EXHIBIT 3.104
OPERATING AGREEMENT
OF
THOROUGHBRED, L.L.C
THE INTERESTS REPRESENTED BY THIS OPERATING AGREEMENT HAVE NOT BEEN
REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNDER STATE SECURITIES LAW. WITHOUT
REGISTRATION, THE INTERESTS MAY NOT BE TRANSFERRED, EXCEPT UPON DELIVERY TO
THE LIMITED LIABILITY COMPANY OF ADVANCE NOTICE OF THE INTENDED TRANSFER
AND, IF REQUESTED BY THE AUTHORIZED PERSON, AN OPINION OF COUNSEL
SATISFACTORY TO THE AUTHORIZED PERSON THAT NEITHER THE SECURITIES ACT OF
1933, AS AMENDED, NOR STATE SECURITIES LAWS REQUIRE REGISTRATION OF THE
TRANSFER AND THAT THE TRANSFER WILL NOT VIOLATE THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.
TABLE OF CONTENTS
Page
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ARTICLE 1 -- ORGANIZATION.................................................. 1
1.1 Organization of the Company................................... 1
1.2 Name.......................................................... 1
1.3 Principal Office.............................................. 1
1.4 Term.......................................................... 1
1.5 Purpose....................................................... 1
1.6 Title to Company Assets....................................... 1
1.7 Registered Agent and Registered Office........................ 1
ARTICLE 2 -- CAPITAL CONTRIBUTIONS......................................... 1
2.1 Member Contributions.......................................... 1
2.2 Initial Capital Contribution.................................. 2
2.3 Additional Capital Contributions.............................. 2
2.4 Return of Distributions....................................... 2
2.5 No Priority................................................... 2
2.6 No Third Party Beneficiaries.................................. 2
ARTICLE 3 -- MANAGEMENT.................................................... 2
3.1 Management Vested in Members and Not in Managers.............. 2
3.2 Authorized Persons............................................ 2
3.3 Management of Company Business................................ 3
3.4 Compensation.................................................. 3
3.5 No Liability.................................................. 4
3.6 Indemnification............................................... 4
ARTICLE 4 -- RIGHTS AND DUTIES OF MEMBERS.................................. 4
4.1 Representation and Warranties................................. 4
4.2 Interests Not Registered Under the Securities Laws............ 4
4.3 Approval Rights............................................... 4
4.4 Admission of Additional Members............................... 5
4.5 Expulsion..................................................... 6
4.6 Restrictions.................................................. 6
4.7 Rights of an Assignee......................................... 6
4.8 Voluntary Withdrawal of a Member.............................. 6
ARTICLE 5 -- MEETINGS: APPROVALS WITHOUT A MEETING......................... 7
ARTICLE 6 -- OTHER BUSINESS VENTURES....................................... 7
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Page
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ARTICLE 7 -- RECORDS, ACCOUNTING, TAX MATTERS............................. 7
7.1 Books and Records of Account................................. 7
7.2 Data Storage................................................. 8
7.3 Filing of Tax Reports........................................ 8
7.4 Tax Matters Partner.......................................... 8
7.5 Fiscal and Tax Year.......................................... 9
7.6 Accounts..................................................... 9
7.7 Tax Status................................................... 9
ARTICLE 8 -- DISTRIBUTION AND ALLOCATION RULES............................ 9
8.1 Cash Available for Distribution.............................. 9
8.2 Cash from Sales or Refinancing............................... 9
8.3 Allocations of Income, Gain, and Profit...................... 10
8.4 Allocations of Loss and Deduction............................ 10
8.5 Tax Regulation Allocations................................... 10
8.6 Curative Allocations......................................... 11
ARTICLE 9 -- DISSOLUTION. LIQUIDATION AND WINDING UP...................... 12
9.1 Dissolution and Winding Up................................... 12
9.2 Liquidating Trustee.......................................... 12
9.3 Liquidation and Termination.................................. 12
ARTICLE 10 -- GENERAL..................................................... 13
10.1 Amendment.................................................... 13
10.2 Benefit...................................................... 13
10.3 Computation of Time.......................................... 13
10.4 Construction................................................. 13
10.5 Entire Agreement............................................. 14
10.6 Equitable Relief............................................. 14
10.7 Execution.................................................... 14
10.8 Exhibits..................................................... 14
10.9 Expenses of Prevailing Party................................. 14
10.10 Further Assurances........................................... 14
10.11 Invalidity of Provisions..................................... 14
10.12 No Waiver.................................................... 15
10.13 Notices...................................................... 15
ARTICLE 11 -- DEFINITIONS................................................. 15
EXHIBIT A -- CAPITAL CONTRIBUTIONS........................................ 21
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OPERATING AGREEMENT
The Members enter this Agreement as of the Effective Date. The Members
mutually agree as follows:
ARTICLE 1-- ORGANIZATION
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1.1 Organization of the Company. The Members organize the Company as
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a limited liability company under the Act and desire that the Company
continue to qualify as a limited liability company. The Authorized Person
will file or cause to be filed Articles of Organization and all necessary
conforming documents and perform such other filing, recording, publishing
and other acts as are necessary to comply with all requirements for the
formation and operation of a limited liability company in Delaware and all
other jurisdictions where the Company desires to conduct its business.
1.2 Name. The name of the Company is "Thoroughbred, L.L.C."
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1.3 Principal Office. The Company will locate its principal office at
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000 Xxxxxx Xxxxxx, Xxxxx 000, Xx. Xxxxx, XX 00000-0000, or such other place
designated by the Authorized Person.
1.4 Term. The existence of the Company began on the Effective Date
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and will end thirty (30) years later unless terminated earlier under this
Agreement.
1.5 Purpose. The Company is organized for the following purposes: any
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lawful business for which a limited liability company may be organized
under the Act.
