13.7 No Third Party Rights. This Agreement is intended to create enforceable
rights between the parties hereto only, and creates no rights in, or
obligations to, any other Persons whatsoever.
13.8 Time is of Essence. Time is of the essence in the performance of each
and every obligation herein imposed.
13.9 Further Assurances. The parties hereto shall execute all further
instruments and perform all acts which are or may become necessary to
effectuate and to carry on the business contemplated by this Agreement.
13.10 Estoppel Certificates. The Members hereby agree that, at the request of
any Member, the other Member will execute and deliver an estoppel
certificate stating that this Agreement is in full force and effect and
that to the best of such Member's knowledge and belief there are no
defaults by such Member (or that certain defaults exist), as the case
may be, under this Agreement.
13.11 Schedules Included in Exhibits; Incorporation by Reference. Any
reference to an Exhibit to this Agreement contained herein shall be
deemed to include any Schedules to such Exhibit. Each of the Exhibits
referred to in this Agreement, and each Schedule to such Exhibits, is
hereby incorporated by reference in this Agreement as if such Schedules
and Exhibits were set out in full in the text of this Agreement.
13.12 Amendments. This Agreement may not be amended except by unanimous
written agreement of all of the Members.
13.13 Creditors. None of the provisions of this Agreement shall be for the
benefit of or enforceable by any creditors of the Company.
13.14 Representations. Each Member, for itself and for its representatives
and Affiliates, hereby represents and warrants that (a) this Agreement
affords the Members significant legal power and control over Company
matters and the Member is capable of intelligently exercising
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such powers, (b) the Member is experienced and knowledgeable in
business affairs generally and in the business and affairs to be
conducted by the Company, and (c) the Member is not so dependent upon
the entrepreneurial or management ability of the other Member that the
Member cannot replace the other Member or otherwise exercise meaningful
Company powers.
13.15 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto and supersedes any and all prior agreements,
arrangements or understandings between the parties relating to the
subject matter hereof. No oral understandings, oral statements, oral
promises or oral inducements exist. No representations, warranties,
covenants or conditions, express or implied, whether by statute or
otherwise, other than as set forth herein, have been made by the
parties hereto.
13.16 Construction. Each Member acknowledges and agrees that it has
participated in the drafting and negotiation of this Agreement and that
this Agreement has been reviewed by its legal counsel and that the
normal rule of construction to the effect that any ambiguities are to
be resolved against the drafting party shall not be applied to the
interpretation of this Agreement. No inference in favor of, or against,
the Company, any Member or the Manager shall be drawn from the fact
that any one or more of them has drafted any portion hereof.
13.17 Remedies Cumulative. Except as specifically set forth herein to the
contrary, the remedies of the parties hereto under this Agreement are
cumulative and will not preclude the recovery, award or grant of any
other remedies to which any party may be lawfully entitled.
13.18 Arbitration. If any dispute arises under this Agreement, upon written
notice of either party, the parties will immediately seek to resolve
the dispute by good faith negotiations. If the parties are unable to
resolve the dispute in writing within ten (10) business days from the
commencement of such good faith negotiations, then without the
necessity of further notice or agreement between the parties, such
dispute will be finally settled in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and its
Supplementary Procedures for International Commercial Arbitration, as
in effect as of the date of this Agreement. The language for such
arbitration will be English and the site will be New York, New York.
The number of arbitrators will be three (3) (the "Arbitrators"). If the
parties agree on the persons to be the Arbitrators at the time the
dispute is submitted to arbitration, then those persons shall be the
Arbitrators. Otherwise, each party will select one (1) of the
Arbitrators, and those Arbitrators will select the third arbitrator.
Failing an agreement on the third Arbitrator, the president of the
American Arbitration Association will be the sole appointing authority
for the third Arbitrator. The decision of the Arbitrators will be final
and non-appealable as between the parties to this Agreement. Either
party may, at its option, seek injunctive relief or other provisional
remedies against the other party from any court of appropriate
jurisdiction. Each party to the dispute will bear its respective
expenses incurred in respect of the dispute and the costs of the
Arbitrators will be borne equally by both parties.
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ARTICLE
XIV
Definitions
The following terms used in this Agreement shall have the meanings described
below:
"Act" shall mean the Arizona Limited Liability Company Act.
"Adjusted Basis" shall have the meaning given such term in Code section 1011.
"Adjusted Capital Account Balance" shall mean, with respect to each Member, the
balance of such Member's Capital Account at the end of the Fiscal Year increased
by any amount which the Member is deemed to be obligated to restore pursuant to
penultimate sentences of Treasury Regulation sections 1.704-2(g)(1) and
1.704-2(i)(5).