1.6 Title to Company Assets. The Company will hold title to assets in
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the name of the Company or such nominees as the Authorized Person
determines appropriate.
1.7 Registered Agent and Registered Office. The initial registered
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agent for the Company has the following name and Delaware address:
Corporation Trust Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx (Xxxxxx of New
Castle), Delaware. The registered agent will send copies of any notices
received on behalf of the Company to each Member.
ARTICLE 2 -- CAPITAL CONTRIBUTIONS
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2.1 Member Contributions. Each Member will make an initial Capital
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Contribution of money and/or other property as of the Effective Date in the
amounts and form listed by the Member's name in Exhibit A.
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2.2 Initial Capital Contribution. If a Member fails to make their
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initial Capital Contribution on a timely basis, then the Member's
Proportionate Share will be adjusted to reflect such failure.
2.3 Additional Capital Contributions. The Members have not agreed to
--------------------------------
make any additional Capital Contributions but the Members may make
additional contributions and/or loans to the Company at such time and on
such conditions as all of the Members may agree.
2.4 Return of Distributions. If a Member has received the return, by
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cash distribution or otherwise, of the whole or part of such Member's
capital, the Member will remain liable to the Company, to the extent
provided under the Act, for any sums (not in excess of the capital so
returned) necessary to discharge the Company's liabilities to all creditors
who extended credit or whose claims arose before such return.
2.5 No Priority. Except as specifically provided in this Agreement,
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no Member may either demand a distribution from the Company or have the
right to withdraw from the Company or to demand the return of any Capital
Contribution or have priority over any other Member either as to the return
of any Capital Contribution or as to distributions.
2.6 No Third Party Beneficiaries. The contribution obligation of the
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Members under this Article is not intended to create any obligation to
third party beneficiaries. No creditor may rely on that obligation unless
the Member against whom the obligation is asserted has expressly agreed in
writing that the creditor may do so.
ARTICLE 3 -- MANAGEMENT
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3.1 Management Vested in Members and Not in Managers. Management of
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the Company is vested in the Members and not in one or more managers. Upon
the approval of the Members as provided by Section 4.3, the Company may
change its status from a limited liability company in which management is
vested in the members to one in which management is vested in one or more
managers, or vice versa.
3.2 Authorized Persons.
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(a) All Members will be Authorized Persons if management of the
Company is vested in the Members, and, if management is vested in one or
more managers, all Managers will be Authorized Persons. The Members intend
Section 10.4 to apply to each reference to Authorized Person. If the
Company has more than one Authorized Person, each reference to decisions or
actions of the Authorized Person will require the agreement of either a
Majority-in-interest of the Members, if management is vested in the
Members, or a Majority-in-Number of the Managers, if management is vested
in Managers. The Authorized Person will devote such time and
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attention to the Company as such Authorized Person deems reasonable
necessary and advisable to manage the affairs of the Company to its best
advantage.
(b) The following offices shall be established, the incumbents of
which shall be Authorized Persons and serve at the pleasure and upon the
approval of the Majority-in-Interest Member, if the management is vested in
the members, or the majority-in-number of the Managers, if the management
is vested in Managers: The General Manager, Secretary, Treasurer, Assistant
Treasurer, Assistant Secretary and various other offices which may be
established from time to time by Members.
3.3 Management of Company Business. Subject to the Approval Rights of
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the Members as provided by Section 4.3, the Authorized Person will have the
power, on behalf of the Company, to do all things necessary or convenient
to carry out the business and affairs of the Company, including the
following:
(a) to transfer or acquire property or the use of property;
(b) to enter into contracts and guaranties;
(c) to borrow money and to issue notes, bonds, and other obligations
and to secure any of the same by mortgage or pledge of Company property or
income;
(d) to lend money, to invest and reinvest the Company's funds, and to
receive and hold property as security for repayment;
(e) to open bank accounts and designate the number and identity of
the individuals authorized to write checks and make withdrawals of funds;
(f) to hire employees and appoint agents of the Company;
(g) to pay, collect, compromise, arbitrate, prosecute or defend legal
action with respect to, or otherwise adjust, claims or demands of or
against the Company;
(h) to indemnify any person;
(i) to participate in partnership agreements, joint ventures, or
other associations of any kind with any person or persons; and
(j) to execute, acknowledge and deliver any and all instruments
appropriate to the foregoing, and to apply Company assets.
3.4 Compensation. The Authorized Person will receive no compensation
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without the approval of the Members as provided by Section 4.3 other than
reasonable expenses incurred in managing the Company.
3.5 No Liability. Unless specifically assumed in writing, no Member
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or Manager will have personal liability for the liabilities of the Company.
The failure of
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the Company to observe any formalities or requirements relating to the
exercise of its powers or management of its business or affairs under this
Agreement or the Act will not result in the imposition of personal
liability on any Member or Manager. The Authorized Person will have no
liability to any member resulting from the disallowance or adjustment of
any deductions or credits in the income tax returns of the Company or the
Members.
3.6 Indemnification. The company will indemnify and hold harmless the
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Authorized Person from and against any loss, expense, damage, or injury
suffered or sustained by any of them by reason of any acts, errors in
judgment, omissions, or alleged acts or omissions related to the business
of the Company, including any judgment, award, settlement, reasonable legal
fees, and other costs and expenses related to the defense of any actual or
threatened action, proceeding, or claim and including any payments made by
the Authorized Person, or by reason of any disallowance by any taxing
authority of any deduction taken on any Company tax return, provided such
acts, errors in judgment, omissions, or alleged acts or omissions upon
which such actual or threatened actions, proceedings, or claims are based
were in good faith, for a purpose reasonably believed to be in the best
interests of the Company and were not performed or omitted as a result of
fraud, gross negligence, or willful misconduct of the Authorized Person.
ARTICLE 4 -- RIGHTS AND DUTIES OF MEMBERS
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4.1 Representation and Warranties. Each Member, and in the case of an
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organization, the person executing the Agreement on behalf of the
organization, represents and warrants to the Company and each other Member
as follows:
(a) if that Member is an organization, that it is duly organized,
validly existing, and in good standing under the law of the jurisdiction of
its organization and that it has full power to execute the agreement and
agrees to perform its obligations under the Agreement; and
(b) that the Member is acquiring its Interest for its own account as
an investment and without an intent to distribute the interest.
4.2 Interests Not Registered Under the Securities Laws. Each Member
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acknowledges that the Interests have not been registered under the
Securities Laws and may not be Transferred by the Member without
appropriate registration or the availability of an exemption from such
requirements.
4.3 Approval Rights. Each Member will have Approval Rights.
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(a) Actions which require the approval of a Majority-in-interest of
the Members will include the following:
(i) a Capital Event;
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(ii) the designation of the liquidating trustee in a
dissolution and winding up of the Company;
(iii) the change of the Company's status from member-managed to
manager-managed and vice versa; or
(iv) if the Company is manager-managed, the addition,
replacement or removal of a Manager.
(b) Actions which require the approval of all Members will include
the following:
(i) the admission of a new Member;
(ii) any additional mandatory Capital Contributions;
(iii) the expulsion of a Member;
(iv) a voluntary withdrawal of a Member;
(v) any of the approvals described in paragraph (d) of the
definition for Event of Withdrawal;
(vi) a voluntary dissolution of the Company;
(vii) a merger or consolidation with another person;
(viii) authorization for any transaction, agreement or action
unrelated to the Company's purpose as set forth in the Articles of
Organization, that otherwise contravenes this Agreement;
(ix) the continuation of the Company after an Event of
Withdrawal; or
(x) any amendment to this Agreement.
Unless otherwise required by this Agreement or by law, a Majority-in-
interest of the Members may approve any other matter submitted for the
approval of the Members.
4.4 Admission of Additional Members. Upon the approval of the Members
-------------------------------
as provided by Section 4.3, the Company may admit new Members and determine
the Capital Contributions for such new Members. The person so admitted will
become a Member after making any required Capital Contribution and after
signing this Agreement.
4.5 Expulsion. Upon approval as provided by Section 4.3, the other
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Members may expel a Member who commits fraud, gross negligence, or willful
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misconduct having a material adverse affect on the Company or on any of the
other Members.
4.6 Restrictions. No Member will Transfer in whole or in part any
------------
Interest to an Assignee until the Company receives from the proposed
Assignee such information and agreements that the Company may reasonably
require, including any taxpayer identification number and any agreement
that federal, state or local tax laws may require and the proposed
Assignee's written agreement to be bound by all of the terms of the
Agreement as an Assignee, and, if admitted as a Member, as a Member. Unless
a Transfer occurs by reason of or incident to the death, dissolution,
divorce, liquidation, merger or termination of the transferor Member and
the transferee is a Permitted Assignee, no Member will Transfer in whole or
part any Interest to an Assignee until the Company receives an opinion of
Counsel to the Company that any such Transfer, alone or when combined with
other transactions, would not result in a termination of the Company within
the meaning of Code Section 708 (or if so that no material adverse tax
consequences would result to the Company or the Members by reason of such
termination), the Company's losing its status as a partnership for income
tax purposes or the taxation of the Company as a publicly-traded
partnership for income tax purposes. An attempted Transfer in violation of
this Section is void.
4.7 Rights of an Assignee. Unless and until admitted as a Member
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under Section 4.4, an Assignee (including a permitted Assignee) will have
no Approval Rights ( or Management Rights, if management is vested in the
Members). An Assignee that has not become a Member will receive, to the
extent assigned, the share of distributions and profits, including
distributions representing the return of contributions, to which the
assignor would otherwise be entitled with respect to the assigned interest.
4.8 Voluntary Withdrawal of a Member. A Member may only voluntarily
--------------------------------
withdraw from the Company upon giving ninety (90) days' prior written
notice of withdrawal to the other Members. If the withdrawing Member fails
to receive the written approval of all Members as provided by Section
4.3(b), then such voluntary withdrawal will violate this Agreement for the
purposes of the Act. After such voluntary withdrawal, the withdrawn Member
will have the rights of an Assignee under Section 4.7. If the Company
dissolves and winds up its business and affairs as a result of a voluntary
withdrawal not approved by all Members, the Company may reduce any
distributions to which such Member would be otherwise entitled by the
damages sustained by the Company as a result of such dissolution and
winding up. If the Company continues its business and affairs after a
voluntary withdrawal not approved by all Members, the Company will within a
reasonable time make a distribution to the withdrawn Member in an amount
equal to fifty percent (50%) of the fair market value of the withdrawn
Member's Interest as of the date of withdrawal as calculated by the Company
in its reasonable discretion. In making distributions under the preceding
sentence, the following rules will apply: (a) the Company will exclude the
value of goodwill in determining fair market value; (b) the Company may
reduce the amount payable to the withdrawn Member by any damages suffered
as a result of the voluntary withdrawal; and (c) the Company may defer
distributions to the
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withdrawn Member until such time as making them will not result in
unreasonable hardship to the Company.
ARTICLE 5 -- MEETINGS: APPROVALS WITHOUT A MEETING
--------------------------------------------------
The Authorized Person's or the Members may take any action or vote at
a meeting at the Company's principal of lice after ten (10) days' prior
written notice to all the Authorized Persons or Members eligible to attend,
as appropriate, given by a Majority-in-Number of the Authorized Persons or
Members eligible to attend, or without a meeting if the Authorized Persons
or Members otherwise required to act or approve the action to make it
effective sign a written approval of the action so taken (eg., the Company
may taken any action requiring the approval of a Majority-in-Interest of
the Members by a written approval of a Majority-in-interest of the Members
and without unanimous written approval). Any action required or permitted
to be taken at any meeting of the Members may be taken without a meeting if
the Majority-in-Interest Member consents thereto in writing, and the
writing or writings are filed with the minutes of the proceedings of the
Member.