"Adjusted Capital Account Deficit" shall have the meaning set forth in Section
5.2(a).
"Affiliate" shall mean a Person who, with respect to any other Person, directly
or indirectly controls, is controlled by, or is under common control with such
other Person. For purposes of this definition, "control" shall mean any one or
more of the following:
(a) ownership or control (whether directly or otherwise) of more
than 50 percent of the equity share capital, voting capital or
other equity interest of such other Person;
(b) ownership of the equity share capital, voting capital or other
equity interest by contract or otherwise, control of, power to
control the composition of, or power to appoint more than 50
percent of the members of the board of directors, board of
management or other equivalent or analogous body of such other
Person;
(c) entitlement to receive by virtue of its ownership or control
of any interest in such other Person more than 50 percent of
any (but not necessarily every) income or capital distribution
made by such other Person (either on liquidation, winding-up,
dissolution or otherwise).
"Agreement" shall mean this Operating Agreement, as it may be amended from time
to time, complete with all exhibits and schedules hereto.
"Agreements" shall have the meaning given such term in Section 6.2(b).
"American Territory" shall mean the United States of America, and its
territories.
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"Approved Plan and Budget" shall mean the Company's business plan and budget for
each Fiscal Year, which shall be proposed by the Manager and subject to the
unanimous written approval of the Members.
"Articles of Organization" shall mean the Articles of Organization of the
Company as may be amended from time to time.
"Asian Territory" shall mean the Asian countries of South Korea, Japan,
Singapore, Malaysia and Taiwan.
"Available Cash Flow" shall have the meaning set forth in Section 4.1.
"Bankruptcy" shall mean, with respect to a Person, the happening of any of the
following:
(a) the making by such Person of a general assignment for the benefit of
creditors;
(b) the filing by such Person of a voluntary petition in bankruptcy or the
filing of a pleading in any court of record admitting in writing an
inability to pay debts as they become due;
(c) the entry of an order, judgment or decree by any court of competent
jurisdiction adjudicating such Person to be bankrupt or insolvent;
(d) the filing of a petition or answer seeking any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation;
(e) the filing of an answer or other pleading admitting the material
allegations of, or consenting to, or defaulting in answering, a
bankruptcy petition filed against such Person in any bankruptcy
proceeding;
(f) the filing of an application or other pleading or any action otherwise
seeking, consenting to or acquiescing in the appointment of a
liquidating trustee, receiver or other liquidator of all or any
substantial part of such Person's properties;
(g) the commencement against such Person of any proceeding seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation
which has not been quashed or dismissed within 180 days; or
(h) the appointment without the consent or acquiescence of such Person of a
liquidating trustee, receiver or other liquidator of all or any
substantial part of such Person's properties without such appointment
being vacated or stayed within 90 days and, if stayed, without such
appointment being vacated within 90 days after the expiration of any
such stay.
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"Capital Account" shall mean the accounting record of each Member's capital
interest in the Company. There shall be credited to each Member's Capital
Account (a) the amount of any contribution of cash by that Member, (b) the Gross
Asset Value of property contributed by that Member, (c) that Member's allocable
share of Profits and any items in the nature of income or gain that are
specially allocated to that Member pursuant to Section 5.2 hereof (not including
Section 5.2(d) hereof) and (d) the amount of any Company liabilities that the
Member assumes or takes subject to under Code section 752. There shall be
debited against each Member's Capital Account (i) the amount of all
distributions of cash to that Member unless a distribution to the Member is a
loan, a repayment of a loan, or is deemed a payment under Code section 707(c),
(ii) the Gross Asset Value of property distributed to that Member by the
Company, (iii) that Member's allocable share of Losses and any items in the
nature of expenses or losses which are specially allocated pursuant to Section
5.2 hereof (not including Section 5.2(d) hereof), and (iv)the amount of any
liabilities of that Member that the Company assumes or takes subject to under
Code section 752. The transferee of all or a portion of the Interest shall
succeed to that portion of the transferor Member's Capital Account that is
allocable to the portion of the Interest transferred. This definition of Capital
Account and the other provisions herein relating to the maintenance of Capital
Accounts are intended to comply with Treasury Regulation sections 1.704-1(b) and
1.704-2 and shall be interpreted and applied in a manner consistent with those
Treasury Regulation sections. In the event the Manager determines that it is
prudent to modify the manner in which the Capital Accounts, or any debits or
credits thereto (including, without limitation, debits or credits relating to
liabilities that are secured by contributed or distributed property or which are
assumed by the Company or the Members), are computed in order to comply with
that Treasury Regulation, the Manager may make such modification. The Manager
shall also make any appropriate modifications in the event unanticipated events
might otherwise cause this Agreement not to comply with Treasury Regulation
sections 1.704-1(b) and 1.704-2.