ARTICLE 6 -- OTHER BUSINESS VENTURES
------------------------------------
Any Member, Authorized Person, or Manager may engage in or possess an
interest in other business ventures of every nature and description,
independently or with others, and neither the Company nor any of the
Members, Authorized Persons, or Managers will have any right by virtue of
this Agreement in or to such independent ventures or to the income or
profits derived therefrom.
ARTICLE 7 -- RECORDS, ACCOUNTING, TAX MATTERS
---------------------------------------------
7.1 Books and Records of Account. Authorized Person will keep proper
----------------------------
and complete records and books of account in which it will records all
transactions and other matters relative to the Company's business in
accordance with generally accepted accounting principles, consistently
applied, or in accordance with such other accounting method customarily
used by businesses similar to the Company. As required by the Act, the
Company will keep at its principal place of business the following:
(a) a current and a past list, setting forth the full name and last
known mailing address of each Member and Manager, if any, in alphabetical
order;
(b) a copy of the Articles of Organization and all articles of
amendment thereto, together with executed copies of any powers of attorney
pursuant to which any articles have been executed;
(c) copies of Company's federal, state and local income tax returns
and reports, if any, for the three (3) most recent years or, if such
returns and reports were not prepared for any reason, copies of the
information and records provided to, or
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which should have been provided to, the Members to enable them to prepare
their federal, state and local tax returns for such period;
(d) copies of this Agreement, and all amendments thereto, and copies
of any written operating agreements no longer in effect;
(e) copies of any financial statements of the Company for the three
(3) most recent years;
(f) copies of any written promise by a Member to make a Contribution
to the Company;
(g) copies of any written approvals by the Members to the admission
of any person as a Member;
(h) copies of any written approvals by the Members to continue the
Company upon an Event of Withdrawal;
(i) copies of any other instruments or documents reflecting matters
required to be in writing pursuant to this Agreement; and
(j) any other records required by the Act.
7.2 Data Storage. The Company may compile the data for any books,
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accounts, or records required by this Agreement in any form (including in
electronic media) from which a person may retrieve such information into a
readily usable form.
7.3 Filing of Tax Reports. The Authorized Person will submit to the
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official or agency administering the tax laws of any applicable
jurisdiction any information, reports or other documents required or
requested to be filed, as and when due. The Company will bear the cost of
preparing such information, reports or other documents. Within seventy-five
(75) days after the close of each taxable year of the Company, the
Authorized Person prepare or cause to be prepared and delivered to each
Member a report containing all Company information necessary to prepare
such Member's federal income tax returns.
7.4 Tax Matters Partner. PHCI shall be the Tax Matters Partner of the
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partnership within the meaning of Code Section 6231 (a)(7). The Tax Matters
Partner may (a) represent the Company and its Members before federal,
state, and local taxing authorities, and before courts of competent
jurisdiction, in tax matters affecting the Company, the Members in their
capacity as members, or both, or (b) execute agreements or other documents
relating to or affecting such tax matters including (i) agreements or
consents to extend the period of limitations on assessment of deficiencies
with respect to "partnership items" or "affected items," as such terms are
defined in Code Section 6231, and (ii) other agreements or documents that
bind the Members with respect to such tax matters or otherwise affect the
rights of the Company, the Members, or both. The Tax Matters Partner will
have the sole right, in
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its discretion, to make any election for the Company permitted by the Code;
provided that any Member or Assignee may unilaterally require the Company
to make a Code Section 754 election if such Member or Assignee agrees to
pay all expenses incurred in connection with such election. The Tax Matters
Partner may retain accountants, attorneys, and other professionals to
assist him in such matters. The Company will pay for or reimburse the Tax
Makers Partner for all expenses incurred in performing the duties described
in this Section.
7.5 Fiscal and Tax Year. The fiscal and taxable year of the Company
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will end on the 30th day of September.
7.6 Accounts. The Company will deposit its funds in such bank account
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or accounts, or invested in such interest-bearing investments established
and maintained in the name of the Company only, as designated by the
Authorized Person. Only the Authorized Person or agents of the Authorized
Person may make a withdrawal from any account or investment. The Authorized
Person will not commingle Company funds with those of any other person.
7.7 Tax Status. Solely for income tax purposes, the Company will be
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subject to all provisions of Subchapter K of Chapter 1 of Subtitle A of the
Code; provided, however, the filing of partnership tax returns with any
jurisdiction will not be construed to expand the obligations or liabilities
of the Company or its Members. No Member will take any action that would
cause the Company to be excluded from the application of any provision of
Subchapter K of Chapter 1 of Subtitle A of the Code, or any similar
provision of any state tax laws. The Members intend this Agreement to be
construed as appropriate to classify the Company as a partnership for tax
purposes. The Members expressly do not intend of form a partnership under
the Uniform Partnership Law or the Uniform Limited Partnership Act. The
Members do not intend to be partners one to another, or partners as to any
third party.
ARTICLE 8 -- DISTRIBUTION AND ALLOCATION RULES
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8.1 Cash Available for Distribution. Except as otherwise provided in
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Section 9.3, at such times as the Authorized Person will designate, the
Company will distribute Cash Available for Distribution in accordance with
the Members' respective Proportionate Shares.
8.2 Cash from Sales or Refinancing. Except as otherwise provided in
------------------------------
Section 9.3, at such times as the Authorized Person designates, the Company
will distribute Cash from Sales or Refinancing in accordance with Members'
respective Proportionate Shares.
8.3 Allocations of Income, Gain, and Profit. After making the Tax
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Regulation Allocations, the Company will allocate Company net taxable
income, including each item of Company income, gain, and profit required to
be separately stated under Code Section 702, in accordance with the
Members' respective Proportionate Shares.
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8.4 Allocations of Loss and Deduction. After making the Tax
---------------------------------
Regulation Allocations, the Company will allocate Company net taxable loss,
including each item of Company loss and deduction required to be separately
stated under Code Section 702, in accordance with the Members' respective
Proportionate Shares.
8.5 Tax Regulation Allocations. The Company will make the following
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allocations in the following order:
(a) Company Minimum Gain Chargeback. If Company Minimum Gain has
-------------------------------
a net decrease during any Company taxable year, the Company will allocate
items of income and gain for such year (and, if necessary, for subsequent
years) to each Member in the amounts required by Regulations Sections
1.704-2(f) and 1.704-2(g)(2).
(b) Member Nonrecourse Debt Minimum Gain Chargeback. If Member
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Nonrecourse Debt Minimum Gain has a net decrease during any Company taxable
year, the Company will allocate items of income and gain for such year
(and, if necessary, for subsequent years) to each Member who has a share of
the Member Nonrecourse Debt Minimum Gain as determined in accordance with
Regulations Section 1.704-2(i).
(c) Qualified Income Offset. If a Member unexpectedly receives an
-----------------------
adjustment, allocation, or distribution described in Regulations Sections
1.704-l(b)(2)(ii)(d)(4), (5), or (6), the Company will allocate to the
Member items of Company income and gain (consisting of a pro rata portion
of each item of Company income, including gross income, and gain for such
year) in an amount and manner sufficient to eliminate the Capital Account
Deficit, if any, caused by such adjustment, allocation, or distribution, as
quickly as possible as required by Regulations Section 1.704-
l(b)(2)(ii)(d).
(d) Allocation of Nonrecourse Deductions. The Company will
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allocate each Nonrecourse Deduction, as defined in Regulations Section
1.704-2(b)(1) and determined in accordance with Regulations Section 1.704-
2(c), in the same manner in which the Company allocates net taxable loss.
(e) Allocation of Member Nonrecourse Deductions. The Company will
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allocate each Member Nonrecourse Deduction to the Members who bear the
economic risk of loss with respect to the liability to which such Member
Nonrecourse Deductions are attributable under Regulations Section 1.704-
2(i)(1).
(f) Code Section 704(c) and Re-evaluation Allocation. If any
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Member contributes property (other than money) to the Company (or is deemed
so to contribute under applicable income tax principles) and the fair
market value of such property at the time it is contributed differs from
the contributing Member's adjusted tax basis therein, or if the property of
the Company is revalued pursuant to Regulations Section 1.704-l(b)(iv)(f),
items of income, gain, profit, depreciation, cost recovery and cost
depletion relating to such property shall be allocated pursuant to
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Treas. Reg. section 1.704-3(b) (the "Traditional Method"), to the extent
they are applicable. Allocations pursuant to this subsection 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, similar items or distributions pursuant to any of
the provisions of this Agreement.
(g) Allocation of Cancellation of Debt Income. The Company will
-----------------------------------------
allocate any cancellation of debt income realized by the Company among the
Members in proportion to the allocation among the Members (under Code
Section 752) of the debt to which such income is attributable.
(h) Allocations to Reflect Changing Interests. If (i) a person
-----------------------------------------
becomes a new Member after the first day of the Company's then-current
taxable year, (ii) the Interest of any Member increases or decreases after
the first day of the Company's then-current taxable year, or (iii) a member
Transfers the Member's Interest after the first day of the Company's then-
current taxable year, unless such disposition and all other dispositions on
the same day and within the twelve-month period prior to that day result in
a termination of the Company for federal income tax purposes, the Company
will not close its books until the end of the taxable year, at which time
the Company will determine the Members' and former Members' respective
shares of profits and losses by applying (1) a ratio having a numerator
equal to the number of days during the year that each person was a Member
and a denominator equal to the total number of days in the Company's
taxable year and (2) taking into account each Member's Interest on each day
such Member held an Interest. These rules will apply whether or not as a
result of such decrease or disposition, the transferee becomes a new or
substituted Member or whether or not the transferor remains a Member.
8.6 Curative Allocations. The Company intends the Tax Regulation
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Allocations to comply with Regulation Sections 1.704-l(b) and 1.704-2. The
Tax Regulation Allocations may not be consistent with the manner in which
the Members intend to divide distributions. Accordingly, the Authorized
Person, to the extent not inconsistent with Code Section 704(b), may
allocate income, gain, profit, loss, deduction and other items among the
Members so as to effect the economic objectives of the Members, and to
offset any distortion of such objectives otherwise resulting from the Tax
Regulation Allocations. In general, the Members anticipate that the
Authorized Person will accomplish this by making special allocations of
other items of income, gain, profit, loss, and deduction among the Members
so that the net amount of the Tax Regulation Allocations and such special
allocations to each such Member is zero. This Section 8.6 is not intended
to, and the Company does not, adopt the traditional method with curative
allocations specified in Treas. Reg. Section 1.704-3(c).
ARTICLE 9 -- DISSOLUTION. LIQUIDATION AND WINDING UP
----------------------------------------------------
9.1 Dissolution and Winding Up. The dissolution of the Company will
--------------------------
occur upon any of the following events:
12
(a) the happening of the events specified in this Agreement or in the
Articles of Organization as grounds for dissolution, including the
expiration of the term provided for in Section 1.4;
(b) the written approval of the Members as provided by Section 4.3;
(c) an Event of Withdrawal of a Member or a Capital Event unless the
Company still has at least one remaining Member and the business of the
Company is continued either under a right to continue stated in the
Articles of Organization and in this Agreement, or by the approval of the
remaining Members as provided by Section 4.3 within ninety (90) days after
the Event of Withdrawal;
(d) entry of a decree of dissolution under Subchapter VIII of the
Act; or
(e) when the Company is not the surviving entity in a merger or
consolidation.