"Capital Contribution" shall mean, with respect to any Member, the amount of
money contributed by that Member to the Company and, if property other than
money is contributed, the initial Gross Asset Value of such property, net of
liabilities assumed or taken subject to by the Company.
"Cerprobe Subsidiary" shall have the meaning set forth in Section 6.1.
"Code" shall mean the Internal Revenue Code of 1986 (or successor thereto), as
amended from time to time.
"Company" shall mean the limited liability company formed pursuant to this
Agreement, as such company may from time to time be constituted.
"Deadlock" shall have the meaning set forth in Section 9.3.
"Defaulting Member" shall mean a Member that has committed an event of default
as described in Section 7.6 hereof.
-31-
"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 that year or other period, except that if the Gross
Asset Value of an asset differs from its adjusted basis for federal income tax
purposes at the beginning of the Fiscal Year or other period, Depreciation shall
be an amount which bears the same ratio to that different Gross Asset Value (as
originally computed) as the federal income tax depreciation, amortization, or
other cost recovery deduction for that Fiscal Year or other period bears to the
adjusted tax basis (as originally computed); provided, however, that if the
federal income tax depreciation, amortization or other cost recovery deduction
for the applicable year or period is zero, Depreciation shall be determined with
reference to the Gross Asset Value (as originally computed) using any reasonable
method selected by the Members.
"Distribution Agreement" shall mean the Distribution Agreement, by and among the
Company, Cerprobe, and Upsys, and entered into in accordance with Section 6.5 of
this Agreement.
"Effective Date" shall have the meaning set forth in Section 1.4.
"Fiscal Year" shall mean the year on which the accounting and federal income tax
records of the Company are kept. The first Fiscal Year shall start on the
Effective Date, and the last Fiscal Year shall end on the termination of the
Company.
"Gross Asset Value" shall mean with respect to any Company asset, the asset's
Adjusted Basis, except as follows:
(a) the initial Gross Asset Value of any asset contributed by a Member to
the Company shall be the gross fair market value of that asset, as
determined by the contributing Member and the Manager;
(b) the Gross Asset Value of all Company assets shall be adjusted to equal
their respective gross fair market values, as determined by the
Manager, as of the date upon which any of the following occurs: (i) the
acquisition of an additional interest in the Company after the
Effective Date by any new or existing Member, in exchange for more than
a de minimis Capital Contribution or the distribution by the Company to
a Member of more than a de minimis amount of Company property as
consideration for an interest in the Company, if the Manager determines
that such adjustment is necessary or appropriate to reflect the
relative economic interest of the Members of the Company; and (ii)the
liquidation of the Company within the meaning of Treasury Regulation
section 1.704-1(b)(2)(ii)(g);
(c) the Gross Asset Value of any Company asset distributed to any Member
shall be the gross fair market value of that asset on the date of
distribution, as determined by the Member receiving that distribution
and the Manager; and
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(d) if an election under Code section 754 has been made, the Gross Asset
Value of Company assets shall be increased (or decreased) to reflect
any adjustments to the adjusted basis of the assets pursuant to Code
section 734(b) or Code section 743(b), but only to the extent that
those adjustments are taken into account in determining Capital
Accounts pursuant to Treasury Regulation section 1.704-1(b)(2)(iv)(m);
provided, however, that Gross Asset Value shall not be adjusted
pursuant to this subsection (d) to the extent that the Manager
determines that an adjustment pursuant to subsection (b) hereof is
necessary or appropriate in connection with a transaction that would
otherwise result in an adjustment pursuant to this subsection (d).
If the Gross Asset Value of an asset has been determined or adjusted hereby,
that Gross Asset Value shall thereafter be further adjusted by the Depreciation,
if any, taken into account with respect to that asset for purposes of computing
Profits and Losses.
"Initial Member Loan" shall have the meaning set forth in Section 3.3.
"Intellectual Property Rights" shall mean patents, design patents, industrial
designs, utility models, trademarks, trade dress, proprietary designs, logos,
company names, trade names, copyrights and copyrightable works, software, trade
secrets, license rights, know-how, processes and all other intellectual property
rights or proprietary information, and in each case, together with associated
goodwill.
"Interest" shall mean the interest of a Member in the Company as a Member
representing such Member's rights, powers and privileges as specified in this
Agreement.
"Legal Opinion" shall mean the legal opinion of X'Xxxxxx, Cavanagh, Anderson,
Xxxxxxxxxxxxx & Xxxxxxxx in the form set forth in Exhibit E hereto.