Dissolution will take effect on the date of the event giving rise to
the dissolution, but the Company will not terminate until its assets have
been distributed pursuant to Section 9.3.
9.2 Liquidating Trustee. In a dissolution and winding up of the
-------------------
Company, the liquidating trustee approved by the Members as provided by
Section 4.3, will proceed diligently to wind up the affairs of the Company
and distribute its assets pursuant to Section 9.3. During the interim, the
liquidating trustee will continue to exercise the rights and operate the
Company consistently with the liquidation thereof, exercising all the power
and authority vested by the Act.
9.3 Liquidation and Termination. As expeditiously as possible after
---------------------------
the dissolution of the Company:
(a) The liquidating trustee will cause the Company's accountants to
make a complete accounting of the assets, liabilities and operations of the
Company as of the last day of the month in which the dissolution occurs.
(b) The liquidating trustee will pay all liabilities of the Company
(including loans from Members but excluding Member Capital Contributions
and Member Capital Accounts) and establish a Reserve, if the trustee deems
a Reserve necessary, for payment of future or contingent Company
obligations.
(c) The Company will allocate its estimated net taxable loss for the
year and any loss realized by the Company on liquidation, including any
book adjustment loss under paragraph (e) of this Section, in accordance
with Article 8 and its estimated net taxable gain for the year and any gain
realized upon liquidation, including any book adjustment gain under
paragraph (e) of this Section, in accordance with Article 8.
13
(d) The liquidating trustee will distribute the balance of the
proceeds of the liquidation after allocating gain or loss under paragraph
(b) of this Section among the Members who or which have positive balances
in their Capital Accounts in proportion to and to the extent of their
positive Capital Account balances. Distributions of Company assets may be
made in Cash or in kind, in the sole and absolute discretion of the
liquidating trustee, but, if in kind, they will be deemed distributed at
their fair market values on the date of distribution (for federal income
tax purposes).
(e) If any Company property is distributed to the Members in kind,
for purposes of reflecting the allocation of gain or loss from liquidation
in the Members' Capital Accounts, the Company will make a book adjustment
with respect to the property distributed in kind as provided in the
Regulations under Code Section 704(b).
(f) All salable assets of the Company may be sold in connection with
any liquidation at public or private sale, at such price and upon such
terms as the liquidating trustee, in his, her or its sole discretion, may
deem advisable. Any Member, Manager, or Authorized Person and any person
related to any Member, Manager, or Authorized Person may purchase assets at
such sale.
ARTICLE 10 -- GENERAL
---------------------
10.1 Amendment. The Members may only amend this Agreement in whole or
---------
in part by a written agreement executed in the same manner as, and
specifically referring to, this Agreement.
10.2 Benefit. This Agreement binds and benefits the parties, their
-------
heirs, legal representatives, successors and assigns.
10.3 Computation of Time. In computing any period of time, the day of
-------------------
the act, event or default from which the designated period time begins to
run will not be included. The last day of the period so computed will be
included, unless it is a Saturday, Sunday, or legal holiday, and, if so,
the period will run until the end of the next day not a Saturday, Sunday,
or legal holiday.
10.4 Construction. Unless the context otherwise requires, when used
------------
in the Agreement, the singular includes the plural and vice versa and the
masculine includes the feminine (and neuter) and vice versa. The words
"include", "includes", and "including" will be deemed to be followed by the
phrase "without limitation". Captions are inserted for convenience only and
will have no legal effect. Each reference to a Code Section shall be deemed
to be followed by the words "and/or the Regulations thereunder." This
Agreement is to be deemed to have been prepared jointly by the parties
hereto, and any uncertainty or ambiguity existing herein, if any, shall not
be interpreted against any party, but shall be interpreted according to the
application of the rules of interpretation for arm's length agreements. The
substantive law of Missouri will govern this Agreement without regard to
its choice of laws rules.
14
10.5 Entire Agreement. This instrument constitutes the entire
----------------
agreement among the parties to this Agreement. The parties have made no
representations, warranties, understandings or agreements other than those
expressly included in this Agreement.
10.6 Equitable Relief. The Company and each Member will have the
----------------
right to seek and obtain equitable relief to enforce the Agreement.
10.7 Execution. The parties may execute this Agreement in any number
---------
of counterparts, and each counterpart will, for all purposes, be deemed an
original instrument, but all such counterparts together will constitute but
one and the same Agreement. Facsimile transmission of any original signed
counterpart and retransmission of any signed facsimile transmission, will
be the same as transmission of an original counterpart. At the request of
any party, the parties will confirm facsimile transmitted signatures by
signing an original Agreement.
10.8 Exhibits. All exhibits referred to in this Agreement are
--------
attached hereto and incorporated herein by this reference.
10.9 Expenses of Prevailing Party. The prevailing party in any
----------------------------
litigation in connection with this Agreement may recover legal fees and
litigation costs incurred in prosecuting and/or defending such litigation
from the nonprevailing party.
10.10 Further Assurances. Each of the parties to this Agreement
------------------
agrees to execute, acknowledge, deliver, file, record and publish such
further certificates, instruments, agreements and other documents, and to
take all such further action required by law or necessary in furtherance of
the Company's purposes and the objectives and intentions underlying this
Agreement and not inconsistent with the terms of this Agreement.
10.11 Invalidity of Provisions. If any provision in this Agreement is
------------------------
or shall become invalid, illegal or unenforceable in any respect, the
validity, legality or enforceability of the remaining provisions of this
agreement and any other application thereof shall not in any way be
affected or impaired thereby; provided that if permitted by applicable law,
any invalid, illegal or unenforceable provision may be considered in
determining the intent of the parties with respect to other provisions of
this Agreement.
10.12 No Waiver. The failure or delay of any party to this Agreement
---------
in requiring strict performance by any other party of any covenant of this
Agreement shall not constitute a waiver of the covenant or of the right to
require strict performance of the covenant.
10.13 Notices. A party may only effect a notice, approval or other
-------
communication required or permitted under this Agreement by giving such
notice in writing, postage or charges paid, and addressed to the address
following the person's name of the signature page hereto, and delivering it
in person, by certified mail (return
15
receipt requested), or by overnight express delivery service. Delivery by
messenger or courier will constitute personal delivery. Members may change
their addresses for the purpose of this Section by notice to the Company at
its principal office in the manner provided in this Section. Such notice
will become effective two (2) days after it is deposited in the mail,
postage prepaid, or one (1) day after it is consigned to an overnight
delivery service, or upon receipt of personal delivery.
ARTICLE 11 -- DEFINITIONS
-------------------------
The definitions below govern this Agreement unless the context
unambiguously requires otherwise:
11.1 "Act" means the Delaware Limited Liability Company Act, (S)18-
101, et seq., as amended from time to time, and any successor statute, as
applicable to the Company.
11.2 "Agreement" means this Operating Agreement, as amended from time
to time.
11.3 "Approval Rights" means the rights of a Member to vote, approve,
or consent to matters described in Section 4.3.
11.4 "Articles of Organization" means the Certificate of Formation
referred to in section 18-201 of the Act, filed with the Delaware Secretary
of State for the purpose of forming the Company, as the same may be amended
or restated from time to time as provided in the Act.
11.5 "Assignee" means a transferee of an interest who has not become
a Member.
11.6 "Authorized Person" means a Member, if management of the Company
is vested in the Members, or a Manager, if management is vested in
Managers.
11.7 "Bankruptcy" means the entry of an order for relief by the court
in a proceeding under the United States Bankruptcy Code, Title 11, U.C.C.,
as amended, or its equivalent under a state insolvency act or a similar law
of other jurisdictions.
11.8 "Capital Account" means an account maintained for each Member
pursuant to Regulations Section 1.704-l(b)(2)(iv).
11.9 "Capital Account Deficit" means the debit balance in a Member's
Capital Account at the end of a taxable year, after (a) crediting the
account with (i) the amount, if any, of the debit balance the Member must
restore under this Agreement, and (ii) the amount of the debit balance the
Member is deemed to be obligated to restore under Regulations Section
1.704-2(g)(1) and 1.704-2(i)(5), and (b) debiting the account with the
items described in Regulations Section 1.704-l(b)(2)(ii)(d)(4), (5), and
(6).
16
11.10 "Capital Contributions" means, with respect to any Member, the
amount of money and the fair market value (net of each liability assumed by
the Company in connection with such contribution and net of each liability
subject to which the Company received such contribution) of any property
(other than money) contributed to the Company as provided in Article 2.
11.11 "Capital Event" means a Transfer of all or substantially all of
the Company's property, including a foreclosure or condemnation.
11.12 "Cash" means money and equivalents, such as checks, but only
when collected, and bank transfers.
11.13 "Cash Available for Distribution" means all sums received in
Cash, or converted to Cash by the Company during any fiscal period,
provided by operations, excluding Capital Contributions, Cash from Sales or
Refinancing or loans or advances by Members to the Company, but including
sums released from Reserves, less Expenses.
11.14 "Cash from Sales or Refinancing" means the net Cash realized by
the Company from a Capital Event, and from any refinancing of any property
or interest therein, real or personal, acquired directly or indirectly by
the Company or a portion thereof after retirement of applicable mortgage
debt and other debt and all expenses related to the transaction and after
an allowance for reserves for repairs, replacements, contingencies and
anticipated obligations (including debt service and costs of improvements)
as determined by the Authorized Person in it sole discretion less Expenses.
Cash from Sales or refinancing shall include all principal and interest
payments with respect to any note or other obligation received by the
Company in connection with Sales and other Transfers of property by the
Company (other than in the ordinary course of business).
11.15 "Code" means the Internal Revenue Code of 1986, as amended from
time to time (including any successor statute or statutes constituting the
United States tax laws), as applicable to the Company and the Members.
11.16 "Company" means a Delaware Limited Liability company governed
by the Agreement and the Act, having the name specified in Section 1.2.
11.17 "Company Minimum Gain" means an amount computed as described in
Regulations Section 1.704-2(d).
11.18 "Contribution" means Cash, other property, the use of property,
services rendered, a promissory note or other binding obligation to
contribute cash or property or perform services or any other valuable
consideration transferred by a person to the Company as a prerequisite for
membership and any subsequent transfer to the Company by a person as a
Member.
17
11.19 "Effective Date" means the date of the filing of the Articles
of Organization.