"Major Decisions" shall mean those decisions requiring the unanimous written
approval of the Members as set forth in Section 6.4 of this Agreement.
"Majority Vote" shall mean a majority of the votes eligible to be cast by the
Members.
"Management Agreement" shall mean the Management Agreement, by and between
Cerprobe Subsidiary and the Company, and entered into in accordance with Section
6.5 of this Agreement.
"Manager" shall mean that person designated as such pursuant to Section 6.1 of
this Agreement.
"Member" shall mean any Person that executes this Agreement as a Member, and any
other Person admitted to the Company as an additional or substituted Member,
that has not made a disposition of such Person's entire Interest.
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"Member Loan" shall mean a loan to the Company from a Member in accordance with
Section 3.3 hereof.
"Non Discretionary Expenditures" shall have the meaning set forth in Section
6.2(b).
"Participating Percentage" shall mean 55 percent as to Cerprobe and 45 percent
as to Upsys, except if otherwise modified by agreement of both Members.
"Person" shall mean an individual, firm, corporation, partnership, limited
liability company, association, estate, trust, pension or profit-sharing plan,
or any other entity.
"Principal Office" shall mean the registered Arizona office of the Company at
which the records of the Company are kept as required under the Act.
"Products" shall have the meaning set forth in Section 2.4.
"Product Components" shall have the meaning set forth in Section 2.4.
"Profits" and "Losses" shall mean for each Fiscal Year or other period, an
amount equal to the Company's taxable income or loss for that year or period,
determined in accordance with Code section 703(a) (for this purpose, all items
of income, gain, loss or deduction required to be stated separately pursuant to
Code section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(a) any income of the Company exempt from federal income tax not otherwise
taken into account in computing Profits or Losses shall be added to
that taxable income or loss;
(b) any expenditures of the Company described in Code section 705(a)(2)(B)
or treated as Code section 705(a)(2)(B) expenditures pursuant to
Treasury Regulation section 1.704- 1(b)(2)(iv)(i), shall be subtracted
from that taxable income or loss;
(c) in the event the Gross Asset Value of any Company asset is adjusted as
required by the definition of Gross Asset Value, the amount of that
adjustment shall be taken into account as gain or loss from the
disposition of that asset (assuming the asset was disposed of just
prior to the adjustment) for purposes of computing Profits or Losses in
the Fiscal Year of adjustment;
(d) gain or loss resulting from any disposition of Company property with
respect to which gain or loss is recognized for federal income tax
purposes shall be computed by reference to the Gross Asset Value of the
property disposed of, notwithstanding that the Adjusted Basis of that
property may differ from its Gross Asset Value;
-34-
(e) depreciation, amortization and other cost recovery deductions taken
into account in computing the taxable income or loss shall be based on
the Gross Asset Value of the assets; and
(f) any items of income, gain, loss or deduction that are specially
allocated pursuant to Section 5.2 hereof shall not be taken into
account in computing Profits or Losses.
"Related Agreements" shall mean the Supply Agreement, the Management Agreement,
and the Distribution Agreement, final forms of which are attached hereto as
Exhibits B, C and D, respectively.
"Supply Agreement" shall mean the Supply Agreement, by and among Upsys, Cerprobe
and the Company, and entered into in accordance with Section 6.5 of this
Agreement.
"Tax Matters Member" shall mean the "tax matters partner" as defined in Code
section 6231(a)(7).
"Territory" shall mean collectively the American Territory and the Asian
Territory.
"Transfer" shall mean to sell, assign, transfer, give, donate, pledge, deposit,
alienate, bequeath, devise or otherwise dispose of or encumber to any Person
other than the Company.
"Transferee" shall mean a Person to whom a Transfer is made.
"Treasury Regulations" shall mean pronouncements, as amended from time to time,
or their successor pronouncements, which clarify, interpret and apply the
provisions of the Code, and which are designated as "Treasury Regulations" by
the United States Department of the Treasury.
"Upsys Technology" shall mean the Intellectual Property Rights of Upsys relating
to vertical probing using cobra shaped types of probes.
"Withdrawal Event" shall mean those events or circumstances listed in A.R.S.
29-733, with the exception of the Bankruptcy of a Member.
"Withdrawn Member" shall have the meaning set forth in Section 9.2 hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
day and year first above written.
CERPROBE CORPORATION
By: /s/ X. Xxxx Close
----------------------------------------
Name: X. Xxxx Close
Its: President and Chief Executive Officer
UPSYS
By: /s/ Xxxx-Xxxxxx Xxxx
----------------------------------------
Name: Xxxx-Xxxxxx Xxxx
Its: General Manager