11.20 "Event of Withdrawal" means any of the following:
(a) a Member voluntarily withdraws from the Company;
(b) except as provided in Section 4.6, a Member assigns
all of the Member's interest;
(c) a Member is expelled from the Company;
(d) unless approved by the Members as provided by Section
4.3, a Member: (i) makes an assignment for the
benefit of creditors; (ii) is the subject of a
Bankruptcy; (iii) files a petition or answer seeking
any reorganization, arrangement, composition,
readjustment, liquidation, or similar relief under
any statute, law or regulation or files an answer or
other pleading admitting or failing to contest the
material allegations of a petition filed in such a
proceeding; or (iv) seeks, approves of or acquiesces
in the appointment of a trustee, receiver or
liquidator of the Member or of all or any substantial
part of the Member's property;
(e) one hundred twenty (120) days after the start of any
proceeding against a Member seeking reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law
or regulation, the proceeding has not been dismissed,
or if within ninety (90) days after the appointment
of a trustee, receiver or liquidator of the Member or
of all or any substantial part of the Member's
property, without the Member's approval, the
appointment is not vacated or stayed, or within
ninety (90) days after the expiration of any such
stay, the appointment is not vacated;
(f) if a Member is a natural person: (i) the Member's
death; or the entry by a court of competent
jurisdiction adjudicating the member incompetent to
manage the Member's person or estate;
(g) if a Member is a trust, the termination of the trust
or a distribution of its entire interest but not
merely the substitution of a new trustee;
18
(h) if a Member is a general or limited partnership, the
dissolution and commencement of winding up of the
partnership or a distribution of its entire interest;
(i) if a Member that is a corporation, the filing of
articles of dissolution, or their equivalent, for a
corporation or revocation of its charter or a
distribution of its entire interest;
(j) if a Member is an estate, the distribution by the
fiduciary of the estate's entire interest; or
(k) if a Member is a limited liability company, the
filing of articles of dissolution or termination, or
their equivalent, for the limited liability company
or a distribution of its entire interest.
11.21 "Expenses" means for any fiscal period, (a) the amount of Cash
disbursed in the period in order to operate the Company (including capital
expenditures and debt service) and to pay expenses of the Company
(excluding expenditures in connection with Capital Events) and (b) amounts
set aside for the period for working capital and to pay taxes, insurance
and other costs and expenses incident to the operation of the Company
including Reserves.
11.22 "Immediate Family" means the Member's spouse, children
(including natural, adopted and stepchildren), grandchildren and parents.
11.23 "Interest" or "Member's Interest" means a Member's share of the
profits and losses of the Company and the right to receive distributions of
the Company assets.
11.24 "Limited Liability Company" means a company organized and
existing under the Act.
11.25 "Majority-in-Interest" means those Members whose aggregate
Proportionate Shares exceed fifty percent (50%).
11.26 "Management Rights" means the right to participate in the
management of the Company, including the rights described in Article 3.
11.27 "Manager" means if management of the Company is vested in one
or more managers, the person or persons designated, appointed or elected as
such pursuant to the Act.
11.28 "Member" means any person that signs in person or by an
attorney-in-fact, or otherwise is a party to the Agreement at the time the
Company is formed and is identified as a Member in this Agreement and any
person who is
19
subsequently admitted as a Member, until an Event of Withdrawal occurs with
respect to such person.
11.29 "Member's Nonrecourse Debt Minimum Gain" means an amount
computed as required by Regulations Section 1.704-2(i)(3).
11.30 "Member's Interest" means a member's share of the profits and
losses of the Company and the right to receive distributions of the Company
assets.
11.31 "Organization" means any person other than an individual.
11.32 "Permitted Assignee" means any member of the Member's Immediate
Family, the estate of the Member or any Member of the Member's Immediate
Family, a trust for the sole benefit of the Member and/or any Member of the
Member's Immediate Family, or any other organization controlled by such
Member or by members of the Member's Immediate Family.
11.33 "Person" includes individuals, partnerships, domestic or
foreign limited partnerships, domestic or foreign limited liability
companies, domestic or foreign corporations, trusts, business trusts, real
estate investment trusts, estates and other associations or business
entities.
11.34 "Proportionate Share" means the percentages provided for each
Member in Exhibit A, as amended from time to time, or as otherwise adjusted
to reflect changes in such Member's Capital Contributions relative to the
aggregate Capital Contributions of all Members.
11.35 "Regulations" means the Income Tax Regulations promulgated
under the Code, as amended from time to time, including corresponding
provisions of succeeding regulations.
11.36 "Reserves" means any sums which the Authorized Person or
liquidating trustee sets aside for the payment of taxes, future expenses
(including capital expenditures) or any other purposes as the Authorized
Person or liquidating trustee, in its sole discretion, determines to be
desirable for the Company.
11.37 "Securities Laws" means all applicable federal and state
securities laws, including the Securities Act of 1933, as amended, and any
regulations promulgated thereunder.
11.38 "Tax Matters Partner" has the meaning contained in Code Section
6231(a)(7).
11.39 "Tax Regulation Allocations" means the allocations described in
Section 8.5.
20
11.40 "Transfer" includes any sale, assignment, disposition,
exchange, mortgage, pledge, grant, hypothecation, or other transfer,
absolute or as security or encumbrance (including transfers by operation of
law).
IN WITNESS WHEREOF, the Members have executed this Operating Agreement
as of the Effective Date.
"MEMBERS"
PEABODY HOLDING COMPANY, INC.
By: X.X. XXXXXX
-----------------------------
Vice President
Address: 000 Xxxxxx Xxxxxx
Xxxxx 000
Xx. Xxxxx, XX 00000-0000
PEABODY DEVELOPMENT COMPANY
By: [Executed]
-----------------------------
President
Address: 000 Xxxxxx Xxxxxx
Xxxxx 000
Xx. Xxxxx, XX 00000-0000
21
EXHIBIT A -- CAPITAL CONTRIBUTIONS
----------------------------------
Member Initial Capital Proportionate
Name and address Contribution Share
Peabody Holding Co., Inc. Cash and Notes 72%
000 Xxxxxx Xxxxxx valued at $93,327,000
Xxxxx 000
Xx. Xxxxx, XX 00000 - 1826
Peabody Development Co. Real Estate Interests 28%
000 Xxxxxx Xxxxxx valued at $36,000,000
Xxxxx 000
Xx. Xxxxx, XX 00000-0000
